PNC Bank 2010 Annual Report Download - page 11
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Please find page 11 of the 2010 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.Warrant). These proceeds were used to enhance National City
Bank’s regulatory capital position to well-capitalized in order
to continue serving the credit and deposit needs of existing
and new customers. On a consolidated basis, these proceeds
resulted in further improvement to our capital and liquidity
positions. See Repurchase of Outstanding TARP Preferred
Stock and Sale By US Treasury of TARP Warrant below for
additional information.
In connection with obtaining regulatory approvals for the
acquisition, PNC agreed to divest 61 of National City Bank’s
branches in Western Pennsylvania. This divestiture, which
included $4.1 billion of deposits and $.8 billion of loans, was
completed during the third quarter of 2009.
National City, based in Cleveland, Ohio, was one of the
nation’s largest financial services companies. At
December 31, 2008, prior to our acquisition, National City had
total assets of approximately $153 billion and total deposits of
approximately $101 billion. National City Corporation was
merged into PNC on the acquisition date, December 31, 2008.
National City Bank was merged into PNC Bank, National
Association (PNC Bank, N.A.) on November 6, 2009.
Our consolidated financial statements for 2009 and 2010
reflect the impact of National City.
R
EPURCHASE
O
F
O
UTSTANDING
TARP P
REFERRED
S
TOCK
A
ND
S
ALE
B
Y
US T
REASURY OF
T
ARP
W
ARRANT
See Note 18 Equity in the Notes To Consolidated Financial
Statements in Item 8 of this Report regarding our
December 31, 2008 issuance of $7.6 billion of Fixed Rate
Cumulative Perpetual Preferred Shares, Series N (Series N
Preferred Stock or TARP Preferred Stock), related issuance
discount, and issuance of the related common stock warrant to
the US Treasury (the TARP Warrant) under the US Treasury’s
Troubled Asset Relief Program (TARP) Capital Purchase
Program.
As approved by the Federal Reserve Board, US Treasury and
our other banking regulators, on February 10, 2010, we
redeemed all 75,792 shares of our Series N Preferred Stock
held by the US Treasury. We used the net proceeds from the
common stock offering described in Note 18, senior notes
offerings and other funds to redeem the Series N Preferred
Stock. We did not exercise our right to seek to repurchase the
related warrant at the time we redeemed the Series N
Preferred Stock.
In connection with the redemption of the Series N Preferred
Stock, we accelerated the accretion of the remaining issuance
discount on the Series N Preferred Stock and recorded a
corresponding reduction in retained earnings of $250 million
during the first quarter of 2010. This resulted in a one-time,
noncash reduction in net income attributable to common
shareholders and related basic and diluted earnings per share.
Dividends of $89 million were paid on February 10, 2010
when the Series N Preferred Stock was redeemed. PNC paid
total dividends of $421 million to the US Treasury while the
Series N preferred shares were outstanding.
The warrant issued to the US Treasury in connection with the
Series N Preferred Stock described above would have enabled
the US Treasury to purchase up to approximately 16.9 million
shares of PNC common stock at an exercise price of $67.33
per share. After exchanging its TARP Warrant for 16,885,192
warrants, each to purchase one share of PNC common stock,
the US Treasury sold the warrants in a secondary public
offering. The sale closed on May 5, 2010. These warrants
expire December 31, 2018.
R
EVIEW
O
F
B
USINESS
S
EGMENTS
In addition to the
following information relating to our lines of business, we
incorporate information under the captions Business Segment
Highlights, Product Revenue, and Business Segments Review
in Item 7 of this Report here by reference. Also, we include
financial and other information by business in Note 25
Segment Reporting in the Notes To Consolidated Financial
Statements in Item 8 of this Report here by reference.
Assets, revenue and earnings attributable to foreign activities
were not material in the periods presented. Business segment
results for periods prior to 2010 have been reclassified to
reflect current methodologies and current business and
management structure and to present those periods on the
same basis. Business segment information for 2008 does not
include the impact of National City, which we acquired on
December 31, 2008.
Retail Banking provides deposit, lending, brokerage, trust,
investment management, and cash management services to
consumer and small business customers within our primary
geographic markets. Our customers are serviced through our
branch network, call centers and the internet. The branch
network is located primarily in Pennsylvania, Ohio, New
Jersey, Michigan, Maryland, Illinois, Indiana, Kentucky,
Florida, Virginia, Missouri, Delaware, Washington, D.C., and
Wisconsin.
Our core strategy is to acquire and retain customers who
maintain their primary checking and transaction relationships
with PNC. We also seek revenue growth by deepening our
share of our customers’ financial assets, including savings and
liquidity deposits, loans and investable assets. A key element
of our strategy is to expand the use of alternative distribution
channels while continuing to optimize the traditional branch
network. In addition, we have a disciplined process to
continually improve the engagement of both our employees
and customers, which is a strong indicator for customer
growth, retention and relationship expansion.
Corporate & Institutional Banking provides lending, treasury
management, and capital markets-related products and
services to mid-sized corporations, government and
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