PNC FINANCIAL SERVICES GROUP, INC. - FORM 8-K - EX-99.1 - FINANCIAL SUPPLEMENT (UNAUDITED) FOR FIRST QUARTER 2012

Attached files

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8-K - FORM 8-K - PNC FINANCIAL SERVICES GROUP, INC.	d331502d8k.htm
EX-99.2 - ELECTRONIC PRESENTATION SLIDES FOR EARNINGS RELEASE CONFERENCE CALL - PNC FINANCIAL SERVICES GROUP, INC.	d331502dex992.htm

Exhibit 99.1

LOGO

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2012

(Unaudited)

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2012

(UNAUDITED)


	Page
Consolidated Results:

Income Statement		1
Balance Sheet		2
Capital Ratios		2
Average Balance Sheet		3-4
Net Interest Margin and Selected Income Statement Information		5
Loans, Loans Held for Sale, and Net Unfunded Commitments		6
Allowances for Credit Losses		7
Purchase Accounting, Accretion & Valuation for Purchased Impaired Loans		8
Nonperforming Assets and Troubled Debt Restructurings		9-10
Accruing Loans Past Due		11

Business Segment Results:

Descriptions		12
Income and Revenue		13
Period End Employees		13
Retail Banking		14-15
Corporate & Institutional Banking		16
Asset Management Group		17
Residential Mortgage Banking		18
Non-Strategic Assets Portfolio		19
Glossary of Terms		20-23

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on April 18, 2012. We have reclassified certain prior period amounts to be consistent with the current period presentation, which we believe is more meaningful to readers of our consolidated financial statements. 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.

BUSINESS

PNC is one of the largest diversified financial services companies in the United States and is headquartered in Pittsburgh, Pennsylvania. PNC has businesses engaged in retail banking, corporate and institutional banking, asset management, and residential mortgage banking, providing many of its products and services nationally and others in PNC’s primary geographic markets located in Pennsylvania, Ohio, New Jersey, Michigan, Illinois, Maryland, Indiana, North Carolina, Florida, Kentucky, Washington, D.C., Alabama, Delaware, Georgia, Virginia, Missouri, Wisconsin and South Carolina. PNC also provides certain products and services internationally.

QUARTERLY COMMON STOCK DIVIDEND INCREASE

In April 2012, the PNC Board of Directors declared a quarterly cash dividend on the common stock of 40 cents per share, an increase of 5 cents per share, or 14 percent, from the prior quarterly dividend of 35 cents per share. The increased dividend is payable to shareholders of record at the close of business April 17, 2012 and the payment date is May 5, 2012.

ACQUISITION OF RBC BANK (USA)

On March 2, 2012, PNC acquired RBC Bank (USA), the US retail banking subsidiary of Royal Bank of Canada, with more than 400 branches in North Carolina, Florida, Alabama, Georgia, Virginia, and South Carolina. As part of the acquisition, PNC also purchased a credit card portfolio from RBC Bank (Georgia), National Association. PNC paid $3.6 billion in cash as consideration for the acquisition. The transaction added approximately $18 billion of deposits and $15 billion of loans to PNC’s Consolidated Balance Sheet.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 1

Consolidated Income Statement (Unaudited)


	Three months ended
In millions, except per share data	March 31 2012			December 31 2011			September 30 2011			June 30 2011			March 31 2011
Interest Income
Loans	$	1,951		$	1,902		$	1,904		$	1,905		$	1,884
Investment securities		526			523			511			549			578
Other		120			109			115			93			121

Total interest income		2,597			2,534			2,530			2,547			2,583

Interest Expense
Deposits		103			139			167			180			182
Borrowed funds		203			196			188			217			225

Total interest expense		306			335			355			397			407

Net interest income		2,291			2,199			2,175			2,150			2,176

Noninterest Income
Asset management		284			250			287			288			263
Consumer services		264			269			330			333			311
Corporate services		232			266			187			228			217
Residential mortgage		230			157			198			163			195
Service charges on deposits		127			140			140			131			123
Net gains on sales of securities		57			62			68			82			37
Net other-than-temporary impairments		(38	)		(44	)		(35	)		(39	)		(34	)
Other		285			250			194			266			343

Total noninterest income		1,441			1,350			1,369			1,452			1,455

Total revenue		3,732			3,549			3,544			3,602			3,631
Provision For Credit Losses		185			190			261			280			421
Noninterest Expense
Personnel		1,111			1,052			949			976			989
Occupancy		190			198			171			176			193
Equipment		175			177			159			158			167
Marketing		68			74			72			63			40
Other (a) (b)		911			1,218			789			803			681

Total noninterest expense		2,455			2,719			2,140			2,176			2,070

Income before income taxes and noncontrolling interests		1,092			640			1,143			1,146			1,140
Income taxes		281			147			309			234			308

Net income		811			493			834			912			832

Less: Net income (loss) attributable to noncontrolling interests		6			17			4			(1	)		(5	)
Preferred stock dividends and discount accretion		39			25			4			25			4

Net income attributable to common shareholders	$	766		$	451		$	826		$	888		$	833

Earnings Per Common Share
Basic	$	1.45		$	.86		$	1.57		$	1.69		$	1.59
Diluted	$	1.44		$	.85		$	1.55		$	1.67		$	1.57

Average Common Shares Outstanding
Basic		526			524			524			524			524
Diluted		529			526			526			527			526

Efficiency		66	%		77	%		60	%		60	%		57	%
Noninterest income to total revenue		39	%		38	%		39	%		40	%		40	%
Effective tax rate (c)		25.7	%		23.0	%		27.0	%		20.4	%		27.0	%

The after-tax amounts below were calculated using a marginal federal income tax rate of 35% and include applicable income tax adjustments.

(a)

Other noninterest expense for the three months ended December 31, 2011 included a $198 million noncash charge ($129 million after taxes) for the unamortized discount related to the redemption of $750 million of trust preferred securities. The impact on diluted earnings per share was $.24 for the three months ended December 31, 2011.

(b)	Includes $240 million ($156 million after taxes) for the three months ended December 31, 2011 for residential mortgage foreclosure-related expenses, primarily as a result of ongoing governmental matters. The impact on diluted earnings per share was $.30 for the three months ended December 31, 2011.

(c)

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 lower effective tax rate for the second quarter of 2011 was primarily attributable to a $54 million benefit related to the reversal of deferred tax liabilities.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 2

Consolidated Balance Sheet (Unaudited)


In millions, except par value	March 31 2012			December 31 2011			September 30 2011			June 30 2011			March 31 2011
Assets
Cash and due from banks (a)	$	4,162		$	4,105		$	3,982		$	3,865		$	3,389
Federal funds sold and resale agreements (b)		1,371			2,205			1,806			2,357			2,240
Trading securities		2,639			2,513			2,960			2,075			2,254
Interest-earning deposits with banks (a)		2,084			1,169			2,773			4,508			1,359
Loans held for sale (b)		2,456			2,936			2,491			2,679			2,980
Investment securities (a)		64,554			60,634			62,105			59,414			60,992
Loans (a) (b)		176,214			159,014			154,543			150,319			149,387
Allowance for loan and lease losses (a)		(4,196	)		(4,347	)		(4,507	)		(4,627	)		(4,759	)

Net loans		172,018			154,667			150,036			145,692			144,628
Goodwill		9,169			8,285			8,207			8,182			8,146
Other intangible assets		2,019			1,859			1,949			2,412			2,618
Equity investments (a) (c)		10,352			10,134			9,915			9,776			9,595
Other (a) (b)		25,059			22,698			23,246			22,157			21,177

Total assets	$	295,883		$	271,205		$	269,470		$	263,117		$	259,378


Liabilities
Deposits
Noninterest-bearing	$	62,463		$	59,048		$	55,180		$	52,683		$	48,707
Interest-bearing		143,664			128,918			132,552			129,208			133,283

Total deposits		206,127			187,966			187,732			181,891			181,990
Borrowed funds
Federal funds purchased and repurchase agreements		4,832			2,984			3,105			3,812			4,079
Federal Home Loan Bank borrowings		8,957			6,967			5,015			5,022			5,020
Bank notes and senior debt		12,065			11,793			11,990			10,526			11,324
Subordinated debt		8,221			8,321			9,564			9,358			9,310
Other (a)		8,464			6,639			5,428			6,458			5,263

Total borrowed funds		42,539			36,704			35,102			35,176			34,996
Allowance for unfunded loan commitments and letters of credit		243			240			217			202			204
Accrued expenses (a)		3,607			4,175			3,587			3,502			3,078
Other (a)		5,131			4,874			5,590			7,473			5,393

Total liabilities		257,647			233,959			232,228			228,244			225,661


Equity
Preferred stock (d)
Common stock - $5 par value
Authorized 800 shares, issued 537, 537, 536, 536, and 536 shares		2,685			2,683			2,682			2,682			2,682
Capital surplus - preferred stock		1,638			1,637			1,636			648			647
Capital surplus - common stock and other		12,074			12,072			12,054			12,025			12,056
Retained earnings		18,834			18,253			17,985			17,344			16,640
Accumulated other comprehensive income (loss)		281			(105	)		397			69			(309	)
Common stock held in treasury at cost: 9, 10, 10, 10, and 10 shares		(467	)		(487	)		(535	)		(533	)		(584	)

Total shareholders’ equity		35,045			34,053			34,219			32,235			31,132
Noncontrolling interests		3,191			3,193			3,023			2,638			2,585

Total equity		38,236			37,246			37,242			34,873			33,717

Total liabilities and equity	$	295,883		$	271,205		$	269,470		$	263,117		$	259,378

Capital Ratios
Tier 1 common (e)		9.3	%		10.3	%		10.5	%		10.5	%		10.3	%
Tier 1 risk-based (e)		11.4			12.6			13.1			12.8			12.6
Total risk-based (e)		14.4			15.8			16.5			16.2			16.2
Leverage (e)		10.5			11.1			11.4			11.0			10.6
Common shareholders’ equity to assets		11.3			12.0			12.1			12.0			11.8

(a)	Amounts include consolidated variable interest entities. Our 2011 Form 10-K as amended by amendment no. 1 thereto included, and first quarter 2012 Form 10-Q will include, additional information regarding these items.

(b)	Amounts include assets for which PNC has elected the fair value option. Our 2011 Form 10-K as amended by amendment no. 1 thereto included, and first quarter 2012 Form 10-Q will include, additional information regarding these items.

(c)	Amounts include our equity interest in BlackRock.

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

(e)	The ratio as of March 31, 2012 is estimated.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 3

Average Consolidated Balance Sheet (Unaudited) (a)


	Three months ended
In millions	March 31 2012			December 31 2011			September 30 2011			June 30 2011			March 31 2011
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency	$	27,031		$	25,691		$	22,822		$	25,993		$	29,134
Non-agency		6,577			6,859			7,135			7,618			8,057
Commercial mortgage-backed		3,774			3,640			3,623			3,278			3,298
Asset-backed		4,329			3,832			3,817			3,185			2,757
US Treasury and government agencies		3,123			3,376			3,699			4,505			5,682
State and municipal		1,770			1,767			1,929			2,234			2,081
Other debt		2,996			2,731			3,113			3,578			3,994
Corporate stocks and other		347			446			449			376			443

Total securities available for sale		49,947			48,342			46,587			50,767			55,446
Securities held to maturity
Residential mortgage-backed		4,576			4,658			3,840			1,130
Commercial mortgage-backed		4,635			4,794			4,520			4,215			4,239
Asset-backed		1,170			1,353			1,863			2,276			2,463
State and municipal		671			670			389			8			8
Other		584			584			489			150			1

Total securities held to maturity		11,636			12,059			11,101			7,779			6,711

Total investment securities		61,583			60,401			57,688			58,546			62,157
Loans
Commercial		69,286			63,483			59,951			57,932			56,300
Commercial real estate		16,818			16,413			16,347			16,779			17,545
Equipment lease financing		6,377			6,233			6,150			6,189			6,307
Consumer		57,148			55,556			54,632			54,014			54,460
Residential real estate		14,927			14,474			14,717			15,001			15,518

Total loans		164,556			156,159			151,797			149,915			150,130
Loans held for sale		2,910			2,673			2,497			2,719			3,193
Federal funds sold and resale agreements		1,821			2,035			2,030			2,321			2,813
Other		6,864			7,138			10,060			7,241			5,802

Total interest-earning assets		237,734			228,406			224,072			220,742			224,095
Noninterest-earning assets:
Allowance for loan and lease losses		(4,314	)		(4,472	)		(4,592	)		(4,728	)		(4,835	)
Cash and due from banks		3,777			3,883			3,544			3,433			3,393
Other		44,345			42,905			43,827			41,659			39,901

Total assets	$	281,542		$	270,722		$	266,851		$	261,106		$	262,554

(a)	Calculated using average daily balances.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 4

Average Consolidated Balance Sheet (Unaudited) (Continued) (a)


	Three months ended
In millions	March 31 2012		December 31 2011		September 30 2011		June 30 2011		March 31 2011
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market	$	61,162	$	58,897	$	59,009	$	58,594	$	58,556
Demand		31,599		29,338		27,654		26,912		26,313
Savings		9,183		8,545		8,305		8,222		7,656
Retail certificates of deposit		29,011		30,888		33,607		35,098		36,509
Time deposits in foreign offices and other time		3,238		2,869		2,191		2,250		3,967

Total interest-bearing deposits		134,193		130,537		130,766		131,076		133,001
Borrowed funds
Federal funds purchased and repurchase agreements		4,551		3,714		3,685		4,138		6,376
Federal Home Loan Bank borrowings		8,967		6,090		5,015		5,021		5,088
Bank notes and senior debt		11,138		11,463		10,480		11,132		11,745
Subordinated debt		7,719		8,463		8,982		8,981		9,353
Other		7,837		5,935		5,736		5,713		5,847

Total borrowed funds		40,212		35,665		33,898		34,985		38,409

Total interest-bearing liabilities		174,405		166,202		164,664		166,061		171,410
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits		57,900		55,946		53,300		49,720		47,755
Allowance for unfunded loan commitments and letters of credit		240		217		202		204		188
Accrued expenses and other liabilities		11,186		11,132		12,478		10,747		9,771
Equity		37,811		37,225		36,207		34,374		33,430

Total liabilities and equity	$	281,542	$	270,722	$	266,851	$	261,106	$	262,554

(a) Calculated using average daily balances. Supplemental Average Balance Sheet Information (Unaudited)
Deposits and Common Shareholders’ Equity
Interest-bearing deposits	$	134,193	$	130,537	$	130,766	$	131,076	$	133,001
Noninterest-bearing deposits		57,900		55,946		53,300		49,720		47,755

Total deposits	$	192,093	$	186,483	$	184,066	$	180,796	$	180,756

Transaction deposits	$	150,661	$	144,181	$	139,963	$	135,226	$	132,624

Common shareholders’ equity	$	32,981	$	32,552	$	32,124	$	31,101	$	30,193


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 5

Details of Net Interest Margin (Unaudited) (a)


	Three months ended
	March 31 2012			December 31 2011			September 30 2011			June 30 2011			March 31 2011
Average yields/rates
Yield on interest-earning assets
Loans
Commercial		4.51	%		4.66	%		4.86	%		4.88	%		5.04	%
Commercial real estate		5.19			5.33			5.25			5.51			4.63
Equipment lease financing		4.74			4.84			5.11			4.86			5.00
Consumer		4.78			4.81			4.82			4.94			4.99
Residential real estate		5.59			5.35			5.90			6.22			6.15
Total loans		4.78			4.85			5.00			5.11			5.09

Investment securities		3.47			3.51			3.59			3.80			3.76
Other		4.17			3.68			3.14			3.04			4.16
Total yield on interest-earning assets		4.41			4.44			4.52			4.64			4.67

Rate on interest-bearing liabilities
Interest-bearing deposits
Money market		.23			.25			.31			.34			.35
Demand		.04			.05			.08			.10			.10
Savings		.10			.16			.19			.19			.19
Retail certificates of deposit		.80			1.16			1.26			1.32			1.28
Time deposits in foreign offices and other time		.49			.53			.72			.75			.54
Total interest-bearing deposits		.31			.42			.51			.55			.55

Borrowed funds		2.01			2.17			2.20			2.46			2.35
Total rate on interest-bearing liabilities		.70			.80			.86			.95			.95

Interest rate spread		3.71			3.64			3.66			3.69			3.72
Impact of noninterest-bearing sources		.19			.22			.23			.24			.22

Net interest margin		3.90	%		3.86	%		3.89	%		3.93	%		3.94	%


(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 generally accepted accounting principles (GAAP) in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the three months ended March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011, and March 31, 2011, were $31 million, $28 million, $27 million, $25 million, and $24 million, respectively. Total and Core Net Interest Income (Unaudited)
	Three months ended
In millions	March 31 2012			December 31 2011			September 30 2011			June 30 2011			March 31 2011
Total net interest income	$	2,291		$	2,199		$	2,175		$	2,150		$	2,176
Purchase accounting accretion (a)		263			256			292			290			281

Core net interest income (a)	$	2,028		$	1,943		$	1,883		$	1,860		$	1,895


(a) We believe that core net interest income and purchase accounting accretion are useful in evaluating the components of net interest income. Selected Consolidated Income Statement Information (Unaudited)
	Three months ended
In millions	March 31 2012			December 31 2011			September 30 2011			June 30 2011			March 31 2011
Noninterest Expense
Noncash charge for the unamortized discount related to redemption of trust preferred securities				$	198
Expenses for residential mortgage foreclosure-related matters	$	38		$	240		$	63		$	16		$	5
Integration costs	$	145		$	28		$	8		$	5		$	1
Income Taxes
Benefit related to reversal of deferred tax liabilities (a)										$	54

(a)	Represents tax benefit recognized within Income taxes on our Consolidated Income Statement.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 6

Details of Loans (Unaudited)


In millions	March 31 2012		December 31 2011		September 30 2011		June 30 2011		March 31 2011
Commercial
Retail/wholesale trade	$	12,983	$	11,539	$	11,287	$	10,952	$	10,665
Manufacturing		12,684		11,453		10,980		10,426		9,805
Service providers		11,215		9,717		9,326		8,984		8,690
Real estate related (a)		10,091		8,488		8,073		7,515		7,533
Financial services		8,273		6,646		5,676		5,206		5,034
Health care		5,695		5,068		4,668		4,115		3,839
Other industries		14,574		12,783		12,240		11,422		11,036

Total commercial		75,515		65,694		62,250		58,620		56,602

Commercial real estate
Real estate projects		12,589		10,640		10,936		11,086		11,581
Commercial mortgage		5,945		5,564		5,477		5,233		5,552

Total commercial real estate		18,534		16,204		16,413		16,319		17,133

Equipment lease financing		6,594		6,416		6,186		6,210		6,215

Total commercial lending		100,643		88,314		84,849		81,149		79,950

Consumer
Home equity
Lines of credit		24,668		22,491		22,677		22,838		23,001
Installment		11,076		10,598		10,486		10,541		10,655
Credit card		4,089		3,976		3,785		3,754		3,707
Other consumer
Education		9,246		9,582		9,154		8,816		9,041
Automobile		5,794		5,181		4,447		3,705		3,156
Other		4,486		4,403		4,490		4,534		4,544

Total consumer		59,359		56,231		55,039		54,188		54,104

Residential real estate
Residential mortgage		15,287		13,885		14,022		14,302		14,602
Residential construction		925		584		633		680		731

Total residential real estate		16,212		14,469		14,655		14,982		15,333

Total consumer lending		75,571		70,700		69,694		69,170		69,437

Total loans (b)	$	176,214	$	159,014	$	154,543	$	150,319	$	149,387

(a) Includes loans to customers in the real estate and construction industries.
(b) Includes purchased impaired loans:	$	8,421	$	6,667	$	6,927	$	7,256	$	7,522

Details of Loans Held for Sale (Unaudited)


In millions	March 31 2012		December 31 2011		September 30 2011		June 30 2011		March 31 2011
Commercial mortgage	$	1,014	$	1,294	$	1,081	$	1,226	$	1,047
Residential mortgage		1,387		1,522		1,353		1,351		1,840
Other		55		120		57		102		93

Total	$	2,456	$	2,936	$	2,491	$	2,679	$	2,980

Net Unfunded Commitments (Unaudited)


In millions	March 31 2012		December 31 2011		September 30 2011		June 30 2011		March 31 2011
Net unfunded commitments	$	112,454	$	103,271	$	103,236	$	99,791	$	96,781


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 7

Allowances for Loan and Lease Losses and Unfunded Loan Commitments and Letters of Credit (Unaudited)

Change in Allowance for Loan and Lease Losses


	March 31			December 31			September 30			June 30			March 31
Three months ended - in millions	2012			2011			2011			2011			2011
Beginning balance	$	4,347		$	4,507		$	4,627		$	4,759		$	4,887
Charge-offs:
Commercial		(111	)		(143	)		(193	)		(185	)		(179	)
Commercial real estate		(84	)		(90	)		(92	)		(124	)		(158	)
Equipment lease financing		(5	)		(7	)		(3	)		(11	)		(14	)
Home equity		(131	)		(109	)		(123	)		(112	)		(140	)
Residential real estate		(30	)		(32	)		(20	)		(43	)		(58	)
Credit card		(55	)		(50	)		(51	)		(60	)		(74	)
Other consumer		(51	)		(51	)		(42	)		(49	)		(51	)

Total charge-offs		(467	)		(482	)		(524	)		(584	)		(674	)
Recoveries:
Commercial		72			76			78			98			80
Commercial real estate		23			40			25			26			14
Equipment lease financing		9			13			13			15			9
Home equity		13			11			16			11			10
Residential real estate		(1	)		1			8			1			1
Credit card		5			5			6			6			6
Other consumer		13			9			13			13			21

Total recoveries		134			155			159			170			141
Net (charge-offs) recoveries:
Commercial		(39	)		(67	)		(115	)		(87	)		(99	)
Commercial real estate		(61	)		(50	)		(67	)		(98	)		(144	)
Equipment lease financing		4			6			10			4			(5	)
Home equity		(118	)		(98	)		(107	)		(101	)		(130	)
Residential real estate		(31	)		(31	)		(12	)		(42	)		(57	)
Credit card		(50	)		(45	)		(45	)		(54	)		(68	)
Other consumer		(38	)		(42	)		(29	)		(36	)		(30	)

Total net charge-offs		(333	)		(327	)		(365	)		(414	)		(533	)
Provision for credit losses		185			190			261			280			421
Other								(1	)
Net change in allowance for unfunded loan commitments and letters of credit		(3	)		(23	)		(15	)		2			(16	)

Ending balance	$	4,196		$	4,347		$	4,507		$	4,627		$	4,759

Supplemental Information
Net charge-offs to average loans (for the three months ended) (annualized)		.81	%		.83	%		.95	%		1.11	%		1.44	%
Allowance for loan and lease losses to total loans		2.38			2.73			2.92			3.08			3.19

Commercial lending net charge-offs	$	(96	)	$	(111	)	$	(172	)	$	(181	)	$	(248	)
Consumer lending net charge-offs		(237	)		(216	)		(193	)		(233	)		(285	)

Total net charge-offs	$	(333	)	$	(327	)	$	(365	)	$	(414	)	$	(533	)

Net charge-offs to average loans
Commercial lending		.42	%		.51	%		.83	%		.90	%		1.25	%
Consumer lending		1.32			1.22			1.10			1.35			1.65

Change in Allowance for Unfunded Loan Commitments and Letters of Credit


	March 31		December 31		September 30		June 30			March 31
Three months ended - in millions	2012		2011		2011		2011			2011
Beginning balance	$	240	$	217	$	202	$	204		$	188
Net change in allowance for unfunded loan commitments and letters of credit		3		23		15		(2	)		16

Ending balance	$	243	$	240	$	217	$	202		$	204


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 8

Purchase Accounting, Accretion and Valuation for Purchased Impaired Loans (Unaudited)

RBC Acquired Loan Portfolio on March 2, 2012


	Purchased Impaired							Other Purchased Loans (a)
In millions	Fair Value		Outstanding Balance		Net Investment			Fair Value		Outstanding Balance (b)		Net Investment
Commercial	$	446	$	746		60	%	$	6,002	$	6,328		95	%
Commercial Real Estate		481		836		58			2,067		2,310		89
Equipment Lease Financing									86		92		93
Consumer		151		215		70			3,203		3,731		86
Residential Real Estate		896		1,214		74			1,168		1,202		97

Total	$	1,974	$	3,011		66	%	$	12,526	$	13,663		92	%

(a)	Other purchased loans includes revolving loans that are excluded from the purchased impaired loans.

(b)	The difference between total outstanding balance and total fair value will be accreted into net interest income on a constant effective yield over the life of the loans unless future credit events cause the loans to be placed on nonaccrual.

Accretion - Purchased Impaired Loans


	Three months ended
In millions	March 31 2012 (a)			December 31 2011 (b)			March 31 2011 (b)
Impaired loans
Scheduled accretion	$	158		$	154		$	160
Reversal of contractual interest on impaired loans		(97	)		(102	)		(106	)

Scheduled accretion net of contractual interest		61			52			54
Excess cash recoveries		40			61			81

Total impaired loans	$	101		$	113		$	135

(a)	Represents National City and RBC acquisitions.

(b)	Represents National City acquisition.

Accretable Net Interest - Purchased Impaired Loans


In billions
January 1, 2012	$	2.1
Addition due to RBC acquisition on March 2, 2012		.6
Accretion		(.2	)
Excess cash recoveries
Net reclassifications to accretable from non-accretable and other activity

March 31, 2012 (a)	$	2.5


In billions
January 1, 2011	$	2.2

Accretion		(.2	)
Excess cash recoveries		(.1	)
Net reclassifications to accretable from non-accretable and other activity		.3

March 31, 2011	$	2.2

(a)

As of March 31, 2012, we estimate that the reversal of contractual interest on purchased impaired loans will total approximately $1.5 billion in future periods, of which $250 million was associated with loans purchased in the RBC acquisition. This will offset the total net accretable in future interest income of $2.5 billion on purchased impaired loans.

Valuation of Purchased Impaired Loans


	March 31, 2012 (a)						December 31, 2011 (b)
Dollars in billions	Balance			Net Investment			Balance			Net Investment
Commercial and commercial real estate loans:
Unpaid principal balance	$	2.4					$	1.0
Purchased impaired mark		(.7	)					(.1	)

Recorded investment		1.7						.9
Allowance for loan losses		(.2	)					(.2	)

Net investment		1.5			63	%		.7			70	%


Consumer and residential mortgage loans:
Unpaid principal balance		7.7						6.5
Purchased impaired mark		(1.0	)					(.7	)

Recorded investment		6.7						5.8
Allowance for loan losses		(.8	)					(.8	)

Net investment		5.9			77	%		5.0			77	%


Total purchased impaired loans:
Unpaid principal balance		10.1						7.5
Purchased impaired mark		(1.7	)					(0.8	)

Recorded investment		8.4						6.7
Allowance for loan losses		(1.0	)					(1.0	)

Net investment	$	7.4			73	%	$	5.7			76	%

(a)	Represents National City and RBC acquisitions.

(b)	Represents National City acquisition.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 9

Details of Nonperforming Assets (Unaudited)

Nonperforming Assets by Type


	March 31			December 31			September 30			June 30			March 31
In millions	2012			2011			2011			2011			2011
Nonperforming loans, including TDRs (a)
Commercial lending
Commercial
Retail/wholesale trade	$	108		$	109		$	117		$	148		$	180
Manufacturing		107			117			149			160			213
Service providers		149			147			198			189			214
Real estate related (b)		232			252			256			261			253
Financial services		20			36			31			18			27
Health care		23			29			39			38			46
Other industries		200			209			204			233			270

Total commercial		839			899			994			1,047			1,203

Commercial real estate
Real estate projects		977			1,051			1,115			1,289			1,468
Commercial mortgage		274			294			310			378			416

Total commercial real estate		1,251			1,345			1,425			1,667			1,884

Equipment lease financing		21			22			30			35			41

Total commercial lending		2,111			2,266			2,449			2,749			3,128

Consumer lending (c)
Home equity (d)		685			529			484			421			464
Residential real estate
Residential mortgage (e)		741			685			676			630			641
Residential construction		44			41			46			36			46
Credit card (f)		12			8			7			8
Other consumer		45			31			30			26			29

Total consumer lending		1,527			1,294			1,243			1,121			1,180

Total nonperforming loans (g)		3,638			3,560			3,692			3,870			4,308

OREO and foreclosed assets
Other real estate owned (OREO) (h)		749			561			553			546			569
Foreclosed and other assets		31			35			53			65			63

Total OREO and foreclosed assets		780			596			606			611			632

Total nonperforming assets	$	4,418		$	4,156		$	4,298		$	4,481		$	4,940

Nonperforming loans to total loans		2.06	%		2.24	%		2.39	%		2.57	%		2.88	%
Nonperforming assets to total loans, OREO and foreclosed assets		2.50			2.60			2.77			2.97			3.29
Nonperforming assets to total assets		1.49			1.53			1.59			1.70			1.90
Allowance for loan and lease losses to nonperforming loans (g) (i)		115			122			122			120			110

(a)	See analysis of troubled debt restructurings (TDRs) on page 10.

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

(c)	Excludes most consumer loans and lines of credit, not secured by residential real estate, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.

(d)	In March 2012, we adopted a policy stating that Home equity loans past due 90 days or more would be placed on nonaccrual status. Prior policy required that these loans be past due 180 days before being placed on nonaccrual status.

(e)	Nonperforming residential mortgage excludes loans of $55 million, $61 million, $68 million, $85 million, and $85 million accounted for under the fair value option as of March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.

(f)	Effective in the second quarter 2011, the commercial nonaccrual policy was applied to certain small business credit card balances. This change resulted in loans being placed on nonaccrual status when they become 90 days or more past due. We continue to charge off these loans at 180 days past due.

(g)	Nonperforming loans do not include government insured or guaranteed loans, loans held for sale, loans accounted for under the fair value option and purchased impaired loans.

(h)

Other real estate owned excludes $252 million, $280 million, $256 million, $273 million, and $233 million at March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011, and March 31, 2011, respectively, related to residential real estate that was acquired by us upon foreclosure of serviced loans because they are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).

(i)	The allowance for loan and lease losses includes impairment reserves attributable to purchased impaired loans.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 10

Details of Nonperforming Assets and Troubled Debt Restructurings (Unaudited)

Change in Nonperforming Assets


In millions	January 1, 2012- March 31, 2012			October 1, 2011- December 31, 2011			July 1, 2011- September 30, 2011			April 1, 2011- June 30, 2011			January 1, 2011- March 31, 2011
Beginning balance	$	4,156		$	4,298		$	4,481		$	4,940		$	5,123
New nonperforming assets		1,243			854			925			843			1,003
Charge-offs and valuation adjustments		(236	)		(221	)		(286	)		(323	)		(390	)
Principal activity, including paydowns and payoffs		(414	)		(506	)		(471	)		(603	)		(380	)
Asset sales and transfers to loans held for sale		(146	)		(152	)		(155	)		(128	)		(178	)
Returned to performing status		(185	)		(117	)		(196	)		(248	)		(238	)

Ending balance	$	4,418		$	4,156		$	4,298		$	4,481		$	4,940

Largest Individual Nonperforming Assets at March 31, 2012 (a)


In millions
Ranking	Outstandings		Industry
1	$	45	Real Estate Rental and Leasing
2		45	Real Estate Rental and Leasing
3		27	Accommodation and Food Services
4		23	Real Estate Rental and Leasing
5		21	Real Estate Rental and Leasing
6		20	Construction
7		20	Construction
8		20	Accommodation and Food Services
9		19	Real Estate Rental and Leasing
10		17	Real Estate Rental and Leasing

Total	$	257

As a percent of total nonperforming assets 6%

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

Summary of Troubled Debt Restructurings

		january 31,2012		january 31,2012		january 31,2012		january 31,2012		january 31,2012
	March 31		December 31		September 30		June 30		March 31
In millions	2012		2011		2011		2011		2011
Total commercial lending	$	412	$	405	$	396	$	305	$	260
Total consumer lending		1,821		1,798		1,751		1,614		1,575

Total TDRs	$	2,233	$	2,203	$	2,147	$	1,919	$	1,835

Nonperforming	$	1,095	$	1,141	$	1,062	$	845	$	882
Accruing (a)		865		771		780		752		639
Credit card (b)		273		291		305		322		314

Total TDRs	$	2,233	$	2,203	$	2,147	$	1,919	$	1,835

Loans whose terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties are considered troubled debt restructurings (TDRs). TDRs typically result from our loss mitigation activities and include rate reductions, principal forgiveness, postponement/reduction of scheduled amortization, and extensions, which are intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Certain consumer government insured or guaranteed loans which were evaluated for TDR consideration, loans held for sale, loans accounted for under the fair value option, and pooled purchased impaired loans are not classified as TDRs.

(a)	Accruing loans have demonstrated a period of at least six months of performance under the restructured terms and are excluded from nonperforming loans.

(b)

Includes credit cards and certain small business and consumer credit agreements whose terms have been restructured and are TDRs. However, since our policy is to exempt these loans from being placed on nonaccrual status as permitted by regulatory guidance as generally these loans are directly charged off in the period that they become 180 days past due, these loans are excluded from nonperforming loans.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 11

Accruing Loans Past Due (Unaudited)

Accruing Loans Past Due 30 to 59 Days (a)


	Amount										Percent of Total Outstandings
	Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31		Mar. 31			Dec. 31			Sept. 30			Jun. 30			Mar. 31
Dollars in millions	2012		2011		2011		2011		2011		2012			2011			2011			2011			2011
Commercial	$	195	$	122	$	163	$	149	$	208		.26	%		.19	%		.26	%		.25	%		.37	%
Commercial real estate		144		96		84		98		315		.78			.59			.51			.60			1.84
Equipment lease financing		25		22		9		9		72		.38			.34			.15			.14			1.16
Home equity		174		173		177		141		146		.49			.52			.53			.42			.43
Residential real estate
Non government insured		233		180		198		201		205		1.44			1.24			1.35			1.34			1.34
Government insured		122		122		121		123		122		.75			.84			.83			.82			.80
Credit card		34		38		39		39		41		.83			.96			1.03			1.04			1.11
Other consumer
Non government insured		50		58		55		51		60		.26			.30			.30			.30			.36
Government insured		171		207		161		134		123		.88			1.08			.89			.79			.73

Total	$	1,148	$	1,018	$	1,007	$	945	$	1,292		.65			.64			.65			.63			.86

Accruing Loans Past Due 60 to 89 Days (a)
	Amount										Percent of Total Outstandings
	Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31		Mar. 31			Dec. 31			Sept. 30			Jun. 30			Mar. 31
Dollars in millions	2012		2011		2011		2011		2011		2012			2011			2011			2011			2011
Commercial	$	53	$	47	$	54	$	75	$	56		.07	%		.07	%		.09	%		.13	%		.10	%
Commercial real estate		44		35		25		71		65		.24			.22			.15			.44			.38
Equipment lease financing		2		5		4		2		5		.03			.08			.06			.03			.08
Home equity		103		114		101		91		96		.29			.34			.30			.27			.29
Residential real estate
Non government insured		79		72		81		68		91		.22			.50			.55			.45			.59
Government insured		100		104		110		119		131		.62			.72			.75			.80			.85
Credit card		24		25		26		23		25		.59			.63			.69			.61			.67
Other consumer
Non government insured		20		21		22		20		25		.10			.11			.12			.12			.15
Government insured		98		124		121		84		82		.50			.65			.67			.49			.49

Total	$	523	$	547	$	544	$	553	$	576		.30			.34			.35			.37			.39

Accruing Loans Past Due 90 Days or More (a)
	Amount										Percent of Total Outstandings
	Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31		Mar. 31			Dec. 31			Sept. 30			Jun. 30			Mar. 31
Dollars in millions	2012		2011		2011		2011		2011		2012			2011			2011			2011			2011
Commercial	$	28	$	49	$	34	$	42	$	49		.04	%		.07	%		.05	%		.08	%		.09	%
Commercial real estate		5		6		13		12		6		.03			.04			.08			.07			.04
Equipment lease financing		5				2		1				.08						.03			.02
Home equity (b)				221		206		182		165					.67			.62			.55			.49
Residential real estate
Non government insured		153		152		137		145		174		.94			1.05			.93			.97			1.13
Government insured		2,012		2,129		1,998		1,926		1,903		12.41			14.71			13.63			12.85			12.41
Credit card		47		48		45		45		65		1.15			1.21			1.19			1.20			1.75
Other consumer
Non government insured		21		23		23		21		27		.11			.12			.13			.12			.16
Government insured		351		345		310		272		256		1.80			1.80			1.71			1.60			1.53

Total	$	2,622	$	2,973	$	2,768	$	2,646	$	2,645		1.49			1.87			1.79			1.76			1.77

(a)	Excludes loans held for sale and purchased impaired loans.

(b)	In March 2012, we adopted a policy stating that Home equity loans past due 90 days or more would be placed on nonaccrual status. Prior policy required that these loans be past due 180 days before being placed on nonaccrual status.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 12

Business Segment Descriptions (Unaudited)

Retail Banking provides deposit, lending, brokerage, 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 online banking channels. The branch network is located primarily in Pennsylvania, Ohio, New Jersey, Michigan, Illinois, Maryland, Indiana, North Carolina, Florida, Kentucky, Washington, D.C., Alabama, Delaware, Georgia, Virginia, Missouri, Wisconsin, and South Carolina.

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, our multi-seller conduit, 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 and internationally.

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 and retirement 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, unions, municipalities, non-profits, foundations and endowments located primarily in our geographic footprint.

Residential Mortgage Banking directly originates primarily first lien residential mortgage loans on a nationwide basis with a significant presence within the retail banking footprint, and also originates loans through majority owned affiliates. Mortgage loans represent loans collateralized by one-to-four-family residential real estate. These loans are typically underwritten to government agency and/or third-party standards, and sold, servicing retained, to secondary mortgage conduits Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal Home Loan Banks and third-party investors, or are securitized and issued under the Government National Mortgage Association (GNMA) program. The mortgage servicing operation performs all functions related to servicing mortgage loans - primarily those in first lien position - for various investors and for loans owned by PNC. Certain loans originated through majority owned affiliates are sold to others.

Non-Strategic Assets Portfolio (formerly, Distressed Assets Portfolio) includes commercial residential development loans, cross-border leases, consumer brokered home equity loans, retail mortgages, non-prime mortgages, and residential construction loans. We obtained the majority of these non-strategic assets through acquisitions of other companies, and most of these assets fall outside of our core business strategy.

BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. BlackRock provides diversified investment management services to institutional clients, intermediary and individual investors through various investment vehicles. Investment management services primarily consist of the management of equity, fixed income, multi-asset class, alternative investment and cash management products. BlackRock offers its investment products in a variety of vehicles, including open-end and closed-end mutual funds, iShares® exchange-traded funds (“ETFs”), collective investment trusts and separate accounts. In addition, BlackRock provides market risk management, financial markets advisory and enterprise investment system services to a broad base of clients. Financial markets advisory services include valuation services relating to illiquid securities, dispositions and workout assignments (including long-term portfolio liquidation assignments), risk management and strategic planning and execution. At March 31, 2012, our economic interest in BlackRock was 21%.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 13

Summary of Business Segment Income and Revenue (Unaudited) (a) (b)


	Three months ended
In millions	March 31 2012		December 31 2011			September 30 2011		June 30 2011		March 31 2011
Income (Loss)
Retail Banking	$	50	$	(28	)	$	33	$	44	$	(18	)
Corporate & Institutional Banking		470		576			419		448		432
Asset Management Group		28		17			33		48		43
Residential Mortgage Banking		61		(61	)		22		55		71
Non-Strategic Assets Portfolio		71		(2	)		93		84		25
Other, including BlackRock (b) (c) (d) (e)		131		(9	)		234		233		279

Net income (f)	$	811	$	493		$	834	$	912	$	832

Revenue
Retail Banking	$	1,285	$	1,241		$	1,283	$	1,271	$	1,247
Corporate & Institutional Banking		1,226		1,271			1,120		1,180		1,098
Asset Management Group		231		222			217		226		222
Residential Mortgage Banking		292		219			252		219		258
Non-Strategic Assets Portfolio		198		207			238		270		245
Other, including BlackRock (b) (c)		500		389			434		436		561

Total revenue	$	3,732	$	3,549		$	3,544	$	3,602	$	3,631

(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 first quarter 2012 Form 10-Q will include additional information regarding BlackRock.

(c)

Includes earnings and gains or losses related to PNC’s equity interest in BlackRock and residual activities that do not meet the criteria for disclosure as a separate reportable business, such as gains or losses related to BlackRock transactions, integration costs, asset and liability management activities including net securities gains or losses, other-than-temporary impairment of investment securities and certain trading activities, exited businesses, alternative investments, including private equity, intercompany eliminations, most corporate overhead, tax adjustments that are not allocated to business segments, and differences between business segment performance reporting and financial statement reporting (GAAP), including the presentation of net income attributable to noncontrolling interests as the segments’ results exclude their portion of net income attributable to noncontrolling interests.

(d)	Amounts for the three months ended December 31, 2011 include a $198 million noncash charge ($129 million after taxes) for the unamortized discount related to redemption of $750 million of trust preferred securities.

(e)

Includes expenses of $145 million, $28 million, $8 million, $5 million, and $1 million ($94 million, $18 million, $5 million, $3 million and zero after taxes, respectively) for the three months ended March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011 for integration costs.

(f)

Includes expenses of $38 million, $240 million, $63 million, $16 million, and $5 million ($24 million, $156 million, $41 million, $11 million and $4 million after taxes, respectively) for the three months ended March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011 for residential mortgage foreclosure-related expenses, primarily as a result of ongoing governmental matters. These amounts have been allocated among the following: Residential Mortgage Banking, Non-Strategic Assets Portfolio, and Other.


	March 31 2012		December 31 2011		September 30 2011		June 30 2011		March 31 2011
Period End Employees (a)
Full-time employees
Retail Banking		23,583		21,056		21,058		21,044		20,932
Corporate & Institutional Banking		4,639		4,364		4,340		3,864		3,761
Asset Management Group		3,158		3,109		3,072		3,053		3,042
Residential Mortgage Banking		4,055		3,718		3,646		3,688		3,682
Non-Strategic Assets Portfolio		229		116		114		121		127
Other
Operations & Technology		9,548		8,933		8,807		8,724		8,644
Staff Services and Other		5,234		4,644		4,639		5,021		4,998

Total Other		14,782		13,577		13,446		13,745		13,642

Total full-time employees		50,446		45,940		45,676		45,515		45,186

Retail Banking part-time employees		5,265		5,083		5,103		5,112		4,981
Other part-time employees		894		868		913		1,216		959

Total part-time employees		6,159		5,951		6,016		6,328		5,940

Total (b)		56,605		51,891		51,692		51,843		51,126

(a)	The period end employee statistics for the businesses reflect staff directly employed by the respective business, and exclude operations, technology and staff services employees that may perform services for the business.

(b)	The increase in the total number of employees is primarily driven by the acquisition of RBC Bank (USA) during the first quarter of 2012.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 14

Retail Banking (Unaudited) (a)


	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions	2012			2011			2011			2011			2011
INCOME STATEMENT
Net interest income	$	895		$	832		$	820		$	810		$	818
Noninterest income
Service charges on deposits		121			135			133			125			117
Brokerage		45			48			48			52			53
Consumer services		191			195			251			253			228
Other		33			31			31			31			31

Total noninterest income		390			409			463			461			429

Total revenue		1,285			1,241			1,283			1,271			1,247
Provision for credit losses		135			229			206			180			276
Noninterest expense		1,070			1,056			1,025			1,021			1,001

Pretax earnings (loss)		80			(44	)		52			70			(30	)
Income taxes (benefit)		30			(16	)		19			26			(12	)

Earnings (loss)	$	50		$	(28	)	$	33		$	44		$	(18	)

AVERAGE BALANCE SHEET
Loans
Consumer
Home equity	$	26,591		$	25,776		$	25,756		$	25,906		$	26,064
Indirect auto		4,433			3,872			3,308			2,756			2,400
Indirect other		1,282			1,355			1,432			1,519			1,612
Education		9,440			9,302			9,124			8,881			9,101
Credit cards		3,928			3,805			3,733			3,680			3,731
Other		2,072			1,957			1,874			1,809			1,823

Total consumer		47,746			46,067			45,227			44,551			44,731
Commercial and commercial real estate		10,682			10,369			10,482			10,636			10,786
Floor plan		1,663			1,452			1,304			1,473			1,572
Residential mortgage		1,031			1,092			1,150			1,196			1,287

Total loans		61,122			58,980			58,163			57,856			58,376
Goodwill and other intangible assets		5,888			5,735			5,748			5,750			5,769
Other assets		2,699			2,455			2,247			2,151			2,525

Total assets	$	69,709		$	67,170		$	66,158		$	65,757		$	66,670

Deposits
Noninterest-bearing demand	$	18,764		$	18,105		$	18,081		$	18,443		$	18,103
Interest-bearing demand		25,707			23,583			22,381			21,869			20,921
Money market		43,601			41,638			41,191			40,776			40,387

Total transaction deposits		88,072			83,326			81,653			81,088			79,411
Savings		9,077			8,450			8,218			8,140			7,573
Certificates of deposit		28,150			29,998			32,664			34,060			35,365

Total deposits		125,299			121,774			122,535			123,288			122,349
Other liabilities		629			758			786			765			1,147
Capital		8,328			8,152			8,223			8,246			8,048

Total liabilities and equity	$	134,256		$	130,684		$	131,544		$	132,299		$	131,544

PERFORMANCE RATIOS
Return on average capital		2	%		(1	)%		2	%		2	%		(1	)%
Return on average assets		.29			(.17	)		.20			.27			(.11	)
Noninterest income to total revenue		30			33			36			36			34
Efficiency		83			85			80			80			80

(a)	See note (a) on page 13.

THE PNC FINANCIAL SERVICES GROUP, INC.

Page 15

Retail Banking (Unaudited) (Continued)


	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions, except as noted	2012			2011			2011			2011			2011
OTHER INFORMATION (a)
Credit-related statistics:
Commercial nonperforming assets	$	315		$	336		$	330		$	301		$	301
Consumer nonperforming assets		650			513			454			403			409

Total nonperforming assets	$	965		$	849		$	784		$	704		$	710

Purchased impaired loans (b)	$	903		$	757		$	786		$	826		$	869

Commercial lending net charge-offs	$	28		$	48		$	39		$	65		$	67
Credit card lending net charge-offs		50			44			45			54			68
Consumer lending (excluding credit card) net charge-offs		113			103			98			104			122

Total net charge-offs	$	191		$	195		$	182		$	223		$	257

Commercial lending annualized net charge-off ratio		.91	%		1.61	%		1.31	%		2.15	%		2.20	%
Credit card lending annualized net charge-off ratio		5.12	%		4.59	%		4.78	%		5.89	%		7.39	%
Consumer lending (excluding credit card) annualized net charge-off ratio		1.01	%		.94	%		.91	%		.99	%		1.17	%

Total annualized net charge-off ratio		1.26	%		1.31	%		1.24	%		1.55	%		1.79	%

Home equity portfolio credit statistics: (c)
% of first lien positions at origination (d)		37	%		39	%		38	%		37	%		36	%
Weighted average loan-to-value ratios (LTVs) (d)		81	%		72	%		72	%		73	%		73	%
Weighted average updated FICO scores (e)		739			743			743			743			731
Annualized net charge-off ratio		1.11	%		1.01	%		1.02	%		1.00	%		1.31	%
Loans 30 - 59 days past due		.56	%		.58	%		.58	%		.48	%		.47	%
Loans 60 - 89 days past due		.35	%		.38	%		.32	%		.30	%		.31	%
Loans 90 days past due (f)		1.24	%		1.22	%		1.12	%		1.02	%		.99	%

Other statistics:
ATMs		7,220			6,806			6,754			6,734			6,660
Branches (g)		2,900			2,511			2,469			2,459			2,446

Customer-related statistics: (in thousands)
Retail Banking checking relationships		6,278			5,761			5,722			5,627			5,521
Retail online banking active customers		3,823			3,519			3,479			3,354			3,226
Retail online bill payment active customers		1,161			1,105			1,079			1,045			1,029

Brokerage statistics:
Financial consultants (h)		693			686			703			712			700
Full service brokerage offices		38			38			37			37			34
Brokerage account assets (billions)	$	37		$	34		$	33		$	35		$	35

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

(b)	Recorded investment of purchased impaired loans related to acquisitions.

(c)	Lien position, LTV, FICO and delinquency statistics are based upon balances and other data that exclude the impact of accounting for acquired loans.

(d)	Updated LTV is reported for March 31, 2012. For previous quarters, lien positions and LTV are based upon data from loan origination. Original LTV excludes certain acquired portfolio loans where this data is not available.

(e)	Represents FICO scores that are updated monthly for home equity lines and quarterly for the home equity installment loans.

(f)	Includes non-accrual loans.

(g)	Excludes satellite offices (e.g., drive-ups, electronic branches, retirement centers) that provide limited products and/or services.

(h)	Financial consultants provide services in full service brokerage offices and traditional bank branches.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 16

Corporate & Institutional Banking (Unaudited) (a)


	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions, except as noted	2012			2011			2011			2011			2011
INCOME STATEMENT
Net interest income	$	896		$	904		$	866		$	848		$	799
Noninterest income
Corporate service fees		202			230			153			197			187
Other		128			137			101			135			112

Noninterest income		330			367			254			332			299

Total revenue		1,226			1,271			1,120			1,180			1,098
Provision for credit losses (benefit)		19			(136	)		11			31			(30	)
Noninterest expense		463			494			448			443			445

Pretax earnings		744			913			661			706			683
Income taxes		274			337			242			258			251

Earnings	$	470		$	576		$	419		$	448		$	432

AVERAGE BALANCE SHEET
Loans
Commercial	$	42,919		$	38,709		$	36,353		$	34,673		$	33,194
Commercial real estate		14,388			13,903			13,670			13,839			14,347
Commercial - real estate related		4,971			4,463			3,741			3,494			3,463
Asset-based lending		9,266			8,893			8,472			7,961			7,370
Equipment lease financing		5,706			5,529			5,457			5,483			5,540

Total loans		77,250			71,497			67,693			65,450			63,914
Goodwill and other intangible assets		3,442			3,291			3,391			3,456			3,484
Loans held for sale		1,244			1,271			1,186			1,229			1,341
Other assets		10,960			10,111			9,629			8,877			8,241

Total assets	$	92,896		$	86,170		$	81,899		$	79,012		$	76,980

Deposits
Noninterest-bearing demand	$	37,225		$	35,770		$	32,631		$	29,504		$	27,843
Money market		13,872			13,385			13,522			12,643			12,131
Other		5,372			5,617			5,781			5,149			6,057

Total deposits		56,469			54,772			51,934			47,296			46,031
Other liabilities		15,987			14,095			14,094			12,871			12,205
Capital		8,537			8,256			7,992			7,928			7,858

Total liabilities and equity	$	80,993		$	77,123		$	74,020		$	68,095		$	66,094

PERFORMANCE RATIOS
Return on average capital		22	%		28	%		21	%		23	%		22	%
Return on average assets		2.03			2.65			2.03			2.27			2.28
Noninterest income to total revenue		27			29			23			28			27
Efficiency		38			39			40			38			41

COMMERCIAL MORTGAGE SERVICING PORTFOLIO (in billions)
Beginning of period	$	267		$	267		$	268		$	266		$	266
Acquisitions/additions		10			12			8			13			10
Repayments/transfers		(9	)		(12	)		(9	)		(11	)		(10	)

End of period	$	268		$	267		$	267		$	268		$	266

OTHER INFORMATION
Consolidated revenue from: (b)
Treasury Management	$	311		$	296		$	298		$	292		$	301
Capital Markets	$	156		$	160		$	158		$	165		$	139
Commercial mortgage loans held for sale (c)	$	13		$	38		$	23		$	23		$	29
Commercial mortgage loan servicing income, net of amortization (d)		25			48			32			29			47
Commercial mortgage servicing rights (impairment)/recovery (e)		5			—			(82	)		(40	)		(35	)

Total commercial mortgage banking activities	$	43		$	86		$	(27	)	$	12		$	41
Total loans (f)	$	84,329		$	73,417		$	70,307		$	66,142		$	64,368
Net carrying amount of commercial mortgage servicing rights (f)	$	428		$	468		$	482		$	592		$	645
Credit-related statistics:
Nonperforming assets (f)	$	1,776		$	1,889		$	2,033		$	2,260		$	2,574
Purchased impaired loans (f) (g)	$	1,177		$	404		$	472		$	603		$	659
Net charge-offs	$	43		$	43		$	94		$	85		$	153

(a)	See note (a) on page 13.

(b)	Represents consolidated PNC amounts. Our first quarter 2012 10-Q will include additional information regarding these items.

(c)	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.

(d)	Includes net interest income and noninterest income from loan servicing and ancillary services, net of commercial mortgage servicing rights amortization. Commercial mortgage servicing rights (impairment)/recovery is shown separately.

(e)	See note (a) on page 1.

(f)	Presented as of period end.

(g)	Recorded investment of purchased impaired loans related to acquisitions.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 17

Asset Management Group (Unaudited) (a)


	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions, except as noted	2012			2011			2011			2011			2011
INCOME STATEMENT
Net interest income	$	63		$	61		$	58		$	59		$	60
Noninterest income		168			161			159			167			162

Total revenue		231			222			217			226			222
Provision for credit losses (benefit)		10			10			(10	)		(18	)		(6	)
Noninterest expense		176			184			175			168			160

Pretax earnings		45			28			52			76			68
Income taxes		17			11			19			28			25

Earnings	$	28		$	17		$	33		$	48		$	43

AVERAGE BALANCE SHEET
Loans
Consumer	$	4,183		$	4,173		$	4,134		$	4,068		$	4,054
Commercial and commercial real estate		1,126			1,193			1,223			1,289			1,503
Residential mortgage		692			696			705			711			715

Total loans		6,001			6,062			6,062			6,068			6,272
Goodwill and other intangible assets		345			349			356			365			374
Other assets		220			233			246			220			271

Total assets	$	6,566		$	6,644		$	6,664		$	6,653		$	6,917

Deposits
Noninterest-bearing demand	$	1,575		$	1,305		$	1,307		$	1,061		$	1,161
Interest-bearing demand		2,637			2,529			2,315			2,309			2,291
Money market		3,651			3,625			3,591			3,548			3,591

Total transaction deposits		7,863			7,459			7,213			6,918			7,043
CDs/IRAs/savings deposits		549			587			620			645			676

Total deposits		8,412			8,046			7,833			7,563			7,719
Other liabilities		71			78			76			71			69
Capital		347			355			345			353			344

Total liabilities and equity	$	8,830		$	8,479		$	8,254		$	7,987		$	8,132

PERFORMANCE RATIOS
Return on average capital		32	%		19	%		38	%		55	%		51	%
Return on average assets		1.72			1.02			1.96			2.89			2.52
Noninterest income to total revenue		73			73			73			74			73
Efficiency		76			83			81			74			72

OTHER INFORMATION
Total nonperforming assets (b)	$	73		$	60		$	69		$	69		$	74
Purchased impaired loans (b) (c)	$	126		$	127		$	134		$	135		$	143
Total net charge-offs (recoveries)	$	2		$	6		$	5		$	—		$	(11	)

ASSETS UNDER ADMINISTRATION (in billions) (b) (d)
Personal	$	104		$	100		$	95		$	102		$	102
Institutional		115			110			107			117			117

Total	$	219		$	210		$	202		$	219		$	219

Asset Type
Equity	$	119		$	111		$	104		$	121		$	120
Fixed income		66			66			66			65			64
Liquidity/Other		34			33			32			33			35

Total	$	219		$	210		$	202		$	219		$	219

Discretionary assets under management
Personal	$	73		$	69		$	65		$	70		$	71
Institutional		39			38			38			39			39

Total	$	112		$	107		$	103		$	109		$	110

Asset Type
Equity	$	58		$	53		$	49		$	56		$	57
Fixed income		38			38			38			37			36
Liquidity/Other		16			16			16			16			17

Total	$	112		$	107		$	103		$	109		$	110

Nondiscretionary assets under administration
Personal	$	31		$	31		$	30		$	32		$	31
Institutional		76			72			69			78			78

Total	$	107		$	103		$	99		$	110		$	109

Asset Type
Equity	$	61		$	58		$	55		$	65		$	63
Fixed income		28			28			28			28			28
Liquidity/Other		18			17			16			17			18

Total	$	107		$	103		$	99		$	110		$	109

(a)	See note (a) on page 13.

(b)	As of period end.

(c)	Recorded investment of purchased impaired loans related to acquisitions.

(d)	Excludes brokerage account assets.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 18

Residential Mortgage Banking (Unaudited) (a)


	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions, except as noted	2012			2011			2011			2011			2011
INCOME STATEMENT
Net interest income	$	51		$	52		$	46		$	47		$	56
Noninterest income
Loan servicing revenue
Servicing fees		56			53			60			63			50
Net MSR hedging gains		71			35			69			52			64
Loan sales revenue		109			74			72			52			84
Other		5			5			5			5			4

Total noninterest income		241			167			206			172			202

Total revenue		292			219			252			219			258
Provision for credit losses (benefit)		(7	)		(10	)		15			(8	)		8
Noninterest expense		203			317			203			140			137

Pretax earnings (loss)		96			(88	)		34			87			113
Income taxes (benefit)		35			(27	)		12			32			42

Earnings (loss)	$	61		$	(61	)	$	22		$	55		$	71

AVERAGE BALANCE SHEET
Portfolio loans	$	2,922		$	2,868		$	2,777		$	2,703		$	2,734
Loans held for sale		1,675			1,409			1,301			1,464			1,802
Mortgage servicing rights (MSR)		645			701			851			1,027			1,048
Other assets		6,747			6,786			5,948			5,628			6,035

Total assets	$	11,989		$	11,764		$	10,877		$	10,822		$	11,619

Deposits	$	1,662		$	1,756		$	1,785		$	1,569		$	1,587
Borrowings and other liabilities		4,353			4,324			3,788			3,253			4,144
Capital		832			832			694			667			729

Total liabilities and equity	$	6,847		$	6,912		$	6,267		$	5,489		$	6,460

PERFORMANCE RATIOS
Return on average capital		29	%		(29	)%		13	%		33	%		39	%
Return on average assets		2.05			(2.06	)		.80			2.04			2.48
Noninterest income to total revenue		83			76			82			79			78
Efficiency		70			145			81			64			53

RESIDENTIAL MORTGAGE SERVICING PORTFOLIO - THIRD-PARTY (in billions)
Beginning of period	$	118		$	121		$	125		$	127		$	125
Acquisitions		7			1									5
Additions		4			3			2			4			3
Repayments/transfers		(8	)		(7	)		(6	)		(6	)		(6	)

End of period	$	121		$	118		$	121		$	125		$	127

Servicing portfolio - third-party statistics: (b)
Fixed rate		91	%		90	%		90	%		90	%		90	%
Adjustable rate/balloon		9	%		10	%		10	%		10	%		10	%
Weighted-average interest rate		5.26	%		5.38	%		5.44	%		5.49	%		5.53	%
MSR capitalized value (in billions)	$	.7		$	.7		$	.7		$	1.0		$	1.1
MSR capitalization value (in basis points)		60			54			56			80			88
Weighted-average servicing fee (in basis points)		29			29			29			29			30

OTHER INFORMATION
Loan origination volume (in billions)	$	3.4		$	3.0		$	2.6		$	2.6		$	3.2
Percentage of originations represented by:
Agency and government programs		100	%		100	%		100	%		100	%		100	%
Refinance volume		82	%		79	%		69	%		68	%		85	%
Total nonperforming assets (b)	$	80		$	76		$	77		$	65		$	78
Purchased impaired loans (b) (c)	$	100		$	112		$	132		$	141		$	158

(a)	See note (a) on page 13.

(b)	As of period end.

(c)	Recorded investment of purchased impaired loans related to acquisitions.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 19

Non-Strategic Assets Portfolio (Unaudited) (a)


	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions	2012			2011			2011			2011			2011
INCOME STATEMENT
Net interest income	$	217		$	192		$	228		$	257		$	236
Noninterest income		(19	)		15			10			13			9

Total revenue		198			207			238			270			245
Provision for credit losses		18			88			45			81			152
Noninterest expense		68			119			47			56			53

Pretax earnings		112			—			146			133			40
Income taxes		41			2			53			49			15

Earnings (loss)	$	71		$	(2	)	$	93		$	84		$	25

AVERAGE BALANCE SHEET
Commercial Lending:
Commercial/Commercial real estate	$	1,004		$	1,030		$	1,143		$	1,363		$	1,582
Lease financing		670			703			691			697			757

Total commercial lending		1,674			1,733			1,834			2,060			2,339

Consumer Lending:
Consumer		4,849			5,006			5,167			5,301			5,559
Residential real estate		6,046			5,937			6,116			6,265			6,332

Total consumer lending		10,895			10,943			11,283			11,566			11,891

Total portfolio loans		12,569			12,676			13,117			13,626			14,230
Other assets (b)		(445	)		(368	)		(402	)		(256	)		(109	)

Total assets	$	12,124		$	12,308		$	12,715		$	13,370		$	14,121

Deposits and other liabilities	$	177		$	85		$	76		$	137		$	159
Capital		1,176			1,213			1,273			1,422			1,371

Total liabilities and equity	$	1,353		$	1,298		$	1,349		$	1,559		$	1,530

PERFORMANCE RATIOS
Return on average capital		24	%		(1	)%		29	%		24	%		7	%
Return on average assets		2.36			(.06	)		2.90			2.52			.72

OTHER INFORMATION
Nonperforming assets (c)	$	1,249		$	1,024		$	1,064		$	1,087		$	1,208
Purchased impaired loans (c) (d)	$	6,097		$	5,251		$	5,390		$	5,543		$	5,685
Net charge-offs	$	91		$	77		$	74		$	96		$	123
Annualized net charge-off ratio		2.91	%		2.41	%		2.24	%		2.83	%		3.51	%

LOANS (c)
Commercial Lending:
Commercial/Commercial real estate	$	1,104		$	976		$	1,077		$	1,222		$	1,474
Lease financing		671			670			701			701			695

Total commercial lending		1,775			1,646			1,778			1,923			2,169

Consumer Lending:
Consumer		4,751			4,930			5,066			5,240			5,381
Residential real estate		6,693			5,840			6,065			6,250			6,325

Total consumer lending		11,444			10,770			11,131			11,490			11,706

Total loans	$	13,219		$	12,416		$	12,909		$	13,413		$	13,875

(a)	See note (a) on page 13.

(b)	Other assets were negative in the first quarter 2012 and each 2011 quarter due to the allowance for loan and lease losses.

(c)	As of period end.

(d)	Recorded investment of purchased impaired loans related to acquisitions.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 20

Glossary of Terms

Accretable net interest (Accretable yield) - 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.

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.

Carrying value of purchased impaired loans - The net value on the balance sheet which represents the recorded investment less any valuation allowance.

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 from portfolio holdings 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.

Commercial mortgage banking activities - Includes commercial mortgage servicing, originating commercial mortgages for sale and related hedging activities. Commercial mortgage banking activities revenue includes commercial mortgage servicing (including net interest income and noninterest income from loan servicing and ancillary services, net of commercial mortgage servicing rights amortization, and commercial mortgage servicing rights valuations), and revenue derived from commercial mortgage loans intended for sale and related hedges (including loan origination fees, net interest income, valuation adjustments and gains or losses on sales).

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.

Core net interest income - Total net interest income less purchase accounting accretion.

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.

Derivatives - Financial contracts whose value is derived from changes in publicly traded securities, interest rates, currency exchange rates or market indices. Derivatives cover a wide assortment of financial contracts, including but not limited to 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; loans held for sale; loans; investment securities; and certain other assets.

Economic capital - Represents the amount of resources that a business or business segment should hold to guard against potentially large losses that could cause insolvency and is based on a measurement of economic risk. 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.


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 21

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 total revenue.

Fair value - The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

FICO score - A credit bureau-based industry standard score created by Fair Isaac Co. which predicts the likelihood of borrower default. We use FICO scores both in underwriting and assessing credit risk in our consumer lending portfolio. Lower FICO scores indicate likely higher risk of default, while higher FICO scores indicate likely lower risk of default. FICO scores are updated on a periodic basis.

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. PNC’s product set includes loans priced using LIBOR as a benchmark.

Loan-to-value ratio (LTV) - A calculation of a loan’s collateral coverage that is used both in underwriting and assessing credit risk in our lending portfolio. LTV is the sum total of loan obligations secured by collateral divided by the market value of that same collateral. Market values of the collateral are based on an independent valuation of the collateral. For example, an LTV of less than 90% is better secured and has less credit risk than an LTV of greater than or equal to 90%.

Loss Given Default (LGD) - An estimate of recovery based on collateral type, collateral value, loan exposure, or the guarantor(s) quality and guaranty type (full or partial). Each loan has its own LGD. The LGD risk rating measures the percentage of exposure of a specific credit obligation that we expect to lose if default occurs. LGD is net of recovery, through either liquidation of collateral or deficiency judgments rendered from foreclosure or bankruptcy proceedings.

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.

Nonperforming assets - Nonperforming assets include non-accrual loans, certain non-accrual troubled debt restructured loans, OREO, foreclosed and other assets. We do not accrue interest income on assets classified as nonperforming.

Nonperforming loans - Loans for which we do not accrue interest income. Nonperforming loans include loans to commercial, commercial real estate, equipment lease financing, consumer (including loans and lines of credit secured by residential real estate), and residential real estate (including mortgages and construction) customers as well as certain non-accrual troubled debt restructured loans. Nonperforming loans do not include loans held for sale or OREO and foreclosed assets. Nonperforming loans do not include purchased impaired loans as we are currently accreting interest income over the expected life of the loans.

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


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 22

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).

Options - Contracts that grant the purchaser, for a premium payment, the right, but not the obligation, to either purchase or sell the associated financial instrument at a set price during a specified period or at a specified date in the future.

Other real estate owned (OREO) and foreclosed assets - Assets taken in settlement of troubled loans through surrender or foreclosure. Foreclosed assets include all assets received in full or partial satisfaction of a loan and include real and personal property, equity interests in corporations, partnerships, joint ventures, and beneficial interests in trusts. Premises that are no longer used in operations may also be included in other real estate owned.

Other-than-temporary impairment (OTTI) - When the fair value of a 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 for debt securities, 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.

Parent company liquidity coverage - Liquid assets divided by funding obligations within a two year period.

Pretax earnings - Income from continuing operations before income taxes and noncontrolling interests.

Pretax, pre-provision earnings from continuing operations - Total revenue less noninterest expense, both from continuing operations.

Probability of Default (PD) - An internal risk rating that indicates the likelihood that a credit obligor will enter into default status.

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. Accretion for purchased impaired loans includes any cash recoveries received in excess of the recorded investment.

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 securities and derivative instruments.

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


THE PNC FINANCIAL SERVICES GROUP, INC.		Page 23

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 and redemptions, 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.

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 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 interest-bearing money market deposits, interest-bearing demand deposits, and noninterest-bearing deposits.

Troubled debt restructuring (TDR) - A loan whose terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties.

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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