PNC Bank 2009 Annual Report Download - page 107

N OTE 2A CQUISITIONS AND D IVESTITURES
P ENDING S ALE OF PNC G LOBAL I NVESTMENT S ERVICING
On February 2, 2010, we entered into a definitive agreement
to sell 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. We currently
anticipate closing the transaction in the third quarter of 2010.
Completion of the transaction is subject to regulatory
approvals and certain other closing conditions.
Results of operations of GIS are presented as income from
discontinued operations, net of income taxes, on our
Consolidated Income Statement for all years presented.
Income taxes related to discontinued operations for 2009
include $18 million of deferred income taxes provided on the
difference in the stock investment and tax basis of GIS, a US
subsidiary.
Investment in Discontinued Operations
December 31, 2009 – In millions
Interest-earning deposits with banks $ 255
Goodwill 1,243
Other intangible assets 51
Other 359
Total assets $1,908
Deposits $93
Accrued expenses 266
Other 1,009
Total liabilities $1,368
Net assets $ 540
N
ATIONAL C ITY C ORPORATION
On December 31, 2008, we acquired National City for
approximately $6.1 billion. The total consideration included
approximately $5.6 billion of common stock, representing
approximately 95 million shares, $150 million of preferred
stock and cash of $379 million paid to warrant holders by
National City. The transaction required no future contingent
consideration payments. National City, based in Cleveland,
Ohio, was one of the nation’s largest financial services
companies. At December 31, 2008, prior to our acquisition,
National City had total assets of approximately $153 billion
and total deposits of approximately $101 billion.
This acquisition was accounted for under the purchase method
of accounting. The purchase price was allocated to the
National City assets acquired and liabilities assumed using
their estimated fair values as of the acquisition date.
During 2009, additional information was obtained about the
fair value of assets acquired and liabilities assumed as of
December 31, 2008 which resulted in adjustments to the initial
purchase price allocation. Most significantly, additional
information was obtained on the credit quality of certain loans
as of the acquisition date which resulted in additional fair
value writedowns on acquired impaired loans. These
adjustments resulted in the allocation of $446 million to other
intangible assets and $891 million to premises and equipment
which had been reduced in the initial purchase price
allocation. The purchase price allocation was completed as of
December 31, 2009 with goodwill of $647 million recognized
from the National City acquisition.
As a condition for regulatory approval of the transaction, we
were required to divest 61 branches. This divestiture, which
included $4.1 billion of deposits and $.8 billion of loans, was
completed during the third quarter of 2009.
A summary of adjustments to the initial purchase price allocation are summarized below.
National City Acquisition – Summary Purchase Price Allocation
In billions
Excess of fair value of adjusted net assets acquired over purchase price – December 31, 2008 $(1.3)
Additional fair value marks on acquired impaired loans – December 31, 2008 1.8
Other adjustments, net .1
Excess of purchase price over fair value of adjusted net assets acquired – December 31, 2009 $ .6
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