U.S. Bancorp, PNC Show More Loans, Mixed Results

Two of the largest U.S. regional banks said on Wednesday that demand for loans from businesses was increasing, a trend that bodes well for the economy.
U.S. Bancorp and PNC Financial Services Group Inc, two of the largest U.S. regional banks, said on Wednesday that demand for loans from businesses was increasing, a trend that bodes well for the economy.

While U.S. Bancorp's fourth-quarter results beat Wall Street estimates, PNC missed, and its shares fell nearly 4 percent.

Both banks showed loan growth and improving credit quality in the fourth quarter. PNC's total loans increased about 3 percent from the third quarter to $159 billion, while U.S. Bancorp's grew about 2 percent to $209.8 billion. Both cited strength in commercial loans.

Wells Fargo & Co and JPMorgan Chase & Co also showed promising signs of loan growth in their fourth-quarter earnings reports in the past week.

Both U.S. Bancorp and PNC took expenses related to mortgage servicing matters, a sign that lenders beyond the five largest mortgage servicers may join a possible settlement related to the "robo-signing" of foreclosure documents.

Several top U.S. banks are expected to sign a $20 billion to $25 billion agreement with the government in the coming weeks to resolve allegations of mortgage abuses. The Justice Department began reaching out to several other banks to gauge their interest in joining the settlement, people familiar with the matter told Reuters earlier this month, a move that could increase the total price tag of the deal.

PNC recorded $240 million in foreclosure-related expenses as a result of "ongoing governmental matters," while U.S. Bancorp took a $130 million charge due to mortgage servicing matters.

In a conference call with analysts, PNC Chief Executive Officer Jim Rohr said the bank had recently been contacted by "additional regulators who gave U.S. some information that we believed that we needed to accrue for in the fourth quarter."

U.S. Bancorp CEO Richard Davis said it was "accurate that banks beyond the big five have been invited into the conversations and for that we believe we have something that we need to reserve for." The fact that the bank was setting aside reserves didn't necessarily mean a final decision had been made or that a final amount had been determined, Davis said.

PNC MISSES ANALYSTS' ESTIMATES

Pittsburgh-based PNC said net income applicable to common shareholders fell to $451 million, or 85 cents per share, from $798 million, or $1.50 per share, a year earlier.

Excluding certain items, PNC's earnings were $1.15 per share, missing the analysts' average estimate of $1.41, according to Thomson Reuters I/B/E/S.

U.S. Bancorp, based in Minneapolis, said net income rose nearly 40 percent as it made more money from its core banking business. Net income applicable to common shareholders was $1.3 billion, or 69 cents per share, up from $951 million, or 49 cents per share, a year earlier.

U.S. Bancorp's earnings before special items came to 64 cents per share, beating analysts' estimates by a penny.

Credit quality improved for the U.S. Bancorp, which has emerged as one of the strongest U.S. regional lenders in the wake of the 2008 financial crisis. Provisions for credit losses nearly halved to $497 million.

PNC's provisions to cover credit losses declined 27 percent sequentially to $190 million. (Reporting by David Henry in New York,; Rick Rothacker in Charlotte, North Carolina,; Aman Shah and Jochelle Mendonca in Bangalore, Aruna Viswanatha in Washington; Editing by Lisa Von Ahn)