July 18, 2012 / 1:22 PM / 7 years ago

PNC Financial profit falls on higher reserves for repurchases

(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

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