PNC Bank 2007 Annual Report Download - page 33

F UNDING AND C APITAL S OURCES
Details Of Funding Sources
December 31 - in millions 2007 2006
Deposits
Money market $32,785 $28,580
Demand 20,861 16,833
Retail certificates of deposit 16,939 14,725
Savings 2,648 1,864
Other time 2,088 1,326
Time deposits in foreign offices 7,375 2,973
Total deposits 82,696 66,301
Borrowed funds
Federal funds purchased 7,037 2,711
Repurchase agreements 2,737 2,051
Federal Home Loan Bank borrowing 7,065 42
Bank notes and senior debt 6,821 3,633
Subordinated debt 4,506 3,962
Other 2,765 2,629
Total borrowed funds 30,931 15,028
Total $113,627 $81,329
Total funding sources increased $32.3 billion at December 31,
2007 compared with the balance at December 31, 2006, as
total deposits increased $16.4 billion and total borrowed funds
increased $15.9 billion. Our acquisition of Mercantile added
$12.5 billion of deposits and $2.1 billion of borrowed funds.
The Yardville acquisition resulted in $2.0 billion of deposits.
During the first quarter of 2007 we issued borrowings to fund
the $2.1 billion cash portion of the Mercantile acquisition. The
remaining increase in borrowed funds was the result of growth
in loans and securities and the need to fund other net changes
in our balance sheet. During the second half of 2007 we
substantially increased Federal Home Loan Bank borrowings,
which provided us with additional liquidity at relatively
attractive rates. The Liquidity Risk Management section of
this Item 7 contains further details regarding actions we have
taken which impacted our borrowed funds balances during
2007 and early 2008.
Capital
We manage our capital position by making adjustments to our
balance sheet size and composition, issuing debt, equity or
hybrid instruments, executing treasury stock transactions,
managing dividend policies and retaining earnings.
Total shareholders’ equity increased $4.1 billion, to $14.9
billion, at December 31, 2007 compared with December 31,
2006. In addition to the net impact of earnings and dividends
in 2007, this increase reflected a $2.5 billion reduction in
treasury stock and a $1.0 billion increase in capital surplus,
largely due to the issuance of PNC common shares for the
Mercantile and Yardville acquisitions.
Common shares outstanding were 341 million at
December 31, 2007 and 293 million at December 31, 2006.
The increase in shares during 2007 reflected the issuance of
approximately 53 million shares in connection with the
Mercantile acquisition and approximately 3 million shares in
connection with the Yardville acquisition.
In October 2007, our Board of Directors terminated the prior
program and approved a new stock repurchase program to
purchase up to 25 million shares of PNC common stock on the
open market or in privately negotiated transactions. This new
program will remain in effect until fully utilized or until
modified, superseded or terminated. During 2007, we
purchased 11 million common shares under our new and prior
common stock repurchase programs at a total cost of
approximately $800 million.
The extent and timing of additional share repurchases under
the new program will depend on a number of factors
including, among others, market and general economic
conditions, economic and regulatory capital considerations,
alternative uses of capital, regulatory limitations resulting
from merger activity, and the potential impact on our credit
rating. We do not expect to actively engage in share
repurchase activity for the foreseeable future.
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