PNC Financial Services Group, Inc. (the) · NYSE:PNC
PNC Financial Services Group, Inc. (the) — Merger or Acquisition (October 2006)
23 slides from PNC Financial Services Group, Inc. (the)'s merger presentation, Oct 10, 2006
Slide 1: PNC Announces Agreement to Acquire Mercantile Bankshares Corporation
Exhibit 99.2 The PNC Financial Services Group, Inc. Announces Agreement to Acquire Mercantile Bankshares Corporation October 9, 2006 1
Slide 2: Forward-Looking Information
Forward-Looking Information This presentation contains forward-looking statements regarding our outlook or expectations with respect to the planned acquisition of Mercantile, the expected costs to be incurred in connection with the acquisition, Mercantile’s future performance and consequences of its
Slide 3: Combination of PNC and Mercantile Will Create a Mid-Atlantic Powerhouse
Combination of PNC and Mercantile Will Create a Mid-Atlantic Powerhouse Mercantile is a premier franchise that fits well into PNC’s footprint PNC is accelerating its expansion into one of the nation’s most affluent and attractive regions Meaningful opportunities for value creation by leveraging PNC
Slide 4: Mercantile is a Premier Franchise in the Mid-Atlantic Region
Mercantile is a Premier Franchise in the Mid-Atlantic Region One-of-a-Kind Opportunity Financial Highlights Leading commercial banking As of or for the Six Months Ended and wealth management June 30, 2006 businesses Total assets $17 billion Complements PNC’s footprint Loans $12 billion with 240 bran
Slide 5: Combination Will Create Mid-Atlantic Powerhouse
Combination Will Create Mid-Atlantic Powerhouse 69% of PNC Proforma Branches Located in the Mid-Atlantic New York Region Combined Proforma Market Share(1) Pennsylvania Maryland Branches 198 Deposit market share 2nd New Jersey Virginia West Virginia Branches 57 Deposit market share 6th Maryland Delaw
Slide 6: Fast Growing and Affluent Region
Fast Growing and Affluent Region Projected 5-Year Growth Median Household Household Income Income Population 18.8% $69,363 17.8% 16.9% 10.0% $58,648 $51,546 6.7% 2.1% PNC MRBK U.S. PNC MRBK U.S. PNC MRBK U.S. PNC - 78 county footprint Mercantile – 38 county footprint Source: SNL DataSource 6
Slide 7: PNC's Proven Model to Increase and Deepen Checking Relationships
PNC’s Proven Model to Increase and Deepen Checking Relationships PNC Retail Banking …Provides Opportunities to Checking Customer Base Leverage Increased Ownership millions in Payments Business 1H06 Growth(1) Small Business Small Business debit card revenue ($ millions) $5.8 +27% Small Business onlin
Slide 8: Success in Greater Washington, DC Market Highlights Scalability of Model
Success in Greater Washington, DC Market Highlights Scalability of Model Demonstrating Ease of PNC Client retention exceeded plan Improved Monthly Same Store Sales Production for PNCs Greater Washington Market Leveraging successful Increase technology platform June ’06 vs June ’05 Extended hours Con
Slide 9: A Comprehensive Integration Plan Begins Today
A Comprehensive Integration Plan Begins Today Developing plans to: Leverage experienced integration teams for each company Minimize customer disruption by preserving customer-contact business units and limited branch consolidations Roll-out intensive communication plans to customers and employees Le
Slide 10: Combination Will Result in Significant Revenue Growth Opportunities
Combination Will Result in Significant Revenue Growth Opportunities Significant opportunity to leverage PNC’s small business capabilities across Mercantile’s banking footprint Application of PNC Treasury Management, Capital Markets and other corporate services to Mercantile’s corporate customers Enh
Slide 11: Transaction Summary
Transaction Summary Transaction total value $6 billion (1) Implied consideration $47.24 per Mercantile share (1) Consideration $2.1 billion in cash and 52.5 million shares of PNC common stock Board composition Two additional directors from Mercantile Due diligence Completed Required approvals Mercan
Slide 12: Transaction is Good for Mercantile Constituents
Transaction is Good for Mercantile Constituents Shareholders Compelling transaction Customers PNC does business like Mercantile; similar philosophy and focus Increase breadth and depth of consumer and commercial product offerings Robust technology leading to even better service Employees Augments in
Slide 13: Pricing Consistent with Recent Transactions
Pricing Consistent with Recent Transactions Price / Price to Premium to Deal Value Market Price / Tangible Estimated Core ($ billions) Premium Book Value Book Value Earnings Deposits PNC / $5.99 28% 2.62x 3.84x 19.9x 40% (1) Mercantile Bank and $1.90 25% 2.51x 3.79x 17.0x 31% (2)(3) Thrift Deals Wac
Slide 14: EPS Impact Based on Conservative Financial Assumptions
EPS Impact Based on Conservative Financial Assumptions EPS assumptions IBES consensus estimates for 2007 and 2008 Cost savings $108 million – 33% in 2007, 100% in 2008 Equals 25% of Mercantile’s 2006 annualized expense base PNC synergies and cost savings $27 million One-time costs $141 million after
Slide 15: Transaction Should Provide Solid Returns to PNC Shareholders
Transaction Should Provide Solid Returns to PNC Shareholders Returns Well in Excess of Share Repurchases and Cost of Equity $ millions Closing 2007 2008 2009 2010 2011 Aggregate offer value ($5,992) After-tax one-time cash costs ($141) Cash flow from income 283 $364 $394 $427 $463 Expense savings 28
Slide 16: Summary
Summary Creating powerhouse banking franchise in one of the nation’s most attractive regions Meets PNC’s acquisition objectives Meaningful opportunities for value creation by leveraging PNC and Mercantile’s strengths 16
Slide 17: Additional Information About This Transaction
Additional Information About This Transaction The PNC Financial Services Group, Inc. and Mercantile Bankshares Corporation will be filing a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Exchange Commission (the “SEC”). WE URGE INV
Slide 18: Appendix
Appendix 18
Slide 19: Combined Balance Sheet
Combined Balance Sheet Appendix As of June 30, 2006 $ billions PNC Mercantile Combined Loans $49.9 $11.9 $61.8 Securities 21.7 3.1 24.8 Total assets 94.9 17.0 111.9 Noninterest bearing deposits 14.4 3.4 17.8 Total deposits 63.5 12.4 75.9 Loans to deposits 80% 98% 82% Excludes purchase accounting adj
Slide 20: Combined Income Statement
Combined Income Statement Appendix For the Six Months Ended June 30, 2006 $ millions PNC Mercantile Combined Revenue Net interest income - FTE $1,125 $323 $1,448 Noninterest income 2,415 125 2,540 Total revenue $3,540 $448 $3,988 Provision for credit losses $66 $0 $66 Net income $735 $144 $879 Net i
Slide 21: One-Time Expenses
One-Time Expenses Appendix Estimated One-Time Costs to be Expensed During 2007 $ millions Customer communications $13 Signage 12 Technology / contract termination / buyouts 11 Training 9 Personnel / retention 8 State taxes 7 Travel / other 12 Total pretax charges $71 After-tax expense $44 Total one-
Slide 22: Bank and Thrift Acquisitions
Bank and Thrift Acquisitions Appendix Bank and Thrift Deals Announced After 1/1/04 with Deal Value Between $1 Billion and $10 Billion Buyer Seller National City Fidelity BankShares Inc. National City Harbor Florida Bankshares Inc. Citizens Banking Corp. Republic Bancorp Inc. Banco Bilboa Vizcaya Arg
Slide 23: Non-GAAP to GAAP Reconcilement
Non-GAAP to GAAP Reconcilement Appendix PNC and Mercantile Proforma Combined EPS $ millions 2007 2008 PNC projected net income (1) $1,637 $1,793 Mercantile projected net income (1) 279 360 Proforma combined net income 1,916 2,153 Adjustments (after-tax) Synergies 28 85 Purchase accounting adjustment
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