PNC Bank 2015 Annual Report Download - page 180

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Financial Instruments Accounted For Under Fair Value
Option
We elect the fair value option to account for certain financial
instruments. For more information on these financial
instruments for which the fair value option election has been
made, please refer to the Fair Value Measurement section of
this Note 7. These financial instruments are initially measured
at fair value, gains and losses from initial measurement and
any changes in fair value are subsequently recognized in
earnings. Additional information about the financial
instruments for which we elected the fair value option follows.
Customer Resale Agreements
Interest income on structured resale agreements is reported on
the Consolidated Income Statement in Other interest income.
Changes in fair value due to instrument-specific credit risk for
2015 and 2014 were not material.
Commercial Mortgage Loans Held for Sale
Interest income on these loans is recorded as earned and
reported on the Consolidated Income Statement in Other
interest income. Changes in fair value due to instrument-
specific credit risk for both 2015 and 2014 were not material.
Residential Mortgage Loans Held for Sale
Interest income on these loans is recorded as earned and
reported on the Consolidated Income Statement in Other
interest income. Throughout 2015 and 2014, certain
residential mortgage loans for which we elected the fair value
option were subsequently reclassified to portfolio loans.
Changes in fair value due to instrument-specific credit risk for
2015 and 2014 were not material.
Residential Mortgage Loans – Portfolio
Interest income on these loans is recorded as earned and
reported on the Consolidated Income Statement in either Loan
interest income or Other interest income. Interest income on
the Home Equity Lines of Credit for which we elected the fair
value option during first quarter 2013 is reported on the
Consolidated Income Statement in Loan interest income.
Other Assets
Interest income on trading loans is reported on the
Consolidated Income Statement in Other interest income.
Changes in value on the prepaid forward contract are reported
on the Consolidated Income Statement in Other noninterest
expense.
Other Borrowed Funds
Interest expense on the Other borrowed funds for which we
have elected the fair value option is reported on the
Consolidated Income Statement in Borrowed funds interest
expense.
The changes in fair value for items for which we elected the
fair value option and are included in Noninterest income and
Noninterest expense on the Consolidated Income Statement
are as follows.
Table 79: Fair Value Option – Changes in Fair Value (a)
Year ended December 31 Gains (Losses)
In millions 2015 2014 2013
Assets
Customer resale agreements $ (2) $ (3) $(7)
Commercial mortgage loans held for sale 96 50 (10)
Residential mortgage loans held for sale 152 212 213
Residential mortgage loans – portfolio 43 157 60
BlackRock Series C Preferred Stock (18) 43 122
Other assets 12 2 3
Liabilities
Other borrowed funds 4 (5) (9)
(a) The impact on earnings of offsetting hedged items or hedging instruments is not
reflected in these amounts.
162 The PNC Financial Services Group, Inc. – Form 10-K