PNC Bank 2014 Annual Report Download - page 67

O FF -B ALANCE S HEET A RRANGEMENTS A ND
V ARIABLE I NTEREST E NTITIES
We engage in a variety of activities that involve
unconsolidated entities or that are otherwise not reflected in
our Consolidated Balance Sheet that are generally referred to
as “off-balance sheet arrangements.” Additional information
on these types of activities is included in the following
sections of this Report:
• Commitments, including contractual obligations and
other commitments, included within the Risk
Management section of this Item 7,
• Note 2 Loan Sale and Servicing Activities and
Variable Interest Entities in the Notes To Consolidated
Financial Statements included in Item 8 of this Report,
• Note 12 Capital Securities of a Subsidiary Trust and
Perpetual Trust Securities in the Notes To
Consolidated Financial Statements included in Item 8
of this Report, and
• Note 22 Commitments and Guarantees in the Notes
To Consolidated Financial Statements included in
Item 8 of this Report.
PNC consolidates variable interest entities (VIEs) when we
are deemed to be the primary beneficiary. The primary
beneficiary of a VIE is determined to be the party that meets
both of the following criteria: (i) has the power to make
decisions that most significantly affect the economic
performance of the VIE; and (ii) has the obligation to absorb
losses or the right to receive benefits that in either case could
potentially be significant to the VIE.
A summary of VIEs, including those that we have
consolidated and those in which we hold variable interests but
have not consolidated into our financial statements, as of
December 31, 2014 and December 31, 2013 is included in
Note 2 in the Notes To Consolidated Financial Statements
included in Item 8 of this Report.
Trust Preferred Securities and REIT Preferred
Securities
We are subject to certain restrictions, including restrictions on
dividend payments, in connection with $206 million in principal
amount of an outstanding junior subordinated debenture
associated with $200 million of trust preferred securities (both
amounts as of December 31, 2014) that were issued by PNC
Capital Trust C, a subsidiary statutory trust. Generally, if there
is (i) an event of default under the debenture, (ii) PNC elects to
defer interest on the debenture, (iii) PNC exercises its right to
defer payments on the related trust preferred security issued by
the statutory trust, or (iv) there is a default under PNC’s
guarantee of such payment obligations, as specified in the
applicable governing documents, then PNC would be subject
during the period of such default or deferral to restrictions on
dividends and other provisions protecting the status of the
debenture holders similar to or in some ways more restrictive
than those potentially imposed under the Exchange Agreement
with PNC Preferred Funding Trust II. See Note 12 Capital
Securities of a Subsidiary Trust and Perpetual Trust Securities
in the Notes To Consolidated Financial Statements in Item 8 of
this Report for additional information on contractual limitations
on dividend payments resulting from securities issued by PNC
Preferred Funding Trust I and PNC Preferred Funding Trust II
and additional discussion of trust preferred securities.
The PNC Financial Services Group, Inc. – Form 10-K 49