PNC Bank 2001 Annual Report Download - page 38

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36
PNC ADVISORS
Year ended December 31
Taxable-equivalent basis
Dollars in millions 2001 2000
INCOME STATEMENT
Net interest income $128 $136
Noninterest income
Investment management and trust 393 421
Brokerage 130 171
Other 84 64
Total noninterest income 607 656
Total revenue 735 792
Provision for credit losses 25
Noninterest expense 504 511
Pretax earnings 229 276
Income taxes 86 103
Earnings $143 $173
AVERAGE BALANCE
S
HEET
Loans
Consumer $1,103 $965
Residential mortgage 848 962
Commercial 528 602
Other 384 532
Total loans 2,863 3,061
Other assets 467 439
Total assets $3,330 $3,500
Deposits $2,058 $2,034
Assigned funds and other liabilities 730 917
Assigned capital 542 549
Total funds $3,330 $3,500
P
ERFORMANCE
R
ATIO
S
Return on assigned capital 26% 32%
Noninterest income to total revenue 83 83
Efficiency 68 64
PNC Advisors provides a full range of tailored investment
products and services to affluent individuals and families,
including full-service brokerage through J.J.B. Hilliard, W.L.
Lyons, Inc. (“Hilliard Lyons”) and investment advisory
services to the ultra-affluent through Hawthorn. PNC
Advisors also serves as investment manager and trustee for
employee benefit plans and charitable and endowment assets.
PNC Advisors is focused on selectively expanding Hilliard
Lyons and Hawthorn, increasing market share in PNC’s
primary geographic region and leveraging its expansive
distribution platform.
PNC Advisors earned $143 million in 2001 compared
with $173 million in 2000. Earnings for 2001 decreased 17%
compared with the prior year primarily due to a $57 million
decrease in total revenue resulting from the impact of weak
equity market conditions on brokerage activity and asset
management fees. Investment management and trust
revenue benefited from accrual adjustments of $15 million in
2001 and $11 million in 2000. Management expects that
revenue and earnings in this business will continue to be
challenged at least until equity market conditions improve.
Noninterest expense decreased $7 million in the year-to-
year comparison primarily due to lower production-based
compensation and expense management initiatives.
Assets Under Management (a)
December 31 – in billions 2001 2000
Personal investment management and trust $47 $50
Institutional trust 13 15
T
ota
l
$60 $65
(a) Excludes brokerage assets administered.
Assets under management decreased $5 billion as net new
asset inflows of $1 billion from new and existing customers
during 2001 were more than offset by a decline in the value
of the equity component of customers’ portfolios. See
Business and Economic Conditions and Asset Management
Performance in the Risk Factors section of this Financial
Review for additional information regarding matters that
could impact PNC Advisors’ revenue.
Brokerage assets administered by PNC Advisors were
$28 billion at December 31, 2001 and 2000 and were also
impacted by weak equity market conditions.
PNC Advisors expects to continue to focus on acquiring
new customers and growing and expanding existing
customer relationships while aggressively managing its
revenue/expense relationship.