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PNC Turns In Weak Performance

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Mortgage Daily

                                                 October 19, 2011

Quarterly delinquency was higher at The PNC Financial Services Group Inc., while the company missed out on production gains reported so far by most of its competitors.

The volume of home loans originated was unchanged from the second quarter at $2.6 billion, according to third-quarter earnings data.

Out of six other lenders that have reported third-quarter production so far, five have reported increases from the second quarter.

Refinance share inched up to 69 percent from the second quarter’s 68 percent share. Agency and government loans accounted for 100 percent of originations, as they did in the second quarter.

Total production at PNC was slightly higher a year prior at $2.7 billion.

Through Sept. 30, year-to-date mortgage fundings totaled $8.4 billion.

The third-party residential servicing portfolio contracted, ending the third quarter at $121 billion versus $125 billion at the end of the second quarter. The company serviced $131 billion for investors as of a year earlier.

There were $14.7 billion in residential loans on PNC’s balance sheet as of Sept. 30. Home-loan holdings were trimmed from $15.0 billion in the prior period and have been cut from $16.5 billion in the same period during 2010. Last month’s total reflected $0.6 billion in residential construction loans.

Residential delinquency of at least 30 days on non-government mortgages was 2.83 percent in the third quarter, higher than 2.76 percent three months earlier. On government-insured mortgages, the rate jumped to 15.21 percent from 14.47 percent.

PNC also owned $33.2 billion in home-equity assets, not too different than $33.4 billion at the end of the second quarter and a little less than $34.6 billion at the same point in 2010. Home-equity lines of credit inched down to $22.7 billion from $22.8 billion on June 30, while HEL installment assets barely changed at $10.5 billion.

HEL delinquency increased to 1.45 percent from the second quarter’s 1.24 percent.

PNC serviced $267 billion in commercial mortgages as of Sept. 30. The portfolio size eased from $268 billion in on June 30 but was up from $263 billion on Sept. 30, 2010.

Commercial real estate assets grew, rising to $16.4 billion from $16.3 billion three months earlier. CRE loans outstanding were lower, however, than $19.1 billion a year earlier. The third-quarter total included $10.9 billion in real estate projects.

The rate of late payments improved on commercial mortgages, falling to 0.74 percent from the previous quarter’s 1.11 percent.

Income from residential mortgage banking fell to $22 million from the second quarter’s $55 million. It was also lower than $97 million in the third quarter of last year.

Earnings before taxes at The PNC Financial Services Group have been unchanged during the past four quarters at $1.1 billion. The company earned $1.0 billion in the third-quarter 2010.

Headcount slipped to 3,646 in residential mortgage banking from 3,688 as of June 30. But staffing has expanded from a year prior when 3,339 people were employed in the mortgage business.

Company-wide staff count declined to 51,692 from 51,843 in the prior quarter.

Branch count closed out the quarter at 2,469. The number will expand by around 424 in March 2012 with the planned acquisition of RBC Bank (USA). Another 27 branches are expected to be acquired from Flagstar Bank, FSB, in December.

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