Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Lehman Brothers Global Financial Services Conference 2008
31 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Sep 10, 2008
Slide 1: The PNC Financial Services Group, Inc. at Lehman Brothers Global Financial Services Conference
Exhibit 99.1 The PNC Financial Services Group, Inc. Lehman Brothers Global Financial Services Conference September 10, 2008
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: Today's Discussion
Today’s Discussion The sector landscape PNC’s differentiation Investing for innovation and growth
Slide 4: Current Sector Assessment
The Current Sector Assessment Sector Landscape Asset quality continues to deteriorate Firms continue to struggle with capital levels Illiquidity in the markets persists Regulatory changes are certain Monetary policy changes are uncertain There are no quick fixes We Continue to Operate in a Difficult
Slide 5: A Short-term Focus on Revenue Growth By Many Led to Increased Risk Taking
A Short-term Focus on Revenue Growth The Sector By Many Led to Increased Risk Taking Landscape FDIC Insured Institutions 60.2% 6% 60.1% 59.6% 59.1% 58.7% 58.1% 57.9% 5% Contributing Factors 55% Increased reliance on 4% interest income for growth 3% Steeper yield curve led many to Growth in consumer
Slide 6: Foreclosures Going Up, Prices Going Down
The Foreclosures Going Up, Prices Going Down Sector Landscape Residential Mortgage Loans Case-Shiller Home Price Index, 20-City Composite 1.0 % in Foreclosure 20 15 0.8 10 0.6 5 0 0.4 -5 -10 0.2 -15 0.0 -20 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 During the early 1990s,
Slide 7: Possible Industry Scenarios
The Possible Industry Scenarios Sector Landscape Our industry is facing a high degree of uncertainty PNC invests in attractive Unlikely risk adjusted return opportunities as they arise PNC continues to invest in organic growth initiatives Unlikely steep Yield curve flat PNC Is Well-Positioned to Res
Slide 8: PNC's Business Model Performed Well
PNC’s Business Model Performed Well PNC’s Differentiation The PNC Business Model Delivered Strong First Half 2008 Commitment to a moderate risk Well-positioned balance sheet resulted in profile strong revenue growth - Asset quality Asset quality migration and related costs - Liquidity position remai
Slide 9: PNC's Differentiated Balance Sheet
PNC’s Differentiated Balance Sheet PNC’s Differentiation Category (billions) June 30, % 2008 Cash and short-term investments $9.2 6% Key Ratios Loans held for sale 2.3 2 PNC Peers¹ Securities available for sale 31.0 22 Loans/Deposits Commercial loans, net of unearned income 43.0 30 86% 113% Consumer
Slide 10: Recent Market Valuations Impacting PNC
Recent Market Valuations Impacting PNC PNC’s Differentiation Potential impact on tangible common equity Accumulated other comprehensive loss increases $800 million to $2.0 billion¹ Widening - Primarily driven by impact on securities available for sale portfolio with an credit estimated average life
Slide 11: Liquidity and Capital Flexibility
Liquidity and Capital Flexibility PNC’s Differentiation Relative Liquidity Tier 1 Capital Ratio 8.2% 2Q08 Measure PNC Peers 7.7% Loans/Deposits 86% 113% Avg. noninterest-bearing deposits/ 6.8% Avg. interest earnings assets 16% 13% Avg. securities/Avg. assets 22% 13% PNC unused borrowing capacity $27
Slide 12: Credit Risk Profile
Credit Risk Profile PNC’s Differentiation Key 2Q08 Metrics 2.00% 1.79% 1.75% Credit decisions driven 1.59% by risk-adjusted returns 1.50% 1.41% 1.35% 1.28% Minimal exposure to 1.25% subprime mortgages, 1.00% .95% high-yield bridge and leveraged finance loans 0.75% .62% .51% Highly granular portfolio
Slide 13: Strong and Diverse Revenue Growth
Strong and Diverse Revenue Growth PNC’s Differentiation Contribution to total revenue¹ Fund Change vs. servicing 1Q08 2Q07 Deposit and Net interest income Asset 11% other net interest management income +14% +32% 10% 29% Noninterest income Consumer Total services and deposit 12% revenue +10% +9% $2.0
Slide 14: Creating Positive Operating Leverage
Creating Positive Operating Leverage PNC’s Differentiation For the six months Compound Annual Growth ended June 30 $7 (2004-2007, as adjusted)¹ 2008 vs. 2007 $6 Revenue Revenue +12% +16% $5 $4 Expense Expense +9% +9% $3 $1.7 $2 $1.2 $1.3 $1.5 Operating Operating Leverage Leverage $1 +3% +7% $0 2004
Slide 15: Realistic Plans for Further Growth
Realistic Plans for Further Growth Investing for Innovation and Growth Leveraging differentiation To drive revenue growth Product depth Existing markets Technology platform Acquired markets Industry expertise Product innovation Emerging client needs capabilities PNC Has Maintained Focus on Staying A
Slide 16: Global Investment Servicing
Global Investment Servicing Investing for Innovation and Growth Transforming from an information processor to an information provider PNC Is Focused on Advancing Our Differentiated Set of Products and Services.
Slide 17: Changes in the Broad Payments Space
Changes in the Broad Payments Space Investing for Innovation and Growth Paper Decline Accelerating Customer and technology driven 37 31 change 21 A shift from cash/check to 146 electronic payments 129 121 Secular payment trends impact business model over long-term 2003 2006 2011 Projected Cash Check
Slide 18: Changes in Capital Markets
Changes in Capital Markets Investing for Innovation and Growth US CMBS Issuance US ABS Issuance Worldwide CDO Issuance $230B $909B $552B $206B $851B $503B $169B $678B $595B $272B $94B $230B $157B $24B $73B 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Ongoing Market Liqu
Slide 19: Capturing Fee Income Opportunities
Capturing Fee Income Opportunities Investing for Innovation and Growth To be the nation’s leading provider of healthcare transaction Goal processing and decision support services Nearly $2 trillion in annual payments - 30 billion transactions - growing 7% annually Market An estimated $4 billion spen
Slide 20: Capturing Gen-Y Clients
Capturing Gen-Y Clients Investing for Innovation and Growth Goal To capture a leading share of the Gen-Y client base across our footprint One of our fastest growing consumer bases Gen-Y will outnumber any other generation by 2017 Market Total income will surpass Baby Boomers by 2017 An estimated 7+
Slide 21: Success in the Greater Washington Area
Success in the Greater Washington Area Investing for Innovation and Growth Growing Checking Relationships in PNC’s GWA PNC’s GWA noninterest income highlights 125,000 2-year CAGR 100,000 Asset management +9% Brokerage +32% 75,000 Consumer services, deposit charges and other +11% 50,000 Corporate ser
Slide 22: Leading the Way in Our New Markets
Leading the Way in Our New Markets Investing for Innovation and Growth June 08 YTD Annualized Sales Contribution by Region Sales Highlights Pittsburgh Total franchise Region Products Philadelphia/ 18% 2Q08 sales up 20% vs. 1Q08 S. NJ Region Greater Maryland Corporate 1H08 sales up 50% vs. 1H07 18% 1
Slide 23: Summary
Summary A Differentiated and Successful Business Model Commitment to a moderate risk profile Ability to grow high quality, diverse revenue streams Focus on continuous improvement Disciplined approach to capital management Strong execution and clear strategies for growth PNC Is Continuing to Build a
Slide 24: 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 25: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) Appendix Our business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through the effective use of third-party insurance, deriva
Slide 26: Global Investment Servicing - Coates Analytics
Global Investment Servicing - Coates Analytics Appendix Transforming from an information processor to an information provider Distribution Management Intelligent Dashboard
Slide 27: Global Investment Servicing - Albridge Solutions
Global Investment Servicing - Albridge Solutions Appendix Transforming from an information processor to an information provider Consolidated client account data for performance reporting
Slide 28: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix % Change for 2Q08 vs. In millions, for the three months ended June 30, 2008 March 31, 2008 June 30, 2007 1Q08 2Q07 Net interest income $977 $854 $738 14% 32% Loan net interest income 396 337 274 18% 45% Deposit and other net interest income 581 517 464 12% 25%
Slide 29: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix For the year ended December 31, 2007 PNC PNC In millions As Reported Adjustments (a) As Adjusted Net interest income $2,915 $2,915 Noninterest income 3,790 $131 3,921 Total revenue 6,705 131 6,836 Provision for credit losses 315 (45) 270 Noninterest expense 4,
Slide 30: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix 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 Noninterest income 4,173 (1,214) $163 3,122 Total revenue 6,327 (1,
Slide 31: 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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