PNC Bank 2010 Annual Report Download - page 54
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Please find page 54 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.Capital Securities of Subsidiary Trusts and Perpetual Trust
Securities in the Notes To Consolidated Financial Statements
in Item 8 of this Report, in September 2010 and October 2010
we redeemed $71 million and $10 million, respectively, in
principal amounts related to the junior subordinated
debentures issued by the acquired entities. Under the terms of
the outstanding debentures, if there is an event of default
under the debentures or PNC exercises its right to defer
payments on the related trust preferred securities issued by the
statutory trusts or there is a default under PNC’s guarantee of
such payment obligations, PNC would be subject during the
period of such default or deferral to restrictions on dividends
and other provisions protecting the status of the debenture
holders 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 13 Capital
Securities of Subsidiary Trusts and Perpetual Trust Securities
in the Notes To Consolidated Financial Statements included in
Item 8 of this Report.
As more fully described in our 2009 Form 10-K, we were
subject to replacement capital covenants with respect to four
tranches of junior subordinated debentures inherited from
National City as well as a replacement capital covenant with
respect to our Series L Preferred Stock. As a result of a
successful consent solicitation of the holders of our 6.875%
Subordinated Notes due May 15, 2019, we terminated the
replacement capital covenants with respect to these four
tranches of junior subordinated debentures and our Series L
Preferred Stock on November 5, 2010. Termination of the
replacement capital covenants allows PNC to call such junior
subordinated debt and the Series L Preferred Stock at our
discretion, subject to any required regulatory approval.
F
AIR
V
ALUE
M
EASUREMENTS
In addition to the following, see Note 8 Fair Value in the
Notes To Consolidated Financial Statements in Item 8 of this
Report for further information regarding fair value.
Assets recorded at fair value represented 27% and 23% of
total assets at December 31, 2010 and December 31, 2009,
respectively. The increase in the percentage compared with
the prior year end was primarily due to increases in securities
available for sale and financial derivatives. Liabilities
recorded at fair value represented 3% and 2% of total
liabilities at December 31, 2010 and December 31, 2009,
respectively.
The following table includes the assets and liabilities
measured at fair value and the portion of such assets and
liabilities that are classified within Level 3 of the valuation
hierarchy.
Dec. 31, 2010 Dec. 31, 2009
In millions
Total Fair
Value Level 3
Total Fair
Value Level 3
Assets
Securities available
for sale $57,310 $ 8,583 $50,798 $ 9,933
Financial
derivatives 5,757 77 3,916 50
Residential
mortgage loans
held for sale 1,878 1,012
Trading securities 1,826 69 2,124 89
Residential
mortgage
servicing rights 1,033 1,033 1,332 1,332
Commercial
mortgage loans
held for sale 877 877 1,050 1,050
Equity investments 1,384 1,384 1,188 1,188
Customer resale
agreements 866 990
Loans 116 2 107
Other assets 853 403 716 509
Total assets $71,900 $12,428 $63,233 $14,151
Level 3 assets as a
percentage of total
assets at fair value 17% 22%
Level 3 assets as a
percentage of
consolidated assets 5% 5%
Liabilities
Financial
derivatives $ 4,935 $ 460 $ 3,839 $ 506
Trading securities
sold short 2,530 1,344
Other liabilities 66
Total liabilities $ 7,471 $ 460 $ 5,189 $ 506
Level 3 liabilities as a
percentage of total
liabilities at fair
value 6% 10%
Level 3 liabilities as a
percentage of
consolidated
liabilities <1% <1%
The majority of Level 3 assets represent non-agency
residential mortgage-backed and asset-backed securities in the
available for sale securities portfolio for which there was a
lack of observable trading activity.
During 2010, no significant transfers of assets or liabilities
between the hierarchy levels occurred.
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