Mercantile acquisition helps boost PNC revenue

October 19, 2007|By Bloomberg News

PNC Financial Services Group Inc., Pennsylvania's biggest bank, said third-quarter profit rose 23 percent as its acquisition of Baltimore's Mercantile Bankshares Corp. helped generate higher fee revenue.

Excluding a gain last year from an investment in fund manager BlackRock Inc., earnings climbed to $469 million, or $1.37 a share, from $380 million, or $1.28, for the third quarter last year, the Pittsburgh company said yesterday.

Exceeds estimates

Per-share profit was 2 cents higher than the average estimate of 17 analysts surveyed by Bloomberg.

If the BlackRock investment was included, net income fell 73 percent to $407 million.

Chief Executive Officer James E. Rohr is increasing the bank's reliance on fees from asset management and other services as lending becomes less profitable.

The bank owns about 34 percent of BlackRock, the largest publicly traded U.S. fund manager.

Expansion here

PNC closed on its purchase of Mercantile in March, extending its reach into the Baltimore-Washington region.

The company has "strong fee-income growth mitigated by an increase in credit costs, though credit quality remains stable," wrote Gary Townsend, an analyst at Friedman, Billings, Ramsey Group Inc., in a report.

PNC shares rose $2.74, or 4 percent, to $70.01.

The stock has declined 5.4 percent this year, compared with a 12 percent drop in the 24-member KBW Bank Index.

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