PNC Bank 2014 Annual Report Download - page 193

The $205 million of junior subordinated debt included in the above table represents the carrying value of debt redeemable prior to
maturity. This carrying value and related net discounts of $1 million comprise the $206 million principal amount of junior
subordinated debentures that are discussed in Note 12 Capital Securities of a Subsidiary Trust and Perpetual Trust Securities.
Included in borrowed funds are FHLB borrowings of $20.0 billion at December 31, 2014, which are generally collateralized by
residential mortgage loans, other mortgage-related loans and commercial mortgage-backed securities. FHLB borrowings have
balances that will mature from 2015 – 2030, with interest rates ranging from zero to 7.33%. There were no short-term FHLB
advances as of December 31, 2014.
Also included in borrowed funds are repurchase agreements. See Note 22 Commitments and Guarantees for additional information
on those agreements. Additionally, certain borrowings are reported at fair value. Refer to Note 7 Fair Value for more information
on those borrowings.
N
OTE 12 C APITAL S ECURITIES OF A S UBSIDIARY T RUST AND P ERPETUAL T RUST S ECURITIES
At December 31, 2014, PNC had $206 million in principal amount of an outstanding junior subordinated debenture associated with
$200 million of trust preferred securities that were issued by a subsidiary statutory trust. These trust preferred securities
represented non-voting preferred beneficial interests in the assets of the following Trust:
Table 105: Capital Securities of a Subsidiary Trust
Trust Date Formed Description of Capital Securities Redeemable
PNC Capital Trust C June 1998 $200 million due June 1, 2028, bearing
interest at a floating rate per annum equal to
3-month LIBOR plus 57 basis points. The
rate in effect at December 31, 2014 was
.806%.
On or after June 1, 2008 at par.
This Trust is a wholly-owned finance subsidiary of PNC. In the event of certain changes or amendments to regulatory requirements
or federal tax rules, the capital securities are redeemable in whole. In accordance with GAAP, the financial statements of the Trust
are not included in PNC’s consolidated financial statements.
At December 31, 2014, PNC’s junior subordinated debt with a carrying value of $205 million represented debentures purchased
and held as assets by the Trust and redeemable prior to maturity.
The obligations of the parent of the Trust, when taken collectively, are the equivalent of a full and unconditional guarantee of the
obligations of the Trust under the terms of the Capital Securities. Such guarantee is subordinate in right of payment in the same
manner as other junior subordinated debt. There are certain restrictions on PNC’s overall ability to obtain funds from its
subsidiaries. For additional disclosure on these funding restrictions, including an explanation of dividend and intercompany loan
limitations, see Note 20 Regulatory Matters. PNC is also subject to restrictions on dividends and other provisions potentially
imposed under the Exchange Agreement with PNC Preferred Funding Trust II, as described in the following Perpetual Trust
Securities section, and to other provisions similar to or in some ways more restrictive than those potentially imposed under that
agreement.
Table 106: Perpetual Trust Securities Summary
We have issued certain hybrid capital vehicles, and the following table lists those that are outstanding as of December 31, 2014.
Date Entity (a) Private Placement (b) Rate (c) Trust Issuing Notes (d)
March 2007 PNC Preferred Funding LLC $500 million 1.463% PNC Preferred Funding Trust II (e)
December 2006 PNC Preferred Funding LLC $500 million 1.891% PNC Preferred Funding Trust I (f)
(a) PNC REIT Corp. owns 100% of the LLC’s common voting securities. As a result, the LLC is an indirect subsidiary of PNC and is consolidated on PNC’s Consolidated Balance Sheet.
(b) Fixed-to-Floating Rate Non-cumulative Exchangeable Perpetual Trust Securities.
(c) As of December 31, 2014.
(d) The trusts’ investments in the LLC’s preferred securities are characterized as a noncontrolling interest on our Consolidated Balance Sheet. This noncontrolling interest totaled
approximately $981 million at December 31, 2014.
(e) Automatically exchangeable into a share of Series I Non-Cumulative Perpetual Preferred Stock of PNC (Series I Preferred Stock).
(f) Automatically exchangeable into a share of Series F Non-Cumulative Perpetual Preferred Stock of PNC Bank (PNC Bank Preferred Stock).
The PNC Financial Services Group, Inc. – Form 10-K 175