PNC Bank 2014 Annual Report Download - page 115

represented 60% of the loan portfolio at December 31, 2013
and 59% at December 31, 2012. Consumer lending
represented 40% of the loan portfolio at December 31, 2013
and 41% at December 31, 2012. Commercial real estate loans
represented 11% of total loans at December 31, 2013 and 10%
at December 31, 2012 and represented 7% of total assets at
December 31, 2013 and 6% at December 31, 2012.
The total loan balances above included purchased impaired loans
of $6.1 billion, or 3% of total loans, at December 31, 2013, and
$7.4 billion, or 4% of total loans, at December 31, 2012.
Investment Securities
As of December 31, 2013, the amortized cost and fair value of
available for sale securities totaled $48.0 billion and $48.6
billion, respectively, compared to an amortized cost and fair
value as of December 31, 2012 of $49.4 billion and $51.1
billion, respectively. The amortized cost and fair value of held
to maturity securities were $11.7 billion and $11.8 billion,
respectively, at December 31, 2013, compared to $10.4 billion
and $10.9 billion, respectively, at December 31, 2012.
Investment securities represented 19% of total assets at
December 31, 2013 and 20% at December 31, 2012. Average
investment securities decreased to $57.3 billion during 2013
compared to $60.8 billion during 2012.
The fair value of investment securities is impacted by interest
rates, credit spreads, market volatility and liquidity conditions.
The fair value of investment securities generally decreases
when interest rates increase and vice versa. In addition, the
fair value generally decreases when credit spreads widen and
vice versa. Net unrealized gains in the total investment
securities portfolio decreased to $.7 billion at December 31,
2013 from $2.1 billion at December 31, 2012 due primarily to
an increase in market interest rates. The comparable amounts
for the securities available for sale portfolio were $.6 billion
and $1.6 billion, respectively.
During 2013, we transferred securities with a fair value of
$1.9 billion from available for sale to held to maturity. We
changed our intent and committed to hold these high-quality
securities to maturity in order to reduce the impact of price
volatility on Accumulated other comprehensive income and
certain capital measures, taking into consideration market
conditions and changes to regulatory capital requirements
under Basel III capital standards.
The weighted-average expected maturity of the investment
securities portfolio (excluding corporate stocks and other) was
4.9 years at December 31, 2013 and 4.0 years at December 31,
2012.
Loans Held For Sale
Loans held for sale totaled $2.3 billion at December 31, 2013
compared with $3.7 billion at December 31, 2012.
For commercial mortgages held for sale designated at fair
value, the balance relating to these loans was $586 million at
December 31, 2013 compared to $772 million at
December 31, 2012. For commercial mortgages held for sale
carried at lower of cost or fair value, we sold $2.8 billion in
2013 compared to $2.2 billion in 2012. All of these loan sales
were to government agencies. Total gains of $79 million were
recognized on the valuation and sale of commercial mortgage
loans held for sale, net of hedges, in 2013, and $41 million in
2012.
Residential mortgage loan origination volume was $15.1
billion in 2013 compared to $15.2 billion in 2012.
Substantially all such loans were originated under agency or
Federal Housing Administration (FHA) standards. We sold
$14.7 billion of loans and recognized related gains of $568
million in 2013. The comparable amounts for 2012 were $13.8
billion and $747 million, respectively.
Asset Quality
Overall credit quality continued to improve during 2013.
Nonperforming assets decreased $.3 billion, or 9%, to $3.5
billion at December 31, 2013 compared to December 31,
2012. Nonperforming assets to total assets were 1.08% at
December 31, 2013, compared to 1.24% at December 31,
2012. Overall delinquencies of $2.5 billion decreased $1.3
billion, or 33%, compared with December 31, 2012. Net
charge-offs of $1.1 billion in 2013 were down 16% compared
to net charge-offs of $1.3 billion in 2012. Net charge-offs
were 0.57% of average loans in 2013 and 0.73% of average
loans in 2012.
The ALLL was $3.6 billion, or 1.84% of total loans and 117%
of nonperforming loans, as of December 31, 2013, compared
to $4.0 billion, or 2.17% of total loans and 124% of
nonperforming loans, as of December 31, 2012.
At December 31, 2013, our largest nonperforming asset was
$36 million in the Real Estate, Rental and Leasing Industry
and our average nonperforming loans associated with
commercial lending were under $1 million.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets totaled $11.3 billion at
December 31, 2013 and $10.9 billion at December 31, 2012.
The increase of $.4 billion was primarily due to additions to
and changes in value of mortgage and other loan servicing
rights.
The PNC Financial Services Group, Inc. – Form 10-K 97