Pittsburgh-based PNC Bank, Youngstown’s third-largest bank by market share, posted a profit of $925 million, or $1.64 per share, in its third-quarter earnings report released Tuesday.
James E. Rohr, chairman and chief executive of PNC called the results “excellent,” saying that “2012 is shaping up to be another good year.”
In all, third-quarter profits rose by 11 percent from where it stood in 2011, when the bank recorded net income of $834 million. Third-quarter results stood in marked contrast to the bank’s second-quarter earnings, which declined by 40 percent from a year earlier.
Bank officials said that reduction stemmed largely from a $284 million cost related to repurchase demands on troubled mortgages, integration costs related to the March purchase of RBC Bank USA, and charges for redeeming trust-preferred securities.
But the third quarter saw revenue increase to $4.1 billion from $3.5 billion a year earlier. In addition to higher revenue, strong earnings were driven by customer growth and tighter credit and expense management.
Retail checking accounts grew by 230,000 in the first nine months of this year, and corporate banking helped bolster growth as well.
Noninterest income rose in the third quarter to $1.7 billion compared with $1.1 billion in the second quarter. PNC also managed a pretax gain of $137 million on the sale of a portion of its investment in Visa shares.
On the other hand, mortgage lending at the bank decreased, which has been expected at some regional banks over their fear of mortgage repurchase demands, also known as put-backs, such as the ones that daunted PNC in the second quarter, when it confronted increased claims related to loans sold to government-backed entities such as Fannie Mae after it acquired National City Corp. in 2009.
While larger banks such as JPMorgan Chase and Wells Fargo reaped major profits on mortgage lending in the third quarter, stoked by government incentives such as the Federal Reserve’s push to buy mortgage-backed bonds, some regional banks have been reluctant to step up such lending because the put-backs can prompt losses that exceed the original income banks made on the loans, PNC officials said.
Instead, commercial lending and auto loans increased at PNC and offset the drop in mortgage lending with overall loans up by 1 percent when compared with the second quarter, but net interest income decreased slightly and stood at $2.4 billion in the third quarter.