Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Keefe, Bruyette & Woods Large Cap Bank Conference (August 2007)
39 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Aug 13, 2007
Slide 1: The PNC Financial Services Group, Inc. at KBW Large Cap Bank Conference
Exhibit 99.1 The PNC Financial Services Group, Inc. Keefe, Bruyette & Woods Large Cap Bank Conference Kohler, WI August 13, 2007
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: Industry Concerns: PNC's Differentiated Position
Industry Concerns PNC’s Differentiated Position High quality home equity portfolio - Relationship based - 92% in footprint - Performing well to date - Reflects our disciplined approach to credit Well-balanced commercial portfolio - Risk is diversified and granular - Proportionally less commercial re
Slide 4: PNC is differentiated by…
PNC is differentiated by… A history of execution A diversified business mix with clear strategies for growth A strong risk management process A disciplined capital deployment strategy
Slide 5: Building a Great Company by Delivering on Our Promises
Building a Great Company by Delivering on Our Promises Focus on improved Deepen customer customer relationships with satisfaction new/enhanced products Build diversified Develop strong Build a disciplined business mix corporate economic capital 2000s allocation process governance Increase LEADING TH
Slide 6: Strong First Half Performance
Strong First Half Performance Financial Highlights Reported earnings of $2.67 per diluted share Assets $126 billion First half 2007 net income up 20% Total revenue $3.3 billion versus first half 2006 Primary businesses met or Net income $882 million exceeded expectations Noninterest income Created p
Slide 7: PNC is differentiated by …
PNC is differentiated by … A history of execution A diversified business mix with clear strategies for growth A strong risk management process A disciplined capital deployment strategy
Slide 8: A Diversified Business Mix
A Diversified Business Mix Business Leadership First Half 2007 Business Earnings Contribution* $ millions Retail Banking Contribution Winning in - A leading community bank in PNC major the markets $428 50% Payments - One of the nation’s largest bank wealth Space management firms Corporate & Institut
Slide 9: Growing Our Diverse Revenue Streams
Growing Our Diverse Revenue Streams Contribution to Total Revenue – For the Six Months Ended June 30, 2007 Adjusted loan net Asset interest income Management increased 13% Loan year over year* net interest income 11% Fund Servicing 15% 12% Adjusted Corporate noninterest income 10% Services increased
Slide 10: Differentiated Fee-Based Businesses
Differentiated Fee-Based Businesses Noninterest Income to Total Revenue For the six months ended June 30, 2007 70% 60% PFPC & BLK 50% 40% 30% 20% 10% 0% PNC USB KEY FITB WB WFC STI BBT NCC RF CMA Source: SNL DataSource, PNC as reported
Slide 11: Strategies for Growth
Strategies for Growth Build brand awareness to acquire, retain, and deepen customer relationships Redeploy capital to high return, high growth products and markets
Slide 12: Opportunity to Enhance Brand Recognition
Opportunity to Enhance Brand Recognition Brand Equity Index Best Purchase Funnel Bank A Differentiated Awareness Bank Areas B to G Improve O Bank Bank Bank Consideration C D E A L PNC Bank Customers F Bank Bank H G Current Bank I Strengths Preferred Entrenched Worst Source: 2006 PNC Brand and Advert
Slide 13: Executing on Our Strategy to Gather Low Cost Deposits
Executing on Our Strategy to Gather Low Cost Deposits PNC Has Been Focused on Growing Through Multiple Channels Noninterest-Bearing Deposits… Contribution to Average 2Q07 vs. 2Q06 Noninterest-Bearing Deposits As of 6/30/07 Average Balances PNC Peers Consumer Corporate Banking, Interest-bearing depos
Slide 14: Differentiated Deposit Strategy
Differentiated Deposit Strategy Providing a Funding Advantage… With a Low Cost of Deposits Average Noninterest-Bearing Deposits to Average Earning Assets Interest Cost of Total Average Deposits 2Q07 2Q07 CMA 21 % USB 2.23 % WFC 21 WFC 2.44 PNC 18 PNC 2.72 KEY 17 CMA 2.73 RF 16 RF 2.83 FITB 15 FITB 2
Slide 15: Relationship Strategy Drives Fee Growth
Relationship Strategy Drives Fee Growth A Leader in Cross-sell Penetration of Leveraging the Payments Business Middle Market Customers in Footprint 1H07 Growth¹ PNC has highest percentage of Small Business lead bank relationships in our Small Business debit card revenue ($ millions) $6.8 +17% footpr
Slide 16: Redeploying Capital to High Return, High Growth Products - PFPC
Redeploying Capital to High Return, High Growth Products - PFPC Driving Fee Revenue Growth Emerging Product Growth Focus Emerging Product Revenue $millions Emerging Product Fee Revenue 3-Year CAGR* 44% Core Product Fee Revenue $450 $400 Combined 3-Year 29% CAGR 19% $350 $300 21% 20% $250 $200 14% 71
Slide 17: Investing in Fast Growing and Affluent Mid-Atlantic Region
Investing in Fast Growing and Affluent Mid-Atlantic Region 76% of PNC Pro Forma Branches Located Between the Hudson and Potomac Rivers New York Pennsylvania Ohio Indiana New Jersey Original PNC Branches Delaware Completion Acquisitions Date Maryland Sterling Financial Corp. Pending Kentucky Virginia
Slide 18: PNC Demographics Continue to Improve
PNC Demographics Continue to Improve 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% 3.4% 3.7% 2.0% 2003 Acquisitions Proforma 2003 Acquisitions Proforma Amounts based on data at time of acquisition announcement.
Slide 19: Bringing the Power of PNC to New Clients
Bringing the Power of PNC to New Clients Expanding Distribution of Fee-based Products Noninterest income to total revenue¹ 51% Opportunities 42% Wealth Management 40% Brokerage 29% Credit Card 24% On-line banking Treasury Management 9% Small Business M&A Advisory Services Capital Markets (1) United,
Slide 20: Executing on Product Depth and Sales Capabilities in Expanded Markets
Executing on Product Depth and Sales Capabilities in Expanded Markets Growing Noninterest Income and Deepening Relationships in the Greater Washington Area (“GWA”) Region Post Riggs Acquisition* PNC - GWA Retail Relationships GWA noninterest income to total revenue 125,000 43.3% 40.5% 100,000 GWA bu
Slide 21: PNC is differentiated by…
PNC is differentiated by… A history of execution A diversified business mix with clear strategies for growth A strong risk management process A disciplined capital deployment strategy
Slide 22: PNC's Credit Culture Evolution
PNC’s Credit Culture Evolution Organizational “Focus on the Front Door” Independence Proactive Process Driven by Returns New Credit Improved Risk Rating Credit Training System Not overly concentrated in any area Credit Culture Evolution Help More granularity (2000 – Present) Talk Listen Teamwork Lim
Slide 23: High Quality Consumer Loan Portfolio
High Quality Consumer Loan Portfolio Composition of Consumer Loan and Residential Mortgage Portfolio As of June 30, 2007 Other Home Equity Portfolio 1 7% Credit Statistics June 30, 2007 First lien positions 42% Home Residential In-footprint exposure 92% Mortgage Equity 34% 52% Weighted average: Loan
Slide 24: Home Equity Credit Trends
Home Equity Credit Trends Delinquency Ratio 90+ Days Net Charge-Offs % of average % of outstandings outstandings 0.45% 0.30% PNC¹ PNC¹ 0.40% RMA 0.25% RMA 0.35% 0.30% 0.20% 0.25% 0.15% 0.20% 0.15% 0.10% 0.10% 0.05% 0.05% 0.00% 0.00% (1) Not including Mercantile Source: The Risk Management Associatio
Slide 25: Well-balanced Commercial Portfolio
Well-balanced Commercial Portfolio Composition of Commercial Portfolio Hotel As of June 30, 2007 Industrial 5% 11% Other 15% Retail Raw Land 17% 4% Commercial Real Estate Condo, Single Commercial Family, Residential Other 53% 25% Land Office 19% 20% Multi-Family 9% Equipment Leasing CRE Portfolio St
Slide 26: Disciplined Approach Leads to Excellent Asset Quality
Disciplined Approach Leads to Excellent Asset Quality Asset Quality Compared to Peers Nonperforming Assets to Loans, Loans Net Charge-offs to Average Loans Held for Sale and Foreclosed Assets 0.7% PNC 0.50% PNC Peer Group Peer Group 0.43% 0.6% 0.35% 0.5% 0.28% 0.4% 0.20% 0.3% 0.13% 0.2% 0.05% 2Q 3Q
Slide 27: Interest Rate Risk – Well-Positioned for this Environment
Interest Rate Risk – Well-Positioned for this Environment Net interest margin expected to remain stable for the second half of 2007 Duration of equity of approximately 3.2 years for second quarter 2007 Less net interest income dependent due to high fee revenue contribution Low cost deposit franchise
Slide 28: PNC is differentiated by…
PNC is differentiated by… A history of execution A diversified business mix with clear strategies for growth A strong risk management process A disciplined capital deployment strategy
Slide 29: Disciplined Capital Deployment
Disciplined Capital Deployment Sources Uses Investing in and growing our Earnings businesses Growth - Enhancing the brand - Improving the customer experience - High return, high growth products Exiting - Technology and innovation under- Capital Flexibility Making Disciplined Acquisitions performing
Slide 30: Summary: Well Positioned to Create Value
Summary Well Positioned to Create Value A history of execution Clear strategies for growth Sound risk management processes Disciplined capital deployment philosophy
Slide 31: 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 32: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) • The adequacy of our intellectual property protection, and the extent of any costs associated with obtaining rights in intellectual property claimed by others, can impact our business and operating results. • Our business and op
Slide 33: Additional Information About The PNC/Sterling Financial Corporation Transaction
Additional Information About The PNC/Sterling Financial Corporation Transaction The PNC Financial Services Group, Inc. and Sterling Financial Corporation will be filing a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Exchange Comm
Slide 34: Additional Information About The PNC/Yardville National Bancorp Transaction
Additional Information About The PNC/Yardville National Bancorp Transaction The PNC Financial Services Group, Inc. (“PNC”) and Yardville National Bancorp (“Yardville”) have filed with the United States Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that includes
Slide 35: Non-GAAP to GAAP Reconcilement: Earnings Summary
Non-GAAP to GAAP Reconcilement Appendix Earnings Summary June 30, 2007 March 31, 2007 June 30, 2006 THREE MONTHS ENDED Pretax Net Diluted Pretax Net Diluted Pretax Net Diluted In millions, except per share data Adjustments Income EPS Impact Adjustments Income EPS Impact Adjustments Income EPS Impact
Slide 36: Non-GAAP to GAAP Reconcilement: Income Statement Summary
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – For the Six Months Ended June 30 SIX MONTHS ENDED June 30, 2007 June 30, 2006 In millions As Reported Adjustments As Adjusted (a) As Reported Adjustments As Adjusted (b) Net interest income $1,361 $1,361 $1,112 $(7) $1,105 Taxable-eq
Slide 37: Non-GAAP to GAAP Reconcilement: Business Segment Earnings and Operating Leverage
Non-GAAP to GAAP Reconcilement Appendix Business Segment Earnings and Operating Leverage Six Months Ending June 30 Earnings (Loss) Dollars in millions 2007 % of Segments Retail Banking $428 50% Corporate & Institutional Banking 254 30% BlackRock (a) 110 13% PFPC 63 7% Total business segment earnings
Slide 38: Non-GAAP to GAAP Reconcilement: Average Balance Sheet and Noninterest Income
Non-GAAP to GAAP Reconcilement Appendix Average Balance Sheet and Noninterest Income Average Balance Sheet for the three months ended: June 30, 2007 June 30, 2006 % Change % Change PNC Excluding PNC As Excluding Including $ millions Mercantile Mercantile (a) Reported PNC Mercantile Mercantile Averag
Slide 39: 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