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Retail, residential mortgage banking net incomes grow YOY at PNC

Pittsburgh-basedPNC Financial Services GroupInc. on July 15 reported net income attributable todiluted common shares of $914 million, or $1.82 per share. It was $987million, or $1.88 per share, a year ago.

TheS&P Capital IQ consensus normalized EPS estimate for the recent quarter was$1.75.

Only PNC's retail banking and residential mortgage bankingsegments grew net income year over year — retail to $307 million from $241million and residential mortgage to $46 million from $19 million. However, thelatter's loan origination volume was down 10% from the second quarter of 2015,while loan servicing acquisitions totaled $6 billion at the end of bothperiods.

Total loans grew 2% year over year, with commercial lending offsettingthe consumer lending decline. Consumer lending saw lower home equity andeducation loans, but an improvement in auto and credit cards. Energy-relatedloans "weakened slightly," according to the earnings report, but at aslower rate than it had in the prior quarter. Fee income generally improved;M&A advisory and loan syndication fees contributed to 9% revenue growth incorporate services.

Nonperforming assets decreased slightly to $2.52 billionfrom the first quarter's $2.55 billion. The provision for credit lossesamounted to $127 million, down sequentially from $152 million but higher thanthe $46 million of a year ago. The most recent quarter's provision included $48million for oil, gas and coal loans. The portfolio for those sectors contained$293 million nonperforming loans. Net charge-offs totaled $134 million,compared with $149 million in the first quarter and $67 million a year ago.

Net interest margin was 2.70%, lower than the priorquarter's and the year-ago period's 2.75% and 2.73%, respectively.