PNC Bank 2006 Annual Report Download - page 12

TABLE OF CONTENTS
PART I Page
Item 1 Business. 2
Item 1A Risk Factors. 9
Item 1B Unresolved Staff Comments. 12
Item 2 Properties. 12
Item 3 Legal Proceedings. 12
Item 4 Submission of Matters to a Vote of Security
Holders. 15
Executive Officers of the Registrant 15
Directors of the Registrant 16
PART II
Item 5 Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity Securities. 16
Common Stock Performance Graph 17
Item 6 Selected Financial Data. 18
Item 7 Management’s Discussion and Analysis of
Financial Condition and Results of
Operations. 20
Item 7A Quantitative and Qualitative Disclosures
About Market Risk. 67
Item 8 Financial Statements and Supplementary
Data. 67
Item 9 Changes in and Disagreements With
Accountants on Accounting and Financial
Disclosure. 123
Item 9A Controls and Procedures. 123
Item 9B Other Information. 124
PART III
Item 10 Directors, Executive Officers and Corporate
Governance. 124
Item 11 Executive Compensation. 125
Item 12 Security Ownership of Certain Beneficial
Owners and Management and Related
Stockholder Matters. 125
Item 13 Certain Relationships and Related
Transactions, and Director Independence. 126
Item 14 Principal Accounting Fees and Services. 126
PART IV
Item 15 Exhibits, Financial Statement Schedules. 126
SIGNATURES 127
EXHIBIT INDEX E-1
PART I
Forward-Looking Statements: From time to time The PNC
Financial Services Group, Inc. (“PNC” or the “Corporation”)
has made and may continue to make written or oral forward-
looking statements regarding our outlook or expectations for
earnings, revenues, expenses, capital levels, asset quality or
other future financial or business performance, strategies or
expectations, or the impact of legal, regulatory or supervisory
matters on our business operations or performance. This
Annual Report on Form 10-K (the “Report” or “Form 10-K”)
also includes forward-looking statements. With respect to all
such forward-looking statements, you should review our Risk
Factors discussion in Item 1A and our Cautionary Statement
Regarding Forward-Looking Information included in Item 7 of
this Report.
ITEM 1– BUSINESS
BUSINESS OVERVIEW We are one of the largest diversified
financial services companies in the United States based on
assets, with businesses engaged in retail banking, corporate
and institutional banking, asset management and global fund
processing services. We provide many of our products and
services nationally and others in our primary geographic
markets located in Pennsylvania; New Jersey; the greater
Washington, DC area, including Maryland and Virginia; Ohio;
Kentucky; and Delaware. We also provide certain global fund
processing services internationally. At December 31, 2006,
our consolidated total assets, deposits and shareholders’ equity
were $101.8 billion, $66.3 billion and $10.8 billion,
respectively.
We were incorporated under the laws of the Commonwealth
of Pennsylvania in 1983 with the consolidation of Pittsburgh
National Corporation and Provident National Corporation.
Since 1983, we have diversified our geographical presence,
business mix and product capabilities through internal growth,
strategic bank and non-bank acquisitions and equity
investments, and the formation of various non-banking
subsidiaries.
On October 8, 2006, we entered into a definitive agreement
with Mercantile Bankshares Corporation (“Mercantile”) for
PNC to acquire Mercantile. Mercantile shareholders will be
entitled to .4184 shares of PNC common stock and $16.45 in
cash for each share of Mercantile, or in the aggregate
approximately 53 million shares of PNC common stock and
$2.1 billion in cash. Based on PNC’s recent stock prices, this
transaction is valued at approximately $6.0 billion in the
aggregate.
Mercantile is a bank holding company with approximately
$18 billion in assets that provides banking and investment and
wealth management services through 240 offices in Maryland,
Virginia, the District of Columbia, Delaware and southeastern
Pennsylvania. The transaction is expected to close in March
2007 and is subject to customary closing conditions, including
regulatory approvals.
We acquired Riggs National Corporation (“Riggs”), a
Washington, DC based banking company, effective May 13,
2005. Under the terms of the agreement, Riggs merged into
The PNC Financial Services Group, Inc. and PNC Bank,
National Association (“PNC Bank, N.A.”), our principal bank
subsidiary, acquired substantially all of the assets of Riggs
Bank, N.A., the principal banking subsidiary of Riggs.
We include information on significant recent acquisitions in
Note 2 Acquisitions in the Notes To Consolidated Financial
Statements in Item 8 of this Report and here by reference.
REVIEW OF LINES OF BUSINESS In addition to the following
information relating to our lines of business, we incorporate
2