PNC Bank 2008 Annual Report Download - page 103

Condensed Statement of National City Net Assets
Acquired
The following condensed statement of net assets reflects the
preliminary value assigned to National City net assets as of
the December 31, 2008 acquisition date. The values are net of
the reallocation of the excess value of net assets acquired over
the purchase price ($1.337 billion), and the cash paid by
National City to its warrant holders ($379 million).
(In millions)
Assets
Cash and due from banks $ 2,144
Federal funds sold and resale agreements 7,335
Trading assets, interest-earning deposits with banks, and
other short-term investments 9,249
Loans held for sale 2,185
Investment securities 13,327
Net loans 97,435
Other intangible assets 1,797
Equity investments 2,060
Other assets 12,651
Total assets $148,183
Liabilities
Deposits $103,639
Federal funds purchased and repurchase agreements 3,501
Other borrowed funds 21,919
Other liabilities 13,370
Total liabilities 142,429
Net assets acquired $ 5,754
Purchase accounting adjustments include discounts and
premiums on interest-earning assets and liabilities as follows:
•Discounts on loans of $6.1 billion will be accreted to
net interest income using the constant effective yield
method over the weighted average life of the loans,
estimated to be between two and three years. The
weighted average lives could vary depending on
prepayments, revised estimated cash flows and other
related factors. Of the $6.1 billion of discounts, $3.7
billion relates to loans accounted for under SOP 03-3
and $2.4 billion relates to performing loans. A total
of $3.7 billion of the fair value mark on impaired
loans is not accretable.
• Premiums on interest-earning time deposits of $2.1
billion will be amortized over the weighted average
life of the deposits of approximately one year using
the constant effective yield method.
• Discounts on borrowed funds of $1.8 billion will be
accreted over the weighted average life of the
borrowings of approximately seven years using the
constant effective yield method.
Other intangible assets acquired consisted of the following (in millions):
Intangible Asset
Fair
Value
Weighted
Life
Amortization
Method
Residential mortgage servicing rights $1,003 (a) (a)
Core deposit (b) 351 12 yrs Accelerated
Commercial mortgage servicing rights 210 13 yrs Accelerated
Wealth management customer relationships (b) 203 12 yrs Straight line
National City brand (b) 15 21 mos Straight line
Consumer loan servicing rights 15 2 yrs Accelerated
Total $1,797
(a) Intangible asset carried at fair value.
(b) Fair value adjusted for the allocation of the excess of fair value of net assets acquired over the purchase price.
See Note 9 Goodwill and Other Intangible Assets for additional information.
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