PNC Bank 2010 Annual Report Download - page 41
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N
ONINTEREST
E
XPENSE
Noninterest expense for 2010 declined 5%, to $8.6 billion,
compared with $9.1 billion for 2009. The impact of higher
cost savings related to the National City acquisition
integration and the reversal of certain accrued liabilities in
2010, including $73 million associated with a franchise tax
settlement and $123 million associated with an
indemnification liability for certain Visa litigation, were
reflected in the lower 2010 expenses. Lower expenses in the
comparison also reflected a special FDIC assessment,
intended to build the FDIC’s Deposit Insurance Fund, of
$133 million in 2009. We also continued to invest in customer
growth and innovation initiatives.
National City integration costs totaled $387 million in 2010
and $421 million in 2009. We achieved National City
acquisition cost savings of $1.8 billion on an annualized
basis in the fourth quarter of 2010 through the reduction of
operational and administrative redundancies. This amount
was higher than our original goal of $1.2 billion, and ahead
of schedule. During 2010, we completed the customer and
branch conversions to our technology platforms and
integrated the businesses and operations of National City
with those of PNC.
We expect that total noninterest expense in 2011 will be less
than total noninterest expense in 2010, with the magnitude of
the decline dependent upon the pace of our investment in
business growth opportunities.
E
FFECTIVE
T
AX
R
ATE
The effective tax rate was 25.5% for 2010 compared with
26.9% for 2009. The decrease in the effective tax rate was
primarily due to a favorable IRS letter ruling in 2010 that
resolved a prior tax position and resulted in a tax benefit of
$89 million.
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