PNC Bank 2011 Annual Report Download - page 32

failure, interruption or security breach will not occur or, if any
does occur, that it can be sufficiently remediated.
There have been increasing efforts on the part of third parties
to breach data security at financial institutions or with respect
to financial transactions, including through the use of social
engineering schemes such as “phishing.” In addition, because
the techniques used to cause such security breaches change
frequently, often are not recognized until launched against a
target and may originate from less regulated and remote areas
around the world, we may be unable to proactively address
these techniques or to implement adequate preventative
measures. The ability of our customers to bank remotely,
including online and through mobile devices, requires secure
transmission of confidential information and increases the risk
of data security breaches.
Although to date efforts to breach our data security have not
had a material impact on PNC, the occurrence of any such
failure, interruption or security breach of our systems,
particularly if widespread or resulting in financial losses to our
customers, could damage our reputation, result in a loss of
customer business, subject us to additional regulatory scrutiny,
or expose us to civil litigation and financial liability.
Our business and financial results could be impacted
materially by adverse results in legal proceedings.
Many aspects of our business involve substantial risk of legal
liability. We have been named or threatened to be named as
defendants in various lawsuits arising from our business
activities (and in some cases from the activities of companies
we have acquired). In addition, we are regularly the subject of
governmental investigations and other forms of regulatory
inquiry. We also are at risk when we have agreed to indemnify
others for losses related to legal proceedings, including
litigation and governmental investigations and inquiries, they
face, such as in connection with the sale of a business or assets
by us. The results of these legal proceedings could lead to
significant monetary damages or penalties, restrictions on the
way in which we conduct our business, or reputational harm.
Although we establish accruals for legal proceedings when
information related to the loss contingencies represented by
those matters indicates both that a loss is probable and that the
amount of loss can be reasonably estimated, we do not have
accruals for all legal proceedings where we face a risk of loss.
In addition, due to the inherent subjectivity of the assessments
and unpredictability of the outcome of legal proceedings,
amounts accrued may not represent the ultimate loss to us
from the legal proceedings in question. Thus, our ultimate
losses may be higher, and possibly significantly so, than the
amounts accrued for legal loss contingencies.
We discuss further the unpredictability of legal proceedings
and describe some of our pending legal proceedings in Note
22 Legal Proceedings in the Notes To Consolidated Financial
Statements in Item 8 of this Report.
Our business and financial performance could be
adversely affected, directly or indirectly, by disasters, by
terrorist activities or by international hostilities.
Neither the occurrence nor the potential impact of disasters,
terrorist activities and international hostilities can be
predicted. However, these occurrences could impact us
directly (for example, by causing significant damage to our
facilities or preventing us from conducting our business in the
ordinary course), or indirectly as a result of their impact on
our borrowers, depositors, other customers, suppliers or other
counterparties. We could also suffer adverse consequences to
the extent that disasters, terrorist activities or international
hostilities affect the financial markets or the economy in
general or in any particular region. These types of impacts
could lead, for example, to an increase in delinquencies,
bankruptcies or defaults that could result in our experiencing
higher levels of nonperforming assets, net charge-offs and
provisions for credit losses.
Our ability to mitigate the adverse consequences of such
occurrences is in part dependent on the quality of our
resiliency planning, and our ability, if any, to anticipate the
nature of any such event that occurs. The adverse impact of
disasters or terrorist activities or international hostilities also
could be increased to the extent that there is a lack of
preparedness on the part of national or regional emergency
responders or on the part of other organizations and businesses
that we deal with, particularly those that we depend upon but
have no control over.
ITEM 1 B – UNRESOLVED STAFF COMMENTS
There are no SEC staff comments regarding PNC’s periodic or
current reports under the Exchange Act that are pending
resolution.
ITEM 2– PROPERTIES
Our executive and primary administrative offices are located
at One PNC Plaza, Pittsburgh, Pennsylvania. The 30-story
structure is owned by PNC Bank, N.A.
We own or lease numerous other premises for use in
conducting business activities, including operations centers,
offices, and branch and other facilities. We consider the
facilities owned or occupied under lease by our subsidiaries to
be adequate. We include here by reference the additional
information regarding our properties in Note 10 Premises,
Equipment and Leasehold Improvements in the Notes To
Consolidated Financial Statements in Item 8 of this Report.
The PNC Financial Services Group, Inc. – Form 10-K 23