PNC Bank 2009 Annual Report Download

James E. Rohr
Chairman and Chief Executive Officer
March 11, 2010
Dear Shareholders,
Building a great company is an ongoing process, and each year we set our goals to serve our shareholders,
while also meeting the needs of customers, employees and communities. We believe 2009 was a very
good year for all of our constituencies, despite the difficult environment for the financial services
industry. PNC begins 2010 determined to capitalize on our expanded franchise to enhance revenue and
gain new clients.
In 2009 our business model delivered full-year revenue of $16.2 billion from diverse sources. We
managed expenses effectively, and we continued to add customers. The acquisition of National City
significantly expanded our franchise, and our integration efforts are ahead of schedule. We worked to
transition our balance sheet throughout the year, and ended 2009 with more transaction deposits, greater
loan loss reserves and higher capital ratios. As a result, we posted full year net income of $2.4 billion, or
$4.36 per diluted common share.
While I have said this before, I think it bears repeating: other than the fourth quarter of 2008 when we
took a substantial provision for credit losses due to the National City acquisition, PNC has been profitable
in every quarter since the economic downturn began in the middle of 2007.
In February of this year we redeemed $7.6 billion of preferred stock issued under the government’s
Troubled Asset Relief Program (TARP) Capital Purchase Program, removing uncertainty for our
shareholders. While some may disagree, I think economists and historians will regard the federal
government’s investment in the banking industry as the right decision at the right time. It helped to
stabilize the country’s financial system at a critical juncture. The investment the government made in
PNC resulted in excellent returns for taxpayers as we paid more than $420 million in dividends to the
U.S. Treasury since the shares were issued at the end of December 2008.
Before reviewing our growth plans, however, I want to address how PNC is making credit available to
consumers and Main Street businesses. We recognize credit is vital to our country’s financial health.
Reflecting our support of economic growth, we originated and renewed more than $110 billion in loans
and commitments in 2009.
Losing a home is a personal financial tragedy, which is why it is our goal is to help homeowners avoid
foreclosure where appropriate. We completed $400 million in refinances in 2009 under the Home
Affordable Refinance Program. We also sent out more than 70,000 workout packages to troubled
borrowers under the Home Affordable Modification Program.
We know that all businesses need credit to sustain and grow their operations. We arranged nearly $14
billion in business loans last year, and we are a leader in making small business loans, originating and
renewing nearly $4 billion in 2009.
Delivering Value to Our Shareholders. The progress we made in 2009 contributed to shares of PNC
stock trading at higher levels at the end of 2009 than at the beginning of the year. Taking a longer view,
we ranked second among our peers in total shareholder return on a five-year basis.*
In this environment, we believe capital levels are critical to the valuation of bank stocks. With that in
mind, we strengthened our Tier 1 common capital position during 2009. We took further steps in
February of this year, selling $3.45 billion of stock in a common equity offering. We announced an
* PNC’s 2009 peer group consists of BB&T Corporation, Bank of America Corporation, Capital One Financial, Inc., Comerica Inc.,
Fifth Third Bancorp, JPMorgan Chase, KeyCorp, M&T Bank, Regions Financial Corporation, SunTrust Banks, Inc., U.S. Bancorp,
and Wells Fargo & Company.
The PNC Financial Services Group
One PNC Plaza 249 Fifth Avenue Pittsburgh Pennsylvania 15222-2707