PNC Bank 2013 Annual Report Download - page 186

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F
INANCIAL
A
SSETS
A
CCOUNTED
F
OR
U
NDER
F
AIR
V
ALUE
O
PTION
Refer to the Fair Value Measurement section of this Note 9
regarding the fair value of customer resale agreements, trading
loans, residential mortgage loans held for sale, commercial
mortgage loans held for sale, certain portfolio loans,
BlackRock Series C Preferred Stock and other borrowed
funds.
Customer Resale Agreements
Interest income on structured resale agreements is reported on
the Consolidated Income Statement in Other interest income.
Changes in fair value due to instrument-specific credit risk for
2013 and 2012 were not material.
Residential Mortgage-Backed Agency Securities with
Embedded Derivatives
Interest income on these securities is reported on the
Consolidated Income Statement in Other interest income.
Trading Loans
Interest income on trading loans is reported on the
Consolidated Income Statement in Other interest income.
Residential Mortgage Loans Held for Sale
Interest income on these loans is recorded as earned and
reported on the Consolidated Income Statement in Other
interest income. Throughout 2013 and 2012, certain
residential mortgage loans for which we elected the fair value
option were subsequently reclassified to portfolio loans.
Changes in fair value due to instrument-specific credit risk for
2013 and 2012 were not material.
Commercial Mortgage Loans Held for Sale
Interest income on these loans is recorded as earned and
reported on the Consolidated Income Statement in Other
interest income. The impact on earnings of offsetting
economic hedges is not reflected in these amounts. Changes in
fair value due to instrument-specific credit risk for both 2013
and 2012 were not material.
Residential Mortgage Loans – Portfolio
Interest income on these loans is recorded as earned and
reported on the Consolidated Income Statement in either Loan
interest income or Other interest income. Interest income on
the Home Equity Lines of Credit for which we have elected
the fair value option during first quarter 2013 is reported on
the Consolidated Income Statement in Loan interest income.
Other Borrowed Funds
Interest expense on the Other borrowed funds for which we
have elected the fair value option during first quarter 2013 is
reported on the Consolidated Income Statement in Borrowed
funds interest expense.
The changes in fair value included in Noninterest income for
items for which we elected the fair value option follow.
Table 92: Fair Value Option – Changes in Fair Value (a)
Gains (Losses)
Year ended December 31
In millions 2013 2012 2011
Assets
Customer resale agreements $ (7) $ (10) $ (12)
Residential mortgage-backed agency
securities with embedded
derivatives (b) 13 24
Trading loans 3 2
Residential mortgage loans held for sale 247 (180) 172
Commercial mortgage loans held for sale (10) (5) 3
Residential mortgage loans – portfolio 27 (36) (17)
BlackRock Series C Preferred Stock 122 33 (14)
Liabilities
Other borrowed funds (9)
(a) The impact on earnings of offsetting hedged items or hedging instruments is not
reflected in these amounts.
(b) At both December 31, 2013 and December 31, 2012, the balance of residential
mortgage-backed agency securities with embedded derivatives carried in Trading
securities was zero.
168 The PNC Financial Services Group, Inc. – Form 10-K