PNC Bank 2015 Annual Report Download - page 103

Total senior and subordinated debt of PNC Bank increased to
$25.5 billion at December 31, 2015 from $17.5 billion at
December 31, 2014 due to the following activity in the period.
Table 38: PNC Bank Senior and Subordinated Debt
In billions 2015
January 1 $17.5
Issuances 8.8
Calls and maturities (.8)
December 31 $25.5
PNC Bank is a member of the FHLB-Pittsburgh and, as such,
has access to advances from FHLB-Pittsburgh secured
generally by residential mortgage loans, other mortgage-
related loans and commercial mortgage-backed securities. At
December 31, 2015, our unused secured borrowing capacity
was $19.4 billion with the FHLB-Pittsburgh. Total FHLB
borrowings increased to $20.1 billion at December 31, 2015
from $20.0 billion at December 31, 2014 due to the following
activity in the period.
Table 39: FHLB Borrowings
In billions 2015
January 1 $20.0
Issuances 2.2
Calls and maturities (2.1)
December 31 $20.1
The FHLB-Pittsburgh also periodically provides standby
letters of credit on behalf of PNC Bank to secure certain
public deposits. PNC Bank began using standby letters of
credit issued by the FHLB-Pittsburgh for these purposes in
response to the regulatory liquidity standards finalized during
2014. If the FHLB-Pittsburgh is required to make payment for
a beneficiary’s draw, the payment amount is converted into a
collateralized advance to PNC Bank. At December 31, 2015,
standby letters of credit issued on our behalf by the FHLB-
Pittsburgh totaled $5.3 billion.
PNC Bank has the ability to offer up to $10.0 billion of its
commercial paper to provide additional liquidity. As of
December 31, 2015, there was $14 million outstanding under
this program.
PNC Bank can also borrow from the Federal Reserve Bank
discount window to meet short-term liquidity requirements.
The Federal Reserve Bank, however, is not viewed as the
primary means of funding our routine business activities, but
rather as a potential source of liquidity in a stressed
environment or during a market disruption. These potential
borrowings are secured by commercial loans. At
December 31, 2015, our unused secured borrowing capacity
was $14.4 billion with the Federal Reserve Bank.
Parent Company Liquidity
As of December 31, 2015, available parent company liquidity
totaled $4.6 billion. Parent company liquidity is primarily held
in short-term investments, the terms of which provide for the
availability of cash in 31 days or less. Investments with longer
durations may also be acquired, but if so, the related
maturities are aligned with scheduled cash needs, such as the
maturity of parent company debt obligations.
Parent Company Liquidity – Uses
The parent company’s contractual obligations consist
primarily of debt service related to parent company
borrowings and funding non-bank affiliates. As of
December 31, 2015, there were approximately $1.3 billion of
parent company borrowings with contractual maturities of less
than one year. Additionally, the parent company maintains
adequate liquidity to fund discretionary activities such as
paying dividends to PNC shareholders, share repurchases, and
acquisitions.
See Balance Sheet, Liquidity and Capital Highlights in the
Executive Summary section of this Item 7 for information on
our 2015 capital plan that was accepted by the Federal
Reserve. Our capital plan included a recommendation to
increase the quarterly common stock dividend in the second
quarter of 2015 and the ability to redeem the Series K
Preferred Stock, as further described below, and also included
share repurchase programs of up to $2.875 billion for the five
quarter period beginning in the second quarter of 2015. See
the Capital portion of the Consolidated Balance Sheet Review
in this Item 7 for more information on our share repurchase
programs.
On April 2, 2015, consistent with our 2015 capital plan, our
Board of Directors approved an increase to PNC’s quarterly
common stock dividend from 48 cents per common share to
51 cents per common share beginning with the May 5, 2015
dividend payment.
On May 4, 2015, we redeemed $500 million of PNC’s Fixed-
to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series K, as well as all Depositary Shares representing
interests therein. Each Depositary Share represented a 1/10
interest in a share of the Series K Preferred Stock. All 50,000
shares of Series K Preferred Stock, as well as all 500,000
Depositary Shares representing interests therein, were
redeemed. The redemption price was $10,000 per share of
Series K Preferred Stock equivalent to $1,000 per Depositary
Share, plus declared and unpaid dividends up to but excluding
the redemption date.
See the Supervision and Regulation section in Item 1 of this
Report for additional information regarding the Federal
Reserve’s CCAR process and the factors the Federal Reserve
takes into consideration in evaluating capital plans, qualitative
and quantitative liquidity risk management standards proposed
The PNC Financial Services Group, Inc. – Form 10-K 85