(Updates with 2014 revenue, expenses starting in third paragraph.)
Jan. 16 (Bloomberg) -- PNC Financial Services Group Inc., the second-biggest U.S. regional bank, posted fourth-quarter profit that beat analysts’ estimates as the lender trimmed expenses and set aside less money for soured loans.
Net income rose 53 percent to $1.1 billion, or $1.85 a share, from $719 million, or $1.24, a year earlier, the Pittsburgh-based bank said today in a statement. The average estimate of 30 analysts surveyed by Bloomberg was $1.64 a share. For the full year, profit increased 41 percent to a record $4.2 billion.
Chief Executive Officer Bill Demchak, 51, has focused on cutting costs, boosting fee revenue and increasing market share in the U.S. Southeast after PNC’s 2012 acquisition of RBC Bank USA. Amid a slowdown in its residential mortgage business, full- year revenue is expected to decline in 2014 and the firm plans to compensate by reducing costs an additional $500 million, Demchak said today on a conference call.
“We do expect revenues to be under continued pressure,” Robert Reilly, PNC’s chief financial officer, said on the call. “In light of that, we have expense management as a priority.”
PNC rose 2.2 percent to $80.57 at 12:24 p.m. in New York, the best performer in the Standard & Poor’s 500 Financials Index. The shares have gained 35 percent in the past year, outpacing the 28 percent advance of the 81-company index.
Fourth-quarter revenue increased 0.1 percent to $4.07 billion from a year earlier, PNC said in the statement. Asset- management revenue increased to $34 million, while revenue from residential mortgage banking slid to $46 million, the bank said.
Noninterest expenses declined 10 percent to $2.55 billion from a year earlier, according to the statement. The bank reduced its mortgage workforce by 7 percent and planned to close 200 branches by the end of 2013, Demchak said last year.
Fourth-quarter noninterest income increased $162 million, primarily from the release of reserves for residential mortgage repurchase obligations. Provisions for credit losses declined by 64 percent from the prior year, the firm said.
BB&T Corp., based in Winston-Salem, North Carolina, said today fourth-quarter profit rose 6 percent to $537 million. JPMorgan Chase & Co., the biggest U.S. bank, said Jan. 14 that quarterly net income fell 7.3 percent amid rising legal costs and Wells Fargo & Co., the largest home lender, posted record fourth-quarter profit as expense cuts bolstered results. Bank of America Corp. said yesterday fourth-quarter profit more than quadrupled as the company quelled claims tied to defective mortgages.
PNC reached an $89 million settlement with Freddie Mac last month over mortgages sold to the government-backed firm in the years leading up to the credit crisis. PNC bought National City Corp., one of the nation’s biggest subprime home lenders, as the mortgage crisis unfolded. The U.S. Justice Department and Consumer Financial Protection Bureau are investigating PNC for foreclosure expenses on federally backed home loans, the company said in August.
--Editors: Steven Crabill, Peter Eichenbaum