PNC CEO: Banks

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That blunt two-word message was a centralk theme in PNC Financial Services Group CEOJames Rohr’s keynotes speech to the Risk Management Associatiomn conference at the Baltimore Marriott Waterfrontt on Oct. 20. The group’s managers juggl risks for the nation’s banks and othere financial services companies. To say the least, they’ve been busy latelhy — slogging through loan losses, tryingb to figure out how to unload assetsw nobody wants tobuy and, most recently, untanglingb the details of the federal government’s bank rescue plan. “We have to admit, we as an industr have really screwedthings up,” Rohr said.
He preachede the importance of knowing your own company andbalancs sheet, a practice he said had falleb by the wayside as many banks sold off their loans to investors as soon as they made them. In introducing RMA officials said they had chosenh him to speak becauseof PNC’se longstanding focus on carefully managing risks. The Pittsburgh-based bank got criticizecd during the boom years for not cranking out more Rohr said. PNC’s third-quarter earnings fell by 39 perceng from ayear earlier, but the companyh stayed in the black. Just over 1 percengt of the bank’s loans were classified as inthe quarter. The bank bought Mercantile Banksharesz Corp.
, Baltimore’s largest independent bank, last year. The government movezs to shore upbanks — which includee buying stock in banks and guaranteeingt the loans they make to each other — shouled help boost confidence, Rohr said. Without them, he said, the industry might have face d people lining up at banks to withdratheir money. But there are plenty of questiona left, Rohr said: “The Fed wants us all to increase Butif we’re having an economic downturn, who are we going to lend to? We can’tf force that issue.
” In an interview after his speech, Rohr said the bank is stilol working through the Fed’ds stock-purchase program before deciding whether to participate. PNC’as strong capital base and the expectation that more bankss will merge led one attendee to ask Rohr if PNC will be an Banks can probably be acquired cheaplyright now, Rohr said, but “you don’t want to catch a falling knife.” Any deals now will require taking a fine-tooth comb to an acquiree’w balance sheet, Rohr said.