* Loan loss provision down 56 pct
* PNC completed RBC Bank acquisition in March
* Period includes merger costs of 18 cents per share
By Rick Rothacker and Tanya Agrawal
April 18 (Reuters) - PNC Financial Services Group Inc posted a lower first-quarter profit as it absorbed merger expenses but managed to beat analysts’ expectations on improved credit quality.
The Pittsburgh-based regional bank said on Wednesday net income fell to $811 million, or $1.44 per share, from $832 million, or $1.57 per share, a year earlier.
Adjusted earnings were $1.49 per share, compared with analysts’ average estimate of $1.43, according to Thomson Reuters I/B/E/S.
In March, PNC completed the acquisition of RBC Bank, the U.S. banking subsidiary of Royal Bank of Canada. PNC now has 2,900 branches across 17 states and the District of Columbia.
PNC’s first-quarter results included a pre-tax expense of $145 million, or 18 cents per share, for integration expenses. The acquisition added about 5 to 7 cents per share to earnings, excluding those costs, executives said.
The bank is looking to hire about 200 people for corporate banking and asset management positions in the former RBC footprint, which stretches from North Carolina to Alabama, Chief Executive Officer James Rohr said in a conference call with analysts.
“We see tremendous opportunities to grow in these markets,” Rohr said.
Total loans for the quarter increased to $176.2 billion from $149.4 billion a year ago, including the addition of RBC’s $15 billion in loans. Organic loan growth came largely from borrowing by businesses.
“The economy is continuing to do a little better,” Rohr said. “What we don’t see is anyone stepping up saying, ‘I’m going to build a giant plant and add lots of people.’ ...That is the confidence level that is missing in this economy.”
Revenue rose to $3.73 billion from $3.63 billion. Provisions to cover credit losses were down 56 percent to $185 million.
The quarter included a $72 million addition to legal reserves, which the bank attributed to mortgage-related matters.
For the year, PNC boosted its earnings outlook, saying total revenue would increase from 2011 by a high single-digit percentage compared with an earlier forecast of mid- to high-single digits. The loan-loss provision will improve versus staying stable, executives said.
PNC shares were up 1.5 percent at $64.38 in morning trading.