Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Q4 2008 Earnings Presentation
23 slides from Pnc Financial Services Group, Inc. (the)'s earnings presentation, Feb 3, 2009
Slide 1: The PNC Financial Services Group, Inc. Fourth Quarter 2008 Earnings Conference Call
Exhibit 99.2 The PNC Financial Services Group, Inc. Fourth Quarter 2008 Earnings Conference Call February 3, 2009
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: PNC's Business Model Performed Relatively Well
PNC’s Business Model Performed Relatively Well The National City acquisition provides a tremendous opportunity to leverage our business model The acquisition allowed us to mark higher risk assets to fair value under purchase accounting While credit quality migration accelerated, our reserve coverage
Slide 4: A Leader in Executing the Banking Basics
A Leader in Executing the Banking Basics 4Q08 growth versus 2Q07 PNC Peers 1 Average total loans 19% 13% PNC has remained “open Average total deposits 12% 7% for business” throughout the credit crunch… Average noninterest-bearing deposits 6% (3%) 4Q08 annualized linked quarter growth Average total l
Slide 5: Key Messages
Key Messages Rapidly weakening economic conditions impacted results Strengthened capital, liquidity and loan loss reserve coverage Created significant positive operating leverage offsetting a substantial portion of increased credit costs Remained focused on the balance sheet, transformation process
Slide 6: Capital and Liquidity
Capital and Liquidity 1 Dec 31 Sept 30 Dec 31 Key Capital Ratios 2008 2008 2007 Tier 1 risk-based 9.7% 8.2% 6.8% 2 Tangible common equity 2.8% 3.6% 4.7% Tangible common equity excluding accumulated 4.1% 5.1% 4.8% other comprehensive loss 2,3 Key Liquidity Ratios Loans to deposits 91% 88% 83% Investm
Slide 7: Creating Positive Operating Leverage
Creating Positive Operating Leverage Revenue Expense 2004-2007 CAGR 2007-2008 1 Pretax pre-provision earnings $7.2 $6.7 Revenue Revenue +7% +7% $5.5 $4.3 $4.4 Expense Expense $3.7 +5% +3% $2.8 $2.4 $1.8 Operating Operating Leverage Leverage +2% +4% 2004 2007 2008 PNC’s Disciplined Growth Strategies
Slide 8: PNC's Balance Sheet Composition
PNC’s Balance Sheet Composition Dec 31 in billions 2008 % of total 2007 % of total 2008 Cash and short-term investments $23.9 8.2% 7.5% Loans held for sale 4.4 1.5 2.8 Investment securities 43.5 14.9 21.8 Loans, net of unearned income 175.5 60.3 49.2 Other assets and allowance for loan and lease los
Slide 9: Credit Quality Migration
Credit Quality Migration 2008 1 Asset quality ratios , % Dec 31 Sept 30 June 30 Mar 31 Net charge-offs to average loans 1.09 .66 .62 .57 Nonperforming loans to total loans .95 1.12 .95 .81 Nonperforming assets to total loans and foreclosed assets 1.23 1.16 1.00 .87 Nonperforming assets to total asse
Slide 10: Investment Securities
Investment Securities Dec 31, 2008 in billions Fair % of Net unrealized value total gain/(loss) Agency residential mortgage-backed $23.2 53% $.4 Non-agency residential mortgage-backed 8.7 20 (4.4) Commercial mortgage-backed 5.3 12 (.9) Asset-backed 3.2 8 (.4) Other (primarily municipals) 3.1 7 (.1)
Slide 11: A Financially Compelling Transaction
A Financially Compelling Transaction 1 Estimates at National City acquisition – financial assessment Closing announcement² Purchase accounting adjustments: Impaired loans $7.4 billion $11.0 billion Performing loans $2.4 billion $2.1 billion Conforming credit provision adjustment $504 million $1.8 bi
Slide 12: 2009 Assumptions
2009 Assumptions Severe recessionary conditions Continued credit quality migration Continued growth in total revenue driven by net interest income Well controlled expenses while investing in growth initiatives Enhanced capital ratios 12
Slide 13: Major Integration Accomplishments
Major Integration Accomplishments Announced transaction on Oct 24, 2008 Appointed integration leaders and teams Announced leadership team and regional executives Closed transaction, purchase accounting marks significantly de-risked the balance sheet Announced business, market, and staff organization
Slide 14: Key Integration Objectives
Key Integration Objectives Objective Status as of Feb 3, 2009 Return the balance sheet Purchase accounting marks finalized, credit approval and to a moderate risk profile loan/deposit pricing processes aligned Achieve $1.2 billion of Cost save plan being implemented annualized cost saves Eliminate 5
Slide 15: Significant Retail and Wealth Management Revenue Opportunity
Significant Retail and Wealth Management Revenue Opportunity 1 2 Legacy PNC PNC Opportunity Allows for deeper penetration of our product set, especially fee based and payment business related Consumer products and small 2.9 million 6+ million Combine focus on on-line innovation and platform business
Slide 16: Significant Corporate & Institutional Banking Revenue Opportunity
Significant Corporate & Institutional Banking Revenue Opportunity 1 2 Legacy PNC PNC Opportunity Leverage established deposit gathering strategy Deposits $15 billion $27 billion and relationship based approach Treasury Leverage combined strengths in the middle market management $545 million $975 mil
Slide 17: Summary
Summary A relentless focus on implementing the PNC model Commitment to returning to a moderate risk profile Grow high quality revenue streams A focus on continuous improvement Disciplined approach to capital management Strong execution capabilities PNC Continues to Build a Great Company. 17
Slide 18: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information Appendix This presentation includes “snapshot” information about PNC used by way of illustration and is not intended as a full business or financial review. It should not be viewed in isolation but rather in the context of all of the informa
Slide 19: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) Appendix Given current economic and financial market conditions, our forward-looking financial statements are subject to the risk that these conditions will be substantially different than we are currently expecting. These statem
Slide 20: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) Appendix In addition, our recent acquisition of National City Corporation (“National City”) presents us with a number of risks and uncertainties related both to the acquisition transaction itself and to the integration of the acq
Slide 21: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix In millions, except percentages Tier 1 risk-based capital ratio (a) December 31 2008 Tier 1 risk-based capital $24,328 Less: TARP issuance 7,579 Tier 1 risk-based capital less TARP issuance $16,749 Risk weighted assets (assumes no decrease in assets without TA
Slide 22: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix In millions, except per share data THREE MONTHS ENDED December 31, 2008 September 30, 2008 Adjustments, Net Diluted Adjustments, Net Diluted Pretax Income EPS Pretax Income EPS Net income (loss), as reported $(248) $(.77) $248 $.71 Adjustments: Conforming prov
Slide 23: 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 Regions Financial RF SunTrust Banks, Inc. STI U.S. Bancorp USB Wells Fargo & Company WFC 23
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