PNC grew retail customer accounts and increased average transaction deposits by $6.6 billion during the quarter, further strengthening its liquidity position and core funding level to an 87 percent loan to deposit ratio at June 30, 2009. The company reduced brokered certificates of deposit as reflected in the $5.4 billion decline in average other time deposits, substantially reducing the overall cost of deposit funding.

PNC remains committed to responsible lending, essential to economic recovery. Loans and commitments of approximately $29 billion were originated and renewed during the second quarter as the company continued to make credit available.

PNC raised $624 million in new common equity at market prices through the issuance of 15 million shares of common stock in May 2009. PNC plans to redeem the preferred shares issued under the TARP Capital Purchase Program when appropriate in a shareholder-friendly manner, subject to approval by its banking regulators.

Capital levels continued to strengthen. During the quarter PNC added 50 basis points to the estimated Tier 1 risk-based capital ratio which was 10.5 percent at June 30, 2009 and added 40 basis points to the estimated Tier 1 common equity ratio which was 5.3 percent at June 30, 2009.

Pretax pre-provision earnings of $1.3 billion exceeded credit costs of $1.1 billion. Total revenue was $4.0 billion for the quarter, reflecting the diversification of PNC’s revenue streams and the strength of noninterest income sources. Expenses remained well controlled and increased primarily due to the special FDIC assessment and integration costs related to the National City acquisition.

As expected, credit quality continued to deteriorate during the second quarter reflecting the weakened economy, but at a slower rate. PNC increased loan loss reserves beyond net charge-offs by $292 million, strengthening the ratio of allowance for loan and lease losses to total loans to 2.77 percent at June 30, 2009 from 2.51 percent at March 31, 2009. Net charge-offs to average loans increased to 1.89 percent for the second quarter from 1.01 percent for the first quarter of 2009. The increase in net charge-offs was consistent with $2.8 billion of reserves for expected losses established for National City loans on acquisition date.

The acquisition of National City Corporation continued to exceed expectations.

The transaction was accretive to first half earnings and is expected to be accretive for the full year.

Cost savings in the first half of 2009 reached an annualized level of approximately $500 million, ahead of plan and tracking to achieve the $1.2 billion two-year goal.

Plans are in place for the required divestiture of 61 branches in the third quarter of 2009.

Integration activities are proceeding on schedule. National City customers will begin to be converted to the PNC platform in November 2009.

The combined company remains focused on delivering the PNC brand for client and business growth.

PNC’s customer retention efforts were successful and met expectations. Net new consumer and business checking relationships grew by 14,000 during the second quarter of 2009. Additionally, online banking and online bill payment active customers each grew 2 percent during the quarter.

Employee engagement and customer satisfaction/loyalty results are tracking at all time highs. PNC recently received the “Gallup Great Workplace Award” in recognition of its extraordinary ability to create an engaged workplace culture.

Average deposit balances increased $2.0 billion over the linked quarter due to demand, money market and savings deposit growth that was partially offset by the planned run off of higher rate certificates of deposit net of the successful retention of customer relationships. The deposit strategy of Retail Banking is to remain disciplined on pricing while targeting specific products and markets for growth. A continued decline in certificates of deposit is expected for the remainder of 2009.

Average loan balances decreased $453 million compared with the linked quarter as education loan growth was offset by declines in commercial, home equity and residential mortgage loans. In the current environment, demand for commercial and home equity loans is being outpaced by paydowns and charge-offs.

Net interest income for the second quarter of 2009 declined $19 million, or 2 percent, compared with the linked quarter primarily as a result of declining loan portfolio spreads and balances.

Noninterest income for the quarter increased $44 million, or 8 percent, compared with the linked quarter as service charges on deposits and consumer service fees increased 8 percent and 9 percent, respectively, while brokerage fees remained relatively flat.

Noninterest expense for the second quarter increased 1 percent compared with the linked quarter. Expenses were well managed as continued investments in distribution channels were partially offset by reductions in expenses from acquisitions.

Provision for credit losses was $304 million for both the second and first quarters of 2009.

Retail Banking had 2,606 branches and an ATM network of 6,474 machines at June 30, 2009 giving PNC one of the largest distribution networks among U.S. banks. During the second quarter of 2009, PNC opened 4 traditional branches and 23 in-store branches, consolidated 6 branches and added 72 ATMs.

Net interest income for the second quarter of 2009 was $885 million, a decrease of $138 million compared with the first quarter of 2009 primarily due to a decline in higher risk and relatively higher yielding loans.

Corporate service fees were $236 million in the second quarter of 2009 compared with $218 million in the linked quarter. The increase was primarily from new business activity and higher corporate finance fees.

Other noninterest income increased $115 million to $169 million in the second quarter of 2009 compared with the first quarter mainly due to higher capital markets activity.

Noninterest expense was $470 million in the second quarter of 2009 compared with $436 million in the first quarter of 2009. The increase was primarily due to higher credit-related costs, a loss on the disposition of repossessed assets and a lease residual impairment.

Provision for credit losses was $649 million in the second quarter of 2009 compared with $287 million in the first quarter and resulted from credit deterioration primarily in real estate and transportation related portfolios. Net charge-offs for the second quarter were $322 million, a $152 million increase compared with the linked quarter.

Average loans were $74 billion for the second quarter of 2009 compared with $78 billion in the first quarter of 2009. The decrease was due to slower loan demand across the customer base reflecting reduced originations as well as lower utilization levels, paydowns and higher net charge-offs.

Average deposits were $36 billion in the second quarter of 2009, an increase of $3 billion, or 10 percent, compared with the first quarter of 2009. PNC continued to experience deposit growth, particularly in money market and noninterest-bearing demand, driven largely by customer safety considerations.

The commercial mortgage servicing portfolio was $269 billion at June 30, 2009 compared with $248 billion at June 30, 2008 and $269 billion at March 31, 2009. Servicing portfolio additions continued to be modest and focused on agency portfolios, and were offset in the second quarter of 2009 by repayments and transfers.

Assets under management increased to $98 billion at June 30, 2009 compared with $96 billion at March 31, 2009 due to higher equity market values.

Noninterest income for the quarter declined $3 million compared with the linked quarter due to a seasonal decline in tax services revenue partially offset by higher asset management fees reflecting improved equity market values.

Net interest income for the quarter declined $21 million compared with the first quarter of 2009 due to a reduction of higher yielding loans. Personal wealth management products include traditional loans and deposits.

Noninterest expense for the quarter declined due to continued expense discipline.

Provision for credit losses was $46 million for the second quarter of 2009 compared with $17 million in the linked quarter. Loan loss reserves were increased beyond net charge-offs as credit quality continued to deteriorate.

Balance sheet activity for the quarter reflected a stable loan portfolio compared with the linked quarter as home equity loan growth largely offset declines in commercial and residential mortgage loans. Average deposits for the quarter declined $568 million compared with the first quarter due to seasonal outflows related to customer tax payments, the internal reassignment of balances to another business segment and the planned run off of higher rate certificates of deposit. These decreases were partially offset by deposit growth that resulted from the recapture of former National City customers and successful retention and acquisition efforts.

Total loan originations were $6.4 billion for the second quarter compared with $6.9 billion in the linked quarter, reflecting strong refinancing activity consistent with industry trends. However, rising mortgage rates reduced incoming application pipeline volume. Loans were primarily originated through direct channels under agency (FNMA, FHLMC, FHA/VA) guidelines.

Residential mortgage loans serviced for others totaled $161 billion at June 30, 2009 compared with $168 billion at March 31, 2009 as payoffs exceeded new direct loan origination volume during the quarter.

Noninterest income was $245 million in the second quarter of 2009 compared with $438 million in the first quarter of 2009. Net hedging gains on mortgage servicing rights were $58 million for the second quarter, a decrease of $144 million compared with the prior quarter. Loan sales revenue declined by $23 million in the linked quarter comparison primarily due to a reduction in the mortgage loan pipeline.

Net interest income was $80 million in the second quarter of 2009 compared with $82 million in the first quarter.

Noninterest expense was $176 million for the second quarter of 2009 and relatively flat compared with $173 million in the linked quarter.

The carrying value of mortgage servicing rights was $1.5 billion at June 30, 2009 compared with $1.0 billion at March 31, 2009. The increase was primarily attributable to a higher fair value of the asset resulting from rising interest rates during the quarter and a steepening of the interest rate curve which increased the expected cash flows associated with this asset due to lower prepayment risk.

Servicing revenue totaled $199 million which reflected a decrease of $45 million, or 18 percent, from the second quarter of 2008 and $6 million, or 3 percent, from the linked quarter. The decrease from the prior year was directly related to declines in equity market values, high redemption activity, and account closures over the past year which resulted in lower asset-based and account-based fees. The majority of the linked quarter decline was due to the seasonal nature of certain investor services.

Operating expense totaled $170 million and decreased $16 million, or 9 percent, from the year ago quarter and $5 million, or 3 percent, from the first quarter of 2009. The decreases were largely due to actions taken to reduce costs in response to the decline in revenue from unfavorable market conditions.

Global Investment Servicing provided accounting/administration services for $774 billion of net fund assets and provided custody services for $399 billion of fund assets as of June 30, 2009 compared with $988 billion and $471 billion, respectively, at June 30, 2008 and $712 billion and $361 billion, respectively, at March 31, 2009. The decrease in assets serviced in the prior year comparison was due to declines in asset values and fund outflows resulting from market conditions, while increases from the linked quarter reflected a strengthening of the market during the second quarter.

Total fund assets serviced by Global Investment Servicing were $2.0 trillion at June 30, 2009 compared with asset servicing levels of $2.6 trillion at June 30, 2008 and $1.8 trillion at March 31, 2009.

Net interest income of $295 million for the second quarter of 2009 declined by $36 million compared with the first quarter primarily as a result of a reduction in higher yielding loans.

Noninterest income was $39 million for the second quarter compared with $13 million in the first quarter of 2009. The increase was primarily due to the early termination of certain credit insurance and third party servicing contracts and a reduction in recourse reserves.

Noninterest expense was $55 million for the second quarter, a decrease of $25 million compared with the linked quarter due to lower other real estate owned expense.

The provision for credit losses of $30 million decreased $229 million due to credit quality stabilizing during the quarter, particularly in the consumer portfolios.

Acquired impaired loans were $8.8 billion at June 30, 2009 compared with $8.5 billion as of March 31, 2009. Nonperforming assets were $1.3 billion, an increase of $.4 billion from March 31, 2009 primarily in the residential mortgage portfolio.

Loans in this business segment require special servicing and management oversight given current loan performance and market conditions. Consequently, the business activities of this segment are focused on maximizing the value of the portfolios assigned to it.

Our businesses and financial results are affected by business and economic conditions, both generally and specifically in the principal markets in which we operate. In particular, our businesses and financial results may be impacted by:

Changes in interest rates and valuations in the debt, equity and other financial markets.

Disruptions in the liquidity and other functioning of financial markets, including such disruptions in the markets for real estate and other assets commonly securing financial products.

Actions by the Federal Reserve and other government agencies, including those that impact money supply and market interest rates.

Changes in our customers’, suppliers’ and other counterparties’ performance in general and their creditworthiness in particular.

Changes in levels of unemployment.

Changes in customer preferences and behavior, whether as a result of changing business and economic conditions or other factors.

A continuation of recent turbulence in significant portions of the US and global financial markets, particularly if it worsens, could impact our performance, both directly by affecting our revenues and the value of our assets and liabilities and indirectly by affecting our counterparties and the economy generally.

Our business and financial performance could be impacted as the financial industry restructures in the current environment, both by changes in the creditworthiness and performance of our counterparties and by changes in the competitive and regulatory landscape.

Given current economic and financial market conditions, our forward-looking financial statements are subject to the risk that these conditions will be substantially different than we are currently expecting. These statements are based on our current expectations that interest rates will remain low through 2009 with continued wide market credit spreads, and our view that national economic trends currently point to a continuation of severe recessionary conditions in 2009 followed by a subdued recovery in 2010.

Legal and regulatory developments could have an impact on our ability to operate our businesses or our financial condition or results of operations or our competitive position or reputation. Reputational impacts, in turn, could affect matters such as business generation and retention, our ability to attract and retain management, liquidity, and funding. These legal and regulatory developments could include:

Changes resulting from legislative and regulatory responses to the current economic and financial industry environment, including current and future conditions or restrictions imposed as a result of our participation in the TARP Capital Purchase Program.

Other legislative and regulatory reforms, including broad-based restructuring of financial industry regulation as well as changes to laws and regulations involving tax, pension, bankruptcy, consumer protection, and other aspects of the financial institution industry.

Increased litigation risk from recent regulatory and other governmental developments.

Unfavorable resolution of legal proceedings or regulatory and other governmental inquiries.

The results of the regulatory examination and supervision process, including our failure to satisfy the requirements of agreements with governmental agencies.

Changes in accounting policies and principles.

Our issuance of securities to the US Department of the Treasury may limit our ability to return capital to our shareholders and is dilutive to our common shares. If we are unable previously to redeem the shares, the dividend rate increases substantially after five years.

Our business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through the effective use of third-party insurance, derivatives, and capital management techniques, and by our ability to meet evolving regulatory capital standards.

The adequacy of our intellectual property protection, and the extent of any costs associated with obtaining rights in intellectual property claimed by others, can impact our business and operating results.

Our ability to anticipate and respond to technological changes can have an impact on our ability to respond to customer needs and to meet competitive demands.

Our ability to implement our business initiatives and strategies could affect our financial performance over the next several years.

Competition can have an impact on customer acquisition, growth and retention, as well as on our credit spreads and product pricing, which can affect market share, deposits and revenues.

Our business and operating results can also be affected by widespread natural disasters, terrorist activities or international hostilities, either as a result of the impact on the economy and capital and other financial markets generally or on us or on our customers, suppliers or other counterparties specifically.

Also, risks and uncertainties that could affect the results anticipated in forward-looking statements or from historical performance relating to our equity interest in BlackRock, Inc. are discussed in more detail in BlackRock’s filings with the SEC, including in the Risk Factors sections of BlackRock’s reports. BlackRock’s SEC filings are accessible on the SEC’s website and on or through BlackRock’s website at www.blackrock.com. This material is referenced for informational purposes only and should not be deemed to constitute a part of this document.

The anticipated benefits of the transaction, including anticipated cost savings and strategic gains, may be significantly harder or take longer to achieve than expected or may not be achieved in their entirety as a result of unexpected factors or events.

Our ability to achieve anticipated results from this transaction is dependent on the state going forward of the economic and financial markets, which have been under significant stress recently. Specifically, we may incur more credit losses from National City’s loan portfolio than expected. Other issues related to achieving anticipated financial results include the possibility that deposit attrition or attrition in key client, partner and other relationships may be greater than expected.

Litigation and governmental investigations currently pending against National City, as well as others that may be filed or commenced relating to National City’s business and activities before the acquisition, could adversely impact our financial results.

Our ability to achieve anticipated results is also dependent on our ability to bring National City’s systems, operating models, and controls into conformity with ours and to do so on our planned time schedule. The integration of National City’s business and operations into PNC, which will include conversion of National City’s different systems and procedures, may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to National City’s or PNC’s existing businesses. PNC’s ability to integrate National City successfully may be adversely affected by the fact that this transaction has resulted in PNC entering several markets where PNC did not previously have any meaningful retail presence.

FINANCIAL RESULTS

Revenue

Net interest income

Noninterest income

Total revenue

Noninterest expense

Pretax, pre-provision earnings

Provision for credit losses

Net income

Net income attributable to common shareholders

Diluted earnings per common share

Cash dividends declared per common share

Total preferred dividends declared

TARP Capital Purchase Program preferred dividends

Impact of TARP Capital Purchase Program preferred dividends per common share

SELECTED RATIOS

Net interest margin (b)

Noninterest income to total revenue (c)

Efficiency (d)

Return on:

Average common shareholders’ equity

Average assets

BALANCE SHEET DATA

Assets

Loans

Allowance for loan and lease losses

Investment securities

Loans held for sale

Goodwill and other intangible assets

Equity investments

Deposits

Borrowed funds

Shareholders’ equity

Common shareholders’ equity

Accumulated other comprehensive loss

Book value per common share

Common shares outstanding (millions)

Loans to deposits

ASSETS ADMINISTERED (billions)

Managed

Nondiscretionary

FUND ASSETS SERVICED (billions)

Accounting/administration net assets

Custody assets

CAPITAL RATIOS (b)

Tier 1 risk-based

Tier 1 common

Total risk-based

Leverage

ASSET QUALITY RATIOS

Nonperforming loans to total loans

Nonperforming assets to total loans and foreclosed and other assets

Nonperforming assets to total assets

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

Allowance for loan and lease losses to total loans

Allowance for loan and lease losses to nonperforming loans

Earnings (Loss)

Retail Banking

Corporate & Institutional Banking

Asset Management Group

Residential Mortgage Banking

Global Investment Servicing

Distressed Assets Portfolio

Other, including BlackRock (b)

Total consolidated net income

Revenue

Retail Banking

Corporate & Institutional Banking

Asset Management Group

Residential Mortgage Banking

Global Investment Servicing

Distressed Assets Portfolio

Other, including BlackRock (b)

Total consolidated revenue