(Reuters) - PNC Financial Services Group Inc's (PNC.N) quarterly profit missed analysts' estimates as it set aside more money for residential mortgage loan repurchases and said it expects the so-called "put-back" requests to increase.
Government-backed entities Fannie Mae and Freddie Mac have been pressing U.S. banks to buy back soured home loans made during the housing boom.
The loans had been bundled into mortgage-backed securities and bought by outside investors, who now allege they do not meet guarantees made by the banks when they were sold.
The Pittsburgh-based regional bank, which reported a 40 percent fall in earnings for the second quarter, said earlier this month, it would add $350 million to its reserves in the second quarter to cover put-back requests.
PNC, one of the 10 largest U.S. banks, said net income fell to $546 million, or 98 cents per share, down from $912 million, or $1.67 per share a year earlier.
The company said its second-quarter profit was hurt by a $284 million after-tax provision for residential mortgage loan repurchase obligations.
Analysts on average had expected the company to earn $1.24 per share, according to Thomson Reuters I/B/E/S.
Total loans increased 20 percent to $180.4 billion. Net interest income rose 17 percent to $2.52 billion.
Provision for credit losses rose more than a third to $256 million for the second quarter, primarily due to credit provisions related to the RBC Bank (USA) acquisition.
PNC shares, which have gained about 4 percent since the beginning of the year, were marginally down at $61.10 before the bell. They closed at $61.59 on Tuesday on the New York Stock Exchange.
(Reporting by Tanya Agrawal and Aman Shah in Bangalore; Editing by Supriya Kurane)
Mitt Romney Takes Obama Remark About Business Out Of Context - Huffington Post
Mitt Romney on Tuesday seized on a recent remark by President Barack Obama to paint him as anti-business, but he took it out of context.
"If you've got a business, you didn't build that, somebody else made that happen," Obama said Friday.
Speaking Tuesday in Irwin, Pa., Romney called the remark "startling and revealing" and said that it was "extraordinary that a philosophy of that nature would be spoken by a president of the United States.
He ran with the idea. "The idea that Steve Jobs didn’t build Apple, that Henry Ford didn’t build Ford Motors, that Papa John didn’t build Papa Johns, that Ray Kraut didn’t build McDonalds, that Bill Gates didn’t build Microsoft," Romney said. "It's not just foolishness, its insulting to every entrepreneur, every innovator in America and it’s wrong."
But in his reaction to the remark, Romney ignored its original context. When he made the comment in Roanoke, Va. Friday, Obama was arguing that businesses needed infrastructure investment to succeed.
"If you were successful, somebody along the line gave you some help," Obama said. "There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen."
The antecedent to "that" is not the business, but "roads and bridges," as well as the "American system" as a whole.
"The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together," Obama said.
Soon after Romney made his remarks, the campaign continued to seize on the comment with a 15-second video, which excerpts the one sentence from Obama's speech and replays it five times.
Business Data Miners Saves Top Bank Tens of Millions by Reducing Customer Delinquency Rate by 50% - NBCNews.com
WESTON, Mass., July 18, 2012 (GLOBE NEWSWIRE) -- via PRWEB - The subprime lending business is attracting some very risky borrowers and could be growing "too much too fast," Moody's wrote in a report in March 2011. So why are lenders such as Santander, Ally Financial, and TD Bank Group diving headlong into this business? Two reasons: the demand for cars is up, thus auto lending is one of the few types of consumer debt that is growing; its market size is $658 billion.
Despite the economic downturn, a Grant Thornton 2011 study shows that automobile loans have withstood the pressures of the credit crisis, ultimately outperforming first and second mortgages since 2007. According to Ally President William Muir, subprime car lending is "a very attractive business today," with profit margins on the loans more than covering the cost of expected losses from borrowers who fail to repay.
But to take full advantage of these subprime loans, banks have to be smarter about their lending practices. Business Data Miners advocates building custom mathematical models that take advantage of the lender's own data. Such a model allows a lender to predict with greater accuracy the probability of a loan applicant to default.
One of our Business Data Miners' auto loan models has been in production for the past three years and has performed extremely well, significantly reducing losses and delinquency rates. As reported by the client, there has been annual loss reductions of approximately 20% from pre-recession levels, and approximately 50% from the losses experienced in the 2008-2009 time frame. Savings are in the tens of millions of dollars.
"A salient characteristic of this work is the ability to balance the costs to the lender with the number of outstanding loans made," said Dr. Larry Bookman, Co-founder and CEO at Business Data Miners. "The graph shows how we optimize loan costs. The model combines the effects of lost opportunity costs (turning away good customers), bad debt (write-off associated with a bad loan), and operational costs (costs to run the business)."
About Business Data Miners
Business Data Miners are experts in creating real value for clients through the use of data analytics. Business Data Miners builds custom predictive models based on a clients' own data to help them make informed, data-driven decisions that improve their bottom line. Business Data Miners has saved clients hundreds of millions. For more information, visit http://www.businessdataminers.com
This article was originally distributed on PRWeb. For the original version including any supplementary images or video, visit http://www.prweb.com/releases/2012/7/prweb9618652.htm
CONTACT: Business Data Miners Larry Bookman lbookman@businessdataminers.com 339-222-6835
© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved
Patagonia: a values-led business from the start - The Guardian
When Patagonia became California's first benefit corporation or B-Corp in January this year, it marked the pinnacle for a new corporate form that commits companies to include environmental and social factors in their business decisions.
But for Patagonia, its new articles of incorporation are just a waymarker on a long journey since its founder, pioneering rock climber Yvon Chouinard, started making equipment to replace pitons, the metal spikes that damaged rock walls in the 1950s.
Rick Ridgeway, Patagonia's vice-president of environmental initiatives, is a long-time climbing partner of Chouinard's. In 1980, he and Chouinard survived an avalanche in the Himalayas. A third friend died in Ridgeway's arms.
Ridgeway said that his high-altitude experiences have informed his sea-level work for the company, which is based in Ventura simply so that Chouinard could stroll from his blacksmith's workshop to a classic Californian beach break.
"Yvon and I both know how ephemeral life is and our time on this planet is limited," said Ridgeway.
"Our mission statement is to make the best product, but do it with no unnecessary harm and use business to implement solutions to the environmental crisis.
"The pitons caused permanent damage to the rockwall. For climbers, it was like religion — like they were messing up their own church.
"The new style equipment protected the rock and increased sales. The big 'a-ha' was that you could do something good for the environment that was also good for your business. That was a seminal lesson for Yvon."
In the mid-1990s, the company struggled as Chouinard insisted on sourcing 100% organic cotton at a time when there was not enough to supply even Patagonia's demand, according to Ridgeway.
"Yvon's answer was if we have to be in business using an evil product like traditionally grown cotton, we don't deserve to be in business," he said.
Patagonia now has $600m in annual revenues from sales of its outdoor sports apparel, making it the largest company so far to sign as a benefit corporation.
Ridgeway said that the company is "doing better than ever in its history" during the recession as consumers have tended towards quality, long-lasting purchases.
Last year, Patagonia launched the Common Threads Initiative to encourage the repair, recycling and resale of garments via eBay and took a full page advert in the New York Times with the tagline: don't buy this jacket, unless you really need it.
Such contrariness matches Chouinard's own unorthodoxy and sets the company apart from The North Face, founded by another of Chouinard's climbing partners, Douglas Tompkins. Tompkins sold his business in 1969 and has since ploughed his money into large conservation projects in Chile.
Chouinard by contrast still owns Patagonia and ploughs 10% of its profits into smaller-scale environmental campaigns where $10,000-$15,000 can make a difference.
Ridgeway estimates donations to date total around $50m, including support for the controversial Restore Hetch Hetchy campaign to drain the reservoir next to Yosemite that supplies San Francisco with pristine Sierra Nevada snow melt.
At the end of this month, one of Ridgeway's ideas comes to fruition with the launch of the Sustainable Apparel Coalition's "cradle to grave" online tracking tool which measures the impacts of materials, manufacturing, packaging, shipping, consumer use and end of life.
Patagonia began the coalition through a joint campaign with Walmart in 2010. It now has around 60 members, including Adidas, Gap, Levis, Marks & Spencer and covers an estimated one-third of the clothes and shoes made globally.
The company's sustainability credentials are so well embedded that the decision to turn the company into a benefit corporation may seem superfluous. But Ridgeway said that Chouinard wants his values to outlive him and "survive any of the succession scenarios that we might envision as far out as we could see — even 100 years."
Andrew Kassoy, co-founder of B-Lab, the non-profit that began advocating for benefit corporation legislation, said that the impact of Patagonia's B-Corp status has been huge.
"It's validating and a moment of great pride for a lot of companies that had joined the community before Patagonia. They felt like real leaders when a pioneer like Patagonia was joining them as opposed to leading them."
Benefit corporation legislation was first introduced in Maryland in 2010, and there are now nine states that have enacted similar legislation that has attracted bipartisan support - a rarity in today's extremely polarised US political environment. For states without benefit corporation legislation, certification is available through the B-Lab non-profit based in Pennsylvania.
Kassoy and two other Stanford graduates established B-Lab in 2007 and there are now some 560 companies certified across the US.
Kassoy previously had a successful career in private equity before realising that mainstream investments were "pretty unsatisfying".
"They primarily create wealth for one group of people and don't add a lot of other value to society," he said.
"If we want to solve a lot of our big social and environmental problems, we need the private sector to play a role because it dominates our economy and [fixing] those problems requires scale."
Kassoy and his co-founders had originally planned to build a business that "should be a guiding light for how a business can behave".
But they soon realised that the social entrepreneurial space was crowded with 100,000 "mission-driven" businesses in the US.
They identified loosely worded statutes in corporate law designed to provide some protection against the hostile takeovers of the 1980s. B-Lab then developed draft legislation along with its certification programme and a "declaration of interdependence".
"In most places, the fiduciary duty of the directors of a company is to maximise value for shareholders at the expense of any other considerations.
"So as soon as entrepreneurs have to raise third party capital or think about succession planning, liquidity or going public, most of the mission stuff goes out the door."
Unilever's purchase of Ben & Jerry's ice cream in 2000 is the most high-profile example, he said. "But there are endless stories of brands that get to a certain size and don't really have a choice but to be sold to a mainstream strategic investor or go public. At worst they compromise their mission; at best you don't know as a consumer."
B-Lab certification and benefit corporation legislation is growing in popularity in the US, driven by social and economic trends, said Kassoy, adding that B-Lab has had "early conversations" to expand the concept in the UK.
"There have been some dramatic changes to the kinds of problems that exist and the ability of government to solve them. As government budgets shrink, business can step up to solve some of those problems."
"There's also a new generation of workers and entrepreneurs and investors who don't just go to work each day and leave their values at the door. That generation thinks about work as a way of expressing what they believe.
"At the same time, the financial crisis highlighted that the reigning idea of financial value maximisation at the expense of everything else led to the loss of several trillion dollars not at the maximisation of anything other than making misery."
Ridgeway said that a real watershed moment will come when a publicly listed company adopts B-Corp status.
"The B-Corp effort is one of the first to challenge the existing model of capitalism," he said. "To find a new way to do business and still stay in business but reduce the harm that business does to the planet."
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