Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — BancAnalysts Association of Boston 2013
35 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Nov 7, 2013
Slide 1: BancAnalysts Association of Boston, November 7, 2013
The PNC Financial Services Group, Inc. BancAnalysts Association of Boston November 7, 2013 Exhibit 99.1
Slide 2: Cautionary Statement Regarding Forward-Looking Information and Adjusted Information
Cautionary Statement Regarding Forward-Looking Information and Adjusted Information This presentation includes “snapshot” information about PNC used by way of illustration. It is not intended as a full business or financial review and should be viewed in the context of all of the information made av
Slide 3: YTD13 Performance Summary
YTD13 Performance Summary YTD13 financial summary Net income Diluted EPS from net income Return on average assets Highlights $3.2 billion $5.55 1.40% Grew loans and fee income Maintained expense discipline Continued improvement in overall credit quality Demonstrated progress on strategic priorities
Slide 4: Well-Positioned to Deliver Long-Term Value
Well-Positioned to Deliver Long-Term Value Increase fee income Expand market share Deepen relationships Improve operating efficiencies Redefine the Retail Banking business Drive growth in acquired & underpenetrated markets Capture more investable assets Build a stronger Residential Mortgage business
Slide 5: Noninterest Expense Trend: Executing Our Expense Objectives
Noninterest Expense Trend Executing Our Expense Objectives Highlights We continue to focus on expense savings initiatives through PNC’s Continuous Improvement Program – YTD expenses down 6% for the first time since 2010 Over 650 ideas are delivering value in 2013 Process improvement efforts begun in
Slide 6: Corporate & Institutional Banking (C&IB)
Corporate & Institutional Banking (C&IB) Michael P. Lyons EVP, Head of Corporate & Institutional Banking
Slide 7: C&IB Overview
C&IB Overview (1) C&IB serves large corporations, middle-market businesses, governments, and not-for- profit institutions with annual revenues of $10 million and above Financial Highlights (1) Corporate & Institutional Banking 60% Contribution to PNC Earnings of $3.9B (1) As of or for the trailing t
Slide 8: Strategy and Go-to-Market Approach
Strategy and Go-to-Market Approach Strategy Approach Products Go to market locally and nationally as one organization Leverage Regional President structure Deliver superior customer service Minimize turnover in client-facing personnel Full complement of traditional banking products and services Outs
Slide 9: Well-Positioned into the Financial Crisis
Well-Positioned into the Financial Crisis
Slide 10: Significant New Primary Clients
Significant New Primary Clients New Corporate Banking Primary Clients Won (1) (1) A Corporate Banking primary client is defined as a corporate ban king relationship with annual revenue generation of $50,000 or more or, within Corporate Banking, a Commercial Banking client relationship with annual re
Slide 11: Strong Commercial Loan Growth
Strong Commercial Loan Growth (1) C&IB commercial loan balances include commercial, commercial real estate and equipment lease financing within the C&IB segment. Balances for certain PNC commercial loan customers are reflected in PNC business segments other than C&IB; in particular, small business c
Slide 12: Loan Growth Driven by Specialty Areas
Loan Growth Driven by Specialty Areas Change in C&IB Loans Outstanding 3/31/10- 9/30/13 Total Change in C&IB Loans: $34.2B or 53% (1) Specialty Lending includes Healthcare, Public Finance, Large Corporate and Diversified Industries Group. (2) FSAB refers to Financial Services Advisory & Banking. (3)
Slide 13: Strong Performance Through the Crisis
Strong Performance Through the Crisis
Slide 14: Scale Franchise is Well-Positioned Today
Scale Franchise is Well-Positioned Today Quality Top 3 #2 #4 #5 #5 #6 #3 #7 Asset-based Lender (1) Servicer of Commercial and Multifamily loans (2) Wholesale lockbox volume processor (3) Bank-affiliated leasing company Commercial & Industrial lender Middle Market Loan Syndications Bookrunner Purchas
Slide 15: Fragmented Industry: PNC Market Share
Fragmented Industry PNC Market Share Top 10 Banks Share of total Corporate Lending (5) 39% Other 6,930 banks (5) 61% Industry Market Share Commercial & Industrial (1) Commercial Real Estate (1) Asset Based Lending (2) Leasing (3) 3% 2% 15% 6% Purchasing Card Issuer Volume (4) 6% (1) Source: FDIC, Ju
Slide 16: Highly Cyclical Business
Highly Cyclical Business Corporate Credit Losses – Moody’s Speculative-Grade Bond Default Rate
Slide 17: Current External Market Conditions
Current External Market Conditions Clients in great financial shape, but cautious Revolver utilization low; client cash balances high Credit losses near cyclical lows Banks, nonbanks and capital markets aggressively seeking commercial assets Pricing compressed, tenor up, terms looser Difficult to ge
Slide 18: Capital Markets Near Record Highs
Capital Markets Near Record Highs Institutional Term Loans + High Yield Bond Issuance Source: Thomson Reuters LPC.
Slide 19: No Change in Risk Appetite
No Change in Risk Appetite Past Present Future C&IB Risk Appetite Box
Slide 20: So Our Growth is Slowing
So Our Growth is Slowing C&IB Year-Over-Year Growth in Average Loans C&IB average loan balance was $62.7 billion for the three months ended December 31, 2010.
Slide 21: Not the First Time We Have Navigated this Environment
Not the First Time We Have Navigated this Environment Slides from Bill Demchak’s November 2006 BAAB Presentation
Slide 22: Significant Revenue Upside from Bringing All Markets to Potential
Significant Revenue Upside from Bringing All Markets to Potential (1) Productivity calculated as YTD September 30, 2013 pre-provision profits divided by MSA population. (2) Southeast markets are in the states of Alabama, Georgia, North Carolina, South Carolina and Florida.
Slide 23: Proven Success in Increasing Cross-Sell
Proven Success in Increasing Cross-Sell Sales Per Corporate Banking Relationship Manager Western Markets as a % of Eastern Markets (1) (1) Western markets primarily NCC and Eastern markets primarily PNC. (1)
Slide 24: Southeast Markets Update
North Carolina South Carolina Georgia Alabama Florida Southeast Markets Update C&IB Highlights Strategic rationale confirmed Hiring completed / top-tier team Early results ahead of plan Strong receptivity to PNC name Primary clients added YTD’13 +30% Y/Y Avg loans of $6B + 11% 3Q13 Y/Y Brand recogni
Slide 25: Fee Income Levels
Fee Income Levels Ratios in chart above were calculated by dividing noninterest income by total revenue. Peers selected based on business segments comparable to PNC’s C&IB business. MTB and RF disclose their respective C&IB business segment in their 10-Qs which were not yet available for 3Q13 when t
Slide 26: Be More Efficient
Be More Efficient C&IB Noninterest Expense Highlights Significant opportunity for us to do things more efficiently Focus on core processes Currently in midst of significant review of our commercial credit process Not curtailing investments
Slide 27: Key Takeaways
Key Takeaways Traditional and resilient business model Corporate Banking business is highly cyclical Attractive near-term and long-term growth opportunities Grew C&IB earnings 5x through the crisis and gained significant share Well-positioned today Current environment challenging…reminiscent of 2006
Slide 28: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information Appendix
Slide 29: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) Appendix • PNC ’ s ability to take certain capital actions, including paying divi dends and any plans to increase common stock dividends, repurcha se common stock under current or future programs, or issue or redeem preferred sto
Slide 30: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) Appendix •Business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through effective use of third-party insurance, derivatives,
Slide 31: Notes
Notes Appendix Source Notes For Slide 14 (1) Commercial Finance Association, September 30, 2013. (2) Mortgage Bankers Association, 2012. (3) Ernst & Young 2012 Cash Management Services Survey. (4) Monitor , 2012. (5) FDIC based on outstandings as of June 30, 2013. (6) Loan Pricing Corporation. Trail
Slide 32: Estimated Pro forma Basel III Tier 1 Common Capital
Estimated Pro forma Basel III Tier I Common Capital Appendix Basel I Tier 1 Common Capital Ratio Dollars in millions Sept. 30, 2013 June 30, 2013 December 31, 2012 Sept. 30, 2012 Basel I Tier 1 common capital $27,540 $26,668 $24,951 $24,382 Basel I risk-weighted assets 266,698 264,750 260,847 257,29
Slide 33: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix $ in millions Trailing 12 Months - Actual September 30, 2013 June 30, 2013 March 31, 2013 December 31, 2012 C&IB reported net income $2,344 $542 $612 $541 $649 Annualized net income $2,344 $2,151 $2,453 $2,195 $2,581 C&IB average allocated capital (1) $9,590 $
Slide 34: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix As of In millions except per share data Dec. 31, 2007 Dec. 31, 2012 % Change Common shareholders' equity $14,847 $35,413 Common shares outstanding Book value per common share $43.60 $67.05 54% Goodwill and other intangible assets, other than servicing rights (
Slide 35: Peer Group of Banks
Peer Group of Banks Appendix The PNC Financial Services Group, Inc. PNC BB&T Corporation BBT Bank of America Corporation BAC Capital One Financial, Inc. COF Comerica Inc. CMA Fifth Third Bancorp FITB JPMorgan Chase JPM KeyCorp KEY M&T Bank MTB Regions Financial Corporation RF SunTrust Banks, Inc. ST
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