On the earnings conference call for PNC Financial Services Group (NYSE:PNC), the company's CEO admitted that the credit environment is tough, but stressed that his company has diverse sources of revenues. Then again, other banks, such as Citigroup (NYSE:C), Bank of America (NYSE:BAC), and Wachovia (NYSE:WB), have this advantage, and it is far from a cure for investor concerns.

For the fiscal fourth quarter, the bank posted net income of $376 million, or $1.27 per share, which compares to $355 million, or $1.20 per share, in the same period a year ago. Unfortunately, the inverted yield curve -- where long-term rates are lower than short-term rates -- has been problematic. For example, PNC's net interest margin has gone from 2.96% to 2.88% over the past year.

PNC had a busy 2006. First, there was the transaction with money management firm BlackRock (NYSE:BLK) -- that is, Merrill Lynch (NYSE:MER) contributed its investment management business to BlackRock. Because of the stock-for-stock exchange, PNC's ownership in BlackRock went from 69% to 34%.

As seen with BlackRock's fourth-quarter results, the merger is certainly getting traction. Net income increased from $72.9 million, or $1.09 per share, to $169.4 million, or $1.28 per share. Currently, BlackRock is the No. 5 money manager in the U.S., with roughly $1.12 trillion in assets.

The next big transaction for PNC came in October -- the $6 billion purchase of Mercantile Bankshares Corporation (NASDAQ:MRBK). The firm has $17 billion in assets, as well as a lucrative wealth management business. It appears that the integration of Mercantile has been fairly smooth, with the deal expected to close in March.

The quality of PNC's loan portfolio looks strong. For example, nonperforming loans fell 12% or about $20 million (compared to the end of September 2006). What's more, over the past few years, PNC has been moving aggressively into fee-based services, which should mute the impact of the inverted yield curve. Some of the services include treasury management and investment banking (through its Harris Williams & Co. unit).

Unfortunately, according to the PNC conference call, the expectation is that the inverted yield curve is going to persist for some time -- perhaps through the year. If so, it's going to continue to be a drag. And, assuming PNC is not about to do a major acquisition (which was the sentiment on the conference call), it is hard to see what will be the catalysts for the stock in 2007.

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Fool contributor Tom Taulli does not own shares of any company mentioned in this article. The Fool has a disclosure policy.