PNC Financial Services (PNC)

commercial loans. PNC Bank, N.A. is also a member of the Federal Home Loan Bank (“FHLB”)-Pittsburgh and as such has access to advances from FHLB-Pittsburgh secured generally by residential mortgage and other mortgage-related loans. At December 31, 2008, we maintained significant unused borrowing capacity from the Federal Reserve Bank discount window and FHLB-Pittsburgh under current collateral requirements. In addition, National City Bank is a member of FHLB – Cincinnati.

Information regarding amounts pledged, for the ability to borrow if necessary, and borrowings related to the Federal Reserve Bank, FHLB – Pittsburgh and FHLB – Cincinnati are as follows:

Total FHLB borrowings were $18.1 billion at December 31, 2008 compared with $7.1 billion at December 31, 2007. We increased total FHLB borrowings during 2008 which provided us with additional liquidity at relatively attractive rates.

We can also obtain funding through traditional forms of borrowing, including federal funds purchased, repurchase agreements, and short and long-term debt issuances. PNC Bank, N.A. has the ability to offer up to $20 billion in senior and subordinated unsecured debt obligations with maturities of more than nine months. Through December 31, 2008, PNC Bank, N.A. had issued $6.9 billion of debt under this program.

PNC Bank, N.A. also has the ability to offer up to $3.0 billion of its commercial paper. As of December 31, 2008, $327 million of commercial paper was outstanding under this program.

As of December 31, 2008, there were $3.1 billion of PNC Bank, N.A. and $4.8 billion of National City Bank short- and long-term debt issuances, including commercial paper, with maturities of less than one year.

FHLB-Pittsburgh resulting in unused borrowing capacity of $18.4 billion and $7.7 billion, respectively, for a combined unused borrowing capacity under these arrangements of $26.1 billion, which is based on current collateral requirements.

At December 31, 2007, we had $1.6 billion of loans and $18.8 billion of securities pledged to the Federal Reserve Bank with a combined collateral value of $18.2 billion. Also at December 31, 2007, we pledged $33.5 billion of loans and $4.3 billion of securities to FHLB-Pittsburgh with a combined collateral value of $23.5 billion. At December 31, 2007 we had no outstanding borrowings with the Federal Reserve Bank and $6.8 billion outstanding with FHLB-Pittsburgh resulting in unused borrowing capacity of $18.2 billion and $16.7 billion, respectively, for a combined unused borrowing capacity under these arrangements of $34.9 billion.

In the first nine months of 2008 we increased FHLB borrowings, which provided us with additional liquidity at relatively attractive rates. Total FHLB borrowings were $10.5 billion at September 30, 2008 compared with $7.1 billion at December 31, 2007.

We can also obtain funding through traditional forms of borrowing, including federal funds purchased, repurchase agreements, and short and long-term debt issuances. In July 2004, PNC Bank, N.A. established a program to offer up to $20 billion in senior and subordinated unsecured debt obligations with maturities of more than nine months. Through September 30, 2008, PNC Bank, N.A. had issued $6.9 billion of debt under this program.

PNC Bank, N.A. established a program in December 2004 to offer up to $3.0 billion of its commercial paper. As of September 30, 2008, $411 million of commercial paper was outstanding under this program.

As of September 30, 2008, there were $4.5 billion of PNC Bank, N.A. short- and long-term debt issuances, including commercial paper, with maturities of less than one year.

At December 31, 2007, we had $1.6 billion of loans and $18.8 billion of securities pledged to the Federal Reserve Bank with a combined collateral value of $18.2 billion. Also at December 31, 2007, we pledged $33.5 billion of loans and $4.3 billion of securities to FHLB-Pittsburgh with a combined collateral value of $23.5 billion. At December 31, 2007 we had no outstanding borrowings with the Federal Reserve Bank and $6.8 billion outstanding with FHLB-Pittsburgh resulting in unused borrowing capacity of $18.2 billion and $16.7 billion, respectively, for a combined unused borrowing capacity under these arrangements of $34.9 billion.

In the first half of 2008 we increased FHLB borrowings, which provided us with additional liquidity at relatively attractive rates. Total FHLB borrowings were $9.6 billion at June 30, 2008 compared with $7.1 billion at December 31, 2007.

We can also obtain funding through traditional forms of borrowing, including federal funds purchased, repurchase agreements, and short and long-term debt issuances. In July 2004, PNC Bank, N.A. established a program to offer up to $20 billion in senior and subordinated unsecured debt obligations with maturities of more than nine months. Through June 30, 2008, PNC Bank, N.A. had issued $6.9 billion of debt under this program.

PNC Bank, N.A. established a program in December 2004 to offer up to $3.0 billion of its commercial paper. As of June 30, 2008, there were no issuances outstanding under this program.

As of June 30, 2008, there were $1.5 billion of PNC Bank, N.A. short- and long-term debt issuances with maturities of less than one year.

December 31, 2007, we had $1.6 billion of loans and $18.8 billion of securities pledged to the Federal Reserve Bank with a combined collateral value of $18.2 billion. Also at December 31, 2007, we pledged $33.5 billion of loans and $4.3 billion of securities to FHLB-Pittsburgh with a combined collateral value of $23.5 billion.

We had no Federal Reserve Bank borrowings outstanding at either March 31, 2008 or December 31, 2007.

In the first quarter of 2008 we increased FHLB borrowings, which provided us with additional liquidity at relatively attractive rates. Total FHLB borrowings were $9.7 billion at March 31, 2008 compared with $7.1 billion at December 31, 2007.

We can also obtain funding through traditional forms of borrowing, including federal funds purchased, repurchase agreements, and short and long-term debt issuances. In July 2004, PNC Bank, N.A. established a program to offer up to $20 billion in senior and subordinated unsecured debt obligations with maturities of more than nine months. Through March 31, 2008, PNC Bank, N.A. had issued $6.9 billion of debt under this program, including $325 million of subordinated debt issued in March 2008 that matures on April 1, 2018. These notes pay interest semiannually at a fixed rate of 6.875%.

Our 2007 Form 10-K has additional information regarding the following first quarter 2008 issuances:

None of the 2008 issuances are redeemable by us or the holders prior to maturity.

We have the ability to issue additional trust preferred securities out of our PNC Preferred Funding structure, subject to certain contractual restrictions. In February 2008, PNC Preferred Funding Trust III issued $375 million of 8.70% Fixed-to-Floating Rate Non-Cumulative Exchangeable Perpetual Trust Securities. See “Perpetual Trust Securities” in the Off-Balance Sheet Arrangements And VIEs section of this Financial Review.

PNC Bank, N.A. established a program in December 2004 to offer up to $3.0 billion of its commercial paper. As of March 31, 2008, there were no issuances outstanding under this program.

As of March 31, 2008, there were $2.5 billion of PNC Bank, N.A. short- and long-term debt issuances with maturities of less than one year.

at relatively attractive rates. Total FHLB borrowings were $7.1 billion at December 31, 2007 compared with $42 million at December 31, 2006.

We can also obtain funding through traditional forms of borrowing, including federal funds purchased, repurchase agreements, and short and long-term debt issuances. In July 2004, PNC Bank, N.A. established a program to offer up to $20 billion in senior and subordinated unsecured debt obligations with maturities of more than nine months. Through December 31, 2007, PNC Bank, N.A. had issued $5.8 billion of debt under this program, including the following 2007 issuances:

In January 2008, $50 million of senior bank notes were issued that mature on January 25, 2011. Interest will be reset quarterly to 3-month LIBOR plus 55 basis points and will be paid quarterly.

In January 2008, $100 million of senior bank notes were issued that mature on January 25, 2010. Interest will be reset quarterly to 3-month LIBOR plus 45 basis points and will be paid quarterly.

In February 2008, $175 million of senior bank notes were issued that mature on February 1, 2010. Interest will be reset quarterly to 3-month LIBOR plus 45 basis points and will be paid quarterly.

In February 2008, $500 million of senior bank notes were issued that mature on August 5, 2009. Interest will be reset quarterly to 3-month LIBOR plus 40 basis points and will be paid quarterly.

None of the 2007 or 2008 issuances described above are redeemable by us or the holders prior to maturity.

We have the ability to issue additional trust preferred securities out of our PNC Preferred Funding structure, subject to certain contractual restrictions. In February 2008, PNC Preferred Funding Trust III issued $375 million of 8.700% Fixed-to-Floating Rate Non-Cumulative Exchangeable Perpetual Trust Securities. See “Perpetual Trust Securities” in the Off-Balance Sheet Arrangements And VIEs section of this Item 7.

PNC Bank, N.A. established a program in December 2004 to offer up to $3.0 billion of its commercial paper. As of December 31, 2007, there were no issuances outstanding under this program.

As of December 31, 2007, there were $5.0 billion of PNC Bank, N.A. short- and long-term debt issuances with maturities of less than one year.

We can also obtain funding through alternative forms of borrowing, including federal funds purchased, repurchase agreements, and short-term and long-term debt issuances. In July 2004, PNC Bank, N.A. established a program to offer up to $20 billion in senior and subordinated unsecured debt obligations with maturities of more than nine months. Through March 31, 2007, PNC Bank, N.A. had issued $2.9 billion of debt under this program. In April 2007, we issued $500 million of 18-month floating rate senior notes under this program that are due October 3, 2008. Interest will be reset monthly to 1-month LIBOR less six basis points and will be paid monthly. These notes are not redeemable by PNC Bank, N.A., or at the option of the holder prior to maturity.

PNC Bank, N.A. established a program in December 2004 to offer up to $3.0 billion of its commercial paper. As of March 31, 2007, $514 million of commercial paper was outstanding under this program.