PNC Bank 2002 Annual Report Download - page 86

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84
billion at December 31, 2002 and December 31, 2001,
respectively, that were designated for exit and will mature over
a period of approximately four years. Costs incurred in 2001
to exit this business, including the impairment of goodwill
associated with a prior acquisition and employee severance
costs and additions to reserves related to insured residual value
exposures, totaled $135 million and were charged to
noninterest expense in 2001.
The Corporation also recorded charges of $65 million in
the fourth quarter of 2001 for certain integration, severance
and other costs related to other strategic initiatives. During
2002, the Corporation recognized a $19 million reduction of
these charges that related to a PFPC facilities consolidation
strategy that has been modified, as certain originally
contemplated relocations will not occur.
NOTE 6 SALE OF SUBSIDIARY STOCK
PNC recognizes as income the gain from the sale of stock by
its subsidiaries. The gain is the difference between PNC’s basis
in the stock and the proceeds per share received. PNC
provides applicable taxes on the gain. Gains from the sale of
stock by PNC’s subsidiaries are recorded in other noninterest
income in the Consolidated Statement Of Income and were
not material for 2002, 2001 or 2000.
NOTE 7 CASH FLOWS
For the consolidated statement of cash flows, cash and cash
equivalents are defined as cash and due from banks.
The following table sets forth information pertaining to
acquisitions and divestitures that affected cash flows:
Cash Flows
Y
ear ended December 31 - in millions 2002 2001 2000
Assets (acquired) divested $(1,736) $7,252 $(4)
Liabilities (acquired) divested (60) 6,852 (4)
Cash paid 1,676 18 31
Cash and due from banks received 503 1
NOTE 8 TRADING ACTIVITIES
Most of PNC’s trading activities are designed to provide
capital markets services to customers and not to position the
Corporation’s portfolio for gains from market movements.
PNC participates in derivatives and foreign exchange trading
as well as underwriting and “market making” in equity
securities as an accommodation to customers. PNC also
engages in trading activities as part of risk management
strategies.
Net trading income in 2002, 2001 and 2000 included in
noninterest income was as follows:
Details Of Trading Activities
Year ended December 31 - in millions 2002 2001 2000
Corporate services $1 $5 $7
Other noninterest income
Securities underwriting and
trading 55 55 42
Derivatives trading 11 61 20
Foreign exchange 25 26 22
Net tradin
g
income $92 $147 $91