The PNC Financial Services Group, Inc. (PNC) 8-K Results of Operations and Financial Condition

The PNC Financial Services Group, Inc.

Citigroup

Financial Services Conference 2008

New York

January 29, 2008

Exhibit 99.1

This

presentation

contains

forward-looking

statements

regarding

our

outlook

or

expectations

relating

to

PNC’s

future

business,

operations,

financial

condition,

financial

performance

and

asset

quality.

Forward-looking

statements

are

necessarily

subject

to

numerous

assumptions,

risks

and

uncertainties,

which

change

over

time.

The

forward-looking

statements

in

this

presentation

are

qualified

by

the

factors

affecting

forward-looking

statements

identified

in

the

more

detailed

Cautionary

Statement

included

in

the

Appendix,

which

is

included

in

the

version

of

the

presentation

materials

posted

on

our

corporate

website

at

www.pnc.com/investorevents.

We

provide

greater

detail

regarding

these

factors

in

our

2006

Form

10-K,

including

in

the

Risk

Factors

and

Risk

Management

sections,

and

in

our

third

quarter

2007

Form

10-Q

and

other

SEC

reports

(accessible

on

the

SEC’s

website

at

www.sec.gov

and

on

or

through

our

corporate

website

at

www.pnc.com/secfilings).

Future

events

or

circumstances

may

change

our

outlook

or

expectations

and

may

also

affect

the

nature

of

the

assumptions,

risks

and

uncertainties

to

which

our

forward-looking

statements

are

subject.

The

forward-looking

statements

in

this

presentation

speak

only

as

of

the

date

of

this

presentation.

We

do

not

assume

any

duty

and

do

not

undertake

to

update

those

statements.

In

this

presentation,

we

will

sometimes

refer

to

adjusted

results

to

help

illustrate

the

impact

of

the

deconsolidation

of

BlackRock

near

the

end

of

third

quarter

2006

and

the

impact

of

certain

types

of

items.

Adjusted

results

reflect,

as

applicable,

the

following

types

of

adjustments:

(1)

2006

and

earlier

periods

reflect

the

impact

of

the

deconsolidation

of

BlackRock

by

adjusting

as

if

we

had

recorded

our

BlackRock

investment

on

the

equity

method

prior

to

its

deconsolidation;

(2)

adjusting

2006

periods,

as

applicable,

to

exclude

the

impact

of

the

third

quarter

2006

gain

on

the

BlackRock/MLIM

transaction

and

losses

on

the

repositioning

of

PNC’s

securities

and

mortgage

loan

portfolios;

(3)

adjusting

fourth

quarter

2006

and

the

2007

periods

to

exclude

the

net

mark-to-market

adjustments

on

PNC’s

remaining

BlackRock

LTIP

shares

obligation

and,

as

applicable,

the

gain

PNC

recognized

in

first

quarter

2007

in

connection

with

the

company’s

transfer

of

BlackRock

shares

to

satisfy

a

portion

of

its

BlackRock

LTIP

shares

obligation;

(4)

adjusting

all

2007

and

2006

periods

to

exclude,

as

applicable,

integration

costs

related

to

acquisitions

and

to

the

BlackRock/MLIM

transaction;

(5)

adjusting

2007

periods,

as

applicable,

for

the

fourth

quarter

2007

Visa

litigation

charge;

and

(6)

adjusting,

as

appropriate,

for

the

tax

impact

of

these

adjustments.

We

have

provided

these

adjusted

amounts

and

reconciliations

so

that

investors,

analysts,

regulators

and

others

will

be

better

able

to

evaluate

the

impact

of

these

items

on

our

results

for

the

periods

presented,

in

addition

to

providing

a

basis

of

comparability

for

the

impact

of

the

BlackRock

deconsolidation

given

the

magnitude

of

the

impact

of

deconsolidation

on

various

components

of

our

income

statement

and

balance

sheet.

We

believe

that

information

as

adjusted

for

the

impact

of

the

specified

items

may

be

useful

due

to

the

extent

to

which

these

items

are

not

indicative

of

our

ongoing

operations

as

the

result

of

our

management

activities

on

those

operations.

While

we

have

not

provided

other

adjustments

for

the

periods

discussed,

this

is

not

intended

to

imply

that

there

could

not

have

been

other

similar

types

of

adjustments,

but

any

such

adjustments

would

not

have

been

similar

in

magnitude

to

the

amount

of

the

adjustments

shown.

In

certain

discussions,

we

may

also

provide

revenue

information

on

a

taxable-equivalent

basis

by

increasing

the

interest

income

earned

on

tax-exempt

assets

to

make

it

fully

equivalent

to

interest

income

earned

on

taxable

investments.

We

believe

this

adjustment

may

be

useful

when

comparing

yields

and

margins

for

all

earning

assets.

This

presentation

may

also

include

a

discussion

of

other

non-GAAP

financial

measures,

which,

to

the

extent

not

so

qualified

therein

or

in

the

Appendix,

is

qualified

by

GAAP

reconciliation

information

available

on

our

corporate

website

at

www.pnc.com

under

“About

PNC–Investor

Relations.”

Cautionary Statement Regarding Forward-Looking

Information and Adjusted Information

Delivered solid growth

Created positive operating

leverage on an adjusted

basis

Strong asset quality

Successful Mercantile

integration; poised for

growth

Effective capital

deployment

Well-positioned for this

environment

2007 Highlights

Assets

$139 billion

Net income

$1.5 billion

Net income adjusted

1

$1.7 billion

Noninterest income

to total revenue 

57%

NPAs

to total assets

.34%

Allowance to loans

1.21%

Tier 1 risk-based ratio

2

6.8%

2007 Financial Highlights

As of or for the year ended December 31, 2007.

(1) Adjusted net income reconciled to GAAP net income in the Appendix.

(2) Estimated.

Key Accomplishments

PNC’s Differentiated Business Model

Delivering Relatively Strong Results Through Economic Cycles

Diversified business mix with a high fee income

contribution

Positive adjusted operating leverage

Moderate risk profile

-Strategic choices

-Operating discipline

Disciplined capital management

Well-positioned for this environment

Key take-aways

Segment Earnings

1

Business Leadership

Our Focused and Diversified Business

Segments

Retail Banking

-

Focused on winning in the payments space

-

A leading community bank in PNC major

markets

-

One of the nation’s largest bank wealth

management firms

Corporate & Institutional Banking

-

A premier middle-market franchise

-

Top 10 treasury management business

-

Harris Williams –

one of the nations’

largest

M&A advisory firms for the middle-market

-

The nation’s 4th

largest lead arranger of asset-

based loan syndications, 2nd

largest in middle-

market

BlackRock

-

A global asset management company with $1.4

trillion in assets under management

PFPC

-

A leading full service provider of processing,

technology and business solutions for the global

investment industry; $2.5 trillion in serviced

assets domestically and internationally.

For the year ended December 31, 2007,  millions

$432

$893

$253

$128

(1) Business earnings reconciled to GAAP net income of $1,467 million in the Appendix.  BlackRock segment earnings are adjusted to exclude

our pretax share of BlackRock/MLIM integration costs totaling $4

million.

Contribution

52%

25%

15%

8%

CMA

21 %

WFC

20

PNC

18

KEY

16

RF

16

FITB

15

USB

14

STI

14

NCC

13

BBT

12

WB

10

Average Noninterest-Bearing Deposits

to Average Interest-Earning Assets¹

2007

PNC       

57 %

USB

52

FITB

46

WFC

45

BBT

42

WB

41

KEY

41

RF

39

STI

39

NCC

36

CMA

30

Building a Differentiated Business Mix

High Fee Income Contribution

2007

(1) As of or for the year ended December 31, 2007. (2) Reconciled to GAAP in the Appendix.  Source: SNL DataSource, PNC as reported.

A Funding Advantage

Noninterest Income to Total Revenue¹

47%

without

PFPC and

BlackRock²

A Unique Revenue Mix

A More Diverse and Valuable Revenue

Stream

Deposit

Net Interest

Income

Loan

Net Interest

Income

12%

26%

16%

Asset

Management

10%

Consumer

Services,

Brokerage

and Deposit

Charges

12%

Fund

Servicing

15%

Corporate

Services

9%

Equity

Mgmt.,

Trading

and Other

For the year ended December 31, 2007

1,2

Adjusted loan net

interest income

increased 25%

year over year²

Adjusted loan net

interest income

increased 25%

year over year*

Adjusted deposit

net interest income

increased 34%

year over year²

Adjusted

noninterest

income

increased 10%

year over year²

(1) As

adjusted.

(2)

Adjusted

noninterest

income,

deposit

net

interest

income,

loan

net

interest

income

and

growth

percentages

are

reconciled

to

GAAP

in

the

Appendix.

Unadjusted

change:

noninterest

income

(40%),

deposit

net

interest

income

34%,

and

loan

net

interest

income

24%.

PNC’s Differentiated Business Model

Delivering Relatively Strong Results Through Economic Cycles

Diversified business mix with a high fee income

contribution

Positive adjusted operating leverage

Moderate risk profile

-Strategic choices

-Operating discipline

Disciplined capital management

Well-positioned for this environment

Key take-aways

$0

$1

$2

$3

$4

$5

$6

$7

Revenue

+9%

Creating Positive Operating Leverage

Growing Revenues Faster Than Expenses

Adjusted Revenue

(as reported

$5.5 billion, $6.3 billion, $8.6 billion, $6.7 billion  for 2004, 2005, 2006, 2007, respectively)

Adjusted Noninterest

Expense

(as reported $3.7 billion, $4.3 billion, $4.4 billion, $4.3 billion for 2004, 2005, 2006, 2007, respectively)

Adjusted Net Income

(as reported $1.2 billion, $1.3 billion, $2.6 billion, $1.5 billion for 2004, 2005, 2006, 2007, respectively)

$1.2

$1.3

$1.5

(1)

As reported: revenue 24%, expense 9%, operating leverage 15%, net income 47%. 

(2)

As reported: revenue (22%), expense (3%), operating leverage (19%), net income (43%). 

(3)

Adjusted amounts are reconciled to GAAP amounts in the Appendix.

2004

2005

2006

Expense

+7%

Net Income

+12%

Compound Annual Growth

(2004-2006, as adjusted)

1,3

Revenue

+18%

Expense

+15%

Net Income

+12%

2006-2007

As adjusted

2,3

Operating

Leverage

+2%

Operating

Leverage

+3%

$1.7

2007

PNC’s Differentiated Business Model

Delivering Relatively Strong Results Through Economic Cycles

Diversified business mix with a high fee income

contribution

Positive adjusted operating leverage

Moderate risk profile

-Strategic choices

-Operating discipline

Disciplined capital management

Well-positioned for this environment

Key take-aways

Nonperforming loans to total

loans

.64%

.85%

Nonperforming assets to total

assets

.34%

.65%

Net charge-offs to average

loans (three months ended)

.49%

.73%

Allowance for loan and lease

losses to loans

1.21%

1.23%

Allowance for loan and lease

losses to nonperforming loans

190%

144%

Disciplined Approach Leads to Strong

Credit Risk Profile

Source: SNL DataSource; Peer Group represents average of super-regional

banks identified in the Appendix other than PNC.

As of December 31, 2007

PNC

Peer

Group

Credit decisions driven by

risk-adjusted returns

Minimal exposure to subprime

mortgages, high-yield bridge and

leveraged finance loans

Relatively low commercial real

estate exposure

Highly granular portfolio

Credit quality migrating at a

manageable pace

Overview

Asset Quality

A High Quality Consumer Loan Portfolio

Auto

5%

Residential

Mortgage

34%

Composition of Consumer Loan and Residential Mortgage Portfolio

As of December 31, 2007

Home Equity Portfolio

Credit Statistics¹

First lien positions

39%

In-footprint exposure

93%

Weighted average:

Loan to value

73%

FICO scores

727

Net charge-offs²

0.20%

90 days past due

0.37%

Other

9%

Home

Equity

52%

Residential Mortgage Portfolio

Credit Statistics¹

Weighted average:

Loan to value

67%

FICO scores

747

Net charge-offs²

0.01%

90 days past due

0.77%

(1) Excludes the impact of Yardville, which PNC acquired effective October 26, 2007 and expects to convert during March 2008.  Includes

loans from acquired portfolios for which lien position and loan-to-value information was limited and represents most recent FICO scores we

have on file, where applicable.

(2) For the year ended December 31, 2007. 

Total Portfolio $27.9 billion

$8.9 billion

A Well-balanced Commercial Portfolio

Composition of Commercial Lending Portfolio 

As of December 31, 2007

Office

16%

Multi-family

9%

Land

5%

Single Family, Residential

Land, Condo

23%

Hotel

5%

Industrial

8%

Other

19%

Retail

15%

Commercial

Other

57%

Asset-

Based

12%

Commercial

Real Estate

22%

Equip.

Leasing

9%

Total Portfolio $41 billion

PNC’s Differentiated Business Model

Delivering Relatively Strong Results Through Economic Cycles

Diversified business mix with a high fee income

contribution

Positive adjusted operating leverage

Moderate risk profile

-Strategic choices

-Operating discipline

Disciplined capital management

Well-positioned for this environment

Key take-aways

$60,949

$56,250

$69,270

$54,620

$73,965

$69,363

$66,273

Improving Our Retail Demographics

3.7%

6.0%

2.0%

3.4%

8.4%

10.0%

3.9%

2003

Proforma

Median Household Income

Projected 5-Year Population Growth

Acquisitions

2003

Proforma

Acquisitions

Amounts based on data at time of acquisition announcement.  United Trust data reflects demographics of footprint counties weighted by

households. Data reflects demographics of footprint counties of that company in the case of Mercantile, Yardville and Sterling, or by MSA in

the case of Riggs, weighted by deposits.  PNC 2003 and PNC Proforma amounts reflect demographics, weighted by deposits, of PNC’s 68

county footprint and 105 county footprint, respectively, including the impact of PNC’s ongoing branch optimization process.  PNC and

Mercantile headquarter offices excluded for purposes of deposit weighting.  Source:  SNL DataSource.  *Pending.

$0

$4

$8

$12

$16

$20

$24

1Q06

4Q07

Corporate Services

Brokerage

Consumer, Service Charges and Other

Asset Management

Executing in the Greater Washington Area

40.5%

45.4%

0

25

50

75

100

125

Deepening Relationships and Growing Noninterest Income*

GWA noninterest

income

to total revenue

PNC -

GWA Retail Relationships

(1) Riggs transaction completed May 2005.

PNC GWA Region

*Excludes the impact of Mercantile.

June 30

2005¹

Dec. 31

2007

PNC -

GWA Fee Growth

+25%

+17%

+61%

+191%

GWA business checking relationships

GWA consumer checking relationships

1Q06

4Q07

High Growth Product Focus

Albridge Solutions

Coates Analytics

To…

Integrated

Provider

Transforming the PFPC Business Model

From

Processor

Unified client views

Performance reporting

Web-based analytics tools

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

Emerging Product

Revenue

Core Product

Revenue

22%

30%

70%

78%

Emerging product

revenue

3-yr CAGR 18%

Transforming the Business Model

2004

2007

Year ended

PNC’s Differentiated Business Model

Delivering Relatively Strong Results Through Economic Cycles

Diversified business mix with a high fee income

contribution

Positive adjusted operating leverage

Moderate risk profile

-Strategic choices

-Operating discipline

Disciplined capital management

Well-positioned for this environment

Key take-aways

PNC Duration

of Equity

(At Quarter End)

(3)

(2)

(1)

0

1

2

3

4

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Proactively Managing the Balance Sheet

Aligning the Balance Sheet with Expectations

Fed Fund

Effective Rate

(At Quarter End)

2004

2005

2006

2007

Source:  SNL DataSource, PNC as reported.

Enhancing Our Capital Flexibility in 2008

Tier 1 Approach Better Aligns Capital Management with Risk

Consistent with economic

capital methodologies

A better measure of risk

Access to broader capital

markets

PNC benchmark of 7.5% -

8.0%

Earnings growth

Capital markets

Return to shareholders

Investing in growth

Tier 1 Risk-based Ratio

Sources/Uses

Continuing to Build a Great Company

2008 Plan

Remain focused on our strategies

Execute, execute, execute

Disciplined investment in opportunities

Cautionary Statement Regarding

Forward-Looking Information

Appendix

We

make

statements

in

this

presentation,

and

we

may

from

time

to

time

make

other

statements,

regarding

our

outlook

or

expectations

for

earnings,

revenues,

expenses

and/or

other

matters

regarding

or

affecting

PNC

that

are

forward-looking

statements

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act.

Forward-looking

statements

are

typically

identified

by

words

such

as

“believe,”

“expect,”

“anticipate,”

“intend,”

“outlook,”

“estimate,”

“forecast,”

“will,”

“project”

and

other

similar

words

and

expressions.

Forward-looking

statements

are

subject

to

numerous

assumptions,

risks

and

uncertainties,

which

change

over

time.

Forward-looking

statements

speak

only

as

of

the

date

they

are

made.

We

do

not

assume

any

duty

and

do

not

undertake

to

update

our

forward-looking

statements.

Because

forward-looking

statements

are

subject

to

assumptions

and

uncertainties,

actual

results

or

future

events

could

differ,

possibly

materially,

from

those

that

we

anticipated

in

our

forward-looking

statements,

and

future

results

could

differ

materially

from

our

historical

performance.

Our

forward-looking

statements

are

subject

to

the

following

principal

risks

and

uncertainties.

We

provide

greater

detail

regarding

some

of

these

factors

in

our

Form

10-K

for

the

year

ended

December

31,

2006,

including

in

the

Risk

Factors

and

Risk

Management

sections

of

that

report,

and

in

our

third

quarter

2007

Form

10-Q

and

other

SEC

reports.

Our

forward-looking

statements

may

also

be

subject

to

other

risks

and

uncertainties,

including

those

that

we

may

discuss

elsewhere

in

this

presentation

or

in

our

filings

with

the

SEC,

accessible

on

the

SEC’s

website

at

www.sec.gov

and

on

or

through

our

corporate

website

at

www.pnc.com/secfilings.

•Our

businesses

and

financial

results

are

affected

by

business

and

economic

conditions,

both

generally

and

specifically

in

the

principal

markets

in

which

we

operate.

In

particular,

our

businesses

and

financial

results

may

be

impacted

by:

•Changes

in

interest

rates

and

valuations

in

the

debt,

equity

and

other

financial

markets.

•Disruptions

in

the

liquidity

and

other

functioning

of

financial

markets,

including

such

disruptions

in

the

markets

for

real

estate

and

other

assets

commonly

securing

financial

products.

•Actions

by

the

Federal

Reserve

and

other

government

agencies,

including

those

that

impact

money

supply

and

market

interest

rates.

•Changes

in

our

customers’,

suppliers’

and

other

counterparties’

performance

in

general

and

their

creditworthiness

in

particular.

•Changes

in

customer

preferences

and

behavior,

whether

as

a

result

of

changing

business

and

economic

conditions

or

other

factors.

•A

continuation

of

recent

turbulence

in

significant

portions

of

the

global

financial

markets

could

impact

our

performance,

both

directly

by

affecting

our

revenues

and

the

value

of

our

assets

and

liabilities

and

indirectly

by

affecting

the

economy

generally.

•Our

operating

results

are

affected

by

our

liability

to

provide

shares

of

BlackRock

common

stock

to

help

fund

certain

BlackRock

long-term

incentive

plan

(“LTIP”)

programs,

as

our

LTIP

liability

is

adjusted

quarterly

(“marked-to-market”)

based

on

changes

in

BlackRock’s

common

stock

price

and

the

number

of

remaining

committed

shares,

and

we

recognize

gain

or

loss

on

such

shares

at

such

times

as

shares

are

transferred

for

payouts

under

the

LTIP

programs.

•Competition

can

have

an

impact

on

customer

acquisition,

growth

and

retention,

as

well

as

on

our

credit

spreads

and

product

pricing,

which

can

affect

market

share,

deposits

and

revenues.

•Our

ability

to

implement

our

business

initiatives

and

strategies

could

affect

our

financial

performance

over

the

next

several

years.

•Legal

and

regulatory

developments

could

have

an

impact

on

our

ability

to

operate

our

businesses

or

our

financial

condition

or

results

of

operations

or

our

competitive

position

or

reputation.

Reputational

impacts,

in

turn,

could

affect

matters

such

as

business

generation

and

retention,

our

ability

to

attract

and

retain

management,

liquidity,

and

funding.

These

legal

and

regulatory

developments

could

include:

(a)

the

unfavorable

resolution

of

legal

proceedings

or

regulatory

and

other

governmental

inquiries;

(b)

increased

litigation

risk

from

recent

regulatory

and

other

governmental

developments;

(c)

the

results

of

the

regulatory

examination

process,

our

failure

to

satisfy

the

requirements

of

agreements

with

governmental

agencies,

and

regulators’

future

use

of

supervisory

and

enforcement

tools;

(d)

legislative

and

regulatory

reforms,

including

changes

to

laws

and

regulations

involving

tax,

pension,

education

lending,

and

the

protection

of

confidential

customer

information;

and

(e)

changes

in

accounting

policies

and

principles.

•Our

business

and

operating

results

are

affected

by

our

ability

to

identify

and

effectively

manage

risks

inherent

in

our

businesses,

including,

where

appropriate,

through

the

effective

use

of

third-party

insurance,

derivatives,

and

capital

management

techniques.

•Our

ability

to

anticipate

and

respond

to

technological

changes

can

have

an

impact

on

our

ability

to

respond

to

customer

needs

and

to

meet

competitive

demands.

•The

adequacy

of

our

intellectual

property

protection,

and

the

extent

of

any

costs

associated

with

obtaining

rights

in

intellectual

property

claimed

by

others,

can

impact

our

business

and

operating

results.

•Our

business

and

operating

results

can

also

be

affected

by

widespread

natural

disasters,

terrorist

activities

or

international

hostilities,

either

as

a

result

of

the

impact

on

the

economy

and

capital

and

other

financial

markets

generally

or

on

us

or

on

our

customers,

suppliers

or

other

counterparties specifically.

•Also,

risks

and

uncertainties

that

could

affect

the

results

anticipated

in

forward-looking

statements

or

from

historical

performance

relating

to

our

equity

interest

in

BlackRock,

Inc.

are

discussed

in

more

detail

in

BlackRock’s

filings

with

the

SEC,

including

in

the

Risk

Factors

sections

of

BlackRock’s

reports.

BlackRock’s

SEC

filings

are

accessible

on

the

SEC’s

website

and

on

or

through

BlackRock’s

website

at

www.blackrock.com.

We

grow

our

business

from

time

to

time

by

acquiring

other

financial

services

companies,

including

our

pending

Sterling

Financial

Corporation

(“Sterling”)

acquisition.

Acquisitions

in

general

present

us

with

risks

in

addition

to

those

presented

by

the

nature

of

the

business

acquired.

In

particular,

acquisitions

may

be

substantially

more

expensive

to

complete

(including

as

a

result

of

costs

incurred

in

connection

with

the

integration

of

the

acquired

company)

and

the

anticipated

benefits

(including

anticipated

cost

savings

and

strategic

gains)

may

be

significantly

harder

or

take

longer

to

achieve

than

expected.

In

some

cases,

acquisitions

involve

our

entry

into

new

businesses

or

new

geographic

or

other

markets,

and

these

situations

also

present

risks

resulting

from

our

inexperience

in

these

new

areas.

As

a

regulated

financial

institution,

our

pursuit

of

attractive

acquisition

opportunities

could

be

negatively

impacted

due

to

regulatory

delays

or

other

regulatory

issues.

Regulatory

and/or

legal

issues

related

to

the

pre-acquisition

operations

of

an

acquired

business

may

cause

reputational

harm

to

PNC

following

the

acquisition

and

integration

of

the

acquired

business

into

ours

and

may

result

in

additional

future

costs

arising

as

a

result

of

those

issues.

Any

annualized,

proforma,

estimated,

third

party

or

consensus

numbers

in

this

presentation

are

used

for

illustrative

or

comparative

purposes

only

and

may

not

reflect

actual

results.

Any

consensus

earnings

estimates

are

calculated

based

on

the

earnings

projections

made

by

analysts

who

cover

that

company.

The

analysts’

opinions,

estimates

or

forecasts

(and

therefore

the

consensus

earnings

estimates)

are

theirs

alone,

are

not

those

of

PNC

or

its

management,

and

may

not

reflect

PNC’s,

Sterling’s

or

other

company’s

actual

or

anticipated

results.

Cautionary Statement Regarding

Forward-Looking Information (continued)

Appendix

The

PNC

Financial

Services

Group,

Inc.

and

Sterling

Financial

Corporation

(“Sterling”)

will

be

filing

a

proxy

statement/prospectus

and

other

relevant

documents

concerning

the

merger

with

the

United

States

Securities

and

Exchange

Commission

(the

“SEC”).

WE

URGE

INVESTORS

TO

READ

THE

PROXY

STATEMENT/PROSPECTUS

AND

ANY

OTHER

DOCUMENTS

TO

BE

FILED

WITH

THE

SEC

IN

CONNECTION

WITH

THE

MERGER

OR

INCORPORATED

BY

REFERENCE

IN

THE

PROXY

STATEMENT/PROSPECTUS

BECAUSE

THEY

WILL

CONTAIN

IMPORTANT

INFORMATION.

Investors

will

be

able

to

obtain

these

documents

free

of

charge

at

the

SEC’s

web

site

at

http://www.sec.gov. 

In

addition,

documents

filed

with

the

SEC

by

The

PNC

Financial

Services

Group,

Inc.

will

be

available

free

of

charge

from

Shareholder

Relations

at

(800)

843-2206.

Documents

filed

with

the

SEC

by

Sterling

will

be

available

free

of

charge

from

Sterling

by

contacting

Shareholder

Relations

at

(877)

248-6420.

The

directors,

executive

officers,

and

certain

other

members

of

management

and

employees

of

Sterling

are

participants

in

the

solicitation

of

proxies

in

favor

of

the

merger

from

the

shareholders

of

Sterling.

Information

about

the

directors

and

executive

officers

of

Sterling

is

included

in

the

proxy

statement

for

its

May

8,

2007

annual

meeting

of

shareholders,

which

was

filed

with

the

SEC

on

April

2,

2007.

Additional

information

regarding

the

interests

of

such

participants

will

be

included

in

the

proxy

statement/prospectus

and

the

other

relevant

documents

filed

with

the

SEC

when

they

become

available.

Additional Information About The PNC/Sterling

Financial Corporation Transaction

Appendix

Non-GAAP to GAAP

Reconcilement

Earnings Summary

Appendix

THREE MONTHS ENDED

In millions, except per share data

Adjustments,

Net

Diluted

Adjustments,

Net

Diluted

Adjustments,

Net

Diluted

Pretax

Income

EPS

Pretax

Income

EPS

Pretax

Income

EPS

Net income, as reported

$178

$0.52

$407

$1.19

$376

$1.27

Adjustments:

   BlackRock LTIP (a)

$128

84

.24

$50

32

.09

$12

7

.02

   Visa indemnification (b)

82

53

.16

   Integration costs (c)

79

50

.15

43

30

.09

10

8

.03

Net income, as adjusted

$365

$1.07

$469

$1.37

$391

$1.32

YEAR ENDED

Adjustments,

Net

Diluted

Adjustments,

Net

Diluted

In millions, except per share data

Pretax

Income

EPS

Pretax

Income

EPS

Net income, as reported

$1,467

$4.35

$2,595

$8.73

Adjustments:

  BlackRock LTIP (a)

$127

83

.24

$12

7

.02

  Visa indemnification (b)

82

53

.16

  Integration costs (c)

151

99

.30

101

47

.16

  Gain on BlackRock/MLIM transaction (d)

(2,078)

(1,293)

(4.36)

  Securities portfolio rebalancing loss (d)

196

127

.43

  Mortgage loan portfolio repositioning loss (d)

48

31

.10

Net income, as adjusted

$1,702

$5.05

$1,514

$5.08

(d) Included in noninterest income on a pretax basis.

December 31, 2006

(b)

Our

payment

services

business

issues

and

acquires

credit

and

debit

card

transactions

through

Visa

U.S.A.

Inc.

card

association

or

its

affiliates

(“Visa”).

In

October

2007,

Visa

completed

a

restructuring

and

issued

shares

of

Visa

Inc.

common

stock

to

its

financial

institution

members

in

contemplation

of

its

initial

public

offering

(“IPO”)

currently

anticipated

in

the

first

quarter

of

2008

(the

“Visa

Reorganization”).

As

part

of

the

Visa

Reorganization,

we

received

our

proportionate

share

of

a

class

of

Visa

Inc.

common

stock

allocated

to

the

U.S.

members.

Visa

expects

that

a

portion

of

these

shares

will

be

redeemed

for

cash

out

of

the

proceeds

of

the

IPO.

The

U.S.

members

are

obligated

to

indemnify

Visa

for

judgments

and

settlements

related

to

specified

litigation.

Visa

will

set

aside

a

portion

of

the

proceeds

from

the

IPO

in

an

escrow

account

for the benefit of the U.S. member financial institutions to fund the expenses of the litigation as well as the members' proportionate share of any judgments or settlements that may arise out of the litigation.

December 31, 2007

September 30, 2007

December 31, 2006

December 31, 2007

(a)

Includes

the

impact

of

the

gain

recognized

in

connection

with

PNC's

transfer

of

BlackRock

shares

to

satisfy

a

portion

of

our

BlackRock

LTIP

shares

obligation

and

the

net

mark-to-market

adjustment

on

our

remaining BlackRock LTIP shares obligation, as applicable.

In

accordance

with

GAAP,

we

recorded

a

liability

and

operating

expense

totaling

$82

million

before

taxes

in

the

fourth

quarter

of

2007

representing

our

estimate

of

the

fair

value

of

our

indemnification

obligation

for

potential

losses

arising

from

this

litigation.

Our

estimate

is

based

on

publicly

available

information

and

other

information

made

available

to

all

of

the

affected

Visa

members

and

does

not

reflect

any

direct

knowledge

of

the

relative

strengths

and

weaknesses

of

the

litigation

still

pending

or

the

status

of

any

on-going

settlement

discussions.

We

believe

that

the

IPO

will

be

completed

and

cash

will

be

available

through

the

escrow

to

satisfy

litigation

settlements.

In

addition,

based

on

estimates

provided

by

Visa

regarding

its

planned

IPO,

we

believe

that

our

ownership

interest

in

Visa

has

a

value

significantly

in

excess

of

our

indemnification

liability.

Our

Visa

shares

will

not

generally

be

transferable

until

they

can

be

converted

into

shares

of

the

publicly

traded

class

of

stock,

which

cannot

happen

until

the

later

of

three

years

after

the

IPO

or

settlement

of all of the specified litigation.

(c)

In

addition

to

integration

costs

related

to

recent

or

pending

PNC

acquisitions

reflected

in

the

2007

periods,

the

first

three

quarters

of

2007

and

all

2006

periods

include

BlackRock/MLIM

integration

costs.

BlackRock/MLIM

integration

costs

recognized

by

PNC

in

the

first

three

quarters

of

2007

and

the

fourth

quarter

of

2006

were

included

in

noninterest

income

as

a

negative

component

of

the

"Asset

management"

line

item, which includes the impact of our equity earnings from our investment in BlackRock. For the first nine months of 2006, BlackRock/MLIM transaction integration costs were included in noninterest expense.

Non-GAAP to GAAP

Reconcilement

Business Segment Summary and Noninterest Income

Appendix

Dollars in millions

2007

% of Segments

Retail Banking

$893

52%

Corporate & Institutional Banking

432

25%

BlackRock (a)

253

15%

PFPC

128

8%

     Total business segment earnings

1,706

Other (a)

(239)

Total consolidated net income

$1,467

Year ended December 31

Earnings (Loss)

(a)

Pre-tax

BlackRock/MLIM

transaction

integration

costs

totaling

$4

million

for

the

year ended December 31, 2007 have been reclassified from BlackRock to "Other."

Year ended December 31, 2007

Dollars in millions

Retail

Banking

Corporate &

Institutional

Banking

Other

Banking and

Other

BlackRock

PFPC

Total

Net interest income (expense)

$2,059

$805

$83

$2,947

($32)

$2,915

Noninterest income

1,736

720

133

2,589

$338

863

3,790

Total Revenue

$3,795

$1,525

$216

$5,536

$338

$831

$6,705

Noninterest income as a % of

total revenue

46%

47%

62%

47%

100%

104%

57%

Non-GAAP to GAAP

Reconcilement

Income Statement Summary –

For the year ended

Appendix

Year ended

In millions

As Reported 

Adjustments

As Adjusted (a) 

As Reported 

Adjustments

As Adjusted (b)

Net interest income

$2,915

$2,915

$2,245

($10)

$2,235

Net interest income:

% Change As

Reported

% Change As

Adjusted

Loans

1,110

1,110

895

(10)

885

24%

25%

Deposits

1,805

1,805

1,350

1,350

34%

34%

Noninterest

Income

3,790

$131

3,921

6,327

(2,755)

3,572

(40%)

10%

Total revenue

6,705

131

6,836

8,572

(2,765)

5,807

(22%)

18%

Loan net interest income as a % of total revenue

16.6%

16.2%

10.4%

15.2%

Deposit net interest income as a % of total revenue

26.9%

26.4%

15.7%

23.2%

Noninterest

income as a % of total revenue

56.5%

57.4%

73.8%

61.5%

Provision for credit losses

315

(45)

270

124

124

Noninterest

income

3,790

131

3,921

6,327

(2,755)

3,572

Noninterest

expense

4,296

(184)

4,112

4,443

(856)

3,587

(3%)

15%

Income before minority interest

and income taxes

2,094

360

2,454

4,005

(1,909)

2,096

Minority interest in income

of BlackRock

47

(47)

Income taxes

627

125

752

1,363

(781)

582

Net income

$1,467

$235

$1,702

$2,595

($1,081)

$1,514

(43%)

12%

Noninterest

income:

Asset management

$784

$4

$788

$1,420

($882)

$538

(45%)

46%

Other

3,006

127

3,133

4,907

(1,873)

3,034

(39%)

3%

Total noninterest

income

$3,790

$131

$3,921

$6,327

($2,755)

$3,572

(40%)

10%

Operating Leverage -

Year Ended

As Reported

As Adjusted

Total revenue

(22%)

18%

Noninterest

expense

(3%)

15%

Operating leverage 

(19%)

3%

2006 to 2007 Change

December 31, 2007

December 31, 2006

Non-GAAP to GAAP

Reconcilement

Income Statement Summary –

For the three months ended

Appendix

For the three months ended December 31, 2007

PNC

PNC

In millions

As Reported

Adjustments (a)

As Adjusted

Reported

Adjusted

Net interest income

$793

$793

Loan net interest income

304

304

3%

3%

Deposit net interest income

489

489

5%

5%

Provision for credit losses

188

($45)

143

     Net interest income less provision for credit losses

605

(45)

650

Asset management

225

(1)

224

Other

609

128

737

     Total noninterest income

834

127

961

(16%)

(8%)

Compensation and benefits

553

(10)

543

Other

660

(107)

553

     Total noninterest expense

1,213

(117)

1,096

10%

4%

Income before income taxes

226

289

515

Income taxes

48

102

150

     Net income

$178

$187

$365

(56%)

(22%)

For the three months ended September 30, 2007

PNC

PNC

In millions

As Reported

Adjustments (b)

As Adjusted

Net interest income

$761

$761

Loan net interest income

294

294

Deposit net interest income

467

467

Provision for credit losses

65

65

     Net interest income less provision for credit losses

696

696

Asset management

204

$2

206

Other

786

50

836

     Total noninterest income

990

52

1,042

Compensation and benefits

553

(16)

537

Other

546

(25)

521

     Total noninterest expense

1,099

(41)

1,058

Income before income taxes

587

93

680

Income taxes

180

31

211

     Net income

$407

$62

$469

% Change vs. Sept 30, 2007

(a)

Amounts

adjusted

to

exclude

the

impact

of

the

following

items

on

a

pretax

basis:

$128

million

net

loss

related

to

our

BlackRock/LTIP

shares

obligation,

$82

million

Visa indemnification charge, and $79 million of acquisition integration costs.  The net tax impact of these items is reflected in the adjustment to income taxes.

(b)

Amounts

adjusted

to

exclude

the

impact

of

the

following

items

on

a

pretax

basis:

$50

million

net

loss

related

to

our

BlackRock/LTIP

shares

obligation

and

$43

million

of acquisition integration costs.  The net tax impact of these items is reflected in the adjustment to income taxes.

Non-GAAP to GAAP

Reconcilement

Income Statement Summary –

2004 to 2007

Appendix

For the year ended December 31, 2007

PNC

PNC

In millions

As Reported 

Adjustments (a)

As Adjusted

Net interest income

$2,915

$2,915

Provision for credit losses

315

$(45)

270

Noninterest income

3,790

131

3,921

Noninterest expense

4,296

(184)

4,112

     Income before income taxes

2,094

360

2,454

Income taxes

627

125

752

     Net income

$1,467

$235

$1,702

BlackRock

For the year ended December 31, 2006

PNC

Deconsolidation and

BlackRock

PNC

In millions

As Reported

Adjustments (a)

Other Adjustments

Equity Method

As Adjusted

Net interest income

$2,245

$(10)

$2,235

Provision for credit losses

124

124

Noninterest income

6,327

$(1,812)

(1,087)

$144

3,572

Noninterest expense

4,443

(91)

(765)

3,587

Income before minority interest and income taxes

4,005

(1,721)

(332)

144

2,096

Minority interest in income of BlackRock

47

18

(65)

Income taxes

1,363

(658)

(130)

7

582

   Net income

$2,595

$(1,081)

$(137)

$137

$1,514

(a)

Includes

the

impact

of

the

following

pretax

items:

$2,078

million

gain

on

BlackRock/MLIM

transaction,

$196

million

securities

portfolio

rebalancing

loss,

$101

million

of

BlackRock/MLIM

transaction

integration

costs,

$48

million

mortgage

loan

portfolio

repositioning

loss,

and

$12

million

net

loss

related

to

our

BlackRock

LTIP

shares

obligation.  The net tax impact of these items is reflected in the adjustment to income taxes.

(a)

Amounts

adjusted

to

exclude

the

impact

of

the

following

pretax

items:

(1)

the

gain

of

$83

million

recognized

in

connection

with

PNC's

transfer

of

BlackRock

shares

to

satisfy

a

portion

of

our

BlackRock

LTIP

shares

obligation,

(2)

the

net

mark-to-market

adjustment

totaling

$210

million

on

our

remaining

BlackRock

LTIP

shares

obligation,

(3)

acquisition

integration

costs

totaling

$151

million,

and

(4)

Visa

indemnification

charge

of

$82

million.

The

net

tax

impact

of

these

items

is

reflected

in

the

adjustment

to income taxes.

Non-GAAP to GAAP

Reconcilement

Income Statement Summary –

2004 to 2007 (continued)

Appendix

For the year ended December 31, 2005

BlackRock

PNC

Deconsolidation and

BlackRock

PNC

In millions

As Reported

Other Adjustments

Equity Method

As Adjusted

Net interest income

$2,154

$(12)

$2,142

Provision for credit losses

21

21

Noninterest income

4,173

(1,214)

$163

3,122

Noninterest expense

4,306

(853)

3,453

Income before minority interest and income taxes

2,000

(373)

163

1,790

Minority interest in income of BlackRock

71

(71)

Income taxes

604

(150)

11

465

   Net income

$1,325

$(152)

$152

$1,325

For the year ended December 31, 2004

BlackRock

PNC

Deconsolidation and

BlackRock

PNC

In millions

As Reported

Other Adjustments

Equity Method

As Adjusted

Net interest income

$1,969

$(14)

$1,955

Provision for credit losses

52

52

Noninterest income

3,572

(745)

$101

2,928

Noninterest expense

3,712

(564)

3,148

Income before minority interest and income taxes

1,777

(195)

101

1,683

Minority interest in income of BlackRock

42

(42)

Income taxes

538

(59)

7

486

   Net income

$1,197

$(94)

$94

$1,197

Non-GAAP to GAAP

Reconcilement

Income Statement Summary –

2004 to 2007 (continued)

Appendix

Adjusted

% Change

In millions

2004

2005

2006

2007

2004-2006 CAGR

2006-2007

Adjusted net interest income

$1,955

$2,142

$2,235

$2,915

7%

30%

Adjusted noninterest income

2,928

3,122

3,572

3,921

10%

10%

Adjusted total revenue

4,883

5,264

5,807

6,836

9%

18%

Adjusted noninterest expense

3,148

3,453

3,587

4,112

7%

15%

Adjusted net income

1,197

1,325

1,514

1,702

12%

12%

Adjusted operating leverage

2%

3%

Reported

% Change

In millions

2004

2005

2006

2007

2004-2006 CAGR

2006-2007

Net interest income, as reported

$1,969

$2,154

$2,245

$2,915

7%

30%

Noninterest income, as reported

3,572

4,173

6,327

3,790

33%

(40%)

Total revenue, as reported

5,541

6,327

8,572

6,705

24%

(22%)

Noninterest expense, as reported

3,712

4,306

4,443

4,296

9%

(3%)

Net income, as reported

1,197

1,325

2,595

1,467

47%

(43%)

Operating leverage, as reported

15%

(19%)

For the year ended December 31, as adjusted

For the year ended December 31, as reported

The PNC Financial Services Group, Inc.

PNC

BB&T Corporation

BBT

Comerica

CMA

Fifth Third Bancorp

FITB

KeyCorp

KEY

National City Corporation

NCC

Regions Financial

RF

SunTrust Banks, Inc.

STI

U.S. Bancorp

USB

Wachovia Corporation

WB

Wells Fargo & Company

WFC

Ticker

Peer Group of

Super-Regional Banks

Appendix