PITTSBURGH, June 23, 2016 /PRNewswire/ -- The PNC Financial Services Group, Inc. (NYSE: PNC) announced today the results of its annual company-run stress test conducted in accordance with regulations of the Board of Governors of the Federal Reserve System (Federal Reserve) and the Office of the Comptroller of the Currency (OCC) under the Dodd-Frank Wall Street Reform and Consumer Protection Act. These company-run stress tests are designed to help assess whether financial institutions have sufficient capital to absorb losses and support operations during hypothetical severely adverse economic conditions over a nine-quarter projection period. The projection period for the 2016 test covers January 1, 2016 to March 31, 2018.
The supervisory severely adverse scenario provided by the Federal Reserve and OCC for the 2016 annual company-run stress test assumes a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities. Under the hypothetical severely adverse scenario provided by the agencies, PNC estimates that as of March 31, 2018, its regulatory capital ratios would be as follows:
Transitional Basel III:
Common Equity Tier 1
Tier 1 Risk-Based Capital
Total Risk-Based Capital
Tier 1 Leverage
Each ratio also represents the minimum quarterly ratio for the metric over the projection period. These results are the product of a forward-looking regulatory exercise using hypothetical macroeconomic assumptions that are far more adverse than currently expected by the Federal Reserve or PNC, and do not represent a forecast of PNC's future capital levels or anticipated economic conditions.
As required by applicable regulations, all capital ratios were calculated using PNC's actual capital actions undertaken in the first quarter of 2016 and applying the capital action assumptions specified by the regulations for the remaining eight quarters. These assumptions include no issuances or redemptions of regulatory capital instruments (other than issuances pursuant to expensed employee compensation programs) and a quarterly common stock dividend amount calculated as the quarterly average of the common stock dividend paid over the course of the second, third and fourth quarters of 2015 and first quarter of 2016, or $261 million per quarter for PNC.
The Transitional Basel III ratios were determined using the Basel III definitions of and deductions from capital, including the phase-ins provided in those rules for 2015, 2016, 2017 and 2018, as appropriate, using the standardized approach for risk weights included in the Basel III rules.
Results of PNC's annual Dodd-Frank company-run stress test, including PNC's estimates of pre-provision net revenue, other revenue, loan and other losses, net income before taxes, and regulatory capital ratios for PNC, as well as additional information on the methodologies used in conducting the stress test, may be found on the Investor Relations page of PNC's corporate website at www.pnc.com/regulatorydisclosures.
The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.
Bryan K. Gill
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SOURCE PNC Financial Services Group, Inc.