PNC sees rise, BNY takes hit in first quarter

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PNC Financial Services Group, the region's biggest bank, Wednesday reported first-quarter profits that climbed 22 percent from a year ago, while officials forecast that another dividend hike was in store for 2014.

At the same time, trust and custody giant Bank of New York Mellon posted a first-quarter loss of $266 million, or 23 cents per share, after taking a previously announced charge due to an unfavorable tax ruling.

At PNC, earnings rose to $938 million, or $1.76 per share, from $766 million, or $1.44 per share, in the first quarter of 2012 when results were hurt by integration costs from the acquisition of North Carolina-based RBC Bank.

Revenue rose 6 percent to $3.96 billion from $3.73 billion a year earlier.

Although loan growth slowed in the most recent quarter, expenses fell.

"We had a great first quarter," PNC president William Demchak told analysts in an early morning conference call, saying he was "honored and excited" to be succeeding James Rohr as CEO next week. Mr. Rohr, who ran the bank for 13 years, has said he plans to stay on as executive chairman for one year.

Mr. Demchak said it remained to be seen whether the pullback in loan demand from the fourth quarter was seasonal or the beginning of a trend.

PNC won approval from regulators to raise the quarterly common stock dividend this month by 10 percent to 44 cents per share, up from 40 cents. The bank had been paying 66 cents before slashing the payout to 10 cents in early 2009 during the financial crisis.

Mr. Demchak told analysts that a dividend increase and share buybacks next year would be among the bank's priorities. Other focuses would be adding clients and controlling costs, he said.

Mr. Demchak has said PNC would close about 200 branches this year across its markets to cut costs and focus on better serving customers who increasingly bank online and via smartphones. Thirty of those branches were shuttered in the first quarter, he said Wednesday.

PNC also is deploying advanced function ATMs that stamp check images on receipts and dispense dollar bills to make it easier for customers to deposit and cash checks at a machine instead of going into a branch.

In southwestern Pennsylvania, the first market where the rollout of the new ATMs has been completed, consumer deposits at teller windows fell 17 percent, Mr. Demchak said.

At BNY Mellon, which has kept a major presence in Pittsburgh since moving the old Mellon Financial headquarters to New York in 2007, the first-quarter loss compared with a profit of $619 million, or 52 cents per share, in the same quarter last year.

Excluding the special charge in the most recent period, BNY Mellon earned $588 million, or 50 cents per share. Revenue slipped 1 percent to $3.61 billion from $3.65 billion a year ago.

Chairman and CEO Gerald Hassell told analysts that core revenues were "pretty strong" and that the company was doing a good job of controlling expenses.

He said assets under custody were held back by the loss of a "significant" client that he didn't name.

"We hate to lose," he said, citing a competitive environment for the loss. "We are kicking ourselves for losing it."

BNY Mellon's shares fell 57 cents Wednesday, or 2 percent, to close at $27.19.

Shares of PNC added 26 cents, or 0.4 percent, to close at $65.05.

businessnews

Patricia Sabatini: psabatini@post-gazette.com or 412-263-3066.


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