×

CNBC "CLOSING BELL" CO-ANCHOR MARIA BARTIROMO'S EXCLUSIVE INTERVIEW WITH CEO & CHAIRMAN PNC FINANCIAL, JAMES E. ROHR, ON CNBC'S "CLOSING BELL" TODAY

CNBC "CLOSING BELL" CO-ANCHOR MARIA BARTIROMO'S EXCLUSIVE INTERVIEW WITH CEO & CHAIRMAN PNC FINANCIAL, JAMES E. ROHR, ON CNBC'S "CLOSING BELL" TODAY

WHEN: Today, Thursday, October 16th at 3:30 PM ET

WHERE: CNBC's "Closing Bell"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with CEO & CHAIRMAN PNC Financial Group, on CNBC'S "CLOSING BELL" Today.

All references must be sourced to CNBC.

------------------------------------------------------------------

MARIA BARTIROMO: I'M JOINED BY JAMES ROHR, THE CHAIRMAN AND CEO OF PNC FINANCIAL. MR. ROHR, NICE TO HAVE YOU ON THE PROGRAM. WELCOME.

JAMES E. ROHR: HELLO,MARIA. NICE TO SEE YOU AGAIN.

BARTIROMO: CHARACTERIZE THE QUARTER FOR US. HOW IS BUSINESS GOING TODAY, HOW DO YOU SEE THINGS?

ROHR: WELL THE QUARTER WAS VERY GOOD IN MANY WAYS FOR US. OUR NET INTEREST INCOME WAS UP 31% AND CREDIT QUALITY WAS VERY GOOD. AS A MATTER OF FACT, I THINK OUR CHARGEOFF RATIO AT .66 WILL PROBABLY BE ONE OF THE BEST IN THE INDUSTRY, AND OUR EXPENSES WERE WELL CONTROLLED. SO FOR THOSE POINTS OF VIEWS IT WAS REALLY GOOD AND OUR CORE BUSINESSES ALL PERFORMED VERY WELL.

BARTIROMO: NONETHELESS, THE EARNINGS DID TAKE A HIT FROM LOSSES ON COMMERCIAL LOANS, PREFERRED STOCK, AND FANNIE AND FREDDIE. GIVE ME YOUR SENSE OF THE LOAN LOSS RESERVES THAT YOU'VE TAKEN AND DO YOU BELIEVE THAT YOU ACTUALLY CAN HAVE A CONVICTION AS FAR AS WHETHER THAT'S ENOUGH?

ROHR: I THINK IN TERMS OF LOAN LOSS RESERVES, WE BUILD OUR RESERVE AND MODESTLY INCREASED OUR NONPERFORMING LOANS. AND SO I THINK FROM A CREDIT POINT OF VIEW WE DID VERY WELL. THERE ARE THREE THINGS THAT IMPACTED US. ONE WAS A $51 MILLION CHARGE ON OUR LONG-TERM INCENTIVE PLAN FOR BLACKROCK WHEN BLACKROCK STOCK GOES UP, THE FEW SHARES THAT WE HAVE DEDICATED TO THEIR LONG-TERM INCENTIVE PLAN, THE LIABILITY GOES UP. SO THAT'S A GOOD THING ON ONE SIDE AND BAD THROUGH THE EARNINGS STREAM. AND THEN WE HAD THE SPREADS GO OUT ON OUR COMMERCIAL MORTGAGE BOOK WHICH IS MARKED AT FAIR VALUE AND THAT WAS AN $80 MILLION CHARGE THROUGH THE P AND L. IN SPITE OF THE FACT THAT THERE WERE NO INCREASE IN DELINQUENCIES IN THE BILLION AND A HALF DOLLAR PORTFOLIO, AND THEN THIRDLY WE HAD THE FANNIE AND FREDDIE $74 MILLION CHARGE. SO ALL OF OUR BUSINESSES DID WELL. BUT WE DID HAVE FAIR VALUE ANOMALIES THAT DID KNOCK US DOWN.

BARTIROMO: ANY OTHER IMPACT THAT YOU'RE SEEING FROM THE FINANCIAL CRISIS?

ROHR:I THINK OUR CREDIT QUALITY IS HOLDING UP VERY, VERY WELL AND OUR NET INTEREST INCOME IS CONTINUING TO GROW AND WILL CONTINUE TO GROW VERY NICELY IN THE FORESEEABLE FUTURE. SO WE'RE PLEASED ABOUT THAT. THE ANOMALIES IN THE MARKETS ARE CLEARLY IMPACTING US AS THEY DID IN THE THIRD QUARTER BUT WE'VE REDUCED EXPOSURE SIGNIFICANTLY AND WE THINK THOSE IMPACTS WILL BE LESS IN THE FOURTH.

BARTIROMO: AND WE KNOW THAT PNC IS NOT ONE OF THE NINE BANKS THAT THE GOVERNMENT IS GOING TO BE TAKING EQUITY STAKES IN. DID YOU GET A CALL?

ROHR: NO, WE DID NOT GET A CALL, BUT WE DO HAVE AN OPPORTUNITY THAT I KNOW OF AND WE'RE LOOKING AT THAT VERY CAREFULLY.IT APPEARS TO BE RELATIVELY ATTRACTIVELY PRICED PREFERRED STOCK BUT ALL OF THE DETAILS AROUND IT HAVE YET TO BE FLESHED OUT SO WE'RE LOOKING AT IT VERY CLOSELY AND THEN, OF COURSE, WHEN WE GET THOSE ANSWERS, WE'LL TALK TO OUR BOARD OF DIRECTORS ABOUT PARTICIPATING.

BARTIROMO: AN OPPORTUNITY FOR THE GOVERNMENT TO TAKE A STAKE?

ROHR: YES.

BARTIROMO: HOW BIG OF A STAKE MIGHT THAT BE?

ROHR: WELL WE DON'T KNOW. RIGHT NOW OUR CAPITAL LEVELS ARE VERY STRONG AND OUR LIQUIDITY IS EXTRAORDINARILY STRONG WITH AN 88% LOAN TO DEPOSIT RATIO WHERE WE'VE ONLY LET OUT 88% OF OUR DEPOSITS AND, QUITE FRANKLY, WE'RE VERY LIQUID AS WELL. SO WE DON'T REALLY NEED THE CAPITAL BUT WE THINK THIS MIGHT BE OPPORTUNISTIC FOR US.

BARTIROMO: I SEE.

ROHR: TO TAKE ADVANTAGE IF THE GOVERNMENT PROGRAM.

BARTIROMO: WHEN DO YOU PLAN ON REVIEWING THIS AND COMING BACK TO TREASURY WITH SOME ANSWERS? TELL ME HOW LONG THIS PROCESS, YOU'RE EXPECTING TO TAKE.

ROHR: WELL, I WOULD EXPECT THAT THE DETAILS WILL COME OUT FROM -- I KNOW SINCE THATCHER WAS WORKING ON IT LAST NIGHT. THE DETAILS, I WOULD GUESS, WOULD BE OUT IN THE NEXT DAY OR TWO. AND I WOULD PRESUME THAT WE WOULD TALK TO OUR BOARD ABOUT IT NEXT WEEK.

BARTIROMO: I SEE. YOU KNOW A LOT OF PEOPLE -- WE WERE JUST ON WITH OUR COLLEAGUE CHARLIE GASPARINO WHO IS TALKING ABOUT THE GOVERNMENT THINKING ABOUT TAKING STAKES IN OTHER NONTRADITIONAL BANKS, LIKE THE BOND INSURANCE COMPANIES, ARE THERE ANY WORRIES AS FAR AS YOU'RE CONCERNED ABOUT THE GOVERNMENT GETTING TOO INVOLVED IN BUSINESS, PERHAPS ON AN OPERATING LEVEL? WE REALIZE THAT ITS PREFERRED SHARES AND NONVOTING BUT IT'S SOMETHING THAT TYPICALLY CAPITALISTS ARE NOT VERY COMFORTABLE WITH.

ROHR: I THINK QUITE FRANKLY, WHEN YOU LOOK AT THE STABILIZATION ACT THAT THEY PUT TOGETHER, I THINK WAS VERY, VERY IMPORTANT FOR THE GOVERNMENT WHO HAS A MUCH BROADER PERSPECTIVE THAN JUST ANY SINGLE ONE OF US OBVIOUSLY TO STABILIZE THE FINANCIAL SERVICES INDUSTRY. I THINK QUITE FRANKLY, MORE FAILURES WOULD HAVE JUST BEEN MORE DISRUPTIVE TO THE INDUSTRY AND, FRANKLY, STABLE FINANCIAL SERVICES INDUSTRY IS IMPORTANT FOR THE COUNTRY AS A WHOLE. AND CERTAINLY FOR ALL THE PEOPLE WHO PARTICIPATEIN IT. SO I THINK THE PLAN IS VERY WELL CONCEIVED AND OF COURSE IT DEPENDS ON HOW IT'S EXECUTED AND THAT WILL PLAY OUT OVER A PERIOD OF TIME AS THEY GET INVOLVED IN THE FIXED INCOME MARKET.

BARTIROMO: LET ME ASK YOU A QUESTION. A LOT OF PEOPLE WORRY THAT WE'RE ON THE CUSP OF A PRETTY NASTY RECESSION TO COME. YOU'VE GOT A GREAT VANTAGE POINT IN TERMS OF LENDING AND SEEING HOW SECURE CONSUMERS ARE REALLY. WHAT ARE YOU EXPECTING? DO YOU THINK THAT WE'RE GOING TO SLIP INTO SOME EVEN WORSE TIMES ECONOMICALLY SPEAKING AND THAT THIS FINANCIAL CRISIS WILL IMPACT THE REAL ECONOMY SHARPLY IN '09?

ROHR: WELL I THINK '09 WILL BE A SLOW YEAR FOR US ALL, QUITE FRANKLY. WE'RE SEEING HOUSING PRICES CONTINUE TO DECLINE AND THAT WILL CONTINUE TO HAPPEN FOR ANOTHER SIX TO NINE MONTHS. IF YOU LOOKED AT '90, '91, '92, HOUSING PRICES DIDN'T BOTTOM UNTIL 12 TO 24 MONTHS AFTER FORECLOSURES PEAKED. AND THEY HAVEN'T PEAKED YET. SO WE'VE GOT A WAYS TO GO. AND HOUSING PRICES COMING DOWN, UNEMPLOYMENT IS RISING AND I THINK YOU'LL CONTINUE TO SEE DELINQUENCIES IN CREDIT CARDS BASED AS THE UNEMPLOYMENT RATE RISES. I THINK THE FIRST HALF OF NEXT YEAR IS DIFFICULT. THAT HAVING BEEN SAID, I THINK THE FINANCIAL SYSTEM SHOULD BE STABILIZED AND THE TARP TYPE PROGRAM WILL BE WELL UNDER WAY BY THEN. SO I DON'T SEE A SPIRAL BUT I JUST SEE IT A VERY SLOW 2009.

BARTIROMO: THAT'S ABOUT AS OPTIMISTIC AS WE'VE HEARD. WE SO APPRECIATE SOME SUNNY DAYS. GOOD TO GAVE YOU ON THE PROGRAM.





About CNBC:
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.