PNC Bank 2012 Annual Report Download - page 52

outstanding indebtedness, and repurchases and redemptions of
issued and outstanding securities of PNC and its subsidiaries.
S ENIOR D EBT I SSUED AND R EDEMPTION OF N ORMAL APEX
On November 9, 2012 PNC issued $500.1 million of its parent
company Senior Notes due November 9, 2022 (the “Senior
Notes”) which were sold in a secondary public offering made
in connection with the remarketing of PNC’s Remarketable
8.729% Junior Subordinated Notes due 2043 (the
“Subordinated Notes”) owned by the National City Preferred
Capital Trust I (the “Trust”). In the remarketing the Trust sold
the Subordinated Notes and PNC exchanged the Senior Notes
with the purchasers of the Subordinated Notes. The Senior
Notes were then sold by the purchasers in the secondary
public offering. The Senior Notes bore interest at 8.729%
from and including June 10, 2012, to but excluding
November 9, 2012 and thereafter bear interest at 2.854% per
annum. The proceeds of the remarketing were ultimately used
by the Trust, after the completion of the Preferred Stock
transactions described below, to redeem all $500.0 million
outstanding of its 12% Fixed-to-Floating Rate Normal APEX
and $.1 million Common Securities of the Trust.
In the fourth quarter of 2012, PNC incurred noncash charges
for unamortized discounts of $70 million related to this
redemption. After the closing of these transactions, including
the redemption of the Normal APEX, only the Senior Notes
due November 9, 2022 remain outstanding.
As required under a stock purchase contract agreement, the
Trust purchased $500.1 million of PNC’s Non-Cumulative
Perpetual Preferred Stock, Series M (the “Preferred Stock”).
PNC then redeemed all of the Preferred Stock from the Trust
immediately upon its issuance. See Note 19 Equity in the
Notes To Consolidated Financial Statements in Item 8 of this
Report for further detail.
A summary of 2013 capital and liquidity actions to date
follows.
On January 28, 2013, PNC Bank, N.A. issued:
• $750 million of fixed rate senior notes with a
maturity date of January 28, 2016. Interest is payable
semi-annually, at a fixed rate of .80%, on January 28
and July 28 of each year, beginning on July 28, 2013.
• $250 million of floating rate senior notes with a
maturity date of January 28, 2016. Interest is payable
at the 3-month LIBOR rate, reset quarterly, plus a
spread of .31% on January 28, April 28, July 28, and
October 28 of each year, beginning on April 28,
2013.
• $750 million of subordinated notes with a maturity
date of January 30, 2023. Interest is payable semi-
annually, at a fixed rate of 2.905%, on January 30
and July 30 of each year, beginning on July 30, 2013.
On February 7, 2013, PNC announced that on March 15, 2013
we will redeem all $375 million of REIT preferred securities
issued by PNC Preferred Funding Trust III. See Note 27
Subsequent Events in the Notes To Consolidated Financial
Statements in Item 8 of this Report.
R ECENT M ARKET AND I NDUSTRY D EVELOPMENTS
There have been numerous legislative and regulatory
developments and dramatic changes in the competitive
landscape of our industry over the last several years.
The United States and other governments have undertaken
major reform of the regulation of the financial services
industry, including engaging in new efforts to impose
requirements designed to strengthen the stability of the
financial system and protect consumers and investors. We
expect to face further increased regulation of our industry as a
result of current and future initiatives intended to provide
economic stimulus, financial market stability and enhanced
regulation of financial services companies and to enhance the
liquidity and solvency of financial institutions and markets.
We also expect in many cases more intense scrutiny from our
bank supervisors in the examination process and more
aggressive enforcement of regulations on both the federal and
state levels. Compliance with new regulations will increase
our costs and reduce our revenue. Some new regulations may
limit our ability to pursue certain desirable business
opportunities.
The Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank), enacted in July 2010, mandates
the most wide-ranging overhaul of financial industry
regulation in decades. Many parts of the law are now in effect
and others are now in the implementation stage, which is
likely to continue for several years.
Until such time as the regulatory agencies issue final
regulations implementing all of the numerous provisions of
Dodd-Frank, PNC will not be able to fully assess the impact
the legislation will have on its businesses. However, we
believe that the expected changes will be manageable for PNC
and will have an overall smaller impact on us than on our
larger peers.
Included in these recent legislative and regulatory
developments are evolving regulatory capital standards for
financial institutions. These evolving standards include the
three sets of proposed rules that the U.S. banking agencies
released in June 2012 to implement the Basel III regulatory
capital framework developed by the Basel Committee on
Banking Supervision (Basel III) and also make other changes
to U.S. regulatory capital standards for banking institutions.
The Basel III proposed rules include heightened capital
requirements for banking institutions in terms of both higher
quality capital and higher regulatory capital ratios. The
proposed Basel III rules would become effective under a
phase-in period and would be in full effect on January 1, 2019.
The capital rules issued by the Federal banking agencies in
June 2012 would also revise the manner in which a banking
The PNC Financial Services Group, Inc. – Form 10-K 33