UPDATE 2-PNC posts lower-than-expected 3rd-qtr income

* Net charge-offs total $122 million

* Provision for credit losses rose to $190 million

* Tier 1 ratio 8.2 percent

(Adds analysts comments, shares price, income details)

NEW YORK, Oct 16 (Reuters) - PNC Financial Services Group Inc's (PNC.N) third-quarter profit fell by a greater-than-expected 39 percent, as bad loans increased slightly due to the credit crisis, Pennsylvania's largest bank said on Thursday.

The bank, whose shares fell 4 percent, said net income fell to $248 million, or 71 cents per share, from $407 million, or $1.19 a year earlier. The average Wall Street estimate was 84 cents, according to Reuters Estimates.

Revenues fell 5.5 percent to $1.65 billion in the third quarter.

PNC's net charge-offs, a measure of bad loans, increased in the third quarter of 2008 to $122 million, or 0.66 percent of average loans, compared with $112 million, or 0.62 percent, in the second quarter.

In addition, the provision for credit losses for the third quarter rose slightly to $190 million compared with $186 million in the linked quarter.

Net interest income rose 31 percent to $1 billion, but noninterest income fell 34 percent to $654 million, due to the global credit crisis.

Net interest margin -- the difference between what the bank earns on loans and pays on deposits -- rose to 3.46 percent from 3 percent a year earlier, but fell from 3.47 percent in the second quarter.

"Credit trends continue to show modest deterioration, but no negative surprises outside of residential construction," Citigroup analysts said in a research note.

"(The) biggest negative in quarter was very weak fee revenue trends (mostly in market-sensitive businesses and other) and no offset on the expense side. Negative surprises on market-sensitive revenues continue to be a weakness for PNC," they added.

The estimated Tier 1 risk-based capital ratio was 8.2 percent at the end of the third quarter.

PNC owns about one-third of BlackRock Inc (BLK.N), the largest publicly traded U.S. asset manager.

The bank operates more than 1,100 branches in eight mid-Atlantic and Midwest states and Washington, D.C., and has about $145.6 billion of assets.

PNC's shares were down 4 percent to $59.32 on the New York Stock Exchange. They have fallen 9 percent this year, compared with a 33 percent drop in the KBW Bank Index .BKX. (Reporting by Juan Lagorio; Editing by Derek Caney)