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PNC Delinquency is Sky High

PNC Delinquency is Sky High$6.4 billion Q2 production

July 23, 2009

By staff

Residential delinquency at The PNC Financial Services Group Inc. jumped and is more than twice as high as the industry rate. Earnings and originations also deteriorated. But one bright spot was an increase in the number of mortgage employees.

Second-quarter originations came in at $6.4 billion, the Pittsburgh, Pa.-based firm reported today. Fundings fell from $6.9 billion in the first quarter.

Agency and government programs accounted for 98 percent of second-quarter business, up from 97 percent in the prior quarter. Refinance share fell to 74 percent from 83 percent.

During the second-quarter 2008 — before PNC entered the residential lending business with its December 2008 acquisition of National City Corp. — residential production at National city was $5.3 billion.

PNC said it serviced $161.0 billion in mortgages for others, down from $168.0 billion on March 31. Adjustable-rate and balloon mortgages accounted for 13 percent of the servicing portfolio.

Residential mortgages on the balance sheet were $19.3 billion on June 30, lower than $19.7 billion on March 31. Home-equity loan holdings eased to $12.3 billion from $12.9 billion, and home-equity lines-of-credit increased to $24.4 billion from $24.1 billion. Residential construction loans fell to $2.2 billion from $2.8 billion.

Residential delinquency of at least 30 days was 20.87 percent, up from 18.05 percent on March 31. In comparison, industry-wide residential delinquency was just 9.12 percent as of March 31, according to the Mortgage Bankers Association.

PNC’s commercial mortgage holdings ended June at $24.9 billion, down from $25.4 billion at the end of March but way up from $9.4 billion on June 30, 2009.

Commercial mortgage delinquency of at least 30 days climbed to 7.20 percent from 5.30 percent at the end of March.

Residential mortgage banking earnings tumbled to $88 million from $221 million in the first quarter.

Net income across all of PNC fell to $207 million from the prior quarter’s $530 million and the prior year’s $517 million.

PNC Chairman and Chief Executive Officer James E. Rohr said the businesses performed well given “the extremely challenging economic environment.”

PNC employed 3,693 employees in its residential mortgage-banking unit at the end of last month, rising from 3,596 three months earlier. Company-wide employee count ended last month at 58,070, lower than 58,795 on March 31 but higher than 28,605 on June 30, 2008.

PNC reported 2,606 bank branches, higher than 2,585 at March’s end.

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