PNC Bank 2011 Annual Report Download - page 38

ITEM 7–M ANAGEMENT ’ S D ISCUSSION
AND
A NALYSIS OF F INANCIAL C ONDITION
AND
R ESULTS OF O PERATIONS
E XECUTIVE S UMMARY
K EY S TRATEGIC G OALS
We manage our company for the long term and focus on
operating within a moderate risk profile while maintaining
strong capital and liquidity positions, investing in our markets
and products, and embracing our corporate responsibility to
the communities where we do business. PNC operates under a
moderate risk profile which has been primarily attributable to
continued improvement in our credit profile as we have
experienced overall positive trends in a number of key
measures.
Our strategy to enhance shareholder value centers on driving
growth in pre-tax, pre-provision earnings by achieving growth
in revenue from our balance sheet and diverse business mix
that exceeds growth in expenses controlled through
disciplined cost management.
The primary drivers of revenue are the acquisition, expansion
and retention of customer relationships. We strive to expand
our customer base by offering convenient banking options and
leading technology solutions, providing a broad range of
fee-based and credit products and services, focusing on
customer service, and managing a significantly enhanced
branding initiative. This strategy is designed to give our
customers choices based on their needs. Rather than striving
to optimize fee revenue in the short term, our approach is
focused on effectively growing targeted market share and
“share of wallet.” We may also grow revenue through
appropriate and targeted acquisitions and, in certain
businesses, by expanding into new geographical markets.
We are focused on our strategies for quality growth. We
remain committed to maintaining a moderate risk philosophy
characterized by continued improvement in a number of key
measures, disciplined credit management, and the successful
execution and implementation of strategic business initiatives.
We have made substantial progress in transitioning our
balance sheet over the past two years, working to return to our
moderate risk profile throughout our expanded franchise. Our
actions have resulted in strong capital measures, created a
well-positioned balance sheet, and helped us to maintain
strong liquidity and investment flexibility to adjust, where
appropriate and permissible, to changing interest rates and
market conditions.
We also expect to build capital via retained earnings while
having opportunities to return capital to shareholders during
2012 subject to regulatory approvals. See the Funding and
Capital Sources section of the Consolidated Balance Sheet
Review section and the Liquidity Risk Management section of
this Item 7 and the Supervision and Regulation section in
Item 1 of this Report.
P
ENDING A CQUISITION OF RBC B ANK (USA)
On June 19, 2011, PNC entered into a definitive agreement to
acquire RBC Bank (USA), the US retail banking subsidiary of
Royal Bank of Canada, with more than 400 branches in North
Carolina, Florida, Alabama, Georgia, Virginia and South
Carolina. The transaction is expected to add approximately
$18 billion of deposits and $16 billion of loans to PNC’s
Consolidated Balance Sheet and to close in March 2012,
subject to remaining customary closing conditions. See Note 2
Acquisition and Divestiture Activity in the Notes To
Consolidated Financial Statements in Item 8 of this Report.
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. We
assumed approximately $210.5 million of deposits associated
with these branches. 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. See Note 2 Acquisition and Divestiture
Activity in the Notes To Consolidated Financial Statements in
Item 8 of this Report.
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. We assumed approximately
$324.5 million of deposits associated with these branches. 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. See Note 2
Acquisition and Divestiture Activity in the Notes To
Consolidated Financial Statements in Item 8 of this Report.
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. The pretax gain in discontinued operations recorded in
the third quarter of 2010 related to this sale was $639 million,
net of transaction costs, or $328 million after taxes.
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 in this
Report. Once we entered into the sales agreement, GIS was no
longer a reportable business segment. See Note 2 Acquisition
and Divestiture Activity in the Notes To Consolidated
Financial Statements in Item 8 of this Report.
The PNC Financial Services Group, Inc. – Form 10-K 29