PNC Bank 2010 Annual Report Download - page 96
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Please find page 96 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.Total deposits decreased $5.9 billion at December 31, 2009
compared with December 31, 2008. Relationship-growth
driven increases in money market, demand and savings
deposits were more than offset by declines in other time
deposits, reflecting a planned run-off of brokered certificates
of deposits, and non-relationship retail certificates of deposits.
The $13.0 billion decline in borrowed funds since
December 31, 2008 primarily resulted from repayments of
Federal Home Loan Bank borrowings along with decreases in
all other borrowed fund categories.
In March 2009, PNC issued $1.0 billion of floating rate senior
notes guaranteed by the FDIC under the FDIC’s TLGP-Debt
Guarantee Program (TLGP). In addition, PNC issued
$1.5 billion of senior notes during the second and third
quarters of 2009, which were not issued under the TLGP.
Shareholders’ Equity
Total shareholders’ equity increased $4.5 billion, to
$29.9 billion, at December 31, 2009 compared with
December 31, 2008 primarily due to the following:
• A decline of $2.0 billion in accumulated other
comprehensive loss primarily as a result of decreases
in net unrealized securities losses,
• An increase of $1.7 billion in retained earnings, and
• An increase of $.6 billion in capital surplus-common
stock and other, primarily due to the May 2009
common stock issuance.
Regulatory capital ratios at December 31, 2009 were 10.1%
for leverage, 11.4% for Tier 1 risk-based and 15.0% for total
risk-based capital. At December 31, 2008, the regulatory
capital ratios were 17.5% for leverage, 9.7% for Tier 1 risk-
based and 13.2% for total risk-based capital.
The leverage ratio at December 31, 2008 reflected the
favorable impact on Tier 1 risk-based capital from the
issuance of securities under TARP and the issuance of PNC
common stock in connection with the National City
acquisition, both of which occurred on December 31, 2008. In
addition, the ratio as of that date did not reflect any impact of
National City on PNC’s adjusted average total assets.
G
LOSSARY
O
F
T
ERMS
Accretable net interest (Accretable yield) – The excess of cash
flows expected to be collected on a purchased impaired loan
over the carrying value of the loan. The accretable net interest
is recognized into interest income over the remaining life of
the loan using the constant effective yield method.
Adjusted average total assets – Primarily comprised of total
average quarterly (or annual) assets plus (less) unrealized
losses (gains) on investment securities, less goodwill and
certain other intangible assets (net of eligible deferred taxes).
Annualized – Adjusted to reflect a full year of activity.
Assets under management – Assets over which we have sole
or shared investment authority for our customers/clients. We
do not include these assets on our Consolidated Balance Sheet.
Basis point – One hundredth of a percentage point.
Cash recoveries – Cash recoveries used in the context of
purchased impaired loans represent cash payments from
customers that exceeded the recorded investment of the
designated impaired loan.
Charge-off – Process of removing a loan or portion of a loan
from our balance sheet because it is considered uncollectible.
We also record a charge-off when a loan is transferred from
portfolio holdings to held for sale by reducing the loan
carrying amount to the fair value of the loan, if fair value is
less than carrying amount.
Common shareholders’ equity to total assets – Common
shareholders’ equity divided by total assets. Common
shareholders’ equity equals total shareholders’ equity less the
liquidation value of preferred stock.
Credit derivatives – Contractual agreements, primarily credit
default swaps, that provide protection against a credit event of
one or more referenced credits. The nature of a credit event is
established by the protection buyer and protection seller at the
inception of a transaction, and such events include
bankruptcy, insolvency and failure to meet payment
obligations when due. The buyer of the credit derivative pays
a periodic fee in return for a payment by the protection seller
upon the occurrence, if any, of a credit event.
Credit spread – The difference in yield between debt issues of
similar maturity. The excess of yield attributable to credit
spread is often used as a measure of relative creditworthiness,
with a reduction in the credit spread reflecting an
improvement in the borrower’s perceived creditworthiness.
Derivatives – Financial contracts whose value is derived from
changes in publicly traded securities, interest rates, currency
exchange rates or market indices. Derivatives cover a wide
assortment of financial contracts, including but not limited to
forward contracts, futures, options and swaps.
Duration of equity – An estimate of the rate sensitivity of our
economic value of equity. A negative duration of equity is
associated with asset sensitivity (i.e., positioned for rising
interest rates), while a positive value implies liability
sensitivity (i.e., positioned for declining interest rates). For
example, if the duration of equity is +1.5 years, the economic
value of equity declines by 1.5% for each 100 basis point
increase in interest rates.
Earning assets – Assets that generate income, which include:
Federal funds sold; resale agreements; trading securities;
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