PNC feels the real estate pain

PNC (PNC) became the latest bank to warn that the hard fall of the housing and credit markets will hit fourth-quarter results. Just days after Washington Mutual (WM) sharply increased its provisions for loan losses in coming quarters, Pittsburgh-based PNC said it expects to earn $1 to $1.15 a share for the quarter on an adjusted basis, excluding unusual items. Wall Street analysts were looking for a profit of $1.39 a share. PNC cited lower noninterest income after an adjustment on its commercial loan portfolio and said its trading results were below expectations, “due to unprecedented market price volatility.” PNC also raised its provision for credit losses on residential real estate by $45 million from third-quarter levels, though it stresses that “asset quality remains relatively strong given the existing credit environment.”

The comments show that bank executives remain optimistic that this year’s credit squeeze will pass and the good times will return. “Commercial mortgage valuation adjustments and reduced trading income do not represent credit quality concerns with the underlying loans held for sale and trading assets,” PNC said, “and instead are primarily the result of general market liquidity pressures.” When liquidity might return to those market remains unclear, however.