PNC Financial Services (PNC)

Changes in Goodwill and Other Intangibles

Changes in Goodwill and Other Intangibles

Our investment in BlackRock changes when BlackRock repurchases its shares in the open market or issues shares for an acquisition or pursuant to its employee compensation plans. We record goodwill when BlackRock repurchases its shares at an amount greater than book value per share and this results in an increase in our percentage ownership interest.

Servicing revenue from both commercial and residential mortgage servicing assets and liabilities generated contractually specified servicing fees, net interest income from servicing portfolio deposit balances, and ancillary fees totaling $147 million for the nine months ended September 30, 2008 and $142 million for the nine months ended September 30, 2007. Comparable amounts for the three months ended September 30, 2008 and September 30, 2007 totaled $52 million and $54 million, respectively. We also generate servicing revenue from fee-based activities provided to others.

Amortization expense on intangible assets for the first nine months of 2008 was $146 million. Amortization expense on existing intangible assets for the remainder of 2008 and for 2009 through 2013 is estimated to be as follows:

Changes in Goodwill and Other Intangibles

Our investment in BlackRock changes when BlackRock repurchases its shares in the open market or issues shares for an acquisition or pursuant to its employee compensation plans. We record goodwill when BlackRock repurchases its shares at an amount greater than book value per share and this results in an increase in our percentage ownership interest.

Servicing revenue from both commercial and residential mortgage servicing assets and liabilities generated contractually specified servicing fees, net interest income from servicing portfolio deposit balances, and ancillary fees totaling $95 million for the six months ended June 30, 2008 and $88 million for the six months ended June 30, 2007. Comparable amounts for the three months ended June 30, 2008 and June 30, 2007 totaled $52 million and $45 million, respectively. We also generate servicing revenue from fee-based activities provided to others.

Amortization expense on intangible assets for the first half of 2008 was $100 million. Amortization expense on existing intangible assets for the remainder of 2008 and for 2009 through 2013 is estimated to be as follows:

Changes in Goodwill and Other Intangibles

Our investment in BlackRock changes when BlackRock repurchases its shares in the open market or issues shares for an acquisition or pursuant to its employee compensation plans. We record goodwill when BlackRock repurchases its shares at an amount greater than book value per share and this results in an increase in our percentage ownership interest.

Servicing revenue from both commercial and residential mortgage servicing assets and liabilities generated contractually specified servicing fees, net interest income from servicing portfolio deposit balances, and ancillary fees totaling $43 million for both the three months ended March 31, 2008 and March 31, 2007. We also generate servicing revenue from fee-based activities provided to others.

Amortization expense on intangible assets for the first three months of 2008 was $54 million. Amortization expense on existing intangible assets for the remainder of 2008 and for 2009 through 2013 is estimated to be as follows:

Changes in Goodwill and Other Intangibles

Our investment in BlackRock changes when BlackRock repurchases its shares in the open market or issues shares for an acquisition or pursuant to its employee compensation plans. We record goodwill when BlackRock repurchases its shares at an amount greater than book value per share and this results in an increase in our percentage ownership interest.

Servicing revenue from both commercial and residential mortgage servicing assets and liabilities generated contractually specified servicing fees, net interest income from servicing portfolio deposit balances and ancillary fees totaling $192 million and $139 million for the years ended December 31, 2007 and 2006, respectively. We also generate servicing revenue from fee-based activities provided to others.

Amortization expense on intangible assets for 2007, 2006 and 2005 was $173 million, $99 million and $74 million, respectively. Amortization expense on existing intangible assets for 2008 through 2012 is estimated to be as follows:

We conduct a goodwill impairment test on our reporting units at least annually or more frequently if any adverse triggering events occur. Based on the results of our analysis, there were no impairment charges related to goodwill recognized in 2007, 2006 or 2005. The fair value of our reporting units is determined by using discounted cash flow and market comparability methodologies.

Changes in Goodwill and Other Intangibles

Our investment in BlackRock changes when BlackRock repurchases its shares in the open market or issues shares for an acquisition or pursuant to its employee compensation plans. We recognize goodwill when BlackRock repurchases its shares at an amount greater than book value per share and this results in an increase in our percentage ownership interest.

We recognized a net reduction to goodwill of approximately $25 million related to BlackRock stock activity, primarily due to the decrease in our ownership interest in BlackRock from approximately 69% to approximately 34% as a result of the BlackRock/MLIM transaction in 2006. The reduction in goodwill reduced the gain realized by PNC from the transaction.

Servicing revenue from both commercial and residential mortgage servicing assets and liabilities generated contractually specified servicing fees, net interest income from servicing portfolio deposit balances and ancillary fees totaling $139 million for the year ended December 31, 2006. We also generate servicing revenue from fee-based activities provided to others.

Amortization expense on intangible assets for 2006, 2005 and 2004 was $99 million, $74 million and $52 million, respectively. Amortization expense on existing intangible assets for 2007 through 2011 is estimated to be as follows:

We conduct a goodwill impairment test on our reporting units at least annually or more frequently if any adverse triggering