PNC Financial Services (PNC)

Asset Quality

Total nonperforming assets at December 31, 2007 increased $311 million, to $495 million, compared with December 31, 2006. Nonperforming loans, the largest component of nonperforming assets, increased $294 million, to $454 million, at December 31, 2007 compared with December 31, 2006. Of this increase in nonperforming loans, $192 million occurred during the fourth quarter of 2007. The increase was primarily due to higher nonaccrual commercial real estate loans primarily related to residential real estate development exposure. At December 31, 2007, our largest nonperforming asset was approximately $20 million and our average nonperforming loan associated with commercial lending was approximately $0.5 million.

The ratio of nonperforming assets to total assets rose to .36% at December 31, 2007 compared with .18% at December 31, 2006. The allowance for loan and lease losses was $830 million and represented 1.21% of total loans and 183% of nonperforming loans at December 31, 2007. The comparable amounts were $560 million, 1.12% and 350%, respectively, at December 31, 2006.

Asset Quality

Nonperforming assets were $171 million at December 31, 2006, a decrease of $44 million from December 31, 2005. Nonperforming loans declined $43 million in the comparison. The ratio of nonperforming assets to total loans and foreclosed assets was .34% at December 31, 2006 compared with .42% at December 31, 2005. The allowance for loan and lease losses was $560 million and represented 1.12% of total loans and 381% of nonperforming loans at December 31, 2006. The comparable amounts were $596 million, 1.21% and 314%, respectively, at December 31, 2005.

Asset Quality

Nonperforming assets were $216 million at December 31, 2005, an increase of $41 million from December 31, 2004. The increase in nonperforming assets was primarily due to an increase in nonaccrual asset-based loans. The ratio of nonperforming assets to total loans, loans held for sale and foreclosed assets was .42% at December 31, 2005 compared with .39% at December 31, 2004. The allowance for loan and lease losses was $596 million and represented 1.21% of total loans and 314% of nonperforming loans at December 31, 2005. The comparable amounts were $607 million, 1.40% and 424%, respectively, at December 31, 2004.