Financial Supplement and Slide Presentation

Filed by The PNC Financial Services Group, Inc.

Pursuant to Rule 425 under the Securities Act of 1933 and

deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934

Subject Company: Sterling Financial Corporation

Commission File No. 000-16276

On July 19, 2007, The PNC Financial Services Group, Inc. (“PNC”) issued a press release and held a conference call for investors regarding PNC’s earnings and business results for the three months ended June 30, 2007. PNC also provided supplementary financial information on its web site, including financial information disclosed in connection with its press release, and provided electronic presentation slides on its web site used in connection with the related investor conference call. Such supplementary financial information and electronic presentation slides consisted of the following:

LOGO

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2007

(UNAUDITED)


THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2007

(UNAUDITED)

 

      Page

Consolidated Income Statement

   2

Adjusted Condensed Consolidated Income Statement

   3

Consolidated Balance Sheet

   4

Capital Ratios

   4

Results of Businesses

  

Summary of Business Results and Period-end Employees

   5

Retail Banking

   6-8

Corporate & Institutional Banking

   9

PFPC

   10

Efficiency Ratios

   11

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

   12

Average Consolidated Balance Sheet and Supplemental Average Balance Sheet Information

   13-14

Details of Loans

   15

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

   16

Details of Nonperforming Assets

   17-18

Glossary of Terms

   19-21

Business Segment Descriptions

   22

Appendix—Adjusted Condensed Consolidated Income Statement Reconciliations

   A1-A4

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on July 19, 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 United States Securities and Exchange Commission (“SEC”) filings.

Additional Information About the PNC/Sterling Financial Corporation Transaction

The PNC Financial Services Group, Inc. (“PNC”) and Sterling Financial Corporation (“Sterling Financial”) will be filing a proxy statement/prospectus and other relevant documents concerning the merger with the SEC. WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Investors will be able to obtain these documents free of charge at the SEC’s web site (www.sec.gov). In addition, documents filed with the SEC by PNC will be available free of charge from Shareholder Relations at (800) 843-2206. Documents filed with the SEC by Sterling Financial will be available free of charge from Sterling Financial by contacting Shareholder Relations at (877) 248-6420.

The directors, executive officers, and certain other members of management and employees of Sterling Financial are participants in the solicitation of proxies in favor of the merger from the shareholders of Sterling Financial. Information about the directors and executive officers of Sterling Financial is included in the proxy statement for its May 8, 2007 annual meeting of shareholders, which was filed with the SEC on April 2, 2007. Additional information regarding the interests of such participants will be included in the proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.


THE PNC FINANCIAL SERVICES GROUP, INC.

Additional Information About the PNC/Yardville National Bancorp Transaction

PNC and Yardville National Bancorp (“Yardville”) have filed with the SEC a Registration Statement on Form S-4 that includes a preliminary version of a proxy statement of Yardville that also constitutes a preliminary prospectus of PNC. The S-4 has not yet become effective. The parties will file other relevant documents concerning the proposed transaction with the SEC. Following the S-4 being declared effective by the SEC, Yardville intends to mail the final proxy statement to its shareholders. Such final documents, however, are not currently available. WE URGE INVESTORS TO READ THE FINAL PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS, IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Investors may obtain these documents, if and when they become available, free of charge at the SEC’s web site (www.sec.gov). In addition, documents filed with the SEC by PNC will be available free of charge from Shareholder Relations at (800) 843-2206. Documents filed with the SEC by Yardville will be available free of charge from Yardville by contacting Howard N. Hall, Assistant Treasurer’s Office, 2465 Kuser Road, Hamilton, NJ 08690 or by calling (609) 631-6223.

The directors, executive officers, and certain other members of management and employees of Yardville are participants in the solicitation of proxies in favor of the merger from the shareholders of Yardville. Information about the directors and executive officers of Yardville is set forth in its Annual Report on Form 10-K filed on March 30, 2007 for the year ended December 31, 2006, as amended by the Form 10-K/A filed on May 10, 2007. Additional information regarding the interests of such participants will be included in the proxy statement/prospectus and the other relevant documents filed with the SEC if and when they become available.

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 common stock and paid approximately $2.1 billion in cash as consideration for the acquisition, and accounted for the transaction under the purchase method.

BlackRock/MLIM Transaction

As further described in our Annual Report on Form 10-K for the year ended December 31, 2006, on September 29, 2006, Merrill Lynch contributed its investment management business (“MLIM”) to BlackRock, Inc. (“BlackRock”), formerly a majority-owned subsidiary of PNC, in exchange for 65 million shares of newly issued BlackRock common and preferred stock.

For the quarters ended September 30, 2006 and June 30, 2006 and the six months ended June 30, 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 June 30, 2007, March 31, 2007, and December 31, 2006 and the six months ended June 30, 2007 and our Consolidated Balance Sheet as of June 30, 2007, March 31, 2007, December 31, 2006 and September 30, 2006 reflect the September 29, 2006 deconsolidation of BlackRock’s balance sheet amounts and recognize our approximate 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.

 

Page 1


THE PNC FINANCIAL SERVICES GROUP, INC.

Consolidated Income Statement (Unaudited)

 

      For the six months ended     For the three months ended  

In millions, except per share data

  

June 30

2007

   

June 30

2006

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

June 30

2006

 

Interest Income

              

Loans

   $ 1,980     $ 1,544     $ 1,084     $ 896     $ 821     $ 838     $ 797  

Securities available for sale

     665       498       355       310       280       271       255  

Other

     224       150       115       109       116       94       74  
                                                        

Total interest income

     2,869       2,192       1,554       1,315       1,217       1,203       1,126  
                                                        

Interest Expense

              

Deposits

     1,000       706       532       468       450       434       379  

Borrowed funds

     508       374       284       224       201       202       191  
                                                        

Total interest expense

     1,508       1,080       816       692       651       636       570  
                                                        

Net interest income

     1,361       1,112       738       623       566       567       556  

Provision for credit losses

     62       66       54       8       42       16       44  
                                                        

Net interest income less provision for credit losses

     1,299       1,046       684       615       524       551       512  
                                                        

Noninterest Income

              

Asset management

     355       890       190       165       149       381       429  

Fund servicing

     412       431       209       203       249       213       210  

Service charges on deposits

     169       153       92       77       79       81       80  

Brokerage

     138       122       72       66       63       61       63  

Consumer services

     198       183       107       91       93       89       94  

Corporate services

     335       292       176       159       177       157       157  

Equity management gains

     34       61       2       32       25       21       54  

Net securities gains (losses)

     (2 )     (12 )     1       (3 )       (195 )     (8 )

Trading

     81       112       29       52       33       38       55  

Net gains (losses) related to BlackRock

     51         (1 )     52       (12 )     2,078    

Other

     195       183       98       97       113       19       96  
                                                        

Total noninterest income

     1,966       2,415       975       991       969       2,943       1,230  
                                                        

Noninterest Expense

              

Compensation

     888       1,113       470       418       442       573       558  

Employee benefits

     146       163       74       72       55       86       76  

Net occupancy

     168       162       81       87       69       79       83  

Equipment

     150       157       79       71       69       77       80  

Marketing

     50       42       29       21       23       39       22  

Other

     582       670       307       275       311       313       326  
                                                        

Total noninterest expense

     1,984       2,307       1,040       944       969       1,167       1,145  
                                                        

Income before minority interest and income taxes

     1,281       1,154       619       662       524       2,327       597  

Minority interest in income of BlackRock

       41             6       19  

Income taxes

     399       378       196       203       148       837       197  
                                                        

Net income

   $ 882     $ 735     $ 423     $ 459     $ 376     $ 1,484     $ 381  
                                                        

Earnings Per Common Share

              

Basic

   $ 2.71     $ 2.51     $ 1.24     $ 1.49     $ 1.29     $ 5.09     $ 1.30  

Diluted

   $ 2.67     $ 2.47     $ 1.22     $ 1.46     $ 1.27     $ 5.01     $ 1.28  
                                                        

Average Common Shares Outstanding

              

Basic

     325       292       342       308       291       291       293  

Diluted

     329       297       346       312       295       296       297  
                                                        

Efficiency

     60 %     65 %     61 %     58 %     63 %     33 %     64 %

Noninterest income to total revenue

     59 %     68 %     57 %     61 %     63 %     84 %     69 %

Effective tax rate (a)

     31.1 %     32.8 %     31.7 %     30.7 %     28.2 %     36.0 %     33.0 %
                                                        

(a) The effective tax rates presented are on a GAAP basis. The lower effective tax rate for the first six months of 2007 compared with the first six months of 2006 was primarily due to the deconsolidation of BlackRock effective September 29, 2006. The effective tax rate increased for the second quarter of 2007 primarily as a result of a full-quarter impact of Mercantile. The lower rates for the first quarter of 2007 and the fourth quarter of 2006 reflect the impact of the deconsolidation of BlackRock 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 2


THE PNC FINANCIAL SERVICES GROUP, INC.

Adjusted Condensed Consolidated Income Statement (Unaudited) (a)

 

For the six months ended - in millions

   June 30
2007
   June 30
2006

Net Interest Income

     

Net interest income

   $ 1,361    $ 1,105

Provision for credit losses

     62      66
             

Net interest income less provision for credit losses

     1,299      1,039
             

Noninterest Income

     

Asset management

     358      257

Other

     1,560      1,492
             

Total noninterest income

     1,918      1,749
             

Noninterest Expense

     

Compensation and benefits

     1,023      907

Other

     935      839
             

Total noninterest expense

     1,958      1,746
             

Income before income taxes

     1,259      1,042

Income taxes

     391      299
             

Net income

   $ 868    $ 743
             

 

For the three months ended - in millions

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

Net Interest Income

              

Net interest income

   $ 738    $ 623    $ 566    $ 564    $ 552

Provision for credit losses

     54      8      42      16      44
                                  

Net interest income less provision for credit losses

     684      615      524      548      508
                                  

Noninterest Income

              

Asset management

     191      167      159      122      129

Other

     786      774      832      710      789
                                  

Total noninterest income

     977      941      991      832      918
                                  

Noninterest Expense

              

Compensation and benefits

     535      488      497      461      457

Other

     490      445      472      411      424
                                  

Total noninterest expense

     1,025      933      969      872      881
                                  

Income before income taxes

     636      623      546      508      545

Income taxes

     202      189      155      128      159
                                  

Net income

   $ 434    $ 434    $ 391    $ 380    $ 386
                                  

(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. 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 3


THE PNC FINANCIAL SERVICES GROUP, INC.

Consolidated Balance Sheet (Unaudited)

 

In millions, except par value

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

Cash and due from banks

   $ 3,177     $ 3,234     $ 3,523     $ 3,018     $ 3,438  

Federal funds sold and resale agreements

     1,824       1,604       1,763       2,818       675  

Other short-term investments, including trading securities

     3,667       3,041       3,130       2,718       2,005  

Loans held for sale

     2,562       2,382       2,366       4,317       2,165  

Securities available for sale

     25,903       26,475       23,191       19,512       21,724  

Loans, net of unearned income of $1,004, $1,005, $795, $815, and $828

     64,714       62,925       50,105       48,900       50,548  

Allowance for loan and lease losses

     (703 )     (690 )     (560 )     (566 )     (611 )
                                        

Net loans

     64,011       62,235       49,545       48,334       49,937  

Goodwill

     7,745       7,739       3,402       3,418       3,636  

Other intangible assets

     913       929       641       590       862  

Equity investments

     5,584       5,408       5,330       5,130       1,461  

Other

     10,265       9,516       8,929       8,581       9,011  
                                        

Total assets

   $ 125,651     $ 122,563     $ 101,820     $ 98,436     $ 94,914  
                                        
Liabilities           

Deposits

          

Noninterest-bearing

   $ 18,302     $ 18,191     $ 16,070     $ 14,840     $ 14,434  

Interest-bearing

     58,919       59,176       50,231       49,732       49,059  
                                        

Total deposits

     77,221       77,367       66,301       64,572       63,493  

Borrowed funds

          

Federal funds purchased

     7,212       5,638       2,711       3,475       3,320  

Repurchase agreements

     2,805       2,586       2,051       2,275       2,136  

Bank notes and senior debt

     7,537       4,551       3,633       2,177       3,503  

Subordinated debt

     4,226       4,628       3,962       4,436       4,329  

Other

     2,736       3,053       2,671       2,332       2,363  
                                        

Total borrowed funds

     24,516       20,456       15,028       14,695       15,651  

Allowance for unfunded loan commitments and letters of credit

     125       121       120       117       103  

Accrued expenses

     3,663       3,864       3,970       3,855       2,635  

Other

     4,252       4,649       4,728       4,031       3,573  
                                        

Total liabilities

     109,777       106,457       90,147       87,270       85,455  
                                        

Minority and noncontrolling interests in consolidated entities

     1,370       1,367       885       408       632  
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

     2,606       2,520       1,651       1,628       1,325  

Retained earnings

     11,339       11,134       10,985       10,771       9,449  

Accumulated other comprehensive loss

     (439 )     (162 )     (235 )     (109 )     (510 )

Common stock held in treasury at cost: 11, 7, 60, 59, and 58 shares

     (766 )     (517 )     (3,377 )     (3,296 )     (3,201 )
                                        

Total shareholders’ equity

     14,504       14,739       10,788       10,758       8,827  
                                        

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

   $ 125,651     $ 122,563     $ 101,820     $ 98,436     $ 94,914  
                                        
Capital Ratios           

Tier 1 risk-based (b)

     8.1 %     8.6 %     10.4 %     10.4 %     8.8 %

Total risk-based (b)

     11.6       12.2       13.5       13.6       12.4  

Leverage (b)

     7.3       8.7       9.3       9.4       7.7  

Tangible common equity

     5.5       5.8       7.4       7.5       5.2  

Common shareholders’ equity to assets

     11.5       12.0       10.6       10.9       9.3  
                                        

(a) Less than $.5 million at each date.
(b) The ratios for June 30, 2007 are estimated.

 

Page 4


THE PNC FINANCIAL SERVICES GROUP, INC.

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

 

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

Earnings

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

Retail Banking (b)

   $ 227    $ 201    $ 184    $ 206    $ 185

Corporate & Institutional Banking (b)

     122      132      126      111      115

PFPC

     32      31      31      40      26

Other, including BlackRock (b) (c)

     42      95      35      1,127      55
                                  

Total consolidated net income

   $ 423    $ 459    $ 376    $ 1,484    $ 381
                                  

Revenue (d)

              
                                  

Retail Banking (b)

   $ 978    $ 839    $ 799    $ 791    $ 782

Corporate & Institutional Banking (b)

     381      370      390      352      378

PFPC (e)

     208      200      194      186      186

Other, including BlackRock (b) (c)

     154      211      157      2,188      446
                                  

Total consolidated revenue

   $ 1,721    $ 1,620    $ 1,540    $ 3,517    $ 1,792
                                  

(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) Amounts for the second quarter of 2007 and the first quarter of 2007 subsequent to March 2, 2007 include the impact of Mercantile.
(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 second 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 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):

 

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

Total consolidated revenue, book (GAAP) basis

   $ 1,713    $ 1,614    $ 1,535    $ 3,510    $ 1,786

Taxable-equivalent adjustment

     8      6      5      7      6
                                  

Total consolidated revenue, taxable-equivalent basis

   $ 1,721    $ 1,620    $ 1,540    $ 3,517    $ 1,792
                                  

(e) PFPC revenue represents the sum of servicing revenue and nonoperating income (expense) less debt financing costs. Prior period servicing revenue amounts have been reclassified to conform with the current period presentation.

 

Period-end Employees

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

Full-time employees:

              

Retail Banking

   11,804    11,838    9,549    9,531    9,674

Corporate & Institutional Banking

   2,084    2,038    1,936    1,925    1,899

PFPC

   4,522    4,400    4,381    4,317    4,314

Other, including BlackRock

              

Operations & Technology

   4,501    4,493    3,909    3,927    3,919

Staff Services

   2,115    2,059    1,680    1,674    1,668
                        

BlackRock

               2,317

Total Other

   6,616    6,552    5,589    5,601    7,904
                        

Total full-time employees

   25,026    24,828    21,455    21,374    23,791

Total part-time employees

   3,028    2,867    2,328    2,165    2,241
                        

Total employees

   28,054    27,695    23,783    23,539    26,032
                        

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. Employees are shown for BlackRock only at June 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 June 30, 2007 and March 31, 2007, respectively. PFPC employee statistics are provided on a legal entity basis.

 

Page 5


THE PNC FINANCIAL SERVICES GROUP, INC.

Retail Banking (Unaudited)

 

Three months ended

Taxable-equivalent basis (a)

Dollars in millions

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

INCOME STATEMENT

          

Net interest income

   $ 535     $ 452     $ 419     $ 427     $ 424  

Noninterest income

     443       387       380       364       358  
                                        

Total revenue

     978       839       799       791       782  

Provision for credit losses

     37       23       35       9       28  

Noninterest expense

     579       496       471       456       460  
                                        

Pretax earnings

     362       320       293       326       294  

Income taxes

     135       119       109       120       109  
                                        

Earnings

   $ 227     $ 201     $ 184     $ 206     $ 185  
                                        

AVERAGE BALANCE SHEET

          

Loans

          

Consumer

          

Home equity

   $ 14,237     $ 13,881     $ 13,807     $ 13,849     $ 13,816  

Indirect

     2,036       1,480       1,133       1,069       1,019  

Other consumer

     1,596       1,490       1,322       1,221       1,202  
                                        

Total consumer

     17,869       16,851       16,262       16,139       16,037  

Commercial

     13,678       8,201       5,907       5,821       5,715  

Floor plan

     1,037       952       853       854       964  

Residential mortgage

     2,038       1,781       1,031       1,509       1,577  

Other

     235       233       234       250       248  
                                        

Total loans

     34,857       28,018       24,287       24,573       24,541  

Goodwill and other intangible assets

     5,737       2,942       1,574       1,580       1,586  

Loans held for sale

     1,554       1,562       1,505       1,513       1,535  

Other assets

     2,626       1,927       1,671       1,640       1,621  
                                        

Total assets

   $ 44,774     $ 34,449     $ 29,037     $ 29,306     $ 29,283  
                                        

Deposits

          

Noninterest-bearing demand

   $ 11,065     $ 8,871     $ 7,834     $ 7,848     $ 7,908  

Interest-bearing demand

     9,097       8,354       7,865       7,787       7,950  

Money market

     17,100       15,669       14,822       14,832       14,697  

Total transaction deposits

     37,262       32,894       30,521       30,467       30,555  

Savings

     2,981       2,243       1,877       1,976       2,109  

Certificates of deposit

     17,531       15,738       14,694       14,053       13,560  

Total deposits

     57,774       50,875       47,092       46,496       46,224  

Other liabilities

     679       708       598       515       537  

Capital

     3,724       3,287       3,034       2,988       2,979  
                                        

Total funds

   $ 62,177     $ 54,870     $ 50,724     $ 49,999     $ 49,740  
                                        

PERFORMANCE RATIOS

          

Return on average capital

     24 %     25 %     24 %     27 %     25 %

Noninterest income to total revenue

     45       46       48       46       46  

Efficiency

     59       59       59       58       59  
                                        

(a) See notes (a), (b) and (d) on page 5.

 

Page 6


THE PNC FINANCIAL SERVICES GROUP, INC.

Retail Banking (Unaudited) (Continued)

 

Three months ended

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

OTHER INFORMATION, INCLUDING MERCANTILE (a) (b)

          

Credit-related statistics:

          

Nonperforming assets

   $ 140     $ 123     $ 106     $ 95     $ 104  

Net charge-offs

   $ 25     $ 27     $ 21     $ 31     $ 19  

Annualized net charge-off ratio

     .29 %     .39 %     .34 %     .50 %     .31 %
                                        

Other statistics:

          

Full-time employees

     11,804       11,838       9,549       9,531       9,674  

Part-time employees

     2,360       2,224       1,829       1,660       1,526  

ATMs

     3,917       3,862       3,581       3,594       3,553  

Branches (c)

     1,084       1,077       852       848       846  
                                        

ASSETS UNDER ADMINISTRATION (in billions) (d)

          

Assets under management

          

Personal

   $ 55     $ 54     $ 44     $ 42     $ 40  

Institutional

     22       22       10       10       10  
                                        

Total

   $ 77     $ 76     $ 54     $ 52     $ 50  
                                        

Asset Type

          

Equity

   $ 43     $ 41     $ 34     $ 32     $ 31  

Fixed income

     20       20       12       12       12  

Liquidity/Other

     14       15       8       8       7  
                                        

Total

   $ 77     $ 76     $ 54     $ 52     $ 50  
                                        

Nondiscretionary assets under administration

          

Personal

   $ 30     $ 31     $ 25     $ 27     $ 25  

Institutional

     81       80       61       62       60  
                                        

Total

   $ 111     $ 111     $ 86     $ 89     $ 85  
                                        

Asset Type

          

Equity

   $ 47     $ 42     $ 33     $ 32     $ 31  

Fixed income

     28       28       24       27       26  

Liquidity/Other

     36       41       29       30       28  
                                        

Total

   $ 111     $ 111     $ 86     $ 89     $ 85  
                                        

(a) Presented as of period-end, except for net charge-offs and annualized net charge-off ratio.
(b) Amounts subsequent to March 2, 2007 include the impact of Mercantile.
(c) Excludes certain satellite branches that provide limited products and service hours.
(d) Excludes brokerage account assets.

 

Page 7


THE PNC FINANCIAL SERVICES GROUP, INC.

Retail Banking (Unaudited) (Continued)

 

Three months ended

Dollars in millions except as noted

  

June 30

2007

    March 31
2007
    December 31
2006
    September 30
2006
   

June 30

2006

 
OTHER INFORMATION, EXCLUDING MERCANTILE (a) (b)           

Home equity portfolio credit statistics:

          

% of first lien positions

     42 %     43 %     43 %     44 %     45 %

Weighted average loan-to-value ratios

     70 %     70 %     70 %     69 %     69 %

Weighted average FICO scores (c)

     727       726       728       728       728  

Loans 90 days past due

     .26 %     .25 %     .24 %     .22 %     .21 %
                                        

Checking-related statistics:

          

Retail Banking checking relationships

     1,967,000       1,962,000       1,954,000       1,958,000       1,956,000  

Consumer DDA households using online banking

     975,000       960,000       938,000       920,000       897,000  

% of consumer DDA households using online banking

     55 %     54 %     53 %     52 %     51 %

Consumer DDA households using online bill payment

     505,000       450,000       404,000       361,000       305,000  

% of consumer DDA households using online bill payment

     29 %     25 %     23 %     20 %     17 %
                                        

Small business loans and managed deposits:

          

Small business loans

   $ 5,365     $ 5,218     $ 5,101     $ 5,023     $ 4,882  

Managed deposits:

          

On-balance sheet

          

Noninterest-bearing demand

   $ 4,224     $ 4,236     $ 4,387     $ 4,370     $ 4,319  

Interest-bearing demand

     1,543       1,627       1,724       1,545       1,392  

Money market

     2,563       2,629       2,755       2,658       2,617  

Certificates of deposit

     647       746       802       647       574  

Off-balance sheet (d)

          

Small business sweep checking

     1,935       1,833       1,812       1,676       1,532  
                                        

Total managed deposits

   $ 10,912     $ 11,071     $ 11,480     $ 10,896     $ 10,434  
                                        

Brokerage statistics:

          

Margin loans

   $ 162     $ 166     $ 163     $ 170     $ 194  

Financial consultants (e)

     767       757       758       752       775  

Full service brokerage offices

     99       99       99       99       100  

Brokerage account assets (billions)

   $ 47     $ 46     $ 46     $ 44     $ 43  
                                        

Other statistics:

          

Gains on sales of education loans (f)

   $ 5     $ 3     $ 11     $ 11     $ 7  
                                        

(a) Presented as of period-end, except for 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) Represents the most recent FICO scores we have on file.
(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 6.

 

Page 8


THE PNC FINANCIAL SERVICES GROUP, INC.

Corporate & Institutional Banking (Unaudited)

 

Three months ended

Taxable-equivalent basis (a)

Dollars in millions except as noted

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

INCOME STATEMENT

          

Net interest income

   $ 194     $ 183     $ 186     $ 178     $ 169  

Noninterest income

          

Corporate service fees

     139       127       149       131       133  

Other

     48       60       55       43       76  
                                        

Noninterest income

     187       187       204       174       209  
                                        

Total revenue

     381       370       390       352       378  

Provision for (recoveries of) credit losses

     17       (16 )     6       7       17  

Noninterest expense

     192       193       199       181       191  
                                        

Pretax earnings

     172       193       185       164       170  

Income taxes

     50       61       59       53       55  
                                        

Earnings

   $ 122     $ 132     $ 126     $ 111     $ 115  
                                        

AVERAGE BALANCE SHEET

          

Loans

          

Corporate (b)

   $ 9,274     $ 8,909     $ 8,885     $ 8,670     $ 8,692  

Commercial real estate

     3,555       3,253       3,143       2,953       2,760  

Commercial—real estate related

     3,736       2,733       2,189       2,476       2,484  

Asset-based lending

     4,562       4,513       4,594       4,563       4,452  
                                        

Total loans (b)

     21,127       19,408       18,811       18,662       18,388  

Goodwill and other intangible assets

     1,837       1,544       1,399       1,366       1,328  

Loans held for sale

     982       1,302       965       865       875  

Other assets

     4,531       4,244       4,550       4,288       3,978  
                                        

Total assets

   $ 28,477     $ 26,498     $ 25,725     $ 25,181     $ 24,569  
                                        

Deposits

          

Noninterest-bearing demand

   $ 6,953     $ 7,083     $ 7,210     $ 6,817     $ 6,353  

Money market

     4,653       4,530       3,644       2,678       2,168  

Other

     1,113       926       921       995       933  
                                        

Total deposits

     12,719       12,539       11,775       10,490       9,454  

Other liabilities

     2,960       2,850       3,093       2,967       2,826  

Capital

     2,050       2,064       1,935       1,735       1,882  
                                        

Total funds

   $ 17,729     $ 17,453     $ 16,803     $ 15,192     $ 14,162  
                                        

PERFORMANCE RATIOS

          

Return on average capital

     24 %     26 %     26 %     25 %     25 %

Noninterest income to total revenue

     49       51       52       49       55  

Efficiency

     50       52       51       51       51  
                                        

COMMERCIAL MORTGAGE

          

SERVICING PORTFOLIO (in billions)

          

Beginning of period

   $ 206     $ 200     $ 180     $ 151     $ 140  

Acquisitions/additions

     28       16       33       37       19  

Repayments/transfers

     (12 )     (10 )     (13 )     (8 )     (8 )
                                        

End of period

   $ 222     $ 206     $ 200     $ 180     $ 151  
                                        

OTHER INFORMATION

          

Consolidated revenue from: (c)

          

Treasury Management

   $ 114     $ 110     $ 107     $ 106     $ 104  

Capital Markets

   $ 76     $ 67     $ 79     $ 64     $ 76  

Midland Loan Services

   $ 56     $ 54     $ 53     $ 47     $ 42  

Total loans (d)

   $ 21,662     $ 21,193     $ 18,957     $ 19,265     $ 18,758  

Nonperforming assets (d)

   $ 100     $ 77     $ 63     $ 94     $ 125  

Net charge-offs

   $ 7     $ 9     $ 24     $ 14     $ 12  

Full-time employees (d)

     2,084       2,038       1,936       1,925       1,899  

Net gains on commercial mortgage loan sales

   $ 9     $ 15     $ 18     $ 12     $ 18  

Net carrying amount of commercial mortgage servicing rights (d)

   $ 493     $ 487     $ 471     $ 414     $ 385  
                                        

(a) See notes (a), (b) and (d) on page 5.
(b) Includes lease financing.
(c) Represents consolidated PNC amounts.
(d) Presented as of period end.

 

Page 9


THE PNC FINANCIAL SERVICES GROUP, INC.

PFPC (Unaudited) (a)

 

Three months ended

Dollars in millions except as noted

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

INCOME STATEMENT

          

Servicing revenue (b)

   $ 216     $ 208     $ 203     $ 196     $ 196  

Operating expense (b)

     158       153       146       144       145  
                                        

Operating income

     58       55       57       52       51  

Debt financing

     9       10       10       11       11  

Nonoperating income (c)

     1       2       1       1       1  
                                        

Pretax earnings

     50       47       48       42       41  

Income taxes (d)

     18       16       17       2       15  
                                        

Earnings

   $ 32     $ 31     $ 31     $ 40     $ 26  
                                        

PERIOD-END BALANCE SHEET

          

Goodwill and other intangible assets

   $ 1,005     $ 1,008     $ 1,012     $ 1,015     $ 1,018  

Other assets

     1,395       1,370       1,192       1,038       1,398  
                                        

Total assets

   $ 2,400     $ 2,378     $ 2,204     $ 2,053     $ 2,416  
                                        

Debt financing

   $ 734     $ 760     $ 792     $ 813     $ 852  

Other liabilities

     1,109       1,091       917       772       1,137  

Shareholder’s equity

     557       527       495       468       427  
                                        

Total funds

   $ 2,400     $ 2,378     $ 2,204     $ 2,053     $ 2,416  
                                        

PERFORMANCE RATIOS

          

Return on average equity

     24 %     25 %     26 %     35 %     25 %

Operating margin (e)

     27       26       28       27       26  
                                        

SERVICING STATISTICS (at period end)

          

Accounting/administration net fund assets (in billions)

          

Domestic

   $ 765     $ 731     $ 746     $ 695     $ 671  

Offshore

     103       91       91       79       72  
                                        

Total

   $ 868     $ 822     $ 837     $ 774     $ 743  
                                        

Asset type (in billions)

          

Money market

   $ 286     $ 280     $ 281     $ 260     $ 247  

Equity

     373       352       354       331       317  

Fixed income

     118       111       117       111       110  

Other (f)

     91       79       85       72       69  
                                        

Total

   $ 868     $ 822     $ 837     $ 774     $ 743  
                                        

Custody fund assets (in billions)

   $ 467     $ 435     $ 427     $ 399     $ 389  
                                        

Shareholder accounts (in millions)

          

Transfer agency

     20       18       18       18       18  

Subaccounting

     50       50       50       48       47  
                                        

Total

     70       68       68       66       65  
                                        

OTHER INFORMATION

          

Period-end full-time employees

     4,522       4,400       4,381       4,317       4,314  
                                        

(a) See note (a) on page 5.
(b) Certain out-of-pocket expense items which are then client billable are included in both servicing revenue and operating expense above, but offset each other entirely and therefore have no net effect on operating income. Distribution revenue and expenses which relate to 12b-1 fees that PFPC receives from certain fund clients for the payment of marketing, sales and service expenses also entirely offset each other, but are netted for presentation purposes above. Prior period amounts have been reclassified to conform with the current period presentation.
(c) Net of nonoperating expense.
(d) 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.
(e) Total operating income divided by total servicing revenue.
(f) Includes alternative investment net assets serviced.

 

Page 10


THE PNC FINANCIAL SERVICES GROUP, INC.

Efficiency Ratios (Unaudited)

 

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

Efficiency, as reported (a)

   61 %   58 %   63 %   33 %   64 %

Efficiency, as adjusted (b)

   60 %   60 %   62 %   62 %   60 %
                              

(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

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

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

          

GAAP basis—net interest income

   $ 738     $ 623     $ 566     $ 567     $ 556  

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

           (3 )     (4 )
                                        

Adjusted net interest income

   $ 738     $ 623     $ 566     $ 564     $ 552  
                                        

GAAP basis—noninterest income

   $ 975     $ 991     $ 969     $ 2,943     $ 1,230  

Adjustments:

          

Gain on BlackRock/MLIM transaction

           (2,078 )  

Securities portfolio rebalancing loss

           196    

Mortgage loan portfolio repositioning loss

           48    

Integration costs

     1       2       10      

BlackRock LTIP

     1       (52 )     12      

BlackRock equity method (c)

           (277 )     (312 )
                                        

Adjusted noninterest income

   $ 977     $ 941     $ 991     $ 832     $ 918  
                                        

Adjusted total revenue

   $ 1,715     $ 1,564     $ 1,557     $ 1,396     $ 1,470  
                                        

GAAP basis—noninterest expense

   $ 1,040     $ 944     $ 969     $ 1,167     $ 1,145  

Adjustments:

          

Integration costs

     (15 )     (11 )       (72 )     (13 )

BlackRock equity method (c)

           (223 )     (251 )
                                        

Adjusted noninterest expense

   $ 1,025     $ 933     $ 969     $ 872     $ 881  
                                        

Adjusted efficiency ratio

     60 %     60 %     62 %     62 %     60 %

(c) See Appendix to Financial Supplement.

 

Page 11


THE PNC FINANCIAL SERVICES GROUP, INC.

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

 

     Three months ended  

Net Interest Income

In millions

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

Interest income, taxable equivalent basis

          

Loans

   $ 1,088     $ 899     $ 824     $ 841     $ 801  

Securities available for sale

     355       310       279       272       255  

Other

     119       112       119       97       76  
                                        

Total interest income

     1,562       1,321       1,222       1,210       1,132  
                                        

Interest expense

          

Deposits

     532       468       450       434       379  

Borrowed funds

     284       224       201       202       191  
                                        

Total interest expense

     816       692       651       636       570  
                                        

Net interest income, taxable-equivalent basis

     746       629       571       574       562  

Less: Taxable-equivalent adjustment

     8       6       5       7       6  
                                        

Net interest income, GAAP basis

   $ 738     $ 623     $ 566     $ 567     $ 556  
                                        
     Three months ended  

Net Interest Margin

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

Average yields/rates

          

Yield on interest-earning assets

          

Loans

     6.81 %     6.68 %     6.63 %     6.59 %     6.38 %

Securities available for sale

     5.37       5.31       5.27       5.01       4.76  

Other

     5.94       5.83       5.56       5.78       5.23  

Total yield on interest-earning assets

     6.35       6.23       6.15       6.09       5.84  

Rate on interest-bearing liabilities

          

Deposits

     3.52       3.52       3.54       3.43       3.11  

Borrowed funds

     5.28       5.33       5.39       5.40       5.06  

Total rate on interest-bearing liabilities

     3.98       3.95       3.97       3.88       3.56  
                                        

Interest rate spread

     2.37       2.28       2.18       2.21       2.28  

Impact of noninterest-bearing sources

     .66       .67       .70       .68       .62  
                                        

Net interest margin

     3.03 %     2.95 %     2.88 %     2.89 %     2.90 %
                                        
     Three months ended  

Trading Revenue (a)

In millions

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

Net interest income (expense)

   $ 1       $ (2 )   $ (1 )   $ (3 )

Noninterest income

     29     $ 52       33       38       55  
                                        

Total trading revenue

   $ 30     $ 52     $ 31     $ 37     $ 52  
                                        

Securities underwriting and trading (b)

   $ 8     $ 9     $ 11     $ 7     $ 6  

Foreign exchange

     13       14       13       11       17  

Financial derivatives

     9       29       7       19       29  
                                        

Total trading revenue

   $ 30     $ 52     $ 31     $ 37     $ 52  
                                        

(a) See pages 13-14 for disclosure of average trading assets and liabilities.
(b) Includes changes in fair value for certain loans accounted for at fair value. See page 13 for disclosure of average loans at fair value.

 

Page 12


THE PNC FINANCIAL SERVICES GROUP, INC.

Average Consolidated Balance Sheet (Unaudited)

 

Three months ended - in millions

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

Interest-earning assets:

          

Securities available for sale

          

Residential mortgage-backed

   $ 19,280     $ 17,198     $ 16,082     $ 15,282     $ 14,247  

Commercial mortgage-backed

     3,646       3,338       2,640       2,182       2,348  

Asset-backed

     2,531       1,876       1,561       1,457       1,170  

U.S. Treasury and government agencies

     344       394       441       2,285       3,181  

State and municipal

     203       162       140       144       152  

Other debt

     33       79       89       90       88  

Corporate stocks and other

     383       347       277       259       230  
                                        

Total securities available for sale (a)

     26,420       23,394       21,230       21,699       21,416  

Loans, net of unearned income

          

Commercial

     24,652       21,479       20,458       20,431       20,348  

Commercial real estate

     9,513       5,478       3,483       3,268       3,071  

Lease financing

     2,566       2,534       2,789       2,790       2,761  

Consumer

     17,886       16,865       16,272       16,150       16,049  

Residential mortgage

     8,527       7,173       5,606       7,332       7,353  

Other

     411       527       385       367       354  
                                        

Total loans, net of unearned income

     63,555       54,056       48,993       50,338       49,936  

Loans held for sale

     2,611       2,955       3,167       2,408       2,411  

Federal funds sold and resale agreements

     1,832       2,092       2,049       1,401       613  

Other

     3,606       2,735       3,198       2,805       2,795  
                                        

Total interest-earning assets

     98,024       85,232       78,637       78,651       77,171  

Noninterest-earning assets:

          

Allowance for loan and lease losses

     (692 )     (612 )     (557 )     (609 )     (600 )

Cash and due from banks

     2,991       2,945       2,999       3,161       3,140  

Other

     22,997       19,857       17,969       14,142       13,736  
                                        

Total assets

   $ 123,320     $ 107,422     $ 99,048     $ 95,345     $ 93,447  
                                        
Supplemental Average Balance Sheet Information           
Trading Assets           

Securities (b)

   $ 2,144     $ 1,569     $ 2,111     $ 1,460     $ 1,477  

Resale agreements (c)

     1,247       820       1,247       537       378  

Financial derivatives (d)

     1,221       1,115       1,209       1,220       1,251  

Loans at fair value (d)

     161       193       172       168       170  
                                        

Total trading assets

   $ 4,773     $ 3,697     $ 4,739     $ 3,385     $ 3,276  
                                        

(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 13


THE PNC FINANCIAL SERVICES GROUP, INC.

Average Consolidated Balance Sheet (Unaudited) (Continued)

 

Three months ended - in millions

   June 30
2007
   March 31
2007
   December 31
2006
   September 30
2006
   June 30
2006
Liabilities, Minority and Noncontrolling Interests, and Shareholders’ Equity               

Interest-bearing liabilities:

              

Interest-bearing deposits

              

Money market

   $ 23,979    $ 22,503    $ 20,879    $ 20,565    $ 19,019

Demand

     9,494      8,671      8,143      8,075      8,229

Savings

     2,988      2,250      1,882      2,021      2,177

Retail certificates of deposit

     17,426      15,691      14,837      14,209      13,686

Other time

     2,297      1,623      1,355      1,467      1,323

Time deposits in foreign offices

     4,220      3,129      3,068      3,712      4,276
                                  

Total interest-bearing deposits

     60,404      53,867      50,164      50,049      48,710

Borrowed funds

              

Federal funds purchased

     6,102      4,533      3,167      3,831      2,715

Repurchase agreements

     2,507      1,858      2,264      2,027      2,226

Bank notes and senior debt

     5,681      4,182      2,757      2,801      3,145

Subordinated debt

     4,466      4,370      4,361      4,436      4,437

Other

     2,565      1,877      2,161      1,627      2,504
                                  

Total borrowed funds

     21,321      16,820      14,710      14,722      15,027
                                  

Total interest-bearing liabilities

     81,725      70,687      64,874      64,771      63,737

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

              

Demand and other noninterest-bearing deposits

     17,824      15,807      14,827      14,549      13,926

Allowance for unfunded loan commitments and letters of credit

     121      126      117      104      103

Accrued expenses and other liabilities

     7,655      7,961      7,882      6,346      6,305

Minority and noncontrolling interests in consolidated entities

     1,367      893      542      640      631

Shareholders’ equity

     14,628      11,948      10,806      8,935      8,745
                                  

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

   $ 123,320    $ 107,422    $ 99,048    $ 95,345    $ 93,447
                                  
Supplemental Average Balance Sheet Information               
Deposits and Common Shareholders’ Equity               

Interest-bearing deposits

   $ 60,404    $ 53,867    $ 50,164    $ 50,049    $ 48,710

Demand and other noninterest-bearing deposits

     17,824      15,807      14,827      14,549      13,926
                                  

Total deposits

   $ 78,228    $ 69,674    $ 64,991    $ 64,598    $ 62,636

Transaction deposits

   $ 51,297    $ 46,981    $ 43,849    $ 43,189    $ 41,174

Common shareholders’ equity

   $ 14,621    $ 11,941    $ 10,799    $ 8,928    $ 8,738
Trading Liabilities               

Securities sold short (a)

   $ 1,431    $ 1,264    $ 1,553    $ 867    $ 769

Repurchase agreements and other borrowings (b)

     669      363      1,096      708      641

Financial derivatives (c)

     1,230      1,126      1,156      1,151      1,200

Borrowings at fair value (c)

     40      39      34      40      48
                                  

Total trading liabilities

   $ 3,370    $ 2,792    $ 3,839    $ 2,766    $ 2,658
                                  

(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 14


THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Loans (Unaudited)

Loans

 

Period ended - in millions

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

Commercial

          

Retail/wholesale

   $ 5,908     $ 5,940     $ 5,301     $ 5,245     $ 5,393  

Manufacturing

     4,371       4,419       4,189       4,318       4,164  

Other service providers

     2,963       2,879       2,186       2,155       2,179  

Real estate related

     4,443       4,364       2,825       3,000       2,903  

Financial services

     1,500       1,509       1,324       1,423       1,479  

Health care

     1,023       959       707       685       641  

Other

     4,538       4,456       4,052       3,858       3,805  
                                        

Total commercial

     24,746       24,526       20,584       20,684       20,564  
                                        

Commercial real estate

          

Real estate projects

     8,962       8,963       2,716       2,691       2,438  

Mortgage

     567       602       816       794       768  
                                        

Total commercial real estate

     9,529       9,565       3,532       3,485       3,206  
                                        

Equipment lease financing

     3,587       3,527       3,556       3,609       3,583  
                                        

Total commercial lending

     37,862       37,618       27,672       27,778       27,353  
                                        

Consumer

          

Home equity

     14,268       14,263       13,749       13,876       13,853  

Automobile

     1,962       1,956       1,135       1,061       1,008  

Other

     1,804       1,769       1,631       1,419       1,388  
                                        

Total consumer

     18,034       17,988       16,515       16,356       16,249  
                                        

Residential mortgage

     9,440       7,960       6,337       5,234       7,416  

Other

     382       364       376       347       358  

Unearned income

     (1,004 )     (1,005 )     (795 )     (815 )     (828 )
                                        

Total, net of unearned income

   $ 64,714     $ 62,925     $ 50,105     $ 48,900     $ 50,548  
                                        

 

Page 15


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

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

Beginning balance

   $ 690     $ 560     $ 566     $ 611     $ 597  

Charge-offs

          

Commercial

     (27 )     (31 )     (23 )     (39 )     (30 )

Commercial real estate

     (1 )       (1 )     (2 )  

Equipment lease financing

         (14 )    

Consumer

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

Residential mortgage

         (1 )     (2 )  
                                        

Total charge-offs

     (43 )     (48 )     (54 )     (56 )     (42 )

Recoveries

          

Commercial

     8       7       3       6       4  

Commercial real estate

     1         1      

Equipment lease financing

         1         4  

Consumer

     2       5       4       3       4  
                                        

Total recoveries

     11       12       9       9       12  

Net recoveries (charge-offs)

          

Commercial

     (19 )     (24 )     (20 )     (33 )     (26 )

Commercial real estate

           (2 )  

Equipment lease financing

         (13 )       4  

Consumer

     (13 )     (12 )     (11 )     (10 )     (8 )

Residential mortgage

         (1 )     (2 )  
                                        

Total net charge-offs

     (32 )     (36 )     (45 )     (47 )     (30 )

Provision for credit losses

     54       8       42       16       44  

Acquired allowance—Mercantile

     (5 )     142        

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

     (4 )     16       (3 )     (14 )  
                                        

Ending balance

   $ 703     $ 690     $ 560     $ 566     $ 611  
                                        
Supplemental Information           

Commercial lending net charge-offs (a)

   $ (19 )   $ (24 )   $ (33 )   $ (35 )   $ (22 )

Consumer lending net charge-offs (b)

     (13 )     (12 )     (12 )     (12 )     (8 )
                                        

Total net charge-offs

   $ (32 )   $ (36 )   $ (45 )   $ (47 )   $ (30 )

Net charge-offs to average loans

          

Commercial lending

     .21 %     .33 %     .49 %     .52 %     .34 %

Consumer lending

     .19       .20       .22       .20       .14  
                                        

(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

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

Beginning balance

   $ 121    $ 120     $ 117    $ 103    $ 103

Acquired allowance - Mercantile

        17          

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

     4      (16 )     3      14   
                                   

Ending balance

   $ 125    $ 121     $ 120    $ 117    $ 103
                                   

Net Unfunded Commitments

In millions

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

Net unfunded commitments

   $ 50,680    $ 49,263     $ 44,835    $ 43,804    $ 40,904
                                   

 

Page 16


THE PNC FINANCIAL SERVICES GROUP, INC.

Details of Nonperforming Assets (Unaudited)

Nonperforming Assets by Type

 

Period ended - in millions

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

Nonaccrual loans

          

Commercial

   $ 126     $ 121     $ 109     $ 112     $ 151  

Commercial real estate

     62       25       12       14       12  

Equipment lease financing

     2       2       1       14       16  

Consumer

     14       14       13       14       14  

Residential mortgage

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