PNC Bank 2014 Annual Report Download - page 230

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 21.
Other
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 22 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 22 C OMMITMENTS AND G UARANTEES
Credit Extension Commitments
Table 148: Credit Commitments
In millions
December 31
2014
December 31
2013
Net unfunded loan commitments
Total commercial lending $ 99,837 $ 90,104
Home equity lines of credit 17,839 18,754
Credit card 17,833 16,746
Other 4,178 4,266
Total net unfunded loan commitments 139,687 129,870
Net outstanding standby letters of credit (a) 9,991 10,521
Total credit commitments $149,678 $140,391
(a) Net outstanding standby letters of credit include $5.2 billion and $6.6 billion which
support remarketing programs at December 31, 2014 and December 31, 2013,
respectively.
Net Unfunded Loan Commitments
Commitments to extend credit represent arrangements to lend
funds or provide liquidity subject to specified contractual
conditions. These commitments generally have fixed
expiration dates, may require payment of a fee, and contain
termination clauses in the event the customer’s credit quality
deteriorates. Based on our historical experience, some
commitments expire unfunded, and therefore cash
requirements are substantially less than the total commitment.
Net Outstanding Standby Letters of Credit
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. Internal credit ratings related to our net
outstanding standby letters of credit were as follows:
Table 149: Internal Credit Ratings Related to Net
Outstanding Standby Letters of Credit
December 31
2014
December 31
2013
Internal credit ratings (as a percentage
of portfolio):
Pass (a) 95% 96%
Below pass (b) 5% 4%
(a) Indicates that expected risk of loss is currently low.
(b) 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, 2014
had terms ranging from less than 1 year to 8 years.
As of December 31, 2014, assets of $1.0 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 $182 million at
December 31, 2014 and is included in Other liabilities on our
Consolidated Balance Sheet.
Other Commitments
Equity Funding and Other Commitments
During 2014, financial support to private equity investments
including existing direct portfolio companies and indirect
private equity investments of $63 million was provided. This
amount is included in Equity Investments on our Consolidated
Balance Sheet. Of this amount, $24 million was provided to
212 The PNC Financial Services Group, Inc. – Form 10-K