PNC Bank 2011 Annual Report Download - page 96

The parent company, through its subsidiary PNC Funding
Corp, has the ability to offer up to $3.0 billion of commercial
paper to provide additional liquidity. As of December 31,
2011, there were no issuances outstanding under this program.
Note 18 Equity in the Notes To Consolidated Financial
Statements in Item 8 of this Report describes our February
2010 redemption of all 75,792 shares of our Fixed Rate
Cumulative Perpetual Preferred Shares, Series N (Series N
Preferred Stock) that had been issued on December 31, 2008
to the US Treasury under the TARP Capital Purchase
Program, the acceleration of the accretion of the remaining
issuance discount on the Series N Preferred Stock in the first
quarter of 2010 (and a corresponding reduction in retained
earnings of $250 million in the first quarter of 2010), and the
exchange by the US Treasury of the TARP warrant issued to it
on December 31, 2008 into warrants, each to purchase one
share of PNC common stock at an exercise price of $67.33,
sold by the US Treasury in a secondary public offering in May
2010. These common stock warrants will expire December 31,
2018.
Status of Credit Ratings
The cost and availability of short-term and long-term funding,
as well as collateral requirements for certain derivative
instruments, is influenced by PNC’s debt ratings.
In general, rating agencies base their ratings on many
quantitative and qualitative factors, including capital
adequacy, liquidity, asset quality, business mix, level and
quality of earnings, and the current legislative and regulatory
environment, including implied government support. In
addition, rating agencies themselves have been subject to
scrutiny arising from the financial crisis and could make or be
required to make substantial changes to their ratings policies
and practices, particularly in response to legislative and
regulatory changes, including as a result of provisions in
Dodd-Frank. Potential changes in the legislative and
regulatory environment and the timing of those changes could
impact our ratings, which as noted above, could impact our
liquidity and financial condition. A decrease, or potential
decrease, in credit ratings could impact access to the capital
markets and/or increase the cost of debt, and thereby
adversely affect liquidity and financial condition.
Credit ratings as of December 31, 2011 for PNC and PNC
Bank, N.A. follow:
Moody’s
Standard
&
Poor’s Fitch
The PNC Financial
Services Group, Inc.
Senior debt A3 A- A+
Subordinated debt Baa1 BBB+ A
Preferred stock Baa3 BBB A-
PNC Bank, N.A.
Subordinated debt A3 A- A
Long-term deposits A2 A AA-
Short-term deposits P-1 A-1 F1+
Commitments
The following tables set forth contractual obligations and various other commitments as of December 31, 2011 representing
required and potential cash outflows.
Contractual Obligations Payment Due By Period
December 31, 2011 – in millions Total
Less than
one year
One to three
years
Four to
five
years
After five
years
Remaining contractual maturities of time deposits (a) $31,632 $25,021 $ 4,146 $1,267 $ 1,198
Borrowed funds (a) (b) 36,704 15,794 6,088 4,679 10,143
Minimum annual rentals on noncancellable leases 2,489 342 586 409 1,152
Nonqualified pension and postretirement benefits 558 64 122 116 256
Purchase obligations (c) 616 343 202 55 16
Total contractual cash obligations $71,999 $41,564 $11,144 $6,526 $12,765
(a) Includes purchase accounting adjustments.
(b) Includes basis adjustment relating to accounting hedges.
(c) Includes purchase obligations for goods and services covered by noncancellable contracts and contracts including cancellation fees.
At December 31, 2011, unrecognized tax benefits totaled $209 million. This liability for unrecognized tax benefits represents an
estimate of tax positions that we have taken in our tax returns which ultimately may not be sustained upon examination by taxing
authorities. Since the ultimate amount and timing of any future cash settlements cannot be predicted with reasonable certainty, this
estimated liability has been excluded from the contractual obligations table. See Note 20 Income Taxes in the Notes To
Consolidated Financial Statements in Item 8 of this Report for additional information.
The PNC Financial Services Group, Inc. – Form 10-K 87