While many of the largest U.S. banks hunker down amid a widespread credit crunch and the fallout from subprime mortgage defaults, PNC Financial Services Group continues to please analysts, industry observers and investors.

Yesterday, the stock of Pittsburgh's largest bank rose 4 percent, to $70.01 per share, as third-quarter income exceeded Wall Street expectations. And American Banker magazine named PNC Chief Executive Officer James Rohr its 2007 Banker of the Year for "setting PNC on an aggressive course" and "expanding at a time when many of its rivals are playing it safe." Mr. Rohr's award follows the naming of PNC Capital Markets President Charlotte McLaughlin as the industry's 12th most powerful woman, according to US Banker magazine.

Said PNC spokesman Fred Solomon: "It's kind of raining good news."

PNC's third-quarter income actually fell due to a $1.3 billion one-time gain a year ago from the sale of a stake in money manager BlackRock Inc., but its performance still surpassed expectations amid the credit crunch now pinching banks around the country. Net income for the quarter was $407 million, compared with $1.5 billion in the same period a year ago. Adjusted for the partial sale of BlackRock to Merrill Lynch Investment Managers, PNC earned $469 million, or $1.37 per share, compared with $380 million, or $1.25 per share, in the third quarter of 2006.

Analysts had predicted profit of $1.35 per share.

PNC credited the rise in adjusted earnings partly to its $6 billion acquisition of Mercantile Bankshares, giving PNC a greater presence in Maryland and Virginia and a total of 1.072 branches nationally.

Mr. Rohr reiterated that PNC has minimal exposure to the subprime mortgage fallout roiling financial markets, telling analysts on a conference call that "we don't take subprime bets and we didn't rely on exotic product plays."

PNC's percentage of nonperforming assets to total assets was .22 percent as of Sept. 30, compared with .19 percent during the same period a year ago. PNC wrote off $49 million in loans and set aside $65 million for future losses, compared with $47 million in loans written off in the third quarter of 2006 and $16 million set aside for expected losses a year ago.

Its exposure to home builders is 3 percent of total loans, according to PNC Chief Financial Officer Richard Johnson, and PNC has "very small exposure" to highly volatile housing markets in Florida and California.

"What we have there is very diversified," he said.

PNC does have some exposure to an off-balance sheet vehicle that issues commercial paper -- the sort of short-term financing tool attracting lots of scrutiny these days on Wall Street. Companies sometimes use the commercial paper instead of bank loans, and banks agree to provide back-up funds to the vehicles if they are unable to unload the notes when they come due. Afraid that too many of these notes backed by subprime mortgages could expire at the same time, Citigroup, Bank of America and J.P. Morgan Chase recently agreed to help form a fund that would buy troubled assets in exchange for a fee.

But Mr. Rohr said that the vehicle PNC participates in, called Market Street, is "plain vanilla" and that it houses "little more" than $2 billion in outstanding loans, funding companies' inventory and receivables.

"We wouldn't have any problems putting it back on the balance sheet," he said. In a second-quarter filing with the Securities and Exchange Commission, PNC also referred to its Market Street exposure as "very limited" and said the bank's obligation to fund defaulted assets totaled $447 million.

Even with a rise in its share price yesterday, PNC's stock is short of its 52-week high of $76.41. With share prices down across the industry, some observers have speculated that there could be more mergers and acquisitions to come. Asked if he has an appetite for more buys such as Mercantile, Mr. Rohr said there is "nothing immediately on the horizon I can see."

"With the share price where it is, I would rather buy that back."

While others in his industry are "struggling," Mr. Rohr said, "we continue to perform. I would hope our share price would reflect that."

Mr. Rohr made that comment in the morning, before PNC's stock shot up 4 percent. In the afternoon, he said, "I think the market has responded well."