PNC Financial Services Group, Inc. (the) · NYSE:PNC
PNC Financial Services Group, Inc. (the) — Citigroup Financial Services Conference 2007
32 slides from PNC Financial Services Group, Inc. (the)'s conference presentation, Jan 31, 2007
Slide 1: The PNC Financial Services Group, Citigroup Financial Services Conference
The PNC Financial Services Group, Inc. Citigroup Financial Services Conference January 31, 2007 EXHIBIT 99.1
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 PNC overview Retail Banking - High performing model - Our framework for winning in 2007 - Investing to drive growth
Slide 4: 2006 Financial Highlights
2006 Highlights 2006 Financial Highlights Record net income Closed on BlackRock/Merrill transaction – $1.6 billion increase in capital Strong client activity – business segment earnings* grew 9% Balance sheet well positioned for this interest rate environment Overall asset quality remained very stro
Slide 5: PNC – A Diversified Financial Services Company
Regional, National and International Businesses PNC – A Diversified Financial Services Company Business Leadership Winning in the Payments Space A Premier Middle- market Franchise A Leading Global Servicing Platform World Class Asset Manager International investment management: BlackRock – with offi
Slide 6: PNC's High Return Business Mix
Business Results – Twelve Months Ended December 31, 2006 PNC’s High Return Business Mix Total business segment earnings grew 9% compared to the twelve months ended 12/31/05 $0 $200 $400 $600 $800 $1,000 Retail Banking Corporate & Institutional Banking BlackRock PFPC Business earnings, earnings growt
Slide 7: Retail Bank's Deposit Franchise is a Primary Source of Revenue
2006 Retail Banking Revenue Generated by Product Segment Retail Bank’s Deposit Franchise is a Primary Source of Revenue Trust & Brokerage 21% Loans 19% Deposits 60%
Slide 8: Retail Banking Model is Relationship Driven
Retail Banking Model is Relationship Driven The payments system Acquisition, retention and growth of checking relationships Capturing increased share of investable assets Opportunistically generating value-added loans Focused on: Focused on:
Slide 9: Retail Banking Model Has Been Delivering Superior Results
Retail Banking Model Has Been Delivering Superior Results Expanding Relationships Growing Earnings Improving Efficiency $37 $39 $43 $46 $16 $20 $23 $24 2003 2004 2005 2006 Average Deposits Average Loans 63% 62% 60% 58% 2003 2004 2005 2006 Efficiency Ratio $566 $610 $682 $765 2003 2004 2005 2006 Earn
Slide 10: Retail Banking – Framework for Winning in 2007
Retail Banking – Framework for Winning in 2007 Deliver Our Brand Promise of Ease and Confidence to Create a Sustainable Competitive Advantage and Win for Our Stakeholders Empowered, Committed Employees Exceptional Customer Service Retain and Grow Payments Business Customer Leverage Manage Risk Commu
Slide 11: Multiple Channels Drive Checking Acquisition
2006 DDA Customer Acquisition by Channel Multiple Channels Drive Checking Acquisition Existing Branches 63% New Branches 8% Workplace & University 28% Web, NFSC, etc. 1% Expanding investment in new branches Upgrading our existing branch facilities Increasing commitment to alternative channels The We
Slide 12: Increasing and Deepening Checking Relationships
Increasing and Deepening Checking Relationships 0.0 0.5 1.0 1.5 2.0 2003 2004 2005 2006 Retail Banking Checking Customer Base millions December 31 Small Business Consumer Small Business Small Business debit card revenue ($ millions) $12.3 +24% Small Business online banking users 48% +17 % Consumer C
Slide 13: PNC Ranked Highest in J.D. Power Small Business Banking Study
Differentiated Customer Experience PNC Ranked Highest in Inaugural J.D. Power and Associates Small Business Banking Satisfaction Study PNC Bank received the highest numerical score in the proprietary J.D. Power and Associates 2006 Small Business Banking Satisfaction Study SM . Study based on 4,996 t
Slide 14: Initiatives to Further Differentiate the Customer Experience
Initiatives to Further Differentiate the Customer Experience Human Sigma program - Measurement, intervention and reward approach to improving customer and employee engagement Service excellence program - Focused on problem reduction and process simplification Employee selection, retention and develo
Slide 15: Investing to Drive Growth – Recent Investments
Investing to Drive Growth Recent Investments Banking made easy Mortgage origination Credit card Merchant services Private Client Group
Slide 16: °StawtHo
°StawtHo i \ é = [© PNCBANK J Investable Assets @®PNC
Slide 17: Investing to Drive Growth – Continuing Investments
Investing to Drive Growth Continuing Investments Recent Investments Banking made easy Mortgage origination Credit card Merchant services Private Client Group Expanded 2007 marketing program Enhancing pnc.com Remote check capture Simplified business checking New branches M&A activity - Mercantile
Slide 18: Success in Greater Washington, DC Market
Success in Greater Washington, DC Market Highlights Scalability of Model Demonstrating Ease of PNC Client retention exceeded plan Leveraging successful technology platform Extended hours Free ATMs Established Business Banking team Improved Monthly Same Store Sales Production for PNC’s Greater Washin
Slide 19: Mercantile Acquisition Will Create a Mid-Atlantic Powerhouse
Mercantile Acquisition Will Create a Mid-Atlantic Powerhouse 69% of PNC Pro forma Branches Located in the Mid-Atlantic Region Existing PNC Mid-Atlantic Branch Locations Existing Mercantile Branch Locations West Virginia West Virginia Virginia Virginia Maryland Maryland Delaware Delaware New Jersey N
Slide 20: Fast Growing and Affluent Region
Fast Growing and Affluent Region PNC - 78 county footprint Mercantile – 38 county footprint Source: SNL DataSource PNC MRBK PNC MRBK PNC MRBK Median Household Median Household Income Income Projected 5-Year Growth Projected 5-Year Growth Household Household Income Income Population Population $58,64
Slide 21: Mercantile Opportunity
Mercantile Opportunity Distribute broader deposit product set and increase Mercantile’s online banking penetration Provide enhanced consumer offerings such as home equity and credit card lending Leverage PNC’s small business technology capabilities across Mercantile’s banking footprint Expand scale
Slide 22: Integration - Top Priority is Retaining Leadership and Clients
Integration - Top Priority is Retaining Leadership and Clients Key Milestones November December January February March April May June July August September Discovery and Integration Strategy Development Systems Testing Mock Conversion Weekend Integration Strategies Final Bank Conversion st Quarter 0
Slide 23: Summary
Summary Achieved remarkable 2006 results Built a differentiated Retail Banking franchise Designed strategies for winning in a difficult retail banking environment Investing to drive growth
Slide 24: 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 and/or other matters regarding or affecting PNC that are forward-looking stat
Slide 25: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) • 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 turn, could
Slide 26: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) • The integration of Mercantile’s business and operations with those of PNC, which will include conversion of Mercantile’s different systems and procedures, may take longer than anticipated, may be more costly than anticipated, a
Slide 27: Additional Information About The PNC/Mercantile Transaction
Additional Information About The PNC/Mercantile Transaction The PNC Financial Services Group, Inc. and Mercantile Bankshares Corporation have filed a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Exchange Commission (the “SEC”). W
Slide 28: Appendix
Appendix
Slide 29: Non-GAAP to GAAP Reconcilement – Income Statement and Selected Ratios
Non-GAAP to GAAP Reconcilement Appendix Income Statement and Selected Ratios (a) – Year Ended December 31, 2006 Net interest income $2,245 ($10) $2,235 Noninterest income 6,327 ($1,824) (1,087) $144 3,560 Total revenue 8,572 (1,824) (1,097) 5,795 Noninterest expense 4,443 (91) (765) 3,587 Pretax, pr
Slide 30: Non-GAAP to GAAP Reconcilement – Income Statement and Selected Ratios
Non-GAAP to GAAP Reconcilement Appendix Income Statement and Selected Ratios (a) – Year Ended December 31, 2006 Noninterest income $6,327 ($1,824) ($1,087) $144 $3,560 Total revenue $8,572 ($1,824) ($1,097) $144 $5,795 Net income $2,595 ($1,088) ($137) $137 $1,507 Average common shareholders’ equity
Slide 31: Non-GAAP to GAAP Reconcilement – Business Earnings Summary
Non-GAAP to GAAP Reconcilement Appendix Business Earnings Summary Retail Banking $765 $682 12% 26% Corporate & Institutional Banking (4)% 23% BlackRock (a)(b)(c) 23% N/A PFPC (e) 19% 29% Total business segment earnings 1,539 1,418 9% Other (c)(d) 1,056 (93) Total consolidated net income $2,595 $1,32
Slide 32: Peer Group of Super-Regional Banks
Peer Group of Super-Regional Banks Appendix BB&T Corporation BBT Comerica CMA Fifth Third Bancorp FITB KeyCorp KEY National City Corporation NCC The PNC Financial Services Group, Inc. PNC Regions Financial RF SunTrust Banks, Inc. STI U.S. Bancorp USB Wachovia Corporation WB Wells Fargo & Company WFC
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