PNC FINANCIAL SERVICES GROUP, INC. - FORM 8-K - EX-99.1 - FINANCIAL SUPPLEMENT (UNAUDITED) FOR FOURTH QUARTER AND FULL YEAR 2009

Attached files

file	filename
8-K - FORM 8-K - PNC FINANCIAL SERVICES GROUP, INC.	d8k.htm
EX-99.2 - ELECTRONIC PRESENTATION SLIDES FOR EARNINGS RELEASE CONFERENCE CALL - PNC FINANCIAL SERVICES GROUP, INC.	dex992.htm

Exhibit 99.1

LOGO

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FOURTH QUARTER AND FULL YEAR 2009

(UNAUDITED)

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FOURTH QUARTER AND FULL YEAR 2009

(UNAUDITED)


		Page

Consolidated Results:

Acquisition Activity		1

Income Statement		2

Balance Sheet		3

Capital Ratios		3

Average Balance Sheet		4 - 5

Net Interest Margin		6

Loans and Loans Held for Sale		7

Accretion		8

Accruing Loans Past Due		9

Allowances for Credit Losses		10

Nonperforming Assets		11 - 12

Business Segment Results:

Business Segment Descriptions		13

Summary of Earnings and Revenue		14

Period-end Employees		14

Retail Banking		15 - 16

Corporate & Institutional Banking		17

Asset Management Group		18

Residential Mortgage Banking		19

Global Investment Servicing		20

Distressed Assets Portfolio		21

Glossary of Terms		22 - 25

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on January 21, 2010. We have reclassified certain prior period amounts to be consistent with the current period presentation. This information speaks only as of the particular date or dates included in the schedules. We do not undertake any obligation to, and disclaim any duty to, correct or update any of the information provided in this Financial Supplement. Our future financial performance is subject to risks and uncertainties as described in our United States Securities and Exchange Commission (“SEC”) filings.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 1
National City Corporation Acquisition and BlackRock/BGI Transaction (Unaudited)

National City Corporation Acquisition

On December 31, 2008, we acquired National City Corporation (“National City”). The accompanying year-end balance sheet includes National City’s assets and liabilities for all periods presented. Our average balance sheet and income statement includes National City’s balances beginning January 1, 2009. Other financial information reported follows this same convention except that year-end disclosures in the business segment portions of this Financial Supplement do not include National City at December 31, 2008 unless otherwise noted.

During 2009, additional information was obtained about the fair value of assets acquired and liabilities assumed as of December 31, 2008 which resulted in adjustments to the initial purchase price allocation. Most significantly, additional information was obtained on the credit quality of certain loans as of the acquisition date which resulted in additional fair value writedowns on acquired impaired loans. Adjustments to the purchase price allocation are summarized in the table below.

National City Acquisition—Summary Purchase Price Allocation


Year ended December 31, 2009 - in billions
Excess of fair value of adjusted net assets acquired over purchase price—December 31, 2008	$	(1.3	)
Additional fair value marks on acquired impaired loans—December 31, 2008		1.8
Other adjustments, net		.1

Excess of purchase price over fair value of adjusted net assets acquired—December 31, 2009	$	.6

BlackRock/BGI Transaction

On December 1, 2009, BlackRock acquired Barclays Global Investors (“BGI”) from Barclays Bank PLC in exchange for approximately $6.65 billion in cash and 37,566,771 shares of BlackRock common and participating preferred stock. Upon closing of the BGI transaction, the carrying value of our investment in BlackRock increased significantly, reflecting our portion of the increase in BlackRock’s equity resulting from the value of the BlackRock shares issued in connection with BlackRock’s acquisition of BGI. PNC recognized this increase in value as a $1.076 billion pretax gain in the fourth quarter of 2009. At December 31, 2009, PNC’s share of BlackRock’s earnings was approximately 23%.

RECONCILIATIONS OF “AS REPORTED” (GAAP) AMOUNTS TO “AS ADJUSTED” AMOUNTS

Dollars in millions


	Noninterest Income			Total Revenue			Noninterest Income to Total Revenue
Fourth Quarter 2009
As reported	$	2,737		$	5,082		54	%
Adjustment:
Gain on BlackRock/BGI transaction		(1,076	)		(1,076	)	(13	)%

As adjusted	$	1,661		$	4,006		41	%

Full Year 2009
As reported	$	7,934		$	16,988		47	%
Adjustment:
Gain on BlackRock/BGI transaction		(1,076	)		(1,076	)	(4	)%

As adjusted	$	6,858		$	15,912		43	%

This table represents reconciliations of certain “As Reported” (GAAP) amounts to “As Adjusted” amounts for the gain on the BlackRock/BGI transaction. We have provided these adjusted amounts and reconciliations so that investors, analysts, regulators and others will be better able to evaluate the impact of this item on those results and ratios for and as of the periods presented. We believe that information as adjusted for the impact of this specified item may be useful due to the extent to which the item is not indicative of ongoing operations. Adjusted information supplements our results as reported in accordance with GAAP and should not be viewed in isolation from, or as a substitute for, GAAP results.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 2
Consolidated Income Statement (Unaudited)


	Three months ended															Year ended
In millions, except per share data	December 31 2009 (a)			September 30 2009 (a)			June 30 2009 (a)			March 31 2009 (a)			December 31 2008			December 31 2009 (a)			December 31 2008
Interest Income
Loans	$	2,160		$	2,091		$	2,203		$	2,465		$	993		$	8,919		$	4,138
Investment securities		643			684			672			689			476			2,688			1,746
Other		137			113			126			106			74			482			429

Total interest income		2,940			2,888			3,001			3,260			1,543			12,089			6,313

Interest Expense
Deposits		334			387			474			546			333			1,741			1,485
Borrowed funds		261			279			345			409			218			1,294			1,005

Total interest expense		595			666			819			955			551			3,035			2,490

Net interest income		2,345			2,222			2,182			2,305			992			9,054			3,823

Noninterest Income
Fund servicing		197			194			193			199			209			783			904
Asset management		219			242			208			189			97			858			686
Consumer services		315			330			329			316			151			1,290			623
Corporate services		260			252			264			245			157			1,021			704
Residential mortgage		107			207			245			431						990
Service charges on deposits		236			248			242			224			101			950			372
Net gains on sales of securities		144			168			182			56			2			550			106
Net other-than-temporary impairments		(144	)		(129	)		(155	)		(149	)		(174	)		(577	)		(312	)
Gain on BlackRock/BGI transaction (b)		1,076															1,076
Other		327			314			297			55			141			993			284

Total noninterest income		2,737			1,826			1,805			1,566			684			7,934			3,367

Total revenue		5,082			4,048			3,987			3,871			1,676			16,988			7,190
Provision for credit losses		1,049			914			1,087			880			990			3,930			1,517
Noninterest Expense
Personnel		1,055			1,158			1,174			1,088			494			4,475			2,154
Occupancy		189			181			190			188			94			748			368
Equipment		192			188			194			198			92			772			359
Marketing		60			58			59			57			31			234			125
Other		873			794			1,041			797			418			3,505			1,392

Total noninterest expense		2,369			2,379			2,658			2,328			1,129			9,734			4,398

Income (loss) before income taxes and noncontrolling interests		1,664			755			242			663			(443	)		3,324			1,275
Income taxes (benefit)		557			196			35			133			(197	)		921			361

Net income (loss)		1,107			559			207			530			(246	)		2,403			914

Less: Net income (loss) attributable to noncontrolling interests		(37	)		(20	)		9			4			2			(44	)		32
Preferred stock dividends		119			99			119			51			21			388			21
Preferred stock discount accretion		14			13			14			15						56

Net income (loss) attributable to common shareholders	$	1,011		$	467		$	65		$	460		$	(269	)	$	2,003		$	861

Earnings (Loss) Per Common Share
Basic	$	2.19		$	1.01		$	.14		$	1.04		$	(.77	)	$	4.40		$	2.49
Diluted	$	2.17		$	1.00		$	.14		$	1.03		$	(.77	)	$	4.36		$	2.44

Average Common Shares Outstanding
Basic		460			460			451			443			348			454			344
Diluted		462			461			453			444			349			455			346

Efficiency		47	%		59	%		67	%		60	%		67	%		57	%		61	%

Noninterest income to total revenue (c)		54	%		45	%		45	%		40	%		41	%		47	%		47	%

Effective income tax rate (d)		33.5	%		26.0	%		14.5	%		20.1	%		44.5	%		27.7	%		28.3	%

(a)	Includes the impact of National City, which we acquired on December 31, 2008.

(b)	The after-tax impact to net income was $687 million for both the fourth quarter and full year 2009. The earnings per diluted share impact was $1.49 for the fourth quarter of 2009 and $1.51 for full year 2009.

(c)	Excluding the gain on BlackRock/BGI transaction, the noninterest income to total revenue ratio was 41% for the fourth quarter of 2009 and 43% for full year 2009. See page 1 for a reconciliation of the GAAP and “as adjusted” amounts related to this ratio.

(d)

The effective income tax rates are generally lower than the statutory rate due to the relationship of pretax income to tax credits and earnings that are not subject to tax. The higher effective tax rate for the fourth quarter of 2009 resulted from the gain on the BlackRock/BGI transaction. The higher effective tax rate for the fourth quarter of 2008 resulted from the net loss in that period.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 3
Consolidated Balance Sheet (Unaudited)


In millions, except par value	December 31 2009			September 30 2009			June 30 2009			March 31 2009			December 31 2008
Assets
Cash and due from banks	$	4,288		$	3,426		$	3,797		$	3,576		$	4,471
Federal funds sold and resale agreements (a)		2,390			2,427			1,814			1,554			1,856
Trading securities		2,124			2,075			1,925			1,087			1,725
Interest-earning deposits with banks		4,488			1,129			10,190			14,783			14,859
Loans held for sale (a)		2,539			3,509			4,662			4,045			4,366
Investment securities		56,027			54,413			49,969			46,253			43,473
Loans (a)		157,543			160,608			165,009			171,373			175,489
Allowance for loan and lease losses		(5,072	)		(4,810	)		(4,569	)		(4,299	)		(3,917	)

Net loans		152,471			155,798			160,440			167,074			171,572
Goodwill		9,505			9,286			9,206			8,855			8,868
Other intangible assets		3,404			3,448			3,684			3,323			2,820
Equity investments		10,254			8,684			8,168			8,215			8,554
Other (a)		22,373			27,212			25,899			27,657			28,517

Total assets	$	269,863		$	271,407		$	279,754		$	286,422		$	291,081

Liabilities
Deposits
Noninterest-bearing	$	44,384		$	43,025		$	41,806		$	40,610		$	37,148
Interest-bearing		142,538			140,784			148,633			154,025			155,717

Total deposits		186,922			183,809			190,439			194,635			192,865
Borrowed funds
Federal funds purchased and repurchase agreements		3,998			3,996			3,921			4,789			5,153
Federal Home Loan Bank borrowings		10,761			11,953			14,777			16,985			18,126
Bank notes and senior debt		12,362			12,424			13,292			13,828			13,664
Subordinated debt		9,907			10,501			10,383			10,694			11,208
Other		2,233			3,036			2,308			2,163			4,089

Total borrowed funds		39,261			41,910			44,681			48,459			52,240
Allowance for unfunded loan commitments and letters of credit		296			324			319			328			344
Accrued expenses		3,590			3,592			3,651			3,340			3,949
Other		7,227			10,109			11,197			11,004			14,035

Total liabilities		237,296			239,744			250,287			257,766			263,433

Equity
Preferred stock (b)
Common stock—$5 par value
Authorized 800 shares, issued 471, 469, 468, 452, and 452 shares		2,354			2,348			2,342			2,261			2,261
Capital surplus—preferred stock		7,974			7,960			7,947			7,933			7,918
Capital surplus—common stock and other		8,945			8,860			8,783			8,284			8,328
Retained earnings (c)		13,144			12,179			11,758			11,738			11,461
Accumulated other comprehensive loss (c)		(1,962	)		(1,947	)		(3,101	)		(3,289	)		(3,949	)
Common stock held in treasury at cost: 9, 8, 7, 7, and 9 shares		(513	)		(472	)		(435	)		(450	)		(597	)

Total shareholders’ equity		29,942			28,928			27,294			26,477			25,422
Noncontrolling interests		2,625			2,735			2,173			2,179			2,226

Total equity		32,567			31,663			29,467			28,656			27,648

Total liabilities and equity	$	269,863		$	271,407		$	279,754		$	286,422		$	291,081

Capital Ratios
Tier 1 risk-based (d)		11.5	%		10.9	%		10.5	%		10.0	%		9.7	%
Tier 1 common (d)		6.0			5.5			5.3			4.9			4.8
Total risk-based (d)		15.1			14.5			14.1			13.6			13.2
Leverage (d) (e)		10.0			9.6			9.1			8.9			17.5
Common shareholders’ equity to assets		8.2			7.7			6.9			6.5			6.0

(a)	Amounts include items for which PNC has elected the fair value option. Our 2009 Form 10-K will include additional information regarding these Consolidated Balance Sheet line items.

(b)	Par value less than $.5 million at each date.

(c)	Retained earnings at January 1, 2009 was increased $110 million representing the after-tax noncredit portion of other-than-temporary impairment losses recognized in net income during 2008 that has been reclassified to accumulated other comprehensive loss.

(d)	The ratio as of December 31, 2009 is estimated.

(e)	The ratio as of December 31, 2008 did not reflect any impact of National City on PNC’s adjusted average total assets.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 4
Average Consolidated Balance Sheet (Unaudited)


	Three months ended															Year ended
In millions	December 31 2009 (a)			September 30 2009 (a)			June 30 2009 (a)			March 31 2009 (a)			December 31 2008			December 31 2009 (a)			December 31 2008
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency	$	22,663		$	20,838		$	21,007		$	23,065		$	11,994		$	21,889		$	10,003
Non-agency		10,788			11,553			12,520			13,140			11,963			11,993			12,055
Commercial mortgage-backed		5,053			5,052			4,624			4,252			5,428			4,748			5,666
Asset-backed		1,927			1,911			1,985			2,031			2,768			1,963			3,126
US Treasury and government agencies		6,403			6,026			4,185			1,222			32			4,477			50
State and municipal		1,346			1,367			1,366			1,334			1,070			1,354			764
Other debt		1,948			1,647			1,012			684			320			1,327			220
Corporate stocks and other		362			388			386			457			358			398			412

Total securities available for sale		50,490			48,782			47,085			46,185			33,933			48,149			32,296
Securities held to maturity (b)		5,014			4,286			3,860			3,402			1,596			4,146			402

Total investment securities		55,504			53,068			50,945			49,587			35,529			52,295			32,698

Loans
Commercial		55,633			58,457			63,570			67,232			33,062			61,183			31,267
Commercial real estate		23,592			24,491			25,418			25,622			9,582			24,775			9,368
Equipment lease financing		6,164			6,045			6,191			6,406			2,563			6,201			2,566
Consumer		52,911			52,066			51,878			52,618			21,645			52,368			20,526
Residential mortgage		19,891			20,847			21,831			21,921			8,597			21,116			9,017

Total loans		158,191			161,906			168,888			173,799			75,449			165,643			72,744
Loans held for sale		2,949			3,696			4,757			4,521			1,915			3,976			2,502
Federal funds sold and resale agreements		1,700			2,417			1,726			1,610			1,591			1,865			2,472
Other		12,654			14,607			16,870			14,728			3,135			14,708			4,068

Total interest-earning assets		230,998			235,694			243,186			244,245			117,619			238,487			114,484
Noninterest-earning assets:
Allowance for loan and lease losses		(4,517	)		(4,264	)		(4,385	)		(4,095	)		(1,084	)		(4,316	)		(962	)
Cash and due from banks		3,657			3,547			3,558			3,832			2,293			3,648			2,705
Other		41,740			39,071			38,496			36,870			24,281			39,057			25,793

Total assets	$	271,878		$	274,048		$	280,855		$	280,852		$	143,109		$	276,876		$	142,020

(a)	Includes the impact of National City, which we acquired on December 31, 2008.

(b)	Primarily consists of commercial mortgage-backed and asset-backed securities.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 5
Average Consolidated Balance Sheet (Unaudited) (Continued)


	Three months ended										Year ended
In millions	December 31 2009 (a)		September 30 2009 (a)		June 30 2009 (a)		March 31 2009 (a)		December 31 2008		December 31 2009 (a)		December 31 2008
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market	$	56,298	$	56,662	$	55,464	$	52,828	$	29,450	$	55,326	$	27,625
Demand		24,223		23,874		23,629		22,156		10,252		23,477		9,947
Savings		6,381		6,652		6,678		6,266		2,668		6,495		2,714
Retail certificates of deposit		49,645		53,468		57,357		57,970		16,767		54,584		16,642
Other time		1,389		2,841		5,259		10,670		4,798		5,009		4,424
Time deposits in foreign offices		4,013		3,356		3,348		3,832		4,748		3,637		5,006

Total interest-bearing deposits		141,949		146,853		151,735		153,722		68,683		148,528		66,358
Borrowed funds
Federal funds purchased and repurchase agreements		4,046		4,422		4,283		5,016		5,979		4,439		7,228
Federal Home Loan Bank borrowings		10,880		12,996		15,818		17,097		9,710		14,177		9,303
Bank notes and senior debt		12,327		12,542		13,688		13,384		5,120		12,981		6,064
Subordinated debt		9,879		10,214		10,239		10,439		5,090		10,191		4,990
Other		2,448		2,806		2,170		1,944		4,087		2,345		3,737

Total borrowed funds		39,580		42,980		46,198		47,880		29,986		44,133		31,322

Total interest-bearing liabilities		181,529		189,833		197,933		201,602		98,669		192,661		97,680
Noninterest-bearing liabilities and equity:
Demand and other noninterest-bearing deposits		44,325		41,816		40,965		38,489		18,809		41,416		18,155
Allowance for unfunded loan commitments and letters of credit		324		319		328		344		127		328		134
Accrued expenses and other liabilities		13,353		11,489		11,990		11,872		10,634		12,179		10,033
Equity		32,347		30,591		29,639		28,545		14,870		30,292		16,018

Total liabilities and equity	$	271,878	$	274,048	$	280,855	$	280,852	$	143,109	$	276,876	$	142,020


Supplemental Average Balance Sheet Information (Unaudited)

Deposits and Common Shareholders’ Equity
Interest-bearing deposits	$	141,949	$	146,853	$	151,735	$	153,722	$	68,683	$	148,528	$	66,358
Demand and other noninterest-bearing deposits		44,325		41,816		40,965		38,489		18,809		41,416		18,155

Total deposits	$	186,274	$	188,669	$	192,700	$	192,211	$	87,492	$	189,944	$	84,513

Transaction deposits	$	124,846	$	122,352	$	120,058	$	113,473	$	58,511	$	120,219	$	55,727

Common shareholders’ equity	$	21,726	$	20,391	$	19,527	$	18,405	$	12,205	$	20,022	$	13,703

(a)	Includes the impact of National City, which we acquired on December 31, 2008.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 6
Details of Net Interest Margin (Unaudited)


	Three months ended
Net Interest Margin (a)	December 31 2009 (b)		September 30 2009 (b)		June 30 2009 (b)		March 31 2009 (b)		December 31 2008
Average yields/rates
Yield on interest-earning assets
Loans	5.42	%	5.12	%	5.22	%	5.72	%	5.22	%
Investment securities	4.67		5.20		5.32		5.59		5.39
Other	3.17		2.18		2.14		2.10		4.43
Total yield on interest-earning assets	5.07		4.88		4.94		5.38		5.22
Rate on interest-bearing liabilities
Deposits	.93		1.04		1.25		1.44		1.92
Borrowed funds	2.60		2.57		2.97		3.42		2.86
Total rate on interest-bearing liabilities	1.30		1.39		1.65		1.91		2.21

Interest rate spread	3.77		3.49		3.29		3.47		3.01
Impact of noninterest-bearing sources	.28		.27		.31		.34		.36

Net interest margin	4.05	%	3.76	%	3.60	%	3.81	%	3.37	%


	Year ended
Net Interest Margin (a)	December 31 2009 (b)		December 31 2008
Average yields/rates
Yield on interest-earning assets
Loans	5.41	%	5.71	%
Investment securities	5.18		5.36
Other	2.37		4.86
Total yield on interest-earning assets	5.10		5.55
Rate on interest-bearing liabilities
Deposits	1.17		2.24
Borrowed funds	2.93		3.21
Total rate on interest-bearing liabilities	1.58		2.55

Interest rate spread	3.52		3.00
Impact of noninterest-bearing sources	.30		.37

Net interest margin	3.82	%	3.37	%

(a)

Calculated as annualized taxable-equivalent net interest income divided by average earning assets. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of yields and margins for all earning assets in calculating net interest margins, in this table we use 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. This adjustment is not permitted under GAAP in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the year ended December 31, 2009 and December 31, 2008 were $65 million and $36 million, respectively. The taxable-equivalent adjustments to net interest income for the three months ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008 were $18 million, $16 million, $16 million, $15 million, and $8 million, respectively.

(b)	Includes the impact of National City, which we acquired on December 31, 2008, including fair value yield and rate paid adjustments associated with purchase accounting.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 7
Details of Loans (Unaudited)


In millions	December 31 2009		September 30 2009		June 30 2009		March 31 2009		December 31 2008
Commercial
Retail/wholesale	$	9,515	$	9,404	$	10,141	$	11,226	$	11,482
Manufacturing		9,880		10,639		11,595		12,796		13,263
Other service providers		8,256		8,364		8,491		8,674		9,038
Real estate related (a)		7,403		7,854		8,346		8,926		9,107
Financial services		3,874		4,422		5,078		5,050		5,194
Health care		2,970		2,888		3,045		3,079		3,201
Other		12,920		13,357		13,898		15,446		17,935

Total commercial		54,818		56,928		60,594		65,197		69,220

Commercial real estate
Real estate projects		15,582		16,112		16,542		16,830		17,176
Commercial mortgage		7,549		7,952		8,323		8,590		8,560

Total commercial real estate		23,131		24,064		24,865		25,420		25,736

Equipment lease financing		6,202		6,283		6,092		6,300		6,461

TOTAL COMMERCIAL LENDING		84,151		87,275		91,551		96,917		101,417

Consumer
Home equity
Lines of credit		24,236		24,272		24,373		24,112		24,024
Installment		11,711		12,098		12,346		12,934		14,252
Education		7,468		6,370		5,340		5,127		4,211
Automobile		2,013		1,988		1,784		1,737		1,667
Credit card and other unsecured lines of credit		3,536		3,533		3,261		3,148		3,163
Other		4,618		4,614		4,833		4,910		5,172

Total consumer		53,582		52,875		51,937		51,968		52,489

Residential real estate
Residential mortgage		18,190		18,469		19,342		19,661		18,783
Residential construction		1,620		1,989		2,179		2,827		2,800

Total residential real estate		19,810		20,458		21,521		22,488		21,583

TOTAL CONSUMER LENDING		73,392		73,333		73,458		74,456		74,072

Total (b)	$	157,543	$	160,608	$	165,009	$	171,373	$	175,489


(a) Includes loans to customers in the real estate and construction industries.
(b) Includes purchased impaired loans related to National City	$	10,287	$	11,064	$	12,289	$	12,560	$	12,709

Details of Loans Held for Sale (Unaudited)

In millions	December 31 2009		September 30 2009		June 30 2009		March 31 2009		December 31 2008
Commercial mortgage	$	1,301	$	1,810	$	1,531	$	1,648	$	2,148
Residential mortgage		1,012		1,552		2,886		2,244		1,962
Other		226		147		245		153		256

Total	$	2,539	$	3,509	$	4,662	$	4,045	$	4,366


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 8
Purchase Accounting Accretion and Accretable Interest (Unaudited)

VALUATION OF FASB ASC 310-30 (AICPA SOP 03-3) PURCHASED IMPAIRED LOANS


	December 31, 2008 (a)					December 31, 2009
Dollars in billions	Balance			Net Investment		Balance			Net Investment
Commercial and commercial real estate loans:
Unpaid principal balance	$	6.3				$	3.5
Impairment mark		(3.4	)				(1.3	)

Recorded investment		2.9					2.2
Impairment reserve							(.2	)

Net investment		2.9		46	%		2.0		57	%

Consumer and residential mortgage loans:
Unpaid principal balance		15.6					11.7
Impairment mark		(5.8	)				(3.6	)

Recorded investment		9.8					8.1
Impairment reserve							(.3	)

Net investment		9.8		63	%		7.8		67	%


Total FASB ASC 310-30 purchased impaired loans:
Unpaid principal balance		21.9					15.2
Impairment mark		(9.2	)				(4.9	)

Recorded investment		12.7					10.3
Impairment reserve							(.5	)	(b	)

Net investment	$	12.7		58	%	$	9.8		64	%

PURCHASE ACCOUNTING ACCRETION


	*Three months ended*												*Year ended*
In millions	March 31 2009			June 30 2009			September 30 2009			December 31 2009			December 31 2009
Non-impaired loans	$	322		$	168		$	172		$	111		$	773
Impaired loans
Accretion		257			220			193			257			927
Cash recoveries					39			11			141			191

Total impaired		257			259			204			398			1,118
Reversal of contractual interest on impaired loans		(223	)		(194	)		(167	)		(168	)		(752	)

Net impaired loans		34			65			37			230			366
Securities		31			41			25			21			118
Deposits		312			264			231			189			996
Borrowings		(85	)		(52	)		(58	)		(55	)		(250	)

Total	$	614		$	486		$	407		$	496		$	2,003

ACCRETABLE NET INTEREST


In billions	December 31 2008			December 31 2009
Non-impaired loans	$	2.4		$	1.6
Impaired loans (c)		3.7			3.5

Total loans (gross)		6.1			5.1
Securities		.2			.1
Deposits		2.1			1.0
Borrowings		(1.5	)		(1.2	)

Total	$	6.9		$	5.0

ACCRETABLE NET INTEREST—PURCHASED IMPAIRED LOANS


In billions
December 31, 2008	$	3.7
Accretion		(.9	)
Cash recoveries		(.2	)
Net reclass to accretable difference		.9

December 31, 2009	$	3.5

(a)

Subsequent to December 31, 2008, an additional $2.6 billion of acquired National City loans were identified as impaired under FASB ASC 310-30. A total fair value mark of $1.8 billion was recorded, resulting in a $.8 billion net investment. These impairments were effective December 31, 2008 based on additional information regarding the borrowers and credit conditions that existed as of the acquisition date.

(b)	Additional impairment reserves of $.5 billion do not recognize the incremental accretable yield of $.9 billion related to certain purchased impaired loans with improving estimated cash flows. This income will be recognized over time.

(c)

Adjustments to accretable net interest include purchase accounting accretion, reclassifications from non-accretable to accretable interest as a result of increases in estimated cash flows, and reductions in the accretable amount as a result of additional loan impairments as of the National City acquisition close date of December 31, 2008.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 9
Accruing Loans Past Due (Unaudited)

Accruing Loans Past Due 30 To 89 Days (a)


	Amount										Percent of Total Outstandings
Dollars in millions	Dec. 31 2009		Sept. 30 2009		June 30 2009		March 31 2009		Dec. 31 2008		Dec. 31 2009		Sept. 30 2009		June 30 2009		March 31 2009		Dec. 31 2008
Commercial	$	684	$	633	$	640	$	741	$	489	1.26	%	1.13	%	1.07	%	1.16	%	.72	%
Commercial real estate		666		743		654		398		400	3.10		3.34		2.85		1.70		1.68
Equipment lease financing		128		50		52		69		74	2.06		.80		.85		1.10		1.15
Consumer		438		444		401		421		451	.87		.90		.83		.87		.93
Residential real estate		472		510		448		507		506	3.12		3.29		2.83		3.01		3.23

Total (b)	$	2,388	$	2,380	$	2,195	$	2,136	$	1,920	1.62	%	1.59	%	1.44	%	1.34	%	1.18	%

Accruing Loans Past Due 90 Days Or More (a)


	Amount										Percent of Total Outstandings
Dollars in millions	Dec. 31 2009		Sept. 30 2009		June 30 2009		March 31 2009		Dec. 31 2008		Dec. 31 2009		Sept. 30 2009		June 30 2009		March 31 2009		Dec. 31 2008
Commercial	$	188	$	196	$	153	$	80	$	90	.35	%	.35	%	.26	%	.12	%	.13	%
Commercial real estate		150		184		104		61		52	.70		.83		.45		.26		.22
Equipment lease financing		6		3		6				2	.10		.05		.10				.03
Consumer		226		216		198		183		154	.45		.44		.41		.38		.32
Residential real estate		314		276		582		177		97	2.07		1.78		3.68		1.05		.62

Total (c)	$	884	$	875	$	1,043	$	501	$	395	.60	%	.59	%	.68	%	.32	%	.24	%

(a)	Excludes loans that are government insured/guaranteed, primarily residential mortgages.

(b)

Excludes impaired loans acquired from National City totaling $0.8 billion at December 31, 2009, $0.8 billion at September 30, 2009, $1.1 billion at June 30, 2009, $1.2 billion at March 31, 2009 and $1.6 billion at December 31, 2008. These loans are excluded 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.

(c)

Excludes impaired loans acquired from National City totaling $2.7 billion at December 31, 2009, $3.0 billion at September 30, 2009, $2.9 billion at June 30, 2009, $2.2 billion at March 31, 2009 and $2.0 billion at December 31, 2008. These loans are excluded 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.

THE PNC FINANCIAL SERVICES GROUP, INC.

Page 10

Allowances for Loan and Lease Losses and Unfunded Loan Commitments and Letters of Credit, and

Net Unfunded Commitments (Unaudited)

Change in Allowance for Loan and Lease Losses


Three months ended - in millions	December 31 2009			September 30 2009			June 30 2009			March 31 2009			December 31 2008
Beginning balance	$	4,810		$	4,569		$	4,299		$	3,917		$	1,053
Charge-offs:
Commercial		(380	)		(323	)		(364	)		(209	)		(109	)
Commercial real estate		(260	)		(20	)		(124	)		(106	)		(70	)
Equipment lease financing		(34	)		(42	)		(50	)		(23	)		(1	)
Consumer		(267	)		(257	)		(289	)		(148	)		(43	)
Residential real estate		(83	)		(96	)		(54	)		(26	)		(4	)

Total charge-offs		(1,024	)		(738	)		(881	)		(512	)		(227	)
Recoveries:
Commercial		87			42			36			16			13
Commercial real estate		15			8			10			5			3
Equipment lease financing		10			7			5			5
Consumer		27			23			28			27			4
Residential real estate		50			8			7			28

Total recoveries		189			88			86			81			20
Net charge-offs:
Commercial		(293	)		(281	)		(328	)		(193	)		(96	)
Commercial real estate		(245	)		(12	)		(114	)		(101	)		(67	)
Equipment lease financing		(24	)		(35	)		(45	)		(18	)		(1	)
Consumer		(240	)		(234	)		(261	)		(121	)		(39	)
Residential real estate		(33	)		(88	)		(47	)		2			(4	)

Total net charge-offs		(835	)		(650	)		(795	)		(431	)		(207	)
Provision for credit losses (a)		1,049			914			1,087			880			990
Acquired allowance—National City		20			(18	)		(31	)		(83	)		2,224
Net change in allowance for unfunded loan commitments and letters of credit (b)		28			(5	)		9			16			(143	)

Ending balance	$	5,072		$	4,810		$	4,569		$	4,299		$	3,917

Supplemental Information
Net charge-offs to average loans (for the three months ended) (annualized)		2.09	%		1.59	%		1.89	%		1.01	%		1.09	%
Allowance for loan and lease losses to total loans		3.22			2.99			2.77			2.51			2.23

Commercial lending net charge-offs	$	(562	)	$	(328	)	$	(487	)	$	(312	)	$	(164	)
Consumer lending net charge-offs		(273	)		(322	)		(308	)		(119	)		(43	)

Total net charge-offs	$	(835	)	$	(650	)	$	(795	)	$	(431	)	$	(207	)

Net charge-offs to average loans
Commercial lending		2.61	%		1.46	%		2.05	%		1.27	%		1.44	%
Consumer lending		1.49			1.75			1.68			.65			.57

(a)	Fourth quarter of 2008 includes integration costs (conforming provision for credit losses) of $504 million related to National City.

(b)	Fourth quarter of 2008 includes $154 million related to the National City conforming provision for credit losses.

Change in Allowance for Unfunded Loan Commitments and Letters of Credit


Three months ended - in millions	December 31 2009			September 30 2009		June 30 2009			March 31 2009			December 31 2008
Beginning balance	$	324		$	319	$	328		$	344		$	127
Acquired allowance—National City													74
Net change in allowance for unfunded loan commitments and letters of credit		(28	)		5		(9	)		(16	)		143

Ending balance	$	296		$	324	$	319		$	328		$	344


Net Unfunded Commitments
In millions	December 31 2009			September 30 2009		June 30 2009			March 31 2009			December 31 2008
Net unfunded commitments	$	100,795		$	102,669	$	103,058		$	102,821		$	104,888


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 11
Details of Nonperforming Assets (Unaudited)

Nonperforming Assets by Type


In millions	December 31 2009 (a)			September 30 2009 (a)			June 30 2009 (a)			March 31 2009 (a)			December 31 2008 (a)
Nonperforming loans
Commercial
Retail/wholesale	$	231		$	219		$	171		$	149		$	88
Manufacturing		423			387			410			334			141
Other service providers		394			348			243			224			114
Real estate related (b)		419			396			322			226			151
Financial services		117			200			58			58			23
Health care		41			48			89			104			37
Other		181			232			157			119			22

Total commercial		1,806			1,830			1,450			1,214			576

Commercial real estate
Real estate projects		1,754			1,637			1,426			1,012			659
Commercial mortgage		386			235			230			200			107

Total commercial real estate		2,140			1,872			1,656			1,212			766

Equipment lease financing		130			164			120			121			97

TOTAL COMMERCIAL LENDING		4,076			3,866			3,226			2,547			1,439

Consumer
Home equity		356			207			164			75			66
Other		36			25			34			24			4

Total consumer		392			232			198			99			70
Residential real estate
Residential mortgage		955			790			663			299			139
Residential construction		248			238			69			15			14

Total residential real estate		1,203			1,028			732			314			153

TOTAL CONSUMER LENDING		1,595			1,260			930			413			223

Total nonperforming loans (c)		5,671			5,126			4,156			2,960			1,662

Foreclosed and other assets
Commercial lending		266			145			113			93			50
Consumer lending		379			373			387			465			469

Total foreclosed and other assets		645			518			500			558			519

Total nonperforming assets	$	6,316		$	5,644		$	4,656		$	3,518		$	2,181

Nonperforming loans to total loans		3.60	%		3.19	%		2.52	%		1.73	%		.95	%
Nonperforming assets to total loans and foreclosed and other assets		3.99			3.50			2.81			2.05			1.24
Nonperforming assets to total assets		2.34			2.08			1.66			1.23			.75
Allowance for loan and lease losses to nonperforming loans		89			94			110			145			236

(a)	Amounts at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009 and December 31, 2008 include $3.8 billion, $3.1 billion, $2.2 billion, $1.6 billion and $738 million, respectively, of nonperforming assets related to National City, excluding those loans that we impaired.

(b)	Includes loans related to customers in the real estate and construction industries.

(c)	Total nonperforming loans include troubled debt restructured loans of $440 million at December 31, 2009, $230 million at September 30, 2009 and $127 million at June 30, 2009.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 12
Details of Nonperforming Assets (Unaudited) (Continued)

Change in Nonperforming Assets


In millions
January 1, 2009	$	2,181
Transferred in		8,501
Charge-offs/valuation adjustments		(1,770	)
Principal activity including payoffs		(1,127	)
Returned to performing		(671	)
Sales		(798	)

December 31, 2009	$	6,316

Largest Individual Nonperforming Assets at December 31, 2009 (a)


In millions
Ranking	Outstandings		Industry
1	$	49	Finance
2		33	Real Estate
3		32	Real Estate
4		31	Real Estate
5		24	Real Estate
6		24	Real Estate
7		24	Real Estate
8		24	Real Estate
9		23	Real Estate
10		23	Real Estate

Total	$	287

As a percent of total nonperforming assets				5	%

(a)	Amounts shown are not net of related allowance for loan and lease losses, if applicable.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 13
Business Segment Descriptions (Unaudited)

Retail Banking provides deposit, lending, brokerage, trust, investment management, and cash management services to consumer and small business customers within our primary geographic markets. Our customers are serviced through our branch network, call centers and the internet. The branch network is located primarily in Pennsylvania, Ohio, New Jersey, Michigan, Maryland, Illinois, Indiana, Kentucky, Florida, Missouri, Virginia, Delaware, Washington, D.C., and Wisconsin.

Corporate & Institutional Banking provides lending, treasury management, and capital markets-related products and services to mid-sized corporations, government and not-for-profit entities, and selectively to large corporations. Lending products include secured and unsecured loans, letters of credit and equipment leases. Treasury management services include cash and investment management, receivables management, disbursement services, funds transfer services, information reporting, and global trade services. Capital markets-related products and services include foreign exchange, derivatives, loan syndications, mergers and acquisitions advisory and related services to middle-market companies, securities underwriting, and securities sales and trading. Corporate & Institutional Banking also provides commercial loan servicing, and real estate advisory and technology solutions for the commercial real estate finance industry. Corporate & Institutional Banking provides products and services generally within our primary geographic markets, with certain products and services offered nationally.

Asset Management Group includes personal wealth management for high net worth and ultra high net worth clients and institutional asset management. Wealth management products and services include financial planning, customized investment management, private banking, tailored credit solutions and trust management and administration for individuals and their families. Institutional asset management provides investment management, custody, and retirement planning services. The institutional clients include corporations, foundations and unions and charitable endowments located primarily in our geographic footprint. This segment includes the asset management businesses acquired through the National City acquisition and the legacy PNC wealth management business previously included in the Retail Banking segment.

Residential Mortgage Banking directly originates first lien residential mortgage loans on a nationwide basis with a significant presence within the retail banking footprint and also originates loans through joint venture partners. Mortgage loans represent loans collateralized by one-to-four-family residential real estate and are made to borrowers in good credit standing. These loans are typically underwritten to third party standards and sold to primary mortgage market aggregators (Fannie Mae, Freddie Mac, Ginnie Mae, Federal Home Loan Banks and third-party investors) with servicing retained. The mortgage servicing operation performs all functions related to servicing first mortgage loans for various investors. Certain loans originated through our joint ventures are serviced by a joint venture partner. In November 2009, we reduced our joint venture relationship related to our legacy PNC business and rebranded the former National City Mortgage as PNC Mortgage.

BlackRock is the largest publicly traded investment management firm in the world. BlackRock manages assets on behalf of institutional and individual investors worldwide through a variety of equity, fixed income, multi-asset class, alternative and cash management separate accounts and funds. In addition, BlackRock provides market risk management, financial markets advisory and enterprise investment system services globally to a broad base of clients. At December 31, 2009, our share of BlackRock's earnings was approximately 23%.

Global Investment Servicing is a leading provider of processing, technology and business intelligence services to asset managers, broker-dealers, and financial advisors worldwide. Securities services include custody, securities lending, and accounting and administration for funds registered under the Investment Company Act of 1940 and alternative investments. Investor services include transfer agency, subaccounting, banking transaction services, and distribution. Financial advisor services include managed investments and information management. International locations include Ireland, Poland and Luxembourg.

Distressed Assets Portfolio includes residential real estate development loans, cross-border leases, subprime residential mortgage loans, brokered home equity loans and certain other residential real estate loans. These loans require special servicing and management oversight given current market conditions. The majority of these loans are from acquisitions, primarily National City.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 14
Summary of Business Segment Earnings and Revenue (Unaudited) (a) (b)


	Three months ended														Year ended
In millions Earnings (Loss)	December 31 2009 (c)			September 30 2009(c)		June 30 2009 (c)			March 31 2009(c)			December 31 2008			December 31 2009 (c)		December 31 2008
Retail Banking	$	(25	)	$	50	$	61		$	50		$	68		$	136	$	328
Corporate & Institutional Banking		415			309		107			359			(55	)		1,190		215
Asset Management Group		23			35		8			39			22			105		119
Residential Mortgage Banking		25			91		92			227						435
Global Investment Servicing		22			19		12			10			25			63		122
Distressed Assets Portfolio		(88	)		14		155			3						84
Other, including BlackRock (b) (d) (e) (f)		735			41		(228	)		(158	)		(306	)		390		130

Total consolidated net income (loss)	$	1,107		$	559	$	207		$	530		$	(246	)	$	2,403	$	914


Revenue
Retail Banking	$	1,379		$	1,434	$	1,467		$	1,441		$	668		$	5,721	$	2,731
Corporate & Institutional Banking		1,377			1,316		1,283			1,290			531			5,266		1,859
Asset Management Group		218			225		226			250			128			919		559
Residential Mortgage Banking		176			292		332			528						1,328
Global Investment Servicing (g)		205			198		188			190			214			781		916
Distressed Assets Portfolio		221			254		334			344						1,153
Other, including BlackRock (b) (d) (e)		1,506			329		157			(172	)		135			1,820		1,125

Total consolidated revenue	$	5,082		$	4,048	$	3,987		$	3,871		$	1,676		$	16,988	$	7,190

(a)

Our business information is presented based on our management accounting practices and our management structure. We refine our methodologies from time to time as our management accounting practices are enhanced and our business and management structure change. Certain prior period amounts have been reclassified to reflect current methodologies and our current business and management structure.

(b)	We consider BlackRock to be a separate reportable business segment but have combined its results with Other for this presentation. Our 2009 Form 10-K will include additional information regarding BlackRock.

(c)	Includes the impact of National City, which we acquired on December 31, 2008.

(d)

Includes earnings and gains or losses related to PNC's equity interest in BlackRock, integration costs, asset and liability management activities including net securities gains or losses and certain trading activities, equity management activities, exited businesses, differences between business segment performance reporting and financial statement reporting under generally accepted accounting principles (GAAP), corporate overhead and intercompany eliminations.

(e)	The $1.076 billion gain related to BlackRock's acquisition of BGI was included in this business segment for the fourth quarter and full year 2009.

(f)	The $504 million conforming provision for credit losses related to the National City acquisition was included in this business segment for the fourth quarter and full year 2008.

(g)	Global Investment Servicing revenue represents the sum of servicing revenue and nonoperating income (expense) less debt financing costs.


Period-end Employees	December 31 2009	September 30 2009	June 30 2009	March 31 2009	December 31 2008
Full-time employees
Retail Banking	21,416	21,644	22,102	22,468	22,461
Corporate & Institutional Banking	3,746	3,861	4,038	4,169	4,264
Asset Management Group	2,960	3,067	3,150	3,210	3,204
Residential Mortgage Banking	3,267	3,606	3,693	3,596	3,637
Global Investment Servicing	4,450	4,561	4,663	4,732	4,934
Distressed Assets Portfolio	175	157	131	110	106
Other
Operations & Technology	9,275	9,400	9,350	9,406	9,350
Staff Services and other	4,472	4,233	4,235	4,167	4,652

Total Other	13,747	13,633	13,585	13,573	14,002

Total full-time employees	49,761	50,529	51,362	51,858	52,608

Retail Banking part-time employees	4,737	4,859	5,199	5,375	5,448
Other part-time employees	1,322	1,520	1,509	1,562	1,539

Total part-time employees	6,059	6,379	6,708	6,937	6,987

Total	55,820	56,908	58,070	58,795	59,595

The period-end employee statistics reflect staff directly employed by the respective business and exclude operations, technology and staff services employees. Global Investment Servicing statistics are presented on a legal entity basis.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 15
Retail Banking (Unaudited) (a)


	Three months ended															Year ended
Dollars in millions	December 31 2009 (b) (c)			September 30 2009 (b) (c)			June 30 2009 (b)			March 31 2009 (b)			December 31 2008			December 31 2009 (b)			December 31 2008
INCOME STATEMENT
Net interest income	$	833		$	865		$	903		$	921		$	398		$	3,522		$	1,594
Noninterest income
Service charges on deposits		229			244			237			220			98			930			359
Brokerage		59			63			62			61			39			245			152
Consumer services		224			227			227			208			105			886			416
Other		34			35			38			31			28			138			210

Total noninterest income		546			569			564			520			270			2,199			1,137

Total revenue		1,379			1,434			1,467			1,441			668			5,721			2,731
Provision for credit losses		409			313			304			304			89			1,330			388
Noninterest expense		1,011			1,040			1,065			1,053			462			4,169			1,789

Pretax earnings (loss)		(41	)		81			98			84			117			222			554
Income taxes (benefit)		(16	)		31			37			34			49			86			226

Earnings (loss)	$	(25	)	$	50		$	61		$	50		$	68		$	136		$	328

AVERAGE BALANCE SHEET
Loans
Consumer
Home equity	$	27,109		$	27,379		$	27,493		$	27,638		$	13,430		$	27,403		$	13,263
Indirect		3,998			3,989			4,040			4,120			2,070			4,036			2,050
Education		6,656			5,742			5,199			4,882			2,756			5,625			2,012
Credit cards		2,503			2,174			2,162			2,112			304			2,239			264
Other		1,789			1,785			1,731			1,860			472			1,791			468

Total consumer		42,055			41,069			40,625			40,612			19,032			41,094			18,057
Commercial and commercial real estate		11,766			12,166			12,550			12,755			4,927			12,306			5,029
Floor plan		1,136			1,059			1,371			1,495			995			1,264			992
Residential mortgage		1,899			1,995			2,114			2,252			1,914			2,064			2,029

Total loans		56,856			56,289			56,660			57,114			26,868			56,728			26,107
Goodwill and other intangible assets		5,882			5,894			5,784			5,807			5,328			5,842			5,192
Other assets		2,697			2,870			2,733			2,699			1,270			2,750			1,623

Total assets	$	65,435		$	65,053		$	65,177		$	65,620		$	33,466		$	65,320		$	32,922

Deposits
Noninterest-bearing demand	$	16,516		$	16,482		$	16,408		$	15,819		$	9,075		$	16,308		$	9,191
Interest-bearing demand		18,446			18,435			18,639			17,900			8,195			18,357			8,073
Money market		39,374			39,753			39,608			38,831			18,635			39,394			17,220

Total transaction deposits		74,336			74,670			74,655			72,550			35,905			74,059			34,484
Savings		6,577			6,731			6,767			6,360			2,637			6,610			2,681
Certificates of deposit		48,338			52,189			55,798			56,355			15,820			53,145			15,800

Total deposits		129,251			133,590			137,220			135,265			54,362			133,814			52,965
Other liabilities		27			55			39			82			306			51			333
Capital		8,301			8,523			8,789			8,376			3,420			8,497			3,334

Total liabilities and equity	$	137,579		$	142,168		$	146,048		$	143,723		$	58,088		$	142,362		$	56,632

PERFORMANCE RATIOS
Return on average capital		(1	)%		2	%		3	%		2	%		8	%		2	%		10	%
Noninterest income to total revenue		40			40			38			36			40			38			42
Efficiency		73			73			73			73			69			73			66

(a)	See note (a) on page 14.

(b)	Includes the impact of National City, which we acquired on December 31, 2008.

(c)	Information as of and for the three months ended December 31, 2009 and September 30, 2009 reflects the impact of the required divestiture of 61 branches that was completed by early September 2009.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 16
Retail Banking (Unaudited) (Continued)


	Three months ended															Year ended
Dollars in millions, except as noted	December 31 2009 (a) (b)			September 30 2009 (a) (b)			June 30 2009 (a)			March 31 2009 (a)			December 31 2008			December 31 2009 (a)			December 31 2008
OTHER INFORMATION (c)
Credit-related statistics:
Commercial nonperforming assets	$	324		$	311		$	246		$	194		$	122
Consumer nonperforming assets		284			191			156			87			68

Total nonperforming assets	$	608		$	502		$	402		$	281		$	190

Impaired loans (d)	$	1,056		$	1,161		$	1,266		$	1,269		$	1,297

Commercial lending net charge-offs	$	173		$	69		$	90		$	83		$	49		$	415		$	139
Consumer lending net charge-offs		166			165			156			124			36			611			118

Total net charge-offs	$	339		$	234		$	246		$	207		$	85		$	1,026		$	257


Commercial lending annualized net charge-off ratio		5.32	%		2.07	%		2.59	%		2.36	%		3.29	%		3.06	%		2.31	%
Consumer lending annualized net charge-off ratio		1.50	%		1.52	%		1.46	%		1.17	%		.68	%		1.42	%		.59	%
Total annualized net charge-off ratio		2.37	%		1.65	%		1.74	%		1.47	%		1.26	%		1.81	%		.98	%

Other statistics:
ATMs		6,473			6,463			6,474			6,402			4,041
Branches (e)		2,512			2,553			2,606			2,585			1,141

Home equity portfolio credit statistics:
% of first lien positions (f)		35	%		35	%		35	%		35	%		37	%
Weighted average loan-to-value ratios (f)		74	%		74	%		74	%		74	%		73	%
Weighted average FICO scores (g)		727			727			728			727			726
Annualized net charge-off ratio		.90	%		.97	%		.80	%		.34	%		.58	%		.75	%		0.49	%
Loans 30 - 89 days past due		.78	%		.75	%		.70	%		.73	%		.68	%
Loans 90 days past due		.76	%		.73	%		.72	%		.67	%		.62	%

Customer-related statistics (h):
Retail Banking checking relationships		5,042,000			5,040,000			5,148,000			5,134,000			2,402,000
Retail online banking active customers		2,771,000			2,682,000			2,676,000			2,636,000			1,215,000
Retail online bill payment active customers		766,000			753,000			744,000			726,000			379,000

Brokerage statistics:
Financial consultants (i)		704			655			658			658			414
Full service brokerage offices		40			42			42			43			23
Brokerage account assets (billions)	$	32		$	30		$	28		$	26		$	15

Managed credit card loans:
Loans held in portfolio	$	2,555		$	2,477		$	2,202		$	2,091		$	330
Loans securitized		1,646			1,654			1,824			1,824

Total managed credit card loans	$	4,201		$	4,131		$	4,026		$	3,915		$	330

Net charge-offs:
Securitized credit card loans	$	30		$	33		$	37		$	31					$	131
Managed credit card loans	$	87		$	86		$	87		$	80		$	4		$	340		$	11

Net charge-offs as a % of average loans (annualized):
Securitized credit card loans		7.21	%		6.78	%		8.14	%		6.89	%					7.25	%
Managed credit card loans		8.33	%		8.34	%		8.79	%		8.25	%		5.23	%		8.42	%		4.17	%

(a)	Includes the impact of National City, which we acquired on December 31, 2008.

(b)	Information as of and for the three months ended December 31, 2009 and September 30, 2009 reflects the impact of the required divestiture of 61 branches that was completed by early September 2009.

(c)	Presented as of period-end, except for net charge-offs and annualized net charge-off ratios, which are for the three months and year ended.

(d)	Recorded investment of purchased impaired loans related to National City, adjusted to reflect additional loan impairments effective December 31, 2008.

(e)	Excludes certain satellite branches that provide limited products and/or services.

(f)	Includes loans from acquired portfolios for which lien position and loan-to-value information is not available.

(g)	Represents the most recent FICO scores we have on file.

(h)	Amounts for 2009 include the impact of National City prior to the completion of all application system conversions. These amounts may be refined subsequent to system conversions.

(i)	Financial consultants provide services in full service brokerage offices and PNC traditional branches.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 17
Corporate & Institutional Banking (Unaudited) (a)


	Three months ended															Year ended
Dollars in millions, except as noted	December 31 2009 (b)			September 30 2009 (b)			June 30 2009 (b)			March 31 2009 (b)			December 31 2008			December 31 2009 (b)			December 31 2008
INCOME STATEMENT
Net interest income	$	1,009		$	915		$	886		$	1,023		$	366		$	3,833		$	1,323
Noninterest income
Corporate service fees		235			226			236			218			128			915			583
Other		133			175			161			49			37			518			(47	)

Noninterest income		368			401			397			267			165			1,433			536

Total revenue		1,377			1,316			1,283			1,290			531			5,266			1,859
Provision for credit losses		283			384			649			287			381			1,603			575
Noninterest expense		444			459			467			430			237			1,800			945

Pretax earnings (loss)		650			473			167			573			(87	)		1,863			339
Income taxes (benefit)		235			164			60			214			(32	)		673			124

Earnings (loss)	$	415		$	309		$	107		$	359		$	(55	)	$	1,190		$	215

AVERAGE BALANCE SHEET
Loans
Commercial	$	36,952		$	39,394		$	42,771		$	45,522		$	21,685		$	41,132		$	20,439
Commercial real estate		15,276			15,309			15,730			15,646			6,043			15,489			5,584
Commercial—real estate related		3,328			3,622			3,884			4,267			3,233			3,772			3,049
Asset-based lending		6,051			5,918			6,401			7,021			5,556			6,344			5,274
Equipment lease financing		5,368			5,260			5,380			5,554			1,586			5,390			1,482

Total loans		66,975			69,503			74,166			78,010			38,103			72,127			35,828
Goodwill and other intangible assets		3,736			3,704			3,512			3,376			3,210			3,583			3,149
Loans held for sale		1,534			1,578			1,893			1,714			1,701			1,679			2,053
Other assets		7,395			6,460			7,332			8,029			6,717			7,300			6,020

Total assets	$	79,640		$	81,245		$	86,903		$	91,129		$	49,731		$	84,689		$	47,050

Deposits
Noninterest-bearing demand	$	23,484		$	20,392		$	18,732		$	17,108		$	9,138		$	19,948		$	8,388
Money market		10,573			10,714			9,514			7,949			6,059			9,697			5,817
Other		8,728			8,009			7,501			7,391			3,582			7,911			3,129

Total deposits		42,785			39,115			35,747			32,448			18,779			37,556			17,334
Other liabilities		8,408			8,363			9,701			10,024			6,038			9,118			5,357
Capital		7,916			7,922			7,816			7,690			3,388			7,837			3,087

Total liabilities and equity	$	59,109		$	55,400		$	53,264		$	50,162		$	28,205		$	54,511		$	25,778

PERFORMANCE RATIOS
Return on average capital		21	%		15	%		5	%		19	%		(6	) %		15	%		7	%
Noninterest income to total revenue		27			30			32			21			31			27			29
Efficiency		32			35			37			33			45			34			51

COMMERCIAL MORTGAGE
SERVICING PORTFOLIO (in billions)
Beginning of period	$	275		$	269		$	269		$	270		$	247		$	270		$	243
Acquisitions/additions		19			15			11			5			28			50			51
Repayments/transfers		(7	)		(9	)		(11	)		(6	)		(5	)		(33	)		(24	)

End of period	$	287		$	275		$	269		$	269		$	270		$	287		$	270

OTHER INFORMATION
Consolidated revenue from: (c)
Treasury Management	$	296		$	281		$	284		$	276		$	152		$	1,137		$	567
Capital Markets	$	187		$	155		$	148		$	43		$	76		$	533		$	336
Commercial mortgage loans held for sale (d)	$	67		$	53		$	63		$	22		$	35		$	205		$	(115	)
Commercial mortgage loan servicing (e)		66			66			76			72			19			280			180

Commercial mortgage banking activities	$	133		$	119		$	139		$	94		$	54		$	485		$	65
Total loans (f)	$	66,206		$	68,352		$	71,077		$	75,886		$	38,063
Nonperforming assets (f)	$	3,167		$	2,992		$	2,317		$	1,862		$	1,173
Impaired loans (f) (g)	$	1,075		$	1,482		$	1,601		$	1,757		$	1,816
Net charge-offs	$	341		$	222		$	322		$	167		$	116		$	1,052		$	267
Net carrying amount of commercial mortgage servicing rights (f)	$	921		$	897		$	895		$	874		$	654

(a)	See note (a) on page 14.

(b)	Includes the impact of National City, which we acquired on December 31, 2008.

(c)	Represents consolidated PNC amounts.

(d)	Includes valuations on commercial mortgage loans held for sale and related commitments, derivative valuations, origination fees, gains on sale of loans held for sale and net interest income on loans held for sale.

(e)	Includes net interest income and noninterest income from loan servicing and ancillary services.

(f)	Presented as of period end. Amounts at December 31, 2008 do not include the impact of National City, except purchased impaired loans.

(g)	Recorded investment of purchased impaired loans related to National City, adjusted to reflect additional loan impairments effective December 31, 2008.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 18
Asset Management Group (Unaudited) (a)


	Three months ended															Year ended
Dollars in millions, except as noted	December 31 2009 (b)			September 30 2009 (b)			June 30 2009 (b)			March 31 2009 (b)			December 31 2008			December 31 2009 (b)			December 31 2008
INCOME STATEMENT
Net interest income	$	67		$	70		$	75		$	96		$	35		$	308		$	130
Noninterest income		151			155			151			154			93			611			429

Total revenue		218			225			226			250			128			919			559
Provision for credit losses		25			9			46			17			4			97			6
Noninterest expense		155			162			167			170			89			654			363

Pretax earnings		38			54			13			63			35			168			190
Income taxes		15			19			5			24			13			63			71

Earnings	$	23		$	35		$	8		$	39		$	22		$	105		$	119

AVERAGE BALANCE SHEET
Loans
Consumer	$	4,044		$	3,997		$	3,936		$	3,851		$	2,289		$	3,957		$	2,136
Commercial and commercial real estate		1,520			1,601			1,714			1,761			588			1,648			577
Residential mortgage		1,000			1,046			1,114			1,153			65			1,078			66

Total loans		6,564			6,644			6,764			6,765			2,942			6,683			2,779
Goodwill and other intangible assets		416			418			390			404			33			407			39
Other assets		221			219			273			288			164			251			183

Total assets	$	7,201		$	7,281		$	7,427		$	7,457		$	3,139		$	7,341		$	3,001

Deposits
Noninterest-bearing demand	$	1,126		$	993		$	988		$	1,260		$	788		$	1,091		$	859
Interest-bearing demand		1,674			1,544			1,563			1,544			728			1,582			700
Money market		3,134			3,154			3,217			3,330			2,123			3,208			1,855

Total transaction deposits		5,934			5,691			5,768			6,134			3,639			5,881			3,414
Certificates of deposit and other		918			1,013			1,088			1,289			683			1,076			589

Total deposits		6,852			6,704			6,856			7,423			4,322			6,957			4,003
Other liabilities		122			106			104			117			11			111			12
Capital		531			612			580			576			271			575			255

Total liabilities and equity	$	7,505		$	7,422		$	7,540		$	8,116		$	4,604		$	7,643		$	4,270

PERFORMANCE RATIOS
Return on average capital		17	%		23	%		6	%		27	%		32	%		18	%		47	%
Noninterest income to total revenue		69			69			67			62			73			66			77
Efficiency		71			72			74			68			70			71			65

OTHER INFORMATION
Total nonperforming assets (c)	$	155		$	129		$	108		$	68		$	5
Impaired loans (c) (d)	$	198		$	206		$	221		$	223		$	225
Total net charge-offs	$	22		$	9		$	21		$	11					$	63		$	2

ASSETS UNDER ADMINISTRATION (in billions) (c) (e) (f)
Personal	$	94		$	93		$	88		$	85		$	61
Institutional		111			124			134			131			83

Total	$	205		$	217		$	222		$	216		$	144

Asset Type
Equity	$	100		$	98		$	88		$	79		$	60
Fixed income		58			56			57			57			38
Liquidity/Other		47			63			77			80			46

Total	$	205		$	217		$	222		$	216		$	144

Discretionary assets under management
Personal	$	67		$	66		$	62		$	59		$	38
Institutional		36			38			36			37			19

Total	$	103		$	104		$	98		$	96		$	57

Asset Type
Equity	$	49		$	47		$	42		$	38		$	26
Fixed income		34			34			32			32			19
Liquidity/Other		20			23			24			26			12

Total	$	103		$	104		$	98		$	96		$	57

Nondiscretionary assets under administration
Personal	$	27		$	27		$	26		$	26		$	23
Institutional		75			86			98			94			64

Total	$	102		$	113		$	124		$	120		$	87

Asset Type
Equity	$	51		$	51		$	46		$	41		$	34
Fixed income		24			22			25			25			19
Liquidity/Other		27			40			53			54			34

Total	$	102		$	113		$	124		$	120		$	87

(a)	See note (a) on page 14. Amounts for the 2008 periods reflect the legacy PNC wealth management business previously included in Retail Banking.

(b)	Includes the impact of National City, which we acquired on December 31, 2008.

(c)	As of period-end.

(d)	Recorded investment of purchased impaired loans related to National City, adjusted to reflect additional loan impairments effective December 31, 2008.

(e)	Excludes brokerage account assets.

(f)	Amounts at December 31, 2008 exclude the impact of National City. Including National City, assets under administration totaled $228 billion at December 31, 2008, including discretionary assets under management of $103 billion and nondiscretionary assets under administration of $125 billion.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 19
Residential Mortgage Banking (Unaudited) (a)


	Three months ended												Year ended
Dollars in millions, except as noted	December 31 2009			September 30 2009			June 30 2009			March 31 2009			December 31 2009
INCOME STATEMENT
Net interest income	$	71		$	83		$	87		$	91		$	332
Noninterest income
Loan servicing revenue
Servicing fees		51			70			42			59			222
Net MSR hedging gains		35			60			58			202			355
Loan sales revenue		26			83			151			175			435
Other		(7	)		(4	)		(6	)		1			(16	)

Total noninterest income		105			209			245			437			996

Total revenue		176			292			332			528			1,328
Provision for (recoveries of) credit losses		(7	)		4			8			(9	)		(4	)
Noninterest expense		142			141			176			173			632

Pretax earnings		41			147			148			364			700
Income taxes		16			56			56			137			265

Earnings	$	25		$	91		$	92		$	227		$	435

AVERAGE BALANCE SHEET
Portfolio loans	$	2,479		$	2,071		$	1,834		$	1,430		$	1,957
Loans held for sale		1,333			2,042			2,766			2,693			2,204
Mortgage servicing rights (MSR)		1,236			1,443			1,343			1,164			1,297
Other assets		3,761			3,483			2,648			1,932			2,962

Total assets	$	8,809		$	9,039		$	8,591		$	7,219		$	8,420

Deposits	$	3,628		$	4,076		$	4,741		$	4,101		$	4,135
Borrowings and other liabilities		3,110			3,811			2,672			2,080			2,924
Capital		1,471			1,411			1,282			1,271			1,359

Total liabilities and equity	$	8,209		$	9,298		$	8,695		$	7,452		$	8,418

PERFORMANCE RATIOS
Return on average capital		7	%		26	%		29	%		72	%		32	%
Efficiency		81	%		48	%		53	%		33	%		48	%

OTHER INFORMATION
Servicing portfolio for others (in billions) (b)	$	145		$	158		$	161		$	168
Fixed rate		88	%		88	%		87	%		87	%
Adjustable rate/balloon		12	%		12	%		13	%		13	%
Weighted average interest rate		5.82	%		5.89	%		5.94	%		5.99	%
MSR capitalized value (in billions)	$	1.3		$	1.3		$	1.5		$	1.0
MSR capitalization value (in basis points)		91			81			90			62
Weighted average servicing fee (in basis points)		30			30			30			30
Loan origination volume (in billions)	$	2.3		$	3.6		$	6.4		$	6.9
Percentage of originations represented by:
Agency and government programs		96	%		97	%		98	%		97	%		97	%
Refinance volume		59	%		59	%		74	%		83	%		72	%
Total nonperforming assets (b)	$	370		$	343		$	285		$	267
Impaired loans (b) (c)	$	369		$	412		$	531		$	533

(a)	See note (a) on page 14.

(b)	As of period end.

(c)	Recorded investment of purchased impaired loans related to National City, adjusted to reflect additional loan impairments effective December 31, 2008.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 20
Global Investment Servicing (Unaudited) (a)


	Three months ended															Year ended
Dollars in millions, except as noted	December 31 2009			September 30 2009			June 30 2009			March 31 2009			December 31 2008			December 31 2009			December 31 2008
INCOME STATEMENT
Servicing revenue	$	206		$	200		$	199		$	205		$	222		$	810		$	947
Operating expense		169			168			170			175			174			682			728

Operating income		37			32			29			30			48			128			219
Debt financing		1			2			3			5			8			11			34
Nonoperating income (b)								(8	)		(10	)					(18	)		3

Pretax earnings		36			30			18			15			40			99			188
Income taxes		14			11			6			5			15			36			66

Earnings	$	22		$	19		$	12		$	10		$	25		$	63		$	122

PERIOD-END BALANCE SHEET
Goodwill and other intangible assets	$	1,294		$	1,289		$	1,294		$	1,297		$	1,301
Other assets		1,556			2,557			1,589			1,182			3,977

Total assets	$	2,850		$	3,846		$	2,883		$	2,479		$	5,278

Debt financing	$	730		$	770		$	792		$	825		$	850
Other liabilities		1,376			2,357			1,388			959			3,737
Shareholder’s equity		744			719			703			695			691

Total liabilities and equity	$	2,850		$	3,846		$	2,883		$	2,479		$	5,278

PERFORMANCE RATIOS
Return on average equity		12	%		11	%		7	%		6	%		14	%		9	%		18	%
Operating margin (c)		18			16			15			15			22			16			23

SERVICING STATISTICS (at period end)
Accounting/administration net fund assets (in billions) (d)
Domestic	$	777		$	719		$	699		$	645		$	764
Offshore		78			76			75			67			75

Total	$	855		$	795		$	774		$	712		$	839

Asset type (in billions) (d)
Money market	$	339		$	318		$	341		$	345		$	431
Equity		296			285			249			199			227
Fixed income		120			105			107			99			103
Other		100			87			77			69			78

Total	$	855		$	795		$	774		$	712		$	839

Custody fund assets (in billions)	$	459		$	427		$	399		$	361		$	379

Shareholder accounts (in millions)
Transfer agency		13			12			13			13			14
Subaccounting		74			68			62			62			58

Total		87			80			75			75			72

(a)	See note (a) on page 14.

(b)	Net of nonoperating expense.

(c)	Total operating income divided by servicing revenue.

(d)	Includes alternative investment net assets serviced.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 21
Distressed Assets Portfolio (Unaudited) (a)


	Three months ended												Year ended
Dollars in millions, except as noted	December 31 2009			September 30 2009			June 30 2009			March 31 2009			December 31 2009
INCOME STATEMENT
Net interest income	$	218		$	235		$	295		$	331		$	1,079
Noninterest income		3			19			39			13			74

Total revenue		221			254			334			344			1,153
Provision for credit losses		314			168			30			259			771
Noninterest expense		49			62			55			80			246

Pretax earnings (loss)		(142	)		24			249			5			136
Income taxes (benefit)		(54	)		10			94			2			52

Earnings (loss)	$	(88	)	$	14		$	155		$	3		$	84

AVERAGE BALANCE SHEET
Commercial lending:
Commercial	$	106		$	136		$	182		$	198		$	155
Commercial real estate:
Real estate projects		2,370			2,698			2,950			3,113			2,780
Commercial mortgage		65			117			112			93			97
Equipment lease financing		800			793			819			858			818

Total commercial lending		3,341			3,744			4,063			4,262			3,850
Consumer lending:
Consumer:
Home equity lines of credit		4,615			4,887			5,016			5,297			4,952
Home equity installment loans		2,060			1,877			2,052			2,553			2,134
Other consumer		23			13			15			10			15

Total consumer		6,698			6,777			7,083			7,860			7,101
Residential real estate:
Residential mortgage		7,974			8,744			8,983			9,231			8,729
Residential construction		871			1,151			1,782			1,954			1,436

Total residential real estate		8,845			9,895			10,765			11,185			10,165

Total consumer lending		15,543			16,672			17,848			19,045			17,266

Total portfolio loans		18,884			20,416			21,911			23,307			21,116
Other assets		1,633			1,901			1,867			1,509			1,728

Total assets	$	20,517		$	22,317		$	23,778		$	24,816		$	22,844

Deposits	$	29		$	32		$	49		$	45		$	39
Other liabilities		70			85			109			107			92
Capital		1,568			1,540			1,619			1,570			1,574

Total liabilities and equity	$	1,667		$	1,657		$	1,777		$	1,722		$	1,705

OTHER INFORMATION
Nonperforming assets (b)	$	1,787		$	1,473		$	1,391		$	933
Impaired loans (b) (c)	$	7,577		$	7,803		$	8,670		$	8,778
Net charge-offs	$	121		$	175		$	197		$	51		$	544
Net charge-offs as a percentage of portfolio loans (annualized)		2.54	%		3.40	%		3.61	%		.89	%		2.58	%

LOANS (in billions) (b)
Commercial:
Residential development	$	2.6		$	3.2		$	3.6		$	3.5
Cross-border leases		.8			.8			.8			.8
Consumer:
Brokered home equity		6.4			6.6			6.9			7.1
Retail mortgages		5.2			5.4			5.8			6.4
Non-prime mortgages		1.7			1.7			1.9			2.0
Residential completed construction		1.3			1.3			1.3			.9
Residential construction		.5			.7			.9			1.5

Total	$	18.5		$	19.7		$	21.2		$	22.2

(a)	See note (a) on page 14.

(b)	As of period end.

(c)	Recorded investment of purchased impaired loans related to National City, adjusted to reflect additional loan impairments effective December 31, 2008.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 22

Glossary of Terms

Accounting/administration net fund assets—Net domestic and foreign fund investment assets for which we provide accounting and administration services. We do not include these assets on our Consolidated Balance Sheet.

Accretable net interest—The excess of cash flows expected to be collected on a purchased impaired loan over the carrying value of the loan. The accretable net interest is recognized into interest income over the remaining life of the loan using the constant effective yield method.

Accretable yield—The excess of a loan’s cash flows expected to be collected over the carrying value of the loan. The accretable yield is recognized in interest income over the remaining life of the loan using the constant effective yield method.

Adjusted average total assets—Primarily comprised of total average quarterly (or annual) assets plus (less) unrealized losses (gains) on investment securities, less goodwill and certain other intangible assets (net of eligible deferred taxes).

Annualized—Adjusted to reflect a full year of activity.

Assets under management—Assets over which we have sole or shared investment authority for our customers/clients. We do not include these assets on our Consolidated Balance Sheet.

Basis point—One hundredth of a percentage point.

Cash recoveries—Cash recoveries used in the context of purchased impaired loans represent cash payments from customers that exceeded the recorded investment of the designated impaired loan.

Charge-off—Process of removing a loan or portion of a loan from our balance sheet because it is considered uncollectible. We also record a charge-off when a loan is transferred to held for sale by reducing the loan carrying amount to the fair value of the loan, if fair value is less than carrying amount.

Client-related noninterest income—Total noninterest income included on our Consolidated Income Statement less amounts for net gains (losses) on sales of securities, net other-than-temporary impairments, and other noninterest income.

Common shareholders’ equity to total assets—Common shareholders’ equity divided by total assets. Common shareholders’ equity equals total shareholders’ equity less the liquidation value of preferred stock.

Credit spread—The difference in yield between debt issues of similar maturity. The excess of yield attributable to credit spread is often used as a measure of relative creditworthiness, with a reduction in the credit spread reflecting an improvement in the borrower’s perceived creditworthiness.

Custody assets—Investment assets held on behalf of clients under safekeeping arrangements. We do not include these assets on our Consolidated Balance Sheet. Investment assets held in custody at other institutions on our behalf are included in the appropriate asset categories on the Consolidated Balance Sheet as if physically held by us.

Derivatives—Financial contracts whose value is derived from publicly traded securities, interest rates, currency exchange rates or market indices. Derivatives cover a wide assortment of financial contracts, including forward contracts, futures, options and swaps.

Duration of equity—An estimate of the rate sensitivity of our economic value of equity. A negative duration of equity is associated with asset sensitivity (i.e., positioned for rising interest rates), while a positive value implies liability sensitivity (i.e., positioned for declining interest rates). For example, if the duration of equity is +1.5 years, the economic value of equity declines by 1.5% for each 100 basis point increase in interest rates.

Earning assets—Assets that generate income, which include: Federal funds sold; resale agreements; trading securities; interest-earning deposits with banks; other short-term investments; loans held for sale; loans; investment securities; and certain other assets.

Economic capital—Represents the amount of resources that a business segment should hold to guard against potentially large losses that could cause insolvency. It is based on a measurement of economic risk, as opposed to


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 23

risk as defined by regulatory bodies. The economic capital measurement process involves converting a risk distribution to the capital that is required to support the risk, consistent with our target credit rating. As such, economic risk serves as a “common currency” of risk that allows us to compare different risks on a similar basis.

Effective duration—A measurement, expressed in years, that, when multiplied by a change in interest rates, would approximate the percentage change in value of on- and off- balance sheet positions.

Efficiency—Noninterest expense divided by the sum of net interest income (GAAP basis) and noninterest income.

Fair value—The price that would be received to sell an asset or the price that would be paid to transfer a liability on the measurement date using the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants.

Funds transfer pricing—A management accounting methodology designed to recognize the net interest income effects of sources and uses of funds provided by the assets and liabilities of a business segment. We assign these balances LIBOR-based funding rates at origination that represent the interest cost for us to raise/invest funds with similar maturity and repricing structures.

Futures and forward contracts—Contracts in which the buyer agrees to purchase and the seller agrees to deliver a specific financial instrument at a predetermined price or yield. May be settled either in cash or by delivery of the underlying financial instrument.

GAAP—Accounting principles generally accepted in the United States of America.

Investment securities—Collectively, securities available for sale and securities held to maturity.

Leverage ratio—Tier 1 risk-based capital divided by adjusted average total assets.

LIBOR—Acronym for London InterBank Offered Rate. LIBOR is the average interest rate charged when banks in the London wholesale money market (or interbank market) borrow unsecured funds from each other. LIBOR rates are used as a benchmark for interest rates on a global basis.

Net interest income from loans and deposits—A management accounting assessment, using funds transfer pricing methodology, of the net interest contribution from loans and deposits.

Net interest margin—Annualized taxable-equivalent net interest income divided by average earning assets.

Nonaccretable difference—Contractually required payments receivable on a purchased impaired loan in excess of the cash flows expected to be collected.

Nondiscretionary assets under administration—Assets we hold for our customers/clients in a non-discretionary, custodial capacity. We do not include these assets on our Consolidated Balance Sheet.

Noninterest income to total revenue—Noninterest income divided by the sum of net interest income (GAAP basis) and noninterest income.

Nonperforming assets—Nonperforming assets include nonaccrual loans, troubled debt restructured loans, foreclosed assets and other assets. We do not accrue interest income on assets classified as nonperforming.

Nonperforming loans—Nonperforming loans include loans to commercial, commercial real estate, equipment lease financing, consumer, and residential mortgage customers and construction customers as well as troubled debt restructured loans. Nonperforming loans do not include loans held for sale or foreclosed and other assets. We do not accrue interest income on loans classified as nonperforming.

Notional amount—A number of currency units, shares, or other units specified in a derivatives contract.

Operating leverage—The period to period dollar or percentage change in total revenue (GAAP basis) less the dollar or percentage change in noninterest expense. A positive variance indicates that revenue growth exceeded expense growth (i.e., positive operating leverage) while a negative variance implies expense growth exceeded revenue growth (i.e., negative operating leverage).


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 24

Other-than-temporary impairment (OTTI)—When the fair value of a debt security is less than its amortized cost basis, an assessment is performed to determine whether the impairment is other-than-temporary. If we intend to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, an other-than-temporary impairment is considered to have occurred. In such cases, an other-than-temporary impairment is recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. Further, if we do not expect to recover the entire amortized cost of the security, an other-than-temporary impairment is considered to have occurred. However, if we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before its recovery, the other-than-temporary loss is separated into (a) the amount representing the credit loss, and (b) the amount related to all other factors. The other-than-temporary impairment related to credit losses is recognized in earnings while the amount related to all other factors is recognized in other comprehensive income, net of tax.

Pretax, pre-provision earnings—Total revenue less noninterest expense.

Purchase accounting accretion—Accretion of the discounts and premiums on acquired assets and liabilities. The purchase accounting accretion is recognized in net interest income over the weighted average life of the financial instruments using the constant effective yield method.

Purchased impaired loans—Acquired loans determined to be credit impaired under FASB ASC 310-30 (AICPA SOP 03-3). Loans are determined to be impaired if there is evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected.

Recorded investment—The initial investment of a purchased impaired loan plus interest accretion and less any cash payments and writedowns to date. The recorded investment excludes any valuation allowance which is included in our allowance for loan and lease losses.

Recovery—Cash proceeds received on a loan that we had previously charged off. We credit the amount received to the allowance for loan and lease losses.

Residential development loans—Project-specific loans to commercial customers for the construction or development of residential real estate including land, single family homes, condominiums and other residential properties. This would exclude loans to commercial customers where proceeds are for general corporate purposes whether or not such facilities are secured.

Residential mortgage servicing rights hedge gains / (losses), net—We have elected to measure acquired or originated residential mortgage servicing rights (MSRs) at fair value under GAAP. We employ a risk management strategy designed to protect the economic value of MSRs from changes in interest rates. This strategy utilizes securities and a portfolio of derivative instruments to hedge changes in the fair value of MSRs arising from changes in interest rates. These financial instruments are expected to have changes in fair value which are negatively correlated to the change in fair value of the MSR portfolio. Net MSR hedge gains/(losses) represent the change in the fair value of MSRs, exclusive of changes due to time decay and payoffs, combined with the change in the fair value of the associated derivative instruments.

Return on average assets—Annualized net income divided by average assets.

Return on average capital—Annualized net income divided by average capital.

Return on average common shareholders’ equity—Annualized net income less preferred stock dividends, including preferred stock discount accretion, divided by average common shareholders’ equity.

Risk-weighted assets—Computed by the assignment of specific risk-weights (as defined by the Board of Governors of the Federal Reserve System) to assets and off-balance sheet instruments.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 25

Securitization—The process of legally transforming financial assets into securities.

Servicing rights—An intangible asset or liability created by an obligation to service assets for others. Typical servicing rights include the right to receive a fee for collecting and forwarding payments on loans and related taxes and insurance premiums held in escrow.

Taxable-equivalent interest—The interest income earned on certain assets is completely or partially exempt from Federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of yields and margins for all interest-earning assets, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on other taxable investments. This adjustment is not permitted under GAAP on the Consolidated Income Statement.

Tier 1 common capital—Tier 1 risk-based capital, less preferred equity, less trust preferred capital securities, and less noncontrolling interests.

Tier 1 common capital ratio—Tier 1 common capital divided by period-end risk-weighted assets.

Tier 1 risk-based capital—Total shareholders’ equity, plus trust preferred capital securities, plus certain noncontrolling interests that are held by others; less goodwill and certain other intangible assets (net of eligible deferred taxes relating to taxable and nontaxable combinations), less equity investments in nonfinancial companies less ineligible servicing assets and less net unrealized holding losses on available for sale equity securities. Net unrealized holding gains on available for sale equity securities, net unrealized holding gains (losses) on available for sale debt securities and net unrealized holding gains (losses) on cash flow hedge derivatives are excluded from total shareholders’ equity for Tier 1 risk-based capital purposes.

Tier 1 risk-based capital ratio—Tier 1 risk-based capital divided by period-end risk-weighted assets.

Total equity—Total shareholders’ equity plus noncontrolling interests.

Total fund assets serviced—Total domestic and offshore fund investment assets for which we provide related processing services. We do not include these assets on our Consolidated Balance Sheet.

Total risk-based capital—Tier 1 risk-based capital plus qualifying subordinated debt and trust preferred securities, other noncontrolling interest not qualified as Tier 1, eligible gains on available for sale equity securities and the allowance for loan and lease losses, subject to certain limitations.

Total risk-based capital ratio—Total risk-based capital divided by period-end risk-weighted assets.

Transaction deposits—The sum of money market and interest-bearing demand deposits and demand and other noninterest-bearing deposits.

Troubled debt restructuring—A restructuring of debt whereby the lender for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider.

Watchlist—A list of criticized loans, credit exposure or other assets compiled for internal monitoring purposes. We define criticized exposure for this purpose as exposure with an internal risk rating of other assets especially mentioned, substandard, doubtful or loss.

Yield curve—A graph showing the relationship between the yields on financial instruments or market indices of the same credit quality with different maturities. For example, a “normal” or “positive” yield curve exists when long-term bonds have higher yields than short-term bonds. A “flat” yield curve exists when yields are the same for short-term and long-term bonds. A “steep” yield curve exists when yields on long-term bonds are significantly higher than on short-term bonds. An “inverted” or “negative” yield curve exists when short-term bonds have higher yields than long-term bonds.

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