Attached files
| file | filename |
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| 8-K - FORM 8-K - PNC FINANCIAL SERVICES GROUP, INC. | d243055d8k.htm |
| EX-99.1 - FINANCIAL SUPPLEMENT (UNAUDITED) FOR THIRD QUARTER 2011 - PNC FINANCIAL SERVICES GROUP, INC. | d243055dex991.htm |
 The PNC
Financial Services Group, Inc. Third Quarter 2011
Earnings Conference Call
October 19, 2011
Exhibit 99.2 |
 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 for earnings, revenues, expenses, capital levels, liquidity levels, asset levels,
asset quality and other matters regarding or affecting PNC and its future business and
operations. 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 2010 Form 10-K and 2011 Form 10-Qs, including 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 we may discuss in this presentation or in SEC filings,
accessible on the SEC’s website at www.sec.gov and on PNC’s corporate website
at www.pnc.com/secfilings. We have included web addresses 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 and may also affect the nature of the
assumptions, risks and uncertainties to which our forward-looking statements are
subject. 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 forward-looking statements. Actual results or future events
could differ, possibly materially, from those anticipated in forward-looking
statements, as well as from historical performance.
In this presentation, we sometimes refer to adjusted results to help illustrate the impact of
certain types of items. 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) and on tangible book value
per share (calculated as book value per share less goodwill and other intangible assets
per share), 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, and that tangible book value per share, a non-GAAP
measure, is useful as a tool to help evaluate the amount, on a per share basis, of
intangible assets included in book value. Where applicable, we provide GAAP reconciliations for such additional information, including in the Appendix.
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
Significant 3Q11 achievements and financial
highlights
Exceptional client growth
Positioned to deliver long-term shareholder value
PNC Continues to Build a Great Company.
PNC Continues to Build a Great Company. |
 4
Significant 3Q11 Achievements
PNC Is Positioned to Deliver Even Greater Shareholder Value.
PNC Is Positioned to Deliver Even Greater Shareholder Value.
3Q11 financial
summary
Net income
Diluted EPS from
net income
Return on
average assets
$834 million
$1.55
1.24%
Delivered strong financial results through exceptional client growth across businesses and
markets
Grew commercial and consumer loans
Maintained
a
high
quality
balance
sheet,
improved
overall
credit
quality
Disciplined expense management
Continued to maintain strong capital levels and ratios and liquidity positions
3Q11 highlights
Issued $1 billion preferred stock
Issued $1.25 billion debt |
 (1) Organic
growth refers to consumer and small business accounts excluding 32,000 relationships acquired by acquisition in 2Q11. (2)
Organic
growth
excludes
3,000
customer
accounts
acquired
by
acquisition
in
2Q11.
(3)
Primary
client
relationships
are
defined
as
client
relationships with
annual
revenue
generation
of
$10,000
or
more.
(4)
New
client
sales
referred
to
AMG
by
Retail
Banking
or
C&IB.
Assets under administration
(billions)
YTD11
referral
sales
4
up
86%
vs.
YTD10
YTD11 new primary clients³ up
34% vs. YTD10
Total sales have increased by 38%
for comparable year over year
periods
Ahead of pace to exceed goal of
1,000 new primary clients
YTD11 annualized organic growth of
5.5%, greater than 1.2% footprint
population growth
Active online bill payment customers
showed organic
growth²
of 13%
from 3Q10, 10% from 4Q10
Period end
Corporate Banking new primary
clients
3
Organic checking relationship
growth
1
Retail
Banking
Corporate & Institutional
Banking Asset Management Group
Focused on Growing Client Relationships
5 |
 6
Corporate and Institutional Banking Loan Momentum
Linked
quarter
change
in
loans
and
commitments
Year over year loan growth
C&IB Loans
C&IB Loan Commitments
Loan and commitment values are average balances.
$63
$68
4Q10
3Q11
$130
$140
4Q10
3Q11
2.0%
0.7%
2.8%
3.8%
-1.0%
1.6%
2.3%
3.3%
4Q10
1Q11
2Q11
3Q11
C&IB Loan Commitments
C&IB Loans |
 7
Financial Performance
Balance Sheet
Growth
3Q11
2Q11
4Q10
Loans
($ billions)
$155
$150
$151
Deposits
($ billions)
$188
$182
$183
Performance
Measures
3Q11
2Q11
YTD11
YTD10
Return on average assets
1.24%
1.40%
1.31%
1.13%
Return
on
Tier
1
common
capital
1,2
14.1%
16.1%
14.7%
14.7%
(1) 3Q11 Tier 1 common capital ratio is period-end Tier 1 common capital divided by
period-end risk weighted assets and is estimated. (2) Return on Tier 1 common
capital calculated as annualized net income divided by estimated period-end Tier 1 common capital. Further
information is provided in the Appendix. (3) YTD10 is adjusted to exclude the $328 million
after-tax gain on the sale of GIS. YTD10 reported net income and earnings per
diluted common share were $2,577 million and $4.24, respectively, and return on average assets and return on
Tier 1 common capital were 1.30% and 16.9%, respectively. Further information is provided in
the Appendix. Strong Earnings
3Q11
2Q11
YTD11
YTD10
Net income ($
millions) $834
$912
$2,578
$2,249
Earnings per diluted common share
$1.55
$1.67
$4.79
$3.62
Capital Adequacy
3Q11
2Q11
4Q10
Tier 1 common capital ratio
10.5%
10.5%
9.8%
1
3
3 |
 8
A Higher Quality, Differentiated Balance Sheet
Change from:
Category (billions)
Sep. 30,
2011
Jun. 30,
2011
Dec. 31,
2010
Total investment securities
$62.1
$2.7
$(2.2)
Core commercial loans
67.7
3.6
7.0
Core commercial real estate
15.4
0.2
(1.0)
Core consumer loans
58.5
0.9
(0.2)
Distressed loans
12.9
(0.5)
(1.9)
Total loans
154.5
4.2
3.9
Other assets
52.9
(0.5)
3.5
Total assets
$269.5
$6.4
$5.2
Transaction deposits
$143.0
$5.9
$8.4
Retail CDs
32.4
(2.0)
(5.0)
Other
12.3
1.9
0.9
Total deposits
187.7
5.8
4.3
Borrowed funds, other
47.6
(1.4)
(3.1)
Shareholders’
equity
34.2
2.0
4.0
Total liabilities and equity
$269.5
$6.4
$5.2
Loans increased $4 billion or 3%
linked-quarter driven by
commercial and consumer loans
Securities increased $3 billion,
adding primarily agency
residential mortgage-backed
securities
Transaction deposits increased
$6 billion or 4% linked-quarter
reflecting increased commercial
liquidity
Retail CDs declined $2 billion
linked-quarter reflecting
expected run-off of higher cost
CDs
Equity increased $2 billion due
to retained earnings and $1
billion preferred stock issuance
Highlights
(1)
Excludes
loans
assigned
to
the
Distressed
Assets
Portfolio
business
segment.
(2)
Represents
loans
assigned
to
the
Distressed
Assets
Portfolio business segment.
2
1
1
1 |
 9
Credit Trends Continue to Improve
Nonperforming
loans
2,4
Provision and net charge-offs
Criticized commercial loans
30-89 Days
90 Days +
Accruing
loans
past
due
2,3
As
of
quarter
end
except
net
charge-offs
and
provision,
which
are
for
the
quarter.
(1)
Criticized
loans
are
ones
that
we
consider
“special
mention,”
“substandard’”
or
“doubtful”.
(2)
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.
(3)
Includes
loans
that
are
government
guaranteed/insured,
primarily
residential
mortgages.
These
loans
totaled
$2.8
billion
in
3Q11.
(4)
Does
not
include
loans
held
for
sale or
foreclosed
and
other
assets.
Effective
in
2011,
excludes
residential
real
estate
loans
accounted
for
under
the
fair
value
option.
Criticized
Commercial
loans
Provision
Net charge-offs
Total nonperforming loans
$4.8
$4.5
$4.3
$3.9
$3.7
$15.0
$13.7
$12.7
$11.7
$10.8
3Q10
4Q10
1Q11
2Q11
3Q11
$2.6
$2.7
$2.6
$2.6
$2.7
$1.8
$1.8
$1.9
$1.5
$1.6
3Q10
4Q10
1Q11
2Q11
3Q11
3Q10
4Q10
1Q11
2Q11
3Q11
$614
$791
$533
$414
$365
$486
$442
$421
$280
$261
3Q10
4Q10
1Q11
2Q11
3Q11
1 |
 10
Net Interest Income and Provision Trends
(millions)
3Q11
2Q11
YTD11
YTD10
Core NII
1
$1,883
$1,860
$5,638
$5,724
Purchase accounting accretion
2
292
290
863
1,305
Total NII
$2,175
$2,150
$6,501
$7,029
Provision
261
280
962
2,060
Provision-adjusted
NII
$1,914
$1,870
$5,539
$4,969
Highlights
Quarterly:
Total NII improved from 2Q11 due
to growth in core NII
1
and better
than expected cash recoveries on
commercial impaired loans
Provision improved modestly as
overall credit quality continued to
improve
YTD:
Provision-adjusted
NII
3
increased
11% as significantly lower
provision more than offset the
expected decline in purchase
accounting accretion
Core NII
1
was stable
Fourth Quarter
Outlook:
NII expected to remain stable with
core NII continuing to grow
Provision expected to remain
stable with 3Q11
Provision-adjusted NII
3
increased 11% YoY
3
(1) Core net interest income is total net interest income, as reported, less related purchase
accounting accretion (scheduled and cash recoveries). (2) Includes scheduled purchase
accounting accretion and cash recoveries. Cash recoveries reflects cash received in excess of
recorded investment from sales or payoffs of impaired commercial loans. (3)
Provision-adjusted net interest income is total net interest income, as reported,
less provision. |
 11
Client Growth and Sales Momentum Provide
Opportunities to Increase Noninterest Revenue
Highlights
Quarterly:
Asset management and consumer
services remained stable
Corporate services declined primarily
due to reduced value of CMSR from
lower interest rates
Residential mortgage increased due to
higher loan sales and MSR hedge
gains
Other decreased primarily due to
lower asset values
YTD:
Noninterest income, adjusted for the
impact of regulatory changes,
increased 4%
Fourth Quarter
Outlook:
Consumer services fees expected to
be reduced by approximately $75
million or 9 cents per share in 4Q11
due to regulatory changes on debit
card interchange fees
(1) Asset management fees include the Asset Management Group and BlackRock. (2) Corporate
services includes impairment charges/recoveries related to commercial mortgage
servicing rights.
(millions)
3Q11
2Q11
YTD11
YTD10
Asset management
1
$287
$288
$838
$751
Consumer services
330
333
974
939
Corporate services
2
187
228
632
712
Residential mortgage
198
163
556
542
Deposit service charges
140
131
394
573
Client fee income
$1,142
$1,143
$3,394
$3,517
Net gains on sales of
securities
less net OTTI
33
43
79
77
Other
194
266
803
650
Total noninterest income
$1,369
$1,452
$4,276
$4,244
Impact of Regulation E and related
regulatory changes
$230
$90
Total adjusted noninterest income
$4,506
$4,334
Adjusted noninterest
income increased 4% YoY |
 12
Well–Controlled Expenses While Investing for Growth
PNC is Committed to Disciplined Expense Management.
PNC is Committed to Disciplined Expense Management.
Highlights
Quarterly:
Personnel, Occupancy, Equipment and
Other expenses remain well-managed
Marketing increased due to elevated
advertising costs associated with new
products and market expansion
YTD:
Noninterest expense increased 2% due
to accruals for legal contingencies and
foreclosure-related costs
Fourth Quarter
Outlook:
Other noninterest expenses expected to
be increased by $198 million or 24
cents per share in 4Q11, due to non-
cash charge associated with calling
$750 million of trust preferred securities
(millions)
3Q11
2Q11
YTD11
YTD10
Personnel
$949
$976
$2,914
$2,874
Occupancy
171
176
540
536
Equipment
159
158
484
492
Marketing
72
63
175
196
Other
789
803
2,273
2,175
Total noninterest expense
$2,140
$2,176
$6,386
$6,273
Noninterest expense
increased 2% YoY |
 13
Strong Capital and Liquidity Position
Highlights
Tier 1 ratio increased primarily due to $1 billion
preferred stock issuance
Proforma Basel III Tier 1 common ratio estimated
to be between 8.0-8.5% at December 31, 2012
2
–
Significant upside potential assuming final
capital requirements reflect the inherent risk
profile in our sub-investment grade securities
–
Continue to assume no common stock
issuance to fund pending acquisition of RBC
Bank (USA)
Strong liquidity position
–
Loan-to-deposit ratio of 82%
–
Parent company two year liquidity coverage
3
of 168%
Tier 1 common ratio
Tier 1 risk-based ratio
1
9.6%
9.8%
10.3%
10.5%
10.5%
3Q10
4Q10
1Q11
2Q11
3Q11
1
11.9%
12.1%
12.6%
12.8%
13.1%
3Q10
4Q10
1Q11
2Q11
3Q11
Tier 1 common ratio and Tier 1 Risk-based ratio as of quarter end. (1) Estimated. (2)
Proforma estimate is based on PNC’s Tier 1 common ratio of 10.5% as of 9/30/11, and
includes an assumed benefit of 1.3%, which reflects First Call 2011 and 2012 estimates and
current dividend payout, as well as an assumed decrease of 3.3%-3.8%, which reflects
assumptions regarding credit, operating and market risk under Basel II, the treatment of
BlackRock under Basel III and sub-investment grade securities (assuming no AOCI double
counting) under Basel II, and assumes no common share issuance for the pending RBC Bank (USA)
acquisition. This estimate is subject to further regulatory guidance and clarity.
(3) Parent company liquidity coverage defined as liquid assets divided by funding obligations
within a two year period. |
 14
Outlook
for
2012
Compared
with
Estimated
2011
1
PNC stand-alone:
Stable NII assuming low interest rates and no loan growth
Increasing fees driven by client growth, despite regulatory
impacts
Lower credit costs
Flat
expenses
2
RBC Bank (USA):
Immediately accretive assuming no capital issuance
PNC is Positioned to Deliver Strong Results in 2012.
PNC is Positioned to Deliver Strong Results in 2012.
(1) Refer to the Cautionary Statement in the Appendix, including assumptions. Estimated 2011
reflects reported results through 3Q11 and 4Q11 management estimates. (2) Does not
include legal and regulatory related contingencies, and Flagstar and RBC Bank (USA) integration
and operating costs, along with capital actions related to trust preferred securities.
|
 15
% change 2007-2011
Delivering Long-Term Shareholder Value
Tangible book value per share
Pretax pre-provision earnings per share
PNC
PNC
4
PNC
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
Peer 6
Peer 7
Peer 8
Peer 9
Peer 10
Peer 11
Peer 12
PNC
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
Peer 6
Peer 7
Peer 8
Peer 9
Peer 10
Peer 11
Peer 12
Peer banks identified in the Appendix. Source for banks other than PNC: SNL DataSource. (1)
Tangible book value per share calculated as book value per
share
less
goodwill
and
other
intangible
assets.
Further
information
is
provided
in
the
Appendix.
(2)
Percentage
change
for
2007
to
six
months ended June
30, 2011, annualized, respectively. (3) Pretax, pre-provision earnings are from continued
operations and are calculated as total revenue less noninterest expense. Further
information is provided in the Appendix. (4) 2011 represents pretax pre-provision earnings for the six months ended June 30,
2011, annualized, divided by the number of shares outstanding as of June 30, 2011.
% change 2007-2011
2
2
1
3
$17.58
$42.93
12/31/07
6/30/11
144%
69%
63%
43%
32%
18%
13%
1%
-6%
-14%
-19%
-45%
-46%
$7.06
$11.45
2007
2011
62%
37%
16%
14%
11%
-8%
-28%
-37%
-42%
-47%
-58%
-68%
-109% |
 16
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 for earnings, revenues, expenses, capital levels,
liquidity levels, asset quality and other matters regarding or affecting PNC and its future business and
operations 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,” “see,” “intend,” “outlook,” “project,” “forecast,”
“estimate,” “goal,” “will,” “should” 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 made. We do not assume any duty
and do not undertake to update forward-looking statements. Actual results or
future events could differ, possibly materially, from those anticipated in forward-looking statements, as well as
from historical performance.
Our forward-looking statements are subject to the following principal risks and
uncertainties. •Our businesses, financial results and balance sheet values are affected by business and
economic conditions, including the following: o
Changes in interest rates and valuations in debt, equity and other financial markets.
o
Disruptions in the liquidity and other functioning of U.S. and global financial markets.
o
The impact on financial markets and the economy of the downgrade by Standard & Poor’s
of U.S. Treasury obligations and other U.S. government-backed debt, as well as
issues surrounding the level of U.S. and European government debt and concerns regarding the
credit worthiness of certain sovereign governments in Europe.
o
Actions by Federal Reserve, U.S. Treasury and other government agencies, including those that
impact money supply and market interest rates.
o
Changes in customers’, suppliers’ and other counterparties’ performance and
creditworthiness. o
Slowing or failure of the current moderate economic recovery.
o
Continued effects of aftermath of recessionary conditions and uneven spread of positive
impacts of recovery on the economy and our counterparties, including adverse
impacts on levels of unemployment, loan utilization rates, delinquencies, defaults and counterparty
ability to meet credit and other obligations.
o
Changes in customer preferences and behavior, whether due to changing business and economic
conditions, legislative and regulatory initiatives, or other factors.
•Our forward-looking financial statements are subject to the risk that economic and
financial market conditions will be substantially different than we are currently
expecting. These statements are based on our current view that the modest economic expansion will persist in the year
ahead and interest rates will remain very low.
|
 17
Cautionary Statement Regarding Forward-Looking
Information (continued)
Appendix
Legal and regulatory developments could have an impact on ability to operate our businesses,
financial condition, results of operations, competitive position, reputation, or
pursuit of attractive acquisition opportunities. Reputational impacts could affect matters such as business generation and retention, liquidity,
funding, and ability to attract and retain management. These developments could
include: o
Changes resulting from legislative and regulatory reforms, including broad-based
restructuring of financial industry regulation and changes to laws and regulations
involving tax, pension, bankruptcy, consumer protection, and other industry aspects, and changes in accounting policies and principles.
We will be impacted by extensive reforms provided for in the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the “Dodd-Frank Act”) and otherwise
growing out of the recent financial crisis, the precise nature, extent and timing of which, and their impact on us, remains uncertain.
o
Changes to regulations governing bank capital and liquidity standards, including due to the
Dodd-Frank Act and to Basel III initiatives. 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 include proceedings, claims,
investigations, or inquiries relating to pre acquisition business and activities of
acquired companies, such as National City. These matters may result in monetary judgments or settlements or other remedies, including fines,
penalties, restitution or alterations in our business practices, and in additional expenses
and collateral costs, and may cause reputational harm to PNC.
o
Results of regulatory examination and supervision process, including our failure to satisfy
requirements of agreements with governmental agencies. o Impact on business and operating results of any costs
associated with obtaining rights in intellectual property claimed by others and of adequacy of our
intellectual property protection in general.
Business and operating results are affected by our ability to identify and effectively
manage risks inherent in our businesses, including, where appropriate, through
effective use of third-party insurance, derivatives, and capital management techniques,
and to meet evolving regulatory capital standards. In particular, our results
currently depend on our ability to manage elevated levels of impaired assets.
Business and operating results also include impacts relating to our equity interest in
BlackRock, Inc. and rely to a significant extent on information provided to us by
BlackRock. Risks and uncertainties that could affect BlackRock are discussed in more
detail by BlackRock in SEC filings. Our planned acquisition of RBC Bank (USA)
presents us with risks and uncertainties related both to the acquisition transaction itself and its integration into PNC after
closing, including:
o
Closing is dependent on, among other things, receipt of regulatory and other applicable
approvals, the timing of which cannot be predicted with precision at this point and
which may not be received at all. The impact of closing on PNC’s financial statements will be affected by the timing of the transaction.
o
The transaction (including integration of RBC Bank (USA)’s businesses) may be
substantially more expensive to complete than anticipated. Anticipated benefits,
including cost savings and strategic gains, may be significantly harder or take longer to achieve than expected or may not be achieved in their
entirety as a result of unexpected factors or events.
o
Our ability to achieve anticipated results from this transaction is dependent also on the
following factors, in part related to the state of economic and financial
markets: the extent of credit losses in the acquired loan portfolios and the extent of deposit attrition. Also, litigation and governmental investigations that
may be filed or commenced, as a result of this transaction or otherwise, could impact the
timing or realization of anticipated benefits to PNC. |
 18
Cautionary Statement Regarding Forward-Looking
Information (continued)
Appendix
o
Integration of RBC Bank (USA)’s business and operations into PNC, which will include
conversion of RBC Bank (USA)’s different systems and procedures, may take longer
than anticipated or be more costly than anticipated or have unanticipated adverse results relating to RBC Bank
(USA)’s or PNC’s existing businesses. PNC’s ability to integrate RBC Bank
(USA) successfully may be adversely affected by the fact that this transaction will
result in PNC entering several markets where PNC does not currently have any meaningful retail presence.
•In addition to the planned RBC Bank (USA) transaction, we grow our business in part by
acquiring from time to time other financial services companies, financial services
assets and related deposits. These other acquisitions, including our planned acquisition of branches and related deposits
in metropolitan Atlanta, Georgia from Flagstar Bank, FSB, often present risks and
uncertainties analogous to those presented by the RBC Bank (USA) transaction, as well
as, in some cases, with risks related to entering into new lines of business.
•Competition can have an impact on customer acquisition, growth and retention and on
credit spreads and product pricing, which can affect market share, deposits and
revenues. Industry restructuring in the current environment could also impact our business and financial performance through
changes
in
counterparty
creditworthiness
and
performance
and
in
competitive
and
regulatory
landscape.
Our
ability
to
anticipate
and
respond
to
technological changes can also impact our ability to respond to customer needs and meet
competitive demands. •Business
and
operating
results
can
also
be
affected
by
widespread
disasters,
dislocations,
terrorist
activities
or
international
hostilities
through
impacts
on
the
economy
and
financial
markets
generally
or
on
us
or
our
counterparties
specifically.
We
provide
greater
detail
regarding
some
of
these
factors
in
our
2010
Form
10-K
and
first
and
second
quarter
2011
Form
10-Qs,
including
Risk
Factors and Risk Management sections of those reports, and our subsequent SEC filings.
Our forward-looking statements may also be subject to other risks and
uncertainties, including those we may discuss elsewhere in this presentation or in SEC filings, accessible on the SEC’s website at
www.sec.gov and on 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. 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. |
 19
Non-GAAP to GAAP Reconcilement
Appendix
In millions
Sept. 30, 2011
June 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sept. 30, 2010
Tier 1 common capital (1)
$23,410
$22,745
$21,976
$21,188
$20,437
Reported net income
834
912
832
820
1,103
Reported net income, if annualized
3,309
3,658
3,374
3,253
4,376
Adjustments:
After-tax gain on sale of GIS
(328)
Adjusted net income
775
Adjusted net income, if annualized
3,075
Return on tier 1 common capital
14.1%
16.1%
15.4%
15.4%
21.4%
Adjusted return on tier 1 common capital
15.0%
In millions
Sept. 30, 2011
Sept. 30, 2010
Tier 1 common capital (1)
$23,410
$20,437
Reported net income
2,578
2,577
Reported net income, if annualized
3,447
3,445
Adjustments:
After-tax gain on sale of GIS
(328)
Adjusted net income
2,249
Adjusted net income, if annualized
3,007
Return on tier 1 common capital
14.7%
16.9%
Adjusted return on tier 1 common capital
14.7%
(1) Estimated for Sept. 30, 2011.
As of or for the three months ended
PNC
believes
that
return
on
tier
1
common
capital
is
useful
as
a
tool
to
help
measure
and
assess
a
company's
use
of
common
equity
and
that
such
information
adjusted
for
the
impact
of
the
GIS
gain
may
be
useful
due
to
the
extent
to
which
that
item
is
not
indicative
of
our
ongoing
operations.
After-tax
adjustments
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.
The
pre-tax
gain
on
the
sale
of
GIS
was $639 million.
As of or for the nine months ended |
 20
Non-GAAP to GAAP Reconcilement
Appendix
As of
In millions except per share data
Dec. 31, 2007
June 30, 2011
% Change
Common shareholders' equity
$14,847
$31,588
Common shares outstanding
341
526
Book value per common share
$43.60
$60.02
38%
Goodwill and other intangible assets
$8,853
$9,005
Common shareholders' equity less intangible assets
$5,994
$22,583
Common shares outstanding
341
526
Tangible book value per common share
$17.58
$42.93
144%
PNC
believes
that
tangible
book
value
per
common
share,
a
non-GAAP
measure,
is
useful
as
a
tool
to
help
evaluate
the
amount,
on
a
per
share
basis,
of
goodwill
and
other
intangible
assets
included
in
book
value
per
common share.
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
Average
Assets
Return on Avg.
Assets (2)
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)
(.62)
Net income, diluted EPS, and return on avg. assets, as adjusted
$2,249
$1,885
$3.62
$265,355
1.13%
(2) Calculated as annualized income divided by average assets.
For the nine months ended September 30, 2010
(1) Calculated using a marginal federal income tax rate of 35% and includes applicable income
tax adjustments and the impact of state income taxes. PNC believes that information
adjusted for the impact of the gain on the sale of GIS may be useful due to the extent to which that item is not indicative of our
ongoing operations. |
 21
Non-GAAP to GAAP Reconcilement
For the year ended
For the six months ended
In millions
Dec. 31, 2007
June 30, 2011
% Change
Total revenue
$6,705
$7,233
Noninterest expense
4,296
4,246
Pretax
pre-provision earnings $2,409
$2,987
Pretax pre-provision earnings, annualized
$2,409
$6,024
Common shares outstanding
341
526
Annualized pretax pre-provision earnings per share
$7.06
$11.45
62%
Appendix |
 22
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 |