PNC Bank 2015 Annual Report Download - page 208

in a reclassification within Capital surplus – Common stock
and other with no impact on PNC’s Shareholders’ equity.
These warrants were sold by the U.S. Treasury in a secondary
public offering that closed on May 5, 2010 after the U.S.
Treasury exchanged its TARP Warrant (issued on
December 31, 2008 under the TARP Capital Purchase
Program) for 16.9 million warrants. These warrants expire
December 31, 2018.
Other Shareholders’ Equity Matters
We have a dividend reinvestment and stock purchase plan.
Holders of preferred stock and PNC common stock may
participate in the plan, which provides that additional shares
of common stock may be purchased at market value with
reinvested dividends and voluntary cash payments. Common
shares issued pursuant to this plan were: 0.3 million shares in
2015, 0.3 million shares in 2014 and 0.4 million shares in
2013.
At December 31, 2015, we had reserved approximately
93 million common shares to be issued in connection with
certain stock plans.
We repurchased 4.4 million shares in 2015 and 13.5 million
shares in 2014 under the stock repurchase program that the
Board of Directors approved effective October 4, 2007.
Effective March 31, 2015, the Board of Directors terminated
this share repurchase program and effective April 1, 2015 the
Board of Directors replaced it with a new stock repurchase
program authorization in the amount of up to 100 million
shares of PNC common stock which may be purchased on the
open market or in privately negotiated transactions. We
repurchased 17.9 million shares under this program in 2015 .
A maximum amount of 82.1 million shares remained available
for repurchase under this program at December 31, 2015. This
program will remain in effect until fully utilized or until
modified, superseded or terminated.
Noncontrolling Interests
Perpetual Trust Securities
In December 2006, one of our indirect subsidiaries, PNC
REIT Corp., sold $500 million of 6.517% Fixed-to-Floating
Rate Non-Cumulative Exchangeable Perpetual Trust
Securities (the “Trust Securities”) of PNC Preferred Funding
Trust I (“Trust I”), in a private placement. PNC REIT Corp.
had previously acquired the Trust Securities from the trust in
exchange for an equivalent amount of Fixed-to-Floating Rate
Non-Cumulative Perpetual Preferred Securities (the “LLC
Preferred Securities”), of PNC Preferred Funding LLC, (the
“LLC”), held by PNC REIT Corp. The LLC’s initial material
assets consist of indirect interests in mortgages and mortgage-
related assets previously owned by PNC REIT Corp. The rate
on these securities at December 31, 2015 was 2.162%.
In March 2007, the LLC, sold $500 million of 6.113% Fixed-
to-Floating Rate Non-Cumulative Exchangeable Perpetual
Trust Securities (the “Trust II Securities”) of PNC Preferred
Funding Trust II (“Trust II”) in a private placement. In
connection with the private placement, Trust II acquired $500
million of LLC Preferred Securities, from the LLC. The rate
on these securities at December 31, 2015 was 1.735%.
The Trust I Securities and Trust II Securities are redeemable
in whole or in part at par ($100,000 per security), plus any
declared and unpaid dividends to the redemption date, on the
quarterly dividend payment date in March 2017 and on the
March quarterly dividend payment date in each fifth
succeeding year (each, a “Five Year Date”).
The Trust I Securities and Trust II Securities are also
redeemable in whole, but not in part, on any quarterly
dividend payment date that is not a Five Year Date at a
redemption price equal to the sum of: (i) the greater of
(A) $100,000 per security or (B) the sum of present values of
$100,000 per security and all undeclared dividends for the
dividend periods from the redemption date to and including
the next succeeding Five Year Date, discounted to the
redemption date on a quarterly basis at the 3-month USD
LIBOR rate applicable to the dividend period immediately
preceding such redemption date plus (ii) any declared and
unpaid dividends to the redemption date.
The Trust I Securities and Trust II Securities are also
redeemable in whole, but not in part, on any quarterly
dividend payment date that is not a Five Year Date in the case
of certain tax, investment company or regulatory capital
events at a redemption price of par plus declared and unpaid
dividends to the redemption date.
Upon certain conditions relating to the capitalization or the
financial condition of PNC Bank and upon the direction of the
OCC, the Trust I Securities are automatically exchangeable
into shares of Series F preferred stock of PNC Bank and the
Trust II Securities are automatically exchangeable into shares
of Series I preferred stock of PNC.
Any redemption is subject to compliance with the applicable
Replacement Capital Covenant (see below) and approval of
the OCC.
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 our Consolidated Balance Sheet.
Trust I and Trust II’s investment in the LLC Preferred
Securities is characterized as a noncontrolling interest on our
Consolidated Balance Sheet since we are not the primary
beneficiary of Trust I and Trust II. This noncontrolling interest
totaled approximately $981 million at December 31, 2015.
190 The PNC Financial Services Group, Inc. – Form 10-K