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PNC » Topics » MORTGAGE LOAN PORTFOLIO REPOSITIONING

This excerpt taken from the PNC 8-K filed Sep 28, 2006.

MORTGAGE LOAN PORTFOLIO REPOSITIONING

The PNC Financial Services Group, Inc. (“PNC” or the “Corporation”) plans to sell or securitize approximately $2.0 billion of loans from its residential mortgage portfolio. In accordance with generally accepted accounting principles, these loans will be transferred to loans held for sale as of September 30, 2006. PNC will recognize a pretax loss in the third quarter of 2006 of approximately $50 million, representing the mark to market valuation of these loans upon transfer to held for sale status. This loss represents the decline in value of the loans almost entirely from the impact of increases in interest rates. PNC expects to replace these loans with other residential mortgage loans, with the expectation of increasing the overall yield on PNC’s total loan portfolio and improving net interest income relative to current estimates by approximately $25 million annually.

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