PNC Bank 2010 Annual Report Download - page 23
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Please find page 23 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.claims could, individually or in the aggregate, result in
significant expense.
PNC commenced a review of its residential mortgage
servicing procedures related to foreclosures after learning of
the industry-wide servicing issues in late September 2010.
After a review of the legal requirements in all fifty states and
the District of Columbia, and of its own procedures, practices,
information systems, and documentation, PNC has developed
enhanced procedures designed to ensure that the
documentation accompanying the foreclosures it pursues
complies with all relevant law. The review, correction and
refiling of foreclosure documentation in the various states is
ongoing and could continue for a number of months,
depending upon federal, state, local and private judicial and
regulatory actions.
Notwithstanding the actions that PNC has taken as described
in the preceding paragraph, PNC is one of the fourteen
federally regulated mortgage servicers subject to a publicly-
disclosed interagency horizontal review of residential
mortgage servicing operations. That review is expected to
result in formal enforcement actions against many or all of the
companies subject to review, which actions are expected to
incorporate remedial requirements, heightened mortgage
servicing standards and potential civil money penalties. PNC
expects that it and PNC Bank will enter into consent orders
with the Federal Reserve and the OCC, respectively, relating
to the residential mortgage servicing operations of PNC Bank.
See “Residential Mortgage Foreclosure Matters” in Item 7 of
this Report for additional information. PNC expects that these
consent orders, among other things, will describe certain
foreclosure-related practices and controls that the regulators
found to be deficient and will require PNC and PNC Bank to,
among other things, develop and implement plans and
programs to enhance PNC’s servicing and foreclosure
processes and take certain other remedial actions, and oversee
compliance with the orders and the new plans and programs.
In addition, either or both of these agencies may seek civil
money penalties.
The issues described above may affect the value of our
ownership interests, direct or indirect, in property subject to
foreclosure. In addition, possible delays in the schedule for
processing foreclosures may result in an increase in
nonperforming loans, additional servicing costs and possible
demands for contractual fees or penalties under servicing
agreements. There is also an increased risk of incurring costs
related to further remedial and related efforts required by the
consent orders and related to repurchase requests arising out
of either the foreclosure process or origination issues.
Reputational damage arising out of this industry-wide inquiry
could also have an adverse effect upon our existing mortgage
business and could reduce future business opportunities.
One or more of the foregoing could adversely affect PNC’s
business, financial condition, results of operations or cash
flows.
We grow our business in part by acquiring other financial
services companies from time to time, and these
acquisitions present a number of risks and uncertainties
related both to the acquisition transactions themselves and
to the integration of the acquired businesses into PNC
after closing.
Acquisitions of other financial services companies or financial
services assets present risks to PNC in addition to those
presented by the nature of the business acquired. In general,
acquisitions may be substantially more expensive to complete
than expected (including unanticipated costs incurred in
connection with the integration of the acquired company) and
the anticipated benefits (including anticipated cost savings and
strategic gains) may be significantly more difficult or take
longer to achieve than expected. In some cases, acquisitions
involve our entry into new businesses or new geographic or
other markets, and these situations also present risks in
instances where we may be inexperienced in these new areas.
As a regulated financial institution, our ability to pursue or
complete attractive acquisition opportunities could be
negatively impacted by regulatory delays or other regulatory
issues. In addition, regulatory and/or legal issues relating to
the pre-acquisition operations of an acquired business may
cause reputational harm to PNC following the acquisition and
integration of the acquired business into ours and may result
in additional future costs or regulatory limitations arising as a
result of those issues. The processes of integrating acquired
businesses, as well as the deconsolidation of divested
businesses, also pose many additional possible risks which
could result in increased costs, liability or other adverse
consequences to PNC. Note 22 Legal Proceedings in the Notes
To Consolidated Financial Statements in Item 8 of this Report
describes several legal proceedings related to pre-acquisition
activities of companies we have acquired, in particular
National City. Other such legal proceedings may be
commenced in the future.
The soundness of other financial institutions could
adversely affect us.
Financial services institutions are interrelated as a result of
trading, clearing, counterparty, or other relationships. We have
exposure to many different industries and counterparties, and
we routinely execute transactions with counterparties in the
financial services industry, including brokers and dealers,
commercial banks, investment banks, mutual and hedge funds,
and other institutional clients. Many of these transactions
expose us to credit risk in the event of default of our
counterparty or client. In addition, our credit risk may be
exacerbated when the collateral held by us cannot be realized
upon or is liquidated at prices that are not sufficient to recover
the full amount of the loan or derivative exposure due us.
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