PNC Bank 2010 Annual Report Download - page 3

Our accomplishments brought PNC unprecedented international recognition.
In December we were selected “Bank of the Year in the U.S.” by The Banker
magazine in London, a publication of the Financial Times Group and the
industry’s longest running trade journal.
An Industry Perspective If I think back to the fall of 2008, it was difficult to
know when or how the financial crisis would end. As a company, we view change
as an opportunity for growth and greater success. In the wake of significant
uncertainty, we positioned the firm with a strong balance sheet and a proven
management team which gave us the confidence to buy a bank larger than PNC. We had already
developed innovative products, and we were focused on the needs of our customers, with
thousands of dedicated employees ready to serve them.
Today, we believe we stand as one of the clear winners coming out of the financial crisis and
are ready to exceed the expectations of our customers as their financial needs expand in an
improving economy.
Delivering Value to Our Shareholders Given the economic uncertainty of the past two years,
it has been prudent to build a larger level of capital. At December 31, 2008, our Tier 1 common
capital ratio – a key current capital adequacy benchmark – was 4.8 percent. By raising capital,
retaining earnings and selling a non-core business, at year end 2010, our Tier 1 common capital
ratio had grown to 9.8 percent, one of the strongest levels in the industry. This should help us
shift from a strategy of capital building to one of capital optimization.
We recently submitted to our regulators a capital plan as part of a second
round of “stress tests.” The result of this regulatory assessment will, in
part, determine whether and how much capital we may begin to return to
shareholders.
With the economy now more stable, our board of directors views increasing
the dividend as a key priority along with repurchasing stock. Subject to
approval from our regulators, I am optimistic that we would be able to
increase our dividend in 2011.
We would also consider mergers and acquisitions at the right prices that offer opportunities to
expand or augment existing markets and businesses and to generate greater shareholder value.
A further factor in determining how much capital we hold will be new international banking
requirements coming out of the Basel Committee on Banking Supervision. Given current
assumptions based on the rules as we understand them today, we anticipate our capital levels
will exceed the expected benchmark even before the new rules go into effect.
Tier 1 Common Capital Ratio
James E. Rohr
Chairman and Chief Executive Officer
4.8%
6.0%
2008 2009 2010
9.8%