PNC Bank 2010 Annual Report Download - page 65
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Please find page 65 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.B
LACK
R
OCK
(Unaudited)
Information related to our equity investment in BlackRock
follows:
Year ended December 31
Dollars in millions 2010 2009
Business segment earnings (a) $351 $207
PNC’s economic interest in BlackRock (b) 20% 24%
(a) Includes PNC’s share of BlackRock’s reported GAAP earnings and additional
income taxes on those earnings incurred by PNC.
(b) At December 31.
In billions
Dec. 31
2010
Dec. 31
2009
Carrying value of PNC’s
investment in BlackRock (c) $5.1 $5.8
Market value of PNC’s
investment in BlackRock (d) 6.9 10.1
(c) The December 31, 2010 amount is comprised of our equity investment of $5.0
billion and $.1 billion of goodwill and accumulated other comprehensive income
related to our BlackRock investment. The comparable amounts at December 31,
2009 were $5.7 billion and $.1 billion. PNC accounts for its investment in
BlackRock under the equity method of accounting. The investment amounts above
are exclusive of a related $1.8 billion deferred tax liability at December 31, 2010
and $1.9 billion deferred tax liability at December 31, 2009.
(d) Does not include liquidity discount.
B
LACK
R
OCK
S
ECONDARY
C
OMMON
S
TOCK
O
FFERING
During November 2010, BlackRock completed a secondary
offering of 58.7 million shares of its common stock at a price
per share of $163.00. Of the shares offered, 51.2 million
common shares were offered by another BlackRock
shareholder and 7.5 million common shares were offered by
PNC. The shares offered by PNC were common shares
issuable upon conversion of shares of BlackRock’s Series B
Preferred Stock. PNC recognized a pretax gain of $160
million in noninterest income during the fourth quarter of
2010 related to our sale of shares of BlackRock common stock
in this offering. Also in connection with this offering, PNC
converted an additional 11.1 million shares of BlackRock’s
Series B Preferred Stock to common stock. Although we
elected to adjust our stake in BlackRock, we continue to
consider our investment in BlackRock a key component of our
diversified revenue strategy.
B
LACK
R
OCK
/B
ARCLAYS
G
LOBAL
I
NVESTORS
T
RANSACTION
On December 1, 2009, BlackRock acquired BGI from
Barclays Bank PLC in exchange for approximately $6.65
billion in cash and 37,566,771 shares of BlackRock common
and participating preferred stock. In connection with the BGI
transaction, BlackRock entered into a stock purchase
agreement with PNC in which we purchased 3,556,188 shares
of BlackRock’s Series D Preferred Stock at a price of $140.60
per share, or $500 million, to partially finance the transaction.
On January 31, 2010, the Series D Preferred Stock was
converted to Series B Preferred Stock.
B
LACK
R
OCK
LTIP
AND
E
XCHANGE
A
GREEMENTS
PNC’s noninterest income for 2009 included a pretax gain of
$98 million related to our BlackRock LTIP shares obligation.
This gain represented the mark-to-market adjustment related
to our remaining BlackRock LTIP common shares obligation
and resulted from the decrease in the market value of
BlackRock common shares in that period. Additional
information regarding our BlackRock LTIP shares obligation
and the Exchange Agreements entered into on December 26,
2008 is included in Note 15 Stock-Based Compensation Plans
in the Notes To Consolidated Financial Statements in Item 8
of this Report.
On February 27, 2009, PNC’s remaining obligation to deliver
BlackRock common shares was replaced with an obligation to
deliver shares of BlackRock’s new Series C Preferred Stock.
PNC acquired 2.9 million shares of Series C Preferred Stock
from BlackRock in exchange for common shares on that same
date. PNC accounts for its BlackRock Series C Preferred
Stock at fair value, which offsets the impact of
marking-to-market the obligation to deliver these shares to
BlackRock.
The fair value amount of the BlackRock Series C Preferred
Stock is included on our Consolidated Balance Sheet in the
caption Other assets. Additional information regarding the
valuation of the BlackRock Series C Preferred Stock is
included in Note 8 Fair Value in the Notes To Consolidated
Financial Statements in Item 8 of this Report.
PNC accounts for its remaining investment in BlackRock
under the equity method of accounting. Our percentage
ownership of BlackRock common stock (approximately 25%
at December 31, 2010) is higher than our overall share of
BlackRock’s equity and earnings. The transactions related to
the Exchange Agreements do not affect our right to receive
dividends declared by BlackRock.
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