PNC Bank 2011 Annual Report Download - page 69

• Net interest income was $201 million in 2011
compared with $256 million in 2010. The decrease in
the comparison was primarily due to lower interest
earned on escrow deposits.
• Noninterest expense was $797 million in 2011
compared with $563 million in 2010. The increase
from the prior year period was primarily due to
higher residential mortgage foreclosure-related
expenses, primarily as a result of ongoing
governmental matters.
• The fair value of residential mortgage servicing
rights was $.7 billion at December 31, 2011
compared with $1.0 billion at December 31, 2010.
The decline in fair value was primarily due to lower
mortgage rates which has resulted in higher
prepayment rates.
B LACK R OCK
(Unaudited)
Information related to our equity investment in BlackRock
follows:
Year ended December 31
Dollars in millions 2011 2010
Business segment earnings (a) $361 $351
PNC’s economic interest in BlackRock (b) 21% 20%
(a) Includes PNC’s share of BlackRock’s reported GAAP earnings net of additional
income taxes on those earnings incurred by PNC.
(b) At December 31.
In billions
Dec. 31
2011
Dec. 31
2010
Carrying value of PNC’s
investment in BlackRock (c) $5.3 $5.1
Market value of PNC’s
investment in BlackRock (d) 6.4 6.9
(c) PNC accounts for its investment in BlackRock under the equity method of
accounting, exclusive of a related deferred tax liability of $1.7 billion at December
31, 2011 and $1.8 billion at December 31, 2010.
(d) Does not include liquidity discount.
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 to partially
fund BlackRock LTIP programs. 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.
On September 29, 2011, PNC transferred 1.3 million shares of
BlackRock Series C Preferred Stock to BlackRock to satisfy a
portion of our LTIP obligation. Upon transfer, Other assets
and Other liabilities on our Consolidated Balance Sheet were
reduced by $172 million, representing the fair value of the
shares transferred. Additional information regarding our
BlackRock LTIP shares obligation is included in Note 15
Stock Based Compensation Plans in the Notes To
Consolidated Financial Statements in Item 8 of this Report.
At December 31, 2011, approximately 1.5 million shares of
BlackRock Series C Preferred Stock were available to fund a
portion of awards under future BlackRock LTIP programs.
PNC accounts for its remaining investment in BlackRock
under the equity method of accounting. Our voting interest in
BlackRock common stock (approximately 24% at
December 31, 2011) is higher than our overall share of
BlackRock’s equity and earnings.
60 The PNC Financial Services Group, Inc. – Form 10-K