PNC Financial Services : 1Q25 Liquidity Coverage Ratio Disclosures

Published: 2025-05-13 11:27:06 ET PNC

Published on 05/13/2025 at 11:27

‌Table of Contents

Section Page

Introduction 1

Liquidity Coverage Ratio 2

High Quality Liquid Assets 4

LCR Funding Sources 4

Net Cash Outflows 4

Deposits 4

Commitments 5

Maturity Mismatch Add-on 5

Liquidity Risk Management 5

‌Introduction‌

The PNC Financial Services Group, Inc. and its subsidiaries on a consolidated basis (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, corporate and institutional banking and asset management, providing many of our products and services nationally. Our retail branch network is located coast-to-coast. We also have strategic international offices in four countries outside the U.S. At March 31, 2025, consolidated total assets, total deposits and total shareholders' equity were

$554.7 billion, $422.9 billion and $56.4 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 chartered in Wilmington, Delaware.

The Liquidity Coverage Ratio (LCR) disclosure is required by the LCR rule issued by the Board of Governors of the Federal Reserve System. This disclosure provides 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, 2024 (2024 Form 10-K) and Quarterly Report on Form 10-Q for the period ended March 31, 2025 (first quarter 2025 Form 10-Q). These SEC filings are available at https://www.pnc.com/secfilings. The LCR disclosure and other regulatory disclosures are available at https://www.pnc.com/ regulatorydisclosures.

Further, the financial information presented within these disclosures may differ from similar information presented in the Consolidated Financial Statements and Notes to Consolidated Financial Statements on Forms 10-K and 10-Q. Unless specified otherwise, all amounts and information within are presented in conformity with the definitions and requirements of the LCR rule.

Forward-Looking Statements

These disclosures 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 any obligation 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 first quarter 2025 Form 10-Q for more information. Also see all risks and uncertainties disclosed in PNC's SEC filings, including its 2024 Form 10-K and subsequent reports, 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 https://www.pnc.com/secfilings and on the SEC's website at https://www.sec.gov.

‌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 in accordance with the LCR rules, divided by its adjusted 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. PNC calculates the LCR on a daily basis and is required to maintain a regulatory minimum of 100%. The LCR for PNC exceeded the regulatory minimum throughout the first quarter of 2025.

The following table summarizes PNC's average LCR for the three months ended March 31, 2025 based on the LCR rules:

Average weighted amount (in millions)

Three months ended March 31, 2025

HQLA

$ 99,073

Total adjusted net cash outflows

91,328

LCR

108 %

HQLA in excess of adjusted net cash outflows

$ 7,745

PNC's average LCR for the three months ended March 31, 2025 was 108%, increasing 1% compared to the three months ended December 31, 2024, primarily due to increased liquidity transferable from PNC Bank, N.A.

HQLA consists of cash balances held with the Federal Reserve Bank (FRB) and Level 1 and Level 2 securities as defined in the LCR rules. Adjusted net cash outflows primarily relate to deposits and lending-related commitments. Refer to Table 2: Liquidity Coverage Ratio and Related Components and Table 3: HQLA Composition for additional information.

The following table provides additional detail on PNC's average LCR, including the average unweighted and weighted amount of HQLA, cash outflows and cash inflows for the three months ended March 31, 2025:

Three months ended

March 31, 2025

Dollars in millions

Average Unweighted Amount

Average Weighted Amount (a)

High Quality Liquid Assets

Total eligible HQLA, of which:

$ 100,328

$ 99,073

Eligible level 1 liquid assets

91,960

Eligible level 2A liquid assets

8,368

7,113

Eligible level 2B liquid assets

Cash Outflow Amounts

Deposit outflow from retail customers and counterparties, of which:

$ 249,984

$ 14,077

Stable retail deposit outflow

167,444

5,023

Other retail funding outflow

72,133

7,248

Brokered deposit outflow

10,407

1,806

Unsecured wholesale funding outflow, of which:

148,218

50,528

Operational deposit outflow

84,031

20,665

Non-operational funding outflow

63,712

29,388

Unsecured debt outflow

475

Secured wholesale funding and asset exchange outflow

24,419

3,390

Additional outflow requirements, of which:

226,926

43,950

Outflow related to derivative exposures and other collateral requirements

5,836

5,475

Outflow related to credit and liquidity facilities including unconsolidated structured transactions and mortgage commitments

221,090

38,475

Other contractual funding obligation outflow

511

Other contingent funding obligations outflow

16,195

487

Total Cash Outflow

$ 666,253

$ 112,943

Cash Inflow Amounts

Secured lending and asset exchange cash inflow

$ 1,735

$ 72

Retail cash inflow

1,333

667

Unsecured wholesale cash inflow

3,119

1,847

Other cash inflows, of which:

4,308

Net derivative cash inflow

3,640

Securities cash inflow

668

Broker-dealer segregated account inflow

Other cash inflow

Total Cash Inflow

$ 10,495

$ 6,894

Average Weighted

Amount (b)

HQLA Amount

$ 99,073

Total Estimated Net Cash Outflow Amount Excluding the Maturity Mismatch Add-on

$ 106,049

Maturity Mismatch Add-on

1,396

Total unadjusted net cash outflow amount

$ 107,445

Outflow adjustment percentage

85 %

Total adjusted net cash outflow amount

$ 91,328

Liquidity Coverage Ratio (%)

108 %

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.

HQLA consists of cash balances held with the FRB and Level 1 and Level 2 securities as defined in the LCR rules. The average weighted amount of HQLA was $99.1 billion for the three months ended March 31, 2025.

The following table presents the composition of PNC's HQLA by asset class for the three months ended March 31, 2025:

(in millions)

March 31, 2025

Average Weighted Amount

HQLA

Eligible cash (a)

$ 34,218

Eligible level 1 securities (b)

57,742

Total eligible Level 1 assets

91,960

Eligible level 2a securities (c)

7,113

Eligible level 2b securities

Total eligible Level 2 assets

7,113

Total HQLA

$ 99,073

Cash represents balances held with the FRB.

Level 1 securities are U.S. Treasuries and securities guaranteed by sovereign entities with no prescribed HQLA haircut under the LCR rules.

Level 2 securities are primarily securities guaranteed by a U.S. government sponsored enterprise, sovereign entity or multilateral development bank net of prescribed HQLA haircuts under the LCR rules.

Our largest source of liquidity on a consolidated basis is the customer deposit base generated by our banking businesses. These deposits provide relatively stable and low-cost funding. We may also obtain liquidity through various forms of funding, such as senior notes, subordinated debt, Federal Home Loan Bank (FHLB) advances, securities sold under repurchase agreements, commercial paper and other short-term borrowings.

PNC Bank maintains additional secured borrowing capacity with the FHLB and through the FRB discount window. The FRB, however, is not viewed as a 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. At March 31, 2025, our unused secured borrowing capacity at the FHLB and the FRB was $51.8 billion and $78.6 billion, respectively.

For additional information on funding sources and sources of liquidity, refer to the Funding Sources section of the Consolidated Balance Sheet Review and the Liquidity and Capital Management section of Risk Management in Item 7 of our 2024 Form 10-K.

Total net cash outflows are defined as the total expected cash outflows minus the total expected cash inflows in the hypothetical 30-day stress scenario. Cash outflows and cash inflows are calculated by multiplying unweighted balances of PNC's funding, assets and obligations by prescribed rates that are defined in the LCR rules. As detailed in Table 2, our largest average weighted cash outflows for the three months ended March 31, 2025 were deposits and credit and liquidity facilities related to unfunded commitments, which are discussed in further detail below. Other cash outflows, including outflows associated with unsecured debt, secured wholesale funding, derivatives, and other contractual/contingent funding obligations, as well as cash inflows associated with secured lending, retail lending, unsecured wholesale lending, derivatives and securities composed the remainder of the average weighted net cash outflows for the three months ended March 31, 2025, excluding the maturity mismatch add-on.

As noted previously, our largest source of liquidity on a consolidated basis is our customer deposit base, which provides a relatively stable source of funding and limits our reliance on wholesale funding markets. The majority of PNC's deposits are retail or wholesale operational, which are both considered to be stable sources of liquidity.

The following table summarizes the average deposit cash outflows for purposes of the LCR for the three months ended

March 31, 2025. The prescribed outflow rates for non-operational wholesale funding are higher than the outflow rates for other deposit sources under the LCR rules.

Dollars in millions

Three months ended March 31, 2025

Average Unweighted Amount

Average Weighted Amount

Implied Cash

Rate

Outflow

Retail deposits

$ 249,984 $

14,077

6 %

Operational wholesale deposits

$ 84,031 $

20,665

25 %

Non-operational wholesale deposits

$ 63,712 $

29,388

46 %

The LCR rules require us to apply prescribed outflow rates against off-balance sheet obligations and transactions. In the normal course of business, we have various commitments outstanding, such as commitments to extend credit, net outstanding standby letters of credit and other commitments. Commitments to extend credit represent arrangements to lend funds or provide liquidity subject to specified contractual conditions to commercial and consumer customers. Net outstanding standby letters of credit, including those issued by other financial institutions where we share the risk, support obligations of our customers to third parties, such as insurance agreements and the facilitation of transactions involving capital markets product execution. For additional information refer to Note 10 Commitments in our 2024 Form 10-K.

The maturity mismatch add-on identifies gaps between the contractual inflows and outflows of liquidity during the period, specifically when there are early outflows and late inflows in the 30-day stress period. In Table 2, the quarterly average for the maturity mismatch add-on did not have a material impact on the total adjusted net cash outflow amount.

We perform ongoing monitoring of liquidity through a series of early warning indicators tailored to PNC's risk profile, complexity, activities and size that may identify a potential market, or PNC-specific, liquidity stress event. In addition, management performs a set of internal liquidity stress tests over multiple time horizons with varying levels of severity and maintains a contingency funding plan to address a potential liquidity stress event. Liquidity-related risk limits and operating guidelines are established within our Enterprise Liquidity Management Policy covering regulatory metrics and various concentration limits. Management committees, including the Asset and Liability Committee and the Board of Directors and its Risk Committee, regularly review compliance with key established limits. PNC was in compliance with all relevant internal and regulatory liquidity limits and guidelines during the first quarter of 2025.

For discussion of Enterprise Risk Management, including our Risk Culture, Enterprise Strategy, Risk Governance and Oversight, Risk Identification, Risk Assessment, Risk Controls and Monitoring, and Risk Aggregation and Reporting, see the Risk Management section in Item 7 of our 2024 Form 10-K.

Disclaimer

The PNC Financial Services Group Inc. published this content on May 13, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 13, 2025 at 15:26 UTC.