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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
COMMISSION FILE NUMBER 1-9718
THE PNC FINANCIAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1435979
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(State or other jurisdiction of incorporation or (I.R.S. Employer Identification
organization) No.)
ONE PNC PLAZA
249 FIFTH AVENUE
PITTSBURGH, PENNSYLVANIA 15222-2707
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code - (412) 762-1553
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Securities registered pursuant to Section 12(b) of the Act:
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Name of Each Exchange
Title of Each Class on Which Registered
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COMMON STOCK, PAR VALUE $5.00 New York Stock Exchange
$1.60 CUMULATIVE CONVERTIBLE PREFERRED STOCK-SERIES C, PAR VALUE $1.00 New York Stock Exchange
$1.80 CUMULATIVE CONVERTIBLE PREFERRED STOCK-SERIES D, PAR VALUE $1.00 New York Stock Exchange
SERIES G JUNIOR PARTICIPATING PREFERRED SHARE PURCHASE RIGHTS New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
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$1.80 CUMULATIVE CONVERTIBLE PREFERRED STOCK - SERIES A, PAR VALUE $1.00
$1.80 CUMULATIVE CONVERTIBLE PREFERRED STOCK - SERIES B, PAR VALUE $1.00
8.25% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2008
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _X_
The aggregate market value of the voting common equity held by non-affiliates of
the registrant amounted to approximately $20.0 billion at February 28, 2001.
There is no non-voting common equity of the registrant outstanding.
Number of shares of registrant's common stock outstanding at February 28, 2001:
289,606,244
DOCUMENTS INCORPORATED BY REFERENCE
Portions of The PNC Financial Services Group, Inc. 2000 Annual Report ("Annual
Report to Shareholders") are incorporated by reference into Parts I and II and
portions of the definitive Proxy Statement of The PNC Financial Services Group,
Inc. to be filed pursuant to Regulation 14A for the annual meeting of
shareholders to be held on April 24, 2001 ("Proxy Statement") are incorporated
by reference into Part III of this Form 10-K. The incorporation by reference
herein of portions of the Proxy Statement shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) and (9)
of Regulation S-K.
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TABLE OF CONTENTS
PART I Page
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Item 1 Business 3
Item 2 Properties 6
Item 3 Legal Proceedings 6
Item 4 Submission of Matters to a Vote of Security
Holders 6
Executive Officers of the Registrant 7
PART II
Item 5 Market for Registrant's Common Equity and
Related Stockholder Matters 7
Item 6 Selected Financial Data 7
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Item 7A Quantitative and Qualitative Disclosures
About Market Risk 7
Item 8 Financial Statements and Supplementary Data 8
Item 9 Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure 8
PART III
Item 10 Directors and Executive Officers of the
Registrant 8
Item 11 Executive Compensation 8
Item 12 Security Ownership of Certain Beneficial
Owners and Management 8
Item 13 Certain Relationships and Related
Transactions 8
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K 8
SIGNATURES 9
EXHIBIT INDEX E-1
PART I
Forward-Looking Statements: From time to time The PNC Financial Services Group,
Inc. ("PNC" or "Corporation") has made and may continue to make written or oral
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act with respect to future financial or business performance,
conditions, strategies, expectations and goals. This report also includes
forward-looking statements. Forward-looking statements are typically identified
by words or phrases such as "believe," "expect," "anticipate," "intend,"
"estimate," "position," "target," "mission," "assume," "achievable,"
"potential," "strategy," "goal," "objective," "plan," "aspiration," "outlook,"
"outcome," "continue," "remain," "maintain," "strive," "trend" and variations of
such words and similar expressions, or future or conditional verbs such as
"will," "would," "should," "could," "may" or similar expressions.
The Corporation cautions that forward-looking statements are subject to numerous
assumptions, risks and uncertainties, which change over time. Actual results
could differ materially from those anticipated in forward-looking statements and
future results could differ materially from historical performance.
Forward-looking statements speak only as of the date they are made and the
Corporation assumes no duty to update forward-looking statements.
In addition to these factors and those mentioned elsewhere in this report, the
following factors, among others, could cause actual results to differ materially
from forward-looking statements or historical performance: decisions the
Corporation makes with respect to the redeployment of available capital; changes
in asset quality and credit risk; economic conditions; changes in financial and
capital markets; the inability to sustain revenue and earnings growth; changes
in interest rates; inflation; changes in values of assets under management and
assets serviced; relative investment performance of assets under management;
customer acceptance of PNC products and services; customer borrowing, repayment,
investment, and deposit practices; customer disintermediation; valuation of debt
and equity investments; the inability to successfully manage risks inherent in
the Corporation's business; the introduction, withdrawal, success and timing of
business initiatives and strategies; the extent and cost of any share
repurchases; decisions the Corporation makes with respect to further reduction
of balance sheet leverage and potential investments in PNC businesses;
competitive conditions; the inability to realize cost savings or revenue
enhancements, implement integration plans and other consequences associated with
mergers, acquisitions, restructurings and divestitures; and the impact, extent
and timing of technological changes, capital management activities, and actions
of the Federal Reserve Board and legislative and regulatory actions and reforms.
Further, an increase in the number of customer or counterparty delinquencies,
bankruptcies, or defaults could result in, among other things, a higher loan
loss provision and reduced profitability.
Some of the above factors are described in more detail in the "Risk Factors"
section of the "Financial Review" included on pages 48 and 49 of the Annual
Report to Shareholders, which is incorporated herein by reference, and factors
relating to credit risk, interest rate risk, liquidity risk, trading activities
and financial derivatives are discussed in the "Risk Management" section of the
"Financial Review" included on pages 49 through 55 of the Annual Report to
Shareholders, which is incorporated herein by reference. Other factors are
described elsewhere in this report.
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ITEM 1 - BUSINESS
BUSINESS OVERVIEW The Corporation is a bank holding company registered under the
Bank Holding Company Act of 1956, as amended ("BHC Act") and a financial holding
company under the Gramm-Leach-Bliley Act. PNC was incorporated under the laws of
the Commonwealth of Pennsylvania in 1983 with the consolidation of Pittsburgh
National Corporation and Provident National Corporation. Since 1983, PNC has
diversified its geographical presence, business mix and product capabilities
through strategic bank and nonbank acquisitions and the formation of various
nonbanking subsidiaries.
The Corporation is one of the largest diversified financial services companies
in the United States, operating community banking, corporate banking, real
estate finance, asset-based lending, wealth management, asset management and
global fund services businesses. The Corporation provides certain products and
services nationally and others in PNC's primary geographic markets in
Pennsylvania, New Jersey, Delaware, Ohio and Kentucky. The Corporation also
provides certain products and services internationally. At December 31, 2000,
the Corporation's consolidated total assets, deposits and shareholders' equity
were $69.8 billion, $47.7 billion and $6.7 billion, respectively. For
information about discontinued operations, see "Note 2 - Discontinued
Operations" of the "Notes to Consolidated Financial Statements" included on page
68 of the Annual Report to Shareholders and incorporated herein by reference.
Financial and other information by segment is included in "Note 22 - Segment
Reporting" of the "Notes to Consolidated Financial Statements" included on pages
80 and 81 of the Annual Report to Shareholders and incorporated herein by
reference.
REVIEW OF BUSINESSES Information relating to the Corporation's businesses, which
reflect its operating structure during 2000, is set forth under the captions
"Overview" and "Review of Businesses" in the "Financial Review" included on
pages 34 through 43 of the Annual Report to Shareholders, which is incorporated
herein by reference.
SUBSIDIARIES The corporate legal structure currently consists of three
subsidiary banks and over 75 active nonbank subsidiaries. PNC Bank, National
Association ("PNC Bank, N.A."), headquartered in Pittsburgh, Pennsylvania, is
the Corporation's principal bank subsidiary. At December 31, 2000, PNC Bank,
N.A. had total consolidated assets representing approximately 90% of the
Corporation's consolidated assets. For additional information on subsidiaries,
see Exhibit 21 to this Form 10-K, which is incorporated herein by reference.
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES The following statistical
information is included on the indicated pages of the Annual Report to
Shareholders and is incorporated herein by reference:
Page of
Annual
Report to
Shareholders
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Average Consolidated Balance Sheet and Net Interest
Analysis 88-89
Analysis of Year-to-Year Changes in Net Interest
Income 87
Book Values of Securities 69
Maturities and Weighted-Average Yield of Securities 70
Loan Types 70
Loan Maturities and Interest Sensitivity 91
Nonaccrual, Past Due and Restructured Loans 49-50 and 71
Potential Problem Loans 50
Summary of Loan Loss Experience 90
Allocation of Allowance for Credit Losses 90
Average Amount and Average Rate Paid on Deposits 88-89
Time Deposits of $100,000 or More 91
Selected Consolidated Financial Data 33
Short-Term Borrowings 91
RISK FACTORS & MANAGEMENT The Corporation is subject to a number of risk factors
including, among others, business and economic conditions, monetary and other
policies, competition, disintermediation, and risk relating to asset management
performance, fund servicing and acquisitions. These factors, and others, could
impact the Corporation's business, financial condition and results of
operations. In the normal course of business, the Corporation assumes various
types of risk, which include, among others, credit risk, interest rate risk,
liquidity risk and risk associated with trading activities and financial
derivatives. PNC has risk management processes designed to provide for risk
identification, measurement and monitoring.
EFFECT OF GOVERNMENTAL, MONETARY AND OTHER POLICIES The activities and results
of operations of bank holding companies and their subsidiaries are affected by
monetary, tax and other policies of the United States government and its
agencies, including the Board of Governors of the Federal Reserve System
("Federal Reserve Board"). An important function of the Federal Reserve Board is
to regulate the national supply of bank credit. The Federal Reserve Board
employs open market operations in U.S. Government securities, changes in the
discount rate on bank borrowings and changes in reserve requirements on bank
deposits to implement its monetary policy objectives. These instruments of
monetary policy are used in varying combinations to influence the overall level
of bank loans, investments and deposits, the interest rates charged on loans and
paid for deposits, the price of the dollar in foreign exchange markets and the
level of inflation. It is not possible to predict the nature or timing of future
changes in monetary, tax and other policies or the effect that they may have on
the Corporation's activities and results of operations.
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IMPACT OF INFLATION The assets and liabilities of the Corporation are primarily
monetary in nature. Accordingly, future changes in prices do not affect the
obligations to pay or receive fixed and determinable amounts of money. During
periods of inflation, monetary assets lose value in terms of purchasing power
and monetary liabilities have corresponding purchasing power gains. The concept
of purchasing power, however, is not an adequate indicator of the effect of
inflation on banks because it does not take into account changes in interest
rates, which are an important determinant of the Corporation's earnings. A
discussion of interest rate risk is set forth under the caption "Interest Rate
Risk" in the "Risk Management" section of the "Financial Review" included on
pages 51 and 52 of the Annual Report to Shareholders, and is incorporated herein
by reference.
SUPERVISION AND REGULATION The Corporation and its subsidiaries are subject to
numerous governmental regulations, some of which are highlighted below and in
"Note 17 - Regulatory Matters" of the "Notes to Consolidated Financial
Statements" included on pages 74 and 75 of the Annual Report to Shareholders
("Note 17 - Regulatory Matters"), which is incorporated herein by reference.
These regulations cover, among other things, permissible activities and
investments and dividend limitations on the Corporation and its subsidiaries,
and consumer-related protections for loan, deposit, brokerage, fiduciary and
mutual fund and other customers.
As a bank holding company and, as discussed below, a "financial holding
company," the Corporation is subject to supervision and regular inspection by
the Federal Reserve Board. The Federal Reserve Board's prior approval is
required whenever the Corporation proposes to acquire all or substantially all
of the assets of any bank, to acquire direct or indirect ownership or control of
more than 5% of the voting shares of any bank, or to merge or consolidate with
any other bank holding company. When reviewing bank acquisition applications for
approval, the Federal Reserve Board considers, among other things, each
subsidiary bank's record in meeting the credit needs of the communities it
serves in accordance with the Community Reinvestment Act of 1977, as amended
("CRA"). At December 31, 2000, two of the Corporation's bank subsidiaries, PNC
Bank, N.A., and PNC Bank, Delaware, were rated "outstanding" with respect to
CRA; its other bank subsidiary was rated "satisfactory."
The Gramm-Leach-Bliley Act ("GLB Act"), which was enacted on November 12, 1999,
and portions of which became effective on March 11, 2000, permits a qualifying
bank holding company to become a financial holding company and thereby to
affiliate with financial companies engaging in a broader range of activities
than had previously been permitted for a bank holding company. Permitted
affiliates include securities underwriters and dealers, insurance companies and
companies engaged in other activities that are declared by the Federal Reserve
Board, in cooperation with the Treasury Department, to be "financial in nature
or incidental thereto" or are declared by the Federal Reserve Board unilaterally
to be "complementary" to financial activities. A bank holding company may elect
to become a financial holding company if each of its subsidiary banks is "well
capitalized," is "well managed," and has at least a "satisfactory" CRA rating.
PNC became a financial holding company as of March 13, 2000.
The Federal Reserve Board is the umbrella supervisor of a financial holding
company. The GLB Act requires the Federal Reserve Board to defer to the actions
and requirements of the "functional" regulators of subsidiary broker-dealers,
investment managers, investment companies, insurance underwriters and brokers,
banks and other regulated institutions. Thus, the various state and federal
regulators of a financial holding company's subsidiaries retain their
jurisdiction and authority over such operating entities. As the umbrella
supervisor, however, the Federal Reserve Board has the potential to affect the
operations and activities of a financial holding company's subsidiaries through
its authority over the financial holding company parent. In addition, the
Federal Reserve Board retains back-up regulatory authority over functionally
regulated subsidiaries, such as broker-dealers and banks, to intervene directly
in the affairs of the subsidiaries for specific reasons.
The Corporation's subsidiary banks and their subsidiaries are subject to
supervision and examination by applicable federal and state banking agencies,
including such federal agencies as the Office of the Comptroller of the Currency
("OCC") with respect to PNC Bank, N.A. and PNC Advisors, N.A., and the Federal
Deposit Insurance Corporation ("FDIC") with respect to PNC Bank, Delaware. One
aspect of this regulation is that the Corporation's subsidiary banks are subject
to various federal and state restrictions on their ability to pay dividends to
PNC Bancorp, Inc., the parent of the subsidiary banks, which in turn may affect
the ability of PNC Bancorp, Inc. to pay dividends to the Corporation. These
dividends constitute the Corporation's principal source of income. Without
regulatory approval, the amount available for dividend payments to PNC Bancorp,
Inc. by all bank subsidiaries was $634 million at December 31, 2000. The
Corporation's subsidiary banks are also subject to federal laws limiting
extensions of credit to their parent holding company and nonbank affiliates as
discussed in "Note 17 - Regulatory Matters."
Under Federal Reserve Board policy, a bank holding company is expected to act as
a source of financial strength to each of its subsidiary banks and to commit
resources to support each such bank. Consistent with the "source of strength"
policy for subsidiary banks, the Federal Reserve Board has stated that, as a
matter of prudent banking, a bank holding company generally should not maintain
a rate of cash dividends unless its net income available to common shareholders
has been sufficient to fully fund the dividends and the prospective rate of
earnings retention appears to be consistent with the corporation's capital
needs, asset quality and overall financial condition.
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Subsidiary banks are also limited by law and regulation in the scope of
permitted activities and investments. Subsidiary banks and their operating
subsidiaries may engage in any activities that are determined by the OCC to be
part of or incidental to the business of banking. The GLB Act, however, permits
a national bank, such as PNC Bank, N.A., to engage in expanded activities
through the formation of a "financial subsidiary." PNC Bank, N.A. has filed a
financial subsidiary certification with the OCC and may thus engage through a
financial subsidiary in any activity that is financial in nature or incidental
to a financial activity, except for insurance underwriting, insurance
investments, real estate investment or development, or merchant banking. In
order to qualify to establish or acquire a financial subsidiary, PNC Bank, N.A.
and each of its depository institution affiliates must be "well capitalized" and
"well managed," and may not have a less than "satisfactory" CRA rating. In
addition, the total assets of all financial subsidiaries of a national bank may
not exceed the lesser of $50 billion or 45% of the parent bank's total assets. A
national bank that is one of the largest 50 insured banks in the United States,
such as PNC Bank, N.A., must also have issued debt with a certain rating. In
addition to calculating its risk-based capital on a GAAP basis, a national bank
with one or more financial subsidiaries must also be well capitalized after
excluding from its assets and equity all equity investments, including retained
earnings, in a financial subsidiary, and the assets of the financial subsidiary
from the bank's consolidated assets. Any published financial statement for a
national bank with a financial subsidiary must provide risk-based capital
information both in accordance with GAAP and as described above. The bank must
also have policies and procedures to assess financial subsidiary risk and
protect the bank from such risks and potential liabilities.
A financial holding company or national bank engaging in activities permitted
under the GLB Act can be subject to various corrective actions by the Federal
Reserve Board or OCC, respectively, if the "well capitalized" or "well managed"
requirements noted above are not met. These corrective actions could include
requiring divestiture of the activities conducted in reliance on the GLB Act. In
addition, if the CRA rating requirements discussed above are not met, the
financial holding company or national bank would not be permitted to engage in
new activities, or to make new investments, in reliance on the GLB Act.
The federal banking agencies possess broad powers to take corrective action as
deemed appropriate for an insured depository institution and its holding
company. The extent of these powers depends upon whether the institution in
question is considered "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Generally, as an institution is deemed to be less well
capitalized, the scope and severity of the agencies' powers increase, ultimately
permitting the agency to appoint a receiver for the institution. Business
activities may also be influenced by an institution's capital classification.
For instance, only a "well capitalized" depository institution may accept
brokered deposits without prior regulatory approval and an "adequately
capitalized" depository institution may accept brokered deposits only with prior
regulatory approval. At December 31, 2000, all of the Corporation's subsidiary
banks exceeded the required ratios for classification as "well capitalized."
Additional discussion of capital adequacy requirements is set forth under the
caption "Capital" in the "Financial Review" on page 47 of the Annual Report to
Shareholders, which is incorporated herein by reference.
All of the Corporation's subsidiary banks are insured by the FDIC and subject to
premium assessments. The FDIC assessment is based upon the institution's
relative risk as measured by regulatory capital ratios and certain other
factors. Under current regulations, the Corporation's subsidiary banks are not
assessed a premium on deposits insured by either the Bank Insurance Fund or the
Savings Association Insurance Fund. However, insured depository institutions
continue to pay premiums based upon deposit levels to service debt issued by a
governmental entity.
The Corporation's subsidiary banks are subject to "cross-guarantee" provisions
under federal law that provide that if one of these banks fails or requires FDIC
assistance, the FDIC may assess a "commonly-controlled" bank for the estimated
losses suffered by the FDIC. Such liability could have a material adverse effect
on the financial condition of any assessed bank and the Corporation. While the
FDIC's claim is junior to the claims of depositors, holders of secured
liabilities, general creditors and subordinated creditors, it is superior to the
claims of shareholders and affiliates, such as the Corporation.
The Corporation's subsidiaries are subject to regulatory restrictions imposed by
the Federal Reserve Board and other federal and state agencies. The
Corporation's registered broker-dealer subsidiaries are regulated by the
Securities and Exchange Commission ("SEC") and either by the OCC or the Federal
Reserve Board. They are also subject to rules and regulations promulgated by the
National Association of Securities Dealers, Inc., among others. Two subsidiaries
are registered as commodity pool operators with the Commodity Futures Trading
Commission and the National Futures Association, and are subject to regulation
by them. Several subsidiaries that are registered investment advisers are
subject to regulation by the SEC and other agencies. Several subsidiaries also
provide investment advisory and other services to registered investment
companies and thus are subject to certain obligations under the Investment
Company Act of 1940, as amended.
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The rules governing the regulation of financial services institutions and their
holding companies are very detailed and technical. Accordingly, the above
discussion is general in nature and does not purport to be complete or to
describe all of the laws and regulations that apply to the Corporation and its
subsidiaries.
COMPETITION The Corporation and its subsidiaries are subject to intense
competition from various financial institutions and from "nonbank" entities that
engage in similar activities without being subject to bank regulatory
supervision and restrictions. This is particularly true as the Corporation
expands nationally beyond its primary geographic region, where expansion
requires significant investments to penetrate new markets and respond to
competition, and as the Corporation and other entities expand their activities
pursuant to the GLB Act, as discussed above.
In making loans, the subsidiary banks compete with traditional banking
institutions as well as consumer finance companies, leasing companies and other
nonbank lenders. Loan pricing and credit standards are under competitive
pressure as lenders seek to deploy capital and a broader range of borrowers have
access to capital markets. Traditional deposit activities are subject to pricing
pressures and customer migration as a result of intense competition for consumer
investment dollars. The Corporation's subsidiary banks compete for deposits with
not only other commercial banks, savings banks, savings and loan associations
and credit unions, but also insurance companies and issuers of commercial paper
and other securities, including mutual funds. Various nonbank subsidiaries
engaged in investment banking, private equity and venture capital activities
compete with commercial banks, investment banking firms, merchant banks,
insurance companies, venture capital firms and other investment vehicles. In
providing asset management services, the Corporation's subsidiaries compete with
many large banks and other financial institutions, brokerage firms, mutual fund
complexes, investment management firms, and insurance companies.
The ability to access and use technology is an increasingly important
competitive factor in the financial services industry. Technology is not only
important with respect to delivery of financial services, but in processing
information. Each of the Corporation's businesses consistently must make
technological investments to remain competitive.
EMPLOYEES Average full-time equivalent employees totaled approximately 24,900 in
2000, and were approximately 25,300 in December 2000.
ITEM 2 - PROPERTIES
The executive and administrative offices of the Corporation and PNC Bank, N.A.
are located at One PNC Plaza, Pittsburgh, Pennsylvania. The thirty-story
structure is owned by PNC Bank, N.A. The Corporation and PNC Bank, N.A. occupy
the entire building. In addition, PNC Bank, N.A. owns a thirty-four story
structure adjacent to One PNC Plaza, known as Two PNC Plaza, that houses
additional office space.
The Corporation and its subsidiaries own or lease numerous other premises for
use in conducting business activities. The facilities owned or occupied under
lease by the Corporation's subsidiaries are considered by management to be
adequate.
Additional information pertaining to the Corporation's properties is set forth
in "Note 10 - Premises, Equipment and Leasehold Improvements" of the "Notes to
Consolidated Financial Statements" included on page 72 of the Annual Report to
Shareholders, which is incorporated herein by reference.
ITEM 3 - LEGAL PROCEEDINGS
The information set forth in "Note 25 - Litigation" of the "Notes to
Consolidated Financial Statements" included on page 83 of the Annual Report to
Shareholders is incorporated herein by reference.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter of 2000.
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EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning each executive
officer of the Corporation as of March 9, 2001 is set forth below. Each
executive officer held the position indicated or another executive position
with the same entity or one of its affiliates for the past five years.
Year
Name Age Position with Corporation Employed(1)
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James E. Rohr 52 President, Chief 1972
Executive Officer and
Director
Walter E. Gregg, Jr. 59 Vice Chairman and Director 1974
Joseph C. Guyaux 50 Executive Vice President 1972
and Group Executive,
Regional Community
Banking
Robert L. Haunschild 51 Senior Vice President and 1990
Chief Financial Officer
Ralph S. Michael III 46 Executive Vice President 1979
and Group Executive,
PNC Advisors and PNC
Capital Markets
Thomas E. Paisley III 53 Senior Vice President and 1972
Chairman, Corporate
Credit Policy Committee
Samuel R. Patterson 42 Controller 1986
Helen P. Pudlin 51 Senior Vice President and 1989
General Counsel
Thomas K. Whitford 45 Executive Vice President 1983
and Group Executive,
Strategic Planning
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(1) Where applicable, refers to year first employed by predecessor company.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Corporation's common stock is listed on the New York Stock Exchange and is
traded under the symbol "PNC." At the close of business on February 28, 2001,
there were 56,976 common shareholders of record.
Holders of common stock are entitled to receive dividends when declared by the
Board of Directors out of funds legally available therefor. The Board of
Directors may not pay or set apart dividends on the common stock until dividends
for all past dividend periods on any series of outstanding preferred stock have
been paid or declared and set apart for payment. The Board presently intends to
continue the policy of paying quarterly cash dividends. However, the amount of
any future dividends will depend on earnings, the financial condition of the
Corporation and other factors, including contractual restrictions and applicable
government regulations and policies (such as those relating to the ability of
bank and nonbank subsidiaries to upstream dividends to the parent company). The
Federal Reserve Board has the power to prohibit the Corporation from paying
dividends without its approval. Further discussion concerning dividend
restrictions and restrictions on loans or advances from bank subsidiaries to the
parent company is set forth under the caption "Supervision and Regulation" in
Part I, Item 1 of this Form 10-K, under the caption "Liquidity Risk" in the
"Risk Management" section of the "Financial Review" on page 52 and in "Note 17 -
Regulatory Matters" of the Annual Report to Shareholders, which sections are
incorporated herein by reference.
Additional information relating to the common stock is set forth under the
caption "Common Stock Prices/Dividends Declared" on the inside back cover of the
Annual Report to Shareholders, which is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information set forth under the caption "Selected Consolidated Financial
Data" in the "Financial Review" on page 33 and the caption "Average Consolidated
Balance Sheet and Net Interest Analysis" in the "Statistical Information" on
pages 88 and 89 of the Annual Report to Shareholders is incorporated herein by
reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The discussion of the Corporation's financial condition and results of
operations set forth under the section "Financial Review" on pages 33 through 58
of the Annual Report to Shareholders is incorporated herein by reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the caption "Risk Management" in the "Financial
Review" and in "Note 2 - Discontinued Operations" on pages 49 through 55 and 68,
respectively, of the Annual Report to Shareholders is incorporated herein by
reference.
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ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The "Report of Ernst & Young LLP, Independent Auditors," "Consolidated Financial
Statements," "Notes to Consolidated Financial Statements" and "Selected
Quarterly Financial Data" on pages 59, 60 through 63, 64 through 85, and 86,
respectively, of the Annual Report to Shareholders are incorporated herein by
reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no reportable events.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors and nominees required by this item is set forth
under the caption "Election of Directors - Information Concerning Nominees" in
the Proxy Statement to be filed for the annual meeting of shareholders to be
held on April 24, 2001 and is incorporated herein by reference.
Information regarding compliance with Section 16(a) of the Securities Exchange
Act of 1934 set forth under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Proxy Statement to be filed for the annual meeting
of shareholders to be held on April 24, 2001 and is incorporated herein by
reference.
Information regarding executive officers of the Corporation is included in Part
I of this Form 10-K under the caption "Executive Officers of the Registrant."
ITEM 11 - EXECUTIVE COMPENSATION
The information required by this item is set forth under the captions "Election
of Directors - Compensation of Directors" and "Compensation of Executive
Officers," excluding the "Personnel and Compensation Committee Report," in the
Proxy Statement to be filed for the annual meeting of shareholders to be held on
April 24, 2001 and is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth under the caption "Security
Ownership of Directors, Nominees and Executive Officers" in the Proxy Statement
to be filed for the annual meeting of shareholders to be held on April 24, 2001
and is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth under the caption
"Transactions Involving Directors, Nominees and Executive Officers" in the Proxy
Statement to be filed for the annual meeting of shareholders to be held on April
24, 2001 and is incorporated herein by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
FINANCIAL STATEMENTS The following report of independent auditors and
consolidated financial information of the Corporation included in the Annual
Report to Shareholders are incorporated herein by reference.
Page of
Annual
Report to
Financial Statements Shareholders
----------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors 59
Consolidated Statement of Income for the three
years ended December 31, 2000 60
Consolidated Balance Sheet as of December 31, 2000
and 1999 61
Consolidated Statement of Shareholders' Equity
for the three years ended December 31, 2000 62
Consolidated Statement of Cash Flows for the
three years ended December 31, 2000 63
Notes to Consolidated Financial Statements 64-85
Selected Quarterly Financial Data 86
----------------------------------------------------------------
No financial statement schedules are being filed.
REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended
December 31, 2000.
EXHIBITS The exhibits listed on the Exhibit Index on pages E-1 and E-2 of this
Form 10-K are filed herewith or are incorporated herein by reference.
8
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE PNC FINANCIAL SERVICES GROUP, INC.
(Registrant)
By: /s/ Robert L. Haunschild
----------------------------------------------------
Robert L. Haunschild, Senior Vice President
and Chief Financial Officer
March 12, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of The PNC Financial
Services Group, Inc. and in the capacities indicated on March 12, 2001.
Signature Capacities
---------------------------------------------------- ----------------------------------------------------
/s/ James E. Rohr President, Chief Executive Officer and Director
---------------------------------------------------- (Principal Executive Officer)
James E. Rohr
/s/ Robert L. Haunschild Senior Vice President and Chief Financial
---------------------------------------------------- Officer (Principal Financial Officer)
Robert L. Haunschild
/s/ Samuel R. Patterson Controller
---------------------------------------------------- (Principal Accounting Officer)
Samuel R. Patterson
* Paul W. Chellgren; Robert N. Clay; George A. Directors
Davidson, Jr.; David F. Girard-diCarlo; Walter E.
Gregg, Jr.; William R. Johnson; Bruce C. Lindsay;
W. Craig McClelland; Thomas H. O'Brien; Jane G.
Pepper; Jackson H. Randolph; Roderic H. Ross;
Lorene K. Steffes; Thomas J. Usher; Milton A.
Washington; and Helge H. Wehmeier
*By: /s/ Thomas R. Moore
------------------------------------------
Thomas R. Moore, Attorney-in-Fact,
pursuant to Powers of Attorney filed
herewith
9
10
EXHIBIT INDEX
Exhibit
No. Description Method of Filing +
------------ -------------------------------------------------------------------- ------------------------------------------------
3.1 Articles of Incorporation of the Corporation, as amended and Incorporated herein by reference to Exhibit 3.1
restated as of May 15, 2000. of the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000.
3.2 By-Laws of the Corporation, as amended. Incorporated herein by reference to Exhibit 3.2
of the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000.
4.1 There are no instruments with respect to long-term debt of the
Corporation and its subsidiaries that involve securities
authorized under the instrument in an amount exceeding 10
percent of the total assets of the Corporation and its
subsidiaries on a consolidated basis. The Corporation agrees to
provide the SEC with a copy of instruments defining the rights
of holders of long-term debt of the Corporation and its
subsidiaries on request.
4.2 Terms of $1.80 Cumulative Convertible Preferred Stock, Series A. Incorporated herein by reference to Exhibit 3.1
of the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000.
4.3 Terms of $1.80 Cumulative Convertible Preferred Stock, Series B. Incorporated herein by reference to Exhibit 3.1
of the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000.
4.4 Terms of $1.60 Cumulative Convertible Preferred Stock, Series C. Incorporated herein by reference to Exhibit 3.1
of the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000.
4.5 Terms of $1.80 Cumulative Convertible Preferred Stock, Series D. Incorporated herein by reference to Exhibit 3.1
of the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000.
4.6 Terms of Fixed/Adjustable Rate Noncumulative Preferred Stock, Incorporated herein by reference to Exhibit 3.1
Series F. of the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000.
4.7 Terms of Series G Junior Participating Preferred Stock. Incorporated herein by reference to Exhibit 3.1
of the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000.
4.8 Rights Agreement between the Corporation and Chase Manhattan Incorporated herein by reference to Exhibit 1
Bank dated May 15, 2000 to the Corporation's Report on Form 8-A filed
May 23, 2000.
10.1 The Corporation's Supplemental Executive Retirement Plan, as Incorporated herein by reference to Exhibit 10.1
amended as of January 1, 1999. of the Corporation's Annual Report on Form
10-K for the year ended December 31, 1999
("1999 Form 10-K"). *
10.2 The Corporation's ERISA Excess Pension Plan, as amended as of Incorporated herein by reference to Exhibit 10.2
January 1, 1999. of the Corporation's 1999 Form 10-K. *
10.3 The Corporation's Key Executive Equity Program, as amended as of Incorporated herein by reference to Exhibit 10.3
January 1, 1999. of the Corporation's 1999 Form 10-K. *
10.4 The Corporation's Supplemental Incentive Savings Plan, as amended Incorporated herein by reference to Exhibit 10.4
as of January 1, 1999. of the Corporation's 1999 Form 10-K. *
E-1
11
10.5 The Corporation's 1997 Long-Term Incentive Award Plan, as amended. Incorporated herein by reference to Exhibit 10.5
of the Corporation's Quarterly Report on Form
10-Q for the quarter ended March 31, 2000. *
10.6 The Corporation's 1996 Executive Incentive Award Plan. Incorporated herein by reference to Exhibit 10.2
of the Corporation's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996. *
10.7 PNC Bank Corp. and Affiliates Deferred Compensation Plan, as Incorporated herein by reference to Exhibit 10.11
amended as of January 1, 1999. of the Corporation's 1999 Form 10-K. *
10.8 Form of Change in Control Severance Agreement. Incorporated herein by reference to Exhibit 10.17
of the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1996
("1996 Form 10-K"). *
10.9 Forms of Amendment to Change in Control Severance Agreements. Filed herewith. *
10.10 1992 Director Share Incentive Plan. Incorporated herein by reference to Exhibit
10.13 of the Corporation's 1999 Form 10-K. *
10.11 The Corporation's Directors Deferred Compensation Plan. Incorporated by reference to Exhibit 10.1 of
the Corporation's Quarterly Report on Form 10-Q
for the Quarter ended September 30, 1996. *
10.12 The Corporation's Outside Directors Deferred Stock Unit Plan Incorporated herein by reference to Exhibit 10.15
of the Corporation's 1999 Form 10-K. *
10.13 Amended and Restated Trust Agreement between the Corporation, as Incorporated herein by reference to Exhibit 10.18
Settlor, and Hershey Trust Company, as successor Trustee to of the Corporation's 1996 Form 10-K. *
NationsBank, N.A., Trustee.
10.14 Consulting arrangement between the Corporation and Thomas H. Incorporated herein by reference to Exhibit 10.17
O'Brien of the Corporation's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000.
12.1 Computation of Ratio of Earnings to Fixed Charges. Filed herewith.
12.2 Computation of Ratio of Earnings to Fixed Charges and Preferred Filed herewith.
Dividends.
13 Excerpts from the Corporation's Annual Report to Shareholders for Filed herewith.
the year ended December 31, 2000. Such Annual Report, except
for the portions thereof that are expressly incorporated by
reference herein, is furnished for information of the SEC only
and is not deemed to be "filed" as part of this Form 10-K.
21 Schedule of Certain Subsidiaries of the Corporation. Filed herewith.
23 Consent of Ernst & Young LLP, independent auditors for the Filed herewith.
Corporation.
24 Powers of Attorney. Filed herewith.
----------------------------------------------------------------------
+ Incorporated document references to filings by the Corporation are to SEC File
No. 1-9718.
* Denotes management contract or compensatory plan.
E-2