PNC Financial Services (PNC)

BlackRock

Our BlackRock business segment earned $23 million for the first quarter of 2009 compared with $60 million for the first quarter of 2008. Lower equity markets in the first quarter of 2009 impacted BlackRock’s results.

BlackRock

PNC owns approximately 40 million shares of BlackRock common stock, accounted for under the equity method. Our total investment in BlackRock was $4.0 billion at March 31, 2009 compared with $4.2 billion at December 31, 2008. The market value of our investment in BlackRock was $5.2 billion at March 31, 2009. The primary risk measurement, similar to other equity investments, is economic capital.

The discussion of BlackRock within the Business Segments Review section of this Financial Review includes information about changes in our ownership structure of BlackRock in the first quarter of 2009.

BlackRock

Our BlackRock business segment earned $207 million in 2008 and $253 million in 2007. These results reflect our approximately 33% share of BlackRock’s reported GAAP earnings during both periods and the additional income taxes on these earnings incurred by PNC.

BlackRock

PNC owns approximately 43 million shares of BlackRock common stock, accounted for under the equity method. Our total investment in BlackRock was $4.2 billion at December 31, 2008 compared with $4.1 billion at December 31, 2007. The market value of our investment in BlackRock was $5.8 billion at December 31, 2008. The primary risk measurement, similar to other equity investments, is economic capital.

The discussion of BlackRock within the Business Segments Review section of this Item 7 includes information about changes in our ownership structure of BlackRock in 2009.

BlackRock

PNC owns approximately 43 million shares of BlackRock common stock, accounted for under the equity method. Our total investment in BlackRock was $4.3 billion at September 30, 2008 compared with $4.1 billion at December 31, 2007. The market value of our investment in BlackRock was $8.4 billion at September 30, 2008. The primary risk measurement, similar to other equity investments, is economic capital.

BlackRock

PNC owns approximately 43 million shares of BlackRock common stock, accounted for under the equity method. Our total investment in BlackRock was $4.3 billion at June 30, 2008 compared with $4.1 billion at December 31, 2007. The market value of our investment in BlackRock was $7.6 billion at June 30, 2008. The primary risk measurement, similar to other equity investments, is economic capital.

BlackRock

PNC owns approximately 43 million shares of BlackRock common stock, accounted for under the equity method. Our total investment in BlackRock was $4.2 billion at March 31, 2008 compared with $4.1 billion at December 31, 2007. The market value of our investment in BlackRock was $8.8 billion at March 31, 2008. The primary risk measurement, similar to other equity investments, is economic capital.

BlackRock

PNC owns approximately 43 million shares of BlackRock common stock, accounted for under the equity method. Our total investment in BlackRock was $4.1 billion at December 31, 2007 compared with $3.9 billion at December 31, 2006. The market value of our investment in BlackRock was $9.4 billion at December 31, 2007. The primary risk measurement, similar to other equity investments, is economic capital.

BlackRock

PNC owns approximately 43 million shares of BlackRock common stock, accounted for under the equity method. Our total investment in BlackRock was $4.0 billion at September 30, 2007 compared with $3.9 billion at

BlackRock

PNC owns approximately 43 million shares of BlackRock common stock, accounted for under the equity method. Our total investment in BlackRock was $4.0 billion at June 30, 2007 compared with $3.9 billion at December 31, 2006. The market value of our investment in BlackRock was $6.8 billion at June 30, 2007. The primary risk measurement, similar to other equity investments, is economic capital.

BlackRock

PNC owns approximately 43 million shares of BlackRock common stock, accounted for under the equity method. Our total investment in BlackRock was $3.8 billion at March 31, 2007 compared with $3.9 billion at December 31, 2006. The market value of our investment in BlackRock was $6.7 billion at March 31, 2007. The primary risk measurement, similar to other equity investments, is economic capital.

BlackRock

The diversity of the business mix makes us less reliant on any one market segment or geography for income. It delivers a high proportion of fees to total revenue – one of the highest proportions among our peers. This is particularly important in the current environment because it eases the pressure on PNC to take outsized risks on the credit side. Only 2 percent of our commercial lending exposure is to non-investment grade companies with more than $50 million in exposure. Furthermore, our commercial loans are targeted to companies where we see opportunity to leverage lending relationships into sales of other fee-based products. On the consumer side, our principal lending activity is in home equity.

This has led to strong asset quality, with a lower percentage of nonperforming loans to average loans than many of our peers.

Our interest rate risk profile is well-positioned, and we have taken aggressive actions to maintain it. In the late summer and fall we repositioned our balance sheet to improve total return performance.

BlackRock

Our BlackRock business segment earned $187 million for 2006 and $152 million for 2005. These amounts represent BlackRock’s contribution to PNC’s earnings, including the impact of minority interest expense, as applicable, and additional income taxes recognized by PNC related to BlackRock’s earnings. For our BlackRock business segment reporting presentation in this Item 7, we have reflected our portion of the 2006 BlackRock/MLIM integration costs in “Other” rather than in earnings from our BlackRock investment. BlackRock business segment earnings for 2006 reflected higher investment advisory and administration fees due to an increase in assets under management and increased performance fees. These factors more than offset the increase in expense due to increased compensation and benefits and higher general and administration expense, and a one-time expense of $34 million incurred during the first quarter of 2006 related to the January 2005 acquisition of State Street Research and Management.

BlackRock

PNC’s BlackRock segment earned $50 million in the fourth quarter of 2006, compared with $48 million in the fourth quarter of 2005 and $42 million in the prior quarter. These amounts include the impact of PNC’s taxes associated with our share of BlackRock’s income, previously recorded in the Other segment.

For PNC business segment reporting presentation, PNC reflects its portion of integration costs incurred by BlackRock for the MLIM transaction in “Other” rather than in earnings from its BlackRock investment.

Prior to the September 29, 2006 closing of the MLIM transaction, PNC owned approximately 69 percent of BlackRock. For the periods prior to the BlackRock/MLIM transaction closing, PNC’s earnings from its investment in BlackRock as presented above have been reduced by minority interest in the income of BlackRock.

Upon closing of the MLIM acquisition, PNC owned approximately 34 percent of BlackRock. In accordance with generally accepted accounting principles, PNC deconsolidated BlackRock and, beginning with the fourth quarter of 2006, accounted for BlackRock’s earnings contribution using the equity method, with BlackRock’s contribution to PNC’s earnings reported in the asset management line item of PNC’s consolidated income statement.

BlackRock

BlackRock reported net income of $153 million for the first nine months of 2006 and $161 million for the first nine months of 2005. BlackRock’s reported net income for the first nine months of 2006 and 2005 included after-tax MLIM and State Street Research and Management (“SSRM”) integration costs of $56 million and $6 million, respectively. The BlackRock business segment earned $209 million in the first nine months of 2006 and $167 million for the first nine months of 2005 excluding the impact of these costs, which we have reported in “Other” for PNC business segment reporting. Adjusted earnings in 2006 reflected higher investment advisory and administration fees due to an increase in assets under management and increased performance fees. These factors more than offset the increase in expense due to increased compensation and benefits, general and administration expense, and a one-time expense of $34 million incurred in the first quarter of 2006 related to the January 2005 acquisition of SSRM.

BlackRock reported net income of $19 million for the third quarter of 2006, compared with $61 million for the third quarter of 2005. BlackRock’s reported net income included after-tax MLIM integration costs of $44 million in the third quarter of 2006. BlackRock earned $63 million in the third quarter of 2006, an increase of $2 million compared with the third quarter of 2005, excluding the impact of MLIM integration costs. The increase compared with the third quarter of 2005 was a result of higher investment and advisory fees due to growth in assets under management, partly offset by lower nonoperating income, due principally to unrealized losses on energy-related investments.

BlackRock

BlackRock reported net income of $19 million for the third quarter of 2006, compared with $61 million in the third quarter of 2005 and $63 million in the second quarter of 2006. BlackRock’s reported net income includes after-tax MLIM integration costs of $44 million in the third quarter of 2006 and $8 million in the second quarter of 2006. The BlackRock segment earned $63 million in the third quarter, an increase of $2 million compared with the third quarter of 2005 and a decrease of $8 million compared with the second quarter of 2006, excluding the impact of MLIM integration costs in those periods. The increase compared with the third quarter of 2005 was a result of higher investment and advisory fees due to growth in assets under management, partly offset by lower nonoperating income, due principally to unrealized losses on energy-related investments. The decrease compared with the second quarter of 2006 was largely a result of lower performance fees, partly offset by decreased expense. Second quarter 2006 benefited from energy-related performance fees.

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PNC Posts Record Earnings of $5.01 per Share – Page 5

Prior to the September 29, 2006 closing of the MLIM acquisition, PNC owned approximately 69 percent of BlackRock. Accordingly, PNC’s Consolidated Income Statement for the third quarter and first nine months of 2006 continued to reflect PNC’s ownership interest in BlackRock’s net income on a consolidated basis through the closing date. Approximately 31 percent of BlackRock’s earnings were recognized as minority interest expense in the Corporation’s Consolidated Income Statement and are reflected on a separate line in the Business Earnings Summary table in the Consolidated Financial Highlights.

Upon closing of the MLIM acquisition, PNC owned approximately 34 percent of BlackRock. In accordance with generally accepted accounting principles, PNC deconsolidated BlackRock as of that date and, going forward, will account for BlackRock’s earnings contribution using the equity method. BlackRock’s net earnings contribution will be noted on a separate line on the income statement titled, “BlackRock Investment.”

BlackRock

Earnings totaled $134 million for BlackRock for the first half of 2006 compared with $100 million for the prior year first half. Higher earnings in 2006 reflected higher investment

BlackRock

BlackRock earned $63 million in the second quarter, an increase of $10 million, or 19 percent, compared with the second quarter of 2005 and a decrease of $8 million, or 11 percent, compared with the first quarter of 2006. The increase compared with the prior year second quarter was largely the result of growth in investment advisory and administrative fees. The decrease compared with the linked quarter was related to higher integration costs in anticipation of the pending Merrill Lynch Investment Managers transaction.

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PNC Reports Record Net Income of $381 Million – Page 5

Assets under management at BlackRock were $464 billion at June 30, 2006, compared with $414 billion at June 30, 2005, and $463 billion at March 31, 2006.

PNC owns approximately 69 percent of BlackRock, and BlackRock is consolidated into PNC’s financial statements. Accordingly, approximately 31 percent of BlackRock’s earnings are recognized as minority interest expense in the Corporation’s Consolidated Income Statement and are reflected on a separate line in the Business Earnings Summary table in the Consolidated Financial Highlights.

BlackRock

BlackRock reported earnings of $71 million for the first quarter of 2006 compared with $47 million for the first quarter of 2005. Higher earnings in the 2006 quarter reflected higher investment advisory and administration fees due to an increase in assets under management and increased performance fees. These factors more than offset the increase in expense due to increased compensation and benefits, including higher incentive compensation associated with performance fees, and a one-time expense of $34 million related to the January 2005 acquisition of SSRM Holdings, Inc. (“SSRM”). BlackRock’s assets under management increased to $463 billion at March 31, 2006 compared with $391 billion at March 31, 2005.

PNC owns approximately 69% of BlackRock and we consolidate BlackRock into our financial statements. Accordingly, approximately 31% of BlackRock’s earnings are recognized as minority interest expense in the Consolidated Income Statement. BlackRock financial information included in the Financial Review section of this Report is presented on a stand-alone basis. The market value of our BlackRock shares was approximately $6.2 billion at March 31, 2006 while the book value at that date was approximately $734 million.