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PNC Performance Mostly Improved

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Residential delinquency at The PNC Financial Services Group Inc. has improved substantially, though the same cannot be said for home-equity delinquency. Quarterly earnings improved, and home-loan fundings moved higher on a quarterly basis but deteriorated substantially from a year ago. The bank plans a big sale of distressed assets.

In its second-quarter earnings report, PNC said first-mortgage originations were $2.3 billion, higher than $2.0 billion in the first quarter but down more than two-thirds from $6.4 billion in the second-quarter 2009.

Third-party loans serviced were $137 billion on June 30, down from $141 billion the previous quarter as payoffs outpaced originations. PNC serviced $161 billion for investors as of June 30, 2009.

Residential loans on the balance sheet as of the end of last month were $16.6 billion. The figure was $17.6 billion at the end of March and $19.3 billion a year prior.

Delinquency of at least 30 days on home loans tumbled, closing out June at 3.85 percent. The rate was 5.06 percent the prior quarter and 6.51 percent a year ago.

Home-equity line-of-credit assets finished the second quarter at $23.9 billion, lower than $24.0 billion at the end of the first quarter and $24.4 billion at the end of the second-quarter 2009. Home-equity loan holdings declined to $11.1 billion from $11.4 billion and last year’s $12.3 billion.

HEL delinquency was 1.65 percent in the latest report, worse than the first quarter’s 1.59 percent and the second-quarter 2009’s 1.42 percent.

The company said it expects to sell around $2.0 billion in home loans and HELs from its distressed assets portfolio during the current quarter. An associated $109 million provision for credit losses and $75 million in charge-offs were taken in the second quarter.

PNC said it owned $1.2 billion in residential construction loans, falling from $1.7 billion the prior quarter and $2.2 billion in June 2009.

The Pittsburgh-based bank reported that its commercial mortgage servicing portfolio fell to $265 billion last month from $282 billion in March. A year prior, the portfolio was $269 billion.

Commercial mortgage assets were $20.4 billion on June 30, less than $22.0 billion March 31 and $24.9 billion on June 30 of last year.

Commercial real estate delinquency declined to 3.25 percent at the end of last month from 4.73 percent at the end of the first quarter. Late payments a year earlier were 3.30 percent.

The residential mortgage banking unit earned $92 million in the latest period, improving from the first quarter’s $82 million but unchanged from a year ago.

Second-quarter income before taxes at all of PNC was $1.1 billion, better than $0.9 billion three months earlier and $0.2 billion 12 months earlier.

Mortgage employees numbered 3,348 on June 30, eight more people than on March 31. Mortgage headcount was lower, however, than 3,693 employees on June 30, 2009.

Company-wide, PNC employed 55,384 people, fewer than 56,098 at the end of the first quarter. PNC had 58,070 employees a year ago.

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