PNC Bank 2013 Annual Report Download - page 237

Table 160: Parent Company – Statement of Cash Flows
Year ended December 31– in millions 2013 2012 2011
Operating Activities
Net income $ 4,220 $ 3,013 $ 3,056
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in undistributed net
earnings of subsidiaries (993) (666) (882)
Other 152 566 (24)
Net cash provided (used) by
operating activities 3,379 2,913 2,150
Investing Activities
Net capital returned from
(contributed to) subsidiaries 87 50
Net change in Restricted deposits
with banking subsidiary (150)
Net cash paid for acquisition activity (3,432)
Other (274) (50) (35)
Net cash provided (used) by
investing activities (187) (3,482) (135)
Financing Activities
Borrowings from subsidiaries 3,624 8,374 4,660
Repayments on borrowings from
subsidiaries (5,767) (6,943) (4,962)
Other borrowed funds (467) (1,753) (2,188)
Preferred stock – Other issuances 495 2,446 987
Preferred stock – Other redemptions (150) (500)
Common and treasury stock
issuances 244 158 72
Acquisition of treasury stock (24) (216) (73)
Preferred stock cash dividends paid (237) (177) (56)
Common stock cash dividends paid (911) (820) (604)
Net cash provided (used) by
financing activities (3,193) 569 (2,164)
Increase (decrease) in cash and due
from banks (1) – (149)
Cash held at banking subsidiary
at beginning of year 2 2 151
Cash held at banking subsidiary
at end of year $ 1 $ 2 $ 2
N
OTE 26 S EGMENT R EPORTING
We have six reportable business segments:
• Retail Banking
• Corporate & Institutional Banking
• Asset Management Group
• Residential Mortgage Banking
• BlackRock
• Non-Strategic Assets Portfolio
Results of individual businesses are presented based on our
internal management reporting practices. There is no
comprehensive, authoritative body of guidance for
management accounting equivalent to GAAP; therefore, the
financial results of our individual businesses are not
necessarily comparable with similar information for any other
company. We periodically refine our internal
methodologies as management reporting practices are
enhanced. To the extent practicable, retrospective application
of new methodologies is made to prior period reportable
business segment results and disclosures to create
comparability to the current period presentation to reflect any
such refinements.
Financial results are presented, to the extent practicable, as if
each business operated on a stand-alone basis. Additionally,
we have aggregated the results for corporate support functions
within “Other” for financial reporting purposes.
Assets receive a funding charge and liabilities and capital
receive a funding credit based on a transfer pricing
methodology that incorporates product maturities, duration
and other factors. A portion of capital is intended to cover
unexpected losses and is assigned to our business segments
using our risk-based economic capital model, including
consideration of the goodwill at those business segments, as
well as the diversification of risk among the business
segments, ultimately reflecting PNC’s portfolio risk adjusted
capital allocation.
We have allocated the allowances for loan and lease losses
and for unfunded loan commitments and letters of credit based
on the loan exposures within each business segment’s
portfolio. Key reserve assumptions and estimation processes
react to and are influenced by observed changes in loan
portfolio performance experience, the financial strength of the
borrower, and economic conditions. Key reserve assumptions
are periodically updated.
Our allocation of the costs incurred by operations and other
shared support areas not directly aligned with the businesses is
primarily based on the use of services.
Total business segment financial results differ from total
consolidated net income. The impact of these differences is
reflected in the “Other” category in the business segment
tables. “Other” includes residual activities that do not meet the
criteria for disclosure as a separate reportable business, such
as gains or losses related to BlackRock transactions,
integration costs, asset and liability management activities
including net securities gains or losses, other-than-temporary
impairment of investment securities and certain trading
activities, exited businesses, private equity investments,
intercompany eliminations, most corporate overhead, tax
adjustments that are not allocated to business segments, and
The PNC Financial Services Group, Inc. – Form 10-K 219