Exhibit 99.1

LOGO

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2007

(UNAUDITED)

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2007

(UNAUDITED)

 

     Page

Consolidated Income Statement

    1

Adjusted Condensed Consolidated Income Statement

    2

Consolidated Balance Sheet

    3

Capital Ratios and Asset Quality Ratios

    3

Results of Businesses

   

Summary of Business Results and Period-end Employees

    4

Retail Banking

    5-7

Corporate & Institutional Banking

    8

PFPC

    9

Efficiency Ratios

    10

Details of Net Interest Income, Net Interest Margin, and Trading Revenue

    11

Average Consolidated Balance Sheet and Supplemental Average Balance Sheet Information

    12-13

Details of Loans and Lending Statistics

    14

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

    15

Details of Nonperforming Assets

    16-17

Glossary of Terms

    18-20

Business Segment Descriptions

    21

Appendix—Reconciliations of Certain Adjusted Amounts

    A1-A3

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on April 18, 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.

Mercantile Acquisition

We completed our acquisition of Mercantile Bankshares Corporation (“Mercantile”) on March 2, 2007 and our financial results include Mercantile from that date. PNC issued approximately 53 million shares of PNC common stock and paid approximately $2.1 billion in cash as consideration for the acquisition, and accounted for the transaction under the purchase method of accounting.

BlackRock/MLIM Transaction

As further described in our Annual Report on Form 10-K for the year ended December 31, 2006, during 2006 BlackRock, Inc. (“BlackRock”), formerly 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 quarters ended September 30, 2006, June 30, 2006 and March 31, 2006 presented in this Financial Supplement, our Consolidated Income Statement reflects our former majority ownership interest in BlackRock. However, our Consolidated Income Statement for the quarters ended March 31, 2007 and December 31, 2006 and our Consolidated Balance Sheet as of March 31, 2007, December 31, 2006 and September 30, 2006 reflect the deconsolidation of BlackRock’s balance sheet amounts and recognize our approximately 34% ownership interest in BlackRock as of those dates as an investment accounted for under the equity method.

We have also provided, for information purposes only, adjusted results in this document to reflect BlackRock as if it had been accounted for under the equity method for all periods presented.

THE PNC FINANCIAL SERVICES GROUP, INC.

Consolidated Income Statement (Unaudited)

 

For the three months ended - in millions, except per share data

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Interest Income

           

Loans

    $ 896     $ 821     $ 838     $ 797     $ 747  

Securities available for sale

      310       280       271       255       243  

Other

      109       116       94       74       76  
                                        

Total interest income

      1,315       1,217       1,203       1,126       1,066  
                                        

Interest Expense

           

Deposits

      468       450       434       379       327  

Borrowed funds

      224       201       202       191       183  
                                        

Total interest expense

      692       651       636       570       510  
                                        

Net interest income

      623       566       567       556       556  

Provision for credit losses

      8       42       16       44       22  
                                        

Net interest income less provision for credit losses

      615       524       551       512       534  
                                        

Noninterest Income

           

Asset management

      165       149       381       429       461  

Fund servicing

      295       249       213       210       221  

Service charges on deposits

      77       79       81       80       73  

Brokerage

      66       63       61       63       59  

Consumer services

      91       93       89       94       89  

Corporate services

      159       177       157       157       135  

Equity management gains

      32       25       21       54       7  

Net securities losses

      (3 )       (195 )     (8 )     (4 )

Trading

      52       33       38       55       57  

Net gains (losses) related to BlackRock

      52       (12 )     2,078      

Other

      97       113       19       96       87  
                                        

Total noninterest income

      1,083       969       2,943       1,230       1,185  
                                        

Noninterest Expense

           

Compensation

      418       442       573       558       555  

Employee benefits

      72       55       86       76       87  

Net occupancy

      87       69       79       83       79  

Equipment

      71       69       77       80       77  

Marketing

      21       23       39       22       20  

Other

      367       311       313       326       344  
                                        

Total noninterest expense

      1,036       969       1,167       1,145       1,162  
                                        

Income before minority interest and income taxes

      662       524       2,327       597       557  

Minority interest in income of BlackRock

          6       19       22  

Income taxes

      203       148       837       197       181  
                                        

Net income

    $ 459     $ 376     $ 1,484     $ 381     $ 354  
                                        

Earnings Per Common Share

           

Basic

    $ 1.49     $ 1.29     $ 5.09     $ 1.30     $ 1.21  

Diluted

    $ 1.46     $ 1.27     $ 5.01     $ 1.28     $ 1.19  
                                        

Average Common Shares Outstanding

           

Basic

      308       291       291       293       292  

Diluted

      312       295       296       297       296  
                                        

Efficiency

      61 %     63 %     33 %     64 %     67 %

Noninterest income to total revenue

      63 %     63 %     84 %     69 %     68 %

Effective tax rate (a)

      30.7 %     28.2 %     36.0 %     33.0 %     32.5 %
                                        
(a) The effective tax rates presented are on a GAAP basis. The lower rates for the first quarter of 2007 and the fourth quarter of 2006 reflect the impact of the deconsolidation of BlackRock effective September 29, 2006 and certain tax adjustments in both periods. 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.

 

Page 1

THE PNC FINANCIAL SERVICES GROUP, INC.

Adjusted Condensed Consolidated Income Statement (Unaudited) (a)

 

For the three months ended - in millions

    March 31
2007		    December 31
2006		    September 30
2006		    June 30
2006		    March 31
2006

Net Interest Income

               

Net interest income

    $ 623    $ 566    $ 564    $ 552    $ 553

Provision for credit losses

      8      42      16      44      22
                                  

Net interest income less provision for credit losses

      615      524      548      508      531
                                  

Noninterest Income

               

Asset management

      167      159      122      129      128

Other

      760      768      675      755      666
                                  

Total noninterest income

      927      927      797      884      794
                                  

Noninterest Expense

               

Compensation and benefits

      488      497      461      457      450

Other

      431      408      376      390      378
                                  

Total noninterest expense

      919      905      837      847      828
                                  

Income before income taxes

      623      546      508      545      497

Income taxes

      189      155      128      159      140
                                  

Net income

    $ 434    $ 391    $ 380    $ 386    $ 357
                                  
(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 specified 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 investors, analysts, regulators and others will be better able to evaluate the impact of these items on our results for these periods, in addition to providing a basis of comparability for the impact of the BlackRock deconsolidation given the magnitude of the impact of deconsolidation on various components of our income statement and balance sheet. Adjusted 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.

 

Page 2

THE PNC FINANCIAL SERVICES GROUP, INC.

Consolidated Balance Sheet (Unaudited)

 

In millions, except par value

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Assets

           

Cash and due from banks

    $ 3,234     $ 3,523     $ 3,018     $ 3,438     $ 3,206  

Federal funds sold and resale agreements

      1,604       1,763       2,818       675       511  

Other short-term investments, including trading securities

      3,041       3,130       2,718       2,005       2,641  

Loans held for sale

      2,382       2,366       4,317       2,165       2,266  

Securities available for sale

      26,475       23,191       19,512       21,724       21,529  

Loans, net of unearned income of $1,005, $795, $815, $828, and $832

      62,925       50,105       48,900       50,548       49,521  

Allowance for loan and lease losses

      (690 )     (560 )     (566 )     (611 )     (597 )
                                        

Net loans

      62,235       49,545       48,334       49,937       48,924  

Goodwill

      7,739       3,402       3,418       3,636       3,638  

Other intangible assets

      929       641       590       862       844  

Equity investments

      5,408       5,330       5,130       1,461       1,387  

Other

      9,516       8,929       8,581       9,011       8,311  
                                        

Total assets

    $ 122,563     $ 101,820     $ 98,436     $ 94,914     $ 93,257  
                                        

Liabilities

           

Deposits

           

Noninterest-bearing

    $ 18,191     $ 16,070     $ 14,840     $ 14,434     $ 14,250  

Interest-bearing

      59,176       50,231       49,732       49,059       46,649  
                                        

Total deposits

      77,367       66,301       64,572       63,493       60,899  

Borrowed funds

           

Federal funds purchased

      5,638       2,711       3,475       3,320       3,156  

Repurchase agreements

      2,586       2,051       2,275       2,136       2,892  

Bank notes and senior debt

      4,551       3,633       2,177       3,503       3,362  

Subordinated debt

      4,628       3,962       4,436       4,329       4,387  

Other

      3,053       2,671       2,332       2,363       2,643  
                                        

Total borrowed funds

      20,456       15,028       14,695       15,651       16,440  

Allowance for unfunded loan commitments and letters of credit

      121       120       117       103       103  

Accrued expenses

      3,864       3,970       3,855       2,635       2,585  

Other

      4,649       4,728       4,031       3,573       3,822  
                                        

Total liabilities

      106,457       90,147       87,270       85,455       83,849  
                                        

Minority and noncontrolling interests in consolidated entities

      1,367       885       408       632       627  

Shareholders’ Equity

           

Preferred stock (a)

           

Common stock—$5 par value

           

Authorized 800 shares, issued 353 shares

      1,764       1,764       1,764       1,764       1,764  

Capital surplus

      2,520       1,651       1,628       1,325       1,305  

Retained earnings

      11,134       10,985       10,771       9,449       9,230  

Accumulated other comprehensive loss

      (162 )     (235 )     (109 )     (510 )     (394 )

Common stock held in treasury at cost: 7, 60, 59, 58, and 57 shares

      (517 )     (3,377 )     (3,296 )     (3,201 )     (3,124 )
                                        

Total shareholders’ equity

      14,739       10,788       10,758       8,827       8,781  
                                        

Total liabilities, minority and noncontrolling interests, and shareholders’ equity

    $ 122,563     $ 101,820     $ 98,436     $ 94,914     $ 93,257  
                                        

Capital Ratios

           

Tier 1 risk-based (b)

      8.6 %     10.4 %     10.4 %     8.8 %     8.8 %

Total risk-based (b)

      12.2       13.5       13.6       12.4       12.5  

Leverage (b)

      8.7       9.3       9.4       7.7       7.6  

Tangible common equity

      5.8       7.4       7.5       5.2       5.2  

Common shareholders’ equity to assets

      12.0       10.6       10.9       9.3       9.4  

Asset Quality Ratios

           

Nonperforming loans to total loans

      .28 %     .29 %     .34 %     .41 %     .37 %

Nonperforming assets to total loans and foreclosed assets

      .32       .34       .39       .46       .42  

Nonperforming assets to total assets

      .17       .17       .19       .24       .22  

Net charge-offs to average loans (For the three months ended)

      .27       .36       .37       .24       .15  

Allowance for loan and lease losses to loans

      1.10       1.12       1.16       1.21       1.21  

Allowance for loan and lease losses to nonperforming loans

      388       381       339       294       328  
                                        
(a) Less than $.5 million at each date.
(b) The ratios for March 31, 2007 are estimated and include Mercantile.

 

Page 3

THE PNC FINANCIAL SERVICES GROUP, INC.

Summary of Business Results and Period-end Employees (Unaudited)

 

Three months ended – in millions (a) (c)

Earnings

   

March 31

2007

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

Retail Banking (b)

    $ 201    $ 184    $ 206    $ 185    $ 190

Corporate & Institutional Banking (b)

      132      126      111      115      102

PFPC

      31      31      40      26      27

Other, including BlackRock (b) (c)

      95      35      1,127      55      35
                                  

Total consolidated net income

    $ 459    $ 376    $ 1,484    $ 381    $ 354
                                  

Revenue (d)

                         

Retail Banking (b)

    $ 839    $ 799    $ 791    $ 782    $ 753

Corporate & Institutional Banking (b)

      370      390      352      378      335

PFPC (e)

      292      245      208      208      218

Other, including BlackRock (b) (c)

      211      106      2,166      424      442
                                  

Total consolidated revenue

    $ 1,712    $ 1,540    $ 3,517    $ 1,792    $ 1,748
                                  
(a) This summary also serves as a reconciliation of total earnings and revenue for all businesses to total consolidated net income and revenue. Our business information is presented based on our management accounting practices and our management structure. We refine our methodologies from time to time as our management accounting practices are enhanced and our businesses and management structure change.
(b) Includes amounts related to Mercantile for the first quarter of 2007, beginning with the Mercantile acquisition closing on March 2, 2007.
(c) We consider BlackRock to be a separate reportable business segment but have combined its results with Other for this presentation. Our Quarterly Report on Form 10-Q for the first quarter of 2007 will provide additional business segment disclosures for BlackRock.
(d) Business 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):

 

     March 31
2007		    December 31
2006		    September 30
2006		    June 30
2006		    March 31
2006

Total consolidated revenue, book (GAAP) basis

    $ 1,706    $ 1,535    $ 3,510    $ 1,786    $ 1,741

Taxable-equivalent adjustment

      6      5      7      6      7
                                  

Total consolidated revenue, taxable-equivalent basis

    $ 1,712    $ 1,540    $ 3,517    $ 1,792    $ 1,748
                                  
(e) Amounts for PFPC represent the sum of total operating revenue and net nonoperating income (expense) less debt financing costs.

 

Period-end Employees

    March 31
2007		    December 31
2006		    September 30
2006		    June 30
2006		    March 31
2006

Full-time employees

               

Retail Banking

    11,645    9,549    9,531    9,674    9,725

Corporate & Institutional Banking

    2,038    1,936    1,925    1,899    1,892

PFPC

    4,400    4,381    4,317    4,314    4,291

Other, including BlackRock

               

Operations & Technology

    4,573    3,988    4,006    3,994    3,942

Staff Services

    1,979    1,601    1,595    1,593    1,560

BlackRock

             2,317    2,232
                        

Total Other

    6,552    5,589    5,601    7,904    7,734
                        

Total full-time employees

    24,635    21,455    21,374    23,791    23,642

Total part-time employees

    3,060    2,328    2,165    2,241    2,003
                        

Total employees

    27,695    23,783    23,539    26,032    25,645
                        

The period-end employee statistics disclosed for each business reflect staff directly employed by the respective business and exclude operations, technology and staff services employees. No employees are shown for BlackRock at March 31, 2007, December 31, 2006 or September 30, 2006 as we deconsolidated BlackRock effective September 29, 2006. Mercantile employees are included in the Retail Banking, Corporate & Institutional Banking, and Other businesses at March 31, 2007.

 

Page 4

THE PNC FINANCIAL SERVICES GROUP, INC.

Retail Banking (Unaudited)

 

Three months ended

Taxable-equivalent basis (a)

Dollars in millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

INCOME STATEMENT

           

Net interest income

    $ 452     $ 419     $ 427     $ 424     $ 408  

Noninterest income

      387       380       364       358       345  
                                        

Total revenue

      839       799       791       782       753  

Provision for credit losses

      23       35       9       28       9  

Noninterest expense

      496       471       456       460       440  
                                        

Pretax earnings

      320       293       326       294       304  

Income taxes

      119       109       120       109       114  
                                        

Earnings

    $ 201     $ 184     $ 206     $ 185     $ 190  
                                        

AVERAGE BALANCE SHEET

           

Loans

           

Consumer

           

Home equity

    $ 13,881     $ 13,807     $ 13,849     $ 13,816     $ 13,778  

Indirect

      1,480       1,133       1,069       1,019       987  

Other consumer

      1,490       1,322       1,221       1,202       1,248  
                                        

Total consumer

      16,851       16,262       16,139       16,037       16,013  

Commercial

      8,201       5,907       5,821       5,715       5,433  

Floor plan

      952       853       854       964       970  

Residential mortgage

      1,781       1,031       1,509       1,577       1,648  

Other

      233       234       250       248       236  
                                        

Total loans

      28,018       24,287       24,573       24,541       24,300  

Goodwill and other intangible assets

      2,942       1,574       1,580       1,586       1,582  

Loans held for sale

      1,562       1,505       1,513       1,535       1,880  

Other assets

      1,927       1,671       1,640       1,621       1,607  
                                        

Total assets

    $ 34,449     $ 29,037     $ 29,306     $ 29,283     $ 29,369  
                                        

Deposits

           

Noninterest-bearing demand

    $ 8,871     $ 7,834     $ 7,848     $ 7,908     $ 7,777  

Interest-bearing demand

      8,354       7,865       7,787       7,950       8,025  

Money market

      15,669       14,822       14,832       14,697       14,644  
                                        

Total transaction deposits

      32,894       30,521       30,467       30,555       30,446  

Savings

      2,243       1,877       1,976       2,109       2,183  

Certificates of deposit

      15,738       14,694       14,053       13,560       13,115  
                                        

Total deposits

      50,875       47,092       46,496       46,224       45,744  

Other liabilities

      708       598       515       537       560  

Capital

      3,287       3,034       2,988       2,979       2,943  
                                        

Total funds

    $ 54,870     $ 50,724     $ 49,999     $ 49,740     $ 49,247  
                                        

PERFORMANCE RATIOS

           

Return on average capital

      25 %     24 %     27 %     25 %     26 %

Noninterest income to total revenue

      46       48       46       46       46  

Efficiency

      59       59       58       59       58  
                                        
(a) See notes (a), (b) and (d) on page 4.

 

Page 5

THE PNC FINANCIAL SERVICES GROUP, INC.

Retail Banking (Unaudited) (Continued)

 

Three months ended

   March 31
2007		    December 31
2006		    September 30
2006		    June 30
2006		    March 31
2006

OTHER INFORMATION, INCLUDING MERCANTILE (a) (b)

               

Other statistics:

               

Full-time employees

      11,645      9,549      9,531      9,674      9,725

Part-time employees

      2,417      1,829      1,660      1,526      1,373

ATMs

      3,862      3,581      3,594      3,553      3,763

Branches (c)

      1,077      852      848      846      846
                                  

ASSETS UNDER ADMINISTRATION (in billions) (d)

               

Assets under management

               

Personal

    $ 54    $ 44    $ 42    $ 40    $ 40

Institutional

      22      10      10      10      10
                                  

Total

    $ 76    $ 54    $ 52    $ 50    $ 50
                                  

Asset Type

               

Equity

    $ 41    $ 34    $ 32    $ 31    $ 32

Fixed income

      20      12      12      12      12

Liquidity/Other

      15      8      8      7      6
                                  

Total

    $ 76    $ 54    $ 52    $ 50    $ 50
                                  

Nondiscretionary assets under administration

               

Personal

    $ 31    $ 25    $ 27    $ 25    $ 28

Institutional

      80      61      62      60      59
                                  

Total

    $ 111    $ 86    $ 89    $ 85    $ 87
                                  

Asset Type

               

Equity

    $ 42    $ 33    $ 32    $ 31    $ 33

Fixed income

      28      24      27      26      26

Liquidity/Other

      41      29      30      28      28
                                  

Total

    $ 111    $ 86    $ 89    $ 85    $ 87
                                  
(a) Presented as of period-end.
(b) Amounts include the impact of Mercantile, which we acquired effective March 2, 2007.
(c) Excludes certain satellite branches that provide limited products and service hours.
(d) Excludes brokerage account assets.

 

Page 6

THE PNC FINANCIAL SERVICES GROUP, INC.

Retail Banking (Unaudited) (Continued)

 

Three months ended

Dollars in millions except as noted

    March 31
2007		     December 31
2006		     September 30
2006		    

June 30

2006

     March 31
2006		  

OTHER INFORMATION, EXCLUDING MERCANTILE (a) (b)

           

Credit-related statistics:

           

Total nonperforming assets (c)

    $ 101     $ 106     $ 95     $ 104     $ 93  

Net charge-offs

    $ 26     $ 21     $ 31     $ 19     $ 14  

Annualized net charge-off ratio

      .43 %     .34 %     .50 %     .31 %     .23 %
                                        

Home equity portfolio credit statistics:

           

% of first lien positions

      43 %     43 %     44 %     45 %     45 %

Weighted average loan-to-value ratios

      70 %     70 %     69 %     69 %     68 %

Weighted average FICO scores

      726       728       728       728       727  

Loans 90 days past due

      .25 %     .24 %     .22 %     .21 %     .22 %
                                        

Checking-related statistics:

           

Retail Banking checking relationships

      1,962,000       1,954,000       1,958,000       1,956,000       1,950,000  

Consumer DDA households using online banking

      960,000       938,000       920,000       897,000       880,000  

% of consumer DDA households using online banking

      54 %     53 %     52 %     51 %     50 %

Consumer DDA households using online bill payment

      450,000       404,000       361,000       305,000       253,000  

% of consumer DDA households using online bill payment

      25 %     23 %     20 %     17 %     14 %
                                        

Small business loans and managed deposits:

           

Small business loans

    $ 5,218     $ 5,101     $ 5,023     $ 4,882     $ 4,652  

Managed deposits:

           

On-balance sheet

           

Noninterest-bearing demand

    $ 4,236     $ 4,387     $ 4,370     $ 4,319     $ 4,357  

Interest-bearing demand

      1,627       1,724       1,545       1,392       1,454  

Money market

      2,629       2,755       2,658       2,617       2,705  

Certificates of deposit

      746       802       647       574       553  

Off-balance sheet (d)

           

Small business sweep checking

      1,833       1,812       1,676       1,532       1,454  
                                        

Total managed deposits

    $ 11,071     $ 11,480     $ 10,896     $ 10,434     $ 10,523  
                                        

Brokerage statistics:

           

Margin loans

    $ 166     $ 163     $ 170     $ 194     $ 205  

Financial consultants (e)

      757       758       752       775       783  

Full service brokerage offices

      99       99       99       100       100  

Brokerage account assets (billions)

    $ 46     $ 46     $ 44     $ 43     $ 43  
                                        

Other statistics:

           

Gains on sales of education loans (f)

    $ 3     $ 11     $ 11     $ 7     $ 4  
                                        
(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 loans and managed deposits, which are for the three months ended.
(b) Amounts exclude the impact of Mercantile, which we acquired effective March 2, 2007.
(c) Includes nonperforming loans of $93 million at March 31, 2007 and $84 million at March 31, 2006.
(d) 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.
(e) Financial consultants provide services in full service brokerage offices and PNC traditional branches.
(f) Included in “Noninterest income” on page 5.

 

Page 7

THE PNC FINANCIAL SERVICES GROUP, INC.

Corporate & Institutional Banking (Unaudited)

 

Three months ended

Taxable-equivalent basis (a)

Dollars in millions except as noted

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

INCOME STATEMENT

           

Net interest income

    $ 183     $ 186     $ 178     $ 169     $ 170  

Noninterest income

           

Corporate service fees

      127       149       131       133       113  

Other

      60       55       43       76       52  
                                        

Noninterest income

      187       204       174       209       165  
                                        

Total revenue

      370       390       352       378       335  

Provision for (recoveries of) credit losses

      (16 )     6       7       17       12  

Noninterest expense

      193       199       181       191       175  
                                        

Pretax earnings

      193       185       164       170       148  

Income taxes

      61       59       53       55       46  
                                        

Earnings

    $ 132     $ 126     $ 111     $ 115     $ 102  
                                        

AVERAGE BALANCE SHEET

           

Loans

           

Corporate (b)

    $ 8,909     $ 8,885     $ 8,670     $ 8,692     $ 8,410  

Commercial real estate

      3,253       3,143       2,953       2,760       2,643  

Commercial—real estate related

      2,733       2,189       2,476       2,484       2,454  

Asset-based lending

      4,513       4,594       4,563       4,452       4,252  
                                        

Total loans (b)

      19,408       18,811       18,662       18,388       17,759  

Goodwill and other intangible assets

      1,544       1,399       1,366       1,328       1,314  

Loans held for sale

      1,302       965       865       875       866  

Other assets

      4,244       4,550       4,288       3,978       3,849  
                                        

Total assets

    $ 26,498     $ 25,725     $ 25,181     $ 24,569     $ 23,788  
                                        

Deposits

           

Noninterest-bearing demand

    $ 7,083     $ 7,210     $ 6,817     $ 6,353     $ 6,697  

Money market

      4,530       3,644       2,678       2,168       2,110  

Other

      926       921       995       933       777  
                                        

Total deposits

      12,539       11,775       10,490       9,454       9,584  

Other liabilities

      2,850       3,093       2,967       2,826       2,557  

Capital

      2,064       1,935       1,735       1,882       1,802  
                                        

Total funds

    $ 17,453     $ 16,803     $ 15,192     $ 14,162     $ 13,943  
                                        

PERFORMANCE RATIOS

           

Return on average capital

      26 %     26 %     25 %     25 %     23 %

Noninterest income to total revenue

      51       52       49       55       49  

Efficiency

      52       51       51       51       52  
                                        

COMMERCIAL MORTGAGE SERVICING PORTFOLIO (in billions)

           

Beginning of period

    $ 200     $ 180     $ 151     $ 140     $ 136  

Acquisitions/additions

      16       33       37       19       13  

Repayments/transfers

      (10 )     (13 )     (8 )     (8 )     (9 )
                                        

End of period

    $ 206     $ 200     $ 180     $ 151     $ 140  
                                        

OTHER INFORMATION

           

Consolidated revenue from: (c)

           

Treasury Management

    $ 110     $ 107     $ 106     $ 104     $ 101  

Capital Markets

    $ 67     $ 79     $ 64     $ 76     $ 64  

Midland Loan Services

    $ 54     $ 53     $ 47     $ 42     $ 42  

Total loans (d)

    $ 21,193     $ 18,957     $ 19,265     $ 18,758     $ 18,163  

Nonperforming assets (d)

    $ 64     $ 63     $ 94     $ 125     $ 111  

Net charge-offs

    $ 7     $ 24     $ 14     $ 12     $ 4  

Full-time employees (d)

      2,038       1,936       1,925       1,899       1,892  

Net gains on commercial mortgage loan sales

    $ 15     $ 18     $ 12     $ 18     $ 7  

Net carrying amount of commercial mortgage servicing rights (d)

    $ 487     $ 471     $ 414     $ 385     $ 353  
                                        
(a) See notes (a), (b) and (d) on page 4.
(b) Includes lease financing.
(c) Represents consolidated PNC amounts.
(d) Presented as of period end.

 

Page 8

THE PNC FINANCIAL SERVICES GROUP, INC.

PFPC (Unaudited) (a)

 

Three months ended

Dollars in millions except as noted

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

INCOME STATEMENT

           

Servicing revenue

    $ 194     $ 190     $ 183     $ 184     $ 190  

Distribution/out-of-pocket revenue

      106       64       35       34       37  
                                        

Total operating revenue

      300       254       218       218       227  
                                        

Operating expense

      139       133       131       133       136  

Distribution/out-of-pocket expense

      106       64       35       34       37  
                                        

Total expense

      245       197       166       167       173  
                                        

Operating income

      55       57       52       51       54  

Debt financing

      10       10       11       11       10  

Nonoperating income

      2       1       1       1       1  
                                        

Pretax earnings

      47       48       42       41       45  

Income taxes (b)

      16       17       2       15       18  
                                        

Earnings

    $ 31     $ 31     $ 40     $ 26     $ 27  
                                        

PERIOD-END BALANCE SHEET

           

Goodwill and other intangible assets

    $ 1,008     $ 1,012     $ 1,015     $ 1,018     $ 1,022  

Other assets

      1,370       1,192       1,038       1,398       1,363  
                                        

Total assets

    $ 2,378     $ 2,204     $ 2,053     $ 2,416     $ 2,385  
                                        

Debt financing

    $ 760     $ 792     $ 813     $ 852     $ 890  

Other liabilities

      1,091       917       772       1,137       1,094  

Shareholder’s equity

      527       495       468       427       401  
                                        

Total funds

    $ 2,378     $ 2,204     $ 2,053     $ 2,416     $ 2,385  
                                        

PERFORMANCE RATIOS

           

Return on average equity

      25 %     26 %     35 %     25 %     28 %

Operating margin (c)

      18       22       24       23       24  

Operating margin, as adjusted (d)

      28       30       28       28       28  
                                        

SERVICING STATISTICS (at period end)

           

Accounting/administration net fund assets (in billions) (e)

           

Domestic

    $ 731     $ 746     $ 695     $ 671     $ 665  

Offshore

      91       91       79       72       85  
                                        

Total

    $ 822     $ 837     $ 774     $ 743     $ 750  
                                        

Asset type (in billions)

           

Money market

    $ 280     $ 281     $ 260     $ 247     $ 238  

Equity

      352       354       331       317       338  

Fixed income

      111       117       111       110       107  

Other

      79       85       72       69       67  
                                        

Total

    $ 822     $ 837     $ 774     $ 743     $ 750  
                                        

Custody fund assets (in billions)

    $ 435     $ 427     $ 399     $ 389     $ 383  
                                        

Shareholder accounts (in millions)

           

Transfer agency

      18       18       18       18       20  

Subaccounting

      50       50       48       47       45  
                                        

Total

      68       68       66       65       65  
                                        

OTHER INFORMATION

           

Period-end full-time employees

      4,400       4,381       4,317       4,314       4,291  
                                        
(a) See notes (a) and (b) on page 4.
(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

    $ 300    $ 254    $ 218    $ 218    $ 227

Less: PFPC distribution/out-of-pocket revenue

      106      64      35      34      37
                                  

Total operating revenue, as adjusted

    $ 194    $ 190    $ 183    $ 184    $ 190
                                  

Total expense

    $ 245    $ 197    $ 166    $ 167    $ 173

Less: PFPC distribution/out-of-pocket expense

      106      64      35      34      37
                                  

Total expense, as adjusted

    $ 139    $ 133    $ 131    $ 133    $ 136
                                  

Total operating income, as adjusted

    $ 55    $ 57    $ 52    $ 51    $ 54
                                  

We have provided the operating margin, as adjusted, because the distribution/out-of-pocket revenue and expense have no impact on PFPC operating income or 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.

 

Page 9

THE PNC FINANCIAL SERVICES GROUP, INC.

Efficiency Ratios (Unaudited)

 

     Three months ended  
     March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Efficiency, as reported (a)

    61 %   63 %   33 %   64 %   67 %

Efficiency, as adjusted (b)

    59 %   61 %   61 %   59 %   61 %
(a) Calculated as noninterest expense divided by the sum of net interest income and noninterest income on the Consolidated Income Statement.
(b) Calculated as PNC’s efficiency ratio adjusted (1) for the impact of certain specified items, and (2) as if we had recorded our investment in BlackRock on the equity method for all 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 these items on our “as reported” efficiency ratio for these periods, in addition to providing a basis of comparability for the impact of the BlackRock deconsolidation. Amounts used for these adjusted ratios are reconciled to amounts used in the PNC efficiency ratio as reported (GAAP basis).

 

     Three months ended  

Dollars in millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Reconciliation of GAAP amounts with amounts used in the calculation of the adjusted efficiency ratio:

           

GAAP basis - net interest income

    $ 623     $ 566     $ 567     $ 556     $ 556  

Adjustment to net interest income: BlackRock equity method (c)

          (3 )     (4 )     (3 )
                                        

Adjusted net interest income

    $ 623     $ 566     $ 564     $ 552     $ 553  
                                        

GAAP basis - noninterest income

    $ 1,083     $ 969     $ 2,943     $ 1,230     $ 1,185  

Adjustments:

           

Gain on BlackRock/MLIM transaction

          (2,078 )    

Securities portfolio rebalancing loss

          196      

Mortgage loan portfolio repositioning loss

          48      

Integration costs

      2       10        

Gain related to transfer of BlackRock shares for LTIP

      (82 )        

Loss from the net mark-to-market adjustment on BlackRock LTIP shares obligation

      30       12        

PFPC distribution/out-of-pocket revenue

      (106 )     (64 )     (35 )     (34 )     (37 )

BlackRock equity method (c)

          (277 )     (312 )     (354 )
                                        

Adjusted noninterest income

    $ 927     $ 927     $ 797     $ 884     $ 794  
                                        

Adjusted total revenue

    $ 1,550     $ 1,493     $ 1,361     $ 1,436     $ 1,347  
                                        

GAAP basis - noninterest expense

    $ 1,036     $ 969     $ 1,167     $ 1,145     $ 1,162  

Adjustments:

           

Integration costs

      (11 )       (72 )     (13 )     (6 )

PFPC distribution/out-of-pocket expense

      (106 )     (64 )     (35 )     (34 )     (37 )

BlackRock equity method (c)

          (223 )     (251 )     (291 )
                                        

Adjusted noninterest expense

    $ 919     $ 905     $ 837     $ 847     $ 828  
                                        

Adjusted efficiency ratio

      59 %     61 %     61 %     59 %     61 %
(c) See Appendix to Financial Supplement.

 

Page 10

THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Net Interest Income, Net Interest Margin, and Trading Revenue (Unaudited)

Taxable-equivalent basis

 

     Three months ended  

Net Interest Income

In millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Interest income

           

Loans

    $ 899     $ 824     $ 841     $ 801     $ 750  

Securities available for sale

      311       279       272       255       244  

Other

      112       119       97       76       79  
                                        

Total interest income

      1,322       1,222       1,210       1,132       1,073  
                                        

Interest expense

           

Deposits

      469       450       434       379       327  

Borrowed funds

      224       201       202       191       183  
                                        

Total interest expense

      693       651       636       570       510  
                                        

Net interest income (a)

    $ 629     $ 571     $ 574     $ 562     $ 563  
                                        
           

(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  

In millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Net interest income, GAAP basis

    $ 623     $ 566     $ 567     $ 556     $ 556  

Taxable-equivalent adjustment

      6       5       7       6       7  
                                        

Net interest income, taxable-equivalent basis

    $ 629     $ 571     $ 574     $ 562     $ 563  
                                        
     Three months ended  

Net Interest Margin

   March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Average yields/rates

           

Yield on interest-earning assets

           

Loans

      6.68 %     6.63 %     6.59 %     6.38 %     6.14 %

Securities available for sale

      5.31       5.27       5.01       4.76       4.66  

Other

      5.83       5.56       5.78       5.23       5.04  

Total yield on interest-earning assets

      6.23       6.15       6.09       5.84       5.64  

Rate on interest-bearing liabilities

           

Deposits

      3.52       3.54       3.43       3.11       2.81  

Borrowed funds

      5.33       5.39       5.40       5.06       4.65  

Total rate on interest-bearing liabilities

      3.95       3.97       3.88       3.56       3.27  
                                        

Interest rate spread

      2.28       2.18       2.21       2.28       2.37  

Impact of noninterest-bearing sources

      .67       .70       .68       .62       .58  
                                        

Net interest margin

      2.95 %     2.88 %     2.89 %     2.90 %     2.95 %
                                        
     Three months ended  

Trading Revenue (b)

In millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Net interest income (expense)

      $ (2 )   $ (1 )   $ (3 )  

Noninterest income

    $ 52       33       38       55     $ 57  
                                        

Total trading revenue

    $ 52     $ 31     $ 37     $ 52     $ 57  
                                        

Securities underwriting and trading (c)

    $ 9     $ 11     $ 7     $ 6     $ 14  

Foreign exchange

      14       13       11       17       14  

Financial derivatives

      29       7       19       29       29  
                                        

Total trading revenue

    $ 52     $ 31     $ 37     $ 52     $ 57  
                                        
(b) See pages 12-13 for disclosure of average trading assets and liabilities.
(c) Includes changes in fair value for certain loans accounted for at fair value. See page 12 for disclosure of average loans at fair value.

 

Page 11

THE PNC FINANCIAL SERVICES GROUP, INC.

Average Consolidated Balance Sheet (Unaudited)

 

Three months ended - in millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Assets

           

Interest-earning assets:

           

Securities available for sale

           

Residential mortgage-backed

    $ 17,198     $ 16,082     $ 15,282     $ 14,247     $ 13,882  

Commercial mortgage-backed

      3,338       2,640       2,182       2,348       2,043  

Asset-backed

      1,876       1,561       1,457       1,170       1,055  

U.S. Treasury and government agencies

      394       441       2,285       3,181       3,465  

State and municipal

      162       140       144       152       156  

Other debt

      79       89       90       88       89  

Corporate stocks and other

      347       277       259       230       216  
                                        

Total securities available for sale (a)

      23,394       21,230       21,699       21,416       20,906  

Loans, net of unearned income

           

Commercial

      21,479       20,458       20,431       20,348       19,556  

Commercial real estate

      5,478       3,483       3,268       3,071       3,021  

Consumer

      16,865       16,272       16,150       16,049       16,184  

Residential mortgage

      7,173       5,606       7,332       7,353       7,272  

Lease financing

      2,534       2,789       2,790       2,761       2,769  

Other

      527       385       367       354       344  
                                        

Total loans, net of unearned income

      54,056       48,993       50,338       49,936       49,146  

Loans held for sale

      2,955       3,167       2,408       2,411       2,745  

Federal funds sold and resale agreements

      2,092       2,049       1,401       613       488  

Other

      2,735       3,198       2,805       2,795       3,147  
                                        

Total interest-earning assets

      85,232       78,637       78,651       77,171       76,432  

Noninterest-earning assets:

           

Allowance for loan and lease losses

      (612 )     (557 )     (609 )     (600 )     (600 )

Cash and due from banks

      2,945       2,999       3,161       3,140       3,187  

Other

      19,857       17,969       14,142       13,736       13,110  
                                        

Total assets

    $ 107,422     $ 99,048     $ 95,345     $ 93,447     $ 92,129  
                                        

 

Supplemental Average Balance Sheet Information

 

 

Trading Assets

           

Securities (b)

    $ 1,569     $ 2,111     $ 1,460     $ 1,477     $ 1,797  

Resale agreements (c)

      820       1,247       537       378       321  

Financial derivatives (d)

      1,115       1,209       1,220       1,251       908  

Loans at fair value (d)

      193       172       168       170    
                                        

Total trading assets

    $ 3,697     $ 4,739     $ 3,385     $ 3,276     $ 3,026  
                                        
(a) Average securities held to maturity totaled less than $.5 million for each of the periods presented and are included in the “Other debt” category above.
(b) Included in “Interest-earning assets-Other” above.
(c) Included in “Federal funds sold and resale agreements” above.
(d) Included in “Noninterest-earning assets-Other” above.

 

Page 12

THE PNC FINANCIAL SERVICES GROUP, INC.

Average Consolidated Balance Sheet (Unaudited) (Continued)

 

Three months ended - in millions

    March 31
2007		    December 31
2006		    September 30
2006		    June 30
2006		    March 31
2006

Liabilities, Minority and Noncontrolling Interests, and Shareholders’ Equity

               

Interest-bearing liabilities:

               

Interest-bearing deposits

               

Money market

    $ 22,503    $ 20,879    $ 20,565    $ 19,019    $ 18,482

Demand

      8,671      8,143      8,075      8,229      8,304

Savings

      2,250      1,882      2,021      2,177      2,250

Retail certificates of deposit

      15,691      14,837      14,209      13,686      13,243

Other time

      1,623      1,355      1,467      1,323      1,309

Time deposits in foreign offices

      3,129      3,068      3,712      4,276      3,396
                                  

Total interest-bearing deposits

      53,867      50,164      50,049      48,710      46,984

Borrowed funds

               

Federal funds purchased

      4,533      3,167      3,831      2,715      2,594

Repurchase agreements

      1,858      2,264      2,027      2,226      2,307

Bank notes and senior debt

      4,182      2,757      2,801      3,145      3,824

Subordinated debt

      4,370      4,361      4,436      4,437      4,437

Other

      1,877      2,161      1,627      2,504      2,599
                                  

Total borrowed funds

      16,820      14,710      14,722      15,027      15,761
                                  

Total interest-bearing liabilities

      70,687      64,874      64,771      63,737      62,745

Noninterest-bearing liabilities, minority and noncontrolling interests, and shareholders’ equity:

               

Demand and other noninterest-bearing deposits

      15,807      14,827      14,549      13,926      13,966

Allowance for unfunded loan commitments and letters of credit

      126      117      104      103      101

Accrued expenses and other liabilities

      7,961      7,882      6,346      6,305      6,106

Minority and noncontrolling interests in consolidated entities

      893      542      640      631      589

Shareholders’ equity

      11,948      10,806      8,935      8,745      8,622
                                  

Total liabilities, minority and noncontrolling interests, and shareholders’ equity

    $ 107,422    $ 99,048    $ 95,345    $ 93,447    $ 92,129
                                  

 

Supplemental Average Balance Sheet Information

 

               
Deposits and Common Shareholders’ Equity               

Interest-bearing deposits

    $ 53,867    $ 50,164    $ 50,049    $ 48,710    $ 46,984

Demand and other noninterest-bearing deposits

      15,807      14,827      14,549      13,926      13,966
                                  

Total deposits

    $ 69,674    $ 64,991    $ 64,598    $ 62,636    $ 60,950

Transaction deposits

    $ 46,981    $ 43,849    $ 43,189    $ 41,174    $ 40,752

Common shareholders’ equity

    $ 11,941    $ 10,799    $ 8,928    $ 8,738    $ 8,615
Trading Liabilities               

Securities sold short (a)

    $ 1,264    $ 1,553    $ 867    $ 769    $ 663

Repurchase agreements and other borrowings (b)

      363      1,096      708      641      886

Financial derivatives (c)

      1,126      1,156      1,151      1,200      901

Borrowings at fair value (c)

      39      34      40      48   
                                  

Total trading liabilities

    $ 2,792    $ 3,839    $ 2,766    $ 2,658    $ 2,450
                                  
(a) Included in “Borrowed funds-Other” above.
(b) Included in “Borrowed funds-Repurchase agreements” and “Borrowed funds-Other” above.
(c) Included in “Accrued expenses and other liabilities” above.

 

Page 13

THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Loans and Lending Statistics (Unaudited)

Loans

 

Period ended - in millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Commercial

    $ 23,522     $ 20,584     $ 20,684     $ 20,564     $ 19,927  

Commercial real estate

           

Real estate projects

      8,769       2,716       2,691       2,438       2,325  

Mortgage

      602       816       794       768       721  
                                        

Total commercial real estate

      9,371       3,532       3,485       3,206       3,046  
                                        

Equipment lease financing

      3,527       3,556       3,609       3,583       3,558  
                                        

Total commercial lending

      36,420       27,672       27,778       27,353       26,531  
                                        

Consumer

           

Home equity

      14,263       13,749       13,876       13,853       13,787  

Automobile

      1,956       1,135       1,061       1,008       958  

Other

      1,769       1,631       1,419       1,388       1,363  
                                        

Total consumer

      17,988       16,515       16,356       16,249       16,108  
                                        

Residential mortgage

      9,158       6,337       5,234       7,416       7,362  

Other

      364       376       347       358       352  

Unearned income

      (1,005 )     (795 )     (815 )     (828 )     (832 )
                                        

Total, net of unearned income

    $ 62,925     $ 50,105     $ 48,900     $ 50,548     $ 49,521  
                                        

 

    

March 31

2007

    

March 31

2006

  

Commercial Lending Exposure (a)

     

Investment grade or equivalent

    47 %   47 %

Non-investment grade

     

$50 million or greater

    3 %   2 %

All other non-investment grade

    50 %   51 %
            

Total

    100 %   100 %
            

(a) Exposure represents the sum of all loans, leases, commitments and letters of credit, excluding those related to Mercantile.

 

Page 14

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

 

Three months ended - in millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Beginning balance

    $ 560     $ 566     $ 611     $ 597     $ 596  

Charge-offs

           

Commercial

      (31 )     (23 )     (39 )     (30 )     (16 )

Commercial real estate

        (1 )     (2 )    

Equipment lease financing

        (14 )      

Consumer

      (17 )     (15 )     (13 )     (12 )     (12 )

Residential mortgage

        (1 )     (2 )    
                                        

Total charge-offs

      (48 )     (54 )     (56 )     (42 )     (28 )

Recoveries

           

Commercial

      7       3       6       4       6  

Commercial real estate

        1        

Equipment lease financing

        1         4    

Consumer

      5       4       3       4       4  
                                        

Total recoveries

      12       9       9       12       10  

Net recoveries (charge-offs)

           

Commercial

      (24 )     (20 )     (33 )     (26 )     (10 )

Commercial real estate

          (2 )    

Equipment lease financing

        (13 )       4    

Consumer

      (12 )     (11 )     (10 )     (8 )     (8 )

Residential mortgage

        (1 )     (2 )    
                                        

Total net charge-offs

      (36 )     (45 )     (47 )     (30 )     (18 )

Provision for credit losses

      8       42       16       44       22  

Acquired allowance - Mercantile

      142          

Net change in allowance for unfunded loan commitments and letters of credit

      16       (3 )     (14 )       (3 )
                                        

Ending balance

    $ 690     $ 560     $ 566     $ 611     $ 597  
                                        

Supplemental Information

           

Commercial lending net charge-offs (a)

    $ (24 )   $ (33 )   $ (35 )   $ (22 )   $ (10 )

Consumer lending net charge-offs (b)

      (12 )     (12 )     (12 )     (8 )     (8 )
                                        

Total net charge-offs

    $ (36 )   $ (45 )   $ (47 )   $ (30 )   $ (18 )

Net charge-offs to average loans

           

Commercial lending

      .33 %     .49 %     .52 %     .34 %     .16 %

Consumer lending

      .20       .22       .20       .14       .14  

Reconciliation of total net charge-offs to total net charge-offs excluding the impact of Mercantile

           

Total net charge-offs

    $ (36 )   $ (45 )   $ (47 )   $ (30 )   $ (18 )

Mercantile net charge-offs

      (3 )        
                                        

Total net charge-offs excluding Mercantile

    $ (33 )   $ (45 )   $ (47 )   $ (30 )   $ (18 )
                                        
           

(a)    Includes commercial, commercial real estate and equipment lease financing.

      

(b)    Includes consumer and residential mortgage.

      

 

Change in Allowance for Unfunded Loan Commitments and Letters of Credit

 

 

Three months ended - in millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Beginning balance

    $ 120     $ 117     $ 103     $ 103     $ 100  

Acquired allowance (Mercantile)

      17          

Net change in allowance for unfunded loan commitments and letters of credit

      (16 )     3       14         3  
                                        

Ending balance

    $ 121     $ 120     $ 117     $ 103     $ 103  
                                        

 

Net Unfunded Commitments

In millions

   

March 31

2007

   

December 31

2006

   

September 30

2006

   

June 30

2006

   

March 31

2006

              

Net unfunded commitments

    $ 49,267    $ 44,835    $ 43,804    $ 40,904    $ 40,806
                                  

 

Page 15

THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Nonperforming Assets (Unaudited)

Nonperforming Assets by Type

 

Period ended - in millions

    March 31
2007		     December 31
2006		     September 30
2006		     June 30
2006		     March 31
2006		  

Nonaccrual loans

           

Commercial

    $ 121     $ 109     $ 112     $ 151     $ 127  

Commercial real estate

      25       12       14       12       13  

Equipment lease financing

      2       1       14       16       16  

Consumer

      14       13       14       14       11  

Residential mortgage

      16       12       13       14       15  
                                        

Total nonaccrual loans

      178       147       167       207       182  

Troubled debt restructured loan

            1    
                                        

Total nonperforming loans

      178       147       167       208       182  

Foreclosed and other assets

           

Equipment lease financing

      12       12       12       12       13  

Residential mortgage

      11       10       9       8       8  

Other

      3       2       3       3       3  
                                        

Total foreclosed and other assets

      26       24       24       23       24  
                                        

Total nonperforming assets (a) (b)

    $ 204     $ 171     $ 191     $ 231     $ 206  
                                        

Nonperforming loans to total loans

      .28 %     .29 %     .34 %     .41 %     .37 %

Nonperforming assets to total loans and foreclosed assets

      .32       .34       .39       .46       .42  

Nonperforming assets to total assets

      .17       .17       .19       .24       .22  
                                        
           

(a)    Excludes equity management assets carried at estimated fair value (amounts include troubled debt restructured assets of $4 million, $4 million, $4 million, $7 million, and $7 million, respectively) and loans held for sale carried at lower of cost or market value ($18 million at March 31, 2007 and $1 million at March 31, 2006):

    $ 33     $ 11     $ 12     $ 18     $ 22  

(b)    Total nonperforming assets at March 31, 2007 of $204 million include $35 million related to Mercantile. Therefore, total nonperforming assets at that date excluding Mercantile total $169 million.

           

Change in Nonperforming Assets

 

In millions

   

Three months

ended

  

January 1, 2007

    $ 171  

Transferred from accrual

      76  

Acquisition - Mercantile

      35  

Asset sales

      (3 )

Returned to performing

      (4 )

Charge-offs and valuation adjustments

      (22 )

Principal activity including payoffs

      (49 )
        

March 31, 2007

    $ 204  
        

 

Page 16

THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Nonperforming Assets (Unaudited) (Continued)

Nonperforming Assets by Business

 

Period ended - in millions

   

March 31

2007

    December 31
2006		    September 30
2006		   

June 30

2006

   

March 31

2006

Retail Banking

               

Nonperforming loans

    $ 93    $ 96    $ 85    $ 95    $ 84

Foreclosed and other assets

      8      10      10      9      9
                                  

Total

    $ 101    $ 106    $ 95    $ 104    $ 93
                                  

Corporate & Institutional Banking

               

Nonperforming loans

    $ 51    $ 50    $ 81    $ 112    $ 97

Foreclosed and other assets

      13      13      13      13      14
                                  

Total

    $ 64    $ 63    $ 94    $ 125    $ 111
                                  

Other (a)

               

Nonperforming loans

    $ 34    $ 1    $ 1    $ 1    $ 1

Foreclosed and other assets

      5      1      1      1      1
                                  

Total

    $ 39    $ 2    $ 2    $ 2    $ 2
                                  

Consolidated Totals

               

Nonperforming loans

    $ 178    $ 147    $ 167    $ 208    $ 182

Foreclosed and other assets

      26      24      24      23      24
                                  

Total (b)

    $ 204    $ 171    $ 191    $ 231    $ 206
                                  
(a) Includes Mercantile ($35 million) for first quarter 2007 and residential mortgages related to PNC’s A&L management function.

Largest Individual Nonperforming Assets at March 31, 2007 - in millions (b)

 

Ranking    Outstandings    

Industry

1    $ 12     Air Transportation
2      11     Merchant Wholesalers, Durable Goods
3      7     Other Commercial Printing
4      7     Computer and Electronic Product Manufacturing
5      7     Transportation Equipment Manufacturing
6      6     Real Estate
7      4     Real Estate
8      4     Plastics and Rubber Products Manufacturing
9      4     Fabricated Metal Product Manufacturing
10      3     Transportation Equipment Manufacturing
          
Total    $ 65    
          
As a percent of total nonperforming assets
     32 %  
          
(b) Amounts shown are not net of related allowance for loan and lease losses, if applicable.

 

Page 17

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 (net of eligible deferred taxes).

Annualized - Adjusted to reflect a full year of activity.

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

Basis point - One hundredth of a percentage point.

Charge-off - Process of removing a loan or portion of a loan from our balance sheet because it is considered uncollectible. We also record a charge-off when a loan is transferred to held for sale by reducing the loan’s carrying amount by the allowance for loan losses associated with such loan or if 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., positioned for declining interest rates). For example, if the duration of equity is +1.5 years, the economic value of equity declines by 1.5% for each 100 basis point increase in interest rates.

Earning assets - Assets that generate income, which include: federal funds sold; resale agreements; 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.

 

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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, 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 nonperforming loans held for sale or foreclosed and other assets. We do not accrue interest income on loans classified as nonperforming.

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

Operating leverage - The period to period 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 (net of eligible deferred taxes), and excluding mortgage servicing rights, divided by period-end assets less goodwill and other intangible assets (net of eligible deferred taxes), and excluding mortgage servicing rights.

 

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Taxable-equivalent interest - The interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of yields and margins for all interest-earning assets, we 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 on taxable investments. 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 (net of eligible deferred taxes), 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 subordinated debt and trust preferred securities, 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.

 

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Business Segment Descriptions

Retail Banking provides deposit, lending, brokerage, trust, investment management, and cash management services to approximately 2.9 million consumer and small business customers within our primary geographic area. Our customers are serviced through 1,077 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; Washington, D.C.; Maryland; Virginia; 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-related products and services include foreign exchange, derivatives, loan syndications, mergers and acquisitions advisory and related services to middle-market companies, securities underwriting, and securities sales and trading. Corporate & Institutional Banking also provides commercial loan servicing, 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. 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. At March 31, 2007, PNC’s ownership interest in BlackRock was approximately 33.5%.

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 March 31, 2007 both domestically and internationally through its Ireland and Luxembourg operations.

 

Page 21

Appendix to Financial Supplement

The PNC Financial Services Group, Inc.

Adjusted Condensed Consolidated Income Statement Reconciliation (Unaudited) (a)

For the three months ended March 31, 2007

 

In millions

   

PNC

As Reported

    Adjustments (b)    

PNC

As Adjusted

Net Interest Income

        

Net interest income

    $ 623      $ 623

Provision for credit losses

      8        8
               

Net interest income less provision for credit losses

      615        615
               

Noninterest Income

        

Asset management

      165    $ 2       167

Other

      918      (158 )     760
                     

Total noninterest income

      1,083      (156 )     927
                     

Noninterest Expense

        

Compensation and benefits

      490      (2 )     488

Other

      546      (115 )     431
                     

Total noninterest expense

      1,036      (117 )     919
                     

Income before income taxes

      662      (39 )     623

Income taxes

      203      (14 )     189
                     

Net income

    $ 459    $ (25 )   $ 434
                     
(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 specified 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 page 1 of the Financial Supplement to the corresponding adjusted amounts shown on page 2 of the Financial Supplement. We have provided these adjusted amounts and reconciliations so that investors, analysts, regulators and others will be better able to evaluate the impact of these items on our results for these periods, in addition to providing a basis of comparability for the impact of the BlackRock deconsolidation given the magnitude of the impact of the deconsolidation on various components of our income statement and balance sheet. We believe that information as adjusted for the impact of the specified items may be useful due to the extent to which these items are not indicative of our ongoing operations as the result of our management activities on those operations, as a result of the following attributes. Integration costs can vary significantly from period to period depending on whether or not we have any such transaction pending or in process and depending on the size and nature of the transaction. The PFPC distribution/out-of-pocket revenue and expense are marketing, sales and servicing fees that we collect from pooled investment fund accounts (as revenue) and pass along to our fund clients (as expense), without any impact on our operating income. Our BlackRock LTIP shares obligation results from an agreement entered into in 2002 and predominantly reflects the market price of BlackRock stock at specified times. We have provided information adjusted for the impact of the third quarter 2006 gain on the BlackRock/MLIM transaction and the securities portfolio rebalancing and mortgage loan portfolio repositioning losses due to the size and nature of those transactions. Adjusted 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. Our 2006 Form 10-K includes additional information regarding our accounting for the BlackRock/MLIM transaction and the BlackRock LTIP shares obligation, and regarding the PFPC distribution/out-of-pocket revenue and expense. 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.
(b) Includes the impact of the following items, all on a pretax basis: $82 million gain related to transfer of BlackRock shares for LTIP, $30 million loss from the net mark-to-market adjustment on BlackRock LTIP shares obligation, and $13 million of Mercantile acquisition and BlackRock/MLIM transaction integration costs. Also included are PFPC distribution/out-of-pocket revenue and expense primarily associated with pooled investment fund accounts totaling $106 million.

 

Page A1

Appendix to Financial Supplement (continued)

The PNC Financial Services Group, Inc.

Adjusted Condensed Consolidated Income Statement Reconciliations (Unaudited) (a)

For the three months ended December 31, 2006

 

In millions

   

PNC

As Reported

    Adjustments (b)    

PNC

As Adjusted

Net Interest Income

        

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      (52 )     768
                     

Total noninterest income

      969      (42 )     927
                     

Noninterest Expense

        

Compensation and benefits

      497        497

Other

      472      (64 )     408
                     

Total noninterest expense

      969      (64 )     905
                     

Income before income taxes

      524      22       546

Income taxes

      148      7       155
                     

Net income

    $ 376    $ 15     $ 391
                     

For the three months ended September 30, 2006

 

In millions

   

PNC

As Reported

    Adjustments (c)    

BlackRock

Deconsolidation and

Other Adjustments

    

BlackRock

Equity Method (d)

    PNC
As Adjusted

Net Interest Income

             

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    $ (1,869 )     (18 )        675
                                    

Total noninterest income

      2,943      (1,869 )     (320 )     43      797
                                    

Noninterest Expense

             

Compensation and benefits

      659      (44 )     (154 )        461

Other

      508      (63 )     (69 )        376
                                

Total noninterest expense

      1,167      (107 )     (223 )        837
                                

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) Includes the impact of the following items on a pretax basis: $12 million loss from the net mark-to-market adjustment on BlackRock LTIP shares obligation and $10 million of integration costs. Also included are PFPC distribution/out-of-pocket revenue and expense primarily associated with pooled investment fund accounts totaling $64 million.
(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. Also included are PFPC distribution/out-of-pocket revenue and expense primarily associated with pooled investment fund accounts totaling $35 million.
(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.

 

Page A2

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

 

In millions

   

PNC

As Reported

    Adjustments (b)    

BlackRock

Deconsolidation and

Other Adjustments

    

BlackRock

Equity Method (c)

   

PNC

As Adjusted

Net Interest Income

             

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    $ (34 )     (12 )        755
                                    

Total noninterest income

      1,230      (34 )     (361 )     49      884
                                    

Noninterest Expense

             

Compensation and benefits

      634      3       (180 )        457

Other

      511      (50 )     (71 )        390
                                

Total noninterest expense

      1,145      (47 )     (251 )        847
                                

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

 

In millions

   

PNC

As Reported

    Adjustments (d)     BlackRock
Deconsolidation and
Other Adjustments		    

BlackRock

Equity Method (c)

   

PNC

As Adjusted

Net Interest Income

             

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    $ (37 )     (21 )        666
                                    

Total noninterest income

      1,185      (37 )     (406 )     52      794
                                    

Noninterest Expense

             

Compensation and benefits

      642      (3 )     (189 )        450

Other

      520      (40 )     (102 )        378
                                

Total noninterest expense

      1,162      (43 )     (291 )        828
                                

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) Includes $13 million of BlackRock/MLIM transaction integration costs and PFPC distribution/out-of-pocket revenue and expense primarily associated with pooled investment fund accounts totaling $34 million.
(c) BlackRock investment revenue represents PNC’s approximately 69% ownership interest in earnings of BlackRock for both the second quarter and first quarter of 2006, excluding pretax BlackRock/MLIM transaction integration costs totaling $13 million and $6 million, respectively. The income taxes amount represents additional income taxes recorded by PNC related to BlackRock earnings.
(d) Includes $6 million of BlackRock/MLIM transaction integration costs and PFPC distribution/out-of-pocket revenue and expense primarily associated with pooled investment fund accounts totaling $37 million.

 

Page A3