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PNC Reports Small Improvement in Production

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The PNC Financial Services Group Inc. managed a small gain in quarter-over-quarter residential production, though mortgage earnings were hurt by repurchases. Mortgage delinquency was lower.

Home-loan originations were $3.6 billion during the three months ended June 30, according to second-quarter earnings data published Wednesday.

Volume climbed from $3.4 billion in the first quarter and $2.6 billion in the second-quarter 2011.

The refinance share of business fell to 72 percent from the first quarter’s 82 percent. All of second-quarter production was agency.

PNC serviced $116 billion for third parties. The serviced-for-investor portfolio was down from $121 billion at the end of the first quarter and $125 billion at the same point in 2011.

Residential loan holdings grew to $15.932 billion from $14.927 billion at the end of March and $15.001 billion as of June 30, 2011.

Residential delinquency of at least 30 days on conventional loans was 1.93 percent, a big improvement from 2.60 percent in the previous quarter and 2.76 percent a year prior.

Government mortgage delinquency also improved, to 13.53 percent from the first quarter’s 13.78 percent and from 14.47 percent as of the second quarter of last year.

Home-equity lines of credit totaled $24.360 billion, slipping from $24.668 billion three months earlier and $22.838 a year earlier. Home-equity loans, meanwhile, grew to $11.478 billion from $11.076 billion and were also higher than $10.541 billion as of the middle of last year.

Delinquency on home-equity loans was reduced to 0.54 percent from 0.78 percent and stood at 1.24 percent in June 2011.

Construction loans eased to $0.896 billion from $0.925 billion but were up from $0.680 billion a year earlier.

Commercial real estate assets were higher, climbing to $18.440 billion from $16.818 billion three months prior and $16.779 billion a year prior.

CRE delinquency worsened to 1.33 percent from the first quarter’s 1.05 percent. But the rate declined from 2.26 percent a year previous.

Repurchase losses increased to $77 million from $40 million and were also up from $50 million in the same period last year. The repurchase reserve closed out June at $462 million.

“PNC has and expects to experience elevated levels of residential mortgage repurchase demands reflecting a change in behavior and demand patterns of two government-sponsored enterprises, FNMA and FHLMC, primarily related to loans sold in 2006 through 2008 in agency securitizations,” the report said.

PNC reported a $213 million loss for residential mortgage banking, swinging from a $61 million profit in the prior period. Mortgage profits were $55 million in the second-quarter 2011.

Earnings across all business lines fell to $0.7 billion from $1.1 billion three months earlier and $1.1 billion a year earlier.

The company employed 4,210 people in residential mortgage banking, expanding the mortgage staff from 4,055 as of March 31, 2012. Mortgage headcount was 3,688 at the same point last year.

Total staffing at all of PNC was 56,633, more than 56,605 at the end of the first quarter. A year prior, there were 51,843 employees. The June 30, 2012 total included 50,448 full-time employees.

The second quarter finished with 2,888 branches, fewer than 2,900 at the end of the prior quarter.

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