PNC Bank 2010 Annual Report Download - page 150
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Please find page 150 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.PNC’s recorded investment, which represents the present
value of expected future principal and interest cash flows, as
adjusted for any ALLL recorded for these loans. See Note 6
Purchased Impaired Loans for additional information. For
revolving home equity loans and commercial credit lines, this
fair value does not include any amount for new loans or the
related fees that will be generated from the existing customer
relationships. Non-accrual loans are valued at their estimated
recovery value. Also refer to the Fair Value Measurement and
Fair Value Option sections of this Note 8 regarding the fair
value of commercial and residential mortgage loans held for
sale. Loans are presented net of the ALLL and do not include
future accretable discounts related to purchased impaired
loans.
O
THER
A
SSETS
Other assets as shown in the accompanying table include the
following:
• FHLB and FRB stock,
• equity investments carried at cost and fair value, and
• BlackRock Series C Preferred Stock.
Investments accounted for under the equity method, including
our investment in BlackRock, are not included in the
accompanying table.
See the Investment in BlackRock, Inc. and Private Equity
Investments sections of Note 1 – Accounting Policies for
additional information.
Fair value of the noncertificated interest-only strips is
estimated based on the discounted value of expected net cash
flows. The aggregate carrying value of our investments that
are carried at cost and FHLB and FRB stock was $2.4 billion
at December 31, 2010 and $2.6 billion as of December 31,
2009, both of which approximate fair value at each date.
M
ORTGAGE
A
ND
O
THER
L
OAN
S
ERVICING
A
SSETS
Fair value is based on the present value of the estimated future
cash flows, incorporating assumptions as to prepayment
speeds, discount rates, escrow balances, interest rates, cost to
service and other factors.
The key valuation assumptions for commercial and residential
mortgage loan servicing assets at December 31, 2010 and
December 31, 2009 are included in Note 9 Goodwill and
Other Intangible Assets.
C
USTOMER
R
ESALE
A
GREEMENTS
Refer to the Fair Value Measurement section of this Note 8
regarding the fair value of customer resale agreements.
D
EPOSITS
The carrying amounts of noninterest-bearing demand and
interest-bearing money market and savings deposits
approximate fair values. For time deposits, which include
foreign deposits, fair values are estimated based on the
discounted value of expected net cash flows assuming current
interest rates.
B
ORROWED
F
UNDS
The carrying amounts of Federal funds purchased, commercial
paper, repurchase agreements, proprietary trading short
positions, cash collateral, other short-term borrowings,
acceptances outstanding and accrued interest payable are
considered to be their fair value because of their short-term
nature. For all other borrowed funds, fair values are estimated
primarily based on dealer quotes or discounted cash flow
analysis.
U
NFUNDED
L
OAN
C
OMMITMENTS
A
ND
L
ETTERS
O
F
C
REDIT
The fair value of unfunded loan commitments and letters of
credit is determined from a market participant’s view
including the impact of changes in interest rates, credit and
other factors. Because the interest rate on substantially all
unfunded loan commitments and letters of credit varies with
changes in market rates, these instruments are subject to little
fluctuation in fair value due to changes in interest rates. We
establish a liability on these facilities related to their
creditworthiness.
F
INANCIAL
D
ERIVATIVES
For exchange-traded contracts, fair value is based on quoted
market prices. For nonexchange-traded contracts, fair value is
based on dealer quotes, pricing models or quoted prices for
instruments with similar characteristics.
Amounts for financial derivatives are presented on a gross
basis.
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