PNC's nonperforming assets and allowance for credit losses increases in first quarter

By Sara Rosenberg

New York, April 19 - PNC reported that non-performing assets increased during the first quarter of 2002 due to the performance of PNC Business Credit. In addition, the allowance for credit losses increased due to a $41 million allowance acquired with the purchase of NBOC and $41 million of additional reserves related to the PNC Business Credit portfolio and the Corporate Banking business, a company filing with the Securities and Exchange Commission said.

NPAs for the first quarter 2002 were $438 million compared to $391 million at the end of the fourth quarter and $386 million at the end of first quarter 2001. The ratio for NPAs to total loans, loans held for sale and foreclosed assets was 1.04% compared to fourth quarter results of 0.93% and 0.81% at the end of first quarter 2001. Excluding PNC Business Credit, the ratio was 0.69% down from 0.78% at the same time last year, the SEC filing said.

The allowance for credit losses was $712 million, which represented 1.85% of period-end loans and 284%. In the fourth quarter of 2001, the comparable ratio was 1.66% of period-end loans and 299% of non-performing loans. At the close of first quarter 2001, the ratio was 1.48% of period-end loans and 201% of non-performing loans. Net charge-offs were $41 million or 0.43% of average loans, compared to $758 million or 7.3% at fourth quarter 2001 and $80 million or 0.65% at first quarter 2001, the filing said.

After the close of the first quarter, PNC said it learned of apparent fraud relating to a PNC credit facility supporting commercial paper issued by Market Street Funding Corp. "Total credit exposure of approximately $50 million is expected to be funded, classified as non-performing and will likely result in charge-offs during the second quarter of 2002," the bank said. However, reserves were allocated to fund basically all of the $50 million at the end of the first quarter.

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