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Net income applicable to common shares was $65 million, or 14 cents per share, down from $505 million, or $1.45 per share, in the same quarter last year. Excluding 20 cents a share for integration costs, PNC earned 34 cents a share, below analysts' consensus estimate of about 43 cents.
"The current economy is a very difficult one," Chairman and CEO James Rohr said in a conference call with analysts. "Our performance is what we would expect in this environment. Overall, I'm pleased with how PNC's businesses performed."
Credit quality, including commercial, residential and consumer loans, continued to deteriorate in the quarter "but at a slower rate," the bank said. Net charge-offs totaled $795 million, nearly double the $431 million in the first quarter this year. The National City loan portfolio accounted for nearly 60 percent of the charge-offs in the quarter, the bank said.
Revenue nearly doubled in the June quarter to $3.99 billion vs. $2.04 billion a year earlier, reflecting the acquisition of Cleveland-based National City at the end of 2008.
The Federal Deposit Insurance Corp. in May levied its first special assessment since 1996 to strengthen its fund. That charge reduced PNC's profits by 19 cents a share.
The bottom line also was hurt by a $95 million dividend PNC paid on the government bailout money it received under the Troubled Asset Relief Program.
PNC, the country's fifth-largest bank based on deposits, said the purchase of National City continued to exceed expectations. The deal added to earnings so far this year, and cost savings are ahead of plan, the bank said. PNC will begin converting National City branches to the PNC platform in November, starting with the Pittsburgh market. Conversions in other markets will continue through the middle of next year.
"I think the economy is going to be tough throughout the rest of the year," Mr. Rohr said. Still, he projected PNC would meet earnings estimates for the rest of the year.
PNC's shares fell $1.62, or 4.3 percent, yesterday to close at $35.79 yesterday.
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