PNC Bank 2012 Annual Report Download - page 20

PART I
Forward-Looking Statements: From time to time, The PNC Financial Services Group, Inc. (PNC or the Corporation) has made
and may continue to make written or oral forward-looking statements regarding our outlook for earnings, revenues, expenses,
capital levels and ratios, liquidity levels, asset levels, asset quality, financial position and other matters regarding or affecting
PNC and its future business and operations or the impact of legal, regulatory or supervisory matters on our business operations or
performance. This Annual Report on Form 10-K (the Report or Form 10-K) also includes forward-looking statements. With respect
to all such forward-looking statements, you should review our Risk Factors discussion in Item 1A, our Risk Management, Critical
Accounting Estimates And Judgments, and Cautionary Statement Regarding Forward-Looking Information sections included in
Item 7, and Note 23 Legal Proceedings and Note 24 Commitments and Guarantees in the Notes To Consolidated Financial
Statements included in Item 8 of this Report.
ITEM 1–B USINESS
B USINESS O VERVIEW
Headquartered in Pittsburgh, Pennsylvania, we are one of the
largest diversified financial services companies in the United
States. We have businesses engaged in retail banking,
corporate and institutional banking, asset management, and
residential mortgage banking, providing many of our products
and services nationally, as well as products and services in our
primary geographic markets located in Pennsylvania, Ohio,
New Jersey, Michigan, Illinois, Maryland, Indiana, North
Carolina, Florida, Kentucky, Washington, D.C., Delaware,
Alabama, Virginia, Georgia, Missouri, Wisconsin and South
Carolina. We also provide certain products and services
internationally. At December 31, 2012, our consolidated total
assets, total deposits and total shareholders’ equity were
$305.1 billion, $213.1 billion and $39.0 billion, respectively.
We were incorporated under the laws of the Commonwealth
of Pennsylvania in 1983 with the consolidation of Pittsburgh
National Corporation and Provident National Corporation.
Since 1983, we have diversified our geographical presence,
business mix and product capabilities through internal growth,
strategic bank and non-bank acquisitions and equity
investments, and the formation of various non-banking
subsidiaries.
RBC B ANK (USA) A CQUISITION
On March 2, 2012, we acquired 100% of the issued and
outstanding common stock of RBC Bank (USA), the U.S.
retail banking subsidiary of Royal Bank of Canada. As part of
the acquisition, PNC also purchased a credit card portfolio
from RBC Bank (Georgia), National Association. PNC paid
$3.6 billion in cash as the consideration for the acquisition of
both RBC Bank (USA) and the credit card portfolio. The
transaction added approximately $18.1 billion in deposits,
$14.5 billion of loans and $1.1 billion of goodwill and
intangible assets to PNC’s Consolidated Balance Sheet. Our
Consolidated Income Statement includes the impact of
business activity associated with the RBC Bank (USA)
acquisition subsequent to March 2, 2012.
RBC Bank (USA), based in Raleigh, North Carolina, operated
more than 400 branches in North Carolina, Florida, Alabama,
Georgia, Virginia and South Carolina. The primary reasons for
the acquisition of RBC Bank (USA) were to enhance
shareholder value, to improve PNC’s competitive position in
the financial services industry, and to further expand PNC’s
existing branch network in the states where it currently
operates as well as expanding into new markets.
S ALE OF S MARTSTREET
Effective October 26, 2012, PNC divested certain deposits and
assets of the Smartstreet business unit, which was acquired by
PNC as part of the RBC Bank (USA) acquisition, to Union
Bank, N.A. Smartstreet is a nationwide business focused on
homeowner or community association managers and had
approximately $1 billion of assets and deposits as of
September 30, 2012. The gain on sale was immaterial and we
reduced goodwill and core deposit intangibles of $46 million
and $13 million, respectively.
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 million of deposits associated
with these branches. No loans were acquired in the
transaction.
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 million of deposits associated with these branches. No
loans were acquired in the transaction.
R EVIEW O F B USINESS S EGMENTS
In addition to the following information relating to our lines of
business, we incorporate the information under the captions
Business Segment Highlights, Product Revenue, and Business
Segments Review in Item 7 of this Report here by reference.
Also, we include the financial and other information by
business in Note 26 Segment Reporting in the Notes To
Consolidated Financial Statements in Item 8 of this Report
here by reference.
Assets, revenue and earnings attributable to foreign activities
were not material in the periods presented. Business segment
results for periods prior to 2012 have been reclassified to
reflect current methodologies and current business and
management structure and to present those periods on the
The PNC Financial Services Group, Inc. – Form 10-K 1