Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Citigroup Financial Services Conference 2006
33 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Feb 1, 2006
Slide 1: Citigroup Financial Services Conference
The PNC Financial Services Group, Inc. Citigroup Financial Services Conference New York, NY February 1, 2006 The PNC Financial Services Group, Inc. Citigroup Financial Services Conference New York, NY February 1, 2006 EXHIBIT 99.1
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information Cautionary Statement Regarding Forward-Looking Information This presentation contains forward-looking statements regarding our outlook or expectations relating to PNC’s future business, operations, financial condition, financial performance
Slide 3: Key Messages
Key Messages Key Messages Accomplished a great deal in 2005 Maintained a moderate risk profile that is key to improving consistency Executing strategies to improve operating leverage
Slide 4: 2005 Highlights
2005 Highlights Financial Highlights Record year – Earned $1.3 billion Strong client activity – business segment earnings* grew 18% Strong revenue growth Average loans and deposits continued to grow Improved operating leverage in th quarter - One PNC initiative ahead of schedule Managed capital effe
Slide 5: Investing in Our Future Growth
Investing in Our Future Growth Investing in Our Future Growth Strengthened management team Investments to grow organically - Expanding and refurbishing branch system - Enhancing technology capabilities - Broadening product set Value-added acquisitions - Riggs – expanding into growth market - State S
Slide 6: PNC – A Diversified Financial Services Company
Regional, National and International Businesses PNC – A Diversified Financial Services Company IN OH PA KY Business Leadership VA DC MD International fund processing: PFPC – with offices in U.S., Ireland & Luxembourg International investment management: BlackRock – with offices in U.S., Scotland, Ho
Slide 7: Key Messages
Key Messages Accomplished a great deal in 2005 Maintained a moderate risk profile that is key to improving consistency – Credit risk – Interest rate risk Executing strategies to improve operating leverage Key Messages
Slide 8: Disciplined Approach Leads to Strong Credit Risk Profile
Disciplined Approach Leads to Strong Credit Risk Profile Strong Asset Quality Lending Profile (As of December 31, 2005) Diverse - No large industry concentration Granular - Only 2% of commercial lending exposure is non-investment grade and >$50 million Targeted - Focused on clients that meet risk- a
Slide 9: Our Approach to Interest Rate Risk
Our Approach to Interest Rate Risk: Preserve and Optimize Long-Term Value Neutral Duration of Equity Positions Us Well in This Environment Our Approach to Interest Rate Risk: Preserve and Optimize Long-Term Value (3) (2) (1) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Duration of Equity Years 3 Month LIBOR 1
Slide 10: Key Messages
Key Messages Accomplished a great deal in 2005 Maintained a moderate risk profile that is key to improving consistency Executing strategies to improve operating leverage – Invest in and grow fee-based businesses – Grow net interest income – Make expense control part of our culture Key Messages
Slide 11: Fee-Based Businesses Differentiate PNC
Fee-Based Businesses Differentiate PNC Noninterest Income to Total Revenue Strong Noninterest Income Growth $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 Fee-Based Businesses Differentiate PNC 0% 10% 20% 30% 40% 50% 60% 70% 80% BK PNC FITB USB WB KEY WFC BBT STI NCC Information for th
Slide 12: BlackRock – A Growth Engine
BlackRock – A Growth Engine Assets Under Management Earnings Reflects adjusted earnings for 2004 and 2005 as presented in BlackRock’s publicly available filings and are reconciled to GAAP in the Appendix BlackRock – A Growth Engine $0 $50 $100 $150 $200 $250 $300 2002 2003 2004 2005 $0 $100 $200 $30
Slide 13: PFPC – Strong Growth
PFPC – Strong Growth Servicing Statistics Strategies to Drive Growth Improve efficiency Expand offshore Invest in and grow alternative investment products PFPC – Strong Growth Assets serviced ($ billions) Accounting / administration $830 +15% Domestic $754 +14% Offshore $76 +25% Shareholder accounts
Slide 14: Banking – Growing Fee Income
Banking – Growing Fee Income Strong Noninterest Income Growth Strategies to Drive Growth Corporate & Institutional Banking reported noninterest income for the years ended 12/31/04 and 12/31/05 was $573 million and $609 million, respectively; chart excludes net gains on institutional loans held for s
Slide 15: Increasing and Deepening Checking Relationships
Increasing and Deepening Checking Relationships 0.0 0.5 1.0 1.5 2.0 2002 2003 2004 2005 Increasing and Deepening Checking Relationships …Provides Opportunities for Deepening Relationships Average home equity loans +15% Consumer on-line banking users +19% Consumer on-line bill-pay users +81% Growth*
Slide 16: Growing a Valuable Core Deposit Base
Growing a Valuable Core Deposit Base Relationship Strategy Generating Deposit Growth $5 $7 $9 $11 $13 $15 $17 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q $5 $7 $9 $11 $13 $15 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% Growing a Valuable Core Deposit Base $ billions Retail Bankin
Slide 17: Growing Deposits Faster Than Our Peers
Growing Deposits Faster Than Our Peers Deposit Increase Compared to Peers Growing Deposits Faster Than Our Peers Total interest-bearing deposits 18% 10% Total noninterest-bearing deposits 11% 10% Total deposits 16% 9% Average Balances 2005 vs. 2004 PNC Peer Median Source: SNL DataSource Peer median
Slide 18: Rising Interest Rates Increase Value of Noninterest-Bearing Deposits
Rising Interest Rates Increase Value of PNC’s Noninterest-Bearing Deposits Noninterest-Bearing Deposits Becoming More Valuable PNC’s High Percentage of Noninterest-Bearing Funding WFC % BK PNC USB STI KEY FITB WB NCC BBT 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Noninterest-B
Slide 19: Average Loans Outstanding
Average Loans Outstanding Improving Execution Driving Loan Growth Improving Execution Driving Loan Growth $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 2004 2005 +14% +12% Retail Banking Corporate & Institutional Banking Drivers of Growth Retail Banking Focus on home equity loan product Offering enhanced Bu
Slide 20: An Opportunity to Increase Securities Yields
An Opportunity to Increase Securities Yields Retained Portfolio Flexibility Increasing Yields on Securities Portfolio An Opportunity to Increase Securities Yields Yield on Securities Portfolio BK 4.44 % 3.68 % +76bp PNC 4.49 3.85 +64bp USB 4.85 4.38 +47bp WB 5.30 4.87 +43bp STI 4.47 4.06 +41bp BBT 4
Slide 21: Net Interest Income Improving
Net Interest Income Improving Consolidated Net Interest Income (Taxable-Equivalent Basis) $400 $450 $500 $550 $600 Net Interest Income Improving Net interest income on a taxable-equivalent basis is reconciled to GAAP net interest income in the Appendix $ millions 2004 2005
Slide 22: One PNC – Driving Improved Operating Leverage
One PNC – Driving Improved Operating Leverage Building a More Competitive Company One PNC – Driving Improved Operating Leverage Eliminate 3,000 positions Implement 2,400 ideas Achieve $400 million of total value 1,800 positions eliminated 88% of ideas are complete or in process Delivered $90 million
Slide 23: Summary
Summary Summary Accomplished a great deal in 2005 Maintained a moderate risk profile that is key to improving consistency Executing strategies to improve operating leverage
Slide 24: © PNC
© PNC
Slide 25: Appendix
Appendix
Slide 26: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information Cautionary Statement Regarding Forward-Looking Information We make statements in this presentation, and we may from time to time make other statements, regarding our outlook or expectations for earnings, revenues, expenses and/or other matte
Slide 27: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) Cautionary Statement Regarding Forward-Looking Information (continued) • customer acceptance of our products and services, and our customers’ borrowing, repayment, investment and deposit practices; • the impact on us of changes i
Slide 28: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) Cautionary Statement Regarding Forward-Looking Information (continued) pursuit of attractive acquisition opportunities could be negatively impacted due to regulatory delays or other regulatory issues. Regulatory and/or legal issu
Slide 29: Non-GAAP to GAAP Reconcilement: Business Earnings and Return on Capital
Non-GAAP to GAAP Reconcilement Appendix Business Earnings and Return on Capital Non-GAAP to GAAP Reconcilement Business segments Retail Banking $682 $610 24% Corporate & Institutional Banking 28% BlackRock 28% PFPC 32% Total business segments 1,500 1,266 18% 26% Minority interest in income of BlackR
Slide 30: Non-GAAP to GAAP Reconcilement: Noninterest Income to Total Revenue
Non-GAAP to GAAP Reconcilement Appendix Noninterest Income to Total Revenue* Non-GAAP to GAAP Reconcilement BlackRock $369 21.6% PFPC 12.6% Banking businesses 30.2% Other 3.0% Total consolidated $1,151 $1,706 67.4% Noninterest Income $ millions Consolidated Total Revenue Noninterest Income to Consol
Slide 31: Non-GAAP to GAAP Reconcilement: BlackRock Adjusted Earnings
Non-GAAP to GAAP Reconcilement Appendix BlackRock Adjusted Earnings Non-GAAP to GAAP Reconcilement $ millions, except earnings per share
Slide 32: Non-GAAP to GAAP Reconcilement: Consolidated Net Interest Income
Non-GAAP to GAAP Reconcilement Appendix Consolidated Net Interest Income Non-GAAP to GAAP Reconcilement $ millions Net interest income, GAAP basis $494 $481 $491 $503 Taxable-equivalent adjustment Net interest income, taxable-equivalent basis $497 $485 $498 $509 1Q04 3Q04 2Q04 4Q04 Net interest inco
Slide 33: Peer Groups
Peer Groups Appendix Peer Groups BB&T Corporation BBT The Bank of New York Company, Inc. BK Fifth Third Bancorp FITB KeyCorp KEY National City Corporation NCC The PNC Financial Services Group, Inc. PNC SunTrust Banks, Inc. STI U.S. Bancorp USB Wachovia Corporation WB Wells Fargo & Company WFC Ticker
PNC Financial Services Group — Citigroup Financial Services Conference 2006 on 6ix