PNC Bank 2011 Annual Report Download - page 129

N OTE 2A CQUISITION AND D IVESTITURE
A CTIVITY
P ENDING A CQUISITION OF RBC B ANK (USA)
On June 19, 2011, we entered into a definitive agreement with
Royal Bank of Canada and RBC USA Holdco Corporation to
acquire RBC Bank (USA), the US retail banking subsidiary of
Royal Bank of Canada, for $3.45 billion. The purchase price is
subject to certain adjustments, including adjustments based on
the closing date tangible net asset value of RBC Bank (USA),
as defined in the definitive agreement. Although PNC has the
option to pay up to $1.0 billion of the purchase price using
shares of PNC common stock under the terms of the
agreement, PNC currently does not plan to issue any shares of
PNC common stock as part of the consideration. PNC has also
agreed to acquire certain credit card accounts of RBC Bank
(USA) customers issued by RBC Bank (Georgia), National
Association, a wholly-owned subsidiary of Royal Bank of
Canada.
RBC Bank (USA) has approximately $25 billion (unaudited)
in “proforma” assets as reflected in the definitive agreement to
be included in the transaction and more than 400 branches in
North Carolina, Florida, Alabama, Georgia, Virginia and
South Carolina. The transaction is expected to close in March
2012, subject to remaining customary closing conditions.
F LAGSTAR B RANCH A CQUISITION
Effective December 9, 2011, PNC acquired 27 branches in the
northern metropolitan Atlanta, Georgia area from Flagstar
Bank, FSB, a subsidiary of Flagstar Bancorp, Inc. The fair
value of the assets acquired totaled approximately $211.8
million, including $169.3 million in cash, $24.3 million in
fixed assets and $18.2 million of goodwill and intangible
assets. We also assumed approximately $210.5 million of
deposits associated with these branches. No deposit premium
was paid and no loans were acquired in the transaction. Our
Consolidated Income Statement includes the impact of the
branch activity subsequent to our December 9, 2011
acquisition.
B ANK A TLANTIC B RANCH A CQUISITION
Effective June 6, 2011, PNC acquired 19 branches in the
greater Tampa, Florida area from BankAtlantic, a subsidiary
of BankAtlantic Bancorp, Inc. The fair value of the assets
acquired totaled approximately $324.9 million, including
$256.9 million in cash, $26.0 million in fixed assets and $42.0
million of goodwill and intangible assets. We also assumed
approximately $324.5 million of deposits associated with
these branches. A $39.0 million deposit premium was paid
and no loans were acquired in the transaction. Our
Consolidated Income Statement includes the impact of the
branch activity subsequent to our June 6, 2011 acquisition.
S ALE OF PNC G LOBAL I NVESTMENT S ERVICING
On July 1, 2010, we sold PNC Global Investment Servicing
Inc. (GIS), a leading provider of processing, technology and
business intelligence services to asset managers, broker-
dealers and financial advisors worldwide, for $2.3 billion in
cash pursuant to a definitive agreement entered into on
February 2, 2010. This transaction resulted in a pretax gain of
$639 million, net of transaction costs, in the third quarter of
2010. This gain and results of operations of GIS through
June 30, 2010 are presented as Income from discontinued
operations, net of income taxes, on our Consolidated Income
Statement. As part of the sale agreement, PNC has agreed to
provide certain transitional services on behalf of GIS until
completion of related systems conversion activities. There
were no assets or liabilities of GIS remaining on our
Consolidated Balance Sheet at December 31, 2010.
N OTE 3L OAN S ALE AND S ERVICING A CTIVITIES
AND
V ARIABLE I NTEREST E NTITIES
L OAN S ALE AND S ERVICING A CTIVITIES
We have transferred residential and commercial mortgage
loans in securitization or sales transactions in which we have
continuing involvement. These transfers have occurred
through Agency securitization, Non-Agency securitization,
and whole-loan sale transactions. Agency securitizations
consist of securitization transactions with Federal National
Mortgage Association (FNMA), Federal Home Loan
Mortgage Corporation (FHLMC), and Government National
Mortgage Association (GNMA) (collectively the Agencies).
FNMA and FHLMC generally securitize our transferred loans
into mortgage-backed securities for sale into the secondary
market through special purpose entities (SPEs) they sponsor.
We, as an authorized GNMA issuer/servicer, pool Federal
Housing Administration (FHA) and Department of Veterans
Affairs (VA) insured loans into mortgage-backed securities
for sale into the secondary market. In Non-Agency
securitizations, we have transferred loans into securitization
SPEs. In other instances third-party investors have purchased
(in whole-loan sale transactions) and subsequently sold our
loans into securitization SPEs. Third-party investors have also
purchased our loans in whole-loan sale transactions.
Securitization SPEs, which are legal entities that are utilized
in the Agency and Non-Agency securitization transactions, are
VIEs.
Our continuing involvement in the Agency securitizations,
Non-Agency securitizations, and whole-loan sale transactions
generally consists of servicing, repurchases of previously
transferred loans and loss share arrangements, and, in limited
circumstances, holding of mortgage-backed securities issued
by the securitization SPEs.
120 The PNC Financial Services Group, Inc. – Form 10-K