PNC Bank 2014 Annual Report Download - page 235

Resale and Repurchase Agreements
We enter into repurchase and resale agreements where we
transfer investment securities to/from a third party with the
agreement to repurchase/resell those investment securities at a
future date for a specified price. Repurchase and resale
agreements are treated as collateralized financing transactions
for accounting purposes and are generally carried at the
amounts at which the securities will be subsequently
reacquired or resold, including accrued interest. Our policy is
to take possession of securities purchased under agreements to
resell. We monitor the market value of securities to be
repurchased and resold and additional collateral may be
obtained where considered appropriate to protect against
credit exposure.
Repurchase and resale agreements are typically entered into
with counterparties under industry standard master netting
agreements which provide for the right to setoff amounts
owed to one another with respect to multiple repurchase and
resale agreements under such master netting agreement
(referred to as netting arrangements) and liquidate the
purchased or borrowed securities in the event of counterparty
default. In order for an arrangement to be eligible for netting
under GAAP, we must obtain the requisite assurance that the
offsetting rights included in the master netting agreement
would be legally enforceable in the event of bankruptcy,
insolvency, or a similar proceeding of such third party.
Enforceability is evidenced by obtaining a legal opinion that
supports, with sufficient confidence, the enforceability of the
master netting agreement in bankruptcy.
In accordance with the disclosure requirements of ASU 2011-
11, Balance Sheet (Topic 210): Disclosures about Offsetting
Assets and Liabilities, Table 154 shows the amounts owed
under resale and repurchase agreements and the securities
collateral associated with those agreements where a legal
opinion supporting the enforceability of the offsetting rights
has been obtained. We do not present resale and repurchase
agreements entered into with the same counterparty under a
legally enforceable master netting agreement on a net basis on
our Consolidated Balance Sheet or within Table 154. The
amounts reported in Table 154 exclude the fair value
adjustment on the structured resale agreements of $7 million
and $11 million at December 31, 2014 and December 31,
2013, respectively, that we have elected to account for at fair
value. Refer to Note 7 Fair Value for additional information
regarding the structured resale agreements at fair value.
Refer to Note 15 Financial Derivatives for additional
information related to offsetting of financial derivatives.
Table 154: Resale and Repurchase Agreements Offsetting
In millions
Gross
Resale
Agreements
Amounts
Offset
on the
Consolidated
Balance Sheet
Net
Resale
Agreements (a) (b)
Securities
Collateral
Held Under
Master Netting
Agreements (c)
Net
Amounts (b)
Resale Agreements
December 31, 2014 $1,646 $1,646 $1,569 $77
December 31, 2013 1,542 1,542 1,453 89
In millions
Gross
Repurchase
Agreements
Amounts
Offset
on the
Consolidated
Balance Sheet
Net
Repurchase
Agreements (d) (e)
Securities
Collateral
Pledged Under
Master Netting
Agreements (c)
Net
Amounts (e)
Repurchase Agreements
December 31, 2014 $3,406 $3,406 $2,580 $ 826
December 31, 2013 4,183 4,183 3,166 1,017
(a) Represents the resale agreement amount included in Federal funds sold and resale agreements on our Consolidated Balance Sheet and the related accrued interest income in the
amount of $1 million at both December 31, 2014 and December 31, 2013, respectively, which is included in Other Assets on the Consolidated Balance Sheet.
(b) These amounts include certain long term resale agreements of $77 million at December 31, 2014 and $89 million at December 31, 2013, respectively, which are fully collateralized
but do not have the benefits of a netting opinion and, therefore, might be subject to a stay in insolvency proceedings and therefore are not eligible under ASC 210-20 for netting.
(c) In accordance with the requirements of ASU 2011-11, represents the fair value of securities collateral purchased or sold, up to the amount owed under the agreement, for agreements
supported by a legally enforceable master netting agreement.
(d) Represents the repurchase agreement amount included in Federal funds purchased and repurchase agreements on our Consolidated Balance Sheet and the related accrued interest
expense in the amount of less than $1 million at both December 31, 2014 and December 31, 2013, which is included in Other Liabilities on the Consolidated Balance Sheet.
(e) These amounts include overnight repurchase agreements of $826 million and $966 million at December 31, 2014 and December 31, 2013, respectively, entered into with
municipalities, pension plans, and certain trusts and insurance companies as well as certain long term repurchase agreements of $50 million at December 31, 2013, which are fully
collateralized but do not have the benefits of a netting opinion and, therefore, might be subject to a stay in insolvency proceedings and therefore are not eligible under ASC 210-20 for
netting. There were no long term repurchase agreements as of December 31, 2014.
The PNC Financial Services Group, Inc. – Form 10-K 217