PNC Bank 2013 Annual Report Download - page 215

In addition to using master netting and related collateral
agreements to reduce credit risk associated with derivative
instruments, we also seek to minimize credit risk by entering
into transactions with counterparties with high credit ratings
and by using internal credit approvals, limits, and monitoring
procedures. Collateral may also be exchanged under certain
derivative agreements that are not considered master netting
agreements.
At December 31, 2013, we held cash, U.S. government
securities and mortgage-backed securities totaling $781
million under master netting and other collateral agreements
to collateralize net derivative assets due from counterparties,
and we have pledged cash totaling $508 million under these
agreements to collateralize net derivative liabilities owed to
counterparties. These totals may differ from the amounts
presented in the preceding offsetting table because they may
include collateral exchanged under an agreement that does not
qualify as a master netting agreement or because the total
amount of collateral held or pledged exceeds the net derivative
fair value with the counterparty as of the balance sheet date
due to timing or other factors. To the extent not netted against
the derivative fair value under a master netting agreement, the
receivable for cash pledged is included in Other assets and the
obligation for cash held is included in Other borrowed funds
on our Consolidated Balance Sheet. Securities held from
counterparties are not recognized on our balance sheet.
Likewise securities we have pledged to counterparties remain
on our balance sheet.
Certain of the master netting agreements and certain other
derivative agreements also contain provisions that require
PNC’s debt to maintain an investment grade credit rating from
each of the major credit rating agencies. If PNC’s debt ratings
were to fall below investment grade, we would be in violation
of these provisions and the counterparties to the derivative
instruments could request immediate payment or demand
immediate and ongoing full overnight collateralization on
derivative instruments in net liability positions. The aggregate
fair value of all derivative instruments with credit-risk-related
contingent features that were in a net liability position on
December 31, 2013 was $757 million for which PNC had
posted collateral of $506 million in the normal course of
business. The maximum amount of collateral PNC would have
been required to post if the credit-risk-related contingent
features underlying these agreements had been triggered on
December 31, 2013 would be an additional $251 million.
N
OTE 18 E ARNINGS P ER S HARE
Table 140: Basic and Diluted Earnings per Common Share
In millions, except per share data 2013 2012 2011
Basic
Net income $4,227 $3,001 $3,071
Less:
Net income (loss) attributable to noncontrolling interests 7 (12) 15
Preferred stock dividends and discount accretion and redemptions 249 181 58
Dividends and undistributed earnings allocated to nonvested restricted shares 18 14 12
Net income attributable to basic common shares $3,953 $2,818 $2,986
Basic weighted-average common shares outstanding 528 526 524
Basic earnings per common share (a) $ 7.48 $ 5.36 $ 5.70
Diluted
Net income attributable to basic common shares $3,953 $2,818 $2,986
Less: Impact of BlackRock earnings per share dilution 18 14 19
Net income attributable to diluted common shares $3,935 $2,804 $2,967
Basic weighted-average common shares outstanding 528 526 524
Dilutive potential common shares (b) (c) 432
Diluted weighted-average common shares outstanding 532 529 526
Diluted earnings per common share (a) $ 7.39 $ 5.30 $ 5.64
(a) Basic and diluted earnings per share under the two-class method are determined on net income reported on the income statement less earnings allocated to nonvested restricted shares
(participating securities).
(b) Excludes number of stock options considered to be anti-dilutive of 1 million for 2013, 4 million for 2012 and 8 million for 2011.
(c) Excludes number of warrants considered to be anti-dilutive of 17 million for 2012 and 2011. No warrants were considered to be anti-dilutive for 2013.
The PNC Financial Services Group, Inc. – Form 10-K 197