PNC Bank 2009 Annual Report Download - page 3

In addition, we see greater opportunities for acceptable, risk-adjusted returns when the economy
improves. Among our fee-based services, we are a leading provider of treasury management products and
services with more than $1 billion in annual revenue. This includes our highly innovative healthcare
industry products. This packaged offering, which helps healthcare providers and third-party payers reduce
costs, posted solid revenue growth in 2009.
We see other opportunities, specifically in the areas of revenue, expenses and credit costs that create a
distinctive advantage for PNC. Beginning with revenue, we now have a significantly expanded franchise,
with access to one-third of the U.S. population and an equal percentage of Fortune 1000 companies. Our
retail distribution network now consists of more than 2,500 branches in 15 states, and we are a recognized
leader in serving middle-market customers and government entities. Our retention rates remained strong
through the first two waves of National City to PNC customer conversions. Once completed, we see
tremendous cross selling prospects. Additionally, improving markets should further enhance income from
our fee-based businesses, and our minimal exposure to rising interest rates provides us with a great deal
of flexibility.
Our fee-based revenue is further diversified by our nearly 25 percent ownership in BlackRock’s earnings.
We carried our investment in BlackRock at $5.8 billion as of December 31, 2009. Based on their year-end
closing stock price of $232 per share, the market value was $10.1 billion. With the acquisition of Barclays
Global Investors last year, BlackRock now manages more than $3 trillion on behalf of institutional and
retail investors worldwide.
We also have plans in place to reduce expenses. Our original two-year cost savings goal related to the
acquisition of National City was $1.2 billion, which we met as of the fourth quarter 2009 on an
annualized basis. We increased the target to $1.5 billion in annualized cost savings, and we are confident
we can meet that goal.
Finally, we believe our credit loss coverage is substantial and appropriate. At year-end our loan loss
reserves represented nearly two years of net charge-off coverage. Additionally, we took marks on
acquired impaired loans. As a result, we believe our credit costs will decline faster than others as the
economy begins to recover.
Taken together, our potential to enhance revenue along with our effective expense management and credit
loss coverage differentiates PNC from many of our peers and positions us for future earnings growth.
Our focus on meeting customer needs is reflected in PNC’s brand, which stands for ease, confidence and
achievement. We are elevating the concept of “achievement” to reflect customers’ hopes and optimism
about the future and our commitment to helping them “achieve” their financial aspirations. These are the
messages you are seeing in our new marketing campaign. We plan to utilize technology and customer
insights to provide truly customized offerings that meet our clients’ individual needs and further enhance
our revenue. We believe this combination will help PNC as we continue to become a great company.
Investing in Our Employees. We continue to invest in attracting, developing and retaining people, and
we remain committed to having a workforce that reflects the diversity of our customers and our
communities. We support our employees with meaningful recognition programs and competitive benefits.
To thank our employees for their efforts in helping PNC deliver exceptional 2009 results in an
unprecedented environment, eligible full-time employees and part-time employees received a one-time
award of $1,000 and $500, respectively, this month.
We believe a company-funded pension plan should be a key part of any firm’s benefits package, which is
why we announced last year that beginning in 2010 PNC’s pension plan would be extended to some
12,000 former National City employees who were hired after April 2006 when that company ceased
offering a pension to new employees. This is notable given that more than half of Fortune 100 companies
have stopped providing pension plans to their new workers. In combination with our robust 401(k)
program, this decision demonstrates our commitment to helping employees reach a financially secure
future.
While we believe we offer employees a good working environment, we are pleased others share that
view. The National Association for Female Executives named us among its “Top 50 Companies for
Executive Women.” For the eighth time, we earned a place on the Working Mother list of the “100 Best
Companies for Working Mothers.”