(Reuters) - PNC Financial Services Group Inc’s (PNC.N) quarterly profit missed analysts’ estimates as it set aside more money for residential mortgage loan repurchases and said it expects the so-called “put-back” requests to increase.
Government-backed entities Fannie Mae and Freddie Mac have been pressing U.S. banks to buy back soured home loans made during the housing boom.
The loans had been bundled into mortgage-backed securities and bought by outside investors, who now allege they do not meet guarantees made by the banks when they were sold.
The Pittsburgh-based regional bank, which reported a 40 percent fall in earnings for the second quarter, said earlier this month, it would add $350 million to its reserves in the second quarter to cover put-back requests.
PNC, one of the 10 largest U.S. banks, said net income fell to $546 million, or 98 cents per share, down from $912 million, or $1.67 per share a year earlier.
The company said its second-quarter profit was hurt by a $284 million after-tax provision for residential mortgage loan repurchase obligations.
Analysts on average had expected the company to earn $1.24 per share, according to Thomson Reuters I/B/E/S.
Total loans increased 20 percent to $180.4 billion. Net interest income rose 17 percent to $2.52 billion.
Provision for credit losses rose more than a third to $256 million for the second quarter, primarily due to credit provisions related to the RBC Bank (USA) acquisition.
PNC shares, which have gained about 4 percent since the beginning of the year, were marginally down at $61.10 before the bell. They closed at $61.59 on Tuesday on the New York Stock Exchange.
Reporting by Tanya Agrawal and Aman Shah in Bangalore; Editing by Supriya Kurane