PNC Bank 2010 Annual Report Download - page 143
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Please find page 143 of the 2010 PNC Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
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multiples of adjusted earnings of the entity, independent
appraisals, anticipated financing and sale transactions with
third parties, or the pricing used to value the entity in a recent
financing transaction. We value indirect investments in private
equity funds based on net asset value as provided in the
financial statements that we receive from their managers. Due
to the time lag in our receipt of the financial information and
based on a review of investments and valuation techniques
applied, adjustments to the manager-provided value are made
when available recent portfolio company information or
market information indicates a significant change in value
from that provided by the manager of the fund. These
investments are classified as Level 3.
Customer Resale Agreements
We have elected to account for structured resale agreements,
which are economically hedged using free-standing financial
derivatives, at fair value. The fair value for structured resale
agreements is determined using a model which includes
observable market data such as interest rates as inputs.
Readily observable market inputs to this model can be
validated to external sources, including yield curves, implied
volatility or other market-related data. These instruments are
classified as Level 2.
BlackRock Series C Preferred Stock
We have elected to account for the 2.9 million shares of the
BlackRock Series C Preferred Stock received in a stock
exchange with BlackRock at fair value. The Series C Preferred
Stock economically hedges the BlackRock LTIP liability that
is accounted for as a derivative. The fair value of the Series C
Preferred Stock is determined using a third-party modeling
approach, which includes both observable and unobservable
inputs. This approach considers expectations of a default/
liquidation event and the use of liquidity discounts based on
our inability to sell the security at a fair, open market price in
a timely manner. Although dividends are equal to common
shares and other preferred series, significant transfer
restrictions exist on our Series C shares for any purpose other
than to satisfy the LTIP obligation. Due to the significance of
unobservable inputs, this security is classified as Level 3.
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