Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Citigroup Financial Services Conference 2008
32 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Jan 29, 2008
Slide 1: The PNC Financial Services Group, Inc. Citigroup Financial Services Conference 2008
Exhibit 99.1 The PNC Financial Services Group, Inc. Citigroup Financial Services Conference 2008 New York January 29, 2008
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: 2007 Highlights
2007 Highlights Key Accomplishments 2007 Financial Highlights Delivered solid growth Assets $139 billion Created positive operating Net income $1.5 billion leverage on an adjusted 1 basis Net income adjusted $1.7 billion Strong asset quality Noninterest income Successful Mercantile to total revenue
Slide 4: PNC's Differentiated Business Model
PNC’s Differentiated Business Model Delivering Relatively Strong Results Through Economic Cycles Key take-aways Diversified business mix with a high fee income contribution Positive adjusted operating leverage Moderate risk profile -Strategic choices -Operating discipline Disciplined capital managem
Slide 5: Our Focused and Diversified Business Segments
Our Focused and Diversified Business Segments 1 Business Leadership Segment Earnings For the year ended December 31, 2007, millions Retail Banking Contribution - Focused on winning in the payments space - A leading community bank in PNC major $893 52% markets - One of the nation’s largest bank wealt
Slide 6: Building a Differentiated Business Mix
Building a Differentiated Business Mix High Fee Income Contribution A Funding Advantage Noninterest Income to Total Revenue¹ Average Noninterest-Bearing Deposits to Average Interest-Earning Assets¹ 2007 2007 PNC 57 % CMA 21 % 47% USB 52 without WFC 20 PFPC and FITB 46 BlackRock² PNC 18 WFC 45 KEY 16
Slide 7: A More Diverse and Valuable Revenue Stream
A More Diverse and Valuable Revenue Stream A Unique Revenue Mix 1,2 For the year ended December 31, 2007 Asset Adjusted loan net Management interest income increased 25% Loan year over year² Net Interest Fund 12% Servicing Income Adjusted loan net 16% 12% interest income increased 25% Adjusted year
Slide 8: PNC's Differentiated Business Model
PNC’s Differentiated Business Model Delivering Relatively Strong Results Through Economic Cycles Key take-aways Diversified business mix with a high fee income contribution Positive adjusted operating leverage Moderate risk profile -Strategic choices -Operating discipline Disciplined capital managem
Slide 9: Creating Positive Operating Leverage
Creating Positive Operating Leverage Growing Revenues Faster Than Expenses Compound Annual Growth 2006-2007 $7 (2004-2006, as adjusted) 1,3 As adjusted 2,3 $6 Revenue Revenue +9% +18% $5 $4 Expense Expense +7% +15% $3 Operating Operating $1.7 Leverage Leverage $2 $1.2 $1.3 $1.5 +2% +3% $1 Net Income
Slide 10: PNC's Differentiated Business Model
PNC’s Differentiated Business Model Delivering Relatively Strong Results Through Economic Cycles Key take-aways Diversified business mix with a high fee income contribution Positive adjusted operating leverage Moderate risk profile -Strategic choices -Operating discipline Disciplined capital managem
Slide 11: Disciplined Approach Leads to Strong Credit Risk Profile
Disciplined Approach Leads to Strong Credit Risk Profile Overview Asset Quality Credit decisions driven by As of December 31, 2007 risk-adjusted returns Peer PNC Group Minimal exposure to subprime mortgages, high-yield bridge and Nonperforming loans to total loans .64% .85% leveraged finance loans N
Slide 12: A High Quality Consumer Loan Portfolio
A High Quality Consumer Loan Portfolio Composition of Consumer Loan and Residential Mortgage Portfolio As of December 31, 2007 Total Portfolio $27.9 billion Other 9% Home Equity Portfolio Residential Mortgage Portfolio Credit Statistics¹ Credit Statistics¹ First lien positions 39% Weighted average:
Slide 13: A Well-balanced Commercial Portfolio
A Well-balanced Commercial Portfolio Composition of Commercial Lending Portfolio As of December 31, 2007 Industrial Hotel Total Portfolio $41 billion 8% 5% Retail 15% Other 19% Commercial Other 57% Commercial $8.9 billion Real Estate Land 22% 5% Office 16% Equip. Asset- Leasing Based 9% 12% Multi-fa
Slide 14: PNC's Differentiated Business Model
PNC’s Differentiated Business Model Delivering Relatively Strong Results Through Economic Cycles Key take-aways Diversified business mix with a high fee income contribution Positive adjusted operating leverage Moderate risk profile -Strategic choices -Operating discipline Disciplined capital managem
Slide 15: Improving Our Retail Demographics
Improving Our Retail 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. Un
Slide 16: Executing in the Greater Washington Area
Executing in the Greater Washington Area Deepening Relationships and Growing Noninterest Income* GWA noninterest income PNC - GWA Retail Relationships PNC - GWA Fee Growth to total revenue $24 125 $20 45.4% 100 +191% 40.5% $16 75 +61% $12 50 $8 +17% 25 $4 +25% 0 $0 June 30 Dec. 31 1Q06 4Q07 1Q06 4Q0
Slide 17: Transforming the PFPC Business Model
Transforming the PFPC Business Model High Growth Product Focus Transforming the Business Model Emerging product Albridge Solutions revenue 3-yr CAGR 18% Coates Analytics Emerging Product $900 Revenue Core Product $800 Revenue $700 30% $600 22% From To… $500 Processor Integrated $400 Provider 70% $30
Slide 18: PNC's Differentiated Business Model
PNC’s Differentiated Business Model Delivering Relatively Strong Results Through Economic Cycles Key take-aways Diversified business mix with a high fee income contribution Positive adjusted operating leverage Moderate risk profile -Strategic choices -Operating discipline Disciplined capital managem
Slide 19: Proactively Managing the Balance Sheet
Proactively Managing the Balance Sheet Aligning the Balance Sheet with Expectations PNC Duration Fed Fund of Equity Effective Rate (At Quarter End) (At Quarter End) 4 6.0% 3 5.0% 2 4.0% 1 3.0% 0 2.0% (1) (2) 1.0% (3) 0.0% 2004 2005 2006 2007 Source: SNL DataSource, PNC as reported.
Slide 20: Enhancing Our Capital Flexibility in 2008
Enhancing Our Capital Flexibility in 2008 Tier 1 Approach Better Aligns Capital Management with Risk Tier 1 Risk-based Ratio Sources/Uses Consistent with economic capital methodologies Earnings growth A better measure of risk Capital markets Access to broader capital markets Return to shareholders P
Slide 21: Continuing to Build a Great Company
Continuing to Build a Great Company 2008 Plan Remain focused on our strategies Execute, execute, execute Disciplined investment in opportunities
Slide 22: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information Appendix 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-loo
Slide 23: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) Appendix •Legal and regulatory developments could have an impact on our ability to operate our businesses or our financial condition or results of operations or our competitive position or reputation. Reputational impacts, in tur
Slide 24: Additional Information About The PNC/Sterling Financial Corporation Transaction
Additional Information About The PNC/Sterling Financial Corporation Transaction Appendix The PNC Financial Services Group, Inc. and Sterling Financial Corporation (“Sterling”) will be filing a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securi
Slide 25: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Earnings Summary THREE MONTHS ENDED December 31, 2007 September 30, 2007 December 31, 2006 In millions, except per share data Adjustments, Net Diluted Adjustments, Net Diluted Adjustments, Net Diluted Pretax Income EPS Pretax Income EPS Pretax Income EPS Net i
Slide 26: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Business Segment Summary and Noninterest Income Year ended December 31 Earnings (Loss) Dollars in millions 2007 % of Segments Retail Banking $893 52% Corporate & Institutional Banking 432 25% BlackRock (a) 253 15% PFPC 128 8% Total business segment earnings 1,
Slide 27: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – For the year ended Year ended December 31, 2007 December 31, 2006 In millions As Reported Adjustments As Adjusted (a) As Reported Adjustments As Adjusted (b) Net interest income $2,915 $2,915 $2,245 ($10) $2,235 % Change As % Change
Slide 28: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – For the three months ended For the three months ended December 31, 2007 PNC PNC % Change vs. Sept 30, 2007 In millions As Reported Adjustments (a) As Adjusted Reported Adjusted Net interest income $793 $793 Loan net interest income 3
Slide 29: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – 2004 to 2007 For the year ended December 31, 2007 PNC PNC In millions As Reported Adjustments (a) As Adjusted Net interest income $2,915 $2,915 Provision for credit losses 315 $(45) 270 Noninterest income 3,790 131 3,921 Noninterest
Slide 30: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – 2004 to 2007 (continued) For the year ended December 31, 2005 BlackRock PNC Deconsolidation and BlackRock PNC In millions As Reported Other Adjustments Equity Method As Adjusted Net interest income $2,154 $(12) $2,142 Provision for c
Slide 31: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – 2004 to 2007 (continued) For the year ended December 31, as adjusted Adjusted % Change In millions 2004 2005 2006 2007 2004-2006 CAGR 2006-2007 Adjusted net interest income $1,955 $2,142 $2,235 $2,915 7% 30% Adjusted noninterest inco
Slide 32: 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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