PNC Bank 2012 Annual Report Download - page 51

S ALE OF PNC G LOBAL I NVESTMENT S ERVICING
On July 1, 2010, we sold PNC Global Investment Servicing
Inc. (GIS), a leading provider of processing, technology and
business intelligence services to asset managers, broker-
dealers and financial advisors worldwide, for $2.3 billion in
cash. The pretax gain in discontinued operations recorded in
the third quarter of 2010 related to this sale was $639 million,
net of transaction costs, or $328 million after taxes.
Results of operations of GIS through June 30, 2010 are
presented as income from discontinued operations, net of
income taxes, on our Consolidated Income Statement in this
Report. Once we entered into the sales agreement, GIS was no
longer a reportable business segment. See Note 2 Acquisition
and Divestiture Activity in the Notes To Consolidated
Financial Statements in Item 8 of this Report.
C APITAL AND L IQUIDITY A CTIONS
Our ability to take certain capital actions, including plans to
pay or increase common stock dividends or to repurchase
shares under current or future programs, is subject to the
results of the supervisory assessment of capital adequacy
undertaken by the Board of Governors of the Federal Reserve
System (Federal Reserve) and our primary bank regulators as
part of the Comprehensive Capital Analysis and Review
(CCAR) process. This capital adequacy assessment is based
on a review of a comprehensive capital plan submitted to the
Federal Reserve. In connection with the 2013 CCAR, PNC
filed its capital plan and stress testing results with the Federal
Reserve on January 7, 2013. PNC expects to receive the
Federal Reserve’s response (either a non-objection or
objection) to the capital plan submitted as part of the 2013
CCAR by March 15, 2013. For additional information
concerning the CCAR process and the factors the Federal
Reserve takes into consideration in evaluating capital plans,
see Item 1 Business – Supervision and Regulation of this
Report.
A summary of 2012 capital and liquidity actions follows.
D EBT S ECURITIES I SSUED
On March 8, 2012, PNC Funding Corp issued $1 billion of
senior notes, unconditionally guaranteed by The PNC
Financial Services Group, Inc., due March 8, 2022. Interest is
paid semi-annually at a fixed rate of 3.30%. The offering
resulted in gross proceeds to us of $990 million before
offering related expenses. We used the net proceeds from this
offering for general corporate purposes, which included
advances to PNC and its subsidiaries to finance their
activities, repayment of outstanding indebtedness, and
repurchases and redemptions of issued and outstanding
securities of PNC and its subsidiaries.
On June 20, 2012, PNC Bank, N.A. issued $1.0 billion of
senior extendible floating rate bank notes with an initial
maturity date of July 20, 2013, subject to the holder’s monthly
option to extend, and a final maturity date of June 20, 2014.
Interest is paid at the 3-month LIBOR rate, reset quarterly,
plus a spread of 22.5 basis points, which spread is subject to
four potential one basis point increases in the event of certain
extensions of maturity by the holder.
On October 22, 2012, PNC Bank, N.A. issued $1.0 billion of
subordinated notes with a maturity date of November 1, 2022.
Interest is payable semi-annually, at a fixed rate of 2.70%, on
May 1 and November 1 of each year, beginning on May 1,
2013.
T RUST P REFERRED S ECURITIES R EDEEMED
On April 25, 2012 we redeemed $300 million of trust
preferred securities issued by PNC Capital Trust D with a
current distribution rate of 6.125% and $6 million of trust
preferred securities issued by Yardville Capital Trust III with
a current distribution rate of 10.18%. In addition, on May 25,
2012 we redeemed $500 million of trust preferred securities
issued by National City Capital Trust III with a current
distribution rate of 6.625%. These redemptions together
resulted in a noncash charge for unamortized discounts of
approximately $130 million in the second quarter of 2012.
On July 30, 2012 we redeemed $450 million of trust preferred
securities issued by PNC Capital Trust E with a current
distribution rate of 7.750% and $517.5 million of enhanced
trust preferred securities issued by National City Capital Trust
IV with a current distribution rate of 8.000%. These
redemptions together resulted in a noncash charge for
unamortized discounts of approximately $95 million in the
third quarter of 2012.
P REFERRED S TOCK I SSUED
On April 24, 2012, we issued 60 million depositary shares,
each representing a 1/4,000th interest in a share of our Fixed-
to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series P, in an underwritten public offering resulting in gross
proceeds of $1.5 billion to us before commissions and
expenses. We used the net proceeds from the sale of the
depositary shares for general corporate purposes, which
included repurchases and redemptions of issued and
outstanding securities of PNC and its subsidiaries, including
trust preferred securities.
On September 21, 2012 we issued 18 million depositary
shares, each representing a 1/4,000th interest in a share of our
5.375% Non-Cumulative Perpetual Preferred Stock, Series Q,
in an underwritten public offering resulting in gross proceeds
of $450 million to us before commissions and expenses. On
October 9, 2012, pursuant to the underwriting agreement for
this offering, we issued an additional 1.2 million depositary
shares in satisfaction of an option granted to the underwriters
in the underwriting agreement to cover over-allotments,
resulting in additional gross proceeds of $30 million. We used
the net proceeds from the sales of the depositary shares for
general corporate purposes, which included advances to our
subsidiaries to finance their activities, repayment of
32 The PNC Financial Services Group, Inc. – Form 10-K