PNC Bank 2009 Annual Report Download - page 106

cost of the acquisition. This standard was effective for all
acquisitions completed on or after January 1, 2009.
On January 1, 2009, we adopted guidance which provided
new accounting and reporting standards for the noncontrolling
interests in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that noncontrolling interests should be
reported as a component of equity on the consolidated
financial statements and required expanded disclosures that
identify and distinguish between the interests of the parent’s
owners and the interests of the noncontrolling owners of an
entity. The consolidated financial statements included herein
reflect the impact of this change in classification.
On January 1, 2009, we adopted new guidance which required
revisions to our derivative disclosures to provide greater
transparency as to the use of derivative instruments and
hedging activities. See Note 17 Financial Derivatives for
additional information.
On January 1, 2009, we adopted new guidance which clarifies
that unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents are
considered participating securities and should be included in
the calculation of basic earnings per share using the two-class
method prescribed by existing GAAP. Our adoption of this
guidance did not have a material effect on either our basic or
diluted earnings per share. See Note 18 Earnings Per Share for
the computation of earnings per share using the two-class
method.
In April 2009, the FASB issued new guidance impacting the
recognition and disclosure of other-than-temporary
impairments (OTTI). The major change in the guidance was
the requirement to recognize only the credit portion of the
OTTI charges in current earnings for those debt securities
where there is no intent to sell and it is not more likely than
not that the entity would be required to sell the security prior
to expected recovery. The remaining portion of the OTTI
charge is to be included in other comprehensive income. As
permitted, we adopted this guidance effective January 1, 2009.
A cumulative effect adjustment of $110 million was made to
2009 beginning retained earnings to reclassify the noncredit
component of OTTI recognized in prior periods from retained
earnings to accumulated other comprehensive income (loss).
See Note 7 Investment Securities for disclosures required by
this new guidance.
In April 2009, the FASB issued new guidance for estimating
fair value when the volume and level of activity for the asset
or liability have significantly decreased. This also provides
guidance on identifying circumstances that indicate a
transaction is not orderly. As permitted, we adopted this
guidance effective January 1, 2009. The adoption of this new
guidance did not have a material effect on our results of
operations or financial position in 2009. See Note 8 Fair Value
for disclosures required by this new guidance.
On June 30, 2009, we adopted new guidance which amends
existing disclosure requirements about fair value of financial
instruments for both annual and interim reporting periods. See
Note 8 Fair Value for disclosures required by this new
guidance.
In September 2009, the FASB issued ASU 2009-12 – Fair
Value Measurements and Disclosures (Topic 820) –
Investments in Certain Entities That Calculate Net Asset
Value per Share (or Its Equivalent). This update provides
further guidance for the fair value measurement of certain
investments and also requires expanded disclosures regarding
restrictions on the redemption of the investments, unfunded
commitments, and investment strategies. See Note 8 Fair
Value for disclosures required by this new guidance.
In December 2009, the FASB issued ASU 2009-16 –
Transfers and Servicing (Topic 860) – Accounting For
Transfers of Financial Assets which is a codification of
guidance issued in June 2009. This removes the concept of a
qualifying special-purpose entity from existing GAAP and
removes the exception from applying FASB ASC 810-10,
Consolidation, to qualifying special purpose entities. The new
guidance also establishes conditions for accounting and
reporting of a transfer of a portion of a financial asset,
modifies the asset sale/derecognition criteria, and changes
how retained interests are initially measured. This guidance
will be effective for PNC beginning January 1, 2010.
In December 2009, the FASB issued ASU 2009-17 –
Consolidations (Topic 810) – Improvements to Financial
Reporting by Enterprises Involved with Variable Interest
Entities which is a codification of guidance issued in June
2009. The new guidance removes the scope exception for
qualifying special-purpose entities, contains new criteria for
determining the primary beneficiary of a variable interest
entity (VIE) and increases the frequency of required
reassessments to determine whether an entity is the primary
beneficiary of a VIE. Enhanced disclosures would also be
required. This guidance will be effective for PNC beginning
January 1, 2010. Based on this new guidance, we consolidated
Market Street effective January 1, 2010 (see Note 3 Variable
Interest Entities). We also consolidated the trusts associated
with the securitization of credit card loans effective January 1,
2010 (see Note 10 Loan Sales and Securitizations). Based on
financial information as of December 31, 2009, the impact of
adopting this revised guidance is to increase total assets by
$4.0 billion. We are continuing to analyze other entities,
including non-PNC sponsored securitization trusts where we
provide loan servicing, for possible consolidation of the trusts.
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