Strong earnings for the second quarter reflected client sales and revenue momentum and improved credit quality.

Net interest income of $2.2 billion and net interest margin of 3.93 percent for the second quarter remained essentially stable with the first quarter.

Noninterest income of $1.5 billion for the second quarter remained essentially stable with the first quarter and included excellent results in most client fee income categories.

The provision for credit losses of $280 million for the second quarter declined from $421 million in the first quarter as overall credit quality continued to improve.

Noninterest expense of $2.2 billion increased $106 million compared with the first quarter primarily due to accruals related to legal contingencies, a first quarter reversal of an accrued liability for certain Visa litigation and higher marketing costs.

A decline in the effective tax rate to 20.4 percent for the second quarter compared with 27.0 percent for the first quarter was primarily attributable to the reversal of deferred tax liabilities.

Credit quality further improved in the second quarter of 2011. Nonperforming assets declined $459 million, or 9 percent, to $4.5 billion at June 30, 2011 compared with the first quarter. Accruing loans past due decreased 8 percent to $4.1 billion from $4.5 billion at March 31, 2011, and included $2.7 billion of government insured or guaranteed loans at June 30, 2011. Net charge-offs declined 22 percent to $414 million from $533 million in the first quarter. The allowance for loan and lease losses was 120 percent of nonperforming loans as of June 30, 2011 compared with 110 percent at March 31, 2011.

PNC continued its momentum in acquiring new clients and deepening customer relationships during the second quarter with its innovative products and services, distribution network and cross-sell expertise. Retail banking checking relationships grew organically by 74,000 during the second quarter of 2011 compared with 10,000 during second quarter 2010. Net growth in small business checking relationships during the second quarter was triple that of second quarter 2010. Corporate banking is on track to exceed its goal of adding 1,000 new primary clients in 2011. Asset management sales referrals from PNC’s retail, corporate and commercial bankers for the first half of 2011 were double those in first half 2010.

Total loans of $150 billion at June 30, 2011 increased $.9 billion compared with March 31, 2011 as a result of growth of $2.0 billion in commercial loans largely from new client acquisition partially offset by declines in commercial real estate and consumer loans. Loans and commitments originated and renewed totaled approximately $38 billion in the second quarter, including $1 billion of small business loans.

Total deposits were $182 billion at June 30, 2011, relatively unchanged from March 31, 2011. Transaction deposits of $137 billion grew $2.6 billion compared with the first quarter end and $11.4 billion from June 30, 2010. Higher cost retail certificates of deposit continued to decline with a net reduction of 4 percent in the second quarter.

PNC’s high quality balance sheet remained core funded with a loans to deposits ratio of 83 percent at June 30, 2011 and a strong liquidity position to support growth.

PNC had strong capital levels at June 30, 2011 with a Tier 1 common capital ratio of an estimated 10.5 percent at June 30, 2011, an increase from 10.3 percent at March 31, 2011.

PNC successfully completed the acquisition and conversion of 19 branches and $324 million of deposits from BankAtlantic Bancorp, Inc. in the Tampa, Florida area, on June 6, 2011.

PNC announced on June 20, 2011 that it had signed a definitive agreement to acquire RBC Bank (USA), the U.S. retail banking subsidiary of Royal Bank of Canada. RBC Bank (USA) has approximately $25 billion of assets and 424 branches in North Carolina, Florida, Alabama, Georgia, Virginia and South Carolina. The transaction is expected to add approximately $19 billion of deposits and $16 billion of loans and to close in March 2012, subject to customary closing conditions, including regulatory approvals.

Checking relationships grew by 74,000 during the second quarter of 2011 exclusive of the BankAtlantic acquisition which added an additional 32,000 checking relationships. Net growth in small business checking relationships during the second quarter was triple that of second quarter 2010. Active online banking and active online bill payment customers each grew by 20 percent, excluding the impact of BankAtlantic, over second quarter 2010.

Success in implementing Retail Banking’s deposit strategy resulted in growth in average deposits of $.9 billion during the second quarter compared with the first quarter. Average transaction deposits grew $1.7 billion, or 2 percent, compared with the first quarter and $3.6 billion, or 5 percent, compared with the prior year second quarter. This growth was partially offset by planned run-off of higher rate certificate of deposit balances, net of retention of customer relationships. Average certificates of deposit declined $8.3 billion, or 20 percent, compared with the second quarter of 2010. Continued decline in certificates of deposit is expected throughout 2011. Retail Banking added approximately $280 million in deposits in the June 2011 acquisition from BankAtlantic.

Average loans declined $.5 billion, or 1 percent, from the first quarter of 2011 and $.9 billion, or 2 percent, compared with second quarter 2010. In both comparisons, decreases in commercial, home equity and residential mortgage loans were partially offset by growth in indirect auto loans and, in the comparison with second quarter 2010, higher education loans. Loan originations have increased, but not to levels that outpace loan paydowns and net charge-offs.

Net interest income for the second quarter of 2011 decreased $8 million, or 1 percent, compared with the first quarter and $69 million, or 8 percent, compared with the second quarter of 2010. The declines were primarily driven by lower average loan balances and lower interest credits assigned to deposits in the continued low interest rate environment.

Noninterest income increased $32 million, or 7 percent, compared with the first quarter and decreased $49 million, or 10 percent, from the second quarter of 2010. The linked quarter increase reflected higher volumes of customer-initiated transactions, including debit and credit cards and merchant services. In the year-over-year quarter comparison, noninterest income declined due to lower overdraft fees resulting from the impact of Regulation E rules partially offset by a higher volume of transaction-related fees.

Noninterest expense for the second quarter increased $20 million, or 2 percent, from the first quarter and $27 million, or 3 percent, over the second quarter of 2010. In both comparisons, the increase resulted from higher new product marketing expense and investments in the business partially offset by lower FDIC expense.

Net charge-offs were $223 million for the second quarter compared with $257 million in the first quarter and $298 million in second quarter 2010. Provision for credit losses was $180 million for the second quarter of 2011 compared with $276 million in the first quarter and $280 million in the second quarter of 2010. The decrease in the provision compared with the first quarter was primarily due to signs of improved credit quality within several loan portfolios.

PNC’s expansive branch footprint covers nearly one-third of the U.S. population in 15 states and Washington, D.C. with a network of 2,459 branches and 6,707 ATMs at June 30, 2011. In the second quarter of 2011, PNC acquired 19 branches from BankAtlantic, opened 5 traditional and 3 in-store branches and consolidated 14 branches. The planned acquisition of RBC Bank (USA) in March 2012 is expected to add 424 banking locations and expand PNC’s footprint to 19 states and over 2,800 branches.

For 2011, Retail Banking revenue will decline compared with 2010 from the impact of the rules set forth in Regulation E related to overdraft fees and the limits related to interchange rates on debit card transactions. The incremental negative impact of these two aspects of regulatory reform on fees is estimated to be approximately $300 million in 2011 compared with 2010. These estimates do not include any additional financial impact of other or additional regulatory requirements.

Overall results benefited from successful sales efforts to new clients and product penetration of the existing customer base. New client acquisitions in corporate banking were on pace to exceed the 1,000 new primary client goal for the year and increased 19 percent over the first quarter of 2011 and 26 percent over the second quarter of 2010. Sales of treasury management and capital markets products to customers in PNC’s western markets continued to be successful and were ahead of both target and first half 2010 levels.

Net interest income for the second quarter of 2011 of $848 million increased $49 million compared with the first quarter of 2011 and declined $86 million compared with the second quarter of 2010. The increase from the linked quarter was primarily due to higher average loans and related loan fees. The decline in the comparison with the prior year quarter was mainly a result of lower purchase accounting accretion and lower interest credits assigned to deposits which more than offset increases in average loans and deposits and improved loan spreads.

Corporate service fees of $197 million for the second quarter of 2011 increased $10 million compared with the first quarter and declined $40 million compared with the second quarter of 2010. An increase in capital markets activity drove the linked quarter increase. Both comparisons were impacted by a decline in commercial mortgage banking income due to changes in interest rates and prepayments as reflected in higher amortization and impairment costs.

Other noninterest income of $135 million in the second quarter of 2011 increased $23 million compared with the first quarter and $76 million compared with the second quarter of 2010. Both comparisons benefited from higher capital markets activity. The increase from the prior year quarter was also attributable to improved valuations on the commercial mortgage held-for-sale portfolio and client-related trading positions.

Noninterest expense of $443 million in the second quarter of 2011 decreased $2 million compared with the first quarter and increased $21 million from second quarter 2010. The increase from the prior year quarter was due to higher compensation-related costs.

Net charge-offs for the second quarter of 2011 decreased to $85 million compared with $153 million in first quarter 2011 and $243 million in the second quarter of 2010. Net charge-offs declined across all portfolios in the linked quarter comparison, particularly in the equipment lease financing and commercial real estate portfolios, which also drove the decline from second quarter 2010. Nonperforming assets declined for the fifth consecutive quarter.

Provision for credit losses was $31 million for the second quarter of 2011 compared with a benefit of $30 million in the first quarter and a provision of $97 million in the second quarter of 2010. The increase from the first quarter was due to higher loan and commitment levels. The year-over-year second quarter decline reflected overall improvement in portfolio credit quality partially offset by higher loans and commitments.

Average loans were $65 billion for the second quarter of 2011 compared with $64 billion in both the first quarter of 2011 and second quarter of 2010. Loan growth in the linked quarter was primarily in commercial loans and asset-based lending due to new client activity and higher utilization.

Average deposits of $47 billion in the second quarter of 2011 increased $1.3 billion, or 3 percent, from the first quarter and $4.3 billion, or 10 percent, from the prior year second quarter. Deposit inflows continued as customers moved balances into noninterest-bearing demand deposits to maintain liquidity. Deposits related to commercial mortgage servicing activities also contributed to the linked quarter increase.

The commercial mortgage servicing portfolio was $268 billion as of June 30, 2011, $266 billion at March 31, 2011 and $265 billion at June 30, 2010. The increase was largely the result of purchased servicing net of portfolio run-off.

Assets under administration were $219 billion at June 30, 2011, consistent with March 31, 2011 and $20 billion, or 10 percent, higher than June 30, 2010. Discretionary assets under management were $109 billion at June 30, 2011 compared with $110 billion at March 31, 2011 and $99 billion at June 30, 2010. The year-over-year quarter growth was driven by higher equity markets, strong sales performance and client retention.

Noninterest income of $167 million for the second quarter increased $5 million, or 3 percent, compared with the linked quarter and $12 million, or 8 percent, in the prior year quarter comparison. The increases were attributable to higher asset values from stronger equity markets in the comparison with second quarter 2010 and new client acquisition.

Net interest income was $59 million for the second quarter of 2011 compared with $60 million in the first quarter and $62 million in the second quarter of 2010. The decreases were due to lower loan yields and lower interest credits assigned to deposits reflective of the current low rate environment.

Noninterest expense of $168 million in the second quarter of 2011 increased $8 million, or 5 percent, compared with both first quarter 2011 and second quarter 2010. The increases resulted from investments in the business and higher compensation-related costs.

Credit quality indicators continued to improve and net charge-offs for second quarter 2011 were minimal. Provision for credit losses was a benefit of $18 million in the second quarter compared with a benefit of $6 million in the first quarter and a provision of $14 million in the second quarter of 2010.

Average deposits for the quarter of $7.6 billion decreased $145 million, or 2 percent, compared with the first quarter due to run-off of higher rate certificates of deposit and other deposits. Deposits increased $549 million, or 8 percent, in the comparison with second quarter 2010 as growth in transaction deposits exceeded the strategic run-off of higher rate certificates of deposit. Average loan balances of $6.1 billion decreased $203 million, or 3 percent, compared with the linked quarter and $271 million, or 4 percent, from the prior year second quarter primarily due to planned exits and soft loan demand in the current economy.

Total loan originations were $2.6 billion for the second quarter of 2011 compared with $3.2 billion in the first quarter of 2011 and $2.3 billion in the second quarter of 2010. The linked quarter decrease was driven by a reduction in refinance volume partially offset by an increase in purchase loan originations. The increase from the prior year quarter resulted from higher refinance volume in second quarter 2011. Loan applications were up 23 percent linked quarter as higher purchase loan applications more than offset the reduction in refinance applications. Loans continue to be originated primarily through direct channels under FNMA, FHLMC and FHA/VA agency guidelines.

Residential mortgage loans serviced for others totaled $125 billion at June 30, 2011 compared with $127 billion at March 31, 2011 and $137 billion at June 30, 2010. Payoffs continued to outpace new loan production.

Noninterest income was $172 million in the second quarter of 2011 compared with $202 million in the first quarter of 2011 and $182 million in the second quarter of 2010. The linked quarter decrease reflected lower loan sales revenue and lower net hedging gains on mortgage servicing rights partially offset by higher servicing fees. The year-over-year second quarter decrease resulted from lower net hedging gains on mortgage servicing rights and lower servicing fees somewhat offset by higher loan sales revenue driven by higher loan origination volume.

Net interest income was $47 million in the second quarter of 2011 compared with $56 million in the first quarter of 2011 and $70 million in the second quarter of 2010. The decrease compared with the first quarter largely resulted from a lower balance of loans held for sale. The year-over-year quarter decrease was primarily due to lower interest earned on escrow deposits.

The provision for credit losses was a benefit of $8 million in the second quarter compared with an $8 million provision in the first quarter of 2011 and a benefit of $8 million in the second quarter of 2010.

Noninterest expense was $140 million in the second quarter of 2011 compared with $137 million in the first quarter and $109 million in the second quarter of 2010. The linked quarter increase included higher foreclosure-related expenses. The increase from second quarter 2010 was driven by an increase in foreclosure-related expenses and higher production expenses on a higher loan origination volume.

The fair value of mortgage servicing rights was $1.0 billion at June 30, 2011 compared with $1.1 billion at March 31, 2011 and $1.0 billion at June 30, 2010. The decline in fair value from the first quarter was primarily due to lower mortgage rates.

Average loans were $14 billion for the second quarter of 2011, a decline of $.6 billion from the first quarter of 2011 and $4.1 billion from the second quarter of 2010. The decreases were due to portfolio management activities including paydowns, loan sales and net charge-offs.

Net interest income was $257 million for the second quarter compared with $236 million for the first quarter of 2011 and $348 million for the second quarter of 2010. The increase over the linked quarter was due to higher purchase accounting accretion on recoveries of commercial loans. The decrease from the prior year quarter reflected lower loan balances, both impaired and unimpaired.

Noninterest income was $13 million in the second quarter of 2011 compared with $9 million in the first quarter and $10 million in the second quarter of 2010. The increase in both comparisons was due to insurance receipts on nonprime loan defaults.

Noninterest expense for the second quarter was $56 million compared with $53 million in the first quarter of 2011 and $75 million in the second quarter of 2010. The year-over-year second quarter decline was driven by lower other real estate owned costs.

Net charge-offs were $96 million for the second quarter compared with $123 million for the first quarter of 2011 and $276 million for the second quarter of 2010. The decrease in the linked quarter comparison was primarily due to lower net charge-offs on the construction loan portfolio. The prior year second quarter decline was a result of net charge-offs taken in second quarter 2010 related to sales of residential mortgage and brokered home equity loans and a decrease in net charge-offs on the construction and mortgage portfolios.

The provision for credit losses was $81 million in the second quarter of 2011 compared with $152 million in the first quarter and $404 million in second quarter of 2010. Credit quality improvements across all portfolios benefited both comparisons. Delinquencies in the consumer portfolio improved from the first quarter of 2011.

Loans in this segment require special servicing and management oversight given current loan performance and market conditions. Accordingly, the business activities of this segment are focused on maximizing value within a defined risk profile. This includes selling assets when the terms and conditions are appropriate to reduce future credit and servicing costs.

FINANCIAL RESULTS

Dollars in millions, except per share data

Revenue

Net interest income

Noninterest income

Total revenue

Noninterest expense

Pretax, pre-provision earnings from continuing operations (a)

Provision for credit losses

Income from continuing operations before income taxes and noncontrolling interests (pretax earnings)

Income from continuing operations before noncontrolling interests (b)

Income from discontinued operations, net of income taxes (c)

Net income

Less:

Net income (loss) attributable to noncontrolling interests

Preferred stock dividends, including TARP (d)

Preferred stock discount accretion and redemptions, including redemption of TARP preferred stock discount accretion (d)

Net income attributable to common shareholders (d)

Diluted earnings per common share

Continuing operations

Discontinued operations (c)

Net income

Cash dividends declared per common share

PERFORMANCE RATIOS

Net interest margin (a)

Provision-adjusted net interest margin (b)

Noninterest income to total revenue (c)

Efficiency (d)

Return on:

Average common shareholders’ equity

Average assets

BUSINESS SEGMENT INCOME (LOSS) (e) (f)

In millions

Retail Banking

Corporate & Institutional Banking (g)

Asset Management Group

Residential Mortgage Banking

Distressed Assets Portfolio

Other, including BlackRock (f) (h)

Income from continuing operations before noncontrolling interests

Net interest margin, as reported

Less: provision adjustment

Provision-adjusted net interest margin

BALANCE SHEET DATA

Assets

Loans (a) (b)

Allowance for loan and lease losses (a)

Interest-earning deposits with banks (a)

Investment securities (a)

Loans held for sale (b)

Goodwill and other intangible assets

Equity investments (a)

Noninterest-bearing deposits

Interest-bearing deposits

Total deposits

Transaction deposits

Borrowed funds (a)

Shareholders’ equity

Common shareholders’ equity

Accumulated other comprehensive income (loss)

Book value per common share

Common shares outstanding (millions)

Loans to deposits

ASSETS UNDER ADMINISTRATION (billions)

Discretionary assets under management

Nondiscretionary assets under administration

Total assets under administration

CAPITAL RATIOS

Tier 1 common (c)

Tier 1 risk-based (c)

Total risk-based (c)

Leverage (c)

Common shareholders’ equity to assets

ASSET QUALITY RATIOS

Nonperforming loans to total loans

Nonperforming assets to total loans, OREO and foreclosed assets

Nonperforming assets to total assets

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

Allowance for loan and lease losses to total loans

Allowance for loan and lease losses to nonperforming loans (d)

The PNC Financial Services Group, Inc.

Our businesses, financial results and balance sheet values are affected by business and economic conditions, including the following:

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

Disruptions in the liquidity and other functioning of U.S. and global financial markets.

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

Changes in customers’, suppliers’ and other counterparties’ performance and creditworthiness.

Slowing or failure of the current moderate economic recovery.

Continued effects of aftermath of recessionary conditions and uneven spread of positive impacts of recovery on the economy and our counterparties, including adverse impacts on levels of unemployment, loan utilization rates, delinquencies, defaults and counterparty ability to meet credit obligations.

Changes in customer preferences and behavior, whether due to changing business and economic conditions, legislative and regulatory initiatives, or other factors.

Our forward-looking financial statements are subject to the risk that economic and financial market conditions will be substantially different than we are currently expecting. These statements are based on our current view that the moderate economic recovery is transitioning into a self-sustaining economic expansion in 2011, with faster economic growth in the second half pushing the unemployment rate lower amidst continued low interest rates.

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

Changes resulting from legislative and regulatory reforms, including broad-based restructuring of financial industry regulation and changes to laws and regulations involving tax, pension, bankruptcy, consumer protection, and other industry aspects, and changes in accounting policies and principles. We will be impacted by extensive reforms provided for in the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and otherwise growing out of the recent financial crisis, the precise nature, extent and timing of which, and their impact on us, remains uncertain.

Changes to regulations governing bank capital, including due to Dodd-Frank and to Basel III initiatives.

Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries. In addition to matters relating to PNC’s business and activities, such matters may include proceedings, claims, investigations, or inquiries relating to pre-acquisition business and activities of acquired companies, such as National City. These matters may result in monetary judgments or settlements or other remedies, including fines, penalties, restitution or alterations in our business practices and in additional expenses and collateral costs, and may cause reputational harm to PNC following the acquisition and integration of acquired businesses into ours.

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

Impact on business and operating results of any costs associated with obtaining rights in intellectual property claimed by others and of adequacy of our intellectual property protection in general.

Business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through effective use of third-party insurance, derivatives, and capital management techniques, and to meet evolving regulatory capital standards. In particular, our results currently depend on our ability to manage elevated levels of impaired assets.

Business and operating results also include impacts relating to our equity interest in BlackRock, Inc. and rely to a significant extent on information provided to us by BlackRock. Risks and uncertainties that could affect BlackRock are discussed in more detail by BlackRock in SEC filings.

Our planned acquisition of RBC Bank (USA) presents us with risks and uncertainties related both to the acquisition transaction itself and its integration into PNC after closing, including:

Closing is dependent on, among other things, receipt of regulatory and other applicable approvals, the timing of which cannot be predicted with precision at this point and which may not be received at all. The impact of closing on PNC’s financial statements will be affected by the timing of the transaction.

The transaction (including integration of RBC Bank (USA)’s businesses) may be substantially more expensive to complete than anticipated. Anticipated benefits, including 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 also on the following factors, in part related to the state of economic and financial markets: the extent of credit losses in the acquired loan portfolios and the extent of deposit attrition. Also, litigation and governmental investigations that may be filed or commenced, as a result of this transaction or otherwise, could impact the timing or realization of anticipated benefits to PNC.

Integration of RBC Bank (USA)’s business and operations into PNC, which will include conversion of RBC Bank (USA)’s different systems and procedures, may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to RBC Bank (USA)’s or PNC’s existing businesses. PNC’s ability to integrate RBC Bank (USA) successfully may be adversely affected by the fact that this transaction will result in PNC entering several markets where PNC does not currently have any meaningful retail presence.

In addition to the planned RBC Bank (USA) transaction, we grow our business in part by acquiring from time to time other financial services companies, financial services assets and related deposits. These other acquisitions often present risks and uncertainties analogous to those presented by the RBC Bank (USA) transaction as well, in some cases, with risks related to entering into new lines of business.

Competition can have an impact on customer acquisition, growth and retention and on credit spreads and product pricing, which can affect market share, deposits and revenues. Industry restructuring in the current environment could also impact our business and financial performance through changes in counterparty creditworthiness and performance and in competitive and regulatory landscape. Our ability to anticipate and respond to technological changes can also impact our ability to respond to customer needs and meet competitive demands.

Business and operating results can also be affected by widespread disasters, dislocations, terrorist activities or international hostilities through impacts on the economy and financial markets generally or on us or our counterparties specifically.