PNC Bank 2009 Annual Report Download - page 140

All of these Trusts are wholly owned finance subsidiaries of
PNC. In the event of certain changes or amendments to
regulatory requirements or federal tax rules, the capital
securities are redeemable in whole. The financial statements
of the Trusts are not included in PNC’s consolidated financial
statements in accordance with GAAP.
At December 31, 2009, PNC’s junior subordinated debt of
$3.0 billion represented debentures purchased and held as
assets by the Trusts.
The obligations of the respective parent of each Trust, when
taken collectively, are the equivalent of a full and
unconditional guarantee of the obligations of such Trust under
the terms of the Capital Securities. Such guarantee is
subordinate in right of payment in the same manner as other
junior subordinated debt. There are certain restrictions on
PNC’s overall ability to obtain funds from its subsidiaries. For
additional disclosure on these funding restrictions, including
an explanation of dividend and intercompany loan limitations,
see Note 23 Regulatory Matters.
PNC is subject to restrictions on dividends and other
provisions similar to or in some ways more restrictive than
those potentially imposed under the Exchange Agreements
with Trust II and Trust III, as described in Note 3 Variable
Interest Entities.
N OTE 15 E MPLOYEE B ENEFIT P LANS
P ENSION A ND P OSTRETIREMENT P LANS
We have a noncontributory, qualified defined benefit pension
plan covering eligible employees. The plan derives benefits
from cash balance formulas based on compensation levels, age
and length of service. Pension contributions are based on an
actuarially determined amount necessary to fund total benefits
payable to plan participants. National City had a qualified
pension plan covering substantially all employees hired prior
to April 1, 2006. Pension benefits are derived from a cash
balance formula, whereby credits based on salary, age, and
years of service are allocated to employee accounts. The
National City plan was merged with our qualified pension
plan on December 31, 2008. During 2009, no changes to
either plan design or benefits occurred.
Effective January 1, 2010, the pension plan has one design for
all eligible employees. All new participants on or after
January 1, 2010 will receive a fixed earnings credit of 3%.
However, participants as of December 31, 2009 will be
maintained at the earnings credit level they have attained as of
that date going forward. The percentage will not increase in
future years.
We also maintain nonqualified supplemental retirement plans
for certain employees. On December 31, 2008, the participants
of National City’s supplemental executive retirement plans
became 100% vested due to the change in control. We also
provide certain health care and life insurance benefits for
qualifying retired employees (postretirement benefits) through
various plans. The nonqualified pension and postretirement
benefit plans are unfunded. Effective January 1, 2010, various
benefit plans were amended to provide one plan design to all
eligible employees.
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