Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Lehman Brothers 2007 Financial Services Conference
38 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Sep 11, 2007
Slide 1: The PNC Financial Services Group, Lehman Brothers 2007 Financial Services Conference
Exhibit 99.1 The PNC Financial Services Group, Inc. Lehman Brothers 2007 Financial Services Conference New York September 11, 2007
Slide 2: Cautionary Statement Regarding Forward-Looking Information and Adjusted Information
Cautionary Statement Regarding Forward-Looking Information and Adjusted Information This presentation contains forward-looking statements regarding our outlook or expectations relating to PNC’s future business, operations, financial condition, financial performance and asset quality. Forward-looking
Slide 3: Industry Concerns
Industry Concerns Mortgage and home equity loans Leveraged lending and bridge commitments Yield curve
Slide 4: PNC is differentiated by …
PNC is differentiated by … A history of execution and strong performance Clear strategies for growth A strong risk management culture
Slide 5: A History of Execution
A History of Execution Building an Enduring Company with a Solid Foundation Enhanced PNC brand Improved customer experience + A continuous improvement culture + Deepened customer relationships + A strong risk management process + A disciplined economic capital allocation process + Expansion into hig
Slide 6: Strong Performance in a Tough Environment
Strong Performance in a Tough Environment $2.67 $2.47 Highlights Strong first half with solid revenue growth and Diluted EPS momentum Primary businesses met or exceeded 1H06 1H07 expectations $882 $735 Created positive operating leverage versus Net first half 2006¹ Income ($millions) Maintained exce
Slide 7: Our Diversified Business Mix
Our Diversified Business Mix Business Leadership First Half 2007 Business Earnings Contribution* $ millions Retail Banking Contribution Winning in - A leading community bank in PNC major markets the - One of the nation’s largest bank wealth $428 50% Payments management firms Space Corporate & Instit
Slide 8: PNC is differentiated by …
PNC is differentiated by … A history of execution and strong performance Clear strategies for growth A strong risk management culture
Slide 9: Strategies for Growth
Strategies for Growth Focus on fee-based drivers Maintain and grow our deposit advantage Create positive operating leverage Capture new market opportunities Enhance brand awareness
Slide 10: Differentiated Fee-Based Businesses
Differentiated Fee-Based Businesses Noninterest Income to Total Revenue For the six months ended June 30, 2007 70% 60% PFPC & BLK 50% 40% 30% 20% 10% 0% PNC USB KEY FITB WB WFC STI BBT NCC RF CMA Source: SNL DataSource, PNC as reported
Slide 11: Executing on Growth Drivers
Executing on Growth Drivers Retail C&I Key Drivers: Key Drivers: Payments Business Earnings Fee based Businesses Earnings Wealth Management Growth Deposit Franchise Growth Small Business 1 1 +14% Disciplined Lending +17% Brokerage Focus on Deepening Relationships 3 55% Consumer DDA HHs Major Product
Slide 12: Executing on Growth Drivers
Executing on Growth Drivers PFPC BlackRock Key Drivers: Key Drivers: Productivity Earnings Expanded Distribution Earnings Improvement Growth Broadened Product Set Growth High Margin, High 1 Strengthened Platform 1 Growth Products +19% +16% Focus on High Growth Products Focus on Gathering Assets 2 $5
Slide 13: Executing on Our Strategy to Gather Low Cost Deposits
Executing on Our Strategy to Gather Low Cost Deposits PNC Has Been Focused on Growing Noninterest-Bearing Deposits… Through Multiple Channels Contribution to Average 2Q07 vs. 2Q06 Noninterest-Bearing Deposits As of 6/30/07 Average Balances PNC Peers Consumer Corporate Banking, Interest-bearing depos
Slide 14: Differentiated Deposit Mix
Differentiated Deposit Mix Providing a Funding Advantage… With Low Cost Deposits Average Noninterest-Bearing Deposits to Average Earning Assets Interest Cost of Average Total Deposits 2Q07 2Q07 CMA 21 % USB 2.23 % WFC 21 WFC 2.44 PNC 18 PNC 2.72 KEY 17 CMA 2.73 RF 16 RF 2.83 FITB 15 FITB 2.93 USB 15
Slide 15: Creating Positive Operating Leverage
Creating Positive Operating Leverage Growing Revenues Faster Than Expenses $ billions Trend Continues* Compound Annual Six months ended June 30, as adjusted $7 Growth Rate (2004 – 2006) 2007 vs 2006 $6 Revenue Revenue +15% 9% $5 $4 Expense Expense +12% $3 7% $2 $1.3 $1.5 $1.2 $1 Net Income Net Incom
Slide 16: Executing on Our Acquisition Strategy
Executing on Our Acquisition Strategy 76% of PNC Pro Forma Branches Located Between the Hudson and Potomac Rivers PNC Branches prior to 2004 Sterling Financial Corp. Pending Yardville National Bancorp Pending New York Mercantile Bankshares Corp. 3/2/07 Riggs National Corp. 5/13/05 United National Ba
Slide 17: Improving Our Demographics
Improving Our Demographics Median Household Income Projected 5-Year Population Growth $73,965 10.0% $69,270 $69,363 $66,273 $60,949 8.4% $56,250 $54,620 6.0% 3.9% 3.7% 3.4% 2.0% 2003 Acquisitions Proforma 2003 Acquisitions Proforma Amounts based on data at time of acquisition announcement. United Tr
Slide 18: Bringing the Power of PNC to New Clients
Bringing the Power of PNC to New Clients Expanding Distribution of Fee-based Products 51% Noninterest income to total revenue¹ Opportunities 40% Wealth Management Brokerage 29% 27% Credit Card 24% Payment Services Treasury Management 9% Small Business M&A Advisory Services Capital Markets (1) United
Slide 19: Execution in the Greater Washington Area (“GWA”)
Execution in the Greater Washington Area (“GWA”) Deepening Relationships and Growing Noninterest Income* GWA noninterest income PNC - GWA Retail Relationships PNC - GWA Fee Growth to total revenue $20 125,000 +7% $16 100,000 43.3% 40.5% +114% $12 75,000 +16% $8 50,000 +42% 25,000 $4 +19% 0 $0 June 3
Slide 20: Investing in Our Brand to Drive Growth
Investing in Our Brand to Drive Growth Key Initiatives Highest in Customer Redesigned and Satisfaction with Small Business simplified checking Banking¹ product Launched regional credit card product Redesigned PNC.com Leveraging existing relationships with affluent clients Partnering with the Gallup
Slide 21: PNC is differentiated by…
PNC is differentiated by… A history of execution and strong performance Clear strategies for growth A strong risk management culture
Slide 22: PNC’s Credit Culture Evolution
PNC’s Credit Culture Evolution “Focus on the Front Door” Proactive Process Driven by Returns Organizational Independence Improved Credit Manage New Credit Risk the Back Door Rating System Training Not overly concentrated in any area Credit Culture Evolution (2000 – Present) Help More granularity Tal
Slide 23: High Quality Consumer Loan Portfolio
High Quality Consumer Loan Portfolio Composition of Consumer Loan and Residential Mortgage Portfolio As of June 30, 2007 Other 7% Home Equity Portfolio Residential Portfolio Credit Statistics¹ Credit Statistics¹ First lien positions 42% Weighted average: Home In-footprint exposure 92% Loan to value
Slide 24: Home Equity Credit Trends
Home Equity Credit Trends Delinquency Ratio 90+ Days Net Charge-Offs % of average % of outstandings outstandings 0.6% 0.4% PNC1 PNC1 0.5% RMA RMA 0.3% 0.4% 0.3% 0.2% 0.2% 0.1% 0.1% 2004 2005 2006 1H07 2004 2005 2006 1H07 (1) Not including Mercantile Source: The Risk Management Association (“RMA”) Co
Slide 25: Disciplined Approach Leads to Excellent Asset Quality
Disciplined Approach Leads to Excellent Asset Quality Asset Quality Compared to Peers Nonperforming Assets to Loans, Loans Held for Sale and Foreclosed Assets Net Charge-offs to Average Loans PNC 0.80% PNC 1.5% Peer Group Peer Group 0.70% 1.2% 0.60% 0.50% 1.0% 0.40% 0.7% 0.30% 0.20% 0.5% 0.10% 0.2%
Slide 26: Well Positioned Based on Lehman Research
Well Positioned Based on Lehman Research Lehman Brothers Criteria Peer Group Ranking Loans to deposits 1 STI Fee income to revenue 2 PNC 3 FITB Demand deposits as % of total deposits 4 RF One-year Gap rank 5 NCC 6 WB Linked quarter change in deposits to average earning assets 7 KEY 8 USB MBS & mortg
Slide 27: Summary
Summary Well Positioned to Create Value A demonstrated history of execution and strong performance Clear strategies to maintain growth Sound risk management processes
Slide 28: 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 matters regarding or affecting PNC that are forward-looking stat
Slide 29: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) • The adequacy of our intellectual property protection, and the extent of any costs associated with obtaining rights in intellectual property claimed by others, can impact our business and operating results. • Our business and op
Slide 30: Additional Information About The PNC/Sterling Financial Corporation Transaction
Additional Information About The PNC/Sterling Financial Corporation Transaction The PNC Financial Services Group, Inc. and Sterling Financial Corporation will be filing a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Exchange Comm
Slide 31: Additional Information About The PNC/Yardville National Bancorp Transaction
Additional Information About The PNC/Yardville National Bancorp Transaction The PNC Financial Services Group, Inc. (“PNC”) and Yardville National Bancorp (“Yardville”) have filed with the United States Securities and Exchange Commission (the “SEC”) a proxy statement/prospectus and other relevant doc
Slide 32: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Earnings Summary June 30, 2007 March 31, 2007 June 30, 2006 THREE MONTHS ENDED Pretax Net Diluted Pretax Net Diluted Pretax Net Diluted In millions, except per share data Adjustments Income EPS Impact Adjustments Income EPS Impact Adjustments Income EPS Impact
Slide 33: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – For the Six Months Ended June 30 SIX MONTHS ENDED June 30, 2007 June 30, 2006 In millions As Reported Adjustments As Adjusted (a) As Reported Adjustments As Adjusted (b) Net interest income $1,361 $1,361 $1,112 $(7) $1,105 Taxable-eq
Slide 34: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Business Segment Earnings and Operating Leverage Six Months Ending June 30 Earnings (Loss) Dollars in millions 2007 % of Segments 2006 % Change Retail Banking $428 50% $375 14% Corporate & Institutional Banking 254 30% 217 17% BlackRock (a) 110 13% 95 16% PFPC
Slide 35: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Average Balance Sheet and Noninterest Income Average Balance Sheet for the three months ended: June 30, 2007 June 30, 2006 % Change % Change PNC Excluding PNC As Excluding Including $ millions Mercantile Mercantile (a) Reported PNC Mercantile Mercantile Averag
Slide 36: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – 2004 to 2006 BlackRock For the year ended December 31, 2006 PNC Deconsolidation and BlackRock PNC In millions As Reported Adjustments (a) Other Adjustments Equity Method As Adjusted Net interest income $2,245 $(10) $2,235 Provision f
Slide 37: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – 2004 to 2006 (continued) For the year ended December 31, 2004 BlackRock PNC Deconsolidation and BlackRock PNC In millions As Reported Other Adjustments Equity Method As Adjusted Net interest income $1,969 $(14) $1,955 Provision for c
Slide 38: Peer Group of Super-Regional Banks
Peer Group of Super-Regional Banks Appendix Ticker The PNC Financial Services Group, Inc. PNC BB&T Corporation BBT Comerica CMA Fifth Third Bancorp FITB KeyCorp KEY National City Corporation NCC Regions Financial RF SunTrust Banks, Inc. STI U.S. Bancorp USB Wachovia Corporation WB Wells Fargo & Comp
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