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PNC » Topics » Mortgage and Other Loan Servicing Assets

This excerpt taken from the PNC 10-K filed Feb 4, 2008.

Mortgage and Other Loan Servicing Assets

 

In millions    2006     2005  

Balance at January 1

    $344     $242  

Additions

    180     135  

Retirements (a)

       

Amortization expense

    (47 )   (33 )

Balance at December 31

    $477     $344  
(a) 2006 and 2005 included $2 million and $25 million, respectively, of fully amortized retirements.

Assuming a prepayment speed of 7%-16% for the respective strata discounted at 8%-10%, the estimated fair value of commercial mortgage servicing rights was $546 million at December 31, 2006. A 10% and 20% adverse change in all assumptions used to determine fair value at December 31, 2006, results in a $33 million and $66 million decrease in fair value, respectively. No valuation allowance was necessary at December 31, 2006 or December 31, 2005.

Assuming a prepayment speed of 12% for the respective strata discounted at 9.5%-10%, the estimated fair value of commercial loan servicing rights was $2 million at December 31, 2006. A 10% and 20% adverse change in all assumptions used to determine fair value at December 31, 2006, results in an insignificant decrease in fair value. No valuation allowance was necessary at December 31, 2006.


 

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Table of Contents

We also own an interest-only strip related to education loans totaling $59 million and $58 million, respectively, at December 31, 2006 and December 31, 2005. This strip was retained from the sales of education loans to a third party trust prior to 2003. Loans that are held by the trust supporting the value of the strip were $88 million and $123 million at December 31, 2006 and December 31, 2005, respectively. The principal of these loans is effectively guaranteed by the federal government. The trust related to the securitization will terminate in 2007.

This excerpt taken from the PNC 10-K filed Mar 1, 2007.

Mortgage and Other Loan Servicing Assets

 

In millions    2006     2005  

Balance at January 1

    $344     $242  

Additions

    180     135  

Retirements (a)

       

Amortization expense

    (47 )   (33 )

Balance at December 31

    $477     $344  
(a) 2006 and 2005 included $2 million and $25 million, respectively, of fully amortized retirements.

Assuming a prepayment speed of 7%-16% for the respective strata discounted at 8%-10%, the estimated fair value of commercial mortgage servicing rights was $546 million at December 31, 2006. A 10% and 20% adverse change in all assumptions used to determine fair value at December 31, 2006, results in a $33 million and $66 million decrease in fair value, respectively. No valuation allowance was necessary at December 31, 2006 or December 31, 2005.

Assuming a prepayment speed of 12% for the respective strata discounted at 9.5%-10%, the estimated fair value of commercial loan servicing rights was $2 million at December 31, 2006. A 10% and 20% adverse change in all assumptions used to determine fair value at December 31, 2006, results in an insignificant decrease in fair value. No valuation allowance was necessary at December 31, 2006.


 

96

Table of Contents

We also own an interest-only strip related to education loans totaling $59 million and $58 million, respectively, at December 31, 2006 and December 31, 2005. This strip was retained from the sales of education loans to a third party trust prior to 2003. Loans that are held by the trust supporting the value of the strip were $88 million and $123 million at December 31, 2006 and December 31, 2005, respectively. The principal of these loans is effectively guaranteed by the federal government. The trust related to the securitization will terminate in 2007.

EXCERPTS ON THIS PAGE:

10-K
Feb 4, 2008
10-K
Mar 1, 2007

RELATED TOPICS for PNC:

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