(Bloomberg) -- PNC Financial Services Group Inc. dropped the most in more than three years as analysts cited concerns about high costs and weak loan growth.

Shares fell as much as 7.6 percent Friday, making PNC the biggest laggard in the KBW Bank Index, after the Pittsburgh-based bank posted third-quarter results.

Net income of $2.82 a share beat analysts’ estimates, yet there were red flags. As some analysts said results were helped by a low tax rate, Jefferies LLC’s Ken Usdin and Jason Goldberg of Barclays Plc pointed to high expenses. Noninterest expense rose 1 percent from the second quarter and 6 percent from a year earlier. In a conference call with analysts Friday, PNC Chief Executive Officer William Demchak cited higher employee compensation and increased business investment for the jump in expenses.

“If you look at the changes that are happening in the banking industry as kind of digital takes over and the need to produce product and serve clients in that space, it would be a real mistake, in my view, to slow down and stop our investments,” Demchak said.

Weak loan growth also plagued PNC in the third quarter, partially due to higher repayments. This is “bound to be a challenge for others,” Usdin wrote in a note.

To contact the reporter on this story: Hannah Levitt in New York at hlevitt@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl, Peter Eichenbaum

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