PNC says mortgage deals will reduce quarterly profit

, Bloomberg

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PNC Financial Services Group Inc. (PNC), the seventh-biggest U.S. bank by deposits, said transactions related to mortgage banking and other activities reduced fourth-quarter earnings 47 cents a share.

The transactions include a charge of about $70 million resulting from a foreclosure agreement with federal regulators, the Pittsburgh-based bank said Wednesday in a regulatory filing. The bank also recorded a gain of $130 million from the sale of a portion of its investment in Visa Inc.

U.S. regulators struck a deal with 10 mortgage servicers including JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) earlier this week in which lenders must provide $5.2 billion in mortgage assistance and $3.3 billion in direct payments to wronged borrowers. Citigroup Inc. (C), the third-largest U.S. bank by assets, said the settlement will result in a $305 million pretax charge.

PNC said fourth-quarter earnings will exceed the First Call mean estimate of $1.57 per share. The average estimate of 30 analysts surveyed by Bloomberg is for fourth-quarter per-share profit of $1.61.

PNC, run by CEO Jim Rohr, 64, recorded a $254 million pretax provision for residential mortgage repurchase demands related to increased requests expected from Freddie Mac and Fannie Mae, which boosted the reserve to $614 million as of Dec. 31, according to the filing.

Last June, PNC increased its mortgage-repurchase reserve by $350 million to cover demands for refunds on faulty loans.

PNC fell to $58.83 at 8:30 a.m. in New York trading, from $60.25 at the close Tuesday. The shares were up 3.3 percent this year through Tuesday.

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