Pnc Financial Services Group, Inc. (the) · NYSE:PNC

Pnc Financial Services Group, Inc. (the) — Merrill Lynch Banking & Financial Services Conference 2003

21 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Nov 19, 2003

  1. Slide 1: The PNC Financial Services Group, Merrill Lynch Banking & Financial Services Conference

    The PNC Financial Services Group, Inc. New York, NY November 18, 2003 Merrill Lynch Banking & Financial Services Conference EXHIBIT 99.1

  2. Slide 2: Cautionary Statement Regarding Forward-Looking Information

    Cautionary Statement Regarding Forward-Looking Information This presentation contains forward-looking statements with respect to PNC's outlook or expectations relating to its future business, operations, financial condition, financial performance and asset quality. Forward-looking statements are nec

  3. Slide 3: PNC's Approach to Interest Rate Risk Management: Key Messages

    PNC's Approach to Interest Rate Risk Management Manage balance sheet to maximize long-term value Disciplined and comprehensive process Committed to improved disclosure Key Messages

  4. Slide 4: Issues Concerning Interest Rate Risk Management: Questions Investors Should Ask

    Issues Concerning Interest Rate Risk Management Is the value of the balance sheet exposed to rising or falling interest rates? What assumptions are made with respect to the lives and price behavior of the deposit base? What is the composition of the bond and swap portfolios? What types of mortgage-r

  5. Slide 5: A Value-Oriented Approach to Managing Interest Rate Risk

    A Value-Oriented Approach to Managing Interest Rate Risk Goal Maximize value in a changing environment Things we know about interest rate risk An inherent risk in banking businesses Non-linear due to embedded options Not at the cornerstone of a bank's ability to create value Can lead to significant

  6. Slide 6: Market View on Interest Rates

    Market View on Interest Rates Current Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 30-Day Forward LIBOR 0.0112 0.0121 0.0129 0.0151 0.0194 0.023 0.0261 0.0292 0.0323 0.0348 0.0376 0.0403 0.0429 0.04

  7. Slide 7: Sample Bank - Unhedged Balance Sheet

    Assets Commercial loans - fixed $5,000 $5,050 2.0 - Commercial loans - floating 10,000 10,000 0.1 100% Home equity installment loans 5,000 5,100 3.0 - Other consumer loans - fixed 5,000 5,050 2.5 - Total assets $25,000 $25,200 Liabilities and Equity Demand deposits $10,000 $8,800 3.8 - Money market

  8. Slide 8: Economic Value of Equity

    Economic Value of Equity Interest Rate Changes Create Volatility in Value of Equity to the Sample Bank -100BPs -50 BPs Base +50 BPs +100BPs +200BPs Demand Deposits -308 -154 0 154 308 616 MMDA -73 -37 0 37 73 146 Time Deposits - Fixed -68 -34 0 34 68 136 Commercial Loans - Fixed 91 45 0 -45 -91 -182

  9. Slide 9: Structuring a Hedge for the Sample Bank

    Structuring a Hedge for the Sample Bank Laddered Hedge of $2.8 Billion Fixed-Rate U.S. Agency Securities, or $400 Million Per Year for 7 Years T-6 T-5 T-4 T-3 T-2 T-1 T T+1 T+2 T+3 T+4 T+5 Hedge Yield - Flat Rates 0.05 0.0457 0.0421 0.0393 0.0371 0.0357 Benchmark - Flat Rates 0.065 0.06 0.055 0.05 0

  10. Slide 10: Impact of Hedging Strategy

    Impact of Hedging Strategy Hedges Used to Maintain a Constant Value of Equity in the Sample Bank -100BPs -50 BPs Base +50 BPs +100BPs +200BPs $ millions Change in Value Laddered hedge: $2.8 billion of U.S. Agency securities Hedge Hedge Unhedged Equity Hedged Equity Assumes instantaneous parallel cha

  11. Slide 11: Leveraging the Balance Sheet to Maintain Net Interest Income

    Leveraging the Balance Sheet to Maintain Net Interest Income Adding $2.8 Billion of 30-Year Mortgages to the Sample Bank Decreases Value of Equity in a Changing Rate Environment -100BPs -50 BPs Base +50 BPs +100BPs +200BPs $ millions Change in Value Unhedged Equity Leveraged Equity - (30-Year Mortga

  12. Slide 12: Impact of Hedging on Sample Bank NII and EVE

    Impact of Hedging on Sample Bank NII and EVE +200 Basis Points Unhedged $1,025 $1,205 $198 Hedged - U.S. Agencies 1,128 1,251 0 Leveraged Strategy - Mortgages 1,141 1,286 (189) -100 Basis Points Unhedged $1,025 $785 ($99) Hedged - U.S. Agencies 1,128 855 0 Leveraged Strategy - Mortgages 1,141 890 (8

  13. Slide 13: PNC's Current Position

    PNC's Current Position Changes in Value Based on Various Interest Rate Scenarios -100 BPs Base +100BPs Commercial Loans and Leases 140.137 0 -132.315 Consumer Loans 173.072 0 -190.614 Other Assets 199.932 0 -196.289 Time Deposits -122.807 0 117.853 Transaction Deposits -633.812 0 571.825 Borrowings

  14. Slide 14: Is the value of the balance sheet exposed to rates?

    Issues Concerning Interest Rate Risk Management Is the value of the balance sheet exposed to rising or falling interest rates? PNC's Response PNC's current position suggests that rates rising faster than the forward curve will cause a reduction in the economic value of equity

  15. Slide 15: What is the composition of the bond and swap portfolios?

    Issues Concerning Interest Rate Risk Management What is the composition of the bond and swap portfolios? PNC's Response U.S. Treasury and agency securities $1.9 2.2 Residential MBS 7.2 2.8 Commercial MBS 2.7 3.2 Asset-backed securities 2.5 2.1 All other 0.6 0.6 Total bonds $14.9 2.6 Receive fixed -

  16. Slide 16: What types of mortgage-related assets are owned?

    Issues Concerning Interest Rate Risk Management What types of mortgage-related assets are owned? PNC's Response Mortgage-Related Asset Composition September 30, 2003 Hybrid ARMs (Primarily 5/1 collateral) $2.6 $2.5 Early cash flow CMOs 3.7 N/A Home equity installment loans N/A 6.0 15 Year pass-throu

  17. Slide 17: Assumptions on lives and price behavior of the deposit base

    Issues Concerning Interest Rate Risk Management What assumptions are made with respect to the lives and price behavior of the deposit base? PNC's Response Balance Noninterest-bearing demand Core $7.7 3.6 Non-core 4.4 0.0 Total noninterest-bearing demand 12.1 2.4 Savings 2.1 2.8 Interest-bearing dema

  18. Slide 18: Every day is an opportunity to do more

    © PNC Every day is an opportunity to do more:

  19. Slide 19: Forward-Looking Information

    Forward-Looking Information This presentation and other statements made by PNC may contain forward-looking statements with respect to PNC's outlook or expectations for earnings, revenues, expenses, capital levels, asset quality or other future financial or business performance, strategies or expecta

  20. Slide 20: Forward-Looking Information (continued)

    Forward-Looking Information developments on such matters as business generation and retention, the ability to attract and retain management, liquidity and funding; (9) the denial of insurance coverage for claims made by PNC; (10) an increase in the number of customer or counterparty delinquencies, b

  21. Slide 21: Proxy Statement/Prospectus Information Relating to Proposed Acquisition of United National Bancorp

    Proxy Statement/Prospectus Information Relating to Proposed Acquisition of United National Bancorp The PNC Financial Services Group, Inc. and United National Bancorp have filed a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Excha

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