The banks reporting earnings results on Thursday showed continued struggles with the credit crunch.
PNC Financial Services Group’s (PNC) earnings plummeted to $248 million, or $0.71 per share, during the third quarter. That represents a drop of 39% from the same period last year, and 51% from the second quarter. Analysts expected Pennsylvania’s largest bank to earn 84-cents per share during the third quarter.
The bank’s retail and corporate banking units took the hardest hits, both earning less than 40% of what they earned in the second quarter. PNC’s investment servicing component, a relatively small unit, fared better, earning nearly exactly the same as it did in the second quarter.
"During a time of great uncertainty, PNC posted solid third quarter results reflecting the quality of our balance sheet, and we maintained strong capital and liquidity positions," PNC Chairman and CEO James Rohr said in a release.
Still, PNC’s balance sheet took a couple of hits during the quarter. Capital ratios remained strong from the second quarter to the third, but the quality of its assets deteriorated. The ratio of nonperforming loans to total loans increased from 0.95% to 1.12%.
“PNC was not immune to the effects of market dislocation on certain fair value assets,” Rohr said.
Capital One Financial Corporation (COF)said its earnings dropped to $374.1 million, or $1.00 per share, in the third quarter, essentially meeting analysts’ expectations. The company earned $452.9 million in the second quarter of this year.
Capital One’s credit unit – by far its biggest component – earned $345 million in the third quarter. That represents about a 1.3% increase from the second quarter, but a whopping 45% decrease relative to the same period last year. Its local banking business reported substantial gains in the third quarter, growing 32% from the second quarter.
Capital One's shares dropped 6% to $36.56 in after-hours from the New York Stock Exchange close of $38.70.
Huntington Bancshares’ (HBAN) earnings were lower in the third quarter, but did beat analysts’ expectations. The Midwest regional bank earned $115 million, or 28 cents per share, in the third quarter, down about 17% from the same period last year. However, the bank did earn about 12% more than it did in the second quarter.
"Huntington's third quarter results were quite solid during this period of unprecedented economic and capital markets turmoil," said Huntington President and CEO Thomas E. Hoaglin.
The Columbus, Ohio, bank’s capital levels remained strong from the second quarter to the third, but its assets decayed. The bank’s non-performing assets grew by 5% in the third quarter, caused primarily by non-accruing commercial real estate and industrial loans. According to Hoaglin, “problem assets are increasing, but at a manageable pace.”
Huntington also slashed its 2008 profit expectations to $1.12 to $1.16 per share, from $1.25 to $1.35 per share amid weakening economic conditions in the Midwest.
"As we head into the fourth quarter, our view is that difficult times will remain and challenges for our customers will increase,” Hoaglin said.
BB&T Corporation’s (BBT)third-quarter profit sunk to $358 million, or 65 cents per share, falling 1-cent below analysts’ expectations. The southeast regional bank earned about 19% less in the third quarter this year as it did in the same period last year.
"While we are not immune to the unprecedented challenges in the financial markets, BB&T remains a strong and financially sound company," said BB&T Chairman and CEO John Allison.
"Our capital levels, debt ratings and earnings are among the best in the industry.”
Capital levels remained “very healthy,” the company said, led by growth in tier-1 capital. However, quality of assets atrophied somewhat -- non-performing assets to total assets grew to 1.2% in the third quarter from 0.95% in the second quarter.
Bank of New York Mellon Corporation’s (BK) profit tumbled by more than half in the third quarter, still besting analysts’ estimates. The bank earned $305 million, or 26 cents per share, from continuing operations in the third quarter. Excluding charges, Bank of New York earned $0.79 per share, which is substantially higher than analysts’ estimates of 66-cents per share.
“In the face of unprecedented market volatility our operating performance exceeded expectations,” said Robert P. Kelly, chairman and chief executive officer of The Bank of New York Mellon.
Bank of New York’s portfolio of securities was, however, pummeled in the third quarter. Overall, the Bank of New York’s portfolio of securities is off $1.68 billion for the third quarter -- unrealized losses now total $4.65 billion. The bank’s Alt-A securities were bludgeoned, causing $925 million in unrealized losses for the quarter, and adding up to $2.34 billion. Its subprime mortgage portfolio has also been slammed. The company says 96% of securities in its portfolio still hold a AAA , AA or A rating, leaving 4% rated as “other.”
The bank’s capital ratios remained strong, and well above regulator requirements from the second quarter to the third quarter. It has also managed to push its non-performing asset ratio lower from 0.5% to 0.4%.
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