PNC Bank 2012 Annual Report Download - page 72

O FF -B ALANCE S HEET A RRANGEMENTS
A ND V ARIABLE I NTEREST E NTITIES
We engage in a variety of activities that involve
unconsolidated entities or that are otherwise not reflected in
our Consolidated Balance Sheet that are generally referred to
as “off-balance sheet arrangements.” Additional information
on these types of activities is included in the following
sections of this Report:
• Commitments, including contractual obligations and
other commitments, included within the Risk
Management section of this Item 7,
• Note 3 Loan Sale and Servicing Activities and
Variable Interest Entities in the Notes To
Consolidated Financial Statements included in Item 8
of this Report,
• Note 14 Capital Securities of Subsidiary Trusts and
Perpetual Trust Securities in the Notes To
Consolidated Financial Statements included in Item 8
of this Report, and
• Note 24 Commitments and Guarantees in the Notes
To Consolidated Financial Statements included in
Item 8 of this Report.
PNC consolidates variable interest entities (VIEs) when we
are deemed to be the primary beneficiary. The primary
beneficiary of a VIE is determined to be the party that meets
both of the following criteria: (i) has the power to make
decisions that most significantly affect the economic
performance of the VIE; and (ii) has the obligation to absorb
losses or the right to receive benefits that in either case could
potentially be significant to the VIE.
A summary of VIEs, including those that we have
consolidated and those in which we hold variable interests but
have not consolidated into our financial statements, as of
December 31, 2012 and December 31, 2011 is included in
Note 3 in the Notes To Consolidated Financial Statements
included in Item 8 of this Report.
Trust Preferred Securities and REIT Preferred Securities
In connection with $402 million in principal amount of
outstanding junior subordinated debentures associated with
$390 million of trust preferred securities as of December 31,
2012 that were issued by various subsidiary statutory trusts,
we are subject to certain restrictions, including restrictions on
dividend payments. Generally, if (i) there is an event of
default under the debentures, (ii) PNC elects to defer interest
on the debentures, (iii) PNC exercises its right to defer
payments on the related trust preferred securities issued by the
statutory trusts, or (iv) there is a default under PNC’s
guarantee of such payment obligations, as specified in the
applicable governing documents, then PNC would be subject
during the period of such default or deferral to restrictions on
dividends and other provisions protecting the status of the
debenture holders similar to or in some ways more restrictive
than those potentially imposed under the Exchange
Agreements with PNC Preferred Funding Trust II and Trust
III, as described in Note 14 Capital Securities of Subsidiary
Trusts and Perpetual Trust Securities in the Notes To
Consolidated Financial Statements in Item 8 of this Report.
See the Capital and Liquidity Actions portion of the Executive
Summary section of this Item 7 for additional information
regarding our redemptions of trust preferred securities and
hybrid capital securities during 2012 and announced
redemption of the REIT Preferred Securities issued by PNC
Preferred Funding Trust III.
The PNC Financial Services Group, Inc. – Form 10-K 53