PNC has a long history dating back to the 1800s through several mergers and acquisitions. It now serves individuals, small businesses, and corporations through various banking products and services across 19 states. Key ratios show declining profit margins but increased sales from 2010-2012. PNC faces risks from economic conditions, regulations, and competition. However, its diversified business model, geographic reach, and recent stock price increase make it a reasonable investment.

1. A FINANCIAL INSTITUTION
ANALYSIS B Y B R E N D A
J A N S E N

2. HISTORY
• PNC has a history dating back to the 1800s
• Pittsburgh National Corporation was originally formed 1852 as Pittsburgh Trust
and Savings Company
• The oldest bank in Pittsburgh
• First bank to apply for a charter under the National Banking Act of 1863
• The bank came to be First National Bank of Pittsburgh
• Joined with Peoples-Pittsburgh Trust Company in 1946 forming Peoples First
National Bank and Trust Company
• 1959: Fidelity Trust Company merged with Peoples First which merged with
First National
• A new symbol in the shape of a triangle

3. HISTORY CONT.
• PNC also has roots in Provident Life and Trust Company, an insurance
company that was created in 1865
• Informally known as “the Quaker bank”
• 1922: The company split into two separate entities of Provident Mutual Life
Insurance Company and Provident Trust Company
• Provident Trust Company of Philadelphia merged with Provident Tradesmens
Bank and Trust Company in 1957 to create Provident National Bank.
• 1982: Pennsylvania passed a law that allowed banks to have statewide banking
• Two of the first banks to act on this were Pittsburgh National and Provident
National
• In 1983, the two banks came together in the largest U.S. bank merger at the
time and used their shared initials to create a new entity called PNC Financial
Corp.
• The company now has the name The PNC Financial Services Group, Inc.

4. PRODUCTS AND SERVICES
• PNC serves individuals, small businesses, corporations, and government entities
• Retail banking:
• Lending, deposits, cash management, and investment services
• 6 million consumer and small business customers
• 19 states and the District of Columbia
• 2,700 branches and 74,000 ATMs
• Online and mobile services
• Award-winning Virtual Wallet
• Wealth management group:
• Tailored investments, wealth planning, trust and estate administration and
private banking services
• Wealth Insight
• Institutional Investments
• PNC Capital Advisors, LLC (a multi-strategy investment management
organization)

5. PRODUCTS AND SERVICES CONT.
• Corporate and Institutional Banking:
• Serves the middle market
• Harris Williams (PNC’s investment bank) is one of the most successful advisory
teams in the nation
• Residential Mortgage:
• 2,700 bank branches and 90 retail mortgage offices in the U.S.
• PNC Mortgage
• One of the top residential mortgage originators and servicers in the nation
• As of September 2013, PNC’s loan portfolio is $115 billion
• BlackRock:
• One of the largest publicly traded investment management firms in the country
• PNC owns 25%
• Around the world they provide equity, fixed income, liquidity and alternative
investment products to institutional and individual investors
• Provide risk management, investment system outsourcing, and financial
advisory services to institutional investors

6. MANAGEMENT STRUCTURE
• Vertical management structure
• Lots of levels
• PNC’s president and CEO is William S. Demchak
• Elected to CEO in February of 2013
• At the Annual Meeting of Shareholders on April 23, 2013
James E. Rohr elected to step down as CEO
• Rohr will assume new role as executive chairman
and plans to retire in 2014
• Board of Directors
• Regional Managers
• Branch Managers
William S. Demchak

7. RISK FACTORS
• Economic conditions
• Still recovering from recent crash
• Regulatory
• Uncertainty of ultimate impacts of Dodd-Frank law passed in July 2010
• New capital and liquidity standards (proposed June 2012)
• Risk retention plan
• Competition
• Other big banks such as Citigroup
• Financial services institutions are interrelated

8. RISK FACTORS CONT.
• Highly subjective and various interpretations
• Estimation of the amount of loss allowances and impairments
• Asset valuation methods
• Use of models
• Operational
• Internal processes and systems, human error and external events
• Technology: need to keep up to date to remain competitive, new products
frequently, help serving customers better
• Information systems

9. GEOGRAPHIC CONSIDERATIONS
• Nationally:
• 6 million consumer and small business customers throughout the U.S.
• 19 states and the District of Columbia
• 2,700 branches and 74,000 ATMs
• Globally:
• PNC’s ownership in BlackRock
• Provide equity, fixed income, liquidity and
alternative investment products to institutional
and individual investors around the world

10. REGULATORY CONSIDERATIONS
• Federal and state levels of governance
• Federal Reserve is the national regulatory body
• In every state where PNC has a branch, there are different rules and
regulations
• Securities and Exchange Commission (SEC)
• Form 4
• Federal Deposit Insurance Corporation (FDIC) provides deposit insurance for
every depositor up to $250,000
• Office of the Comptroller of the Currency (OCC)
• U.S. Department of the Treasury
• The Dodd-Frank Wall Street Reform and Consumer Protection Act

11. PROFITABILITY
• Observations from ratios:
• Net profit margin is declining
• Profit growth is negative in 2011 and 2012
• Sales are up
• Most of their revenue is from fees and interest
• Risk that a failure to sustain reduced amounts of the provision for credit losses
could result in decreases in net income
• Provision for credit losses totaled $3.9 billion in 2009
• $1.0 billion in 2012

12. IMPORTANT RATIOS
22.38%
21.44%
19.35%
17.00%
18.00%
19.00%
20.00%
21.00%
22.00%
23.00%
2010 2011 2012
Net Profit Margin

13. IMPORTANT RATIOS
9.40
9.90
10.26
8.80
9.00
9.20
9.40
9.60
9.80
10.00
10.20
10.40
2010 2011 2012
P/E Ratio

14. IMPORTANT RATIOS
-6.48%
-5.60%
8.28%
-10.00%
-5.00%
0.00%
5.00%
10.00%
2010 2011 2012
Sales Growth

15. IMPORTANT RATIOS
41.36%
-9.60% -2.28%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
2010 2011 2012
Profit Growth

16. IMPORTANT RATIOS
3.49%
3.21%
3.16%
2.90%
3.00%
3.10%
3.20%
3.30%
3.40%
3.50%
3.60%
2010 2011 2012
Net Interest Income/Average Assets

17. IMPORTANT RATIOS
0.95%
0.42%
0.32%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
2010 2011 2012
Provision for Loan Losses/Average Assets

18. IMPORTANT RATIOS
1.29%
1.13%
0.98%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
2010 2011 2012
Net Income/Average Assets

19. IMPORTANT RATIOS
7.87%
20.18%
28.92%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
2010 2011 2012
Cash Dividends/Net Income

20. IMPORTANT RATIOS
9.87%
10.72%
9.91%
9.40%
9.60%
9.80%
10.00%
10.20%
10.40%
10.60%
10.80%
2010 2011 2012
Tier 1 Capital/Average Assets

21. IMPORTANT RATIOS
2.32%
1.85%
1.99%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
2010 2011 2012
Non-Current Loans/Total Loans

22. INVESTMENT CRITERIA
Credit Rating
The PNC Financial Services Group, Inc.
Senior debt A3 A- A+ A (high)
Subordinated
debt
Baa1 BBB+ A A
Preferred
stock
Baa3 BBB BBB- BBB
PNC Bank, N.A.
Subordinated
debt
A3 A- A A (high)
Long-term
deposits
A2 A AA- AA (low)
Short-term
deposits
P-1 A-1 F1+ R-1 (middle)
Moody's
Standard
& Poor's
Fitch DBRS
*As of November 30, 2013

23. INVESTMENT CRITERIA
• Credit Rating isn’t that great but its not the worst
• BBB S&P rating is considered the lowest “good” stock
• Profit Growth rates are going down
• Opportunity to go up
• In 2013, stock price has gone from 55 in January to 75 in December
• P/E is going up
• Diverse products and services
• Broad geographic location
• Could expand into other states
• I would invest in PNC