PNC Bank 2010 Annual Report Download - page 86
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Please find page 86 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.liquidity available to offset projected uses. We calculate
funding gaps for the overnight, thirty-day, ninety-day, one
hundred eighty-day and one-year time intervals. Risk limits
are established within our Liquidity Risk Policy.
Management’s Asset and Liability Committee regularly
reviews compliance with the established limits.
Parent company liquidity guidelines are designed to help
ensure that sufficient liquidity is available to meet our parent
company obligations over the succeeding 24-month period.
Risk limits for parent company liquidity are established within
our Enterprise Capital Management Policy. The Board of
Directors’ Risk Committee regularly reviews compliance with
the established limits.
Bank Level Liquidity – Uses
Obligations requiring the use of liquidity can generally be
characterized as either contractual or discretionary. At the
bank level, primary contractual obligations include funding
loan commitments, satisfying deposit withdrawal requests and
maturities and debt service related to bank borrowings. We
also maintain adequate bank liquidity to meet future potential
loan demand and provide for other business needs, as
necessary.
As of December 31, 2010, there were approximately $5.3
billion of bank borrowings with maturities of less than one
year.
Bank Level Liquidity – Sources
Our largest source of bank liquidity on a consolidated basis is
the deposit base that comes from our retail and commercial
businesses. Liquid assets and unused borrowing capacity from
a number of sources are also available to maintain our
liquidity position. Borrowed funds come from a diverse mix
of short and long-term funding sources.
At December 31, 2010, our liquid assets consisted of short-
term investments (Federal funds sold, resale agreements,
trading securities, and interest-earning deposits with banks)
totaling $7.1 billion and securities available for sale totaling
$57.3 billion. Of our total liquid assets of $64.4 billion, we
had $28.0 billion pledged as collateral for borrowings, trust,
and other commitments. The level of liquid assets fluctuates
over time based on many factors, including market conditions,
loan and deposit growth and active balance sheet
management.
In addition to the customer deposit base, which has
historically provided the single largest source of relatively
stable and low-cost funding and liquid assets, the bank also
obtains liquidity through the issuance of traditional forms of
funding including long-term debt (senior notes and
subordinated debt and Federal Home Loan Bank (FHLB)
advances) and short-term borrowings (Federal funds
purchased, securities sold under repurchase agreements,
commercial paper issuances, and other short-term
borrowings).
PNC Bank, N.A. has the ability to offer up to $20 billion in
senior and subordinated unsecured debt obligations with
maturities of more than nine months. Through December 31,
2010, PNC Bank, N.A. had issued $6.9 billion of debt under
this program. Total senior and subordinated debt declined to
$5.5 billion at December 31, 2010 from $7.4 billion at
December 31, 2009 due to maturities.
PNC Bank, N.A. is a member of the FHLB-Pittsburgh and as
such has access to advances from FHLB-Pittsburgh secured
generally by residential mortgage and other mortgage-related
loans. At December 31, 2010, our unused secured borrowing
capacity was $13.0 billion with FHLB-Pittsburgh. Total
FHLB borrowings declined to $6.0 billion at December 31,
2010 from $10.8 billion at December 31, 2009 due to
maturities.
PNC Bank, N.A. has the ability to offer up to $3.0 billion of
its commercial paper. As of December 31, 2010, there were no
issuances outstanding under this program. Commercial paper
included in Other borrowed funds on our Consolidated
Balance Sheet is issued by Market Street as described in
Off-Balance Sheet Arrangements and Variable Interest
Entities in this Financial Review.
PNC Bank, N.A. can also borrow from the Federal Reserve
Bank of Cleveland’s (Federal Reserve Bank) discount window
to meet short-term liquidity requirements. The Federal
Reserve Bank, however, is not viewed as the primary means
of funding our routine business activities, but rather as a
potential source of liquidity in a stressed environment or
during a market disruption. These potential borrowings are
secured by securities and commercial loans. At December 31,
2010, our unused secured borrowing capacity was $24.7
billion with the Federal Reserve Bank.
Parent Company Liquidity – Uses
Obligations requiring the use of liquidity can generally be
characterized as either contractual or discretionary. The parent
company’s contractual obligations consist primarily of debt
service related to parent company borrowings and funding
non-bank affiliates. Additionally, the parent company
maintains adequate liquidity to fund discretionary activities
such as paying dividends to PNC shareholders, share
repurchases, and acquisitions.
As of December 31, 2010, there were approximately $2.3
billion of parent company borrowings with maturities of less
than one year.
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