PNC Bank 2009 Annual Report Download - page 96

N OTES T O C ONSOLIDATED F INANCIAL S TATEMENTS
T HE PNC F INANCIAL S ERVICES G ROUP ,I NC .
B USINESS
PNC is one of the largest diversified financial services
companies in the United States and is headquartered in
Pittsburgh, Pennsylvania.
PNC has businesses engaged in retail banking, corporate and
institutional banking, asset management, residential mortgage
banking and global investment servicing, providing many of
its products and services nationally and others in PNC’s
primary geographic markets located in Pennsylvania, Ohio,
New Jersey, Michigan, Maryland, Illinois, Indiana, Kentucky,
Florida, Missouri, Virginia, Delaware, Washington, D.C., and
Wisconsin. PNC also provides certain investment servicing
internationally.
As described in Note 1 Accounting Policies and Note 2
Acquisitions and Divestitures, PNC acquired National City
Corporation (National City) on December 31, 2008.
N OTE 1A CCOUNTING P OLICIES
B ASIS O F F INANCIAL S TATEMENT P RESENTATION
Our consolidated financial statements include the accounts of
the parent company and its subsidiaries, most of which are
wholly owned, and certain partnership interests and variable
interest entities.
We acquired National City on December 31, 2008. Our
Consolidated Balance Sheet as of December 31, 2009 and
2008 and other information as of and subsequent to
December 31, 2008 included in these consolidated financial
statements reflects the impact of National City. Also, the
Consolidated Income Statement for all years presented and
related Notes to Consolidated Financial Statements reflect the
global investment servicing business as discontinued
operations. See Note 2 Acquisitions and Divestitures.
We prepared these consolidated financial statements in
accordance with accounting principles generally accepted in
the United States of America. We have eliminated
intercompany accounts and transactions. We have also
reclassified certain prior year amounts to conform with the
2009 presentation, including reclassifications required in
connection with the adoption of new guidance impacting the
accounting and reporting of noncontrolling interests in
consolidated financial statements. These reclassifications did
not have a material impact on our consolidated financial
condition or results of operations.
Effective July 1, 2009, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting
Standards No. (SFAS) 168, “The FASB Accounting Standards
Codification TM and the Hierarchy of Generally Accepted
Accounting Principles—a replacement of FASB Statement
No. 162.” The FASB Accounting Standards CodificationTM
(FASB ASC) is the single source of authoritative
nongovernmental generally accepted accounting principles
(GAAP) in the United States of America. The FASB ASC was
effective for financial statements that cover interim and annual
periods ending after September 15, 2009. Technical references
to GAAP included in these Notes To Consolidated Financial
Statements are provided under the new FASB ASC structure.
We have considered the impact on these consolidated
financial statements of events occurring subsequent to
December 31, 2009.
U
SE O F E STIMATES
We prepare the consolidated financial statements using
financial information available at the time, which requires us
to make estimates and assumptions that affect the amounts
reported. Our most significant estimates pertain to our
allowance for loan and lease losses, impaired loans, fair value
measurements, including security valuations and residential
mortgage servicing rights, and revenue recognition. Actual
results may differ from the estimates and the differences may
be material to the consolidated financial statements.
I NVESTMENT IN B LACK R OCK ,I NC .
We account for our investment in the common stock, Series B
and Series D Preferred Stocks of BlackRock (both deemed to
be in substance common stock) under the equity method of
accounting. On January 31, 2010, the Series D Preferred Stock
was converted to Series B Preferred Stock. The investment in
BlackRock is reflected on our Consolidated Balance Sheet in
the caption Equity investments, while our equity in earnings
of BlackRock is reported on our Consolidated Income
Statement in the caption Asset management.
On February 27, 2009, PNC’s obligation to deliver BlackRock
common shares in connection with BlackRock’s long-term
incentive plan programs was replaced with an obligation to
deliver shares of BlackRock’s new Series C Preferred Stock.
The 2.9 million shares of Series C Preferred Stock were
acquired from BlackRock in exchange for common shares on
that same date. Since these preferred shares were not deemed
to be in substance common stock, we elected to account for
these preferred shares at fair value and the changes in fair
value will offset the impact of marking-to-market the
obligation to deliver these shares to BlackRock. Our
investment in the BlackRock Series C Preferred Stock is
included on the Consolidated Balance Sheet in the caption
Other assets.
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