Filed by The PNC Financial Services Group, Inc.
Pursuant to Rule 425 under the Securities Act of 1933 and
deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934

Subject Company: Mercantile Bankshares Corporation
Commission File No. 0-5127

     On January 23, 2007, The PNC Financial Services Group, Inc. (“PNC”) issued the attached press release and supplementary information announcing its earnings and business for the quarter and year ended December 31, 2006, and presentation materials from an accompanying presentation to investors.


                                                                                                                                                                                                            Exhibit 99.1


CONTACTS:

MEDIA:
Brian E. Goerke
(412) 762-4550
corporate.communications@pnc.com

INVESTORS:
William H. Callihan
(412) 762-8257
investor.relations@pnc.com

PNC 2006 DILUTED EPS OF $8.73 SETS ALL-TIME RECORD

Adjusted diluted EPS of $5.06 excludes net effects of BlackRock transaction
and balance sheet repositioning

Total assets exceed $100 billion for first time

     PITTSBURGH, Jan. 23, 2007 – The PNC Financial Services Group, Inc. (NYSE: PNC) today reported record 2006 net income of $2.6 billion, or $8.73 per diluted share, compared with 2005 net income of $1.3 billion, or $4.55 per diluted share.

     PNC earned adjusted net income of $1.5 billion, or $5.06 per diluted share, for the year. Adjusted net income for 2006 excluded, after-tax, a $1.3 billion gain on the BlackRock/Merrill Lynch Investment Managers (MLIM) transaction, a $127 million loss on the repositioning of PNC’s securities portfolio, $47 million in BlackRock/MLIM transaction integration costs and a $31 million loss on the repositioning of PNC’s mortgage loan portfolio, as noted in the adjustments on page 13 of this release.

     Net income for the fourth quarter of 2006 was $376 million, or $1.27 per diluted share. Excluding BlackRock/MLIM transaction integration costs of $8 million after-tax, adjusted net income for the fourth quarter of 2006 was $384 million, or $1.30 per diluted share. Net income was $355 million, or $1.20 per diluted share, in the fourth quarter of 2005.

     “PNC delivered extraordinary value to its shareholders in 2006,” said PNC Chairman and Chief Executive Officer James E. Rohr. “Total return was among the best in the industry. We grew customers, revenue, and average loans and deposits compared with 2005. At the same time, we accomplished key strategic initiatives. The completion of the BlackRock/MLIM transaction, the announcement of our planned Mercantile acquisition and our continuing success in risk management position us well for the years ahead.”

HIGHLIGHTS


                 territory. PNC’s priority for the integration is the retention of customers and customer-facing staff. The transaction is expected to close
                
in March of 2007.

     Return on average common shareholders’ equity for the year was 27.97 percent, or 16.24 percent, as adjusted. Return on average common shareholders’ equity for 2005 was 16.58 percent. For the fourth quarter of 2006, return on average common shareholders’ equity was 13.82 percent, or 14.10 percent, as adjusted. The return on average common shareholders’ equity was 16.91 percent for the fourth quarter of 2005. The decline of the return from the fourth quarter of 2005 to the fourth quarter of 2006 was due to the significant increase in equity resulting from the BlackRock/MLIM transaction.

     As described on page 9 of this news release, the Consolidated Financial Highlights accompanying this news release include several new and reformatted schedules to reconcile the reported and adjusted results, including adjusted results referred to in this news release, and to provide information illustrating the impact of the equity method of accounting for BlackRock.

BUSINESS SEGMENT RESULTS

Retail Banking

Retail Banking earned $184 million for the quarter, compared with $195 million for the year-ago quarter and $206 million for the third quarter of 2006. The decreases when compared with the prior year fourth quarter and the prior quarter were largely the result of an increase in the provision for credit losses due to small business commercial loan growth. Revenue growth, primarily driven by fee income, was substantially offset by higher expenses associated with increased fee income and business growth initiatives. These initiatives included continued expansion of the Private Client Group and branch network, the launch of a refined set of checking products, a new PNC branded credit card, and an increase to majority ownership of the merchant services business.
 
     Full year 2006 earnings increased $83 million, to $765 million, a 12 percent increase in earnings. Compared with the full year 2005, revenue increased 9 percent, while noninterest expense increased 6 percent, creating positive operating leverage.

Retail Banking highlights:

Corporate & Institutional Banking

Corporate & Institutional Banking earned $463 million in 2006, compared with $480 million in 2005. The 2005 results included the after-tax benefit of a large loan recovery of $34 million recognized in the second quarter. Earnings grew 7 percent year over year excluding the provision for credit losses of $27 million after tax in 2006 and net recovery of credit losses of $20 million after tax in 2005.


     Corporate & Institutional Banking earned $129 million in the fourth quarter, compared with $108 million in the fourth quarter of the prior year and $113 million in the third quarter of 2006. The increase when compared with the fourth quarter of 2005 was largely the result of a decrease in provision for credit losses and increases in corporate service fees and net interest income, partly offset by an increase in noninterest expense. The earnings increase compared with the prior quarter was primarily attributable to growth in fee and trading revenue, partly offset by an increase in noninterest expense.

Corporate & Institutional Banking highlights:

BlackRock

PNC’s BlackRock segment earned $50 million in the fourth quarter of 2006, compared with $48 million in the fourth quarter of 2005 and $42 million in the prior quarter. These amounts include the impact of PNC’s taxes associated with our share of BlackRock’s income, previously recorded in the Other segment. 

     
For PNC business segment reporting presentation, PNC reflects its portion of integration costs incurred by BlackRock for the MLIM transaction in “Other” rather than in earnings from its BlackRock investment.

     
Prior to the September 29, 2006 closing of the MLIM transaction, PNC owned approximately 69 percent of BlackRock. For the periods prior to the BlackRock/MLIM transaction closing, PNC’s earnings from its investment in BlackRock as presented above have been reduced by minority interest in the income of BlackRock. 

     
Upon closing of the MLIM acquisition, PNC owned approximately 34 percent of BlackRock. In accordance with generally accepted accounting principles, PNC deconsolidated BlackRock and, beginning with the fourth quarter of 2006, accounted for BlackRock’s earnings contribution using the equity method, with BlackRock’s contribution to PNC’s earnings reported in the asset management line item of PNC’s consolidated income statement.

PFPC

PFPC earned $124 million in 2006, compared with $104 million in 2005. The increase resulted from the benefit of a deferred tax reversal of $14 million in the third quarter, increased servicing revenue and disciplined expense control. 

     
The business earned $31 million for the quarter, compared with $29 million in the year-earlier period and $40 million in the linked quarter. The earnings decrease from the third quarter of 2006 reflected the tax benefit in the earlier period. 

     
PFPC provided accounting/administration services for $837 billion of net fund assets and provided custody services for $427 billion of fund assets as of December 31, 2006, compared with $835 billion and $476 billion, respectively, on December 31, 2005 and $774 billion and $399 billion, respectively, at September 30, 2006. Total fund assets serviced by PFPC were $2.2 trillion at December 31, 2006, which represented an increase over the asset servicing levels of $1.9 trillion at December 31, 2005 and $2.0 trillion at September 30, 2006.


Other

The “Other” category includes the gains (losses) related to BlackRock, BlackRock/MLIM transaction integration costs, One PNC implementation costs, asset and liability management activities, related net securities gains or losses, certain trading activities, equity management activities, differences between business segment performance reporting and financial statement (GAAP) reporting, corporate overhead, and intercompany eliminations. 

     
PNC recorded a net loss of $18 million in Other for the quarter, including $8 million after-tax in BlackRock/MLIM transaction integration costs, compared with a net loss of $25 million in the fourth quarter of 2005 and a net gain of $1.1 billion in the third quarter of 2006. The third quarter of 2006 included a $1.3 billion after-tax gain on the BlackRock/MLIM transaction, partly offset by the $127 million after-tax securities portfolio rebalancing loss, $31 million after-tax BlackRock/MLIM transaction integration costs and a $31 million after-tax loss on the mortgage loan portfolio repositioning.

CONSOLIDATED REVENUE REVIEW

Taxable-equivalent net interest income totaled $571 million for the quarter, an increase of $3 million compared with the year-earlier period and a decrease of $3 million compared with the third quarter of 2006. The net interest margin in the fourth quarter of 2006 was 2.88 percent, compared with 2.96 percent in the year-earlier period and 2.89 percent in the third quarter of 2006. The increase in net interest income over the prior year quarter was largely the result of increased interest income from loans and securities, partly offset by the higher cost of deposits and borrowings. The decrease compared with the prior quarter was due to the deconsolidation of BlackRock. The Consolidated Financial Highlights accompanying this news release include a reconciliation of taxable-equivalent net interest income to net interest income as reported under GAAP. 

     
Noninterest income totaled $969 million, or $979 million as adjusted for BlackRock/MLIM transaction integration costs, for the fourth quarter of 2006 compared with $1.2 billion, or $837 million as adjusted, for the same quarter in the prior year, and $2.9 billion, or $832 million as adjusted, in the third quarter of 2006. Noninterest income as adjusted reflects the impact of certain significant 2006 items (the BlackRock/MLIM transaction and balance sheet repositionings) and BlackRock equity method of accounting as noted in the Consolidated Financial Highlights section of this release. 

     
The increase in adjusted noninterest income compared with the fourth quarter of 2005 and third quarter 2006 adjusted results was due primarily to an increase in fund servicing, asset management, and corporate and consumer service revenues. Customer-driven fee revenue increased compared with the year earlier period, including a 24 percent increase in corporate services and a 16 percent increase in consumer services. 

     
Asset management revenue as adjusted increased 24 percent compared with the fourth quarter of 2005, due to an increased contribution from BlackRock and higher assets under management in Retail Banking’s wealth management business. Fund servicing revenue increased largely as a result of growth in distribution/out-of-pocket revenues at PFPC due to the BlackRock/MLIM merger. These revenues and the related expenses are recorded on a gross basis with no operating margin.

CONSOLIDATED EXPENSE REVIEW

Noninterest expense for the three months ended December 31, 2006 was $969 million, compared with the prior year quarter noninterest expense of $1.1 billion, or $870 million as adjusted, and noninterest expense of $1.2 billion, or $872 million as adjusted, for the third quarter of 2006. Also excluding PFPC’s distribution/out-of-pocket expenses noted above, which were $64 million, $32 million and $35 million in the fourth quarter 2006, fourth quarter 2005 and third quarter 2006, respectively, the increases compared with both adjusted quarters would have been approximately $67 million, or 8 percent. The increase was equally driven by increased costs associated with higher staff incentive compensation, including a $16 million one-time payment to non-executive employees, and other expense growth, including the call of trust preferred securities. Noninterest expense as adjusted reflects adjustments related to the impact of certain significant 2006 items and BlackRock equity method of accounting, as listed in the Consolidated Financial Highlights section of this release.

CONSOLIDATED BALANCE SHEET REVIEW

Total assets were $101.8 billion at December 31, 2006, compared with $92.0 billion at December 31, 2005, and $98.4 billion at September 30, 2006. The increase compared with year-end 2005 reflected a $4.0 billion increase in equity investments primarily due to the impact of the BlackRock/MLIM transaction on PNC and growth in securities and loans. The increase compared with the third quarter of 2006 was largely due to an increase in loans and securities, reflecting the third quarter balance sheet repositioning. 

     
Average loans of $49.0 billion for the quarter increased $210 million over the year-earlier period and decreased $1.3 billion, or 3 percent, compared with the linked period. Average loans increased $2.1 billion, or 4 percent, compared with the prior year fourth quarter excluding the $1.9 billion decrease in residential mortgage loans related to PNC’s balance sheet repositioning. The increase in average loans compared with the fourth quarter of 2005 was primarily a result of increased


commercial and commercial real estate loans. The decrease from the third quarter of 2006 was a result of the lower residential mortgages after the balance sheet repositioning, partly offset by growth in commercial real estate and consumer loans. 

     
Average securities for the fourth quarter of 2006 were $21.2 billion, an increase of $413 million, or 2 percent, compared with the fourth quarter of 2005, and average securities decreased $469 million, or 2 percent, compared with the linked quarter. The increase in securities compared with the prior year quarter was primarily the result of an increase in mortgage- and asset-backed securities, offset by a decline in U.S. Treasury and government agency securities. This change in mix resulted in part from the third quarter 2006 balance sheet repositioning. The decrease in securities compared with the third quarter of 2006 was primarily the result of the balance sheet repositioning, somewhat offset by growth in mortgage- and asset-backed securities. 

     
Average deposits of $65.0 billion increased $4.2 billion, or 7 percent, compared with the same quarter in the prior year, and increased $393 million, or 1 percent, compared with the linked quarter. Average deposits grew from the prior year quarter primarily as a result of an increase in interest-bearing deposits as customers continued to shift deposits to higher-return accounts. Average deposits compared with the prior quarter increased as a result of growth in money market and retail certificates of deposit, partly offset by a decline in Eurodollar deposits. Average demand and other noninterest-bearing deposits increased $770 million, or 5 percent, compared with the prior year quarter and increased $278 million, or 2 percent, versus the linked quarter, largely as a result of deposits attributed to the commercial mortgage servicing portfolio at Midland. 

     
PNC’s Tier 1 risk-based capital ratio was an estimated 10.4 percent at December 31, 2006, compared with 8.3 percent at December 31, 2005 and 10.4 percent at September 30, 2006. 

     
The company repurchased 1.3 million common shares during the fourth quarter under its current common stock repurchase program. The board has authorized a repurchase of up to 20 million shares of common stock, of which approximately 14.5 million remained at the end of the fourth quarter. Following the vote of the Mercantile shareholders regarding the acquisition by PNC, management expects to resume its share repurchase program. 

     
Under the terms of its definitive agreement to acquire Mercantile Bankshares Corporation, which is subject to customary closing conditions, including regulatory and Mercantile shareholder approvals, PNC plans to issue 52.5 million shares of common stock and pay Mercantile shareholders and option holders $2.13 billion in cash upon close of the transaction, expected in March of 2007.

ASSET QUALITY REVIEW

Overall asset quality remained very strong as the company continued to focus on lending that meets prudent risk-reward parameters. The provision for credit losses for the fourth quarter of 2006 was $42 million, compared with $24 million in the fourth quarter of 2005 and $16 million in the third quarter of 2006. The increase in the provision compared with the linked quarter was primarily due to growth in the loan portfolio. 

     
Net charge-offs for the fourth quarter of 2006 were $45 million, or .36 percent of average loans, compared with net charge-offs of $41 million, or .33 percent, for the fourth quarter of 2005 and net charge-offs of $47 million, or .37 percent, for the linked quarter. 

     
Nonperforming assets at December 31, 2006 declined 21 percent compared with the balances at December 31, 2005 and 10 percent compared with September 30, 2006.

CONSOLIDATED FINANCIAL HIGHLIGHTS

The Consolidated Financial Highlights accompanying this news release include: (1) adjusted results for 2006 and 2005, the four quarters of 2006 and the fourth quarter of 2005 illustrating the impact of certain 2006 items, including the gain on the BlackRock/MLIM transaction net of expense, securities portfolio and mortgage loan portfolio rebalancing losses and BlackRock/MLIM transaction integration costs, due to the magnitude of the aggregate of those items for those periods and the impact of the deconsolidation and application of the equity method of accounting for BlackRock, and (2) a reconciliation of these adjusted amounts to net income, certain components of net income, diluted earnings per share and selected ratios as reported under generally accepted accounting principles (GAAP), and to GAAP condensed, consolidated income statements. We have provided these adjusted amounts and reconciliations so that investors, analysts, regulators and others will be better able to evaluate the impact of certain significant items on our GAAP results for these periods. The absence of other adjusted amounts for periods discussed in this news release is not intended to imply that there could not have been other similar types of adjustments for these periods, but any such adjustments would not have been similar in magnitude to the amount of the adjustments shown.


CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL INFORMATION

PNC Chairman and Chief Executive Officer James E. Rohr and Chief Financial Officer Richard J. Johnson will hold a conference call for investors today at 10:30 a.m. Eastern Time regarding the topics addressed in this release and the related financial supplement. Investors should call five to 10 minutes before the start of the conference call at (800) 990-2718 or (706) 643-0187 (international). A slide presentation to accompany the conference call remarks may be found at www.pnc.com under “About PNC – Investor Relations – Investor Events.” A taped replay of the call will be available for one week at (800) 642-1687 or (706) 645-9291 (international); enter conference ID 4753520.

     In addition, Internet access to the call (listen only) and to PNC’s fourth quarter and full year 2006 earnings release and supplemental financial information will be available at www.pnc.com under “About PNC – Investor Relations – Investor Events.” A replay of the webcast will be available on PNC’s Web site for 30 days.

     The PNC Financial Services Group, Inc. (www.pnc.com) is one of the nation’s largest diversified financial services organizations providing retail and business banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund services.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

We make statements in this news release and in the conference call regarding this news release, and we may from time to time make other statements, regarding our outlook or expectations for earnings, revenues, expenses and/or other matters regarding or affecting PNC that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions.

Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. We do not assume any duty and do not undertake to update our forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that we anticipated in our forward-looking statements, and future results could differ materially from our historical performance.

Our forward-looking statements are subject to the following principal risks and uncertainties. We provide greater detail regarding some of these factors in our Form 10-K for the year ended December 31, 2005 and in our 2006 Form 10-Qs, including in the Risk Factors and Risk Management sections of those reports. Our forward-looking statements may also be subject to other risks and uncertainties, including those that we may discuss elsewhere in this news release or in our filings with the SEC, accessible on the SEC’s website at www.sec.gov and on or through our corporate website at www.pnc.com under “About PNC – Investor Relations – Financial Information.”


In addition, our pending acquisition of Mercantile Bankshares presents us with a number of risks and uncertainties related both to the acquisition transaction itself and to the integration of the acquired businesses into PNC after closing. These risks and uncertainties include the following:

In addition to the pending Mercantile Bankshares transaction, we grow our business from time to time by acquiring other financial services companies. Acquisitions in general present us with risks other than those presented by the nature of the business acquired. In particular, acquisitions may be substantially more expensive to complete (including as a result of costs incurred in connection with the integration of the acquired company) and the anticipated benefits (including anticipated cost savings and strategic gains) may be significantly harder or take longer to achieve than expected. In some cases, acquisitions involve our entry into new businesses or new geographic or other markets, and these situations also present risks resulting from our inexperience in these new areas. As a regulated financial institution, our pursuit of attractive acquisition opportunities could be negatively impacted due to regulatory delays or other regulatory issues. Regulatory and/or legal issues related to the pre-acquisition operations of an acquired business may cause reputational harm to PNC following the acquisition and integration of the acquired business into ours and may result in additional future costs and expenses arising as a result of those issues.


Additional Information about the PNC/Mercantile Transaction

The PNC Financial Services Group, Inc. and Mercantile Bankshares Corporation have filed a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Exchange Commission (the “SEC”). WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

Investors may obtain these documents free of charge at the SEC’s website (www.sec.gov). In addition, documents filed with the SEC by The PNC Financial Services Group, Inc. are available free of charge from Shareholder Relations at (800) 843-2206. Documents filed with the SEC by Mercantile Bankshares are available free of charge from Mercantile Bankshares Corporation, 2 Hopkins Plaza, P.O. Box 1477, Baltimore, Maryland 21203, Attention: Investor Relations.

The directors, executive officers, and certain other members of management and employees of Mercantile Bankshares Corporation are participants in the solicitation of proxies in favor of the merger from the shareholders of Mercantile Bankshares Corporation. Information about the directors and executive officers of Mercantile Bankshares Corporation is set forth in the proxy statement for its 2006 annual meeting of shareholders, which was filed with the SEC on March 29, 2006. Additional information regarding the interests of such participants is included in the proxy statement/prospectus filed with the SEC.


                     Consolidated Financial Highlights (Unaudited)                                    
 
   Three months ended                    December 31, 2006                                 September 30, 2006                                 December 31, 2005              
   Dollars in millions, except per share data                             As Reported       As Adjusted (a)   As Reported   As Adjusted (a)   As Reported   As Adjusted (a)
FINANCIAL PERFORMANCE                                            
                       
Revenue                                            
           Net interest income (taxable-                                            
                   equivalent basis) (b)............................   $ 571   $ 571   $ 574   $ 571   $ 568   $ 563
                Noninterest income...................................       969       979   2,943     832   1,154   837






                              Total revenue....................................   $ 1,540   $ 1,550   $ 3,517   $ 1,403   $ 1,722   $ 1,400






Net income.......................................................................   $ 376   $ 384   $ 1,484   $ 380   $ 355   $ 355
               
Diluted earnings per common share............................   $ 1.27   $ 1.30   $ 5.01   $ 1.28   $ 1.20   $ 1.20
Cash dividends declared per common share..............   $ .55   $ .55   $ .55   $ .55   $ .50   $ .50
 
SELECTED RATIOS                                            
Net interest margin.........................................................       2.88%        2.88%                  2.89%   2.88%   2.96%                            2.93%
Noninterest income to total revenue (c).....................       63       63   84       60       68   60
Efficiency (d)..................................................       63       63   33       62       66   63
Return on:                                            
           Average common shareholders’ equity......          13.82%         14.10%      65.94%         16.88%         16.91%     16.91%
           Average assets................................................       1.51       1.54   6.17   1.58   1.53   1.53
 
           Year ended               December 31, 2006   December 31, 2005
           Dollars in millions, except per share data               As Reported     As Adjusted (a)   As Reported   As Adjusted (a)
        FINANCIAL PERFORMANCE                                            
       Revenue                                            
                   Net interest income (taxable-equivalent basis) (b)       $ 2,270   $ 2,260   $ 2,187   $ 2,175
                   Noninterest income                   6,327       3,560       4,173       3,122




Total revenue               $ 8,597   $ 5,820   $ 6,360   $ 5,297




       Net income               $ 2,595   $ 1,507   $ 1,325   $ 1,325




       Diluted earnings per common share...................               $ 8.73   $ 5.06   $ 4.55   $ 4.55
       Cash dividends declared per common share....           $ 2.15   $ 2.15   $ 2.00   $ 2.00
 
       SELECTED RATIOS                                            
       Net interest margin                   2.92%                2.91%        3.00%   2.98%
       Noninterest income to total revenue (c)                   74       61       66       59
       Efficiency (d)                   52       62       68       66
       Return on:                                            
                   Average common shareholders’ equity               27.97%                16.24%       16.58%   16.58%
                   Average assets                   2.73       1.59       1.50       1.50

                                                                 
Certain prior period amounts included in these Consolidated Financial Highlights have been reclassified to conform with the current period presentation.

(a)      Amounts adjusted for (1) the impact of certain significant 2006 items for informational purposes due to the magnitude of the aggregate of such adjustments for these periods and (2) as if we had recorded our investment in BlackRock on the equity method for all periods presented. Reconciliations of these adjusted amounts to net income, diluted earnings per share and selected ratios as reported on a generally accepted accounting principles (“GAAP”) basis are included on page 13. Reconciliations of net interest income, noninterest income, noninterest expense, minority interest, and income taxes as reported (GAAP basis) to adjusted amounts are included on page 14.
(b)      See Reconciliation of Net Interest Income on a GAAP Basis to Taxable-Equivalent Net Interest Income on page 14.

(c)      Calculated as noninterest income divided by the sum of net interest income (GAAP basis) and noninterest income. Noninterest income for the first, second and third quarters of 2006 and all of 2005 included the impact of BlackRock on a consolidated basis, primarily consisting of asset management fees. Fourth quarter 2006 noninterest income reflected income from our equity investment in BlackRock included in the “Asset management” line item.
(d)      Calculated as noninterest expense divided by the sum of net interest income (GAAP basis) and noninterest income.

 


RECONCILIATION OF GAAP NET INCOME, DILUTED EPS                    
AND SELECTED RATIOS TO ADJUSTED AMOUNTS                        
 
                                         Three months ended December 31, 2006                
                        Adjustments,     Net   Diluted
   Dollars in millions, except per share data                                                                                 Pretax             Income           EPS Impact 
Net income, GAAP basis.................................................................................................................                 $                376   $               1.27
Adjustments:                                    
           BlackRock/MLIM transaction integration costs (a)......................................................           $                 10                               8                    0.03
Net income, as adjusted....................................................................................................................                 $                 384   $               1.30
 
                          Three months ended September 30, 2006                                              Year ended December 31, 2006                        
        Adjustments,   Net       Diluted   Adjustments,     Net   Diluted
        Pretax   Income       EPS Impact   Pretax   Income   EPS Impact
Net income, GAAP basis........................       $     1,484   $ 5.01       $             2,595   $               8.73
Adjustments:                                    
           Gain on BlackRock/MLIM                                    
                   transaction (b).................   $               (2,078)   (1,293)       (4.36)   $             (2,078)       (1,293)   (4.36)
           Securities portfolio                                    
                   rebalancing loss (b)........       196   127       0.43   196       127   0.43
           BlackRock/MLIM transaction                                
                   integration costs (a)........       72   31       0.10   101       47   0.16
           Mortgage loan portfolio                                    
                   repositioning loss (b).....       48                31                       0.10   48                        31                   0.10
Net income, as adjusted       $         380   $              1.28       $             1,507   $              5.06

(a)      BlackRock/MLIM transaction integration costs for the third quarter 2006 were included in noninterest expense. For the full year 2006, BlackRock/MLIM transaction integration costs recognized by PNC totaled $101 million, including $91 million for the first nine months of 2006 that were included in noninterest expense as BlackRock was consolidated during this period. The remaining $10 million of integration costs, recognized during the fourth quarter 2006, were included in noninterest income as a negative component of the “Asset management” line item. This line item includes the impact of our equity earnings from our investment in BlackRock, including PNC’s share of BlackRock’s fourth quarter 2006 integration costs.
(b)      Included in noninterest income on a pretax basis.

    Three months ended   Three months ended   Three months ended   Year ended   Year ended
    December 31   September 30   December 31   December 31   December 31
                       2006                                         2006                                         2005                                  2006                        2005          
Net interest margin, as                    
     reported..............................     2.88%   2.89%   2.96%   2.92%   3.00%
Pretax impact of                    
     adjustments.......................                                                                           (0.01)                                      (0.03)                        (0.01)                     (0.02)
Net interest margin, as                    
     adjusted.............................                                     2.88%                                     2.88%                                     2.93%                       2.91%                    2.98%
Noninterest income to                    
     total revenue, GAAP                    
     basis...................................   63%   84%   68%   74%   66%
Pretax impact of                    
     adjustments.......................                                                                                (24)                                            (8)                           (13)                          (7)
Noninterest income to                    
     total revenue, as                    
     adjusted.............................                                          63%                                         60%                                         60%                          61%                       59%
Efficiency, GAAP basis .   63%   33%   66%   52%   68%
Pretax impact of                    
     adjustments.......................                                                                                   29                                            (3)                              10                          (2)
Efficiency, as adjusted...........                                          63%                                         62%                                         63%                          62%                       66%
 
Return on:                    
           Average common                    
                  shareholders’                    
                  equity, GAAP                    
                  basis.................   13.82%   65.94%   16.91%   27.97%   16.58%
           After-tax impact                    
                  of adjustments.                                0.28                                     (49.06)                                                           (11.73)                        
           Average common                    
                  shareholders’                    
                  equity, as                    
                  adjusted............                                     14.10%                                    16.88%                                    16.91%                     16.24%                  16.58%
           Average assets,                    
                  GAAP basis.....   1.51%   6.17%   1.53%   2.73%   1.50%
           After-tax impact                    
                  of adjustments.                                0.03                                       (4.59)                                                              (1.14)                        
           Average assets, as                    
                  adjusted............                                       1.54%                                      1.58%                                       1.53%                       1.59%                    1.50%

The tables above represent reconciliations of certain GAAP disclosures to adjusted amounts for the periods presented. We have provided these adjusted amounts and reconciliations so that shareholders, investor analysts, regulators and others will be better able to evaluate the impact of certain significant items on our GAAP results for these periods. This information supplements our results as reported in accordance with GAAP and should not be viewed in isolation from, or as a substitute for, our GAAP results. The absence of other adjustments is not intended to imply that there could not have been other similar types of adjustments, but any such adjustments would not have been similar in magnitude to the amount of the adjustments shown. Our third quarter 2006 Form 10-Q includes additional information regarding our BlackRock/MLIM transaction accounting, securities portfolio rebalancing, and mortgage loan portfolio repositioning.


                   RECONCILIATION OF GAAP CONDENSED CONSOLIDATED                                        
                   INCOME STATEMENT TO ADJUSTED AMOUNTS (a)                                            
 
   Three months   December 31, 2006   September 30, 2006       December 31, 2005



   ended                                                                    
   Dollars in   As           As                 As       As           As
   millions   Reported   Adjustments (a)   As Adjusted (a)   Reported        Adjustments (a)   Adjusted (a)   Reported   Adjustments (b)   Adjusted (b)










Net interest                                                                    
     income   $ 566   $ 566   $ 567                                 $ (3) $      $ 564   $ 555   $ (5)   $ 550
Provision for                                                                    
     credit losses       42       42   16                       16       24               24
Noninterest                                                                    
     income       969 $   10   979   2,943           (2,111)       832       1,154       (317)       837
Noninterest                                                                    
     expense       969       969   1,167           (295)       872       1,127       (257)       870









     Income                                                                    
           before                                                                    
           minority                                                                    
           interest                                                                    
           and                                                                    
           income                                                                    
           taxes       524   10   534   2,327           (1,819)       508       558       (65)       493
Minority                                                                    
     interest in                                                                    
     income of                                                                    
     BlackRock                   6           (6)               22       (22)        
Income taxes       148   2   150   837           (709)       128       181       (43)       138









 
     Net income .   $ 376 $   8 $   384   $ 1,484   $ (1,104) $       380   $ 355           $ 355









 
 
                December 31, 2006   December 31, 2005


             Year ended                                                                
                As           As   As             As    
             Dollars in millions           Reported   Adjustments (a)   Adjusted (a)   Reported        Adjustments (b)   Adjusted (b)    









 
         Net interest income       $ 2,245   $ (10)   $ 2,235   $ 2,154   $ (12)   $ 2,142    
         Provision for credit losses   124                   124           21               21    
         Noninterest income       6,327       (2,767)           3,560       4,173       (1,051)       3,122    
         Noninterest expense       4,443       (856)           3,587       4,306       (853)       3,453    






 
                     Income before minority interest                                                        
    and income taxes   4,005       (1,921)           2,084       2,000       (210)       1,790    
         Minority interest in income of                                                        
BlackRock           47       (47)                       71       (71)            
         Income taxes           1,363       (786)           577           604       (139)       465    


 




 
                     Net income       $ 2,595   $ (1,088)   $ 1,507   $ 1,325           $ 1,325    







                                                        
(a)      See page 13 for additional information. We have included adjusted amounts as additional, supplemental information in the tables on this page 14 because of the magnitude of the aggregate of such adjustments for certain significant items for these periods. Additionally, the amounts also include the impact of the deconsolidation of BlackRock as if we had recorded our investment in BlackRock on the equity method for these periods presented.
(b)      Amounts adjusted for the impact of the deconsolidation of BlackRock as if we had recorded our investment in BlackRock on the equity method for these periods presented.
 

RECONCILIATION OF NET INTEREST INCOME ON A GAAP BASIS TO TAXABLE-EQUIVALENT NET INTEREST INCOME
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 a taxable investment. To provide more meaningful comparisons of yields and margins for all earning assets, we also provide revenue 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 other taxable investments. This adjustment is not permitted under GAAP in the Consolidated Income Statement.

The following is a reconciliation of net interest income as reported in the Consolidated Income Statement to net interest income on a taxable-equivalent basis (in millions):

                              Three months ended                                                       Year ended                          
    December 31   September 30   December 31   December 31        December 31    
              2006                         2006                           2005                           2006                      2005             
               Net interest income, GAAP basis......................   $                   566   $                      567   $                         555   $                2,245   $                   2,154    
               Taxable-equivalent adjustment..........................   5       7       13       25       33    
               Net interest income, taxable-equivalent basis...   $                   571   $                      574   $                         568   $                2,270   $                   2,187    
 
                                     Three months ended                                                      Year ended                
    December 31   September 30   December 31   December 31   December 31
   In millions                                                                                                  2006                              2006                           2005                        2006                        2005            
BUSINESS EARNINGS SUMMARY (a)                                        
Retail Banking............................................................................   $                                  184   $                       206   $                         195   $                   765   $                         682
Corporate & Institutional Banking.........................................       129       113       108       463       480
BlackRock (b) (c) (d).................................................................       50       42       48       187       152
PFPC............................................................................................                               31                       40                         29                  124                       104
           Total business segment earnings       394       401       380       1,539       1,418
Other (d) (e)................................................................................                             (18)                   1,083                       (25)                1,056                      (93)
           Total consolidated net income (f)............................   $                                 376   $                  1,484   $                        355   $               2,595   $                    1,325

(a)      This summary also serves as a reconciliation of total earnings for all business segments to total consolidated net income. Our business segment 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 businesses and management structure change. Certain prior period amounts have been reclassified to conform with the current period presentation.
(b)      Our ownership interest in BlackRock was approximately 69% -70% for the fourth quarter and full year 2005 and through the first nine months of 2006. Effective September 29, 2006, PNC’s ownership interest in BlackRock dropped to approximately 34%.
(c)      These amounts have been reduced by minority interest in income of BlackRock, excluding MLIM integration costs, totaling $20 million and $22 million for the three months ended September 30, 2006 and December 31, 2005, respectively, and totaling $65 million and $71 million for the years ended December 31, 2006 and 2005, respectively.
(d)      For this PNC business segment reporting presentation, integration costs incurred by BlackRock for the MLIM transaction totaling $8 million and $31 million for the three months ended December 31, 2006 and September 30, 2006, respectively, and totaling $47 million for full year 2006 have been reclassified from BlackRock to “Other.” These amounts are after-tax and, as applicable, net of minority interest.
(e)      “Other” for the three months ended September 30, 2006 and full year 2006 includes the after-tax impact of the gain on the BlackRock/MLIM transaction, MLIM integration costs, and costs associated with the securities portfolio rebalancing and mortgage loan portfolio repositioning.
(f)      See pages 12-14.

    December 31       September 30       December 31
          Dollars in millions, except per share data                    2006       2006       2005  







BALANCE SHEET DATA                        
Assets..............................................................................................................................................   $                             101,820       $                     98,436       $                  91,954
Loans, net of unearned income....................................................................................................   50,105       48,900       49,101
Allowance for loan and lease losses...........................................................................................   560       566           596
Securities.........................................................................................................................................    23,191       19,512       20,710
Loans held for sale.........................................................................................................................   2,366       4,317       2,449
Equity investments........................................................................................................................   5,330       5,130       1,323
Deposits..........................................................................................................................................   66,301       64,572       60,275
Borrowed funds.............................................................................................................................   15,028       14,695       16,897
Shareholders’ equity.....................................................................................................................   10,788       10,758       8,563
Common shareholders’ equity.....................................................................................................   10,781       10,751       8,555
Book value per common share.....................................................................................................   36.80       36.60       29.21
Common shares outstanding (millions)......................................................................................   293       294           293
Loans to deposits...........................................................................................................................                       81
    76   %   76   %       %
 
ASSETS ADMINISTERED (billions)                        
Managed (a)..................................................................................................................................   $ 54       $ 52       $ 494
Nondiscretionary..........................................................................................................................   $ 86       $ 89       $ 84
 
FUND ASSETS SERVICED (billions)                        
Accounting/administration net assets......................................................................................   $ 837       $ 774       $ 835
Custody assets..............................................................................................................................   427       399           476
 
CAPITAL RATIOS                        
Tier 1 risk-based (b)......................................................................................................................                       8.3
                       10.4%                          10.4%           %
Total risk-based (b)......................................................................................................................   13.5       13.6           12.1
Leverage (b)...................................................................................................................................   9.3       9.4           7.2
Tangible common equity (c)........................................................................................................   7.4       7.5           5.0
Common shareholders’ equity to assets...................................................................................   10.6       10.9           9.3
 
ASSET QUALITY RATIOS                        
Nonperforming assets to loans, loans held for sale and foreclosed assets.........................                       .42
    .33%       .36%           %
Nonperforming loans to loans.....................................................................................................   .29       .34           .39
Net charge-offs to average loans (for the three months ended)............................................   .36       .37           .33
Allowance for loan and lease losses to loans...........................................................................   1.12       1.16           1.21
Allowance for loan and lease losses to nonperforming loans................................................   381       339           314

(a)      Our assets under management at December 31, 2006 and September 30, 2006 do not include BlackRock’s assets under management as we deconsolidated BlackRock effective September 29, 2006. Excluding the impact of BlackRock, our assets under management (consisting of Retail Banking assets under management) totaled $49 billion at December 31, 2005.
(b)      The ratios for December 31, 2006 are estimated.
(c)      Common shareholders’ equity less goodwill and other intangible assets (excluding mortgage servicing rights) divided by assets less goodwill and other intangible assets (excluding mortgage servicing rights).
 

THE PNC FINANCIAL SERVICES GROUP, INC.

     FINANCIAL SUPPLEMENT
FOURTH QUARTER AND FULL YEAR 2006
UNAUDITED


THE PNC FINANCIAL SERVICES GROUP, INC.    
FINANCIAL SUPPLEMENT    
FOURTH QUARTER AND FULL YEAR 2006    
UNAUDITED    
 
    Page

Consolidated Income Statement   1
Adjusted Condensed Consolidated Income Statement   2
Consolidated Income Statement Quarterly Trend   3
Adjusted Condensed Consolidated Income Statement Quarterly Trend   4
Consolidated Balance Sheet   5
Capital Ratios and Asset Quality Ratios   5
Results of Businesses    
           Summary of Business Results and Period-end Employees   6-7
           Retail Banking   8-12
           Corporate & Institutional Banking   13-14
           PFPC   15-16
Efficiency Ratios   17
Details of Net Interest Income, Net Interest Margin, and Trading Revenue   18
Average Consolidated Balance Sheet and Supplemental Average Balance Sheet Information   19-22
Details of Loans and Lending Statistics   23
Allowances for Loan and Lease Losses and Unfunded Loan Commitments and Letters    
of Credit and Net Unfunded Commitments   24
Details of Nonperforming Assets   25-26
Glossary of Terms   27-29
Business Segment Descriptions   30
Additional Information About The PNC/Mercantile Transaction   31
 
Appendix - Reconciliations of Certain Adjusted Amounts   A1-A4

The information contained in this Financial Supplement is preliminary, unaudited and based on data available at January 23, 2007. We have reclassified certain prior period amounts included in this Financial Supplement to be consistent with the current period presentation. This information speaks only as of the particular date or dates included in the schedules. We do not undertake any obligation to, and disclaim any duty to, correct or update any of the information provided in this Financial Supplement. Our future financial performance is subject to risks and uncertainties as described in our SEC filings.

BlackRock/MLIM Transaction

As further described in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, BlackRock, Inc. ("BlackRock"), then a majority-owned subsidiary of The PNC Financial Services Group, Inc., and Merrill Lynch entered into a definitive agreement pursuant to which Merrill Lynch agreed to contribute its investment management business ("MLIM") to BlackRock in exchange for 65 million shares of newly issued BlackRock common and preferred stock. This transaction closed on September 29, 2006.

For the full years 2005 and 2004 and the quarters ended September 30, 2006, June 30, 2006, March 31, 2006 and December 31, 2005 presented in this Financial Supplement, our Consolidated Income Statement reflects our former majority ownership interest in BlackRock. However, our Consolidated Income Statement for the quarter ended December 31, 2006 and our Consolidated Balance Sheet as of December 31, 2006 and September 30, 2006 reflects the deconsolidation of BlackRock's balance sheet amounts and recognizes our 34% ownership interest in BlackRock as of those dates and for that quarter as an investment accounted for under the equity method.


               THE PNC FINANCIAL SERVICES GROUP, INC.            
               Consolidated Income Statement (Unaudited)            
 
   For the year ended December 31 - in millions, except per share data   2006   2005   2004




Interest Income            
Loans   $ 3,203   $ 2,669   $ 2,043
Securities available for sale and held to maturity   1,049   822   568
Other   360   243   141



           Total interest income   4,612   3,734   2,752



Interest Expense            
Deposits   1,590   981   484
Borrowed funds   777   599   299



           Total interest expense   2,367   1,580   783



           Net interest income   2,245   2,154   1,969
Provision for credit losses   124   21   52



           Net interest income less provision for credit losses   2,121   2,133   1,917



Noninterest Income            
Asset management   1,420   1,443   994
Fund servicing   893   870   817
Service charges on deposits   313   273   252
Brokerage   246   225   219
Consumer services   365   293   259
Corporate services   626   485   423
Equity management gains   107   96   67
Net securities gains (losses)   (207)   (41)   55
Trading   183   157   113
Net gains related to BlackRock   2,066        
Other   315   372   373



           Total noninterest income   6,327   4,173   3,572



Noninterest Expense            
Compensation   2,128   2,061   1,755
Employee benefits   304   332   309
Net occupancy   310   313   267
Equipment   303   296   290
Marketing   104   106   87
Other   1,294   1,198   1,004



           Total noninterest expense   4,443   4,306   3,712



Income before minority interest and income taxes   4,005   2,000   1,777
Minority interest in income of BlackRock   47   71   42
Income taxes   1,363   604   538



           Net income   $ 2,595   $ 1,325   $ 1,197



Earnings Per Common Share            
           Basic   $ 8.89   $ 4.63   $ 4.25
           Diluted   $ 8.73   $ 4.55   $ 4.21



Average Common Shares Outstanding            
           Basic   292   286   281
           Diluted   297   290   284



Efficiency   52%   68%   67%
 
Noninterest income to total revenue   74%   66%   64%
 
Effective tax rate (a)   34.0%            30.2%            30.3%


 
                                                        
(a)      The higher effective rate for 2006 was primarily due to the impact of the third quarter 2006 gain on the BlackRock/MLIM transaction and a $57 million cumulative adjustment to deferred taxes made in the same quarter in connection with that transaction.
 
THE PNC FINANCIAL SERVICES GROUP, INC.        
Adjusted Condensed Consolidated Income Statement (Unaudited) (a)        
      For the year ended December 31 - in millions   2006   2005



Net Interest Income        
Interest income   $ 4,596   $ 3,714
Interest expense   2,361   1,572


           Net interest income   2,235   2,142
Provision for credit losses   124   21


           Net interest income less provision for credit losses   2,111   2,121


Noninterest Income        
Asset management   538   463
Other   3,022   2,659


           Total noninterest income   3,560   3,122


Noninterest Expense        
Compensation and benefits   1,865   1,798
Other   1,722   1,655


           Total noninterest expense   3,587   3,453


Income before income taxes   2,084   1,790
Income taxes   577   465


           Net income   $ 1,507   $ 1,325



                                                                            
(a)      This schedule is provided for informational purposes only and reflects historical consolidated financial information of PNC (1) with amounts adjusted for the impact of certain significant 2006 items and (2) as if we had recorded our investment in BlackRock on the equity method for all periods presented. See Appendix to Financial Supplement for reconciliations of these amounts to the corresponding GAAP amounts for each of the periods presented. We have provided these adjusted amounts and reconciliations so that shareholders, investor analysts, regulators and others will be better able to evaluate the impact of certain significant items on our GAAP results for these periods, in addition to providing a basis of comparability for the impact of BlackRock. This information supplements our results as reported in accordance with GAAP and should not be viewed in isolation from, or as a substitute for, our GAAP results. The absence of other adjustments is not intended to imply that there could not have been other similar types of adjustments, but any such adjustments would not have been similar in magnitude to the amount of the adjustments shown. Our third quarter 2006 Form 10-Q includes additional information regarding our BlackRock/MLIM transaction accounting, securities portfolio rebalancing and mortgage loan portfolio repositioning.
 

             THE PNC FINANCIAL SERVICES GROUP, INC.                        
             Consolidated Income Statement Quarterly Trend (Unaudited)                    
 
    December 31   September 30   June 30   March 31   December 31
    For the three months ended December 31 - in millions, except per share data   2006   2006          2006            2006   2005






Interest Income                      
Loans   $ 821   $ 838   $ 797   $ 747   $ 727
Securities available for sale and held to maturity     280   271   255   243   233
Other   116   94   74   76   74

 




           Total interest income   1,217   1,203   1,126   1,066   1,034

 




Interest Expense                        
Deposits       450   434   379   327   305
Borrowed funds       201   202   191   183   174

 




           Total interest expense       651   636   570   510   479

 




           Net interest income       566   567   556   556   555
Provision for credit losses       42   16   44   22   24

 




           Net interest income less provision for credit losses       524   551   512   534   531

 




Noninterest Income                        
Asset management       149   381   429   461   431
Fund servicing       249   213   210   221   213
Service charges on deposits       79   81   80   73   74
Brokerage       63   61   63   59   57
Consumer services       93   89   94   89   80
Corporate services       177   157   157   135   143
Equity management gains       25   21   54   7   16
Net securities losses           (195)   (8)   (4)   (4)
Trading       33   38   55   57   49
Gains (losses) related to BlackRock       (12)   2,078            
Other       113   19   96   87   95

 




           Total noninterest income       969   2,943   1,230   1,185   1,154

 




Noninterest Expense                        
Compensation       442   573   558   555   556
Employee benefits       55   86   76   87   77
Net occupancy       69   79   83   79   82
Equipment       69   77   80   77   75
Marketing       23   39   22   20   31
Other       311   313   326   344   306

 




           Total noninterest expense       969   1,167   1,145   1,162   1,127

 




Income before minority interest and income taxes       524   2,327   597   557   558
Minority interest in income of BlackRock           6   19   22   22
Income taxes       148   837   197   181   181

 




           Net income   $ 376   $ 1,484   $ 381   $ 354   $ 355





Earnings Per Common Share                        
           Basic   $ 1.29   $ 5.09   $ 1.30   $ 1.21   $ 1.22
           Diluted   $ 1.27   $ 5.01   $ 1.28   $ 1.19   $ 1.20





Average Common Shares Outstanding                        
           Basic       291   291   293   292   290
           Diluted       295   296   297   296   294

 




Efficiency       63%                            33%                64%                    67%                          66%
 
Noninterest income to total revenue       63%                            84%                69%                    68%                          68%


Effective tax rate (a)   28.2%   36.0%   33.0%   32.5%   32.4%

                                                                
(a)      The lower effective tax rate in the fourth quarter of 2006 reflects the impact of the deconsolidation of BlackRock effective September 29, 2006 and the impact of the reversal of $11 million of income tax reserves in that quarter. The higher effective rate for the third quarter of 2006 was primarily due to the impact of the gain on the BlackRock/MLIM transaction and a $57 million cumulative adjustment to deferred taxes made in the same quarter in connection with that transaction.
 

THE PNC FINANCIAL SERVICES GROUP, INC.

Adjusted Condensed Consolidated Income Statement Quarterly Trend (Unaudited) (a)

    December 31   September 30   June 30   March 31   December 31
   For the three months ended - in millions   2006   2006   2006   2006   2005






Net Interest Income                        
Interest income   $ 1,217   $ 1,198   $ 1,120   $ 1,061   $ 1,027
Interest expense       651   634   568   508   477

 




           Net interest income       566   564   552   553   550
Provision for credit losses       42   16   44   22   24





           Net interest income less provision for credit                        
                losses       524   548   508   531   526





Noninterest Income                        
Asset management       159   122   129   128   128
Other       820   710   789   703   709





           Total noninterest income       979   832   918   831   837





Noninterest Expense                        
Compensation and benefits       497   461   457   450   451
Other       472   411   424   415   419





           Total noninterest expense       969   872   881   865   870





Income before income taxes       534   508   545   497   493
Income taxes       150   128   159   140   138





           Net income   $ 384   $ 380   $ 386   $ 357   $ 355






                                          
(a)      This schedule is provided for informational purposes only and reflects historical consolidated financial information of PNC (1) with amounts adjusted for the impact of certain significant 2006 items and (2) as if we had recorded our investment in BlackRock on the equity method for all periods presented. See Appendix to Financial Supplement for reconciliations of these amounts to the corresponding GAAP amounts for each of the periods presented. We have provided these adjusted amounts and reconciliations so that shareholders, investor analysts, regulators and others will be better able to evaluate the impact of certain significant items on our GAAP results for these periods, in addition to providing a basis of comparability for the impact of BlackRock. This information supplements our results as reported in accordance with GAAP and should not be viewed in isolation from, or as a substitute for, our GAAP results. The absence of other adjustments is not intended to imply that there could not have been other similar types of adjustments, but any such adjustments would not have been similar in magnitude to the amount of the adjustments shown. Our third quarter 2006 Form 10-Q includes additional information regarding our BlackRock/MLIM transaction accounting, securities portfolio rebalancing and mortgage loan portfolio repositioning.
 

THE PNC FINANCIAL SERVICES GROUP, INC.                    
Consolidated Balance Sheet (Unaudited)                    
 
    December 31   September 30   June 30   March 31   December 31
      In millions, except par value              2006   2006   2006   2006   2005






Assets                    
Cash and due from banks   $ 3,523   $ 3,018   $ 3,438   $ 3,206   $ 3,518
Federal funds sold and resale agreements   1,763   2,818   675   511   350
Other short-term investments, including trading securities   3,130   2,718   2,005   2,641   2,543
Loans held for sale   2,366   4,317   2,165   2,266   2,449
Securities available for sale and held to maturity   23,191   19,512   21,724   21,529   20,710
Loans, net of unearned income of $795, $815, $828, $832, and $835   50,105   48,900   50,548   49,521   49,101
           Allowance for loan and lease losses   (560)   (566)   (611)   (597)   (596)





           Net loans   49,545   48,334   49,937   48,924   48,505
Goodwill   3,402   3,418   3,636   3,638   3,619
Other intangible assets   641   590   862   844   847
Equity investments (a)   5,330   5,130   1,461   1,387   1,323
Other   8,929   8,581   9,011   8,311   8,090





           Total assets   $ 101,820   $ 98,436   $ 94,914   $ 93,257   $ 91,954





Liabilities                    
Deposits                    
           Noninterest-bearing   $ 16,070   $ 14,840   $ 14,434   $ 14,250   $ 14,988
           Interest-bearing   50,231   49,732   49,059   46,649   45,287





                    Total deposits   66,301   64,572   63,493   60,899   60,275
Borrowed funds                    
           Federal funds purchased   2,711   3,475   3,320   3,156   4,128
           Repurchase agreements   2,051   2,275   2,136   2,892   1,691
           Bank notes and senior debt   3,633   2,177   3,503   3,362   3,875
           Subordinated debt   3,962   4,436   4,329   4,387   4,469
           Other   2,671   2,332   2,363   2,643   2,734





                       Total borrowed funds   15,028   14,695   15,651   16,440   16,897
Allowance for unfunded loan commitments and letters of credit   120   117   103   103   100
Accrued expenses   3,970   3,855   2,635   2,585   2,770
Other   4,728   4,031   3,573   3,822   2,759





           Total liabilities   90,147   87,270   85,455   83,849   82,801





Minority and noncontrolling interests in consolidated entities   885   408   632   627   590
 
Shareholders’ Equity                    
Preferred stock (b)                    


Common stock - $5 par value                    
           Authorized 800 shares, issued 353 shares   1,764   1,764   1,764   1,764   1,764
Capital surplus   1,697   1,679   1,385   1,349   1,358
Retained earnings   10,985   10,771   9,449   9,230   9,023
Deferred compensation expense   (46)   (51)   (60)   (44)   (59)
Accumulated other comprehensive loss   (235)   (109)   (510)   (394)   (267)
Common stock held in treasury at cost: 60, 59, 58, 57, and 60 shares   (3,377)   (3,296)   (3,201)   (3,124)   (3,256)





           Total shareholders’ equity   10,788   10,758   8,827   8,781   8,563





           Total liabilities, minority and noncontrolling interests, and shareholders’ equity                    
    $ 101,820   $ 98,436   $ 94,914   $ 93,257   $ 91,954





CAPITAL RATIOS                    
Tier 1 risk-based (c)                      10.4%                      10.4%   8.8%   8.8%   8.3%
Total risk-based (c)   13.5   13.6   12.4   12.5   12.1
Leverage (c)   9.3   9.4   7.7   7.6   7.2
Tangible common equity   7.4   7.5   5.2   5.2   5.0
Common shareholders’ equity to assets   10.6   10.9   9.3   9.4   9.3
 
ASSET QUALITY RATIOS                    
Nonperforming assets to loans, loans held for sale and foreclosed assets   .33%   .36%   .44%   .40%   .42%
Nonperforming loans to loans   .29   .34   .41   .37   .39
Net charge-offs to average loans (For the three months ended)   .36   .37   .24   .15   .33
Allowance for loan and lease losses to loans   1.12   1.16   1.21   1.21   1.21
Allowance for loan and lease losses to nonperforming loans   381   339   294   328   314

                                                         
(a)      Includes equity investment in BlackRock.
 
(b)      Less than $.5 million at each date.
 
(c)      The ratios for December 31, 2006 are estimated.
 

       THE PNC FINANCIAL SERVICES GROUP, INC.        
       Summary of Business Results (Unaudited)        
 
   Year ended December 31 - in millions (a)   2006   2005



Earnings        
Retail Banking   $ 765   $ 682
Corporate & Institutional Banking   463   480
BlackRock (b) (c)   187   152
PFPC   124   104


           Total business segment earnings   1,539   1,418
Other (c) (d)   1,056   (93)


           Total consolidated net income   $ 2,595   $ 1,325


Revenue (e)        
Retail Banking   $ 3,125   $ 2,868
Corporate & Institutional Banking   1,472   1,335
BlackRock (f)   1,170   1,229
PFPC (g)   879   846


           Total business segment revenue   6,646   6,278
Other   1,951   82


           Total consolidated revenue   $ 8,597   $ 6,360



                                                 
(a)      This summary also serves as a reconciliation of total earnings and revenue for all business segments to total consolidated net income and revenue. Our business segment 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 businesses and management structure change.
 
(b)      These amounts have been reduced by minority interest in income of BlackRock, excluding MLIM integration costs, totaling $65 million and $71 million for the years ended December 31, 2006 and 2005, respectively.
 
(c)      For this PNC business segment reporting presentation, integration costs incurred by BlackRock for the MLIM transaction totaling $47 million for 2006 have been reclassified from BlackRock to “Other.” These amounts are after- tax and net of minority interest.
 
(d)      "Other" for 2006 also includes the after-tax impact of the following third quarter items: gain on the BlackRock/MLIM transaction, and costs associated with the securities portfolio rebalancing and mortgage loan portfolio repositioning.
 
(e)      Business segment revenue is presented on a taxable-equivalent basis. 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 a taxable investment. To provide more meaningful comparisons of yields and margins for all earning assets, we also provide revenue 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 other taxable investments. This adjustment is not permitted under generally accepted accounting principles (GAAP) on the Consolidated Income Statement. The following is a reconciliation of total consolidated revenue on a book (GAAP) basis to total consolidated revenue on a taxable-equivalent basis (in millions):
 
    2006   2005


Total consolidated revenue, book (GAAP) basis   $ 8,572   $ 6,327
Taxable-equivalent adjustment   25   33


           Total consolidated revenue, taxable-equivalent basis   $ 8,597   $ 6,360



(f)      For 2005 and the first nine months of 2006, amounts for BlackRock represent the sum of total operating revenue and nonoperating income. For the fourth quarter of 2006, revenue represents our equity income from BlackRock. (g) Amounts for PFPC represent the sum of total operating revenue and net nonoperating income (expense) less debt financing costs.
 

               THE PNC FINANCIAL SERVICES GROUP, INC.                        
                    Summary of Business Results and Period-end Employees (Unaudited)                
 
    December 31   September 30   June 30   March 31   December 31
   Three months ended – in millions (a)   2006   2006   2006   2006   2005


 




Earnings                        
Retail Banking   $ 184   $ 206   $ 185   $ 190   $ 195
Corporate & Institutional Banking       129   113   116   105   108
BlackRock (b) (c)       50   42   46   49   48
PFPC       31   40   26   27   29





           Total business segment earnings       394   401   373   371   380
Other (b) (d)       (18)   1,083   8   (17)   (25)





           Total consolidated net income   $ 376   $ 1,484   $ 381   $ 354   $ 355





Revenue (e)                        
Retail Banking   $ 799   $ 791   $ 782   $ 753   $ 755
Corporate & Institutional Banking       394   356   382   340   358
BlackRock (f)       67   328   365   410   375
PFPC (g)       245   208   208   218   209





           Total business segment revenue   1,505   1,683   1,737   1,721   1,697
Other       35   1,834   55   27   25





           Total consolidated revenue   $ 1,540   $ 3,517   $ 1,792   $ 1,748   $ 1,722






(a)      See note (a) on page 6.
 
(b)      For this PNC business segment reporting presentation, integration costs incurred by BlackRock for the MLIM transaction totaling $8 million, $31 million, $5 million and $3 million for the three months ended December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006, respectively, have been reclassified from BlackRock to "Other." These amounts are after-tax and, as applicable, net of minority interest.
 
(c)      These amounts have been reduced by minority interest income of BlackRock, excluding MLIM integration costs, totaling $20 million, $22 million, $23 million and $22 million for the three months ended September 30, 2006, June 30, 2006, March 31, 2006 and December 31, 2005, respectively.
 
(d)      "Other" for the three months ended September 30, 2006 includes the after-tax impact of the gain on the BlackRock/MLIM transaction and costs associated with the securities portfolio rebalancing and mortgage loan portfolio repositioning.
 
(e)      See note (e) on page 6. The following is a reconciliation of total consolidated revenue on a book (GAAP) basis to total consolidated revenue on a taxable-equivalent basis (in millions):
 
    December 31   September 30   June 30   March 31   December 31
    2006   2006   2006   2006   2005





Total consolidated revenue, book                    
(GAAP) basis   $ 1,535   $ 3,510   $ 1,786   $ 1,741   $ 1,709
Taxable-equivalent adjustment   5   7   6   7   13





Total consolidated revenue,                    
taxable-equivalent basis   $ 1,540   $ 3,517   $ 1,792   $ 1,748   $ 1,722






(f)      See note (f) on page 6.
 
(g)      See note (g) on page 6.
 
    December 31   September 30   June 30   March 31   December 31
Period-end Employees   2006   2006   2006   2006   2005





Full-time employees                    
Retail Banking              9,549                9,531      9,674   9,725              9,679
Corporate & Institutional Banking              1,936                1,925      1,899   1,892              1,861
BlackRock              2,317   2,232              2,151
PFPC              4,381                4,317      4,314   4,291              4,391


Other                    
           Operations & Technology   3,988   4,006   3,994   3,942   3,966
           Staff Services   1,601   1,595   1,593   1,560   1,545





                         Total Other   5,589   5,601   5,587   5,502   5,511





           Total full-time employees   21,455   21,374   23,791   23,642   23,593
Total part-time employees   2,328   2,165   2,241   2,003   1,755





           Total employees   23,783   23,539   26,032   25,645   25,348






                                                             
The period-end employee statistics disclosed for each business segment reflect staff directly employed by the respective business segment and exclude operations, technology and staff services employees. No employees are shown for BlackRock at December 31, 2006 or September 30, 2006 as we deconsolidated BlackRock effective September 29, 2006.


THE PNC FINANCIAL SERVICES GROUP, INC.        
Retail Banking (Unaudited)        
 
Year ended December 31        
Taxable-equivalent basis (a)        
     Dollars in millions   2006   2005



INCOME STATEMENT        
Net interest income   $ 1,678   $ 1,593
Noninterest income        
           Asset management   352   337
           Service charges on deposits   304   265
           Brokerage   236   217
           Consumer services   348   278
           Other   207   178


                   Total noninterest income   1,447   1,275


           Total revenue   3,125   2,868
Provision for credit losses   81   52
Noninterest expense   1,827   1,726


           Pretax earnings   1,217   1,090
Income taxes   452   408


           Earnings   $ 765   $ 682


AVERAGE BALANCE SHEET        
Loans        
           Consumer        
                   Home equity   $ 13,813   $ 13,351
                   Indirect   1,052   936
                   Other consumer   1,248   1,195


                         Total consumer   16,113   15,482
           Commercial   5,721   5,094
           Floor plan   910   975
           Residential mortgage   1,440   1,405
           Other   242   261


Total loans   24,426   23,217
Goodwill and other intangible assets   1,581   1,394
Loans held for sale   1,607   1,553
Other assets   1,634   1,454


           Total assets   $ 29,248   $ 27,618


Deposits        
           Noninterest-bearing demand   $ 7,841   $ 7,639
           Interest-bearing demand   7,906   7,946
           Money market   14,750   13,635


                   Total transaction deposits   30,497   29,220
           Savings   2,035   2,574
           Certificates of deposit   13,861   11,494


                        Total deposits   46,393   43,288
Other liabilities   553   392
Capital   2,986   2,852


           Total funds   $ 49,932   $ 46,532


PERFORMANCE RATIOS        
Return on average capital   26%   24%
Noninterest income to total revenue   46   44
Efficiency   58   60


Efficiency, as adjusted (b)   56   58

                                                              
(a)      See notes (a) and (e) on page 6.
 
(b)      See page 12 for a reconciliation of the efficiency ratio, as adjusted, to the efficiency ratio.
 

THE PNC FINANCIAL SERVICES GROUP, INC.            
Retail Banking (Unaudited) (Continued)            
 
Year ended December 31            
   Dollars in millions except as noted   2006     2005



OTHER INFORMATION (a)            
Credit-related statistics:            
           Total nonperforming assets   $ 106   $ 90
           Net charge-offs   $ 85   $ 53
           Annualized net charge-off ratio   .35%   .23%


Home equity portfolio credit statistics:            
           % of first lien positions   43%   46%
           Weighted average loan-to-value ratios   70%   68%
           Weighted average FICO scores   728   728
           Loans 90 days past due   .24%   .21%


Checking-related statistics:            
           Retail Banking checking relationships   1,954,000   1,934,000
           Consumer DDA households using online banking   938,000   855,000
           % of consumer DDA households using online banking   53%   49%
           Consumer DDA households using online bill payment   404,000   205,000
           % of consumer DDA households using online bill payment   23%   12%


Small business managed deposits:            
On-balance sheet            
           Noninterest-bearing demand   $ 4,359   $ 4,353
           Interest-bearing demand   1,529   1,560
           Money market   2,684   2,849
           Certificates of deposit   645   412
Off-balance sheet (b)            
           Small business sweep checking   1,619   1,305


Total managed deposits   10,836   10,479


Brokerage statistics:            
           Margin loans   $ 163   $ 217
           Financial consultants (c )       758   779
           Full service brokerage offices       99   100
           Brokerage account assets (billions)   $ 46   $ 42


Other statistics:            
           Gains on sales of education loans (d)   $ 33   $ 19
           Full-time employees   9,549   9,679
           Part-time employees   1,829   1,117
           ATMs   3,581   3,721
           Branches (e)   852   839


ASSETS UNDER ADMINISTRATION (in billions) (f)            
Assets under management            
Personal   $ 44   $ 40
Institutional       10   9


           Total   $ 54   $ 49


Asset Type            
Equity   $ 34   $ 31
Fixed income       12   12
Liquidity/Other       8   6


           Total   $ 54   $ 49


Nondiscretionary assets under administration          
Personal   $ 25   $ 27


Institutional   61                          57


     Total   $ 86   $ 84


Asset Type        
Equity   $ 33   $ 33
Fixed income   24                          24
Liquidity/Other   29                          27


Total   $ 86   $ 84



                                                          
(a)      Presented as of December 31, except for net charge-offs, annualized net charge-off ratio, gains on sales of education loans, and small business deposits, which are for the year ended.
 
(b)      Represents small business balances, a portion of which are calculated on a one-month lag. These balances are swept into liquidity products managed by other PNC business segments, the majority of which are off-balance sheet.
 
(c)      Financial consultants provide services in full service brokerage offices and PNC traditional branches.
 
(d)      Included in "Noninterest income-Other" on page 8.
 
(e)      Excludes certain satellite branches that provide limited products and service hours.
 
(f)      Excludes brokerage account assets.
 

 


   THE PNC FINANCIAL SERVICES GROUP, INC.                        
     Retail Banking (Unaudited)                        
 
Three months ended                        
Taxable-equivalent basis (a)   December 31   September 30   June 30   March 31   December 31
Dollars in millions   2006     2006   2006            2006              2005






INCOME STATEMENT                        
Net interest income   $ 419   $ 427   $ 424   $ 408   $ 417
Noninterest income                        
           Asset management       91   87   87   87   86
           Service charges on deposits       77   79   77   71   72
           Brokerage       60   59   59   58   54
           Consumer services       88   86   88   86   78
           Other       64   53   47   43   48





                         Total noninterest income       380   364   358   345   338





           Total revenue       799   791   782   753   755
Provision for credit losses       35   9   28   9   9
Noninterest expense       471   456   460   440   434





           Pretax earnings       293   326   294   304   312
Income taxes       109   120   109   114   117





           Earnings   $ 184   $ 206   $ 185   $ 190   $ 195





AVERAGE BALANCE SHEET                        
Loans                        
           Consumer                        
                         Home equity   $ 13,807   $ 13,849   $ 13,816   $ 13,778   $ 13,751
                         Indirect   1,133   1,069   1,019   987   980
                         Other consumer   1,322   1,221   1,202   1,248   1,264





                         Total consumer   16,262   16,139   16,037   16,013   15,995
           Commercial   5,907   5,821   5,715   5,433   5,282
           Floor plan       853   854   964   970   936
           Residential mortgage   1,031   1,509   1,577   1,648   1,716
           Other       234   250   248   236   244





                         Total loans   24,287   24,573   24,541   24,300   24,173
Goodwill and other intangible assets   1,574   1,580   1,586   1,582   1,560
Loans held for sale   1,505   1,513   1,535   1,880   1,802
Other assets   1,671   1,640   1,621   1,607   1,505





           Total assets   $ 29,037   $ 29,306   $ 29,283   $ 29,369   $ 29,040





Deposits                        
           Noninterest-bearing demand   $ 7,834   $ 7,848   $ 7,908   $ 7,777   $ 7,925
           Interest-bearing demand   7,865   7,787   7,950   8,025   8,095
           Money market   14,822   14,832   14,697   14,644   14,399





                         Total transaction deposits   30,521   30,467   30,555   30,446   30,419
           Savings   1,877   1,976   2,109   2,183   2,309
           Certificates of deposit   14,694   14,053   13,560   13,115   12,671





                         Total deposits   47,092   46,496   46,224   45,744   45,399
Other liabilities       598   515   537   560   392
Capital   3,034   2,988   2,979   2,943   2,965





           Total funds   $ 50,724   $ 49,999   $ 49,740   $ 49,247   $ 48,756





PERFORMANCE RATIOS                        
Return on average capital       24%                            27%   25%                    26%                          26%
Noninterest income to total revenue       48   46   46   46   45
Efficiency       59   58   59   58   57


Efficiency, as adjusted (b)   56   56   57   57   55

(a)      See notes (a) and (e) on page 6.
(b)      See page 12 for a reconciliation of the efficiency ratio, as adjusted, to the efficiency ratio.
 

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

   Three months ended   December 31   September 30   June 30   March 31   December 31
   Dollars in millions except as noted   2006     2006   2006   2006   2005






OTHER INFORMATION (a)                        
Credit-related statistics:                        
           Total nonperforming assets   $ 106   $ 95   $ 104   $ 93   $ 90
           Net charge-offs (b)   $ 21   $ 31   $ 19   $ 14   $ 12
           Annualized net charge-off ratio       .34%   .50%   .31%   .23%   .20%





Home equity portfolio credit statistics:                        
           % of first lien positions       43%   44%   45%   45%   46%
           Weighted average loan-to-value ratios       70%   69%   69%   68%   68%
           Weighted average FICO scores       728   728   728   727   728
           Loans 90 days past due       .24%   .22%   .21%   .22%   .21%





Checking-related statistics:                        
           Retail Banking checking relationships   1,954,000   1,958,000   1,956,000   1,950,000   1,934,000
           Consumer DDA households using online banking   938,000   920,000   897,000   880,000   855,000
           % of consumer DDA households using online                        
                   banking       53%   52%   51%   50%   49%
           Consumer DDA households using online bill                        
                   payment   404,000   361,000   305,000   253,000   205,000
           % of consumer DDA households using online bill                        
                   payment       23%   20%   17%   14%   12%





Small business managed deposits:                        
On-balance sheet                        
           Noninterest-bearing demand   $ 4,387   $ 4,370   $ 4,319   $ 4,357   $ 4,555
           Interest-bearing demand   1,724   1,545   1,392   1,454   1,656
           Money market   2,755   2,658   2,617   2,705   2,941
           Certificates of deposit       802   647   574   553   530
           Off-balance sheet (c)                        
                   Small business sweep checking   1,812   1,676   1,532   1,454   1,392





Total managed deposits   $ 11,480   $ 10,896   $ 10,434   $ 10,523   $ 11,074





Brokerage statistics:                        
           Margin loans   $ 163   $ 170   $ 194   $ 205   $ 217
           Financial consultants (d)       758   752   775   783   779
           Full service brokerage offices       99   99   100   100   100
           Brokerage account assets (billions)   $ 46   $ 44   $ 43   $ 43   $ 42





Other statistics:                        
           Gains on sales of education loans (e)   $ 11   $ 11   $ 7   $ 4   $ 4
           Full-time employees   9,549   9,531   9,674   9,725   9,679
           Part-time employees   1,829   1,660   1,526   1,373   1,117
           ATMs   3,581   3,594   3,553   3,763   3,721
           Branches (f)       852   848   846   846   839





ASSETS UNDER ADMINISTRATION (in billions) (g)                        
 
Assets under management                        
Personal   $ 44   $ 42   $ 40   $ 40   $ 40
Institutional       10   10   10   10   9







           Total   $ 54   $ 52   $ 50   $ 50   $ 49





Asset Type                    
Equity   $ 34   $ 32   $ 31   $ 32   $ 31
Fixed income   12   12   12   12   12
Liquidity/Other   8   8   7   6   6





           Total   $ 54   $ 52   $ 50   $ 50   $ 49





Nondiscretionary assets under administration                    





Personal   $ 25   $ 27   $ 25   $ 28   $ 27
Institutional   61   62   60   59   57





           Total   $ 86   $ 89   $ 85   $ 87   $ 84





Asset Type                    
Equity   $ 33   $ 32   $ 31   $ 33   $ 33
Fixed income   24   27   26   26   24
Liquidity/Other   29   30   28   28   27





           Total   $ 86   $ 89   $ 85   $ 87   $ 84






                                         
(a)      Presented as of period-end, except for net charge-offs, annualized net charge-off ratio, gains on sales of education loans, and small business deposits, which are for the three months ended.
(b)      The increase at September 30, 2006 was primarily due to a single large overdraft fraud that occurred during the second quarter of 2006.
(c)      Represents small business balances, a portion of which are calculated on a one-month lag. These balances are swept into liquidity products managed by other PNC business segments, the majority of which are off-balance sheet.
(d)      Financial consultants provide services in full service brokerage offices and PNC traditional branches.
(e)      Included in "Noninterest income-Other" on page 10.
(f)      Excludes certain satellite branches that provide limited products and service hours.
(g)      Excludes brokerage account assets.
 
           THE PNC FINANCIAL SERVICES GROUP, INC.                        
           Retail Banking Efficiency Ratios (Unaudited)                        
 
    Three months ended       Year ended December 31


    December 31   September 30   June 30   March 31   December 31            
    2006   2006   2006   2006   2005   2006   2005







Efficiency (a)                    59%   58%          59%              58%                    57%   58%       60%
Efficiency, as adjusted (b)                    56%   56%          57%              57%                    55%   56%       58%

                                             
(a)      Calculated as noninterest expense divided by the sum of net interest income and noninterest income.
(b)      Calculated by excluding the impact of Hilliard Lyons activities included within the Retail Banking business segment. Activities excluded are the principal activities of Hilliard Lyons on a management reporting basis, including client- related brokerage and trading, investment banking and investment management. Industry-wide efficiency measures for brokerage firms and asset management firms differ significantly due primarily to the highly variable compensation structure of brokerage firms. We believe the disclosure of an efficiency ratio for Retail Banking excluding the impact of these Hilliard Lyons activities is meaningful for investors as it provides a more relevant basis of comparison with other retail banking franchises.
 
Reconciliation of amounts with amounts used in the calculation of the adjusted Retail Banking efficiency ratio:    

 
    Three months ended       Year ended December 31


    December 31   September 30   June 30   March 31   December 31        
   In millions   2006   2006   2006   2006   2005   2006   2005








Revenue   $ 799   $ 791   $ 782   $ 753   $ 755   $ 3,125   $ 2,868
Less: Hilliard Lyons   52   48   50   56   48   206   198







       Revenue, as adjusted   $ 747   $ 743   $ 732   $ 697   $ 707   $ 2,919   $ 2,670


Noninterest expense   $ 471   $ 456   $ 460   $ 440   $ 434   $ 1,827   $ 1,726
Less: Hilliard Lyons   50   43   45   45   44   183   178







       Noninterest expense, as adjusted                            
    $ 421   $ 413   $ 415   $ 395   $ 390   $ 1,644   $ 1,548


         THE PNC FINANCIAL SERVICES GROUP, INC.        
         Corporate & Institutional Banking (Unaudited)        
 
   Year ended December 31        
   Taxable-equivalent basis (a)        
   Dollars in millions except as noted   2006   2005



INCOME STATEMENT        
Net interest income   $ 720   $ 739
Noninterest income        
           Corporate service fees   526   398
           Other   226   198


                         Noninterest income   752   596


                                 Total revenue   1,472   1,335
Provision for (recoveries of) credit losses   42   (30)
Noninterest expense   749   658


                         Pretax earnings   681   707
Income taxes   218   227


                         Earnings   $ 463   $ 480


AVERAGE BALANCE SHEET        
Loans        
           Corporate (b)   $ 9,925   $ 10,656
           Commercial real estate   2,876   2,289
           Commercial - real estate related   2,433   2,071
           Asset-based lending   4,467   4,203


                         Total loans (b)   19,701   19,219
Loans held for sale   893   752
Goodwill and other intangible assets   1,352   1,064
Other assets   4,602   4,274


           Total assets   $ 26,548   $ 25,309


Deposits        
           Noninterest-bearing demand   $ 6,771   $ 6,025
           Money market   2,654   2,670
           Other   907   687


                         Total deposits   10,332   9,382
Commercial paper (c)       1,838
Other liabilities   3,771   3,348
Capital   1,976   1,724


           Total funds   $ 16,079   $ 16,292


PERFORMANCE RATIOS        
Return on average capital   23%   28%
Noninterest income to total revenue   51   45
Efficiency   51   49


COMMERCIAL MORTGAGE        
SERVICING PORTFOLIO (in billions)        
Beginning of period   $ 136   $ 98
Acquisitions/additions   102   74
Repayments/transfers   (38)   (36)


           End of period   $ 200   $ 136


OTHER INFORMATION        
Consolidated revenue from: (d)        
           Treasury Management   $ 424   $ 410
           Capital Markets   $ 283   $ 175


           Midland Loan Services   $ 184   $ 144
Total loans (e)   $ 20,054   $ 18,817
Nonperforming assets (e)   $ 63   $ 124
Net charge-offs (recoveries)   $ 54   $ (23)
Full-time employees (e)   1,936   1,861
Net gains on commercial mortgage loan sales   $ 55   $ 61
Net carrying amount of commercial mortgage servicing rights (e)   $ 471   $ 344



                                                     
(a)      See notes (a) and (e) on page 6.
(b)      Includes lease financing and, for 2005 as applicable, Market Street. Market Street was deconsolidated from our Consolidated Balance Sheet effective October 17, 2005.
(c)      Includes Market Street for 2005 as applicable. See Supplemental Average Balance Sheet Information on pages 19 and 20.
(d)      Represents consolidated PNC amounts.
(e)      Presented as of period-end.
 

THE PNC FINANCIAL SERVICES GROUP, INC.                
Corporate & Institutional Banking (Unaudited)                    
 
   Three months ended                        
   Taxable-equivalent basis (a)   December 31   September 30   June 30   March   December
  Dollars in millions except as noted   2006   2006            2006   31 2006   31 2005






INCOME STATEMENT                        
Net interest income   $ 190   $ 182   $ 173   $ 175   $ 184
Noninterest income                        
           Corporate service fees       149   131   133   113   118
           Other       55   43   76   52   56





                 Noninterest income       204   174   209   165   174





                              Total revenue       394   356   382   340   358
Provision for credit losses       6   7   17   12   23
Noninterest expense       199   182   192   176   177





           Pretax earnings       189   167   173   152   158
Income taxes       60   54   57   47   50





           Earnings   $ 129   $ 113   $ 116   $ 105   $ 108





AVERAGE BALANCE SHEET                        
Loans                        
           Corporate (b)   $ 10,193   $ 9,966   $ 9,981   $ 9,685   $ 9,829
           Commercial real estate       3,143   2,953   2,760   2,643   2,620
           Commercial - real estate related       2,189   2,476   2,484   2,454   2,219
           Asset-based lending       4,594   4,563   4,452   4,252   4,227





                         Total loans (b)       20,119   19,958   19,677   19,034   18,895
Loans held for sale       965   865   875   866   923
Goodwill and other intangible assets       1,399   1,366   1,328   1,314   1,265
Other assets       4,988   4,721   4,411   4,282   4,243





           Total assets   $ 27,471   $ 26,910   $ 26,291   $ 25,496   $ 25,326





Deposits                        
           Noninterest-bearing demand   $ 7,210   $ 6,817   $ 6,353   $ 6,697   $ 6,526
           Money market       3,644   2,678   2,168   2,110   2,886
           Other       921   995   933   777   717





                         Total deposits       11,775   10,490   9,454   9,584   10,129
Commercial paper (c)                       514
Other liabilities       4,028   3,885   3,722   3,439   3,405
Capital       2,054   1,879   2,027   1,945   1,787





           Total funds   $ 17,857   $ 16,254   $ 15,203   $ 14,968   $ 15,835





PERFORMANCE RATIOS                        
Return on average capital                        25%                            24%                    23%                    22%   24%
Noninterest income to total revenue       52   49   55   49   49
Efficiency       51   51   50   52   49





COMMERCIAL MORTGAGE                        
SERVICING PORTFOLIO (in billions)                        
Beginning of period   $ 180   $ 151   $ 140   $ 136   $ 126
Acquisitions/additions       33   37   19   13   21
Repayments/transfers       (13)   (8)   (8)   (9)   (11)





           End of period   $ 200   $ 180   $ 151   $ 140   $ 136





OTHER INFORMATION                        
Consolidated revenue from: (d)                        
           Treasury Management   $ 108   $ 108   $ 106   $ 102   $ 105
           Capital Markets   $ 79   $ 64   $ 76   $ 64   $ 62


           Midland Loan Services   $ 53   $ 47   $ 42   $ 42   $ 41
Total loans (e)   $ 20,054   $ 20,405   $ 20,057   $ 19,447   $ 18,817
Nonperforming assets (e)   $ 63   $ 94   $ 125   $ 112   $ 124
Net charge-offs   $ 24   $ 14   $ 12   $ 4   $ 28
Full-time employees (e)   1,936   1,925   1,899   1,892   1,861
Net gains on commercial mortgage loan sales   $ 18   $ 12   $ 18   $ 7   $ 13
Net carrying amount of commercial mortgage                    
servicing rights (e)   $ 471   $ 414   $ 385   $ 353   $ 344






                                           
(a)      See notes (a) and (e) on page 6.
(b)      Includes lease financing and Market Street until Market Street was deconsolidated from our Consolidated Balance Sheet effective October 17, 2005.
(c)      Includes Market Street as applicable.
(d)      Represents consolidated PNC amounts.
(e)      Presented as of period-end.
 

   THE PNC FINANCIAL SERVICES GROUP, INC.        
   PFPC (Unaudited) (a)        
 
   Year ended December 31        
   Dollars in millions except as noted   2006   2005



INCOME STATEMENT        
Servicing revenue   $ 747   $ 732
Distribution/out-of-pocket revenue   170   147
Other revenue       10


           Total operating revenue   917   889


Operating expense   519   524
Distribution/out-of-pocket expenses   170   147
Amortization of other intangibles, net   14   14


           Total expense   703   685


                         Operating income   214   204
Debt financing   42   38
Nonoperating income (expense) (b)   4   (5)


           Pretax earnings   176   161
Income taxes   52   57


           Earnings   $ 124   $ 104


PERIOD-END BALANCE SHEET        
Goodwill and other intangible assets   $ 1,012   $ 1,025
Other assets   1,192   1,103


           Total assets   $ 2,204   $ 2,128


Debt financing   $ 792   $ 890
Other liabilities   917   864
Shareholder's equity   495   374


           Total funds   $ 2,204   $ 2,128


PERFORMANCE RATIOS        
Return on average equity   29%                32%
Operating margin (c)   23   23
Operating margin, as adjusted (d)   29   27


SERVICING STATISTICS (at period end)        
Accounting/administration net fund assets (in billions) (e)        
           Domestic   $ 746   $ 754
           Offshore   91   81


                         Total   $ 837   $ 835


Asset type (in billions)        
           Money market   $ 281   $ 361
           Equity   354   305
           Fixed income   117   104
           Other   85   65


                         Total   $ 837   $ 835


Custody fund assets (in billions)   $ 427   $ 476


Shareholder accounts (in millions)        
           Transfer agency   18   19
           Subaccounting   50   43


                         Total   68   62


OTHER INFORMATION        


Full-time employees (at December 31)   4,381 4,391

                                            
(a)      See notes (a) and (e) on page 6.
(b)      Net of nonoperating expense.
(c)      Operating income divided by total operating revenue.
(d)      Reconciliation of reported amounts to amounts used in the calculation of the operating margin, as adjusted:
 
Total operating revenue   $ 917   $ 889
           Less: PFPC distribution/out-of-pocket revenue            170            147


Total operating revenue, as adjusted   $ 747   $ 742


Total expense   $ 703   $ 685
           Less: PFPC distribution/out-of-pocket expenses            170            147


                         Total expense, as adjusted   $ 533   $ 538


Total operating income, as adjusted   $ 214   $ 204



We have provided the operating margin, as adjusted, because the distribution/out-of-pocket revenue and expenses have no impact on PFPC earnings. Therefore, we believe that this adjusted performance ratio may assist shareholders, investor analysts, regulators and others in their evaluation of PFPC’s performance.

(e) Includes alternative investment net assets serviced.

THE PNC FINANCIAL SERVICES GROUP, INC.

PFPC (Unaudited) (a)

    Three months ended   December 31   September 30   June 30   March 31   December 31
   Dollars in millions except as noted   2006   2006          2006            2006   2005






INCOME STATEMENT                    
Servicing revenue   $ 190   $ 183   $ 184   $ 190   $ 185
Distribution/out-of-pocket revenue   64   35   34   37   32





                         Total operating revenue   254   218   218   227   217





Operating expense   129   128   129   133   129
Distribution/out-of-pocket expenses   64   35   34   37   32
Amortization of other intangibles, net   4   3   4   3   4





                         Total expense   197   166   167   173   165





           Operating income   57   52   51   54   52
Debt financing   10   11   11   10   10
Nonoperating income   1   1   1   1   2





           Pretax earnings   48   42   41   45   44
Income taxes (b)   17   2   15   18   15





                         Earnings   $ 31   $ 40   $ 26   $ 27   $ 29





PERIOD-END BALANCE SHEET                    
Goodwill and other intangible assets   $ 1,012   $ 1,015   $ 1,018   $ 1,022   $ 1,025
Other assets   1,192   1,038   1,398   1,363   1,103





                         Total assets   $ 2,204   $ 2,053   $ 2,416   $ 2,385   $ 2,128





Debt financing   $ 792   $ 813   $ 852   $ 890   $ 890
Other liabilities   917   772   1,137   1,094   864
Shareholder's equity   495   468   427   401   374





                         Total funds   $ 2,204   $ 2,053   $ 2,416   $ 2,385   $ 2,128





PERFORMANCE RATIOS                    
Return on average equity                          26%                            35%                25%                    28%                          32%


Operating margin (c)   22   24   23   24   24
Operating margin, as adjusted (d)   30   28   28   28   28





SERVICING STATISTICS (at period end)                    
Accounting/administration net fund assets (in                    
        billions) (e)                    
           Domestic   $ 746   $ 695   $ 671   $ 665   $ 754
           Offshore   91   79   72   85   81





Total   $ 837   $ 774   $ 743   $ 750   $ 835





Asset type (in billions)                    
           Money market   $ 281   $ 260   $ 247   $ 238   $ 361
           Equity   354   331   317   338   305
           Fixed income   117   111   110   107   104
           Other   85   72   69   67   65





Total   $ 837   $ 774   $ 743   $ 750   $ 835





Custody fund assets (in billions)   $ 427   $ 399   $ 389   $ 383   $ 476





Shareholder accounts (in millions)                    
           Transfer agency   18   18   18   20   19
           Subaccounting   50   48   47   45   43





Total   68   66   65   65   62





OTHER INFORMATION                    
Period-end full-time employees   4,381   4,317   4,314   4,291   4,391

                                          
(a)      See notes (a) and (e) on page 6.
(b)      Income taxes for the quarter ended September 30, 2006 included the benefit of a $13.5 million reversal of deferred taxes related to foreign subsidiary earnings.
(c)      Operating income divided by total operating revenue.
(d)      Reconciliation of reported amounts to amounts used in the calculation of the operating margin, as adjusted:
 
Total operating revenue   $ 254   $ 218   $ 218   $ 227   $ 217
Less: PFPC distribution/out-of-pocket                    
         revenue   64   35   34   37   32





                Total operating revenue, as                    
                         adjusted   $ 190   $ 183   $ 184   $ 190   $ 185





Total expense   $ 197   $ 166   $ 167   $ 173   $ 165
Less: PFPC distribution/out-of-pocket                    
          expenses   64   35   34   37   32





                    Total expense, as adjusted   $ 133   $ 131   $ 133   $ 136   $ 133





                Total operating income, as                    
                            adjusted   $ 57   $ 52   $ 51   $ 54   $ 52






We have provided the operating margin, as adjusted, because the distribution/out-of-pocket revenue and expenses have no impact on PFPC earnings. Therefore, we believe that this adjusted performance ratio may assist shareholders, investor analysts, regulators and others in their evaluation of PFPC’s performance.

(e) Includes alternative investment net assets serviced.


THE PNC FINANCIAL SERVICES GROUP, INC.                
Efficiency Ratios (Unaudited)                        
 
    Three months ended   Year ended


    December 31   September 30   June 30   March 31   December 31   December 31   December 31
    2006   2006   2006   2006   2005   2006   2005







Efficiency, as                            
     reported (a)   63%                  33%                    64%              67%                    66%                    52%                    68%
Efficiency, as                            
     adjusted (b) .   63%                  62%                    60%              63%                    63%                    62%                    66%
Efficiency, as                            
     adjusted and                            
     excluding                            
     PFPC                            
     distribution/                            
     out-of-                            
     pocket                            
     revenue and                            
     expenses (b)   61%                  61%                    59%              61%                    62%                    61%                    65%

                                                
(a)      Calculated as noninterest expense divided by the sum of net interest income and noninterest income on the Consolidated Income Statement.
(b)      The following present calculations of PNC's efficiency ratio (1) adjusted to illustrate the impact of certain significant 2006 items and adjusted as if we had recorded our investment in BlackRock on the equity method for all periods presented, and (2) further adjusted by excluding PFPC distribution/out-of-pocket revenue and expenses primarily associated with pooled investment vehicles to illustrate the impact of certain items due to the magnitude of the aggregate of those items. We have provided these adjusted amounts and reconciliations so that shareholders, investor analysts, regulators and others will be better able to evaluate the impact of certain significant items on our "as reported" efficiency ratio for these periods, in addition to providing a basis of comparability for the impact of BlackRock. Amounts used for these adjusted ratios are reconciled to amounts used in the PNC efficiency ratio as reported (GAAP basis).
 
 
    Three months ended   Year ended


    December 31   September 30   June 30   March 31   December 31   December 31   December 31
    Dollars in millions   2006   2006   2006   2006   2005   2006   2005








Reconciliation of GAAP amounts with amounts used in the calculation of the adjusted efficiency ratio:        
GAAP basis - net                              
      interest income   $ 566   $ 567   $ 556   $ 556   $ 555   $ 2,245   $ 2,154
              Adjustment                            
             to net                                
             interest                                
             income:                            
             BlackRo                            
             ck equity                            
             method                                
             (c)           (3)   (4)   (3)   (5)   (10)   (12)







              Adjusted                                
              net                                
              interest                                
              income   $ 566   $ 564   $ 552   $ 553   $ 550   $ 2,235   $ 2,142







GAAP basis -                                
     noninterest income   $ 969   $ 2,943   $ 1,230   $ 1,185   $ 1,154   $ 6,327   $ 4,173
Adjustments:                                
           Gain on                                
                  BlackRock/ML                            
                  IM transaction.       (2,078)               (2,078)    
           Securities                                
              portfolio                                
              rebalancing           196               196    


                   loss                                
           Mortgage loan                                
                   portfolio                                
                   repositioning                                
                   loss       48                   48    
           BlackRock/MLIM                                
                   transaction                                
                   integration                                
                   costs   10                       10    
           BlackRock equity                                
                   method (c)       (277)   (312)   (354)       (317)   (943)   (1,051)







                         Adjusted                                
                                 nonintere                                
                                 st                                
                                 income   $ 979   $ 832   $ 918   $ 831   $ 837   $ 3,560   $ 3,122







                         Adjusted                                
                                 total                                
                                 revenue   $ 1,545   $ 1,396   $ 1,470   $ 1,384   $ 1,387   $ 5,795   $ 5,264







GAAP basis -                                
     noninterest expense   $ 969   $ 1,167   $ 1,145   $ 1,162   $ 1,127   $ 4,443   $ 4,306
Adjustments:                                
           BlackRock/MLIM                                
                   transaction                                
                   integration                                
                   costs       (72)   (13)   (6)           (91)    
           BlackRock equity                                
                   method (c)       (223)   (251)   (291)       (257)   (765)   (853)







                         Adjusted                                
                                 nonintere                                
                                 st                                
                                 expense   $ 969   $ 872   $ 881   $ 865   $ 870   $ 3,587   $ 3,453







Adjusted efficiency                                
     ratio   63%   62%   60%   63%       63%   62%   66%
 
Amounts further adjusted by excluding PFPC distribution/out-of-pocket revenue and expenses:            
Adjusted net interest                                
     income   $ 566   $ 564   $ 552   $ 553   $ 550   $ 2,235   $ 2,142
Adjusted noninterest                                
     income   $ 979   $ 832   $ 918   $ 831   $ 837   $ 3,560   $ 3,122
           Less: PFPC                                
                   distribution/out                                
                   -of-pocket                                
                   revenue   64   35   34   37       32   170   147







                         Noninterest                                
                                 income,                                
                                 as                                
                                 adjusted                                
                                 and                                
                                 excludin                                
                                 g PFPC                                
                                 distributi                                
                                 on/out-                                
                                 of-pocket                                
                                 revenue   $ 915   $ 797   $ 884   $ 794   $ 805   $ 3,390   $ 2,975







                         Total                                
                                 revenue,                                
                                 as   $ 1,481   $ 1,361   $ 1,436   $ 1,347   $ 1,355   $ 5,625   $ 5,117


                                 adjusted                                
                                 and                                    
                                 excludin                                
                                 g PFPC                                
                                 distributi                                
                                 on/out-                                    
                                 of-pocket                                
                                 revenue                                







Adjusted noninterest                                    
     expense   $ 969   $ 872   $ 881   $ 865   $ 870   $ 3,587   $ 3,453
            Less: PFPC                                    
               distribution/out                                
            -of-pocket                                    
            expenses       64       35   34   37   32   170   147







                    Noninterest                                
                                 expense,                                
                                 as                                    
                                 adjusted                                
                                 and                                    
                                 excludin                                
                                 g PFPC                                
                                 distributi                                
                                 on/out-                                    
                                 of-pocket                                
                                 expenses $   905   $ 837   $ 847   $ 828   $ 838   $ 3,417   $ 3,306








Efficiency ratio, as                                    
     adjusted and                                    
     excluding PFPC                                    
       distribution/out-of-                                
       pocket revenue and                                
     expenses       61%       61%   59%   61%   62%   61%   65%

 
                 (c) See Appendix to Financial Supplement.                        


          THE PNC FINANCIAL SERVICES GROUP, INC.                        
          Details of Net Interest Income, Net Interest Margin, and Trading Revenue (Unaudited)            
          Taxable-equivalent basis                                
    Three months ended   Year ended


Net Interest Income   December 31   September 30   June 30   March 31   December 31   December 31   December 31
In millions   2006   2006   2006   2006   2005   2006   2005








Interest income                                
           Loans   $ 824   $ 841   $ 801   $ 750   $ 730   $ 3,216   $ 2,680
           Securities available for sale and held                                
                    to maturity   279   272   255       244   234   1,050   825
           Other   119   97   76       79   83   371   262







                     Total interest income   1,222   1,210   1,132       1,073   1,047   4,637   3,767







Interest expense                                
           Deposits   450   434   379       327   305   1,590   981
           Borrowed funds   201   202   191       183   174   777   599







                         Total interest expense   651   636   570       510   479   2,367   1,580







                             Net interest income (a)   $ 571   $ 574   $ 562   $ 563   $ 568   $ 2,270   $ 2,187








                                                     
(a)      The following is a reconciliation of net interest income as reported in the Consolidated Income Statement (GAAP basis) to net interest income on a taxable-equivalent basis:
 
    Three months ended   Year ended


    December 31   September 30   June 30   March 31   December 31   December 31   December 31
In millions   2006   2006   2006   2006   2005   2006   2005








Net interest income,                                                    
       GAAP basis   $ 566   $ 567   $ 556   $ 556   $ 555   $ 2,245   $ 2,154
Taxable-equivalent                                                    
      adjustment       5       7   6       7                          13       25       33







Net interest income,                                                    
        taxable-equivalent basis   $ 571   $ 574   $ 562   $ 563   $ 568   $ 2,270   $ 2,187







 
    Three months ended   Year ended


December 31   September 30   June 30   March 31   December 31   December 31   December 31
Net Interest Margin   2006   2006   2006   2006   2005   2006   2005








Average yields/rates                                                    
    Yield on interest-earning                                                    
       assets                                                    
          Loans          6.63%                    6.59%            6.38%   6.14%                          5.91%       6.49%                        5.66%
          Securities available                                                    
                   for sale and held                                                    
                   to maturity          5.27   5.01   4.76   4.66                          4.49       4.93                        4.28
          Other          5.56   5.78   5.23 5.04                          5.00       5.45                        4.11
                   Total yield on                                                    
                  interest-                                                    
                  earning                                                    
                  assets          6.15   6.09   5.84   5.64                          5.44       5.97                        5.16
           Rate on interest-bearing                                                    
                   liabilities                                                    
                     Deposits          3.54   3.43   3.11   2.81                          2.58       3.25                        2.21
                     Borrowed funds          5.39   5.40   5.06                4.65                          4.23       5.17                        3.70
                                Total rate on                                                    
                            interest-                                                    
                            bearing                                                    
                            liabilities          3.97   3.88   3.56                3.27                          3.01       3.70   2.61




 



                             Interest rate          2.18   2.21   2.28                2.37                          2.43       2.27   2.55


       spread                            
  Impact of noninterest-                            
        bearing sources   .70   .68   .62   .58   .53   .65   .45







            Net interest margin .   2.88%   2.89%   2.90%   2.95%   2.96%   2.92%   3.00%







 
    Three months ended   Year ended


Trading Revenue (b)   December 31   September 30   June 30   March 31   December 31   December 31   December 31
   In millions   2006   2006   2006   2006   2005   2006   2005








Net interest income (expense)   $ (2)   $ (1)   $ (3)       $ 2   $ (6)   $ 9
Noninterest income   33   38   55   $ 57   49   183   157







           Total trading revenue   $ 31   $ 37   $ 52   $ 57   $ 51   $ 177   $ 166







Securities underwriting and                            
trading (c)   $ 11   $ 7   $ 6   $ 14   $ 6   $ 38   $ 47
Foreign exchange   13   11   17   14   12   55   39
Financial derivatives   7   19   29   29   33   84   80







           Total trading revenue   $ 31   $ 37   $ 52   $ 57   $ 51   $ 177   $ 166








                                                      
(b)      See pages 19-22 for disclosure of average trading assets and liabilities.
(c)      Includes changes in fair value for certain loans accounted for at fair value. See pages 19 and 21 for disclosure of average loans at fair value.
 

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

       Year ended December 31- in millions   2006   2005



Assets        
Interest-earning assets        
Securities available for sale and held to maturity        
           Mortgage-backed, asset-backed, and other debt   $ 14,670   $ 11,377
           U.S. Treasury and government agencies/corporations   6,251   7,558
           State and municipal   148   167
           Corporate stocks and other   246   173


                         Total securities available for sale and held to maturity (a) (b)   21,315   19,275
Loans, net of unearned income        
           Commercial   20,201   19,007
           Commercial real estate   3,212   2,609
           Consumer   16,125   16,208
           Residential mortgage   6,888   6,136
           Lease financing   2,777   2,944
           Other   363   453


                         Total loans, net of unearned income (a)   49,566   47,357
           Loans held for sale   2,683   2,301
           Federal funds sold and resale agreements   1,143   985
           Other   2,985   3,083


                         Total interest-earning assets   77,692   73,001
Noninterest-earning assets        
           Allowance for loan and lease losses   (591)   (632)
           Cash and due from banks   3,121   3,164
           Other assets   14,790   13,015


                         Total assets (a)   $ 95,012   $ 88,548


Supplemental Average Balance Sheet Information        
Loans        
Loans excluding conduit   $ 49,566   $ 45,691


Market Street conduit (a)       1,666


             Total loans (a)   $ 49,566   $ 47,357


Trading Assets        
Securities (c)   $ 1,712   $ 1,850
Resale agreements (d)   623   663
Financial derivatives (e)   1,148   772
Loans at fair value (e)   128    


        Total trading assets   $ 3,611   $ 3,285



                                                
(a)      We deconsolidated Market Street from our Consolidated Balance Sheet in October 2005. Assets and liabilities of Market Street, consisting primarily of securities, loans, and commercial paper, are not reflected in our Average Consolidated Balance Sheet after October 17, 2005.
(b)      Securities held to maturity totaled less than $.5 million for the year ended December 31, 2006 and $1 million for the year ended December 31, 2005 and are included in the "Mortgage-backed, asset-backed, and other debt" category above.
(c)      Included in "Interest-earning assets-Other" above.
(d)      Included in "Federal funds sold and resale agreements" above.
(e)      Included in "Noninterest-earning assets-Other assets" above.
 

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

    Year ended December 31- in millions   2006   2005



Liabilities, Minority and Noncontrolling Interests, and Shareholders' Equity        
Interest-bearing liabilities        
Interest-bearing deposits        
           Money market   $ 19,745   $ 17,930
           Demand   8,187   8,224
           Savings   2,081   2,645
           Retail certificates of deposit   13,999   11,623
           Other time   1,364   1,559
           Time deposits in foreign offices   3,613   2,347


                         Total interest-bearing deposits   48,989   44,328
Borrowed funds        
           Federal funds purchased   3,081   2,098
           Repurchase agreements   2,205   2,189
           Bank notes and senior debt   3,128   3,198
           Subordinated debt   4,417   4,044
           Commercial paper (a)   166   2,223
           Other   2,046   2,447


                         Total borrowed funds   15,043   16,199


                         Total interest-bearing liabilities   64,032   60,527
Noninterest-bearing liabilities, minority and noncontrolling interests, and shareholders' equity        
           Demand and other noninterest-bearing deposits   14,320   13,309
           Allowance for unfunded loan commitments and letters of credit   106   80
           Accrued expenses and other liabilities   6,672   6,098
           Minority and noncontrolling interests in consolidated entities   600   542
           Shareholders' equity   9,282   7,992


                         Total liabilities, minority and noncontrolling interests, and shareholders' equity   $ 95,012   $ 88,548


Supplemental Average Balance Sheet Information        
 
Deposits and Other        
Interest-bearing deposits   $ 48,989   $ 44,328
Demand and other noninterest-bearing deposits   14,320   13,309




                         Total deposits   $ 63,309   $ 57,637
 
Transaction deposits   $ 42,252   $ 39,463
Market Street commercial paper (a)       $ 1,837
Common shareholders' equity   $ 9,275   $ 7,984
 
Trading Liabilities        
Securities sold short (b)   $ 965   $ 993
Repurchase agreements and other borrowings (c)   833   1,044
Financial derivatives (d)   1,103   825
Borrowings at fair value (d)   31    


                         Total trading liabilities   $ 2,932   $ 2,862



                                               
(a)      See note (a) on page 19.
(b)      Included in "Borrowed funds-Other" above.
(c)      Included in "Borrowed funds-Repurchase agreements" and "Borrowed funds-Other" above.
(d)      Included in "Accrued expenses and other liabilities" above.
 

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

        December 31   September 30   June 30   March 31   December 31
    Three months ended - in millions       2006   2006          2006          2006   2005






Assets                        
Interest-earning assets                        
Securities available for sale and held to maturity                        
           Mortgage-backed, asset-backed, and other                        
                    debt   $ 16,747   $ 15,109   $ 13,771   $ 13,007   $ 12,541
           U.S. Treasury and government                        
                    agencies/corporations       4,066   6,187   7,263   7,527   7,952
           State and municipal       140   144   152   156   161
           Corporate stocks and other       277   259   230   216   163





              Total securities available for sale and                        
                        held to maturity (a) (b)       21,230   21,699   21,416   20,906   20,817
Loans, net of unearned income                        
           Commercial       20,458   20,431   20,348   19,556   19,130
           Commercial real estate       3,483   3,268   3,071   3,021   2,983
           Consumer       16,272   16,150   16,049   16,184   16,310
           Residential mortgage       5,606   7,332   7,353   7,272   7,175
           Lease financing       2,789   2,790   2,761   2,769   2,821
           Other       385   367   354   344   364





                         Total loans, net of unearned income                        
                                             (a)       48,993   50,338   49,936   49,146   48,783
Loans held for sale       3,167   2,408   2,411   2,745   2,715
Federal funds sold and resale agreements       2,049   1,401   613   488   643
Other       3,198   2,805   2,795   3,147   3,248





                         Total interest-earning assets       78,637   78,651   77,171   76,432   76,206
Noninterest-earning assets                        
           Allowance for loan and lease losses       (557)   (609)   (600)   (600)   (628)
           Cash and due from banks       2,999   3,161   3,140   3,187   3,325
           Other       17,969   14,142   13,736   13,110   13,167





                         Total assets (a)   $ 99,048   $ 95,345   $ 93,447   $ 92,129   $ 92,070





Supplemental Average Balance Sheet Information                    
 
Trading Assets                        
Securities (c)   $ 2,111   $ 1,460   $ 1,477   $ 1,797   $ 1,852


Resale agreements (d)   1,247   537   378   321   593
Financial derivatives (e)   1,209   1,220   1,251   908   849
Loans at fair value (e)   172   168   170        





            Total trading assets   $ 4,739   $ 3,385   $ 3,276   $ 3,026   $ 3,294






                                           
(a)      We deconsolidated Market Street from our Consolidated Balance Sheet in October 2005. Assets and liabilities of Market Street, consisting primarily of securities, loans, and commercial paper, are not reflected in our Average Consolidated Balance Sheet after October 17, 2005. Average total loans and average commercial paper for the fourth quarter of 2005 included $430 million and $514 million, respectively, related to Market Street.
(b)      Securities held to maturity totaled less than $.5 million for each of the periods presented and are included in the "Mortgage-backed, asset-backed, and other debt" category above.
(c)      Included in "Interest-earning assets-Other" above.
(d)      Included in "Federal funds sold and resale agreements" above.
(e)      Included in "Noninterest-earning assets-Other" above.
 

THE PNC FINANCIAL SERVICES GROUP, INC.                    
Average Consolidated Balance Sheet (Unaudited) (Continued)                
 
    December 31   September 30   June 30   March 31   December 31
      Three months ended - in millions   2006   2006   2006   2006   2005






Liabilities, Minority and Noncontrolling                        
Interests, and Shareholders' Equity                        
Interest-bearing liabilities                        
Interest-bearing deposits                        
           Money market   $ 20,879   $ 20,565   $ 19,019   $ 18,482   $ 19,194
           Demand       8,143   8,075   8,229   8,304   8,378
           Savings       1,882   2,021   2,177   2,250   2,377
           Retail certificates of deposit       14,837   14,209   13,686   13,243   12,804
           Other time       1,355   1,467   1,323   1,309   1,527
           Time deposits in foreign offices       3,068   3,712   4,276   3,396   2,482





                         Total interest-bearing deposits       50,164   50,049   48,710   46,984   46,762
Borrowed funds                        
           Federal funds purchased       3,167   3,831   2,715   2,594   2,518
           Repurchase agreements       2,264   2,027   2,226   2,307   1,915
           Bank notes and senior debt       2,757   2,801   3,145   3,824   3,558
           Subordinated debt       4,361   4,436   4,437   4,437   4,438
           Commercial paper (a)       88   153   206   219   798
           Other       2,073   1,474   2,298   2,380   2,960





                         Total borrowed funds       14,710   14,722   15,027   15,761   16,187





                         Total interest-bearing liabilities       64,874   64,771   63,737   62,745   62,949
Noninterest-bearing liabilities, minority and                        
noncontrolling interests, and shareholders' equity                        
           Demand and other noninterest-bearing                        
deposits       14,827   14,549   13,926   13,966   14,057
           Allowance for unfunded loan commitments                        
and letters of credit       117   104   103   101   80
           Accrued expenses and other liabilities       7,882   6,346   6,305   6,106   6,049
           Minority and noncontrolling interests in                        
                   consolidated entities       542   640   631   589   599
           Shareholders' equity       10,806   8,935   8,745   8,622   8,336





                         Total liabilities, minority and                        
                                 noncontrolling interests, and                        
shareholders' equity   $ 99,048   $ 95,345   $ 93,447   $ 92,129   $ 92,070





Supplemental Average Balance Sheet                        
Information                        
 
Deposits and Other                        
Interest-bearing deposits   $ 50,164   $ 50,049   $ 48,710   $ 46,984   $ 46,762
Demand and other noninterest-bearing deposits       14,827   14,549   13,926   13,966   14,057





           Total deposits   $ 64,991   $ 64,598   $ 62,636   $ 60,950   $ 60,819
Transaction deposits   $ 43,849   $ 43,189   $ 41,174   $ 40,752   $ 41,629
Common shareholders' equity   $ 10,799   $ 8,928   $ 8,738   $ 8,615   $ 8,328
 
Trading Liabilities                        
Securities sold short (b)   $ 1,553   $ 867   $ 769   $ 663   $ 961
Repurchase agreements and other borrowings (c)       1,096   708   641   886   985
Financial derivatives (d)       1,156   1,151   1,200   901   908
Borrowings at fair value (d)       34   40   48        





           Total trading liabilities   $ 3,839   $ 2,766   $ 2,658   $ 2,450   $ 2,854







(a)      See note (a) on page 21.
(b)      Included in "Borrowed funds-Other" above.
(c)      Included in "Borrowed funds-Repurchase agreements" and "Borrowed funds-Other" above.
(d)      Included in "Accrued expenses and other liabilities" above.
 

THE PNC FINANCIAL SERVICES GROUP, INC.
Details of Loans and Lending Statistics (Unaudited)
Loans

    December 31   September 30   June 30   March 31   December 31
         Period ended - in millions   2006   2006          2006   2006   2005






Commercial                        
           Retail/wholesale   $ 5,301   $ 5,245   $ 5,393   $ 4,962   $ 4,854
           Manufacturing   4,189   4,318   4,164       4,113   4,045
           Other service providers   2,186   2,155   2,179       2,114   1,986
           Real estate related   2,825   3,000   2,903       2,845   2,577
           Financial services   1,324   1,423   1,479       1,561   1,438
           Health care   707   685   641       651   616
           Other   4,052   3,858   3,805       3,681   3,809





                         Total commercial   20,584   20,684   20,564       19,927   19,325





Commercial real estate                        
           Real estate projects   2,716   2,691   2,438       2,325   2,244
           Mortgage   816   794   768       721   918





                         Total commercial real estate   3,532   3,485   3,206       3,046   3,162





Equipment lease financing   3,556   3,609   3,583       3,558   3,628





                         Total commercial lending   27,672   27,778   27,353       26,531   26,115





Consumer                        
           Home equity   13,749   13,876   13,853       13,787   13,790
           Automobile   1,135   1,061   1,008       958   938
           Other   1,631   1,419   1,388       1,363   1,445





                         Total consumer   16,515   16,356   16,249       16,108   16,173





Residential mortgage   6,337   5,234   7,416       7,362   7,307
Other   376   347   358       352   341
Unearned income (795) (815) (828) (832) (835)





                         Total, net of unearned income   $ 50,105   $ 48,900   $ 50,548   $ 49,521   $ 49,101





 
        December 31   December 31      
        2006   2005     


Commercial Lending Exposure (a) (b)                        
Investment grade or equivalent       49%       46%    
Non-investment grade                        
           $50 million or greater       2%       2%    
           All other non-investment grade       49%       52%    


                         Total       100%   100%    



                            
(a)      Includes all commercial loans in the Retail Banking and Corporate & Institutional Banking business segments.
(b)      Exposure represents the sum of all loans, leases, commitments and letters of credit.
 

THE PNC FINANCIAL SERVICES GROUP, INC.

Allowances for Loan and Lease Losses and Unfunded Loan Commitments and Letters of Credit and Net Unfunded Commitments (Unaudited)
Change in Allowance for Loan and Lease Losses

    December 31   September 30   June 30   March 31   December 31
      Three months ended - in millions   2006   2006   2006   2006   2005






Beginning balance   $ 566   $ 611   $ 597   $ 596   $ 634
Charge-offs                    
           Commercial   (23)   (39)   (30)   (16)   (8)
           Commercial real estate   (1)   (2)           (1)
           Equipment lease financing (a)   (14)               (29)
           Consumer   (15)   (13)   (12)   (12)   (12)
           Residential mortgage   (1)   (2)           (1)





                         Total charge-offs (a)   (54)   (56)   (42)   (28)   (51)
Recoveries                    
           Commercial   3   6   4   6   6
           Commercial real estate   1                
           Equipment lease financing   1       4        
           Consumer   4   3   4   4   4





                         Total recoveries   9   9   12   10   10
Net recoveries (charge-offs)                    
           Commercial   (20)   (33)   (26)   (10)   (2)
           Commercial real estate       (2)           (1)
           Equipment lease financing (a)   (13)       4       (29)
           Consumer   (11)   (10)   (8)   (8)   (8)
           Residential mortgage   (1)   (2)           (1)





                         Total net charge-offs (a)   (45)   (47)   (30)   (18)   (41)
Provision for credit losses   42   16   44   22   24
Net change in allowance for unfunded loan                    
commitments and letters of credit   (3)   (14)       (3)   (21)





                         Ending balance   $ 560   $ 566   $ 611   $ 597   $ 596





Supplemental Information                    
Commercial lending net charge-offs (a) (b)   $ (33)   $ (35)   $ (22)   $ (10)   $ (32)
Consumer lending net charge-offs (c)   (12)   (12)   (8)   (8)   (9)





           Total net charge-offs (a)   $ (45)   $ (47)   $ (30)   $ (18)   $ (41)
Net charge-offs to average loans                    
           Commercial lending                        .49%                          .52%              .34%                  .16%   .51%
           Consumer lending   .22   .20   .14   .14   .15

                                          
(a)      Fourth quarter 2005 amounts reflect the impact of a charge-off related to a single leasing customer during that period.
(b)      Includes commercial, commercial real estate and equipment lease financing.
(c)      Includes consumer and residential mortgage.
 
Change in Allowance for Unfunded Loan Commitments and Letters of Credit            
 
    December 31   September 30   June 30   March 31   December 31
       Three months ended - in millions   2006   2006   2006   2006   2005






Beginning balance   $ 117   $ 103   $ 103   $ 100   $ 79
Net change in allowance for unfunded loan                        
     commitments and letters of credit       3   14       3   21






Ending balance   $ 120   $ 117   $ 103   $ 103   $ 100







   Net Unfunded Commitments   December 31   September 30   June 30   March 31   December 31
   In millions   2006   2006   2006   2006   2005






Net unfunded commitments   $ 44,835   $ 43,804   $ 40,904   $ 40,806   $ 40,178






  THE PNC FINANCIAL SERVICES GROUP, INC.
Details of Nonperforming Assets (Unaudited)
Nonperforming Assets by Type

        December 31   September 30   June 30   March 31   December 31
   Period ended - in millions   2006   2006   2006   2006   2005






Nonaccrual loans                    
         Commercial   $ 109   $ 112   $ 151   $ 127   $ 134
         Commercial real estate   12   14   12   13   14
         Equipment lease financing   1   14   16   16   17
         Consumer   13   14   14   11   10
         Residential mortgage   12   13   14   15   15





                       Total nonaccrual loans   147   167   207   182   190
Troubled debt restructured loan           1        





                       Total nonperforming loans   147   167   208   182   190
Nonperforming loans held for sale (a)               1   1
Foreclosed and other assets                    
         Equipment lease financing   12   12   12   13   13
         Residential mortgage   10   9   8   8   9
         Other   2   3   3   3   3





                       Total foreclosed and other assets   24   24   23   24   25





                                     Total nonperforming assets (b).   $ 171   $ 191   $ 231   $ 207   $ 216





Nonperforming loans to total loans                        .29%                          .34%              .41%                  .37%                        .39%
Nonperforming assets to total loans, loans held                    
    for sale and foreclosed assets   .33   .36   .44   .40   .42
Nonperforming assets to total assets   .17   .19   .24   .22   .23
 
(a)        Amounts represent troubled debt restructured loans held for sale.                
 
(b)        Excludes equity management assets carried                    
         at estimated fair value (amounts include                    
         troubled debt restructured assets of $4                    
         million, $4 million, $7 million, $7 million,                    
         and $7 million, respectively).   $ 11   $ 12   $ 18   $ 21   $ 25

Change in Nonperforming Assets    
 
In millions   Year ended

January 1, 2006   $ 216
Transferred from accrual                    225
Returned to performing   (17)
Principal activity including payoffs   (116)
Asset sales   (17)
Charge-offs and valuation adjustments   (120)

December 31, 2006   $ 171



THE PNC FINANCIAL SERVICES GROUP, INC.                    
Details of Nonperforming Assets (Unaudited) (Continued)                
Nonperforming Assets by Business                    
    December 31   September 30   June 30   March 31   December 31
   Period ended - in millions   2006   2006   2006   2006   2005






Retail Banking                    
Nonperforming loans   $96   $85   $95   $84   $81
Foreclosed and other assets   10   10   9   9   9





           Total   $106   $95   $104   $93   $90





Corporate & Institutional Banking                    
Nonperforming loans   $50   $81   $112   $97   $108
Nonperforming loans held for sale               1   1
Foreclosed and other assets   13   13   13   14   15





           Total   $63   $94   $125   $112   $124





Other (a)                    
Nonperforming loans   $1   $1   $1   $1   $1
Foreclosed and other assets   1   1   1   1   1





           Total   $2   $2   $2   $2   $2





Consolidated Totals                    
Nonperforming loans   $147   $167   $208   $182   $190
Nonperforming loans held for sale               1   1
Foreclosed and other assets   24   24   23   24   25





           Total   $171   $191   $231   $207   $216






 

(a) Represents residential mortgages related to PNC's asset and liability management function.        
 
Largest Nonperforming Assets at December 31, 2006 - in millions (b)                

Ranking   Outstandings     Industry



1 $17 Food Manufacutring
2   12   Air Transportation
3   11   Computer and Electronic Product Mfg.
4   4   Real Estate
5   4   Fabricated Metal Product Mfg.
6   4   Construction of Buildings
7   4   Private Households
8   3   Truck Transportation
9   3   Merchant Wholesalers, Nondurable Goods
10   2   Motor Vehicle and Parts Dealers


Total   $64    

 As a percent of total nonperforming assets
    37%    

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


Glossary of Terms

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

Adjusted average total assets - Primarily comprised of total average quarterly (or annual) assets plus (less) unrealized losses (gains) on available-for-sale debt securities, less goodwill and certain other intangible assets.

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.

Charge-off - Process of removing a loan or portion of a loan from our balance sheet because it is considered uncollectible. We also record a charge-off when a loan is transferred to held for sale and the loan’s market value is less than its 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.

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

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

Duration of equity - An estimate of the rate sensitivity of our economic value of equity. A negative duration of equity is associated with asset sensitivity (i.e., positioned for rising interest rates), while a positive value implies liability sensitivity (i.e., vulnerable to rising 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; other short-term investments, including trading securities; loans held for sale; loans, net of unearned income; securities; and certain other assets.

Economic capital - Represents the amount of resources that our business segments 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.

Economic value of equity (“EVE”) - The present value of the expected cash flows of our existing assets less the present value of the expected cash flows of our existing liabilities, plus the present value of the net cash flows of our existing off-balance sheet positions.

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

Efficiency - Noninterest expense divided by the sum of net interest income and noninterest income.

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 our business segments. 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.

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

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

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

Noninterest income to total revenue - Noninterest income divided by the sum of net interest income and noninterest income.

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

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

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

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.

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

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

Return on average common equity - Annualized net income divided by average common shareholders’ equity.

Risk-weighted assets - Primarily 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.

Tangible common equity ratio - Period-end common shareholders’ equity less goodwill and other intangible assets (excluding mortgage servicing rights) divided by period-end assets less goodwill and other intangible assets (excluding mortgage servicing rights).

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 a taxable asset. To provide more meaningful comparisons of yields and margins for all interest-earning assets, we also provide revenue 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 other taxable assets. This adjustment is not permitted under GAAP on the Consolidated Income Statement.

Tier 1 risk-based capital - Tier 1 risk-based capital equals: total shareholders’ equity, plus trust preferred capital securities, plus certain minority interests that are held by others; less goodwill and certain other intangible assets, less equity investments in nonfinancial companies 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 fund assets serviced - Total domestic and offshore fund investment assets for which we provide related processing services. We do not include these assets on our Consolidated Balance Sheet.

Total return swap - A non-traditional swap where one party agrees to pay the other the “total return” of a defined underlying asset (e.g., a loan), usually in return for receiving a stream of LIBOR-based cash flows. The total returns of the asset, including interest and any default shortfall, are passed through to the counterparty. The counterparty is therefore assuming the credit and economic risk of the underlying asset.


Total risk-based capital - Tier 1 risk-based capital plus qualifying senior and subordinated debt, other minority interest not qualified as tier 1, and the allowance for loan and lease losses, subject to certain limitations.

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

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

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.

Business Segment Descriptions

Retail Banking provides deposit, lending, brokerage, trust, investment management, and cash management services to approximately 2.5 million consumer and small business customers within our primary geographic area. Our customers are serviced through approximately 850 offices in our branch network, the call center located in Pittsburgh and the Internet – www.pncbank.com. The branch network is located primarily in Pennsylvania; New Jersey; the greater Washington, D.C. area, including Virginia and Maryland; Ohio; Kentucky and Delaware. Brokerage services are provided through PNC Investments, LLC, and J.J.B. Hilliard, W.L. Lyons, Inc. Retail Banking also serves as investment manager and trustee for employee benefit plans and charitable and endowment assets and provides nondiscretionary defined contribution plan services and investment options through its Vested Interest® product. These services are provided to individuals and corporations primarily within our primary geographic markets.

Corporate & Institutional Banking provides lending, treasury management, and capital markets products and services to mid-sized corporations, government 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 products and services include foreign exchange, derivatives, loan syndications, mergers and acquisitions advisory and related services to middle-market companies, securities underwriting, and securities sales and trading. Corporate & Institutional Banking also provides commercial loan servicing, 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 provided nationally.

BlackRock is one of the world’s largest publicly traded investment management firms. As of December 31, 2006, BlackRock’s assets under management were $1.1 trillion. The firm manages assets on behalf of institutions and individuals worldwide through a variety of equity, fixed income, cash management and alternative investment products. In addition, BlackRock provides BlackRock Solutions® investment system, risk management, and financial advisory services to a growing number of institutional investors. The firm has a major presence in key global markets, including the United States, Europe, Asia, Australia and the Middle East. For additional information, please see the firm’s SEC reports on its website at www.blackrock.com. At December 31, 2006, PNC owned approximately 34% of BlackRock and accounts for its investment in BlackRock under the equity method.

PFPC is a leading full service provider of processing, technology and business solutions for the global investment industry. Securities services include custody, securities lending, and accounting and administration for funds registered under the 1940 Act and alternative investments. Investor services include transfer agency, managed accounts, subaccounting, and distribution. PFPC serviced $2.2 trillion in total assets and 68 million shareholder accounts as of December 31, 2006 both domestically and internationally through its Ireland and Luxembourg operations.

Additional Information About The PNC/Mercantile Transaction

The PNC Financial Services Group, Inc. and Mercantile Bankshares Corporation have filed a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Exchange Commission (the “SEC”). WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

Investors may obtain these documents free of charge at the SEC’s website (www.sec.gov). In addition, documents filed with the SEC by The PNC Financial Services Group, Inc. are available free of charge from Shareholder Relations at (800) 843-


2206. Documents filed with the SEC by Mercantile Bankshares are available free of charge from Mercantile Bankshares Corporation, 2 Hopkins Plaza, P.O. Box 1477, Baltimore, Maryland 21203, Attention: Investor Relations.

The directors, executive officers, and certain other members of management and employees of Mercantile Bankshares Corporation are participants in the solicitation of proxies in favor of the merger from the shareholders of Mercantile Bankshares Corporation. Information about the directors and executive officers of Mercantile Bankshares Corporation is set forth in the proxy statement for its 2006 annual meeting of shareholders, which was filed with the SEC on March 29, 2006. Additional information regarding the interests of such participants is included in the proxy statement/prospectus filed with the SEC.


               Appendix to Financial Supplement                        
               The PNC Financial Services Group, Inc.                    
               Adjusted Condensed Consolidated Income Statement Reconciliations (Unaudited) (a)        
 
   For the year ended December 31, 2006               BlackRock        
    PNC       Deconsolidation and   BlackRock   PNC
   In millions   As Reported   Adjustments (b)   Other Adjustments   Equity Method (c)   As Adjusted






Net Interest Income                        
Interest income   $ 4,612       $ (16)       $ 4,596
Interest expense       2,367       (6)       2,361



           Net interest income       2,245       (10)       2,235
Provision for credit losses       124               124



           Net interest income less provision for                        
                    credit losses       2,121       (10)       2,111



Noninterest Income                        
Asset management       1,420   $ 10   (1,036)   $ 144   538
Other       4,907   (1,834)   (51)       3,022





           Total noninterest income       6,327   (1,824)   (1,087)   144   3,560





Noninterest Expense                        
Compensation and benefits       2,432   (44)   (523)       1,865
Other       2,011   (47)   (242)       1,722




           Total noninterest expense       4,443   (91)   (765)       3,587




Income before minority interest and income                        
taxes       4,005   (1,733)   (332)   144   2,084
Minority interest in income of BlackRock       47   18   (65)        
Income taxes       1,363   (663)   (130)   7   577





           Net income   $ 2,595   $ (1,088)   $ (137)   $ 137   $ 1,507





 
 
   For the year ended December 31, 2005           BlackRock            
    PNC   Deconsolidation and   BlackRock   PNC    
   In millions   As Reported   Other Adjustments   Equity Method (d)   As Adjusted    





Net Interest Income                        
Interest income   $ 3,734   $ (20)       $ 3,714    
Interest expense       1,580   (8)       1,572    



           Net interest income       2,154   (12)       2,142    
Provision for credit losses       21           21    



           Net interest income less provision for                        
                    credit losses       2,133   (12)       2,121    



Noninterest Income                        
Asset management       1,443   (1,143)   $ 163   463    
Other       2,730   (71)       2,659    




           Total noninterest income       4,173   (1,214)   163   3,122    




Noninterest Expense                        
Compensation and benefits       2,393   (595)       1,798    
Other       1,913   (258)       1,655    



           Total noninterest expense       4,306   (853)       3,453    



Income before minority interest and income                        
        taxes       2,000   (373)   163   1,790    
Minority interest in income of BlackRock       71   (71)            
Income taxes       604   (150)   11   465    




           Net income   $ 1,325   $ (152)   $ 152   $ 1,325    



                                              
(a)      This adjusted condensed consolidated income statement reconciliation is provided for informational purposes only and reflects historical consolidated financial information of PNC (1) with amounts adjusted for the impact of certain significant 2006 items and (2) as if we had recorded our investment in BlackRock on the equity method for all periods presented. This reconciliation is from the reported GAAP amounts shown on pages 1 and 3 of the Financial Supplement to the corresponding adjusted amounts shown on pages 2 and 4 of the Financial Supplement. We have provided these adjusted amounts and reconciliations so that shareholders, investor analysts, regulators and others will be better able to evaluate the impact of certain significant items on our GAAP results for these periods, in addition to providing a basis of comparability for the impact of BlackRock. This information supplements our results as reported in accordance with GAAP and should not be viewed in isolation from, or as a substitute for, our GAAP results. The absence of other adjustments is not intended to imply that there could not have been other similar types of adjustments, but any such adjustments would not have been similar in magnitude to the amount of the adjustments shown. Our third quarter 2006 Form 10-Q includes additional information regarding our BlackRock/Merrill Lynch Investment Managers ("MLIM") transaction accounting, securities portfolio rebalancing and mortgage loan portfolio repositioning.
(b)      Includes the impact of the following items, all on a pretax basis: $2,078 million gain on BlackRock/MLIM transaction, $196 million securities portfolio rebalancing loss, $101 million of BlackRock/MLIM transaction integration costs, and $48 million mortgage loan portfolio repositioning loss.
(c)      BlackRock investment revenue represents PNC's ownership interest in earnings of BlackRock excluding our share of pretax BlackRock/MLIM transaction integration costs totaling $101 million. The income taxes amount represents additional income taxes recorded by PNC related to BlackRock earnings.
(d)      BlackRock investment revenue represents PNC's approximately 70% ownership interest in earnings of BlackRock at December 31, 2005. The income taxes amount represents additional income taxes recorded by PNC related to BlackRock earnings.
 

               Appendix to Financial Supplement (continued)                
               The PNC Financial Services Group, Inc.                    
               Adjusted Condensed Consolidated Income Statement Reconciliations (Unaudited) (a)        
 
BlackRock Equity
   For the three months ended December 31, 2006       Method - BlackRock/MLIM            
    PNC   Transaction   PNC        
   In millions   As Reported   Integration Costs (b)   As Adjusted        




Net Interest Income                        
Interest income   $ 1,217           $ 1,217        
Interest expense   651           651        


           Net interest income   566           566        
Provision for credit losses   42           42        


           Net interest income less                        
                   provision for credit losses   524           524        


Noninterest Income                        
Asset management   149   $ 10   159        
Other   820           820        



           Total noninterest income   969       10   979        



Noninterest Expense                        
Compensation and benefits   497           497        
Other   472           472        


           Total noninterest expense   969           969        


Income before income taxes   524       10   534        
Income taxes   148       2   150        



           Net income   $ 376   $ 8   $ 384        



 
 
   For the three months ended September 30, 2006               BlackRock        
    PNC           Deconsolidation and   BlackRock   PNC
   In millions   As Reported   Adjustments (c)   Other Adjustments   Equity Method (d)   As Adjusted



 



Net Interest Income                        
Interest income   $ 1,203           $ (5)       $ 1,198
Interest expense   636           (2)       634



           Net interest income   567           (3)       564
Provision for credit losses   16                   16



           Net interest income less                        
                   provision for credit losses   551           (3)       548



Noninterest Income                        
Asset management   381           (302)   $ 43   122
Other   2,562   $ (1,834)   (18)       710





           Total noninterest income   2,943       (1,834)   (320)   43   832





Noninterest Expense                        
Compensation and benefits   659       (44)   (154)       461
Other   508       (28)   (69)       411




           Total noninterest expense   1,167       (72)   (223)       872




Income before minority interest and                        
income taxes   2,327       (1,762)   (100)   43   508
Minority interest in income of                        
BlackRock   6       14   (20)        
Income taxes   837       (672)   (38)   1   128





           Net income   $ 1,484   $ (1,104)   $ (42)   $ 42   $ 380








                                                          
(a)      See note (a) on page A1.
(b)      BlackRock recorded $51 million pretax ($32 million after-tax) of BlackRock/MLIM transaction integration costs for the fourth quarter of 2006. PNC incurred approximately 34%, or $10 million, of these costs under the equity method.
(c)      Includes the impact of the following items, all on a pretax basis: $2,078 million gain on BlackRock/MLIM transaction, $196 million securities portfolio rebalancing loss, $72 million of BlackRock/MLIM transaction integration costs, and $48 million mortgage loan portfolio repositioning loss.
(d)      BlackRock investment revenue represents PNC's approximately 69% ownership interest in earnings of BlackRock for the third quarter of 2006, excluding pretax BlackRock/MLIM transaction integration costs totaling $72 million. The income taxes amount represents additional income taxes recorded by PNC related to BlackRock earnings.
 

               Appendix to Financial Supplement (continued)                
               The PNC Financial Services Group, Inc.                    
               Adjusted Condensed Consolidated Income Statement Reconciliations (Unaudited) (a)        
 
   For the three months ended June 30, 2006       BlackRock/MLIM   BlackRock        
    PNC   Transaction   Deconsolidation and   BlackRock   PNC
   In millions   As Reported   Integration Costs   Other Adjustments   Equity Method (b)   As Adjusted






Net Interest Income                    
Interest income   $ 1,126       $ (6)       $ 1,120
Interest expense   570       (2)       568



           Net interest income   556       (4)       552
Provision for credit losses   44               44



           Net interest income less provision for                    
                   credit losses   512       (4)       508



Noninterest Income                    
Asset management   429       (349)   $ 49   129
Other   801       (12)       789




           Total noninterest income   1,230       (361)   49   918




Noninterest Expense                    
Compensation and benefits   634   $ 3   (180)       457
Other   511   (16)   (71)       424




           Total noninterest expense   1,145   (13)   (251)       881




Income before minority interest and income                    
taxes   597   13   (114)   49   545
Minority interest in income of BlackRock   19   3   (22)        
Income taxes   197   5   (46)   3   159





           Net income   $ 381   $ 5   $ (46)   $ 46   $ 386





 
 
   For the three months ended March 31, 2006       BlackRock/MLIM   BlackRock        
    PNC   Transaction   Deconsolidation and   BlackRock   PNC
   In millions   As Reported   Integration Costs   Other Adjustments   Equity Method (c)   As Adjusted






Net Interest Income                    
Interest income   $ 1,066       $ (5)       $ 1,061
Interest expense   510       (2)       508



           Net interest income   556       (3)       553
Provision for credit losses   22               22



           Net interest income less provision for                    
                     credit losses   534       (3)       531



Noninterest Income                    
Asset management   461       (385)   $ 52   128
Other   724       (21)       703




           Total noninterest income   1,185       (406)   52   831




Noninterest Expense                    
Compensation and benefits   642   $ (3)   (189)       450
Other   520   (3)   (102)       415




           Total noninterest expense   1,162   (6)   (291)       865




Income before minority interest and income                    
taxes   557   6   (118)   52   497
Minority interest in income of BlackRock   22   1   (23)        
Income taxes   181   2   (46)   3   140





           Net income   $ 354   $ 3   $ (49)   $ 49   $ 357



                                                  
(a)      See note (a) on page A1.
(b)      BlackRock investment revenue represents PNC's approximately 69% ownership interest in earnings of BlackRock for the second quarter of 2006, excluding pretax BlackRock/MLIM transaction integration costs totaling $13 million. The income taxes amount represents additional income taxes recorded by PNC related to BlackRock earnings.
(c)      BlackRock investment revenue represents PNC's approximately 69% ownership interest in earnings of BlackRock for the first quarter of 2006, excluding pretax BlackRock/MLIM transaction integration costs totaling $6 million. The income taxes amount represents additional income taxes recorded by PNC related to BlackRock earnings.
 

Appendix to Financial Supplement (continued)                
The PNC Financial Services Group, Inc.                
Adjusted Condensed Consolidated Income Statement Reconciliation (Unaudited) (a)        
 
For the three months ended December 31, 2005       BlackRock        
    PNC   Deconsolidation and   BlackRock   PNC
   In millions   As Reported   Other Adjustments   Equity Method (b)   As Adjusted





Net Interest Income                
Interest income   $ 1,034   $ (7)       $ 1,027
Interest expense   479   (2)       477



           Net interest income   555   (5)       550
Provision for credit losses   24           24



           Net interest income less provision for credit                
                    losses   531   (5)       526



Noninterest Income                
Asset management   431   (354)   $ 51   128
Other   723   (14)       709




           Total noninterest income   1,154   (368)   51   837




Noninterest Expense                
Compensation and benefits   633   (182)       451
Other   494   (75)       419



           Total noninterest expense   1,127   (257)       870



Income before minority interest and income taxes                
    558   (116)   51   493
Minority interest in income of BlackRock   22   (22)        
Income taxes   181   (46)   3   138




           Net income   $ 355   $ (48)   $ 48   $ 355





(a)      See note (a) on page A1.
(b)      BlackRock investment revenue represents PNC’s approximately 70% ownership interest in earnings of BlackRock for the fourth quarter of 2005. The income taxes amount represents additional income taxes recorded by PNC related to BlackRock earnings.
 


The PNC Financial Services Group, Inc.

Fourth Quarter and Full Year 2006 Earnings Conference Call

January 23, 2007


  2006 Highlights

*Total business segment earnings are reconciled to total GAAP consolidated earnings in the Appendix

2


  Income Statement

    Fourth Quarter   Third Quarter   Fourth Quarter
$ millions (except per share data)   2006   2006   2005


Net interest income *   $571   $574   $568
Noninterest income   969   2,943   1,154



         Total revenue*   1,540   3,517   1,722
Noninterest expense   969   1,167   1,127


         Pretax, pre-provision income   571   2,350   595
Provision   42   16   24



         Income before minority            
         interest and income taxes   529   2,334   571
Minority interest   -   6   22
Income taxes*   153   844   194



         Net income   $376   $1,484   $355
         EPS - diluted   $1.27   $5.01   $1.20

*      Presented on a taxable-equivalent basis. See Appendix for GAAP reconciliation of net interest income, total revenue & income taxes, which are included in the 4Q06, 3Q06 & 4Q05 Income Statement reconciliations.
 

3


Income Statement - As Adjusted

        As Adjusted**    



    Fourth Quarter   Third Quarter   Fourth Quarter
$ millions (except per share data)                  2006   2006                  2005



Net interest income *   $571   $571   $563
Noninterest income   979   832   837
         Total revenue*   1,550   1,403   1,400
Noninterest expense   969   872   870
         Pretax, pre-provision income   581   531   530
Provision   42   16   24
         Income before minority            
         interest and income taxes   539   515   506
Minority interest   -   -   -
Income taxes*   155   135   151
         Net income   $384   $380   $355
         EPS - diluted   $1.30   $1.28   $1.20

*      Presented on a taxable-equivalent basis. See Appendix for GAAP reconciliation of net interest income, total revenue & income taxes, which are included in the 4Q06, 3Q06 & 4Q05 Income Statement reconciliations.
 
**      See Appendix for GAAP reconciliation of adjustments to reported 4Q06, 3Q06 and 4Q05 income statement, including the taxable-equivalent adjustments to net interest income, total revenue & income taxes. Adjustments to 3Q06 & 4Q05 are intended to illustrate the impact of the deconsolidation of BlackRock as if recorded on the equity method of accounting for all periods presented. Also, adjustments for certain significant items (net gain on BlackRock/MLIM transaction, balance sheet repositioning losses, and BlackRock/MLIM transaction integration costs) were made to 4Q06 and 3Q06, due to their aggregate magnitude. Other types of adjustments were not made as such adjustments would not have been similar in magnitude to the amount of those shown in the Appendix.
 

4


Balance Sheet Highlights -    
 
Fourth Quarter 2006        
 
        % Change vs.

Fourth Quarter   Third Quarter   Fourth Quarter
    Reported   Reported   Reported
Average balances, $ billions   2006                  2006   2005


Loans   $49.0   (3)%   N/M
Securities   $21.2   (2)%   2%
Total interest-earning assets   $78.6   N/M   3%
Total assets   $99.0   4%   8%
 
Noninterest-bearing demand deposits   $14.8   2%   5%
Money market deposits   $20.9   2%   9%
Savings and retail CDs   $16.7   3%   10%
Total deposits   $65.0   1%   7%
Total borrowed funds   $14.7   N/M   (9)%




 
At quarter-end            
Tangible common equity ratio   7.4%        
Loans to deposits   76%        
Deposits to total funds   65%        
 
N/M – not meaningful            





5


Cautionary Statement Regarding Forward -Looking Information

We make statements in this presentation, and we may from time to time make other statements, regarding our outlook or expectations for earnings, revenues, expenses and/or other matters regarding or affecting PNC that are forward -looking statements within the meaning of the Private Securities Litigation Reform Act. Forward -looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions.

Forward -looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward -looking statements speak only as of the date they are made. We do not assume any duty and do not undertake to update our forward -looking statements. Because forward -looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that we anticipated in our forward -looking statements, and future results could differ materially from our historical performance.

Our forward -looking statements are subject to the following principal risks and uncertainties. We provide greater detail regarding some of these factors in our Form 10-K for the year ended December 31, 2005 and in our 2006 Form 10-Qs, including in the Risk Factors and Risk Management sections of those reports. Our forward -looking statements may also be subject to other risks and uncertainties, including those that we may discuss elsewhere in this presentation or in our filings with the SEC, accessible on the SEC’s website at www.sec.gov and on or through our corporate website at www.pnc.com under “About PNC – Investor RelationsFinancial Information.

6


Cautionary Statement Regarding Forward -Looking Information (continued)

In addition, our pending acquisition of Mercantile Bankshares presents us with a number of risks and uncertainties related both to the acquisition transaction itself and to the integration of the acquired businesses into PNC after closing. These risks and uncertainties include the following:

7


Cautionary Statement Regarding Forward -Looking Information (continued)

In addition to the pending Mercantile Bankshares transaction, we grow our business from time to time by acquiring other financial services companies. Acquisitions in general present us with risks other than those presented by the nature of the business acquired. In particular, acquisitions may be substantially more expensive to complete (including as a result of costs incurred in connection with the integration of the acquired company) and the anticipated benefits (including anticipated cost savings and strategic gains) may be significantly harder or take longer to achieve than expected. In some cases, acquisitions involve our entry into new businesses or new geographic or other markets, and these situations also present risks resulting from our inexperience in these new areas. As a regulated financial institution, our pursuit of attractive acquisition opportunities could be negatively impacted due to regulatory delays or other regulatory issues. Regulatory and/or legal issues related to the pre-acquisition operations of an acquired business may cause reputational harm to PNC following the acquisition and integration of the acquired business into ours and may result in additional future costs and expenses arising as a result of those issues.

Any annualized, proforma, estimated, third party or consensus numbers in this presentation are used for illustrative or comparative purposes only and may not reflect actual results. Any consensus earnings estimates are calculated based on the earnings projections made by analysts who cover that company. The analysts’ opinions, estimates or forecasts (and therefore the consensus earnings estimates) are theirs alone, are not those of PNC or its management, and may not reflect PNC’s, Mercantile’s or other company’s actual or anticipated results.

8


Additional Information About The PNC/Mercantile Transaction

The PNC Financial Services Group, Inc. and Mercantile Bankshares Corporation have filed a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Exchange Commission (the “SEC”) . WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

Investors may obtain these documents free of charge at the SEC’s website (www.sec.gov). In addition, documents filed with the SEC by The PNC Financial Services Group, Inc. are available free of charge from Shareholder Relations at (800) 843-2206. Documents filed with the SEC by Mercantile Bankshares are available free of charge from Mercantile Bankshares Corporation, 2 Hopkins Plaza, P.O. Box 1477, Baltimore, Maryland 21203, Attention: Investor Relations.

The directors, executive officers, and certain other members of management and employees of Mercantile Bankshares Corporation are participants in the solicitation of proxies in favor of the merger from the shareholders of Mercantile Bankshares Corporation. Information about the directors and executive officers of Mercantile Bankshares Corporation is set forth in the proxy statement for its 2006 annual meeting of shareholders, which was filed with the SEC on March 29, 2006. Additional information regarding the interests of such participants is included in the proxy statement/prospectus filed with the SEC.

9


Non-GAAP to GAAP            
 
Reconcilement               Appendix

 
 
Business Earnings Summary                
    Year Ended December 31    

        Earnings (Loss)        
$ millions   2006   2005   Growth    



Retail Banking   $765   $682   12%    
Corporate & Institutional Banking   463   480   (4)%    
BlackRock (a)(b)(c)   187   152   23%    
PFPC   124   104   19%    
         Total business segment earnings   1,539   1,418   9%    
Other (c)(d)   1,056                    (93)        



           Total consolidated net income   $2,595   $1,325   96%    

(a)      PNC’s ownership interest in BlackRock was approximately 69%-70% for 2005 and through the first nine months of 2006. Effective September 29, 2006, PNC’s ownership interest in BlackRock dropped to approximately 34%.
 
(b)      These amounts have been reduced by minority interest in income of BlackRock, excluding MLIM integration costs, totaling $65 million and $71 million for the years ended December 31, 2006 and 2005, respectively.
 
(c)      For this PNC business segment reporting presentation, integration costs incurred by BlackRock for the MLIM transaction totaling $47 million for 2006 have been reclassified from BlackRock to “Other”. These amounts are after-tax and, as applicable, net of minority interest.
 
(d)      “Other” for 2006 includes the after-tax impact of the net gain on the BlackRock/MLIM transaction, MLIM integration costs and costs associated with the securities portfolio rebalancing and mortgage loan portfolio repositioning.
 

10


Non-GAAP to GAAP            

 
 
Reconcilement               Appendix

 
 
Income Statement – Fourth Quarter 2006            
 
    Reported,   Taxable-   Taxable-       As Adjusted,
    GAAP   Equivalent   Equivalent                              TE
   $ millions (except per share data)   Basis   Adjustment        Basis   Adjustments *   Basis





   Net interest income   $566   $5   $571   -   $571
   Noninterest income   969   -   969   $10   979




             Total revenue   1,535   5   1,540   10   1,550
   Noninterest expense   969   -   969   -   969




             Pretax, pre-provision income   566   5   571   10   581
   Provision   42   -   42   -   42





             Income before income taxes   524   5   529   10   539
   Income taxes   148   5   153   2   155





             Net income   $376   -   $376   $8   $384
             EPS - diluted   $1.27   -   $1.27   $0.03   $1.30

        Income       Diluted EPS
Adjustments: *   Pre-Tax   Taxes   After-Tax   Impact



BlackRock/MLIM transaction integration costs   $10   $2   $8   $0.03

11


Non-GAAP to GAAP            
 
 
Reconcilement               Appendix

 
 
 
Income Statement – Third Quarter 2006            
 
    Reported,   Taxable-   Taxable-   Significant   BlackRock    
    GAAP   Equivalent   Equivalent            Item   Deconsolidation   As Adjusted,
$ millions (except per share data)   Basis   Adjustment   Basis   Adjustments *   & Equity Method   TE Basis






   Net interest income   $567   $7   $574   -   $(3)   $571
   Noninterest income   2,943   -   2,943   $(1,834)   (277)   832



             Total revenue   3,510   7   3,517   (1,834)   (280)   1,403
   Noninterest expense   1,167   -   1,167   (72)   (223)   872



             Pretax, pre-provision income   2,343   7   2,350   (1,762)   (57)   531
   Provision   16   -   16   -   -   16




             Income before minority                        
             interest and income taxes   2,327   7   2,334   (1,762)   (57)   515
   Minority interest   6   -   6   14   (20)   -
   Income taxes   837   7   844   (672)   (37)   135



Net income   $1,484   -   1,484   $(1,104)   -   $380
             EPS - diluted   $5.01   -   $5.01   $(3.73)   -   $1.28
 
            Minority   Income       Diluted EPS
Significant Item Adjustments: *       Pre-Tax   Interest   Taxes   After-Tax   Impact




Gain on BlackRock/MLIM transaction   $(2,078)   -   $(785)   $(1,293)   $(4.36)
Securities portfolio rebalancing loss   196   -   69   127   .43
Mortgage loan portfolio repositioning loss   48   -   17   31   .10




           Total included in noninterest income   (1,834)   -   (699)   (1,135)   (3.83)
BlackRock/MLIM transaction integration costs   (72)   $14   27   (31)   (.10)




           Total included in noninterest expense   (72)   14   27   (31)   (.10)





           Total Significant Item Adjustments   $(1,762)   $14   $(672)   $(1,104)   $(3.73)

12


Non-GAAP to GAAP            

 
 
Reconcilement               Appendix

 
 
Income Statement – Fourth Quarter 2005            
 
    Reported,   Taxable-   Taxable-   BlackRock   As Adjusted
    GAAP   Equivalent   Equivalent   Deconsolidation   For BlackRock,
$ millions (except per share data)   Basis   Adjustment   Basis   & Equity Method   TE Basis





Net interest income   $555   $13   $568   $(5)   $563
Noninterest income   1,154   -   1,154   (317)   837

         Total revenue   1,709   13   1,722   (322)   1,400
Noninterest expense   1,127   -   1,127   (257)   870
Pretax, pre-provision income   582   13   595   (65)   530
Provision   24   -   24   -   24

Income before minority interest                    
and income taxes   558   13   571   (65)   506
Minority interest   22   -   22   (22)   -
Income taxes   181   13   194   (43)   151
Net income   $355   -   $355   -   $355
EPS - diluted   $1.20   -   $1.20   -   $1.20

13




ADDITIONAL INFORMATION ABOUT THE PNC/MERCANTILE TRANSACTION

Additional Information about the PNC/Mercantile Transaction

     The PNC Financial Services Group, Inc. and Mercantile Bankshares Corporation have filed a proxy statement/prospectus and other relevant documents concerning the merger with the United States Securities and Exchange Commission (the “SEC”). WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

     Investors may obtain these documents free of charge at the SEC’s website (www.sec.gov). In addition, documents filed with the SEC by The PNC Financial Services Group, Inc. are available free of charge from Shareholder Relations at (800) 843-2206. Documents filed with the SEC by Mercantile Bankshares are available free of charge from Mercantile Bankshares Corporation, 2 Hopkins Plaza, P.O. Box 1477, Baltimore, Maryland 21203, Attention: Investor Relations.

     The directors, executive officers, and certain other members of management and employees of Mercantile Bankshares Corporation are participants in the solicitation of proxies in favor of the merger from the shareholders of Mercantile Bankshares Corporation. Information about the directors and executive officers of Mercantile Bankshares Corporation is set forth in the proxy statement for its 2006 annual meeting of shareholders, which was filed with the SEC on March 29, 2006. Additional information regarding the interests of such participants is included in the proxy statement/prospectus filed with the SEC.