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PNC Originations Slip

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Thanks to its participation in the government-supported refinance program, The PNC Financial Services Group Inc. kept quarterly mortgage production from significantly sliding. While delinquency crept up on its conventional mortgage investments, a big improvement was made on its government-insured portfolio. Mortgage earnings swung to a profit thanks to lower repurchase provisions.

First-quarter earnings data indicated that residential loan originations totaled $4.2 billion.

Business retreated from the fourth-quarter 2012, when PNC generated $4.4 billion in home loan production.

But fundings improved from $3.4 billion during the first-quarter 2012.

Refinances accounted for 81 percent of first-quarter activity, widening from an 80 percent refinance share in the prior period but narrowing from 82 percent in the same period in the prior year. One-third of all originations were processed for the Home Affordable Refinance Program.

The third-party residential mortgage servicing portfolio crept up to $120 billion from $119 billion at the end of last year but was off from $121 billion at the same point last year.

PNC’s balance sheet reflected $14.985 billion in residential loans. The Pittsburgh-based company cut its holdings from $15.240 billion three months earlier and $16.212 billion a year earlier. The March 31 total included $14.217 billion in residential mortgages and $0.768 billion in residential construction loans.

Delinquency of at least 30 days on its residential conventional portfolio was 1.63 percent, a little worse than 1.61 percent as of Dec. 31, 2012 but much better than 2.60 percent as of March 31, 2012.

Delinquency on the portfolio of residential loans insured by the government was a whopping 11.06 percent, though that was a big improvement from 13.64 percent at the end of the prior quarter and 13.78 percent 12 months prior.

Home-equity loans on the books climbed to $13.001 billion from $12.344 billion and were $11.076 billion as of March 31, 2012. In addition, PNC owned $23.029 billion in home-equity lines of credit, a little less than $23.576 billion in the prior period and $24.668 billion in the same period last year.

Home-equity delinquency tumbled to 0.33 percent from 0.49 percent and was significantly improved from 0.78 percent in the year-earlier period.

Commercial real estate holdings totaled $18.779 billion, more than $18.655 billion at the end of December and $18.534 billion at the same point in 2012. The most recent figure reflected $12.596 billion in real estate projects and $6.183 billion in commercial mortgages.

CRE delinquency fell to 0.80 percent last month from 0.93 percent in December and 1.05 percent in March of last year.

The residential loan repurchase reserve finished the latest period at $522 million, lower than $614 million three month prior.

Residential mortgage banking pretax income swung to a $71 million profit from a $277 million loss in the fourth quarter but fell short of the $97 million earned in the first-quarter 2012.

“Residential mortgage revenue reflected a substantially reduced provision for residential mortgage repurchase obligations,” the report said.

The report indicated that company-wide income before income taxes and non-controlling interests jumped to $1.3 billion from $0.9 billion in the fourth quarter. Earnings came in at $1.1 billion a year prior.

PNC employed 56,172 full- and part-time employees as of the end of the first quarter across all business lines, reducing staffing from 56,285 people at the end of 2012. At the same point last year, 56,605 people worked at the company.

Branch count fell to 2,856 from 2,881.

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