CARY, N.C. — Nobody knows better what's under the hood of clunker RBC Bank than President Reggie Davis, and he says its new owner, PNC, has the right repairs in mind.

The changes will not be draconian, he said, but PNC's plans would measurably alter how the $25 billion-asset acquisition does business in its Southeastern territory.

Davis, who has been the president of the Raleigh bank for roughly two years, said in an interview that PNC will immediately upgrade technology, accelerating a much-needed retooling that would have taken RBC at least five years to do on its own. PNC is also expected to bring treasury management and other fee-generating products to lure prospects before offering them loans.

"It won't take that long at all" for PNC to realize returns from the $3.45 billion deal, Davis said after prepared remarks at the 2011 North Carolina CEO Forum at Prestonwood Country Club. PNC "looked at our strategy and saw that it was consistent with what they're doing in other markets."

PNC Financial Services Group Inc., of Pittsburgh, in June agreed to buy Royal Bank of Canada's struggling U.S. retail bank, ending a decade-long effort by the Toronto banking company to build a franchise here. In recent years, RBC Bank had lost millions of dollars as it slowly worked through problem loans that included sizable exposures in Georgia (primarily Atlanta) and Florida.

RBC Bank also has branches in Alabama, North Carolina, South Carolina and Virginia. Besides RBC's 424 branches, PNC has announced two other notable acquisitions in the Southeast this year. It said in July it would pay $42 million, or book value, for Flagstar Bancorp Inc.'s 27 branches in metropolitan Atlanta. The deal includes $240 million of deposits and is expected to close in the fourth quarter. PNC also paid a 10% deposit premium to buy 19 branches and $350 million of deposits on Florida's west coast from BankAtlantic Bancorp Inc. That deal was completed in June.

Under the agreement between PNC and RBC, the final price depends on the size of RBC Bank's loan losses over three quarters: the higher they are, the less PNC will pay. PNC's final form of payment — a mix of cash and securities — hinges on capital buffers for globally risky banks that are still to be determined. PNC has an option to issue up to $1 billion of common stock to RBC to finance the transaction.

Davis said RBC Bank has largely addressed issues in its "legacy portfolio," adding that it has "dramatically" reduced exposures and that fewer new problems are popping up in its loan portfolio. Though investors may have been frustrated by prolonged quarterly losses, Davis said the bank's main strategy had been capital preservation, which translated into a lengthier process of shedding bad assets. "We never did a fire sale," he said.

PNC executives have said that they expect to generate enough capital to pay for the deal solely with cash, debt and an issuance of preferred shares. A common stock issue would delay how soon the deal translates to higher earnings. It could immediately add to PNC's earnings if the company can avoid issuing common stock.

PNC's capital levels should be higher by the time the deal is scheduled to close in March than they were at the time it was announced, James Rohr, PNC's chairman and chief executive said in July. "We're comfortable that we don't think that we have to issue any common," Rohr said. "It appears as if our capital ratios will be just fine."

Davis, who has met with PNC counterparts, expressed confidence Wednesday that the two cultures will jibe. "It's the same strategy of pairing big banking capability with a local feel … [but] PNC will bring world-class products. I think they'll do really well."

PNC and RBC have not announced whether Davis or fellow executives will remain with the combined company or what their positions might be.

Some investors are already looking beyond the deal, worried that PNC will try to tackle an even bigger bank acquisition to further strengthen its growing profile in the Southeast.

Based on meetings with top PNC management, including Rohr, Stifel Nicolaus analyst Christopher Mutascio said the bank has no interest in acquiring a large regional bank such as Regions Financial Corp. or SunTrust Banks Inc. "Rohr was clear to state that he has no interest in Regions … or SunTrust and that a large regional bank acquisition is not on the radar screen," he wrote.