New York, May 24, 2012 -- The following release represents Moody's Investors Service's summary credit
opinion on PNC Financial Services Group, Inc. and includes
certain regulatory disclosures regarding its ratings. This release
does not constitute any change in Moody's ratings or rating rationale
for PNC Financial Services Group, Inc. and its affiliates.
Moody's current ratings on PNC Financial Services Group, Inc.
and its affiliates are:
Long Term Issuer rating of A3
Preferred Stock Non-cumulative (domestic currency) ratings of Baa3
(hyb)
Junior Subordinate Shelf (domestic currency) ratings of (P)Baa2
Preferred Shelf (domestic currency) ratings of (P)Baa2
Preferred shelf -- PS2 (domestic currency) ratings of (P)Baa3
National City Corporation
Senior Unsecured (domestic currency) ratings of A3
Subordinate (domestic currency) ratings of Baa1
Preferred Stock Non-cumulative (domestic currency) ratings of Baa3
(hyb)
National City Bank
Senior Unsecured (domestic currency) ratings of A2
Subordinate (domestic currency) ratings of A3
PNC Bank, N.A.
Long Term Issuer rating of A2
Senior Unsecured (domestic currency) ratings of A2
Senior Unsecured Bank Note Program (domestic currency) ratings of (P)A2
Senior Unsecured MTN Program (domestic currency) ratings of (P)A2
Long Term Bank Deposits (domestic currency) ratings of A2
Long Term Other Senior Obligations ratings of A2
Bank Financial Strength ratings of C+
Subordinate Bank Note Program (domestic currency) ratings of (P)A3
Subordinate (domestic currency) ratings of A3
Short Term Bank Note Program (domestic currency) ratings of P-1/(P)P-1
Short Term Bank Deposits (domestic currency) ratings of P-1
Other Short Term (domestic currency) ratings of (P)P-1
Short Term Other Senior Obligations ratings of P-1
PNC Funding Corporation
Senior Unsecured (domestic currency) ratings of A3
Subordinate (domestic currency) ratings of Baa1
BACKED Senior Unsecured (domestic currency) ratings of Aaa/A3
BACKED Senior Unsecured MTN Program (domestic currency) ratings of (P)A3
BACKED Subordinate (domestic currency) ratings of Baa1
BACKED Subordinate MTN Program (domestic currency) ratings of (P)Baa1
BACKED Senior Unsecured Shelf (domestic currency) ratings of (P)A3
BACKED Subordinate Shelf (domestic currency) ratings of (P)Baa1
BACKED Commercial Paper (domestic currency) ratings of P-2
PNC Capital Trust C
BACKED Preferred Stock (domestic currency) ratings of Baa2 (hyb)
PNC Capital Trust E
BACKED Preferred Stock (domestic currency) ratings of Baa2 (hyb)
BACKED Preferred Shelf (domestic currency) ratings of (P)Baa2
PNC Capital Trust F
BACKED Preferred Shelf (domestic currency) ratings of (P)Baa2
PNC Capital Trust G
BACKED Preferred Shelf (domestic currency) ratings of (P)Baa2
PNC Capital Trust H
BACKED Preferred Shelf (domestic currency) ratings of (P)Baa2
PNC Preferred Funding Trust I
BACKED Preferred Stock Non-cumulative (domestic currency) ratings
of Baa2 (hyb)
PNC Preferred Funding Trust II
Preferred Stock Non-cumulative (domestic currency) ratings of Baa3
(hyb)
PNC Preferred Funding Trust III
Preferred Stock Non-cumulative (domestic currency) ratings of Baa3
(hyb)
RATING RATIONALE
PNC is rated A3 for long-term senior debt and its funding subsidiary,
PNC Funding Corporation, is rated Prime-2 for short-term
obligations. PNC's operating bank subsidiary, PNC Bank,
N.A., is rated C+ for stand-alone bank
financial strength, mapping to an a2 rating on the long-term
scale. The bank is also rated A2 for long-term deposits
and Prime-1 for short-term obligations.
PNC's ratings reflect its sizable and consistently profitable direct banking
franchise. That franchise, centered on the Mid-Atlantic,
the Midwest and the Southeast, largely generates its earnings from
direct retail and commercial banking, business lines that are comparatively
predictable. PNC's net interest margin is strong and continues
to benefit from purchase accounting accretion, from both the late-2008
National City acquisition as well as the recent RBC Bank (USA) acquisition.
In addition, PNC's fee income is also healthy. This solid
revenue base, combined with PNC's roughly 60% efficiency
ratio (excluding unusual non-core items), results in a good
level of core recurring pre-provision profitability.
PNC's capital and liquidity profiles are similarly robust and provide
a cushion against challenges arising from the current sluggish economic
environment. Although PNC acquired RBC Bank (USA) without issuing
common shares, management expects to grow its Basel III Tier 1 common
ratio to 8.0 - 8.5% by the end of 2013.
Currently, however, PNC's capital position is below the level
enjoyed by a number of its regional bank peers, which is reflected
in its comparatively modest share buyback intentions for 2012.
- Comparatively steady profitability indicators that look to be
sustainable
- Strong liquidity profile supported by a sizable core funding
base
- Good acquisition integration track record
- Sizable real estate exposure, particularly residential
real estate
- More modest capital position relative to many peers
Rating Outlook
PNC's rating outlook is positive.
What Could Change the Rating - Up
In order for PNC's ratings to be upgraded, its core earnings will
need to remain healthy and predictable, even as purchase discount
accretion from its acquisitions trends lower. Strong credit performance
would also support positive rating pressure as would steady progress towards
PNC's goal of achieving a robust Basel III Tier 1 common ratio.
What Could Change the Rating - Down
Given our positive rating outlook, downward rating pressure is unlikely
absent material asset quality deterioration or a sustained downturn in
profitability. PNC's ratings will also be influenced by its future
acquisition strategy, and the risks that will impose on bondholders.
The methodologies used in these ratings were Bank Financial Strength Ratings:
Global Methodology published in February 2007, and Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: Global
Methodology published in March 2012. Please see the Credit Policy
page on www.moodys.com for a copy of these methodologies.
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare each of the ratings are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
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Moody's adopts all necessary measures so that the information it
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Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%)
and for (B) further information regarding certain affiliations that may
exist between directors of MCO and rated entities as well as (C) the names
of entities that hold ratings from MIS that have also publicly reported
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Please see Moody's Rating Symbols and Definitions on the Rating
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recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history. The date on
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Consequently, Moody's provides a date that it believes is
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Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has
issued the rating.
Allen H. Tischler
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Franklyn Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Disclosures on Credit Rating of PNC Financial Services Group, Inc.