PNC Bank 2005 Annual Report Download

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2005
Commission file number 001-09718
THE PNC FINANCIAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1435979
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
One PNC Plaza
249 Fifth Ave nue
Pittsburgh, Pennsylvania 15222-2707
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code - (412) 762-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, par value $5.00 New York Stock Exchange
$1.60 Cumulative Convertible Preferred Stock-Series C, par value $1.00 New York Stock Exchange
$1.80 Cumulative Convertible Preferred Stock-Series D, par value $1.00 New York Stock Exchange
Series G Junior Participating Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
$1.80 Cumulative Convertible Preferred Stock - Series A, par value $1.00
$1.80 Cumulative Convertible Preferred Stock - Series B, par value $1.00
8.25% Convertible Subordinated Debentures Due 2008
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No__
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes__ No X
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No __
Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer X Accelerated filer ___ Non-accelerated filer ___
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes__No X
The aggregate market value of the registrant’ s outstanding voting common stock held by nonaffiliates on June 30, 2005, determined using the
per share closing price on that date on the New York Stock Exchange of $54.46, was approximately $15.7 billion. There is no non-voting
common equity of the registrant outstanding.
Number of shares of registrant's common stock outstanding at February 28, 2006: 294,852,255
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement of The PNC Financial Services Group, Inc. to be filed pursuant to Regulation 14A for the
annual meeting of shareholders to be held on April 25, 2006 ("Proxy Statement") are incorporated by reference into Part III of this Form
10-K. The incorporation by reference herein of portions of the Proxy Statement shall not be deemed to specifically incorporate by
reference the information referred to in Items 306(c), 306(d) and 402(a)(8) and (9) of Regulation S-K.

Table of contents

  • Page 1
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2005 Commission file number 001-09718 THE PNC FINANCIAL SERVICES GROUP, INC. ( Exact name of...

  • Page 2
    ... and Related Transactions. Principal Accounting Fees and Services. Exhibits, Financial Statement Schedules. financial services companies in the United States, operating businesses engaged in retail banking, corporate and institutional banking, asset management, and global fund processing services...

  • Page 3
    ...credit and equipment leases. Treasury management services include cash and investment management, receivables management, disbursement services, funds transfer services, information reporting and global trade services. Capital markets products and services include foreign exchange, derivatives, loan...

  • Page 4
    ...For Loan And Lease Losses 46-47 and 117 Average Amount And Average Rate Paid On Deposits 115 Time Deposits Of $100,000 Or More 92 and 118 Selected Consolidated Financial Data 17-18 Short -Term Borrowings 118 SUPERVISION AND REGULATION OVERVIEW PNC is a bank holding company registered under the Bank...

  • Page 5
    ... and state "functional" regulators with normal regulatory responsibility for companies in their lines of business. As subsidiaries of a financial holding company under the GLB Act, our non-bank subsidiaries are allowed to conduct new financial activities or acquire non-bank financial companies with...

  • Page 6
    ... insured banks in the United States, such as PNC Bank, N.A., must also have issued debt (which, for this purpose, may include the uninsured portion of PNC Bank, N.A.' s long-term certificates of deposit) with certain minimum ratings. PNC Bank, N.A. has filed a financial subsidiary certification with...

  • Page 7
    ..., • Savings and loan associations, • Credit unions, • Treasury management service companies, • Insurance companies, and • Issuers of commercial paper and other securities, including mutual funds. Our various non-bank subsidiaries engaged in investment banking and private equity activities...

  • Page 8
    ...and Chief Executive Officer submitted the required annual CEO' s Certification regarding the NYSE' s corporate governance listing standards (a Section 12(a) CEO Certification) to the NYSE within 30 days after our 2005 annual shareholders meeting. ITEM 1 A - RISK FACTORS We are subject to a number of...

  • Page 9
    ... the value of equity investments that we hold, To the extent to which we access capital markets to raise funds to support our business, such 9 As a result of the high percentage of our assets and liabilities that are in the form of interest-bearing instruments, the monetary, tax and other policies...

  • Page 10
    ...In providing asset management services, our subsidiaries compete with investment management firms, large banks and other financial institutions, brokerage firms , mutual fund complexes, and insurance companies. The fund servicing business is also highly competitive, with a relatively small number of...

  • Page 11
    ... of our fund servicing business may be adversely affected by changes in investor preferences, or changes in existing or potential fund servicing clients or alternative providers. Fund servicing fees are primarily derived from the market value of the assets and the number of shareholder accounts that...

  • Page 12
    ...occupy the entire building. In addition, PNC Bank, N.A. owns a thirty-four story structure adjacent to One PNC Plaza, known as Two PNC Plaza, that houses additional office space. We own or lease numerous other premises for use in conducting business activities. The facilities owned or occupied under...

  • Page 13
    ...AIG Financial Products and its affiliate, American International Surplus Lines Insurance Company ("AISLIC"), on the other hand, related to the PAGIC transactions. AIG Financial Products was our counterparty in the PAGIC transactions, and AISLIC is one of the insurers under our Executive Blended Risk...

  • Page 14
    ... putative shareholders and any other derivative demands that may be filed in connection with the PAGIC transactions are being resolved as a result of the settlement of the consolidated class action. • Releases. We are releasing the insurers providing our Executive Blended Risk insurance coverage...

  • Page 15
    ... Banking business and continued to oversee PNC' s asset and liability management and equity management activities while transitioning the responsibilities of Chief Financial Officer to Richard J. Johnson. From 1997 to 2002, he served as Global Head of Structured Finance and Credit Portfolio...

  • Page 16
    ... is listed on the New York Stock Exchange and is traded under the symbol "PNC." At the close of business on February 28, 2006, there were 43,120 common shareholders of record. Holders of PNC common stock are entitled to receive dividends when declared by the Board of Directors out of funds legally...

  • Page 17
    ... To Consolidated Financial Statements in Item 8 of this Report for information on significant recent business acquisitions and the $45 million reversal of deferred tax liabilities recognized in 2005. For information regarding certain business risks, see Item 1A Risk Factors and the Risk Management...

  • Page 18
    ... 2005 2004 2003 2002 2001(a) B ALANCE SHEET HIGHLIGHTS Assets Loans, net of unearned income Allowance for loan and lease losses Securities Loans held for sale Deposits Borrowed funds (b) Shareholders' equity Common shareholders' equity ASSETS UNDER MANAGEMENT (in billions) FUND ASSETS SERVICED...

  • Page 19
    ... products and services nationally and others in our primary geographic markets in Pennsylvania, New Jersey, Delaware, Ohio, Kentucky and the greater Washington, D.C. area. We also provide certain asset management and global fund processing services internationally. KEY S TRATEGIC GOALS Our strategy...

  • Page 20
    ... diluted share, in the first quarter related to our transfer of ownership in BlackRock from PNC Bank, National Association ("PNC Bank, N.A.") to our intermediate bank holding company, PNC Bancorp, Inc., in January 2005; and • The $34 million after-tax benefit of a second quarter 2005 loan recovery...

  • Page 21
    ... subordinated bank notes and Federal Home Loan Bank ("FHLB") advances throughout 2005, as further detailed within Capital and Funding Sources in the Consolidated Balance Sheet Review section of this Financial Review, along with the comparative impact of $500 million of subordinated bank notes issued...

  • Page 22
    ... lending, and managed account services operations, reduced intercompany debt financing costs, a gain related to the resolution of a client contract dispute in the first quarter of 2005, and tax benefits related to foreign dividends repatriation and changes in state income tax apportionment methods...

  • Page 23
    ...for 2005 compared with 2004. The average rate paid on money market accounts, the largest single component of interest-bearing deposits, increased 130 basis points, reflecting the increases in short-term interest rates that began in mid-2004. • An increase in the average rate paid on borrowed funds...

  • Page 24
    ... capital markets-related products and services, commercial loan servicing and equipment leasing products that are marketed by several businesses across PNC. Treasury management revenue, which includes fees as well as net interest revenue from customer deposit balances, totaled $410 million for 2005...

  • Page 25
    ... tax liabilities in connection with the transfer of our ownership in BlackRock to our intermediate bank holding company. This transaction reduced our first quarter 2005 tax provision by $45 million, or $.16 per diluted share. See Note 2 Acquisitions in the Notes To Consolidated Financial Statements...

  • Page 26
    ... all commercial loans in the Retail Banking and Corporate & Institutional Banking business segments other than the loans of Market Street. We deconsolidated Market Street from our Consolidated Balance Sheet effective October 17, 2005. Cross-Border Leases and Related Tax and Accounting Matters...

  • Page 27
    ... Accounting Standards Board ("FASB") issued a proposed staff position to consider whether any change in the timing of tax benefits associated with these types of transactions should result in a recalculation under Statement of Financial Accounting Standards No. ("SFAS") 13, "Accounting for Leases...

  • Page 28
    ... 31, 2005 compared with the prior year-end, due in part to increases at PFPC and BlackRock. S ECURITIES AVAILABLE FOR S ALE Debt securities U.S. Treasury and government agencies Mortgage-backed Commercial mortgage-backed Asset-backed State and municipal Other debt Corporate stocks and other Total...

  • Page 29
    ... of deposit Savings Other time Time deposits in foreign offices Total deposits Borrowed funds Federal funds purchased Repurchase agreements Bank notes and senior debt Subordinated debt Commercial paper (a) Other borrowed funds Total borrowed funds Total Capital We manage our capital position by...

  • Page 30
    ... derivatives Equity investments in nonfinancial companies Other, net Tier 1 risk-based capital Subordinated debt Eligible allowance for credit losses Total risk-based capital Assets Risk-weighted assets, including offbalance-sheet instruments and market risk equivalent assets Adjusted average total...

  • Page 31
    ... services, a portion of the program-level credit enhancement and the majority of liquidity facilities to Market Street in exchange for fees negotiated based on market rates. Credit enhancement is provided in part by PNC Bank, N.A. in the form of a cash collateral account that is funded by a loan...

  • Page 32
    ... nor equity investors in the LIHTC investments have any recourse to our general credit. The consolidated aggregate assets and debt of these LIHTC investments are provided in the Consolidated VIEs - PNC Is Primary Beneficiary table and reflected in the Corporate & Institutional Banking business...

  • Page 33
    ... management, disbursement services, funds transfer services, information reporting, and global trade services; capital markets products and services, which include foreign exchange, derivatives, loan syndications, securities underwriting, securities sales and trading, and mergers and acquisitions...

  • Page 34
    ... taxes Earnings AVERAGE BALANCE SHEET Loans Consumer Home equity Indirect Other consumer Total consumer Commercial Floor plan Residential mortgage Other Total loans Goodwill Loans held for sale Other assets Total assets Deposits Noninterest-bearing demand Interest-bearing demand Money market Total...

  • Page 35
    ...-footprint ATM network. • The provision for credit losses declined $9 million in 2005 compared with 2004 primarily due to a one-time impact in the first quarter of 2004 associated with the decision to change the charge-off policy related to smaller nonperforming commercial loans. Overall credit...

  • Page 36
    ... Checking accounts • Savings, money market and certificates of deposit • Personal and business loans • Cash management, collection and payment services • Brokerage and insurance services • Personal and charitable trusts • Executorships • Employee benefit plans • Investment management...

  • Page 37
    .../transfers End of period $98 74 (36) $136 OTHER INFORMATION Consolidated revenue from (c): Treasury management Capital markets Midland Loan Services Equipment leasing Total loans (d) Nonperforming assets (d) (e) Net charge-offs (recoveries) Full-time employees (d) Net carrying amount of commercial...

  • Page 38
    ... • Funds transfer services • Information reporting • Global trade services Capital markets products and services include: • Foreign exchange • Derivatives • Loan syndications • Securities underwriting • Securities sales and trading • Mergers and acquisitions advisory and related...

  • Page 39
    ... PERFORMANCE DATA Return on average equity Operating margin Diluted earnings per share ASSETS UNDER MANAGEMENT (in billions) (a) Separate accounts Fixed income Cash management Cash management-securities lending Equity Alternative investment products Total separate accounts Mutual funds (b) Fixed...

  • Page 40
    ..., and managed account services operations, reduced intercompany debt financing costs, a gain related to the resolution of a client contract dispute in the first quarter of 2005, and tax benefits related to both foreign dividends repatriation and changes in state income tax apportionment methods...

  • Page 41
    ... To Consolidated Financial Statements, and Allocation Of Allowance For Loan And Lease Losses in the Statistical Information section in Item 8 of this Report. Private Equity Asset Valuation At December 31, 2005, private equity investments carried at estimated fair value totaled $449 million compared...

  • Page 42
    ... private equity activities, and Securities and derivatives trading activities including foreign exchange. We also earn fees and commissions from issuing loan commitments, standby letters of credit and financial guarantees, selling various insurance products, providing treasury management services...

  • Page 43
    ... of Certified Public Accountants issued Statement of Position 03-3, "Accounting for Loans and Debt Securities Acquired in a Transfer." 2002 B LACKROCK LONG -TERM RETENTION AND INCENTIVE P LAN See Note 18 Stock-Based Compensation Plans in the Notes To Consolidated Financial Statements in Item...

  • Page 44
    ... risks and then effectively managing them so to optimize shareholder value. Change in Assumption .5% decrease in discount rate .5% decrease in expected long-term return on assets .5% increase in compensation rate $2 8 1 We currently estimate a pretax pension benefit of $1 million in 2006 compared...

  • Page 45
    ... the estimated market value of financial instruments (Market Risk), failure of people, processes or systems (Operational Risk), and income losses associated with declining volumes, margins and/or fees, and the fixed cost structure of the business (Business Risk). We estimate credit and market risks...

  • Page 46
    ...on the loan and is derived from the loan' s internal LGD credit risk rating. 46 Change In Nonperforming Assets In millions January 1 Purchases Transferred from accrual Returned to performing Principal reductions and payoffs Asset sales Charge-offs and valuation adjustments December 31 2005 $175 340...

  • Page 47
    ... an improvement in the overall credit quality of the commercial loan portfolio. The increase in equipment lease financing net charge-offs in 2005 compared with the prior year reflected an additional charge-off in the fourth quarter of 2005 related to a single leasing customer. Aside from the impact...

  • Page 48
    ..., 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. As of December 31, 2005, PNC Bank, N.A. had issued...

  • Page 49
    ... issued in September 2005 and mature in September 2017. These notes pay interest semiannually at a fixed annual rate of 4.875%. In addition to dividends from PNC Bank, N.A., other sources of parent company liquidity include cash and shortterm investments, as well as dividends and loan repayments...

  • Page 50
    ... banking activities of taking deposits and extending loans, • Private equity and other investments and activities whose economic values are directly impacted by market factors, and • Trading in fixed income products, equities, derivatives, and foreign exchange, as a result of customer activities...

  • Page 51
    ... trading in fixed income securities, equities, derivatives, and foreign exchange contracts. For each trading group (e.g., fixed income, derivatives, foreign exchange), we have implemented a set of risk limits that govern that particular group. Our overall corporate trading risk policy governs...

  • Page 52
    ... RISK Equity investment risk is the risk of potential losses associated with investing in both private and public equity markets. In addition to extending credit, taking deposits, and underwriting and trading financial instruments, we make and manage direct investments in a variety of transactions...

  • Page 53
    ... of this type included low income housing tax credits and capitalized servicing rights for commercial mortgage loans. Other investments include BlackRock' s mutual funds, hedge funds, and CDOs for which the economic values could be driven by either the fixed-income market or the equity markets, or...

  • Page 54
    ... of interest rate swaps, interest rate caps and floors, futures, swaptions, and foreign exchange and equity contracts. We manage our market risk exposure from customer positions through transactions with third-party dealers. The credit risk associated with derivatives executed with customers is...

  • Page 55
    ... amount and fair value of financial derivatives used for risk management and designated as accounting hedges as well as free-standing derivatives at December 31, 2005 and 2004. Weighted-average interest rates presented are based on contractual terms, if fixed, or the implied forward yield curve at...

  • Page 56
    ... 1.98 Free-Standing Derivatives Customer-related Interest rate Swaps Caps/floors Sold Purchased Futures Foreign exchange Equity Swaptions Other Total customer-related Other risk management and proprietary Interest rate Swaps Basis swaps Pay fixed swaps Futures Credit derivatives Risk participation...

  • Page 57
    ... million, or 12%, in asset management and fund servicing fees combined, • Equity management (private equity activities) net gains of $67 million in 2004 compared with net losses of $25 million in the prior year, Pretax gains totaling $47 million from two sale transactions that occurred during the...

  • Page 58
    ... year of the three entities formed in 2001 in the PAGIC transactions. Noninterest revenue from trading activities totaled $113 million for 2004 and $127 million for 2003. We provide additional information on our trading activities under Market Risk Management - Trading Risk in the Risk Management...

  • Page 59
    ... • Our United National acquisition, • An 8% increase in checking relationships, • An increase in time deposits in foreign offices that reflected our increased use of Eurodollar deposits as a short-term funding mechanism, • The issuance of $500 million of 18 month, floating rate bank notes in...

  • Page 60
    ...-cost funding sources available. Glossary of Terms Accounting/administration net fund assets - Net domestic and foreign fund investment assets for which we provide accounting and administration services. We do not include these assets on our Consolidated Balance Sheet. Adjusted average total assets...

  • Page 61
    ... management strategy to reduce interest rate risk. Interest rate swap contracts are exchanges of interest rate payments, such as fixed-rate payments for floatingrate payments, based on notional principal amounts. Leverage ratio - Tier 1 risk-based capital divided by adjusted average total assets...

  • Page 62
    ... ratio - Tier 1 risk-based capital divided by period-end risk-weighted assets. Total fund assets serviced - Total domestic and offshore fund investment assets for which we provide related processing services. We do not include these assets on our Consolidated Balance Sheet. Total return swap - A non...

  • Page 63
    ...a number of risks and uncertainties related both to the acquisition transactions themselves and to the integration of the acquired businesses into PNC after closing. These uncertainties are present in transactions such as the pending acquisition by BlackRock of Merrill Lynch' s investment management...

  • Page 64
    ... FIRM To the Board of Directors and Shareholders of The PNC Financial Services Group, Inc. Pittsburgh, Pennsylvania We have audited the accompanying consolidated balance sheet of The PNC Financial Services Group, Inc. and subsidiaries (the "Company") as of December 31, 2005 and 2004, and the related...

  • Page 65
    CONSOLIDATED INCOME STATEMENT THE PNC FINANCIAL SERVICES GROUP, INC. Year ended December 31 In millions, except per share data 2005 2004 2003 Interest Income Loans Securities available for sale and held to maturity Other Total interest income $2,669 822 243 3,734 981 599 1,580 2,154 21 2,133 1,443 ...

  • Page 66
    CONSOLIDATED BALANCE SHEET THE PNC FINANCIAL SERVICES GROUP, INC. December 31 In millions, except par value 2005 2004 Assets Cash and due from banks Federal funds sold and resale agreements Other short-term investments, including trading securities Loans held for sale Securities available for sale ...

  • Page 67
    CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY THE PNC FINANCIAL SERVICES GROUP, INC. Shares Outstanding Common Stock Common Stock Capital Surplus Retained Earnings Deferred Compensation Expense Accumulated Other Comprehensive Income (Loss) Treasury Stock In millions Total Balance at January 1, ...

  • Page 68
    ...by investing activities Financing Activities Net change in Noninterest-bearing deposits Interest-bearing deposits Federal funds purchased Repurchase agreements Commercial paper Other short-term borrowed funds Sales/issuances Bank notes and senior debt Subordinated debt Other long-term borrowed funds...

  • Page 69
    ...banking, • Corporate & institutional banking, • Asset management, and • Global fund processing services. We provide many of our products and services nationally and others in our primary geographic markets located in Pennsylvania, New Jersey, Delaware, Ohio, Kentucky and the greater Washington...

  • Page 70
    ... insurance products, • Providing treasury management services, • Providing mergers and acquisitions advisory and related services, and • Participating in certain capital markets transactions. We recognize revenue from loan servicing, securities and derivatives and foreign exchange trading, and...

  • Page 71
    ... a positive intent to sell them. We transfer loans and commitments to the loans held for sale category at the lower of cost or fair market value. At the time of transfer, related write-downs on the loans and commitments are recorded as charge-offs or as a separate liability. We establish a new cost...

  • Page 72
    ...related loan balance or market value of the collateral less estimated disposition costs. We estimate market values primarily based on appraisals when available or quoted market prices on liquid assets. Subsequently, foreclosed assets are valued at the lower of the amount recorded at acquisition date...

  • Page 73
    ... and deposit balance earnings, • Discount rates, • Estimated prepayment speeds, and • Estimated servicing costs. We record the asset as an other intangible asset and amortize it over its estimated life in proportion to estimated net servicing income. On a quarterly basis, we test the asset for...

  • Page 74
    ... financial derivatives as part of our overall asset and liability risk management process to manage interest rate, market and credit risk inherent in our business activities. We use substantially all such instruments to manage risk related to changes in interest rates. Interest rate and total return...

  • Page 75
    ...the enacted tax rates and laws that we expect will apply at the time when we believe the differences will reverse. EARNINGS PER COMMON SHARE We calculate basic earnings per common share by dividing net income adjusted for preferred stock dividends declared by the weighted-average number of shares of...

  • Page 76
    ...25. SFAS 123R requires compensation cost related to share-based payments to employees to be recognized in the financial statements based on their fair value. In April 2005, the SEC issued a rule which delayed the required effective date to the beginning of an entity' s fiscal year which begins after...

  • Page 77
    ... FSP 106-2 in the third quarter of 2004. See Note 17 Employee Benefit Plans for additional information. In December 2003, the American Institute of Certified Public Accountants issued Statement of Position 03-3, "Accounting for Loans and Debt Securities Acquired in a Transfer" ("SOP 03-3"). SOP 03...

  • Page 78
    ... Corporation ("Riggs"), a Washington, D.C. based banking company, effective May 13, 2005. Under the terms of the agreement, Riggs merged into The PNC Financial Services Group, Inc. and PNC Bank, National Association ("PNC Bank, N.A.") acquired substantially all of the assets of Riggs Bank, National...

  • Page 79
    ... services, a portion of the program-level credit enhancement and the majority of liquidity facilities to Market Street in exchange for fees negotiated based on market rates. Credit enhancement is provided in part by PNC Bank, N.A. in the form of a cash collateral account that is funded by a loan...

  • Page 80
    ... : Investment Company Accounting - Deferred Application In millions Aggregate Assets Aggregate Equity PNC Risk of Loss Laws and regulations, Corporate policies, Contractual restrictions, and Other factors. Also, there are statutory and regulatory limitations on the ability of national banks to...

  • Page 81
    ... laws related to disclosures regarding the PAGIC transactions and related matters. In August 2002, the United States Department of Labor began a formal investigation of the Administrative Committee of our Incentive Savings Plan ("Plan") in connection with the Administrative Committee' s conduct...

  • Page 82
    ...AIG Financial Products and its affiliate, American International Surplus Lines Insurance Company ("AISLIC"), on the other hand, related to the PAGIC transactions. AIG Financial Products was our counterparty in the PAGIC transactions, and AISLIC is one of the insurers under our Executive Blended Risk...

  • Page 83
    ... Fund. In addition, PNC and AIG are releasing each other with respect to all claims between us arising out of the PAGIC transactions. In connection with industry-wide investigations of practices in the mutual fund industry including market timing, late day trading, employee trading in mutual funds...

  • Page 84
    ... Losses Fair Value December 31, 2005 S ECURITIES AVAILABLE FOR S ALE (a) Debt securities U.S. Treasury and government agencies Mortgage-backed Commercial mortgage-backed Asset-backed State and municipal Other debt Total debt securities Corporate stocks and other Total securities available for sale...

  • Page 85
    ... unrealized losses reported for commercial mortgage-backed securities relate primarily to fixed rate securities. The $10 million unrealized losses associated with asset-backed securities relate primarily to securities collateralized by home equity, automobile and credit card loans. The majority...

  • Page 86
    ... Year through 5 Years After 5 Years through 10 Years After 10 Years Total S ECURITIES AVAILABLE FOR S ALE U.S. Treasury and government agencies Mortgage-backed Commercial mortgage-backed Asset-backed State and municipal Other debt Total debt securities available for sale Fair value Weighted-average...

  • Page 87
    ...below-market interest rates and interest-only loans, among others. We originate interest-only loans to commercial borrowers. These products are standard in the financial services industry and the features of these products are considered during the underwriting process to mitigate the increased risk...

  • Page 88
    ...subsidiary banks in the ordinary course of business. All such loans were on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers and did not involve more than a normal risk of collectibility or present...

  • Page 89
    ... past due 90 days or more As a percentage of total loans held for sale (a) (b) Includes $1 million and $2 million of troubled debt restructured loans held for sale at December 31, 2005 and 2004, respectively. Excludes equity management assets that are carried at estimated fair value of $25 million...

  • Page 90
    ... related to its 2003 ADVISORport acquisition. The additional consideration is expected to be paid in 2006. Our ownership of BlackRock continues to change primarily when BlackRock repurchases its shares in the open market and issues shares for an acquisition or pursuant to its employee compensation...

  • Page 91
    ... by using discounted cash flow and market comparability methodologies. requirements of SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities." NOTE 11 S ECURITIZATIONS AND R ETAINED INTERESTS During 2005, 2004 and 2003, we sold commercial mortgage loans totaling $284 million...

  • Page 92
    ... or federal tax rules, the capital securities are redeemable in whole. With the exception of Riggs Capital Trust, the financial statements of the Trusts are not included in PNC' s consolidated financial statements in accordance with GAAP. • Trust A, formed in December 1996, issued $350 million...

  • Page 93
    ... and total return swaps, interest rate caps, floors and futures derivative contracts to hedge designated commercial mortgage loans held for sale, commercial loans, bank notes, senior debt and subordinated debt for changes in fair value primarily due to changes in interest rates. Adjustments related...

  • Page 94
    ... of interest rate swaps, interest rate caps and floors, futures, swaptions, and foreign exchange and equity contracts. We manage our market risk exposure from customer positions through transactions with third-party dealers. The credit risk associated with derivatives executed with customers is...

  • Page 95
    ... 2004 Estimated net fair value Credit risk Fair value hedges Cash flow hedges Total FREE-STANDING DERIVATIVES Interest rate contracts Equity contracts Foreign exchange contracts Credit contracts Options Risk participation agreements Commitments related to mortgage-related assets Other Total $5,900...

  • Page 96
    ... National acquisition Riggs acquisition Actual return on plan assets Employer contribution Participant contributions Benefits paid Fair value of plan assets at end of year Funded status Unrecognized net actuarial loss Unrecognized prior service cost (credit) Net amount recognized on the balance...

  • Page 97
    ... of the Code. Plan assets consist primarily of listed domestic and international equity securities and US government, agency, and corporate debt securities and, in 2005, real estate investments. Plan assets do not include common or preferred stock or any debt of PNC. The Pension Plan Administrative...

  • Page 98
    ... economic means of improving risk/reward profile of the portfolio. BlackRock, PFPC and our Retail Banking business segment receive compensation for providing investment management, trustee and custodial services for the ma jority of the Trust portfolio. Compensation for such services is paid by PNC...

  • Page 99
    ...31, 2005 - in millions Year ended December 31 Discount rate Rate of compensation increase Assumed health care cost trend rate Initial trend Ultimate trend Year ultimate reached Expected long-term return on plan assets Effect on total service and interest cost Effect on year-end benefit obligation...

  • Page 100
    ... BlackRock mutual funds, at the A summary of stock option activity follows: direction of the employee. Effective November 22, 2005, we Per Option amended the plan to provide all participants the ability to Weighteddiversify the matching portion of their plan account invested in Average shares of PNC...

  • Page 101
    ...5,248 3,563 13,582 $41.18 46.92 56.05 72.55 $56.58 Options granted in 2005, 2004 and 2003 include options for 30,000 shares that were granted to non-employee directors in each year. The weighted-average grant-date fair value of options granted in 2005, 2004 and 2003 was $8.72, $9.64, and $8.11 per...

  • Page 102
    ... in month-end closing stock prices over a five-year period, and • The expected life assumption represents the period of time that options granted are expected to be outstanding and is based on a weighted average of historical option activity. 2002 BLACKROCK LONG-TERM R ETENTION AND INCENTIVE PLAN...

  • Page 103
    ... data 2005 $1,325 1 1,324 $1,324 286,276 $4.63 $4.63 2004 $1,197 1 1,196 $1,196 281,248 $4.25 $4.25 2003 $1,029 1 1,028 (28) $1,000 279,677 $3.68 (.10) $3.58 CALCULATION OF BASIC EARNINGS PER COMMON SHARE Income before cumulative effect of accounting change Less: Preferred dividends declared...

  • Page 104
    ... market comparables for this business. The capital for BlackRock and PFPC has been increased to reflect their legal entity shareholders' equity. BlackRock' s capital is consistent with its separate public company financial statement disclosures. Significant components of deferred tax assets...

  • Page 105
    ...loans, letters of credit and equipment leases. Treasury management services include cash and investment management, receivables management, disbursement services, funds transfer services, information reporting, and global trade services. Capital markets products and services include foreign exchange...

  • Page 106
    Results Of Businesses Year ended December 31 In millions Retail Banking Corporate & Institutional Banking BlackRock PFPC Other Intercompany Eliminations Consolidated 2005 INCOME STATEMENT Net interest income (expense) Noninterest income Total revenue Provision for (recoveries of) credit losses ...

  • Page 107
    ...) Balance at December 31, 2005 $(240) (a) Pretax amounts represent net unrealized gains (losses) as of the prior year-end date that were realized in the subsequent year when the related securities were sold. These amounts differ from net securities gains included in the Consolidated Income Statement...

  • Page 108
    ... and short-term assets Securities Loans held for sale Net loans (excludes leases) Other assets Commercial mortgage servicing rights Financial derivatives Fair value hedges Cash flow hedges Free-standing derivatives Liabilities Demand, savings and money market deposits Time deposits Borrowed funds...

  • Page 109
    ...subordinated debt securities with an equity component. Funding of this investment is expected to occur over a five-year period. The limited partnership will be consolidated for financial reporting purposes as PNC will have a 57% ownership interest. S TANDBY LETTERS OF CREDIT We issue standby letters...

  • Page 110
    ... relating to providing various servicing and processing functions to third parties, • Agreements relating to the creation of trusts or other legal entities to facilitate leasing transactions, commercial mortgage-backed securities transactions (loan securitizations) and certain other off-balance...

  • Page 111
    ... a specific time period. Due to the nature of the contract provisions, we cannot quantify our total exposure that may result from these agreements. Balance Sheet 2005 ASSETS Cash and due from banks $3 Short-term investments with subsidiary bank Securities available for sale 293 Investments in: Bank...

  • Page 112
    ... and Merrill Lynch had entered into a definitive agreement pursuant to which Merrill Lynch will contribute its investment management business to BlackRock in exchange for newly issued BlackRock common and preferred stock. Upon the closing of this transaction, which we expect to occur on or around...

  • Page 113
    ...Financial Statements regarding the $45 million reversal of deferred tax liabilities recognized in the first quarter of 2005. The sum of quarterly amounts for the year 2005 does not equal the respective year' s amount because the quarterly calculations are based on a changing number of average shares...

  • Page 114
    ... Money market Demand Savings Retail certificates of deposit Other time Time deposits in foreign offices Total interest-bearing deposits Borrowed funds Federal funds purchased Repurchase agreements Bank notes and senior debt Subordinated debt Commercial paper Other borrowed funds Total borrowed funds...

  • Page 115
    ... loan and lease losses (632) Cash and due from banks 3,164 Other assets 13,015 Total assets $88,548 Liabilities, Minority and Noncontrolling Interests, Capital Securities and Shareholders' Equity Interest-bearing liabilities Interest-bearing deposits Money market $17,930 403 Demand 8,224 56 Savings...

  • Page 116
    ... of troubled debt restructured loans held for sale at December 31, 2005, 2004, 2003, 2002 and 2001, respectively. Excludes equity management assets that are carried at estimated fair value of $25 million (including $7 million of troubled debt restructured assets) at December 31, 2005, $32 million...

  • Page 117
    ... Recoveries Commercial (a) Commercial real estate Consumer Residential mortgage Lease financing Total recoveries Net charge-offs (a) Provision for credit losses Acquisitions Net change in allowance for unfunded loan commitments and letters of credit Allowance for loan and lease losses at end of year...

  • Page 118
    ... that converted the floating rate (1 month and 3 month LIBOR) on the underlying commercial loans to a fixed rate as part of a risk management strategy. TIME D EPOSITS OF $100,000 OR MORE Time deposits in foreign offices totaled $2.0 billion at December 31, 2005, substantially all of which are...

  • Page 119
    ... FIRM To the Board of Directors and Shareholders of The PNC Financial Services Group, Inc. Pittsburgh, Pennsylvania We have audited management' s assessment, included in the accompanying "Management's Responsibility For Internal Control Over Financial Reporting" that The PNC Financial Services Group...

  • Page 120
    ...with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2005 and the related consolidated statements of income, shareholders' equity and cash flows for the year then ended of the Company and our report dated March 3, 2006...

  • Page 121
    ...and rights Equity compensation plans approved by security holders 1997 Long-Term Incentive Award Plan (Note 1) Stock Options Incentive Share Awards (Note 2) Subtotal 1996 Executive Incentive Award Plan Incentive Awards Employee Stock Purchase Plan 1992 Director Share Incentive Plan Total approved by...

  • Page 122
    ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is included under the caption "Transactions Involving Directors And Executive Officers" in our Proxy Statement to be filed for the annual meeting of shareholders to be held on April 25, 2006 and is ...

  • Page 123
    ...the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of The PNC Financial Services Group, Inc. and in the capacities indicated on March 15, 2006. Signature /s/ James E. Rohr James E. Rohr Capacities Chairman, Chief Executive Officer and Director...

  • Page 124
    ... Agreement between the Corporation, The Chase Manhattan Bank, and Computershare Investor Services, LLC dated January 1, 2003 Form of PNC Bank, National Association Global Bank Note for Fixed Rate Global Senior Bank Note with Maturity of more than Nine Months from Date of Issuance Form of PNC Bank...

  • Page 125
    ... between PNC Investment Corp., as settlor, and PNC Bank, National Association, as trustee The Corporation' s Employee Stock Purchase Plan, as amended and restated Forms of employee stock option, restricted stock, restricted deferral, and incentive share agreements 2005 Forms of employee stock option...

  • Page 126
    ... 15, 2006, to the Share Surrender Agreement among BlackRock, Inc., PNC Bancorp, Inc. and the Corporation Initial Public Offering Agreement, dated September 30, 1999, among BlackRock, Inc., The PNC Financial Services Group, Inc., formerly PNC Bank Corp., and PNC Asset Management, Inc. Amendment No...

  • Page 127
    ... at www.sec.gov or from the SEC' s public reference section at 100 F Street NE, Room 1580, Washington, D.C. 20549 at prescribed rates. The Exhibits are also available as part of this Form 10-K on or through PNC' s corporate website at www.pnc.com in the "For Investors" section. Shareholders may also...

  • Page 128

  • Page 129

  • Page 130

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  • Page 132
    ... 2006 FORMS OF EMPLOYEE STOCK OPTION, RESTRICTED STOCK AND RESTRICTED DEFERRAL AGREEMENTS FORM OF STANDARD EMPLOYEE STOCK OPTION AGREEMENT THE PNC FINANCIAL SERVICES GROUP, INC. 1997 LONG-TERM INCENTIVE AWARD PLAN NONSTATUTORY STOCK OPTION AGREEMENT OPTIONEE: GRANT DATE: OPTION PRICE: COVERED SHARES...

  • Page 133
    ... of the Option immediately prior to the effective time of the Corporate Transaction and payment, in cash, in consideration therefor, of an amount equal to the product of (a) the excess, if any, of the per share value of the consideration payable to a PNC common shareholder in connection with such...

  • Page 134
    ... a brokerage service/margin account pursuant to the broker-assisted cashless option exercise procedure under Regulation T of the Board of Governors of the Federal Reserve System and in such manner as may be permitted by PNC from time to time consistent with said Regulation T. The effective date of...

  • Page 135
    ...and on Shares Issued on Exercise. Notwithstanding any other provision of the Agreement, the Option may not be exercised at any time that PNC does not have in effect a registration statement under the Securities Act of 1933 as amended relating to the offer of shares of PNC common stock under the Plan...

  • Page 136
    ...practice by Optionee during the term of Optionee' s employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources...

  • Page 137
    ... the Internal Revenue Code, and/or any rules, regulations or other regulatory guidance issued under such statutory provisions. 12. Effective Date. If Optionee does not accept the grant of the Option by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms of...

  • Page 138
    ... effective as of the Grant Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: Chairman and Chief Executive Officer ATTEST: By: Corporate Secretary Accepted and agreed to as of the Grant Date Optionee Annex A - Certain Definitions Annex B - Notice of Exercise Annex C - Tax Payment Election Form

  • Page 139
    ...to the Nonstatutory Stock Option Agreement ("Agreement") to which this Annex A is attached. A.1 "Board" means the Board of Directors of PNC. A.2 "Cause." (a) "Cause" during a Coverage Period. If the termination of Optionee' s employment with the Corporation occurs during a Coverage Period, then, for...

  • Page 140
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 141
    ...date specified in clause (2) of Section A.12(i), in either case whether Optionee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.10 "Corporation" means PNC...

  • Page 142
    ... rules and regulations promulgated thereunder. A.14 "Exercise Date" means the date (which must be a business day for PNC Bank, National Association) on which PNC receives written notice, in such form as PNC may from time to time prescribe, of the exercise, in whole or in part, of the Option pursuant...

  • Page 143
    ... the close of business on the ninetieth (90th ) day after the occurrence of the Change in Control (or the tenth (10th ) anniversary of the Grant Date if earlier), provided that either (1) Optionee is an employee of the Corporation at the time the Change in Control occurs and Optionee' s employment...

  • Page 144
    ... of a Change in Control. A.16 "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of a share of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date, or...

  • Page 145
    ... of the Exchange Act. A.23 "PNC" means The PNC Financial Services Group, Inc. A.24 "Retiree" means an Optionee who has Retired. A.25 "Retire" or "Retirement" means termination of Optionee' s employment with the Corporation (a) at any time on or after the first day of the first month coincident with...

  • Page 146
    ... in accordance with the terms of Article 7 of the Plan. A.27 "SEC" means the Securities and Exchange Commission. A.28 "Termination Date" means Optionee' s last date of employment with the Corporation. If Optionee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Optionee does not...

  • Page 147
    FORM OF STOCK OPTION AGREEMENT WITH 1-YEAR VESTING THE PNC FINANCIAL SERVICES GROUP, INC. 1997 LONG-TERM INCENTIVE AWARD PLAN NONSTATUTORY STOCK OPTION AGREEMENT OPTIONEE: GRANT DATE: OPTION PRICE: COVERED SHARES: _____, 200__ $_____ per share «Shares» Terms defined in The PNC Financial ...

  • Page 148
    ... of (a) the excess, if any, of the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction over the Option Price and (b) the total number of Covered Shares subject to the Option that were outstanding and unexercised immediately prior to...

  • Page 149
    ... a brokerage service/margin account pursuant to the broker-assisted cashless option exercise procedure under Regulation T of the Board of Governors of the Federal Reserve System and in such manner as may be permitted by PNC from time to time consistent with said Regulation T. The effective date of...

  • Page 150
    regulations promulgated thereunder, (b) the staff of the SEC has issued a no-action letter with respect to such dis position, or (c) such registration or notification as is, in the opinion of counsel for PNC, required for the lawful disposition of such shares has been filed and has become effective;...

  • Page 151
    ...practice by Optionee during the term of Optionee' s employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources...

  • Page 152
    ... SEC of a Form 4 reporting the Grant, the Option and the Agreement are effective as of the Grant Date. IN W ITNESS W HEREOF, PNC has caused the Agreement to be signed on its behalf effective as of the Grant Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: Chairman and Chief Executive Officer ATTEST...

  • Page 153
    Accepted and agreed to as of the Grant Date Optionee Annex A - Certain Definitions Annex B - Notice of Exercise Annex C - Tax Payment Election Form

  • Page 154
    ...to the Nonstatutory Stock Option Agreement ("Agreement") to which this Annex A is attached. A.1 "Board" means the Board of Directors of PNC. A.2 "Cause." (a) "Cause" during a Coverage Period. If the termination of Optionee' s employment with the Corporation occurs during a Coverage Period, then, for...

  • Page 155
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 156
    ...either case whether Optionee is acting as agent, consultant, independent contractor, emp loyee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.10 "Corporation" means PNC and its Subsidiaries. A.11 "Coverage Period" means...

  • Page 157
    ... rules and regulations promulgated thereunder. A.14 "Exercise Date" means the date (which must be a business day for PNC Bank, National Association) on which PNC receives written notice, in such form as PNC may from time to time prescribe, of the exercise, in whole or in part, of the Option pursuant...

  • Page 158
    ...Optionee has not revoked such waiver and release agreement, and (c) the time for revocation of such waiver and release agreement by Optionee has lapsed, then the Option will expire at the close of business on the ninetieth (90th ) day after Optionee' s Termination Date (but in no event later than on...

  • Page 159
    ... of a Change in Control. A.16 "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of a share of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date, or...

  • Page 160
    ... of the Exchange Act. A.23 "PNC" means The PNC Financial Services Group, Inc. A.24 "Retiree" means an Optionee who has Retired. A.25 "Retire" or "Retirement" means termination of Optionee' s employment with the Corporation (a) at any time on or after the first day of the first month coincident with...

  • Page 161
    ...Option Agreement Form for Original Options Granted During 1997 or 1998 THE PNC FINANCIAL SERVICES GROUP, INC. 1997 LONG-TERM INCENTIVE AWARD PLAN RELOAD NONSTATUTORY STOCK OPTION AGREEMENT OPTIONEE: ORIGINAL OPTION GRANT DATE: RELOAD OPTION GRANT DATE: RELOAD OPTION PRICE: COVERED SHARES: «EMPLOYEE...

  • Page 162
    ...per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction over the Reload Option Price and (b) the total number of Covered Shares subject to the Reload Option that were outstanding and unexercised immediately prior to the effective time of...

  • Page 163
    ... a brokerage service/margin account pursuant to the broker-assisted cashless option exercise procedure under Regulation T of the Board of Governors of the Federal Reserve System and in such manner as may be permitted by PNC from time to time consistent with said Regulation T. The effective date of...

  • Page 164
    ..., but the terms of the Plan will not be considered an enlargement of any benefits under the Reload Agreement. In addition, the Reload Option is subject to any rules and regulations promulgated by or under the authority of the Committee. 9. Applicable Law. The Reload Agreement is governed by and...

  • Page 165
    ...Grant Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: _____ Chairman and Chief Executive Officer ATTEST: By: _____ Corporate Secretary Accepted and agreed to as of the Reload Option Grant Date Optionee Annex A - Certain Definitions Annex B - Notice of Exercise Annex C - Tax Payment Election Form

  • Page 166
    ... chief executive officer of PNC. A.4 "Change in Control" means a change of control of PNC of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Exchange...

  • Page 167
    in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other than a ...

  • Page 168
    ... rules and regulations promulgated thereunder. A.11 "Exercise Date" means the date (which must be a business day for PNC Bank, National Association) on which PNC receives written notice, in such form as PNC may from time to time prescribe, of the exercise, in whole or in part, of the Reload Option...

  • Page 169
    ... anniversary of the Original Option Grant Date). A.13 "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of a share of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on...

  • Page 170
    ... amount per share of PNC common stock set forth as the Reload Option Price on page 1 of the Reload Agreement. A.23 "Retiree" means an Optionee who has Retired. A.24 "Retire" or "Retirement" means termination of Optionee' s employment with the Corporation (a) at any time on or after the first day of...

  • Page 171
    A.28 "Total and Permanent Disability" means, unless the Committee determines otherwise, Optionee' s disability as determined to be total and permanent by the Corporation for purposes of the Reload Agreement.

  • Page 172
    ...Option Agreement Form for Original Options Granted During 1999 or 2000 THE PNC FINANCIAL SERVICES GROUP, INC. 1997 LONG-TERM INCENTIVE AWARD PLAN RELOAD NONSTATUTORY STOCK OPTION AGREEMENT OPTIONEE: ORIGINAL OPTION GRANT DATE: RELOAD OPTION GRANT DATE: RELOAD OPTION PRICE: COVERED SHARES: «EMPLOYEE...

  • Page 173
    ... value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction over the Reload Option Price and (b) the total number of Covered Shares subject to the Reload Option that were outstanding and unexe rcised immediately prior to the effective time of the...

  • Page 174
    ... a brokerage service/margin account pursuant to the broker-assisted cashless option exercise procedure under Regulation T of the Board of Governors of the Federal Reserve System and in such manner as may be permitted by PNC fromtime to time consistent with said Regulation T. The effective date of...

  • Page 175
    ..., but the terms of the Plan will not be considered an enlargement of any benefits under the Reload Agreement. In addition, the Reload Option is subject to any rules and regulations promulgated by or under the authority of the Committee. 9. Applicable Law. The Reload Agreement is governed by and...

  • Page 176
    ...Grant Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: _____ Chairman and Chief Executive Officer ATTEST: By: _____ Corporate Secretary Accepted and agreed to as of the Reload Option Grant Date Optionee Annex A - Certain Definitions Annex B - Notice of Exercise Annex C - Tax Payment Election Form

  • Page 177
    ... chief executive officer of PNC. A.4 "Change in Control" means a change of control of PNC of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Exchange...

  • Page 178
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 179
    ...date specified in clause (2) of Section A.12(i), in either case whether Optionee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.10 "Corporation" means PNC...

  • Page 180
    ... rules and regulations promulgated thereunder. A.14 "Exercise Date" means the date (which must be a business day for PNC Bank, National Association) on which PNC receives written notice, in such form as PNC may from time to time prescribe, of the exercise, in whole or in part, of the Reload Option...

  • Page 181
    ...and release agreement by Optionee has lapsed, then the Reload Option will expire at the close of business on the ninetieth (90th ) day after Optionee' s Termination Date (but in no event later than on the tenth (10th ) anniversary of the Original Option Grant Date) with respect to any Covered Shares...

  • Page 182
    ... of a Change in Control. A.16 "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of a share of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date, or...

  • Page 183
    ... amount per share of PNC common stock set forth as the Reload Option Price on page 1 of the Reload Agreement. A.26 "Retiree" means an Optionee who has Retired. A.27 "Retire" or "Retirement" means termination of Optionee' s employment with the Corporation (a) at any time on or after the first day of...

  • Page 184
    Reload Option Agreement Form for Original Options Granted 2001-2004 THE PNC FINANCIAL SERVICES GROUP, INC. 1997 LONG-TERM INCENTIVE AWARD PLAN RELOAD NONSTATUTORY STOCK OPTION AGREEMENT OPTIONEE: ORIGINAL OPTION GRANT DATE: RELOAD OPTION GRANT DATE: RELOAD OPTION PRICE: COVERED SHARES: «EMPLOYEE» ...

  • Page 185
    ...per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction over the Reload Option Price and (b) the total number of Covered Shares subject to the Reload Option that were outstanding and unexercised immediately prior to the effective time of...

  • Page 186
    ... a brokerage service/margin account pursuant to the broker-assisted cashless option exercise procedure under Regulation T of the Board of Governors of the Federal Reserve System and in such manner as may be permitted by PNC from time to time consistent with said Regulation T. The effective date of...

  • Page 187
    ...Issued on Exercise. Notwithstanding any other provision of the Reload Agreement, the Reload Option may not be exercised at any time that PNC does not have in effect a registration statement under the Securities Act of 1933 as amended relating to the offer of shares of PNC common stock under the Plan...

  • Page 188
    ...practice by Optionee during the term of Optionee' s employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources...

  • Page 189
    ...Optionee is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Reload Option Grant, the Reload Option and the Reload Agreement are effective as of the Reload Option Grant Date.

  • Page 190
    ...Grant Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: _____ Chairman and Chief Executive Officer ATTEST: By: _____ Corporate Secretary Accepted and agreed to as of the Reload Option Grant Date Optionee Annex A - Certain Definitions Annex B - Notice of Exercise Annex C - Tax Payment Election Form

  • Page 191
    ... Nonstatutory Stock Option Agreement ("Reload Agreement") to which this Annex A is attached. A.1 "Board" means the Board of Directors of PNC. A.2 "Cause." (a) "Cause" during a Coverage Period. If the termination of Optionee' s employment with the Corporation occurs during a Coverage Period, then...

  • Page 192
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 193
    ...date specified in clause (2) of Section A.12(i), in either case whether Optionee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.10 "Corporation" means PNC...

  • Page 194
    ... rules and regulations promulgated thereunder. A.14 "Exercise Date" means the date (which must be a business day for PNC Bank, National Association) on which PNC receives written notice, in such form as PNC may from time to time prescribe, of the exercise, in whole or in part, of the Reload Option...

  • Page 195
    ... or vests at the time the Change in Control occurs, the Reload Option will not expire at the earliest before the close of business on the ninetieth (90th ) day after the occurrence of the Change in Control (or the tenth (10th ) anniversary of the Original Option Grant Date if earlier), provided that...

  • Page 196
    ... of a Change in Control. A.16 "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of a share of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date, or...

  • Page 197
    ... under Section 13(d)(3) of the Exchange Act. A.22 "PNC" means The PNC Financial Services Group, Inc. A.23 "Reload Option" means the Nonstatutory Stock Option granted to Optionee in Section 1 of the Reload Agreement pursuant to which Optionee may purchase shares of PNC common stock as provided in the...

  • Page 198
    ... amount per share of PNC common stock set forth as the Reload Option Price on page 1 of the Reload Agreement. A.26 "Retiree" means an Optionee who has Retired. A.27 "Retire" or "Retirement" means termination of Optionee' s employment with the Corporation (a) at any time on or after the first day of...

  • Page 199
    ... Employment Performance Goal Restricted Period: Three Years (100%) THE PNC FINANCIAL SERVICES GROUP, INC. 1997 LONG-TERM INCENTIVE AWARD PLAN *** 200__ LONG-TERM INCENTIVE AWARD PROGRAM *** RESTRICTED STOCK AGREEMENT *** GRANTEE: GRANT DATE: SHARES: < name > _____, 200__ < number of whole shares...

  • Page 200
    ... with the provisions of such Plan and such Agreement, a copy of each of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc." Where a book-entry system is used with respect to the issuance of Restricted Shares, appropriate notation of such forfeiture...

  • Page 201
    ... Shares will be released and reissued by PNC to, or at the proper direction of, Grantee' s legal representative pursuant to Section 9 as soon as administratively practicable following such date. 7.4 Qualifying Disability Termination. (a) In the event Grantee' s employment with the Corporation...

  • Page 202
    ... Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC. 7.6 Termination in Anticipation of a Change in Control...

  • Page 203
    ... with respect to such shares will terminate as of the end of the day on the day immediately preceding Grantee' s Termination Date, in which case such shares will become Awarded Shares prior to Grantee' s termination of employment and will be released and reissued by PNC pursuant to Section 9. In...

  • Page 204
    ... tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing...

  • Page 205
    ... the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. Any such tax election shall be made pursuant to a form provided by PNC. Shares of PNC common stock that are used for this purpose will be valued at their Fair Market Value on the date the tax...

  • Page 206
    ... practice by Grantee during the term of Grantee' s employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources...

  • Page 207
    ... of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Agreement is effective. Grantee will not have any of the rights of a shareholder with respect to the Restricted Shares as set forth in Section 4, and...

  • Page 208
    THE PNC FINANCIAL SERVICES GROUP, INC. By: Chairman and Chief Executive Officer ATTEST: By: Corporate Secretary A CCEPTED AND A GREED TO by GRANTEE _____ Grantee

  • Page 209
    ... Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated. A.2 A.3 business. A.4 "Board" means the Board of Directors of PNC. "Business Day" means any day when the New York Stock Exchange...

  • Page 210
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 211
    ...date specified in clause (ii) of Section A.14(a), in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.11 "Corporation" means PNC...

  • Page 212
    .... A.16 "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of a share of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date, or, if no PNC common stock...

  • Page 213
    ... of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation. A.27 "SEC" means the United States Securities and Exchange Commission. A.28 "Termination Date" means Grantee' s last date of employment with the Corporation. If...

  • Page 214
    ... legend: "This certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended and an Agreement entered into...

  • Page 215
    ...made on the system with respect to the account or accounts to which the Restricted Shares are credited. Restricted Shares deposited with PNC or its designee during the term of the Restricted Period that become Awarded Shares will be released and reissued to, or at the proper direction of, Grantee or...

  • Page 216
    ... Shares will be released and reissued by PNC to, or at the proper direction of, Grantee' s legal representative pursuant to Section 9 as soon as administratively practicable following such date. 7.4 Qualifying Disability Termination. (a) In the event Grantee' s employment with the Corporation...

  • Page 217
    ... with respect to such shares will terminate as of the end of the day on the day immediately preceding Grantee' s Termination Date, in which case such shares will become Awarded Shares prior to Grantee' s termination of employment and will be released and reissued by PNC pursuant to Section 9. In...

  • Page 218
    ... tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing...

  • Page 219
    ...in connection with the Restricted Shares. For purposes of this Section 10.2, shares of PNC common stock retained to satisfy applicable withholding tax requirements will be valued at their Fair Market Value on the date the tax withholding obligation arises. PNC will not retain more than the number of...

  • Page 220
    ... practice by Grantee during the term of Grantee' s employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources...

  • Page 221
    ... of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Agreement is effective. Grantee will not have any of the rights of a shareholder with respect to the Restricted Shares as set forth in Section 4, and...

  • Page 222
    ...effective and the Restricted Shares had been issued on the Grant Date. IN W ITNESS W HEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: Chairman and Chief Executive Officer ATTEST: By: Corporate Secretary A CCEPTED AND...

  • Page 223
    ... Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated. A.2 A.3 business. A.4 "Board" means the Board of Directors of PNC. "Business Day" means any day when the New York Stock Exchange...

  • Page 224
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 225
    ... A.15(a), in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.11 "Continued Employment Performance Goal" means, subject to early...

  • Page 226
    .... A.17 "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of a share of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date, or, if no PNC common stock...

  • Page 227
    ...3rd) anniversary of the Grant Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a) of the Agreement, if applicable. A.26 "SEC" means the United States Securities and Exchange Commission. A.27 "Termination Date" means Grantee' s last date of employment...

  • Page 228
    ... Grant Continued Employment Performance Goals Restricted Periods: Three Years (25%); Four Years (25%); Five Years (50%) THE PNC FINANCIAL SERVICES GROUP, INC. 1997 LONG-TERM INCENTIVE AWARD PLAN *** RESTRICTED STOCK AGREEMENT *** GRANTEE: GRANT DATE: SHARES: < name > _____, 200__ < number of whole...

  • Page 229
    ... legend: "This certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended and an Agreement entered into...

  • Page 230
    ...anniversary of the Grant Date in the case of Second or Third Tranche shares, respectively, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable. If the vesting of...

  • Page 231
    ... applicable Restricted Periods with respect to such shares will terminate as of the end of the day on the day immediately preceding Grantee' s Termination Date, in which case such shares will become Awarded Shares prior to Grantee' s termination of employment and will be released and reissued by PNC...

  • Page 232
    ... definition of Change in Control in Section A.6 of Annex A will exclude the proviso in Section A.6(a). (c) If Unvested Shares will be forfeited by Grantee to PNC by reason of Grantee' s termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in...

  • Page 233
    ... tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing...

  • Page 234
    ... reason for such termination of employment. (a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Grantee' s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNC...

  • Page 235
    ... 15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one...

  • Page 236
    ...effective and the Restricted Shares had been issued on the Grant Date. IN W ITNESS W HEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: Chairman and Chief Executive Officer ATTEST: By: Corporate Secretary A CCEPTED AND...

  • Page 237
    ... pursuant to the terms of the Agreement; and (b) the Restricted Period applicable to such Restricted Shares has terminated. A.2 A.3 business. A.4 "Board" means the Board of Directors of PNC. "Business Day" means any day when the New Yo rk Stock Exchange is open for "Cause" means: (a) the willful...

  • Page 238
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 239
    ...either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.11 "Continued Employment Performance Goal" means: (a) with respect to shares in...

  • Page 240
    .... A.17 "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of a share of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date, or, if no PNC common stock...

  • Page 241
    ... "PNC" means The PNC Financial Services Group, Inc. A.27 "Restricted Period." The applicable Restricted Period for Restricted Shares means, subject to early termination if so determined by the Committee or its delegate or pursuant to Section 7.6 of the Agreement, if applicable, the period set forth...

  • Page 242
    A.30 "SEC" means the United States Securities and Exchange Commission. A.31 "Termination Date" means Grantee' s last date of employment with the Corporation. If Grantee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Grantee does not continue to be employed by PNC or a ...

  • Page 243
    ... Employment Performance Goal Restricted Period: Three Years (100%) THE PNC FINANCIAL SERVICES GROUP, INC. 1997 LONG-TERM INCENTIVE AWARD PLAN *** ANNUAL 25/25 PROGRAM 200__ RESTRICTED STOCK GRANT *** RESTRICTED STOCK AGREEMENT *** GRANTEE: GRANT DATE: SHARES: < name > February __, 200__ < number...

  • Page 244
    ... with the provisions of such Plan and such Agreement, a copy of each of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc." Where a book-entry system is used with respect to the issuance of Restricted Shares, appropriate notation of such forfeiture...

  • Page 245
    ... will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC. 7.5 Retirement. (a) In the event that Grantee Retires prior to the third (3rd) anniversary of the Grant Date, Unvested Shares will not be forfeited on...

  • Page 246
    ...event that Grantee' s employment with the Corporation is terminated prior to the third (3rd) anniversary of the Grant Date by the Corporation and Grantee is offered and has entered into the standard Waiver and Release Agreement with PNC or a Subsidiary under an applicable PNC or Subsidiary Displaced...

  • Page 247
    ... then all such Unvested Shares will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC. 7.7 Termination in Anticipation of a Change in Control. (a) Notwithstanding anything in the Agreement to the contrary, if...

  • Page 248
    ... with respect to such shares will terminate as of the end of the day on the day immediately preceding Grantee' s Termination Date, in which case such shares will become Awarded Shares prior to Grantee' s termination of employment and will be released and reissued by PNC pursuant to Section 9. In...

  • Page 249
    ... tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing...

  • Page 250
    ... the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. Any such tax election shall be made pursuant to a form provided by PNC. Shares of PNC common stock that are used for this purpose will be valued at their Fair Market Value on the date the tax...

  • Page 251
    ... practice by Grantee during the term of Grantee' s employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources...

  • Page 252
    ... of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Agreement is effective. Grantee will not have any of the rights of a shareholder with respect to the Restricted Shares as set forth in Section 4, and...

  • Page 253
    Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: Chairman and Chief Executive Officer ATTEST: By: Corporate Secretary A CCEPTED AND A GREED TO by GRANTEE _____ Grantee

  • Page 254
    ... Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated. A.2 A.3 business. A.4 "Board" means the Board of Directors of PNC. "Business Day" means any day when the New York Stock Exchange...

  • Page 255
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 256
    ...date specified in clause (ii) of Section A.14(a), in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.11 "Corporation" means PNC...

  • Page 257
    ... "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date, or, if no PNC common stock trades have been...

  • Page 258
    ... of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation. A.27 "SEC" means the United States Securities and Exchange Commission. A.28 "Termination Date" means Grantee' s last date of employment with the Corporation. If...

  • Page 259
    ... STOCK GRANT Annual 25/25 Program (NEOs) -- 200__ Restricted Stock Grant Continued Employment Performance Go a l Restricted Period: Three Years (100%) THE PNC FINANCIAL SERVICES GROUP, INC. 1996 EXECUTIVE INCENTIVE AWARD PLAN *** RESTRICTED STOCK AGREEMENT GRANTEE: GRANT DATE: SHARES:

  • Page 260
    ...made on the system with respect to the account or accounts to which the Restricted Shares are credited. Restricted Shares deposited with PNC or its designee during the term of the Restricted Period that become Awarded Shares will be released and reissued to, or at the proper direction of, Grantee or...

  • Page 261
    ... will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC. 7.5 Retirement. (a) In the event that Grantee Retires prior to the third (3rd) anniversary of the Grant Date, Unvested Shares will not be forfeited on...

  • Page 262
    ...event that Grantee' s employment with the Corporation is terminated prior to the third (3rd) anniversary of the Grant Date by the Corporation and Grantee is offered and has entered into the standard Waiver and Release Agreement with PNC or a Subsidiary under an applicable PNC or Subsidiary Displaced...

  • Page 263
    ... then all such Unvested Shares will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC. 7.7 Termination in Anticipation of a Change in Control. (a) Notwithstanding anything in the Agreement to the contrary, if...

  • Page 264
    ... the end of the day on the day immediately preceding Grantee' s Termination Date, in which case such shares will become Awarded Shares prior to Grantee' s termination of employm ent and will be released and reissued by PNC pursuant to Section 9. In the alternative, if Grantee' s employment with the...

  • Page 265
    ... tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing...

  • Page 266
    ... the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. Any such tax election shall be made pursuant to a form provided by PNC. Shares of PNC common stock that are used for this purpose will be valued at their Fair Market Value on the date the tax...

  • Page 267
    ... practice by Grantee during the term of Grantee' s employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources...

  • Page 268
    ... of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Agreement is effective. Grantee will not have any of the rights of a shareholder with respect to the Restricted Shares as set forth in Section 4, and...

  • Page 269
    ... and the Restricted Shares had been issued on the Grant Date. IN W ITNESS W HEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: Chairman and Chief Executive Officer ATTEST: By: Corporate Secretary A CCEPTED AND...

  • Page 270
    ... Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated. A.2 A.3 business. A.4 "Board" means the Board of Directors of PNC. "Business Day" means any day when the New York Stock Exchange...

  • Page 271
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 272
    ...date specified in clause (ii) of Section A.14(a), in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.11 "Corporation" means PNC...

  • Page 273
    .... A.16 "Fair Market Value" as it relates to a share of PNC common stock means the average of the reported high and low trading prices of a share of PNC common stock on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date, or, if no PNC common stock...

  • Page 274
    ... of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation. A.27 "SEC" means the United States Securities and Exchange Commission. A.28 "Termination Date" means Grantee' s last date of employment with the Corporation. If...

  • Page 275
    ... Years (100%) THE PNC FINANCIAL SERVICES GROUP, INC. AND AFFILIATES DEFERRED COMPENSATION PLAN *** ANNUAL 25/25 PROGRAM RESTRICTED DEFERRED 200__ INCENTIVE AWARD *** RESTRICTED AWARD DEFERRAL ACCOUNT AGREEMENT *** PARTICIPANT: GRANT DATE: DEFERRED SHARES: < name > February __, 200__ < number of...

  • Page 276
    ... units of corporate transactions, including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC, on shares of PNC common stock; provided, however, that any share units credited to Participant as deemed...

  • Page 277
    ... and (d) Detrimental Conduct will cease to apply to any Deferred Share Units upon a Change in Control. 7.3 Death. In the event of Participant' s death while an employee of the Corporation and prior to the third (3rd) anniversary of the Grant Date, the Three-Year Continued Employment Performance Goal...

  • Page 278
    ... will be forfeited by Participant to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC. 7.5 Retirement. (a) In the event that Participant Retires prior to the third (3rd) anniversary of the Grant Date, Unvested Share Units will not be...

  • Page 279
    ... will be released from the terms and conditions of the Agreement pursuant to Section 9. (b) In the event that the record date for any phantom dividend to be credited to Participant' s Plan Account with respect to the Unvested Share Units occurs on or after Participant' s Termination Date but prior...

  • Page 280
    ... Unvested Share Units will terminate as of the end of the day on the day immediately preceding Participant' s Termination Date, in which case such Unvested Share Units will become Awarded Share Units prior to Participant' s termination of employment and will be released from the terms and conditions

  • Page 281
    ..., all as of the day immediately preceding the Change in Control, provided, however, in the case of Unvested Share Units that remained in effect post-employment solely pursuant to Section 7.6(a), that Participant entered into and does not revoke the waiver and release agreement specified in Section...

  • Page 282
    ...the reason for such termination of employment. (a) Non-Solicitation. Participant shall not, directly or indirectly, either for Participant' s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere...

  • Page 283
    ... or will be conceived and/or reduced to practice by Participant during the term of Participant' s employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any...

  • Page 284
    .... The 200__ Restricted Award Deferral Account will not be established and Participant' s Plan Account will not be credited with any phantom dividends with respect to the Deferred Share Units as set forth in Section 4 unless and until the date the Award and the terms and conditions of the deferral of...

  • Page 285
    IN W ITNESS W HEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date. THE PNC FINANCIAL SERVICES GROUP, INC. By: Chairman and Chief Executive Officer ATTEST: By: Corporate Secretary A CCEPTED AND A GREED TO by PARTICIPANT _____ Participant

  • Page 286
    ... pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated. A.2 A.3 business. A.4 "Board" means the Board of Directors of PNC. "Business Day" means any day when the New York Stock Exchange is open for "Cause" means: (a) the willful and continued failure of Participant to...

  • Page 287
    ... a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence; (b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a "Fundamental Transaction") with any other corporation, other...

  • Page 288
    ... case whether Participant is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein. A.11 "Corporation" means PNC and its Subsidiaries. A.12 "Coverage Period" means...

  • Page 289
    ... plans or programs in which Participant was participating, at costs substantially similar to those paid by Participant, immediately prior to the CIC Triggering Event or the Change in Control. A.18 "Grant Date" means the Grant Date set forth on page 1 of the Agreement. A.19 "Internal Revenue Code...

  • Page 290
    ... of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation. A.26 "SEC" means the United States Securities and Exchange Commission. A.27 "Termination Date" means Participant' s last date of employment with the Corporation. If...

  • Page 291
    ... PNC Financial Services Group, Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges EXHIBIT 12.1 Dollars in millions 2005 Year Ended December 31 2004 2003 2002 2001 Earnings Pretax income from continuing operations before adjustments for minority interest (1) Fixed charges...

  • Page 292
    The PNC Financial Services Group, Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends EXHIBIT 12.2 Dollars in millions 2005 Year Ended December 31 2004 2003 2002 2001 Earnings Pretax income from continuing operations before adjustments for ...

  • Page 293
    ... Bank, Delaware (1) PNC Bank, National Association (1) PNC REIT Corp. PNC Bank Capital Securities, LLC PNC Capital Leasing, LLC BlackRock, Inc. (1) BlackRock Advisors, Inc. (1) BlackRock Financial Management, Inc. (1) PNC Holding, LLC (1) PFPC Worldwide Inc. (1) PNC Funding Corp PNC Investment Corp...

  • Page 294
    ... PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference of our reports relating to the consolidated financial statements of The PNC Financial Services Group, Inc. (the "Corporation") and management' s report on the effectiveness of internal control over financial reporting dated...

  • Page 295
    ... ATTORNEY The PNC Financial Services Group, Inc. Annual Report on Form 10-K for Year Ended December 31, 2005 EXHIBIT 24 KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned Directors of The PNC Financial Services Group, Inc. (the "Corporation"), a Pennsylvania corporation, hereby names...

  • Page 296
    ... /s/ Lorene K. Steffes Lorene K. Steffes Director /s/ Dennis F. Strigl Dennis F. Strigl Director /s/ Stephen G. Thieke Stephen G. Thieke Director /s/ Thomas J. Usher Thomas J. Usher Director /s/ Milton A. Washington Milton A. Washington Director /s/ Helge H. Wehmeier Helge H. Wehmeier...

  • Page 297
    EXHIBIT 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, James E. Rohr, certify that: 1. I have reviewed this report on Form 10-K for the year ended December 31, 2005 of The PNC Financial Services Group, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material ...

  • Page 298
    EXHIBIT 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Richard J. Johnson, certify that: 1. I have reviewed this report on Form 10-K for the year ended December 31, 2005 of The PNC Financial Services Group, Inc.; Based on my knowledge, this report does not contain any untrue statement of a ...

  • Page 299
    ... ACT OF 2002 In connection with the Annual Report on Form 10-K for the year ended December 31, 2005 of The PNC Financial Services Group, Inc. (Corporation) as filed with the Securities and Exchange Commission on the date hereof (Report), I, James E. Rohr, Chairman and Chief Executive Officer of the...

  • Page 300
    ... In connection with the Annual Report on Form 10-K for the year ended December 31, 2005 of The PNC Financial Services Group, Inc. (Corporation) as filed with the Securities and Exchange Commission on the date hereof (Report), I, Richard J. Johnson, Chief Financial Officer of the Corporation, hereby...