PNC Bank 2000 Annual Report Download - page 7

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5
implementing leading technologies to drive both rev-
enue and efficiency. Very importantly, our investments
have resulted in greater business diversity, which we
believe will help to mitigate the impact of cycles that
individual businesses will inevitably face.
The diversity of our franchise has been impro v e d
by the exceptional growth of our asset management
and processing businesses — PNC Advisors,
BlackRock and PFPC. These businesses contributed
nearly 25% of earnings in 2000, up from approxi-
mately 15% in 1996. Because of the strong growth
dynamics of these businesses, we believe that their
relative contributions to total earnings will continue
to move higher. And because these businesses
compete in some of the most highly-valued sectors
in financial services, we believe their increased
contributions will further improve the valuation
dynamics of our company.
Equally important, we have increased revenue
and earnings diversity within our banking businesses.
In 2000, non-lending revenue accounted for more
than twice the revenue generated by lending activities
within our banking businesses. And again, this
increased diversity was due in large part to the growth
of more highly-valued activities, including treasury
management, deposit gathering and brokerage.
A FO C U S O N CO N S I S T E N C Y A N D VA L U E
We recognize that no company operating in the
financial markets is immune to risk. But we believe
that our strategic actions in recent years have signifi-
cantly improved our potential to generate consistent
earnings growth over time.
We have lowered our reliance on traditional
lending activities, which are historically more volatile
than fee-driven businesses because of their inherent
vulnerability to credit risk and economic cycles. We
have exited the credit card business, warehouse lending
and significant portions of our national real estate
and corporate lending businesses. In the first quarter
of 2001, we sold our residential mortgage banking
business, which competes in an industry historically
vulnerable to significant levels of volatility.
In the past two years alone, our loan commit-
ments have decreased by nearly $30 billion. But
there is still work to be done, particularly in light of
an uncertain economic future. We will not hesitate to
take further strategic actions to improve our ability to
James E. Rohr, President and Chief Executive Officer