PNC FINANCIAL SERVICES GROUP, INC. - FORM 8-K - EX-99.1 - FINANCIAL SUPPLEMENT (UNAUDITED) FOR FIRST QUARTER 2011

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

FIRST QUARTER 2011

(UNAUDITED)

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2011

(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		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
Distressed 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 21, 2011. 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, Maryland, Illinois, Indiana, Kentucky, Florida, Virginia, Missouri, Delaware, Washington, D.C., and Wisconsin. PNC also provides certain products and services internationally.

QUARTERLY COMMON STOCK DIVIDEND INCREASE

In April 2011, the PNC Board of Directors declared a quarterly cash dividend on common stock of 35 cents per share, an increase of 25 cents per share, or 250%, from the prior quarterly dividend of 10 cents per share. The increased dividend is payable May 5, 2011 to shareholders of record at the close of business on April 18, 2011.

BUSINESS SEGMENT CAPITAL ALLOCATIONS

Effective January 1, 2011, we revised certain capital allocations among our business segments including, as appropriate, amounts for prior periods included in this Financial Supplement.

Capital is intended to cover unexpected losses and is assigned to the banking and servicing businesses using PNC’s risk-based economic capital model. Prior to January 1, 2011, we assigned capital equal to 6% of funds to the Retail Banking business segment to reflect the capital required for well-capitalized domestic banks and to approximate market comparables for this business. Beginning January 1, 2011, this 6% allocation methodology was replaced with an economic capital allocation methodology. We have also made other capital modeling updates involving technical enhancements to result in more precise capital calculations.

In addition, effective January 1, 2011, we began allocating additional capital to our business segments for goodwill using a methodology consistent with how goodwill is allocated to the business segments.

PNC’s total capital did not change as a result of these adjustments for any periods presented. In addition, the reallocation of goodwill had no impact on PNC’s BlackRock reportable business segment reflecting our equity interest in BlackRock, Inc.

THE PNC FINANCIAL SERVICES GROUP, INC.

Consolidated Income Statement (Unaudited)


	Three months ended
In millions, except per share data	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
Interest Income
Loans	$	1,884		$	1,962		$	1,996		$	2,158		$	2,160
Investment securities		578			602			592			572			623
Other		121			107			113			143			122

Total interest income		2,583			2,671			2,701			2,873			2,905

Interest Expense
Deposits		182			205			233			244			281
Borrowed funds		225			265			253			194			245

Total interest expense		407			470			486			438			526

Net interest income		2,176			2,201			2,215			2,435			2,379

Noninterest Income
Asset management		263			303			249			243			259
Consumer services		311			322			328			315			296
Corporate services		217			370			183			261			268
Residential mortgage		195			157			216			179			147
Service charges on deposits		123			132			164			209			200
Net gains on sales of securities		37			68			121			147			90
Net other-than-temporary impairments		(34	)		(44	)		(71	)		(94	)		(116	)
Gain on BlackRock transaction (a)					160
Other		343			234			193			217			240

Total noninterest income		1,455			1,702			1,383			1,477			1,384

Total revenue		3,631			3,903			3,598			3,912			3,763
Provision For Credit Losses		421			442			486			823			751
Noninterest Expense
Personnel		989			1,032			959			959			956
Occupancy		193			194			177			172			187
Equipment		167			176			152			168			172
Marketing		40			70			81			65			50
Other		681			868			789			638			748

Total noninterest expense		2,070			2,340			2,158			2,002			2,113

Income from continuing operations before income taxes and noncontrolling interests		1,140			1,121			954			1,087			899
Income taxes		308			301			179			306			251

Income from continuing operations before noncontrolling interests		832			820			775			781			648
Income from discontinued operations (net of income taxes of zero, zero, $311, $13, and $14) (b)								328			22			23

Net income		832			820			1,103			803			671

Less: Net income (loss) attributable to noncontrolling interests		(5	)		(3	)		2			(9	)		(5	)
Preferred stock dividends		4			24			4			25			93
Preferred stock discount accretion and redemptions					1			3			1			250

Net income attributable to common shareholders	$	833		$	798		$	1,094		$	786		$	333

Basic Earnings Per Common Share
Continuing operations	$	1.59		$	1.52		$	1.45		$	1.45		$	.62
Discontinued operations								.63			.04			.05

Net income	$	1.59		$	1.52		$	2.08		$	1.49		$	.67
Diluted Earnings Per Common Share
Continuing operations	$	1.57		$	1.50		$	1.45		$	1.43		$	.61
Discontinued operations								.62			.04			.05

Net income	$	1.57		$	1.50		$	2.07		$	1.47		$	.66
Average Common Shares Outstanding
Basic		524			524			523			524			498
Diluted		526			526			526			527			500

Efficiency		57	%		60	%		60	%		51	%		56	%

Noninterest income to total revenue		40	%		44	%		38	%		38	%		37	%

Effective tax rate (c)		27.0	%		26.9	%		18.8	%		28.2	%		27.9	%

(a)

Amount represents the $160 million gain ($102 million after taxes) related to our gain on the sale of a portion of our shares of BlackRock stock as part of BlackRock’s November 2010 secondary common stock offering. Our 2010 Annual Report on Form 10-K (2010 Form 10-K) includes additional information regarding this transaction.

(b)

Includes results of operations for PNC Global Investment Servicing Inc. (GIS) through June 30, 2010 and the related after-tax gain on sale. We sold GIS effective July 1, 2010, resulting in a gain of $639 million, or $328 million after taxes, recognized during the third quarter of 2010. The earnings per diluted share impact of the gain on sale was $.62 for the third quarter of 2010. Our 2010 Form 10-K includes additional information regarding our sale of GIS.

(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 third quarter of 2010 was primarily the result of receiving a favorable IRS letter ruling in July 2010 that resolved a prior tax position and resulted in a tax benefit of $89 million.

Page 1

THE PNC FINANCIAL SERVICES GROUP, INC.

Consolidated Balance Sheet (Unaudited)


In millions, except par value	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
Assets
Cash and due from banks (a)	$	3,389		$	3,297		$	3,724		$	3,558		$	3,563
Federal funds sold and resale agreements (b)		2,240			3,704			2,094			2,209			1,367
Trading securities		2,254			1,826			955			882			1,595
Interest-earning deposits with banks (a)		1,359			1,610			415			5,028			607
Loans held for sale (b)		2,980			3,492			3,275			2,756			2,691
Investment securities (a)		60,992			64,262			63,461			53,717			57,606
Loans (a) (b)		149,387			150,595			150,127			154,342			157,266
Allowance for loan and lease losses (a)		(4,759	)		(4,887	)		(5,231	)		(5,336	)		(5,319	)

Net loans		144,628			145,708			144,896			149,006			151,947
Goodwill		8,146			8,149			8,166			9,410			9,425
Other intangible assets		2,618			2,604			2,352			2,728			3,289
Equity investments (a)		9,595			9,220			10,137			10,159			10,256
Other (a) (b)		21,177			20,412			20,658			22,242			23,050

Total assets	$	259,378		$	264,284		$	260,133		$	261,695		$	265,396


Liabilities
Deposits
Noninterest-bearing	$	48,707		$	50,019		$	46,065		$	44,312		$	43,122
Interest-bearing		133,283			133,371			133,118			134,487			139,401

Total deposits		181,990			183,390			179,183			178,799			182,523
Borrowed funds
Federal funds purchased and repurchase agreements		4,079			4,144			4,661			3,690			5,511
Federal Home Loan Bank borrowings		5,020			6,043			7,106			8,119			8,700
Bank notes and senior debt		11,324			12,904			13,508			12,617			12,638
Subordinated debt		9,310			9,842			10,023			10,184			10,001
Other (a)		5,263			6,555			4,465			5,817			5,611

Total borrowed funds		34,996			39,488			39,763			40,427			42,461
Allowance for unfunded loan commitments and letters of credit		204			188			193			218			252
Accrued expenses (a)		3,078			3,188			3,134			2,757			2,939
Other (a)		5,393			5,192			5,194			8,504			7,787

Total liabilities		225,661			231,446			227,467			230,705			235,962


Equity
Preferred stock (c)
Common stock - $5 par value Authorized 800 shares, issued 536, 536, 536, 535, and 535 shares		2,682			2,682			2,680			2,678			2,676
Capital surplus - preferred stock		647			647			646			646			645
Capital surplus - common stock and other		12,056			12,057			12,008			11,979			11,945
Retained earnings		16,640			15,859			15,114			14,073			13,340
Accumulated other comprehensive income (loss)		(309	)		(431	)		146			(442	)		(1,288	)
Common stock held in treasury at cost: 10, 10, 10, 10, and 9 shares		(584	)		(572	)		(552	)		(557	)		(500	)

Total shareholders’ equity		31,132			30,242			30,042			28,377			26,818
Noncontrolling interests		2,585			2,596			2,624			2,613			2,616

Total equity		33,717			32,838			32,666			30,990			29,434

Total liabilities and equity	$	259,378		$	264,284		$	260,133		$	261,695		$	265,396

Capital Ratios
Tier 1 common (d)		10.3	%		9.8	%		9.6	%		8.3	%		7.9	%
Tier 1 risk-based (d)		12.6			12.1			11.9			10.7			10.3
Total risk-based (d)		16.2			15.6			15.6			14.3			13.9
Leverage (d)		10.6			10.2			9.9			9.1			8.8
Common shareholders’ equity to assets		11.8			11.2			11.3			10.6			10.0

(a)	Amounts include consolidated variable interest entities. Our 2010 Form 10-K included, and first quarter 2011 Form 10-Q will include, additional information regarding these items. Also includes our equity interest in BlackRock under Equity investments.

(b)	Amounts include assets for which PNC has elected the fair value option. Our 2010 Form 10-K included, and first quarter 2011 Form 10-Q will include, additional information regarding these items.

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

(d)	The ratio as of March 31, 2011 is estimated.

Page 2

THE PNC FINANCIAL SERVICES GROUP, INC.

Average Consolidated Balance Sheet (Unaudited)


	Three months ended
In millions	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency	$	29,134		$	28,457		$	22,916		$	20,382		$	21,926
Non-agency		8,057			8,495			8,917			9,358			10,213
Commercial mortgage-backed		3,298			3,325			3,100			2,962			5,357
Asset-backed		2,757			2,824			2,436			1,695			1,992
US Treasury and government agencies		5,682			6,250			7,758			8,708			7,493
State and municipal		2,081			1,732			1,323			1,356			1,365
Other debt		3,994			3,618			3,092			2,526			1,874
Corporate stocks and other		443			418			472			446			457

Total securities available for sale		55,446			55,119			50,014			47,433			50,677
Securities held to maturity
Commercial mortgage-backed		4,239			4,311			4,130			4,264			2,110
Asset-backed		2,463			2,849			3,435			3,697			3,665
Other		9			10			9			21			160

Total securities held to maturity		6,711			7,170			7,574			7,982			5,935

Total investment securities		62,157			62,289			57,588			55,415			56,612
Loans
Commercial		56,300			54,065			53,502			54,349			55,464
Commercial real estate		17,545			18,555			19,847			20,963			22,423
Equipment lease financing		6,307			6,375			6,514			6,080			6,131
Consumer		54,460			54,741			55,036			54,939			55,349
Residential real estate		15,518			16,145			16,766			18,576			19,397

Total loans		150,130			149,881			151,665			154,907			158,764
Loans held for sale		3,193			3,331			3,021			2,646			2,476
Federal funds sold and resale agreements		2,813			2,130			1,602			2,193			1,669
Other		5,802			6,164			9,801			9,419			7,471

Total interest-earning assets		224,095			223,795			223,677			224,580			226,992
Noninterest-earning assets:
Allowance for loan and lease losses		(4,835	)		(5,039	)		(5,290	)		(5,113	)		(5,136	)
Cash and due from banks		3,393			3,516			3,436			3,595			3,735
Other		39,901			41,286			42,756			41,304			41,557

Total assets	$	262,554		$	263,558		$	264,579		$	264,366		$	267,148

Page 3

THE PNC FINANCIAL SERVICES GROUP, INC.

Average Consolidated Balance Sheet (Unaudited) (Continued)


	Three months ended
In millions	March 31 2011		December 31 2010		September 30 2010		June 30 2010		March 31 2010
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market	$	58,556	$	58,436	$	58,016	$	58,679	$	57,923
Demand		26,313		25,388		25,078		24,953		24,672
Savings		7,656		7,221		7,092		7,075		6,623
Retail certificates of deposit		36,509		39,201		41,724		43,745		47,162
Other time		515		598		740		881		1,039
Time deposits in foreign offices		3,452		2,799		2,650		2,661		3,034

Total interest-bearing deposits		133,001		133,643		135,300		137,994		140,453
Borrowed funds
Federal funds purchased and repurchase agreements		6,376		4,552		4,179		4,159		4,344
Federal Home Loan Bank borrowings		5,088		6,168		7,680		8,575		9,603
Bank notes and senior debt		11,745		13,073		12,799		12,666		12,616
Subordinated debt		9,353		9,490		9,569		9,764		9,769
Other		5,847		4,947		4,886		6,005		5,934

Total borrowed funds		38,409		38,230		39,113		41,169		42,266

Total interest-bearing liabilities		171,410		171,873		174,413		179,163		182,719
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits		47,755		47,998		45,306		44,308		42,631
Allowance for unfunded loan commitments and letters of credit		188		193		218		251		295
Accrued expenses and other liabilities		9,771		10,506		12,687		10,446		10,401
Equity		33,430		32,988		31,955		30,198		31,102

Total liabilities and equity	$	262,554	$	263,558	$	264,579	$	264,366	$	267,148


Supplemental Average Balance Sheet Information (Unaudited)

Deposits and Common Shareholders’ Equity
Interest-bearing deposits	$	133,001	$	133,643	$	135,300	$	137,994	$	140,453
Noninterest-bearing deposits		47,755		47,998		45,306		44,308		42,631

Total deposits	$	180,756	$	181,641	$	180,606	$	182,302	$	183,084

Transaction deposits	$	132,624	$	131,822	$	128,400	$	127,940	$	125,226

Common shareholders’ equity	$	30,193	$	29,729	$	28,755	$	27,054	$	24,764

Page 4

THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Net Interest Margin (Unaudited) (a)


	Three months ended
	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
Average yields/rates
Yield on interest-earning assets
Loans		5.09	%		5.21	%		5.24	%		5.58	%		5.50	%
Investment securities		3.76			3.91			4.15			4.17			4.44
Other		4.16			3.61			3.15			3.98			4.26
Total yield on interest-earning assets		4.67			4.76			4.82			5.13			5.17
Rate on interest-bearing liabilities
Deposits		.55			.61			.68			.71			.81
Borrowed funds		2.35			2.74			2.56			1.88			2.33
Total rate on interest-bearing liabilities		.95			1.08			1.10			.98			1.16

Interest rate spread		3.72			3.68			3.72			4.15			4.01
Impact of noninterest-bearing sources		.22			.25			.24			.20			.23

Net interest margin (b)		3.94	%		3.93	%		3.96	%		4.35	%		4.24	%

(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 three months ended March 31, 2011, December 31, 2010, September 30, 2010, June 30, 2010, and March 31, 2010 were $24 million, $22 million, $22 million, $19 million, and $18 million, respectively.

(b)	A reconciliation of net interest margin to provision-adjusted net interest margin follows. We believe that provision-adjusted net interest margin, a non-GAAP measure, is useful as a tool to help evaluate the amount of credit related risk associated with interest-earning assets.


	Three months ended
	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
Net interest margin, as reported		3.94	%		3.93	%		3.96	%		4.35	%		4.24	%
Less: provision adjustment		.76			.78			.86			1.47			1.34

Provision-adjusted net interest margin		3.18	%		3.15	%		3.10	%		2.88	%		2.90	%

The adjustment represents annualized provision for credit losses divided by average interest-earning assets.

Selected Consolidated Income Statement Information (Unaudited)


	Three months ended
In millions	March 31 2011	December 31 2010		September 30 2010		June 30 2010		March 31 2010
Income from Continuing Operations before Income Taxes
Integration costs		$	78	$	96	$	100	$	113

Income from Discontinued Operations, Net of Income Taxes
Gain on sale of GIS				$	328

Net Income Attributable to Common Shareholders
TARP preferred stock accelerated discount accretion (c)								$	250

(c)	Represents accelerated accretion of the remaining issuance discount on redemption of the TARP preferred stock in February 2010. This resulted in a $.50 reduction to diluted earnings per share for the first quarter of 2010.

Page 5

THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Loans (Unaudited)


In millions	March 31 2011		December 31 2010		September 30 2010		June 30 2010		March 31 2010
Commercial
Retail/wholesale	$	10,665	$	9,901	$	9,752	$	9,576	$	9,557
Manufacturing		9,805		9,334		9,519		9,728		9,863
Service providers		8,690		8,866		8,747		8,289		8,528
Real estate related (a)		8,040		7,500		7,398		7,269		7,379
Financial services		5,034		4,573		3,773		4,302		4,654
Health care		3,839		3,481		3,169		3,099		2,998
Other		10,529		11,522		10,830		11,969		11,724

Total commercial		56,602		55,177		53,188		54,232		54,703

Commercial real estate
Real estate projects		11,581		12,211		13,021		13,914		14,535
Commercial mortgage		5,552		5,723		6,070		6,450		7,415

Total commercial real estate		17,133		17,934		19,091		20,364		21,950

Equipment lease financing		6,215		6,393		6,408		6,630		6,111

TOTAL COMMERCIAL LENDING		79,950		79,504		78,687		81,226		82,764

Consumer
Home equity
Lines of credit		23,001		23,473		23,770		23,901		24,040
Installment		10,655		10,753		10,815		11,060		11,390
Residential real estate
Residential mortgage		14,602		15,292		15,708		16,618		17,599
Residential construction		731		707		776		1,219		1,669
Credit card		3,707		3,920		3,883		3,967		4,012
Other consumer
Education		9,041		9,196		8,819		8,867		8,320
Automobile		3,156		2,983		2,863		2,697		2,206
Other		4,544		4,767		4,806		4,787		5,266

TOTAL CONSUMER LENDING		69,437		71,091		71,440		73,116		74,502

Total (b)	$	149,387	$	150,595	$	150,127	$	154,342	$	157,266

(a) Includes loans to customers in the real estate and construction industries.
(b) Includes purchased impaired loans:	$	7,522	$	7,780	$	8,130	$	9,127	$	9,673

Details of Loans Held for Sale (Unaudited)

In millions	March 31 2011		December 31 2010		September 30 2010		June 30 2010		March 31 2010
Commercial mortgage	$	1,047	$	1,207	$	1,381	$	1,239	$	1,316
Residential mortgage		1,840		1,890		1,786		1,336		1,158
Other		93		395		108		181		217

Total	$	2,980	$	3,492	$	3,275	$	2,756	$	2,691


Net Unfunded Commitments (Unaudited)

In millions	March 31 2011		December 31 2010		September 30 2010		June 30 2010		March 31 2010
Net unfunded commitments	$	96,781	$	95,805	$	97,147	$	95,775	$	96,363

Page 6

THE PNC FINANCIAL SERVICES GROUP, INC.

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

Change in Allowance for Loan and Lease Losses


Three months ended - in millions	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
Beginning balance	$	4,887		$	5,231		$	5,336		$	5,319		$	5,072
Charge-offs:
Commercial		(179	)		(331	)		(310	)		(313	)		(273	)
Commercial real estate		(158	)		(181	)		(102	)		(149	)		(238	)
Equipment lease financing		(14	)		(29	)		(12	)		(43	)		(36	)
Residential real estate		(58	)		(124	)		(47	)		(197	)		(38	)
Home equity		(140	)		(124	)		(160	)		(131	)		(73	)
Credit card		(74	)		(73	)		(67	)		(95	)		(100	)
Other consumer		(51	)		(62	)		(58	)		(57	)		(69	)

Total charge-offs		(674	)		(924	)		(756	)		(985	)		(827	)
Recoveries:
Commercial		80			71			80			78			65
Commercial real estate		14			20			14			10			33
Equipment lease financing		9			18			13			13			12
Residential real estate		1			(1	)		7			13
Home equity		10			9			10			12			10
Credit card		6			5			5			5			5
Other consumer		21			11			13			14			11

Total recoveries		141			133			142			145			136
Net charge-offs (recoveries):
Commercial		(99	)		(260	)		(230	)		(235	)		(208	)
Commercial real estate		(144	)		(161	)		(88	)		(139	)		(205	)
Equipment lease financing		(5	)		(11	)		1			(30	)		(24	)
Residential real estate		(57	)		(125	)		(40	)		(184	)		(38	)
Home equity		(130	)		(115	)		(150	)		(119	)		(63	)
Credit card		(68	)		(68	)		(62	)		(90	)		(95	)
Other consumer		(30	)		(51	)		(45	)		(43	)		(58	)

Total net charge-offs		(533	)		(791	)		(614	)		(840	)		(691	)
Provision for credit losses		421			442			486			823			751
Adoption of ASU 2009-17, Consolidations														141
Acquired allowance adjustments								(2	)					2
Net change in allowance for unfunded loan commitments and letters of credit		(16	)		5			25			34			44

Ending balance	$	4,759		$	4,887		$	5,231		$	5,336		$	5,319

Supplemental Information
Net charge-offs to average loans (for the three months ended) (annualized)		1.44	%		2.09	%		1.61	%		2.18	%		1.77	%
Allowance for loan and lease losses to total loans		3.19			3.25			3.48			3.46			3.38

Commercial lending net charge-offs	$	(248	)	$	(432	)	$	(317	)	$	(404	)	$	(437	)
Consumer lending net charge-offs		(285	)		(359	)		(297	)		(436	)		(254	)

Total net charge-offs	$	(533	)	$	(791	)	$	(614	)	$	(840	)	$	(691	)

Net charge-offs to average loans
Commercial lending		1.25	%		2.17	%		1.57	%		1.99	%		2.11	%
Consumer lending		1.65			2.01			1.64			2.38			1.38


Change in Allowance for Unfunded Loan Commitments and Letters of Credit

Three months ended - in millions	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
Beginning balance	$	188		$	193		$	218		$	252		$	296
Net change in allowance for unfunded loan commitments and letters of credit		16			(5	)		(25	)		(34	)		(44	)

Ending balance	$	204		$	188		$	193		$	218		$	252

Page 7

THE PNC FINANCIAL SERVICES GROUP, INC.

Purchase Accounting Accretion and Accretable Interest (Unaudited)

VALUATION OF PURCHASED IMPAIRED LOANS


	March 31, 2011						December 31, 2010
Dollars in billions	Balance			Net Investment			Balance			Net Investment
Commercial and commercial real estate loans:
Unpaid principal balance	$	1.6					$	1.8
Purchased impaired mark		(.3	)					(.4	)

Recorded investment		1.3						1.4
Allowance for loan losses		(.3	)					(.3	)

Net investment		1.0			63	%		1.1			61	%

Consumer and residential mortgage loans:
Unpaid principal balance		7.6						7.9
Purchased impaired mark		(1.4	)					(1.5	)

Recorded investment		6.2						6.4
Allowance for loan losses		(.6	)					(.6	)

Net investment		5.6			74	%		5.8			73	%


Total purchased impaired loans:
Unpaid principal balance		9.2						9.7
Purchased impaired mark		(1.7	)					(1.9	)

Recorded investment		7.5						7.8
Allowance for loan losses		(.9	) (a)					(.9	)

Net investment	$	6.6			72	%	$	6.9			71	%

PURCHASE ACCOUNTING ACCRETION


	Three months ended
In millions	March 31 2011			December 31 2010			March 31 2010
Non-impaired loans	$	68		$	73		$	112
Impaired loans		160			175			265
Reversal of contractual interest on impaired loans		(106	)		(121	)		(134	)

Net impaired loans		54			54			131
Securities		9			15			11
Deposits		100			112			167
Borrowings		(31	)		(43	)		(56	)

Total	$	200		$	211		$	365


Cash received in excess of recorded investment from sales or payoffs of impaired commercial loans (cash recoveries)	$	81		$	133		$	75

REMAINING PURCHASE ACCOUNTING ACCRETION


In billions	March 31 2011			December 31 2010
Non-impaired loans	$	1.1		$	1.2
Impaired loans		2.2			2.2

Total loans (gross)		3.3			3.4
Securities		.2			.1
Deposits		.4			.5
Borrowings		(1.0	)		(1.1	)

Total	$	2.9		$	2.9

ACCRETABLE NET INTEREST - PURCHASED IMPAIRED LOANS


In billions				In billions
January 1, 2011	$	2.2		January 1, 2009	$	3.7
Accretion		(.2	)	Accretion		(2.0	)
Cash recoveries		(.1	)	Cash recoveries		(.8	) (a)
Net reclass to accretable difference and other activity		.3		Net reclass to accretable difference and other activity		1.3	(a)

March 31, 2011	$	2.2		March 31, 2011	$	2.2

(a)

Impairment reserves of $.9 billion at March 31, 2011 reflect impaired loans with further credit quality deterioration since acquisition. This deterioration was more than offset by cash received to date in excess of recorded investment of $.8 billion and the net reclassification to accretable net interest, to be recognized over time, of $1.3 billion.

Page 8

THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Nonperforming Assets (Unaudited)

Nonperforming Assets by Type


In millions	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
Nonperforming loans, including TDRs (a)
Commercial
Retail/wholesale	$	180		$	197		$	219		$	242		$	246
Manufacturing		213			250			266			312			341
Real estate related (b)		277			263			338			405			460
Financial services		27			16			36			60			77
Health care		46			50			59			55			48
Other industries		460			477			612			619			661

Total commercial		1,203			1,253			1,530			1,693			1,833

Commercial real estate
Real estate projects		1,468			1,422			1,562			1,661			1,797
Commercial mortgage		416			413			427			420			419

Total commercial real estate		1,884			1,835			1,989			2,081			2,216

Equipment lease financing		41			77			104			114			123

TOTAL COMMERCIAL LENDING		3,128			3,165			3,623			3,888			4,172

Consumer (c)
Home equity		464			448			406			405			337
Residential real estate
Residential mortgage		726			764			727			713			968
Residential construction		46			54			42			79			249
Other consumer		29			35			38			25			35

TOTAL CONSUMER LENDING		1,265			1,301			1,213			1,222			1,589

Total nonperforming loans (d)		4,393			4,466			4,836			5,110			5,761

OREO and foreclosed assets
Other real estate owned (OREO)		802			767			736			748			734
Foreclosed and other assets		63			68			97			46			45

OREO and foreclosed assets		865			835			833			794			779

Total nonperforming assets	$	5,258		$	5,301		$	5,669		$	5,904		$	6,540

Nonperforming loans to total loans		2.94	%		2.97	%		3.22	%		3.31	%		3.66	%
Nonperforming assets to total loans, OREO and foreclosed assets		3.50			3.50			3.76			3.81			4.14
Nonperforming assets to total assets		2.03			2.01			2.18			2.26			2.46
Allowance for loan and lease losses to nonperforming loans (d), (e)		108			109			108			104			92

(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)	Nonperforming loans do not include purchased impaired loans or loans held for sale.

(e)	The allowance for loan and lease losses includes impairment reserves attributable to purchased impaired loans. See page 8, note (a).

Page 9

THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Nonperforming Assets and Troubled Debt Restructurings (Unaudited)

Change in Nonperforming Assets


In millions	January 1, 2011 - March 31, 2011			October 1, 2010 - December 31, 2010			July 1, 2010 - September 30, 2010			April 1, 2010 - June 30, 2010			January 1, 2010 - March 31, 2010
Beginning balance	$	5,301		$	5,669		$	5,904		$	6,540		$	6,316
Transferred in		1,143			1,125			1,369			1,011			1,774
Charge-offs/valuation adjustments		(390	)		(467	)		(452	)		(532	)		(620	)
Principal activity including payoffs		(380	)		(377	)		(365	)		(296	)		(278	)
Asset sales and transfers to held for sale		(178	)		(410	)		(351	)		(420	)		(265	)
Returned to performing - TDRs		(104	)		(118	)		(96	)		(112	)		(217	)
Returned to performing - Other		(134	)		(121	)		(340	)		(287	)		(170	)

Ending balance	$	5,258		$	5,301		$	5,669		$	5,904		$	6,540

Largest Individual Nonperforming Assets at March 31, 2011 (a)


In millions
Ranking	Outstandings		Industry
1	$	33	Accommodation & Food Svcs
2		25	Construction
3		24	Real Estate Rental & Leasing
4		23	Real Estate Rental & Leasing
5		21	Real Estate Rental & Leasing
6		21	Real Estate Rental & Leasing
7		20	Accommodation & Food Svcs
8		20	Real Estate Rental & Leasing
9		19	Real Estate Rental & Leasing
10		18	Real Estate Rental & Leasing

Total	$	224

As a percent of total nonperforming assets 4%

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

Troubled Debt Restructurings by Type


In millions	March 31 2011		December 31 2010		September 30 2010		June 30 2010		March 31 2010
Commercial	$	260	$	236	$	108	$	54	$	33
Consumer		1,575		1,422		1,226		1,065		848

Total	$	1,835	$	1,658	$	1,334	$	1,119	$	881

Nonperforming		882		784		595		500		385
Accrual (a)		639		543		424		329		217
Credit card (b)		314		331		315		290		279

Total	$	1,835	$	1,658	$	1,334	$	1,119	$	881

Loans whose contractual terms have been restructured in a manner which grants a concession to a borrower experiencing financial difficulties are considered troubled debt restructurings (TDRs). TDRs typically result from our loss mitigation activities and could include rate reductions, principal forgiveness, forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of collateral. Purchased impaired loans are excluded from TDRs.

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

(b)

Credit cards and certain small business and consumer credit agreements whose terms have been modified 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.

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THE PNC FINANCIAL SERVICES GROUP, INC.

Accruing Loans Past Due (Unaudited)

Accruing Loans Past Due 30 to 59 Days (a)


	Amount				Percent of Outstandings
Dollars in millions	Mar. 31 2011		Dec. 31 2010		Mar. 31 2011			Dec. 31 2010
Commercial	$	208	$	251		.37	%		.45	%
Commercial real estate		315		128		1.84			.71
Equipment lease financing		72		37		1.16			.58
Residential real estate		205		226		1.34			1.41
Home equity		146		159		.43			.47
Credit card		41		46		1.11			1.17
Other consumer		60		95		.36			.56

Total	$	1,047	$	942		.70			.62

Accruing Loans Past Due 60 to 89 Days (a)


	Amount				Percent of Outstandings
Dollars in millions	Mar. 31 2011		Dec. 31 2010		Mar. 31 2011			Dec. 31 2010
Commercial	$	56	$	92		.10	%		.17	%
Commercial real estate		65		62		.38			.35
Equipment lease financing		5		2		.08			.03
Residential real estate		91		107		.59			.67
Home equity		96		91		.29			.26
Credit card		25		32		.67			.82
Other consumer		25		32		.15			.19

Total	$	363	$	418		.24			.28

Accruing Loans Past Due 90 Days or More (a)


	Amount				Percent of Outstandings
Dollars in millions	Mar. 31 2011		Dec. 31 2010		Mar. 31 2011			Dec. 31 2010
Commercial	$	49	$	59		.09	%		.11	%
Commercial real estate		6		43		.04			.24
Equipment lease financing		—		1		—			.02
Residential real estate		174		160		1.13			1.00
Home equity		165		174		.49			.51
Credit card		65		77		1.75			1.96
Other consumer		27		28		.16			.16

Total	$	486	$	542		.33			.36

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

Page 11

THE PNC FINANCIAL SERVICES GROUP, INC.

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, Virginia, Missouri, 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, 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 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 or minority 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 or minority owned affiliates are sold to others.

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. These loans require special servicing and management oversight given current market conditions. We obtained the majority of these loans through acquisitions of other companies.

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, including iShares^®, the global product leader in exchange-traded funds. In addition, BlackRock provides market risk management, financial markets advisory and enterprise investment system services globally to a broad base of clients. At March 31, 2011, our economic interest in BlackRock was 20%.

Page 12

THE PNC FINANCIAL SERVICES GROUP, INC.

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


	Three months ended
In millions Income (Loss)	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
Retail Banking	$	(18	)	$	44		$	(4	)	$	80		$	24
Corporate & Institutional Banking		432			543			435			448			368
Asset Management Group		43			28			43			27			39
Residential Mortgage Banking		71			3			97			91			78
Distressed Assets Portfolio		25			(71	)		20			(79	)		73
Other, including BlackRock (b) (c) (d)		279			273			184			214			66

Income from continuing operations before noncontrolling interests	$	832		$	820		$	775		$	781		$	648


Revenue
Retail Banking	$	1,247		$	1,278		$	1,360		$	1,389		$	1,359
Corporate & Institutional Banking		1,098			1,376			1,083			1,230			1,261
Asset Management Group		222			224			216			217			227
Residential Mortgage Banking		258			228			284			252			228
Distressed Assets Portfolio		245			200			248			358			330
Other, including BlackRock (b) (c) (d)		561			597			407			466			358

Revenue from continuing operations	$	3,631		$	3,903		$	3,598		$	3,912		$	3,763

(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. See Business Segment Capital Allocations on the Table of Contents page of this Report. Amounts are presented on a continuing operations basis and therefore exclude the earnings and revenue attributable to GIS, which we sold effective July 1, 2010.

(b)	We consider BlackRock to be a separate reportable business segment but have combined its results with Other for this presentation. Our first quarter 2011 Form 10-Q will include additional information regarding BlackRock.

(c)

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, other than temporary impairment of debt securities 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.

(d)	Amount for the fourth quarter of 2010 includes the $160 million gain ($102 million after taxes) related to our gain on the sale of a portion of our shares of BlackRock stock as part of BlackRock’s November 2010 secondary common stock offering.


Period-end Employees	March 31 2011		December 31 2010		September 30 2010		June 30 2010		March 31 2010
Full-time employees
Retail Banking		20,932		20,925		21,203		21,380		21,522
Corporate & Institutional Banking		3,761		3,756		3,660		3,601		3,760
Asset Management Group		3,042		3,001		2,975		2,964		2,999
Residential Mortgage Banking		3,682		3,539		3,339		3,348		3,340
Distressed Assets Portfolio		127		152		155		169		178
Other
Operations & Technology		8,787		8,727		8,704		8,959		9,259
Staff Services and Other (e)		4,855		4,717		4,584		9,069		9,055

Total Other		13,642		13,444		13,288		18,028		18,314

Total full-time employees		45,186		44,817		44,620		49,490		50,113

Retail Banking part-time employees		4,981		4,965		4,799		4,790		4,798
Other part-time employees		959		987		974		1,104		1,187

Total part-time employees		5,940		5,952		5,773		5,894		5,985

Total		51,126		50,769		50,393		55,384		56,098

The period end employee statistics reflect staff directly employed by the respective business and exclude operations, technology and staff services employees.

(e)	Includes GIS employees totaling 4,528 at June 30, 2010 and 4,573 at March 31, 2010. We sold GIS effective July 1, 2010.

Page 13

THE PNC FINANCIAL SERVICES GROUP, INC.

Retail Banking (Unaudited) (a)


	Three months ended
Dollars in millions	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
INCOME STATEMENT
Net interest income	$	818		$	826		$	861		$	879		$	869
Noninterest income
Service charges on deposits		117			125			157			204			195
Brokerage		53			52			53			55			53
Consumer services		228			239			242			223			208
Other		31			36			47			28			34

Total noninterest income		429			452			499			510			490

Total revenue		1,247			1,278			1,360			1,389			1,359
Provision for credit losses		276			157			327			280			339
Noninterest expense		1,001			1,048			1,039			994			975

Pretax earnings (loss)		(30	)		73			(6	)		115			45
Income taxes (benefit)		(12	)		29			(2	)		35			21

Earnings (loss)	$	(18	)	$	44		$	(4	)	$	80		$	24

AVERAGE BALANCE SHEET
Loans
Consumer
Home equity	$	26,064		$	26,189		$	26,289		$	26,510		$	26,821
Indirect auto		2,400			2,318			2,170			2,005			1,893
Indirect other		1,612			1,695			1,792			1,939			2,080
Education		9,101			8,758			8,817			8,342			8,060
Credit cards		3,731			3,827			3,901			3,948			4,079
Other		1,823			1,840			1,805			1,776			1,793

Total consumer		44,731			44,627			44,774			44,520			44,726
Commercial and commercial real estate		10,786			10,897			11,086			11,275			11,455
Floor plan		1,572			1,482			1,267			1,299			1,296
Residential mortgage		1,287			1,389			1,528			1,683			1,801

Total loans		58,376			58,395			58,655			58,777			59,278
Goodwill and other intangible assets		5,769			5,803			5,837			5,873			5,934
Other assets		2,524			2,180			2,511			3,354			3,142

Total assets	$	66,669		$	66,378		$	67,003		$	68,004		$	68,354

Deposits
Noninterest-bearing demand	$	18,102		$	17,723		$	17,144		$	17,240		$	16,776
Interest-bearing demand		20,920			20,140			19,767			19,977			19,212
Money market		40,382			40,362			40,148			40,283			39,699

Total transaction deposits		79,404			78,225			77,059			77,500			75,687
Savings		7,573			7,155			7,029			7,006			6,552
Certificates of deposit		35,364			37,949			40,378			42,313			45,614

Total deposits		122,341			123,329			124,466			126,819			127,853
Other liabilities		1,147			1,087			1,444			1,656			1,652
Capital		8,048			8,323			8,582			8,538			8,310

Total liabilities and equity	$	131,536		$	132,739		$	134,492		$	137,013		$	137,815

PERFORMANCE RATIOS
Return on average capital		(1	) %		2	%		—	%		4	%		1	%
Return on average assets		(.11	)		.26			(.02	)		.47			.14
Noninterest income to total revenue		34			35			37			37			36
Efficiency		80			82			76			72			72

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

Page 14

THE PNC FINANCIAL SERVICES GROUP, INC.

Retail Banking (Unaudited) (Continued)


	Three months ended
Dollars in millions, except as noted	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
OTHER INFORMATION (a)
Credit-related statistics:
Commercial nonperforming assets	$	301		$	297		$	262		$	297		$	324
Consumer nonperforming assets		409			422			400			336			276

Total nonperforming assets	$	710		$	719		$	662		$	633		$	600

Impaired loans (b)	$	869		$	895		$	939		$	974		$	1,013

Commercial lending net charge-offs	$	67		$	49		$	85		$	100		$	96
Credit card lending net charge-offs (c)		68			68			63			89			96
Consumer lending (excluding credit card) net charge-offs		122			108			99			109			108

Total net charge-offs	$	257		$	225		$	247		$	298		$	300

Commercial lending annualized net charge-off ratio		2.20	%		1.57	%		2.73	%		3.19	%		3.05	%
Credit card lending annualized net charge-off ratio (c)		7.39	%		7.05	%		6.41	%		9.04	%		9.54	%
Consumer lending (excluding credit card) annualized net charge-off ratio		1.17	%		1.02	%		.93	%		1.03	%		1.03	%

Total annualized net charge-off ratio		1.79	%		1.53	%		1.67	%		2.03	%		2.05	%

Home equity portfolio credit statistics:
% of first lien positions (d)		36	%		36	%		35	%		35	%		34	%
Weighted average loan-to-value ratios (d)		73	%		73	%		73	%		73	%		73	%
Weighted average FICO scores (e)		731			726			725			727			725
Annualized net charge-off ratio		1.28	%		.97	%		.90	%		1.01	%		.70	%
Loans 30 - 59 days past due		.47	%		.49	%		.49	%		.45	%		.44	%
Loans 60 - 89 days past due		.31	%		.30	%		.30	%		.29	%		.30	%
Loans 90 days past due		.99	%		1.02	%		.94	%		.91	%		.85	%

Other statistics:
ATMs		6,660			6,673			6,626			6,539			6,467
Branches (f)		2,446			2,470			2,461			2,458			2,461

Customer-related statistics:
Retail Banking checking relationships		5,521,000			5,465,000			5,438,000			5,389,000			5,379,000
Retail online banking active customers		3,226,000			3,057,000			2,968,000			2,774,000			2,782,000
Retail online bill payment active customers		1,029,000			977,000			942,000			870,000			826,000

Brokerage statistics:
Financial consultants (g)		700			694			713			711			722
Full service brokerage offices		34			34			40			41			41
Brokerage account assets (billions)	$	34		$	33		$	31		$	31		$	33

(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)	The decline for the three months ended September 30, 2010 was primarily due to the alignment of charge-off policies within the consolidated portfolio post-conversion.

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

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

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

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

Page 15

THE PNC FINANCIAL SERVICES GROUP, INC.

Corporate & Institutional Banking (Unaudited) (a)


	Three months ended
Dollars in millions, except as noted	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
INCOME STATEMENT
Net interest income	$	799		$	917		$	846		$	934		$	890
Noninterest income
Corporate service fees		187			334			148			237			242
Other		112			125			89			59			129

Noninterest income		299			459			237			296			371

Total revenue		1,098			1,376			1,083			1,230			1,261
Provision for (recoveries of) credit losses		(30	)		18			(48	)		97			236
Noninterest expense		445			506			447			422			446

Pretax earnings		683			852			684			711			579
Income taxes		251			309			249			263			211

Earnings	$	432		$	543		$	435		$	448		$	368

AVERAGE BALANCE SHEET
Loans
Commercial	$	33,194		$	31,895		$	32,195		$	33,006		$	34,081
Commercial real estate		14,347			15,035			15,897			17,010			17,961
Commercial - real estate related		3,463			3,254			3,021			2,901			3,128
Asset-based lending		7,370			6,893			6,362			6,066			5,940
Equipment lease financing		5,540			5,605			5,750			5,265			5,320

Total loans		63,914			62,682			63,225			64,248			66,430
Goodwill and other intangible assets		3,484			3,449			3,553			3,660			3,795
Loans held for sale		1,341			1,644			1,427			1,409			1,410
Other assets		8,241			8,890			8,725			7,712			7,940

Total assets	$	76,980		$	76,665		$	76,930		$	77,029		$	79,575

Deposits
Noninterest-bearing demand	$	27,843		$	27,544		$	25,259		$	23,715		$	22,271
Money market		12,131			11,880			12,105			12,380			12,253
Other		6,057			6,632			6,833			6,856			7,610

Total deposits		46,031			46,056			44,197			42,951			42,134
Other liabilities		12,205			13,155			12,936			10,797			10,871
Capital		7,858			8,073			8,487			9,002			8,800

Total liabilities and equity	$	66,094		$	67,284		$	65,620		$	62,750		$	61,805

PERFORMANCE RATIOS
Return on average capital		22	%		27	%		20	%		20	%		17	%
Return on average assets		2.28			2.81			2.24			2.33			1.88
Noninterest income to total revenue		27			33			22			24			29
Efficiency		41			37			41			34			35

COMMERCIAL MORTGAGE SERVICING PORTFOLIO (in billions)
Beginning of period	$	266		$	263		$	265		$	282		$	287
Acquisitions/additions		10			12			8			7			8
Repayments/transfers		(10	)		(9	)		(10	)		(24	)		(13	)

End of period	$	266		$	266		$	263		$	265		$	282

OTHER INFORMATION
Consolidated revenue from: (b)
Treasury Management	$	301		$	305		$	320		$	299		$	296
Capital Markets	$	139		$	205		$	116		$	124		$	161
Commercial mortgage loans held for sale (c)	$	29		$	9		$	24		$	(2	)	$	27
Commercial mortgage loan servicing (d)		12			107			(40	)		49			88

Total commercial mortgage banking activities	$	41		$	116		$	(16	)	$	47		$	115
Total loans (e)	$	64,364		$	63,688		$	62,466		$	63,990		$	65,137
Net carrying amount of commercial mortgage servicing rights (e)	$	645		$	665		$	616		$	722		$	921
Credit-related statistics:
Nonperforming assets (e)	$	2,574		$	2,594		$	3,064		$	3,103		$	3,343
Impaired loans (e) (f)	$	659		$	714		$	890		$	923		$	1,033
Net charge-offs	$	153		$	349		$	211		$	243		$	271

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

(b)	Represents consolidated PNC amounts.

(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, and commercial MSR valuations.

(e)	Presented as of period end.

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

Page 16

THE PNC FINANCIAL SERVICES GROUP, INC.

Asset Management Group (Unaudited) (a)


	Three months ended
Dollars in millions, except as noted	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
INCOME STATEMENT
Net interest income	$	60		$	65		$	66		$	62		$	63
Noninterest income		162			159			150			155			164

Total revenue		222			224			216			217			227
Provision for (recoveries of) credit losses		(6	)		9			(12	)		14			9
Noninterest expense		160			171			160			160			156

Pretax earnings		68			44			68			43			62
Income taxes		25			16			25			16			23

Earnings	$	43		$	28		$	43		$	27		$	39

AVERAGE BALANCE SHEET
Loans
Consumer	$	4,054		$	4,083		$	4,020		$	4,003		$	3,993
Commercial and commercial real estate		1,503			1,426			1,447			1,422			1,442
Residential mortgage		715			723			802			915			963

Total loans		6,272			6,232			6,269			6,340			6,398
Goodwill and other intangible assets		374			384			394			403			415
Other assets		272			271			236			249			228

Total assets	$	6,918		$	6,887		$	6,899		$	6,992		$	7,041

Deposits
Noninterest-bearing demand	$	1,162		$	1,432		$	1,364		$	1,268		$	1,228
Interest-bearing demand		2,291			2,033			1,869			1,735			1,699
Money market		3,597			3,393			3,258			3,261			3,217

Total transaction deposits		7,050			6,858			6,491			6,264			6,144
Certificates of deposit and other		677			694			714			769			818

Total deposits		7,727			7,552			7,205			7,033			6,962
Other liabilities		70			74			81			92			112
Capital		344			380			413			398			418

Total liabilities and equity	$	8,141		$	8,006		$	7,699		$	7,523		$	7,492

PERFORMANCE RATIOS
Return on average capital		51	%		29	%		41	%		27	%		38	%
Return on average assets		2.52			1.61			2.47			1.55			2.25
Noninterest income to total revenue		73			71			69			71			72
Efficiency		72			76			74			74			69

OTHER INFORMATION
Total nonperforming assets (b)	$	74		$	90		$	102		$	114		$	139
Impaired loans (b) (c)	$	143		$	146		$	155		$	182		$	191
Total net charge-offs (recoveries)	$	(11	)	$	21		$	1		$	16		$	4

ASSETS UNDER ADMINISTRATION (in billions) (b) (d)
Personal	$	102		$	99		$	95		$	92		$	96
Institutional		117			113			111			107			113

Total	$	219		$	212		$	206		$	199		$	209

Asset Type
Equity	$	120		$	115		$	107		$	98		$	104
Fixed income		64			63			66			64			59
Liquidity/Other		35			34			33			37			46

Total	$	219		$	212		$	206		$	199		$	209

Discretionary assets under management
Personal	$	71		$	69		$	67		$	65		$	69
Institutional		39			39			38			34			36

Total	$	110		$	108		$	105		$	99		$	105

Asset Type
Equity	$	57		$	55		$	51		$	46		$	51
Fixed income		36			36			38			36			35
Liquidity/Other		17			17			16			17			19

Total	$	110		$	108		$	105		$	99		$	105

Nondiscretionary assets under administration
Personal	$	31		$	30		$	28		$	27		$	27
Institutional		78			74			73			73			77

Total	$	109		$	104		$	101		$	100		$	104

Asset Type
Equity	$	63		$	60		$	56		$	52		$	53
Fixed income		28			27			28			28			24
Liquidity/Other		18			17			17			20			27

Total	$	109		$	104		$	101		$	100		$	104

(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.

Page 17

THE PNC FINANCIAL SERVICES GROUP, INC.

Residential Mortgage Banking (Unaudited) (a)


	Three months ended
Dollars in millions, except as noted	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
INCOME STATEMENT
Net interest income	$	56		$	60		$	52		$	70		$	74
Noninterest income
Loan servicing revenue
Servicing fees		50			46			61			66			69
Net MSR hedging gains		64			47			86			66			46
Loan sales revenue		84			66			77			49			39
Other		4			9			8			1

Total noninterest income		202			168			232			182			154

Total revenue		258			228			284			252			228
Provision for (recoveries of) credit losses		8			8			21			(8	)		(16	)
Noninterest expense		137			215			119			109			120

Pretax earnings		113			5			144			151			124
Income taxes		42			2			47			60			46

Earnings	$	71		$	3		$	97		$	91		$	78

AVERAGE BALANCE SHEET
Portfolio loans	$	2,734		$	2,667		$	2,572		$	2,540		$	2,820
Loans held for sale		1,802			1,731			1,427			1,148			974
Mortgage servicing rights (MSR)		1,048			863			863			1,084			1,264
Other assets		6,035			5,008			4,302			3,914			3,797

Total assets	$	11,619		$	10,269		$	9,164		$	8,686		$	8,855

Deposits	$	1,587		$	2,089		$	2,108		$	3,088		$	3,602
Borrowings and other liabilities		4,144			3,444			2,740			2,817			2,279
Capital		729			745			767			977			1,195

Total liabilities and equity	$	6,460		$	6,278		$	5,615		$	6,882		$	7,076

PERFORMANCE RATIOS
Return on average capital		39	%		2	%		50	%		37	%		26	%
Return on average assets		2.48			.12			4.20			4.20			3.57
Noninterest income to total revenue		78			74			82			72			68
Efficiency		53			94			42			43			53

RESIDENTIAL MORTGAGE SERVICING PORTFOLIO (in billions)
Beginning of period	$	125		$	131		$	137		$	141		$	145
Acquisitions		5
Additions		3			3			3			2			2
Repayments/transfers		(6	)		(9	)		(9	)		(6	)		(6	)

End of period		127			125			131			137			141

Servicing portfolio statistics: (b)
Fixed rate		90	%		89	%		89	%		89	%		89	%
Adjustable rate/balloon		10	%		11	%		11	%		11	%		11	%
Weighted average interest rate		5.53	%		5.62	%		5.69	%		5.74	%		5.79	%
MSR capitalized value (in billions)	$	1.1		$	1.0		$	.8		$	1.0		$	1.3
MSR capitalization value (in basis points)		88			82			60			71			90
Weighted average servicing fee (in basis points)		30			30			30			30			30

OTHER INFORMATION
Loan origination volume (in billions)	$	3.2		$	3.5		$	2.7		$	2.3		$	2.0
Percentage of originations represented by:
Agency and government programs		100	%		99	%		99	%		99	%		98	%
Refinance volume		85	%		83	%		76	%		58	%		73	%
Total nonperforming assets (b)	$	395		$	349		$	327		$	326		$	418
Impaired loans (b) (c)	$	158		$	161		$	173		$	168		$	298

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

(b)	As of period end.

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

Page 18

THE PNC FINANCIAL SERVICES GROUP, INC.

Distressed Assets Portfolio (Unaudited) (a)


	Three months ended
Dollars in millions	March 31 2011			December 31 2010			September 30 2010			June 30 2010			March 31 2010
INCOME STATEMENT
Net interest income	$	236		$	256		$	283		$	348		$	342
Noninterest income		9			(56	)		(35	)		10			(12	)

Total revenue		245			200			248			358			330
Provision for credit losses		152			231			176			404			165
Noninterest expense		53			81			46			75			48

Pretax earnings (loss)		40			(112	)		26			(121	)		117
Income taxes (benefit)		15			(41	)		6			(42	)		44

Earnings (loss)	$	25		$	(71	)	$	20		$	(79	)	$	73

AVERAGE BALANCE SHEET
Commercial lending:
Commercial/Commercial real estate	$	1,582		$	1,840		$	2,088		$	2,442		$	2,599
Equipment lease financing		757			759			753			807			803

Total commercial lending		2,339			2,599			2,841			3,249			3,402

Consumer lending:
Consumer		5,559			5,903			6,144			6,350			6,573
Residential real estate		6,332			6,845			7,205			8,120			8,190

Total consumer lending		11,891			12,748			13,349			14,470			14,763

Total loans		14,230			15,347			16,190			17,719			18,165
Other assets (d)		(129	)		15			555			797			1,342

Total assets	$	14,101		$	15,362		$	16,745		$	18,516		$	19,507

Deposits							$	2		$	180		$	85
Other liabilities	$	159		$	109			102			77			55
Capital		1,371			1,476			1,605			1,671			1,734

Total liabilities and equity	$	1,530		$	1,585		$	1,709		$	1,928		$	1,874

PERFORMANCE RATIOS
Return on average capital		7	%		(19	)%		5	%		(19	)%		17	%
Return on average assets		.72			(1.83	)		.47			(1.71	)		1.52

OTHER INFORMATION
Nonperforming assets (b)	$	1,209		$	1,243		$	1,218		$	1,436		$	1,777
Impaired loans (b) (c)	$	5,685		$	5,879		$	6,001		$	6,867		$	7,124
Net charge-offs	$	123		$	183		$	107		$	276		$	111
Annualized net charge-off ratio		3.51	%		4.73	%		2.62	%		6.25	%		2.48	%

LOANS (in billions) (b)
Commercial lending:
Commercial/Commercial real estate	$	1,474		$	1,684		$	1,911		$	2,282		$	2,641
Equipment lease financing		695			764			757			757			806

Total commercial lending		2,169			2,448			2,668			3,039			3,447

Consumer lending:
Consumer		5,381			5,769			6,011			6,323			6,511
Residential real estate		6,325			6,564			7,014			7,911			8,105

Total consumer lending		11,706			12,333			13,025			14,234			14,616

Total loans	$	13,875		$	14,781		$	15,693		$	17,273		$	18,063

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

(b)	As of period end.

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

(d)	Other assets were negative in the first quarter of 2011 due to a decline in deferred taxes and an increase in loan reserve.

Page 19

THE PNC FINANCIAL SERVICES GROUP, INC.

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.

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.

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.

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 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 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 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.

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THE PNC FINANCIAL SERVICES GROUP, INC.

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.

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%. Our real estate market values are updated on an annual basis but may be updated more frequently for select loans.

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. The LGD rating is updated with the same frequency as the borrower’s PD rating, and should be done more frequently than the PD if the collateral values and amounts change often.

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.

Nonperforming assets - Nonperforming assets include non-accrual loans, certain non-accrual troubled debt restructured loans, OREO and foreclosed 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.

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THE PNC FINANCIAL SERVICES GROUP, INC.

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).

Other real estate owned (OREO) - Foreclosed 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 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.

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.

Provision-adjusted net interest margin - Net interest margin less the ratio of the annualized provision for credit losses to average interest-earning assets.

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 securities and derivative instruments.

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

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

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THE PNC FINANCIAL SERVICES GROUP, INC.

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 - A restructuring of a loan whereby the lender for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that the lender 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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