PNC Financial Services Group's CEO Hosts Annual Meeting of Shareholders Conference (Transcript)

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Executives

James E. Rohr - Executive Chairman, Member of Executive Committee and Member of Risk Committee

George P. Long - Chief Governance Counsel and Corporate Secretary

James E. Rohr

Good morning, ladies and gentlemen. I'm Jim Rohr, Chairman and Chief Executive Officer of the PNC Financial Services Group. I'll be presiding today at the meeting as Chairman. And I now call the PNC 2013 Annual Meeting of Shareholders to order.

On behalf of our Board of Directors and management team, I welcome all of you, and would like to acknowledge those shareholders and others listening by means of webcast or teleconference.

I'm pleased that we're holding, again, our meeting today at the August Wilson Center for African American Culture, which is named for Pulitzer Prize winning playwright and Pittsburgh native, August Wilson.

Now everyone in attendance should have received an agenda describing the business to be conducted at today's meeting and the rules of conduct. If you have not received an agenda, please raise your hand, and the attendants will give you one. There's one back there in the back.

Thank you. We have 3 management proposals and 1 shareholder proposal to consider at this meeting. There will be time for discussion of the proposals after they have been presented. If you have a question or comment on a matter other than the specific proposals, please wait until the end of the meeting.

After we adjourn the formal meeting, you will have the opportunity to speak. Your agenda provides instructions on addressing the group. When addressing the meeting at any time, please remember that only shareholders or their proxies may address the audience. All questions and comments must be directed to me. And upon being recognized by me, please step to one of the microphones in the aisles, identify yourself and state whether you're a shareholder or represent a shareholder.

If you have a question that concerns your personal circumstances and does not affect shareholders generally, please consult one of the employees at the information tables outside of the room, they will be available to assist you.

As noted on the agenda, I have the right to limit questions to one at a time, and end discussions if it appears that the subject has been adequately covered or is not appropriate.

To accommodate all shareholders who wish to speak, we are limiting each speaker to 9 minutes overall, with each topic or question limited to 3 minutes.

I would like to introduce Bill Demchak, PNC President; and George Long, our Chief Governance Counsel and Corporate Secretary, who are sitting up here with me today. In addition to Bill and myself, I would also like to welcome the other PNC director nominees who are present, and ask each one of them in the audience to stand when his or her name is read: Rick Berndt, Chuck Bunch, Paul Chellgren, Kay James, Rick Kelson, Bruce Lindsay, Tony Massaro, Jane Pepper, Don Shepard, Lorene Steffes, Dennis Strigl, Tom Usher, George Walls and Helge Wehmeier. Please join me in thanking our talented and dedicated Board of Directors.

I would now like to introduce the representatives present from PricewaterhouseCoopers LLP, our independent registered public accounting firm. Here today are Bill Lewis, Brad Buchanan, Tom Kelly and Megan Boyers. Would you please stand? Thank you very much.

You'll have the opportunity to ask questions with these representatives during the question-and-answer session.

I'll now ask our Executive Committee to please stand to be recognized. Thank you very much.

I would now ask George Long to present the Secretary's report. George?

George P. Long

Mr. Chairman, I present an affidavit from Computershare Trust Company, NA, PNC's transfer agent. The affidavit states that the notice of Internet availability of proxy materials was mailed to certain shareholders on March 14, 2013, at which time, shareholders were given access to the notice of annual meeting, proxy statement and form of proxy and our 2012 annual report.

Certain other shareholders were mailed paper copies or received electronic delivery of these proxy materials beginning on March 14, 2013. The materials were distributed to those who were shareholders of record as of January 31, 2013, the record date for this meeting.

The Board of Directors appointed Computershare as the judge of election for this meeting. The judge of election keeps a certified listing of all shareholders of record and this list is available for inspection by any shareholder.

On behalf of Computershare, Joe Roach is here to supervise the voting, and he has delivered his oath of office to me. Mr. Roach, will you please stand? Thank you.

The affidavit, notice and oath will be filed with the records of this meeting. Copies of the proxy statement and annual report are available at the information tables outside. The judge of election has certified at the beginning of this meeting, there are present, in person or by proxy, 454 million votes out of approximately 528 million votes, represented by shares outstanding or over 86% of the total voting power.

That concludes my report. As you can see on this slide, our presentation materials and information in the Investor Relations section of our website, pnc.com, include cautionary statements regarding forward-looking information and adjusted information, and I urge you to read them. Jim?

James E. Rohr

Thank you, George. There is a quorum present, and I declare this to be a duly constituted meeting of the shareholders. Copies of the minutes of last year's annual meeting are available from the Secretary. George, would you please comment on those minutes?

George P. Long

Thank you, Jim. The 2012 Annual Meeting of Shareholders was held in Pittsburgh on Tuesday, April 24, 2012. The minutes reflect the following: the election of 15 directors, the ratification of the selection of PricewaterhouseCoopers LLC as PNC's independent auditor for 2012, and the approval of the advisory vote on executive compensation. That concludes my summary of the minutes of last year's meeting. Jim?

James E. Rohr

Thank you again, George. The stated purposes of this meeting...

Unknown Attendee

|

[indiscernible] I would like to state my [indiscernible].

James E. Rohr

George, could you...

Unknown Attendee

[indiscernible] and destroying [indiscernible] out there. [indiscernible] everyone's involved because it's a matter of great concern to us, and even [indiscernible].

James E. Rohr

Thank you, thank you, George. Excuse me, we have...let me...

Unknown Attendee

[indiscernible]

James E. Rohr

The stated purposes of this meeting are to consider and act upon 3 management proposals and 1 shareholder proposal. They are: first, the election as directors of the 16 nominees named in the proxy statement to serve until the next annual meeting and until their successors are elected and qualified; second, the proposal to ratify the Audit Committee selection of PricewaterhouseCoopers LLP as PNC's independent registered public accounting firm for 2013; and third, the proposed advisory vote approving executive officer compensation; and fourth, the proposed shareholder proposal regarding a report on greenhouse gas emissions of borrowers and exposure to climate change risk.

At this time, the chair recognizes Meredith Benton from Boston Common Asset Management, who will be presenting the shareholder proposal. Ms. Benton, you may approach the microphone and speak of the proposal.

Meredith Benton

Good morning. My name is Meredith Benton, and I represent Boston Common Asset Management, a shareholder of PNC Financial. The move items are on the proxy statement on behalf of Boston Common and the proposal's co-filers: Catholic Health East, Domini Social Investments, Friends Fiduciary Corporation, Mercy Investments services and Walden Asset Management. Our resolution request, that the Board of Directors report to shareholders on PNC's assessment of the greenhouse gas emissions resulting from its lending portfolio and its exposure to climate change risk in its lending, investing and financing activities. We are concerned that a lack of strategic response to climate change may harm the company's reputation and brand, may expose it to unnecessary risk and may allow incorrect loan valuation. PNC has been seeking to build its reputation as an environmental leader for a number of years, going so far as to trademark the term Green Branch in 2007. PNC website states that it's more newly constructed green building, certified by the U.S. Green Building Council than any company on earth. Its efforts include: recycling, using environmental construction materials and energy-efficient lighting. We commend PNC for this program. Lest there be allegations that dirty loans are coming inside a green bank, we as PNC shareholders, are seeking to protect the reputation earned by the good work this company has done. To be frank, I would be more comfortable with PNC having inefficient light bulbs and a clean loan portfolio than I am with fluorescent light and PNC financing mountaintop removal coal mining. From a risk perspective, climate change brings looming regulatory and legislative uncertainty. Climate disruption, meanwhile, puts any property or industry with a weather dependency at risk: agriculture, tourism and industrial facilities, anything in a flood zone or a water scarce region. Banks, which consider the loans according to risk tranches, need to be incorporating these new patterns into their models. It will not be weather as usual. How can we think it will be business as usual? In addition, financing a coal-dependent infrastructure requires assumptions that society will allow current rates of greenhouse gas emissions to continue. Last June, HSBC released a report titled, Coal and Carbon, Stranded Assets: assessing the risk, which stated that carbon constraints post-2020, could impact discounted cash flow valuation of coal assets by as much as 44%. If this is correct, the ability of carbon-dependent companies to generate the revenues required to service PNC loans or their corporate bonds may be called into question. I want to emphasize what we, as shareholders, are requesting, we are seeking evidence that the company has made a strategic review of climate change risk and the impact it will have on its loan portfolio, lending practices and consequently, the company as a whole. We are seeking to understand the ways in which PNC has internal expertise on these issues and is integrating these assessed risk into the business of the company. Green Branches, however noteworthy, are not the core of PNC's business. We ask for evidence that the board, our representatives, are assessing the imminent risk, the changes to the business environment, and the environmental implications brought by climate change. Thank you.

James E. Rohr

Thank you very much, and thank you very much for recognizing all the things that we do with green buildings and Green Branches. I think that's a wonderful thing. But with regards to what our lawfully operating customers are doing, the board's response to the shareholder proposal on greenhouse gas emissions was set forth on Page 83 of the proxy statement...

Unknown Attendee

[indiscernible] Will you support a full sector exclusion of mountaintop removal coal mining?

James E. Rohr

That is not part...

Unknown Attendee

[indiscernible] Will you support a full sector exclusion on mountaintop removal coal mining?

James E. Rohr

Thank you very much. In order to make the meeting as efficient as possible, I will now ask for a single motion to introduce these proposals. I'm sorry, you are out of order. Thank you. Such a motion will eliminate the need to have separate motions made and seconded throughout the meeting. May I have such a motion?

Unknown Attendee

Richard Johnson, will you support a full sector exclusion to mountaintop coal mining, yes or no?

James E. Rohr

Do we have a motion?

Kevin Glass

Mr. Chairman, my name is Kevin Glass, and as a shareholder of PNC, I so move.

James E. Rohr

Do we have a second?

Unknown Shareholder

Mr. Chairman, my name is Michele Huggins [ph], I'm a shareholder, and I second the motion.

James E. Rohr

Thank you. I declare that these proposals have been properly introduced and moved. And I open the floor to a discussion for any question specifically regarding these proposals.

Unknown Attendee

[indiscernible] Will you support a full sector exclusion of mountaintop removal?

James E. Rohr

Seeing no at this time, you may approach the microphone if you want to talk about these proposals. All proposals are now formally before the meeting, and I declare the polls to be open. If anyone needs a ballot, please raise your hand so we can give you one before the polls close. Anyone need a ballot? If you have already voted and don't intend to change your vote today, you do not need a ballot. Will the proxies please cast their votes?

Unknown Attendee

Mr. Chairman, do you support a full sector exclusion on mountaintop coal mining?

[Voting]

James E. Rohr

I declare the polls to be closed. While the votes are being counted, I would like to take a moment to share my thoughts on 2012 accomplishments and about the growth our company has experienced. Our customer relationships drove PNC's progress in 2012 by increasing...

Unknown Attendee

[indiscernible] I would like to know whether directors will support the sector's exclusion to mountaintop before I [indiscernible]?

James E. Rohr

Ma'am, you are out of order. By increasing customers, both organically and through acquisition, we were able to grow full year loans by $27 billion and deposits by $25 billion compared to 2011. Some of these gains were achieved through the very successful acquisition...

Unknown Attendee

$3,138,090 taken out of people's personal accounts and they -- when your customers hear about your investments in mountaintop removal mining, they'd close their accounts, they'd sell their stock. They're losing business, it's all business. Coal is dying. You need to stop now. And which side are you on?

James E. Rohr

We will have time after the meeting to have a full discussion if you believe so. Some of these gains were achieved through a very successful acquisition and integration of RBC Bank (USA), which we completed in the first quarter last year.

Unknown Attendee

[indiscernible] Will you support a full sector exclusion on mountaintop coal mining?

James E. Rohr

Why don't we just move forward with the vote? Okay, why don't we move to the declaration of the vote? I think there's been a thorough review in the first quarter, in the notice of the first quarter of our earnings. And also with the first quarter earnings that Bill Demchak was going to review. With regards to that, we will go straight to the video. George, will you go to the video, please? Roll the video.

[Presentation]

James E. Rohr

And now I'd like to call upon George Long for the results of the voting. George?

George P. Long

Thank you, Jim. The judge of election has provided a preliminary report to me, which certifies that a majority of the votes cast were: for all 16 director nominees, for the ratification of the selection of PricewaterhouseCoopers LLP, for the advisory vote on executive compensation and against the shareholder proposal. I will file this report with the records of this meeting, and PNC will disclose the final results on our current report on Form 8-K. Jim?

James E. Rohr

Thank you, George. Subject to certification of the final voting results by the judge of election, I declare that the shareholders have approved the 3 proposals introduced by management, shareholders have not approved the proposal regarding a report on greenhouse gas emissions.

This concludes the formal business before the meeting. As stated in the agenda, we will now adjourn, and you'll be able to step forward. Being no further business, this concludes our meeting, and I hereby declare this annual meeting to be adjourned. Thank you, everyone, for joining the 2013 Annual Meeting of PNC Financial. Thank you.

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