 The PNC
Financial Services Group, Inc. Fourth Quarter and Full Year 2010
Earnings Conference Call
January 20, 2011
Exhibit 99.2 |
| The PNC
Financial Services Group, Inc. Fourth Quarter and Full Year 2010
Earnings Conference Call
January 20, 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
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
other
National
City
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 strategic achievements
Business highlights
Key financial take-aways
Summary and 2011 expectations
PNC Continues to Build a Great Company.
PNC Continues to Build a Great Company. |
 4
2010 Strategic Highlights
Grew our businesses and delivered record net income in 2010
Transitioned to a higher quality balance sheet
Improved our Tier 1 capital ratios to record levels
Implemented the PNC sales and service model
Exceeded our original acquisition-related cost savings target
Actively managed our risk positions toward a moderate profile
Exceptional achievements in a challenging environment
6.0%
9.8%²
Tier 1 common ratio
Diluted EPS
Return on avg assets
Net income
As reported
$4.36
$5.74
.87%
1.28%
$2.4 billion
$3.4 billion
2009
2010
Diluted EPS
Return on avg assets
Net income
As adjusted¹
$3.45
$6.07
.72%
1.25%
$2.0 billion
$3.3 billion
2009
2010
Amounts are as of or for the year ended December 31. (1) 2010 adjusted for the after-tax
gain on the sale of GIS and the impact of the accelerated accretion of the remaining
issuance discount in connection with the redemption of our TARP preferred stock. 2009 adjusted for the
after-tax BLK/BGI gain. Both periods adjusted for after-tax integration costs. Further
information is provided in the Appendix. (2) Estimated. PNC Is Positioned to Deliver
Even Greater Shareholder Value. PNC Is Positioned to Deliver Even Greater Shareholder
Value. |
 5
Strong 2010 Business Results Contributed to
Record Performance
(1) Represents consolidated PNC amounts.
Retail Banking
Grew checking relationships by
75,000 during the year
Online bill payment active
customers up 25% from 4Q09
High customer and employee
engagement
Corporate & Institutional Banking
Added record number of new clients
FY10
treasury
management
1
revenue
up 8% vs. 2009
FY10
capital
markets
1
revenue
up
16% year over year
Asset Management
Record high client acquisition and
client satisfaction
Assets under management up
$5 billion from 4Q09
Assets under administration over
$210 billion
Residential Mortgage
Realigned the business to PNC’s model
FY10 servicing fees up 9% year over
year
FY10 noninterest expenses down 11%
from 2009 |
 6
2010 sales up 16% vs. 2009
2H10 sales up 17% vs. 1H10
100% of markets exceeded 2010 goal
2010 sales up 26% vs. 2009
2H10 sales up 58% vs. 1H10
90% of markets exceeded 2010 goal
Strong Sales Momentum Across the Franchise
Corporate
Banking
Wealth
Management
Institutional
Investments
Commercial
Banking
Sales contribution by region
2010 annualized
Products
Eastern
markets
56%
(vs. 58% in 2009)
Western
markets
44%
(vs. 42% in 2009)
2010 franchise sales up 20% vs. 2009 |
 7
Key Financial Take-Aways
$1.60
$1.50
4Q10
$6.07
$5.74
FY10
$1.56
$2.07
3Q10
Strong
earnings
$3.45
$4.36
FY09
Adjusted
earnings
per
diluted
share
1,2
Reported earnings per diluted share
17.2%
16.0%
21.4%
15.4%
Return
on
Tier
1
common
capital
4
$56.29
4Q10
$56.29
FY10
$55.91
3Q10
Improved
valuation
drivers
$47.68
FY09
Book
value
per
common
share
5
3.82%
4.14%
3.96%
3.93%
Net interest margin
2.17%
3.03%
3.10%
3.15%
Provision-adjusted
net
interest
margin³
44%
4Q10
39%
FY10
38%
3Q10
Improved
earnings
drivers
44%
FY09
Noninterest income to total revenue
(1)
3Q10
and
FY10
adjusted
for
the
after-tax
gain
on
the
sale
of
GIS.
FY09
adjusted
for
the
after-tax
BLK/BGI
gain.
All
periods
adjusted
for
after-tax
integration
costs.
(2)
FY10
adjusted
for
the
impact
of
the
accelerated
accretion
of
the
remaining
issuance
discount
in
connection
with
the
redemption
of
our
TARP
preferred
stock
in
1Q10.
(3)
Net
interest
margin
less
(annualized
provision/average
interest-earning
assets).
(4)
4Q10
and
FY10
tier
1
common
capital
are
estimated.
Return
on
tier
1
common
capital
calculated
as
annualized
net
income
divided
by
tier
1
common
capital.
(5)
At
period
end.
Further
information
related
to
(1),
(2),
(3)
and
(4)
is
provided
in
the
Appendix. |
 8
A Higher Quality, Differentiated Balance Sheet
$260.1
29.4
.6
50.9
179.2
51.0
$128.2
$260.1
46.5
150.1
$63.5
Sept. 30,
2010
$264.3
29.6
.6
50.7
183.4
48.7
$134.7
$264.3
49.4
150.6
$64.3
Dec. 31,
2010
7.8
Preferred equity
$269.9
Total liabilities and equity
53.2
Borrowed funds, other
186.9
Total deposits
22.0
Common equity
60.7
Retail CDs, time, savings
$126.2
Transaction deposits
56.4
Other assets
157.5
Total loans
$269.9
Total assets
$56.0
Dec. 31,
2009
Investment securities
Category (billions)
Growth in high quality, short-
duration securities
Loan balances appear to be
stabilizing
Continued growth in
transaction deposits while
reducing higher cost brokered
and retail CDs
Core funded –
loans to deposits
ratio of 82%
Significant improvement in
common equity
Highlights |
 9
Credit Quality Improvement
Accruing
loans
past
due
1,2
(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.
(2)
Excludes
loans
that
are
government
insured/guaranteed,
primarily
residential
mortgages.
(3)
Does
not
include
loans
held
for
sale
or
foreclosed
and
other
assets.
$2.5
$1.9
$1.4
$1.4
$.8
$.6
$.6
$.5
1Q10
2Q10
3Q10
4Q10
30-89 Days
90 Days +
Provision for credit losses
$751
$823
$486
$442
1Q10
2Q10
3Q10
4Q10
Net charge-offs
$691
$840
$614
$791
1Q10
2Q10
3Q10
4Q10
Nonperforming
loans
1,3
$5.8
$5.1
$4.8
$4.5
1Q10
2Q10
3Q10
4Q10 |
 10
Relatively Stable Net Interest Income and
Provision-Adjusted Net Interest Margin¹
$2.0
$1.9
$1.9
$1.9
$.3
$.3
$.5
$.4
NII
$2.4
$2.4
$2.2
1Q10
2Q10
3Q10
$227
$225
$224
$224
NII excluding purchase accounting accretion
Impact of purchase accounting accretion
Average interest-earning assets
4Q10
$2.2
3.96%
4.35%
3.93%
4.24%
2.88%
3.15%
3.10%
2.90%
1Q10
2Q10
3Q10
4Q10
Net interest margin
Provision-adjusted
NIM
1
(1)
Net
interest
margin
less
(annualized
provision/average
interest-earning
assets).
PNC
believes
that
provision-adjusted
net
interest
margin,
a
non-GAAP
measure,
is
useful
as
a
tool
to
help
evaluate
the
amount
of
credit
related
risk
associated
with
interest-earning
assets.
Further
information is provided in the Appendix.
Provision
.8
.8
.5
.4
NII less
provision
$1.6
$1.6
$1.7
$1.8 |
 11
Strong Pretax Pre-Provision Earnings¹
from Diverse
Revenue Streams and Well-Controlled Expenses
(1) Total revenue less noninterest expense. PNC believes that pretax, pre-provision
earnings, a non-GAAP measure, is useful as a tool to help evaluate our ability to
provide for credit costs through operations. Further information is provided in the Appendix.
$3,903
$2,340
$1,563
$442
Net
interest
income
56%
Non-
interest
income
44%
Total
revenue
Noninterest
expense
Pretax
pre-
provision
earnings¹
Provision
Three months ended December 31, 2010
Asset
management
Consumer
services
Corporate
services
Residential
mortgage
Deposit
service
charges
18%
19%
9%
22%
8%
Other
24%
$1.7B
Noninterest income |
 12
Improved Capital and Solid Returns
Ratios and book value per common share as of quarter end. (1) Estimated. (2) Return on tier 1
common capital calculated as annualized net income divided by tier 1 common capital.
All periods adjusted for after-tax integration costs. 3Q10 also adjusted for the after-tax gain on the
sale of GIS. Unadjusted, the return on Tier 1 common for 1Q10, 2Q10, 3Q10 and 4Q10 was 15.5%,
17.7%, 21.4%, and 15.4%, respectively. Further information is provided in the
Appendix. Tier 1 ratio
Tier 1 common ratio
7.9%
8.3%
9.6%
9.8%
1Q10
2Q10
3Q10
4Q10
Adjusted return on Tier 1 common²
Book value per common share
$50.32
$52.77
$55.91
$56.29
1Q10
2Q10
3Q10
4Q10
10.3%
10.7%
11.9%
12.1%
1Q10
2Q10
3Q10
4Q10
17.2%
19.2%
16.2%
16.3%
1Q10
2Q10
3Q10
4Q10
1
1
1 |
 13
PNC Is Well Positioned to Capture
Growth Opportunities
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 in place
across franchise
PNC’s outlook
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
Strong sales, cross-sell and client
acquisition momentum |
 14
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
in
mid-2009
and
continued
throughout
2010.
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.
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.
•Turbulence
in
significant
portions
of
the
US
and
global
financial
markets
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. |
 15
Cautionary Statement Regarding Forward-Looking
Information (continued)
Appendix
•We
will
be
impacted
by
the
extensive
reforms
provided
for
in
the
Dodd-Frank
Wall
Street
Reform
and
Consumer
Protection
Act
(“Dodd-Frank
Act”)
and
ongoing
reforms
impacting
the
financial
institution
industry
generally.
Further,
as
much
of
the
Dodd-Frank
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
in
mid-2009
and
continued
throughout
2010
will
slowly
gather
enough
momentum
in
2011
to
lower
the
unemployment
rate
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
(such
as
that
under
the
Dodd-Frank
Act)
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. o
Changes
to
regulations
governing
bank
capital,
including
as
a
result
of
the
Dodd-Frank
Act
and
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.
•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. |
 16
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.
In
addition,
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. |
 17
Non-GAAP to GAAP Reconcilement
Appendix
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
Net income, diluted EPS, and return on avg. assets, as reported
$820
$798
$1.50
Reported net income, if annualized
$3,253
$263,558
1.23%
Adjustment:
Integration costs
$78
($27)
51
51
.10
Net income, diluted EPS, and return on avg. assets, as adjusted
$871
$849
$1.60
Net income, as adjusted, if annualized
$3,454
$263,558
1.31%
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
$1,103
$1,094
$2.07
Adjustments:
Gain on sale of GIS
($639)
$311
(328)
(328)
(.62)
Integration costs
96
(34)
62
62
.11
Net income and diluted EPS, as adjusted
$837
$828
$1.56
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
$1,107
$1,011
$2.17
Adjustments:
Gain on BlackRock/BGI transaction
($1,076)
$389
(687)
(687)
(1.49)
Integration costs
155
(54)
101
101
.22
Net income and diluted EPS, as adjusted
$521
$425
$.90
For the three months ended December 31, 2010
For the three months ended September 30, 2010
For the three months ended December 31, 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 and the after-tax gain
on the BlackRock/BGI transaction also reflect the impact of state income taxes. |
 18
Non-GAAP to GAAP Reconcilement
Appendix
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
Net income, diluted EPS, and return on avg. assets, as reported
$3,397
$3,011
$5.74
$264,902
1.28%
Adjustments:
Gain on sale of GIS
($639)
$311
(328)
(328)
(.63)
Integration costs
387
(136)
251
251
.48
TARP preferred stock accelerated discount accretion²
250
.48
Net income, diluted EPS, and return on avg. assets, as adjusted
$3,320
$3,184
$6.07
$264,902
1.25%
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
Net income, diluted EPS, and return on avg. assets, as reported
$2,403
$2,003
$4.36
$276,876
0.87%
Adjustments:
Gain on BlackRock/BGI transaction
($1,076)
$389
(687)
(687)
(1.51)
Integration costs
421
(147)
274
274
.60
Net income, diluted EPS, and return on avg. assets, as adjusted
$1,990
$1,590
$3.45
$276,876
0.72%
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
and
the
after-tax
gain
on the BlackRock/BGI transaction also reflect the impact of state income taxes.
(2) Represents accelerated accretion of the remaining issuance discount on redemption of the
preferred stock in February 2010. For the year ended December 31, 2010
For the year ended December 31, 2009 |
 19
Non-GAAP to GAAP Reconcilement
Appendix
For the three months ended
$ in millions
Dec. 31, 2010
Sept. 30, 2010
June 30, 2010
Mar. 31, 2010
Dec. 31, 2009
Net interest margin, as reported
3.93%
3.96%
4.35%
4.24%
4.05%
Provision for credit losses
$442
$486
$823
$751
$1,049
Avg. interest earning assets
$223,795
$223,677
$224,580
$226,992
$230,998
Annualized provision/Avg. interest earning assets
0.78%
0.86%
1.47%
1.34%
1.80%
Provision-adjusted net interest margin (1)
3.15%
3.10%
2.88%
2.90%
2.25%
For the year ended
$ in millions
Dec. 31, 2010
Dec. 31, 2009
Net interest margin, as reported
4.14%
3.82%
Provision for credit losses
$2,502
$3,930
Avg. interest earning assets
$224,749
$238,487
Annualized provision/Avg. interest earning assets
1.11%
1.65%
Provision-adjusted net interest margin (1)
3.03%
2.17%
PNC
believes
that
provision-adjusted
net
interest
margin,
a
non-GAAP
measure,
is
useful
as
a
tool
to
help
evaluate
the
amount
of
credit
related
risk
associated with interest-earning assets.
(1) The adjustment represents annualized provision for credit losses divided by average
interest-earning assets. For the three months ended
In millions
Dec. 31, 2010
Sept. 30, 2010
June 30, 2010
Mar. 31, 2010
Dec. 31, 2009
Total revenue
$3,903
$3,598
$3,912
$3,763
$4,886
Noninterest expense
2,340
2,158
2,002
2,113
2,209
Pretax pre-provision earnings
$1,563
$1,440
$1,910
$1,650
$2,677
For the year ended
In millions
Dec. 31, 2010
Dec. 31, 2009
Total revenue
$15,176
$16,228
Noninterest expense
8,613
9,073
Pretax pre-provision earnings
$6,563
$7,155
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. Total revenue and noninterest expense are both from continuing
operations on our consolidated income statement. |
 20
Non-GAAP to GAAP Reconcilement
Appendix
As of or for the three months ended
In millions
Dec. 31, 2010
Sept. 30, 2010
June 30, 2010
Mar. 31, 2010
Tier 1 common capital
$21,191
$20,437
$18,173
$17,562
Reported net income
820
1,103
803
671
Reported net income, if annualized
3,253
4,376
3,221
2,721
Adjustments:
After-tax gain on sale of GIS
-
(328)
After-tax impact of integration costs
51
62
65
73
Adjusted net income
$871
$837
$868
$744
Adjusted net income, if annualized
3,454
3,321
3,482
3,017
Return on tier 1 common capital
15.4%
21.4%
17.7%
15.5%
Adjusted return on tier 1 common capital
16.3%
16.2%
19.2%
17.2%
As of or for the year ended
In millions
Dec. 31, 2010
Dec. 31, 2009
Tier 1 common capital
$21,191
$13,941
Reported net income
3,397
2,403
Adjustments:
After-tax gain on BlackRock/BGI transaction
-
(687)
After-tax gain on sale of GIS
(328)
-
After-tax impact of integration costs
251
274
Adjusted net income
$3,320
$1,990
Return on tier 1 common capital
16.0%
17.2%
Adjusted return on tier 1 common capital
15.7%
14.3%
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
BLK/BGI
and
GIS
gains
and
integration
costs
may
be
useful
due
to
the
extent
to
which
those
items
are
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
and
the
after-
tax
BLK/BGI
gain
also
reflect
the
impact
of
state
income
taxes.
Pretax
amounts
and
tax
benefit
for
all
adjustments
other
than
first
and
second
quarters
of
2010
are
shown
on
slides
18
and
19.
Integration
costs
for
1Q10
are
$113
million
pretax
with
tax
benefit
of
$40 million; integration costs for 2Q10 are $100 million pretax with tax benefit of $35
million. |
 21
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 |