The PNC Financial Services Group, Inc.
Liquidity Coverage Ratio Disclosure
September 30, 2021
Table of Contents | |
Section | Page |
Introduction | 1 |
Liquidity Coverage Ratio | 2 |
High Quality Liquid Assets | 4 |
Funding Sources | 4 |
Net Cash Outflows | 4 |
Deposits | 5 |
Commitments | 5 |
Maturity Mismatch Add-on | 5 |
Liquidity Risk Management | 5 |
PNC Liquidity Coverage Ratio Disclosure as of September 30, 2021
Introduction
The PNC Financial Services Group, Inc. (PNC) is one of the largest diversified financial services companies in the United States (U.S.) and is headquartered in Pittsburgh, Pennsylvania. We have businesses engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many of our products and services nationally. Our retail branch network is located coast-to-coast. At September 30, 2021, consolidated total assets, total deposits and total shareholders' equity were $553.5 billion, $448.9 billion and $56.3 billion, respectively.
PNC is a bank holding company registered under the Bank Holding Company Act of 1956 and a financial holding company under the Gramm-Leach-Bliley Act. Our bank subsidiary is PNC Bank, National Association (PNC Bank), a national bank headquartered in Pittsburgh, Pennsylvania.
On June 1, 2021, PNC acquired BBVA USA Bancshares Inc. (BBVA), a U.S. financial holding company conducting its business operations primarily through its U.S. banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the acquisition.
On October 8, 2021, BBVA USA merged into PNC Bank. As of October 12, 2021, PNC has converted approximately 2.6 million customers, 9,000 employees and over 600 branches across seven states. PNC's third quarter results reflect the full quarter benefit of BBVA's acquired business operations.
The Liquidity Coverage Ratio (LCR) disclosures are required by the LCR rules issued by the Board of Governors of the Federal Reserve System. These disclosures provide information about our LCR, liquidity risk management, sources of liquidity and contractual obligations and commitments and should be read in conjunction with our Securities and Exchange Commission (SEC) filings, including the Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K) and Quarterly Report on the Form 10-Q for the period ended September 30, 2021 (September 30, 2021 Form 10-Q). These SEC filings are available at www.pnc.com/secfilings. The LCR disclosures and other regulatory disclosures are available at www.pnc.com/regulatorydisclosures.
Further, the financial information presented within this LCR disclosure may differ from similar information presented in the Consolidated Financial Statements and Notes To Consolidated Financial Statements on Form 10-K/Q. Unless specified otherwise, all amounts and information within are presented in conformity with the definitions and requirements of the LCR rules.
Forward-Looking Statements
This disclosure may contain forward-looking statements, which are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date made. We do not assume any duty and do not undertake to update forward-looking statements. Actual results or future events could differ, possibly materially, from those anticipated in forward-looking statements, as well as from historical performance. See the Cautionary Statement Regarding Forward-Looking Information in PNC's September 30, 2021 Form 10-Q for more information. Also see all risks and uncertainties disclosed in PNC's SEC filings, including its 2020 Form 10-K, and subsequent reports on Forms 10-K,10-Q and 8-K, Proxy Statements on Schedule 14A, and, if applicable, its registration statements under the Securities Act of 1933, as amended, all of which are or will upon filing be accessible on PNC's website at www.pnc.com/secfilings and on the SEC's website at www.sec.gov.
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PNC Liquidity Coverage Ratio Disclosure as of September 30, 2021
Liquidity Coverage Ratio
The LCR is a regulatory minimum liquidity requirement designed to ensure that covered banking organizations maintain an adequate level of unencumbered high quality liquid assets (HQLA) to meet net liquidity needs over the course of a hypothetical 30-day stress scenario. The LCR, for disclosure purposes, is calculated as the quarterly average of the daily amount of an institution's HQLA, as defined and calculated in accordance with the LCR rules, divided by its estimated net cash outflows, with net cash outflows determined by applying the prescribed outflow factors in the LCR rules. The resulting quotient is expressed as a percentage. The regulatory minimum LCR that we are required to maintain is 100%. PNC is required to calculate the LCR on a daily basis, and as of September 30, 2021, the LCR for PNC exceeded the requirement of 100%.
The following table summarizes PNC's average LCR for the three months ended September 30, 2021 based on the LCR rules:
Table 1: Liquidity Coverage Ratio
Three Months Ended | ||
Average weighted amount (in millions) | September 30, 2021 | |
HQLA | $ | 93,420 |
Estimated net cash outflows | 88,728 | |
LCR | 105 % | |
HQLA in excess of estimated net cash outflows | $ | 4,692 |
PNC's third quarter consolidated LCR results reflect the full quarter benefit of BBVA's acquired business operations on an average basis. PNC's average LCR for the three months ended September 30, 2021 was 105%, an 8% decrease from the three months ended June 30, 2021. The primary driver of the decrease in average consolidated LCR is the full quarter effect of the $11.5 billion purchase of BBVA USA, which closed on June 1, 2021. For additional information on the BBVA acquisition refer to Note 2 Acquisition and Divestiture Activity in our June 30, 2021 Form 10-Q.
HQLA consists of cash balances held with the Federal Reserve Bank and Level 1 and Level 2 securities. Estimated net cash outflows primarily relate to our deposits and lending-related commitments. Refer to Table 2: Liquidity Coverage Ratio and Related Components and Table 3: HQLA Composition for additional information.
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PNC Liquidity Coverage Ratio Disclosure as of September 30, 2021
The following table provides additional detail on PNC's average LCR, average unweighted and weighted amount of HQLA, cash outflows and cash inflows for the three months ended September 30, 2021:
Table 2: Liquidity Coverage Ratio and Related Components
Three months ended | |||||||
September 30, 2021 | |||||||
Dollars in millions | Average Unweighted | Average Weighted | |||||
Amount | Amount (a) | ||||||
High Quality Liquid Assets | |||||||
1 | Total eligible HQLA, of which: | $ | 93,420 | $ | 93,420 | ||
2 | Eligible level 1 liquid assets | 93,420 | 93,420 | ||||
3 | Eligible level 2A liquid assets | ||||||
4 | Eligible level 2B liquid assets | ||||||
Cash Outflow Amounts | |||||||
5 | Deposit outflow from retail customers and counterparties, of which: | $ | 270,568 | $ | 15,355 | ||
6 | Stable retail deposit outflow | 182,588 | 5,477 | ||||
7 | Other retail funding outflow | 78,103 | 7,901 | ||||
8 | Brokered deposit outflow | 9,877 | 1,977 | ||||
9 | Unsecured wholesale funding outflow, of which: | 167,743 | 57,450 | ||||
10 | Operational deposit outflow | 88,791 | 21,805 | ||||
11 | Non-operational funding outflow | 78,558 | 35,251 | ||||
12 | Unsecured debt outflow | 394 | 394 | ||||
13 | Secured wholesale funding and asset exchange outflow | 17,340 | 1,906 | ||||
14 | Additional outflow requirements, of which: | 195,092 | 31,445 | ||||
15 | Outflow related to derivative exposures and other collateral requirements | 3,602 | 2,877 | ||||
16 | Outflow related to credit and liquidity facilities including unconsolidated | 191,490 | 28,568 | ||||
structured transactions and mortgage commitments | |||||||
17 | Other contractual funding obligation outflow | 411 | 411 | ||||
18 | Other contingent funding obligations outflow | 4,153 | 125 | ||||
19 | Total Cash Outflow | $ | 655,307 | $ | 106,692 | ||
Cash I | nflow Amounts | ||||||
20 | Secured lending and asset exchange cash inflow | $ | 1,203 | $ | 62 | ||
21 | Retail cash inflow | 970 | 485 | ||||
22 | Unsecured wholesale cash inflow | 1,510 | 831 | ||||
23 | Other cash inflows, of which: | 2,464 | 2,464 | ||||
24 | Net derivative cash inflow | 1,591 | 1,591 | ||||
25 | Securities cash inflow | 873 | 873 | ||||
26 | Broker-dealer segregated account inflow | ||||||
27 | Other cash inflow | ||||||
28 | Total Cash Inflow | $ | 6,147 | $ | 3,842 | ||
Average Weighted | |||||||
Amount (b) | |||||||
29 | HQLA Amount | $ | 93,420 | ||||
30 | Total Estimated Net Cash Outflow Amount Excluding the Maturity | $ | 102,850 | ||||
Mismatch Add-on | |||||||
31 | Maturity Mismatch Add-on | 1,536 | |||||
32 | Total unadjusted net cash outflow amount | $ | 104,386 | ||||
33 | Outflow adjustment percentage | 85 % | |||||
34 | Total net cash outflow amount | $ | 88,728 | ||||
35 | Liquidity Coverage Ratio (%) | 105 % |
- Average weighted amount represents the average balances after applying HQLA haircuts and outflow/inflow rates prescribed by the LCR rules.
- The amounts reported in this column may not equal the calculation of those amounts using component amounts reported in rows 1-28 due to technical factors such as the application of the level 2 asset caps, the total inflow cap, and for depository institution holding companies subject to subpart G, the application of the modification to total net cash outflows.
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The PNC Financial Services Group Inc. published this content on 10 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2021 15:58:04 UTC.