PITTSBURGH -- PNC Financial Services Group Inc. said Monday it is slashing its quarterly dividend 85 percent for savings of about $1 billion annually.
Pittsburgh-based PNC joins a growing list of banks, including JPMorgan Chase & Co., that have cut their dividends to shore up capital amid the market and economic turmoil.
PNC, which bought troubled Cleveland bank National City Corp. late last year, is reducing its dividend to 10 cents per share from 66 cents. The next dividend is expected to be declared in early April.
"We are taking this proactive step to build capital, further strengthen our balance sheet and serve our customers in an unprecedented and uncertain economy," said James E. Rohr, chairman and chief executive, in a statement. "While our overall capital and liquidity positions are strong, extreme market deterioration and the changing regulatory environment drove this difficult but prudent decision."
PNC said the additional capital from the dividend cut will enable it to pay back the government's preferred stock investment in full "as soon as appropriate."
Late last year, PNC received a $7.6 billion investment from the Treasury Department as part of the government's capital purchase program. PNC was the first U.S. bank to use that money to make an acquisition, scooping up National City.
PNC said the integration of National City is on track, with the transaction expected to add to earnings in 2009.
The bank said its first-quarter results to date are in line with Wall Street's estimates, and that sales are above expectations. Analysts surveyed by Thomson Financial, on average, anticipate earnings of 52 cents per share in the first quarter.
PNC said it has no plans to issue additional common equity, adding that it is adequately capitalized to withstand further economic deterioration.
Shares fell 85 cents, or 3.1 percent, to $26.49 in pre-market trading.