The PNC Financial Services Group, Inc. Goldman Sachs Financial Services Conference December 7, 2010 Exhibit 99.1 |
2 Cautionary Statement Regarding Forward-Looking Information and Adjusted Information This presentation includes “snapshot” information about PNC used by way of illustration. It is not intended as a full business or financial review and should be viewed in the context of all of the information made available by PNC in its SEC filings. The presentation also contains forward-looking statements regarding our outlook or expectations relating to PNC’s future business, operations, financial condition, financial performance, capital and liquidity levels, and asset quality. Forward-looking statements are necessarily subject to numerous assumptions, risks and uncertainties, which change over time. The forward-looking statements in this presentation are qualified by the factors affecting forward-looking statements identified in the more detailed Cautionary Statement included in the Appendix, which is included in the version of the presentation materials posted on our corporate website at www.pnc.com/investorevents. We provide greater detail regarding some of these factors in our 2009 Form 10-K and 2010 Form 10-Qs, including in the Risk Factors and Risk Management sections of those reports, and in our subsequent SEC filings (accessible on the SEC’s website at www.sec.gov and on or through our corporate website at www.pnc.com/secfilings). We have included web addresses here and elsewhere in this presentation as inactive textual references only. Information on these websites is not part of this presentation. Future events or circumstances may change our outlook or expectations and may also affect the nature of the assumptions, risks and uncertainties to which our forward-looking statements are subject. The forward-looking statements in this presentation speak only as of the date of this presentation. We do not assume any duty and do not undertake to update those statements. In this presentation, we will sometimes refer to adjusted results to help illustrate the impact of certain types of items, such as our third quarter 2010 gain related to the sale of PNC Global Investment Servicing Inc. (“GIS”), the acceleration of accretion of the remaining issuance discount on our TARP preferred stock in connection with the first quarter 2010 redemption of such stock, our fourth quarter 2009 gain related to BlackRock’s acquisition of Barclays Global Investors (the “BLK/BGI gain”), our fourth quarter 2008 conforming provision for credit losses for National City, and integration costs in the 2010 and 2009 periods. This information supplements our results as reported in accordance with GAAP and should not be viewed in isolation from, or a substitute for, our GAAP results. We believe that this additional information and the reconciliations we provide may be useful to investors, analysts, regulators and others as they evaluate the impact of these respective items on our results for the periods presented due to the extent to which the items are not indicative of our ongoing operations. We may also provide information on pretax pre-provision earnings (total revenue less noninterest expense), as we believe that pretax pre-provision earnings, a non-GAAP measure, is useful as a tool to help evaluate the ability to provide for credit costs through operations. Where applicable, we provide GAAP reconciliations for such additional information. In certain discussions, we may also provide information on yields and margins for all interest-earning assets calculated using net interest income on a taxable-equivalent basis by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. We believe this adjustment may be useful when comparing yields and margins for all earning assets. We may also use annualized, proforma, estimated or third party numbers for illustrative or comparative purposes only. These may not reflect actual results. This presentation may also include discussion of other non-GAAP financial measures, which, to the extent not so qualified therein or in the Appendix, is qualified by GAAP reconciliation information available on our corporate website at www.pnc.com under “About PNC–Investor Relations.” |
3 Today’s Discussion 2010 has been a year of strategic achievements for PNC in a challenging environment PNC is well positioned to deliver strong returns PNC has substantial opportunities for growth to achieve even greater shareholder value PNC Continues to Build a Great Company. PNC Continues to Build a Great Company. |
4 Footprint covering nearly 1/3 of the U.S. population Retail Corporate & Institutional A leader in serving middle-market customers and government entities One of the largest bank-held asset managers in the U.S. Asset Management Residential Mortgage One of the nation’s largest mortgage platforms PNC - A Powerful Franchise 8 th $260 billion Assets U.S. Rank 1 Sept. 30, 2010 6,626 2,461 $179 billion 5 th ATMs 5 th Branches 6 th Deposits (1) Rankings source: SNL DataSource; Banks headquartered in U.S. CO TX KS OK BlackRock A leader in investment management, risk management and advisory services worldwide A Focus on Achievement |
5 Building a High Quality, Differentiated Balance Sheet (1) December 31, 2008 was the closing date of our National City acquisition. $260.1 29.4 .6 11.1 39.8 179.2 10.3 40.7 $128.2 $260.1 46.5 150.1 $63.5 Sept. 30, 2010 (9.3) Other (7.3) Preferred equity ($30.9) Total liabilities and equity (12.5) Borrowed funds (13.3) Other time/savings (13.7) Total deposits 11.9 Common equity (17.6) Retail CDs $17.2 Transaction deposits (25.5) Other assets (25.4) Total loans ($30.9) Total assets $20.0 Change from Dec. 31, 2008 1 Investment securities (billions) Loans to deposits ratio of 84% Loans declined driven by loan payoffs, sales, net charge-offs and ongoing soft demand Continued to grow transaction deposits while reducing higher cost brokered and retail CDs Added high quality, short-duration investment securities Significant improvement in common equity Sept. 30, 2010 highlights A Focus on Achievement |
6 Continued Credit Quality Improvement $5.1 $5.7 $5.8 $5.1 $4.8 3Q09 4Q09 1Q10 2Q10 3Q10 Quarter end nonperforming loans 1 Accruing loans past due 2 Nonperforming loans 1 $2.4 $2.4 $2.5 $1.9 $1.4 $0.9 $0.9 $0.8 $0.6 $0.6 3Q09 4Q09 1Q10 2Q10 3Q10 30-89 Days 90 Days + (1) Loans acquired from National City that were impaired are not included as they were recorded at estimated fair value when acquired and are currently considered performing loans due to the accretion of interest in purchase accounting. Does not include loans held for sale or foreclosed and other assets. (2) Excludes loans that are government insured/guaranteed, primarily residential mortgages. A Focus on Achievement |
7 Well-Positioned Capital Level to Support Growth Ratios as of quarter end. Source: Company reports, MTB is estimated. Sept. 30, 2010 Tier 1 common ratio PNC’s capital priorities 4.8% 6.4% 7.3% 7.6% 7.6% 8.0% 8.5% 8.6% 9.0% 9.5% 9.6% 10.0% 8.2% 8.0% PNC MTB FITB RF USB STI WFC COF BAC KEY BBT JPM PNC CMA Maintain strong levels Support our clients Invest in our businesses Basel III clarity Return capital to shareholders when appropriate A Focus on Achievement |
8 Sustaining Solid Returns Return on tangible common equity¹ 33% 13% 27% 18% 20% 21% 16% 6% 10% 2% 2% 6% 9% 8% 0% 10% 20% 30% 40% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 PNC Peer 2 average (1) Return on tangible common equity calculated as net income divided by (common equity less intangible assets), annualized. PNC believes that return on tangible common equity, a non-GAAP measure, is useful as a tool to help measure and assess a company’s use of equity. (2) Peers represent banks identified in the Appendix as available. COF not available. Source: SNL DataSource. (3) Excludes the $687 million after- tax, $1,076 million pretax, BLK/BGI gain. ROTCE including the gain was 49%. (4) Excludes the $328 million after-tax, $639 million pretax, gain on the sale of GIS. ROTCE including the gain was 23%. Return on common equity including the gain was 15% and excluding the gain was 11%. Further information on (1), (3) and (4) is provided in the Appendix. 3 4 3Q10 ROTCE 1 A Focus on Achievement (23%) BAC (8%) RF 4% CMA 5% STI 9% BBT 12% KEY 12% FITB 15% JPM 16% PNC 4 17% WFC 20% MTB 21% USB |
9 PNC’s Growth Opportunities A Focus on Growth Time Disciplined expense management Growth through execution Growth through lending Growth through innovation Growth through market share Credit quality improvement Capital management Higher interest rates |
10 YTD10 sales up 8% vs. YTD09 100% of markets exceeded YTD10 goal YTD10 sales up 27% vs. YTD09 3Q10 sales up 27% linked quarter 75% of markets exceeded YTD10 goal Sales Momentum Across the Franchise Corporate Banking Wealth Management Institutional Investments Commercial Banking Sales contribution by region YTD10 annualized Products Eastern markets 57% Western markets 43% YTD10 franchise sales up 15% vs. YTD09 Growth Through Execution |
11 Growing Corporate Services Revenue 2009 2010 Treasury Management $841 $919 Revenue 1 (1) Consolidated PNC amounts. Not all of these revenues are reflected in noninterest income. September YTD Capital Markets One of the nation's top treasury management providers Excellent source of low cost deposits Continued growth in purchasing cards Strong pipeline including healthcare providers, gov’t agencies and middle market companies 2009 2010 $346 $411 Revenue 1 September YTD A leading provider of innovative investment banking solutions to the middle market In terms of deals - #2 middle market deal bookrunner - #4 U.S. real estate bookrunner - #4 U.S. asset-based credit lead arranger Harris Williams YTD10 revenue up $40 million from YTD09 Sales at 116% of YTD10 cross-sell goal Sales at 115% of YTD10 cross-sell goal Growth Through Execution |
12 Growing Asset Management and Residential Mortgage Revenue (1) Consolidated PNC amounts. Includes earnings from our equity investment in BlackRock. 2009 2010 $639 $751 Revenue 1 September YTD Asset Management Asset Management Group continued to outperform sales and client acquisition goals PNC assets under administration over $200 billion at Sept. 30, 2010 PNC assets under management up 6% linked quarter to $105 billion 2009 2010 $171 $196 Servicing Fees September YTD Residential Mortgage Aligning the business with PNC’s model Focused on leveraging the customer value relationship with differentiated service Capturing cross-sell opportunities with banking businesses 3Q10 loan origination volumes up 17% linked quarter Sales at 108% of YTD10 cross-sell goal Growth Through Execution |
13 Growing and Deepening Customer Relationships Online banking 2,682 2,968 Online bill payment 753 942 Checking relationships Growing and retaining checking relationships Retail active customers 3 (thousands) 3Q09 3Q10 3Q09 3Q10 3Q08 1 3Q09 2 3Q10 +37,000 +43,000 +53,000 (Growth during the quarter) (1) Excludes the impact of the conversion of Sterling Financial Corporation accounts. (2) Excludes the impact of the required divestitures related to the National City acquisition. (3) At quarter end. Growth Through Execution |
14 0 25 50 75 100 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Recognizing Changing Customer Preferences Customers have more choices and want more control US banking transactions by channel (billions) Mobile Online ATM Call center Branch Source: Tower Group, McKinsey & Co. Growth in electronic channels continues to reduce consumer check payments In 2002, checks accounted for 48% of non-cash transactions By 2012, checks are expected to account for only 17% of non-cash transactions Growth Through Innovative Thinking Forecast Actual |
15 Delivering Innovative Products and Services Recognized as an industry leading payment account Overall site ranked #1 - Inside Online Banking 2010 A tremendously successful platform for PNC to reach a broader consumer base over time Virtual Wallet - Student Edition recognized by 2010 CIO 100 and InformationWeek 2010 0 100 200 300 400 2Q08 Sep 10 Virtual Wallet growth Virtual Wallet accounts Virtual Wallet Student Edition accounts 2Q09 Growth Through Innovative Thinking 4Q08 4Q09 323 30 73 142 35 90 |
16 Capturing More Share of the Wallet Growth Through Innovative Thinking While PNC’s footprint includes some lower growth markets… …the footprint also includes some of the wealthiest. Sources: SNL DataSource as of June 30, 2010, IRS Statistics of Income Division, August 2008. PNC retail footprint states. Top 20 states based on wealth holders with >$1.5 million in net worth Arizona Wyoming Colorado Wisconsin Washington Connecticut Maryland Virginia North Carolina Ohio Michigan Georgia New Jersey Massachusetts Pennsylvania Texas Illinois Florida New York California State 11 3 11 2 3 5 1 4 13 Deposit market share 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 PNC’s retail footprint covers 9 of the top 20 wealthiest states Average 2010-2015 CMA COF FITB JPM KEY MTB PNC USB BBT BAC RF STI WFC 2.2% 4.5% Projected population growth PNC has demonstrated the ability to grow and attract customers in all markets PNC continues to leverage its suite of innovative products to deepen customer relationships |
17 Helping Clients Manage Their Businesses Industry-wide, nearly $2 trillion in annual healthcare payments are processed; growing at 7% annually PNC was the first bank accredited by the Electronic Healthcare Network Accreditation Commission for both clearinghouse and lockbox operations PNC has worked with more than 1,400 healthcare organizations across the country $104 $85 $69 $62 $55 $45 $38 2004 2005 2006 2007 2008 2009 2010 (millions) Growth Through Innovative Thinking PNC healthcare-related revenue growth 1 (1) For the nine months ended September 30, annualized. |
18 PNC’s net interest income, excluding purchase accounting, has remained stable PNC’s Net Interest Income Trend $1.7 $1.7 $1.8 $1.8 $2.0 $1.9 $1.9 $.5 $.4 $.5 $.4 $.5 $.6 $.3 NII excluding purchase accounting accretion Impact of purchase accounting accretion Net interest income (billions) $2.3 $2.2 $2.2 $2.3 $2.4 $2.4 $2.2 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 $244 $243 $236 $231 $227 $225 $224 Average interest-earning assets Growth From Higher Rates |
19 (6) (5) (4) (3) (2) (1) 0 1 2 3 4 0% 1% 2% 3% 4% 5% 6% Active Balance Sheet Management PNC Duration of Equity (At Quarter End) Fed Funds Effective Rate (At Quarter End) 2007 2008 2009 +4.6% 100 bps increase (5.9%) 1 100 bps decrease Effect on NII in 2nd year from gradual interest rate change over preceding 12 months Effect on NII in 1st year from gradual interest rate change over following 12 months PNC 3Q10 NII Sensitivity (1.8%) 1 +1.5% 100 bps decrease 100 bps increase Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 Q3 Growth From Higher Rates (1) Given the inherent limitations in certain of these measurement tools and techniques, results become less meaningful as interest rates approach zero. |
20 Capturing Lending Opportunities Corporate & Institutional Increased loan utilization Commercial real estate Retail Small business Credit card Direct/indirect auto Residential mortgage Growth Through Lending 3Q10 loans/deposits 84% 84% 89% 93% 93% 96% 96% 96% 99% 102% 103% 106% 76% JPM KEY PNC RF WFC FITB BAC STI BBT CMA USB MTB COF Information as of quarter end. Peer source: SNL DataSource. Substantial lending potential |
21 Leveraging the PNC Brand to Drive Revenue Growth Growth Through Market Share (1) Includes YTD10 from corporate banking, commercial banking, wealth management, and institutional investment products. (2) Source: SNL DataSource as of June 30, 2010. Revenue per sales FTE by selected tier 1 market .6x .6x .4 x Tier 1 market baseline average .4x Revenue per sales FTE by selected tier 2 market .5x .4 x .7x Tier 2 market baseline average .6x .2x 1/3 2 3 4 6 4 1/1 4 6 8 13 5 Deposit market share² Washington D.C., Columbus and Indianapolis higher than 2009 St. Louis, Florida and Milwaukee higher than 2009 .5x 1 1 |
22 PNC Is Well Positioned to Capture Growth Opportunities A Focus on Growth Time Disciplined expense management Growth through execution Growth through lending Growth through innovation Growth through market share Credit quality improvement Capital management Higher interest rates Non-distressed loan contraction beginning to level off Balance sheet remains well-positioned for rising rates Continuous improvement culture taking hold across franchise PNC’s view Continued low cost deposit growth expected Credit metrics expected to continue to improve with a stable to improving economy Proven products growing with more in pipeline Sales, cross-sell and client acquisition well ahead of 2009 pace |
23 A Demonstrated Ability to Achieve Greater Shareholder Value PNC 5-year CAGR versus peers¹ through 3Q10 (1) Peers represents average of banks identified in the Appendix. Source: SNL DataSource. (2) Excludes our 3Q10 $328 million after-tax, $639 million pretax, gain on the sale of GIS. Including the gain, our annualized net income and annualized EPS CAGRs were 27% and 13%, respectively. Further information is provided in the Appendix. A Focus on Growth Total shareholder return Annualized EPS Annualized net income Book value/share Deposits Assets As of or for the three months ended Sept. 30 +1% +5%² +18%² +14% +24% +23% PNC (10%) (14%) (23%) +1% +12% +13% Peers¹ |
24 Summary PNC Continues to Build a Great Company. PNC Continues to Build a Great Company. 2010 has been a year of strategic achievements for PNC in a challenging environment PNC is well positioned to deliver strong returns PNC has substantial opportunities for growth to achieve even greater shareholder value |
25 Cautionary Statement Regarding Forward-Looking Information Appendix This presentation includes “snapshot” information about PNC used by way of illustration and is not intended as a full business or financial review. It should not be viewed in isolation but rather in the context of all of the information made available by PNC in its SEC filings. We also make statements in this presentation, and we may from time to time make other statements, regarding our outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality and/or other matters regarding or affecting PNC that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are typically identified by words such as “believe,” “plan,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “will,” “should,” “project,” “goal” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. We do not assume any duty and do not undertake to update our forward- looking statements. Actual results or future events could differ, possibly materially, from those that we anticipated in our forward-looking statements, and future results could differ materially from our historical performance. Our forward-looking statements are subject to the following principal risks and uncertainties. We provide greater detail regarding some of these factors in our 2009 Form 10-K and 2010 Form 10-Qs, including in the Risk Factors and Risk Management sections of those reports, and in our subsequent SEC filings. Our forward-looking statements may also be subject to other risks and uncertainties, including those that we may discuss elsewhere in this presentation or in our filings with the SEC, accessible on the SEC’s website at www.sec.gov and on or through our corporate website at www.pnc.com/secfilings. We have included these web addresses as inactive textual references only. Information on these websites is not part of this document. •Our businesses and financial results are affected by business and economic conditions, both generally and specifically in the principal markets in which we operate. In particular, our businesses and financial results may be impacted by: o Changes in interest rates and valuations in the debt, equity and other financial markets; o Disruptions in the liquidity and other functioning of financial markets, including such disruptions in the markets for real estate and other assets commonly securing financial products; o Actions by the Federal Reserve and other government agencies, including those that impact money supply and market interest rates; o Changes in our customers’, suppliers’ and other counterparties’ performance in general and their creditworthiness in particular; o A slowing or failure of the moderate economic recovery that began last year; o Continued effects of the aftermath of recessionary conditions and the uneven spread of the positive impacts of the recovery on the economy in general and our customers in particular, including adverse impact on loan utilization rates as well as delinquencies, defaults and customer ability to meet credit obligations; o Changes in levels of unemployment; and o Changes in customer preferences and behavior, whether as a result of changing business and economic conditions, climate-related physical changes or legislative and regulatory initiatives, or other factors. •A continuation of turbulence in significant portions of the US and global financial markets, particularly if it worsens, could impact our performance, both directly by affecting our revenues and the value of our assets and liabilities and indirectly by affecting our counterparties and the economy generally. |
26 Cautionary Statement Regarding Forward-Looking Information (continued) Appendix •We will be impacted by the extensive reforms enacted in the Dodd-Frank Wall Street Reform and Consumer Protection Act. Further, as much of that Act will require the adoption of implementing regulations by a number of different regulatory bodies, the precise nature, extent and timing of many of these reforms and the impact on us is still uncertain. •Financial industry restructuring in the current environment could also impact our business and financial performance as a result of changes in the creditworthiness and performance of our counterparties and by changes in the competitive and regulatory landscape. •Our results depend on our ability to manage current elevated levels of impaired assets. •Given current economic and financial market conditions, our forward-looking financial statements are subject to the risk that these conditions will be substantially different than we are currently expecting. These statements are based on our current view that the moderate economic recovery that began last year will continue throughout the rest of 2010 and slowly gather momentum in 2011 amidst continued low interest rates. •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 affect matters such as business generation and retention, our ability to attract and retain management, liquidity, and funding. These legal and regulatory developments could include: o Changes resulting from legislative and regulatory responses to the current economic and financial industry environment; o Other legislative and regulatory reforms, including broad-based restructuring of financial industry regulation as well as changes to laws and regulations involving tax, pension, bankruptcy, consumer protection, and other aspects of the financial institution industry; o Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries. In addition to matters relating to PNC’s business and activities, such matters may also include proceedings, claims, investigations, or inquiries relating to pre-acquisition business and activities of acquired companies such as National City; o The results of the regulatory examination and supervision process, including our failure to satisfy the requirements of agreements with governmental agencies; o Changes in accounting policies and principles; o Changes resulting from legislative and regulatory initiatives relating to climate change that have or may have a negative impact on our customers’ demand for or use of our products and services in general and their creditworthiness in particular; and o Changes to regulations governing bank capital, including as a result of the so-called “Basel III” initiatives. •Our business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through the effective use of third-party insurance, derivatives, and capital management techniques, and by our ability to meet evolving regulatory capital standards. •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 ability to anticipate and respond to technological changes can have an impact on our ability to respond to customer needs and to meet competitive demands. •Our ability to implement our business initiatives and strategies could affect our financial performance over the next several years. •Our expansion with our National City acquisition in geographic markets and into business operations in areas in which we did not have significant experience or presence prior to 2009 presents greater risks and uncertainties than were present for us in other recent acquisitions. •Competition can have an impact on customer acquisition, growth and retention, as well as on our credit spreads and product pricing, which can affect market share, deposits and revenues. |
27 Cautionary Statement Regarding Forward-Looking Information (continued) Appendix •Our business and operating results can also be affected by widespread disasters, terrorist activities or international hostilities, either as a result of the impact on the economy and capital and other financial markets generally or on us or on our customers, suppliers or other counterparties specifically. •Also, risks and uncertainties that could affect the results anticipated in forward-looking statements or from historical performance relating to our equity interest in BlackRock, Inc. are discussed in more detail in BlackRock’s filings with the SEC, including in the Risk Factors sections of BlackRock’s reports. BlackRock’s SEC filings are accessible on the SEC’s website and on or through BlackRock’s website at www.blackrock.com. This material is referenced for informational purposes only and should not be deemed to constitute a part of this document. We grow our business in part by acquiring from time to time other financial services companies. Acquisitions present us with risks in addition to those presented by the nature of the business acquired. These include risks and uncertainties related both to the acquisition transactions themselves and to the integration of the acquired businesses into PNC after closing. Acquisitions may be substantially more expensive to complete (including unanticipated costs incurred in connection with the integration of the acquired company) and the anticipated benefits (including anticipated cost savings and strategic gains) may be significantly harder or take longer to achieve than expected. Acquisitions may involve our entry into new businesses or new geographic or other markets, and these situations also present risks resulting from our inexperience in those new areas. As a regulated financial institution, our pursuit of attractive acquisition opportunities could be negatively impacted due to regulatory delays or other regulatory issues. Regulatory and/or legal issues relating to the pre-acquisition operations of an acquired business may cause reputational harm to PNC following the acquisition and integration of the acquired business into ours and may result in additional future costs or regulatory limitations arising as a result of those issues. Any annualized, proforma, estimated, third party or consensus numbers in this presentation are used for illustrative or comparative purposes only and may not reflect actual results. Any consensus earnings estimates are calculated based on the earnings projections made by analysts who cover that company. The analysts’ opinions, estimates or forecasts (and therefore the consensus earnings estimates) are theirs alone, are not those of PNC or its management, and may not reflect PNC’s or other company’s actual or anticipated results. |
28 Non-GAAP to GAAP Reconcilement Appendix In millions except per share data and percentages Adjustments, pretax Income taxes (benefit) 1 Net income Net income attributable to common shareholders Diluted EPS from net income Average Assets Return on Avg. Assets Net income, diluted EPS, and return on avg. assets, as reported $1,103 $1,094 $2.07 $264,579 1.65% Adjustments: Gain on sale of GIS $(639) $311 (328) (328) (.62) Integration costs 96 (34) 62 62 .11 Net income, diluted EPS, and return on avg. assets, as adjusted $837 $828 $1.56 $264,579 1.27% In millions except per share data Adjustments, pretax Income taxes (benefit) 1 Net income Net income attributable to common shareholders Diluted EPS from net income Net income and diluted EPS, as reported $803 $786 $1.47 Adjustment: Integration costs $100 ($35) 65 65 .13 Net income and diluted EPS, as adjusted $868 $851 $1.60 In millions except per share data Adjustments, pretax Income taxes (benefit) 1 Net income Net income attributable to common shareholders Diluted EPS from net income Net income and diluted EPS, as reported $559 $467 $1.00 Adjustment: Integration costs $89 ($31) 58 58 .12 Net income and diluted EPS, as adjusted $617 $525 $1.12 For the three months ended September 30, 2010 For the three months ended June 30, 2010 For the three months ended September 30, 2009 PNC believes that information adjusted for the impact of certain items may be useful due to the extent to which the items are not indicative of our ongoing operations. (1) Calculated using a marginal federal income tax rate of 35% and includes applicable income tax adjustments. The after-tax gain on the sale of GIS also reflects the impact of state income taxes. |
29 Non-GAAP to GAAP Reconcilement Appendix In millions except per share data and percentages Adjustments, pretax Income taxes (benefit) 1 Net income Net income attributable to common shareholders Diluted EPS from net income Average Assets Return on Avg. Assets Net income, diluted EPS, and return on avg. assets, as reported $2,577 $2,213 $4.24 $265,355 1.30% Adjustments: Gain on sale of GIS $(639) $311 (328) (328) (.63) Integration costs 309 (108) 201 201 .38 TARP preferred stock accelerated discount accretion² 250 .48 Net income, diluted EPS, and return on avg. assets, as adjusted $2,450 $2,336 $4.47 $265,355 1.23% In millions except per share data Adjustments, pretax Income taxes (benefit) 1 Net income Net income attributable to common shareholders Diluted EPS from net income Net income and diluted EPS, as reported $1,296 $992 $2.17 Adjustment: Integration costs $266 ($83) 183 183 .40 Net income and diluted EPS, as adjusted $1,479 $1,175 $2.57 (2) Represents accelerated accretion of the remaining issuance discount on redemption of the preferred stock in February 2010. (1) Calculated using a marginal federal income tax rate of 35% and includes applicable income tax adjustments. The after-tax gain on the sale of GIS also reflects the impact of state income taxes. PNC believes that information adjusted for the impact of certain items may be useful due to the extent to which the items are not indicative of our ongoing operations. For the nine months ended September 30, 2010 For the nine months ended September 30, 2009 |
30 Non-GAAP to GAAP Reconcilement Appendix Sept. 30, 2010 Sept. 30, 2009 In millions except ratio Total revenue $11,273 $11,342 Noninterest expense 6,273 6,864 Pretax pre-provision earnings $5,000 $4,478 Provision $2,060 $2,881 Income from continuing operations before income taxes and noncontrolling interests (Pretax earnings) $2,940 $1,597 Pretax pre-provision earnings/provision 2.4 1.6 PNC believes that pretax pre-provision earnings, a non-GAAP measure, is useful as a tool to help evaluate the ability to provide for credit costs through operations. For the nine months ended In millions except per percentages March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Common shareholders' equity $18,546 $19,363 $20,997 $22,011 $26,466 $27,725 $29,394 Intangible assets 12,178 12,890 12,734 12,909 12,714 12,138 10,518 Common shareholders' equity less intangible assets 6,368 6,473 8,263 9,102 13,752 15,587 18,876 Net income $530 $207 $559 $1,107 $671 $803 $1,103 Net income, if annualized $2,120 $828 $2,236 $4,428 $2,684 $3,212 $4,412 Return on common shareholders' equity 11% 4% 11% 20% 10% 12% 15% Return on tangible common equity 33% 13% 27% 49% 20% 21% 23% After-tax BLK/BGI gain, $1,076 pretax (687) After-tax gain on sale of GIS, $639 pretax (328) Net income excluding BLK/BGI and GIS gains $420 $775 Net income excluding BLK/BGI and GIS gains, if annualized $1,680 $3,100 Return on common shareholders' equity excluding gains 8% 11% Return on tangible common equity excluding gains 18% 16% 2009 2010 PNC believes that return on tangible common equity, a non-GAAP measure, is useful as a tool to help measure and assess a company's use of equity and that information adjusted for the impact of the BLK/BGI and GIS gains, respectively, may be useful due to the extent to which those items are not indicative of our ongoing operations. After-tax gains are calculated using a marginal federal income tax rate of 35% and include applicable income tax adjustments. The after- tax gain on the sale of GIS also reflects the impact of state income taxes. For the three months ended |
31 Non-GAAP to GAAP Reconcilement Appendix In millions except per share data and percentages Adjustments, pretax Income taxes (benefit) 1 Net income Net income attributable to common shareholders Diluted EPS from net income Net income and diluted EPS, as reported $1,103 $1,094 $2.07 Adjustments: Gain on sale of GIS $(639) $311 (328) (328) (.62) Net income and diluted EPS, as adjusted $775 $766 $1.45 2005 As reported As reported As adjusted for GIS gain Based on reported Based on adjusted for GIS gain Net income $334 $1,103 $775 Net income, if annualized $1,336 $4,412 $3,100 27% 18% Diluted EPS $1.14 $2.07 $1.45 Diluted EPS, if annualized $4.56 $8.28 $5.80 13% 5% For the three months ended September 30, 2010 PNC believes that information adjusted for the impact of our gain on the sale of GIS may be useful due to the extent to which that item is not indicative of our ongoing operations. (1) Calculated using a marginal federal income tax rate of 35% and includes applicable income tax adjustments. The after-tax gain on the sale of GIS also reflects the impact of state income taxes. 2010 For the three months ended September 30 CAGR |
32 Peer Group of Banks Appendix The PNC Financial Services Group, Inc. PNC BB&T Corporation BBT Bank of America Corporation BAC Capital One Financial, Inc. COF Comerica Inc. CMA Fifth Third Bancorp FITB JPMorgan Chase JPM KeyCorp KEY M&T Bank MTB Regions Financial Corporation RF SunTrust Banks, Inc. STI U.S. Bancorp USB Wells Fargo & Co. WFC Ticker |