PNC Bank 2009 Annual Report Download - page 76

Dividends may also be impacted by the bank’s capital needs
and by contractual restrictions. We provide additional
information on certain contractual restrictions under the
“Perpetual Trust Securities,” “PNC Capital Trust E Trust
Preferred Securities,” and “Acquired Entity Trust Preferred
Securities” sections of the Off-Balance Sheet Arrangements
And Variable Interest Entities section of this Item 7. The
amount available for dividend payments to the parent
company by PNC Bank, N.A. without prior regulatory
approval was approximately $378 million at December 31,
2009.
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 and dividends or distributions from equity
investments. As of December 31, 2009, the parent company
had approximately $4.7 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 debt and
equity securities in public or private markets.
PNC Funding Corp issued the following securities during 2009:
• September – $500 million of senior notes due
September 2015; interest paid semiannually at a fixed
rate of 4.25%.
• June – $600 million of senior notes due June 2019;
interest paid semiannually at a fixed rate of 6.7%.
• June – $400 million of senior notes due June 2014;
interest paid semiannually at a fixed rate of 5.4%.
• March – $1.0 billion of floating rate senior notes due
April 2012 under the TLGP-Debt Guarantee
Program. Interest will be reset quarterly to 3-month
LIBOR plus 20 basis points and paid quarterly. These
senior notes are guaranteed by the parent company
and by the FDIC and are backed by the full faith and
credit of the United States of America through
maturity.
As further described in the Executive Summary and
Consolidated Balance Sheet sections of this Item 7, in May
2009 we raised $624 million in common equity through the
issuance of 15 million shares of common stock.
PNC Bank, N.A., through its subsidiary PNC Funding Corp,
has the ability to offer up to $3.0 billion of commercial paper
to provide the parent company with additional liquidity. As of
December 31, 2009, there were no issuances outstanding
under this program.
As of December 31, 2009, there were $1.1 billion of parent
company contractual obligations with maturities of less than
one year.
We have effective shelf registration statements pursuant to
which we can issue additional debt and equity securities,
including certain hybrid capital instruments.
February 2010 Actions
On February 8, 2010, we raised $3.0 billion in new common
equity through the issuance of 55.6 million shares of common
stock in an underwritten offering at $54 per share. On March 4,
2010, the underwriters exercised their option to purchase an
additional 8.3 million shares of common stock at the offering
price of $54 per share, totaling approximately $450 million, to
cover over-allotments. We expect to complete this issuance on
March 11, 2010.
Also on February 8, 2010 PNC Funding Corp issued the
following securities:
• $1 billion of senior notes due February 2015; interest
will be paid semiannually at a fixed rate of 3.625%.
• $1 billion of senior notes due February 2020; interest
will be paid semiannually at a fixed rate of 5.125%.
As approved by the Federal Reserve Board, US Treasury and our
other banking regulators, on February 10, 2010, we redeemed all
75,792 shares of our Fixed Rate Cumulative Perpetual Preferred
Shares, Series N (Series N Preferred Stock) issued to the US
Treasury on December 31, 2008 totaling $7.6 billion. We used
the net proceeds from the common stock and senior notes
offerings described above and other parent company funds to
redeem the Series N Preferred Stock.
Dividends of $89 million were paid on February 10, 2010
when the Series N Preferred Stock was redeemed. PNC paid
total dividends of $421 million to the US Treasury while the
Series N Preferred Stock was outstanding.
In connection with the redemption of the Series N Preferred
Stock, we accelerated the accretion of the remaining issuance
discount on the Series N Preferred Stock and recorded a
corresponding reduction in retained earnings of $250.0
million. This resulted in a one-time, noncash reduction in net
income available to common stockholders and related basic
and diluted earnings per share. This transaction will be
reflected in our consolidated financial statements for the first
quarter of 2010.
We did not exercise our right to seek to repurchase the related
warrant to purchase common shares at the time we redeemed
the Series N Preferred Stock.
See Note 19 Equity in the Notes To Consolidated Financial
Statements in Item 8 of this Report for more details regarding
the issuance of Series N Preferred Stock, related issuance
discount and the warrant to purchase common shares to the
US Treasury under the TARP Capital Purchase Program.
Status of Credit Ratings
The cost and availability of short- and long-term funding, as
well as collateral requirements for certain derivative
instruments, is influenced by debt ratings. A decrease, or
potential decrease, in credit ratings could impact access to the
capital markets and/or increase the cost of debt, and thereby
adversely affect liquidity and financial condition.
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