Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Merrill Lynch Banking & Financial Services Investor Conference (November 2007)
37 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Nov 13, 2007
Slide 1: The PNC Financial Services Group, Inc. at Merrill Lynch Investor Conference
Exhibit 99.1 The PNC Financial Services Group, Inc. Merrill Lynch Banking & Financial Services Investor Conference New York November 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: Grow PNC
Slide 4: PNC is differentiated by …
PNC is differentiated by … A history of execution and strong performance Clear strategies for growth A strong risk management culture
Slide 5: A History of Execution
A History of Execution Building an Enduring Company with a Solid Foundation Enhanced PNC brand Improved customer experience + A continuous improvement culture + Deepened customer relationships + A strong risk management process + A disciplined economic capital allocation process + Expansion into hig
Slide 6: Strong Performance in a Tough Environment
Strong Performance in a Tough Environment Highlights Reported nine month earnings of $3.85 per diluted share versus $7.46 last year Adjusted nine month earnings¹ of $4.00 per diluted share versus $3.77 last year Primary businesses met or exceeded expectations Diverse revenue streams delivering stron
Slide 7: Our Diversified Business Mix
Our Diversified Business Mix Business Leadership Segment Earnings Contribution * For the nine months ended September 30, 2007 $ millions Retail Banking Contribution Winning in - A leading community bank in PNC major markets the - One of the nation’s largest bank wealth $678 53% Payments management f
Slide 8: PNC is differentiated by …
PNC is differentiated by … A history of execution and strong performance Clear strategies for growth A strong risk management culture
Slide 9: Strategies for Growth
Strategies for Growth Focus on fee-based drivers Maintain and grow our deposit advantage Create positive operating leverage Capture new market opportunities Enhance brand awareness
Slide 10: Differentiated Fee-Based Businesses
Differentiated Fee-Based Businesses Noninterest Income to Total Revenue For the nine months ended September 30, 2007 70% 60% PFPC & BLK 50% 40% 30% 20% 10% 0% PNC USB FITB WFC WB STI BBT KEY RF NCC CMA Source: SNL DataSource, PNC as reported
Slide 11: Executing on Growth Drivers
Executing on Growth Drivers Retail C&I Key Drivers: Key Drivers: Payments Business Small Business Fee based Businesses Disciplined Wealth Management Brokerage Deposit Franchise Lending Focus on Deepening Relationships Consumer DDA HHs 1 Major Product Revenue using online banking Midland Loan 1,250 $
Slide 12: Executing on Growth Drivers
Executing on Growth Drivers PFPC BlackRock Key Drivers: Key Drivers: Business Model High Margin, High Expanded Distribution Broadened Transformation Growth Products Strengthened Platform Product Set Focus on High Growth Products Focus on Gathering Assets Assets Under Management 1 Emerging Product Re
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 Noninterest-Bearing Deposits… Through Multiple Channels Contribution to Average YTD07 vs. YTD06 Noninterest-Bearing Deposits As of 9/30/07 Year-to-Date Average Balances PNC Peers 27% Corporate Banking, Interest-bea
Slide 14: Creating Positive Operating Leverage
Creating Positive Operating Leverage Generating Capital by Growing Revenues Faster Than Expenses Trend Continues¹ billions Compound Annual Nine months ended September 30, as adjusted $7 Growth Rate (2004 – 2006) 2007 vs 2006 $6 Revenue 9% Revenue +20% $5 $4 Expense Expense +15% $3 7% $2 $1.5 $1.2 $1
Slide 15: Executing on Our Acquisition Strategy
Executing on Our Acquisition Strategy 76% of PNC Pro Forma Branches Located Between the Hudson and Potomac Rivers PNC Branches prior to 2004 Sterling Financial Corp. Pending Yardville National Bancorp 10/26/07 New York Mercantile Bankshares Corp. 3/2/07 Riggs National Corp. 5/13/05 United National B
Slide 16: Improving Our Demographics
Improving Our 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. United Tr
Slide 17: Bringing the Power of PNC to New Clients
Bringing the Power of PNC to New Clients Expanding Distribution of Fee-based Products 50% Noninterest income to total revenue¹ Opportunities 40% Wealth Management Brokerage 29% 27% Credit Card 24% Payment Services Treasury Management 9% Small Business M&A Advisory Services Capital Markets (1) United
Slide 18: Execution in the Greater Washington Area (“GWA”)
Execution in the Greater Washington Area (“GWA”) Deepening Relationships and Growing Noninterest Income* GWA noninterest income PNC - GWA Retail Relationships PNC - GWA Fee Growth to total revenue 125 $20 +38% 43.6% 100 40.5% $16 +96% 75 $12 +45% 50 $8 +48% 25 $4 +14% 0 $0 June 30 Sept 30 1Q06 3Q07
Slide 19: Investing in Our Business Segments
Investing in Our Business Segments Transforming the PFPC Business Model Albridge Solutions, Inc.¹ Will extend PFPC’s capabilities into the delivery of knowledge-based information services through relationships with: - 150 financial institutions and - More than 100,000 financial advisors With more th
Slide 20: Investing in Our Brand to Drive Growth
Investing in Our Brand to Drive Growth Key Initiatives Redesigned and simplified checking product Launched regional credit card product Redesigned PNC.com Leveraging existing relationships with affluent clients Partnering with the Gallup Organization to improve the customer experience PNC.com person
Slide 21: PNC is differentiated by…
PNC is differentiated by… A history of execution and strong performance Clear strategies for growth A strong risk management culture
Slide 22: PNC’s Credit Culture Evolution
PNC’s Credit Culture Evolution “Focus on the Front Door” Proactive Process Driven by Returns Organizational Independence Improved Credit Manage New Credit Risk the Back Door Rating System Training Not overly concentrated in any area Credit Culture Evolution (2000 – Present) Help More granularity Tal
Slide 23: High Quality Consumer Loan Portfolio
High Quality Consumer Loan Portfolio Composition of Consumer Loan and Residential Mortgage Portfolio As of September 30, 2007 Other 8% Home Equity Portfolio Residential Mortgage Portfolio Credit Statistics Credit Statistics First lien positions 39% Weighted average: Home In-footprint exposure 93% Lo
Slide 24: Home Equity Credit Trends
Home Equity Credit Trends Delinquency Ratio 90+ Days Net Charge-Offs % of outstandings 0.5% % of average outstandings 0.6% PNC¹ PNC¹ 0.5% RMA 0.4% RMA 0.4% 0.3% 0.3% 0.2% 0.2% 0.1% 0.1% 0.0% 0.0% 2004 2005 2006 3Q07 2004 2005 2006 3Q07 (1) Not including Mercantile prior to 3Q07. Source: The Risk Man
Slide 25: Disciplined Approach Leads to Strong Asset Quality
Disciplined Approach Leads to Strong Asset Quality Asset Quality Compared to Peers Nonperforming Assets to Loans, Loans Held for Sale and Foreclosed Assets Net Charge-offs to Average Loans (Year to date) PNC 0.80% PNC 1.5% Peer Group Peer Group 0.70% 1.2% 0.60% 0.50% 1.0% 0.40% 0.7% 0.30% 0.20% 0.5%
Slide 26: Well Positioned for the Yield Curve
Well Positioned for the Yield Curve Relevant Factors Duration of equity Loans to deposits ratio Fee income to revenue percentage Demand deposits as % of total deposits EPS impact of gradual +100bps parallel shift MBS & mortgage loans as % of average earning assets Linked quarter change in deposits t
Slide 27: Summary
Summary Well Positioned to Create Value A demonstrated history of execution and strong performance Clear strategies to maintain growth Sound risk management processes
Slide 28: 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 29: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) Appendix •Our ability to implement our business initiatives and strategies could affect our financial performance over the next several years. •Legal and regulatory developments could have an impact on our ability to operate our
Slide 30: 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 will be filing a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Exch
Slide 31: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Earnings Summary – Nine Months Ended NINE MONTHS ENDED September 30, 2007 September 30, 2006 In millions, except per share data Adjustments, Net Diluted Adjustments, Net Diluted Pretax Income EPS Pretax Income EPS Net income, as reported $1,289 $3.85 $2,219 $7
Slide 32: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – For the Nine Months Ended September 30 NINE MONTHS ENDED September 30, 2007 September 30, 2006 In millions As Reported Adjustments As Adjusted (a) As Reported Adjustments As Adjusted (b) Net interest income $2,122 $2,122 $1,679 ($10)
Slide 33: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – For the Three Months Ended For the three months ended September 30, 2007 PNC PNC % Change vs. June 30, 2007 In millions As Reported Adjustments (a) As Adjusted Reported Adjusted Net interest income $761 $761 Loan net interest income
Slide 34: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – 2004 to 2006 BlackRock For the year ended December 31, 2006 PNC Deconsolidation and BlackRock PNC In millions As Reported Adjustments (a) Other Adjustments Equity Method As Adjusted Net interest income $2,245 $(10) $2,235 Provision f
Slide 35: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Income Statement Summary – 2004 to 2006 (continued) For the year ended December 31, 2004 BlackRock PNC Deconsolidation and BlackRock PNC In millions As Reported Other Adjustments Equity Method As Adjusted Net interest income $1,969 $(14) $1,955 Provision for c
Slide 36: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Business Segments Nine Months Ending September 30, 2007 Corporate & Retail Institutional Banking and Dollars in millions Banking Banking Other Other BlackRock PFPC Total Net interest income (expense) $1,517 $571 $48 $2,136 ($14) $2,122 Noninterest income 1,280
Slide 37: 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