Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Smith Barney Citigroup Financial Services Conference 2005
26 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Jan 26, 2005
Slide 1: The PNC Financial Services Group, Inc.
EXHIBIT 99.1 The PNC Financial Services Group, Inc. Smith Barney Citigroup Financial Services Conference New York, NY January 26, 2005
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking 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 statements are necessari
Slide 3: Today's Discussion
Today’s Discussion 2004 accomplishments Current environment and our 2005 opportunities Summary
Slide 4: 2004 Accomplishments
2004 Accomplishments Improved returns on capital Increased client acquisition and retention Continued strong asset quality trends Maintained balance sheet flexibility Integrated UnitedTrust successfully Financial Highlights Twelve Months Ended December 31, 2004 Net income $1.2 billion EPS $4.21 ROCE
Slide 5: Business Results are Gaining Momentum
Business Results are Gaining Momentum Twelve Months Ended December 31 $ millions Earnings (Loss) 2003 2004 Growth Return on Capital/Equity PNC banking businesses $1,053 $957 10% 24% BlackRock 143 155 (8)% 19% PFPC 70 64 9% 27% Total business segment earnings 1,266 1,176 8% 24% Minority interest in i
Slide 6: 2004 Business Highlights
2004 Business Highlights Banking businesses Expanded low-cost deposits in the Regional Community Bank Checking relationships +8% Average demand deposits +14% Increased average loan balances Consumer loans +29% Commercial loans +8% Grew fee income BlackRock Grew assets under management by 10% to $342
Slide 7: Today's Discussion
Today’s Discussion 2004 accomplishments Current environment and our 2005 opportunities Summary
Slide 8: Current Environment
Current Environment Higher interest rates Flatter yield curve Reduced mortgage production Regulatory and compliance requirements Increased provisioning
Slide 9: Building on Our Strengths and Seizing Our Opportunities
Building on Our Strengths and Seizing Our Opportunities What we’re good at… Growing low-cost deposit relationships Generating loans Maintaining a moderate risk profile Expanding differentiated set of fee-based businesses nationally and internationally And the opportunities/challenges we see… Managin
Slide 10: Improving Loan Demand
Improving Loan Demand Relative Change in PNC Wholesale Banking Loans Compared to Industry 110% Wholesale Loans Industry C&I Loans 100% 90% 80% 2002 2003 2004 2005 Forecast PNC Wholesale loans outstanding exclude reclassification of Market Street Funding purchased customer receivables and is reconcil
Slide 11: Earnings Cycle of a Hypothetical Commercial Loan
Earnings Cycle of a Hypothetical Commercial Loan Impact on Pretax Earnings from Net Interest Income and Provision Expense $ thousands $400 $300 $200 $100 $0 2005 2006 2007 2008 2009 Assumptions Date of loan: January 1, 2005 Amount: $10 million Term: 5 years Spread: 200 bps Risk rating: 6
Slide 12: Lower Relative Asset Yields
Lower Relative Asset Yields Quarter Ended December 31, 2004 Peer Group Median Yield on earning assets 4.59% 4.93% Funding 1.47% 1.59% Net interest margin 3.12% 3.34% Net charge-offs to earnings assets 0.09% 0.20% Net charge-off-adjusted net interest margin 3.03% 3.14% Source: SNL DataSource Peer gro
Slide 13: An Opportunity to Increase Asset Yields
An Opportunity to Increase Asset Yields Short-Term Securities Portfolio Lower Real Estate Exposure Receive Fixed Swaps Weighted-Average Life of Securities Portfolio Total Real Estate-Related Assets to Total Assets Receive Fixed Swaps to Average Earnings Assets NCC 0.14% PNC 0.32 FITB 2.41 STI 2.97 B
Slide 14: Value-Based Approach to Balance Sheet Management
Value-Based Approach to Balance Sheet Management PRINCIPLE Manage balance sheet to maximize long term value ACTIONS Strengthened treasury team Established New York office to attract top talent Leveraging BlackRock Solutions® capabilities GOAL Consistently outperform benchmark returns while effective
Slide 15: Leveraging BlackRock Solutions Capabilities
Leveraging BlackRock Solutions® Capabilities PNC Balance Sheet Balance Sheet Executive Summary Position Description Book Value (000s) Accr Int Market (000s) Value (000) BV G/L (000s) Nominal Field DV01 (000s) SprDur01 (000s) Gamma 100p (000s) Tega ID (000s) Eff. Dur Spd Dur Eff. Conv Volat. Dur OAS
Slide 16: Improving the Revenue/Expense Relationship
Improving the Revenue/Expense Relationship Efficiency Ratio for Twelve Months Ended December 31, 2004 Efficiency Ratio PNC reported 68% Excluding PFPC & BlackRock 63% Proforma revenue generated by: Increasing securities yield to peer median Growing loans to 100% of deposits 58% Efficiency ratio reco
Slide 17: Improving Efficiency
Improving Efficiency Approach Team-oriented, company-wide process to identify efficiency improvement opportunities Outcome Drive PNC closer to the customer Reallocate resources to value-added activities Make processes more efficient
Slide 18: Today's Discussion
Today’s Discussion 2004 accomplishments Current environment and our 2005 opportunities Summary
Slide 19: Every day is an opportunity to do more
Every day is an opportunity to do more.sm
Slide 20: Appendix
Appendix
Slide 21: 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, capital levels, asset quality or other future financial or business performa
Slide 22: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) (8) how we choose to redeploy available capital, including the extent and timing of any share repurchases and acquisitions or other investments in our businesses; (9) the impact, extent and timing of technological changes, the ad
Slide 23: Additional Information About the Proposed Riggs National Corporation Acquisition
Additional Information About the Proposed Riggs National Corporation Acquisition The PNC Financial Services Group, Inc. and Riggs National Corporation have filed a proxy statement/prospectus and will file other relevant documents concerning the merger with the United States Securities and Exchange C
Slide 24: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Wholesale Banking Loans Outstanding * $ millions Wholesale Banking Loans Outstanding Excluding Market Street Market Street Funding Loans Total Wholesale Banking Loans = - 9/30/03 $17,478 $2,481 $14,997 12/31/03 16,441 2,223 14,218 3/31/04 16,728 1,932 14,796 6
Slide 25: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Efficiency Ratio Twelve Months Ended 12/31/04 $ millions Efficiency Ratio Total Revenue Noninterest Expense PNC, GAAP basis $5,532 $3,735 68% Less: BlackRock (761) (559) PFPC (763) (646) PNC excluding BlackRock and PFPC $4,008 $2,530 63% Proforma increase of s
Slide 26: Peer Group of Super-Regional Banks
Peer Group of Super-Regional Banks Appendix Ticker BB&T Corporation BBT The Bank of New York Company, Inc. BK Fifth Third Bancorp FITB KeyCorp KEY National City Corporation NCC The PNC Financial Services Group, Inc. PNC SunTrust Banks, Inc. STI U.S. Bancorp USB Wachovia Corporation WB Wells Fargo &
PNC Financial Services Group — Smith Barney Citigroup Financial Services Conference 2005 on 6ix