PNC Bank 2010 Annual Report Download - page 58
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Please find page 58 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.employee satisfaction, investing in the business for future
growth, and disciplined expense management during this
period of market and economic uncertainty.
Information for 2010 reflects the impact of the consolidation
in our financial statements of the securitized credit card
portfolio of approximately $1.6 billion of credit card loans as
of January 1, 2010. This consolidation impacted primarily the
loan, borrowings, and other liabilities categories on the
balance sheet and nearly all major categories of our income
statement.
In January 2011, PNC reached a definitive agreement to
acquire 19 branches and the associated deposits from
BankAtlantic Bancorp, Inc. located in the Tampa, Florida
area. The transaction is expected to close in June 2011, subject
to regulatory approval and customary closing conditions. PNC
will convert the branches and customer accounts to the PNC
brand and systems at that time. This transaction is expected to
provide Retail Banking with the opportunity to establish a
foothold in the Tampa area and leverage those branches to
help grow other business activities, such as wealth
management and corporate banking.
Highlights of Retail Banking’s performance for 2010 include
the following:
• PNC successfully completed the conversion of
customers at over 1,300 branches across nine states
from National City Bank to PNC, providing further
growth opportunities throughout our expanded
footprint.
• Success in implementing Retail Banking’s deposit
strategy resulted in growth in average demand
deposits of $2.3 billion, or 7%, over the prior year.
Excluding approximately $0.7 billion of average
demand deposits from 2009 balances related to the 61
required branch divestitures completed in early
September 2009, average demand deposits increased
$3.0 billion, or 9%, over the prior year.
• For the second consecutive year, the Retail Bank was
named a Gallup Great WorkPlace Award Winner.
PNC was the only U.S. Bank to be recognized. This
recognition reflects our commitment to having an
engaged workforce and a unified culture.
• Implementing the business model in the acquired
markets and building on strengths in the core
franchise resulted in the growth of 75,000 checking
relationships in 2010, a solid gain considering the
first half of the year was dominated by the customer
conversion process and 2010 was a difficult
environment. The majority of this growth came in the
second half of the year as strength in customer
retention from the converted markets was coupled
with sales momentum in channels and products such
as Workplace and University Banking and Virtual
Wallet. Our investment in online banking capabilities
continued to pay off as active online bill payment
customers grew by 25% in 2010.
• PNC’s expansive branch footprint covers nearly
one-third of the U.S. population with a network of
2,470 branches and 6,673 ATM machines at
December 31, 2010. We continued to invest in the
branch network. In 2010, we opened 21 traditional
and 27 in-store branches, and consolidated 91
branches. The decrease in branches was primarily
driven by acquisition-related branch consolidations.
Total revenue for 2010 was $5.4 billion compared with $5.7
billion in 2009. Net interest income of $3.4 billion declined
$89 million compared with 2009. Net interest income was
negatively impacted by lower interest credits assigned to
deposits, reflective of the rate environment, and benefited
from the consolidation of the securitized credit card portfolio,
higher transaction deposits, and increased education loans.
Noninterest income for 2010 was $1.9 billion, a decline of
$256 million over the prior year. The decrease was due to a
decrease in service charges on deposits related to lower
overdraft fees, the negative impact of the consolidation of the
securitized credit card portfolio, lower brokerage fees, and the
impact of the required branch divestitures partially offset by,
higher transaction volume-related fees within consumer
services.
In 2010, Retail Banking revenues were negatively impacted
by the implementation of new federal regulations. These
regulations include: 1) the new rules set forth in Regulation E
related to overdraft fees, 2) the Credit CARD Act of 2009, and
3) the education lending portions of the Health Care and
Education Reconciliation Act of 2010 (HCERA).
The negative impact of Regulation E on revenue for 2010 was
approximately $145 million. Additionally, the Credit CARD
Act had a negative impact on revenue of approximately $75
million, largely in net interest income. These estimates do not
include additional impacts to revenue for other changes that
were made in 2010 responding to market conditions, or other/
additional regulatory requirements, or any offsetting impact of
changes to products and/or pricing.
The education lending business was adversely impacted by
provisions of HCERA that went into effect on July 1, 2010.
The law essentially eliminates the Federal Family Education
Loan Program (FFELP), the federally guaranteed portion of
this business available to private lenders. We originated $2.6
billion of federally guaranteed loans under FFELP in 2009 and
$1.0 billion in 2010, the majority of which were originated in
the first half of the year. We plan to continue to provide
private education loans as another source of funding for
students and families.
Additionally, in 2011 Retail Banking revenue is expected to
continue to be negatively impacted by the rules set forth in
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