PNC Financial Services Group, Inc. (the) · NYSE:PNC
PNC Financial Services Group, Inc. (the) — BancAnalysts Association of Boston 25th Annual Conference (November 2006)
29 slides from PNC Financial Services Group, Inc. (the)'s conference presentation, Nov 3, 2006
Slide 1: Corporate & Institutional Banking – BancAnalysts Association of Boston
EXHIBIT 99.1 The PNC Financial Services Group, Inc. Corporate & Institutional Banking BancAnalysts Association of Boston 25 th Annual Conference November 3, 2006
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: Key Takeaways
Key Takeaways We’ve built a unique middle market franchise Which positions us well in an environment where it is difficult to generate appropriate risk-adjusted returns from lending-only relationships Our strategy is differentiated by a broad array of product solutions, execution and cross-sell
Slide 4: Corporate & Institutional Banking – A Major Contributor to PNC's Earnings
Corporate & Institutional Banking – A Major Contributor to PNC’s Earnings Contribution to Total PNC Business C&I Banking Financial Highlights Segment Earnings of $1.2 Billion For the Nine Months Ended 9/30/06 As of or for the Nine Months Ended September 30, 2006 Net income $334 million Return on ave
Slide 5: Disciplined Approach Leads to Strong Credit Risk Profile
Disciplined Approach Leads to Strong Credit Risk Profile Lending Profile (As of September 30, 2006) Strong Asset Quality Commercial Loans September 30, 2006 PNC Peer Diverse Consolidated Group - No large industry concentration Nonperforming loans to loans 0.34% 0.38% Limited large non-investment Net
Slide 6: Focused on National Middle Market Opportunity
Focused on National Middle Market Opportunity Middle Market Statistics Approximately 35,000 companies with annual sales of $20 million to $1 billion (D&B) Vast majority of middle market companies are privately held (One Source) Recent advances in the capital markets have opened up new and more sophi
Slide 7: Broad Array of Solutions for Middle Market Companies
Broad Array of Solutions for Middle Market Companies Cash Flow Lending / Asset Based Lending / Asset Securitization / Financing Commercial Real Estate Finance / Equipment Finance Treasury Management Receivables / Disbursements / Information Reporting / Liquidity Management Trade Services / Trade Fin
Slide 8: A Leader in Cross-Sell Penetration of Middle Market Customers
A Leader in Cross-Sell Penetration of Middle Market Customers in PNC’s Footprint (1) PNC has Highest Percentage of Lead Bank Relationships in Our Footprint (63%) PNC Penetration 2006 Rank st Treasury management 74% 1 st Business checking accounts 69% 1 st Capital markets 26% 1 st Short-term investme
Slide 9: Key Takeaways
Key Takeaways We’ve built a unique middle market franchise Which positions us well in an environment where it is difficult to generate appropriate risk-adjusted returns from lending-only relationships Our strategy is differentiated by a broad array of product solutions, execution and cross-sell
Slide 10: The Market is Flooded with New Competitors..
The Market is Flooded with New Competitors.. Total Syndicated Loan Volume $ billions New Money Issuance Refinancings $1,400 $1,200 $1,000 +49% $800 Non-Investment $600 +0% Grade: 53% $400 $200 $0 2005 2006 Nine Months Ended September 30
Slide 11: Others Are Lending At Below Breakeven Returns..
Others Are Lending At Below Breakeven Returns.. Bond Spreads vs. Historical Loss Results Based on our analysis, Break-even spreads spreads typically cover cover only average losses in less than half losses of all years Current Current Spread Coverage of Break-even Bond Rating Spread (1) Historical L
Slide 12: And Default Rates are at a Low Point
And Default Rates are at a Low Point U.S. Speculative-Grade Bond Default Rate Source: Moody’s Investor Service
Slide 13: Key Takeaways
Key Takeaways We’ve built a unique middle market franchise Which positions us well in an environment where it is difficult to generate appropriate risk-adjusted returns from lending-only relationships Our strategy is differentiated by a broad array of product solutions, execution and cross-sell - Bu
Slide 14: Already Delivering on Our Strategies
Already Delivering on Our Strategies Generating Loan Growth, but… Spreads Have Narrowed, so… Selling More Fee-Based Products Commercial & Institutional Banking Commercial & Institutional Banking Commercial & Institutional Banking Total Average Loans Net Interest Income (TE) Noninterest Income $ bill
Slide 15: Building on Our National Distribution Capabilities
Building on Our National Distribution Capabilities Offering Commercial Real Estate, Asset Based Lending, Treasury Management and M&A Advisory Services Nationwide Corporate & Institutional Banking Location Lock Box Location
Slide 16: PNC's Commercial Real Estate Model
PNC’s Commercial Real Estate Model Offering Real Estate Solutions that Span the Life of a Project Development Interim Permanent Pre-development Bridge financing CMBS funding Mezzanine financing FHA permanent loan Construction finance programs Equity bridge loans Tax credit equity Freddie Mac loan Le
Slide 17: Capturing Full Spectrum of Commercial Real Estate Opportunities
Capturing Full Spectrum of Commercial Real Estate Opportunities Originations Sales Servicing Balance Sheet Driven Loan Syndications Commercial Mortgage CMBS Conduit CMBS Servicing Portfolio $ billions $ billions $ billions $180 $6.1 $2.1 $2.0 $4.6 $1.3 $93 $0.9 $2.0 $1.0 2004 2006 2004 2006 2004 200
Slide 18: A Leading Asset Based Lending Franchise
A Leading Asset Based Lending Franchise Building on Established National Network Transaction Volumes Sales and Servicing Capabilities $ billions New Deals 28 offices across the country $1.5 $1.4 14 managers $1.1 65 sales representatives $1.0 86 67 portfolio managers 16 underwriters 75 $0.5 46 field
Slide 19: Harris Williams – A Leader in M&A Advisory to the Middle Market
Harris Williams – A Leader in M&A Advisory to the Middle Market PNC & Harris Williams Highly - Successful First Year Together Growing revenue Harris Williams YTD 9/30/06 revenue up 58% over YTD 9/30/05* Two new industry-focused teams launched: Technology and Transportation / Logistics Generating str
Slide 20: Treasury Management – Expanding High Growth Product Revenues
Treasury Management – Expanding High Growth Product Revenues Faster than the Industry Selected Product Revenue Growth 2005 –vs2004 * Industry PNC Average Wholesale lockbox 8% 5% Purchasing card 46% 14% EDI 59% 9% All products 6% 3% * Source: Ernst & Young industry survey
Slide 21: Summary
Summary We’ve built a unique middle market franchise Which positions us well in an environment where it is difficult to generate appropriate risk-adjusted returns from lending-only relationships Our strategy is differentiated by a broad array of product solutions, execution and cross-sell
Slide 22: 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 23: 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 24: Cautionary Statement Regarding Forward-Looking Information (continued)
Cautionary Statement Regarding Forward-Looking Information (continued) • The integration of Mercantile’s business and operations into PNC, which will include conversion of Mercantile’s different systems and procedures, may take longer than anticipated or be more costly than anticipated or have unant
Slide 25: Additional Information About The PNC/Mercantile Transaction
Additional Information About The PNC/Mercantile Transaction The PNC Financial Services Group, Inc. and Mercantile Bankshares Corporation will be filing a proxy statement/prospectus and other relevant documents concerning the PNC/Mercantile merger transaction with the United States Securities and Exc
Slide 26: Appendix
Appendix
Slide 27: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Business Earnings and Return on Capital Nine Months Ended September 30, 2006 Return on Segment $ millions Average Earnings Earnings Capital * Contribution Business segments Retail Banking $581 26% 48% Corporate & Institutional Banking 334 23% 27% BlackRock (a)
Slide 28: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix Net Interest Income Nine Months Ended September 30 GAAP Taxable- GAAP Taxable- $ millions Net Interest Equivalent Net Interest Net Interest Equivalent Net Interest Income Adjustment Income TE Income Adjustment Income TE 2005 2005 2005 2006 2006 2006 Business s
Slide 29: 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 Regions Financial RF SunTrust Banks, Inc. STI U.S. Bancorp USB Wachovia Corporat