PNC Bank 2012 Annual Report Download - page 212

All of these Trusts are wholly owned finance subsidiaries of
PNC. In the event of certain changes or amendments to
regulatory requirements or federal tax rules, the capital
securities are redeemable in whole. In accordance with GAAP,
the financial statements of the Trusts are not included in
PNC’s consolidated financial statements.
At December 31, 2012, PNC’s junior subordinated debt with a
carrying value of $343 million represented debentures
purchased and held as assets by the Trusts and redeemable
prior to maturity.
The obligations of the respective parent of each Trust, when
taken collectively, are the equivalent of a full and
unconditional guarantee of the obligations of such Trust under
the terms of the Capital Securities. Such guarantee is
subordinate in right of payment in the same manner as other
junior subordinated debt. There are certain restrictions on
PNC’s overall ability to obtain funds from its subsidiaries. For
additional disclosure on these funding restrictions, including
an explanation of dividend and intercompany loan limitations,
see Note 22 Regulatory Matters. PNC is also subject to
restrictions on dividends and other provisions potentially
imposed under the Exchange Agreements with PNC Preferred
Funding Trust II and Trust III as described in the following
Perpetual Trust Securities section and to other provisions
similar to or in some ways more restrictive than those
potentially imposed under those agreements. In April 2012,
we redeemed all of the underlying capital securities of PNC
Capital Trust D and Yardville Capital Trust III. The capital
securities redeemed totaled $306 million. In May 2012, we
redeemed all of the underlying capital securities of National
City Capital Trust III, totaling $500 million. In July 2012, we
redeemed all of the underlying capital securities of PNC
Capital Trust E and National City Trust IV. The capital
securities redeemed totaled $968 million. In December 2012,
we redeemed all of the underlying capital securities of
National City Preferred Capital Trust I. The capital securities
totaled $500 million.
Table 115: Perpetual Trust Securities Summary
We have issued certain hybrid capital vehicles that currently qualify as capital for regulatory purposes.
Date Entity (a) Private Placement (b) Rate Trust Issuing Notes (c)
February 2008 PNC Preferred Funding LLC $375 million 8.700% PNC Preferred Funding Trust III (d)
March 2007 PNC Preferred Funding LLC $500 million 6.113% PNC Preferred Funding Trust II (e)
December 2006 PNC Preferred Funding LLC $500 million 6.517% PNC Preferred Funding Trust I (f)
(a) PNC REIT Corp. owns 100% of the LLC’s common voting securities. As a result, the LLC is an indirect subsidiary of PNC and is consolidated on PNC’s Consolidated Balance Sheet.
(b) Fixed-to-Floating Rate Non-cumulative Exchangeable Perpetual Trust Securities.
(c) The trusts investments in the LLC’s preferred securities are characterized as a noncontrolling interest on our Consolidated Balance Sheet. This noncontrolling interest totaled
approximately $1.3 billion at December 31, 2012.
(d) Automatically exchangeable into a share of Series J Non-Cumulative Perpetual Preferred Stock of PNC (Series J Preferred Stock).
(e) Automatically exchangeable into a share of Series I Non-Cumulative Perpetual Preferred Stock of PNC (Series I Preferred Stock).
(f) Automatically exchangeable into a share of Series F Non-Cumulative Perpetual Preferred Stock of PNC Bank, N.A. (PNC Bank Preferred Stock).
These Trust Securities are automatically exchangeable as set
forth above under certain conditions relating to the
capitalization or the financial condition of PNC Bank, N.A.
and upon the direction of the Office of the Comptroller of the
Currency.
See Note 27 Subsequent Events for additional discussion of
our February 2013 announcement of our March 2013
redemption of REIT Preferred Securities issued by PNC
Preferred Funding Trust III.
Table 116: Summary of Replacement Capital Covenants of Perpetual Trust Securities
Replacement Capital Covenant (a) Trust Description of Capital Covenants
Trust I RCC PNC Preferred Funding Trust I Neither we nor our subsidiaries (other than PNC Bank, N.A. and its
subsidiaries) would purchase the Trust Securities, the LLC Preferred
Securities or the PNC Bank Preferred Stock unless such repurchases or
redemptions are made from proceeds of the issuance of certain qualified
securities and pursuant to the other terms and conditions set forth in the
Trust I RCC.
Trust II RCC PNC Preferred Funding Trust II Until March 29, 2017, neither we nor our subsidiaries would purchase or
redeem the Trust II Securities, the LLC Preferred Securities or the Series I
Preferred Stock unless such repurchases or redemptions are made from
proceeds of the issuance of certain qualified securities and pursuant to the
other terms and conditions set forth in the Trust II RCC.
(a) As of December 31, 2012, each of the Trust I RCC and the Trust II RCC are for the benefit of holders of our $200 million of Floating Rate Junior Subordinated Notes issued in June
1998.
The PNC Financial Services Group, Inc. – Form 10-K 193