PNC Bank 2013 Annual Report Download - page 230

• Through the U.S. Attorney’s Office for the District of
Maryland, the office of the Inspector General
(“OIG”) for the Small Business Administration
(“SBA”) has served a subpoena on PNC requesting
documents concerning PNC’s relationship with,
including SBA-guaranteed loans made through, a
broker named Jade Capital Investments, LLC
(“Jade”), as well as information regarding other
PNC-originated SBA guaranteed loans made to
businesses located in the State of Maryland, the
Commonwealth of Virginia, and Washington, DC.
Certain of the Jade loans have been identified in an
indictment and subsequent superseding indictment
charging persons associated with Jade with
conspiracy to commit bank fraud, substantive
violations of the federal bank fraud statute, and
money laundering. PNC is cooperating with the U.S.
Attorney’s Office for the District of Maryland.
Our practice is to cooperate fully with regulatory and
governmental investigations, audits and other inquiries,
including those described in this Note 23.
O THER
In addition to the proceedings or other matters described
above, PNC and persons to whom we may have
indemnification obligations, in the normal course of business,
are subject to various other pending and threatened legal
proceedings in which claims for monetary damages and other
relief are asserted. We do not anticipate, at the present time,
that the ultimate aggregate liability, if any, arising out of such
other legal proceedings will have a material adverse effect on
our financial position. However, we cannot now determine
whether or not any claims asserted against us or others to
whom we may have indemnification obligations, whether in
the proceedings or other matters described above or otherwise,
will have a material adverse effect on our results of operations
in any future reporting period, which will depend on, among
other things, the amount of the loss resulting from the claim
and the amount of income otherwise reported for the reporting
period.
See Note 24 Commitments and Guarantees for additional
information regarding the Visa indemnification and our other
obligations to provide indemnification, including to current
and former officers, directors, employees and agents of PNC
and companies we have acquired.
N OTE 24 C OMMITMENTS AND G UARANTEES
E QUITY F UNDING AND O THER C OMMITMENTS
Our unfunded commitments at December 31, 2013 included
private equity investments of $164 million.
S TANDBY L ETTERS OF C REDIT
We issue standby letters of credit and have risk participations
in standby letters of credit issued by other financial
institutions, in each case to support obligations of our
customers to third parties, such as insurance requirements and
the facilitation of transactions involving capital markets
product execution. Net outstanding standby letters of credit
and internal credit ratings were as follows:
Table 151: Net Outstanding Standby Letters of Credit
Dollars in billions
December 31
2013
December 31
2012
Net outstanding standby letters of
credit (a) $10.5 $11.5
Internal credit ratings (as a percentage
of portfolio):
Pass (b) 96% 95%
Below pass (c) 4% 5%
(a) The amounts above exclude participations in standby letters of credit of $3.3 billion
and $3.2 billion to other financial institutions as of December 31, 2013 and
December 31, 2012, respectively. The amounts above include $6.6 billion and $7.5
billion which support remarketing programs at December 31, 2013 and
December 31, 2012, respectively.
(b) Indicates that expected risk of loss is currently low.
(c) Indicates a higher degree of risk of default.
If the customer fails to meet its financial or performance
obligation to the third party under the terms of the contract or
there is a need to support a remarketing program, then upon a
draw by a beneficiary, subject to the terms of the letter of
credit, we would be obligated to make payment to them. The
standby letters of credit outstanding on December 31, 2013
had terms ranging from less than 1 year to 6 years.
As of December 31, 2013, assets of $2.0 billion secured
certain specifically identified standby letters of credit. In
addition, a portion of the remaining standby letters of credit
issued on behalf of specific customers is also secured by
collateral or guarantees that secure the customers’ other
obligations to us. The carrying amount of the liability for our
obligations related to standby letters of credit and
participations in standby letters of credit was $218 million at
December 31, 2013.
S TANDBY B OND P URCHASE A GREEMENTS AND O THER
L IQUIDITY F ACILITIES
We enter into standby bond purchase agreements to support
municipal bond obligations. At December 31, 2013, the
aggregate of our commitments under these facilities was $1.3
billion. We also enter into certain other liquidity facilities to
support individual pools of receivables acquired by
commercial paper conduits. There were no commitments
under these facilities at December 31, 2013.
212 The PNC Financial Services Group, Inc. – Form 10-K