PhillyDeals: PNC buying 424 Royal Bank of Canada branches

PNC Financial Services Group

, the biggest bank in Pennsylvania, plans to cement its position as the fifth-largest U.S. bank by purchasing

Royal Bank of Canada's

424 RBC bank branches from Virginia to Alabama.

PNC picks up RBC's $25 billion in loans and investments for a relatively modest premium of $3.45 billion, over the next two years.

PNC plans to cut $230 million in yearly operating expenses, laying off thousands.

"The branches are primarily located in semi-rural and suburban locations, which fits well with PNC's current strategy of being a big player in small towns," FBR Capital Markets analyst Paul Miller Jr., a former Federal Reserve Bank of Philadelphia examiner, told clients in a report.

RBC is unprofitable, but PNC should be able to

fire enough people to change that, he added.

PNC boss James Rohr told investors he looked forward to expanding in the faster-growing South. But with U.S. interest rates near record lows and the recovery in low gear, "revenues won't grow so much," warned veteran Wall Street bank-watcher Mike Mayo of Calyon Securities (USA) in a conference call discussing the merger. PNC shares fell in Monday trading, closing at $56.66, down nearly 2 percent.

Under Rohr, Pittsburgh-based PNC has become one of the most successful U.S. banks, since making peace with regulators after an accounting scandal in the early 2000s at the beginning of his term.

Rohr deals have given PNC control of the former National City Bank in the Midwest and Riggs National Bank in Washington, D.C., both troubled institutions he was able to buy at discount prices. Meanwhile, Rohr has sold long-term investments in the BlackRock management group and in PNC's Bellevue, Del.-based fund-service group, for fat profits.

PNC also avoided the mortgage and derivatives losses that destroyed rival Wachovia Corp., among other big banks.

Slow sales cost Robert Ambrosi control of the tony Ten Rittenhouse Square condo tower. It was taken over by his investors and creditors, led by Tom Leonard's union-backed Delaware Valley Real Estate Investment Fund and iStar Financial, earlier this year.

But the developer is still leaving marks on the high-rise, including his choice of restaurant: Serafina, the Philadelphia outpost of New York food men Vittorio Assaf and Fabio Granato, is due to open in a "pasta-cutting" ceremony Tuesday night.

"I used to eat there all the time in New York," says Ambrosi, of Serafina restaurants on East 61st St. and 53d & Broadway, two of the group's several locations. "You see celebrities there. Lady Gaga. Ivana Trump. Derek Jeter." How are the owners? "Very Italian. Nice accents," Ambrosi said. Menu? "No heavy sauces. If it's fish, it's simply grilled with olive oil and lemon," he said. "Just clean, healthy food."

Ambrosi says he convinced Assaf and Granato to pick Philly over Las Vegas after he walked them around Rittenhouse Square for an hour as they came to terms.

What's left for Ambrosi? His proposed project at Fifth and Race, with an Aloft hotel, 44 apartments, and a country-and- western-theme restaurant: "We got the rest of our city approvals last week," Ambrosi said.

If that gets built, he'll need tourists and tenants, not condo-buyers, to get paid.

ProtonMedia, the Lansdale "business-focused collaboration" software firm that claims AstraZeneca, Boeing, Chevron, Johnson & Johnson, Lockheed Martin and Merck as clients, says it has raised $4.5 million from a group of investors led by Washington Post Co.'s Kaplan EduNeering unit, which sells government-regulatory compliance software.

The firms hope to target big companies that are shutting offices to save costs, and can use business software in "creating a virtual work environment," said ProtonMedia chief executive Ron Burns.

Kaplan and ProtonMedia will jointly market their services to drugmakers, Kaplan Ventures boss Jason Palmer said in a statement.

Other investors include Originate Ventures, of Bethlehem, and Osage Venture Partners, of Bala Cynwyd, which also backed ProtonMedia in an earlier $2.5 million investment.