The PNC Investments Bank Deposit Program Disclosure Document
Summary
Deposits
By electing the PNC Investments Bank Deposit Program (the “Program”), your available
cash balances in eligible accounts will automatically be deposited into an interest-bearing
deposit account insured by the Federal Deposit Insurance Corporation (“FDIC”) and
maintained in the name of Hilliard Lyons at PNC Bank, National Association (“PNC
Bank”), an affiliate of Hilliard Lyons and PNC Investments.
Interest and Fees
The interest rate for the Program will vary over time. You can obtain current interest rates
from your PNC Investments financial consultant or at http://currentrates.hilliard.com.
The interest rate on the bank deposit account is a variable rate and will be determined by
the rate that PNC Bank is willing to pay.
The interest rate on the bank deposit account may result in a lower rate of return than the
rate of return for similar investments offered outside the Program, and may be lower than
interest rates on money market mutual funds. Money market mutual funds seek to
achieve the highest rate of return (less fees and expenses) consistent with prudence and
their investment objective.
Benefits to Hilliard Lyons
Hilliard Lyons receives fees for services provided in connection with the Program.
Your Responsibility
Because PNC Investments would not be aware of deposits made by you outside of the
Program, you are responsible for monitoring the total amount of all deposits you have at
PNC Bank for the purpose of calculating your FDIC coverage.
Relationships and Your Privacy
Although Hilliard Lyons, PNC Investments and PNC Bank may share certain information
about you and your accounts, information shared with PNC Bank will be handled in
accordance with The PNC Financial Services Group, Inc. Privacy Policy.
Differing Risks and Account Protection
Money market mutual funds and the Program are subject to differing risks and account
protection. Money market mutual funds invest in high-quality, short-term securities and
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seek to maintain a stable net asset value but are subject to market risk and potential loss
of value. Money market mutual funds are not bank accounts and are not subject to FDIC
insurance protection. Money market mutual funds are covered by SIPC, which protects
against the custodial risk (not a decline in the market value) if a brokerage firm fails, by
replacing missing securities and cash up to a limit of $500,000, of which $100,000 may
be cash. The PNC Bank deposit account is not subject to market risk and loss of value but
is subject to the risk of PNC Bank’s failure. Bank deposits are eligible for FDIC
insurance protection, which protects against a PNC Bank failure by replacing cash up to a
basic FDIC insured limit of $100,000 or other applicable FDIC insurance limits based on
account type and ownership category. In calculating your insured limit, the FDIC would
consider other deposits you have at PNC Bank outside of the program.
Terms and Conditions
The available sweep options for your PNC Investments Account(s) consist of the
PNC Investments Bank Deposit Program and various taxable and tax-exempt
money market mutual funds. You are participating in the FDIC-Insured PNC
Investments Bank Deposit Program, to which the following terms and conditions
apply.
By electing the Program, your available cash balances (such as those from securities
transactions, dividend and interest payments, and additional deposits) in eligible PNC
Investments accounts (“PNC Investments Account(s)”) will systematically be deposited
into an interest-bearing FDIC-insured deposit account maintained in the name of Hilliard
Lyons as custodian at PNC Bank. You receive interest on your portion of the balance
held on deposit in accordance with these Terms and Conditions.
Your funds are pooled with funds from other PNC Investments customers and deposited
at PNC Bank in a manner designed to provide you with FDIC insurance. If you maintain
balances at PNC Bank outside of the Program, you are responsible for monitoring the
total amount of the deposits that you have with PNC Bank, including Program deposits,
to determine the extent of deposit insurance coverage available to you. This is discussed
further in the “FDIC Operations and Limitations” section below.
Hilliard Lyons provides certain services with respect to the operation of the Program and
the placing of your funds on deposit with PNC Bank. All activity with respect to your
Hilliard Lyons account will appear in your periodic account statement from PNC
Investments, including the total of your portion of the opening and closing bank deposit
balance.
Deposits
Periodically, Hilliard Lyons will systematically deposit the cash balance in your PNC
Investments Account to the PNC Bank deposit account. Your interest in the bank deposit
will receive FDIC coverage up to the maximum permitted by law (generally up to
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$100,000 per depositor) as discussed further in the FDIC Operations and Limitations
section set forth below.
Your interest in the bank deposit assets will be evidenced by an entry on records
maintained by Hilliard Lyons. You will not be issued any additional evidence of
ownership, such as a passbook or certificate. However, your PNC Investments Account
statement will reflect all deposits, withdrawals, and applicable interest rates. See the
“Account Statements” section below for more details regarding your PNC Investments
statement.
Cash intended for deposit into the Program must be deposited through your PNC
Investments Account and may not be placed directly by you into PNC Bank. Deposits by
you with PNC Bank outside of the Program may affect the extent of FDIC coverage of
your funds.
Cash balances in your PNC Investments Account will be transferred to the bank deposit
account before 11:00 a.m. ET each business day. Cash balances in your PNC Investments
Account after 11:00 a.m. ET will be processed the following business day.
Cash balances resulting from the sale of securities will be deposited into the PNC Bank
deposit account on settlement date. Cash balances resulting from dividends, interest or
other entries will be deposited into the PNC Bank deposit account on the next business
day following the date of entry into your PNC Investments Account. Funds used to
purchase securities will be transferred out of the PNC Bank deposit account to cover the
cost of trades on settlement date. Check deposits will be deposited into the PNC Bank
deposit account one business day following the date of the deposit entry into your PNC
Investments Account.
PNC Bank, National Association
PNC Bank, Hilliard Lyons and PNC Investments are wholly owned subsidiaries of The
PNC Financial Services Group, Inc. The bank deposit account established by Hilliard
Lyons at PNC Bank constitutes a direct obligation of PNC Bank to Hilliard Lyons and is
not directly or indirectly an obligation of Hilliard Lyons. Under federal regulations, PNC
Bank is permitted to impose a seven-day delay on any withdrawal request. While PNC
Bank has not indicated its intention to implement such a policy, PNC Bank may, at any
time, choose to do so. In such event, PNC Investments can delay your access to your
money for a corresponding period of time.
You can obtain publicly available financial information concerning PNC Bank at
http://www2.fdic.gov/idasp/main.aspor by contacting the FDIC Public Information
Center by mail at 801 17th Street, N. W., Room 100, Washington, DC 20434 or by phone
at 877.275.3342. Hilliard Lyons is not responsible for any insured or uninsured portion of
any deposits at PNC Bank and does not guarantee the financial condition of PNC Bank or
the accuracy of any publicly available financial information concerning PNC Bank.
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Interest and Fees
The variable rate of interest paid on your bank deposits will be established by PNC Bank
based on the interest that PNC Bank is willing to pay on the deposit account. The fee paid
to Hilliard Lyons is an obligation of PNC Bank to Hilliard Lyons in addition to the
interest paid by PNC Bank on the bank deposit account. There is not necessarily a
relationship between the bank deposit account rate of interest and the highest rates or any
other rates available in the market, including any money market mutual fund rates. The
interest rate on the bank deposit account may change over time. See
http://currentrates.hilliard.com for details about current interest rates for the Program. By
comparison, a money market mutual fund, including money market mutual funds
available through PNC Investments, generally seeks to achieve the highest rate of return
(less fees and expenses) consistent with the fund’s investment objective, which can be
found in the fund’s prospectus. The current rate of return on bank deposit accounts will
vary over time, and there is no guarantee that the return on the bank deposit accounts will
be or remain higher than other alternatives over any given period. Clients in higher tax
brackets should carefully examine the after-tax return of the Program compared to
available non-FDIC-insured tax-exempt money market mutual fund return. For
current rates for existing money market mutual funds and the Program, call your financial
consultant or visit http://currentrates.hilliard.com.
Interest will accrue on the bank deposit balances from the business day the funds are
deposited into the bank deposit account at PNC Bank through the business day preceding
the date of withdrawal from such bank deposit account. Interest will be compounded and
credited to the applicable accounts monthly. The daily balance method is used to
calculate interest on bank deposit account balances. This method applies a daily periodic
rate to the principal in the account each day. The rate you earn on your bank deposit may
be higher or lower than the rates available to depositors making non-Program deposits
with PNC Bank directly, through other types of accounts at PNC Investments, or with
other depository institutions in comparable accounts. You should compare the terms,
rates of return, required minimum amounts, charges and other features of the Program
with other accounts and investment alternatives. Subject to PNC Investments right to
impose a seven-day delay on any withdrawal request, in the event of a similar delay by
PNC Bank, there is no minimum period that your money must remain on deposit, and
there is no penalty for withdrawal of your entire balance, or any part thereof, at any time.
Hilliard Lyons makes a profit on deposits at PNC Bank determined by negotiated fees
between PNC Bank and Hilliard Lyons.
Conflicts of Interest
Hilliard Lyons receives fees for services provided in connection with the Program.
Hilliard Lyons may earn a higher fee if you elect to participate in the Program than if you
purchase shares in a money market mutual fund.
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PNC Bank may use the cash balances in the deposit account to fund certain lending and
investing activities. As with other depository institutions, the profitability of PNC Bank is
determined in large part by the difference between the interest paid and other costs
incurred on its deposit accounts, and the interest or other income earned on its loans,
investments and other assets
Program Risks
PNC Bank is permitted to impose a seven-day delay on any withdrawal request. PNC
Bank reserves the right to not accept deposits as part of this Program. In the event of a
failure of PNC Bank, there may be a time period during which you may not be able to
access your money.
If you have money on deposit at PNC Bank outside the Program, this may negatively
impact the availability of FDIC insurance for the total amount of your funds held within
and outside the Program. Program deposits exceeding $100,000 might not be insured by
the FDIC, depending on ownership category and other rules established by the FDIC. If
you expect to have total deposits at PNC Bank, including Program balances at PNC
Investments and in other deposit accounts at PNC Bank, that exceed the FDIC insurance
coverage limits, you should carefully evaluate other investment alternatives that best
meet your investment needs because the excess would no longer be FDIC-insured.
Alternatives to the Program
By participating in the Program, you agree to the terms provided herein. You understand
that, at any time, you may elect out of the Program. If you elect out of the Program and
you do not designate a replacement automatic cash investment option for your PNC
Investments Account, the un-invested cash will be invested in the Hilliard Lyons
Government Fund.
Withdrawals
By participating in the Program you consent to have your money on deposit at PNC Bank
automatically withdrawn from the bank deposit account in the event of a debit in your
PNC Investments Account or, on settlement date, to pay for securities purchased for or
sold to your PNC Investments Account. Debits may also be created by writing a check on
your PNC Investments Account, withdrawing funds through your debit card, or paying
other liabilities to PNC Investments.
Checks, ACH payments, debit cards, ATM withdrawals, direct deposits, credits and other
transactions and items for your PNC Investments Account are processed through that
account rather than through the PNC Bank deposit account. PNC Investments will debit
and credit the bank deposit account to accommodate this processing. You may make
withdrawals from the Program, in any amount, not to exceed your then-current total
account balance in the Program, through your PNC Investments Account. Withdrawals
from the Program may not be made directly by you from PNC Bank. PNC Investments
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reserves the right to restrict or limit your ability to withdraw funds, and may limit or
terminate checking or other privileges.
Right of Set-Off. Under the terms of your PNC Investments Account agreement, PNC
Investments may charge or offset funds in the PNC Bank deposit account against
indebtedness or obligations you may have to PNC Investments. For further information
on the right of PNC Investments regarding such indebtedness or obligations, you should
review your PNC Investments Account agreement. This provision does not apply where
otherwise prohibited by law.
Account Statements
Your PNC Investments Account statements, for each statement period, will reflect:
•
Program deposits to and withdrawals from the PNC Bank deposit account
•
Your closing Program balance in the PNC Bank deposit account
•
Interest earned on your Program account balance
You should retain all account statements. You must notify PNC Investments immediately
of any discrepancies noted on your account statement, and in no event later then ten (10)
days after the date of the account statement on which the problem or error first occurred.
You should also notify PNC Investments if there is unauthorized activity in your account
or if you have general complaints regarding the Program. You will not receive a separate
statement from PNC Bank.
You can also access information about your Hilliard Lyons Account online at
http://currentrates.hilliard.com.
Tax Reporting
For most clients, interest earned on deposits in the bank deposit account will be taxed as
interest income in the year it is received. A Form 1099-INT will be sent to you each year
showing the amount of interest income you have earned on deposits in the PNC Bank
deposit account.
Your Relationship with PNC Investments
PNC Investments is acting as your agent in establishing and maintaining the PNC Bank
deposit account, including depositing your money to and withdrawing your money from
PNC Bank.
PNC Investments is a registered broker-dealer in securities and is a member of the
National Association of Securities Dealers, Inc.
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Personal Information. PNC Investments and its service providers may share
information concerning you and your accounts in connection with providing the services
contemplated by these Terms and Conditions, and may disclose information about the
bank deposits to any affiliate of PNC Investments in accordance with applicable laws,
The PNC Financial Services Group, Inc. Privacy Policy, and customary brokerage and
banking practices. PNC Investments, PNC Bank and their service providers may obtain
such information as may be necessary for legitimate business needs in connection with
the operation of the Program. For information regarding the collection, processing, and
use of your personal information and your rights to limit the use and disclosure of such
information, you should refer to The PNC Financial Services Groups, Inc. Privacy Policy
as presented on www.hilliard.com, or ask your PNC Investments financial consultant for
a copy of The PNC Financial Services Group, Inc. Privacy Policy.
Differences Between Hilliard Lyons Bank Deposit Program and Money Market
Mutual Funds
The bank deposit account available through the Program at PNC Bank is regulated by
federal bank regulatory agencies under various banking laws and regulations. The bank
deposit account balance is an obligation of PNC Bank and qualifies for FDIC insurance
protection per depositor in each recognized insurable capacity in accordance with the
rules of the FDIC. The discussion below presents more information on FDIC Operations
and Limitations, as well as on money market mutual funds and SIPC coverage.
FDIC Operations and Limitations. PNC Bank is a Member FDIC. Deposits into a PNC
Bank account are insured by the FDIC, an independent agency of the federal government
backed by the full faith and credit of the United States. These deposits are insured up to a
maximum amount of $100,000 ($250,000 for certain self-directed retirement accounts
such as IRAs) per depositor. The applicable $100,000 or $250,000 limit includes your
bank deposit account principal and accrued interest, when aggregated with all other
deposits held by you directly, or through others, in the same recognized legal capacity at
PNC Bank. The FDIC protects you against loss of your insured deposits in the event PNC
Bank fails. If you separately maintain deposit accounts with PNC Bank, your funds might
exceed $100,000 and any such funds in excess of $100,000 ($250,000 for IRA and
certain retirement accounts) would not be insured by the FDIC.
The Program account is in the name of Hilliard Lyons, as custodian. However, FDIC
regulations permit “pass-through” insurance coverage for funds being held in a
representative or custodial capacity so long as certain requirements are met. Thus, while
the account holds the funds of several PNC Investments clients, each client’s interest in
the Program account will be afforded separate FDIC Insurance coverage, up to the
maximum permitted by law, assuming certain requirements are met. PNC Investments
and PNC Bank have taken all necessary steps to comply with such FDIC regulations so
that individual interest will be afforded pass-through insurance coverage.
The limitations on FDIC coverage apply to your deposits, whether made by you
individually on your own or through the Program. If you have or make a deposit on
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your own with PNC Bank, PNC Investments would not be aware of these deposits.
For the purpose of calculating your FDIC coverage, you must aggregate all deposits
that you maintain with PNC Bank in the same insurable capacity, including deposits
you hold directly with PNC Bank and deposits you hold through PNC Investments
and other intermediaries. By way of example, any funds swept into a deposit
account at PNC Bank through the Program will be aggregated with any CDs issued
to you by PNC Bank and held in the same insurable capacity. You are responsible
for monitoring the total amount of deposits that you have at PNC Bank and through
the Program for purposes of calculating your FDIC coverage.
In the unlikely event that payments under the federal deposit insurance program become
necessary, payments of insured deposits will be made by the FDIC, or the deposit may be
assumed by another institution. However, there is no specific time period during which
the FDIC must make insurance payments available. Furthermore, you may be required to
provide certain documentation to the FDIC before insurance payments are made.
Questions About FDIC Deposit Insurance Coverage. You may wish to seek advice
from your own attorney concerning FDIC Insurance coverage of deposits held in more
than one capacity. You may also obtain information by contacting the FDIC, Division of
Supervision and Consumer Protection, by letter (550 17th Street, N.W., Washington,
D.C., 20429), or by phone (877.275.3342, 800.925.4618 TDD), by email
(dcainternet@fdic.gov), or by accessing the FDIC website at www.fdic.gov
SIPC Coverage and Money Market Mutual Fund Features. SIPC is a nonprofit
membership corporation created by the Securities Investor Protection Act of 1970,
funded primarily by its member’s securities brokerage firms registered with the U. S.
Securities and Exchange Commission. SIPC provides protection against custodial risk to
clients of securities brokerage firms, such as PNC Investments, in the event such firms
become insolvent. Unlike FDIC insurance, SIPC does not insure against the loss of your
investment. Nor does SIPC insurance insure the quality of investments or protect against
a decline or fluctuations in the value of your investments. SIPC protects against the loss
of client securities and cash up to a total of $500,000 (of which up to $100,000 may be
cash) per client under SIPC rules.
In the event the SIPC limits are not sufficient, Hilliard Lyons has purchased additional
protection up to $100,000,000 firm aggregate through a third party insurance carrier.
Similar to SIPC protection, this coverage protects your securities, money market fund
shares and cash held by Hilliard Lyons should Hilliard Lyons be required to liquidate.
Unlike the money market fund shares held in your Hilliard Lyons Account, balances in
the bank deposit accounts are not covered by SIPC or the additional insurance discussed
above, but is guaranteed by the FDIC, subject to certain limitations. If you have questions
about SIPC coverage and additional coverage provided through Hilliard Lyons, ask your
PNC Investments financial consultant for details. You may also obtain information about
SIPC coverage, including a brochure that describes SIPC and SIPC insurance, by
accessing the SIPC Web site at www.sipc.org.
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Other Terms
Abandoned Accounts. PNC Investments and PNC Bank may be required by law to turn
over (escheat) funds in the bank deposits account to a state, typically your state of
residence, based on inability to locate you, as required by applicable state law. If funds
are remitted to the state, you may file a claim with the state to recover the funds.
Transferability. Your bank deposits may not be transferred by you except by a change
in ownership of the linked PNC Investments Account. A transfer that occurs due to death,
incompetence, marriage, divorce, attachment or otherwise by operation of law shall not
be binding on PNC Investments or PNC Bank unless and until sufficient, acceptable
documentation has been received.
Termination; Closing of Account. PNC Investments may, at its sole discretion and
without any prior notice, terminate your participation in the Program. If you or PNC
Investments, for any reason, closes your brokerage account, your associated funds in the
bank deposit account will be distributed through the PNC Investments Account according
to the conditions of your PNC Investments Account agreement.
Standard of Care. Any failure by PNC Investments or PNC Bank to act or any delay by
such party beyond time limits prescribed by law or permitted by these Terms and
Conditions is excused if caused by your negligence, interruption of communication
facilities, suspension of payments by another financial institution, war, emergency
conditions or other circumstances beyond the control of PNC Investments or PNC Bank
provided that PNC Investments or PNC Bank exercised ordinary care. Any act or
omission made by PNC Investments or PNC Bank in reliance upon or in accordance with
any provisions of the Uniform Commercial Codes as adopted in Kentucky, or any rule or
regulation of Kentucky, the New York Stock Exchange, Inc., National Association of
Securities Dealers, Inc., or a federal agency having jurisdiction over such party shall
constitute ordinary care.
Days of Operation. The Program will operate on all days when both the New York
Stock Exchange and the Federal Reserve Bank of Cleveland are open for business.
Modification of Terms and Conditions. Subject to regulatory requirements, PNC
Investments may modify these Terms and Conditions at any time without your
agreement, and will provide notice to you of material changes to the Program.
Tax Withholding. PNC Investments may be required to withhold U.S. federal income
taxes at the prevailing rate on all taxable distributions payable to certain depositors who
fail to provide their correct taxpayer identification number or to make required
certifications or who have been notified by the Internal Revenue Service that they are
subject to backup withholding. Consult your tax advisor for details on interest that is
earned on accounts held by entities that are neither citizens nor residents of the United
States.
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Legal Process. PNC Investments and PNC Bank may comply with any writ of
attachment, execution, garnishment, tax levy, restraining order, subpoena, warrant or
other legal process that such party reasonably and in good faith believes to be valid. PNC
Investments may notify you of such process by telephone, electronically or in writing. If
PNC Investments is not fully reimbursed for its records research, photocopying, and
handling cost by the party that served the process, PNC Investments may charge such
cost to your PNC Investments Account or bank deposit balance, in addition to its
minimum legal process fee. PNC Investments and PNC Bank may honor legal process
that is served personally, by mail, or by facsimile transmission at any of their respective
offices (including locations other than where the funds, records or property sought is
held), even if the law requires personal delivery at the office where your bank deposit
account records are maintained.
Governing Law. These Terms and Conditions shall be governed by applicable federal
laws and, to the extent not preempted by federal law, the laws of Kentucky without
regard to its conflict of law provisions. Unless explicitly otherwise provided herein, PNC
Investments may comply with applicable clearinghouse, Federal Reserve and
correspondent bank rules in processing transactions for your bank deposit account. PNC
Investments is not required to notify you of a change in those rules, except to the extent
required by law.
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