PNC Bank 2008 Annual Report Download - page 6

TABLE OF CONTENTS
PART I Page
Item 1 Business. 2
Item 1A Risk Factors. 10
Item 1B Unresolved Staff Comments. 17
Item 2 Properties. 17
Item 3 Legal Proceedings. 17
Item 4 Submission of Matters to a Vote of
Security Holders.
Executive Officers of the Registrant
Directors of the Registrant
17
18
18
PART II
Item 5 Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity Securities. 19
Common Stock Performance Graph 20
Item 6 Selected Financial Data. 21
Item 7 Management’s Discussion and Analysis of
Financial Condition and Results of
Operations 23
Item 7A Quantitative and Qualitative Disclosures
About Market Risk. 79
Item 8 Financial Statements and Supplementary
Data. 79
Item 9 Changes in and Disagreements With
Accountants on Accounting and
Financial Disclosure. 162
Item 9A Controls and Procedures. 162
Item 9B Other Information. 162
PART III
Item 10 Directors, Executive Officers and
Corporate Governance. 162
Item 11 Executive Compensation. 163
Item 12 Security Ownership of Certain Beneficial
Owners and Management and Related
Stockholder Matters. 163
Item 13 Certain Relationships and Related
Transactions, and Director
Independence. 165
Item 14 Principal Accounting Fees and Services. 165
PART IV
Item 15 Exhibits, Financial Statement Schedules. 165
SIGNATURES 167
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, liquidity 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 Risk Management,
Critical Accounting Policies and Judgments, and Cautionary
Statement Regarding Forward-Looking Information sections
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 and are
headquartered in Pittsburgh, Pennsylvania. As described
further below and elsewhere in this Report, on December 31,
2008, PNC acquired National City Corporation (“National
City”), nearly doubling our assets to a total of $291 billion and
expanding our total consolidated deposits to $193 billion.
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.
Prior to the National City acquisition, PNC had businesses
engaged in retail banking, corporate and institutional banking,
asset management, and global investment servicing, providing
many of its products and services nationally and others in
PNC’s primary geographic markets located in Pennsylvania,
New Jersey, Washington, DC, Maryland, Virginia, Ohio,
Kentucky and Delaware. PNC also provided certain
investment servicing internationally.
National City’s primary businesses prior to its acquisition by
PNC included commercial and retail banking, mortgage
financing and servicing, consumer finance and asset
management, operating through an extensive network in Ohio,
Florida, Illinois, Indiana, Kentucky, Michigan, Missouri,
Pennsylvania and Wisconsin. National City also conducted
selected consumer lending businesses and other financial
services on a nationwide basis.
A CQUISITION O F N ATIONAL C ITY C ORPORATION
On December 31, 2008, we acquired National City for
approximately $6.1 billion. The total consideration included
approximately $5.6 billion of PNC common stock, $150
million of preferred stock, and cash paid to warrant holders by
National City.
We completed the acquisition primarily by issuing
approximately 95 million shares of PNC common stock. In
accordance with purchase accounting methodologies, National
City Bank’s balance sheet was adjusted to fair value at which
time the bank was under-capitalized from a regulatory
perspective. However, PNC’s Consolidated Balance Sheet
remained well-capitalized and liquid.
Following the closing, PNC received $7.6 billion from the US
Department of the Treasury under the Emergency Economic
Stabilization Act of 2008 in exchange for the issuance of
preferred stock and a warrant. These proceeds were used to
enhance National City Bank’s regulatory capital position to
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