PNC Bank 2002 Annual Report Download - page 3

Download and view the complete annual report

Please find page 3 of the 2002 PNC Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

In my 30 years with PNC, I
can’t remember a year as unique
and challenging as 2002.
Yet, despite this difficult
environment, I am tremendously
proud of what our team of
24,000 employees accomplished.
• We reported earnings of $1.2
billion and generated a 19%
return on equity in 2002.
• Our employees continued
to win the confidence of our
customers, as customer satisfac-
tion neared all-time highs in
several areas, and more employ-
ees referred new business than
ever before.
• We also continued to strength-
en our balance sheet, build a
more valuable mix of business-
es, and make strides in other
areas critical to enhancing our
competitive position.
In short, what we accom-
plished in 2002 reflects our
team’s commitment to achieving
our goal of growing PNC and
delivering premium returns for
the risk we’re willing to take.
Clearly, though, the
economic pressures facing our
industry had an impact.
In a year marked by declin-
ing equity markets, record
bankruptcies, lower capital
investment, and weak credit
quality, revenue softened in a
number of our businesses.
In addition, we also had
to work to regain shareholder
confidence after restating our
2001 earnings.
As you’ll read, we’ve taken a
number of steps to address these
issues, and I believe we enter
2003 better positioned to create
value for all the constituencies
we serve.
For a variety of reasons, issues
related to risk management
and corporate governance drew
additional national attention
last year. These issues can
dramatically affect a company’s
integrity and performance —
and we take them very seriously.
Our efforts to enhance our
risk management and corporate
governance practices intensified
after restating our 2001 earnings.
In order to settle a related
inquiry by the Securities and
Exchange Commission, we
consented to an SEC cease and
desist order. We also entered into
written agreements that focused
on risk, management and finan-
cial controls with the Federal
Reserve Bank of Cleveland and
the Office of the Comptroller of
Currency following examinations
by those regulatory agencies. I’m
pleased to say that we have worked
closely with our regulators to
aggressively address these issues.
We also engaged highly
regarded consultants McKinsey &
Company, Promontory Financial
Group, and Wachtell, Lipton,
Rosen & Katz to assist us in
developing a broad risk manage-
ment and corporate governance
plan. Throughout the year, we
made tremendous progress.
• We named a senior executive,
Tom Whitford, to the newly-
created position of Chief Risk
Officer to help implement an
enterprise-wide approach to
risk management.
•
We created management commit-
tees to address risks associated with
significant transactions, products,
services, and capital commitments.
• We worked to dramatically
improve regulatory relations,
and recruited Jack Wixted
from the Federal Reserve Bank
of Chicago to serve as Chief
Regulatory Officer.
DEAR FELLOW SHAREHOLDERS:
1
Strengthening Critical Areas