PNC Bank 2005 Annual Report Download - page 49

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August 2005. These issuances mature in January
2007 and February 2007, respectively. Interest will
be reset monthly to 1-month LIBOR minus 3 basis
points and will be paid monthly on each issuance.
• $500 million of subordinated bank notes were
issued in September 2005 and mature in September
2017. These notes pay interest semiannually at a
fixed annual rate of 4.875%.
None of the 2005 issuances outlined above are redeemable
or subject to repayment at the option of the holder prior to
maturity.
In December 2004, PNC Bank, N.A. established a program
to offer up to $3.0 billion of its commercial paper. As of
December 31, 2005, $10 million of commercial paper was
outstanding under this program.
Our parent company’ s routine funding needs consist
primarily of dividends to PNC shareholders, share
repurchases, debt service, the funding of non-bank affiliates,
and acquisitions. Parent company liquidity guidelines are
designed to help ensure that sufficient liquidity is available
to meet these requirements over the succeeding 12-month
period. In managing parent company liquidity we consider
funding sources, such as expected dividends to be received
from PNC Bank, N.A. and potential debt issuance, and
discretionary funding uses, the most significant of which is
the external dividend to be paid on PNC’ s stock.
The principal source of parent company cash flow is the
dividends it receives from PNC Bank, N.A., which may be
impacted by the following:
• Capital needs,
• Laws and regulations,
• Corporate policies,
• Contractual restrictions, and
• Other factors.
Also, there are statutory and regulatory limitations on the
ability of national banks to pay dividends or make other
capital distributions or to extend credit to the parent
company or its non-bank subsidiaries. We provide
additional information on these limitations in Note 4
Regulatory Matters in the Notes To Consolidated Financial
Statements in Item 8 of this Report and include such
information here by reference. Dividends may also be
impacted by the bank’ s capital needs and by contractual
restrictions. The amount available for dividend payments to
the parent company by PNC Bank, N.A. without prior
regulatory approval was approximately $567 million at
December 31, 2005.
In addition to dividends from PNC Bank, N.A., other
sources of parent company liquidity include cash and short-
term investments, as well as dividends and loan repayments
from other subsidiaries. As of December 31, 2005, the
parent company had approximately $1.4 billion in funds
available from its cash and short-term investments.
We can also generate liquidity for the parent company and
PNC’ s non-bank subsidiaries through the issuance of
securities in public or private markets. BlackRock, one of
our majority-owned non-bank subsidiaries, also has access
to public and private financing.
• In March 2005, PNC issued two series of senior
debt under PNC’ s effective shelf registration
statements. The first series consisted of $350
million of 4.2% Senior Notes due 2008 and the
second series consisted of $350 million of 4.5%
Senior Notes due 2010. The Senior Notes due 2008
were issued at a price of 99.953%, resulting in
proceeds to PNC of approximately $350 million.
The Senior Notes due 2010 were issued at a price
of 99.774%, resulting in proceeds to PNC of
approximately $349 million.
• PNC issued $400 million of senior notes in
December 2005 that mature in December 2010.
These notes pay interest semiannually at a fixed
rate of 5.125%.
None of the 2005 issuances outlined above are redeemable
or subject to repayment at the option of the holder prior to
maturity.
At December 31, 2005, we had unused capacity under
effective shelf registration statements of approximately $1.6
billion of debt or equity securities.
During the fourth quarter of 2005, no parent company senior
debt matured. As of December 31, 2005, there were $1.1
billion of parent company contractual obligations with
maturities of less than one year.
See Note 13 Borrowed Funds in the Notes To Consolidated
Financial Statements in Item 8 of this Report for additional
information.