PNC Bank 2013 Annual Report Download - page 108

• On June 17, 2013, we completed the redemption of
the following trust preferred securities originally
called on May 1, 2013:
– $15 million issued by Sterling Financial
Statutory Trust III,
– $15 million issued by Sterling Financial
Statutory Trust IV,
– $20 million issued by Sterling Financial
Statutory Trust V,
– $30 million issued by MAF Bancorp Capital
Trust I, and
– $8 million issued by James Monroe Statutory
Trust III.
• On July 23, 2013, we completed the redemption of
the $22 million of trust preferred securities issued by
Fidelity Capital Trust II, originally called on June 7,
2013,
• On September 12, 2013, we used $500 million of
parent company cash to purchase senior extendible
floating rate bank notes issued by PNC Bank, N.A,
• On September 16, 2013, we completed the
redemption of the $35 million of trust preferred
securities issued by MAF Bancorp Capital Trust II,
originally called on August 1, 2013, and
• On November 7, 2013, we used $600 million of
parent company cash to purchase senior extendible
floating rate bank notes issued by PNC Bank, N.A.
P ARENT C OMPANY L IQUIDITY –S OURCES
The principal source of parent company liquidity is the
dividends it receives from its subsidiary bank, which may be
impacted by the following:
• Bank-level capital needs,
• Laws and regulations,
• Corporate policies,
• Contractual restrictions, and
• Other factors.
There are statutory and regulatory limitations on the ability of
national banks to pay dividends or make other capital
distributions or to extend credit to the parent company or its
non-bank subsidiaries. The amount available for dividend
payments by PNC Bank, N.A. to the parent company without
prior regulatory approval was approximately $1.4 billion at
December 31, 2013. See Note 22 Regulatory Matters in the
Notes To Consolidated Financial Statements in Item 8 of this
Report for a further discussion of these limitations. We
provide additional information on certain contractual
restrictions in Note 14 Capital Securities of Subsidiary Trusts
and Perpetual Trust Securities in the Notes To Consolidated
Financial Statements in Item 8 of this Report.
In addition to dividends from PNC Bank, N.A., other sources
of parent company liquidity include cash and investments, as
well as dividends and loan repayments from other subsidiaries
and dividends or distributions from equity investments. As of
December 31, 2013, the parent company had approximately
$6.5 billion in funds available from its cash and investments.
We can also generate liquidity for the parent company and
PNC’s non-bank subsidiaries through the issuance of debt
securities and equity securities, including certain capital
instruments, in public or private markets and commercial
paper. We have an effective shelf registration statement
pursuant to which we can issue additional debt, equity and
other capital instruments. Total senior and subordinated debt
and hybrid capital instruments decreased to $10.7 billion at
December 31, 2013 from $11.5 billion at December 31, 2012.
During 2013, we issued the following securities under our
shelf registration statement:
• On May 7, 2013, we issued 500,000 depositary
shares, each representing a 1/100th interest in a share
of our Fixed-to-Floating Rate Non-Cumulative
Perpetual Preferred Stock, Series R, in an
underwritten public offering resulting in gross
proceeds of $500 million to us before commissions
and expenses. Dividends are payable when, as, and if
declared by our Board of Directors, or an authorized
committee of our Board, semi-annually on June 1 and
December 1 of each year, beginning on December 1,
2013 and ending on June 1, 2023, at a rate of 4.850%.
From and including June 1, 2023, such dividends will
be payable quarterly on March 1, June 1,
September 1 and December 1 of each year beginning
on September 1, 2023 at a rate of 3-month LIBOR
plus 3.04% per annum. The Series R Preferred Stock
is redeemable at our option on or after June 1, 2023
and at our option within 90 days of a regulatory
capital treatment event as defined in the designations.
The parent company, through its subsidiary PNC Funding
Corp, has the ability to offer up to $3.0 billion of commercial
paper to provide additional liquidity. As of December 31,
2013, there were no issuances outstanding under this program.
Note 19 Equity in the Notes To Consolidated Financial
Statements in Item 8 of this Report describes the 16,885,192
warrants we have outstanding, each to purchase one share of PNC
common stock at an exercise price of $67.33 per share. These
warrants were sold by the U.S. Treasury in a secondary public
offering in May 2010 after the U.S. Treasury exchanged its
TARP Warrant. These warrants will expire December 31, 2018.
S TATUS OF C REDIT R ATINGS
The cost and availability of short-term and long-term funding,
as well as collateral requirements for certain derivative
instruments, is influenced by PNC’s debt ratings.
In general, rating agencies base their ratings on many
quantitative and qualitative factors, including capital
adequacy, liquidity, asset quality, business mix, level and
quality of earnings, and the current legislative and regulatory
90 The PNC Financial Services Group, Inc. – Form 10-K