PNC Bank 2010 Annual Report Download - page 95
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Please find page 95 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.Noninterest Expense
Noninterest expense for 2009 was $9.1 billion compared with
$3.7 billion in 2008. The increase was substantially related to
National City. We also recorded a special FDIC assessment of
$133 million in the second quarter of 2009, which was
intended to build the FDIC’s Deposit Insurance Fund.
Integration costs included in noninterest expense totaled
$421 million in 2009 compared with $122 million in 2008.
Our quarterly run rate of acquisition cost savings related to
National City increased to $300 million in the fourth quarter
of 2009, or $1.2 billion per year. Acquisition cost savings
totaled $800 million in 2009.
Effective Tax Rate
Our effective tax rate was 26.9% for 2009 and 27.2% for
2008.
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Loans
Loans decreased $17.9 billion, or 10%, as of December 31,
2009 compared with December 31, 2008. Loans represented
58% of total assets at December 31, 2009 and 60% of total
assets at December 31, 2008. The decline in loans during 2009
was driven primarily by lower utilization levels for
commercial lending among middle market and large corporate
clients, although this trend in utilization rates appeared to have
eased in the fourth quarter of 2009.
Commercial lending represented 53% of the loan portfolio and
consumer lending represented 47% at December 31, 2009.
Commercial lending declined 17% at December 31, 2009
compared with December 31, 2008. Commercial loans, which
comprised 65% of total commercial lending, declined 21%
due to reduced demand for new loans, lower utilization levels
and paydowns as clients continued to deleverage their balance
sheets. Total consumer lending decreased slightly at
December 31, 2009 from December 31, 2008.
Investment Securities
Total investment securities at December 31, 2009 were
$56.0 billion compared with $43.5 billion at December 31,
2008. Securities represented 21% of total assets at
December 31, 2009 compared with 15% of total assets at
December 31, 2008. The increase in securities of $12.6 billion
since December 31, 2008 primarily reflected the purchase of
US Treasury and government agency securities as well as
price appreciation in the available for sale portfolio, partially
offset by maturities, prepayments and sales.
At December 31, 2009, the securities available for sale
portfolio included a net unrealized loss of $2.3 billion, which
represented the difference between fair value and amortized
cost. The comparable amount at December 31, 2008 was a net
unrealized loss of $5.4 billion. The expected weighted-average
life of investment securities (excluding corporate stocks and
other) was 4.1 years at December 31, 2009 and 3.1 years at
December 31, 2008.
Loans Held For Sale
Loans held for sale totaled $2.5 billion at December 31, 2009
compared with $4.4 billion at December 31, 2008. We stopped
originating commercial mortgage loans held for sale
designated at fair value during the first quarter of 2008 and
intend to continue pursuing opportunities to reduce these
positions at appropriate prices. For commercial mortgages
held for sale carried at the lower of cost or market, strong
origination volumes partially offset sales to government
agencies during 2009. Residential mortgage loans held for sale
decreased during 2009 despite strong refinancing volumes,
especially in the first quarter.
Asset Quality
Nonperforming assets increased $4.1 billion to $6.3 billion at
December 31, 2009 compared with $2.2 billion at
December 31, 2008. The increase resulted from recessionary
conditions in the economy and reflected a $2.6 billion increase
in commercial lending nonperforming loans and a $1.4 billion
increase in consumer lending nonperforming loans. The
increase in nonperforming commercial lending was primarily
from real estate, including residential real estate development
and commercial real estate exposure; manufacturing; and
service providers. The increase in nonperforming consumer
lending was mainly due to residential mortgage loans. While
nonperforming assets increased across all applicable business
segments during 2009, the largest increases were $2.0 billion
in Corporate & Institutional Banking and $854 million in
Distressed Assets Portfolio.
At December 31, 2009, our largest nonperforming asset was
approximately $49 million and our average nonperforming
loan associated with commercial lending was approximately
$1 million.
Goodwill and Other Intangible Assets
Goodwill increased $637 million and other intangible assets
increased $584 million at December 31, 2009 compared with
December 31, 2008. During 2009, adjustments were made to
the estimated fair values of assets acquired and liabilities
assumed as part of the National City acquisition. This resulted
in the recognition of $451 million of core deposit and other
relationship intangibles at December 31, 2009. In addition, the
purchase price allocation for the National City acquisition was
completed as of December 31, 2009 with goodwill of
$647 million recognized.
Funding Sources
Total funding sources were $226.2 billion at December 31,
2009 and $245.1 billion at December 31, 2008. Funding
sources decreased $18.9 billion, driven by declines in other
time deposits, retail certificates of deposit and Federal Home
Loan Bank borrowings, partially offset by increases in money
market and demand deposits.
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