Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

# Annual	Report	Pursuant	to	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934

# For	the	fiscal	year	ended	December	31,	2014

# THE	PNC	FINANCIAL	SERVICES	GROUP,	INC.

(Exact	name	of	registrant	as	specified	in	its	charter)

Pennsylvania

(State	or	other	jurisdiction	of	incorporation	or	organization)

(I.R.S.	Employer	Identification	No.)

One	PNC	Plaza

249	Fifth	Avenue

(Address	of	principal	executive	offices,	including	zip	code)

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Title	of	Each	Class

Common	Stock,	par	value	$5.00

Depositary	Shares	Each	Representing	a	1/4,000	Interest	in	a	Share	of	Fixed-to-Floating	Rate

Non-Cumulative	Perpetual	Preferred	Stock,	Series	P

Depositary	Shares	Each	Representing	a	1/4,000	Interest	in	a	Share	of	5.375%	Non-Cumulative

# Perpetual	Preferred	Stock,	Series	Q

Warrants	(expiring	December	31,	2018)	to	purchase	Common	Stock

	Name	of	Each	Exchange

				on	Which	Registered

	 New	York	Stock	Exchange

Securities	registered	pursuant	to	Section	12(g)	of	the	Act:

# $1.80	Cumulative	Convertible	Preferred	Stock	-	Series	B,	par	value	$1.00

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	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to	be submitted	and	posted	pursuant	to	Rule	405	of	Regulation	S-T	(§232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was required	to	submit	and	post	such	files).	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.

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.	See	the	definitions of	"large	accelerated	filer",	"accelerated	filer"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.

Large	accelerated	filer	X

Accelerated	filer

	 Non-accelerated	filer

Smaller	reporting	company

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,	2014,	determined	using	the	per	share	closing	price	on that	date	on	the	New	York	Stock	Exchange	of	$89.05,	was	approximately	$47.3	billion.	There	is	no	non-voting	common	equity	of	the	registrant	outstanding.

# 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	2015	annual	meeting	of shareholders	(Proxy	Statement)	are	incorporated	by	reference	into	Part	III	of	this	Form	10-K.

# Cross-Reference	Index	to	2014	Form	10-K

|  |  | Page |
| :--- | :--- | :--- |
| PART\tI |  |  |
| Item\t1 | \t\t Business. | 1 |
| Item\t1A | \t\t Risk\tFactors. | 15 |
| Item\t1B | \t\t Unresolved\tStaff\tComments. | 26 |
| Item\t2 | \t\t Properties. | 26 |
| Item\t3 | \t\t Legal\tProceedings. | 26 |
| Item\t4 | \t\t Mine\tSafety\tDisclosures. | 26 |
| Executive\tOfficers\tof\tthe\tRegistrant | Executive\tOfficers\tof\tthe\tRegistrant | 26 |
| Directors\tof\tthe\tRegistrant | Directors\tof\tthe\tRegistrant | 28 |
| PART\tII |  |  |
| Item\t5 | \t\t Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities. | 28 |
|  | \t\t Common\tStock\tPerformance\tGraph | 29 |
| Item\t6 | \t\t Selected\tFinancial\tData. | 30 |
| Item\t7 | \t\t Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations\t(MD&A). | 32 |
|  | Executive\tSummary | 32 |
|  | Consolidated\tIncome\tStatement\tReview | 37 |
|  | Consolidated\tBalance\tSheet\tReview | 39 |
|  | Off-Balance\tSheet\tArrangements\tAnd\tVariable\tInterest\tEntities | 49 |
|  | Fair\tValue\tMeasurements | 50 |
|  | Business\tSegments\tReview | 50 |
|  | Critical\tAccounting\tEstimates\tAnd\tJudgments | 61 |
|  | Status\tOf\tQualified\tDefined\tBenefit\tPension\tPlan | 65 |
|  | Recourse\tAnd\tRepurchase\tObligations | 67 |
|  | Risk\tManagement | 69 |
|  | 2013\tVersus\t2012 | 95 |
|  | Glossary\tOf\tTerms | 99 |
|  | Cautionary\tStatement\tRegarding\tForward-Looking\tInformation | \t103 |
| Item\t7A | \t\t Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk. | \t104 |
| Item\t8 | \t\t Financial\tStatements\tand\tSupplementary\tData. | \t105 |
|  | \t\t Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | \t105 |
|  | \t\t Consolidated\tIncome\tStatement | \t106 |
|  | \t\t Consolidated\tStatement\tof\tComprehensive\tIncome | \t107 |
|  | \t\t Consolidated\tBalance\tSheet | \t108 |
|  | \t\t Consolidated\tStatement\tOf\tChanges\tIn\tEquity | \t109 |
|  | \t\t Consolidated\tStatement\tOf\tCash\tFlows | \t110 |
|  | \t\t Notes\tTo\tConsolidated\tFinancial\tStatements | \t112 |
|  | Note\t1\tAccounting\tPolicies | \t112 |
|  | Note\t2\tLoan\tSale\tand\tServicing\tActivities\tand\tVariable\tInterest\tEntities | \t124 |

# Cross-Reference	Index	to	2014	Form	10-K	(continued)

# TABLE	OF	CONTENTS	(Continued)

| TABLE	OF	CONTENTS	(Continued) | TABLE	OF	CONTENTS	(Continued) | Page |
| :--- | :--- | :--- |
| Item\t8 | Financial\tStatements\tand\tSupplementary\tData.\t(continued) |  |
|  | Note\t3\tAsset\tQuality | \t128 |
|  | Note\t4\tPurchased\tLoans | \t142 |
|  | Note\t5\tAllowances\tfor\tLoan\tand\tLease\tLosses\tand\tUnfunded\tLoan\tCommitments\tand\tLetters\tof\tCredit | \t143 |
|  | Note\t6\tInvestment\tSecurities | \t146 |
|  | Note\t7\tFair\tValue | \t151 |
|  | Note\t8\tGoodwill\tand\tOther\tIntangible\tAssets | \t171 |
|  | Note\t9\tPremises,\tEquipment\tand\tLeasehold\tImprovements | \t174 |
|  | Note\t10\tTime\tDeposits | \t174 |
|  | Note\t11\tBorrowed\tFunds | \t174 |
|  | Note\t12\tCapital\tSecurities\tof\ta\tSubsidiary\tTrust\tand\tPerpetual\tTrust\tSecurities | \t175 |
|  | Note\t13\tEmployee\tBenefit\tPlans | \t177 |
|  | Note\t14\tStock\tBased\tCompensation\tPlans | \t184 |
|  | Note\t15\tFinancial\tDerivatives | \t187 |
|  | Note\t16\tEarnings\tPer\tShare | \t195 |
|  | Note\t17\tEquity | \t196 |
|  | Note\t18\tOther\tComprehensive\tIncome | \t198 |
|  | Note\t19\tIncome\tTaxes | \t200 |
|  | Note\t20\tRegulatory\tMatters | \t202 |
|  | Note\t21\tLegal\tProceedings | \t203 |
|  | Note\t22\tCommitments\tand\tGuarantees | \t212 |
|  | Note\t23\tParent\tCompany | \t218 |
|  | Note\t24\tSegment\tReporting | \t219 |
|  | Note\t25\tSubsequent\tEvents | \t221 |
|  | Statistical\tInformation\t(Unaudited) | \t222 |
| Item\t9 | Changes\tin\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure. | \t231 |
| Item\t9A | Controls\tand\tProcedures. | \t231 |
| Item\t9B | Other\tInformation. | \t231 |
| PART\tIII |  |  |
| Item\t10 | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance. | \t231 |
| Item\t11 | Executive\tCompensation. | \t232 |
| Item\t12 | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters. | \t232 |
| Item\t13 | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence. | \t234 |
| Item\t14 | Principal\tAccounting\tFees\tand\tServices. | \t234 |
| PART\tIV |  |  |
| Item\t15 | Exhibits,\tFinancial\tStatement\tSchedules. | \t234 |
| SIGNATURES |  | \t235 |

# MD&A	TABLE	REFERENCE

| Table | Description | Page |
| :--- | :--- | :--- |
| 1 | Summary\tFinancial\tResults | \t 33 |
| 2 | Summarized\tAverage\tBalance\tSheet | \t 35 |
| 3 | Results\tOf\tBusinesses\t–\tSummary | \t 36 |
| 4 | Net\tInterest\tIncome\tand\tNet\tInterest\tMargin | \t 37 |
| 5 | Noninterest\tIncome | \t 37 |
| 6 | Summarized\tBalance\tSheet\tData | \t 39 |
| 7 | Details\tOf\tLoans | \t 40 |
| 8 | Accretion\t–\tPurchased\tImpaired\tLoans | \t 41 |
| 9 | Purchased\tImpaired\tLoans\t–\tAccretable\tYield | \t 41 |
| 10 | Valuation\tof\tPurchased\tImpaired\tLoans | \t 42 |
| 11 | Weighted\tAverage\tLife\tof\tthe\tPurchased\tImpaired\tPortfolios | \t 42 |
| 12 | Accretable\tDifference\tSensitivity\t–\tTotal\tPurchased\tImpaired\tLoans | \t 42 |
| 13 | Net\tUnfunded\tLoan\tCommitments | \t 43 |
| 14 | Investment\tSecurities | \t 43 |
| 15 | Loans\tHeld\tFor\tSale | \t 45 |
| 16 | Details\tOf\tFunding\tSources | \t 45 |
| 17 | Shareholders'\tEquity | \t 46 |
| 18 | Basel\tIII\tCapital | \t 47 |
| 19 | Fair\tValue\tMeasurements\t–\tSummary | \t 50 |
| 20 | Retail\tBanking\tTable | \t 51 |
| 21 | Corporate\t&\tInstitutional\tBanking\tTable | \t 54 |
| 22 | Asset\tManagement\tGroup\tTable | \t 56 |
| 23 | Residential\tMortgage\tBanking\tTable | \t 58 |
| 24 | BlackRock\tTable | \t 59 |
| 25 | Non-Strategic\tAssets\tPortfolio\tTable | \t 60 |
| 26 | Pension\tExpense\t–\tSensitivity\tAnalysis | \t 66 |
| 27 | Analysis\tof\tQuarterly\tResidential\tMortgage\tRepurchase\tClaims\tby\tVintage | \t 68 |
| 28 | Analysis\tof\tResidential\tMortgage\tUnresolved\tAsserted\tIndemnification\tand\tRepurchase\tClaims | \t 68 |
| 29 | Analysis\tof\tResidential\tMortgage\tIndemnification\tand\tRepurchase\tClaim\tSettlement\tActivity | \t 68 |
| 30 | Nonperforming\tAssets\tBy\tType | \t 73 |
| 31 | OREO\tand\tForeclosed\tAssets | \t 73 |
| 32 | Change\tin\tNonperforming\tAssets | \t 74 |
| 33 | Accruing\tLoans\tPast\tDue\t30\tTo\t59\tDays | \t 75 |
| 34 | Accruing\tLoans\tPast\tDue\t60\tTo\t89\tDays | \t 75 |
| 35 | Accruing\tLoans\tPast\tDue\t90\tDays\tOr\tMore | \t 75 |
| 36 | Home\tEquity\tLines\tof\tCredit\t–\tDraw\tPeriod\tEnd\tDates | \t 76 |
| 37 | Consumer\tReal\tEstate\tRelated\tLoan\tModifications | \t 77 |
| 38 | Consumer\tReal\tEstate\tRelated\tLoan\tModifications\tRe-Default\tby\tVintage | \t 78 |

# MD&A	TABLE	REFERENCE	(Continued)

| Table | Description | Page |
| :--- | :--- | :--- |
| 39 | Summary\tof\tTroubled\tDebt\tRestructurings | \t 79 |
| 40 | Loan\tCharge-Offs\tAnd\tRecoveries | \t 80 |
| 41 | Allowance\tfor\tLoan\tand\tLease\tLosses | \t 81 |
| 42 | PNC\tBank\tBank\tNotes\tIssued\tDuring\t2014 | \t 87 |
| 43 | PNC\tBank\tSenior\tand\tSubordinated\tDebt | \t 88 |
| 44 | FHLB\tBorrowings | \t 88 |
| 45 | Parent\tCompany\tSenior\tand\tSubordinated\tDebt\tand\tHybrid\tCapital\tInstruments | \t 89 |
| 46 | Credit\tRatings\tas\tof\tDecember\t31,\t2014\tfor\tPNC\tand\tPNC\tBank | \t 90 |
| 47 | Contractual\tObligations | \t 90 |
| 48 | Other\tCommitments | \t 90 |
| 49 | Interest\tSensitivity\tAnalysis | \t 91 |
| 50 | Net\tInterest\tIncome\tSensitivity\tto\tAlternative\tRate\tScenarios\t(Fourth\tQuarter\t2014) | \t 91 |
| 51 | Alternate\tInterest\tRate\tScenarios:\tOne\tYear\tForward | \t 92 |
| 52 | Enterprise-Wide\tGains/Losses\tVersus\tValue-at-Risk | \t 92 |
| 53 | Customer-Related\tTrading\tRevenue | \t 92 |
| 54 | Equity\tInvestments\tSummary | \t 93 |
| 55 | Financial\tDerivatives\tSummary | \t 95 |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS	TABLE	REFERENCE

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS	TABLE	REFERENCE	(Continued)

| NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS	TABLE	REFERENCE	(Continued) |  |  |
| :--- | :--- | :--- |
| Table | Description | Page |
| 93 | Amortization\tExpense\ton\tExisting\tIntangible\tAssets | \t171 |
| 94 | Summary\tof\tChanges\tin\tCustomer-Related\tand\tOther\tIntangible\tAssets | \t171 |
| 95 | Commercial\tMortgage\tServicing\tRights\tAccounted\tfor\tat\tFair\tValue | \t172 |
| 96 | Commercial\tMortgage\tServicing\tRights\tAccounted\tfor\tUnder\tthe\tAmortization\tMethod | \t172 |
| 97 | Residential\tMortgage\tServicing\tRights | \t173 |
| 98 | Commercial\tMortgage\tLoan\tServicing\tRights\t–\tKey\tValuation\tAssumptions | \t173 |
| 99 | Residential\tMortgage\tLoan\tServicing\tRights\t–\tKey\tValuation\tAssumptions | \t173 |
| 100 | Fees\tfrom\tMortgage\tand\tOther\tLoan\tServicing | \t173 |
| 101 | Premises,\tEquipment\tand\tLeasehold\tImprovements | \t174 |
| 102 | Depreciation\tand\tAmortization\tExpense | \t174 |
| 103 | Lease\tRental\tExpense | \t174 |
| 104 | Bank\tNotes,\tSenior\tDebt\tand\tSubordinated\tDebt | \t174 |
| 105 | Capital\tSecurities\tof\ta\tSubsidiary\tTrust | \t175 |
| 106 | Perpetual\tTrust\tSecurities\tSummary | \t175 |
| 107 | Summary\tof\tReplacement\tCapital\tCovenants\tof\tPerpetual\tTrust\tSecurities | \t176 |
| 108 | Summary\tof\tContractual\tCommitments\tof\tPerpetual\tTrust\tSecurities | \t176 |
| 109 | Reconciliation\tof\tChanges\tin\tProjected\tBenefit\tObligation\tand\tChange\tin\tPlan\tAssets | \t177 |
| 110 | Asset\tStrategy\tAllocations | \t178 |
| 111 | Pension\tPlan\tAssets\t–\tFair\tValue\tHierarchy | \t180 |
| 112 | Rollforward\tof\tPension\tPlan\tLevel\t3\tAssets | \t181 |
| 113 | Estimated\tCash\tFlows | \t181 |
| 114 | Components\tof\tNet\tPeriodic\tBenefit\tCost | \t182 |
| 115 | Net\tPeriodic\tCosts\t–\tAssumptions | \t182 |
| 116 | Other\tPension\tAssumptions | \t182 |
| 117 | Effect\tof\tOne\tPercent\tChange\tin\tAssumed\tHealth\tCare\tCost | \t183 |
| 118 | Estimated\tAmortization\tof\tUnamortized\tActuarial\tGains\tand\tLosses\t–\t2015 | \t183 |
| 119 | Option\tPricing\tAssumptions | \t184 |
| 120 | Stock\tOption\tRollforward | \t184 |
| 121 | Nonvested\tIncentive/Performance\tUnit\tShare\tAwards\tand\tRestricted\tStock/Share\tUnit\tAwards\t–\tRollforward | \t185 |
| 122 | Nonvested\tCash-Payable\tIncentive/Performance\tUnits\tand\tRestricted\tShare\tUnits\t–\tRollforward | \t186 |
| 123 | Employee\tStock\tPurchase\tPlan\t–\tSummary | \t186 |
| 124 | Total\tGross\tDerivatives | \t187 |
| 125 | Derivatives\tDesignated\tAs\tHedging\tInstruments\tunder\tGAAP | \t188 |
| 126 | Gains\t(Losses)\ton\tDerivatives\tand\tRelated\tHedged\tItems\t–\tFair\tValue\tHedges | \t188 |
| 127 | Gains\t(Losses)\ton\tDerivatives\tand\tRelated\tCash\tFlows\t–\tCash\tFlow\tHedges | \t189 |
| 128 | Gains\t(Losses)\ton\tDerivatives\t–\tNet\tInvestment\tHedges | \t189 |
| 129 | Derivatives\tNot\tDesignated\tAs\tHedging\tInstruments\tunder\tGAAP | \t190 |
| 130 | Gains\t(Losses)\ton\tDerivatives\tNot\tDesignated\tAs\tHedging\tInstruments\tunder\tGAAP | \t192 |
| 131 | Credit\tDefault\tSwaps | \t192 |

# PART	I

Forward-Looking	Statements:	From	time	to	time,	The	PNC	Financial	Services	Group,	Inc.	(PNC	or	the	Corporation)	has	made	and	may	continue	to	make	written	or oral	forward-looking	statements	regarding	our	outlook	for	earnings,	revenues,	expenses,	capital	and	liquidity	levels	and	ratios,	asset	levels,	asset	quality,	financial position	and	other	matters	regarding	or	affecting	PNC	and	its	future	business	and	operations	or	the	impact	of	legal,	regulatory	or	supervisory	matters	on	our	business operations	or	performance.	This	Annual	Report	on	Form	10-K	(the	Report	or	Form	10-K)	also	includes	forward-looking	statements.	With	respect	to	all	such	forward- looking	statements,	you	should	review	our	Risk	Factors	discussion	in	Item	1A,	our	Risk	Management,	Critical	Accounting	Estimates	And	Judgments,	and	Cautionary Statement	Regarding	Forward-Looking	Information	sections	included	in	Item	7,	and	Note	21	Legal	Proceedings	and	Note	22	Commitments	and	Guarantees	in	the	Notes To	Consolidated	Financial	Statements	included	in	Item	8	of	this	Report.	See	page	99	for	a	glossary	of	certain	terms	used	in	this	Report.

# ITEM	1	–	BUSINESS

# Business	Overview

Headquartered	in	Pittsburgh,	Pennsylvania,	we	are	one	of	the	largest	diversified financial	services	companies	in	the	United	States.	We	have	businesses	engaged in	retail	banking,	corporate	and	institutional	banking,	asset	management,	and residential	mortgage	banking,	providing	many	of	our	products	and	services nationally,	as	well	as	other	products	and	services	in	our	primary	geographic markets	located	in	Pennsylvania,	Ohio,	New	Jersey,	Michigan,	Illinois, Maryland,	Indiana,	North	Carolina,	Florida,	Kentucky,	Washington,	D.C., Delaware,	Virginia,	Alabama,	Missouri,	Georgia,	Wisconsin	and	South	Carolina. We	also	provide	certain	products	and	services	internationally.	At	December	31, 2014,	our	consolidated	total	assets,	total	deposits	and	total	shareholders'	equity were	$345.1	billion,	$232.2	billion	and	$44.6	billion,	respectively.

We	were	incorporated	under	the	laws	of	the	Commonwealth	of	Pennsylvania	in 1983	with	the	consolidation	of	Pittsburgh	National	Corporation	and	Provident National	Corporation.	Since	1983,	we	have	diversified	our	geographical presence,	business	mix	and	product	capabilities	through	internal	growth, strategic	bank	and	non-bank	acquisitions	and	equity	investments,	and	the formation	of	various	non-banking	subsidiaries.

# Review	Of	Business	Segments

In	addition	to	the	following	information	relating	to	our	lines	of	business,	we incorporate	the	information	under	the	captions	Business	Segment	Highlights	and Business	Segments	Review	in	Item	7	of	this	Report	here	by	reference.	Also,	we include	the	financial	and	other	information	by	business	in	Note	24	Segment Reporting	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this Report	here	by	reference.

Assets,	revenue	and	earnings	attributable	to	foreign	activities	were	not	material in	the	periods	presented.	Business	segment	results	for	periods	prior	to	2014	have been	reclassified	to	reflect	current	methodologies	and	current	business	and management	structure	and	to	present	those	periods	on	the	same	basis.

Retail	Banking	provides	deposit,	lending,	brokerage,	investment	management and	cash	management	services	to	consumer	and	small	business	customers	within our	primary	geographic	markets.	Our	customers	are	serviced	through	our	branch network,	ATMs,	call	centers,	online	banking	and	mobile	channels.	The	branch network	is	located	primarily	in	Pennsylvania,	Ohio,	New	Jersey,	Michigan, Illinois,	Maryland,	Indiana,	North	Carolina,	Florida,	Kentucky,	Washington, D.C.,	Delaware,	Virginia,	Alabama,	Missouri,	Georgia,	Wisconsin	and	South Carolina.

Our	core	strategy	is	to	acquire	and	retain	customers	who	maintain	their	primary checking	and	transaction	relationships	with	PNC.	We	also	seek	revenue	growth by	deepening	our	share	of	our	customers'	financial	assets,	such	as	savings	and liquidity	deposits,	loans	and	investable	assets,	including	retirement	assets.	A strategic	priority	for	PNC	is	to	redefine	the	retail	banking	business	in	response	to changing	customer	preferences.	A	key	element	of	this	strategy	is	to	expand	the use	of	lower-cost	alternative	distribution	channels	while	continuing	to	optimize the	traditional	branch	network.	In	addition,	we	have	a	disciplined	process	to continually	improve	the	engagement	of	both	our	employees	and	customers, which	is	a	strong	indicator	of	customer	growth,	retention	and	relationship expansion.

Corporate	&	Institutional	Banking	provides	lending,	treasury	management,	and capital	markets-related	products	and	services	to	mid-sized	and	large corporations,	government	and	not-for-profit	entities.	Lending	products	include secured	and	unsecured	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-related	products	and services	include	foreign	exchange,	derivatives,	securities,	loan	syndications, mergers	and	acquisitions	advisory,	equity	capital	markets	advisory	and	related services.	We	also	provide	commercial	loan	servicing	and	real	estate	advisory and	technology	solutions	for	the	commercial	real	estate	finance	industry. Products	and	services	are	generally	provided	within	our	primary	geographic markets,	with	certain	products	and	services	offered	nationally	and internationally.

Corporate	&	Institutional	Banking's	strategy	is	to	be	the	leading	relationship- based	provider	of	traditional	banking	products	and	services	to	its	customers through	the	economic	cycles.	We	aim	to	expand	our	market	share	and	drive higher	returns	by	growing	and	deepening	customer	relationships	while maintaining	prudent	risk	and	expense	management.

Asset	Management	Group	includes	personal	wealth	management	for	high	net worth	and	ultra	high	net	worth	clients	and	institutional	asset	management. Wealth	management	products	and	services	include	investment	and	retirement planning,	customized	investment	management,	private	banking,	tailored	credit solutions,	and	trust	management	and	administration	for	individuals	and	their families.	Hawthorn	provides	multi-generational	family	planning	including wealth	strategy,	investment	management,	private	banking,	tax	and	estate planning	guidance,	performance	reporting	and	personal	administration	services to	ultra	high	net	worth	families.	Institutional	asset	management	provides investment	management,	custody	administration	and	retirement	administration services.	Institutional	clients	include	corporations,	unions,	municipalities,	non- profits,	foundations	and	endowments,	primarily	located	in	our	geographic footprint.

Asset	Management	Group	is	focused	on	being	one	of	the	premier	bank-held individual	and	institutional	asset	managers	in	each	of	the	markets	it	serves.	The business	seeks	to	deliver	high	quality	banking	advice	and	trust	and	investment management	services	to	our	high	net	worth,	ultra	high	net	worth	and	institutional client	sectors	through	a	broad	array	of	products	and	services.	Asset	Management Group's	primary	goals	are	to	service	our	clients,	grow	the	business	and	deliver solid	financial	performance	with	prudent	risk	and	expense	management.

Residential	Mortgage	Banking	directly	originates	first	lien	residential	mortgage loans	on	a	nationwide	basis	with	a	significant	presence	within	the	retail	banking footprint.	Mortgage	loans	represent	loans	collateralized	by	one-to-four-family residential	real	estate.	These	loans	are	typically	underwritten	to	government agency	and/or	third-party	standards,	and	either	sold,	servicing	retained,	or	held on	PNC's	balance	sheet.	Loan	sales	are	primarily	to	secondary	mortgage conduits	of	Federal	National	Mortgage	Association	(FNMA),	Federal	Home Loan	Mortgage	Corporation	(FHLMC),	Federal	Home	Loan	Banks	and	third- party	investors,	or	are	securitized	and	issued	under	the	Government	National Mortgage	Association	(GNMA)	program,	as	described	in	more	detail	in	Note	2 Loan	Sale	and	Servicing	Activities	and	Variable	Interest	Entities	in	Item	8	of this	Report	and	included	here	by	reference.	The	mortgage	servicing	operation performs	all	functions	related	to	servicing	mortgage	loans,	primarily	those	in first	lien	position,	for	various	investors	and	for	loans	owned	by	PNC.

Residential	Mortgage	Banking	is	focused	on	adding	value	to	the	PNC	franchise by	building	stronger	customer	relationships,	providing	quality	investment	loans and	mortgage	servicing	opportunities,	and	delivering	acceptable	returns consistent	with	our	desired	risk	appetite.	A	strategic	priority	for	PNC	is	to	build a	stronger	residential	mortgage	business	offering	seamless	delivery	to	customers while	improving	efficiencies.	Our	national	distribution	capability	provides volume	that	drives	economies	of	scale,	risk	dispersion	and	cost-effective extension	of	the	retail	banking	footprint	for	cross-selling	opportunities.

BlackRock,	in	which	we	hold	an	equity	investment,	is	a	leading	publicly	traded investment	management	firm	providing	a	broad	range	of	investment	and	risk management	services	to	institutional	and	retail	clients	worldwide.	Using	a diverse	platform	of	active	and	index	investment	strategies	across	asset	classes, BlackRock	develops	investment	outcomes	and	asset	allocation	solutions	for clients.	Product	offerings	include	single-	and	multi-asset	class	portfolios investing	in	equities,	fixed	income,	alternatives	and	money	market	instruments. BlackRock	also	offers	an	investment	and	risk	management	technology	platform, risk	analytics	and	advisory	services	and	solutions	to	a	broad	base	of	institutional investors.	We	hold	our	equity	investment	in	BlackRock	as	a	key	component	of our	diversified	revenue	strategy.	BlackRock	is	a	publicly	traded	company,	and additional	information	regarding	its	business	is	available	in	its	filings	with	the Securities	and	Exchange	Commission	(SEC).

Non-Strategic	Assets	Portfolio	includes	a	consumer	portfolio	of	mainly residential	mortgage	and	brokered	home	equity	loans	and	lines	of	credit	and	a small	commercial/commercial	real	estate	loan	and	lease	portfolio.	We	obtained	a significant	portion	of	these	non-strategic	assets	through	acquisitions	of	other companies.

# Subsidiaries

Our	corporate	legal	structure	at	December	31,	2014	consisted	of	one	domestic subsidiary	bank,	including	its	subsidiaries,	and	approximately	80	active	non- bank	subsidiaries,	in	addition	to	various	affordable	housing	investments.	Our bank	subsidiary	is	PNC	Bank,	National	Association	(PNC	Bank),	a	national bank	headquartered	in	Pittsburgh,	Pennsylvania.	For	additional	information	on our	subsidiaries,	see	Exhibit	21	to	this	Report.

# Statistical	Disclosure	By	Bank	Holding	Companies

The	following	statistical	information	is	included	on	the	indicated	pages	of	this Report	and	is	incorporated	herein	by	reference:

# Supervision	and	Regulation

PNC	is	a	bank	holding	company	(BHC)	registered	under	the	Bank	Holding Company	Act	of	1956	(BHC	Act)	and	a	financial	holding	company	under	the Gramm-Leach-Bliley	Act	(GLB	Act).

We	are	subject	to	numerous	governmental	regulations,	some	of	which	are highlighted	below.	See	Note	20	Regulatory	Matters	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report	for	additional information	regarding	our	regulatory	matters.	Applicable	laws	and	regulations restrict	our	permissible	activities	and	investments,	impose	conditions	and requirements	on	the	products	and	services	we	offer	and	the	manner	in	which	they are	offered	and	sold,	and	require	compliance	with	protections	for	loan,	deposit, brokerage,

fiduciary,	investment	management	and	other	customers,	among	other	things. They	also	restrict	our	ability	to	repurchase	stock	or	pay	dividends,	or	to	receive dividends	from	our	bank	subsidiary,	and	impose	capital	adequacy	requirements. The	consequences	of	noncompliance	can	include	substantial	monetary	and nonmonetary	sanctions.

In	addition,	we	are	subject	to	comprehensive	supervision	and	periodic examination	by,	among	other	regulatory	bodies,	the	Board	of	Governors	of	the Federal	Reserve	System	(Federal	Reserve)	and	the	Office	of	the	Comptroller	of the	Currency	(OCC).	These	examinations	consider	not	only	compliance	with applicable	laws,	regulations	and	supervisory	policies	of	the	agency,	but	also capital	levels,	asset	quality	and	risk,	management	ability	and	performance, earnings,	liquidity	and	various	other	factors.	The	results	of	examination	activity by	any	of	our	federal	bank	regulators	potentially	can	result	in	the	imposition	of significant	limitations	on	our	activities	and	growth.	These	regulatory	agencies generally	have	broad	discretion	to	impose	restrictions	and	limitations	on	the operations	of	a	regulated	entity	and	take	enforcement	action	against	a	regulated entity	where	the	relevant	agency	determines,	among	other	things,	that	such operations	fail	to	comply	with	applicable	law	or	regulations	or	are	conducted	in an	unsafe	or	unsound	manner.	This	supervisory	framework,	including	the examination	reports	and	supervisory	ratings	(which	are	not	publicly	available)	of the	agencies,	could	materially	impact	the	conduct,	growth	and	profitability	of our	operations.

The	Consumer	Financial	Protection	Bureau	(CFPB)	is	responsible	for	examining PNC	Bank	and	its	affiliates	(including	PNC)	for	compliance	with	most	federal consumer	financial	protection	laws,	including	the	laws	relating	to	fair	lending and	prohibiting	unfair,	deceptive	or	abusive	acts	or	practices	in	connection	with the	offer,	sale	or	provision	of	consumer	financial	products	or	services,	and	for enforcing	such	laws	with	respect	to	PNC	Bank	and	its	affiliates.	The	results	of the	CFPB's	examinations,	which	are	not	publicly	available,	also	can	result	in restrictions	or	limitations	on	the	operations	of	a	regulated	entity	as	well	as enforcement	actions	against	a	regulated	entity,	including	the	imposition	of monetary	penalties	and	nonmonetary	requirements.

We	also	are	subject	to	regulation	by	the	SEC	by	virtue	of	our	status	as	a	public company	and	by	the	SEC	and	the	Commodity	Futures	Trading	Commission (CFTC)	due	to	the	nature	of	some	of	our	businesses.	Our	banking	and	securities businesses	with	operations	outside	the	United	States,	including	those	conducted by	BlackRock,	are	also	subject	to	regulation	by	appropriate	authorities	in	the foreign	jurisdictions	in	which	they	do	business.

As	a	regulated	financial	services	firm,	our	relationships	and	good	standing	with regulators	are	of	fundamental	importance	to	the	operation	and	growth	of	our businesses.	The	Federal	Reserve,	OCC,	CFPB,	SEC,	CFTC	and	other	domestic and

foreign	regulators	have	broad	enforcement	powers,	and	certain	of	the	regulators have	the	power	to	approve,	deny,	or	refuse	to	act	upon	our	applications	or notices	to	conduct	new	activities,	acquire	or	divest	businesses,	assets	or	deposits, or	reconfigure	existing	operations.

We	anticipate	new	legislative	and	regulatory	initiatives	over	the	next	several years,	focused	specifically	on	banking	and	other	financial	services	in	which	we are	engaged.	Legislative	and	regulatory	developments	to	date,	as	well	as	those that	come	in	the	future,	have	had	and	are	likely	to	continue	to	have	an	impact	on the	conduct	of	our	business.	The	more	detailed	description	of	the	significant regulations	to	which	we	are	subject	included	in	this	Report	is	based	on	the current	regulatory	environment	and	is	subject	to	potentially	material	change.	See also	the	additional	information	included	as	Risk	Factors	in	Item	1A	of	this Report	discussing	the	impact	of	financial	regulatory	reform	initiatives,	including Dodd-Frank	and	regulations	promulgated	to	implement	it,	on	the	regulatory environment	for	PNC	and	the	financial	services	industry.

Among	other	areas	that	have	been	receiving	a	high	level	of	regulatory	focus	over the	last	several	years	are	compliance	with	the	Bank	Secrecy	Act	and	anti-money laundering	laws,	the	oversight	of	arrangements	with	third-party	vendors	and suppliers,	the	protection	of	confidential	customer	information,	and	cyber-security more	generally.	In	addition,	there	is	an	increased	focus	on	fair	lending	and	other consumer	protection	issues.

Additional	legislation,	changes	in	rules	promulgated	by	federal	financial regulators,	other	federal	and	state	regulatory	authorities	and	self-regulatory organizations,	or	changes	in	the	interpretation	or	enforcement	of	existing	laws and	rules,	may	directly	affect	the	method	of	operation	and	profitability	of	our businesses.	The	profitability	of	our	businesses	could	also	be	affected	by	rules and	regulations	that	impact	the	business	and	financial	communities	in	general, including	changes	to	the	laws	governing	taxation,	antitrust	regulation	and electronic	commerce.

There	are	numerous	rules	governing	the	regulation	of	financial	services institutions	and	their	holding	companies.	Accordingly,	the	following	discussion is	general	in	nature	and	does	not	purport	to	be	complete	or	to	describe	all	of	the laws,	regulations	and	supervisory	policies	that	apply	to	us.	To	a	substantial extent,	the	purpose	of	the	regulation	and	supervision	of	financial	services institutions	and	their	holding	companies	is	not	to	protect	our	shareholders	and our	non-customer	creditors,	but	rather	to	protect	our	customers	(including depositors)	and	the	financial	markets	in	general.

# Dodd-Frank	Act

The	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	(Dodd- Frank),	which	was	signed	into	law	on	July	21,	2010,	comprehensively	reformed the	regulation	of	financial	institutions,	products	and	services.	Dodd-Frank

requires	various	federal	regulatory	agencies	to	implement	numerous	new	rules and	regulations.	Because	federal	agencies	are	granted	broad	discretion	in	drafting these	rules	and	regulations,	and	many	implementing	rules	have	not	yet	been issued,	have	only	been	issued	in	proposed	form,	or	have	only	recently	been finalized,	many	of	the	details	and	much	of	the	impact	of	Dodd-Frank	may	not	be known	for	months	or	years.	Among	other	things,	Dodd-Frank	established	the CFPB;	provided	for	new	capital	standards	that	eliminate	the	treatment	of	trust preferred	securities	as	Tier	1	regulatory	capital;	required	that	deposit	insurance assessments	be	calculated	based	on	an	insured	depository	institution's	assets rather	than	its	insured	deposits;	raised	the	minimum	Designated	Reserve	Ratio (the	balance	in	the	Deposit	Insurance	Fund	divided	by	estimated	insured deposits)	to	1.35%;	established	a	comprehensive	regulatory	regime	for	the derivatives	activities	of	financial	institutions;	prohibited	banking	entities,	after	a transition	period,	from	engaging	in	certain	types	of	proprietary	trading,	as	well as	having	investments	in,	sponsoring,	and	maintaining	certain	types	of relationships	with	hedge	funds	and	private	equity	funds	(through	provisions commonly	referred	to	as	the	"Volcker	Rule");	placed	limitations	on	the interchange	fees	charged	for	debit	card	transactions;	and	established	new minimum	mortgage	underwriting	standards	for	residential	mortgages.

Financial	Stability	Oversight	Council.	Dodd-Frank	also	established	the	10- member	inter-agency	Financial	Stability	Oversight	Council	(FSOC),	which	is charged	with	identifying	and	monitoring	systemic	risks	and	strengthening	the regulation	of	financial	holding	companies	and	certain	non-bank	companies deemed	to	be	"systemically	important."	In	extraordinary	cases,	the	FSOC,	in conjunction	with	the	Federal	Reserve,	could	order	the	break-up	of	financial	firms that	are	deemed	to	present	a	grave	threat	to	the	financial	stability	of	the	United States.

# Banking	Regulation	and	Supervision

Enhanced	Prudential	Requirements.	Dodd-Frank	requires	the	Federal	Reserve	to establish	enhanced	prudential	standards	for	BHCs	with	total	consolidated	assets of	$50	billion	or	more,	such	as	PNC,	as	well	as	systemically	important	non-bank financial	companies	designated	by	the	FSOC	for	Federal	Reserve	supervision. For	such	BHCs,	these	enhanced	standards	must	be	more	stringent	than	the standards	and	requirements	applicable	to	BHCs	with	less	than	$50	billion	in assets,	and	must	increase	in	stringency	based	on	the	Federal	Reserve's assessment	of	a	BHC's	risk	to	the	financial	system.	The	FSOC	may	make recommendations	to	the	Federal	Reserve	concerning	the	establishment	and refinement	of	these	enhanced	prudential	standards.

The	Federal	Reserve	in	February	2014	issued	final	rules	that	establish	the	new enhanced	prudential	standards	related	to	liquidity	risk	management	and	overall risk	management	for	BHCs	with	$50	billion	or	more	in	assets.	These	new	rules, which	took	effect	for	PNC	on	January	1,	2015,	among	other

things,	require	that	covered	BHCs	conduct	liquidity	stress	tests	at	least	monthly, maintain	a	contingency	funding	plan	and	sufficient	highly	liquid	assets	to	meet net	stress	cash-flow	needs	(as	projected	under	the	company's	liquidity	stress tests)	for	30	days,	and	establish	certain	oversight	and	governance	responsibilities for	the	chief	risk	officer,	the	board	of	directors	and	the	risk	committee	of	the board	of	directors	of	a	covered	company.	In	addition,	the	rules	implement	the provisions	of	Dodd-Frank	that	require	the	Federal	Reserve	to	impose	a	maximum 15-to-1	debt	to	equity	ratio	on	a	BHC	if	the	FSOC	determines	that	the	company poses	a	grave	threat	to	the	financial	stability	of	the	United	States	and	that	the imposition	of	such	a	debt-to-equity	requirement	would	mitigate	such	risk.	The rules	issued	in	February	2014	did	not	finalize	the	other	enhanced	prudential standards	that	the	Federal	Reserve	proposed	in	December	2011,	including counterparty	credit	exposure	limits	and	early	remediation	requirements,	although the	Federal	Reserve	has	indicated	that	these	matters	remain	under	development. See	the	Recent	Market	and	Industry	Developments	portion	of	Item	7	MD&A and	Item	1A	Risk	Factors	for	additional	information.

Regulatory	Capital	Requirements,	Stress	Testing	and	Capital	Planning.	PNC and	PNC	Bank	are	subject	to	the	regulatory	capital	requirements	established	by the	Federal	Reserve	and	the	OCC,	respectively.	These	requirements	have changed,	and	will	continue	to	change	significantly,	as	a	result	of	the	rules adopted	by	the	U.S.	banking	agencies	in	July	2013	to	implement	the	new international	guidelines	for	determining	regulatory	capital	established	by	the Basel	Committee	on	Banking	Supervision	(Basel	Committee)	known	as	"Basel III,"	as	well	as	to	implement	certain	provisions	of	Dodd-Frank.	The	rules adopted	in	July	2013	generally	have	three	fundamental	parts.

The	first	part,	referred	to	as	the	Basel	III	capital	rule,	among	other	things, narrows	the	definition	of	regulatory	capital,	requires	banking	organizations	with $15	billion	or	more	in	assets	(including	PNC)	to	phase-out	trust	preferred securities	from	Tier	1	regulatory	capital,	establishes	a	new	common	equity	Tier 1	capital	regulatory	requirement	for	banking	organizations,	and	revises	the capital	levels	at	which	PNC	and	PNC	Bank	would	be	subject	to	prompt corrective	action.	These	rules	also	require	that	significant	common	stock investments	in	unconsolidated	financial	institutions	(as	defined	in	the	rule),	as well	as	mortgage	servicing	rights	and	deferred	tax	assets,	be	deducted	from	Tier 1	common	regulatory	capital	to	the	extent	such	items	individually	exceed	10%, or	in	the	aggregate	exceed	15%,	of	the	organization's	adjusted	Basel	III	common equity	Tier	1	regulatory	capital.	We	previously	referred	to	Basel	III	common equity	Tier	1	capital	as	Basel	III	Tier	1	common	capital.	The	Basel	III	capital rule	also	significantly	limits	the	extent	to	which	minority	interests	in consolidated	subsidiaries	(including	minority	interests	in	the	form	of	REIT preferred	securities)	may	be	included	in	regulatory	capital.	In	addition,	for banking	organizations,	like	PNC,	which	are	subject	to	the	advanced

approaches	(described	below),	the	rule	includes	other	comprehensive	income related	to	both	available	for	sale	securities	and	pension	and	other	post-retirement plans	as	a	component	of	common	equity	Tier	1	capital.	The	Basel	III	capital	rule became	effective	on	January	1,	2014	for	PNC	and	PNC	Bank,	although	many provisions	are	phased-in	over	a	period	of	years,	with	the	rules	generally	fully phased-in	as	of	January	1,	2019.

The	second	part	of	the	rules	adopted	in	July	2013	is	referred	to	as	the	advanced approaches	and	materially	revises	the	framework	for	the	risk-weighting	of	assets under	Basel	II.	The	Basel	II	framework,	which	was	adopted	by	the	Basel Committee	in	2004,	seeks	to	provide	more	risk-sensitive	regulatory	capital calculations	and	promote	enhanced	risk	management	practices	among	large, internationally	active	banking	organizations.	The	advanced	approaches modifications	adopted	by	the	U.S.	banking	agencies	became	effective	on January	1,	2014,	and	generally	apply	to	banking	organizations	that	have	$250 billion	or	more	in	total	consolidated	assets	or	that	have	$10	billion	or	more	in on-balance	sheet	foreign	exposure.	Prior	to	fully	implementing	the	advanced approaches	to	calculate	risk-weighted	assets,	PNC	and	PNC	Bank	must successfully	complete	a	"parallel	run"	qualification	phase.	PNC	and	PNC	Bank entered	this	parallel	run	qualification	phase	on	January	1,	2013.	Although	the minimum	parallel	run	qualification	period	is	four	quarters,	the	parallel	run	period for	PNC	and	PNC	Bank,	now	in	its	third	year,	is	consistent	with	the	experience of	other	U.S.	banks	that	have	all	had	multi-year	parallel	run	periods.

The	third	major	part	of	the	rules	adopted	in	July	2013	is	referred	to	as	the standardized	approach	and	materially	revises	the	framework	for	the	risk- weighting	of	assets	under	Basel	I.	The	standardized	approach,	for	example, establishes	a	new	framework	for	the	risk-weighting	of	securitization	and	non- U.S.	sovereign	exposures,	and	increases	the	risk-weights	on	certain	types	of assets	including	high-volatility	commercial	real	estate	and	past	due	corporate and	retail	exposures.	The	standardized	approach	took	effect	on	January	1,	2015.

The	risk-based	capital	and	leverage	rules	that	the	federal	banking	regulators	have adopted	require	the	capital-to-assets	ratios	of	banking	organizations,	including PNC	and	PNC	Bank,	to	meet	certain	minimum	standards.	The	Basel	III	rule generally	divides	regulatory	capital	into	three	components:	common	equity	Tier 1	capital,	additional	Tier	1	capital	(which,	together	with	common	equity	Tier	1 capital,	comprises	Tier	1	capital)	and	Tier	2	capital.	Common	equity	Tier	1 capital	is	generally	common	stock,	retained	earnings,	qualifying	minority interest	and,	for	advanced	approaches	banking	organizations,	accumulated	other comprehensive	income,	less	the	deductions	required	to	be	made	from	common equity	Tier	1	capital.	Additional	Tier	1	generally	includes,	among	other	things, perpetual	preferred	stock	and	qualifying	minority	interests,	less	the	deductions required	to	be	made	from	additional	Tier	1.	Tier	2	capital	generally	comprises qualifying	subordinated	debt.

Total	capital	is	the	sum	of	Tier	1	and	Tier	2	capital,	less	the	deductions	required from	total	capital.	For	additional	information	regarding	the	differences	between Basel	III	common	equity	Tier	1	capital	and	Basel	I	Tier	1	common	capital,	see the	Capital	section	of	the	Consolidated	Balance	Sheet	Review	section	of	Item	7 of	this	Report.

Under	the	regulatory	capital	rules,	a	banking	organization's	risk-based	capital ratios	are	calculated	by	allocating	assets	and	specified	off-balance	sheet	financial instruments	into	risk-weighted	categories	(with	higher	levels	of	capital	being required	for	the	categories	perceived	as	representing	greater	risk),	which	are	used to	determine	the	amount	of	a	banking	organization's	total	risk-weighted	assets (RWAs).	Under	the	standardized	approach,	the	nominal	dollar	amounts	of	assets and	credit	equivalent	amounts	of	off-balance	sheet	items	are	generally	multiplied by	one	of	several	risk	adjustment	percentages	set	forth	in	the	rules	and	that increase	as	the	perceived	credit	risk	of	the	relevant	asset	increases.	For	certain types	of	exposures,	such	as	securitization	exposures,	the	standardized	approach establishes	one	or	more	methodologies	that	are	to	be	used	to	calculate	the	risk- weighted	asset	amount	for	the	exposure.

As	a	result	of	the	staggered	effective	dates	of	the	final	U.S.	capital	rules	issued	in July	2013,	as	well	as	the	fact	that	PNC	remains	in	the	parallel	run	qualification phase	for	the	advanced	approaches,	PNC's	regulatory	risk-based	capital	ratios	in 2014	were	based	on	the	definitions	of,	and	deductions	from,	capital	under	Basel III	(as	such	definitions	and	deductions	are	phased-in	for	2014)	and	Basel	I	risk- weighted	assets	(but	subject	to	certain	adjustments	as	defined	by	the	Basel	III rules).	As	of	January	1,	2015,	and	until	PNC	has	exited	parallel	run,	PNC's regulatory	risk-based	Basel	III	ratios	will	be	calculated	using	the	standardized approach	for	determining	risk-weighted	assets,	and	the	definitions	of,	and deductions	from,	capital	under	Basel	III	(as	such	definitions	and	deductions	are phased-in	through	2019).	Once	PNC	exits	parallel	run,	its	regulatory	risk-based capital	ratios	will	be	the	lower	of	the	ratios	calculated	under	the	standardized approach	or	the	advanced	approaches.	We	refer	to	the	capital	ratios	calculated using	the	phased-in	Basel	III	provisions	as	the	Transitional	Basel	III	ratios.	The Transitional	Basel	III	regulatory	capital	ratios	of	PNC	and	PNC	Bank	as	of December	31,	2014	exceeded	the	applicable	minimum	levels	in	effect	for	2014. For	additional	information	regarding	the	Transitional	Basel	III	capital	ratios	of PNC	and	PNC	Bank	as	of	December	31,	2014,	as	well	as	the	levels	necessary	to exceed	the	regulatory	minimums	and	those	needed	to	be	considered	"well capitalized",	see	the	Capital	portion	of	the	Consolidated	Balance	Sheet	Review section	of	Item	7	of	this	Report.

The	Basel	III	capital	rule	requires	that	banking	organizations	maintain	a minimum	common	equity	Tier	1	ratio	of	4.5%,	a	Tier	1	capital	ratio	of	6.0%, and	a	total	capital	ratio	of	8.0%.	Moreover,	when	fully	phased-in	on	January	1, 2019,	the	rule

will	require	banking	organizations	to	maintain	a	common	equity	Tier	1	capital ratio	of	at	least	7.0%,	a	Tier	1	capital	ratio	of	at	least	8.5%,	and	a	total	capital ratio	of	at	least	10.5%	to	avoid	limitations	on	capital	distributions	(including common	stock	dividends	and	share	repurchases)	and	certain	discretionary incentive	compensation	payments.	For	banking	organizations	that	are	subject	to the	advanced	approaches,	these	higher	capital	conservation	buffer	levels	above the	regulatory	minimums	could	be	supplemented	by	a	countercyclical	capital buffer	of	up	to	an	additional	2.5%	during	periods	of	excessive	credit	growth, although	this	buffer	is	initially	set	at	zero	in	the	United	States.

In	December	2014,	the	Federal	Reserve	requested	comment	on	proposed	rules that	would	apply	an	additional	risk-based	common	equity	Tier	1	capital surcharge	of	between	1.0%	and	4.5%	(when	fully	phased-in	on	January	1,	2019) to	firms	identified	as	globally	systemically	important	banks	(GSIBs)	using	a scoring	methodology	that	is	based	on	five	measures	of	global	systemic importance	(size,	interconnectedness,	substitutability,	complexity,	and	cross- jurisdictional	activity).	Based	on	the	methodology	proposed,	PNC	would	not	be subject	to	the	proposed	GSIB	surcharge.	In	its	December	2014	release,	the Federal	Reserve	indicated	that	there	is	a	significant	gap	between	the	systemic scores	of	the	eight	U.S.	BHCs	that	would	be	subject	to	the	proposed	GSIB surcharge	and	other	BHCs	(such	as	PNC).

The	regulatory	capital	framework	adopted	by	the	federal	banking	regulators	also requires	that	banking	organizations	maintain	a	minimum	amount	of	Tier	1 capital	to	average	consolidated	assets,	referred	to	as	the	leverage	ratio.	Banking organizations	are	required	to	maintain	a	minimum	leverage	ratio	of	Tier	1	capital to	total	assets	of	4.0%.	As	of	December	31,	2014,	the	leverage	ratios	of	PNC	and PNC	Bank	were	above	the	required	minimum	level.

Under	the	Basel	III	capital	rule,	banking	organizations	subject	to	the	advanced approaches	(such	as	PNC	and	PNC	Bank)	also	will	be	subject	to	a	new	minimum 3.0%	supplementary	leverage	ratio	that	becomes	effective	on	January	1,	2018, with	public	regulatory	reporting	of	the	ratio	beginning	in	2015.	Unlike	the existing	leverage	ratio,	the	denominator	of	the	supplementary	leverage	ratio takes	into	account	certain	off-balance	sheet	items,	including	loan	commitments and	potential	future	exposure	under	derivative	contracts.	Consistent	with	the January	2014	Basel	Committee	revisions	to	the	leverage	ratio,	the	U.S.	banking agencies	in	September	2014	adopted	final	rules	that,	among	other	things,	revise the	denominator	of	the	supplementary	leverage	ratio	and	the	supplementary leverage	ratio	disclosures	that	covered	banking	organizations	are	required	to make	beginning	in	2015.	In	April	2014,	the	U.S.	banking	agencies	released	final rules	imposing	a	higher	supplementary	leverage	ratio	requirement	on	BHCs	with total	consolidated	assets	of	more	than	$700	billion	or	assets	under	custody	of more	than	$10	trillion,	as	well	as	the	insured	depository	institution	subsidiaries of	these	BHCs.

Based	on	the	asset	and	custody	thresholds	adopted	in	the	final	rules,	these	higher supplementary	leverage	requirements	do	not	apply	to	PNC	or	PNC	Bank.

The	Federal	Reserve	and	the	international	bodies	responsible	for	establishing globally	applicable	regulatory	standards	for	banks	(the	Financial	Stability	Board (FSB)	and	the	Basel	Committee)	have	been	working	during	the	past	few	years on	developing	a	minimum	total	loss	absorbing	capacity	(TLAC)	requirement that	would	facilitate	the	orderly	resolution	of	GSIBs	by	requiring	that	such	firms maintain	a	minimum	amount	of	regulatory	capital	and	eligible	debt	that	could	be converted	to	equity	upon	failure.	In	November	2014,	the	FSB	requested comment	on	a	consultative	document	that	would	establish	a	global	framework for	the	implementation	of	such	a	TLAC	requirement.	As	the	proposal	would apply	only	to	firms	that	are	identified	as	a	GSIB	by	the	FSB,	it	would	not	apply to	PNC.	The	comment	period	on	the	FSB	proposal	ended	on	February	2,	2015.

Failure	to	meet	applicable	capital	guidelines	could	subject	a	banking organization	to	a	variety	of	enforcement	remedies	available	to	the	federal	bank regulatory	agencies,	including	a	limitation	on	the	ability	to	pay	dividends	or repurchase	shares,	the	issuance	of	a	capital	directive	to	increase	capital	and,	in severe	cases,	the	termination	of	deposit	insurance	by	the	FDIC,	and	the appointment	of	a	conservator	or	receiver.	In	some	cases,	the	extent	of	these powers	depends	upon	whether	the	institution	in	question	is	considered	"well capitalized,"	"adequately	capitalized,"	"undercapitalized,"	"significantly undercapitalized"	or	"critically	undercapitalized."	Generally,	the	smaller	an institution's	capital	base	in	relation	to	its	risk-weighted	or	total	assets,	the	greater the	scope	and	severity	of	the	agencies'	powers,	ultimately	permitting	the agencies	to	appoint	a	receiver	for	the	institution.	Business	activities	may	also	be affected	by	an	institution's	capital	classification.	For	instance,	only	a	"well capitalized"	insured	depository	institution	may	accept	brokered	deposits	without prior	regulatory	approval.	In	addition,	in	order	to	remain	a	financial	holding company	and	engage	in	the	broader	range	of	financial	activities	authorized	for such	a	company,	PNC	and	PNC	Bank	must	remain	"well	capitalized."	At December	31,	2014,	PNC	and	PNC	Bank	exceeded	the	required	ratios	for classification	as	"well	capitalized."	The	Basel	III	capital	rule	revised	the thresholds	at	which	an	insured	depositary	institution	is	considered	"well capitalized,"	"adequately	capitalized,"	"undercapitalized,"	"significantly undercapitalized"	or	"critically	undercapitalized."	The	new	thresholds	among other	things	(i)	include	the	common	equity	Tier	1	capital	metric;	(ii)	generally increase	the	amount	of	Tier	1	capital	required	to	remain	within	each	capital category	(other	than	the	"critically	undercapitalized"	category);	and	(iii)	for institutions	subject	to	the	advanced	approaches,	include	a	supplementary leverage	ratio	threshold	in	the	definitions	of	"adequately	capitalized"	and "undercapitalized"	once	the	supplementary	leverage	ratio	takes	effect	as	a minimum	requirement	in	2018.	The	revised	thresholds	generally	took	effect	on January	1,	2015.	For

additional	discussion	of	capital	adequacy	requirements,	we	refer	you	to	the Capital	portion	of	the	Consolidated	Balance	Sheet	Review	section	of	Item	7	of this	Report	and	to	Note	20	Regulatory	Matters	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report.

In	addition	to	these	regulatory	capital	requirements,	PNC	is	subject	to	the Federal	Reserve's	capital	plan	rule,	annual	capital	stress	testing	requirements and	Comprehensive	Capital	Analysis	and	Review	(CCAR)	process,	as	well	as the	annual	and	mid-year	Dodd-Frank	capital	stress	testing	(DFAST) requirements	of	the	Federal	Reserve	and	the	OCC.	As	part	of	the	CCAR	process, the	Federal	Reserve	undertakes	a	supervisory	assessment	of	the	capital	adequacy of	BHCs,	including	PNC,	that	have	$50	billion	or	more	in	total	consolidated assets.	This	capital	adequacy	assessment	is	based	on	a	review	of	a comprehensive	capital	plan	submitted	by	each	participating	BHC	to	the	Federal Reserve	that	describes	the	company's	planned	capital	actions	during	the	nine quarter	review	period,	as	well	as	the	results	of	stress	tests	conducted	by	both	the company	and	the	Federal	Reserve	under	different	hypothetical	macro-economic scenarios,	including	a	supervisory	adverse	and	a	severely	adverse	scenario provided	by	the	Federal	Reserve.	In	evaluating	a	BHC's	capital	plan,	the	Federal Reserve	considers	a	number	of	qualitative	factors.	In	assessing	these	qualitative factors,	which	have	become	increasingly	important	in	the	CCAR	process	in recent	years,	the	Federal	Reserve	considers	whether	the	BHC's	capital	adequacy processes	are	supported	by	strong	foundational	risk	management,	effective	loss and	capital	estimation	methodologies,	a	sufficient	capital	adequacy	assessment process,	comprehensive	capital	policies	and	capital	planning	processes,	robust internal	controls,	and	effective	governance.	From	a	quantitative	perspective,	the Federal	Reserve	considers	whether	under	different	hypothetical	macro-economic scenarios,	including	the	supervisory	severely	adverse	scenario,	the	company would	be	able	to	maintain	throughout	each	quarter	of	the	nine	quarter	planning horizon,	even	if	it	maintained	its	base	case	planned	capital	actions,	(i)	a projected	pro	forma	Basel	I	Tier	1	common	capital	ratio	above	5%,	and (ii)	regulatory	risk-based	and	leverage	capital	ratios	that	exceed	the	minimums that	are,	or	would	then	be,	in	effect	for	the	company,	taking	into	account	the Basel	III	capital	rules	adopted	in	July	2013	and	any	applicable	phase-in	periods. In	addition,	the	Federal	Reserve	evaluates	a	company's	projected	path	towards compliance	with	the	Basel	III	regulatory	capital	framework	on	a	fully implemented	basis.	After	completing	its	review,	the	Federal	Reserve	may	object or	not	object	to	the	BHC's	proposed	capital	actions,	such	as	plans	to	pay	or increase	common	stock	dividends,	reinstate	or	increase	common	stock repurchase	programs,	or	redeem	preferred	stock	or	other	regulatory	capital instruments.	In	connection	with	the	2015	CCAR	exercise,	PNC	filed	its	capital plan	and	stress	testing	results	using	financial	data	as	of	September	30,	2014	with the	Federal	Reserve	on	January	5,	2015.	PNC	expects	to	receive	the	Federal Reserve's	response	(either	a

non-objection	or	objection)	to	the	capital	plan	submitted	as	part	of	the	2015 CCAR	in	March	2015.

As	part	of	the	CCAR	and	annual	DFAST	processes,	both	the	Federal	Reserve and	PNC	release	certain	revenue,	loss	and	capital	results	from	their	stress	testing exercises.	For	the	2015	exercises,	the	Federal	Reserve	has	announced	that	it intends	to	publish	its	supervisory	revenue,	loss	and	capital	projections	for participating	BHCs	under	the	supervisory	adverse	and	severely	adverse	macro- economic	scenarios	using	the	common	assumptions	concerning	capital distributions	established	by	the	Federal	Reserve	in	its	DFAST	regulations (DFAST	capital	action	assumptions),	as	well	as	capital	ratio	information	using the	firm's	proposed	base	case	capital	actions.	Within	15	days	after	the	Federal Reserve	publishes	its	DFAST	results,	PNC	also	is	required	to	publicly	disclose its	own	estimates	of	certain	capital,	revenue	and	loss	information	under	the	same hypothetical	supervisory	severely	adverse	macro-economic	scenario	and applying	the	DFAST	capital	action	assumptions.	Federal	Reserve	regulations also	require	that	PNC	and	other	large	BHCs	conduct	a	separate	mid-year	stress test	using	financial	data	as	of	March	31	and	three	company-derived	macro- economic	scenarios	(base,	adverse	and	severely	adverse)	and	publish	a	summary of	the	results	under	the	severely	adverse	scenario.	For	the	2015	mid-year	stress test,	PNC	must	publish	its	results	in	the	period	between	July	5	and	August	4, 2015.

In	October	2014,	the	Federal	Reserve	adopted	amendments	to	its	capital	plan and	stress	testing	rules	that	will	modify	the	schedule	for	the	CCAR	and	DFAST processes	effective	January	1,	2016.	Beginning	in	2016,	covered	BHCs	are required	to	submit	their	annual	capital	plans	and	company-run	stress	test	results to	the	Federal	Reserve	by	April	5	of	each	year	(rather	than	by	January	5	as currently	required).	In	order	to	transition	to	this	new	schedule,	the	Federal Reserve's	non-objection	to	a	capital	plan	submitted	in	January	2015	will	cover capital	actions	for	the	five	quarter	period	from	the	second	quarter	of	2015 through	and	including	the	second	quarter	of	2016.	Under	the	new	schedule	that becomes	effective	in	2016,	the	Federal	Reserve	will	release	its	decisions	on capital	plans	and	release	the	results	of	its	supervisory	stress	test	by	June	30, approximately	three	months	later	than	currently.	The	amendments	also	shift	the schedule	for	the	company-run	mid-cycle	DFAST	exercise,	with	PNC's submission	date	for	this	exercise	shifting	to	October	5	(from	July	5)	and	the release	date	for	company	results	moving	to	October	(from	July).

Basel	III	Liquidity	Requirements.	The	Basel	III	framework	adopted	by	the	Basel Committee	also	includes	new	short-term	liquidity	standards	(the	"Liquidity Coverage	Ratio"	or	"LCR")	and	long-term	funding	standards	(the	"Net	Stable Funding	Ratio"	or	"NSFR").

In	September	2014,	the	U.S.	banking	agencies	released	final	rules	to	implement the	LCR.	The	LCR	rules	are	designed	to

ensure	that	covered	banking	organizations	maintain	an	adequate	level	of	cash and	high	quality,	unencumbered	liquid	assets	(HQLA)	to	meet	estimated	net liquidity	needs	in	a	short-term	stress	scenario	using	liquidity	inflow	and	outflow assumptions	provided	in	the	rules	(net	cash	outflow).	An	institution's	LCR	is	the amount	of	its	HQLA,	as	defined	and	calculated	in	accordance	with	the	haircuts and	limitations	in	the	rule,	divided	by	its	net	cash	outflow,	with	the	quotient expressed	as	a	percentage.

Top-tier	BHCs	(like	PNC)	that	are	subject	to	the	advanced	approaches	for regulatory	capital	purposes,	as	well	as	any	subsidiary	depository	institution	of such	a	company	that	has	$10	billion	or	more	in	total	consolidated	assets	(such	as PNC	Bank),	are	subject	to	the	full	LCR	(rather	than	the	less	stringent	modified LCR)	under	the	final	rules	that	took	effect	January	1,	2015.	However,	the minimum	required	LCR	and	the	requirement	to	calculate	the	LCR	on	a	daily basis	will	be	phased-in	over	a	period	of	years.	The	minimum	LCR	PNC	and PNC	Bank	are	required	to	maintain	in	2015	is	80%	and	increases	to	90%	in	2016 and	then	to	100%	when	fully	phased-in	in	2017.	PNC	and	PNC	Bank	are required	to	calculate	the	LCR	on	a	month-end	basis	until	June	30,	2016,	and	then on	a	daily	basis	beginning	on	July	1,	2016.	If	an	institution	fails	to	meet	the required	minimum	ratio,	it	must	promptly	notify	its	primary	federal	banking regulator	and	may	be	required	to	take	remedial	actions.	An	institution	required to	calculate	its	LCR	on	a	month-end	basis	must	consult	with	its	regulator	to determine	whether	the	institution	must	provide	a	plan	for	achieving	compliance with	the	minimum	LCR.	An	institution	required	to	calculate	the	LCR	on	a	daily basis	must	promptly	provide	its	regulator	with	a	plan	for	achieving	compliance with	the	minimum	if	its	LCR	is	below	the	minimum	for	three	consecutive business	days.

For	additional	discussion	of	regulatory	liquidity	requirements,	please	refer	to	the Capital	portion	of	the	Consolidated	Balance	Sheet	Review	section	and	the Liquidity	Risk	Management	portion	of	the	Risk	Management	section	of	Item	7 of	this	Report.

The	NSFR	is	designed	to	promote	a	stable	maturity	structure	of	assets	and liabilities	of	banking	organizations	over	a	one-year	time	horizon.	The	Basel Committee,	in	October	2014,	released	the	final	NSFR	framework.	Under	that framework,	the	NSFR	would	take	effect	as	a	minimum	regulatory	standard	on January	1,	2018,	although	the	U.S.	banking	agencies	have	not	yet	proposed	rules to	implement	the	NSFR.

Parent	Company	Liquidity	and	Dividends.	The	principal	source	of	our	liquidity at	the	parent	company	level	is	dividends	from	PNC	Bank.	PNC	Bank	is	subject to	various	restrictions	on	its	ability	to	pay	dividends	to	PNC	Bancorp,	Inc.,	its direct	parent,	which	is	a	wholly-owned	direct	subsidiary	of	PNC.	PNC	Bank	is also	subject	to	federal	laws	limiting	extensions	of	credit	to	its	parent	holding company	and	non-bank	affiliates	as	discussed	in	Note	20	Regulatory

Matters	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this Report.	Further	information	on	bank	level	liquidity	and	parent	company liquidity	and	on	certain	contractual	restrictions	is	also	available	in	the	Liquidity Risk	Management	portion	of	the	Risk	Management	section	and	the	Trust Preferred	Securities	and	REIT	Preferred	Securities	portion	of	the	Off-Balance Sheet	Arrangements	And	Variable	Interest	Entities	section	of	Item	7	of	this Report,	and	in	Note	12	Capital	Securities	of	a	Subsidiary	Trust	and	Perpetual Trust	Securities	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of this	Report.

Federal	Reserve	rules	provide	that	a	BHC	is	expected	to	serve	as	a	source	of financial	strength	to	its	subsidiary	banks	and	to	commit	resources	to	support	such banks	if	necessary.	Consistent	with	the	"source	of	strength"	policy	for	subsidiary banks,	the	Federal	Reserve	has	stated	that,	as	a	matter	of	prudent	banking,	a BHC	generally	should	not	maintain	a	rate	of	cash	dividends	unless	its	net income	available	to	common	shareholders	has	been	sufficient	to	fully	fund	the dividends	and	the	prospective	rate	of	earnings	retention	appears	to	be	consistent with	the	corporation's	capital	needs,	asset	quality	and	overall	financial	condition. Further,	in	providing	guidance	to	the	large	BHCs	participating	in	the	2015 CCAR,	discussed	above,	the	Federal	Reserve	stated	that	it	expects	capital	plans submitted	in	2015	to	reflect	conservative	dividend	payout	ratios	and	net	share repurchase	programs,	and	that	requests	that	imply	common	dividend	payout ratios	above	30%	of	projected	after-tax	net	income	available	to	common shareholders	will	receive	particularly	close	scrutiny.

Additional	Powers	Under	the	GLB	Act.	The	GLB	Act	permits	a	qualifying	BHC to	become	a	"financial	holding	company"	and	thereby	engage	in,	or	affiliate	with financial	companies	engaging	in,	a	broader	range	of	activities	than	would otherwise	be	permitted	for	a	BHC.	Permitted	affiliates	include	securities underwriters	and	dealers,	insurance	companies	and	companies	engaged	in	other activities	that	are	determined	by	the	Federal	Reserve,	in	consultation	with	the Secretary	of	the	Treasury,	to	be	"financial	in	nature	or	incidental	thereto"	or	are determined	by	the	Federal	Reserve	unilaterally	to	be	"complementary"	to financial	activities.	We	became	a	financial	holding	company	as	of	March	13, 2000.	In	order	to	be	and	remain	a	financial	holding	company,	a	BHC	and	its subsidiary	depository	institutions	must	be	"well	capitalized"	and	"well managed."	In	addition,	a	financial	holding	company	generally	may	not	engage	in a	new	financial	activity,	or	acquire	a	company	engaged	in	a	new	activity,	if	any of	its	insured	depository	institutions	received	a	less	than	Satisfactory	rating	at	its most	recent	evaluation	under	the	Community	Reinvestment	Act	(CRA).	Among other	activities,	we	currently	rely	on	our	status	as	a	financial	holding	company	to conduct	merchant	banking	activities	and	securities	underwriting	and	dealing activities.	As	subsidiaries	of	a	financial	holding	company	under	the	GLB	Act, our	non-bank	subsidiaries	are	generally	allowed	to	conduct	new	financial activities,	and	PNC	is	generally	permitted	to	acquire	non-bank

financial	companies	that	have	less	than	$10	billion	in	assets,	with	after-the-fact notice	to	the	Federal	Reserve.

The	Federal	Reserve	is	the	"umbrella"	regulator	of	a	financial	holding	company, with	its	operating	entities,	such	as	its	subsidiary	broker-dealers,	investment advisers,	insurance	companies	and	banks,	as	well	as	investment	companies advised	by	investment	adviser	subsidiaries	of	the	financial	holding	company, also	being	subject	to	the	jurisdiction	of	various	federal	and	state	"functional" regulators	with	normal	regulatory	responsibility	for	companies	in	their	lines	of business.

In	addition,	the	GLB	Act	permits	qualifying	national	banks	to	engage	in expanded	activities	through	the	formation	of	a	"financial	subsidiary."	PNC	Bank has	filed	a	financial	subsidiary	certification	with	the	OCC	and	currently	engages in	insurance	agency	activities	through	financial	subsidiaries.	PNC	Bank	may also	generally	engage	through	a	financial	subsidiary	in	any	activity	that	is determined	to	be	financial	in	nature	or	incidental	to	a	financial	activity	by	the Secretary	of	the	Treasury,	in	consultation	with	the	Federal	Reserve.	Certain activities,	however,	are	impermissible	for	a	financial	subsidiary	of	a	national bank,	including	certain	insurance	underwriting	activities,	insurance	company investment	activities,	real	estate	investment	or	development,	and	merchant banking.	In	order	to	have	a	financial	subsidiary,	a	national	bank	and	each	of	its depository	institution	affiliates	must	be	and	remain	"well	capitalized"	and	"well managed."	In	addition,	a	financial	subsidiary	generally	may	not	engage	in	a	new financial	activity,	or	acquire	a	company	engaged	in	a	new	financial	activity,	if the	national	bank	or	any	of	its	insured	depository	institution	affiliates	received	a less	than	Satisfactory	rating	at	its	most	recent	evaluation	under	the	CRA.

Volcker	Rule.	In	December	2013,	the	U.S.	banking	agencies,	SEC	and	CFTC issued	final	rules	to	implement	the	"Volcker	Rule"	provisions	of	Dodd-Frank. The	rules	prohibit	banks	and	their	affiliates	(collectively,	banking	entities)	from trading	as	principal	on	a	short-term	basis	in	securities,	derivatives	and	certain other	financial	instruments,	but	also	includes	several	important	exclusions	and exemptions	from	this	prohibition.	These	exclusions	and	exemptions,	for example,	permit	banking	entities,	subject	to	a	variety	of	conditions	and restrictions,	to	trade	as	principal	for	market	making,	risk-mitigating	hedging,	and securities	underwriting	purposes,	and	to	trade	in	U.S.	government	and	municipal securities.	The	rules	also	prohibit	banking	entities	from	investing	in,	sponsoring, and	having	certain	relationships	with	private	funds	(such	as,	for	example,	private equity	or	hedge	funds)	that	would	be	an	investment	company	for	purposes	of	the Investment	Company	Act	of	1940	but	for	the	exemptions	in	sections	3(c)(1)	or 3(c)(7)	of	that	act	(covered	funds).	Again	there	are	exemptions	from	these restrictions	which	themselves	are	subject	to	a	variety	of	conditions.	Moreover, the	rules	prohibit	banking	entities	from	engaging	in	permitted	trading

or	covered	fund	activities	if	the	activity	would	involve	or	result	in	a	material conflict	of	interest	between	the	banking	entity	and	its	clients,	customers,	or counterparties,	result	in	a	material	exposure	by	the	banking	entity	to	a	high-risk asset	or	a	high-risk	trading	strategy,	or	pose	a	threat	to	the	safety	and	soundness of	the	banking	entity	or	to	the	financial	stability	of	the	United	States.	Banking entities,	like	PNC,	that	have	$50	billion	or	more	in	total	assets	are	required	to establish	and	maintain	an	enhanced	compliance	program	designed	to	ensure	that the	entity	complies	with	the	requirements	of	the	final	rule.	Based	on	the	level	of PNC's	trading	assets	and	liabilities,	PNC	is	not	subject	to	the	metrics	reporting requirements	of	the	final	rules.

The	Volcker	rule's	prohibitions	and	restrictions	generally	become	effective	on July	21,	2015.	In	December	2014,	the	Federal	Reserve	granted	an	extension	of the	conformance	period	to	give	all	banking	entities	until	July	21,	2016	to conform	their	investments	in,	and	relationships	with,	covered	funds	that	were	in place	prior	to	December	31,	2013	(legacy	covered	funds).	Moreover,	the	Federal Reserve	indicated	its	intent	to	grant	an	additional	one-year	extension	of	the conformance	period	for	legacy	covered	funds,	which	would	give	banking	entities until	July	21,	2017	to	conform	their	ownership	interests	in,	and	relationships with,	legacy	covered	funds.	The	Federal	Reserve	also	has	the	ability	to	provide up	to	an	additional	5-year	conformance	period	for	investments	held	as	of	May	1, 2010	in	qualifying	illiquid	funds.	For	additional	information	concerning	the potential	impact	of	the	Volcker	Rule	on	PNC's	operations,	please	refer	to Item	1A	Risk	Factors	of	this	Report.

Other	Federal	Reserve	and	OCC	Regulation	and	Supervision.	The	federal banking	agencies	possess	broad	powers	to	take	corrective	action	as	deemed appropriate	for	an	insured	depository	institution	and	its	holding	company.

Laws	and	regulations	limit	the	scope	of	our	permitted	activities	and	investments. National	banks	(such	as	PNC	Bank)	and	their	operating	subsidiaries	generally may	engage	only	in	activities	that	are	determined	by	the	OCC	to	be	part	of	or incidental	to	the	business	of	banking,	although	a	financial	subsidiary	may	engage in	a	broader	range	of	activities	as	described	above.

Moreover,	examination	ratings	of	"3"	or	lower,	lower	capital	ratios	than	peer group	institutions,	regulatory	concerns	regarding	management,	controls,	assets, operations	or	other	factors,	can	all	potentially	result	in	practical	limitations	on the	ability	of	a	bank	or	BHC	to	engage	in	new	activities,	grow,	acquire	new businesses,	repurchase	its	stock	or	pay	dividends,	or	to	continue	to	conduct existing	activities.	The	OCC,	moreover,	has	been	applying	certain	heightened risk	management	and	governance	expectations	in	its	supervision	of	large	national banks,	including	PNC	Bank.	In	September	2014,	the	OCC	incorporated	these expectations	into	final	enforceable	guidelines	established	under	section	39	of	the

Federal	Deposit	Insurance	Act	(FDI	Act).	The	guidelines	establish	minimum standards	for	the	design	and	implementation	of	a	risk	governance	framework	at large	insured	national	banks,	including	PNC	Bank.	The	guidelines	describe	the appropriate	risk	management	roles	and	responsibilities	of	front	line	units, independent	risk	management,	internal	audit,	and	the	board	of	directors,	and provide	that	a	bank	should	have	a	comprehensive	written	statement	that articulates	its	risk	appetite	and	serves	as	a	basis	for	the	framework	(a	risk appetite	statement).	PNC	Bank	is	required	to	be	in	compliance	with	the guidelines	by	May	10,	2015.	If	the	OCC	determines	that	a	national	bank	is	not	in compliance	with	these	or	other	guidelines	established	under	section	39	of	the FDI	Act,	the	OCC	may	require	the	bank	to	submit	a	corrective	action	plan	and may	initiate	enforcement	action	against	the	bank	if	an	acceptable	plan	is	not submitted	or	the	bank	fails	to	comply	with	an	approved	plan.

The	Federal	Reserve's	prior	approval	is	required	whenever	we	propose	to acquire	all	or	substantially	all	of	the	assets	of	any	bank	or	thrift,	to	acquire	direct or	indirect	ownership	or	control	of	more	than	5%	of	any	class	of	voting	securities of	any	bank	or	thrift,	or	to	merge	or	consolidate	with	any	other	BHC	or	thrift holding	company.	The	BHC	Act	enumerates	the	factors	the	Federal	Reserve must	consider	when	reviewing	the	merger	of	BHCs,	the	acquisition	of	banks,	or the	acquisition	of	voting	securities	of	a	bank	or	BHC.	These	factors	include	the competitive	effects	of	the	proposal	in	the	relevant	geographic	markets;	the financial	and	managerial	resources	and	future	prospects	of	the	companies	and banks	involved	in	the	transaction;	the	effect	of	the	transaction	on	the	financial stability	of	the	United	States;	the	organizations'	compliance	with	anti-money laundering	laws	and	regulations;	the	convenience	and	needs	of	the	communities to	be	served;	and	the	records	of	performance	under	the	CRA	of	the	insured depository	institutions	involved	in	the	transaction.	In	cases	involving	interstate bank	acquisitions,	the	Federal	Reserve	also	must	consider	the	concentration	of deposits	nationwide	and	in	certain	individual	states.	Under	Dodd-Frank,	a	BHC also	is	generally	prohibited	from	merging	or	consolidating	with,	or	acquiring, another	company	if	the	resulting	company's	liabilities	upon	consummation would	exceed	10%	of	the	aggregate	liabilities	of	the	U.S.	financial	sector (including	the	U.S.	liabilities	of	foreign	financial	companies).	OCC	prior approval	is	required	for	PNC	Bank	to	acquire	another	insured	bank	or	thrift	by merger	or	to	acquire	deposits	or	substantially	all	of	the	assets	of	such	institutions. In	deciding	whether	to	approve	such	a	transaction,	the	OCC	is	required	to consider	factors	similar	to	those	that	must	be	considered	by	the	Federal	Reserve. Our	ability	to	grow	through	acquisitions	could	be	limited	by	these	approval requirements.

At	December	31,	2014,	PNC	Bank	had	an	"Outstanding"	rating	with	respect	to CRA.

Because	of	PNC's	ownership	interest	in	BlackRock,	BlackRock	is	subject	to	the supervision	and	regulation	of	the	Federal	Reserve.

FDIC	Insurance	and	Related	Matters.	PNC	Bank	is	insured	by	the	FDIC	and subject	to	premium	assessments.	Regulatory	matters	could	increase	the	cost	of FDIC	deposit	insurance	premiums	to	an	insured	bank	as	FDIC	deposit	insurance premiums	are	"risk	based."	Therefore,	higher	fee	percentages	would	be	charged to	banks	that	have	lower	capital	ratios	or	higher	risk	profiles.	These	risk	profiles take	into	account,	among	other	things,	weaknesses	that	are	found	by	the	primary banking	regulator	through	its	examination	and	supervision	of	the	bank	and	the bank's	holdings	of	assets	or	liabilities	classified	as	higher	risk	by	the	FDIC.	For example,	the	amount	of	brokered	deposits	(as	defined	under	the	FDI	Act)	held	by an	insured	depository	institution	can	adversely	affect	the	institution's	deposit insurance	assessments.	A	negative	evaluation	by	the	FDIC	or	a	bank's	primary federal	banking	regulator	could	increase	the	costs	to	a	bank	and	result	in	an aggregate	cost	of	deposit	funds	higher	than	that	of	competing	banks	in	a	lower risk	category.	The	methodology	for	the	deposit	insurance	base	calculation currently	uses	average	assets	less	average	tangible	equity.

On	January	5,	2015,	the	FDIC	issued	guidance	in	the	form	of	frequently	asked questions	regarding	the	definition	of	brokered	deposits	under	the	FDI	Act,	as well	as	the	acceptance	and	regulatory	reporting	of	brokered	deposits	by	insured depository	institutions.	Federal	banking	laws	and	regulations	apply	a	variety	of requirements	or	restrictions	on	insured	depository	institutions	with	respect	to brokered	deposits.	For	example,	only	a	"well	capitalized"	insured	depository institution	may	accept	brokered	deposits	without	prior	regulatory	approval	and brokered	deposits	are	generally	subject	to	higher	outflow	assumptions	than	other types	of	deposits	for	purposes	of	the	LCR.

Resolution	Planning.	Dodd-Frank	requires	BHCs	that	have	$50	billion	or	more in	assets,	such	as	PNC,	to	periodically	submit	to	the	Federal	Reserve	and	the FDIC	a	resolution	plan	that	includes,	among	other	things,	an	analysis	of	how	the company	could	be	resolved	in	a	rapid	and	orderly	fashion	if	the	company	were	to fail	or	experience	material	financial	distress.	The	Federal	Reserve	and	the	FDIC may	jointly	impose	restrictions	on	a	covered	BHC,	including	additional	capital requirements	or	limitations	on	growth,	if	the	agencies	jointly	determine	that	the company's	plan	is	not	credible	or	would	not	facilitate	a	rapid	and	orderly resolution	of	the	company	under	the	U.S.	Bankruptcy	Code	(or	other	applicable resolution	framework),	and	additionally	could	require	the	company	to	divest assets	or	take	other	actions	if	the	company	did	not	submit	an	acceptable resolution	plan	within	two	years	after	any	such	restrictions	were	imposed.	The FDIC	also	has	adopted	a	rule	that	requires	large	insured	depository	institutions, including	PNC	Bank,	to	periodically	submit	a	resolution	plan	to	the	FDIC	that includes,	among	other	things,

an	analysis	of	how	the	institution	could	be	resolved	under	the	FDI	Act	in	a manner	that	protects	depositors	and	limits	losses	or	costs	to	creditors	of	the	bank in	accordance	with	the	FDI	Act.	Depending	on	how	the	agencies	conduct	their review	of	the	resolution	plans	submitted	by	PNC	and	PNC	Bank,	these requirements	could	affect	the	ways	in	which	PNC	structures	and	conducts	its business	and	result	in	higher	compliance	and	operating	costs.	PNC	and	PNC Bank	submitted	their	2014	resolution	plans	under	these	rules	in	December	2014.

CFPB	Regulation	and	Supervision.	As	noted	above,	Dodd-Frank	gives	the	CFPB authority	to	examine	PNC	and	PNC	Bank	for	compliance	with	a	broad	range	of federal	consumer	financial	laws	and	regulations,	including	the	laws	and regulations	that	relate	to	credit	card,	deposit,	mortgage,	automobile	loans	and other	consumer	financial	products	and	services	we	offer.	In	addition,	Dodd- Frank	gives	the	CFPB	broad	authority	to	take	corrective	action	against	PNC Bank	and	PNC	as	it	deems	appropriate.	The	CFPB	also	has	the	power	to	issue regulations	and	take	enforcement	actions	to	prevent	and	remedy	acts	and practices	relating	to	consumer	financial	products	and	services	that	it	deems	to	be unfair,	deceptive	or	abusive,	and	to	impose	new	disclosure	requirements	for	any consumer	financial	product	or	service.	These	authorities	are	in	addition	to	the authority	the	CFPB	assumed	on	July	21,	2011	under	existing	consumer	financial law	governing	the	provision	of	consumer	financial	products	and	services.	While the	CFPB	concentrated	much	of	its	initial	rulemaking	efforts	on	a	variety	of mortgage	related	topics	required	under	Dodd-Frank,	including	ability-to-repay and	qualified	mortgage	standards,	mortgage	servicing	standards,	loan	originator compensation	standards,	high-cost	mortgage	requirements,	appraisal	and	escrow standards	and	requirements	for	higher-priced	mortgages,	and	disclosure requirements,	it	is	also	engaged	in	rulemakings	relating	to	other	products	and services	offered	by	PNC	Bank,	including	prepaid	cards.

In	January	2014,	new	rules	issued	by	the	CFPB	for	mortgage	origination	and mortgage	servicing	became	effective.	The	rules	require	lenders	to	conduct	a reasonable	and	good	faith	determination	at	or	before	consummation	of	a residential	mortgage	loan	that	the	borrower	will	have	a	reasonable	ability	to repay	the	loan.	The	regulations	also	define	criteria	for	making	Qualified Mortgages	which	entitle	the	lender	and	any	assignee	to	either	a	conclusive	or rebuttable	presumption	of	compliance	with	the	ability	to	repay	rule.	The	new mortgage	servicing	rules	include	new	standards	for	notices	to	consumers,	loss mitigation	procedures,	and	consumer	requests	for	information.	Both	the origination	and	servicing	rules	create	new	private	rights	of	action	for	consumers in	the	event	of	certain	violations.	In	August	2015,	broad	new	regulations	take effect	concerning	the	disclosures	we	provide	to	prospective	residential	mortgage customers.	These	regulations,	among	other	things,	require	the	provision	of	new disclosures	near	the	time	a	prospective	borrower	submits	an	application	and three	days	prior	to	closing	of	a	mortgage	loan.	In	addition	to	the

exercise	of	its	rulemaking	authority,	the	CFPB	is	continuing	its	ongoing examination	and	supervisory	activities	with	respect	to	a	number	of	consumer businesses	and	products.

# Securities	and	Derivatives	Regulation

Our	registered	broker-dealer	and	investment	adviser	subsidiaries	are	subject	to rules	and	regulations	promulgated	by	the	SEC.

Several	of	our	subsidiaries	are	registered	with	the	SEC	as	investment	advisers and	may	provide	investment	advisory	services	to	clients,	other	PNC	affiliates	or related	entities,	including	registered	investment	companies.	Certain	of	these advisers	are	registered	as	investment	advisers	to	private	equity	funds	under	rules adopted	under	Dodd-Frank.

Broker-dealer	subsidiaries	are	subject	to	the	requirements	of	the	Securities Exchange	Act	of	1934	and	related	regulations.	The	Financial	Industry Regulatory	Authority	(FINRA)	is	the	primary	self-regulatory	organization	(SRO) for	our	registered	broker-dealer	subsidiaries.	Investment	adviser	subsidiaries	are subject	to	the	requirements	of	the	Investment	Advisers	Act	of	1940	and	related regulations.	An	investment	adviser	to	a	registered	investment	company	is	also subject	to	the	requirements	of	the	Investment	Company	Act	of	1940	and	related regulations.	Our	broker-dealer	and	investment	adviser	subsidiaries	also	are subject	to	additional	regulation	by	states	or	local	jurisdictions.

Over	the	past	several	years,	the	SEC	and	other	regulatory	agencies	have increased	their	focus	on	the	asset	management,	mutual	fund	and	broker-dealer industries.	Congress	and	the	SEC	have	adopted	regulatory	reforms	and	are considering	additional	reforms	that	have	increased,	and	are	likely	to	continue	to increase,	the	extent	of	regulation	of	the	mutual	fund	and	broker-dealer	industries and	impose	additional	compliance	obligations	and	costs	on	our	subsidiaries involved	with	those	industries.	Under	provisions	of	the	federal	securities	laws applicable	to	broker-dealers,	investment	advisers	and	registered	investment companies	and	their	service	providers,	a	determination	by	a	court	or	regulatory agency	that	certain	violations	have	occurred	at	a	company	or	its	affiliates	can result	in	fines,	restitution,	a	limitation	on	permitted	activities,	disqualification	to continue	to	conduct	certain	activities	and	an	inability	to	rely	on	certain	favorable exemptions.	Certain	types	of	infractions	and	violations	can	also	affect	a	public company	in	its	timing	and	ability	to	expeditiously	issue	new	securities	into	the capital	markets.	In	addition,	certain	changes	in	the	activities	of	a	broker-dealer require	approval	from	FINRA,	and	FINRA	takes	into	account	a	variety	of considerations	in	acting	upon	applications	for	such	approval,	including	internal controls,	capital	levels,	management	experience	and	quality,	prior	enforcement and	disciplinary	history	and	supervisory	concerns.

Title	VII	of	Dodd-Frank	imposes	new	comprehensive	and	significant	regulations on	the	activities	of	financial	institutions

that	are	active	in	the	U.S.	over-the-counter	derivatives	and	foreign	exchange markets.	Title	VII	was	enacted	to	(i)	address	systemic	risk	issues,	(ii)	bring greater	transparency	to	the	derivatives	markets,	(iii)	provide	enhanced disclosures	and	protection	to	customers,	and	(iv)	promote	market	integrity. Among	other	things,	Title	VII:	(i)	requires	the	registration	of	both	"swap dealers"	and	"major	swap	participants"	with	one	or	both	of	the	CFTC	(in	the case	of	non	security-based	swaps)	and	the	SEC	(in	the	case	of	security-based swaps);	(ii)	requires	that	most	standardized	swaps	be	centrally	cleared	through	a regulated	clearing	house	and	traded	on	a	centralized	exchange	or	swap	execution facility;	(iii)	subjects	swap	dealers	and	major	swap	participants	to	capital	and margin	requirements	in	excess	of	historical	practice;	(iv)	subjects	swap	dealers and	major	swap	participants	to	comprehensive	new	recordkeeping	and	real-time public	reporting	requirements;	(v)	subjects	swap	dealers	and	major	swap participants	to	new	business	conduct	requirements,	including	the	provision	of daily	marks	to	counterparties	and	disclosing	to	counterparties	(pre-execution)	the material	risks,	material	incentives,	and	any	conflicts	of	interest	associated	with their	swap;	and	(vi)	imposes	special	duties	on	swap	dealers	and	major	swap participants	when	transacting	a	swap	with	a	"special	entity"	(e.g.,	governmental agency	(federal,	state	or	local)	or	political	subdivision	thereof,	pension	plan	or endowment).

Based	on	the	definition	of	a	"swap	dealer"	under	Title	VII,	PNC	Bank	registered with	the	CFTC	as	a	swap	dealer	on	January	31,	2013.	As	a	result,	PNC	Bank	is subject	to	the	regulations	and	requirements	imposed	on	registered	swap	dealers, and	the	CFTC	will	have	a	meaningful	supervisory	role	with	respect	to	PNC Bank's	derivatives	and	foreign	exchange	businesses.	Because	of	the	limited volume	of	our	security-based	swap	activities,	PNC	Bank	has	not	registered	with the	SEC	as	a	security-based	swap	dealer.	The	regulations	and	requirements applicable	to	swap	dealers	will	collectively	impose	implementation	and	ongoing compliance	burdens	on	PNC	Bank	and	will	introduce	additional	legal	risks (including	as	a	result	of	newly	applicable	antifraud	and	anti-manipulation provisions	and	private	rights	of	action).

As	originally	enacted,	the	so-called	"swap	push-out"	provisions	of	Section	716 of	Dodd-Frank	required	an	insured	depository	institution	that	is	a	"swaps	entity" (defined	to	include	a	registered	swap	dealer	like	PNC	Bank)	to	cease	engaging	in certain	types	of	swaps	by	July	16,	2013,	although	the	institution's	appropriate Federal	banking	agency	could	extend	this	transition	period.	In	2013,	PNC	Bank received	such	an	extension	of	the	transition	period	to	July	16,	2015	from	its appropriate	Federal	banking	agency.	In	December	2014,	the	U.S.	Congress significantly	narrowed	the	"push-out"	restrictions	of	Section	716.	These amendments	generally	allow	insured	depository	institutions	that	are	a	swaps entity	to	engage	in	all	types	of	swaps	other	than	structured	finance	swaps (defined	as	a	swap	that	references	either	an	asset-backed	security	or	a	group	or index	primarily	comprised	of

asset-backed	securities).	However,	an	insured	depository	institution	is	permitted to	engage	in	structured	finance	swaps	for	hedging	or	other	risk	mitigating purposes.	An	insured	depository	institution	that	fails	to	comply	with	the restrictions	in	Section	716	could	face	restrictions	on	the	institution's	access	to	the Federal	Reserve's	discount	window	or	FDIC	deposit	insurance	or	guarantees.

In	addition,	an	investment	adviser	to	private	funds	or	to	registered	investment companies	may	be	required	to	register	with	the	CFTC	as	a	commodity	pool operator.	Registration	could	impose	significant	new	regulatory	compliance burdens.	Presently,	we	expect	our	subsidiaries	that	serve	as	investment	advisers to	such	entities	to	be	eligible	for	exemptions	from	registration	as	a	commodity pool	operator.

BlackRock	has	subsidiaries	in	securities	and	related	businesses	subject	to	SEC, other	governmental	agencies,	state,	local	and	FINRA	regulation,	and	a	federally chartered	nondepository	trust	company	subsidiary	subject	to	supervision	and regulation	by	the	OCC.	For	additional	information	about	the	regulation	of BlackRock	by	these	agencies	and	otherwise,	we	refer	you	to	the	discussion	under the	"Regulation"	section	of	Item	1	Business	in	BlackRock's	most	recent	Annual Report	on	Form	10-K,	which	may	be	obtained	electronically	at	the	SEC's website	at	www.sec.gov.

# Competition

We	are	subject	to	intense	competition	from	other	regulated	banking organizations,	as	well	as	various	other	types	of	financial	institutions	and	non- bank	entities	that	can	offer	a	number	of	similar	products	and	services	without being	subject	to	bank	regulatory	supervision	and	restrictions.

In	making	loans,	PNC	Bank	competes	with	traditional	banking	institutions	as well	as	consumer	finance	companies,	leasing	companies	and	other	non-bank lenders,	and	institutional	investors	including	collateralized	loan	obligation (CLO)	managers,	hedge	funds,	mutual	fund	complexes	and	private	equity	firms. Loan	pricing,	structure	and	credit	standards	are	extremely	important	in	the current	environment	as	we	seek	to	achieve	appropriate	risk-adjusted	returns. Traditional	deposit-taking	activities	are	also	subject	to	pricing	pressures	and	to customer	migration	as	a	result	of	intense	competition	for	deposits	and investments.

PNC	Bank	competes	for	deposits	with: •	Other	commercial	banks, •	Savings	banks,

•	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	businesses	engaged	in	investment	banking	and	alternative investment	activities	compete	with:

•	Commercial	banks,

•	Investment	banking	firms,

•	Merchant	banks,

•	Insurance	companies,

•	Private	equity	firms,	and

•	Other	investment	vehicles.

In	providing	asset	management	services,	our	businesses	compete	with: •	Investment	management	firms,

•	Large	banks	and	other	financial	institutions,

•	Brokerage	firms,

•	Mutual	fund	complexes,	and

We	include	here	by	reference	the	additional	information	regarding	competition and	factors	affecting	our	competitive	position	included	in	the	Item	1A	Risk Factors	section	of	this	Report.

# Employees

Employees	totaled	53,587	at	December	31,	2014.	This	total	includes	49,745	full- time	and	3,842	part-time	employees,	of	which	22,216	full-time	and	3,274	part- time	employees	were	employed	by	our	Retail	Banking	business.

# SEC	Reports	and	Corporate	Governance	Information

We	are	subject	to	the	informational	requirements	of	the	Securities	Exchange	Act of	1934	(Exchange	Act)	and,	in	accordance	with	the	Exchange	Act,	we	file annual,	quarterly	and	current	reports,	proxy	statements,	and	other	information with	the	SEC.	Our	SEC	File	Number	is	001-09718.	You	may	read	and	copy	this information	at	the	SEC's	Public	Reference	Room	located	at	100	F	Street	NE, Room	1580,	Washington,	D.C.	20549.	You	can	obtain	information	on	the operation	of	the	Public	Reference	Room	by	calling	the	SEC	at	1-800-SEC-0330.

You	can	also	obtain	copies	of	this	information	by	mail	from	the	Public	Reference Section	of	the	SEC,	100	F	Street	NE,	Washington,	D.C.	20549,	at	prescribed rates.

The	SEC	also	maintains	an	internet	website	that	contains	reports,	including exhibits,	proxy	and	information	statements,	and	other	information	about	issuers, like	us,	who	file	electronically	with	the	SEC.	The	address	of	that	site	is www.sec.gov.	You	can	also	inspect	reports,	proxy	statements	and	other information	about	us	at	the	offices	of	the	New	York	Stock	Exchange,	20	Broad Street,	New	York,	New	York	10005.

We	also	make	our	Annual	Report	on	Form	10-K,	Quarterly	Reports	on	Form	10- Q,	Current	Reports	on	Form	8-K,	and	amendments	to	those	reports	filed	with	or furnished	to	the

SEC	pursuant	to	Section	13(a)	or	15(d)	of	the	Exchange	Act	available	free	of charge	on	our	internet	website	as	soon	as	reasonably	practicable	after	we electronically	file	such	material	with,	or	furnish	it	to,	the	SEC.	PNC's	corporate internet	address	is	www.pnc.com	and	you	can	find	this	information	at www.pnc.com/secfilings.	Shareholders	and	bondholders	may	also	obtain	copies of	these	filings	without	charge	by	contacting	Shareholder	Services	at	800-982- 7652	or	via	the	online	contact	form	at	www.computershare.com/contactus	for copies	without	exhibits,	and	by	contacting	Shareholder	Relations	at	800-843- 2206	or	via	e-mail	at	investor.relations@pnc.com	for	copies	of	exhibits, including	financial	statement	and	schedule	exhibits	where	applicable.	The interactive	data	file	(XBRL)	exhibit	is	only	available	electronically.

Information	about	our	Board	of	Directors	and	its	committees	and	corporate governance	at	PNC	is	available	on	PNC's	corporate	website	at www.pnc.com/corporategovernance.	Our	PNC	Code	of	Business	Conduct	and Ethics	is	available	on	our	corporate	website	at www.pnc.com/corporategovernance.	In	addition,	any	future	amendments	to,	or waivers	from,	a	provision	of	the	PNC	Code	of	Business	Conduct	and	Ethics	that applies	to	our	directors	or	executive	officers	(including	our	principal	executive officer,	principal	financial	officer,	and	principal	accounting	officer	or	controller) will	be	posted	at	this	internet	address.

Shareholders	who	would	like	to	request	printed	copies	of	the	PNC	Code	of Business	Conduct	and	Ethics	or	our	Corporate	Governance	Guidelines	or	the charters	of	our	Board's	Audit,	Nominating	and	Governance,	Personnel	and Compensation,	or	Risk	Committees	(all	of	which	are	posted	on	the	PNC corporate	website	at	www.pnc.com/corporategovernance)	may	do	so	by	sending their	requests	to	PNC's	Corporate	Secretary	at	corporate	headquarters	at	One PNC	Plaza,	249	Fifth	Avenue,	Pittsburgh,	Pennsylvania	15222-2707.	Copies will	be	provided	without	charge	to	shareholders.

Our	common	stock	is	listed	on	the	New	York	Stock	Exchange	(NYSE)	under	the symbol	"PNC."

# Internet	Information

The	PNC	Financial	Services	Group,	Inc.'s	financial	reports	and	information about	its	products	and	services	are	available	on	the	internet	at	www.pnc.com. We	provide	information	for	investors	on	our	corporate	website	under	"About	Us –	Investor	Relations,"	such	as	Investor	Events,	SEC	Filings,	Financial Information	(including	Quarterly	Earnings,	Annual	Reports,	Proxy	Statements and	Regulatory	Disclosures),	Financial	Press	Releases,	Message	from	the Chairman	and	Corporate	Governance.	Under	"Investor	Relations,"	we	will	from time	to	time	post	information	that	we	believe	may	be	important	or	useful	to investors.	We	use	our	Twitter	account,	@pncnews,	as	an	additional	way	of disseminating	public	information	from	time	to	time	to	investors.	We	generally post	the	following	on	our	corporate	website	shortly	before	or	promptly	following its

first	use	or	release:	financially-related	press	releases	(including	earnings releases),	various	SEC	filings,	including	SEC	Reports,	presentation	materials associated	with	earnings	and	other	investor	conference	calls	or	events,	and	access to	live	and	taped	audio	from	earnings	and	other	investor	conference	calls	or events.	In	some	cases,	we	may	post	the	presentation	materials	for	other	investor conference	calls	or	events	several	days	prior	to	the	call	or	event.	For	earnings and	other	conference	calls	or	events,	we	generally	include	in	our	posted materials	a	cautionary	statement	regarding	forward-looking	and	adjusted information	and	we	provide	GAAP	reconciliations	when	we	refer	to	adjusted information	and	results.	Where	applicable,	we	provide	GAAP	reconciliations	for such	additional	information	in	materials	for	that	event	or	in	materials	for	other prior	investor	presentations	or	in	our	annual,	quarterly	or	current	reports.	When warranted,	we	will	also	use	our	website	to	expedite	public	access	to	time-critical information	regarding	PNC	in	advance	of	distribution	of	a	press	release	or	a filing	with	the	SEC	disclosing	the	same	information.

PNC	is	also	required	to	provide	additional	public	disclosure	regarding	estimated income,	losses	and	pro	forma	regulatory	capital	ratios	in	March	2015	under	a supervisory	hypothetical	severely	adverse	economic	scenario	and	in	September 2015	under	a	PNC-developed	hypothetical	severely	adverse	economic	scenario, as	well	as	information	concerning	its	capital	stress	testing	processes,	pursuant	to the	stress	testing	regulations	adopted	by	the	Federal	Reserve	and	the	OCC.	The timing	of	these	disclosures	will	change	beginning	in	2016,	as	discussed	in Regulatory	Capital	Requirements,	Stress	Testing	and	Capital	Planning	in	the Supervision	and	Regulation	section	above.	PNC	also	is	required	to	make	certain market	risk-related	public	disclosures	and	certain	additional	regulatory	capital- related	disclosures	under	the	regulatory	capital	rules	adopted	by	the	Federal banking	agencies.	Under	these	regulations,	PNC	may	be	able	to	satisfy	at	least	a portion	of	these	requirements	through	postings	on	its	website,	and	PNC	has done	so	and	expects	to	continue	to	do	so	without	also	providing	disclosure	of	this information	through	filings	with	the	Securities	and	Exchange	Commission.	We also	post	on	our	website	communications	to	our	shareholders,	such	as	the	letter to	shareholders	that	accompanies	the	Form	10-K	mailed	to	shareholders,	and may	not	file	them	as	exhibits	to	filings	with	the	SEC	when	not	expressly required.

Where	we	have	included	web	addresses	in	this	Report,	such	as	our	web	address and	the	web	address	of	the	SEC,	we	have	included	those	web	addresses	as inactive	textual	references	only.	Except	as	specifically	incorporated	by	reference into	this	Report,	information	on	those	websites	is	not	part	hereof.

# ITEM	1A	–	RISK	FACTORS

We	are	subject	to	a	number	of	risks	potentially	impacting	our	business,	financial condition,	results	of	operations	and	cash	flows.	As	a	financial	services organization,	certain	elements	of	risk	are	inherent	in	our	transactions	and operations	and	are	present	in	the	business	decisions	we	make.	Thus,	we encounter	risk	as	part	of	the	normal	course	of	our	business,	and	we	design	risk management	processes	to	help	manage	these	risks.

Our	success	is	dependent	on	our	ability	to	identify,	understand	and	manage	the risks	presented	by	our	business	activities	so	that	we	can	appropriately	balance revenue	generation	and	profitability.	These	risks	include,	but	are	not	limited	to, credit	risk,	market	risk,	liquidity	risk,	operational	risk,	model	risk,	technology, compliance	and	legal	risk,	and	strategic	and	reputation	risk.	We	discuss	our principal	risk	management	processes	and,	in	appropriate	places,	related	historical performance	in	the	Risk	Management	section	included	in	Item	7	of	this	Report.

The	following	are	the	key	risk	factors	that	affect	us.	Any	one	or	more	of	these risk	factors	could	have	a	material	adverse	impact	on	our	business,	financial condition,	results	of	operations	or	cash	flows,	in	addition	to	presenting	other possible	adverse	consequences,	including	those	described	below.	These	risk factors	and	other	risks	are	also	discussed	further	in	other	sections	of	this	Report.

# Difficult	economic	conditions	or	volatility	in	the	financial	markets	would likely	have	an	adverse	effect	on	our	business,	financial	position	and	results of	operations.

As	a	financial	services	company,	PNC's	business	and	overall	financial performance	are	vulnerable	to	the	impact	of	poor	or	weak	economic	conditions, particularly	in	the	United	States	but	also	to	some	extent	in	the	global	economy. Recessionary	conditions,	particularly	if	severe	such	as	was	experienced	starting in	2007	and	ending	in	2009,	are	likely	to	have	a	negative	financial	impact	across the	financial	services	industry,	including	on	PNC.	Recessionary	economic conditions	can	lead	to	turmoil	and	volatility	in	financial	markets,	which	can increase	the	adverse	impact	on	financial	institutions	such	as	PNC,	with	the impact	increased	to	the	extent	the	conditions	are	more	severe.	A	return	to recessionary	economic	conditions	in	the	United	States	would	likely	adversely affect	PNC,	its	business	and	financial	performance,	with	the	impact	potentially as	or	more	detrimental	than	that	of	the	last	recession.

The	economic	recovery	from	the	last	recession	continued	in	2014,	but	at	a slower	pace	than	for	recoveries	from	prior	recessions.	Although	unemployment rates	have	dropped	significantly	from	the	highest	levels	during	the	recession, employment	is	not	yet	at	robust	levels.	Consumer	and	business	confidence	is improving	but	remains	in	the	cautious	zone.

Although	Congress	and	the	President	have	recently	been	able	to	reach	agreement on	budgets	and	the	U.S.	government's	debt	ceiling,	significant	long-term	issues remain	with	respect	to	federal	budgetary	and	spending	matters,	and	it	is	unclear whether	agreements	to	resolve	these	issues	will	be	reached,	particularly	in	light of	the	divided	state	of	the	U.S.	government.	Uncertainty	resulting	from	these issues	and	recent	difficulties	in	resolving	these	types	of	matters	could	contribute to	slower	economic	growth.	Another	period	where	the	Congress	and	the President	cannot	reach	resolution	of	key	federal	budgetary	and	spending	matters, leading	to	events	such	as	actual	or	threatened	government	shutdowns	or	defaults, could	adversely	affect	the	U.S.	economy.	In	recent	years,	a	downgrade	in	the ratings	for	U.S.	Treasury	securities	by	a	credit	rating	agency,	an	extended government	shutdown,	and	substantial	spending	cuts	through	sequestration	have resulted	from	government	stalemate	on	budgetary	issues.

The	global	recession	and	disruption	of	the	financial	markets	led	to	concerns	over the	solvency	of	certain	European	countries,	affecting	these	countries'	capital markets	access	and	in	some	cases	sovereign	credit	ratings,	as	well	as	market perception	of	financial	institutions	that	have	significant	direct	or	indirect exposure	to	these	countries.	These	concerns	continue	even	as	the	global economy	is	recovering	and	some	previously	stressed	European	economies	have experienced	at	least	partial	recoveries	from	their	lowpoint	during	the	recession. If	measures	to	address	sovereign	debt	and	financial	sector	problems	in	Europe are	inadequate,	they	may	delay	or	weaken	economic	recovery,	or	result	in	the exit	of	one	or	more	member	states	from	the	Eurozone	or	more	severe	economic and	financial	conditions.	If	realized,	these	risk	scenarios	could	contribute	to severe	financial	market	stress	or	a	global	recession,	likely	affecting	the	economy and	capital	markets	in	the	United	States	as	well.

Other	Risk	Factors,	presented	below,	address	specific	ways	in	which	we	may	be adversely	impacted	by	economic	conditions.

# Our	business	and	financial	results	are	subject	to	risks	associated	with	the creditworthiness	of	our	customers	and	counterparties.

Credit	risk	is	inherent	in	the	financial	services	business	and	results	from,	among other	things,	extending	credit	to	customers,	purchasing	securities,	and	entering into	financial	derivative	transactions	and	certain	guarantee	contracts.	Credit	risk is	one	of	our	most	significant	risks,	particularly	given	the	high	percentage	of	our assets	represented	directly	or	indirectly	by	loans	and	the	importance	of	lending	to our	overall	business.	We	manage	credit	risk	by	assessing	and	monitoring	the creditworthiness	of	our	customers	and	counterparties	and	by	diversifying	our loan	portfolio.	Many	factors	impact	credit	risk.

A	borrower's	ability	to	repay	a	loan	can	be	adversely	affected	by	several	factors, such	as	business	performance,	job	losses	or

health	issues.	A	weak	or	deteriorating	economy	and	changes	in	the	United	States or	global	markets	also	could	adversely	impact	the	ability	of	our	borrowers	to repay	outstanding	loans.	Any	decrease	in	our	borrowers'	ability	to	repay	loans would	result	in	higher	levels	of	nonperforming	loans,	net	charge-offs,	provision for	credit	losses	and	valuation	adjustments	on	loans	held	for	sale.

Financial	services	institutions	are	interrelated	as	a	result	of	trading,	clearing, counterparty,	and	other	relationships.	We	have	exposure	to	many	different industries	and	counterparties,	and	we	routinely	execute	transactions	with counterparties	in	the	financial	services	industry,	including	brokers	and	dealers, commercial	banks,	investment	banks,	mutual	and	hedge	funds,	and	other institutional	clients.	Many	of	these	transactions	expose	us	to	credit	risk	in	the event	of	default	of	our	counterparty	or	client.

Despite	maintaining	a	diversified	loan	portfolio,	in	the	ordinary	course	of business,	we	may	have	concentrated	credit	exposure	to	a	particular	person	or entity,	industry,	region	or	counterparty.	Events	adversely	affecting	specific customers,	industries,	regions	or	markets,	a	decrease	in	the	credit	quality	of	a customer	base,	or	an	adverse	change	in	the	risk	profile	of	a	market,	industry,	or group	of	customers	could	adversely	affect	us.

Our	credit	risk	may	be	exacerbated	when	collateral	held	by	us	to	secure obligations	to	us	cannot	be	realized	upon	or	is	liquidated	at	prices	that	are	not sufficient	to	recover	the	full	amount	of	the	loan	or	derivative	exposure	due	us.

In	part	due	to	improvement	in	economic	conditions,	as	well	as	actions	taken	by PNC	to	manage	its	portfolio,	PNC's	provision	for	credit	losses	has	declined substantially	every	year	since	the	end	of	the	recent	recession.	If	we	were	to	once again	experience	higher	levels	of	provision	for	credit	losses,	it	could	result	in lower	levels	of	net	income.

# Our	business	and	financial	performance	is	impacted	significantly	by	market interest	rates	and	movements	in	those	rates.	The	monetary,	tax	and	other policies	of	governmental	agencies,	including	the	Federal	Reserve,	have	a significant	impact	on	interest	rates	and	overall	financial	market performance	over	which	we	have	no	control	and	which	we	may	not	be	able to	predict	adequately.

As	a	result	of	the	high	percentage	of	our	assets	and	liabilities	that	are	in	the	form of	interest-bearing	or	interest-related	instruments,	changes	in	interest	rates,	in	the shape	of	the	yield	curve,	or	in	spreads	between	different	market	interest	rates	can have	a	material	effect	on	our	business,	our	profitability	and	the	value	of	our financial	assets	and	liabilities.	For	example:

•	Changes	in	interest	rates	or	interest	rate	spreads	can	affect	the difference	between	the	interest	that	we	earn	on	assets	and	the	interest that	we	pay	on	liabilities,

	which	impacts	our	overall	net	interest	income	and	profitability. •	Such	changes	can	affect	the	ability	of	borrowers	to	meet	obligations under	variable	or	adjustable	rate	loans	and	other	debt	instruments,	and can,	in	turn,	affect	our	loss	rates	on	those	assets.

•	Such	changes	may	decrease	the	demand	for	interest	rate-based products	and	services,	including	loans	and	deposit	accounts. •	Such	changes	can	also	affect	our	ability	to	hedge	various	forms	of market	and	interest	rate	risk	and	may	decrease	the	effectiveness	of those	hedges	in	helping	to	manage	such	risks.

•	Movements	in	interest	rates	also	affect	mortgage	prepayment	speeds and	could	result	in	impairments	of	mortgage	servicing	assets	or otherwise	affect	the	profitability	of	such	assets.

The	monetary,	tax	and	other	policies	of	the	government	and	its	agencies, including	the	Federal	Reserve,	have	a	significant	impact	on	interest	rates	and overall	financial	market	performance.	These	governmental	policies	can	thus affect	the	activities	and	results	of	operations	of	banking	companies	such	as	PNC. An	important	function	of	the	Federal	Reserve	is	to	regulate	the	national	supply of	bank	credit	and	certain	interest	rates.	The	actions	of	the	Federal	Reserve influence	the	rates	of	interest	that	we	charge	on	loans	and	that	we	pay	on borrowings	and	interest-bearing	deposits	and	can	also	affect	the	value	of	our	on- balance	sheet	and	off-balance	sheet	financial	instruments.	Both	due	to	the impact	on	rates	and	by	controlling	access	to	direct	funding	from	the	Federal Reserve	Banks,	the	Federal	Reserve's	policies	also	influence,	to	a	significant extent,	our	cost	of	funding.	We	cannot	predict	the	nature	or	timing	of	future changes	in	monetary,	tax	and	other	policies	or	the	effects	that	they	may	have	on our	activities	and	financial	results.	The	current	very	low	interest	rate environment	has	had	a	negative	impact	on	our	ability	to	increase	our	net	interest income,	and	its	continuation,	which	is	expected	at	least	through	mid-year	2015 based	on	statements	by	the	Chair	of	the	Federal	Reserve,	could	affect	consumer and	business	behavior	in	ways	that	are	adverse	to	us	in	addition	to	continuing	to affect	our	net	interest	income.	Even	once	the	Federal	Reserve	begins	increasing the	interest	rates	it	directly	influences,	there	may	be	a	prolonged	period	before interest	rates	return	to	more	historically	typical	levels.

In	addition,	monetary	and	fiscal	policy	actions	by	governmental	and	regulatory decision	makers	in	other	countries	or	in	the	European	Union	could	have	an impact	on	global	interest	rates,	affecting	rates	in	the	United	States	as	well	as rates	on	instruments	denominated	in	currencies	other	than	the	United	States dollar,	any	of	which	could	have	one	or	more	of	the	potential	effects	on	PNC described	above.

# Our	business	and	financial	performance	are	vulnerable	to	the	impact	of changes	in	the	values	of	financial	assets.

As	a	financial	institution,	a	substantial	majority	of	PNC's	assets	and	liabilities are	financial	in	nature	(items	such	as	loans,	securities,	servicing	rights,	deposits and	borrowings).	Such	assets	and	liabilities	will	fluctuate	in	value,	often significantly,	due	to	movements	in	the	financial	markets	or	market	volatility	as well	as	developments	specific	to	the	asset	or	liability	in	question.

Credit-based	assets	and	liabilities	will	fluctuate	in	value	due	to	changes	in	the perceived	creditworthiness	of	the	borrowers	and	also	due	to	changes	in	market interest	rates.	A	lessening	of	confidence	in	the	creditworthiness	of	the	United States	or	other	governments	whose	securities	we	hold	could	impact	the	value	of those	holdings.	Changes	in	loan	prepayment	speeds,	usually	based	on fluctuations	in	market	interest	rates,	could	adversely	impact	the	value	of	our mortgage	servicing	rights.	The	financial	strength	of	counterparties,	with	whom we	have	hedged	some	of	our	exposure	to	certain	types	of	assets,	could	affect	the value	of	such	transactions	and	assets.	Additionally,	the	underlying	value	of	an asset	under	lease	may	decrease	due	to	supply	and	demand	for	the	asset	or	the condition	of	the	asset	at	the	end	of	the	lease.	This	could	cause	our	recorded	lease value	to	decline.

In	many	cases,	PNC	marks	its	assets	and	liabilities	to	market	on	its	financial statements,	either	through	its	Net	income	and	Retained	earnings	or	through adjustments	to	Accumulated	other	comprehensive	income	on	its	balance	sheet. We	may	need	to	record	losses	in	the	value	of	financial	assets	even	where	our expectation	of	realizing	the	face	value	of	the	underlying	instrument	has	not changed.

In	addition,	asset	management	revenue	is	primarily	based	on	a	percentage	of	the value	of	the	assets	being	managed	and	thus	is	impacted	by	general	changes	in market	valuations.	Thus,	although	we	are	not	directly	impacted	by	changes	in	the value	of	such	assets,	decreases	in	the	value	of	those	assets	would	affect	related fee	income.

# Our	business	and	financial	performance	are	dependent	on	our	ability	to attract	and	retain	customers	for	our	products	and	services,	which	may	be negatively	impacted	by	a	lack	of	consumer	and	business	economic confidence	as	well	as	our	actions,	including	our	ability	to	anticipate	and satisfy	customer	demands	for	products	and	services.

As	a	financial	institution,	our	performance	is	subject	to	risks	associated	with	the loss	of	customer	confidence	and	demand.	Economic	and	market	developments, in	the	United	States,	Europe	or	elsewhere,	may	affect	consumer	and	business confidence	levels.	If	customers	lose	confidence	due	to	a	weak	or	deteriorating economy	or	uncertainty	surrounding	the	future

of	the	economy,	the	demand	for	our	products	and	services	could	suffer.

We	may	also	fail	to	attract	or	retain	customers	if	we	are	unable	to	develop	and market	products	and	services	that	meet	evolving	customer	needs	or	demands	or if	we	are	unable	to	deliver	them	effectively	and	securely	to	our	customers, particularly	to	the	extent	that	our	competitors	are	able	to	do	so.

News	or	other	publicity	that	impairs	our	reputation,	or	the	reputation	of	our industry	generally,	also	could	cause	a	loss	of	customers.

If	we	fail	to	attract	and	retain	customers,	demand	for	our	loans	and	other financial	products	and	services	could	decrease	and	we	could	experience	adverse changes	in	payment	patterns.	We	could	lose	interest	income	from	a	decline	in credit	usage	and	fee	income	from	a	decline	in	product	sales,	investments	and other	transactions.	PNC's	customers	could	remove	money	from	checking	and savings	accounts	and	other	types	of	deposit	accounts	in	favor	of	other	banks	or other	types	of	investment	products.	Deposits	are	a	low	cost	source	of	funds. Therefore,	losing	deposits	could	increase	our	funding	costs	and	reduce	our	net interest	income.

For	several	years,	the	United	States	has	been	in	a	very	low	interest	rate environment.	This	situation	has	decreased	the	attractiveness	of	alternatives	to bank	checking	and	savings	accounts,	which	may	lack	deposit	insurance	and some	of	the	convenience	associated	with	more	traditional	banking	products	and which	may	no	longer	be	able	to	offer	much	higher	interest	rates.	If	interest	rates were	to	rise	significantly,	customers	may	be	less	willing	to	maintain	balances	in non-interest	bearing	or	low	interest	bank	accounts,	which	could	result	in	a	loss	of deposits	or	a	relatively	higher	cost	of	funds	to	PNC.	This	could	also	result	in	a loss	of	fee	income.

In	our	asset	management	business,	investment	performance	is	an	important factor	influencing	the	level	of	assets	that	we	manage.	Poor	investment performance	could	impair	revenue	and	growth	as	existing	clients	might	withdraw funds	in	favor	of	better	performing	products.	Additionally,	the	ability	to	attract funds	from	existing	and	new	clients	might	diminish.	Overall	economic conditions	may	limit	the	amount	that	customers	are	able	or	willing	to	invest	as well	as	the	value	of	the	assets	they	do	invest.	The	failure	or	negative performance	of	products	of	other	financial	institutions	could	lead	to	a	loss	of confidence	in	similar	products	offered	by	us	without	regard	to	the	performance of	our	products.	Such	a	negative	contagion	could	lead	to	withdrawals, redemptions	and	liquidity	issues	in	such	products	and	have	a	material	adverse impact	on	our	assets	under	management	and	asset	management	revenues	and earnings.

# As	a	regulated	financial	services	firm,	we	are	subject	to	numerous governmental	regulations,	and	the	financial	services	industry	as	a	whole	is subject	to	significant	regulatory	reform	initiatives	in	the	United	States	and elsewhere.

PNC	is	a	bank	holding	company	(BHC)	and	a	financial	holding	company	and	is subject	to	numerous	governmental	regulations	involving	both	its	business	and organization.

Our	businesses	are	subject	to	regulation	by	multiple	banking,	consumer protection,	securities	and	derivatives	regulatory	bodies.	Applicable	laws	and regulations	restrict	our	ability	to	repurchase	stock	or	to	receive	dividends	from subsidiaries	that	operate	in	the	banking	and	securities	businesses	and	impose capital	adequacy	requirements.	PNC's	ability	to	service	its	obligations	and	pay dividends	to	shareholders	is	largely	dependent	on	the	receipt	of	dividends	and advances	from	its	subsidiaries,	primarily	PNC	Bank.	The	Federal	Reserve requires	a	BHC	to	act	as	a	source	of	financial	and	managerial	strength	for	its subsidiary	banks.	The	Federal	Reserve	could	require	PNC	to	commit	resources	to PNC	Bank	when	doing	so	is	not	otherwise	in	the	interests	of	PNC	or	its shareholders	or	creditors.

Applicable	laws	and	regulations	restrict	permissible	activities	and	investments and	require	compliance	with	protections	for	loan,	deposit,	brokerage,	fiduciary, mutual	fund	and	other	customers,	and	for	the	protection	of	customer	information, among	other	things.	We	are	also	subject	to	laws	and	regulations	designed	to combat	money	laundering,	terrorist	financing,	and	transactions	with	persons, companies	or	foreign	governments	designated	by	U.S.	authorities.

Starting	shortly	after	the	beginning	of	the	financial	crisis	in	2007,	we	have	faced, and	expect	to	continue	to	face	for	the	foreseeable	future,	increased	regulation	of the	financial	services	industry	as	a	result	of	initiatives	intended	to	promote	the safety	and	soundness	of	financial	institutions,	financial	market	stability,	the transparency	and	liquidity	of	financial	markets,	and	consumer	and	investor protection.	We	also	expect,	in	many	cases,	more	intense	scrutiny	from	bank, consumer	protection	and	other	supervisors	in	the	examination	process	and	more aggressive	enforcement	of	laws	and	regulations	on	both	the	federal	and	state levels.	Compliance	with	regulations	and	other	supervisory	initiatives	will	likely increase	the	company's	costs	and	reduce	its	revenue,	and	may	limit	the company's	ability	to	pursue	certain	desirable	business	opportunities.	New reforms	will	also	introduce	additional	legal	risk	(including	as	a	result	of	newly applicable	antifraud	and	anti-manipulation	provisions	and	private	rights	of action)	and	affect	regulatory	oversight,	applicable	capital	and	liquidity requirements,	and	residential	mortgage	and	other	consumer	financial	products. The	consequences	of	noncompliance	with	applicable	laws	and	regulations	can include	substantial	monetary	and	nonmonetary	sanctions	as	well	as	damage	to our	reputation	and	businesses.

A	number	of	reform	provisions	are	likely	to	significantly	impact	the	ways	in which	banks	and	BHCs,	including	PNC,	do	business.	Some	of	the	reform initiatives	have	led	to	the	formation	of	new	regulatory	bodies,	such	as	the	CFPB, which	has	authority	to	regulate	consumer	financial	products	and	services	sold	by banks	and	non-bank	companies	and	to	supervise	banks	with	assets	of	more	than $10	billion	and	their	affiliates	for	compliance	with	federal	consumer	protection laws.	Other	agencies	have	significant	new	powers	relevant	to	PNC,	such	as	the authority	now	held	by	the	CFTC	to	regulate	non	security-based	swaps,	which, among	other	things,	led	PNC	Bank	to	register	with	the	CFTC	as	a	swap	dealer	in early	2013.

See	Supervision	and	Regulation	in	Item	1	of	this	Report	for	more	information concerning	the	regulation	of	PNC	and	recent	initiatives	to	reform	financial institution	regulation,	including	some	of	the	matters	discussed	in	this	Risk Factor.	Note	20	Regulatory	Matters	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report	also	discusses	some	of	the	regulation applicable	to	PNC.

The	following	describes	the	key	risks	associated	with	some	of	the	initiatives recently	undertaken	as	part	of	the	regulatory	reform	initiatives	affecting	the financial	services	industry,	either	where	pending	rules	have	not	yet	been finalized	or	where	the	impact	of	new	rules	has	not	been	substantially	realized. •	In	December	2013,	the	U.S.	banking	agencies,	the	SEC	and	the	CFTC adopted	regulations	implementing	the	Volcker	Rule	provisions	of Dodd-Frank.	The	Volcker	Rule	prohibits	banks	and	their	affiliates from	engaging	in	some	types	of	proprietary	trading	and	restricts	the ability	of	banks	and	their	affiliates	to	sponsor,	invest	in	or	have specified	other	financial	relationships	with	certain	types	of	private funds	(referred	to	as	covered	funds).	We	discuss	the	Volcker	Rule	in the	Supervision	and	Regulation	section	included	in	Item	1	of	this Report.	PNC	discontinued	its	designated	proprietary	trading	operations several	years	ago.	We	currently	do	not	expect	the	proprietary	trading aspects	of	the	final	regulations	to	have	a	material	effect	on	PNC's businesses	or	revenue.	Nevertheless,	the	Volcker	Rule	regulations place	limits	and	conditions	on	many	types	of	permissible	trading activities,	including	transactions	conducted	for	purposes	of	hedging, liquidity	management,	underwriting	or	to	facilitate	customer transactions.	These	limits	and	restrictions	could	cause	PNC	to	forego engaging	in	hedging	or	other	transactions	that	it	would	otherwise undertake	in	the	ordinary	course	of	business	and,	thus,	to	some	extent, may	limit	the	ability	of	PNC	to	most	effectively	hedge	its	risks,

manage	its	balance	sheet	or	provide	products	or	services	to	its customers.

•	In	addition,	as	of	December	31,	2014,	PNC	held	interests	in	private equity	and	hedge	funds	that	are

covered	funds	subject	to	the	Volcker	Rule	regulations	totaling approximately	$579	million,	including	$140	million	of	sponsored funds.	Certain	of	PNC's	REIT	Preferred	Securities	also	were	issued	by statutory	trusts	that,	as	currently	structured,	are	considered	covered funds.	As	of	December	31,	2014,	PNC	also	held	approximately	$1.5 billion	of	senior	debt	interests	in	collateralized	loan	obligations	and certain	other	investment	securities	that	may	be	considered	ownership interests	in	covered	funds.	The	unrealized	loss	associated	with	these securities	was	approximately	$11	million.	In	December	2014,	the Federal	Reserve	extended	the	conformance	period	for	the	Volcker Rule,	which	generally	goes	into	effect	on	July	21,	2015,	to	give	all banking	entities	until	July	21,	2016	to	conform	their	investments	in, and	relationships	with,	covered	funds	that	were	in	place	prior	to December	31,	2013	(legacy	covered	funds).	Moreover,	the	Federal Reserve	also	indicated	its	intent	to	grant	an	additional	one-year extension	of	the	conformance	period	for	legacy	covered	funds	in	order to	permit	banking	entities	until	July	21,	2017	to	conform	their ownership	interests	in,	and	relationships	with,	these	funds. Substantially	all	of	PNC's	interests	in	covered	funds	qualify	for	the extended	conformance	period	granted	for	holdings	in	legacy	covered funds.	Moreover,	certain	of	PNC's	legacy	covered	funds	may	qualify for	an	additional	5-year	conformance	period	(i.e.,	until	July	21,	2022), subject	to	Federal	Reserve	approval.	It	is	likely	that	at	least	some	of the	amounts	invested	in	legacy	covered	funds	will	reduce	over	time	in the	ordinary	course	before	compliance	is	required.	A	forced	sale	or restructuring	of	PNC's	investments	due	to	the	Volcker	Rule	would likely	result	in	PNC	receiving	less	value	than	it	would	otherwise	have received	or	experiencing	other	adverse	consequences. •	In	February	2014,	the	Federal	Reserve	issued	final	rules	establishing new	enhanced	prudential	standards	relating	to	liquidity	risk	and	overall risk	management	for	BHCs	(like	PNC)	that	have	$50	billion	or	more	in consolidated	total	assets.	The	Federal	Reserve,	however,	continues	to develop	the	other	enhanced	prudential	standards	that	are	required under	Dodd-Frank	for	bank	holding	companies	with	$50	billion	or more	in	consolidated	total	assets,	including	the	counterparty	credit exposure	limits	and	early	remediation	requirements	that	were	the subject	of	proposed	rules	issued	in	December	2011.	Under	these proposed	rules,	PNC	could	be	subject	to	increasingly	stringent	actions by	the	Federal	Reserve	if	its	financial	condition	or	risk	management deteriorated	as	reflected	by	the	company's	current	or	projected	post- stress	capital	levels,	compliance	with	supervisory	liquidity	and	risk management	standards	and,	in	some	instances,	market-based indicators,	such	as	credit	default	swap	spreads.	In	addition,	the

Federal	Reserve	has	indicated	that	it	intends	to	continue	to	develop	the set	of	enhanced	prudential	standards	that	apply	to	large	bank	holding companies	in	order	to	further	promote	the	resiliency	of	such	firms	and the	U.S.	financial	system.	Until	the	Federal	Reserve's	rules	and initiatives	to	establish	these	enhanced	prudential	standards	are completed,	we	are	unable	to	fully	estimate	their	impact	on	PNC, although	we	expect	these	initiatives	will	result	in	increased	compliance costs.

•	In	October	2014,	six	federal	agencies	(the	Federal	Reserve,	OCC,

FDIC,	SEC,	Federal	Housing	Finance	Agency	and	the	Department	of Housing	and	Urban	Development)	adopted	final	rules	to	implement	the credit	risk	retention	requirements	of	Section	941	of	Dodd-Frank	for asset-backed	securitization	transactions.	The	regulations	specify	when and	how	securitizers	of	different	types	of	asset-backed	securitizations, including	transactions	backed	by	residential	mortgages,	commercial mortgages,	and	commercial,	credit	card	and	auto	loans,	must	comply with	the	Dodd-Frank	requirement	that	they	retain	at	least	five	percent of	the	credit	risk	of	the	assets	being	securitized.	The	final	rules	also implement	the	exemptions	from	these	credit	risk	retention requirements	for	transactions	that	are	backed	by	"qualified	residential mortgages"	or	other	high-quality	commercial	mortgage,	commercial	or automobile	loans,	each	as	defined	in	the	final	rules.	The	regulations will	take	effect	on	December	24,	2015	with	respect	to	new securitization	transactions	backed	by	residential	mortgages	and	on December	24,	2016	with	respect	to	new	securitization	transactions backed	by	other	types	of	assets.	The	final	rules	are	likely	to	have	an impact	on	PNC	both	directly	as	well	as	indirectly.	The	extent	and magnitude	of	these	impacts	is	not	yet	known	and	will,	to	some	extent, depend	on	how	the	markets	and	market	participants	(including	PNC) adjust	to	the	new	rules.

On	the	indirect	impact	side,	PNC	originates	loans	of	a	variety	of	types, including	residential	and	commercial	mortgages,	credit	card,	auto,	and student,	that	historically	have	commonly	been	securitized,	and	PNC	is also	a	significant	servicer	of	residential	and	commercial	mortgages	held by	others,	including	securitization	vehicles.	PNC	anticipates	that	the risk	retention	requirements	will	impact	the	market	for	loans	of	types that	historically	have	been	securitized,	potentially	affecting	the	volumes of	loans	securitized,	the	types	of	loan	products	made	available,	the terms	on	which	loans	are	offered,	consumer	and	business	demand	for loans,	and	the	market	for	third-party	loan	servicers.	The	risk	retention rules	also	could	have	the	effect	of	slowing	the	rebound	in	the securitization	markets.	One	effect	of	having	substantially	reduced

opportunities	to	securitize	loans	would	likely	be	a	reduction	in	the willingness	of	banks,	including	PNC,	to	make	loans	due	to	balance sheet	management	requirements.	Any	of	these	potential	impacts	of	the Dodd-Frank	risk	retention	rules	could	affect	the	way	in	which	PNC conducts	its	business,	including	its	product	offerings.

Even	after	new	rules	are	finalized	and	become	effective,	it	still	may	take	a period	of	time	before	the	manner	in	which	the	rules	will	be	interpreted	and administered	by	the	relevant	agencies	becomes	clarified	and	known.	A	failure	to comply,	or	to	have	adequate	policies	and	procedures	designed	to	comply,	with these	and	other	regulatory	requirements	could	expose	us	to	damages,	fines	and regulatory	penalties	and	other	regulatory	actions,	which	could	be	significant,	and could	also	injure	our	reputation	with	customers	and	others	with	whom	we	do business.

# New	capital	and	liquidity	standards	will	result	in	banks	and	bank	holding companies	needing	to	maintain	more	and	higher	quality	capital	and	greater liquidity	than	has	historically	been	the	case.

We	are	subject	to	regulatory	capital	and	liquidity	requirements	established	by	the Federal	Reserve	and	the	OCC,	and	discuss	these	requirements	and	standards	in the	Supervision	and	Regulation	section	included	in	Item	1	of	this	Report.

The	regulatory	capital	requirements	applicable	to	banks	and	BHCs	have undergone,	and	continue	to	undergo,	significant	changes.	For	example,	the	final rules	adopted	by	the	U.S.	banking	agencies	in	July	2013	to	implement	the	new international	guidelines	for	determining	regulatory	capital	established	by	the Basel	Committee	known	as	"Basel	III",	as	well	as	to	implement	certain provisions	of	Dodd-Frank,	fundamentally	altered	the	U.S.	regulatory	capital requirements	for	U.S.	BHCs	and	banks.	Significant	parts	of	these	rules	became effective	for	PNC	on	January	1,	2014	and	on	January	1,	2015,	although	as	a result	of	the	staggered	effective	dates	of	the	rules	many	provisions	are	phased-in over	a	period	of	years,	with	the	rules	generally	fully	phased-in	as	of	January	1, 2019.	The	Basel	Committee,	moreover,	continues	to	consider	additional, significant	changes	to	the	international	capital	framework	for	banking organizations,	including	modifications	that	would	significantly	alter	the international	frameworks	governing	the	market	risk	capital	requirements	for trading	positions	and	the	standardized	risk	weighting	approach	for	credit	risk, establish	a	capital	floor	for	banking	organizations	subject	to	the	advanced approaches	for	the	risk	weighting	of	assets,	modify	the	treatment	of securitization	positions,	and	seek	to	enhance	the	transparency	and	consistency	of capital	requirements	amongst	banks	and	jurisdictions.	It	is	unclear	how	these	or other	initiatives	by	the	Basel	Committee	may	be	finalized	and	implemented	in the

United	States	and,	thus,	we	are	unable	to	estimate	what	potential	impact	such initiatives	may	have	on	PNC.

The	U.S.	banking	agencies	also	recently	have	implemented	rules	that significantly	strengthen	and	alter	the	framework	for	liquidity	regulation	in	the United	States.	In	September	2014,	the	U.S.	banking	agencies	adopted	final	rules to	implement	the	LCR,	a	new,	short-term	quantitative	liquidity	requirement. These	rules	require	PNC	and	PNC	Bank	to	maintain	an	amount	of	qualifying high-quality	liquid	assets	sufficient	to	cover	the	entity's	projected	net	cash outflows	over	a	30-day	stress	period	using	inflow,	outflow	and	maturity assumptions	included	in	the	rule.	The	LCR	rules	became	effective	for	PNC	and PNC	Bank	on	January	1,	2015,	and	the	minimum	required	LCR	and	the requirement	to	calculate	the	LCR	on	a	daily	basis	will	be	phased-in	over	a	period of	years,	with	the	standard	being	fully	implemented	on	January	1,	2017.	In anticipation	of	the	final	rules,	PNC	undertook	several	actions	to	prepare	for implementation	of	the	LCR.	The	Federal	Reserve's	new	liquidity	risk management	requirements	for	bank	holding	companies	with	$50	billion	or	more in	consolidated	total	assets	(like	PNC)	also	became	effective	on	January	1,	2015. The	new	rules	require	covered	BHCs	to,	among	other	things,	conduct	internal liquidity	stress	tests	over	a	range	of	time	horizons,	maintain	a	buffer	of	highly liquid	assets	sufficient	to	meet	projected	net	outflows	under	the	BHC's	30-day liquidity	stress	test,	and	maintain	a	contingency	funding	plan	that	meets	detailed requirements.

Additional	liquidity	standards	also	are	expected	to	be	implemented	in	the	coming years.	For	example,	the	Basel	Committee,	in	October	2014,	released	the	final framework	for	the	NSFR	standard,	which	is	designed	to	ensure	that	banking organizations	maintain	a	stable,	long-term	funding	profile	in	relation	to	their asset	composition	and	off-balance	sheet	activities.	Under	that	framework,	the NSFR	would	take	effect	as	a	minimum	regulatory	standard	on	January	1,	2018, although	the	U.S.	banking	agencies	have	not	yet	proposed	rules	to	implement	the NSFR.

The	need	to	maintain	more	and	higher	quality	capital,	as	well	as	greater	liquidity, going	forward	than	historically	has	been	required	could	limit	PNC's	business activities,	including	lending,	and	its	ability	to	expand,	either	organically	or through	acquisitions.	It	could	also	result	in	PNC	taking	steps	to	increase	its capital	that	may	be	dilutive	to	shareholders	or	being	limited	in	its	ability	to	pay dividends	or	otherwise	return	capital	to	shareholders,	or	selling	or	refraining from	acquiring	assets,	the	capital	requirements	for	which	are	inconsistent	with the	assets'	underlying	risks.	In	addition,	the	new	liquidity	standards	require	PNC to	maintain	holdings	of	highly	liquid	short-term	investments,	thereby	reducing PNC's	ability	to	invest	in	longer-term	or	less	liquid	assets	even	if	more	desirable from	a	balance	sheet	or	interest	rate	risk	management	perspective.	Moreover, although	these	new	requirements	are	being	phased	in	over	time,	U.S.	federal

banking	agencies	have	been	taking	into	account	expectations	regarding	the ability	of	banks	to	meet	these	new	requirements,	including	under	stressed conditions,	in	approving	actions	that	represent	uses	of	capital,	such	as	dividend increases,	share	repurchases	and	acquisitions.	Moreover,	PNC,	as	a	BHC	that	is subject	to	the	advanced	approaches	for	regulatory	capital	purposes,	is	subject	to a	higher	LCR	requirement	than	other	BHCs	that	have	more	than	$50	billion	in total	assets	but	are	not	subject	to	the	advanced	approaches.	Until	the	scope	and terms	of	pending	or	future	rulemakings	relating	to	capital,	liquidity,	or	liability composition	are	known,	the	extent	to	which	such	rules	may	apply	to	PNC	and the	potential	impact	of	such	rules	on	PNC	will	remain	uncertain.

# We	depend	on	information	systems,	both	internally	and	through	third- parties,	to	conduct	our	business	and	could	suffer	a	material	adverse	impact from	interruptions	in	the	effective	operation	of,	or	security	breaches affecting,	those	systems.

As	a	large	financial	company,	we	handle	a	substantial	volume	of	customer	and other	financial	transactions	virtually	on	a	continuous	basis.	As	a	result,	we	rely heavily	on	information	systems	to	conduct	our	business	and	to	process,	record, and	monitor	our	transactions.	In	recent	years,	PNC	has	increased	substantially	in size,	scope	and	complexity.	We	have	also	seen	more	customer	usage	of technological	solutions	for	financial	needs	and	higher	expectations	of	customers and	regulators	regarding	effective	and	safe	systems	operation.	We	expect	these trends	to	continue	for	the	foreseeable	future.	The	need	to	ensure	proper functioning	of	these	systems	has	become	more	challenging,	and	the	costs involved	in	that	effort	are	greater	than	ever.

The	risks	to	these	systems	result	from	a	variety	of	factors,	both	internal	and external.	In	some	cases,	these	factors	are	largely	outside	of	our	control,	including the	potential	for	bad	acts	on	the	part	of	hackers,	criminals,	employees	and	others. In	other	cases,	our	systems	could	fail	to	operate	as	needed	due	to	factors	such	as design	or	performance	issues,	human	error,	unexpected	transaction	volumes,	or inadequate	measures	to	protect	against	unauthorized	access	or	transmissions.	We are	also	at	risk	for	the	impact	of	natural	or	other	disasters,	terrorism, international	hostilities	and	the	like	on	our	systems	or	for	the	effect	of	outages	or other	failures	involving	power	or	communications	systems	operated	by	others.	In addition,	we	face	a	variety	of	types	of	cyber	attacks,	some	of	which	are discussed	in	more	detail	below.	Cyber	attacks	often	include	efforts	to	disrupt	our ability	to	provide	services	or	to	gain	access	to	confidential	company	and customer	information.

We	rely	on	other	companies	for	the	provision	of	a	broad	range	of	products	and services.	Many	of	these	products	and	services	include	information	systems themselves	or	involve	the	use	of	such	systems	in	connection	with	providing	the products	or	services.	In	some	cases,	these	other	companies	provide	the infrastructure	that	supports	electronic	communications.	These

other	companies	are	generally	subject	to	many	of	the	same	risks	we	face	with respect	to	our	systems.	To	the	extent	we	rely	on	these	other	companies,	we	could be	adversely	affected	if	they	are	impacted	by	system	failures,	cyber	attacks	or employee	misconduct.

All	of	these	types	of	events,	whether	resulting	from	cyber	attacks	or	other internal	or	external	sources,	expose	customer	and	other	confidential	information to	security	risks.	They	also	could	disrupt	our	ability	to	use	our	accounting, deposit,	loan	and	other	systems	and	could	cause	errors	in	transactions	with customers,	vendors	or	other	counterparties.

In	addition,	our	customers	often	use	their	own	devices,	such	as	computers, smartphones	and	tablets,	to	do	business	with	us.	We	have	limited	ability	to	assure the	safety	and	security	of	our	customers'	transactions	with	us	to	the	extent	they are	utilizing	their	own	devices.

We	are	faced	with	ongoing	efforts	by	others	to	breach	data	security	at	financial institutions	or	with	respect	to	financial	transactions.	Some	of	these	involve efforts	to	enter	our	systems	directly	by	going	through	or	around	our	security protections.	Others	involve	the	use	of	schemes	such	as	"phishing"	to	gain	access to	identifying	customer	information,	often	from	customers	themselves.	Most corporate	and	commercial	transactions	are	now	handled	electronically,	and	our retail	customers	increasingly	use	online	access	and	mobile	devices	to	bank	with us.	The	ability	to	conduct	business	with	us	in	this	manner	depends	on	the transmission	of	confidential	information,	which	increases	the	risk	of	data security	breaches.

Starting	in	late	2012,	there	have	been	several	well-publicized	series	of apparently	related	denial	of	service	attacks	on	large	financial	services companies,	including	PNC.	In	a	denial	of	service	attack,	individuals	or organizations	flood	commercial	websites	with	extraordinarily	high	volumes	of traffic,	with	the	goal	of	disrupting	the	ability	of	commercial	enterprises	to process	transactions	and	possibly	making	their	websites	unavailable	to	customers for	extended	periods	of	time.	The	attacks	against	PNC	have	resulted	in temporary	disruptions	in	customers'	ability	to	access	the	corporate	website	and	to perform	on-line	banking	transactions.	To	date,	no	customer	data	has	been	lost	or compromised	as	a	result	of	these	attacks	and	these	efforts	have	not	had	a material	impact	on	PNC.	We	cannot,	however,	provide	assurance	that	future attacks	of	this	type	might	not	have	a	greater	effect	on	PNC.

As	our	customers	regularly	use	PNC-issued	credit	and	debit	cards	to	pay	for transactions	with	retailers	and	other	businesses,	there	is	the	risk	of	data	security breaches	at	those	other	businesses	covering	PNC	account	information.	When	our customers	use	PNC-issued	cards	to	make	purchases	from	those	businesses,	card account	information	may	be	provided	to	the	business.	If	the	business's	systems that	process	or	store	card	account	information	are	subject	to	a	data	security breach,

holders	of	our	cards	who	have	made	purchases	from	that	business	may experience	fraud	on	their	card	accounts.	PNC	may	suffer	losses	associated	with reimbursing	our	customers	for	such	fraudulent	transactions	on	customers'	card accounts,	as	well	as	for	other	costs	related	to	data	security	compromise	events, such	as	replacing	cards	associated	with	compromised	card	accounts.	In	addition, PNC	provides	card	transaction	processing	services	to	some	merchant	customers under	agreements	we	have	with	payment	networks	such	as	Visa	and	MasterCard. Under	these	agreements,	we	may	be	responsible	for	certain	losses	and	penalties if	one	of	our	merchant	customers	suffers	a	data	security	breach.

Over	the	last	several	years,	several	large	retailers,	prominently	including	Target and	Home	Depot,	disclosed	that	they	had	suffered	substantial	data	security breaches	compromising	millions	of	card	accounts.	To	date,	PNC's	losses	and costs	related	to	these	breaches	have	not	been	material,	but	other	similar	events	in the	future	could	be	more	significant	to	PNC.

There	have	been	other	recent	publicly	announced	cyber	attacks	that	were	not focused	on	gaining	access	to	credit	card	information	but	instead	sought	access	to a	range	of	other	types	of	confidential	information	including	internal	emails	and other	forms	of	customer	financial	information	or	sought	to	capture	and	possibly shutdown	systems	and	devices	maintained	by	target	companies.	Notable examples	include	attacks	in	2014	on	JP	Morgan	Chase	and	Sony	Pictures	and	in early	2015	on	Anthem.	These	other	attacks	have	generally	not	had	any	financial impact	on	PNC	but	demonstrate	the	risks	to	confidential	information	and systems	operations	potentially	posed	by	cyber	attacks.

Methods	used	by	others	to	attack	information	systems	change	frequently	(with generally	increasing	sophistication),	often	are	not	recognized	until	launched against	a	target,	may	be	supported	by	foreign	governments	or	other	well- financed	entities,	and	may	originate	from	less	regulated	and	remote	areas	around the	world.	As	a	result,	we	may	be	unable	to	address	these	methods	in	advance	of attacks,	including	by	implementing	adequate	preventive	measures.

We	have	policies,	procedures	and	systems	(including	business	continuity programs)	designed	to	prevent	or	limit	the	effect	of	possible	failures, interruptions	or	breaches	in	security	of	information	systems.	We	design	our business	continuity	and	other	information	and	technology	risk	management programs	to	manage	our	capabilities	to	provide	services	in	the	case	of	an	event resulting	in	material	disruptions	of	business	activities	affecting	our	employees, facilities,	technology	or	suppliers.	We	regularly	seek	to	test	the	effectiveness	of and	enhance	these	policies,	procedures	and	systems.

Our	ability	to	mitigate	the	adverse	consequences	of	such	occurrences	is	in	part dependent	on	the	quality	of	our	business	continuity	planning	and	our	ability	to anticipate	the	timing	and	nature	of	any	such	event	that	occurs.	The	adverse impact	of

natural	and	other	disasters,	terrorist	activities,	international	hostilities	and	the like	could	be	increased	to	the	extent	that	there	is	a	lack	of	preparedness	on	the part	of	national	or	regional	governments,	including	emergency	responders,	or	on the	part	of	other	organizations	and	businesses	with	which	we	deal,	particularly those	on	which	we	depend	but	have	no	control	over.

In	recent	years,	we	have	incurred	significant	expense	towards	improving	the reliability	of	our	systems	and	their	security	against	external	and	internal	threats. Nonetheless,	there	remains	the	risk	that	an	adverse	event	might	occur.	If	one does	occur,	we	might	not	be	able	to	remediate	the	event	or	its	consequences timely	or	adequately.	To	the	extent	that	the	risk	relates	to	products	or	services provided	by	others,	we	seek	to	engage	in	due	diligence	and	monitoring	to	limit the	risk,	but	here	as	well	we	cannot	eliminate	it.	Should	an	adverse	event affecting	another	company's	systems	occur,	we	may	not	have	indemnification	or other	protection	from	the	other	company	sufficient	to	compensate	us	or otherwise	protect	us	from	the	consequences.

The	occurrence	of	any	failure,	interruption	or	security	breach	of	any	of	our information	or	communications	systems,	or	the	systems	of	other	companies	on which	we	rely,	could	result	in	a	wide	variety	of	adverse	consequences	to	PNC. This	risk	is	greater	if	the	issue	is	widespread	or	results	in	financial	losses	to	our customers.	Possible	adverse	consequences	include	damage	to	our	reputation	or	a loss	of	customer	business.	We	also	could	face	litigation	or	additional	regulatory scrutiny.	Litigation	or	regulatory	actions	in	turn	could	lead	to	liability	or	other sanctions,	including	fines	and	penalties	or	reimbursement	of	customers	adversely affected	by	a	systems	problem	or	security	breach.	Even	if	we	do	not	suffer	any material	adverse	consequences	as	a	result	of	events	affecting	us	directly, successful	attacks	or	systems	failures	at	other	financial	institutions	could	lead	to a	general	loss	of	customer	confidence	in	financial	institutions,	including	PNC. Also,	systems	problems,	including	those	resulting	from	third	party	attacks, whether	at	PNC	or	at	our	competitors,	would	likely	increase	regulatory	and customer	concerns	regarding	the	functioning,	safety	and	security	of	such	systems generally.	In	that	case,	we	would	expect	to	incur	even	higher	levels	of	costs	with respect	to	prevention	and	mitigation	of	these	risks.

# We	continually	encounter	technological	change	and	we	could	falter	in	our ability	to	remain	competitive	in	this	arena.

The	financial	services	industry	is	continually	undergoing	rapid	technological change	with	frequent	introductions	of	new	technology-driven	products	and services.	The	effective	use	of	technology	increases	efficiency	and	enables financial	institutions	to	better	serve	customers	and	to	reduce	costs.	We	have	been investing	in	technology	and	connectivity	to	automate	functions	previously performed	manually,	to	facilitate	the	ability	of	customers	to	engage	in	financial

transactions,	and	otherwise	to	enhance	the	customer	experience	with	respect	to our	products	and	services.	On	the	retail	side,	this	has	included	developments such	as	more	sophisticated	ATMs	and	expanded	access	to	banking	transactions through	the	internet,	smart	phones,	tablets	and	other	remote	devices.	These efforts	have	all	been	in	response	to	actual	and	anticipated	customer	behavior	and expectations.	Our	continued	success	depends,	in	part,	upon	our	ability	to	address the	needs	of	our	customers	by	using	technology	to	provide	products	and	services that	satisfy	customer	demands	and	create	efficiencies	in	our	operations.	A	failure to	maintain	or	enhance	our	competitive	position	with	respect	to	technology, whether	because	we	fail	to	anticipate	customer	expectations	or	because	our technological	developments	fail	to	perform	as	desired	or	are	not	rolled	out	in	a timely	manner,	may	cause	us	to	lose	market	share	or	incur	additional	expense.

# There	are	risks	resulting	from	the	extensive	use	of	models	in	our	business.

PNC	relies	on	quantitative	models	to	measure	risks	and	to	estimate	certain financial	values.	Models	may	be	used	in	such	processes	as	determining	the pricing	of	various	products,	grading	loans	and	extending	credit,	measuring interest	rate	and	other	market	risks,	predicting	losses,	assessing	capital adequacy,	and	calculating	economic	and	regulatory	capital	levels,	as	well	as	to estimate	the	value	of	financial	instruments	and	balance	sheet	items.	Poorly designed	or	implemented	models	present	the	risk	that	our	business	decisions based	on	information	incorporating	models	will	be	adversely	affected	due	to	the inadequacy	of	that	information.	Also,	information	we	provide	to	the	public	or	to our	regulators	based	on	poorly	designed	or	implemented	models	could	be inaccurate	or	misleading.	Some	of	the	decisions	that	our	regulators	make, including	those	related	to	capital	distributions	to	our	shareholders,	could	be affected	adversely	due	to	their	perception	that	the	quality	of	the	models	used	to generate	the	relevant	information	is	insufficient.	See	the	Model	Risk Management	portion	of	the	Risk	Management	section	included	in	Item	7	of	this Report.

# Our	asset	and	liability	valuations	and	the	determination	of	the	amount	of loss	allowances	and	impairments	taken	on	our	assets	are	highly	subjective, and	inaccurate	estimates	could	materially	impact	our	results	of	operations or	financial	position.

We	must	use	estimates,	assumptions,	and	judgments	when	assets	and	liabilities are	measured	and	reported	at	fair	value.	Assets	and	liabilities	carried	at	fair	value inherently	result	in	a	higher	degree	of	financial	statement	volatility.	Changes	in underlying	factors	or	assumptions	in	any	of	the	areas	underlying	our	estimates could	materially	impact	our	future	financial	condition	and	results	of	operations. During	periods	of	market	disruption,	it	may	be	more	difficult	to	value	certain	of our	assets	if	trading	becomes	less	frequent	and/or	market	data	becomes	less observable.	There	may	be	certain	asset

classes	that	were	historically	in	active	markets	with	significant	observable	data that	rapidly	become	illiquid	due	to	market	volatility,	a	loss	in	market	confidence or	other	factors.	Further,	rapidly	changing	and	unprecedented	market	conditions in	any	particular	market	could	materially	impact	the	valuation	of	assets	as reported	within	our	consolidated	financial	statements.

The	determination	of	the	amount	of	loss	allowances	and	asset	impairments	varies by	asset	type	and	is	based	upon	our	periodic	evaluation	and	assessment	of known	and	inherent	risks	associated	with	the	respective	asset	class.	Management updates	its	evaluations	regularly	and	reflects	changes	in	allowances	and impairments	in	operations	as	such	evaluations	are	revised.	Although	we	have policies	and	procedures	in	place	to	determine	loss	allowance	and	asset impairments,	due	to	the	substantial	subjective	nature	of	this	area,	there	can	be	no assurance	that	our	management	has	accurately	assessed	the	level	of	impairments taken	and	allowances	reflected	in	our	financial	statements.	Furthermore, additional	impairments	may	need	to	be	taken	or	allowances	provided	for	in	the future.	Historical	trends	may	not	be	indicative	of	future	impairments	or allowances.

# Our	business	and	financial	results	could	be	impacted	materially	by	adverse results	in	legal	proceedings.

Many	aspects	of	our	business	involve	substantial	risk	of	legal	liability.	We	have been	named	or	threatened	to	be	named	as	defendants	in	various	lawsuits	arising from	our	business	activities	(and	in	some	cases	from	the	activities	of	companies we	have	acquired).	In	addition,	we	are	regularly	the	subject	of	governmental investigations	and	other	forms	of	regulatory	inquiry.	We	also	are	at	risk	when	we have	agreed	to	indemnify	others	for	losses	related	to	legal	proceedings,	including litigation	and	governmental	investigations	and	inquiries,	they	face,	such	as	in connection	with	the	sale	of	a	business	or	assets	by	us.	The	results	of	these	legal proceedings	could	lead	to	significant	monetary	damages	or	penalties,	restrictions on	the	way	in	which	we	conduct	our	business,	or	reputational	harm.

Although	we	establish	accruals	for	legal	proceedings	when	information	related to	the	loss	contingencies	represented	by	those	matters	indicates	both	that	a	loss	is probable	and	that	the	amount	of	loss	can	be	reasonably	estimated,	we	do	not have	accruals	for	all	legal	proceedings	where	we	face	a	risk	of	loss.	In	addition, due	to	the	inherent	subjectivity	of	the	assessments	and	unpredictability	of	the outcome	of	legal	proceedings,	amounts	accrued	may	not	represent	the	ultimate loss	to	us	from	the	legal	proceedings	in	question.	Thus,	our	ultimate	losses	may be	higher,	and	possibly	significantly	so,	than	the	amounts	accrued	for	legal	loss contingencies.

We	discuss	further	the	unpredictability	of	legal	proceedings	and	describe	certain of	our	pending	legal	proceedings	in	Note	21	Legal	Proceedings	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report.

# PNC	faces	legal	and	regulatory	risk	arising	out	of	its	residential	mortgage businesses.

Numerous	federal	and	state	governmental,	legislative	and	regulatory	authorities are	investigating	practices	in	the	business	of	mortgage	and	home	equity	loan lending	and	servicing	and	in	the	mortgage-related	insurance	and	reinsurance industries.	PNC	has	received	inquiries	from	governmental,	legislative	and regulatory	authorities	on	these	topics	and	is	responding	to	these	inquiries.	These inquiries	and	investigations	could	lead	to	administrative,	civil	or	criminal proceedings,	possibly	resulting	in	remedies	including	fines,	penalties,	restitution, alterations	in	our	business	practices	and	additional	expenses	and	collateral	costs. They	could	also	result	in	reputational	harm	to	PNC,	either	individually	or	as	part of	the	overall	industry,	regardless	of	the	extent	to	which	PNC	is	penalized.

In	addition	to	governmental	or	regulatory	inquiries	and	investigations,	PNC,	like other	companies	with	residential	mortgage	and	home	equity	loan	origination	and servicing	operations,	faces	the	risk	of	class	actions,	other	litigation	and	claims from:	the	owners	of,	investors	in,	or	purchasers	of	such	loans	originated	or serviced	by	PNC	(or	securities	backed	by	such	loans),	homeowners	involved	in foreclosure	proceedings	or	various	mortgage-related	insurance	programs, downstream	purchasers	of	homes	sold	after	foreclosure,	title	insurers,	and	other potential	claimants.	Included	among	these	claims	are	claims	from	purchasers	of mortgage	and	home	equity	loans	seeking	the	repurchase	of	loans	where	the	loans allegedly	breached	origination	covenants	and	representations	and	warranties made	to	the	purchasers	in	the	purchase	and	sale	agreements.

At	this	time	PNC	cannot	predict	the	ultimate	overall	cost	to	or	effect	upon	PNC from	governmental,	legislative	or	regulatory	actions	and	private	litigation	or claims	arising	out	of	residential	mortgage	and	home	equity	loan	lending, servicing	or	reinsurance	practices,	although	such	actions,	litigation	and	claims could,	individually	or	in	the	aggregate,	result	in	significant	expense.	See	Note	21 Legal	Proceedings	and	Note	22	Commitments	and	Guarantees	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report	for	additional information	regarding	federal	and	state	governmental,	legislative	and	regulatory inquiries	and	investigations	and	additional	information	regarding	potential repurchase	obligations	relating	to	mortgage	and	home	equity	loans.

There	is	a	continuing	risk	of	incurring	costs	related	to	further	remedial	and related	efforts	required	by	governmental	or	regulatory	authorities	and	related	to repurchase	requests	arising	out	of	either	the	foreclosure	process	or	origination issues.	Reputational	damage	arising	out	of	this	industry-wide	inquiry	could	also have	an	adverse	effect	upon	our	existing	mortgage	and	home	equity	loan business	and	could	reduce	future	business	opportunities.	Investors	in	mortgage loans	and

other	assets	that	we	sell	are	more	likely	to	seek	indemnification	from	us	against losses	or	otherwise	seek	to	have	us	share	in	such	losses.

The	CFPB	has	issued	new	rules	for	mortgage	origination	and	mortgage servicing.	Both	the	origination	and	servicing	rules	create	new	private	rights	of action	for	consumers	against	lenders	and	servicers	like	PNC	in	the	event	of certain	violations.	For	additional	information	concerning	the	mortgage	rules,	see Supervision	and	Regulation	in	Item	1	of	this	Report.

Additionally,	two	government-sponsored	enterprises	(GSEs)	(FHLMC	and FNMA)	are	currently	in	conservatorship,	with	its	primary	regulator	acting	as	a conservator.	We	cannot	predict	when	or	if	the	conservatorships	will	end	or whether,	as	a	result	of	legislative	or	regulatory	action,	there	will	be	any associated	changes	to	the	structure	of	these	GSEs	or	the	housing	finance	industry more	generally,	including,	but	not	limited	to,	changes	to	the	relationship	among these	GSEs,	the	government	and	the	private	markets.	The	effects	of	any	such reform	on	our	business	and	financial	results	are	uncertain.

# Our	regional	concentrations	make	us	at	risk	to	adverse	economic	conditions in	our	primary	retail	banking	footprint.

Our	retail	banking	business	is	primarily	concentrated	within	our	retail	branch network	footprint.	Although	our	other	businesses	are	national	in	scope,	to	a lesser	extent	these	other	businesses	also	have	a	greater	presence	within	these primary	geographic	markets.	Thus,	we	are	particularly	vulnerable	to	adverse changes	in	economic	conditions	in	the	Mid-Atlantic,	Midwest,	and	Southeast regions.

We	grow	our	business	in	part	by	acquiring	other	financial	services companies	or	assets	from	time	to	time,	and	these	acquisitions	present	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.

Acquisitions	of	other	financial	services	companies,	financial	assets	and	related deposits	and	other	liabilities	present	risks	and	uncertainties	to	PNC	in	addition	to those	presented	by	the	nature	of	the	business	acquired.

In	general,	acquisitions	may	be	substantially	more	expensive	or	take	longer	to complete	than	anticipated	(including	unanticipated	costs	incurred	in	connection with	the	integration	of	the	acquired	company).	Anticipated	benefits	(including anticipated	cost	savings	and	strategic	gains,	for	example	resulting	from	being able	to	offer	product	sets	to	a	broader	potential	customer	base)	may	be significantly	harder	or	take	longer	to	achieve	than	expected	or	may	not	be achieved	in	their	entirety	as	a	result	of	unexpected	factors	or	events.

Our	ability	to	achieve	anticipated	results	from	acquisitions	is	often	dependent also	on	the	extent	of	credit	losses	in	the	acquired	loan	portfolios	and	the	extent	of deposit	attrition,	which	are,	in	part,	related	to	the	state	of	economic	and	financial markets.

Also,	litigation	and	governmental	investigations	that	may	be	pending	at	the	time of	the	acquisition	or	be	filed	or	commenced	thereafter,	as	a	result	of	an acquisition	or	otherwise,	could	impact	the	timing	or	realization	of	anticipated benefits	to	PNC.	Note	21	Legal	Proceedings	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report	describes	several	legal	proceedings related	to	pre-acquisition	activities	of	companies	we	have	acquired,	including National	City.	Other	such	legal	proceedings	may	be	commenced	in	the	future.

Integration	of	an	acquired	company's	business	and	operations	into	PNC, including	conversion	of	the	acquired	company's	different	systems	and procedures,	may	take	longer	than	anticipated	or	be	more	costly	than	anticipated or	have	unanticipated	adverse	results	relating	to	the	acquired	company's	or PNC's	existing	businesses.	In	some	cases,	acquisitions	involve	our	entry	into new	businesses	or	new	geographic	or	other	markets,	and	these	situations	also present	risks	and	uncertainties	in	instances	where	we	may	be	inexperienced	in these	new	areas.

Our	ability	to	analyze	the	risks	presented	by	prospective	acquisitions,	as	well	as our	ability	to	prepare	in	advance	of	closing	for	integration,	depends,	in	part,	on the	information	we	can	gather	with	respect	to	the	target,	which	is	more	limited than	the	information	we	have	regarding	companies	we	already	own.

As	a	regulated	financial	institution,	our	ability	to	pursue	or	complete	attractive acquisition	opportunities	could	be	negatively	impacted	by	regulatory	delays	or other	regulatory	issues.	In	addition,	our	ability	to	make	large	acquisitions	in	the future	may	be	negatively	impacted	by	regulatory	rules	or	future	regulatory initiatives	designed	to	limit	the	potential	for	a	financial	institution	to	become "too	big	to	fail."

We	operate	in	a	highly	competitive	environment,	in	terms	of	the	products and	services	we	offer	and	the	geographic	markets	in	which	we	conduct business,	as	well	as	in	our	labor	markets	where	we	compete	for	talented employees.	Competition	could	adversely	impact	our	customer	acquisition, growth	and	retention,	as	well	as	our	credit	spreads	and	product	pricing, causing	us	to	lose	market	share	and	deposits	and	revenues.

We	are	subject	to	intense	competition	from	various	financial	institutions	as	well as	from	non-bank	entities	that	engage	in	many	similar	activities	without	being subject	to	bank	regulatory	supervision	and	restrictions.	This	competition	is described	in	Item	1	of	this	Report	under	"Competition."

Competition	in	our	industry	could	intensify	as	a	result	of	the	increasing consolidation	of	financial	services	companies,	in	connection	with	current	market conditions	or	otherwise.

In	all,	the	principal	bases	for	competition	are	pricing	(including	the	interest	rates charged	on	loans	or	paid	on	interest-bearing	deposits),	product	structure,	the range	of	products	and	services	offered,	and	the	quality	of	customer	service (including	convenience	and	responsiveness	to	customer	needs	and	concerns). The	ability	to	access	and	use	technology	is	an	increasingly	important competitive	factor	in	the	financial	services	industry,	and	it	is	a	critically important	component	to	customer	satisfaction	as	it	affects	our	ability	to	deliver the	right	products	and	services.

Another	increasingly	competitive	factor	in	the	financial	services	industry	is	the competition	to	attract	and	retain	talented	employees	across	many	of	our	business and	support	areas.	This	competition	leads	to	increased	expenses	in	many	business areas	and	can	also	cause	us	to	not	pursue	certain	business	opportunities. Limitations	on	the	manner	in	which	regulated	financial	institutions	can compensate	their	officers	and	employees	may	make	it	more	difficult	for regulated	financial	institutions	to	compete	with	unregulated	financial	institutions for	talent.

A	failure	to	adequately	address	the	competitive	pressures	we	face	could	make	it harder	for	us	to	attract	and	retain	customers	across	our	businesses.	On	the	other hand,	meeting	these	competitive	pressures	could	require	us	to	incur	significant additional	expense	or	to	accept	risk	beyond	what	we	would	otherwise	view	as desirable	under	the	circumstances.	In	addition,	in	our	interest	rate	sensitive businesses,	pressures	to	increase	rates	on	deposits	or	decrease	rates	on	loans could	reduce	our	net	interest	margin	with	a	resulting	negative	impact	on	our	net interest	income.

# Our	business	and	financial	performance	could	be	adversely	affected, directly	or	indirectly,	by	disasters,	natural	or	otherwise,	by	terrorist activities	or	by	international	hostilities.

Neither	the	occurrence	nor	the	potential	impact	of	disasters	(such	as	earthquakes, hurricanes,	tornadoes,	floods	and	other	severe	weather	conditions,	pandemics, dislocations,	fires,	explosions,	and	other	catastrophic	accidents	or	events), terrorist	activities	and	international	hostilities	can	be	predicted.	However,	these occurrences	could	impact	us	directly	(for	example,	by	causing	significant damage	to	our	facilities	or	preventing	us	from	conducting	our	business	in	the ordinary	course),	or	indirectly	as	a	result	of	their	impact	on	our	borrowers, depositors,	other	customers,	suppliers	or	other	counterparties.	We	could	also suffer	adverse	consequences	to	the	extent	that	disasters,	terrorist	activities	or international	hostilities	affect	the	financial	markets	or	the	economy	in	general	or in	any	particular	region.	These	types	of	impacts	could	lead,	for	example,	to	an increase	in	delinquencies,

bankruptcies	or	defaults	that	could	result	in	our	experiencing	higher	levels	of nonperforming	assets,	net	charge-offs	and	provisions	for	credit	losses.

Our	ability	to	mitigate	the	adverse	consequences	of	such	occurrences	is	in	part dependent	on	the	quality	of	our	resiliency	planning,	and	our	ability,	if	any,	to anticipate	the	nature	of	any	such	event	that	occurs.	The	adverse	impact	of disasters	or	terrorist	activities	or	international	hostilities	also	could	be	increased to	the	extent	that	there	is	a	lack	of	preparedness	on	the	part	of	national	or regional	emergency	responders	or	on	the	part	of	other	organizations	and businesses	that	we	deal	with,	particularly	those	that	we	depend	upon	but	have	no control	over.

# ITEM	1B	–	UNRESOLVED	STAFF	COMMENTS

There	are	no	SEC	staff	comments	regarding	PNC's	periodic	or	current	reports under	the	Exchange	Act	that	are	pending	resolution.

# ITEM	2	–	PROPERTIES

Our	executive	and	primary	administrative	offices	are	currently	located	at	One PNC	Plaza,	Pittsburgh,	Pennsylvania.	The	30-story	structure	is	owned	by	PNC Bank,	National	Association.

We	own	or	lease	numerous	other	premises	for	use	in	conducting	business activities,	including	operations	centers,	offices,	and	branch	and	other	facilities. We	consider	the	facilities	owned	or	occupied	under	lease	by	our	subsidiaries	to be	adequate	for	the	purposes	of	our	business	operations.	We	include	here	by reference	the	additional	information	regarding	our	properties	in	Note	9	Premises, Equipment	and	Leasehold	Improvements	in	the	Notes	To	Consolidated	Financial Statements	in	Item		8	of	this	Report.

# ITEM	3	–	LEGAL	PROCEEDINGS

See	the	information	set	forth	in	Note	21	Legal	Proceedings	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report,	which	is incorporated	here	by	reference.

# ITEM	4	–	MINE	SAFETY	DISCLOSURES

# Not	applicable

# EXECUTIVE	OFFICERS	OF	THE	REGISTRANT

Information	regarding	each	of	our	executive	officers	as	of	February	23,	2015	is set	forth	below.	Executive	officers	do	not	have	a	stated	term	of	office.	Each executive	officer	has	held	the	position	or	positions	indicated	or	another executive	position	with	the	same	entity	or	one	of	its	affiliates	for	the	past	five years	unless	otherwise	indicated	below.

(a) Where	applicable,	refers	to	year	employed	by	predecessor	company.

(b) Mr.	Demchak	also	serves	as	a	director.	Biographical	information	for	Mr.	Demchak	is	included	in "Election	of	Directors	(Item	1)"	in	our	proxy	statement	for	the	2015	annual	meeting	of shareholders.	See	Item	10	of	this	Report.

Joseph	C.	Guyaux	has	served	as	Senior	Vice	Chairman	since	February	2012	and was	appointed	chief	executive	officer	and	president	of	PNC	Mortgage	in	January 2015.	Mr.	Guyaux	was	Chief	Risk	Officer	from	February	2012	to	January	2015, prior	to	which	he	served	as	President.

Orlando	C.	Esposito	was	appointed	Executive	Vice	President	and	head	of	PNC's Asset	Management	Group	in	April	2013.	Prior	to	being	named	to	his	current position,	he	held	numerous	leadership	positions	including	Executive	Vice President	of	Corporate	Banking	from	November	2006	to	April	2013.

Neil	F.	Hall	has	been	an	Executive	Vice	President	since	April	2012	and	head	of PNC's	Retail	Banking	since	February	2012.	Prior	to	being	named	to	his	current position,	Mr.	Hall	led	the	delivery	of	sales	and	service	to	PNC's	retail	and	small business	customers,	directed	branch	banking,	business	banking,	community development	and	PNC	Investments.

Michael	J.	Hannon	has	served	as	Executive	Vice	President	since	February	2009, prior	to	which	he	served	as	Senior	Vice	President.	He	has	served	as	Chief	Credit Officer	since	November	2001.	He	also	served	as	Interim	Chief	Risk	Officer from	December	2011	to	February	2012.

Vicki	C.	Henn	has	served	as	Executive	Vice	President	and	Chief	Human Resources	Officer	of	PNC	since	July	2014.	Ms.	Henn	joined	PNC	in	1994	and has	held	numerous	management	positions.	Prior	to	being	named	to	her	current position,	Ms.	Henn	was	a	Senior	Vice	President,	responsible	for	Human Resources	for	Retail	Banking.

Gregory	B.	Jordan	joined	PNC	as	Executive	Vice	President,	General	Counsel and	Head	of	Regulatory	and	Government	Affairs	in	October	2013.	Prior	to joining	PNC,	he	served	as	the	Global	Managing	Partner	for	the	last	13	years	of his	29	year	tenure	at	Reed	Smith	LLP.

Stacy	M.	Juchno	has	served	as	Executive	Vice	President	and	General	Auditor	of PNC	since	April	2014.	Ms.	Juchno	joined	PNC	in	2009	and	previously	served	as a	Senior	Vice	President	and	Finance	Governance	and	Oversight	Director.

Karen	L.	Larrimer	was	appointed	Executive	Vice	President	in	May	2013.	She has	served	as	Chief	Customer	Officer	since	April	2014,	prior	to	which	she served	as	Chief	Marketing	Officer.

Michael	P.	Lyons	has	been	an	Executive	Vice	President	since	November	2011 and	is	head	of	Corporate	and	Institutional	Banking.	Prior	to	joining	PNC	in October	2011,	from	May	2010	until	October	2011,	Mr.	Lyons	was	head	of corporate	development	and	strategic	planning	for	Bank	of	America.	Prior	to joining	Bank	of	America,	from	September	2004	to	May	2010,	Mr.	Lyons	held various	positions	at	Maverick	Capital,	most	recently	as	a	principal	focused	on financial	institutions	investments.

E.	William	Parsley,	III	has	served	as	Treasurer	and	Chief	Investment	Officer since	January	2004.	He	was	appointed	Executive	Vice	President	in	February 2009.

Robert	Q.	Reilly	was	appointed	Chief	Financial	Officer	in	August	2013.	He served	as	the	head	of	PNC's	Asset	Management	Group	from	2005	until	April 2013.	Previously,	he	held	numerous	management	roles	in	both	Corporate Banking	and	Asset	Management.	He	was	appointed	Executive	Vice	President	in February	2009.

Joseph	E.	Rockey	was	appointed	Chief	Risk	Officer	in	January	2015.	Prior	to	his appointment,	Mr.	Rockey	led	enterprise	risk	management	and	the	Basel	office within	PNC's	risk	management	organization.	Mr.	Rockey	joined	PNC	in	1999 and	was	appointed	Executive	Vice	President	in	January	2015.

Steven	Van	Wyk	joined	PNC	as	Head	of	Technology	and	Operations	in	January 2013.	From	2007	until	joining	PNC,	Mr.	Van	Wyk	served	as	Global	Chief Operating	Officer	for	ING.	He	was	appointed	Executive	Vice	President	of	PNC in	February	2013.

Gregory	H.	Kozich	has	served	as	a	Senior	Vice	President	and	Controller	of	PNC since	2011.	Mr.	Kozich	joined	PNC	as	Senior	Vice	President	of	PNC	Bank	in October	2010.	Prior	to	joining	PNC,	Mr.	Kozich	was	with	FNMA	from	2005 until	late	2010,	most	recently	serving	as	its	corporate	controller.

# DIRECTORS	OF	THE	REGISTRANT

The	name,	age	and	principal	occupation	of	each	of	our	directors	as	of February	23,	2015	and	the	year	he	or	she	first	became	a	director	is	set	forth below:

•	Richard	O.	Berndt,	72,	Managing	Partner	of	Gallagher,	Evelius	& Jones	LLP	(law	firm)	(2007)

•	Charles	E.	Bunch,	65,	Chairman	and	Chief	Executive	Officer	of	PPG

Industries,	Inc.	(coatings,	sealants	and	glass	products)	(2007)

•	Paul	W.	Chellgren,	72,	Operating	Partner,	Snow	Phipps	Group,	LLC

•	Marjorie	Rodgers	Cheshire,	46,	President	and	Chief	Operating	Officer,

A&R	Development	Corp.	(real	estate	development	company)	(2014)

•	William	S.	Demchak,	52,	Chairman,	Chief	Executive	Officer	and

•	Andrew	T.	Feldstein,	50,	Chief	Executive	Officer	and	Co-Chief

Investment	Officer	of	BlueMountain	Capital	Management,	LLC	(asset

•	Kay	Coles	James,	65,	President	and	Founder	of	The	Gloucester

•	Richard	B.	Kelson,	68,	Chairman,	President	and	Chief	Executive

Officer,	ServCo	LLC	(strategic	sourcing,	supply	chain	management)

•	Anthony	A.	Massaro,	70,	Retired	Chairman	and	Chief	Executive

Officer	of	Lincoln	Electric	Holdings,	Inc.	(manufacturer	of	welding

•	Jane	G.	Pepper,	69,	Retired	President	of	the	Pennsylvania	Horticultural Society	(non-profit)	(1997)

•	Donald	J.	Shepard,	68,	Retired	Chairman	of	the	Executive	Board	and Chief	Executive	Officer	of	AEGON	N.V.	(insurance)	(2007) •	Lorene	K.	Steffes,	69,	Independent	Business	Advisor	(executive, business	management	and	technical	expertise)	(2000)

•	Dennis	F.	Strigl,	68,	Retired	President	and	Chief	Operating	Officer	of Verizon	Communications	Inc.	(telecommunications)	(2001) •	Thomas	J.	Usher,	72,	Non-executive	Chairman	of	Marathon	Petroleum Corporation	(oil	and	gas	industry)	(1992)

•	George	H.	Walls,	Jr.,	72,	former	Chief	Deputy	Auditor	for	the	State	of North	Carolina	(2006)

•	Helge	H.	Wehmeier,	72,	Retired	Vice	Chairman	of	Bayer	Corporation (international	life	sciences,	polymers	and	specialty	chemicals)	(1992)

# PART	II

# ITEM	5	–	MARKET	FOR	REGISTRANT'S	COMMON EQUITY,	RELATED	STOCKHOLDER	MATTERS	AND ISSUER	PURCHASES	OF	EQUITY	SECURITIES

(a)	(1)	Our	common	stock	is	listed	on	the	New	York	Stock	Exchange	and	is traded	under	the	symbol	"PNC."	At	the	close	of	business	on	February	18,	2015, there	were	69,964	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	available	for	this	purpose.	Our Board	of	Directors	may	not	pay	or	set	apart	dividends	on	the	common	stock until	dividends	for	all	past	dividend	periods	on	any	series	of	outstanding preferred	stock	have	been	paid	or	declared	and	set	apart	for	payment.	The	Board presently	intends	to	continue	the	policy	of	paying	quarterly	cash	dividends.	The amount	of	any	future	dividends	will	depend	on	economic	and	market	conditions, our	financial	condition	and	operating	results,	and	other	factors,	including contractual	restrictions	and	applicable	government	regulations	and	policies	(such as	those	relating	to	the	ability	of	bank	and	non-bank	subsidiaries	to	pay dividends	to	the	parent	company	and	regulatory	capital	limitations).	The	amount of	our	dividend	is	also	currently	subject	to	the	results	of	the	supervisory assessment	of	capital	adequacy	and	capital	planning	processes	undertaken	by	the Federal	Reserve	and	our	primary	bank	regulators	as	part	of	the	2015 Comprehensive	Capital	Analysis	and	Review	(CCAR)	process	as	described	in the	Supervision	and	Regulation	section	in	Item	1	of	this	Report.

The	Federal	Reserve	has	the	power	to	prohibit	us	from	paying	dividends	without its	approval.	For	further	information	concerning	dividend	restrictions	and	other factors	that	could	limit	PNC's	ability	to	pay	dividends,	as	well	as	restrictions	on loans,	dividends	or	advances	from	bank	subsidiaries	to	the	parent	company,	see the	Supervision	and	Regulation	section	in	Item	1,	Item	1A	Risk	Factors,	the Capital	portion	of	the	Consolidated	Balance	Sheet	Review	section,	the	Liquidity Risk	Management	portion	of	the	Risk	Management	section,	and	the	Trust Preferred	Securities	and	REIT	Preferred	Securities	portion	of	the	Off-Balance Sheet	Arrangements	And	Variable	Interest	Entities	section	in	Item	7,	and	Note 12	Capital	Securities	of	a	Subsidiary	Trust	and	Perpetual	Trust	Securities	and Note	20	Regulatory	Matters	in	the	Notes	To	Consolidated	Financial	Statements in	Item	8	of	this	Report,	which	we	include	here	by	reference.

We	include	here	by	reference	additional	information	relating	to	PNC	common stock	under	the	Common	Stock	Prices/Dividends	Declared	section	in	the Statistical	Information	(Unaudited)	section	of	Item	8	of	this	Report.

We	include	here	by	reference	the	information	regarding	our	compensation	plans under	which	PNC	equity	securities	are	authorized	for	issuance	as	of December	31,	2014	in	the	table	(with	introductory	paragraph	and	notes)	that appears	in	Item	12	of	this	Report.

Our	stock	transfer	agent	and	registrar	is: Computershare	Trust	Company,	N.A. 250	Royall	Street Canton,	MA	02021 800-982-7652

Registered	shareholders	may	contact	the	above	phone	number	regarding dividends	and	other	shareholder	services.

We	include	here	by	reference	the	information	that	appears	under	the	Common Stock	Performance	Graph	caption	at	the	end	of	this	Item	5. (a)(2) None.

(b) Not	applicable.

(c) Details	of	our	repurchases	of	PNC	common	stock	during	the	fourth quarter	of	2014	are	included	in	the	following	table:

# In	thousands,	except	per	share	data

| 2014	period | Total	shares<br>purchased	(a) | Average<br>price<br>paid	per<br>share | Total	shares<br>purchased	as<br>part	of<br>publicly<br>announced<br>programs	(b) | Maximum<br>number	of<br>shares	that<br>may	yet	be<br>purchased<br>under	the<br>programs	(b) |
| :--- | :--- | :--- | :--- | :--- |
| October\t1\t–\t31 | 2,772 | $82.77 | 2,734 | 11,417 |
| November\t1\t–\t30 | 1,311 | $87.63 | 1,309 | 10,108 |
| December\t1\t–\t31 | 2,026 | $90.38 | 2,022 | 8,086 |
| Total | 6,109 | $86.33 | 6,065 |  |
| (a)\nIncludes\tPNC\tcommon\tstock\tpurchased\tin\tconnection\twith\tour\tvarious\temployee\tbenefit\tplans |  |  |  |  |

(a) Includes	PNC	common	stock	purchased	in	connection	with	our	various	employee	benefit	plans generally	related	to	forfeitures	of	unvested	restricted	stock	awards	and	shares	used	to	cover employee	payroll	tax	withholding	requirements.	Note	13	Employee	Benefit	Plans	and	Note	14 Stock	Based	Compensation	Plans	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of this	Report	include	additional	information	regarding	our	employee	benefit	and	equity	compensation plans	that	use	PNC	common	stock.

(b) On	October	4,	2007,	our	Board	of	Directors	authorized	the	repurchase	of	up	to	25	million	shares	of PNC	common	stock.	The	repurchases	are	made	in	open	market	or	privately	negotiated	transactions and	the	repurchase	program	will	remain	in	effect	until	fully	utilized	or	until	modified,	superseded	or terminated.	The	timing	and	exact	amount	of	common	stock	repurchases	will	depend	on	a	number	of factors	including,	among	others,	market	and	general	economic	conditions,	economic	capital	and regulatory	capital	considerations,	alternative	uses	of	capital,	the	potential	impact	on	our	credit ratings,	and	contractual	and	regulatory	limitations,	including	the	results	of	the	supervisory assessment	of	capital	adequacy	and	capital	planning	processes	undertaken	by	the	Federal	Reserve and	our	primary	bank	regulators	as	part	of	the	CCAR	process.

Our	2014	capital	plan,	submitted	as	part	of	the	CCAR	process	and	approved	by	the	Federal	Reserve, included	share	repurchase	programs	of	up	to	$1.5	billion	for	the	four	quarter	period	beginning	with the	second	quarter	of	2014.	This	amount	does	not	include	share	repurchases	in	connection	with various	employee	benefit	plans	referenced	in	note	(a).	In	the	fourth	quarter	of	2014,	in	accordance with	the	2014	capital	plan,	we	repurchased	6.065	million	shares	of	common	stock	on	the	open market,	with	an	average	price	of	$86.41	per	share	and	an	aggregate	repurchase	price	of	$524 million.

# Common	Stock	Performance	Graph

This	graph	shows	the	cumulative	total	shareholder	return	(i.e.,	price	change	plus reinvestment	of	dividends)	on	our	common	stock	during	the	five-year	period ended	December	31,	2014,	as	compared	with:	(1)	a	selected	peer	group	as	set forth	below	and	referred	to	as	the	"Peer	Group;"	(2)	an	overall	stock	market index,	the	S&P	500	Index;	and	(3)	a	published	industry

index,	the	S&P	500	Banks.	The	yearly	points	marked	on	the	horizontal	axis	of the	graph	correspond	to	December	31	of	that	year.	The	stock	performance	graph assumes	that	$100	was	invested	on	January	1,	2010	for	the	five-year	period	and that	any	dividends	were	reinvested.	The	table	below	the	graph	shows	the resultant	compound	annual	growth	rate	for	the	performance	period.

|  |  |  | Assumes	$100	investment	at	Close	of | Assumes	$100	investment	at	Close	of | Assumes	$100	investment	at	Close	of | Assumes	$100	investment	at	Close	of |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | Market\ton\tDecember\t31,\t2009 | Market\ton\tDecember\t31,\t2009 | Market\ton\tDecember\t31,\t2009 | 5-Year |
|  |  |  | Total\tReturn\t=\tPrice\tchange\tplus | Total\tReturn\t=\tPrice\tchange\tplus | Total\tReturn\t=\tPrice\tchange\tplus | Total\tReturn\t=\tPrice\tchange\tplus | Compound |
|  | Base\nPeriod |  |  |  | reinvestment\nof\tdividends | reinvestment\nof\tdividends | Growth\nRate |
|  | \tDec.\t09 | \tDec.\t10 | \tDec.\t11 | \tDec.\t12 | \tDec.\t13 | \tDec.\t14 |  |
| PNC | 100\t\t\t\t115.81\t\t\t\t112.26\t\t\t\t116.38\t\t\t\t158.80\t\t\t\t191.07 | 100\t\t\t\t115.81\t\t\t\t112.26\t\t\t\t116.38\t\t\t\t158.80\t\t\t\t191.07 | 100\t\t\t\t115.81\t\t\t\t112.26\t\t\t\t116.38\t\t\t\t158.80\t\t\t\t191.07 | 100\t\t\t\t115.81\t\t\t\t112.26\t\t\t\t116.38\t\t\t\t158.80\t\t\t\t191.07 | 100\t\t\t\t115.81\t\t\t\t112.26\t\t\t\t116.38\t\t\t\t158.80\t\t\t\t191.07 | 100\t\t\t\t115.81\t\t\t\t112.26\t\t\t\t116.38\t\t\t\t158.80\t\t\t\t191.07 | 13.83% |
| S&amp;P\t500\tIndex | 100\t\t\t\t115.06\t\t\t\t117.48\t\t\t\t136.27\t\t\t\t180.39\t\t\t\t205.07 | 100\t\t\t\t115.06\t\t\t\t117.48\t\t\t\t136.27\t\t\t\t180.39\t\t\t\t205.07 | 100\t\t\t\t115.06\t\t\t\t117.48\t\t\t\t136.27\t\t\t\t180.39\t\t\t\t205.07 | 100\t\t\t\t115.06\t\t\t\t117.48\t\t\t\t136.27\t\t\t\t180.39\t\t\t\t205.07 | 100\t\t\t\t115.06\t\t\t\t117.48\t\t\t\t136.27\t\t\t\t180.39\t\t\t\t205.07 | 100\t\t\t\t115.06\t\t\t\t117.48\t\t\t\t136.27\t\t\t\t180.39\t\t\t\t205.07 | 15.45% |
| S&amp;P\t500\tBanks | 100\t\t\t\t119.84\t\t\t\t107.00\t\t\t\t132.74\t\t\t\t180.15\t\t\t\t208.10 | 100\t\t\t\t119.84\t\t\t\t107.00\t\t\t\t132.74\t\t\t\t180.15\t\t\t\t208.10 | 100\t\t\t\t119.84\t\t\t\t107.00\t\t\t\t132.74\t\t\t\t180.15\t\t\t\t208.10 | 100\t\t\t\t119.84\t\t\t\t107.00\t\t\t\t132.74\t\t\t\t180.15\t\t\t\t208.10 | 100\t\t\t\t119.84\t\t\t\t107.00\t\t\t\t132.74\t\t\t\t180.15\t\t\t\t208.10 | 100\t\t\t\t119.84\t\t\t\t107.00\t\t\t\t132.74\t\t\t\t180.15\t\t\t\t208.10 | 15.79% |
| Peer\tGroup | 100\t\t\t\t120.80\t\t\t\t104.59\t\t\t\t137.49\t\t\t\t186.35\t\t\t\t216.01 | 100\t\t\t\t120.80\t\t\t\t104.59\t\t\t\t137.49\t\t\t\t186.35\t\t\t\t216.01 | 100\t\t\t\t120.80\t\t\t\t104.59\t\t\t\t137.49\t\t\t\t186.35\t\t\t\t216.01 | 100\t\t\t\t120.80\t\t\t\t104.59\t\t\t\t137.49\t\t\t\t186.35\t\t\t\t216.01 | 100\t\t\t\t120.80\t\t\t\t104.59\t\t\t\t137.49\t\t\t\t186.35\t\t\t\t216.01 | 100\t\t\t\t120.80\t\t\t\t104.59\t\t\t\t137.49\t\t\t\t186.35\t\t\t\t216.01 | 16.65% |

The	Peer	Group	for	the	preceding	chart	and	table	consists	of	the	following companies:	BB&T	Corporation;	Comerica	Inc.;	Fifth	Third	Bancorp;	KeyCorp; The	PNC	Financial	Services	Group,	Inc.;	SunTrust	Banks,	Inc.;	U.S.	Bancorp; Regions	Financial	Corporation;	Wells	Fargo	&	Company;	Capital	One Financial,	Inc.;	Bank	of	America	Corporation;	M&T	Bank;	and	JP	Morgan Chase	and	Company.	This	Peer	Group	was	approved	for	2014	by	the	Board's Personnel	and	Compensation	Committee.	Such	Committee	has	approved	a	peer group	of	twelve	for	2015,	consisting	of	all	of	the	same	companies	as	those	in	the 2014	Peer	Group	other	than	Comerica	Inc.

Each	yearly	point	for	the	Peer	Group	is	determined	by	calculating	the	cumulative total	shareholder	return	for	each	company	in	the	Peer	Group	from	December	31, 2009	to	December	31	of	that	year	(End	of	Month	Dividend	Reinvestment Assumed)	and	then	using	the	median	of	these	returns	as	the	yearly	plot	point.

In	accordance	with	the	rules	of	the	SEC,	this	section,	captioned	"Common	Stock Performance	Graph,"	shall	not	be	incorporated	by	reference	into	any	of	our future	filings	made	under	the	Securities	Exchange	Act	of	1934	or	the	Securities Act	of	1933.	The	Common	Stock	Performance	Graph,	including	its accompanying	table	and	footnotes,	is	not	deemed	to	be	soliciting	material	or	to be	filed	under	the	Exchange	Act	or	the	Securities	Act.

# ITEM	6	–	SELECTED	FINANCIAL	DATA

| Dollars	in	millions,	except	per	share	data | 2014	(a) | 2013	(a) | 2012	(a) | 2011 | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| SUMMARY\tOF\tOPERATIONS |  |  |  |  |  |
| Interest\tincome | $9,431 | $10,007 | $10,734 | $10,194 | $11,150 |
| Interest\texpense | 906 | 860 | 1,094 | 1,494 | 1,920 |
| Net\tinterest\tincome | 8,525 | 9,147 | 9,640 | 8,700 | 9,230 |
| Noninterest\tincome | 6,850 | 6,865 | 5,872 | 5,626 | 5,946 |
| Total\trevenue | \t 15,375 | \t 16,012 | \t 15,512 | \t 14,326 | \t 15,176 |
| Provision\tfor\tcredit\tlosses | 273 | 643 | 987 | 1,152 | 2,502 |
| Noninterest\texpense\t(b) | 9,488 | 9,681 | \t 10,486 | 9,022 | 8,529 |
| Income\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | 5,614 | 5,688 | 4,039 | 4,152 | 4,145 |
| Income\ttaxes\t(b) | 1,407 | 1,476 | 1,045 | 1,087 | 1,127 |
| Income\tfrom\tcontinuing\toperations\tbefore\tnoncontrolling\tinterests | 4,207 | 4,212 | 2,994 | 3,065 | 3,018 |
| Income\tfrom\tdiscontinued\toperations\t(net\tof\tincome\ttaxes\tof\tzero,\tzero,\tzero,\tzero\tand\t$338)\t(c) |  |  |  |  | 373 |
| Net\tincome\t(b) | 4,207 | 4,212 | 2,994 | 3,065 | 3,391 |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests\t(b) | 23 | 11 | (7) | 16 | (11) |
| \tPreferred\tstock\tdividends\t(d) | 232 | 237 | 177 | 56 | 146 |
| \tPreferred\tstock\tdiscount\taccretion\tand\tredemptions\t(d) | 5 | 12 | 4 | 2 | 255 |
| Net\tincome\tattributable\tto\tcommon\tshareholders\t(d) | $3,947 | $3,952 | $2,820 | $2,991 | $3,001 |
| PER\tCOMMON\tSHARE |  |  |  |  |  |
| Basic\tearnings |  |  |  |  |  |
| Continuing\toperations\t(b) | $7.44 | $7.45 | $5.33 | $5.69 | $5.06 |
| Discontinued\toperations\t(c) |  |  |  |  | .72 |
| Net\tincome | $7.44 | $7.45 | $5.33 | $5.69 | $5.78 |
| Diluted\tearnings |  |  |  |  |  |
| Continuing\toperations\t(b) | $7.30 | $7.36 | $5.28 | $5.62 | $5.00 |
| Discontinued\toperations\t(c) |  |  |  |  | .72 |
| Net\tincome | $7.30 | $7.36 | $5.28 | $5.62 | $5.72 |
| Book\tvalue\t(b) | $77.61 | $72.07 | $66.95 | $61.44 | $56.22 |
| Cash\tdividends\tdeclared | $1.88 | $1.72 | $1.55 | $1.15 | $.40 |
| (a) |  |  |  |  |  |

(a) Includes	the	impact	of	RBC	Bank	(USA),	which	we	acquired	on	March	2,	2012.

(b) Amounts	for	prior	periods	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	Accounting	Standards	Update	(ASU)	2014-01	related	to	investments	in	low	income	housing	tax	credits.

(c) Includes	results	of	operations	for	PNC	Global	Investment	Servicing	Inc.	(GIS)	through	June	30,	2010	and	the	related	after-tax	gain	on	sale.	We	sold	GIS	effective	July	1,	2010,	resulting	in	a	gain	of	$639	million, or	$328	million	after	taxes,	recognized	during	the	third	quarter	of	2010.

(d) We	redeemed	the	Series	N	(TARP)	Preferred	Stock	on	February	10,	2010.	In	connection	with	the	redemption,	we	accelerated	the	accretion	of	the	remaining	issuance	discount	on	the	Series	N	Preferred	Stock	and recorded	a	corresponding	reduction	in	retained	earnings	of	$250	million	in	the	first	quarter	of	2010.	This	resulted	in	a	noncash	reduction	in	net	income	attributable	to	common	shareholders	and	related	basic	and diluted	earnings	per	share.	The	Series	N	Preferred	Stock	was	issued	on	December	31,	2008.

Certain	prior	period	amounts	have	been	reclassified	to	conform	with	the	current	period	presentation,	which	we	believe	is	more	meaningful	to	readers	of	our	consolidated financial	statements.

This	Selected	Financial	Data	should	be	reviewed	in	conjunction	with	the	Consolidated	Financial	Statements	and	Notes	included	in	Item	8	of	this	Report	as	well	as	the other	disclosure	in	this	Report	concerning	our	historical	financial	performance,	our	future	prospects	and	the	risks	associated	with	our	business	and	financial performance.

|  |  | At	or	for	the	year	ended	December	31 | At	or	for	the	year	ended	December	31 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions,\texcept\tas\tnoted | 2014\t(a) | 2013\t(a) | 2012\t(a) | 2011 | 2010 |
| BALANCE\tSHEET\tHIGHLIGHTS |  |  |  |  |  |
| Assets\t(b)\t(c) | \t\t $345,072 | $320,192 | $305,029 | $271,141 | $264,230 |
| Loans\t(c)\t(d) | \t 204,817 | \t 195,613 | \t 185,856 | \t 159,014 | \t 150,595 |
| Allowance\tfor\tloan\tand\tlease\tlosses\t(c) | 3,331 | 3,609 | 4,036 | 4,347 | 4,887 |
| Interest-earning\tdeposits\twith\tbanks\t(c)\t(e) | 31,779 | 12,135 | 3,984 | 1,169 | 1,610 |
| Investment\tsecurities\t(c) | 55,823 | 60,294 | 61,406 | 60,634 | 64,262 |
| Loans\theld\tfor\tsale\t(d) | 2,262 | 2,255 | 3,693 | 2,936 | 3,492 |
| Goodwill\tand\tother\tintangible\tassets | 10,947 | 11,290 | 10,869 | 10,144 | 10,753 |
| Equity\tinvestments\t(b)\t(c)\t(f) | 10,728 | 10,560 | 10,799 | 10,070 | 9,166 |
| Noninterest-bearing\tdeposits | 73,479 | 70,306 | 69,980 | 59,048 | 50,019 |
| Interest-bearing\tdeposits | \t 158,755 | \t 150,625 | \t 143,162 | \t 128,918 | \t 133,371 |
| Total\tdeposits | \t 232,234 | \t 220,931 | \t 213,142 | \t 187,966 | \t 183,390 |
| Transaction\tdeposits\t(g) | \t 198,267 | \t 186,391 | \t 176,705 | \t 147,637 | \t 134,654 |
| Borrowed\tfunds\t(c)\t(d)\t(h) | 56,768 | 46,105 | 40,907 | 36,704 | 39,488 |
| Total\tshareholders'\tequity\t(b) | 44,551 | 42,334 | 38,948 | 34,010 | 30,206 |
| Common\tshareholders'\tequity\t(b) | 40,605 | 38,392 | 35,358 | 32,374 | 29,560 |
| CLIENT\tINVESTMENT\tASSETS\t(billions) |  |  |  |  |  |
| Discretionary\tclient\tassets\tunder\tmanagement | \t\t $135 | $127 | $112 | $107 | $108 |
| Nondiscretionary\tclient\tassets\tunder\tmanagement | 128 | 120 | 112 | 103 | 104 |
| Total\tclient\tassets\tunder\tadministration | 263 | 247 | 224 | 210 | 212 |
| Brokerage\taccount\tclient\tassets | 43 | 41 | 38 | 34 | 34 |
| Total | \t\t $306 | $288 | $262 | $244 | $246 |
| SELECTED\tRATIOS |  |  |  |  |  |
| Net\tinterest\tmargin\t(i) | 3.08% | 3.57% | 3.94% | 3.92% | 4.14% |
| Noninterest\tincome\tto\ttotal\trevenue | 45 | 43 | 38 | 39 | 39 |
| Efficiency\t(b) | 62 | 60 | 68 | 63 | 56 |
| Return\ton |  |  |  |  |  |
| Average\tcommon\tshareholders'\tequity\t(b) | 9.91 | 10.85 | 8.29 | 9.56 | 10.87 |
| Average\tassets\t(b) | 1.28 | 1.38 | 1.02 | 1.16 | 1.28 |
| Loans\tto\tdeposits | 88 | 89 | 87 | 85 | 82 |
| Dividend\tpayout\t(b) | 25.3 | 23.1 | 29.1 | 20.2 | 6.8 |
| Transitional\tBasel\tIII\tcommon\tequity\tTier\t1\tcapital\tratio\t(j)\t(k) | 10.9 | N/A | N/A | N/A | N/A |
| Transitional\tBasel\tIII\tTier\t1\trisk-based\tcapital\tratio\t(j)\t(k) | 12.6 | N/A | N/A | N/A | N/A |
| Pro\tforma\tfully\tphased-in\tBasel\tIII\tcommon\tequity\tTier\t1\tcapital\tratio\t(k)\t(l)\t(m) | 10.0 | 9.4 | 7.5 | N/A | N/A |
| Basel\tI\tTier\t1\tcommon\tcapital\tratio\t(m) | N/A | 10.5 | 9.6 | 10.3 | 9.8 |
| Basel\tI\tTier\t1\trisk-based\tcapital\tratio\t(m) | N/A | 12.4 | 11.6 | 12.6 | 12.1 |
| Common\tshareholders'\tequity\tto\ttotal\tassets\t(b) | 11.8 | 12.0 | 11.6 | 11.9 | 11.2 |
| Average\tcommon\tshareholders'\tequity\tto\taverage\tassets\t(b) | 12.1 | 11.9 | 11.5 | 11.9 | 10.4 |
| SELECTED\tSTATISTICS |  |  |  |  |  |
| Employees | 53,587 | 54,433 | 56,285 | 51,891 | 50,769 |
| Retail\tBanking\tbranches | 2,697 | 2,714 | 2,881 | 2,511 | 2,470 |
| ATMs | 8,605 | 7,445 | 7,282 | 6,806 | 6,673 |
| Residential\tmortgage\tservicing\tportfolio\t–\tServiced\tfor\tThird\tParties\t(in\tbillions) | \t\t $108 | $114 | $119 | $118 | $125 |
| Commercial\tmortgage\tservicing\tportfolio\t–\tServiced\tfor\tPNC\tand\tOthers\t(in\tbillions) | \t\t $336 | $308 | $282 | $267 | $266 |
| (a) |  |  |  |  |  |

(c) Amounts	include	consolidated	variable	interest	entities.	See	Consolidated	Balance	Sheet	in	Item	8	of	this	Report	for	additional	information.

(d) Amounts	include	assets	and	liabilities	for	which	we	have	elected	the	fair	value	option.	See	Consolidated	Balance	Sheet	in	Item	8	of	this	Report	for	additional	information.

(f) Amounts	include	our	equity	interest	in	BlackRock.

(g) Represents	the	sum	of	interest-bearing	money	market	deposits,	interest-bearing	demand	deposits,	and	noninterest-bearing	deposits.

(i) Calculated	as	taxable-equivalent	net	interest	income	divided	by	average	earning	assets.	The	interest	income	earned	on	certain	earning	assets	is	completely	or	partially	exempt	from	federal	income	tax.	As	such, these	tax-exempt	instruments	typically	yield	lower	returns	than	taxable	investments.	To	provide	more	meaningful	comparisons	of	net	interest	margins	for	all	earning	assets,	we	use	net	interest	income	on	a	taxable- equivalent	basis	in	calculating	net	interest	margin	by	increasing	the	interest	income	earned	on	tax-exempt	assets	to	make	it	fully	equivalent	to	interest	income	earned	on	taxable	investments.	This	adjustment	is	not permitted	under	accounting	principles	generally	accepted	in	the	United	States	of	America	(GAAP)	on	the	Consolidated	Income	Statement.	The	taxable-equivalent	adjustments	to	net	interest	income	for	the	years 2014,	2013,	2012,	2011	and	2010	were	$189	million,	$168	million,	$144	million,	$104	million	and	$81	million,	respectively.

(j) Calculated	using	the	regulatory	capital	methodology	applicable	to	PNC	during	2014.

(k) See	capital	ratios	discussion	in	the	Supervision	and	Regulation	section	of	Item	1	and	in	the	Consolidated	Balance	Sheet	Review	section	in	Item	7	of	this	Report	for	additional	discussion	on	these	capital	ratios.

(l) Pro	forma	ratios	as	of	December	31,	2014	and	December	31,	2013	were	calculated	under	the	standardized	approach	and	the	pro	forma	ratio	as	of	December	31,	2012	was	calculated	under	the	advanced approaches.	The	prior	period	ratios	have	not	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.

(m) See	additional	information	on	the	pro	forma	ratios	and	Basel	I	ratios	in	the	Statistical	Information	(Unaudited)	section	in	Item	8	of	this	Report.

# ITEM	7	–	MANAGEMENT'S	DISCUSSION	AND ANALYSIS	OF	FINANCIAL	CONDITION	AND	RESULTS OF	OPERATIONS	(MD&A)

# EXECUTIVE	SUMMARY

# Key	Strategic	Goals

At	PNC	we	manage	our	company	for	the	long	term.	We	are	focused	on	the fundamentals	of	growing	customers,	loans,	deposits	and	fee	revenue	and improving	profitability,	while	investing	for	the	future	and	managing	risk, expenses	and	capital.	We	continue	to	invest	in	our	products,	markets	and	brand, and	embrace	our	corporate	responsibility	to	the	communities	where	we	do business.

We	strive	to	expand	and	deepen	customer	relationships	by	offering	a	broad	range of	deposit,	fee-based	and	credit	products	and	services.	We	are	focused	on delivering	those	products	and	services	where,	when	and	how	our	customers choose	with	the	goal	of	offering	insight	that	addresses	their	specific	needs.	Our approach	is	concentrated	on	organically	growing	and	deepening	client relationships	that	meet	our	risk/return	measures.	Our	strategies	for	growing	fee income	across	our	lines	of	business	are	focused	on	achieving	deeper	market penetration	and	cross	selling	our	diverse	product	mix.

Our	strategic	priorities	are	designed	to	enhance	value	over	the	long	term.	A	key priority	is	to	drive	growth	in	acquired	and	underpenetrated	geographic	markets, including	in	the	Southeast.	In	addition,	we	are	seeking	to	attract	more	of	the investable	assets	of	new	and	existing	clients.	PNC	is	focused	on	transforming our	retail	banking	business	to	a	more	customer-centric	and	sustainable	model while	lowering	delivery	costs	as	customer	banking	preferences	evolve.	We	are also	working	to	build	a	stronger	residential	mortgage	banking	business	with	the goal	of	becoming	the	provider	of	choice	for	our	customers.	Additionally,	we continue	to	focus	on	expense	management	while	investing	in	technology	and business	infrastructure	and	streamlining	our	processes.

Our	capital	priorities	are	to	support	client	growth	and	business	investment, maintain	appropriate	capital	in	light	of	economic	uncertainty	and	the	Basel	III framework	and	return	excess	capital	to	shareholders,	in	accordance	with	the capital	plan	included	in	our	2015	Comprehensive	Capital	Analysis	and	Review (CCAR)	submission	to	the	Board	of	Governors	of	the	Federal	Reserve	System (Federal	Reserve).	We	continue	to	maintain	a	strong	capital	position	and	expect to	build	capital	through	retention	of	future	earnings	net	of	dividend	payments and	share	repurchases.	PNC	has	increased	its	liquidity	positions	at	both	PNC and	PNC	Bank,	National	Association	(PNC	Bank).	For	more	detail,	see	the Capital	and	Liquidity	Actions	portion	of	this	Executive	Summary,	the	Capital portion	of	the	Consolidated	Balance	Sheet	Review	section	and	the	Liquidity Risk	Management	portion	of	the	Risk

Management	section	of	this	Item	7	and	the	Supervision	and	Regulation	section	in Item	1	Business	of	this	Report.

PNC	faces	a	variety	of	risks	that	may	impact	various	aspects	of	our	risk	profile from	time	to	time.	The	extent	of	such	impacts	may	vary	depending	on	factors such	as	the	current	economic,	political	and	regulatory	environment,	merger	and acquisition	activity	and	operational	challenges.	Many	of	these	risks	and	our	risk management	strategies	are	described	in	more	detail	elsewhere	in	this	Report.

# Recent	Market	and	Industry	Developments

There	have	been	numerous	legislative	and	regulatory	developments	and significant	changes	in	the	competitive	landscape	of	our	industry	over	the	last several	years.	The	United	States	and	other	governments	have	undertaken	major reform	of	the	regulation	of	the	financial	services	industry,	including	engaging	in new	efforts	to	impose	requirements	designed	to	strengthen	the	stability	of	the financial	system	and	protect	consumers	and	investors.	The	Dodd-Frank	Wall Street	Reform	and	Consumer	Protection	Act	(Dodd-Frank),	enacted	in	July 2010,	mandates	the	most	wide-ranging	overhaul	of	financial	industry	regulation in	decades.	Many	parts	of	the	law	are	now	in	effect,	and	others	are	now	in	the implementation	stage,	which	is	likely	to	continue	for	several	years.	We	expect	to face	further	increased	regulation	of	our	industry	as	a	result	of	Dodd-Frank	as well	as	other	current	and	future	initiatives	intended	to	enhance	the	regulation	of financial	services	companies,	the	stability	of	the	financial	system,	the	protection of	consumers	and	investors,	and	the	liquidity	and	solvency	of	financial institutions	and	markets.	We	also	expect	in	many	cases	more	intense	scrutiny from	our	supervisors	in	the	examination	process	and	more	aggressive enforcement	of	laws	and	regulations	on	both	the	federal	and	state	levels. Compliance	with	new	regulations	will	increase	our	costs	and	reduce	our revenue.	Some	new	regulations	may	limit	our	ability	to	pursue	certain	desirable business	opportunities.

On	January	20,	2015,	the	U.S.	Supreme	Court	denied	a	writ	of	certiorari	in NACS	v.	Board	of	Governors	of	the	Federal	Reserve	System,	with	the	effect	that the	decision	of	the	U.S.	Court	of	Appeals	for	the	D.C.	Circuit	in	this	case	will stand.	In	March	2014,	the	court	of	appeals	had	upheld	the	Federal	Reserve's network	processing	rule	and	its	interchange	fee	rule	except	as	to	the	issue	of transaction	monitoring	costs,	which	it	remanded	to	the	Federal	Reserve	for further	explanation.	The	court	of	appeals	decision	reversed	the	grant	of	summary judgment	in	July	2013	by	the	U.S.	District	Court	for	the	District	of	Columbia	in favor	of	the	plaintiffs	in	this	case	vacating	these	rules.

For	additional	information	concerning	recent	legislative	and	regulatory developments,	as	well	as	certain	governmental,	legislative	and	regulatory inquiries	and	investigations	that	may	affect	PNC,	please	see	the	Supervision	and Regulation	section	of	Item	1	Business,	Item	1A	Risk	Factors,	and	Note	21	Legal

Proceedings	and	Note	22	Commitments	and	Guarantees	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report.

# Key	Factors	Affecting	Financial	Performance

Our	financial	performance	is	substantially	affected	by	a	number	of	external factors	outside	of	our	control,	including	the	following:

•	General	economic	conditions,	including	the	continuity,	speed	and stamina	of	the	current	U.S.	economic	expansion	in	general	and	on	our customers	in	particular,

•	The	monetary	policy	actions	and	statements	of	the	Federal	Reserve	and the	Federal	Open	Market	Committee	(FOMC),

•	The	level	of,	and	direction,	timing	and	magnitude	of	movement	in, interest	rates	and	the	shape	of	the	interest	rate	yield	curve,

•	The	functioning	and	other	performance	of,	and	availability	of	liquidity in,	the	capital	and	other	financial	markets,

•	Loan	demand,	utilization	of	credit	commitments	and	standby	letters	of credit,	and	asset	quality,

•	Customer	demand	for	non-loan	products	and	services, •	Changes	in	the	competitive	and	regulatory	landscape	and	in counterparty	creditworthiness	and	performance	as	the	financial services	industry	restructures	in	the	current	environment, •	The	impact	of	the	extensive	reforms	enacted	in	the	Dodd-Frank legislation	and	other	legislative,	regulatory	and	administrative initiatives	and	actions,	including	those	outlined	elsewhere	in	this Report	and	in	our	other	SEC	filings,	and •	The	impact	of	market	credit	spreads	on	asset	valuations.

In	addition,	our	success	will	depend	upon,	among	other	things: •	Focused	execution	of	strategic	priorities	for	organic	customer	growth opportunities,

•	Further	success	in	growing	profitability	through	the	acquisition	and retention	of	customers	and	deepening	relationships,

•	Driving	growth	in	acquired	and	underpenetrated	geographic	markets,

including	our	Southeast	markets,

•	Our	ability	to	effectively	manage	PNC's	balance	sheet	and	generate	net interest	income,

•	Revenue	growth	from	fee	income	and	our	ability	to	provide	innovative and	valued	products	to	our	customers,

•	Our	ability	to	utilize	technology	to	develop	and	deliver	products	and

services	to	our	customers	and	protect	PNC's	systems	and	customer information,

•	Our	ability	to	bolster	our	critical	infrastructure	and	streamline	our	core processes,

•	Our	ability	to	manage	and	implement	strategic	business	objectives within	the	changing	regulatory	environment,

•	A	sustained	focus	on	expense	management,

•	Improving	our	overall	asset	quality,

•	Managing	the	non-strategic	assets	portfolio	and	impaired	assets,

•	Continuing	to	maintain	and	grow	our	deposit	base	as	a	low-cost funding	source,

•	Prudent	risk	and	capital	management	related	to	our	efforts	to	manage risk	to	acceptable	levels	and	to	meet	evolving	CCAR	compliance, regulatory	capital	and	liquidity	standards,

•	Actions	we	take	within	the	capital	and	other	financial	markets, •	The	impact	of	legal	and	regulatory-related	contingencies,	and •	The	appropriateness	of	reserves	needed	for	critical	accounting estimates	and	related	contingencies.

For	additional	information,	please	see	the	Cautionary	Statement	Regarding Forward-Looking	Information	section	in	this	Item	7	and	Item	1A	Risk	Factors	in this	Report.

# Table	1:	Summary	Financial	Results

| Year	ended	December	31 | 2014 | 2013 |
| :--- | :--- | :--- |
| Net\tincome\t(millions) | $4,207 | $4,212 |
| Diluted\tearnings\tper\tcommon\tshare\tfrom\tnet |  |  |
| income | $7.30 | $7.36 |
| Return\tfrom\tnet\tincome\ton: |  |  |
| Average\tcommon\tshareholders'\tequity | 9.91% | \t 10.85% |
| Average\tassets | 1.28% | 1.38% |

# Income	Statement	Highlights

Our	performance	in	2014	included	the	following:

•	Net	income	for	2014	of	$4.2	billion	was	stable	compared	with	2013,	as a	4%	decrease	in	revenue	was	mostly	offset	by	a	reduction	in	provision for	credit	losses	and	a	2%	decline	in	noninterest	expense.	Lower revenue	in	the	comparison	was	driven	by	a	7%	decline	in	net	interest income,	as	noninterest	income	was	essentially	unchanged.	For additional	detail,	please	see	the	Consolidated	Income	Statement Review	section	in	this	Item	7.

•	Net	interest	income	of	$8.5	billion	for	2014	decreased	7%	compared with	2013,	as	lower	yields	on	loans	and	investment	securities,	a decline	in	investment	securities	balances	and	a	reduction	in	purchase accounting	accretion	were	partially	offset	by	commercial	and commercial	real	estate	loan	growth.

•	Net	interest	margin	decreased	to	3.08	%	for	2014	compared	to	3.57	% for	2013.	The	decline	reflected	the	impact	of	lower	loan	and	securities yields	in	the	ongoing	low	rate	environment,	lower	purchase	accounting accretion	and	the	impact	of	higher	interest-earning	deposits	with	the Federal	Reserve	Bank.

•	Noninterest	income	was	$6.9	billion	for	2014	and	2013,	as	strong overall	client	fee	income	was	offset	by	lower	residential	mortgage revenue,	declines	in	asset	valuations	and	reduced	sales	of	securities. •	The	provision	for	credit	losses	decreased	to	$273	million	for	2014 compared	to	$643	million	for	2013	due	to	overall	credit	quality improvement.

compared	with	2013,	primarily	reflecting	well	managed	expenses.

# Credit	Quality	Highlights

•	Asset	quality	trends	in	2014	improved	from	2013.	For	additional	detail,

see	the	Credit	Risk	Management	portion	of	the	Risk	Management section	of	this	Item	7.

•	Net	charge-offs	of	$.5	billion	in	2014	declined	51%	compared	to	net charge-offs	of	$1.1	billion	for	2013.	Net	charge-offs	were	0.27%	of average	loans	in	2014	and	0.57%	of	average	loans	in	2013.	These comparisons	were	impacted	by	alignment	with	interagency	guidance	in the	first	quarter	of	2013	on	practices	for	loans	and	lines	of	credit related	to	consumer	lending.	In	the	first	quarter	2013,	this	alignment had	the	overall	effect	of	(i)	accelerating	charge-offs,	(ii)	increasing nonperforming	loans	and	(iii)	in	the	case	of	loans	accounted	for	under the	fair	value	option,	increasing	nonaccrual	loans.

# Balance	Sheet	Highlights

•	Total	commercial	lending	increased	by	$11.2	billion,	or	10%,	as

a	result	of	growth	in	commercial	and	commercial	real	estate loans.

•	Total	consumer	lending	decreased	$2.0	billion,	or	3%,	due	to

lower	home	equity,	education	and	residential	mortgage	loans, partially	offset	by	growth	in	automobile	loans.

•	Total	deposits	increased	by	$11.3	billion,	or	5%,	to	$232	billion	at December	31,	2014	compared	with	December	31,	2013,	driven	by growth	in	transaction	deposits.

•	PNC	further	increased	its	liquidity	position	as	reflected	in	higher deposit	balances	maintained	with	the	Federal	Reserve	Bank. •	The	regulatory	short-term	Liquidity	Coverage	Ratio	became effective	for	PNC	as	an	advanced	approaches	bank	beginning January	1,	2015,	with	a	minimum	phased-in	requirement	of	80% in	2015,	calculated	as	of	month	end.	The	estimated	pro	forma ratio	at	December	31,	2014	exceeded	100%	and	95%	for	PNC and	PNC	Bank,	respectively.

•	PNC's	well-positioned	balance	sheet	remained	core	funded	with	a

•	The	Transitional	Basel	III	common	equity	Tier	1	capital	ratio,

calculated	using	the	regulatory	capital	methodology	applicable	to	PNC during	2014,	was	10.9%	at	December	31,	2014.

•	Pro	forma	fully	phased-in	Basel	III	common	equity	Tier	1	capital	ratio increased	to	an	estimated	10.0%	at	December	31,	2014	from	9.4%	at December	31,	2013	based	on	the	standardized	approach	rules.	See	the Capital	discussion	and	Table	18	in	the	Consolidated	Balance	Sheet Review	section	of	this	Item	7	and	the	December	31,	2013	capital	ratio tables	in	the	Statistical	Information	(Unaudited)	section	in	Item	8	of this	Report	for	more	detail.

Our	Consolidated	Income	Statement	and	Consolidated	Balance	Sheet	Review sections	of	this	Item	7	describe	in	greater	detail	the	various	items	that	impacted our	results	during	2014	and	2013	and	balances	at	December	31,	2014	and December	31,	2013,	respectively.

# Capital	and	Liquidity	Actions

Our	ability	to	take	certain	capital	actions,	including	plans	to	pay	or	increase common	stock	dividends	or	to	repurchase	shares	under	current	or	future programs,	is	subject	to	the	results	of	the	supervisory	assessment	of	capital adequacy	undertaken	by	the	Federal	Reserve	and	our	primary	bank	regulators	as part	of	the	CCAR	process.

In	connection	with	the	2014	CCAR,	PNC	submitted	its	2014	capital	plan,	as approved	by	its	Board	of	Directors,	to	the	Federal	Reserve	in	January	2014.	As we	announced	on	March	26,	2014,	the	Federal	Reserve	accepted	the	capital	plan and	did	not	object	to	our	proposed	capital	actions,	which	included	a recommendation	to	increase	the	quarterly	common	stock	dividend	in	the	second quarter	of	2014.	The	capital	plan	also	included	share	repurchase	programs	of	up to	$1.5	billion	for	the	four	quarter	period	beginning	in	the	second	quarter	of	2014 under	PNC's	existing	common	stock	repurchase	authorization.	These	programs include	repurchases	of	up	to	$200	million	to	mitigate	the	financial	impact	of employee	benefit	plan	transactions.	In	the	last	three	quarters	of	2014,	in

accordance	with	the	2014	capital	plan,	we	repurchased	12.9	million	shares	of common	stock	on	the	open	market,	with	an	average	price	of	$85.95	per	share and	an	aggregate	repurchase	price	of	$1.1	billion.

On	April	3,	2014,	consistent	with	our	2014	capital	plan,	our	Board	of	Directors approved	an	increase	to	PNC's	quarterly	common	stock	dividend	from	44	cents per	common	share	to	48	cents	per	common	share	beginning	with	the	May	5, 2014	dividend	payment.

In	connection	with	the	2015	CCAR,	PNC	submitted	its	2015	capital	plan,	as approved	by	its	Board	of	Directors,	to	the	Federal	Reserve	in	January	2015.	PNC expects	to	receive	the	Federal	Reserve's	response	(either	a	non-objection	or objection)	to	the	capital	plan	submitted	as	part	of	the	2015	CCAR	in	March 2015.	For	additional	information	concerning	the	CCAR	process	and	the	factors the	Federal	Reserve	takes	into	consideration	in	evaluating	capital	plans,	see	the Supervision	and	Regulation	section	of	Item	1	of	this	Report.

See	the	Liquidity	Risk	Management	portion	of	the	Risk	Management	section	of this	Item	7	for	more	detail	on	our	2014	capital	and	liquidity	actions.

# Average	Consolidated	Balance	Sheet	Highlights

# Table	2:	Summarized	Average	Balance	Sheet

| Year	ended	December	31 |  |  | Change |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | 2014 | 2013 | $% | $% |
| Average\tassets |  |  |  |  |
| Interest-earning\tassets |  |  |  |  |
| Investment\tsecurities | $55,820 | $57,319 | $(1,499) | (3)% |
| Loans | \t 199,648 | \t 189,973 | 9,675 | 5% |
| Interest-earning\tdeposits\twith\tbanks | 19,204 | 4,910 | \t 14,294\t\t\t\t291% | \t 14,294\t\t\t\t291% |
| Other | 8,633 | 8,443 | 190 | 2% |
| Total\tinterest-earning\tassets | \t 283,305 | \t 260,645 | \t 22,660 | 9% |
| Noninterest-earning\tassets | 44,548 | 45,019 | (471) | (1)% |
| Total\taverage\tassets | $327,853 | $305,664 | $22,189 | 7% |
| Average\tliabilities\tand\tequity |  |  |  |  |
| Interest-bearing\tliabilities |  |  |  |  |
| Interest-bearing\tdeposits | $152,814 | $146,000 | $6,814 | 5% |
| Borrowed\tfunds | 48,817 | 40,022 | 8,795 | 22% |
| Total\tinterest-bearing\tliabilities | \t 201,631 | \t 186,022 | \t 15,609 | 8% |
| Noninterest-bearing\tdeposits | 70,108 | 66,168 | 3,940 | 6% |
| Other\tliabilities | 10,768 | 11,159 | (391) | (4)% |
| Equity | 45,346 | 42,315 | 3,031 | 7% |
| Total\taverage\tliabilities\tand\tequity | $327,853 | $305,664 | $22,189 | 7% |

Total	assets	were	$345.1	billion	at	December	31,	2014	compared	with	$320.2 billion	at	December	31,	2013.	The	increase	from	year	end	2013	was	primarily due	to	higher	interest-earning	deposits	with	banks	and	loan	growth,	partially offset	by	lower	investment	securities.

Various	seasonal	and	other	factors	impact	our	period-end	balances,	whereas average	balances	are	generally	more	indicative	of	underlying	business	trends apart	from	the	impact	of	acquisitions	and	divestitures.	The	Consolidated	Balance Sheet	Review	section	of	this	Item	7	provides	information	on	changes	in	selected Consolidated	Balance	Sheet	categories	at	December	31,	2014	compared	with December	31,	2013.

Average	investment	securities	decreased	during	2014	compared	with	2013, primarily	due	to	a	net	decline	in	average	residential	and	commercial	mortgage- backed	securities	from	principal	payments,	partially	offset	by	an	increase	in average	U.S.	Treasury	and	government	agencies	securities,	which	was	largely driven	by	purchases	to	enhance	our	liquidity	position.

Total	investment	securities	comprised	20%	of	average	interest-earning	assets	in 2014	and	22%	in	2013.

Average	loans	grew	in	2014,	driven	by	increases	in	average	commercial	loans	of $6.4	billion	and	average	commercial	real	estate	loans	of	$3.2	billion.	The	overall increase	in	loans	reflected	organic	loan	growth,	primarily	in	our	Corporate	& Institutional	Banking	segment.

Loans	represented	70%	of	average	interest-earning	assets	for	2014	and	73%	of average	interest-earning	assets	for	2013.

Average	interest-earning	deposits	with	banks,	which	are	primarily	maintained with	the	Federal	Reserve	Bank,	increased	significantly	in	the	comparison	to	the prior	year	period	as	we	continued	to	enhance	our	liquidity	position.

Average	noninterest-earning	assets	decreased	in	2014	compared	with	2013, primarily	reflecting	lower	unsettled	securities	sales,	partially	offset	by	higher investment	securities	valuation	adjustments,	both	of	which	are	included	in noninterest-earning	assets	for	average	balance	sheet	purposes.

Average	total	deposits	increased	$10.8	billion	in	2014	compared	with	the	prior year,	driven	by	an	increase	of	$12.1	billion	in	average	transaction	deposits, which	grew	to	$189	billion	in	2014.	Higher	average	money	market	deposits, average	noninterest-bearing	deposits,	and	average	interest-bearing	demand deposits	drove	the	increase	in	both	commercial	and	consumer	average transaction	deposits.	These	increases	were	partially	offset	by	a	decrease	of	$2.6 billion	in	average	retail	certificates	of	deposit	attributable	to	runoff	of

maturing	accounts.	Total	deposits	at	December	31,	2014	were	$232.2	billion compared	with	$220.9	billion	at	December	31,	2013	and	are	further	discussed within	the	Consolidated	Balance	Sheet	Review	section	of	this	Item	7.

Average	total	deposits	represented	68%	of	average	total	assets	for	2014	and	69% for	2013.

Average	borrowed	funds	increased	in	2014	compared	with	2013	primarily	due	to increases	in	average	Federal	Home	Loan	Bank	(FHLB)	borrowings,	average bank	notes	and	senior	debt,	and	average	subordinated	debt,	in	part	to	enhance our	liquidity	position.	These	increases	were	partially	offset	by	a	decline	in average	commercial	paper.	Total	borrowed	funds	at	December	31,	2014	were $56.8	billion	compared	with	$46.1	billion	at	December	31,	2013	and	are	further discussed	within	the	Consolidated	Balance	Sheet	Review	section	of	this	Item	7. The	Liquidity	Risk	Management	portion	of	the	Risk	Management	section	of	this Item	7	includes	additional	information	regarding	our	borrowed	funds.

# Business	Segment	Highlights

Total	business	segment	earnings	were	$3.9	billion	in	2014	and	$4.0	billion	in	2013.	The	Business	Segments	Review	section	of	this	Item	7	includes	further	analysis	of	our business	segment	results	during	2014	and	2013,	including	presentation	differences	from	Note	24	Segment	Reporting	in	our	Notes	To	Consolidated	Financial	Statements in	Item	8	of	this	Report.	Note	24	Segment	Reporting	presents	results	of	businesses	for	2014,	2013	and	2012.

We	provide	a	reconciliation	of	total	business	segment	earnings	to	PNC	total	consolidated	net	income	as	reported	on	a	GAAP	basis	in	Note	24	Segment	Reporting	in	our Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report.

# Table	3:	Results	Of	Businesses	–	Summary

# (Unaudited)

| Year	ended	December	31 | Net	Income	(a) | Net	Income	(a) | Revenue |  | Average	Assets	(a)	(b) | Average	Assets	(a)	(b) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Retail\tBanking | $728 | $550 | $6,049 | $6,100 | $75,046\t\t\t\t $ | 74,971 |
| Corporate\t&amp;\tInstitutional\tBanking | \t 2,106 | \t 2,264 | 5,476 | 5,506 | \t 122,927 | \t 112,970 |
| Asset\tManagement\tGroup | 181 | 162 | 1,107 | 1,040 | 7,745 | 7,366 |
| Residential\tMortgage\tBanking | 35 | 148 | 800 | 1,100 | 7,857 | 9,896 |
| BlackRock | 530 | 469 | 703 | 621 | 6,640 | 6,272 |
| Non-Strategic\tAssets\tPortfolio | 367 | 379 | 587 | 742 | 8,338 | 9,987 |
| Total\tbusiness\tsegments | \t 3,947 | \t 3,972 | \t 14,722 | \t 15,109 | \t 228,553 | \t 221,462 |
| Other\t(c)\t(d)\t(e) | 260 | 240 | 653 | 903 | 99,300 | 84,202 |
| Total | $4,207 | $4,212 | $15,375 | $16,012 | $327,853\t\t\t\t $305,664 | $327,853\t\t\t\t $305,664 |
| (a) |  |  |  |  |  |  |

(a) Amounts	for	2013	period	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.

(b) Period-end	balances	for	BlackRock.

(c) "Other"	average	assets	include	investment	securities	associated	with	asset	and	liability	management	activities.

(d) "Other"	includes	differences	between	the	total	business	segment	financial	results	and	our	total	consolidated	net	income.	Additional	detail	is	included	in	Note	24	Segment	Reporting	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report.

(e) Net	income	for	"Other"	in	2014	increased	slightly	compared	to	2013	as	lower	noninterest	expense	due	to	a	reduction	in	benefits	costs	was	mostly	offset	by	lower	interest	income	from	investment	securities.

# CONSOLIDATED	INCOME	STATEMENT	REVIEW

Our	Consolidated	Income	Statement	is	presented	in	Item	8	of	this	Report.

Net	income	for	2014	of	$4.2	billion	was	stable	compared	with	2013,	as	a	4% decrease	in	revenue	was	mostly	offset	by	a	reduction	in	provision	for	credit losses	and	a	2%	decline	in	noninterest	expense.	Lower	revenue	in	the comparison	was	driven	by	a	7%	decline	in	net	interest	income,	as	noninterest income	was	essentially	unchanged.

# Net	Interest	Income

# Table	4:	Net	Interest	Income	and	Net	Interest	Margin

|  | Year	ended<br>December	31 |  |
| :--- | :--- | :--- |
| Dollars\tin\tmillions | 2014 | 2013 |
| Net\tinterest\tincome | $8,525 | $9,147 |
| Net\tinterest\tmargin | 3.08% | 3.57% |

Changes	in	net	interest	income	and	margin	result	from	the	interaction	of	the volume	and	composition	of	interest-earning	assets	and	related	yields,	interest- bearing	liabilities	and	related	rates	paid,	and	noninterest-bearing	sources	of funding.	See	the	Statistical	Information	(Unaudited)	–	Average	Consolidated Balance	Sheet	And	Net	Interest	Analysis	and	Analysis	Of	Year-To-Year Changes	In	Net	Interest	Income	in	Item	8	of	this	Report	and	the	discussion	of purchase	accounting	accretion	on	purchased	impaired	loans	in	the	Consolidated Balance	Sheet	review	in	this	Item	7	for	additional	information.

Net	interest	income	decreased	by	$622	million,	or	7%,	in	2014	compared	with 2013	reflecting	the	ongoing	low	rate	environment.	Lower	yields	on	loans	and investment	securities,	a	decline	in	investment	securities	balances	and	a	reduction in	purchase	accounting	accretion	were	partially	offset	by	commercial	and commercial	real	estate	loan	growth.	Lower	net	interest	income	also	included	the impact	from	the	second	quarter	2014	correction	to	reclassify	certain	commercial facility	fees	from	net	interest	income	to	noninterest	income.

Net	interest	margin	decreased	in	the	comparison	to	the	prior	year,	driven	by	a	50 basis	point	decline	in	the	yield	on	total	interest-earning	assets,	which	included the	impact	of	lower	purchase	accounting	accretion,	continued	spread compression,	and	repricing	of	new	and	existing	loans	and	securities	in	the ongoing	low	rate	environment.	The	decline	also	included	the	impact	of	the second	quarter	2014	correction	to	reclassify	certain	commercial	facility	fees	and the	impact	of	higher	interest-earning	deposits	maintained	with	the	Federal Reserve	Bank.

We	expect	net	interest	income	for	the	first	quarter	of	2015	to	remain	stable	with fourth	quarter	2014.	However,	for	full	year	2015,	we	expect	purchase	accounting accretion	to	be	down	approximately	$225	million	compared	to	2014.

# Noninterest	Income

# Table	5:	Noninterest	Income

| Year	ended	December	31 |  |  | Change |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | 2014 | 2013 | $\t% | $\t% |
| Noninterest\tincome |  |  |  |  |
| Asset\tmanagement | $1,513 | $1,342 | $171 | \t 13% |
| Consumer\tservices | \t 1,254 | \t 1,253 | 1 | – |
| Corporate\tservices | \t 1,415 | \t 1,210 | 205 | \t 17% |
| Residential\tmortgage | 618 | 871 | (253) | \t(29)% |
| Service\tcharges\ton\tdeposits | 662 | 597 | 65 | \t 11% |
| Net\tgains\ton\tsales\tof\tsecurities | 4 | 99 | (95) | \t(96)% |
| Net\tother-than-temporary |  |  |  |  |
| impairments | (11) | (16) | 5 | \t(31)% |
| Other | \t 1,395 | \t 1,509 | (114) | (8)% |
| Total\tnoninterest\tincome | $6,850 | $6,865 | $(15) | – |

Noninterest	income	remained	relatively	stable	in	2014	compared	to	the	prior year,	as	strong	overall	client	fee	income	was	offset	by	lower	residential	mortgage revenue,	declines	in	asset	valuations	and	reduced	sales	of	securities.	Noninterest income	as	a	percentage	of	total	revenue	was	45%	for	2014,	up	from	43%	for 2013.

Asset	management	revenue	increased	in	2014	compared	to	2013,	driven	by increased	earnings	from	our	BlackRock	investment,	as	well	as	stronger	average equity	markets	and	positive	net	flows,	after	adjustments	for	cyclical	client activities.	Discretionary	client	assets	under	management	in	the	Asset Management	Group	increased	to	$135	billion	at	December	31,	2014	compared with	$127	billion	at	December	31,	2013.

Consumer	service	fees	were	relatively	unchanged	in	2014	compared	to	the	prior year,	as	higher	consumer	service	fees	in	Retail	Banking	were	offset	by	lower revenue	from	previously	discontinued	insurance	programs,	as	well	as	the termination	of	our	debit	card	rewards	program	in	the	fourth	quarter	of	2013, which	resulted	in	a	prior	year	benefit	and	consequently	diluted	the	year-over- year	growth	comparison.

Corporate	service	fees	increased	to	$1.4	billion	in	2014	compared	to	$1.2	billion in	2013,	driven	by	higher	merger	and	acquisition	advisory	fees	from	a	record year	for	our	mergers	and	acquisition	advisory	firm,	Harris	Williams,	and	the impact	of	the	second	quarter	2014	correction	to	reclassify	certain	commercial facility	fees	from	net	interest	income	to	noninterest	income.	These	increases were	partially	offset	by	lower	net	commercial	mortgage	servicing	rights valuation	gains,	which	were	$38	million	in	2014	compared	to	$68	million	in 2013.

Residential	mortgage	revenue	decreased	to	$618	million	in	2014	from	$871 million	in	2013,	primarily	due	to	lower	loan	sales	revenue	from	a	reduction	in origination	volume	and	significantly	lower	net	hedging	gains	on	residential mortgage	servicing	rights,	partially	offset	by	higher	loan	servicing	fee	revenue and	the	impact	of	second	quarter	2014	gains	on	sales	of	previously underperforming	portfolio	loans.

Lower	residential	mortgage	revenue	in	the	comparison	also	reflected	the	impact of	the	2013	net	benefit	from	release	of	reserves	for	residential	mortgage repurchase	obligations	of	$53	million,	as	the	impact	to	2014	was	not	significant. This	net	release	of	reserves	in	2013	was	largely	the	result	of	agreements	with	two government-sponsored	enterprises	(GSEs),	FHLMC	and	FNMA,	for	loans	sold into	agency	securitizations.	See	the	Recourse	And	Repurchase	Obligations section	of	this	Item	7	for	further	detail.

Service	charges	on	deposits	increased	in	2014,	benefitting	from	changes	in product	offerings	and	higher	customer-related	activity.

Other	noninterest	income	decreased	to	$1.4	billion	in	2014	compared	to	$1.5 billion	in	2013.	The	decline	was	driven	by	a	reduction	in	asset	valuations,	lower revenue	associated	with	private	equity	investments,	decreased	revenue	due	to	the lower	market	value	of	investments	related	to	deferred	compensation	obligations, and	lower	revenue	associated	with	customer-related	derivative	activities, including	credit	valuations.	These	decreases	were	partially	offset	by	higher	gains on	sales	of	other	assets.

The	decline	in	revenue	from	credit	valuations	for	customer-related	derivatives activities	was	driven	primarily	by	market	interest	rate	changes	impacting	the valuations.	The	2013	impact	of	these	customer-related	derivatives	activities	was $56	million,	while	the	2014	impact	was	not	significant.

Higher	gains	on	sales	of	other	assets	in	the	comparison	included	$94	million	on the	fourth	quarter	2014	sale	of	PNC's	Washington,	D.C.	regional	headquarters building,	as	well	as	increased	gains	on	sales	of	Visa	Class	B	Common	shares, which	were	$209	million	on	sales	of	3.5	million	shares	in	2014	compared	to	$168 million	on	the	sale	of	4	million	shares	in	2013.	As	of	December	31,	2014,	we held	approximately	7	million	Visa	Class	B	common	shares	with	a	fair	value	of approximately	$742	million	and	a	recorded	investment	of	approximately	$77 million.

Other	noninterest	income	typically	fluctuates	from	period	to	period	depending on	the	nature	and	magnitude	of	transactions	completed.	Further	details	regarding our	customer-related	trading	activities	are	included	in	the	Market	Risk Management	–	Customer-Related	Trading	Risk	portion	of	the	Risk	Management section	of	this	Item	7.	Further	details	regarding	private	and	other	equity investments	are	included	in	the	Market	Risk	Management	–	Equity	And	Other Investment	Risk	section,	and	further	details	regarding	gains	or	losses	related	to our	equity	investment	in	BlackRock	are	included	in	the	Business	Segments Review	section	of	this	Item	7.

In	the	first	quarter	of	2015,	we	expect	fee	income	to	be	down	mid-single	digits, on	a	percentage	basis,	compared	with	the	fourth	quarter	of	2014	due	to seasonality.

For	full	year	2015,	we	expect	revenue	to	continue	to	be	under	pressure	compared with	2014,	as	we	expect	the	combined	revenue	growth	from	our	businesses	to partially	offset	the	decline	in	purchase	accounting	accretion.

# Provision	For	Credit	Losses

The	provision	for	credit	losses	totaled	$273	million	in	2014	compared	with	$643 million	in	2013.	The	decrease	in	provision	reflected	improved	overall	credit quality,	including	lower	consumer	loan	delinquencies.	A	contributing	economic factor	was	the	increasing	value	of	residential	real	estate,	which	improved expected	cash	flows	from	our	purchased	impaired	loans.

We	currently	expect	our	provision	for	credit	losses	in	the	first	quarter	of	2015	to be	between	$50	million	and	$100	million.

The	Credit	Risk	Management	portion	of	the	Risk	Management	section	of	this Item	7	includes	additional	information	regarding	factors	impacting	the	provision for	credit	losses.

# Noninterest	Expense

Noninterest	expense	was	$9.5	billion	for	2014,	a	decrease	of	$.2	billion,	or	2%, from	$9.7	billion	for	2013,	reflecting	overall	disciplined	expense	management. The	decline	was	driven	by	a	decrease	in	personnel	expense	related	to	lower headcount	and	benefits	costs,	partially	offset	by	investments	in	technology	and infrastructure.	Additionally,	noncash	charges	of	$57	million	in	2013	for unamortized	discounts	related	to	redemption	of	trust	preferred	securities contributed	to	the	decline.	See	Note	14	Capital	Securities	of	Subsidiary	Trusts and	Perpetual	Trust	Securities	in	Item	8	of	our	2013	Form	10-K	for	additional detail	on	the	2013	redemption	of	trust	preferred	securities.

During	2014,	we	completed	actions	and	exceeded	our	2014	continuous improvement	goal	of	$500	million	in	cost	savings.	These	cost	savings	are funding	investments	in	our	infrastructure,	including	those	related	to cybersecurity	and	our	datacenters,	and	investments	in	our	diversified	businesses, including	our	Retail	Banking	transformation,	consistent	with	our	strategic priorities.

In	2015,	we	expect	to	continue	this	approach	and	have	a	goal	of	an	additional $400	million	in	cost	savings	through	our	Continuous	Improvement	Program, which	again	we	expect	will	help	to	fund	our	business	and	technology investments.

For	the	first	quarter	of	2015,	we	expect	noninterest	expense	to	be	down	by	high- single	digits	on	a	percentage	basis	compared	with	the	fourth	quarter	of	2014.

# Effective	Income	Tax	Rate

The	effective	income	tax	rate	was	25.1%	for	2014	compared	with	25.9%	for 2013.	The	effective	tax	rate	is	generally	lower	than	the	statutory	rate	primarily due	to	tax	credits	PNC	receives	from	our	investments	in	low	income	housing and	new	markets	investments,	as	well	as	earnings	in	other	tax	exempt investments.

The	effective	tax	rates	for	both	2014	and	2013	reflect	the	adoption	of	Accounting Standards	Update	(ASU)	2014-01,	which	relates	to	amortization	of	investments in	low	income	housing	tax	credits.	See	the	Recently	Adopted	Accounting Standards	portion	of	Note	1	Accounting	Policies	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report	for	further	detail.	The	retrospective application	of	this	guidance	resulted	in	increased	income	tax	expenses	in	both periods	due	to	the	reclassification	of	noninterest	expense	associated	with	these investments.

# CONSOLIDATED	BALANCE	SHEET	REVIEW

# Table	6:	Summarized	Balance	Sheet	Data

| Dollars	in	millions | December	31<br>2014 | December	31<br>2013 | Change<br>$% | Change<br>$% |
| :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |
| Interest-earning\tdeposits\twith\tbanks | $31,779 | $12,135 | $19,644 | \t162% |
| Loans\theld\tfor\tsale | 2,262 | 2,255 | 7 | –% |
| Investment\tsecurities | 55,823 | 60,294 | (4,471) | (7)% |
| Loans | 204,817 | 195,613 | 9,204 | 5% |
| Allowance\tfor\tloan\tand\tlease\tlosses | (3,331) | (3,609) | 278 | (8)% |
| Goodwill | 9,103 | 9,074 | 29 | –% |
| Other\tintangible\tassets | 1,844 | 2,216 | (372) | \t (17)% |
| Other,\tnet | 42,775 | 42,214 | 561 | 1% |
| Total\tassets | $345,072 | $320,192 | $24,880 | 8% |
| Liabilities |  |  |  |  |
| Deposits | $232,234 | $220,931 | $11,303 | 5% |
| Borrowed\tfunds | 56,768 | 46,105 | \t 10,663 | 23% |
| Other | 9,996 | 9,119 | 877 | 10% |
| Total\tliabilities | 298,998 | 276,155 | \t 22,843 | 8% |
| Equity |  |  |  |  |
| Total\tshareholders'\tequity | 44,551 | 42,334 | 2,217 | 5% |
| Noncontrolling\tinterests | 1,523 | 1,703 | (180) | \t (11)% |
| Total\tequity | 46,074 | 44,037 | 2,037 | 5% |
| Total\tliabilities\tand\tequity | $345,072 | $320,192 | $24,880 | 8% |

The	summarized	balance	sheet	data	above	is	based	upon	our	Consolidated	Balance	Sheet	in	Item	8	of	this	Report.

The	increase	in	total	assets	was	primarily	due	to	higher	interest-earning	deposits	with	banks	and	loan	growth,	partially	offset	by	lower	investment	securities.	The increase	in	interest-earning	deposits	with	banks	was	driven	by	higher	deposit	balances	maintained	with	the	Federal	Reserve	Bank	due	to	regulatory	short-term	liquidity standards	that	became	effective	for	PNC	as	an	advanced	approaches	bank	beginning	January	1,	2015.	Interest-earning	deposits	with	banks	included	balances	held	with the	Federal	Reserve	Bank	of	Cleveland	of	$31.4	billion	and	$11.7	billion	at	December	31,	2014	and	December	31,	2013,	respectively.	The	increase	in	liabilities	was largely	due	to	growth	in	deposits	and	higher	Federal	Home	Loan	Bank	borrowings	and	issuances	of	bank	notes	and	senior	debt	and	subordinated	debt,	partially	offset	by a	decline	in	federal	funds	purchased	and	repurchase	agreements.	An	analysis	of	changes	in	selected	balance	sheet	categories	follows.

# Loans

Outstanding	loan	balances	of	$204.8	billion	at	December	31,	2014	and	$195.6	billion	at	December	31,	2013	were	net	of	unearned	income,	net	deferred	loan	fees, unamortized	discounts	and	premiums,	and	purchase	discounts	and	premiums	totaling	$1.7	billion	at	December	31,	2014	and	$2.1	billion	at	December	31,	2013, respectively.	The	balances	include	purchased	impaired	loans	but	do	not	include	future	accretable	net	interest	(i.e.,	the	difference	between	the	undiscounted	expected	cash flows	and	the	carrying	value	of	the	loan)	on	those	loans.

# Table	7:	Details	Of	Loans

|  | December	31 | December	31 | Change |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | 2014 | 2013 | $% |  |
| Commercial\tlending |  |  |  |  |
| Commercial |  |  |  |  |
| Retail/wholesale\ttrade | $16,972 | $15,530 | $1,442 | 9% |
| Manufacturing | 18,744 | 16,208 | 2,536 | \t 16% |
| Service\tproviders | 14,103 | 13,052 | 1,051 | 8% |
| Real\testate\trelated\t(a) | 10,812 | 10,729 | 83 | 1% |
| Financial\tservices | 6,178 | 4,927 | 1,251 | \t 25% |
| Health\tcare | 9,017 | 8,690 | 327 | 4% |
| Other\tindustries | 21,594 | 19,242 | 2,352 | \t 12% |
| Total\tcommercial | 97,420 | 88,378 | 9,042 | \t 10% |
| Commercial\treal\testate |  |  |  |  |
| Real\testate\tprojects\t(b) | 14,577 | 13,613 | 964 | 7% |
| Commercial\tmortgage | 8,685 | 7,578 | 1,107 | \t 15% |
| Total\tcommercial\treal\testate | 23,262 | 21,191 | 2,071 | \t 10% |
| Equipment\tlease\tfinancing | 7,686 | 7,576 | 110 | 1% |
| Total\tcommercial\tlending\t(c) | 128,368 | 117,145 | \t 11,223 | \t 10% |
| Consumer\tlending |  |  |  |  |
| Home\tequity |  |  |  |  |
| Lines\tof\tcredit | 20,361 | 21,696 | (1,335) | (6)% |
| Installment | 14,316 | 14,751 | (435) | (3)% |
| Total\thome\tequity | 34,677 | 36,447 | (1,770) | (5)% |
| Residential\treal\testate |  |  |  |  |
| Residential\tmortgage | 13,885 | 14,418 | (533) | (4)% |
| Residential\tconstruction | 522 | 647 | (125) | \t(19)% |
| Total\tresidential\treal\testate | 14,407 | 15,065 | (658) | (4)% |
| Credit\tcard | 4,612 | 4,425 | 187 | 4% |
| Other\tconsumer |  |  |  |  |
| Education | 6,626 | 7,534 | (908) | \t(12)% |
| Automobile | 11,616 | 10,827 | 789 | 7% |
| Other | 4,511 | 4,170 | 341 | 8% |
| Total\tconsumer\tlending | 76,449 | 78,468 | (2,019) | (3)% |
| Total\tloans | $204,817 | $195,613 | $9,204 | 5% |
| (a) |  |  |  |  |

(a) Includes	loans	to	customers	in	the	real	estate	and	construction	industries.

(b) Includes	both	construction	loans	and	intermediate	financing	for	projects.

(c) Construction	loans	with	interest	reserves	and	A/B	Note	restructurings	are	not	significant	to	PNC.

The	increase	in	loans	was	driven	by	the	increase	in	commercial	lending	as	a result	of	growth	in	commercial	and	commercial	real	estate	loans,	primarily	from new	customers	and	organic	growth.	The	decline	in	consumer	lending	resulted from	lower	home	equity,	education	and	residential	mortgage	loans,	partially offset	by	growth	in	automobile	loans.

Commercial	real	estate	loans	represented	11%	of	total	loans	at	both December	31,	2014	and	December	31,	2013	and	represented	7%	of	total	assets	at both	December	31,	2014	and	December	31,	2013.	See	the	Credit	Risk Management	portion	of	the	Risk	Management	section	of	this	Item	7	for additional	information	regarding	our	loan	portfolio.

Our	loan	portfolio	continued	to	be	diversified	among	numerous	industries,	types of	businesses	and	consumers	across	our	principal	geographic	markets.

# Allowance	for	Loan	and	Lease	Losses	(ALLL)

Our	total	ALLL	of	$3.3	billion	at	December	31,	2014	consisted	of	$1.6	billion and	$1.7	billion	established	for	the	commercial	lending	and	consumer	lending categories,	respectively.	The	ALLL	included	what	we	believe	to	be	appropriate loss	coverage	on	all	loans,	including	higher	risk	loans,	in	the	commercial	and consumer	portfolios.	We	do	not	consider	government	insured	or	guaranteed loans	to	be	higher	risk	as	defaults	have	historically	been	materially	mitigated	by payments	of	insurance	or	guarantee	amounts	for	approved	claims.	Additional information	regarding	our	higher	risk	loans	is	included	in	the	Credit	Risk Management	portion	of	the	Risk	Management	section	of	this	Item	7	and	Note	1 Accounting	Policies,	Note	3	Asset	Quality	and	Note	5	Allowances	for	Loan	and Lease	Losses	and	Unfunded	Loan	Commitments	and	Letters	of	Credit	in	our Notes	To	Consolidated	Financial	Statements	included	in	Item	8	of	this	Report.

# Purchase	Accounting	Accretion	and	Valuation	of	Purchased	Impaired Loans

Information	related	to	purchase	accounting	accretion	and	accretable	yield	for 2014	and	2013	follows.	Additional	information	is	provided	in	Note	4	Purchased Loans	in	the	Notes	To	Consolidated	Financial	Statements	included	in	Item	8	of this	Report.

# Table	8:	Accretion	–	Purchased	Impaired	Loans

| In	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| Accretion\ton\tpurchased\timpaired\tloans |  |  |
| Scheduled\taccretion | $460 | $580 |
| Reversal\tof\tcontractual\tinterest\ton\timpaired\tloans | (253) | (314) |
| Scheduled\taccretion\tnet\tof\tcontractual\tinterest | 207 | 266 |
| Excess\tcash\trecoveries\t(a) | 127 | 115 |
| Total | $334 | $381 |
| (a)\nRelates\tto\texcess\tcash\trecoveries\tfor\tpurchased\timpaired\tcommercial\tloans. |  |  |

(a) Relates	to	excess	cash	recoveries	for	purchased	impaired	commercial	loans.

# Table	9:	Purchased	Impaired	Loans	–	Accretable	Yield

| In	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| January\t1 | $2,055 | $2,166 |
| Scheduled\taccretion | (460) | (580) |
| Excess\tcash\trecoveries | (127) | (115) |
| Net\treclassification\tto\taccretable\tfrom\tnon-accretable |  |  |
| and\tother\tactivity\t(a) | 90 | 584 |
| December\t31\t(b) | $1,558 | $2,055 |
| (a)\nApproximately\t93%\tand\t37%\tof\tthe\tnet\treclassifications\tfor\tthe\tyears\tended\tDecember\t31,\t2014 |  |  |

(a) Approximately	93%	and	37%	of	the	net	reclassifications	for	the	years	ended	December	31,	2014 and	2013,	respectively,	were	driven	by	the	commercial	portfolio	and	were	due	to	improvements	of cash	expected	to	be	collected	on	acquired	loans	in	future	periods,	with	the	remainder	predominantly due	to	future	cash	flow	changes	in	the	consumer	portfolio.

(b) As	of	December	31,	2014,	we	estimate	that	the	reversal	of	contractual	interest	on	purchased impaired	loans	will	total	approximately	$.9	billion	in	future	periods.	This	will	partially	offset	the total	net	accretable	interest	in	future	interest	income	of	$1.6	billion	on	purchased	impaired	loans.

Information	related	to	the	valuation	of	purchased	impaired	loans	at	December	31,	2014	and	December	31,	2013	follows.

# Table	10:	Valuation	of	Purchased	Impaired	Loans

(a) Outstanding	balance	represents	the	balance	on	the	loan	servicing	system	for	active	loans.	It	is	possible	for	the	outstanding	balance	to	be	lower	than	the	recorded	investment	for	certain	loans	due	to	the	use	of	pool accounting.	See	Note	4	Purchased	Loans	for	more	information	on	purchased	impaired	loans.

At	December	31,	2014,	our	largest	individual	purchased	impaired	loan	had	a recorded	investment	of	$9	million.	We	currently	expect	to	collect	total	cash	flows of	$5.6	billion	on	purchased	impaired	loans,	representing	the	$4.0	billion	net investment	at	December	31,	2014	and	the	accretable	net	interest	of	$1.6	billion shown	in	Table	9.

# Weighted	Average	Life	of	the	Purchased	Impaired	Portfolios

The	table	below	provides	the	weighted	average	life	(WAL)	for	each	of	the purchased	impaired	portfolios	as	of	December	31,	2014.

# Table	11:	Weighted	Average	Life	of	the	Purchased	Impaired	Portfolios

| As	of	December	31,	2014<br>Dollars	in	millions | Recorded	Investment | WAL	(a) |
| :--- | :--- | :--- |
| Commercial | $74 | \t1.8\tyears |
| Commercial\treal\testate | 236 | \t1.3\tyears |
| Consumer\t(b) | 1,989 | \t3.9\tyears |
| Residential\treal\testate | 2,559 | \t4.8\tyears |
| Total | $4,858 | \t4.1\tyears |
| (a)\nWeighted\taverage\tlife\trepresents\tthe\taverage\tnumber\tof\tyears\tfor\twhich\teach\tdollar\tof\tunpaid |  |  |

(a) Weighted	average	life	represents	the	average	number	of	years	for	which	each	dollar	of	unpaid principal	remains	outstanding.

(b) Portfolio	primarily	consists	of	nonrevolving	home	equity	products.

# Purchased	Impaired	Loans	–	Accretable	Difference	Sensitivity	Analysis

The	following	table	provides	a	sensitivity	analysis	on	the	Total	Purchased Impaired	Loans	portfolio.	The	analysis	reflects	hypothetical	changes	in	key drivers	for	expected	cash	flows	over	the	life	of	the	loans	under	declining	and improving	conditions	at	a	point	in	time.	Any	unusual	significant	economic events	or	changes,	as	well	as	other	variables	not	considered	below	(e.g.,	natural or	widespread	disasters),	could	result	in	impacts	outside	of	the	ranges represented	below.	Additionally,	commercial	and	commercial	real	estate	loan settlements	or	sales	proceeds	can	vary	widely	from	appraised	values	due	to	a number	of	factors	including,	but	not	limited	to,	special	use	considerations, liquidity	premiums	and	improvements/deterioration	in	other	income	sources.

# Table	12:	Accretable	Difference	Sensitivity	–	Total	Purchased	Impaired	Loans

| In	billions | December	31,<br>2014 | Declining<br>Scenario	(a) | Improving<br>Scenario	(b) |
| :--- | :--- | :--- | :--- |
| Expected\tcash\tflows | $5.6 | $(.2) | $.2 |
| Accretable\tdifference | 1.6 | – | – |
| Allowance\tfor\tloan\tand\nlease\tlosses | (.9) | (.1) | .2 |
| (a)\nDeclining\tScenario\t–\tReflects\thypothetical\tchanges\tthat\twould\tdecrease\tfuture\tcash\tflow |  |  |  |

(a) Declining	Scenario	–	Reflects	hypothetical	changes	that	would	decrease	future	cash	flow expectations.	For	consumer	loans,	we	assume	home	price	forecast	decreases	by	ten	percent	and unemployment	rate	forecast	increases	by	two	percentage	points;	for	commercial	loans,	we	assume that	collateral	values	decrease	by	ten	percent.

(b) Improving	Scenario	–	Reflects	hypothetical	changes	that	would	increase	future	cash	flow expectations.	For	consumer	loans,	we	assume	home	price	forecast	increases	by	ten	percent, unemployment	rate	forecast	decreases	by	two	percentage	points	and	interest	rate	forecast	increases by	two	percentage	points;	for	commercial	loans,	we	assume	that	collateral	values	increase	by	ten percent.

The	present	value	impact	of	declining	cash	flows	is	primarily	reflected	as	an immediate	impairment	charge	to	the	provision	for	credit	losses,	resulting	in	an increase	to	the	allowance	for	loan	and	lease	losses.	The	present	value	impact	of increased	cash	flows	is	first	recognized	as	a	reversal	of	the	allowance	with	any additional	cash	flow	increases	reflected	as	an	increase	in	accretable	yield	over the	life	of	the	loan.

Net	unfunded	credit	commitments	are	comprised	of	the	following:

# Table	13:	Net	Unfunded	Loan	Commitments

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Total\tcommercial\tlending\t(a) | $99,837 | $90,104 |
| Home\tequity\tlines\tof\tcredit | 17,839 | 18,754 |
| Credit\tcard | 17,833 | 16,746 |
| Other | 4,178 | 4,266 |
| Total | $139,687 | $129,870 |
| (a) |  |  |

(a) Less	than	5%	of	net	unfunded	loan	commitments	relate	to	commercial	real	estate	at	each	date.

Commitments	to	extend	credit	represent	arrangements	to	lend	funds	or	provide liquidity	subject	to	specified	contractual	conditions.

Standby	bond	purchase	agreements	totaled	$1.1	billion	at	December	31,	2014 and	$1.3	billion	at	December	31,	2013	and	are	included	in	the	preceding	table, primarily	within	the	Total	commercial	lending	category.

In	addition	to	the	credit	commitments	set	forth	in	the	table	above,	our	net outstanding	standby	letters	of	credit	totaled	$10.0	billion	at	December	31,	2014 and	$10.5	billion	at	December	31,	2013.	Standby	letters	of	credit	commit	us	to make	payments	on	behalf	of	our	customers	if	specified	future	events	occur.

Information	regarding	our	credit	extension	commitments	and	our	allowance	for unfunded	loan	commitments	and	letters	of	credit	is	included	in	Note	1 Accounting	Policies,	Note	5	Allowances	for	Loan	and	Lease	Losses	and Unfunded	Loan	Commitments	and	Letters	of	Credit	and	Note	22	Commitments and	Guarantees	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of this	Report.

# Investment	Securities

The	following	table	presents	the	distribution	of	our	investment	securities	portfolio.	We	have	included	credit	ratings	information	because	the	information	is	an	indicator of	the	degree	of	credit	risk	to	which	we	are	exposed.	Changes	in	credit	ratings	classifications	could	indicate	increased	or	decreased	credit	risk	and	could	be	accompanied by	a	reduction	or	increase	in	the	fair	value	of	our	investment	securities	portfolio.	For	those	securities,	where	during	our	quarterly	security-level	impairment	assessments we	determined	losses	represented	other-than-temporary	impairment	(OTTI),	we	have	recorded	cumulative	credit	losses	of	$1.2	billion	in	earnings	and	accordingly	have reduced	the	amortized	cost	of	our	securities.	See	Table	78	in	Note	6	Investment	Securities	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	for more	detail.	The	majority	of	these	cumulative	impairment	charges	related	to	non-agency	residential	mortgage-backed	and	asset-backed	securities	rated	BB	or	lower.

# Table	14:	Investment	Securities

|  | December	31,	2014 | December	31,	2014 | December	31,	2013 | December	31,	2013 |  | As	of	December	31,	2014 | Ratings	(a) |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  |  |  | BB |  |
|  | Amortized | Fair | Amortized | Fair | AAA/ |  |  | and | No |
| Dollars\tin\tmillions | Cost | Value | Cost | Value | AA | A | BBB | Lower | Rating |
| U.S.\tTreasury\tand\tgovernment\tagencies | $5,485 | $5,714 | $4,229 | $4,361 | \t100% |  |  |  |  |
| Agency\tresidential\tmortgage-backed\t(b) | \t 23,382 | \t 23,935 | \t 27,370 | \t 27,535 | \t100 |  |  |  |  |
| Non-agency\tresidential\tmortgage-backed | 4,993 | 5,225 | 5,750 | 5,894 | 10 | 1% | 3% | 81% | 5% |
| Agency\tcommercial\tmortgage-backed\t(b) | 3,378 | 3,440 | 2,996 | 3,063 | \t100 |  |  |  |  |
| Non-agency\tcommercial\tmortgage-backed\t(c) | 5,095 | 5,191 | 5,624 | 5,744 | 77 | 7 | 7 | 4 | 5 |
| Asset-backed\t(d) | 5,900 | 5,940 | 6,763 | 6,773 | 90 | 2 |  | 7 | 1 |
| State\tand\tmunicipal | 3,995 | 4,191 | 3,664 | 3,678 | 86 | 7 |  |  | 7 |
| Other\tdebt | 2,099 | 2,142 | 2,845 | 2,891 | 65 | \t23 | \t 11 |  | 1 |
| Corporate\tstock\tand\tother | 442 | 441 | 434 | 433 |  |  |  |  | \t 100 |
| Total\tinvestment\tsecurities\t(e) | $54,769 | $56,219 | $59,675 | $60,372 | 85% | 2% | 1% | 10% | 2% |
| (a)\nRatings\tpercentages\tallocated\tbased\ton\tamortized\tcost. |  |  |  |  |  |  |  |  |  |

(a) Ratings	percentages	allocated	based	on	amortized	cost.

(b) These	line	items	were	corrected	for	the	prior	period	due	to	a	misclassification	of	Government	National	Mortgage	Association	(GNMA)	securities	collateralized	by	project	loans.	$1.1	billion	was	previously	reported as	residential	mortgage-backed	agency	securities	and	was	reclassified	to	commercial	mortgage-backed	agency	securities.

(c) Collateralized	primarily	by	retail	properties,	office	buildings,	lodging	properties	and	multi-family	housing.

(d) Collateralized	primarily	by	government	guaranteed	student	loans	and	other	consumer	credit	products	and	corporate	debt.

(e) Includes	available	for	sale	and	held	to	maturity	securities.

We	evaluate	our	investment	securities	portfolio	in	light	of	changing	market conditions	and	other	factors	and,	where	appropriate,	take	steps	to	improve	our overall	positioning.	We	consider	the	portfolio	to	be	well-diversified	and	of	high quality.	At	December	31,	2014,	85%	of	the	securities	in	the	portfolio	were	rated AAA/AA,	with	U.S.	Treasury	and	government	agencies,	agency	residential mortgage-backed	and	agency	commercial	mortgage-backed	securities collectively	representing	59%	of	the	portfolio.

The	investment	securities	portfolio	includes	both	available	for	sale	and	held	to maturity	securities.	Securities	classified	as	available	for	sale	are	carried	at	fair value	with	net	unrealized	gains	and	losses,	representing	the	difference	between amortized	cost	and	fair	value,	included	in	Shareholders'	equity	as	Accumulated other	comprehensive	income	or	loss,	net	of	tax,	on	our	Consolidated	Balance Sheet.	Securities	classified	as	held	to	maturity	are	carried	at	amortized	cost.	As of	December	31,	2014,	the	amortized	cost	and	fair	value	of	available	for	sale securities	totaled	$43.2	billion	and	$44.2	billion,	respectively,	compared	to	an amortized	cost	and	fair	value	as	of	December	31,	2013	of	$48.0	billion	and	$48.6 billion,	respectively.	The	amortized	cost	and	fair	value	of	held	to	maturity securities	were	$11.6	billion	and	$12.0	billion,	respectively,	at	December	31, 2014,	compared	to	$11.7	billion	and	$11.8	billion,	respectively,	at	December	31, 2013.

The	fair	value	of	investment	securities	is	impacted	by	interest	rates,	credit spreads,	market	volatility	and	liquidity	conditions.	The	fair	value	of	investment securities	generally	decreases	when	interest	rates	increase	and	vice	versa.	In addition,	the	fair	value	generally	decreases	when	credit	spreads	widen	and	vice versa.	Net	unrealized	gains	in	the	total	investment	securities	portfolio	increased to	$1.5	billion	at	December	31,	2014	from	$.7	billion	at	December	31,	2013 primarily	due	to	the	impact	of	market	interest	rates	and	credit	spreads.	The comparable	amounts	for	the	securities	available	for	sale	portfolio	were	$1.1 billion	and	$.6	billion,	respectively.

Unrealized	gains	and	losses	on	available	for	sale	debt	securities	do	not	impact liquidity.	However	these	gains	and	losses	do	affect	risk-based	capital	under	the regulatory	capital	rules	that	became	effective	beginning	in	2014	for	PNC.	Also,	a change	in	the	securities'	credit	ratings	could	impact	the	liquidity	of	the	securities and	may	be	indicative	of	a	change	in	credit	quality,	which	could	affect	our	risk- weighted	assets	and,	therefore,	our	regulatory	capital	ratios	under	the	regulatory capital	rules	in	effect	starting	with	2014.	In	addition,	the	amount	representing	the credit-related	portion	of	OTTI	on	available	for	sale	securities	would	reduce	our earnings	and	regulatory	capital	ratios.

During	the	second	quarter	of	2014,	we	transferred	securities	with	a	fair	value	of $1.4	billion	from	available	for	sale	to	held	to	maturity.	We	changed	our	intent and	committed	to	hold	these	high-quality	securities	to	maturity	in	order	to	reduce the	impact	of	price	volatility	on	Accumulated	other	comprehensive	income	and certain	capital	measures,	after	taking	into	consideration	market	conditions	and regulatory	capital	requirements	under	Basel	III	capital	standards.	See	additional discussion	of	this	transfer	in	Note	6	Investment	Securities	in	our	Notes	To Consolidated	Financial	Statements	included	in	Item	8	of	this	Report.

The	duration	of	investment	securities	was	2.2	years	at	December	31,	2014.	We estimate	that,	at	December	31,	2014,	the	effective	duration	of	investment securities	was	2.2	years	for	an	immediate	50	basis	points	parallel	increase	in interest	rates	and	2.1	years	for	an	immediate	50	basis	points	parallel	decrease	in interest	rates.	Comparable	amounts	at	December	31,	2013	for	the	effective duration	of	investment	securities	were	3.0	years	and	2.8	years,	respectively.

At	least	quarterly,	we	conduct	a	comprehensive	security-level	impairment assessment	on	all	securities.	For	securities	in	an	unrealized	loss	position,	we determine	whether	the	loss	represents	OTTI.	For	debt	securities	that	we	neither intend	to	sell	nor	believe	we	will	be	required	to	sell	prior	to	expected	recovery, we	recognize	the	credit	portion	of	OTTI	charges	in	current	earnings	and	include the	noncredit	portion	of	OTTI	in	Net	unrealized	gains	(losses)	on	OTTI securities	on	our	Consolidated	Statement	of	Comprehensive	Income	and	net	of tax	in	Accumulated	other	comprehensive	income	(loss)	on	our	Consolidated Balance	Sheet.	In	2014	and	2013	we	recognized	OTTI	credit	losses	of	$11 million	and	$16	million,	respectively.	The	credit	losses	related	to	residential mortgage-backed	and	asset-backed	securities	collateralized	by	non-agency residential	loans.

If	economic	conditions,	including	housing	values,	were	to	deteriorate	from current	levels,	and	if	market	volatility	and	illiquidity	were	to	deteriorate	from current	levels,	or	if	market	interest	rates	were	to	increase	or	credit	spreads	were to	widen	appreciably,	the	valuation	of	our	investment	securities	portfolio	would likely	be	adversely	affected	and	we	could	incur	additional	OTTI	credit	losses that	would	impact	our	Consolidated	Income	Statement.

Additional	information	regarding	our	investment	securities	is	included	in	Note	6 Investment	Securities	and	Note	7	Fair	Value	in	the	Notes	To	Consolidated Financial	Statements	included	in	Item	8	of	this	Report.

# Loans	Held	for	Sale

# Table	15:	Loans	Held	For	Sale

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Commercial\tmortgages\tat\tfair\tvalue | $893 | $586 |
| Commercial\tmortgages\tat\tlower\tof\tcost\tor |  |  |
| fair\tvalue | 29 | 281 |
| Total\tcommercial\tmortgages | 922 | 867 |
| Residential\tmortgages\tat\tfair\tvalue | 1,261 | 1,315 |
| Residential\tmortgages\tat\tlower\tof\tcost\tor |  |  |
| fair\tvalue | 18 | 41 |
| Total\tresidential\tmortgages | 1,279 | 1,356 |
| Other | 61 | 32 |
| Total | $2,262 | $2,255 |

As	of	September	1,	2014,	we	have	elected	to	apply	the	fair	value	option	to commercial	mortgage	loans	held	for	sale	to	agencies.	This	election	applies	to	all new	commercial	mortgage	loans	held	for	sale	originated	for	sale	to	the	agencies effective	on	or	after	September	1,	2014.	The	election	of	fair	value	option	aligns the	accounting	for	the	commercial	mortgages	with	the	related	commitments	to sell	the	loans.

We	sold	$3.5	billion	of	commercial	mortgage	loans	to	agencies	in	2014 compared	to	$2.8	billion	in	2013.	Total	gains	of	$80	million	were	recognized	on the	valuation	and	sale	of	commercial	mortgage	loans	held	for	sale,	net	of	hedges, in	2014,	and	$79	million	in	2013.	These	amounts	are	included	in

Other	noninterest	income	on	our	Consolidated	Income	Statement.

Residential	mortgage	loan	origination	volume	was	$9.5	billion	in	2014	compared to	$15.1	billion	in	2013.	The	majority	of	such	loans	were	originated	under agency	or	Federal	Housing	Administration	(FHA)	standards.	We	sold	$8.3 billion	of	loans	and	recognized	loan	sales	revenue	of	$420	million	in	2014.	The comparable	amounts	for	2013	were	$14.7	billion	and	$568	million.

Interest	income	on	loans	held	for	sale	was	$99	million	in	2014	and	$157	million in	2013.	These	amounts	are	included	in	Other	interest	income	on	our Consolidated	Income	Statement.

Additional	information	regarding	our	loan	sale	and	servicing	activities	is included	in	Note	2	Loan	Sale	and	Servicing	Activities	and	Variable	Interest Entities	and	Note	7	Fair	Value	in	our	Notes	To	Consolidated	Financial Statements	included	in	Item	8	of	this	Report.

# Goodwill	and	Other	Intangible	Assets

Goodwill	and	other	intangible	assets	totaled	$10.9	billion	at	December	31,	2014 and	$11.3	billion	at	December	31,	2013.	The	decrease	of	$.4	billion	was primarily	due	to	fair	value	changes	of	mortgage	servicing	rights,	partially	offset by	new	additions,	including	purchases	of	mortgage	servicing	rights.	See additional	information	regarding	our	goodwill	and	intangible	assets	in	Note	8 Goodwill	and	Other	Intangible	Assets	included	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report.

# Funding	Sources

# Table	16:	Details	Of	Funding	Sources

| Dollars	in	millions | December	31<br>2014 | December	31<br>2013 | Change<br>$% |  |
| :--- | :--- | :--- | :--- | :--- |
| Deposits |  |  |  |  |
| Money\tmarket | $115,438 | $108,631 | $6,807 | 6% |
| Demand | 82,829 | 77,756 | 5,073 | 7% |
| Retail\tcertificates\tof\tdeposit | 18,544 | 20,795 | (2,251) | \t(11)% |
| Savings | 12,571 | 11,078 | 1,493 | \t 13% |
| Time\tdeposits\tin\tforeign\toffices\tand\tother\ttime\tdeposits | 2,852 | 2,671 | 181 | 7% |
| Total\tdeposits | 232,234 | 220,931 | \t 11,303 | 5% |
| Borrowed\tfunds |  |  |  |  |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements | 3,510 | 4,289 | (779) | \t(18)% |
| Federal\tHome\tLoan\tBank\tborrowings | 20,005 | 12,912 | 7,093 | \t 55% |
| Bank\tnotes\tand\tsenior\tdebt | 15,750 | 12,603 | 3,147 | \t 25% |
| Subordinated\tdebt | 9,151 | 8,244 | 907 | \t 11% |
| Commercial\tpaper | 4,995 | 4,997 | (2) | –% |
| Other | 3,357 | 3,060 | 297 | \t 10% |
| Total\tborrowed\tfunds | 56,768 | 46,105 | \t 10,663 | \t 23% |
| Total\tfunding\tsources | $289,002 | $267,036 | $21,966 | 8% |

See	the	Liquidity	Risk	Management	portion	of	the	Risk	Management	section	of	this	Item	7	for	additional	information	regarding	our	2014	capital	and	liquidity	activities.

Total	deposits	increased	$11.3	billion	at	December	31,	2014	compared	with	December	31,	2013	due	to	strong	growth	in	demand	and	money	market,	partially	offset	by lower	retail	certificates	of	deposit.	Interest-bearing	deposits	represented	68%	of	total	deposits	at	both	December	31,	2014	and	December	31,	2013.	Total	borrowed	funds increased	$10.7	billion	since	December	31,	2013	as	higher	Federal	Home	Loan	Bank	borrowings	and	issuances	of	bank	notes	and	senior	debt	and	subordinated	debt were	partially	offset	by	a	decline	in	federal	funds	purchased	and	repurchase	agreements.

# Capital

# Table	17:	Shareholders'	Equity

| Dollars	in	millions | December	31<br>2014 | December	31<br>2013 | Change<br>$% |  |
| :--- | :--- | :--- | :--- | :--- |
| Shareholders'\tequity |  |  |  |  |
| Preferred\tstock\t(a) |  |  |  |  |
| Common\tstock | $2,705 | $2,698 | $7 | –% |
| Capital\tsurplus\t–\tpreferred\tstock | 3,946 | 3,941 | 5 | –% |
| Capital\tsurplus\t–\tcommon\tstock\tand\tother | 12,627 | 12,416 | 211 | 2% |
| Retained\tearnings | 26,200 | 23,251 | 2,949 | 13% |
| Accumulated\tother\tcomprehensive\tincome | 503 | 436 | 67 | 15% |
| Common\tstock\theld\tin\ttreasury\tat\tcost | (1,430) | (408) | (1,022) | \t(250)% |
| Total\tshareholders'\tequity | $44,551 | $42,334 | $2,217 | 5% |
| (a)\nPar\tvalue\tless\tthan\t$.5\tmillion\tat\teach\tdate. |  |  |  |  |

(a) Par	value	less	than	$.5	million	at	each	date.

We	manage	our	funding	and	capital	positions	by	making	adjustments	to	our balance	sheet	size	and	composition,	issuing	debt,	equity	or	other	capital instruments,	executing	treasury	stock	transactions	and	capital	redemptions, managing	dividend	policies	and	retaining	earnings.

The	increase	in	total	shareholders'	equity	compared	to	the	prior	year	end reflected	an	increase	in	retained	earnings,	partially	offset	by	share	repurchases	of $1.2	billion	under	PNC's	existing	common	stock	repurchase	authorization.	The increase	in	retained	earnings	was	driven	by	net	income	of	$4.2	billion,	reduced by	$1.2	billion	of	common	and	preferred	dividends	declared.	Accumulated	other comprehensive	income	increased	slightly	as	the	impact	of	market	interest	rates and	credit	spreads	on	securities	available	for	sale	and	derivatives	that	are	part	of cash	flow	hedging	strategies	were	mostly	offset	by	the	impact	of	pension	and other	postretirement	benefit	plan	adjustments.	Common	shares	outstanding	were 523	million	at	December	31,	2014	and	533	million	at	December	31,	2013.

Our	current	common	stock	repurchase	program	authorization	permits	us	to purchase	up	to	25	million	shares	of	PNC	common	stock	on	the	open	market	or	in privately	negotiated	transactions.	This	program	will	remain	in	effect	until	fully utilized	or	until	modified,	superseded	or	terminated.	The	extent	and	timing	of share	repurchases	under	this	program	will	depend	on	a	number	of	factors including,	among	others,	market	and	general	economic	conditions,	economic	and regulatory	capital	considerations,	alternative	uses	of	capital,	the	potential	impact on	our	credit	ratings,	contractual	and	regulatory	limitations,	and	the	results	of	the supervisory	assessment	of	capital	adequacy

and	capital	planning	processes	undertaken	by	the	Federal	Reserve	and	our primary	bank	regulators	as	part	of	the	CCAR	process.	The	Federal	Reserve accepted	our	2014	capital	plan	and	did	not	object	to	our	proposed	capital	actions. The	capital	plan	included	share	repurchase	programs	of	up	to	$1.5	billion	for	the four	quarter	period	beginning	in	the	second	quarter	of	2014	under	PNC's	existing common	stock	repurchase	authorization.	These	programs	include	repurchases	of up	to	$200	million	to	mitigate	the	financial	impact	of	employee	benefit	plan transactions.	Under	the	capital	plan	authorization,	PNC	repurchased	2.6	million common	shares	for	$223	million	in	the	second	quarter	of	2014,	4.2	million common	shares	for	$360	million	in	the	third	quarter	of	2014	and	6.1	million common	shares	for	$524	million	in	the	fourth	quarter	of	2014.	Under	the	"de minimis"	safe	harbor	of	the	Federal	Reserve's	capital	plan	rule,	PNC	may	make limited	repurchases	of	common	stock	or	other	capital	distributions	in	amounts that	exceed	the	amounts	included	in	its	most	recently	approved	capital	plan, provided	that,	among	other	things,	such	distributions	do	not	exceed,	in	the aggregate,	1%	of	PNC's	Tier	1	capital	and	the	Federal	Reserve	does	not	object to	the	additional	repurchases	or	distributions.	Under	this	"de	minimis"	safe harbor,	PNC	repurchased	$50	million	of	common	shares	to	mitigate	the	financial impact	of	employee	benefit	plan	transactions	in	the	first	quarter	of	2014.	See	the Supervision	and	Regulation	section	of	Item	1	Business	in	this	Report	for	further information	concerning	the	CCAR	process	and	the	factors	the	Federal	Reserve takes	into	consideration	in	its	evaluation	of	capital	plans	and	the	Capital	and Liquidity	Actions	portion	of	the	Executive	Summary	section	of	this	Item	7	for the	impact	of	the	Federal	Reserve's	current	supervisory	assessment	of	the	capital adequacy	program.

# Table	18:	Basel	III	Capital

|  | Transitional | Phased-In	Basel |
| :--- | :--- | :--- |
| Dollars\tin\tmillions | Basel\tIII\t(a) | III\t(b)(c) |
| Common\tequity\tTier\t1\tcapital |  |  |
| Common\tstock\tplus\trelated\tsurplus,\tnet\tof\ttreasury\tstock | $13,903 | \t$13,903 |
| Retained\tearnings | 26,200 | 26,200 |
| Accumulated\tother\tcomprehensive\tincome\tfor\tsecurities\tcurrently\tand\tpreviously\theld\tas\tavailable\tfor\tsale | 144 | 721 |
| Accumulated\tother\tcomprehensive\tincome\tfor\tpension\tand\tother\tpostretirement\tplans | (104) | (520) |
| Goodwill,\tnet\tof\tassociated\tdeferred\ttax\tliabilities | (8,855) | (8,855) |
| Other\tdisallowed\tintangibles,\tnet\tof\tdeferred\ttax\tliabilities | (84) | (421) |
| Other\tadjustments/(deductions) | (63) | (121) |
| Total\tcommon\tequity\tTier\t1\tcapital\tbefore\tthreshold\tdeductions | 31,141 | 30,907 |
| Total\tthreshold\tdeductions | (212) | (1,081) |
| Common\tequity\tTier\t1\tcapital | 30,929 | 29,826 |
| Additional\tTier\t1\tcapital |  |  |
| Preferred\tstock\tplus\trelated\tsurplus | 3,946 | 3,946 |
| Trust\tpreferred\tcapital\tsecurities | 99 |  |
| Noncontrolling\tinterests\t(d) | 790 | 43 |
| Other\tadjustments/(deductions) | (77) | (104) |
| Tier\t1\tcapital | 35,687 | 33,711 |
| Additional\tTier\t2\tcapital |  |  |
| Qualifying\tsubordinated\tdebt | 5,473 | 4,764 |
| Trust\tpreferred\tcapital\tsecurities | 99 |  |
| Allowance\tfor\tloan\tand\tlease\tlosses\tincluded\tin\tTier\t2\tcapital | 3,521 | 215 |
| Other | 2 | 10 |
| Total\tBasel\tIII\tcapital | $44,782 | \t$38,700 |
| Risk-weighted\tassets\t(e) |  |  |
| Basel\tI\trisk-weighted\tassets\tcalculated\tin\taccordance\twith\ttransition\trules\tfor\t2014\t(f) | $284,018 | N/A |
| Estimated\tBasel\tIII\tstandardized\tapproach\trisk-weighted\tassets\t(g) | N/A | \t$298,786 |
| Estimated\tBasel\tIII\tadvanced\tapproaches\trisk-weighted\tassets\t(h) | N/A | 285,870 |
| Average\tquarterly\tadjusted\ttotal\tassets | \t 329,827 | 328,562 |
| Basel\tIII\trisk-based\tcapital\tand\tleverage\tratios |  |  |
| Common\tequity\tTier\t1 | 10.9% | 10.0%\t(i)(k) |
| Tier\t1 | 12.6 | 11.3\t(i)(l) |
| Total | 15.8 | 13.5\t(j)(m) |
| Leverage\t(n) | 10.8 | 10.3 |
| (a) |  |  |

(a) Calculated	using	the	regulatory	capital	methodology	applicable	to	PNC	during	2014.

(b) PNC	utilizes	the	pro	forma	fully	phased-in	Basel	III	capital	ratios	to	assess	its	capital	position	(without	the	benefit	of	phase-ins),	including	comparison	to	similar	estimates	made	by	other	financial	institutions.

(c) Basel	III	capital	ratios	and	estimates	may	be	impacted	by	additional	regulatory	guidance	or	analysis	and,	in	the	case	of	those	ratios	calculated	using	the	advanced	approaches,	the	ongoing	evolution,	validation	and regulatory	approval	of	PNC's	models	integral	to	the	calculation	of	advanced	approaches	risk-weighted	assets.

(d) Primarily	includes	REIT	Preferred	Securities.

(e) Calculated	as	of	period	end.

(f) Includes	credit	and	market	risk-weighted	assets.

(g) Estimated	based	on	Basel	III	standardized	approach	rules	and	includes	credit	and	market	risk-weighted	assets.

(h) Estimated	based	on	Basel	III	advanced	approaches	rules	and	includes	credit,	market	and	operational	risk-weighted	assets.

(i) Pro	forma	fully	phased-in	Basel	III	capital	ratio	based	on	estimated	Basel	III	standardized	approach	risk-weighted	assets	and	rules.

(j) Pro	forma	fully	phased-in	Basel	III	capital	ratio	based	on	estimated	Basel	III	advanced	approaches	risk-weighted	assets	and	rules.

(k) For	comparative	purposes	only,	the	pro	forma	fully	phased-in	advanced	approaches	Basel	III	Common	equity	Tier	1	capital	ratio	is	10.4%.	This	capital	ratio	is	calculated	using	Common	equity	Tier	1	capital	and dividing	by	estimated	Basel	III	advanced	approaches	risk-weighted	assets.

(l) For	comparative	purposes	only,	the	pro	forma	fully	phased-in	advanced	approaches	Basel	III	Tier	1	risk-based	capital	ratio	is	11.8%.	This	capital	ratio	is	calculated	using	Tier	1	capital	and	dividing	by	estimated Basel	III	advanced	approaches	risk-weighted	assets.

(m) For	comparative	purposes	only,	the	pro	forma	fully	phased-in	standardized	approach	Basel	III	Total	capital	risk-based	capital	ratio	is	14.1%.	This	ratio	is	calculated	using	additional	Tier	2	capital	which,	under	the standardized	approach,	reflects	allowance	for	loan	and	lease	losses	of	up	to	1.25%	of	credit	risk	related	risk-weighted	assets	and	dividing	by	estimated	Basel	III	standardized	approach	risk-weighted	assets.

(n) Leverage	ratio	is	calculated	based	on	Tier	1	capital	divided	by	Average	quarterly	adjusted	total	assets.

The	Basel	II	framework,	which	was	adopted	by	the	Basel	Committee	on	Banking Supervision	in	2004,	seeks	to	provide	more	risk-sensitive	regulatory	capital calculations	and	promote	enhanced	risk	management	practices	among	large, internationally	active	banking	organizations.	The	U.S.	banking	agencies	initially adopted	rules	to	implement	the	Basel	II	capital	framework	in	2004.	In	July	2013, the	U.S.	banking	agencies	adopted	final	rules	(referred	to	as	the	advanced approaches)	that	modified	the	Basel	II	framework	effective	January	1,	2014.	See the	Supervision	and	Regulation	section	in	Item	1	Business	and	Item	1A	Risk Factors	in	this	Report.	Prior	to	fully	implementing	the	advanced	approaches	to calculate	risk-weighted	assets,	PNC	and	PNC	Bank	must	successfully	complete a	"parallel	run"	qualification	phase.	Both	PNC	and	PNC	Bank	entered	this parallel	run	phase	on	January	1,	2013.	Although	the	minimum	parallel	run qualification	period	is	four	quarters,	the	parallel	run	period	for	PNC	and	PNC Bank,	now	in	its	third	year,	is	consistent	with	the	experience	of	other	U.S.	banks that	have	all	had	multi-year	parallel	run	periods.	After	PNC	exits	parallel	run,	its regulatory	risk-based	capital	ratio	for	each	measure	(e.g.,	Common	equity	Tier	1 ratio)	will	be	the	lower	of	the	ratios	as	calculated	under	the	standardized approach	and	the	advanced	approaches.

As	a	result	of	the	staggered	effective	dates	of	the	final	U.S.	capital	rules	issued	in July	2013,	as	well	as	the	fact	that	PNC	remains	in	the	parallel	run	qualification phase	for	the	advanced	approaches,	PNC's	regulatory	risk-based	capital	ratios	in 2014	were	based	on	the	definitions	of,	and	deductions	from,	capital	under	Basel III	(as	such	definitions	and	deductions	are	phased-in	for	2014)	and	Basel	I	risk- weighted	assets	(subject	to	certain	adjustments	as	defined	by	the	Basel	III	rules). We	refer	to	the	capital	ratios	calculated	using	the	Basel	III	phased-in	provisions and	applicable	risk-weighted	assets	as	the	Transitional	Basel	III	ratios.

Federal	banking	regulators	have	stated	that	they	expect	the	largest	U.S.	bank holding	companies,	including	PNC,	to	have	a	level	of	regulatory	capital	well	in excess	of	the	regulatory	minimum	and	have	required	the	largest	U.S.	bank holding	companies,	including	PNC,	to	have	a	capital	buffer	sufficient	to withstand	losses	and	allow	them	to	meet	the	credit	needs	of	their	customers through	estimated	stress	scenarios.	We	seek	to	manage	our	capital	consistent with	these	regulatory	principles,	and	believe	that	our	December	31,	2014	capital levels	were	aligned	with	them.

At	December	31,	2014,	PNC	and	PNC	Bank,	our	domestic	bank	subsidiary, were	both	considered	"well	capitalized,"	based	on	applicable	U.S.	regulatory capital	ratio	requirements.	To	qualify	as	"well	capitalized,"	PNC	and	PNC	Bank were	required	during	2014	to	maintain	Transitional	Basel	III	capital	ratios	of	at least	6%	for	Tier	1	risk-based	and	10%	for	Total	risk-based,	and	PNC	Bank	was required	to	have	a	Transitional	Basel	III	leverage	ratio	of	at	least	5%.

Common	equity	Tier	1	capital	as	defined	under	the	Basel	III	rules	adopted	by	the U.S.	banking	agencies	differs	materially	from	Basel	I.	For	example,	under	Basel III,	significant	common	stock	investments	in	unconsolidated	financial institutions,	mortgage	servicing	rights	and	deferred	tax	assets	must	be	deducted from	capital	to	the	extent	they	individually	exceed	10%,	or	in	the	aggregate exceed	15%,	of	the	institution's	adjusted	Common	equity	Tier	1	capital.	Also, Basel	I	regulatory	capital	excludes	accumulated	other	comprehensive	income related	to	securities	currently	and	previously	held	as	available	for	sale,	as	well	as pension	and	other	postretirement	plans,	whereas	under	Basel	III	these	items	are	a component	of	PNC's	capital.	The	Basel	III	final	rules	also	eliminate	the	Tier	1 treatment	of	trust	preferred	securities	for	bank	holding	companies	with	$15 billion	or	more	in	assets.	In	2013,	we	completed	the	redemption	of	several	series of	trust	preferred	securities	previously	assumed	through	acquisitions.	PNC	still holds	trust	preferred	securities	in	one	Trust,	which	would	not	be	included	within Common	equity	Tier	1	capital	under	the	Basel	III	final	rules.	See	Note	12 Capital	Securities	of	a	Subsidiary	Trust	and	Perpetual	Trust	Securities	in	the Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	for	more detail	on	this	Trust.

The	access	to	and	cost	of	funding	for	new	business	initiatives,	the	ability	to undertake	new	business	initiatives	including	acquisitions,	the	ability	to	engage	in expanded	business	activities,	the	ability	to	pay	dividends	or	repurchase	shares	or other	capital	instruments,	the	level	of	deposit	insurance	costs,	and	the	level	and nature	of	regulatory	oversight	depend,	in	large	part,	on	a	financial	institution's capital	strength.

We	provide	additional	information	regarding	regulatory	capital	requirements	and some	of	their	potential	impacts	on	PNC	in	the	Supervision	and	Regulation section	of	Item	1	Business,	Item	1A	Risk	Factors	and	Note	20	Regulatory Matters	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this Report.

PNC's	Basel	I	ratios	as	of	December	31,	2013,	which	were	PNC's	effective regulatory	capital	ratios	as	of	that	date,	were	10.5%	for	Tier	1	common	capital ratio,	12.4%	for	Tier	1	risk-based	capital	ratio,	15.8%	for	Total	risk-based capital	ratio	and	11.1%	for	leverage	ratio.	Our	2013	Form	10-K	included additional	information	regarding	our	Basel	I	capital	ratios.

# OFF-BALANCE	SHEET	ARRANGEMENTS	AND	VARIABLE INTEREST	ENTITIES

We	engage	in	a	variety	of	activities	that	involve	unconsolidated	entities	or	that are	otherwise	not	reflected	in	our	Consolidated	Balance	Sheet	that	are	generally referred	to	as	"off-balance	sheet	arrangements."	Additional	information	on	these types	of	activities	is	included	in	the	following	sections	of	this	Report: •	Commitments,	including	contractual	obligations	and	other commitments,	included	within	the	Risk	Management	section	of	this Item	7,

•	Note	2	Loan	Sale	and	Servicing	Activities	and	Variable	Interest Entities	in	the	Notes	To	Consolidated	Financial	Statements	included	in Item	8	of	this	Report,

•	Note	12	Capital	Securities	of	a	Subsidiary	Trust	and	Perpetual	Trust Securities	in	the	Notes	To	Consolidated	Financial	Statements	included in	Item	8	of	this	Report,	and

•	Note	22	Commitments	and	Guarantees	in	the	Notes	To	Consolidated Financial	Statements	included	in	Item	8	of	this	Report.

PNC	consolidates	variable	interest	entities	(VIEs)	when	we	are	deemed	to	be	the primary	beneficiary.	The	primary	beneficiary	of	a	VIE	is	determined	to	be	the party	that	meets	both	of	the	following	criteria:	(i)	has	the	power	to	make decisions	that	most	significantly	affect	the	economic	performance	of	the	VIE; and	(ii)	has	the	obligation	to	absorb	losses	or	the	right	to	receive	benefits	that	in either	case	could	potentially	be	significant	to	the	VIE.

A	summary	of	VIEs,	including	those	that	we	have	consolidated	and	those	in which	we	hold	variable	interests	but	have	not	consolidated	into	our	financial statements,	as	of	December	31,	2014	and	December	31,	2013	is	included	in	Note 2	in	the	Notes	To	Consolidated	Financial	Statements	included	in	Item	8	of	this Report.

# Trust	Preferred	Securities	and	REIT	Preferred	Securities

We	are	subject	to	certain	restrictions,	including	restrictions	on	dividend payments,	in	connection	with	$206	million	in	principal	amount	of	an	outstanding junior	subordinated	debenture	associated	with	$200	million	of	trust	preferred securities	(both	amounts	as	of	December	31,	2014)	that	were	issued	by	PNC Capital	Trust	C,	a	subsidiary	statutory	trust.	Generally,	if	there	is	(i)	an	event	of default	under	the	debenture,	(ii)	PNC	elects	to	defer	interest	on	the	debenture, (iii)	PNC	exercises	its	right	to	defer	payments	on	the	related	trust	preferred security	issued	by	the	statutory	trust,	or	(iv)	there	is	a	default	under	PNC's guarantee	of	such	payment	obligations,	as	specified	in	the	applicable	governing documents,	then	PNC	would	be	subject	during	the	period	of	such	default	or deferral	to	restrictions	on	dividends	and	other	provisions	protecting	the	status	of the	debenture	holders	similar	to	or	in	some	ways	more	restrictive	than	those potentially	imposed	under	the	Exchange	Agreement	with	PNC	Preferred Funding	Trust	II.	See	Note	12	Capital	Securities	of	a	Subsidiary	Trust	and Perpetual	Trust	Securities	in	the	Notes	To	Consolidated	Financial	Statements	in Item	8	of	this	Report	for	additional	information	on	contractual	limitations	on dividend	payments	resulting	from	securities	issued	by	PNC	Preferred	Funding Trust	I	and	PNC	Preferred	Funding	Trust	II	and	additional	discussion	of	trust preferred	securities.

# FAIR	VALUE	MEASUREMENTS

In	addition	to	the	following,	see	Note	7	Fair	Value	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	for	further	information	regarding	fair value.

The	following	table	summarizes	the	assets	and	liabilities	measured	at	fair	value	at	December	31,	2014	and	December	31,	2013,	respectively,	and	the	portions	of	such assets	and	liabilities	that	are	classified	within	Level	3	of	the	valuation	hierarchy.	Level	3	assets	and	liabilities	are	those	where	the	fair	value	is	estimated	using	significant unobservable	inputs.

# Table	19:	Fair	Value	Measurements	–	Summary

|  | December	31,	2014 |  | December	31,	2013 | December	31,	2013 |
| :--- | :--- | :--- | :--- | :--- |
|  | Total |  | Total |  |
| Dollars\tin\tmillions | Fair\tValue | Level\t3 | Fair\tValue | Level\t3 |
| Total\tassets | \t\t $58,973 | \t\t $10,257 | $63,221 | $10,650 |
| Total\tassets\tat\tfair\tvalue\tas\ta\tpercentage\tof\tconsolidated\tassets | 17% |  | 20% |  |
| Level\t3\tassets\tas\ta\tpercentage\tof\ttotal\tassets\tat\tfair\tvalue |  | 17% |  | 17% |
| Level\t3\tassets\tas\ta\tpercentage\tof\tconsolidated\tassets |  | 3% |  | 3% |
| Total\tliabilities | \t\t $5,799 | \t\t $716 | $5,585 | $638 |
| Total\tliabilities\tat\tfair\tvalue\tas\ta\tpercentage\tof\tconsolidated\tliabilities | 2% |  | 2% |  |
| Level\t3\tliabilities\tas\ta\tpercentage\tof\ttotal\tliabilities\tat\tfair\tvalue |  | 12% |  | 11% |
| Level\t3\tliabilities\tas\ta\tpercentage\tof\tconsolidated\tliabilities |  | &lt;1% |  | &lt;1% |

The	majority	of	assets	recorded	at	fair	value	are	included	in	the	securities	available	for	sale	portfolio.	The	majority	of	Level	3	assets	represent	non-agency	residential mortgage-backed	securities	in	the	securities	available	for	sale	portfolio,	equity	investments	and	mortgage	servicing	rights.

An	instrument's	categorization	within	the	hierarchy	is	based	on	the	lowest	level	of	input	that	is	significant	to	the	fair	value	measurement.	Changes	from	one	quarter	to the	next	related	to	the	observability	of	inputs	to	a	fair	value	measurement	may	result	in	a	reclassification	(transfer)	of	assets	or	liabilities	between	hierarchy	levels. PNC's	policy	is	to	recognize	transfers	in	and	transfers	out	as	of	the	end	of	the	reporting	period.	For	additional	information	regarding	the	transfers	of	assets	or	liabilities between	hierarchy	levels,	see	Note	7	Fair	Value	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report.

# BUSINESS	SEGMENTS	REVIEW

We	have	six	reportable	business	segments:

•	 Retail	Banking

•	 Corporate	&	Institutional	Banking

•	 Asset	Management	Group

•	 Residential	Mortgage	Banking

•	 BlackRock

•	 Non-Strategic	Assets	Portfolio

Business	segment	results,	including	the	basis	of	presentation	of	inter-segment	revenues,	and	a	description	of	each	business	are	included	in	Note	24	Segment	Reporting included	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report.	Certain	amounts	included	in	this	Business	Segments	Review	section	and	the Business	Segment	Highlights	in	the	Executive	Summary	section	of	this	Item	7	differ	from	those	amounts	shown	in	Note	24,	primarily	due	to	the	presentation	in	Item	7 of	this	Report	of	business	net	interest	revenue	on	a	taxable-equivalent	basis.	Note	24	presents	results	of	businesses	for	2014,	2013	and	2012.

# Table	20:	Retail	Banking	Table

| Dollars	in	millions,	except	as	noted | 2014 | 2013 |
| :--- | :--- | :--- |
| INCOME\tSTATEMENT |  |  |
| Net\tinterest\tincome | $3,924 | $4,079 |
| Noninterest\tincome |  |  |
| Service\tcharges\ton\tdeposits | 633 | 570 |
| Brokerage | 240 | 224 |
| Consumer\tservices | 961 | 935 |
| Other | 291 | 292 |
| Total\tnoninterest\tincome | 2,125 | 2,021 |
| Total\trevenue | 6,049 | 6,100 |
| Provision\tfor\tcredit\tlosses | 277 | 657 |
| Noninterest\texpense | 4,625 | 4,576 |
| Pretax\tearnings | 1,147 | 867 |
| Income\ttaxes | 419 | 317 |
| Earnings | $728 | $550 |
| AVERAGE\tBALANCE\tSHEET |  |  |
| Loans |  |  |
| Consumer |  |  |
| Home\tequity | $28,852 | $29,300 |
| Indirect\tauto | 9,122 | 7,746 |
| Indirect\tother | 703 | 909 |
| Education | 7,208 | 7,923 |
| Credit\tcards | 4,364 | 4,142 |
| Other | 2,238 | 2,148 |
| Total\tconsumer | 52,487 | 52,168 |
| Commercial\tand\tcommercial\treal\testate | 10,867 | 11,266 |
| Floor\tplan | 2,215 | 2,055 |
| Residential\tmortgage | 601 | 741 |
| Total\tloans | 66,170 | 66,230 |
| Goodwill\tand\tother\tintangible\tassets | 6,034 | 6,116 |
| Other\tassets | 2,842 | 2,625 |
| Total\tassets | $75,046 | $74,971 |
| Deposits |  |  |
| Noninterest-bearing\tdemand | $22,134 | $21,248 |
| Interest-bearing\tdemand | 33,992 | 31,811 |
| Money\tmarket | 50,263 | 48,784 |
| Total\ttransaction\tdeposits | \t 106,389 | \t 101,843 |
| Savings | 11,847 | 10,835 |
| Certificates\tof\tdeposit | 18,972 | 21,488 |
| Total\tdeposits | \t 137,208 | \t 134,166 |
| Other\tliabilities | 469 | 337 |
| Total\tliabilities | $137,677 | $134,503 |

| Dollars	in	millions,	except	as	noted | 2014 | 2013 |
| :--- | :--- | :--- |
| PERFORMANCE\tRATIOS |  |  |
| Return\ton\taverage\tassets | .97% | .73% |
| Noninterest\tincome\tto\ttotal\trevenue | 35 | 33 |
| Efficiency | 76 | 75 |
| OTHER\tINFORMATION\t(a) |  |  |
| Credit-related\tstatistics: |  |  |
| Commercial\tnonperforming\tassets | $139 | $208 |
| Consumer\tnonperforming\tassets | \t 1,059 | \t 1,077 |
| Total\tnonperforming\tassets\t(b) | $1,198 | $1,285 |
| Purchased\timpaired\tloans\t(c) | $575 | $692 |
| Commercial\tlending\tnet\tcharge-offs | $31 | $89 |
| Credit\tcard\tlending\tnet\tcharge-offs | 142 | 156 |
| Consumer\tlending\t(excluding\tcredit\tcard)\tnet\tcharge-offs | 285 | 468 |
| Total\tnet\tcharge-offs | $458 | $713 |
| Commercial\tlending\tnet\tcharge-off\tratio | .24% | .67% |
| Credit\tcard\tlending\tnet\tcharge-off\tratio | 3.25% | 3.77% |
| Consumer\tlending\t(excluding\tcredit\tcard)\tnet\tcharge-off\tratio\t(d) | .58% | .96% |
| Total\tnet\tcharge-off\tratio\t(d) | .69% | 1.08% |
| Home\tequity\tportfolio\tcredit\tstatistics:\t(e) |  |  |
| %\tof\tfirst\tlien\tpositions\tat\torigination\t(f) | 54% | 52% |
| Weighted-average\tloan-to-value\tratios\t(LTVs)\t(f)\t(g) | 77% | 81% |
| Weighted-average\tupdated\tFICO\tscores\t(h) | 748 | 745 |
| Net\tcharge-off\tratio\t(d) | .54% | 1.14% |
| Delinquency\tdata\t–\t%\tof\ttotal\tloans:\t(i) |  |  |
| Loans\t30\t–\t59\tdays\tpast\tdue | .20% | .20% |
| Loans\t60\t–\t89\tdays\tpast\tdue | .09% | .09% |
| Accruing\tloans\tpast\tdue | .29% | .29% |
| Nonperforming\tloans | 3.13% | 3.15% |
| Other\tstatistics: |  |  |
| ATMs | \t 8,605 | \t 7,445 |
| Branches\t(j) | \t 2,697 | \t 2,714 |
| Brokerage\taccount\tclient\tassets\t(in\tbillions)\t(k) | $43 | $41 |
| Customer-related\tstatistics\t(average): |  |  |
| Non-teller\tdeposit\ttransactions\t(l) | 35% | 25% |
| Digital\tconsumer\tcustomers\t(m) | 46% | 38% |

(a) Presented	as	of	December	31,	except	for	net	charge-offs,	net	charge-off	ratios	and	customer-related statistics,	which	are	for	the	year	ended.

(c) Recorded	investment	of	purchased	impaired	loans	related	to	acquisitions.

(d) Ratio	for	2013	includes	additional	consumer	charge-offs	taken	as	a	result	of	alignment	with interagency	guidance	on	practices	for	loans	and	lines	of	credit	that	we	implemented	in	the	first quarter	of	2013.

(e) Lien	position,	LTV	and	FICO	statistics	are	based	upon	customer	balances.

(f) Lien	position	and	LTV	calculations	reflect	management	assumptions	where	data	limitations	exist.

(g) LTV	statistics	are	based	upon	current	information.

(h) Represents	FICO	scores	that	are	updated	at	least	quarterly.

(i) Data	based	upon	recorded	investment.	Past	due	amounts	exclude	purchased	impaired	loans,	even	if contractually	past	due,	as	we	are	currently	accreting	interest	income	over	the	expected	life	of	the loans.

(j) Excludes	satellite	offices	(e.g.,	drive-ups,	electronic	branches	and	retirement	centers)	that	provide limited	products	and/or	services.

(k) Amounts	include	cash	and	money	market	balances.

(l) Percentage	of	total	consumer	and	business	banking	deposit	transactions	processed	at	an	ATM	or through	our	mobile	banking	application.

(m) Represents	consumer	checking	relationships	that	process	the	majority	of	their	transactions	through non-teller	channels.

Retail	Banking	earned	$728	million	in	2014	compared	with	earnings	of	$550 million	in	2013.	The	increase	in	earnings	was	driven	by	a	lower	provision	for credit	losses,	and	increased	noninterest	income	due	to	strong	fee	income	growth. These	increases	in	earnings	were	partially	offset	by	lower	net	interest	income driven	by	lower	yields	on	loans,	interest	rate	spread	compression	on	the	value	of deposits,	and	lower	purchase	accounting	accretion.

Retail	Banking	continues	to	augment	and	refine	its	core	checking	account products	to	enhance	the	customer	experience	and	grow	value.	In	2014,	we completed	the	conversion	of	consumer	and	business	banking	customers	from free	checking.	We	also	focused	on	product	value	for	consumers	and	small businesses	and	growing	customer	share	of	wallet	through	the	sale	of	liquidity, banking	and	investment	products.

•	Completed	the	market	rollout	of	PNC	Total	Insight ,	an	integrated online	banking	and	investing	experience	for	our	customers. •	Offered	Apple	Pay to	our	customers	as	a	convenient	payment	option. •	Enhanced	business	banking	Cash	Flow	Insight 	features	and	customer experience. •	Introduced	relationship	pricing	for	business	banking	customers. SM TM SM

Retail	Banking	also	continued	to	focus	on	serving	more	customers	through	cost effective	channels	that	meet	their	evolving	preferences	for	convenience. •	In	2014,	approximately	46%	of	consumer	customers	used	non-teller channels	for	the	majority	of	their	transactions	compared	with	38%	for 2013.

•	Deposit	transactions	via	ATM	and	mobile	channels	increased	to	35% of	total	deposit	transactions	in	2014	compared	with	25%	for	2013. •	As	part	of	PNC's	retail	branch	transformation	strategy,	we	continue	to evolve	our	network.	We	converted	156	branches	to	universal	branches in	2014;	additional	branches	will	be	converted	in	2015.	In	2014,	48 branches	were	closed	or	consolidated.

•	Retail	Banking's	primary	geographic	footprint	extends	across	17	states and	Washington,	D.C.	Our	retail	branch	network	covers	nearly	half	the U.S.	population,	with	2,697	branches	and	8,605	ATMs.

Total	revenue	declined	$51	million	to	$6.0	billion	in	2014.	Net	interest	income of	$3.9	billion	decreased	$155	million	compared	with	2013.	The	decrease resulted	primarily	from	lower	yields	on	loans,	interest	rate	spread	compression on	the	value	of	deposits,	and	lower	purchase	accounting	accretion	on	loans	and deposits.

Noninterest	income	of	$2.1	billion	increased	$104	million,	or	5%,	compared	to 2013.	Noninterest	income	included	strong	customer-related	fee	income	growth primarily	resulting	from	changes	in	product	offerings,	increases	in	customer- initiated	transactions,	and	increased	brokerage	and	merchant	processing	revenue. Gains	on	sales	of	Visa	Class	B	common	shares	totaled	$209	million	in	2014 compared	to	$168	million	in	2013;	3.5	million	shares	were	sold	in	2014 compared	to	four	million	shares	in	2013.

The	provision	for	credit	losses	was	$277	million	and	net	charge-offs	were	$458 million	in	2014	compared	with	$657	million	and	$713	million,	respectively,	for 2013.	Provision	for	credit	losses	decreased	due	to	improved	credit	metrics.	The decrease	in	the	net	charge-offs	was	attributable	to	the	impact	of	additional consumer	charge-offs	taken	as	a	result	of	alignment	with	interagency	guidance	in the	first	quarter	of	2013	and	improved	credit	quality	during	2014.

Noninterest	expense	of	$4.6	billion	was	$49	million,	or	1%,	higher	than	2013. Increases	in	technology	investments,	customer	transaction-related	costs,	and non-credit	losses	were	offset	by	reduced	branch	network	expenses	as	a	result	of transaction	migration	to	lower	cost	digital	and	ATM	channels.

Growing	core	checking	deposits	is	key	to	Retail	Banking's	growth	and	to providing	a	source	of	low-cost	funding	and	liquidity	to	PNC.	The	deposit product	strategy	of	Retail	Banking	is	to	remain	disciplined	on	pricing,	target specific	products	and	markets	for	growth,	and	focus	on	the	retention	and	growth of	customer	balances.	In	2014,	average	total	deposits	of	$137.2	billion	increased $3.0	billion,	or	2%,	compared	with	2013.

•	Average	transaction	deposits	grew	$4.5	billion,	or	4%,	and	average savings	deposit	balances	grew	$1.0	billion,	or	9%,	over	2013	as	a	result of	organic	deposit	growth.	In	2014,	average	demand	deposits	increased $3.1	billion,	or	6%,	to	$56.1	billion	and	average	money	market deposits	increased	$1.5	billion,	or	3%,	to	$50.3	billion. •	Total	average	certificates	of	deposit	decreased	$2.5	billion,	or	12%, compared	to	2013.	The	decline	in	average	certificates	of	deposit	was due	to	the	expected	run-off	of	maturing	accounts.

Retail	Banking	continued	to	focus	on	a	relationship-based	lending	strategy	that targets	specific	products	and	markets	for	growth,	small	businesses,	and	auto dealerships.	In	2014,	average	total	loans	declined	$60	million	to	$66.2	billion	as growth	in	specific	products	was	offset	by	declines	from	run-off	of	non-strategic portions	of	the	portfolios.

•	Average	indirect	auto	loans	increased	$1.4	billion,	or	18%,	compared to	2013.	The	increase	was	primarily	due	to	increases	in	auto	sales	as well	as	the	expansion	of	our	indirect	sales	force	and	product introduction	into	the	Southeast	market.

•	Average	credit	card	balances	increased	$222	million,	or	5%,	over	2013 as	a	result	of	efforts	to	increase	credit	card	share	of	wallet	through organic	growth.

•	Average	auto	dealer	floor	plan	loans	grew	$160	million,	or	8%,	in

2014,	primarily	resulting	from	sales	growth	and	additional	dealer relationships.

•	Average	home	equity	loans	decreased	$448	million	compared	to	2013.

The	decrease	in	lines	of	credit	of	approximately	$1.0	billion	was partially	offset	by	an	increase	of	approximately	$600	million	in	term loans.	The	overall	portfolio	declines	resulted	from	reduced	refinance activity.	Retail	Banking's	home	equity	loan	portfolio	is	relationship based,	with	97%	of	the	portfolio	attributable	to	borrowers	in	our primary	geographic	footprint.

•	Average	loan	balances	for	the	remainder	of	the	portfolio	declined	a	net $1.4	billion,	driven	by	declines	in	the	education	portfolio	of	$715 million	and	commercial	&	commercial	real	estate	of	$399	million.	The discontinued	government	guaranteed	education	loan,	indirect	other	and residential	mortgage	portfolios	are	primarily	run-off	portfolios.	In December	2014	we	sold	$148	million	of	education	loans.	The	impacts of	the	sale	to	2014	average	loans	and	earnings	were	not	significant.

Nonperforming	assets	totaled	$1.2	billion	at	December	31,	2014,	a	decrease	of $87	million,	or	7%,	over	2013.	The	decrease	was	driven	by	declines	in	both commercial	and	consumer	non-performing	loans.

# Table	21:	Corporate	&	Institutional	Banking	Table

| Dollars	in	millions,	except	as	noted | 2014 | 2013 |
| :--- | :--- | :--- |
| INCOME\tSTATEMENT |  |  |
| Net\tinterest\tincome | $3,733 | $3,804 |
| Noninterest\tincome |  |  |
| Corporate\tservice\tfees | 1,295 | 1,097 |
| Other | 448 | 605 |
| Noninterest\tincome | 1,743 | 1,702 |
| Total\trevenue | 5,476 | 5,506 |
| Provision\tfor\tcredit\tlosses\t(benefit) | 107 | (25) |
| Noninterest\texpense | 2,064 | 1,999 |
| Pretax\tearnings | 3,305 | 3,532 |
| Income\ttaxes | 1,199 | 1,268 |
| Earnings | $2,106 | $2,264 |
| AVERAGE\tBALANCE\tSHEET |  |  |
| Loans |  |  |
| Commercial | $78,688 | $72,256 |
| Commercial\treal\testate | 21,127 | 17,668 |
| Equipment\tlease\tfinancing | 6,892 | 6,642 |
| Total\tcommercial\tlending | \t 106,707 | 96,566 |
| Consumer | 1,198 | 947 |
| Total\tloans | \t 107,905 | 97,513 |
| Goodwill\tand\tother\tintangible\tassets | 3,826 | 3,804 |
| Loans\theld\tfor\tsale | 1,006 | 1,017 |
| Other\tassets | 10,190 | 10,636 |
| Total\tassets | $122,927 | $112,970 |
| AVERAGE\tBALANCE\tSHEET\t(CONTINUED) |  |  |
| Deposits |  |  |
| Noninterest-bearing\tdemand | $44,210 | $41,514 |
| Money\tmarket | 21,377 | 18,168 |
| Other | 7,958 | 7,124 |
| Total\tdeposits | 73,545 | 66,806 |
| Other\tliabilities | 7,551 | 14,465 |
| Total\tliabilities | $81,096 | $81,271 |
| PERFORMANCE\tRATIOS |  |  |
| Return\ton\taverage\tassets | 1.71% | 2.00% |
| Noninterest\tincome\tto\ttotal\trevenue | 32 | 31 |
| Efficiency | 38 | 36 |
| COMMERCIAL\tMORTGAGE\tSERVICING\tPORTFOLIO\t–\tSERVICED |  |  |
| FOR\tPNC\tAND\tOTHERS\t(in\tbillions) |  |  |
| Beginning\tof\tperiod | $308 | $282 |
| Acquisitions/additions | 96 | 83 |
| Repayments/transfers | (68) | (57) |
| End\tof\tperiod | $336 | $308 |
| OTHER\tINFORMATION |  |  |
| Consolidated\trevenue\tfrom:\t(a) |  |  |
| Treasury\tManagement\t(b) | $1,288 | $1,260 |
| Capital\tMarkets\t(c) | $777 | $722 |
| Commercial\tmortgage\tbanking\tactivities |  |  |
| Commercial\tmortgage\tloans\theld\tfor\tsale\t(d) | $126 | $133 |
| Commercial\tmortgage\tloan\tservicing\tincome\t(e) | 222 | 226 |
| Commercial\tmortgage\tservicing\trights\tvaluation,\tnet\tof\neconomic\thedge\t(f) | 38 | 68 |
| Total | $386 | $427 |

| Dollars	in	millions,	except	as	noted | 2014 | 2013 |
| :--- | :--- | :--- |
| Average\tLoans\t(by\tC&amp;IB\tbusiness) |  |  |
| Corporate\tBanking | $54,341 | $50,620 |
| Real\tEstate | 27,740 | 22,287 |
| Business\tCredit | 13,270 | 11,678 |
| Equipment\tFinance | 10,474 | 9,994 |
| Other | 2,080 | 2,934 |
| Total\taverage\tloans | $107,905 | $97,513 |
| Total\tloans\t(g) | $113,935 | $101,773 |
| Net\tcarrying\tamount\tof\tcommercial\tmortgage\tservicing\trights\t(g) | $506 | $549 |
| Credit-related\tstatistics: |  |  |
| Nonperforming\tassets\t(g)\t(h) | $557 | $804 |
| Purchased\timpaired\tloans\t(g)\t(i) | $246 | $515 |
| Net\tcharge-offs | $8 | $105 |
| (a) |  |  |

(a) Represents	consolidated	PNC	amounts.	See	the	additional	revenue	discussion	regarding	treasury management,	capital	markets-related	products	and	services,	and	commercial	mortgage	banking activities	in	the	Product	Revenue	section	of	the	Corporate	&	Institutional	Banking	portion	of	this Business	Segments	Review	section.

(b) Includes	amounts	reported	in	net	interest	income	and	corporate	service	fees.

(c) Includes	amounts	reported	in	net	interest	income,	corporate	service	fees	and	other	noninterest income.

(d) Includes	other	noninterest	income	for	valuations	on	commercial	mortgage	loans	held	for	sale	and related	commitments,	derivative	valuations,	origination	fees,	gains	on	sale	of	loans	held	for	sale	and net	interest	income	on	loans	held	for	sale.

(e) Includes	net	interest	income	and	noninterest	income,	primarily	in	corporate	services	fees,	from	loan servicing	and	ancillary	services,	net	of	changes	in	fair	value	on	commercial	mortgage	servicing rights	due	to	time	and	payoffs	for	2014	and	net	of	commercial	mortgage	servicing	rights amortization	for	2013.	Commercial	mortgage	servicing	rights	valuation,	net	of	economic	hedge	is shown	separately.

(f) Includes	amounts	reported	in	corporate	services	fees. (g) As	of	December	31.

(h) Includes	nonperforming	loans	of	$.5	billion	at	December	31,	2014	and	$.7	billion	at	December	31, 2013. (i) Recorded	investment	of	purchased	impaired	loans	related	to	acquisitions.

Corporate	&	Institutional	Banking	earned	$2.1	billion	in	2014,	a	decrease	of $158	million	compared	with	2013.	The	decrease	in	earnings	was	due	to	narrower spreads	on	loans	and	deposits,	lower	purchase	accounting	accretion,	an	increase in	the	provision	for	credit	losses,	and	decreases	in	asset	valuations,	partially offset	by	the	impact	of	higher	average	loans	and	deposits.	We	continue	to	focus on	building	client	relationships	where	the	risk-return	profile	is	attractive, including	the	Southeast.

Net	interest	income	was	$3.7	billion	in	2014,	a	decrease	of	$71	million	from 2013	primarily	due	to	continued	spread	compression	on	loans	and	deposits, lower	purchase	accounting	accretion	and	the	impact	from	the	second	quarter 2014	correction	to	reclassify	certain	commercial	facility	usage	fees	from	net interest	income	to	corporate	service	fees,	partially	offset	by	the	impact	of	higher average	loans	and	deposits.

Corporate	service	fees	were	$1.3	billion	in	2014,	increasing	$198	million compared	to	2013.	This	increase	was	primarily	due	to	higher	merger	and acquisition	advisory	fees	and	the	impact	of	the	second	quarter	2014	correction	to reclassify	certain	commercial	facility	fees	from	net	interest	income	to	corporate service	fees,	partially	offset	by	a	lower	commercial	mortgage	servicing	rights valuation,	net	of	economic	hedge.

Other	noninterest	income	was	$448	million	in	2014	compared	with	$605	million in	2013.	The	decrease	of	$157	million	was	driven	by	lower	revenue	associated with	credit	valuations	for	customer-related	derivatives	activities,	lower	gains	on asset	sales	and	lower	derivatives	sales.

The	provision	for	credit	losses	was	$107	million	in	2014	compared	with	a	benefit of	$25	million	in	2013	reflecting	portfolio	growth	over	recent	quarters	paired with	the	slowing	of	the	reserve	releases	related	to	credit	quality	improvement. Net	charge-offs	were	$8	million	in	2014,	which	represents	a	decrease	of	$97 million	compared	with	2013	primarily	attributable	to	a	decrease	in	commercial and	commercial	real	estate	charge-offs.

Nonperforming	assets	were	$557	million,	a	31%	decrease	from	December	31, 2013	resulting	from	continued	improving	credit	quality.

Noninterest	expense	was	$2.1	billion	in	2014,	an	increase	of	$65	million primarily	driven	by	higher	incentive	compensation	costs	associated	with	business activity.

Average	loans	were	$107.9	billion	in	2014	compared	with	$97.5	billion	in	2013, an	increase	of	11%	reflecting	strong	growth	in	Corporate	Banking,	Real	Estate, Business	Credit	and	Equipment	Finance:

•	Corporate	Banking	business	provides	lending,	treasury	management and	capital	markets-related	products	and	services	to	mid-sized	and large	corporations,	government	and	not-for-profit	entities.	Average loans	for	this	business	increased	$3.7	billion,	or	7%,	in	2014	compared with	2013,	primarily	due	to	an	increase	in	loan	commitments	from specialty	lending	businesses.

•	PNC	Real	Estate	provides	commercial	real	estate	and	real	estate- related	lending	through	both	conventional	and	affordable	multifamily financing.	Average	loans	for	this	business	increased	$5.5	billion,	or 24%,	in	2014	compared	with	2013	due	to	increased	originations. •	PNC	Business	Credit	provides	asset-based	lending.	The	loan	portfolio is	relatively	high	yielding,	with	acceptable	risk	as	the	loans	are	mainly secured	by	short-term	assets.	Average	loans	increased	$1.6	billion,	or 14%,	in	2014	compared	with	2013	due	to	increasing	deal	sizes	and higher	utilization.

•	PNC	Equipment	Finance	provides	equipment	financing	solutions	with $11.9	billion	in	equipment	finance	assets	as	of	December	31,	2014. Average	equipment	finance	assets	in	2014	were	$11.2	billion,	an increase	of	$.6	billion	or	5%	compared	with	2013.

Loan	commitments	increased	8%,	or	$16.2	billion,	to	$212.3	billion	at December	31,	2014	compared	to	$196.1	billion	at	December	31,	2013,	primarily due	to	growth	in	our	Real	Estate,	Corporate	Banking	and	Business	Credit businesses.

Average	deposits	were	$73.5	billion	in	2014,	an	increase	of	$6.7	billion,	or	10%, compared	with	2013	as	a	result	of	business	growth	and	inflows	into	money market	and	noninterest-bearing	deposits.

The	commercial	mortgage	servicing	portfolio	was	$336	billion	at	December	31, 2014,	an	increase	of	9%	compared	with	December	31,	2013	as	servicing additions	exceeded	portfolio	run-off.

# Product	Revenue

In	addition	to	credit	and	deposit	products	for	commercial	customers, Corporate	&	Institutional	Banking	offers	other	services,	including	treasury management,	capital	markets-related	products	and	services,	and	commercial mortgage	banking	activities,	for	customers	of	other	business	segments.	On	a consolidated	basis,	the	revenue	from	these	other	services	is	included	in	net interest	income,	corporate	service	fees	and	other	noninterest	income.	From	a segment	perspective,	the	majority	of	the	revenue	and	expense	related	to	these services	is	reflected	in	the	Corporate	&	Institutional	Banking	segment	results and	the	remainder	is	reflected	in	the	results	of	other	businesses.	The	Other Information	section	in	Table	21	in	the	Corporate	&	Institutional	Banking	portion of	this	Business	Segments	Review	section	includes	the	consolidated	revenue	to PNC	for	these	services.	A	discussion	of	the	consolidated	revenue	from	these services	follows.

Treasury	management	revenue,	comprised	of	fees	and	net	interest	income	from customer	deposit	balances,	totaled	$1.3	billion	in	2014	compared	with	$1.3 billion	in	2013.	Higher	average	deposit	balances	were	offset	by	lower	spreads	on deposits.

Capital	markets	revenue	includes	merger	and	acquisition	advisory	fees,	loan syndications,	derivatives,	foreign	exchange,	asset-backed	finance	revenue,	fixed income	and	equity	capital	markets	advisory	activities.	Revenue	from	capital markets-related	products	and	services	totaled	$777	million	in	2014	compared with	$722	million	in	2013.	The	increase	in	the	comparison	was	driven	by	higher merger	and	acquisition	advisory	fees	and	to	a	lesser	extent	higher	loan syndications	and	foreign	exchange	revenue,	which	was	partially	offset	by	lower revenue	associated	with	credit	valuations	for	customer-related	derivatives activities	and	related	derivatives	sales.

Commercial	mortgage	banking	activities	include	revenue	derived	from commercial	mortgage	servicing	(including	net	interest	income	and	noninterest income)	and	revenue	derived	from	commercial	mortgage	loans	held	for	sale	and related	hedges.	Total	commercial	mortgage	banking	activities	resulted	in	revenue of	$386	million	in	2014	compared	with	$427	million	in	2013.	The	decrease	in	the comparison	was	mainly	due	to	lower	net	commercial	mortgage	servicing	rights valuations.

# Table	22:	Asset	Management	Group	Table

| Dollars	in	millions,	except	as	noted | 2014 | 2013 |
| :--- | :--- | :--- |
| INCOME\tSTATEMENT |  |  |
| Net\tinterest\tincome | $289 | $288 |
| Noninterest\tincome | 818 | 752 |
| Total\trevenue | \t 1,107 | \t 1,040 |
| Provision\tfor\tcredit\tlosses\t(benefit) | (1) | 10 |
| Noninterest\texpense | 821 | 774 |
| Pretax\tearnings | 287 | 256 |
| Income\ttaxes | 106 | 94 |
| Earnings | $181 | $162 |
| AVERAGE\tBALANCE\tSHEET |  |  |
| Loans |  |  |
| Consumer | $5,457 | $5,025 |
| Commercial\tand\tcommercial\treal\testate | 986 | \t 1,047 |
| Residential\tmortgage | 809 | 776 |
| Total\tloans | \t 7,252 | \t 6,848 |
| Goodwill\tand\tother\tintangible\tassets | 259 | 293 |
| Other\tassets | 234 | 225 |
| Total\tassets | $7,745 | $7,366 |
| Deposits |  |  |
| Noninterest-bearing\tdemand | $1,366 | $1,311 |
| Interest-bearing\tdemand | \t 3,954 | \t 3,491 |
| Money\tmarket | \t 3,944 | \t 3,754 |
| Total\ttransaction\tdeposits | \t 9,264 | \t 8,556 |
| CDs/IRAs/savings\tdeposits | 454 | 438 |
| Total\tdeposits | \t 9,718 | \t 8,994 |
| Other\tliabilities | 51 | 60 |
| Total\tliabilities | $9,769 | $9,054 |
| PERFORMANCE\tRATIOS |  |  |
| Return\ton\taverage\tassets | 2.34% | 2.20% |
| Noninterest\tincome\tto\ttotal\trevenue | 74 | 72 |
| Efficiency | 74 | 74 |
| OTHER\tINFORMATION |  |  |
| Total\tnonperforming\tassets\t(a)\t(b) | $66 | $75 |
| Purchased\timpaired\tloans\t(a)\t(c) | $83 | $99 |
| Total\tnet\tcharge-offs | $3 | $1 |

| Dollars	in	millions,	except	as	noted | Dollars	in	millions,	except	as	noted | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| CLIENT\tASSETS\tUNDER\tADMINISTRATION\t(in\tbillions)\t(a)\t(d) |  |  |  |
| Personal | Personal | $115 | $111 |
| Institutional | Institutional | \t 148 | \t 136 |
| Total | Total | $263 | $247 |
| Asset\tType |  |  |  |
| Equity |  | $151 | $142 |
| Fixed\tIncome | Fixed\tIncome | 72 | 70 |
| Liquidity/Other | Liquidity/Other | 40 | 35 |
| Total | Total | $263 | $247 |
| Discretionary\tclient\tassets\tunder\tmanagement |  |  |  |
| Personal | Personal | $87 | $83 |
| Institutional | Institutional | 48 | 44 |
| Total | Total | $135 | $127 |
| Asset\tType |  |  |  |
| Equity | Equity | $75 | $70 |
| Fixed\tIncome | Fixed\tIncome | 40 | 39 |
| Liquidity/Other | Liquidity/Other | 20 | 18 |
| Total | Total | $135 | $127 |
| Nondiscretionary\tclient\tassets\tunder\tadministration |  |  |  |
| Personal | Personal | $28 | $28 |
| Institutional | Institutional | \t 100 | 92 |
| Total | Total | $128 | $120 |
| Asset\tType |  |  |  |
| Equity |  | $76 | $72 |
| Fixed\tIncome | Fixed\tIncome | 32 | 31 |
| Liquidity/Other | Liquidity/Other | 20 | 17 |
| Total | Total | $128 | $120 |
| (a) | As\tof\tDecember\t31. |  |  |

(d) Excludes	brokerage	account	client	assets.

Asset	Management	Group	earned	$181	million	in	2014	compared	with	$162 million	in	2013.	Client	assets	under	administration	were	$263	billion	as	of December	31,	2014	compared	to	$247	billion	as	of	December	31,	2013.	Earnings increased	due	to	higher	noninterest	income	from	higher	assets,	partially	offset	by higher	noninterest	expense	from	strategic	growth.

The	core	growth	strategies	of	the	business	include	increasing	sales	sourced	from other	PNC	lines	of	business,	maximizing	front	line	productivity	and	optimizing market	presence	including	additions	to	staff	in	high	opportunity	markets.	Wealth Management	and	Hawthorn	have	over	100	offices	operating	in	7	out	of	the	10 most	affluent	states	in	the	U.S.	with	a	majority	co-located	with	retail	banking branches.	The	businesses'	strategies	primarily	focus	on	growing	client	assets under	management	through	expanding	relationships	directly	and	through	cross- selling	from	PNC's	other	lines	of	business.

Institutional	Asset	Management	provides	advisory,	custody,	and	retirement administration	services	to	institutional	clients	primarily	within	our	banking footprint.	The	business	also	offers	PNC	proprietary	mutual	funds.	Institutional Asset	Management	is	strengthening	its	partnership	with	the	Corporate	Bank	to drive	growth	and	is	focused	on	building	retirement	capabilities	and	expanding product	solutions	for	all	customers.

Client	assets	under	administration	of	$263	billion	increased	$16	billion compared	to	a	year	ago.	Discretionary	client	assets	under	management	were $135	billion	at	December	31,	2014	increased	$8	billion	compared	with December	31,	2013.	The	increase	was	driven	by	higher	equity	markets,	new sales,	and	positive	net	flows,	after	adjustments	for	cyclical	client	activities.

Total	revenue	for	2014	increased	$67	million	to	$1.1	billion	compared	with	$1.0 billion	for	2013,	primarily	relating	to	noninterest	income	due	to	stronger	average equity	markets	and	positive	net	flows,	after	adjustments	for	cyclical	client activities.

Noninterest	expense	was	$821	million	in	2014,	an	increase	of	$47	million,	or 6%,	from	the	prior	year.	The	increase	was	primarily	attributable	to	compensation expense	from	increases	in	headcount	and	investments	in	technology.	Over	the last	12	months,	total	full-time	headcount	has	increased	by	approximately	43 positions,	or	1%.	Asset	Management	Group	remains	focused	on	disciplined expense	management	as	it	invests	in	strategic	growth	opportunities.

Average	deposits	for	2014	increased	$.7	billion,	or	8%,	from	the	prior	year. Average	transaction	deposits	grew	8%	to	$9.3	billion	compared	with	2013	and were	partially	offset	by	the	run-off	of	maturing	certificates	of	deposit.	Average loan	balances	of	$7.3	billion	increased	$.4	billion,	or	6%,	from	the	prior	year	due to	continued	growth	in	the	consumer	loan	portfolio.

# Table	23:	Residential	Mortgage	Banking	Table

| Dollars	in	millions,	except	as	noted | 2014 | 2013 |
| :--- | :--- | :--- |
| INCOME\tSTATEMENT |  |  |
| Net\tinterest\tincome | $149 | $194 |
| Noninterest\tincome |  |  |
| Loan\tservicing\trevenue |  |  |
| Servicing\tfees | 224 | 174 |
| Mortgage\tservicing\trights\tvaluation,\tnet\tof |  |  |
| economic\thedge | 12 | 121 |
| Loan\tsales\trevenue |  |  |
| Benefit\t/\t(Provision)\tfor\tresidential\tmortgage |  |  |
| repurchase\tobligations | – | 53 |
| Loan\tsales\trevenue | 420 | 568 |
| Other | (5) | (10) |
| Total\tnoninterest\tincome | 651 | 906 |
| Total\trevenue | 800 | \t 1,100 |
| Provision\tfor\tcredit\tlosses\t(benefit) | (2) | 21 |
| Noninterest\texpense | 746 | 845 |
| Pretax\tearnings | 56 | 234 |
| Income\ttaxes | 21 | 86 |
| Earnings | $35 | $148 |
| AVERAGE\tBALANCE\tSHEET |  |  |
| Portfolio\tloans | $1,689 | $2,376 |
| Loans\theld\tfor\tsale | \t 1,120 | \t 1,896 |
| Mortgage\tservicing\trights\t(MSR) | \t 1,014 | 938 |
| Other\tassets | \t 4,034 | \t 4,686 |
| Total\tassets | $7,857 | $9,896 |
| Deposits | $2,285 | $2,920 |
| Borrowings\tand\tother\tliabilities | \t 2,879 | \t 3,142 |
| Total\tliabilities | $5,164 | $6,062 |
| PERFORMANCE\tRATIOS |  |  |
| Return\ton\taverage\tassets | .45% | 1.50% |
| Noninterest\tincome\tto\ttotal\trevenue | 81 | 82 |
| Efficiency | 93 | 77 |

| Dollars	in	millions,	except	as	noted | 2014 | 2013 |
| :--- | :--- | :--- |
| RESIDENTIAL\tMORTGAGE\tSERVICING |  |  |
| PORTFOLIO\t–\tSERVICED\tFOR\tTHIRD |  |  |
| PARTIES\t(in\tbillions) |  |  |
| Beginning\tof\tperiod | $ 114 | $119 |
| Acquisitions | 4 | 10 |
| Additions | 8 | 15 |
| Repayments/transfers | (18) | (30) |
| End\tof\tperiod | $ 108 | $114 |
| Servicing\tportfolio\t–\tthird-party\tstatistics:\t(a) |  |  |
| Fixed\trate | 94% | 93% |
| Adjustable\trate/balloon | 6% | 7% |
| Weighted-average\tinterest\trate | \t 4.47% | 4.59% |
| MSR\tasset\tvalue\t(in\tbillions) | $0.8 | $1.1 |
| MSR\tcapitalization\tvalue\t(in\tbasis\tpoints) | 78 | 95 |
| Weighted-average\tservicing\tfee\t(in\tbasis\tpoints) | 27 | 28 |
| RESIDENTIAL\tMORTGAGE\tREPURCHASE |  |  |
| RESERVE |  |  |
| Beginning\tof\tperiod | $ 131 | $614 |
| (Benefit)/\tProvision |  | (53) |
| Agency\tsettlements |  | (191) |
| Losses\t–\tloan\trepurchases | (24) | (239) |
| End\tof\tPeriod | $ 107 | $131 |
| OTHER\tINFORMATION |  |  |
| Loan\torigination\tvolume\t(in\tbillions) | $9.5 | $15.1 |
| Loan\tsale\tmargin\tpercentage | \t 4.41% | 3.76% |
| Percentage\tof\toriginations\trepresented\tby: |  |  |
| Purchase\tvolume\t(b) | 45% | 30% |
| Refinance\tvolume | 55% | 70% |
| Total\tnonperforming\tassets\t(a)\t(c) | $ 120 | $189 |
| (a)\nAs\tof\tDecember\t31. |  |  |

(b) Mortgages	with	borrowers	as	part	of	residential	real	estate	purchase	transactions.

Residential	Mortgage	Banking	earned	$35	million	in	2014	compared	with	$148 million	in	2013.	Earnings	declined	from	the	prior	year	primarily	as	a	result	of decreased	loan	sales	revenue	and	lower	net	hedging	gains	on	residential mortgage	servicing	rights,	partially	offset	by	increased	servicing	fees	and	lower origination	and	servicing	expenses.

The	strategic	focus	of	the	business	is	the	acquisition	of	new	customers	through	a retail	loan	officer	sales	force	with	an	emphasis	on	home	purchase	transactions. Our	strategy	involves	competing	on	the	basis	of	superior	service	to	new	and existing	customers	in	serving	their	home	purchase	and	refinancing	needs.	A	key consideration	in	pursuing	this	approach	is	the	cross-sell	opportunity,	especially in	the	bank	footprint	markets.

Residential	Mortgage	Banking	overview:

•	Total	loan	originations	were	$9.5	billion	for	2014	compared	with	$15.1 billion	for	2013.	Loans	continue	to	be	originated	primarily	through direct	channels	under	Federal	National	Mortgage	Association (FNMA),	Federal	Home	Loan	Mortgage	Corporation	(FHLMC)	and Federal	Housing	Administration	(FHA)/Department	of	Veterans Affairs	agency	guidelines.	Refinancings	were	55%	of	originations	for 2014	and	70%	in	2013.	During	2014,	21%	of	loan	originations	were under	the	original	or	revised	Home	Affordable	Refinance	Program (HARP	or	HARP	2).

•	Investors	having	purchased	mortgage	loans	may	request	PNC	to indemnify	them	against	losses	on	certain	loans	or	to	repurchase	loans that	they	believe	do	not	comply	with	applicable	contractual	loan origination	covenants	and	representations	and	warranties	we	have made.	At	December	31,	2014,	the	liability	for	estimated	losses	on repurchase	and	indemnification	claims	for	the	Residential	Mortgage Banking	business	segment	was	$107	million	compared	with	$131 million	at	December	31,	2013.	See	the	Recourse	And	Repurchase Obligations	section	of	this	Item	7	and	Note	22	Commitments	and Guarantees	in	the	Notes	To	Consolidated	Financial	Statements	under Item	8	of	this	Report	for	additional	information.

•	Residential	mortgage	loans	serviced	for	others	totaled	$108	billion	at December	31,	2014	and	$114	billion	at	December	31,	2013	as	payoffs continued	to	outpace	new	direct	loan	origination	volume	and acquisitions.

•	Noninterest	income	was	$651	million	in	2014	compared	with	$906 million	in	2013.	Decreased	loan	sales	revenue	and	lower	net	hedging gains	on	residential	mortgage	servicing	rights	were	partially	offset	by increased	servicing	fees.	In	addition,	the	comparison	was	impacted	by a	residential	mortgage	repurchase	obligation	benefit	of	$53	million recorded	in	2013.

•	Provision	for	credit	losses	in	2014	was	a	$2	million	benefit,	compared with	an	expense	of	$21	million	in	2013.

•	Net	interest	income	was	$149	million	in	2014	compared	with	$194 million	in	2013.	The	decrease	in	net	interest	income	was	primarily	due to	the	decline	in	origination	volume.

•	Noninterest	expense	was	$746	million	in	2014	compared	with	$845 million	in	2013.	Lower	origination	and	servicing	costs,	as	well	as lower	residential	mortgage	foreclosure-related	costs,	drove	the	decline in	expenses.

# Table	24:	BlackRock	Table

Information	related	to	our	equity	investment	in	BlackRock	follows:

(a) Includes	PNC's	share	of	BlackRock's	reported	GAAP	earnings	and	additional	income	taxes	on those	earnings	incurred	by	PNC.

|  | December	31 | December	31 |
| :--- | :--- | :--- |
| In\tbillions | 2014 | 2013 |
| Carrying\tvalue\tof\tPNC's\tinvestment\nin\tBlackRock\t(c) | $6.3 | $6.0 |
| Market\tvalue\tof\tPNC's\tinvestment\tin |  |  |
| BlackRock\t(d) | 12.6 | 11.3 |

(c) PNC	accounts	for	its	investment	in	BlackRock	under	the	equity	method	of	accounting,	exclusive	of	a related	deferred	tax	liability	of	$2.1	billion	at	December	31,	2014	and	$2.0	billion	at	December	31, 2013.	Our	voting	interest	in	BlackRock	common	stock	was	approximately	21%	at	December	31, 2014.

(d) Does	not	include	liquidity	discount.

At	December	31,	2014,	we	held	approximately	1.3	million	shares	of	BlackRock Series	C	Preferred	Stock,	which	are	available	to	fund	our	obligation	in connection	with	certain	BlackRock	long-term	incentive	plan	(LTIP)	programs. Additional	information	regarding	our	BlackRock	LTIP	shares	obligation	is included	in	Note	14	Stock	Based	Compensation	Plans	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report.

We	account	for	the	BlackRock	Series	C	Preferred	Stock	at	fair	value,	which offsets	the	impact	of	marking-to-market	the	obligation	to	deliver	these	shares	to BlackRock.	The	fair	value	amount	of	the	BlackRock	Series	C	Preferred	Stock	is included	on	our	Consolidated	Balance	Sheet	in	the	caption	Other	assets. Additional	information	regarding	the	valuation	of	the	BlackRock	Series	C Preferred	Stock	is	included	in	Note	7	Fair	Value	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report.

# Table	25:	Non-Strategic	Assets	Portfolio	Table

| Dollars	in	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| INCOME\tSTATEMENT |  |  |
| Net\tinterest\tincome | $547 | $689 |
| Noninterest\tincome | 40 | 53 |
| Total\trevenue | 587 | 742 |
| Provision\tfor\tcredit\tlosses\t(benefit) | (119) | (21) |
| Noninterest\texpense | 125 | 163 |
| Pretax\tearnings | 581 | 600 |
| Income\ttaxes | 214 | 221 |
| Earnings | $367 | $379 |
| AVERAGE\tBALANCE\tSHEET |  |  |
| Commercial\tLending: |  |  |
| Commercial/Commercial\treal\testate | $180 | $382 |
| Lease\tfinancing | 675 | 687 |
| Total\tcommercial\tlending | 855 | 1,069 |
| Consumer\tLending: |  |  |
| Home\tequity | \t 3,396 | 3,993 |
| Residential\treal\testate | \t 4,812 | 5,613 |
| Total\tconsumer\tlending | \t 8,208 | 9,606 |
| Total\tportfolio\tloans | \t 9,063 | \t 10,675 |
| Other\tassets\t(a) | (725) | (688) |
| Total\tassets | $8,338 | $9,987 |
| Deposits\tand\tother\tliabilities | $225 | $236 |
| Total\tliabilities | $225 | $236 |
| PERFORMANCE\tRATIOS |  |  |
| Return\ton\taverage\tassets | 4.40% | 3.79% |
| Noninterest\tincome\tto\ttotal\trevenue | 7 | 7 |
| Efficiency | 21 | 22 |
| OTHER\tINFORMATION |  |  |
| Nonperforming\tassets\t(b)\t(c) | $710 | $834 |
| Purchased\timpaired\tloans\t(b)\t(d) | $3,943 | $4,797 |
| Net\tcharge-offs | $47 | $172 |
| Net\tcharge-off\tratio | .52% | 1.61% |
| Loans\t(b) |  |  |
| Commercial\tLending |  |  |
| Commercial/Commercial\treal\testate | $130 | $236 |
| Lease\tfinancing | 625 | 680 |
| Total\tcommercial\tlending | 755 | 916 |
| Consumer\tLending |  |  |
| Home\tequity | \t 3,091 | 3,692 |
| Residential\treal\testate | \t 4,290 | 5,267 |
| Total\tconsumer\tlending | \t 7,381 | 8,959 |
| Total\tloans | $8,136 | $9,875 |

(a) Other	assets	includes	deferred	taxes,	ALLL	and	other	real	estate	owned	(OREO).	Other	assets	were negative	in	both	periods	due	to	the	ALLL.

(d) Recorded	investment	of	purchased	impaired	loans	related	to	acquisitions.	At	December	31,	2014,

this	segment	contained	80%	of	PNC's	purchased	impaired	loans.

This	business	segment	consists	of	non-strategic	assets	primarily	obtained through	acquisitions	of	other	companies.	The	business	activity	of	this	segment	is to	manage	the	wind-down	of	the	portfolios	while	maximizing	the	value	and mitigating	risk.

Non-Strategic	Assets	Portfolio	had	earnings	of	$367	million	in	2014	compared with	$379	million	in	2013.	Earnings	decreased	year-over-year	due	to	lower income	driven	by	a	smaller	portfolio	partially	offset	by	an	increased	benefit	from the	provision	for	credit	losses,	driven	by	improved	economic	conditions	and, lower	non-interest	expense.

# Non-Strategic	Assets	Portfolio	overview:

•	Net	interest	income	was	$547	million	in	2014	compared	with	$689 million	in	2013.	The	decrease	was	driven	by	lower	purchase accounting	accretion	and	interest	earned	on	a	declining	average	loan portfolio.

•	Noninterest	income	was	$40	million	in	2014	compared	with	$53 million	in	2013.	The	decrease	was	driven	by	lower	loss reimbursements	on	insured	loans	and	higher	provision	for	estimated losses	on	repurchase	obligations	on	home	equity	loans	and	lines. •	The	2014	period	reflected	a	benefit	from	the	provision	for	credit	losses of	$119	million	compared	to	a	benefit	of	$21	million	in	2013.	The decline	in	provision	reflected	overall	improvement	in	credit	quality.	A contributing	economic	factor	was	the	increasing	value	of	residential real	estate	that	improved	expected	cash	flows	on	purchased	impaired loans.

•	Noninterest	expense	in	2014	was	$125	million	compared	with	$163 million	in	2013.	A	smaller	portfolio	and	improving	market	conditions drove	lower	cost	on	nonaccrual	residential	mortgages	and	lower commercial	OREO	expense.

•	Average	portfolio	loans	declined	to	$9.1	billion	in	2014	compared	with $10.7	billion	in	2013.	The	overall	decline	was	driven	by	customer payment	activity	and	portfolio	management	activities	to	reduce	under- performing	assets.

# CRITICAL	ACCOUNTING	ESTIMATES	AND	JUDGMENTS

Our	consolidated	financial	statements	are	prepared	by	applying	certain accounting	policies.	Note	1	Accounting	Policies	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report	describes	the	most	significant accounting	policies	that	we	use.	Certain	of	these	policies	require	us	to	make estimates	or	economic	assumptions	that	may	vary	under	different	assumptions	or conditions	and	such	variations	may	significantly	affect	our	reported	results	and financial	position	for	the	period	or	in	future	periods.

We	must	use	estimates,	assumptions,	and	judgments	when	assets	and	liabilities are	required	to	be	recorded	at,	or	adjusted	to	reflect,	fair	value.

Assets	and	liabilities	carried	at	fair	value	inherently	result	in	a	higher	degree	of financial	statement	volatility.	Fair	values	and	the	information	used	to	record valuation	adjustments	for	certain	assets	and	liabilities	are	based	on	either	quoted market	prices	or	are	provided	by	independent	third-party	sources,	including appraisers	and	valuation	specialists,	when	available.	When	such	third-party information	is	not	available,	we	estimate	fair	value	primarily	by	using	cash	flow and	other	financial	modeling	techniques.	Changes	in	underlying	factors, assumptions,	or	estimates	in	any	of	these	areas	could	materially	impact	our future	financial	condition	and	results	of	operations.

PNC	applies	ASC	820	–	Fair	Value	Measurements.	This	guidance	defines	fair value	as	the	price	that	would	be	received	to	sell	a	financial	asset	or	paid	to transfer	a	financial	liability	in	an	orderly	transaction	between	market	participants at	the	measurement	date.	This	guidance	requires	a	three	level	hierarchy	for disclosure	of	assets	and	liabilities	recorded	at	fair	value.	The	classification	of assets	and	liabilities	within	the	hierarchy	is	based	on	whether	the	inputs	to	the valuation	methodology	used	in	the	measurement	are	observable	or	unobservable.

The	following	sections	of	this	Report	provide	further	information	on	this	type	of activity:

•	Fair	Value	Measurements	included	within	this	Item	7,	and •	Note	7	Fair	Value	included	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report.

# Allowances	for	Loan	and	Lease	Losses	and	Unfunded	Loan	Commitments and	Letters	of	Credit

We	maintain	the	ALLL	and	the	Allowance	for	Unfunded	Loan	Commitments and	Letters	of	Credit	at	levels	that	we	believe	to	be	appropriate	to	absorb estimated	probable	credit	losses	incurred	in	the	loan	and	lease	portfolios	and	on these	unfunded	credit	facilities	as	of	the	balance	sheet	date.	Our	determination	of the	allowances	is	based	on	periodic	evaluations	of	the	loan	and	lease	portfolios and	unfunded	credit	facilities	and	other	relevant	factors.	These	critical	estimates include	significant	use	of	PNC's	own	historical	data	and	complex	methods	to interpret	them.	We	have	an	ongoing	process	to	evaluate	and	enhance	the	quality, quantity	and	timeliness	of	our	data	and	interpretation	methods	used	in	the determination	of	these	allowances.	These	evaluations	are	inherently	subjective, as	they	require	material	estimates	and	may	be	susceptible	to	significant	change, and	include,	among	others:

•	Probability	of	default	(PD),

•	Loss	given	default	(LGD),

•	Outstanding	balance	of	the	loan,

•	Movement	through	delinquency	stages,

•	Amounts	and	timing	of	expected	future	cash	flows,

•	Value	of	collateral,	which	may	be	obtained	from	third	parties,	and •	Qualitative	factors,	such	as	changes	in	current	economic	conditions, that	may	not	be	reflected	in	modeled	results.

For	all	loans,	the	ALLL	is	the	sum	of	three	components:	(i)	asset specific/individual	impaired	reserves,	(ii)	quantitative	(formulaic	or	pooled) reserves	and	(iii)	qualitative	(judgmental)	reserves.	The	reserve	calculation	and determination	process	is	dependent	on	the	use	of	key	assumptions.	Key	reserve assumptions	and	estimation	processes	react	to	and	are	influenced	by	observed changes	in	loan	portfolio	performance	experience,	the	financial	strength	of	the borrower,	and	economic	conditions.	For	unfunded	commitments,	the	reserve estimate	also	includes	estimation	of	the	probability	of	funding.	Key	reserve assumptions	are	periodically	updated.

To	the	extent	actual	outcomes	differ	from	our	estimates,	additional	provision	for credit	losses	may	be	required	that	would	reduce	future	earnings.	See	the following	for	additional	information:

•	Allowances	For	Loan	And	Lease	Losses	And	Unfunded	Loan

Commitments	And	Letters	Of	Credit	in	the	Credit	Risk	Management section	of	this	Item	7,	and

•	Note	1	Accounting	Policies	and	Note	5	Allowances	for	Loan	and Lease	Losses	and	Unfunded	Loan	Commitments	and	Letters	of	Credit in	the	Notes	To	Consolidated	Financial	Statements	and	Allocation	of Allowance	for	Loan	and	Lease	Losses	in	the	Statistical	Information (Unaudited)	section	of	Item	8	of	this	Report.

# Estimated	Cash	Flows	On	Purchased	Impaired	Loans

ASC	310-30	–	Loans	and	Debt	Securities	Acquired	with	Deteriorated	Credit Quality	(formerly	SOP	03-3)	provides	the	GAAP	guidance	for	the	accounting	for purchased	impaired	loans.	These	loans	have	experienced	a	deterioration	of	credit quality	from	origination	to	acquisition	for	which	it	is	probable	that	the	investor will	be	unable	to	collect	all	contractually	required	payments	receivable, including	both	principal	and	interest.

In	our	assessment	of	credit	quality	deterioration,	we	must	make	numerous assumptions,	interpretations	and	judgments,	using	internal	and	third-party	credit quality	information	to	determine	whether	it	is	probable	that	we	will	be	able	to collect	all	contractually	required	payments.	This	point	in	time	assessment	is inherently	subjective	due	to	the	nature	of	the	available	information	and	judgment involved.

Those	loans	that	qualify	under	ASC	310-30	are	recorded	at	fair	value	at acquisition,	which	involves	estimating	the	expected	cash	flows	to	be	received. Measurement	of	the	fair	value	of	the	loan	is	based	on	the	provisions	of	ASC	820. ASC	310-30	prohibits	the	carryover	or	establishment	of	an	allowance	for	loan losses	on	the	acquisition	date.

Subsequent	to	the	acquisition	of	the	loan,	we	are	required	to	continue	to	estimate cash	flows	expected	to	be	collected	over	the	life	of	the	loan	(or	pool	of	loans). The	measurement	of	expected	cash	flows	involves	assumptions	and	judgments	as to	credit	risk,	interest	rate	risk,	prepayment	risk,	default	rates,	loss	severity, payment	speeds	and	collateral	values.	All	of	these	factors	are	inherently subjective	and	can	result	in	significant	changes	in	the	cash	flow	estimates	over the	life	of	the	loan.	Such	changes	in	expected	cash	flows	could	increase	future earnings	volatility.

See	Note	1	Accounting	Policies,	Note	4	Purchased	Loans,	and	Note	5 Allowances	for	Loan	and	Lease	Losses	and	Unfunded	Loan	Commitments	and Letters	of	Credit	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of this	Report	for	additional	information.

# Goodwill

Goodwill	arising	from	business	acquisitions	represents	the	value	attributable	to unidentifiable	intangible	elements	in	the	business	acquired.	Most	of	our	goodwill relates	to	value	inherent	in	the	Retail	Banking	and	Corporate	&	Institutional Banking	businesses.	The	value	of	this	goodwill	is	dependent	upon	our	ability	to provide	quality,	cost-effective	services	in	the	face	of	competition	from	other market	participants	on	a	national	and,	with	respect	to	some	products	and services,	an	international	basis.	We	also	rely	upon	continuing	investments	in processing	systems,	the	development	of	value-added	service	features,	and	the ease	of	access	by	customers	to	our	services.

As	such,	the	value	of	goodwill	is	supported	by	earnings,	which	is	driven	by transaction	volume	and,	for	certain	businesses,	the	market	value	of	assets	under administration	or	for	which	processing	services	are	provided.	Lower	earnings resulting	from	a	lack	of	growth	or	our	inability	to	deliver	cost-effective	services over	sustained	periods	can	lead	to	impairment	of	goodwill,	which	could	result	in a	current	period	charge	to	earnings.	At	least	annually,	in	the	fourth	quarter,	or more	frequently	if	events	occur	or	circumstances	have	changed	significantly from	the	annual	test	date,	management	reviews	the	current	operating environment	and	strategic	direction	of	each	reporting	unit	taking	into consideration	any	events	or	changes	in	circumstances	that	may	have	an	effect	on the	unit.	For	this	review,	inputs	are	generated	and	used	in	calculating	the	fair value	of	the	reporting	unit,	which	is	compared	to	its	carrying	amount	("Step	1" of	the	goodwill	impairment	test)	as	further	discussed	below.	The	fair	values	of the	majority	of	our	reporting	units	are	determined	using	a	discounted	cash	flow valuation	model	with	assumptions	based	upon	market	comparables.	Additionally, we	may	also	evaluate	certain	financial	metrics	that	are	indicative	of	fair	value, including	market	quotes,	price	to	earnings	ratios	and	recent	acquisitions involving	other	financial	institutions.	A	reporting	unit	is	defined	as	an	operating segment	or	one	level	below	an	operating	segment.	If	the	fair	value	of	the reporting	unit	exceeds	its	carrying	amount,	the	reporting	unit	is	not	considered impaired.	However,	if	the	fair	value	of	the	reporting	unit	is	less	than	its	carrying amount,	the	reporting	unit's	goodwill	would	be	evaluated	for	impairment.	In	this circumstance,	the	implied	fair	value	of	reporting	unit	goodwill	would	be compared	to	the	carrying	amount	of	that	goodwill	("Step	2"	of	the	goodwill impairment	test).	If	the	carrying	amount	of	goodwill	exceeds	the	implied	fair value	of	goodwill,	the	difference	is	recognized	as	an	impairment	loss.	The implied	fair	value	of	reporting	unit	goodwill	is	determined	by	assigning	the	fair value	of	a	reporting	unit	to	its	assets	and	liabilities	(including	any	unrecognized intangible	assets)	with	the	residual	amount	equal	to	the	implied	fair	value	of goodwill	as	if	the	reporting	unit	had	been	acquired	in	a	business	combination.

A	reporting	unit's	carrying	amount	is	based	upon	assigned	economic	capital	as determined	by	PNC's	internal	management	methodologies.	Additionally,	in performing	Step	1	of	our	goodwill	impairment	testing,	we	utilize	three	equity metrics:

•	Assigned	reporting	unit	economic	capital	as	determined	by	our	internal management	methodologies,	inclusive	of	goodwill.

•	A	7%	fully	phased-in	Basel	III	common	equity	Tier	1	capital	ratio	for the	reporting	unit	consistent	with	PNC's	risk	framework	guidelines. •	The	capital	levels	for	comparable	companies	(as	reported	in comparable	company	public	financial	statements),	adjusted	for differences	in	risk	characteristics	between	the	comparable	companies and	the	reporting	unit.

In	determining	a	reporting	unit's	fair	value	and	comparing	it	to	its	carrying value,	we	generally	utilize	the	highest	of	these	three	amounts	(the	"targeted equity")	in	our	discounted	cash	flow	methodology.	Under	this	methodology,	if necessary,	we	will	infuse	capital	to	achieve	the	targeted	equity	amount.	As	of October	1,	2014	(annual	impairment	testing	date),	unallocated	excess	capital (difference	between	shareholders'	equity	minus	total	economic	capital	assigned and	increased	by	the	incremental	targeted	equity	capital	infusion)	represented capital	reserved	for	potential	future	capital	needs.

The	results	of	our	annual	2014	impairment	test	indicated	that	the	estimated	fair values	of	our	reporting	units	exceeded	their	carrying	values	by	at	least	10%	and are	not	considered	to	be	at	risk	of	not	passing	Step	1.	By	definition,	assumptions utilized	in	estimating	the	fair	value	of	a	reporting	unit	are	judgmental	and inherently	uncertain,	but	absent	a	significant	change	in	economic	conditions	of	a reporting	unit,	we	would	not	expect	the	fair	values	of	these	reporting	units	to decrease	below	their	respective	carrying	values.	Similarly,	there	were	no impairment	charges	related	to	goodwill	in	2013.

During	2012,	our	residential	mortgage	banking	business,	similar	to	other residential	mortgage	banking	businesses,	experienced	higher	operating	costs	and increased	uncertainties	such	as	elevated	indemnification	and	repurchase liabilities	and	foreclosure	related	issues.	As	a	result	of	our	annual	impairment test,	we	determined	that	the	carrying	amount	of	goodwill	relating	to	the Residential	Mortgage	Banking	reporting	unit	was	impaired.	We	recorded	an impairment	charge	of	$45	million	within	noninterest	expense	which	reduced	the carrying	value	of	goodwill	attributed	to	Residential	Mortgage	Banking	to	zero.

See	Note	8	Goodwill	and	Other	Intangible	Assets	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report	for	additional	information.

# Lease	Residuals

We	provide	financing	for	various	types	of	equipment,	including	aircraft,	energy and	power	systems,	and	vehicles	through	a	variety	of	lease	arrangements.	Direct financing	leases	are	carried	at	the	sum	of	lease	payments	and	the	estimated residual	value	of	the	leased	property,	less	unearned	income.	Residual	values	are subject	to	judgments	as	to	the	value	of	the	underlying	equipment	that	can	be affected	by	changes	in	economic	and	market	conditions	and	the	financial viability	of	the	residual	guarantors.	Residual	values	are	derived	from	historical remarketing	experience,	secondary	market	contacts,	and	industry	publications. To	the	extent	not	guaranteed	or	assumed	by	a	third-party,	we	bear	the	risk	of ownership	of	the	leased	assets.	This	includes	the	risk	that	the	actual	value	of	the leased	assets	at	the	end	of	the	lease	term	will	be	less	than	the	estimated	residual value,	which	could	result	in	an	impairment	charge	and	reduce	earnings	in	the

future.	Residual	values	are	reviewed	for	impairment	at	least	annually.

# Revenue	Recognition

We	earn	net	interest	and	noninterest	income	from	various	sources,	including: •	Lending,

•	Securities	portfolio,

•	Asset	management,

•	Customer	deposits,

•	Loan	sales	and	servicing,

•	Brokerage	services,

•	Sale	of	loans	and	securities,

•	Certain	private	equity	activities,	and

•	Securities,	derivatives	and	foreign	exchange	activities.

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,	providing	merger	and	acquisition advisory	and	related	services,	and	participating	in	certain	capital	markets transactions.	Revenue	earned	on	interest-earning	assets,	including	the	accretion of	discounts	recognized	on	acquired	or	purchased	loans	recorded	at	fair	value,	is recognized	based	on	the	constant	effective	yield	of	the	financial	instrument	or based	on	other	applicable	accounting	guidance.

The	timing	and	amount	of	revenue	that	we	recognize	in	any	period	is	dependent on	estimates,	judgments,	assumptions,	and	interpretation	of	contractual	terms. Changes	in	these	factors	can	have	a	significant	impact	on	revenue	recognized	in any	period	due	to	changes	in	products,	market	conditions	or	industry	norms.

# Residential	And	Commercial	Mortgage	Servicing	Rights

We	elect	to	measure	our	residential	mortgage	servicing	rights	(MSRs)	at	fair value.	This	election	was	made	to	be	consistent	with	our	risk	management strategy	to	hedge	changes	in	the	fair	value	of	these	assets	as	described	below. The	fair	value	of	residential	MSRs	is	estimated	by	using	a	cash	flow	valuation model	which	calculates	the	present	value	of	estimated	future	net	servicing	cash flows,	taking	into	consideration	actual	and	expected	mortgage	loan	prepayment rates,	discount	rates,	servicing	costs,	and	other	economic	factors	which	are determined	based	on	current	market	conditions.

As	of	January	1,	2014,	PNC	made	an	irrevocable	election	to	subsequently measure	all	classes	of	commercial	MSRs	at	fair	value	in	order	to	eliminate	any potential	measurement	mismatch	between	our	economic	hedges	and	the commercial	MSRs.	The	impact	of	this	election	was	not	material.	The	fair	value of	commercial	MSRs	is	estimated	by	using	a	discounted	cash	flow	model incorporating	inputs	for	assumptions	as	to	constant	prepayment	rates,	discount rates	and	other	factors	determined	based	on	current	market	conditions	and

expectations.	We	recognize	gain/(loss)	on	changes	in	the	fair	value	of commercial	MSRs	as	a	result	of	that	election.	Commercial	MSRs	are	subject	to declines	in	value	from	actual	or	expected	prepayment	of	the	underlying	loans and	also	from	defaults.	We	manage	this	risk	by	economically	hedging	the	fair value	of	commercial	MSRs	with	securities	and	derivatives	instruments	which	are expected	to	increase	(or	decrease)	in	value	when	the	value	of	commercial	MSRs declines	(or	increases).	Prior	to	2014,	commercial	MSRs	were	initially	recorded at	fair	value	and	subsequently	accounted	for	at	the	lower	of	amortized	cost	or	fair value.	Commercial	MSRs	were	periodically	evaluated	for	impairment.	For purposes	of	impairment,	the	commercial	MSRs	were	stratified	based	on	asset type,	which	characterizes	the	predominant	risk	of	the	underlying	financial	asset.

PNC	employs	risk	management	strategies	designed	to	protect	the	value	of	MSRs from	changes	in	interest	rates	and	related	market	factors.	The	values	of	the residential	MSRs	are	economically	hedged	with	securities	and	derivatives, including	interest-rate	swaps,	options,	and	forward	mortgage-backed	and	futures contracts.	As	interest	rates	change,	these	financial	instruments	are	expected	to have	changes	in	fair	value	negatively	correlated	to	the	change	in	fair	value	of	the hedged	residential	MSRs	portfolio.	The	hedge	relationships	are	actively managed	in	response	to	changing	market	conditions	over	the	life	of	the residential	MSRs.	Commercial	MSRs	are	economically	hedged	at	a	macro	level or	with	specific	derivatives	and	securities	to	protect	against	a	significant	decline in	interest	rates.	Selecting	appropriate	financial	instruments	to	economically hedge	residential	or	commercial	MSRs	requires	significant	management judgment	to	assess	how	mortgage	rates	and	prepayment	speeds	could	affect	the future	values	of	MSRs.	Hedging	results	can	frequently	be	less	predictable	in	the short	term,	but	over	longer	periods	of	time	are	expected	to	protect	the	economic value	of	the	MSRs.

The	following	sections	of	this	Report	provide	further	information	on	residential and	commercial	MSRs:

•	Note	7	Fair	Value	included	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report.

•	Note	8	Goodwill	and	Other	Intangible	Assets	included	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report.

# Income	Taxes

In	the	normal	course	of	business,	we	and	our	subsidiaries	enter	into	transactions for	which	the	tax	treatment	is	unclear	or	subject	to	varying	interpretations.	In addition,	filing	requirements,	methods	of	filing	and	the	calculation	of	taxable income	in	various	state	and	local	jurisdictions	are	subject	to	differing interpretations.

We	evaluate	and	assess	the	relative	risks	and	merits	of	the	tax	treatment	of transactions,	filing	positions,	filing	methods	and	taxable	income	calculations after	considering	statutes,	regulations,	judicial	precedent,	and	other	information, and	maintain	tax	accruals	consistent	with	our	evaluation	of	these	relative	risks and	merits.	The	result	of	our	evaluation	and	assessment	is	by	its	nature	an estimate.	We	and	our	subsidiaries	are	routinely	subject	to	audit	and	challenges from	taxing	authorities.	In	the	event	we	resolve	a	challenge	for	an	amount different	than	amounts	previously	accrued,	we	will	account	for	the	difference	in the	period	in	which	we	resolve	the	matter.

# Recently	Issued	Accounting	Standards

In	January	2014,	the	Financial	Accounting	Standards	Board	(FASB)	issued Accounting	Standards	Update	(ASU)	2014-04,	Receivables	–	Troubled	Debt Restructurings	by	Creditors	(Subtopic	310-40):	Reclassification	of	Residential Real	Estate	Collateralized	Consumer	Mortgage	Loans	upon	Foreclosure.	This

ASU	clarifies	that	an	in	substance	repossession	or	foreclosure	is	considered	to have	occurred,	and	a	creditor	is	considered	to	have	received	physical	possession of	residential	real	estate	property	collateralizing	a	consumer	mortgage	loan,	upon a)	the	creditor	obtaining	legal	title	to	the	residential	real	estate	property	upon completion	of	a	foreclosure	or	b)	the	borrower	conveying	all	interest	in	the residential	real	estate	property	to	the	creditor	to	satisfy	the	loan	through completion	of	a	deed	in	lieu	of	foreclosure	or	through	a	similar	legal	agreement. We	adopted	this	guidance	as	of	January	1,	2015.	Adoption	of	this	ASU	did	not have	a	material	effect	on	our	results	of	operations	or	financial	position.

In	May	2014,	the	FASB	issued	ASU	2014-09,	Revenue	from	Contracts	with Customers	(Topic	606).	This	ASU	clarifies	the	principles	for	recognizing revenue	and	replaces	nearly	all	existing	revenue	recognition	guidance	in	U.S. GAAP	with	one	accounting	model.	The	core	principle	of	the	guidance	is	that	an entity	should	recognize	revenue	to	depict	the	satisfaction	of	a	performance obligation	by	transfer	of	promised	goods	or	services	to	customers.	The	ASU	also requires	additional	qualitative	and	quantitative	disclosures	relating	to	the	nature, amount,	timing,	and	uncertainty	of	revenue	and	cash	flows	arising	from	contracts with	customers.	The	ASU	is	effective	for	annual	reporting	periods	beginning after	December	15,	2016,	including	interim	periods	within	that	reporting	period. Early	application	is	not	permitted.	The	requirements	within	the	ASU	should	be applied	retrospectively	to	each	prior	period	presented	(with	several	practical expedients	for	certain	completed	contracts)	or	retrospectively	with	the cumulative	effect	of	initially	applying	the	ASU	recognized	at	the	date	of	initial application.	We	are	currently	evaluating	the	impact	of	this	ASU	on	our	results	of operations	and	financial	position.

In	June	2014,	the	FASB	issued	ASU	2014-11,	Transfers	and	Servicing	(Topic 860):	Repurchase-to-Maturity	Transactions,	Repurchase	Financings,	and Disclosures.	This	ASU	changes

the	accounting	for	repurchase-to-maturity	transactions	and	linked	repurchase financings	to	secured	borrowing	accounting,	which	is	consistent	with	the accounting	for	other	repurchase	agreements.	The	ASU	also	requires	separate accounting	for	a	transfer	of	a	financial	asset	executed	contemporaneously	with	a repurchase	agreement	with	the	same	counterparty	(i.e.,	a	repurchase	financing), which	will	result	in	secured	borrowing	treatment	for	the	repurchase	agreement. We	adopted	this	guidance	as	of	January	1,	2015.	Adoption	of	this	ASU	did	not have	a	material	effect	on	our	results	of	operations	or	financial	position.

In	August	2014,	the	FASB	issued	ASU	2014-14,	Receivables	–	Troubled	Debt Restructurings	by	Creditors	(Subtopic	310-40):	Classification	of	Certain Government-Guaranteed	Mortgage	Loans	upon	Foreclosure	(a	consensus	of	the

FASB	Emerging	Issues	Task	Force).	This	ASU	requires	that	a	mortgage	loan	be derecognized	and	that	a	separate	other	receivable	be	recognized	upon foreclosure	when	a)	the	loan	has	a	government	guarantee	that	is	not	separable from	the	loan	before	foreclosure;	b)	the	creditor	has	the	intent	to	convey	the	real estate	to	the	guarantor	and	make	a	claim	on	the	guarantee	and	the	creditor	has the	ability	to	recover	under	that	claim	at	the	time	of	foreclosure;	and	c)	any amount	of	the	claim	that	is	determined	upon	the	basis	of	the	real	estate	is	fixed	at the	time	of	foreclosure.	The	receivable	should	be	measured	based	on	the	loan balance	(inclusive	of	principal	and	interest)	that	is	expected	to	be	recovered	from the	guarantor.	This	ASU	is	effective	for	annual	periods,	and	interim	periods within	those	annual	periods,	beginning	after	December	15,	2014.	The	ASU	may be	adopted	using	either	a	prospective	or	modified	retrospective	transition	method consistent	with	the	method	elected	to	adopt	ASU	2014-04,	Receivables	– Troubled	Debt	Restructurings	by	Creditors	(Subtopic	310-40):	Reclassification of	Residential	Real	Estate	Collateralized	Consumer	Mortgage	Loans	upon Foreclosure.	We	adopted	this	guidance	as	of	January	1,	2015.	Adoption	of	this ASU	did	not	have	a	material	effect	on	our	results	of	operations	or	financial position.

In	November	2014,	the	FASB	issued	ASU	2014-16,	Derivatives	and	Hedging (Topic	815):	Determining	Whether	the	Host	Contract	in	a	Hybrid	Financial Instrument	Issued	in	the	Form	of	a	Share	is	More	Akin	to	Debt	or	to	Equity	(a consensus	of	the	FASB	Emerging	Issues	Task	Force).	This	ASU	clarifies	that	an entity	should	consider	all	relevant	terms	and	features,	inclusive	of	the	embedded derivative	feature	being	evaluated	for	bifurcation,	when	evaluating	whether	the nature	of	the	host	contract	in	a	hybrid	financial	instrument	issued	in	the	form	of	a share,	is	debt-like	or	equity-like.	When	making	this	determination,	the	ASU	also clarifies	that	the	substance	of	the	economic	characteristics	of	the	relevant	terms and	features,	and	circumstances	under	which	the	instrument	was	issued	should be	considered.	The	ASU	is	effective	for	annual	periods,	and	interim	periods within	those	annual	periods,	beginning	after	December	15,	2015	and	should	be applied	on	a	modified	retrospective	basis	to	existing	hybrid

financial	instruments	issued	in	the	form	of	a	share	as	of	the	beginning	of	the period	of	adoption.	Retrospective	application	is	permitted	to	all	relevant	prior periods.	We	are	currently	evaluating	the	impact	of	this	ASU	on	our	results	of operations	and	financial	position.

# Recently	Adopted	Accounting	Pronouncements

See	Note	1	Accounting	Policies	in	the	Notes	To	the	Consolidated	Financial Statements	in	Item	8	of	this	Report	regarding	the	impact	of	new	accounting pronouncements	which	we	have	adopted.

# STATUS	OF	QUALIFIED	DEFINED	BENEFIT	PENSION	PLAN

We	have	a	noncontributory,	qualified	defined	benefit	pension	plan	(plan	or pension	plan)	covering	eligible	employees.	Benefits	are	determined	using	a	cash balance	formula	where	earnings	credits	are	applied	as	a	percentage	of	eligible compensation.	Pension	contributions	are	based	on	an	actuarially	determined amount	necessary	to	fund	total	benefits	payable	to	plan	participants.	Consistent with	our	investment	strategy,	plan	assets	are	primarily	invested	in	equity investments	and	fixed	income	instruments.	Plan	fiduciaries	determine	and review	the	plan's	investment	policy,	which	is	described	more	fully	in	Note	13 Employee	Benefit	Plans	in	the	Notes	To	Consolidated	Financial	Statements	in Item	8	of	this	Report.

We	calculate	the	expense	associated	with	the	pension	plan	and	the	assumptions and	methods	that	we	use	include	a	policy	of	reflecting	plan	assets	at	their	fair market	value.	On	an	annual	basis,	we	review	the	actuarial	assumptions	related	to the	pension	plan.	The	primary	assumptions	used	to	measure	pension	obligations and	costs	are	the	discount	rate,	mortality,	compensation	increase	and	expected long-term	return	on	plan	assets.	Among	these,	the	compensation	increase assumption	does	not	significantly	affect	pension	expense.

ASC	715-30	and	ASC	715-60	stipulate	that	each	individual	assumption, including	mortality,	should	reflect	the	plan	sponsor's	best	estimate.	PNC	has historically	utilized	a	version	of	the	Society	of	Actuaries'	(SOA)	published mortality	tables	in	developing	its	best	estimate	of	mortality.	On	October	27, 2014,	the	SOA	published	a	new	study	on	mortality	rates	that	included	updated mortality	tables	and	mortality	improvement	scale,	which	both	reflect	longer	life expectancy.	Based	on	an	evaluation	of	the	mortality	experience	of	PNC's qualified	pension	plan	participants	in	conjunction	with	the	updated	SOA mortality	study,	PNC	adopted	an	adjusted	version	of	the	SOA's	new	mortality table	and	improvement	scale	for	purposes	of	measuring	the	plan's	benefit obligations	at	December	31,	2014.	This	change	to	the	mortality	assumption increased	the	qualified	pension	plan's	benefit	obligations	by	approximately	$115 million	at	December	31,	2014.

The	discount	rate	used	to	measure	pension	obligations	is	determined	by comparing	the	expected	future	benefits	that	will	be	paid	under	the	plan	with yields	available	on	high	quality	corporate	bonds	of	similar	duration.	The	impact on	pension	expense	of	a	.5%	decrease	in	discount	rate	in	the	current	environment is	an	increase	of	$18	million	per	year.	This	sensitivity	depends	on	the	economic environment	and	amount	of	unrecognized	actuarial	gains	or	losses	on	the measurement	date.

The	expected	long-term	return	on	assets	assumption	also	has	a	significant	effect on	pension	expense.	The	expected	return	on	plan	assets	is	a	long-term assumption	established	by	considering	historical	and	anticipated	returns	of	the asset	classes	invested	in	by	the	pension	plan	and	the	asset	allocation	policy currently	in	place.	For	purposes	of	setting	and	reviewing	this	assumption,	"long term"	refers	to	the	period	over	which	the	plan's	projected	benefit	obligations	will be	disbursed.	We	review	this	assumption	at	each	measurement	date	and	adjust	it if	warranted.	Our	selection	process	references	certain	historical	data	and	the current	environment,	but	primarily	utilizes	qualitative	judgment	regarding	future return	expectations.

To	evaluate	the	continued	reasonableness	of	our	assumption,	we	examine	a variety	of	viewpoints	and	data.	Various	studies	have	shown	that	portfolios comprised	primarily	of	U.S.	equity	securities	have	historically	returned approximately	9%	annually	over	long	periods	of	time,	while	U.S.	debt	securities have	returned	approximately	6%	annually	over	long	periods.	Application	of these	historical	returns	to	the	plan's	allocation	ranges	for	equities	and	bonds produces	a	result	between	6.50%	and	7.25%	and	is	one	point	of	reference, among	many	other	factors,	that	is	taken	into	consideration.	We	also	examine	the plan's	actual	historical	returns	over	various	periods	and	consider	the	current economic	environment.	Recent	experience	is	considered	in	our	evaluation	with appropriate	consideration	that,	especially	for	short	time	periods,	recent	returns are	not	reliable	indicators	of	future	returns.	While	annual	returns	can	vary significantly	(actual	returns	for	2014,	2013	and	2012	were	+6.50%,	+15.48%, and	+15.29%,	respectively),	the	selected	assumption	represents	our	estimated long-term	average	prospective	returns.

Acknowledging	the	potentially	wide	range	for	this	assumption,	we	also	annually examine	the	assumption	used	by	other	companies	with	similar	pension investment	strategies,	so	that	we	can	ascertain	whether	our	determinations markedly	differ	from	others.	In	all	cases,	however,	this	data	simply	informs	our process,	which	places	the	greatest	emphasis	on	our	qualitative	judgment	of future	investment	returns,	given	the	conditions	existing	at	each	annual measurement	date.

Taking	into	consideration	all	of	these	factors,	the	expected	long-term	return	on plan	assets	for	determining	net	periodic	pension	cost	for	2014	was	7.00%,	down from	7.50%	for	2013.	After	considering	the	views	of	both	internal	and	external

capital	market	advisors,	particularly	with	regard	to	the	effects	of	the	recent economic	environment	on	long-term	prospective	fixed	income	returns,	we	are reducing	our	expected	long-term	return	on	assets	to	6.75%	for	determining pension	cost	for	2015.

Under	current	accounting	rules,	the	difference	between	expected	long-term returns	and	actual	returns	is	accumulated	and	amortized	to	pension	expense	over future	periods.	Each	one	percentage	point	difference	in	actual	return	compared with	our	expected	return	can	cause	expense	in	subsequent	years	to	increase	or decrease	by	up	to	$9	million	as	the	impact	is	amortized	into	results	of	operations.

We	currently	estimate	pretax	pension	expense	of	$9	million	in	2015	compared with	pretax	income	of	$7	million	in	2014.	This	year-over-year	expected	increase in	expense	reflects	the	effects	of	the	lower	expected	return	on	asset	assumption, improved	mortality,	and	the	lower	discount	rate	required	to	be	used	in	2015. These	factors	will	be	partially	offset	by	the	favorable	impact	of	the	increase	in plan	assets	at	December	31,	2014	and	the	assumed	return	on	a	$200	million voluntary	contribution	to	the	plan	made	in	February	2015.

The	table	below	reflects	the	estimated	effects	on	pension	expense	of	certain changes	in	annual	assumptions,	using	2015	estimated	expense	as	a	baseline.

# Table	26:	Pension	Expense	–	Sensitivity	Analysis

(a) The	impact	is	the	effect	of	changing	the	specified	assumption	while	holding	all	other	assumptions constant.

Our	pension	plan	contribution	requirements	are	not	particularly	sensitive	to actuarial	assumptions.	Investment	performance	has	the	most	impact	on contribution	requirements	and	will	drive	the	amount	of	required	contributions	in future	years.	Also,	current	law,	including	the	provisions	of	the	Pension Protection	Act	of	2006,	sets	limits	as	to	both	minimum	and	maximum contributions	to	the	plan.	Notwithstanding	the	voluntary	contribution	made	in February	2015	noted	above,	we	do	not	expect	to	be	required	to	make	any contributions	to	the	plan	during	2015.

We	maintain	other	defined	benefit	plans	that	have	a	less	significant	effect	on financial	results,	including	various	nonqualified	supplemental	retirement	plans for	certain	employees,	which	are	described	more	fully	in	Note	13	Employee Benefit	Plans	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of this	Report.

# RECOURSE	AND	REPURCHASE	OBLIGATIONS

As	discussed	in	Note	2	Loan	Sale	and	Servicing	Activities	and	Variable	Interest Entities	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this Report,	PNC	has	sold	commercial	mortgage,	residential	mortgage	and	home equity	loans	directly	or	indirectly	through	securitization	and	loan	sale transactions	in	which	we	have	continuing	involvement.	One	form	of	continuing involvement	includes	certain	recourse	and	loan	repurchase	obligations associated	with	the	transferred	assets.

# Commercial	Mortgage	Loan	Recourse	Obligations

We	originate,	close	and	service	certain	multi-family	commercial	mortgage	loans which	are	sold	to	FNMA	under	FNMA's	Delegated	Underwriting	and	Servicing (DUS)	program.	We	participated	in	a	similar	program	with	the	FHLMC.	Our exposure	and	activity	associated	with	these	recourse	obligations	are	reported	in the	Corporate	&	Institutional	Banking	segment.	For	more	information	regarding our	commercial	mortgage	loan	recourse	obligations,	see	the	Recourse	and Repurchase	Obligations	section	of	Note	22	Commitments	and	Guarantees included	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this Report.

# Residential	Mortgage	and	Home	Equity	Repurchase	Obligations

As	a	result	of	alleged	breaches	of	loan	covenants	and	representations	and warranties,	investors	may	request	PNC	to	indemnify	them	against	losses	on certain	loans	or	to	repurchase	loans.	Indemnification	and	repurchase	claims	are often	settled	on	an	individual	basis	through	make	whole	payments	or	loan repurchases,	although	we	may	also	negotiate	pooled	settlements	with	investors. In	connection	with	pooled	settlements,	we	typically	do	not	repurchase	loans	and the	consummation	of	such	transactions	generally	results	in	us	no	longer	having indemnification	and	repurchase	exposure	with	the	investor	in	the	transaction.

# Residential	Mortgage	Repurchase	Obligations

While	residential	mortgage	loans	are	sold	on	a	non-recourse	basis,	we	assume certain	loan	repurchase	obligations	associated	with	mortgage	loans	we	have	sold to	investors.	These	loan	repurchase	obligations	primarily	relate	to	situations where	PNC	is	alleged	to	have	breached	certain	origination	covenants	and representations	and	warranties	made	to	purchasers	of	the	loans	in	the	respective purchase	and	sale	agreements.	Residential	mortgage	loans	covered	by	these	loan repurchase	obligations	include	first	and	second-lien	mortgage	loans	we	have	sold through	Agency	securitizations,	Non-Agency	securitizations,	and	loan	sale transactions.	As	discussed	in	Note	2	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report,	Agency	securitizations	consist	of	mortgage loan	sale	transactions	with	FNMA,	FHLMC	and	the	Government	National Mortgage	Association	(GNMA),	while	Non-Agency	securitizations	consist	of

mortgage	loan	sale	transactions	with	private	investors.	Mortgage	loan	sale transactions	that	are	not	part	of	a	securitization	may	involve	FNMA,	FHLMC	or private	investors.	Our	historical	exposure	and	activity	associated	with	Agency securitization	repurchase	obligations	has	primarily	been	related	to	transactions with	FNMA	and	FHLMC,	as	indemnification	and	repurchase	losses	associated with	FHA	and	VA-insured	and	uninsured	loans	pooled	in	GNMA	securitizations historically	have	been	minimal.	In	addition	to	indemnification	and	repurchase risk,	we	face	other	risks	of	loss	with	respect	to	our	participation	in	these programs,	some	of	which	are	described	in	Note	21	Legal	Proceedings	in	the Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	with respect	to	governmental	inquiries	related	to	FHA-insured	loans.	Repurchase obligation	activity	associated	with	residential	mortgages	is	reported	in	the Residential	Mortgage	Banking	segment.

Origination	and	sale	of	residential	mortgages	is	an	ongoing	business	activity	and, accordingly,	management	continually	assesses	the	need	to	recognize indemnification	and	repurchase	liabilities	pursuant	to	the	associated	investor	sale agreements.	We	establish	indemnification	and	repurchase	liabilities	for estimated	losses	on	sold	first	and	second-lien	mortgages	for	which indemnification	is	expected	to	be	provided	or	for	loans	that	are	expected	to	be repurchased.	For	the	first	and	second-lien	mortgage	sold	portfolio,	we	have established	an	indemnification	and	repurchase	liability	pursuant	to	investor	sale agreements	based	on	claims	made	and	our	estimate	of	future	claims	on	a	loan	by loan	basis.	To	estimate	the	mortgage	repurchase	liability	arising	from	breaches of	representations	and	warranties,	we	consider	the	following	factors:	(i)	borrower performance	in	our	historically	sold	portfolio	(both	actual	and	estimated	future defaults);	(ii)	the	level	of	outstanding	unresolved	repurchase	claims; (iii)	estimated	probable	future	repurchase	claims,	considering	information	about expected	investor	behaviors,	delinquent	and	liquidated	loans,	resolved	and unresolved	mortgage	insurance	rescission	notices	and	our	historical	experience with	claim	rescissions;	(iv)	the	potential	ability	to	cure	the	defects	identified	in the	repurchase	claims	("rescission	rate")	and	(v)	the	estimated	severity	of	loss upon	repurchase	of	the	loan	or	collateral,	make-whole	settlement	or indemnification.

For	more	information	on	our	Residential	Mortgage	Repurchase	Obligations,	see Note	22	Commitments	and	Guarantees	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report.

The	following	tables	present	the	unpaid	principal	balance	of	repurchase	claims	by	vintage	and	total	unresolved	repurchase	claims	for	the	quarter	ended	and	as	of December	31,	2014,	respectively,	compared	to	the	quarter	ended	and	as	of	December	31,	2013,	respectively.	These	comparisons	reflect	the	impact	of	settlement agreements	reached	late	in	the	fourth	quarter	of	2013.

# Table	27:	Analysis	of	Quarterly	Residential	Mortgage	Repurchase	Claims	by	Vintage

| Three	months	ended	–	Dollars	in	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| 2004\t&amp;\tPrior | $3 | $66 |
| 2005 | 2 | 88 |
| 2006 | 2 | 27 |
| 2007 | 2 | 35 |
| 2008 |  | 9 |
| Subtotal\t–\t2008\t&amp;\tPrior | 9 | 225 |
| 2009\t–\t2014 | 16 | 19 |
| Total | $25 | $244 |
| FNMA,\tFHLMC\tand\tGNMA\t% | 81% | 96% |

# Table	28:	Analysis	of	Residential	Mortgage	Unresolved	Asserted	Indemnification	and	Repurchase	Claims

| Dollars	in	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| FNMA,\tFHLMC\tand\tGNMA\tsecuritizations | $12 | $13 |
| Private\tinvestors\t(a) | 32 | 22 |
| Total\tunresolved\tclaims | $44 | $35 |
| FNMA,\tFHLMC\tand\tGNMA\t% | 27% | 37% |
| (a) |  |  |

(a) Activity	relates	to	loans	sold	through	Non-Agency	securitization	and	loan	sale	transactions.

The	table	below	details	our	indemnification	and	repurchase	claim	settlement	activity	during	2014	and	2013.

# Table	29:	Analysis	of	Residential	Mortgage	Indemnification	and	Repurchase	Claim	Settlement	Activity

|  |  | 2014 |  |  | 2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Year\tended\tDecember\t31\t–\tIn\tmillions | Unpaid\nPrincipal\nBalance\t(a) | Losses\nIncurred\t(b) | Fair\tValue\tof\nRepurchased\nLoans\t(c) | Unpaid\nPrincipal\nBalance\t(a) | Losses\nIncurred\t(b) | Fair\tValue\tof\nRepurchased\nLoans\t(c) |
| Residential\tmortgages\t(d): |  |  |  |  |  |  |
| FNMA,\tFHLMC\tand\tGNMA\tsecuritizations | $47 | $17 | $15 | $378 | $399 | $89 |
| Private\tinvestors\t(e) | 10 | 7 | 2 | 47 | 31 | 6 |
| Total\tindemnification\tand\trepurchase\tsettlements | $57 | $24 | $17 | $425 | $430 | $95 |
| (a) |  |  |  |  |  |  |

(a) Represents	unpaid	principal	balance	of	loans	at	the	indemnification	or	repurchase	date.	Excluded	from	these	balances	are	amounts	associated	with	pooled	settlement	payments	as	loans	are	typically	not repurchased	in	these	transactions.

(b) Represents	both	i)	amounts	paid	for	indemnification/settlement	payments	and	ii)	the	difference	between	loan	repurchase	price	and	fair	value	of	the	loan	at	the	repurchase	date.	These	losses	are	charged	to	the indemnification	and	repurchase	liability.

(c) Represents	fair	value	of	loans	repurchased	only	as	we	have	no	exposure	to	changes	in	the	fair	value	of	loans	or	underlying	collateral	when	indemnification/settlement	payments	are	made	to	investors.

(d) Repurchase	activity	associated	with	insured	loans,	government-guaranteed	loans	and	loans	repurchased	through	the	exercise	of	our	removal	of	account	provision	(ROAP)	option	are	excluded	from	this	table.	Refer to	Note	2	Loan	Sale	and	Servicing	Activities	and	Variable	Interest	Entities	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	for	further	discussion	of	ROAPs.

(e) Activity	relates	to	loans	sold	through	Non-Agency	securitizations	and	loan	sale	transactions.

Residential	mortgages	that	we	service	through	FNMA,	FHLMC	and	GNMA	securitizations,	and	for	which	we	could	experience	a	loss	if	required	to	repurchase	a delinquent	loan	due	to	a	breach	in	representations	or	warranties,	were	$49	billion	at	December	31,	2014,	of	which	$251	million	was	90	days	or	more	delinquent.	These amounts	were	$48	billion	and	$253	million,	respectively,	at	December	31,	2013.

In	the	fourth	quarter	of	2013,	PNC	reached	agreements	with	both	FNMA	and	FHLMC	to	resolve	their	repurchase	claims	with	respect	to	loans	sold	between	2000	and 2008.	PNC	paid	a	total	of	$191	million	related	to	these	settlements.	The	volume	of	new	repurchase	demand	claims	dropped	significantly	in	2014	compared	to	the	same period	in	2013	as	a	result	of	the	settlement

agreements	in	the	fourth	quarter	of	2013.	Additionally,	the	liability	for	estimated losses	on	indemnification	and	repurchase	claims	for	residential	mortgages decreased	to	$107	million	at	December	31,	2014	from	$131	million	at December	31,	2013.

We	believe	our	indemnification	and	repurchase	liability	appropriately	reflects the	estimated	probable	losses	on	indemnification	and	repurchase	claims	for	all residential	mortgage	loans	sold	and	outstanding	as	of	December	31,	2014	and December	31,	2013.	In	making	these	estimates,	we	consider	the	losses	that	we expect	to	incur	over	the	life	of	the	sold	loans.	See	Note	22	Commitments	and Guarantees	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this Report	for	additional	information.

# Home	Equity	Repurchase	Obligations

PNC's	repurchase	obligations	include	obligations	with	respect	to	certain brokered	home	equity	loans/lines	of	credit	that	were	sold	to	a	limited	number	of private	investors	in	the	financial	services	industry	by	National	City	prior	to	our acquisition	of	National	City.	PNC	is	no	longer	engaged	in	the	brokered	home equity	lending	business,	and	our	exposure	under	these	loan	repurchase obligations	is	limited	to	repurchases	of	the	loans	sold	in	these	transactions. Repurchase	activity	associated	with	brokered	home	equity	loans/lines	of	credit	is reported	in	the	Non-Strategic	Assets	Portfolio	segment.

Loan	covenants	and	representations	and	warranties	were	established	through loan	sale	agreements	with	various	investors	to	provide	assurance	that	loans	PNC sold	to	the	investors	were	of	sufficient	investment	quality.	Key	aspects	of	such covenants	and	representations	and	warranties	include	the	loan's	compliance	with any	applicable	loan	criteria	established	for	the	transaction,	including underwriting	standards,	delivery	of	all	required	loan	documents	to	the	investor or	its	designated	party,	sufficient	collateral	valuation,	and	the	validity	of	the	lien securing	the	loan.	As	a	result	of	alleged	breaches	of	these	contractual obligations,	investors	may	request	PNC	to	indemnify	them	against	losses	on certain	loans	or	to	repurchase	loans.

Investor	indemnification	or	repurchase	claims	are	typically	settled	on	an individual	loan	basis	through	make-whole	payments	or	loan	repurchases; however,	on	occasion	we	may	negotiate	pooled	settlements	with	investors.	In connection	with	pooled	settlements,	we	typically	do	not	repurchase	loans	and	the consummation	of	such	transactions	generally	results	in	us	no	longer	having indemnification	and	repurchase	exposure	with	the	investor	in	the	transaction.

An	indemnification	and	repurchase	liability	for	estimated	losses	for	which indemnification	is	expected	to	be	provided	or	for	loans	that	are	expected	to	be repurchased	was	established	at	the	acquisition	of	National	City.	Management's evaluation	of	these	indemnification	and	repurchase	liabilities	is	based	upon trends	in	indemnification	and	repurchase	claims,	actual	loss	experience,	risks	in the	underlying	serviced	loan

portfolios,	current	economic	conditions	and	the	periodic	negotiations	that management	may	enter	into	with	investors	to	settle	existing	and	potential	future claims.

Indemnification	and	repurchase	liabilities,	which	are	included	in	Other	liabilities on	the	Consolidated	Balance	sheet,	are	evaluated	by	management	on	a	quarterly basis.	Initial	recognition	and	subsequent	adjustments	to	the	indemnification	are recognized	in	Other	noninterest	income	on	the	Consolidated	Income	Statement. For	more	information	regarding	our	Home	Equity	Repurchase	Obligations,	see Note	22	Commitments	and	Guarantees	in	the	Notes	To	Consolidated	Statements in	Item	8	of	this	Report.

# RISK	MANAGEMENT

# Enterprise	Risk	Management

PNC	encounters	risk	as	part	of	the	normal	course	of	operating	our	business. Accordingly,	we	design	risk	management	processes	to	help	manage	this	risk.	We take	risks	we	understand	in	order	to	optimize	long	term	shareholder	value.

This	Risk	Management	section	describes	our	risk	framework,	including	risk appetite	and	strategy,	culture,	governance,	risk	identification,	controls	and reporting.	The	overall	Risk	Management	section	of	this	Item	7	also	provides	an analysis	of	our	key	areas	of	risk,	which	include	but	are	not	limited	to	credit, operational,	compliance,	market,	liquidity	and	model.	Our	use	of	financial derivatives	as	part	of	our	overall	asset	and	liability	risk	management	process	is also	addressed	within	the	risk	management	section.

PNC	operates	within	a	rapidly	evolving	regulatory	environment.	Accordingly, we	are	actively	focused	on	the	timely	adoption	of	regulatory	pronouncements within	our	Enterprise	Risk	Management	(ERM)	Framework.

We	view	risk	management	as	a	cohesive	combination	of	the	following	risk elements	which	form	PNC's	ERM	Framework:

# Risk	Appetite	and	Strategy

PNC	manages	risk	in	light	of	our	risk	appetite	to	optimize	long	term	shareholder value	while	supporting	our	employees,	customers,	and	communities.	PNC's	risk appetite	represents	the	organization's	desired	enterprise	risk	position,	set	within our	capital-based	risk	and	liquidity	capacity	to	achieve	our	strategic	objectives and	business	plans.	Reviewed	periodically	through	the	risk	reporting	and Strategic	Planning	processes,	the	risk	appetite	serves	as	an	operating	guide	for making	balanced	risk	decisions	that	support	our	business	strategies;	it	will	adjust over	time	to	reflect	the	current	and	anticipated	economic	environment,	growth objectives,	risk	capacity	and	our	risk	profile.

We	establish	guiding	principles	for	each	of	the	risks	within	our	taxonomy	to support	the	Risk	Appetite	Statement.	The	guiding	principles	are	qualitative statements	that	guide	risk-taking	activities	and	are	supported	by	quantitative metrics,	risk	limits,	and	risk	appetite	descriptions	as	defined	in	policy	and managed	through	the	ERM	framework.

# Risk	Culture

All	employees	are	considered	risk	managers,	and	are	responsible	for understanding	PNC's	Risk	Appetite	Statement,	guiding	principles	and	ERM framework	and	how	they	apply	to	their	respective	roles.	PNC's	governance structure	establishes	clear	roles	and	responsibilities	for	risk	management throughout	the	organization.	All	employees	are	encouraged	to	collaborate	across groups	to	identify	and	mitigate	risks	and	elevate	issues	as	required.	PNC reinforces	risk	management	responsibilities	through	a	performance	management system	where	employee	performance	goals	include	risk	management	objectives. Incentives	for	eligible	employees	incorporate	risk	management	results	through balanced	measures	of	risk-adjusted	performance.

Proactive	communication,	between	groups	and	up	to	the	Board	of	Directors, facilitates	timely	identification	and	resolution	of	risk	issues.	PNC's	multi-level risk	committee	structure	provides	a	formal	channel	to	identify,	decision,	and report	risk.	Risk	committee	membership	includes	representatives	from	business and	risk	stakeholder	groups	that	are	responsible	for	helping	ensure	risk	issues	are proactively	identified,	decisioned,	monitored,	communicated	and	managed appropriately	within	the	enterprise	risk	management	framework.

# Risk	Organization	and	Governance

PNC	employs	a	comprehensive	risk	management	governance	structure	to	help ensure	that	risks	are	identified,	balanced	decisions	are	made	that	consider	risk and	return,	and	risks	are	adequately	monitored	and	managed.	Risk	committees established	within	this	governance	structure	provide	oversight	for	risk management	activities	at	the	Board,	corporate,	and	business	levels.	Committee composition	is	designed	to	provide	effective	oversight	balanced	across	the	three lines	of	defense	in	accordance	with	the	OCC's	heightened	risk	management	and governance	expectations	and	guidelines.	See

further	discussion	in	the	Supervision	and	Regulation	section	in	Item	1	of	this Report.	Within	the	three	lines	of	defense,	the	risk	organization	has	sufficient authority	to	influence	material	decisions.	The	Board	oversees	enterprise	risk management	of	PNC	for	any	material	changes	to	the	risk	profile	and	periodically reviews	core	elements	of	enterprise	risk	including	the	Risk	Appetite	Statement, Risk	Capacity,	Appetite	and	Strategy,	and	Risk	Controls	and	Limits.

We	use	our	governance	structure	to	assess	the	effectiveness	of	our	risk management	practices	on	an	ongoing	basis,	based	on	how	we	manage	our	day- to-day	business	activities	and	on	our	development	and	execution	of	more specific	strategies	to	mitigate	risks.	Specific	responsibilities	include:

Board	of	Directors	–	The	Board	oversees	enterprise	risk	management.	The Risk	Committee	of	the	Board	of	Directors	evaluates	PNC's	risk	appetite, management's	assessment	of	the	enterprise	risk	profile,	and	the	enterprise- wide	risk	structure	and	processes	established	by	management	to	identify, measure,	monitor,	and	manage	risk.	The	Audit	Committee	of	the	Board also	has	responsibility	for	select	areas	of	risk	(e.g.,	Financial	Reporting, Ethics	and	Internal	Controls	over	Financial	Reporting).

Corporate	Committees	–	The	corporate	committees	are	responsible	for overseeing	risk	standards	and	strategies,	recommending	risk	limits,	policies and	metrics,	monitoring	risk	exposures,	reviewing	risk	profiles	and	key	risk issues,	and	approving	significant	transactions	and	initiatives.	At	the management	level,	PNC	has	established	several	senior	management-level committees	to	facilitate	the	review,	evaluation,	and	management	of	risk. The	management-level	Executive	Committee	(EC)	is	the	corporate committee	that	is	responsible	for	developing	enterprise-wide	strategy	and achieving	PNC's	strategic	objectives.	The	EC	evaluates	risk	management, in	part,	by	monitoring	risk	reporting	from	the	other	corporate	committees, which	are	the	supporting	committees	for	EC.

Working	Committees	–	The	working	committees	are	generally subcommittees	of	the	corporate	committees	and	include	risk	management committees	for	each	of	PNC's	major	businesses	or	functions.	Working committees	are	intended	to	define,	design	and	develop	the	risk	management framework,	including	risk	appetite,	at	the	business	or	function	level.	The working	committees	help	to	implement	key	enterprise-level	activities within	a	business	or	function.	These	committees	recommend	risk management	policies	for	the	business	or	function	that	are	consistent	with the	enterprise-wide	risk	management	objectives	and	policies.	The	business level	committees	are	also	responsible	for	approving	significant	initiatives under	a	certain	threshold.

Working	Groups	–	Where	appropriate,	management	will	also	form	ad	hoc groups	(working	groups)	to	address	specific	risk	topics	and	report	to	a working	committee	or	corporate	committee.	These	working	groups generally	have	a	more	narrow	scope	and	may	be	limited	in	their	duration.

Policies	and	Procedures	–	PNC	has	established	risk	management	policies and	procedures	to	provide	direction,	guidance,	and	clarity	on	roles	and responsibilities	to	management	and	the	Board	of	Directors.	These	policies and	procedures	are	organized	in	a	multi-tiered	framework	and	require periodic	review	and	approval	by	relevant	committees	within	the	governance structure.

Business	Activities	–	Our	businesses	strive	to	enhance	risk	management	and internal	control	processes.	Integrated	and	comprehensive	processes	are designed	to	adequately	identify,	measure,	manage,	monitor,	and	report	risks which	may	significantly	impact	each	business.

# Risk	Identification	and	Quantification

Risk	identification	takes	place	across	a	variety	of	risk	types	throughout	the organization.	These	risk	types	consist	of,	but	are	not	limited	to,	credit, operational,	compliance,	market,	liquidity	and	model.	Risks	are	identified	based on	a	balanced	use	of	analytical	tools	and	management	judgment	for	both	on-	and off-balance	sheet	exposures.	Our	governance	structure	supports	risk identification	by	facilitating	assessment	of	key	risk	issues,	emerging	risks,	and idiosyncratic	risks	and	implementation	of	mitigation	strategies	as	appropriate. These	risks	are	prioritized	based	on	quantitative	and	qualitative	analysis	and assessed	against	the	risk	appetite.	Multiple	tools	and	approaches	are	used	to	help identify	and	prioritize	risks,	including	Risk	Appetite	Metrics,	Key	Risk Indicators	(KRIs),	Key	Performance	Indicators	(KPIs),	Risk	Control	and	Self- Assessments	(RCSAs),	scenario	analysis,	stress	testing,	special	investigations and	controls.

Risks	are	aggregated	and	assessed	within	and	across	risk	functions	or	businesses. The	aggregated	risk	information	is	reviewed	and	reported	at	an	enterprise	level for	adherence	to	the	risk	appetite	as	established	through	the	policy	framework and	approved	by	the	Board	of	Directors	or	by	appropriate	managing	committees. This	enterprise	aggregation	and	reporting	approach	promotes	the	identification and	appropriate	escalation	of	material	risks	across	the	organization	and	supports an	understanding	of	the	cumulative	impact	of	risk	in	relation	to	our	risk	appetite.

# Risk	Control	and	Limits

PNC	uses	a	multi-tiered	risk	policy,	procedure,	and	committee	charter framework	to	provide	direction	and	guidance	for	identifying,	decisioning, monitoring,	communicating	and	managing	risk,	including	appropriate	processes to	escalate	control	parameter	exceptions	when	applicable.

Risk	controls	and	limits	provide	the	linkage	from	PNC's	Risk	Appetite Statement	and	associated	guiding	principles	to	the	risk	taking	activities	of	our businesses.	Risk	limits	are	quantitative	measures,	including	forward	looking assumptions,	which	allocate	the	firm's	aggregate	risk	appetite	statement	to	lines of	business	and	functional	risk	areas.	They	are	established	within	policy	across risk	categories	and	are	embedded	within	each	risk	appetite	description.

When	setting	risk	limits,	PNC	considers	major	risks,	aligns	with	the	established risk	appetite,	balances	risk-reward,	leverages	analytics	including	stressed scenarios	along	with	historical	data,	and	adjusts	limits	in	a	timely	manner	in response	to	changes	in	internal	and	external	environments.	Quantitative	and qualitative	operating	guidelines	support	risk	limits	and	serve	as	an	early	warning system	for	potential	violations	of	the	limits.	These	operating	guidelines	trigger mitigation	strategies	and	management	escalation	protocols	if	limits	are	breached.

PNC's	control	structure	is	balanced	in	terms	of	efficiency	and	effectiveness	with the	risks	that	we	are	willing	to	take,	as	defined	by	our	risk	appetite.	Controls	are in	place	across	the	risk	taxonomy	to	monitor	established	risk	limits.

# Risk	Monitoring	and	Reporting

PNC	uses	similar	tools	to	monitor	and	report	risk	as	when	performing	Risk Identification.	These	tools	include	Risk	Appetite	Metrics,	KRIs,	KPIs,	RCSAs, scenario	analysis,	stress	testing,	special	investigations	and	controls.

The	risk	identification	and	quantification	processes,	the	risk	control	and	limits reviews,	and	the	tools	used	for	risk	monitoring	provide	the	basis	for	risk reporting.	The	objective	of	risk	reporting	is	comprehensive	risk	aggregation	and transparent	communication	of	aggregated	risks,	issues,	risk	level	compared	to appetite,	outlook	as	well	as	mitigation	strategies	where	appropriate,	to	the	Risk Committee	of	the	Board	of	Directors,	Corporate	Committees,	Working Committees	and	other	designated	parties	for	effective	decision	making.

Risk	reports	are	produced	at	the	line	of	business	level,	functional	risk	level	and the	enterprise	level.	The	enterprise	level	risk	report	aggregates	risks	identified	in the	functional	and	business	reports	to	define	the	enterprise	risk	profile.	The enterprise	risk	profile	is	a	point-in-time	assessment	of	enterprise	risk.	The	risk profile	represents	PNC's	overall	risk	position	in	relation	to	the	desired	enterprise risk	appetite	and	overall	risk	capacity.	The	determination	of	the	enterprise	risk profile	is	based	on	analysis	of	quantitative	reporting	of	risk	limits	and	other measures	along	with	qualitative	assessments.	Quarterly	aggregation	of	our	risk profile	enables	a	clear	view	of	our	risk	level	relative	to	our	quantitative	risk appetite	and	overall	risk	capacity.	The	enterprise	level	report	is	provided	through the	governance	structure	to	the	Board	of	Directors.

# Credit	Risk	Management

Credit	risk	represents	the	possibility	that	a	customer,	counterparty	or	issuer	may not	perform	in	accordance	with	contractual	terms.	Credit	risk	is	inherent	in	the financial	services	business	and	results	from	extending	credit	to	customers, purchasing	securities,	and	entering	into	financial	derivative	transactions	and certain	guarantee	contracts.	Credit	risk	is	one	of	our	most	significant	risks.	Our processes	for	managing	credit	risk	are	embedded	in	PNC's	risk	culture	and	in our	decision-making	processes	using	a	systematic	approach	whereby	credit	risks and	related	exposures	are	identified	and	assessed,	managed	through	specific policies	and	processes,	measured	and	evaluated	against	our	risk	appetite	and credit	concentration	limits,	and	reported,	along	with	specific	mitigation activities,	to	management	and	the	Board	through	our	governance	structure.

# Asset	Quality	Overview

Asset	quality	trends	in	2014	improved	from	2013. •	Nonperforming	assets	at	December	31,	2014	decreased	$577	million compared	with	December	31,	2013	as	a	result	of	improvements	in	both consumer	and	commercial	nonperforming	loans.	Consumer	lending nonperforming	loans	decreased	$224	million,	commercial	real	estate nonperforming	loans	declined	$184	million	and	commercial nonperforming	loans	decreased	$167	million.	Nonperforming	assets were	0.83%	of	total	assets	at	December	31,	2014	compared	with	1.08% at	December	31,	2013.

•	Overall	loan	delinquencies	of	$1.9	billion	decreased	$.5	billion,	or 22%,	from	year-end	2013	levels.	The	reduction	was	due	in	large	part	to a	reduction	in	accruing	government	insured	residential	real	estate	loans past	due	90	days	or	more	of	$.3	billion,	the	majority	of	which	we	took possession	of	and	conveyed	the	real	estate,	or	are	in	the	process	of conveyance	and	claim	resolution.

•	Net	charge-offs	were	$.5	billion	in	2014,	down	51%	from	net	charge- offs	in	2013	of	$1.1	billion,	due	primarily	to	improved	overall	credit quality.	Net	charge-offs	for	2013	included	$134	million	of	charge-offs due	to	the	impact	of	alignment	with	interagency	supervisory	guidance on	practices	for	loans	and	lines	of	credit	related	to	consumer	lending	in the	first	quarter	of	2013.

•	Provision	for	credit	losses	in	2014	decreased	to	$273	million	compared with	$643	million	in	2013.	The	smaller	provision	is	attributed	to improved	overall	credit	quality,	including	lower	consumer	loan delinquencies,	and	the	increasing	value	of	residential	real	estate	which resulted	in	greater	expected	cash	flows	from	our	purchased	impaired loans.

# Nonperforming	Assets	and	Loan	Delinquencies

Nonperforming	Assets,	including	OREO	and	Foreclosed	Assets Nonperforming	assets	include	nonperforming	loans	and	leases	for	which ultimate	collectability	of	the	full	amount	of	contractual	principal	and	interest	is not	probable	and	include	nonperforming	troubled	debt	restructurings	(TDRs), OREO	and	foreclosed	assets.	Loans	held	for	sale,	certain	government	insured	or guaranteed	loans,	purchased	impaired	loans	and	loans	accounted	for	under	the fair	value	option	are	excluded	from	nonperforming	loans.	Additional	information regarding	our	nonperforming	loans	and	nonaccrual	policies	is	included	in	Note	1 Accounting	Policies	in	the	Notes	To	Consolidated	Financial	Statements	in Item	8	of	this	Report.	The	major	categories	of	nonperforming	assets	are presented	in	Table	30.

In	the	first	quarter	of	2013,	we	completed	our	alignment	of	certain	nonaccrual and	charge-off	policies	consistent	with	interagency	supervisory	guidance	on practices	for	loans	and	lines	of	credit	related	to	consumer	lending.	This alignment	primarily	related	to	(i)	subordinate	consumer	loans	(home	equity loans	and	lines	of	credit	and	residential	mortgages)	where	the	first-lien	loan	was 90	days	or	more	past	due,	(ii)	government	guaranteed	loans	where	the	guarantee may	not	result	in	collection	of	substantially	all	contractual	principal	and	interest and	(iii)	certain	loans	with	borrowers	in	or	discharged	from	bankruptcy.	In	the first	quarter	of	2013,	nonperforming	loans	increased	by	$426	million	and	net charge-offs	increased	by	$134	million	as	a	result	of	completing	the	alignment	of the	aforementioned	policies.	Additionally,	overall	delinquencies	decreased	$395 million	due	to	loans	now	being	reported	as	either	nonperforming	or,	in	the	case of	loans	accounted	for	under	the	fair	value	option,	nonaccruing	or	having	been charged	off.	Certain	consumer	nonperforming	loans	were	charged-off	to	the respective	collateral	value	less	costs	to	sell,	and	any	associated	allowance	at	the time	of	charge-off	was	reduced	to	zero.	As	the	interagency	guidance	was adopted,	incremental	provision	for	credit	losses	was	recorded	if	the	related	loan charge-off	exceeded	the	associated	allowance.	Subsequent	declines	in	collateral value	for	these	loans	will	result	in	additional	charge-offs	to	maintain	recorded investment	at	collateral	value	less	costs	to	sell.

At	December	31,	2014,	TDRs	included	in	nonperforming	loans	were	$1.4 billion,	or	55%,	of	total	nonperforming	loans	compared	to	$1.5	billion,	or	49%, of	total	nonperforming	loans	as	of	December	31,	2013.	Within	consumer nonperforming	loans,	residential	real	estate	TDRs	comprise	60%	of	total residential	real	estate	nonperforming	loans	at	December	31,	2014,	up	from	59% at	December	31,	2013.	Home	equity	TDRs	comprise	54%	of	home	equity nonperforming	loans	at	both	December	31,	2014	and	at	December	31,	2013. TDRs	generally	remain	in	nonperforming	status	until	a	borrower	has	made	at least	six	consecutive	months	of	both	principal	and	interest	payments	under	the modified	terms	or	ultimate	resolution	occurs.	Loans	where	borrowers	have	been discharged	from	personal	liability

through	Chapter	7	bankruptcy	and	have	not	formally	reaffirmed	their	loan obligations	to	PNC	and	loans	to	borrowers	not	currently	obligated	to	make	both principal	and	interest	payments	under	the	restructured	terms	are	not	returned	to accrual	status.

At	December	31,	2014,	our	largest	nonperforming	asset	was	$35	million	in	the Real	Estate,	Rental	and	Leasing	Industry	and	our	average	nonperforming	loans associated	with	commercial	lending	were	under	$1	million.	All	of	the	ten	largest outstanding	nonperforming	assets	are	from	the	commercial	lending	portfolio	and represent	21%	and	4%	of	total	commercial	lending	nonperforming	loans	and total	nonperforming	assets,	respectively,	as	of	December		31,	2014.

# Table	30:	Nonperforming	Assets	By	Type

| Dollars	in	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Nonperforming\tloans |  |  |
| Commercial\tlending\nCommercial |  |  |
| Retail/wholesale\ttrade | $48 | $57 |
| Manufacturing | 59 | 58 |
| Service\tproviders | 67 | 108 |
| Real\testate\trelated\t(a) | 66 | 124 |
| Financial\tservices | 4 | 7 |
| Health\tcare | 28 | 19 |
| Other\tindustries | 18 | 84 |
| Total\tcommercial | 290 | 457 |
| Commercial\treal\testate |  |  |
| Real\testate\tprojects\t(b) | 290 | 436 |
| Commercial\tmortgage | 44 | 82 |
| Total\tcommercial\treal\testate | 334 | 518 |
| Equipment\tlease\tfinancing | 2 | 5 |
| Total\tcommercial\tlending | 626 | 980 |
| Consumer\tlending\t(c) |  |  |
| Home\tequity | 1,112 | 1,139 |
| Residential\treal\testate |  |  |
| Residential\tmortgage | 694 | 890 |
| Residential\tconstruction | 12 | 14 |
| Credit\tcard | 3 | 4 |
| Other\tconsumer | 63 | 61 |
| Total\tconsumer\tlending | 1,884 | 2,108 |
| Total\tnonperforming\tloans\t(d) | 2,510 | 3,088 |
| OREO\tand\tforeclosed\tassets |  |  |
| Other\treal\testate\towned\t(OREO)\t(e) | 351 | 360 |
| Foreclosed\tand\tother\tassets | 19 | 9 |
| Total\tOREO\tand\tforeclosed\tassets | 370 | 369 |
| Total\tnonperforming\tassets | $2,880 | $3,457 |
| Amount\tof\tTDRs\tincluded\tin\tnonperforming\tloans | $1,370 | $1,511 |
| Percentage\tof\ttotal\tnonperforming\tloans | 55% | 49% |
| Nonperforming\tloans\tto\ttotal\tloans | 1.23% | 1.58% |
| Nonperforming\tassets\tto\ttotal\tloans,\tOREO\tand\tforeclosed\tassets | 1.40 | 1.76 |
| Nonperforming\tassets\tto\ttotal\tassets | 0.83 | 1.08 |
| Allowance\tfor\tloan\tand\tlease\tlosses\tto\ttotal\tnonperforming\tloans |  |  |
| (f) | 133 | 117 |

(a) Includes	loans	related	to	customers	in	the	real	estate	and	construction	industries. (b) Includes	both	construction	loans	and	intermediate	financing	for	projects.

(c) Excludes	most	consumer	loans	and	lines	of	credit,	not	secured	by	residential	real	estate,	which	are charged	off	after	120	to	180	days	past	due	and	are	not	placed	on	nonperforming	status.

(d) Nonperforming	loans	exclude	certain	government	insured	or	guaranteed	loans,	loans	held	for	sale, loans	accounted	for	under	the	fair	value	option	and	purchased	impaired	loans.

(e) OREO	excludes	$194	million	and	$245	million	at	December	31,	2014	and	December	31,	2013, respectively,	related	to	commercial	and	residential	real	estate	that	was	acquired	by	us	upon foreclosure	of	serviced	loans	because	they	are	insured	by	the	FHA	or	guaranteed	by	the	VA	or guaranteed	by	the	Department	of	Housing	and	Urban	Development.

(f) The	allowance	for	loan	and	lease	losses	includes	impairment	reserves	attributable	to	purchased impaired	loans.	See	Note	1	Accounting	Policies	and	Note	5	Allowances	for	Loan	and	Lease	Losses and	Unfunded	Loan	Commitments	and	Letters	of	Credit	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report	for	additional	information.

# Table	31:	OREO	and	Foreclosed	Assets

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Other\treal\testate\towned\t(OREO): |  |  |
| Residential\tproperties | $183 | $164 |
| Residential\tdevelopment\tproperties | 48 | 74 |
| Commercial\tproperties | 120 | 122 |
| Total\tOREO | 351 | 360 |
| Foreclosed\tand\tother\tassets | 19 | 9 |
| Total\tOREO\tand\tforeclosed\tassets | $370 | $369 |

Total	OREO	and	foreclosed	assets	increased	$1	million	during	2014	from	$369 million	at	December	31,	2013	to	$370	million	at	December	31,	2014	and	is	13% of	total	nonperforming	assets	at	December	31,	2014.	As	of	December	31,	2014 and	December	31,	2013,	62%	and	64%,	respectively,	of	our	OREO	and foreclosed	assets	were	comprised	of	residential	related	properties.

# Table	32:	Change	in	Nonperforming	Assets

| In	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| January\t1 | $3,457 | $3,794 |
| New\tnonperforming\tassets\t(a) | 2,127 | 3,343 |
| Charge-offs\tand\tvaluation\tadjustments\t(b) | (585) | (1,002) |
| Principal\tactivity,\tincluding\tpaydowns\tand\tpayoffs | (1,001) | (1,016) |
| Asset\tsales\tand\ttransfers\tto\tloans\theld\tfor\tsale | (570) | (492) |
| Returned\tto\tperforming\tstatus | (548) | (1,170) |
| December\t31 | $2,880 | $3,457 |
| (a)\nNew\tnonperforming\tassets\tin\tthe\t2013\tperiod\tinclude\t$560\tmillion\tof\tloans\tadded\tin\tthe\tfirst |  |  |

(a) New	nonperforming	assets	in	the	2013	period	include	$560	million	of	loans	added	in	the	first quarter	of	2013	due	to	the	alignment	with	interagency	supervisory	guidance	on	practices	for	loans and	lines	of	credit	related	to	consumer	lending.

(b) Charge-offs	and	valuation	adjustments	in	the	2013	period	include	$134	million	of	charge-offs	due	to the	alignment	with	interagency	supervisory	guidance	discussed	in	footnote	(a)	above.

The	table	above	presents	nonperforming	asset	activity	during	2014	and	2013, respectively.	Nonperforming	assets	decreased	$577	million	from	$3.5	billion	at December	31,	2013	to	$2.9	billion	at	December	31,	2014,	as	a	result	of improvements	in	both	consumer	and	commercial	lending.	Consumer	lending nonperforming	loans	decreased	$224	million,	commercial	real	estate nonperforming	loans	declined	$184	million	and	commercial	nonperforming loans	decreased	$167	million.	As	of	December	31,	2014,	approximately	90%	of total	nonperforming	loans	were	secured	by	collateral	which	lessens	reserve requirements	and	is	expected	to	reduce	credit	losses	in	the	event	of	default.	As	of December	31,	2014,	commercial	lending	nonperforming	loans	were	carried	at approximately	65%	of	their	unpaid	principal	balance,	due	to	charge-offs recorded	to	date,	before	consideration	of	the	ALLL.	See	Note	3	Asset	Quality	in the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	for additional	information	on	these	loans.

Purchased	impaired	loans	are	considered	performing,	even	if	contractually	past due	(or	if	we	do	not	expect	to	receive	payment	in	full	based	on	the	original contractual	terms),	as	we	accrete	interest	income	over	the	expected	life	of	the loans.	The	accretable	yield	represents	the	excess	of	the	expected	cash	flows	on the	loans	at	the	measurement	date	over	the	carrying	value.	Generally	decreases, other	than	interest	rate	decreases	for	variable	rate	notes,	in	the	net	present	value of	expected	cash	flows	of	individual	commercial	or	pooled	purchased	impaired loans	would	result	in	an	impairment	charge	to	the	provision	for	credit	losses	in the	period	in	which	the	change	is	deemed	probable.	Generally	increases	in	the net	present	value	of	expected	cash	flows	of	purchased	impaired	loans	would

first	result	in	a	recovery	of	previously	recorded	allowance	for	loan	losses,	to	the extent	applicable,	and	then	an	increase	to	accretable	yield	for	the	remaining	life of	the	purchased	impaired	loans.	Total	nonperforming	loans	and	assets	in	the tables	above	are	significantly	lower	than	they	would	have	been	due	to	this accounting	treatment	for	purchased	impaired	loans.	This	treatment	also	results	in a	lower	ratio	of	nonperforming	loans	to	total	loans	and	a	higher	ratio	of	ALLL	to nonperforming	loans.	See	Note	4	Purchased	Loans	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report	for	additional	information	on	these loans.

# Loan	Delinquencies

We	regularly	monitor	the	level	of	loan	delinquencies	and	believe	these	levels may	be	a	key	indicator	of	loan	portfolio	asset	quality.	Measurement	of delinquency	status	is	based	on	the	contractual	terms	of	each	loan.	Loans	that	are 30	days	or	more	past	due	in	terms	of	payment	are	considered	delinquent.	Loan delinquencies	exclude	loans	held	for	sale	and	purchased	impaired	loans,	but include	government	insured	or	guaranteed	loans	and	loans	accounted	for	under the	fair	value	option.

Total	early	stage	loan	delinquencies	(accruing	loans	past	due	30	to	89	days) decreased	from	$1.0	billion	at	December	31,	2013	to	$0.8	billion	at December	31,	2014.	The	reduction	in	both	consumer	and	commercial	lending early	stage	delinquencies	resulted	from	improved	credit	quality.	See	Note	1 Accounting	Policies	in	the	Notes	To	Consolidated	Financial	Statements	of	this Report	for	additional	information	regarding	our	nonperforming	loan	and nonaccrual	policies.

Accruing	loans	past	due	90	days	or	more	are	referred	to	as	late	stage delinquencies.	These	loans	are	not	included	in	nonperforming	loans	and	continue to	accrue	interest	because	they	are	well	secured	by	collateral,	and/or	are	in	the process	of	collection,	are	managed	in	homogenous	portfolios	with	specified charge-off	timeframes	adhering	to	regulatory	guidelines,	or	are	certain government	insured	or	guaranteed	loans.	These	loans	decreased	$.4	billion,	or 26%,	from	$1.5	billion	at	December	31,	2013	to	$1.1	billion	at	December	31, 2014,	mainly	due	to	a	decline	in	government	insured	residential	real	estate	loans of	$.3	billion,	the	majority	of	which	we	took	possession	of	and	conveyed	the	real estate,	or	are	in	the	process	of	conveyance	and	claim	resolution.	The	following tables	display	the	delinquency	status	of	our	loans	at	December	31,	2014	and December	31,	2013.	Additional	information	regarding	accruing	loans	past	due	is included	in	Note	3	Asset	Quality	in	the	Notes	To	Consolidated	Financial Statements	of	this	Report.

|  |  |  | Amount |  | Percentage	of	Total	Outstandings | Percentage	of	Total	Outstandings |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | December\t31 |  | December\t31 | December\t31 | December\t31 |
| Dollars\tin\tmillions | Dollars\tin\tmillions | 2014 |  | 2013 | 2014 | 2013 |
| Commercial | Commercial | $73 |  | $81 | .07% | .09% |
| Commercial\treal\testate | Commercial\treal\testate | 23 |  | 54 | .10 | .25 |
| Equipment\tlease\tfinancing | Equipment\tlease\tfinancing | 11 |  | 31 | .14 | .41 |
| Home\tequity | Home\tequity | 70 |  | 86 | .20 | .24 |
| Residential\treal\testate |  |  |  |  |  |  |
| Non\tgovernment\tinsured | Non\tgovernment\tinsured | 95 |  | 112 | .66 | .74 |
| Government\tinsured | Government\tinsured | 68 |  | 105 | .47 | .70 |
| Credit\tcard | Credit\tcard | 28 |  | 29 | .61 | .66 |
| Other\tconsumer |  |  |  |  |  |  |
| Non\tgovernment\tinsured | Non\tgovernment\tinsured | 62 |  | 62 | .27 | .28 |
| Government\tinsured | Government\tinsured | 152 |  | 154 | .67 | .68 |
| Total | Total | $582 |  | $714 | .28 | .37 |
| (a) | Amounts\tin\ttable\trepresent\trecorded\tinvestment. |  |  |  |  |  |

# (a) Amounts	in	table	represent	recorded	investment.

|  |  |  | Amount |  | Percentage	of	Total	Outstandings | Percentage	of	Total	Outstandings |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | Dollars\tin\tmillions | December\t31\n2014 |  | December\t31\n2013 | December\t31\n2014 | December\t31\n2013 |
| Commercial | Commercial | $24 |  | $20 | .02% | .02% |
| Commercial\treal\testate | Commercial\treal\testate | 2 |  | 11 | .01 | .05 |
| Equipment\tlease\tfinancing | Equipment\tlease\tfinancing | 1 |  | 2 | .01 | .03 |
| Home\tequity | Home\tequity | 32 |  | 34 | .09 | .09 |
| Residential\treal\testate |  |  |  |  |  |  |
| Non\tgovernment\tinsured | Non\tgovernment\tinsured | 25 |  | 30 | .17 | .20 |
| Government\tinsured | Government\tinsured | 43 |  | 57 | .30 | .38 |
| Credit\tcard | Credit\tcard | 20 |  | 19 | .43 | .43 |
| Other\tconsumer |  |  |  |  |  |  |
| Non\tgovernment\tinsured | Non\tgovernment\tinsured | 19 |  | 18 | .08 | .08 |
| Government\tinsured | Government\tinsured | 93 |  | 94 | .41 | .42 |
| Total | Total | $259 |  | $285 | .13 | .15 |
| (a) | Amounts\tin\ttable\trepresent\trecorded\tinvestment. |  |  |  |  |  |

# Table	35:	Accruing	Loans	Past	Due	90	Days	Or	More	(a)

|  | Amount |  | Percentage	of	Total	Outstandings |  |
| :--- | :--- | :--- | :--- | :--- |
|  | December\t31 | December\t31 | December\t31 | December\t31 |
| Dollars\tin\tmillions | 2014 | 2013 | 2014 | 2013 |
| Commercial | $37 | $42 | .04% | .05% |
| Commercial\treal\testate |  | 2 |  | .01 |
| Residential\treal\testate |  |  |  |  |
| Non\tgovernment\tinsured | 23 | 35 | .16 | .23 |
| Government\tinsured | 719 | 1,025 | 4.99 | 6.80 |
| Credit\tcard | 33 | 34 | .72 | .77 |
| Other\tconsumer |  |  |  |  |
| Non\tgovernment\tinsured | 16 | 14 | .07 | .06 |
| Government\tinsured | 277 | 339 | 1.22 | 1.50 |
| Total | $1,105 | $1,491 | .54 | .76 |
| (a)\nAmounts\tin\ttable\trepresent\trecorded\tinvestment. |  |  |  |  |

On	a	regular	basis	our	Special	Asset	Committee	closely	monitors	loans, primarily	commercial	loans,	that	are	not	included	in	the	nonperforming	or accruing	past	due	categories	and	for	which	we	are	uncertain	about	the	borrower's ability	to	comply	with	existing	repayment	terms.	These	loans	totaled	$.2	billion at	both	December	31,	2014	and	December	31,	2013.

# Home	Equity	Loan	Portfolio

Our	home	equity	loan	portfolio	totaled	$34.7	billion	as	of	December	31,	2014, or	17%	of	the	total	loan	portfolio.	Of	that	total,	$20.4	billion,	or	59%,	was outstanding	under	primarily	variable-rate	home	equity	lines	of	credit	and	$14.3 billion,	or	41%,	consisted	of	closed-end	home	equity	installment	loans. Approximately	3%	of	the	home	equity	portfolio	was	on	nonperforming	status	as of	December	31,	2014.

As	of	December	31,	2014,	we	are	in	an	originated	first	lien	position	for approximately	51%	of	the	total	portfolio	and,	where	originated	as	a	second	lien, we	currently	hold	or	service	the	first	lien	position	for	approximately	an additional	2%	of	the	portfolio.	The	remaining	47%	of	the	portfolio	was	secured by	second	liens	where	we	do	not	hold	the	first	lien	position.	The	credit performance	of	the	majority	of	the	home	equity	portfolio	where	we	are	in,	hold or	service	the	first	lien	position,	is	superior	to	the	portion	of	the	portfolio	where we	hold	the	second	lien	position	but	do	not	hold	the	first	lien.

Lien	position	information	is	generally	based	upon	original	LTV	at	the	time	of origination.	However,	after	origination	PNC	is	not	typically	notified	when	a senior	lien	position	that	is	not	held	by	PNC	is	satisfied.	Therefore,	information about	the	current	lien	status	of	junior	lien	loans	is	less	readily	available	in	cases where	PNC	does	not	also	hold	the	senior	lien.	Additionally,	PNC	is	not	typically notified	when	a	junior	lien	position	is	added	after	origination	of	a	PNC	first	lien. This	updated	information	for	both	junior	and	senior	liens	must	be	obtained	from external	sources,	and	therefore,	PNC	has	contracted	with	an	industry-leading third-party	service	provider	to	obtain	updated	loan,	lien	and	collateral	data	that	is aggregated	from	public	and	private	sources.

We	track	borrower	performance	monthly,	including	obtaining	original	LTVs, updated	FICO	scores	at	least	quarterly,	updated	LTVs	semi-annually,	and	other credit	metrics	at	least	quarterly,	including	the	historical	performance	of	any mortgage	loans	regardless	of	lien	position	that	we	do	or	do	not	hold.	This information	is	used	for	internal	reporting	and	risk	management.	For	internal reporting	and	risk	management	we	also	segment	the	population	into	pools	based on	product	type	(e.g.,	home	equity	loans,	brokered	home	equity	loans,	home equity	lines	of	credit,	brokered	home	equity	lines	of	credit).	As	part	of	our overall	risk	analysis	and	monitoring,	we	segment	the	home	equity	portfolio based	upon	the	delinquency,	modification	status	and	bankruptcy	status	of

these	loans,	as	well	as	the	delinquency,	modification	status	and	bankruptcy status	of	any	mortgage	loan	with	the	same	borrower	(regardless	of	whether	it	is	a first	lien	senior	to	our	second	lien).

In	establishing	our	ALLL	for	non-impaired	loans,	we	primarily	utilize	a delinquency	roll-rate	methodology	for	pools	of	loans.	In	accordance	with accounting	principles,	under	this	methodology,	we	establish	our	allowance	based upon	incurred	losses,	not	lifetime	expected	losses.	The	roll-rate	methodology estimates	transition/roll	of	loan	balances	from	one	delinquency	state	(e.g.,	30-59 days	past	due)	to	another	delinquency	state	(e.g.,	60-89	days	past	due)	and ultimately	to	charge-off.	The	roll	through	to	charge-off	is	based	on	PNC's	actual loss	experience	for	each	type	of	pool.	Each	of	our	home	equity	pools	contains both	first	and	second	liens.	Our	experience	has	been	that	the	ratio	of	first	to second	lien	loans	has	been	consistent	over	time	and	the	charge-off	amounts	for the	pools,	used	to	establish	our	allowance,	include	losses	on	both	first	and second	liens	loans.

Generally,	our	variable-rate	home	equity	lines	of	credit	have	either	a	seven	or	ten year	draw	period,	followed	by	a	20-year	amortization	term.	During	the	draw period,	we	have	home	equity	lines	of	credit	where	borrowers	pay	either	interest or	principal	and	interest.	We	view	home	equity	lines	of	credit	where	borrowers are	paying	principal	and	interest	under	the	draw	period	as	less	risky	than	those where	the	borrowers	are	paying	interest	only,	as	these	borrowers	have	a demonstrated	ability	to	make	some	level	of	principal	and	interest	payments.	The risk	associated	with	the	borrower's	ability	to	satisfy	the	loan	terms	upon	the	draw period	ending	is	considered	in	establishing	our	ALLL.	Based	upon	outstanding balances	at	December	31,	2014,	the	following	table	presents	the	periods	when home	equity	lines	of	credit	draw	periods	are	scheduled	to	end.

# Table	36:	Home	Equity	Lines	of	Credit	–	Draw	Period	End	Dates

| In	millions | Interest	Only<br>Product | Principal	and<br>Interest	Product |
| :--- | :--- | :--- |
| 2015 | $1,597 | $541 |
| 2016 | 1,366 | 437 |
| 2017 | 2,434 | 596 |
| 2018 | 1,072 | 813 |
| 2019\tand\tthereafter | 3,880 | 5,391 |
| Total\t(a)(b) | $10,349 | $7,778 |

(a) Includes	all	home	equity	lines	of	credit	that	mature	in	2015	or	later,	including	those	with	borrowers where	we	have	terminated	borrowing	privileges.

(b) Includes	approximately	$154	million,	$48	million,	$57	million,	$42	million	and	$564	million	of home	equity	lines	of	credit	with	balloon	payments,	including	those	where	we	have	terminated borrowing	privileges,	with	draw	periods	scheduled	to	end	in	2015,	2016,	2017,	2018	and	2019	and thereafter,	respectively.

Based	upon	outstanding	balances,	and	excluding	purchased	impaired	loans,	at December	31,	2014,	for	home	equity	lines	of	credit	for	which	the	borrower	can no	longer	draw	(e.g.,	draw	period	has	ended	or	borrowing	privileges	have	been terminated),	approximately	3%	were	30-89	days	past	due	and	approximately	5% were	90	days	or	more	past	due.	Generally,	when	a	borrower	becomes	60	days past	due,	we	terminate	borrowing	privileges	and	those	privileges	are	not subsequently	reinstated.	At	that	point,	we	continue	our	collection/recovery processes,	which	may	include	loan	modification	resulting	in	a	loan	that	is classified	as	a	TDR.

See	Note	3	Asset	Quality	in	the	Notes	To	Consolidated	Financial	Statements	of this	Report	for	additional	information.

# Loan	Modifications	and	Troubled	Debt	Restructurings

# Consumer	Loan	Modifications

We	modify	loans	under	government	and	PNC-developed	programs	based	upon our	commitment	to	help	eligible	homeowners	and	borrowers	avoid	foreclosure, where	appropriate.	Initially,	a	borrower	is	evaluated	for	a	modification	under	a government	program.	If	a	borrower	does	not	qualify	under	a	government program,	the	borrower	is	then	evaluated	under	a	PNC	program.	Our	programs utilize	both	temporary	and	permanent	modifications	and	typically	reduce	the interest	rate,	extend	the	term	and/or	defer	principal.	Loans	that	are	either temporarily	or	permanently	modified	under	programs	involving	a	change	to	loan terms	are	generally	classified	as	TDRs.	Further,	loans	that	have	certain	types	of payment	plans	and	trial	payment	arrangements	which	do	not	include	a contractual	change	to	loan	terms	may	be	classified	as	TDRs.	Additional	detail	on TDRs	is	discussed	below	as	well	as	in	Note	3	Asset	Quality	in	the	Notes	To Consolidated	Financial	Statements	of	this	Report.

A	temporary	modification,	with	a	term	between	3	and	24	months,	involves	a change	in	original	loan	terms	for	a	period	of	time	and	reverts	to	a	calculated	exit rate	for	the	remaining	term	of	the	loan	as	of	a	specific	date.	A	permanent modification,	with	a	term	greater	than	24	months,	is	a	modification	in	which	the terms	of	the	original	loan	are	changed.	Permanent	modification	programs primarily	include	the	government-created	Home	Affordable	Modification Program	(HAMP)	and	PNC-developed	HAMP-like	modification	programs.

For	home	equity	lines	of	credit,	we	will	enter	into	a	temporary	modification when	the	borrower	has	indicated	a	temporary	hardship	and	a	willingness	to	bring current	the	delinquent	loan	balance.	Examples	of	this	situation	often	include delinquency	due	to	illness	or	death	in	the	family	or	loss	of	employment. Permanent	modifications	are	entered	into	when	it	is	confirmed	that	the	borrower does	not	possess	the	income	necessary	to	continue	making	loan	payments	at	the current	amount,	but	our	expectation	is	that	the	borrower	can	make	payments	at	a lower	amount.

We	also	monitor	the	success	rates	and	delinquency	status	of	our	loan modification	programs	to	assess	their	effectiveness	in	serving	our	customers' needs	while	mitigating	credit	losses.	Table	37	provides	the	number	of	accounts and	unpaid	principal	balance	of	modified	consumer	real	estate	related	loans	at the	end	of	each	year	presented	and	Table	38	provides	the	number	of	accounts and	unpaid	principal	balance	of	modified	loans	that	were	60	days	or	more	past due	as	of	six	months,	nine	months,	twelve	months	and	fifteen	months	after	the modification	date.

# Table	37:	Consumer	Real	Estate	Related	Loan	Modifications

|  | December	31,	2014 | December	31,	2014 | December	31,	2013 | December	31,	2013 |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | Number\tof\nAccounts | Unpaid\nPrincipal\nBalance | Number\tof\nAccounts | Unpaid\nPrincipal\nBalance |
| Home\tequity |  |  |  |  |
| Temporary\tModifications | 5,346 | $417 | 6,683\t\t\t\t $ | 539 |
| Permanent\tModifications | 13,128 | 968 | 11,717 | 889 |
| Total\thome\tequity | 18,474 | \t 1,385 | 18,400 | \t 1,428 |
| Residential\tMortgages |  |  |  |  |
| Permanent\tModifications | 5,876 | \t 1,110 | 7,397 | \t 1,445 |
| Non-Prime\tMortgages |  |  |  |  |
| Permanent\tModifications | 4,358 | 611 | 4,400 | 621 |
| Residential\tConstruction |  |  |  |  |
| Permanent\tModifications | 2,292 | 629 | 2,260 | 763 |
| Total\tConsumer\tReal\tEstate\tRelated\tLoan\tModifications | 31,000 | $3,735 | 32,457\t\t\t\t $4,257 | 32,457\t\t\t\t $4,257 |

# Table	38:	Consumer	Real	Estate	Related	Loan	Modifications	Re-Default	by	Vintage	(a)	(b)

|  | Six	Months |  | Nine	Months |  | Twelve	Months |  | Fifteen	Months |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014\nDollars\tin\tthousands | Number\t\tof\nAccounts\nRe-defaulted | %\tof\nVintage\nRe-defaulted | Number\t\tof\nAccounts\nRe-defaulted | %\tof\nVintage\nRe-defaulted | Number\t\tof\nAccounts\nRe-defaulted | %\tof\nVintage\nRe-defaulted | Number\t\tof\nAccounts\nRe-defaulted | %\tof\nVintage\nRe-defaulted | Unpaid\nPrincipal\nBalance\t(c) |
| Permanent\tModifications |  |  |  |  |  |  |  |  |  |
| Home\tEquity |  |  |  |  |  |  |  |  |  |
| Second\tQuarter\t2014 | 16 | 2.8% |  |  |  |  |  |  | \t$1,053 |
| First\tQuarter\t2014 | 19 | 2.7 | 29 | 4.2% |  |  |  |  | 1,749 |
| Fourth\tQuarter\t2013 | 29 | 2.5 | 47 | 4.0 | 66 | 5.7% |  |  | 4,539 |
| Third\tQuarter\t2013 | 30 | 2.6 | 44 | 3.7 | 60 | 5.1 | 65 | 5.5% | 6,376 |
| Second\tQuarter\t2013 | 25 | 2.0 | 43 | 3.5 | 63 | 5.1 | 87 | 7.0 | 10,046 |
| Residential\tMortgages |  |  |  |  |  |  |  |  |  |
| Second\tQuarter\t2014 | 29 | 7.9 |  |  |  |  |  |  | 4,538 |
| First\tQuarter\t2014 | 50 | 6.1 | 96 | 11.8 |  |  |  |  | 14,143 |
| Fourth\tQuarter\t2013 | 84 | 9.4 | 121 | 13.6 | 173 | 19.4 |  |  | 24,450 |
| Third\tQuarter\t2013 | 97 | 8.9 | 150 | 13.8 | 216 | 19.8 | 255 | 23.4 | 40,999 |
| Second\tQuarter\t2013 | 137 | 16.4 | 163 | 19.5 | 187 | 22.4 | 227 | 27.2 | 42,977 |
| Non-Prime\tMortgages |  |  |  |  |  |  |  |  |  |
| Second\tQuarter\t2014 | 12 | 13.8 |  |  |  |  |  |  | 2,174 |
| First\tQuarter\t2014 | 29 | 16.4 | 42 | 23.7 |  |  |  |  | 6,383 |
| Fourth\tQuarter\t2013 | 18 | 9.9 | 35 | 19.2 | 40 | 22.0 |  |  | 5,817 |
| Third\tQuarter\t2013 | 23 | 13.7 | 26 | 15.5 | 38 | 22.6 | 47 | 28.0 | 6,119 |
| Second\tQuarter\t2013 | 24 | 18.8 | 35 | 27.3 | 41 | 32.0 | 43 | 33.6 | 8,927 |
| Residential\tConstruction |  |  |  |  |  |  |  |  |  |
| Second\tQuarter\t2014 | 3 | 2.5 |  |  |  |  |  |  | 757 |
| First\tQuarter\t2014 | 3 | 2.2 | 3 | 2.2 |  |  |  |  | 469 |
| Fourth\tQuarter\t2013 | 1 | 0.7 | 3 | 2.2 | 4 | 2.9 |  |  | 2,354 |
| Third\tQuarter\t2013 | 1 | 0.7 | 1 | 0.7 | 1 | 0.7 | 1 | 0.7 | 50 |
| Second\tQuarter\t2013 | 1 | 0.5 | 2 | 1.1 | 4 | 2.1 | 6 | 3.2 | 1,166 |
| Temporary\tModifications |  |  |  |  |  |  |  |  |  |
| Home\tEquity |  |  |  |  |  |  |  |  |  |
| Second\tQuarter\t2014 | 12 | 37.5% |  |  |  |  |  |  | \t$779 |
| First\tQuarter\t2014 | 3 | 15.8 | 3 | 15.8% |  |  |  |  | 249 |
| Fourth\tQuarter\t2013 | 10 | 19.6 | 12 | 23.5 | 13 | 25.5% |  |  | 1,442 |
| Third\tQuarter\t2013 | 4 | 9.8 | 9 | 22.0 | 11 | 26.8 | 13 | 31.7% | 925 |
| Second\tQuarter\t2013 | 11 | 14.9 | 18 | 24.3 | 18 | 24.3 | 17 | 23.0 | 1,757 |
| (a) |  |  |  |  |  |  |  |  |  |

(a) An	account	is	considered	in	re-default	if	it	is	60	days	or	more	delinquent	after	modification.	The	data	in	this	table	represents	loan	modifications	completed	during	the	quarters	ending	June	30,	2013	through June	30,	2014	and	represents	a	vintage	look	at	all	quarterly	accounts	and	the	number	of	those	modified	accounts	(for	each	quarterly	vintage)	60	days	or	more	delinquent	at	six,	nine,	twelve,	and	fifteen	months	after modification.	Account	totals	include	active	and	inactive	accounts	that	were	delinquent	when	they	achieved	inactive	status.	Accounts	that	are	no	longer	60	days	or	more	delinquent,	or	were	re-modified	since	prior period,	are	removed	from	re-default	status	in	the	period	in	which	they	are	cured	or	re-modified.

(b) Vintage	refers	to	the	quarter	in	which	the	modification	occurred.

(c) Reflects	December	31,	2014	unpaid	principal	balances	of	the	re-defaulted	accounts	for	the	Second	Quarter	2014	vintage	at	Six	Months,	for	the	First	Quarter	2014	vintage	at	Nine	Months,	for	the	Fourth	Quarter 2013	vintage	at	Twelve	Months,	and	for	the	Third	Quarter	2013	and	prior	vintages	at	Fifteen	Months.

In	addition	to	temporary	loan	modifications,	we	may	make	available	to	a	borrower	a	payment	plan	or	a	HAMP	trial	payment	period.	Under	a	payment	plan	or	a	HAMP trial	payment	period,	there	is	no	change	to	the	loan's	contractual	terms	so	the	borrower	remains	legally	responsible	for	payment	of	the	loan	under	its	original	terms.

Payment	plans	may	include	extensions,	re-ages	and/or	forbearance	plans.	All	payment	plans	bring	an	account	current	once	certain	requirements	are	achieved	and	are primarily	intended	to	demonstrate	a	borrower's	renewed	willingness	and	ability	to	re-pay.	Due	to	the	short	term	nature	of	the	payment	plan,	there	is	a	minimal	impact	to the	ALLL.

Under	a	HAMP	trial	payment	period,	we	establish	an	alternate	payment,	generally	at	an	amount	less	than	the	contractual	payment	amount,	for	the	borrower	during	this short	time	period.	This	allows	a	borrower	to	demonstrate	successful	payment	performance

before	permanently	restructuring	the	loan	into	a	HAMP	modification. Subsequent	to	successful	borrower	performance	under	the	trial	payment	period, we	will	capitalize	the	original	contractual	amount	past	due,	to	include	accrued interest	and	fees	receivable,	and	restructure	the	loan's	contractual	terms,	along with	bringing	the	restructured	account	current.	As	the	borrower	is	often	already delinquent	at	the	time	of	participation	in	the	HAMP	trial	payment	period, generally	enrollment	in	the	program	does	not	significantly	increase	the	ALLL.	If the	trial	payment	period	is	unsuccessful,	the	loan	will	be	evaluated	for	further action	based	upon	our	existing	policies.

Residential	conforming	and	certain	residential	construction	loans	have	been permanently	modified	under	HAMP	or,	if	they	do	not	qualify	for	a	HAMP modification,	under	PNC-developed	programs,	which	in	some	cases	may	operate similarly	to	HAMP.	These	programs	first	require	a	reduction	of	the	interest	rate followed	by	an	extension	of	term	and,	if	appropriate,	deferral	of	principal payments.	As	of	December	31,	2014	and	December	31,	2013,	6,349	accounts with	a	balance	of	$.9	billion	and	5,834	accounts	with	a	balance	of	$.9	billion, respectively,	of	residential	real	estate	loans	had	been	modified	under	HAMP	and were	still	outstanding	on	our	balance	sheet.

Commercial	Loan	Modifications	and	Payment	Plans Modifications	of	terms	for	commercial	loans	are	based	on	individual	facts	and circumstances.	Commercial	loan	modifications	may	involve	reduction	of	the interest	rate,	extension	of	the	loan	term	and/or	forgiveness	of	principal.	Modified commercial	loans	are	usually	already	nonperforming	prior	to	modification.	We evaluate	these	modifications	for	TDR	classification	based	upon	whether	we granted	a	concession	to	a	borrower	experiencing	financial	difficulties.	Additional detail	on	TDRs	is	discussed	below	as	well	as	in	Note	3	Asset	Quality	in	the Notes	To	Consolidated	Financial	Statements	of	this	Report.

We	have	established	certain	commercial	loan	modification	and	payment programs	for	small	business	loans,	Small	Business	Administration	loans,	and investment	real	estate	loans.	As	of	December	31,	2014	and	December	31,	2013, $34	million	and	$47	million,	respectively,	in	loan	balances	were	covered	under these	modification	and	payment	plan	programs.	Of	these	loan	balances,	$12 million	and	$16	million	have	been	determined	to	be	TDRs	as	of	December	31, 2014	and	December	31,	2013,	respectively.

# Troubled	Debt	Restructurings

A	TDR	is	a	loan	whose	terms	have	been	restructured	in	a	manner	that	grants	a concession	to	a	borrower	experiencing	financial	difficulties.	TDRs	result	from our	loss	mitigation	activities	and	include	rate	reductions,	principal	forgiveness, postponement/reduction	of	scheduled	amortization	and

extensions,	which	are	intended	to	minimize	economic	loss	and	to	avoid foreclosure	or	repossession	of	collateral.	Additionally,	TDRs	also	result	from borrowers	that	have	been	discharged	from	personal	liability	through	Chapter	7 bankruptcy	and	have	not	formally	reaffirmed	their	loan	obligations	to	PNC.	For the	twelve	months	ended	December	31,	2014,	$1.2	billion	of	Consumer	loans held	for	sale,	loans	accounted	for	under	the	fair	value	option	and	pooled purchased	impaired	loans,	as	well	as	certain	government	insured	or	guaranteed loans,	were	excluded	from	the	TDR	population.	The	comparable	amount	for	the twelve	months	ended	December	31,	2013	was	$2.3	billion.

# Table	39:	Summary	of	Troubled	Debt	Restructurings	(a)

(a) Amounts	in	table	represent	recorded	investment,	which	includes	the	unpaid	principal	balance	plus accrued	interest	and	net	accounting	adjustments,	less	any	charge-offs.	Recorded	investment	does	not include	any	associated	valuation	allowance.

(b) Accruing	loans	have	demonstrated	a	period	of	at	least	six	months	of	performance	under	the restructured	terms	and	are	excluded	from	nonperforming	loans.	Loans	where	borrowers	have	been discharged	from	personal	liability	through	Chapter	7	bankruptcy	and	have	not	formally	reaffirmed their	loan	obligations	to	PNC	and	loans	to	borrowers	not	currently	obligated	to	make	principal	and interest	payments	under	the	restructured	terms	are	not	returned	to	accrual	status.

Total	TDRs	decreased	$156	million,	or	6%,	during	2014.	Nonperforming	TDRs totaled	$1.4	billion,	which	represents	approximately	55%	of	total	nonperforming loans,	and	53%	of	total	TDRs.

TDRs	that	are	performing,	including	credit	card	loans,	are	excluded	from nonperforming	loans.	These	TDRs	decreased	$15	million,	or	1%,	during	2014	to $1.2	billion	as	of	December	31,	2014.	Generally,	the	accruing	category	is comprised	of	loans	where	borrowers	have	been	performing	under	the restructured	terms	for	at	least	six	consecutive	months.	Loans	where	borrowers have	been	discharged	from	personal	liability	through	Chapter	7	bankruptcy	and have	not	formally	reaffirmed	their	loan	obligations	to	PNC	and	loans	to borrowers	not	currently	obligated	to	make	both	principal	and	interest	payments under	the	restructured	terms	are	not	returned	to	accrual	status.	See	Note	3	Asset Quality	in	the	Notes	To	Consolidated	Financial	Statements	in	this	Report	for additional	information.

We	recorded	$.5	billion	in	net	charge-offs	for	2014,	compared	to	$1.1	billion	for 2013.	Commercial	lending	net	charge-offs	decreased	from	$249	million	in	2013 to	$55	million	in	2014.	Consumer	lending	net	charge-offs	decreased	from	$828 million	in	2013,	which	included	$134	million	due	to	the	impact	of	alignment with	interagency	supervisory	guidance,	to	$476	million	in	2014.

# Table	40:	Loan	Charge-Offs	And	Recoveries

| Year	ended	December	31<br>Dollars	in	millions | Gross<br>Charge-offs | Recoveries | Charge-offs	/<br>(Recoveries) | Percent	of<br>Average	Loans |
| :--- | :--- | :--- | :--- | :--- |
| 2014 |  |  |  |  |
| Commercial | $276 | $207 | $69 | .07% |
| Commercial\treal |  |  |  |  |
| estate | 70 | 84 | (14) | (.06) |
| Equipment\tlease |  |  |  |  |
| financing | 14 | 14 |  |  |
| Home\tequity | 275 | 78 | 197 | .56 |
| Residential\treal |  |  |  |  |
| estate | 40 | 26 | 14 | .10 |
| Credit\tcard | 163 | 21 | 142 | 3.24 |
| Other\tconsumer | 183 | 60 | 123 | .54 |
| Total | $1,021 | $490 | $531 | .27 |
| 2013 |  |  |  |  |
| Commercial | $395 | $248 | $147 | .17% |
| Commercial\treal |  |  |  |  |
| estate | 203 | 93 | 110 | .57 |
| Equipment\tlease\nfinancing | 8 | 16 | (8) | (.11) |
| Home\tequity | 486 | 73 | 413 | 1.14 |
| Residential\treal\nestate | 133 | 4 | 129 | .86 |
| Credit\tcard | 178 | 22 | 156 | 3.75 |
| Other\tconsumer | 185 | 55 | 130 | .60 |
| Total | $1,588 | $511 | $1,077 | .57 |

Total	net	charge-offs	are	lower	than	they	would	have	been	otherwise	due	to	the accounting	treatment	for	purchased	impaired	loans.	This	treatment	also	results	in a	lower	ratio	of	net	charge-offs	to	average	loans.	See	Note	4	Purchased	Loans	in the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	for additional	information	on	net	charge-offs	related	to	these	loans.

We	maintain	an	ALLL	to	absorb	losses	from	the	loan	and	lease	portfolio	and determine	this	allowance	based	on	quarterly	assessments	of	the	estimated probable	credit	losses	incurred	in	the	loan	and	lease	portfolio.	We	maintain	the ALLL	at	a	level	that	we	believe	to	be	appropriate	to	absorb	estimated	probable credit	losses	incurred	in	the	loan	and	lease	portfolio	as	of	the	balance	sheet	date. The	reserve	calculation	and	determination	process	is	dependent	on	the	use	of	key assumptions.	Key	reserve	assumptions	and	estimation	processes	react	to	and	are influenced	by	observed	changes	in	loan	and	lease	portfolio	performance experience,	the	financial

strength	of	the	borrower,	and	economic	conditions.	Key	reserve	assumptions	are periodically	updated.

We	establish	specific	allowances	for	loans	considered	impaired	using	methods prescribed	by	GAAP.	All	impaired	loans	are	subject	to	individual	analysis, except	leases	and	large	groups	of	smaller-balance	homogeneous	loans	which may	include,	but	are	not	limited	to,	credit	card,	residential	real	estate	secured and	consumer	installment	loans.	Specific	allowances	for	individual	loans (including	commercial	and	consumer	TDRs)	are	determined	based	on	an analysis	of	the	present	value	of	expected	future	cash	flows	from	the	loans discounted	at	their	effective	interest	rate,	observable	market	price	or	the	fair value	of	the	underlying	collateral.

Reserves	allocated	to	non-impaired	commercial	loan	classes	are	based	on	PD and	LGD	credit	risk	ratings.

Our	commercial	pool	reserve	methodology	is	sensitive	to	changes	in	key	risk parameters	such	as	PD	and	LGD.	The	results	of	these	parameters	are	then applied	to	the	loan	balance	and	unfunded	loan	commitments	and	letters	of	credit to	determine	the	amount	of	the	respective	reserves.	Our	PDs	and	LGDs	are primarily	determined	using	internal	commercial	loan	loss	data.	This	internal	data is	supplemented	with	third-party	data	and	management	judgment,	as	deemed necessary.	We	continue	to	evaluate	and	enhance	our	use	of	internal	commercial loss	data	and	will	periodically	update	our	PDs	and	LGDs	as	well	as	consider third-party	data,	regulatory	guidance	and	management	judgment.

The	majority	of	the	commercial	portfolio	is	secured	by	collateral,	including loans	to	asset-based	lending	customers,	which	continues	to	demonstrate	lower LGD	compared	to	loans	not	secured	by	collateral.	Further,	the	large	investment grade	or	equivalent	portion	of	the	loan	portfolio	has	performed	well	and	has	not been	subject	to	significant	deterioration.	Additionally,	guarantees	on	loans greater	than	$1	million	and	owner	guarantees	for	small	business	loans	do	not significantly	impact	our	ALLL.

Allocations	to	non-impaired	consumer	loan	classes	are	primarily	based	upon	a roll-rate	model	which	uses	statistical	relationships,	calculated	from	historical data	that	estimate	the	movement	of	loan	outstandings	through	the	various	stages of	delinquency	and	ultimately	charge-off.

A	portion	of	the	ALLL	is	related	to	qualitative	and	measurement	factors.	These factors	may	include,	but	are	not	limited	to,	the	following:

•	Industry	concentrations	and	conditions,

•	Recent	credit	quality	trends,

•	Recent	loss	experience	in	particular	portfolios,

•	Recent	macro-economic	factors,

•	Model	imprecision,

•	Changes	in	lending	policies	and	procedures,

•	Timing	of	available	information,	including	the	performance	of	first	lien positions,	and

•	Limitations	of	available	historical	data.

PNC's	determination	of	the	ALLL	for	non-impaired	loans	is	sensitive	to	the	risk grades	assigned	to	commercial	loans	and	loss	rates	for	consumer	loans.	There are	several	other	qualitative	and	quantitative	factors	considered	in	determining the	ALLL.	This	sensitivity	analysis	does	not	necessarily	reflect	the	nature	and extent	of	future	changes	in	the	ALLL.	It	is	intended	to	provide	insight	into	the impact	of	adverse	changes	to	risk	grades	and	loss	rates	only	and	does	not	imply any	expectation	of	future	deterioration	in	the	risk	ratings	or	loss	rates.	Given	the current	processes	used,	we	believe	the	risk	grades	and	loss	rates	currently assigned	are	appropriate.	In	the	hypothetical	event	that	the	aggregate	weighted average	commercial	loan	risk	grades	would	experience	a	1%	deterioration, assuming	all	other	variables	remain	constant,	the	allowance	for	commercial loans	would	increase	by	approximately	$35	million	as	of	December	31,	2014.	In the	hypothetical	event	that	consumer	loss	rates	would	increase	by	10%,	assuming all	other	variables	remain	constant,	the	allowance	for	consumer	loans	would increase	by	approximately	$37	million	at	December	31,	2014.

Purchased	impaired	loans	are	initially	recorded	at	fair	value	and	applicable accounting	guidance	prohibits	the	carry	over	or	creation	of	valuation	allowances at	acquisition.	Because	the	initial	fair	values	of	these	loans	already	reflect	a credit	component,	additional	reserves	are	established	when	performance	is expected	to	be	worse	than	our	expectations	as	of	the	acquisition	date.	At December	31,	2014,	we	had	established	reserves	of	$.9	billion	for	purchased impaired	loans.	In	addition,	loans	(purchased	impaired	and	non-impaired) acquired	after	January	1,	2009	were	recorded	at	fair	value.	No	allowance	for	loan losses	was	carried	over	and	no	allowance	was	created	at	the	date	of	acquisition. See	Note	4	Purchased	Loans	in	the	Notes	To	Consolidated	Financial	Statements in	Item	8	of	this	Report	for	additional	information.

In	determining	the	appropriateness	of	the	ALLL,	we	make	specific	allocations	to impaired	loans	and	allocations	to	portfolios	of	commercial	and	consumer	loans. We	also	allocate	reserves	to	provide	coverage	for	probable	losses	incurred	in	the portfolio	at	the	balance	sheet	date	based	upon	current	market	conditions,	which may	not	be	reflected	in	historical	loss	data.	Commercial	lending	is	the	largest category	of	credits	and	is	sensitive	to	changes	in	assumptions	and	judgments underlying	the	determination	of	the	ALLL.	We	have	allocated	approximately $1.6	billion,	or	47%,	of	the	ALLL	at	December	31,	2014	to	the	commercial lending	category.	Consumer	lending	allocations	are	made	based	on	historical loss	experience	adjusted	for	recent	activity.	Approximately	$1.7	billion,	or	53%, of	the	ALLL	at	December	31,	2014	has	been	allocated	to	these	consumer	lending categories.

In	addition	to	the	ALLL,	we	maintain	an	allowance	for	unfunded	loan commitments	and	letters	of	credit.	We	report	this	allowance	as	a	liability	on	our Consolidated	Balance	Sheet.	We	maintain	the	allowance	for	unfunded	loan commitments	and	letters	of	credit	at	a	level	we	believe	is	appropriate	to	absorb estimated	probable	losses	on	these	unfunded	credit	facilities.	We	determine	this amount	using	estimates	of	the	probability	of	the	ultimate	funding	and	losses related	to	those	credit	exposures.	Other	than	the	estimation	of	the	probability	of funding,	this	methodology	is	very	similar	to	the	one	we	use	for	determining	our ALLL.

We	refer	you	to	Note	1	Accounting	Policies	and	Note	3	Asset	Quality	in	the Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	for	further information	on	certain	key	asset	quality	indicators	that	we	use	to	evaluate	our portfolios	and	establish	the	allowances.

# Table	41:	Allowance	for	Loan	and	Lease	Losses

(a) Includes	charge-offs	of	$134	million	taken	pursuant	to	alignment	with	interagency	guidance	on practices	for	loans	and	lines	of	credit	related	to	consumer	lending	in	the	first	quarter	of	2013.

The	provision	for	credit	losses	totaled	$273	million	for	2014	compared	to	$643 million	for	2013.	The	primary	drivers	of	the	decrease	to	the	provision	were improved	overall	credit	quality,	including	lower	consumer	loan	delinquencies, and	the	increasing	value	of	residential	real	estate	which	resulted	in	greater expected	cash	flows	from	our	purchased	impaired	loans.	For	2014,	the	provision for	commercial	lending	credit	losses	increased	by	$64	million,	or	178%,	from 2013	primarily	due	to	continued	growth	in	the	commercial	book,	paired	with slowing	of	the	reserve	releases	related	to	credit	quality	improvement.	The provision	for	consumer	lending	credit	losses	decreased	$434	million,	or	71%, from	2013.

At	December	31,	2014,	total	ALLL	to	total	nonperforming	loans	was	133%.	The comparable	amount	for	December	31,	2013	was	117%.	These	ratios	are	85%	and 72%,	respectively,	when	excluding	the	$1.2	billion	and	$1.4	billion,	respectively, of	ALLL	at	December	31,	2014	and	December	31,	2013	allocated	to	consumer loans	and	lines	of	credit	not	secured	by	residential	real	estate	and	purchased impaired	loans.	We	have	excluded	consumer	loans	and	lines	of	credit	not secured	by	real	estate	as	they	are	charged	off	after	120	to	180	days	past	due	and not	placed	on	nonperforming	status.	Additionally,	we	have	excluded	purchased impaired	loans	as	they	are	considered	performing	regardless	of	their	delinquency status	as	interest	is	accreted	in	accordance	with	ASC	310-30	based	on	the recorded	investment	balance.	Additional	allowance	is	recorded	when	the	net present	value	of	expected	cash	flows	is	lower	than	the	recorded	investment balance.	See	Table	30	within	this	Credit	Risk	Management	section	for	additional information.

The	ALLL	balance	increases	or	decreases	across	periods	in	relation	to fluctuating	risk	factors,	including	asset	quality	trends,	net	charge-offs	and changes	in	aggregate	portfolio	balances.	During	2014,	improved	asset	quality trends,	including,	but	not	limited	to,	delinquency	status	and	improving	economic conditions,	as	well	as	reduced	net	charge-offs	and	overall	portfolio	growth combined	to	result	in	the	ALLL	balance	declining	$.3	billion,	or	8%	to	$3.3 billion	as	of	December	31,	2014	compared	to	December	31,	2013.

See	Note	1	Accounting	Policies	and	Note	4	Purchased	Loans	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report	regarding	changes	in the	ALLL	and	in	the	allowance	for	unfunded	loan	commitments	and	letters	of credit.

# Operational	Risk	Management

Operational	risk	is	the	risk	of	loss	resulting	from	inadequate	or	failed	internal processes	or	systems,	human	factors,	or	external	events.	This	includes	losses	that may	arise	as	a	result	of	non-compliance	with	laws	or	regulations,	failure	to	fulfill fiduciary	responsibilities,	as	well	as	litigation	or	other	legal	actions.	Operational risk	may	occur	in	any	of	our	business	activities	and	manifests	itself	in	various ways,	including	but	not	limited	to:

•	Transaction	processing	errors,

•	Unauthorized	transactions	and	fraud	by	employees	or	third	parties, •	Material	disruption	in	business	activities, •	System	breaches	and	misuse	of	sensitive	information, •	Regulatory	or	governmental	actions,	fines	or	penalties,	and •	Significant	legal	expenses,	judgments	or	settlements.

PNC's	Operational	Risk	Management	is	inclusive	of	Technology	Risk Management	and	Business	Continuity	Risk.	Enterprise	Compliance	is responsible	for	coordinating	the

compliance	risk	component	of	PNC's	Operational	Risk	framework.	Operational Risk	Management	focuses	on	balancing	business	needs,	regulatory	expectations and	risk	management	priorities	through	an	adaptive	and	proactive	program	that is	designed	to	provide	a	strong	governance	model,	sound	and	consistent	risk management	processes	and	transparent	operational	risk	reporting	across	the enterprise.

The	PNC	Board	determines	the	strategic	approach	to	operational	risk	via establishment	of	guiding	principles,	risk	appetite	and	appropriate	risk management	structure.	This	includes	establishment	of	risk	metrics	and	limits	and operational	risk	committee	hierarchy	and	reporting	structure	to	identify, understand	and	manage	operational	risks.

Executive	Management	has	responsibility	for	operational	risk	management.	The executive	management	team	is	responsible	for	monitoring	significant	risks,	key controls	and	related	issues	through	management	reporting	and	a	governance structure	of	risk	committees,	to	help	ensure	that	objectives	are	pursued	within	the bounds	of	our	risk	appetite.

Within	the	Independent	Risk	Management	function,	Operational	Risk Management	(ORM)	is	responsible	for	developing	and	maintaining	the	policies, methodologies,	tools,	and	technology	utilized	across	the	enterprise	to	identify, assess,	monitor,	and	report	operational	risks.	ORM	monitors	enterprise-wide adherence	with	related	policies	and	procedures	and	regularly	assesses	overall program	effectiveness.	In	addition,	ORM	independently	challenges	the	results and	conclusions	generated	by	the	business	units	during	the	execution	of	the operational	risk	management	program.

Business	Unit	management	is	responsible	for	the	day-to-day	management	of operational	risks	inherent	in	the	products,	services,	and	activities	for	which	they are	responsible.	Business	Unit	management	is	also	responsible	for	adhering	to PNC's	enterprise-wide	operational	risk	management	policies	and	procedures including	regularly	identifying,	measuring,	and	monitoring	operational	risks	in their	respective	areas,	as	well	as	capturing,	analyzing	and	reporting	operational risks	and	issues.

Management	of	operational	risk	is	based	upon	a	comprehensive	framework designed	to	enable	PNC	to	determine	the	enterprise	and	individual	business unit's	operational	risk	profile	in	comparison	to	the	established	risk	appetite	and identify	operational	risks	that	may	require	further	mitigation.	This	framework	is established	around	a	set	of	enterprise-wide	policies	and	a	system	of	internal controls	that	are	designed	to	manage	risk	and	to	provide	management	with timely	and	accurate	information	about	the	operations	of	PNC.	This	framework employs	a	number	of	techniques	to	manage	operational	risk,	including: •	Risk	and	Control	Self	Assessments	(RCSAs)	that	are	performed	at least	annually	across	PNC's	businesses,	processes,	systems	and products.	RCSA	methodology

is	a	standard	process	for	business	units	to	document	and	assess operational	risks,	evaluate	key	control	design	and	operating effectiveness,	and	determine	if	control	enhancements	are	required, •	A	Scenario	Analysis	program	that	is	leveraged	to	proactively	evaluate operational	risks	with	the	potential	for	severe	business,	financial, operational	or	regulatory	impact	on	the	company	or	a	major	business unit.	This	methodology	leverages	standard	processes	and	tools	to evaluate	a	wide	range	of	business	and	operational	risks	encompassing both	external	and	internal	events	relevant	to	the	company.	Based	upon scenario	analysis	conclusions,	management	may	implement	additional controls	or	risk	management	activities	to	reduce	exposure	to	an acceptable	level,

•	A	Metrics	and	Key	Risk	Indicator	framework	that	allows	management to	proactively	monitor	and	assess	shifts	in	operational	risk	exposure	or key	control	effectiveness	compared	to	expectations	and	thresholds. Enterprise-level	Operational	Risk	Appetite	metrics	support	PNC's Operational	Risk	Management	framework	and	guiding	principles	with the	objective	of	maintaining	a	risk	profile	within	risk	appetite.	A	broad set	of	operational	risk	indicators	are	in	place	to	monitor	and	report exposures	across	the	different	inherent	operational	risk	types.	Lastly, business-specific	risk	indicators	are	established	to	monitor	the	most significant	risks	and	controls	identified	in	the	individual	risk	and control	self	assessments,	and

•	Operational	loss	events	as	well	as	technology	and	operational breakdowns	that	do	not	result	in	direct	loss	(near	miss	events)	across the	enterprise	are	continuously	captured	and	maintained	in	a	central repository.	This	information	is	analyzed	and	used	to	help	determine	the root	causes	of	these	events	and	to	identify	trends	that	could	indicate changes	in	the	company's	risk	exposure	or	control	effectiveness. PNC's	External	Loss	Event	program	utilizes	a	number	of	sources	to monitor	and	identify	external	loss	events	occurring	across	the	financial services	industry.	Relevant	external	events	are	evaluated	by	appropriate business	and	risk	management	personnel	to	determine	whether	PNC	is exposed	to	similar	events,	and	if	so,	whether	appropriate	controls	are	in place.

We	continue	to	refine	our	methodology	to	estimate	capital	requirements	for operational	risk	using	a	proprietary	version	of	an	Advanced	Measurement Approach	(AMA)	as	prescribed	in	Basel	II.	Under	the	AMA,	the	results	of	the program	elements	described	above	are	key	inputs	directly	incorporated	into	the capital	calculation	methodology.

Risk	professionals	from	Operational	Risk,	Technology	Risk	Management, Compliance	and	Legal	work	closely	with	business	areas	to	evaluate	risks	and challenge	that	appropriate

key	controls	are	established	prior	to	the	introduction	of	new	or	enhanced products,	services	and	technologies.	These	risk	professionals	also	challenge Business	Units'	design	and	implementation	of	mitigation	strategies	to	address risks	and	issues	identified	through	ongoing	assessment	and	monitoring	activities.

PNC's	Technology	Risk	Management	(TRM)	program	is	aligned	with	the operational	risk	framework.	Technology	risk	represents	the	risk	associated	with the	use,	ownership,	operation,	involvement,	influence	and	adoption	of technology	within	an	enterprise.

Management	of	technology	risk	is	embedded	into	the	culture	and	decision- making	processes	of	PNC	through	an	information	and	technology	risk management	framework	designed	to	help	ensure	secure,	sound,	and	compliant	IT systems	and	infrastructure	in	support	of	business	strategies	and	goals.	The management	of	technology	risk	is	a	core	business	skill	and	an	integral	part	of day-to-day	activity.

Cybersecurity	is	a	principal	concern	for	financial	institutions	and	is	a	very	high priority	for	PNC.	The	ever	changing	and	complex	threat	landscape	is	closely monitored	and	PNC	participates	in	proactive	information	sharing	with intelligence	sources,	law	enforcement,	and	the	private	sector.	The	cyber	security program	is	based	on	a	continuous	improvement	strategy	by	assessing	current	and emerging	threats	to	protect	our	critical	business	functions,	as	well	as	the integrity,	privacy,	and	confidentiality	of	data.	We	continue	to	strengthen	our controls,	processes	and	systems	to	help	protect	our	networks,	computers, software,	and	data	from	attack,	damage	or	unauthorized	access.	See	Item	1A Risk	Factors	in	this	Report	for	additional	information	regarding	the	risk	of	a material	adverse	impact	from	interruptions	in	the	effective	operation	of,	or security	breaches	affecting,	those	systems.

Managers	and	staff	at	all	levels	are	responsible	for	applying	risk	management policies,	procedures,	and	strategies	in	their	areas	of	responsibility.	PNC's	TRM function	supports	enterprise	management	of	technology	risk	by	independently assessing	technology	and	information	security	risks,	and	by	serving	in	an oversight	role	by	measuring,	monitoring,	and	challenging	enterprise	technology capabilities.	Specifically,	Technology	Risk	Management	has	the	following objectives:

•	A	sound	control	infrastructure	is	in	place	to	effectively	manage technology	risks	to	help	drive	informed	business	decisions,

•	Technology	risks	related	to	ongoing	business	and	operational	activities are	identified,	assessed,	and	monitored,

•	Technology	risks	related	to	new	key	initiatives	are	assessed	and appropriately	managed,	and

•	Emerging	technology	risks	are	monitored	and	assessed	to	verify	their potential	impact	to	PNC's	overall	risk	profile.

To	support	PNC's	overall	risk	profile	within	risk	appetite	and	the	Enterprise	Risk Appetite	Statement,	Technology	Risk	Management	has	established	governance, operating	structures,	metrics,	and	guiding	principles	designed	to	ensure	that technology	risk	is	distinctly	considered	in	business	activities	and	strategic decision	making	processes.

PNC	has	defined	an	enterprise-wide	business	continuity	program	that	provides structure	and	guidelines	to	ensure	resiliency	and	recovery	of	PNC's	facilities, employees,	suppliers	and	technology	should	there	be	a	business	disruption.	It	is	a comprehensive	program	based	upon	a	life	cycle	containing	repeatable	activities to	identify	and	mitigate	internal	and	external	business	disruptive	threats.	It	is	the responsibility	of	PNC's	business	units	to	execute	and	comply	with	the	business continuity	program.	The	program	is	administered	by	a	separate	group,	with governance	and	oversight	being	provided	by	additional	resources	in	the Independent	Risk	Management	function.

PNC's	Corporate	Insurance	Group	is	responsible	for	managing	insurance	risk across	the	organization,	and	is	aligned	within	the	enterprise	risk	management governance	framework.	PNC	retains	select	corporate	risks	through	its	wholly- owned	captive	insurance	company	Alpine	Indemnity	Limited,	and	transfers excess	risk	through	the	purchase	of	insurance	where	appropriate,	to	mitigate	the effects	of	operational	loss	events.	PNC's	risks	associated	with	its	participation	as an	insurer	for	these	programs	are	mitigated	through	policy	and	annual	aggregate limits.	Decisions	surrounding	PNC's	retention	of	its	operating	risks	through deductibles	or	captive	participation	are	made	in	conjunction	with	the	enterprise risk	management	governance	framework.

The	Corporate	Insurance	Group	monitors	and	manages	insurable	risks	through	a combination	of	risk	mitigation,	retention	and	transfer	consistent	with	the organization's	risk	appetite	and	philosophy.	To	ensure	the	lines	of	business	have a	clear	understanding	of	insurance	risk	and	the	ability	to	retain	or	transfer	risk, management	holds	regular	meetings	with	the	lines	of	business	regarding	risk evaluation	and	the	utilization	of	insurance	as	a	risk	transfer	technique. Furthermore,	Corporate	Insurance	management	and	the	Insurance	Risk Committee	have	primary	oversight	of	reporting	insurance	related	activities through	the	governance	structure	that	allows	management	to	fully	vet	risk information.

Quarterly,	an	enterprise	operational	risk	report	is	developed	to	report	key operational	risks	to	senior	management	and	the	Board	of	Directors.	The	report encompasses	key	operational	risk	management	conclusions,	including	the overall	operational	risk	level,	risk	management	effectiveness	and	outlook, grounded	in	quantitative	measures	and	qualitative	factors.	Key	enterprise operational	risks	are	also	included	in	the	enterprise	risk	report.	In	addition, operational	risk	is	an	integrated	part	of	the	quarterly	business-specific	risk reports.

# Compliance	Risk

Enterprise	Compliance	is	responsible	for	coordinating	the	compliance	risk component	of	PNC's	Operational	Risk	framework.	Compliance	issues	are identified	and	tracked	through	enterprise-wide	monitoring	and	tracking programs.	Key	compliance	risk	issues	are	escalated	through	a	comprehensive risk	reporting	process	at	both	a	business	and	enterprise	level	and	incorporated,	as appropriate,	into	the	development	and	assessment	of	the	firm's	operational	risk profile.	The	Compliance,	Conflicts	&	Ethics	Policy	Committee,	chaired	by	the Chief	Compliance	Officer,	provides	oversight	for	compliance,	conflicts	and ethics	programs	and	strategies	across	PNC.	This	committee	also	oversees	the compliance	processes	related	to	fiduciary	and	investment	risk.	In	order	to	help understand,	and	where	appropriate,	proactively	address	emerging	regulatory issues,	Enterprise	Compliance	communicates	regularly	with	various	regulators with	supervisory	or	regulatory	responsibilities	with	respect	to	PNC,	its subsidiaries	or	businesses	and	participates	in	forums	focused	on	regulatory	and compliance	matters	in	the	financial	services	industry.

Risk	professionals	from	Operational	Risk,	Technology	Risk	Management, Compliance	and	Legal	work	closely	with	business	areas	to	evaluate	risks	and challenge	that	appropriate	key	controls	are	established	prior	to	the	introduction of	new	or	enhanced	products,	services	and	technologies.	These	risk	professionals also	challenge	Business	Units'	design	and	implementation	of	mitigation strategies	to	address	risks	and	issues	identified	through	ongoing	assessment	and monitoring	activities.

# Model	Risk	Management

PNC	relies	on	quantitative	models	to	measure	risks,	to	estimate	certain	financial values,	and	to	support	or	inform	certain	business	decisions.	Models	may	be	used in	processes	such	as	determining	the	pricing	of	various	products,	grading	and granting	loans,	measuring	interest	rate	risks	and	other	market	risks,	predicting losses,	and	assessing	capital	adequacy,	as	well	as	to	estimate	the	value	of financial	instruments	and	balance	sheet	items.

There	are	risks	involved	in	the	use	of	models	as	they	have	the	potential	to provide	inaccurate	output	or	results,	could	be	used	for	purposes	other	than	those for	which	they	have	been	designed,	or	may	be	operated	in	an	uncontrolled environment	where	unauthorized	changes	can	take	place	and	where	other	control risks	exist.

The	Model	Risk	Management	Group	is	responsible	for	policies	and	procedures describing	how	model	risk	is	evaluated	and	managed,	and	the	application	of	the governance	process	to	implement	these	practices	throughout	the	enterprise.	The Model	Risk	Management	Group,	a	subgroup	of	the	Enterprise	Risk	Management Committee,	oversees	all	aspects	of	model	risk,	including	PNC's	compliance	with regulatory	requirements	related	to	model	risk	management,	and	approves exceptions	to	policy	when	appropriate.

To	better	manage	our	business,	our	practices	around	the	use	of	models,	and	to comply	with	regulatory	guidance	and	requirements,	we	have	policies	and procedures	in	place	that	define	our	governance	processes	for	assessing	and controlling	model	risk.	These	processes	focus	on	identifying,	reporting	and remediating	any	problems	with	the	soundness,	accuracy,	improper	use	or operating	environment	of	our	models.	We	recognize	that	models	must	be monitored	over	time	to	ensure	their	continued	accuracy	and	functioning,	and	our policies	also	address	the	type	and	frequency	of	performance	monitoring	that	is appropriate	according	to	the	importance	of	each	model.	PNC	also	monitors	key metrics	designed	to	assess	our	level	of	model	risk	and	its	alignment	with	our	risk appetite.

There	are	a	number	of	practices	we	undertake	to	identify	and	control	model	risk. A	primary	consideration	is	that	models	be	well	understood	by	those	who	use them	as	well	as	by	other	parties.	Our	policies	require	detailed	written	model documentation	for	significant	models	to	assist	in	making	their	use	transparent and	understood	by	users,	independent	reviewers,	and	regulatory	and	auditing bodies.	The	documentation	must	include	details	on	the	data	and	methods	used	to develop	each	model,	assumptions	utilized	within	the	model,	an	assessment	of model	performance	and	a	description	of	model	limitations	and	circumstances	in which	a	model	should	not	be	relied	upon.

Our	modeling	methods	and	data	are	reviewed	by	independent	model	reviewers not	involved	in	the	development	of	the	model	to	identify	possible	errors	or	areas where	the	soundness	of	the	model	could	be	in	question.	Issues	identified	by	the independent	reviewer	are	tracked	and	reported	using	our	existing	governance structure	until	the	issue	has	been	fully	remediated.

It	is	important	that	models	operate	in	a	controlled	environment	where	access	to code	or	the	ability	to	make	changes	is	limited	to	those	who	are	authorized	to	do so.	Additionally,	proper	back-up	and	recovery	mechanisms	are	needed	for	the ongoing	functioning	of	models.	Our	use	of	independent	model	control	reviewers aids	in	the	evaluation	of	the	existing	control	mechanisms	to	help	ensure	that controls	are	appropriate	and	are	functioning	properly.

# Liquidity	Risk	Management

Liquidity	risk	has	two	fundamental	components.	The	first	is	potential	loss assuming	we	were	unable	to	meet	our	funding	requirements	at	a	reasonable	cost. The	second	is	the	potential	inability	to	operate	our	businesses	because	adequate contingent	liquidity	is	not	available.	We	manage	liquidity	risk	at	the consolidated	company	level	(bank,	parent	company,	and	nonbank	subsidiaries combined)	to	help	ensure	that	we	can	obtain	cost-effective	funding	to	meet current	and	future	obligations	under	both	normal	"business	as	usual"	and stressful	circumstances,	and	to	help	ensure	that	we	maintain	an	appropriate	level of	contingent	liquidity.

Management	monitors	liquidity	through	a	series	of	early	warning	indicators	that may	indicate	a	potential	market,	or	PNC-specific,	liquidity	stress	event.	In addition,	management	performs	a	set	of	liquidity	stress	tests	over	multiple	time horizons	with	varying	levels	of	severity	and	maintains	a	contingency	funding plan	to	address	a	potential	stress	event.	In	the	most	severe	liquidity	stress simulation,	we	assume	that	PNC's	liquidity	position	is	under	pressure,	while	the market	in	general	is	under	systemic	pressure.	The	simulation	considers,	among other	things,	the	impact	of	restricted	access	to	both	secured	and	unsecured external	sources	of	funding,	accelerated	run-off	of	customer	deposits,	valuation pressure	on	assets	and	heavy	demand	to	fund	contingent	obligations.	Parent company	liquidity	guidelines	are	designed	to	help	ensure	that	sufficient	liquidity is	available	to	meet	our	parent	company	obligations	over	the	succeeding	24- month	period.	Liquidity-related	risk	limits	are	established	within	our	Enterprise Liquidity	Management	Policy	and	supporting	policies.	Management	committees, including	the	Asset	and	Liability	Committee,	and	the	Board	of	Directors	and	its Risk	Committee	regularly	review	compliance	with	key	established	limits.

In	addition	to	these	liquidity	monitoring	measures	and	tools	described	above, PNC	also	monitors	its	liquidity	by	reference	to	the	LCR,	a	new	regulatory minimum	liquidity	requirement	designed	to	ensure	that	covered	banking organizations	maintain	an	adequate	level	of	liquidity	to	meet	net	liquidity	needs over	the	course	of	a	30-day	stress	scenario.	The	LCR	is	calculated	by	dividing the	amount	of	an	institution's	high	quality,	unencumbered	liquid	assets	(HQLA), as	defined	and	calculated	in	accordance	with	the	haircuts	and	limitations	of	the LCR	rules,	by	its	estimated	net	cash	outflow,	with	net	cash	outflows	determined by	applying	assumed	outflow	factors	in	the	LCR	rules.	The	resulting	quotient	is expressed	as	a	percentage.	For	PNC	and	PNC	Bank,	the	LCR	became	effective January	1,	2015.	The	minimum	required	LCR	and	the	requirement	to	calculate the	LCR	on	a	daily	basis	will	be	phased-in	over	a	period	of	years.	For	2015, PNC	and	PNC	Bank	are	required	to	calculate	the	LCR	on	a	month-end	basis	and the	minimum	LCR	that	PNC	and	PNC	Bank	are	required	to	maintain	is	80%.

As	of	January	31,	2015,	PNC	and	PNC	Bank	exceeded	the	minimum	LCR requirement	in	effect	for	2015.	The	estimated	January	31,	2015	LCR	calculation and	the	underlying	components	are	based	on	PNC's	current	interpretation	and understanding	of	the	final	LCR	rules	and	are	subject	to,	among	other	things, further	regulatory	guidance.

We	provide	additional	information	regarding	regulatory	liquidity	requirements and	their	potential	impact	on	PNC	in	the	Supervision	and	Regulation	section	of Item	1	Business	and	Item	1A	Risk	Factors	of	this	Report.

# Bank	Level	Liquidity	–	Uses

At	the	bank	level,	primary	contractual	obligations	include	funding	loan commitments,	satisfying	deposit	withdrawal	requests	and	maturities	and	debt service	related	to	bank	borrowings.	As	of	December	31,	2014,	there	were approximately	$7.2	billion	of	bank	borrowings	with	contractual	maturities	of	less than	one	year.	We	also	maintain	adequate	bank	liquidity	to	meet	future	potential loan	demand	and	provide	for	other	business	needs,	as	necessary.	See	the	Bank Level	Liquidity	–	Sources	section	below.

# Bank	Level	Liquidity	–	Sources

Our	largest	source	of	bank	liquidity	on	a	consolidated	basis	is	the	deposit	base generated	by	our	retail	and	commercial	businesses.	Total	deposits	increased	to $232.2	billion	at	December	31,	2014	from	$220.9	billion	at	December	31,	2013, primarily	driven	by	growth	in	transaction	deposits.	Assets	determined	by	PNC	to be	liquid	(liquid	assets)	and	unused	borrowing	capacity	from	a	number	of sources	are	also	available	to	maintain	our	liquidity	position.	Borrowed	funds come	from	a	diverse	mix	of	short-term	and	long-term	funding	sources.

At	December	31,	2014,	our	liquid	assets	consisted	of	short-term	investments (Federal	funds	sold,	resale	agreements,	trading	securities	and	interest-earning deposits	with	banks)	totaling	$36.0	billion	and	securities	available	for	sale totaling	$44.2	billion.	The	level	of	liquid	assets	fluctuates	over	time	based	on many	factors,	including	market	conditions,	loan	and	deposit	growth	and	balance sheet	management	activities.	Of	our	total	liquid	assets	of	$80.2	billion,	we	had $6.1	billion	of	securities	available	for	sale	and	trading	securities	pledged	as collateral	to	secure	public	and	trust	deposits,	repurchase	agreements	and	for	other purposes.	In	addition	to	the	liquid	assets	we	pledged,	$4.8	billion	of	securities held	to	maturity	were	also	pledged	as	collateral	for	these	purposes.

In	addition	to	the	customer	deposit	base,	which	has	historically	provided	the single	largest	source	of	relatively	stable	and	low-cost	funding,	the	bank	also obtains	liquidity	through	the	issuance	of	traditional	forms	of	funding	including long-term	debt	(senior	notes	and	subordinated	debt	and	FHLB	advances)	and short-term	borrowings	(Federal	funds	purchased,	securities	sold	under repurchase	agreements,	commercial	paper	issuances	and	other	short-term borrowings).

On	January	16,	2014,	PNC	Bank	established	a	new	bank	note	program	under	which	it	may	from	time	to	time	offer	up	to	$25	billion	aggregate	principal	amount	at	any one	time	outstanding	of	its	unsecured	senior	and	subordinated	notes	due	more	than	nine	months	from	their	date	of	issue	(in	the	case	of	senior	notes)	and	due	five	years or	more	from	their	date	of	issue	(in	the	case	of	subordinated	notes).	The	$25	billion	of	notes	authorized	to	be	issued	and	outstanding	at	any	one	time	includes	notes issued	by	PNC	Bank	prior	to	January	16,	2014	under	the	2004	bank	note	program	and	those	notes	PNC	Bank	has	assumed	through	the	acquisition	of	other	banks,	in each	case	for	so	long	as	such	notes	remain	outstanding.	The	terms	of	the	new	program	do	not	affect	any	of	the	bank	notes	issued	prior	to	January	16,	2014.	At December	31,	2014,	PNC	Bank	had	$16.0	billion	of	bank	notes	outstanding.	The	following	table	details	all	issuances	during	2014:

# Table	42:	PNC	Bank	Bank	Notes	Issued	During	2014

(a) These	issuances	were	called	in	the	fourth	quarter	of	2014.

Total	senior	and	subordinated	debt	of	PNC	Bank	increased	to	$17.5	billion	at December	31,	2014	from	$14.6	billion	at	December	31,	2013	due	to	the following	activity	in	the	period.

# Table	43:	PNC	Bank	Senior	and	Subordinated	Debt

On	February	6,	2015,	PNC	Bank	issued	$600	million	of	floating	rate	senior notes	with	a	maturity	date	of	January	26,	2017	to	an	affiliate.	Interest	is	payable at	the	3-month	LIBOR	rate,	reset	quarterly,	plus	a	spread	of	.30%,	on January	26,	April	26,	July	26	and	October	26	of	each	year,	beginning	on April	26,	2015.	These	floating	rate	notes	were	subsequently	purchased	by	PNC. See	the	Parent	Company	Liquidity	–	Uses	portion	of	this	Liquidity	Risk Management	section	for	further	detail.

See	Note	25	Subsequent	Events	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report	for	information	on	the	issuance	of	senior notes	of	$750	million	and	$1.0	billion	on	February	23,	2015.

PNC	Bank	is	a	member	of	the	FHLB-Pittsburgh	and,	as	such,	has	access	to advances	from	FHLB-Pittsburgh	secured	generally	by	residential	mortgage loans,	other	mortgage-related	loans	and	commercial	mortgage-backed	securities. At	December	31,	2014,	our	unused	secured	borrowing	capacity	was	$13.9 billion	with	FHLB-Pittsburgh.	Total	FHLB	borrowings	increased	to	$20.0	billion at	December	31,	2014	from	$12.9	billion	at	December		31,	2013	due	to	the following	activity	in	the	period.

# Table	44:	FHLB	Borrowings

The	FHLB-Pittsburgh	also	periodically	provides	standby	letters	of	credit	on behalf	of	PNC	Bank	to	secure	certain	public	deposits.	PNC	Bank	began	using standby	letters	of	credit	issued	by	the	FHLB-Pittsburgh	in	response	to	the regulatory	liquidity	standards	finalized	during	2014.	If	the	FHLB-Pittsburgh	is required	to	make	payment	for	a	beneficiary's	draw,	the	payment	amount	is converted	into	a	collateralized	advance	to	PNC	Bank.	At	both	December	31, 2014	and	December	31,	2013,	standby	letters	of	credit	issued	on	our	behalf	by the	FHLB-Pittsburgh	totaled	$6.2	billion.

PNC	Bank	has	the	ability	to	offer	up	to	$10.0	billion	of	its	commercial	paper	to provide	additional	liquidity.	As	of	December	31,	2014,	there	was	$5.0	billion outstanding	under	this	program.	During	the	fourth	quarter	of	2013,	PNC finalized	the	wind	down	of	Market	Street	Funding	LLC	("Market	Street"),	a multi-seller	asset-backed	commercial	paper	conduit	administered	by	PNC	Bank. As	part	of	the	wind	down	process,	the	commitments	and	outstanding	loans	of Market	Street	were	assigned	to	PNC	Bank,	which	will	fund	these	commitments and	loans	by	utilizing	its	diversified	funding	sources.	In	conjunction	with	the assignment	of	commitments	and	loans,	the	associated	liquidity	facilities	were terminated	along	with	the	program-level	credit	enhancement	provided	to	Market Street.	The	wind	down	did	not	have	a	material	impact	to	PNC's	financial condition	or	results	of	operations.

PNC	Bank	can	also	borrow	from	the	Federal	Reserve	Bank	of	Cleveland's (Federal	Reserve	Bank)	discount	window	to	meet	short-term	liquidity requirements.	The	Federal	Reserve	Bank,	however,	is	not	viewed	as	the	primary means	of	funding	our	routine	business	activities,	but	rather	as	a	potential	source of	liquidity	in	a	stressed	environment	or	during	a	market	disruption.	These potential	borrowings	are	secured	by	commercial	loans.	At	December	31,	2014, our	unused	secured	borrowing	capacity	was	$15.6	billion	with	the	Federal Reserve	Bank.

# Parent	Company	Liquidity

As	of	December	31,	2014,	available	parent	company	liquidity	totaled	$7.1 billion.	Parent	company	liquidity	is	primarily	held	in	short-term	investments,	the terms	of	which	provide	for	the	availability	of	cash	in	31	days	or	less.	Investments with	longer	durations	may	also	be	acquired,	but	if	so,	the	related	maturities	are aligned	with	scheduled	cash	needs,	such	as	the	maturity	of	parent	company	debt obligations.

# Parent	Company	Liquidity	–	Uses

The	parent	company's	contractual	obligations	consist	primarily	of	debt	service related	to	parent	company	borrowings	and	funding	non-bank	affiliates.	As	of December	31,	2014,	there	were	approximately	$2.5	billion	of	parent	company borrowings	with	contractual	maturities	of	less	than	one	year.	Additionally,	the parent	company	maintains	adequate	liquidity	to	fund	discretionary	activities	such as	paying	dividends	to	PNC	shareholders,	share	repurchases,	and	acquisitions. See	the	Parent	Company	Liquidity	–	Sources	section	below.

See	Capital	and	Liquidity	Actions	in	the	Executive	Summary	section	of	this Item	7	for	information	on	our	2014	capital	plan	that	was	accepted	by	the	Federal Reserve,	which	included	certain	share	repurchases	that	are	described	in	more detail	in	the	Capital	portion	of	the	Consolidated	Balance	Sheet	Review	section	in this	Item	7	and	the	dividend	increase	described	below.

In	connection	with	the	2015	CCAR,	PNC	submitted	its	2015	capital	plan,	as approved	by	its	Board	of	Directors,	to	the	Federal	Reserve	in	January	2015.	PNC expects	to	receive	the	Federal	Reserve's	response	(either	a	non-objection	or objection)	to	the	capital	plan	submitted	as	part	of	the	2015	CCAR	in	March 2015.

See	the	Supervision	and	Regulation	section	in	Item	1	of	this	Report	for additional	information	regarding	the	Federal	Reserve's	CCAR	process	and	the factors	the	Federal	Reserve	takes	into	consideration	in	evaluating	capital	plans, qualitative	and	quantitative	liquidity	risk	management	standards	proposed	by	the U.S.	banking	agencies,	and	final	rules	issued	by	the	Federal	Reserve	that	make certain	modifications	to	the	Federal	Reserve's	capital	planning	and	stress	testing rules.

See	Table	42	for	information	on	affiliate	purchases	of	notes	issued	by	PNC	Bank during	2014.

On	February	6,	2015,	PNC	used	$600	million	of	parent	company/non-bank subsidiary	cash	to	purchase	floating	rate	senior	notes	that	were	issued	by	PNC Bank	to	an	affiliate	on	that	same	date.

# Parent	Company	Liquidity	–	Sources

The	principal	source	of	parent	company	liquidity	is	the	dividends	it	receives from	its	subsidiary	bank,	which	may	be	impacted	by	the	following: •	Bank-level	capital	needs, •	Laws	and	regulations,

•	Corporate	policies,

•	Contractual	restrictions,	and •	Other	factors.

There	are	statutory	and	regulatory	limitations	on	the	ability	of	national	banks	to pay	dividends	or	make	other	capital	distributions	or	to	extend	credit	to	the	parent company	or	its	non-bank	subsidiaries.	The	amount	available	for	dividend payments	by	PNC	Bank	to	the	parent	company	without	prior	regulatory approval	was	approximately	$1.5	billion	at	December	31,	2014.	See	Note	20 Regulatory	Matters	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8 of	this	Report	for	a	further	discussion	of	these	limitations.	We	provide	additional information	on	certain	contractual	restrictions	in	Note	12	Capital	Securities	of	a Subsidiary	Trust	and	Perpetual	Trust	Securities	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report.

In	addition	to	dividends	from	PNC	Bank,	other	sources	of	parent	company liquidity	include	cash	and	investments,	as	well	as	dividends	and	loan	repayments from	other	subsidiaries	and	dividends	or	distributions	from	equity	investments.

We	can	also	generate	liquidity	for	the	parent	company	and	PNC's	non-bank subsidiaries	through	the	issuance	of	debt	and	equity	securities,	including	certain capital	instruments,	in	public	or	private	markets	and	commercial	paper.	We	have an	effective	shelf	registration	statement	pursuant	to	which	we	can	issue additional	debt,	equity	and	other	capital	instruments.

During	2014,	we	issued	the	following	parent	company	debt	under	our	shelf registration	statement:

•	$750	million	of	subordinated	notes	with	a	maturity	date	of	April	29, 2024.	Interest	is	payable	semi-annually,	at	a	fixed	rate	of	3.90%,	on April	29	and	October	29	of	each	year,	beginning	on	October	29,	2014.

Total	parent	company	senior	and	subordinated	debt	and	hybrid	capital instruments	decreased	to	$10.1	billion	at	December	31,	2014	from	$10.7	billion at	December	31,	2013	due	to	the	following	activity	in	the	period.

# Table	45:	Parent	Company	Senior	and	Subordinated	Debt	and	Hybrid	Capital Instruments

On	October	16,	2014,	the	parent	company	established	a	$5.0	billion	commercial paper	program	to	provide	additional	liquidity.	As	of	December	31,	2014,	there were	no	issuances	outstanding	under	this	program.	Following	the	establishment of	this	parent	company	program,	PNC	Funding	Corp	terminated	its	$3.0	billion commercial	paper	program.

Note	17	Equity	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of this	Report	describes	the	16,885,192	warrants	outstanding,	each	to	purchase	one share	of	PNC	common	stock	at	an	exercise	price	of	$67.33	per	share.	These warrants	were	sold	by	the	U.S.	Treasury	in	a	secondary	public	offering	in	May 2010	after	the	U.S.	Treasury	exchanged	its	TARP	Warrant.	These	warrants	will expire	December	31,	2018,	and	are	considered	in	the	calculation	of	diluted earnings	per	common	share	in	Note	16	Earnings	Per	Share	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report.

# Status	of	Credit	Ratings

The	cost	and	availability	of	short-term	and	long-term	funding,	as	well	as collateral	requirements	for	certain	derivative	instruments,	is	influenced	by	PNC's debt	ratings.

In	general,	rating	agencies	base	their	ratings	on	many	quantitative	and qualitative	factors,	including	capital	adequacy,	liquidity,	asset	quality,	business mix,	level	and	quality	of	earnings,	and	the	current	legislative	and	regulatory environment,	including	implied	government	support.	In

addition,	rating	agencies	themselves	have	been	subject	to	scrutiny	arising	from the	most	recent	financial	crisis	and	could	make	or	be	required	to	make substantial	changes	to	their	ratings	policies	and	practices,	particularly	in response	to	legislative	and	regulatory	changes.	Potential	changes	in	the legislative	and	regulatory	environment	and	the	timing	of	those	changes	could impact	our	ratings,	which	as	noted	above,	could	impact	our	liquidity	and financial	condition.	A	decrease,	or	potential	decrease,	in	credit	ratings	could impact	access	to	the	capital	markets	and/or	increase	the	cost	of	debt,	and	thereby adversely	affect	liquidity	and	financial	condition.

# Table	46:	Credit	Ratings	as	of	December	31,	2014	for	PNC	and	PNC	Bank

# Commitments

The	following	tables	set	forth	contractual	obligations	and	various	other	commitments	as	of	December	31,	2014	representing	required	and	potential	cash	outflows.

# Table	47:	Contractual	Obligations

|  |  |  | Payment	Due	By	Period | Payment	Due	By	Period |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014\t–\tin\tmillions | Total | Less\tthan\none\tyear | One\tto\nthree\tyears | Four\tto\nfive\tyears | After\tfive\nyears |
| Remaining\tcontractual\tmaturities\tof\ttime\tdeposits\t(a) | $21,396 | $15,185 | $2,709 | $694\t\t\t\t $ | 2,808 |
| Borrowed\tfunds\t(a)\t(b) | \t 56,768 | \t 15,243 | 19,116 | \t 13,291 | 9,118 |
| Minimum\tannual\trentals\ton\tnoncancellable\tleases | 2,655 | 376 | 622 | 478 | 1,179 |
| Nonqualified\tpension\tand\tpostretirement\tbenefits | 519 | 56 | 109 | 108 | 246 |
| Purchase\tobligations\t(c) | 703 | 468 | 144 | 63 | 28 |
| Total\tcontractual\tcash\tobligations | $82,041 | $31,328 | $22,700 | $14,634\t\t\t\t $13,379 | $14,634\t\t\t\t $13,379 |
| (a)\nIncludes\tpurchase\taccounting\tadjustments. |  |  |  |  |  |

(a) Includes	purchase	accounting	adjustments.

(b) Includes	basis	adjustment	relating	to	accounting	hedges.

(c) Includes	purchase	obligations	for	goods	and	services	covered	by	noncancellable	contracts	and	contracts	including	cancellation	fees.

At	December	31,	2014,	we	had	unrecognized	tax	benefits	of	$77	million,	which	represents	a	reserve	for	tax	positions	that	we	have	taken	in	our	tax	returns	which ultimately	may	not	be	sustained	upon	examination	by	taxing	authorities.	Since	the	ultimate	amount	and	timing	of	any	future	cash	settlements	cannot	be	predicted	with reasonable	certainty,	this	estimate	has	been	excluded	from	the	contractual	obligations	table.	See	Note	19	Income	Taxes	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report	for	additional	information.

Our	contractual	obligations	totaled	$73.5	billion	at	December	31,	2013.	The	increase	in	the	comparison	is	primarily	attributable	to	an	increase	in	borrowed	funds partially	offset	by	the	decline	in	time	deposits.	See	Funding	Sources	in	the	Consolidated	Balance	Sheet	Review	section	of	this	Item	7	for	additional	information regarding	our	funding	sources.

# Table	48:	Other	Commitments	(a)

| December	31,	2014	–	in	millions | Amounts<br>Committed | Less	than	one<br>year | One	to<br>three	years | Four	to<br>five	years | After<br>five	years |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tunfunded\tloan\tcommitments | $139,687 | $53,849 | $47,180 | $37,873\t\t\t\t $ | 785 |
| Net\toutstanding\tstandby\tletters\tof\tcredit\t(b) | 9,991 | 4,973 | 4,043 | 973 | 2 |
| Reinsurance\tagreements\t(c) | 4,342 | 2,071 | 20 | 36 | 2,215 |
| Other\tcommitments\t(d) | 962 | 693 | 236 | 32 | 1 |
| Total\tcommitments | $154,982 | $61,586 | $51,479 | $38,914\t\t\t\t $ 3,003 | $38,914\t\t\t\t $ 3,003 |
| (a) |  |  |  |  |  |

(a) Other	commitments	are	funding	commitments	that	could	potentially	require	performance	in	the	event	of	demands	by	third	parties	or	contingent	events.	Loan	commitments	are	reported	net	of	syndications, assignments	and	participations.

(b) Includes	$5.2	billion	of	standby	letters	of	credit	that	support	remarketing	programs	for	customers'	variable	rate	demand	notes.

(c) Reinsurance	agreements	are	with	third-party	insurers	related	to	insurance	sold	to	or	placed	on	behalf	of	our	customers.	Balances	represent	estimates	based	on	availability	of	financial	information.

(d) Includes	unfunded	commitments	related	to	equity	investments	of	$169	million	that	were	not	on	our	Consolidated	Balance	Sheet,	of	which	$140	million	relate	to	private	equity	investments.	The	remaining	$793 million	of	commitments	were	included	in	Other	liabilities	on	our	Consolidated	Balance	Sheet,	of	which	$717	million	related	to	tax	credit	investments.

Our	total	commitments	totaled	$146.8	billion	at	December	31,	2013.	The increase	in	the	comparison	is	primarily	due	to	an	increase	in	exposure	on	net unfunded	loan	commitments	partially	offset	by	a	decline	in	reinsurance agreements	and	net	outstanding	standby	letters	of	credit.	See	Note	22 Commitments	and	Guarantees	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report	for	additional	information	on	net	unfunded loan	commitments,	our	reinsurance	agreements,	net	outstanding	standby	letters of	credit,	and	certain	other	commitments.

# Market	Risk	Management

Market	risk	is	the	risk	of	a	loss	in	earnings	or	economic	value	due	to	adverse movements	in	market	factors	such	as	interest	rates,	credit	spreads,	foreign exchange	rates	and	equity	prices.	We	are	exposed	to	market	risk	primarily	by our	involvement	in	the	following	activities,	among	others: •	Traditional	banking	activities	of	taking	deposits	and	extending	loans, •	Equity	and	other	investments	and	activities	whose	economic	values	are directly	impacted	by	market	factors,	and •	Fixed	income	securities,	derivatives	and	foreign	exchange	activities,	as a	result	of	customer	activities	and	securities	underwriting.

We	have	established	enterprise-wide	policies	and	methodologies	to	identify, measure,	monitor	and	report	market	risk.	Market	Risk	Management	provides independent	oversight	by	monitoring	compliance	with	these	limits	and guidelines,	and	reporting	significant	risks	in	the	business	to	the	Risk	Committee of	the	Board.

# Market	Risk	Management	–	Interest	Rate	Risk

Interest	rate	risk	results	primarily	from	our	traditional	banking	activities	of gathering	deposits	and	extending	loans.	Many	factors,	including	economic	and financial	conditions,	movements	in	interest	rates	and	consumer	preferences, affect	the	difference	between	the	interest	that	we	earn	on	assets	and	the	interest that	we	pay	on	liabilities	and	the	level	of	our	noninterest-bearing	funding sources.	Due	to	the	repricing	term	mismatches	and	embedded	options	inherent	in certain	of	these	products,	changes	in	market	interest	rates	not	only	affect expected	near-term	earnings,	but	also	the	economic	values	of	these	assets	and liabilities.

Asset	and	Liability	Management	centrally	manages	interest	rate	risk	as prescribed	in	our	risk	management	policies,	which	are	approved	by management's	Asset	and	Liability	Committee	and	the	Risk	Committee	of	the Board.

Sensitivity	results	and	market	interest	rate	benchmarks	for	the	fourth	quarters	of 2014	and	2013	follow:

# Table	49:	Interest	Sensitivity	Analysis

|  | Fourth<br>Quarter<br>2014 | Fourth<br>Quarter<br>2013 |
| :--- | :--- | :--- |
| Net\tInterest\tIncome\tSensitivity\tSimulation\t(a) |  |  |
| Effect\ton\tnet\tinterest\tincome\tin\tfirst\tyear\tfrom |  |  |
| gradual\tinterest\trate\tchange\tover\tfollowing |  |  |
| 12\tmonths\tof: |  |  |
| 100\tbasis\tpoint\tincrease | 2.1% | 2.2% |
| 100\tbasis\tpoint\tdecrease | (1.0)% | (.9)% |
| Effect\ton\tnet\tinterest\tincome\tin\tsecond\tyear |  |  |
| from\tgradual\tinterest\trate\tchange\tover\tthe |  |  |
| preceding\t12\tmonths\tof: |  |  |
| 100\tbasis\tpoint\tincrease | 5.8% | 7.4% |
| 100\tbasis\tpoint\tdecrease | (5.7)% | (3.8)% |
| Duration\tof\tEquity\tModel\t(a) |  |  |
| Base\tcase\tduration\tof\tequity\t(in\tyears) | (4.6) | (1.2) |
| Key\tPeriod-End\tInterest\tRates |  |  |
| One-month\tLIBOR | .17% | .17% |
| Three-year\tswap | 1.30% | .88% |

(a) Given	the	inherent	limitations	in	certain	of	these	measurement	tools	and	techniques,	results	become less	meaningful	as	interest	rates	approach	zero.

In	addition	to	measuring	the	effect	on	net	interest	income	assuming	parallel changes	in	current	interest	rates,	we	routinely	simulate	the	effects	of	a	number	of nonparallel	interest	rate	environments.	Table	50	reflects	the	percentage	change	in net	interest	income	over	the	next	two	12-month	periods	assuming	(i)	the	PNC Economist's	most	likely	rate	forecast,	(ii)	implied	market	forward	rates	and (iii)	Yield	Curve	Slope	Flattening	(a	100	basis	point	yield	curve	slope	flattening between	1-month	and	ten-year	rates	superimposed	on	current	base	rates) scenario.

# Table	50:	Net	Interest	Income	Sensitivity	to	Alternative	Rate	Scenarios (Fourth	Quarter	2014)

|  | PNC<br>Economist | Market<br>Forward | Slope<br>Flattening |
| :--- | :--- | :--- | :--- |
| First\tyear\tsensitivity | 1.3% | 1.0% | (1.0)% |
| Second\tyear\tsensitivity | 5.3% | 3.6% | (4.8)% |

All	changes	in	forecasted	net	interest	income	are	relative	to	results	in	a	base	rate scenario	where	current	market	rates	are	assumed	to	remain	unchanged	over	the forecast	horizon.

When	forecasting	net	interest	income,	we	make	assumptions	about	interest	rates and	the	shape	of	the	yield	curve,	the	volume	and	characteristics	of	new	business and	the	behavior	of	existing	on-	and	off-balance	sheet	positions.	These assumptions	determine	the	future	level	of	simulated	net	interest	income	in	the base	interest	rate	scenario	and	the	other	interest	rate	scenarios	presented	in Tables	49	and	50	above.

These	simulations	assume	that	as	assets	and	liabilities	mature,	they	are	replaced or	repriced	at	then	current	market	rates.	We	also	consider	forward	projections	of purchase	accounting	accretion	when	forecasting	net	interest	income.

The	following	graph	presents	the	LIBOR/Swap	yield	curves	for	the	base	rate scenario	and	each	of	the	alternate	scenarios	one	year	forward.

# Table	51:	Alternate	Interest	Rate	Scenarios:	One	Year	Forward

The	fourth	quarter	2014	interest	sensitivity	analyses	indicate	that	our Consolidated	Balance	Sheet	is	positioned	to	benefit	from	an	increase	in	interest rates	and	an	upward	sloping	interest	rate	yield	curve.	We	believe	that	we	have the	deposit	funding	base	and	balance	sheet	flexibility	to	adjust,	where appropriate	and	permissible,	to	changing	interest	rates	and	market	conditions.

# Market	Risk	Management	–	Customer-Related	Trading	Risk

We	engage	in	fixed	income	securities,	derivatives	and	foreign	exchange transactions	to	support	our	customers'	investing	and	hedging	activities.	These transactions,	related	hedges	and	the	credit	valuation	adjustment	(CVA)	related	to our	customer	derivatives	portfolio	are	marked-to-market	daily	and	reported	as customer-related	trading	activities.	We	do	not	engage	in	proprietary	trading	of these	products.

We	use	value-at-risk	(VaR)	as	the	primary	means	to	measure	and	monitor	market risk	in	customer-related	trading	activities.	We	calculate	a	diversified	VaR	at	a 95%	confidence	interval.	VaR	is	used	to	estimate	the	probability	of	portfolio losses	based	on	the	statistical	analysis	of	historical	market	risk	factors.	A diversified	VaR	reflects	empirical	correlations	across	different	asset	classes.

To	help	ensure	the	integrity	of	the	models	used	to	calculate	VaR	for	each portfolio	and	enterprise-wide,	we	use	a	process

known	as	backtesting.	The	backtesting	process	consists	of	comparing	actual observations	of	gains	or	losses	against	the	VaR	levels	that	were	calculated	at	the close	of	the	prior	day.	This	assumes	that	market	exposures	remain	constant throughout	the	day	and	that	recent	historical	market	variability	is	a	good predictor	of	future	variability.	Our	customer-related	trading	activity	includes customer	revenue	and	intraday	hedging	which	helps	to	reduce	losses,	and	may reduce	the	number	of	instances	of	actual	losses	exceeding	the	prior	day	VaR measure.	There	were	two	instances	during	2014	under	our	diversified	VaR measure	where	actual	losses	exceeded	the	prior	day	VaR	measure.	In comparison,	there	was	one	such	instance	during	2013.	We	use	a	500	day	look back	period	for	backtesting	and	include	customer-related	trading	revenue.

The	following	graph	shows	a	comparison	of	enterprise-wide	gains	and	losses against	prior	day	diversified	VaR	for	the	period	indicated.

# Table	52:	Enterprise	–	Wide	Gains/Losses	Versus	Value-at-Risk

Total	customer-related	trading	revenue	was	as	follows:

# Table	53:	Customer-Related	Trading	Revenue	(a)

| In	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| Net\tinterest\tincome | $31 | $30 |
| Noninterest\tincome | \t 147 | \t 234 |
| Total\tcustomer-related\ttrading\trevenue | $178 | $264 |
| Securities\ttrading\t(b) | $33 | $21 |
| Foreign\texchange | 96 | 98 |
| Financial\tderivatives\tand\tother | 49 | \t 145 |
| Total\tcustomer-related\ttrading\trevenue | $178 | $264 |

(a) Customer-related	trading	revenues	exclude	underwriting	fees	for	both	periods	presented. (b) Includes	changes	in	fair	value	for	certain	loans	accounted	for	at	fair	value.

Customer-related	trading	revenues	for	2014	decreased	$86	million	compared with	2013.	The	decrease	was	primarily	due	to	market	interest	rate	changes impacting	credit	valuations	for	customer-related	derivatives	activities	and reduced	derivatives	client	sales	revenues,	which	were	partially	offset	by improved	securities	and	foreign	exchange	client	sales	results.

# Market	Risk	Management	–	Equity	And	Other	Investment	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,	securities	underwriting	and	trading	financial	instruments,	we	make	and manage	direct	investments	in	a	variety	of	transactions,	including	management buyouts,	recapitalizations	and	growth	financings	in	a	variety	of	industries.	We also	have	investments	in	affiliated	and	non-affiliated	funds	that	make	similar investments	in	private	equity	and	in	debt	and	equity-oriented	hedge	funds.	The economic	and/or	book	value	of	these	investments	and	other	assets	such	as	loan servicing	rights	are	directly	affected	by	changes	in	market	factors.

The	primary	risk	measurement	for	equity	and	other	investments	is	economic capital.	Economic	capital	is	a	common	measure	of	risk	for	credit,	market	and operational	risk.	It	is	an	estimate	of	the	potential	value	depreciation	over	a	one year	horizon	commensurate	with	solvency	expectations	of	an	institution	rated single-A	by	the	credit	rating	agencies.	Given	the	illiquid	nature	of	many	of	these types	of	investments,	it	can	be	a	challenge	to	determine	their	fair	values.	See Note	7	Fair	Value	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8 of	this	Report	for	additional	information.

Various	PNC	business	units	manage	our	equity	and	other	investment	activities. Our	businesses	are	responsible	for	making	investment	decisions	within	the approved	policy	limits	and	associated	guidelines.

A	summary	of	our	equity	investments	follows:

# Table	54:	Equity	Investments	Summary

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| BlackRock | $6,265 | $5,940 |
| Tax\tcredit\tinvestments\t(a) | 2,616 | 2,572 |
| Private\tequity | 1,615 | 1,656 |
| Visa | 77 | 158 |
| Other | 155 | 234 |
| Total | $10,728 | $10,560 |

(a) The	December	31,	2013	amount	has	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU 2014-01	related	to	investments	in	low	income	housing	tax	credits.

PNC	owned	approximately	35	million	common	stock	equivalent	shares	of BlackRock	equity	at	December	31,	2014,	accounted	for	under	the	equity method.	The	primary	risk	measurement,	similar	to	other	equity	investments,	is economic	capital.	The	Business	Segments	Review	section	of	this	Item	7	includes additional	information	about	BlackRock.

# Tax	Credit	Investments

Included	in	our	equity	investments	are	direct	tax	credit	investments	and	equity investments	held	by	consolidated	partnerships	which	totaled	$2.6	billion	at	both December	31,	2014	and	December	31,	2013.	These	equity	investment	balances include	unfunded	commitments	totaling	$717	million	and	$802	million	at December	31,	2014	and	December	31,	2013,	respectively.	These	unfunded commitments	are	included	in	Other	Liabilities	on	our	Consolidated	Balance Sheet.

Note	2	Loan	Sale	and	Servicing	Activities	and	Variable	Interest	Entities	in	the Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	has	further information	on	Tax	Credit	Investments.

# Private	Equity

The	private	equity	portfolio	is	an	illiquid	portfolio	comprised	of	mezzanine	and equity	investments	that	vary	by	industry,	stage	and	type	of	investment.

Private	equity	investments	carried	at	estimated	fair	value	totaled	$1.6	billion	at December	31,	2014	and	$1.7	billion	at	December	31,	2013.	As	of	December	31, 2014,	$1.1	billion	was	invested	directly	in	a	variety	of	companies	and	$.5	billion was	invested	indirectly	through	various	private	equity	funds.	Included	in	direct investments	are	investment	activities	of	two	private	equity	funds	that	are consolidated	for	financial	reporting	purposes.	The	noncontrolling	interests	of these	funds	totaled	$212	million	as	of	December	31,	2014.	The	interests	held	in indirect	private	equity	funds	are	not	redeemable,	but	PNC	may	receive distributions	over	the	life	of	the	partnership	from	liquidation	of	the	underlying investments.	See	Item	1	Business	–	Supervision	and	Regulation	and	Item	1A Risk	Factors	of	this	Report	for	discussion	of	the	potential	impacts	of	the	Volcker Rule	provisions	of	Dodd-Frank	on	our	interests	in	and	sponsorship	of	private funds	covered	by	the	Volcker	Rule.

Our	unfunded	commitments	related	to	private	equity	totaled	$140	million	at December	31,	2014	compared	with	$164	million	at	December	31,	2013.

During	2014,	we	sold	3.5	million	Visa	Class	B	common	shares,	in	addition	to	the 13	million	shares	sold	in	the	previous	two	years.	We	have	entered	into	swap agreements	with	the	purchaser	of	the	shares	as	part	of	these	sales.	See	Note	7 Fair	Value	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this Report	for	additional	information.	At	December	31,	2014,	our	investment	in	Visa Class	B	common	shares	totaled	approximately	7	million	shares	and	had	a carrying	value	of	$77	million.	Based	on	the	December	31,	2014	closing	price	of $262.20	for	the	Visa	Class	A	common	shares,	the	fair	value	of	our	total investment	was	approximately	$742	million	at	the	current	conversion	rate,	which reflects	adjustments	in	respect	of	all	litigation	funding	by	Visa	to	date.	The	Visa Class	B	common	shares	that	we	own	are	transferable	only	under	limited circumstances	(including	those	applicable	to	the	sales	in	2014	and	the	previous two	years)	until	they	can	be	converted	into	shares	of	the	publicly	traded	class	of stock,	which	cannot	happen	until	the	settlement	of	all	of	the	specified	litigation.

Note	21	Legal	Proceedings	and	Note	22	Commitments	and	Guarantees	in	the Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	have additional	information	regarding	the	October	2007	Visa	restructuring,	our involvement	with	judgment	and	loss	sharing	agreements	with	Visa	and	certain other	banks,	and	the	status	of	pending	interchange	litigation.

# Other	Investments

We	also	make	investments	in	affiliated	and	non-affiliated	funds	with	both traditional	and	alternative	investment	strategies.	The	economic	values	could	be driven	by	either	the	fixed-income	market	or	the	equity	markets,	or	both.	At December	31,	2014,	other	investments	totaled	$155	million	compared	with	$234 million	at	December	31,	2013.	We	recognized	net	gains	related	to	these investments	of	$19	million	during	2014,	compared	with	$39	million	during 2013.

Given	the	nature	of	these	investments,	if	market	conditions	affecting	their valuation	were	to	worsen,	we	could	incur	future	losses.

Our	unfunded	commitments	related	to	other	investments	were	immaterial	at	both December	31,	2014	and	December	31,	2013.

See	the	Supervision	and	Regulation	section	of	Item	1	Business	and	Item	1A	Risk Factors	of	this	Report	for	additional	information	on	the	potential	impact	of	the Volcker	Rule	on	PNC's	investments	in	and	relationships	with	private	funds	that are	covered	by	that	rule,	as	well	as	PNC's	ability	to	maximize	the	value	of	its investments	in	such	funds.

# Impact	of	Inflation

Our	assets	and	liabilities	are	primarily	financial	in	nature	and	typically	have varying	maturity	dates.	Accordingly,	future	changes	in	prices	do	not	affect	the obligations	to	pay	or	receive	fixed	and	determinable	amounts	of	money. However,	during	periods	of	inflation,	there	may	be	a	subsequent	impact affecting	certain	fixed	costs	or	expenses,	an	erosion	of	consumer	and	customer purchasing	power,	and	fluctuations	in	the	need	or	demand	for	our	products	and services.	Should	significant	levels	of	inflation	occur,	our	business	could potentially	be	impacted	by,	among	other	things,	reducing	our	tolerance	for extending	credit	or	causing	us	to	incur	additional	credit	losses	resulting	from possible	increased	default	rates.

# Financial	Derivatives

We	use	a	variety	of	financial	derivatives	as	part	of	the	overall	asset	and	liability risk	management	process	to	help	manage	exposure	to	market	and	credit	risk inherent	in	our	business	activities.	Substantially	all	such	instruments	are	used	to manage	risk	related	to	changes	in	interest	rates.	Interest	rate	and	total	return swaps,	interest	rate	caps	and	floors,	swaptions,	options,	forwards	and	futures contracts	are	the	primary	instruments	we	use	for	interest	rate	risk	management. We	also	enter	into	derivatives	with	customers	to	facilitate	their	risk	management activities.

Financial	derivatives	involve,	to	varying	degrees,	market	and	credit	risk.	For interest	rate	swaps	and	total	return	swaps,	options	and	futures	contracts,	only periodic	cash	payments	and,	with	respect	to	options,	premiums	are	exchanged. Therefore,	cash	requirements	and	exposure	to	credit	risk	are	significantly	less than	the	notional	amount	on	these	instruments.

Further	information	on	our	financial	derivatives	is	presented	in	Note	1 Accounting	Policies,	Note	7	Fair	Value	and	Note	15	Financial	Derivatives	in	the Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report,	which	is incorporated	here	by	reference.

Not	all	elements	of	market	and	credit	risk	are	addressed	through	the	use	of financial	derivatives,	and	such	instruments	may	be	ineffective	for	their	intended purposes	due	to	unanticipated	market	changes,	among	other	reasons.

The	following	table	summarizes	the	notional	or	contractual	amounts	and	net	fair	value	of	financial	derivatives	at	December	31,	2014	and	December	31,	2013.

# Table	55:	Financial	Derivatives	Summary

|  | December	31,	2014 | December	31,	2014 | December	31,	2013 | December	31,	2013 |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Notional/\nContractual\nAmount | Net\tFair\nValue\t(a) | Notional/\nContractual\nAmount | Net\tFair\nValue\t(a) |
| Derivatives\tdesignated\tas\thedging\tinstruments\tunder\tGAAP |  |  |  |  |
| Total\tderivatives\tdesignated\tas\thedging\tinstruments | $49,061 | $1,075 | $36,197\t\t\t\t $ | 825 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments\tunder\tGAAP |  |  |  |  |
| Total\tderivatives\tused\tfor\tresidential\tmortgage\tbanking\tactivities | $76,102 | $409 | $119,679\t\t\t\t $ | 330 |
| Total\tderivatives\tused\tfor\tcommercial\tmortgage\tbanking\tactivities | 26,290 | 26 | 53,149 | (12) |
| Total\tderivatives\tused\tfor\tcustomer-related\tactivities | \t 183,474 | 122 | \t 169,534 | 138 |
| Total\tderivatives\tused\tfor\tother\trisk\tmanagement\tactivities | 5,390 | (425) | 2,697 | (422) |
| Total\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | $291,256 | $132 | $345,059\t\t\t\t $ | 34 |
| Total\tDerivatives | $340,317 | $1,207 | $381,256\t\t\t\t $ | 859 |
| (a)\nRepresents\tthe\tnet\tfair\tvalue\tof\tassets\tand\tliabilities. |  |  |  |  |

(a) Represents	the	net	fair	value	of	assets	and	liabilities.

# Summary	Results

Net	income	for	2013	was	$4.2	billion,	or	$7.36	per	diluted	common	share, compared	with	$3.0	billion,	or	$5.28	per	diluted	common	share,	for	2012.	The increase	was	driven	by	an	8%	decline	in	noninterest	expense,	a	3%	increase	in revenue	and	lower	provision	for	credit	losses.	The	decline	in	noninterest	expense reflected	our	continued	focus	on	disciplined	expense	management.	Higher revenue	in	the	comparison	was	driven	by	improvement	in	the	provision	for residential	mortgage	repurchase	obligations,	strong	client	fee	income	and	higher gains	on	asset	valuations,	partially	offset	by	lower	net	interest	income	and	lower gains	on	asset	sales.

Net	interest	income	decreased	by	$493	million,	or	5%,	in	2013	compared	with 2012,	reflecting	a	decline	in	purchase	accounting	accretion	in	the	comparison, the	impact	of	lower	yields	on	loans	and	securities,	and	the	impact	of	lower securities	balances.	These	decreases	were	partially	offset	by	higher	loan balances,	reflecting	commercial	and	consumer	loan	growth	over	the	period,	and lower	rates	paid	on	borrowed	funds	and	deposits.	Total	purchase	accounting accretion	was	$.8	billion	for	2013	compared	to	$1.1	billion	in	2012.

Net	interest	margin	declined	37	basis	points	in	2013	compared	with	2012	due	to lower	purchase	accounting	accretion	and	lower	yields	on	interest-earning	assets, which	decreased	48	basis	points,	partially	offset	by	a	decrease	in	the	weighted- average	rate	paid	on	total	interest-bearing	liabilities	of	14	basis	points.

The	decrease	in	the	yield	on	interest-earning	assets	was	primarily	due	to	lower rates	on	new	loans	and	purchased

securities	in	the	ongoing	low	interest	rate	environment,	as	well	as	the	impact	of higher	levels	of	interest-earning	deposits	with	banks	maintained	in	light	of anticipated	regulatory	requirements.	The	decrease	in	the	rate	paid	on	interest- bearing	liabilities	was	primarily	due	to	redemptions	of	higher-rate	bank	notes and	senior	debt	and	subordinated	debt,	including	the	redemption	of	trust preferred	and	hybrid	capital	securities.

Noninterest	income	increased	to	$6.9	billion	in	2013	compared	to	$5.9	billion	in 2012,	due	to	higher	residential	mortgage	revenue,	which	was	driven	by improvement	in	the	provision	for	residential	mortgage	repurchase	obligations, strong	client	fee	income	and	higher	gains	on	asset	valuations,	partially	offset	by lower	gains	on	asset	sales.	Noninterest	income	as	a	percentage	of	total	revenue was	43%	for	2013,	up	from	38%	for	2012.

Asset	management	revenue	increased	to	$1.3	billion	in	2013	compared	to	$1.2 billion	in	2012,	driven	by	higher	earnings	from	our	BlackRock	investment, stronger	average	equity	markets	and	strong	sales	resulting	in	positive	net	flows, after	adjustments	for	cyclical	client	activities.	Discretionary	client	assets	under management	increased	to	$127	billion	at	December	31,	2013	compared	with $112	billion	at	December	31,	2012.

The	increase	in	consumer	service	fees	to	$1.3	billion	in	2013	compared	to	$1.1 billion	in	2012	was	due	to	growth	in	brokerage	fees	and	the	impact	of	higher customer-initiated	fee	based	transactions.

Corporate	services	revenue	increased	$44	million,	or	4%,	to	$1.2	billion	in	2013 compared	with	2012.	This	increase	included	the	impact	of	higher	valuation	gains from	rising	interest	rates	on	net	commercial	mortgage	servicing	rights valuations,	which	were	gains	of	$68	million	in	2013	compared

with	$31	million	for	2012.	The	increase	in	corporate	services	revenue	was primarily	due	to	higher	net	commercial	mortgage	servicing	rights	valuations, higher	commercial	mortgage	fees,	net	of	amortization,	and	higher	treasury management	fees,	partially	offset	by	lower	merger	and	acquisition	advisory	fees.

Residential	mortgage	revenue	increased	to	$871	million	in	2013	from	$284 million	in	2012.	The	increase	was	driven	by	improvement	in	the	provision	for residential	mortgage	repurchase	obligations,	which	was	a	benefit	of	$53	million in	2013	compared	with	a	provision	of	$761	million	in	2012.	The	release	of reserves	in	2013	was	largely	the	result	of	agreements	with	two	government- sponsored	enterprises	(GSEs),	FHLMC	and	FNMA,	for	loans	sold	into	agency securitizations.	See	the	Recourse	And	Repurchase	Obligations	section	of	this Item	7	and	Item	7	in	our	2013	Form	10-K	for	further	detail.	This	benefit	was partially	offset	by	lower	loan	sales	revenue	resulting	from	an	increase	in mortgage	interest	rates	which	had	the	effect	of	reducing	gain	on	sale	margins and,	to	a	lesser	extent,	loan	origination	volume.

Service	charges	on	deposits	were	$597	million	in	2013	compared	with	$573 million	in	2012.

Net	gains	on	sales	of	securities	totaled	$99	million	for	2013	and	$204	million	for 2012.	The	net	credit	component	of	other-than-temporary	impairment	(OTTI)	of securities	recognized	in	earnings	was	$16	million	in	2013	compared	with	$111 million	for	2012.

Other	noninterest	income	increased	by	$58	million,	or	4%,	to	$1.5	billion	in 2013	due	to	higher	revenue	associated	with	private	equity	investments	and commercial	mortgage	loans	held	for	sale.	In	addition,	the	increase	reflected higher	revenue	from	credit	valuations	for	customer-related	derivatives	activities as	higher	market	interest	rates	reduced	the	fair	value	of	PNC's	credit	exposure	on these	activities.	The	impact	to	2013	revenue	due	to	these	credit	valuations	was $56	million,	while	the	impact	to	2012	revenue	was	not	significant.	These increases	were	partially	offset	by	lower	gains	on	sale	of	Visa	Class	B	common shares,	which	were	$168	million	on	the	sale	of	4	million	shares	in	2013 compared	with	gains	of	$267	million	on	the	sale	of	9	million	shares	in	2012.	We held	approximately	10	million	Visa	Class	B	common	shares	with	a	fair	value	of approximately	$971	million	and	recorded	investment	of	$158	million	as	of December	31,	2013.

The	provision	for	credit	losses	totaled	$643	million	in	2013	compared	with	$987 million	in	2012.	The	decrease	in	provision	compared	to	prior	year	was	the	result of	continued	credit	quality	improvement,	including	improvement	in	our purchased	impaired	loan	portfolio.	Increasing	value	of	residential	real	estate resulted	in	greater	expected	cash	flows	from	our	purchased	impaired	loans.

Noninterest	expense	was	$9.7	billion	for	2013,	a	decrease	of	$.8	billion,	or	8%, from	$10.5	billion	for	2012.	The	decline	reflected	the	impact	of	2012	integration costs	of	$267	million	and	a	reduction	in	noncash	charges	related	to	redemption of	trust	preferred	securities	to	$57	million	in	2013	from	$295	million	in	2012. Additionally,	residential	mortgage	foreclosure-related	expenses	declined	to	$56 million	from	$225	million	in	the	same	comparison.	These	decreases	to noninterest	expense	were	partially	offset	by	the	impact	of	a	full	year	of	operating expense	for	the	March	2012	RBC	Bank	(USA)	acquisition	during	2013 compared	to	2012.

In	the	third	quarter	of	2013,	we	concluded	redemptions	of	discounted	trust preferred	securities	assumed	in	our	acquisitions.	From	the	fourth	quarter	of	2011 through	2013,	we	redeemed	a	total	of	$3.2	billion	of	these	higher-rate	trust preferred	securities,	resulting	in	noncash	charges	totaling	approximately	$550 million.	See	Note	14	Capital	Securities	of	Subsidiary	Trusts	and	Perpetual	Trust Securities	in	Item	8	of	our	2013	Form	10-K	and	2012	Form	10-K	for	more information	on	our	redemption	of	trust	preferred	securities	in	2013	and	2012, respectively.

The	effective	income	tax	rate	was	25.9%	in	both	2013	and	2012.	The	effective tax	rate	is	generally	lower	than	the	statutory	rate	primarily	due	to	tax	credits PNC	receives	from	our	investments	in	low	income	housing	and	new	markets investments,	as	well	as	earnings	in	other	tax	exempt	investments.

Loans	increased	$9.8	billion	to	$195.6	billion	as	of	December	31,	2013 compared	with	December	31,	2012.	The	increase	in	loans	was	driven	by	the increase	in	commercial	lending	as	a	result	of	growth	in	commercial	and commercial	real	estate	loans,	primarily	from	new	customers	and	organic	growth. The	increase	in	consumer	lending	resulted	from	growth	in	automobile	and	home equity	loans,	partially	offset	by	paydowns	of	education	loans.

Average	total	loans	increased	by	$13.4	billion	to	$190.0	billion	in	2013,	which was	driven	by	increases	in	average	commercial	loans	of	$9.4	billion,	average consumer	loans	of	$2.4	billion	and	average	commercial	real	estate	loans	of	$1.4 billion.	The	overall	increase	in	loans	reflected	organic	loan	growth,	primarily	in our	Corporate	&	Institutional	Banking	segment.

Loans	represented	61%	of	total	assets	at	both	December	31,	2013	and December	31,	2012.	Commercial	lending

The	total	loan	balances	above	included	purchased	impaired	loans	of	$6.1	billion, or	3%	of	total	loans,	at	December	31,	2013,	and	$7.4	billion,	or	4%	of	total loans,	at	December	31,	2012.

As	of	December	31,	2013,	the	amortized	cost	and	fair	value	of	available	for	sale securities	totaled	$48.0	billion	and	$48.6	billion,	respectively,	compared	to	an amortized	cost	and	fair	value	as	of	December	31,	2012	of	$49.4	billion	and	$51.1 billion,	respectively.	The	amortized	cost	and	fair	value	of	held	to	maturity securities	were	$11.7	billion	and	$11.8	billion,	respectively,	at	December	31, 2013,	compared	to	$10.4	billion	and	$10.9	billion,	respectively,	at	December	31, 2012.	Investment	securities	represented	19%	of	total	assets	at	December	31, 2013	and	20%	at	December	31,	2012.	Average	investment	securities	decreased to	$57.3	billion	during	2013	compared	to	$60.8	billion	during	2012.

The	fair	value	of	investment	securities	is	impacted	by	interest	rates,	credit spreads,	market	volatility	and	liquidity	conditions.	The	fair	value	of	investment securities	generally	decreases	when	interest	rates	increase	and	vice	versa.	In addition,	the	fair	value	generally	decreases	when	credit	spreads	widen	and	vice versa.	Net	unrealized	gains	in	the	total	investment	securities	portfolio	decreased to	$.7	billion	at	December	31,	2013	from	$2.1	billion	at	December	31,	2012	due primarily	to	an	increase	in	market	interest	rates.	The	comparable	amounts	for	the securities	available	for	sale	portfolio	were	$.6	billion	and	$1.6	billion, respectively.

During	2013,	we	transferred	securities	with	a	fair	value	of	$1.9	billion	from available	for	sale	to	held	to	maturity.	We	changed	our	intent	and	committed	to hold	these	high-quality	securities	to	maturity	in	order	to	reduce	the	impact	of price	volatility	on	Accumulated	other	comprehensive	income	and	certain	capital measures,	taking	into	consideration	market	conditions	and	changes	to	regulatory capital	requirements	under	Basel	III	capital	standards.

The	weighted-average	expected	maturity	of	the	investment	securities	portfolio (excluding	corporate	stocks	and	other)	was	4.9	years	at	December	31,	2013	and 4.0	years	at	December	31,	2012.

For	commercial	mortgages	held	for	sale	designated	at	fair	value,	the	balance relating	to	these	loans	was	$586	million	at	December	31,	2013	compared	to	$772 million	at	December	31,	2012.	For	commercial	mortgages	held	for	sale	carried	at lower	of	cost	or	fair	value,	we	sold	$2.8	billion	in	2013	compared	to	$2.2	billion in	2012.	All	of	these	loan	sales	were	to	government	agencies.	Total	gains	of	$79 million	were	recognized	on	the	valuation	and	sale	of	commercial	mortgage	loans held	for	sale,	net	of	hedges,	in	2013,	and	$41	million	in	2012.

Residential	mortgage	loan	origination	volume	was	$15.1	billion	in	2013 compared	to	$15.2	billion	in	2012.	Substantially	all	such	loans	were	originated under	agency	or	Federal	Housing	Administration	(FHA)	standards.	We	sold $14.7	billion	of	loans	and	recognized	related	gains	of	$568	million	in	2013.	The comparable	amounts	for	2012	were	$13.8	billion	and	$747	million,	respectively.

# Asset	Quality

At	December	31,	2013,	our	largest	nonperforming	asset	was	$36	million	in	the Real	Estate,	Rental	and	Leasing	Industry	and	our	average	nonperforming	loans associated	with	commercial	lending	were	under	$1	million.

Goodwill	and	other	intangible	assets	totaled	$11.3	billion	at	December	31,	2013 and	$10.9	billion	at	December	31,	2012.	The	increase	of	$.4	billion	was primarily	due	to	additions	to	and	changes	in	value	of	mortgage	and	other	loan servicing	rights.

Total	deposits	increased	$7.8	billion	at	December	31,	2013	compared	with December	31,	2012	due	to	increases	in	money	market,	demand,	and	savings accounts,	partially	offset	by	decreases	in	retail	certificates	of	deposit.	Interest- bearing	deposits	represented	68%	of	total	deposits	at	December	31,	2013 compared	to	67%	at	December	31,	2012

Average	total	deposits	increased	$10.6	billion	to	$212.2	billion	in	2013 compared	with	the	prior	year,	primarily	due	to	an	increase	of	$15.0	billion	in average	transaction	deposits,	which	grew	to	$176.9	billion	in	2013.	Higher average	interest-bearing	demand	deposits,	average	money	market	deposits	and average	noninterest-bearing	deposits	drove	the	increase	in	average	transaction deposits.	These	increases	were	partially	offset	by	a	decrease	of	$4.3	billion	in average	retail	certificates	of	deposit	attributable	to	runoff	of	maturing	accounts. Average	total	deposits	represented	69%	of	average	total	assets	for	2013	and	68% for	2012.

Total	borrowed	funds	increased	$5.2	billion	to	$46.1	billion	at	December	31, 2013	as	higher	Federal	Home	Loan	Bank	borrowings	and	bank	notes	and	senior debt	were	partially	offset	by	a	decrease	in	commercial	paper.

Average	borrowed	funds	were	$40.0	billion	in	2013	compared	with	$41.8	billion in	2012.	The	decrease	was	primarily	due	to	lower	average	commercial	paper, lower	average	Federal	Home	Loan	Bank	(FHLB)	borrowings	and	lower	average federal	funds	purchased	and	repurchase	agreements.

# Shareholders'	Equity

Total	shareholders'	equity	increased	$3.4	billion,	to	$42.3	billion	at December	31,	2013	compared	with	December	31,	2012,	primarily	reflecting	an increase	in	retained	earnings	of	$3.0	billion	(driven	by	net	income	of	$4.2	billion and	the	impact	of	$1.1	billion	of	common	and	preferred	dividends	declared)	and an	increase	of	$.6	billion	in	capital	surplus	due	to	the	net	issuances	of	preferred stock	and	common	stock	and	other.	These	increases	were	partially	offset	by	the decline	of	accumulated	other	comprehensive	income	of	$.4	billion.	This	decline was	primarily	due	to	the	impact	of	an	increase	in	market	interest	rates	and widening	asset	spreads	on	securities	available	for	sale	and	derivatives	that	are part	of	cash	flow	hedging	strategies,	partially	offset	by	the	impact	of	pension	and other	postretirement	benefit	plan	adjustments.	Common	shares	outstanding	were 533	million	at	December	31,	2013	and	528	million	at	December	31,	2012.

# Risk-Based	Capital

Regulatory	Basel	I	capital	ratios	at	December	31,	2013	were	10.5%	for	Tier	1 common,	11.1%	for	leverage,	12.4%	for	Tier	1	risk-based	and	15.8%	for	total risk-based	capital.	At	December	31,	2012,	the	Basel	I	regulatory	capital	ratios were	9.6%	for	Tier	1	common,	10.4%	for	leverage,	11.6%	for	Tier	1	risk-based and	14.7%	for	total	risk-based	capital.	The	Basel	I	capital	ratios	increased	in	all comparisons	primarily	due	to	growth	in	retained	earnings.	The	net	issuance	of preferred	stock	during	2013	partially	offset	by	the	redemption	of	trust	preferred securities	favorably	impacted	the	December	31,	2013	Basel	I	Tier	1	risk-based and	Basel	I	total	risk-based	capital	ratios.	Basel	I	risk-weighted	assets	increased $11.3	billion	to	$272.2	billion	at	December	31,	2013	compared	to	December	31, 2012.

# GLOSSARY	OF	TERMS

Accretable	net	interest	(Accretable	yield)	–	The	excess	of	cash	flows	expected	to be	collected	on	a	purchased	impaired	loan	over	the	carrying	value	of	the	loan. The	accretable	net	interest	is	recognized	into	interest	income	over	the	remaining life	of	the	loan	using	the	constant	effective	yield	method.

Adjusted	average	total	assets	–	Primarily	comprised	of	total	average	quarterly	(or annual)	assets	plus	(less)	unrealized	losses	(gains)	on	investment	securities,	less goodwill	and	certain	other	intangible	assets	(net	of	eligible	deferred	taxes).

Annualized	–	Adjusted	to	reflect	a	full	year	of	activity.

Basel	III	common	equity	Tier	1	capital	–	Common	stock	plus	related	surplus, net	of	treasury	stock,	plus	retained	earnings,	plus	accumulated	other comprehensive	income	for	securities	currently	and	previously	held	as	available for	sale,	plus	accumulated	other	comprehensive	income	for	pension	and	other post	postretirement	benefit	plans,	less	goodwill,	net	of	associated	deferred	tax liabilities,	less	other	disallowed	intangibles,	net	of	deferred	tax	liabilities	and plus/less	other	adjustments.

Basel	III	common	equity	Tier	1	capital	ratio	–	Common	equity	Tier	1	capital divided	by	period-end	risk-weighted	assets	(as	applicable).

Basel	III	Tier	1	capital	–	Common	equity	Tier	1	capital,	plus	preferred	stock, plus	certain	trust	preferred	capital	securities,	plus	certain	noncontrolling interests	that	are	held	by	others	and	plus/	less	other	adjustments.

Basel	III	Tier	1	capital	ratio	–	Tier	1	capital	divided	by	period-end	risk-weighted assets	(as	applicable).

Basel	III	Total	capital	–	Tier	1	capital	plus	qualifying	subordinated	debt,	plus certain	trust	preferred	securities,	plus,	under	the	Basel	III	transitional	rules	and the	standardized	approach,	the	allowance	for	loan	and	lease	losses	included	in Tier	2	capital	and	other.

Basel	III	Total	capital	ratio	–	Total	capital	divided	by	period-end	risk-weighted assets	(as	applicable).

# Basis	point	–	One	hundredth	of	a	percentage	point.

Carrying	value	of	purchased	impaired	loans	–	The	net	value	on	the	balance	sheet which	represents	the	recorded	investment	less	any	valuation	allowance.

Cash	recoveries	–	Cash	recoveries	used	in	the	context	of	purchased	impaired loans	represent	cash	payments	for	a	single	purchased	impaired	loan	not	included within	a	pool	of	loans	from	customers	that	exceeded	the	recorded	investment	of that	loan.

Charge-off	–	Process	of	removing	a	loan	or	portion	of	a	loan	from	our	balance sheet	because	it	is	considered	uncollectible.	We	also	record	a	charge-off	when	a loan	is	transferred	from	portfolio	holdings	to	held	for	sale	by	reducing	the	loan carrying	amount	to	the	fair	value	of	the	loan,	if	fair	value	is	less	than	carrying amount.

Combined	loan-to-value	ratio	(CLTV)	–	This	is	the	aggregate	principal balance(s)	of	the	mortgages	on	a	property	divided	by	its	appraised	value	or purchase	price.

Common	shareholders'	equity	to	total	assets	–	Common	shareholders'	equity divided	by	total	assets.	Common	shareholders'	equity	equals	total	shareholders' equity	less	the	liquidation	value	of	preferred	stock.

Core	net	interest	income	–	Core	net	interest	income	is	total	net	interest	income less	purchase	accounting	accretion.

Credit	derivatives	–	Contractual	agreements,	primarily	credit	default	swaps,	that provide	protection	against	a	credit	event	of	one	or	more	referenced	credits.	The nature	of	a	credit	event	is	established	by	the	protection	buyer	and	protection seller	at	the	inception	of	a	transaction,	and	such	events	include	bankruptcy, insolvency	and	failure	to	meet	payment	obligations	when	due.	The	buyer	of	the credit	derivative	pays	a	periodic	fee	in	return	for	a	payment	by	the	protection seller	upon	the	occurrence,	if	any,	of	a	credit	event.

Credit	spread	–	The	difference	in	yield	between	debt	issues	of	similar	maturity. The	excess	of	yield	attributable	to	credit	spread	is	often	used	as	a	measure	of relative	creditworthiness,	with	a	reduction	in	the	credit	spread	reflecting	an improvement	in	the	borrower's	perceived	creditworthiness.

Credit	valuation	adjustment	(CVA)	–	Represents	an	adjustment	to	the	fair	value of	our	derivatives	for	our	own	and	counterparties'	non-performance	risk.

Derivatives	–	Financial	contracts	whose	value	is	derived	from	changes	in publicly	traded	securities,	interest	rates,	currency	exchange	rates	or	market indices.	Derivatives	cover	a	wide	assortment	of	financial	contracts,	including	but not	limited	to	forward	contracts,	futures,	options	and	swaps.

Discretionary	client	assets	under	management	–	Assets	over	which	we	have	sole or	shared	investment	authority	for	our	customers/clients.	We	do	not	include these	assets	on	our	Consolidated	Balance	Sheet.

Duration	of	equity	–	An	estimate	of	the	rate	sensitivity	of	our	economic	value	of equity.	A	negative	duration	of	equity	is	associated	with	asset	sensitivity	(i.e., positioned	for	rising	interest	rates),	while	a	positive	value	implies	liability sensitivity	(i.e.,	positioned	for	declining	interest	rates).	For	example,	if	the duration	of	equity	is	-1.5	years,	the	economic	value	of	equity	increases	by	1.5% for	each	100	basis	point	increase	in	interest	rates.

Earning	assets	–	Assets	that	generate	income,	which	include:	federal	funds	sold; resale	agreements;	trading	securities;	interest-earning	deposits	with	banks;	loans held	for	sale;	loans;	investment	securities;	and	certain	other	assets.

Effective	duration	–	A	measurement,	expressed	in	years,	that,	when	multiplied by	a	change	in	interest	rates,	would	approximate	the	percentage	change	in	value of	on-	and	off-	balance	sheet	positions.

Efficiency	–	Noninterest	expense	divided	by	total	revenue.

Enterprise	risk	management	framework	–	An	enterprise	process	designed	to identify	potential	risks	that	may	affect	PNC,	manage	risk	to	be	within	our	risk appetite	and	provide	reasonable	assurance	regarding	achievement	of	our objectives.

Fair	value	–	The	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a liability	in	an	orderly	transaction	between	market	participants	at	the measurement	date.

Fee	income	–	When	referring	to	the	components	of	Noninterest	income,	we	use the	term	fee	income	to	refer	to	the	following	categories	within	Noninterest income:	Asset	management;	Consumer	services;	Corporate	services;	Residential mortgage;	and	Service	charges	on	deposits.

FICO	score	–	A	credit	bureau-based	industry	standard	score	created	by	Fair Isaac	Co.	which	predicts	the	likelihood	of	borrower	default.	We	use	FICO	scores both	in	underwriting	and	assessing	credit	risk	in	our	consumer	lending	portfolio. Lower	FICO	scores	indicate	likely	higher	risk	of	default,	while	higher	FICO scores	indicate	likely	lower	risk	of	default.	FICO	scores	are	updated	on	a periodic	basis.

Foreign	exchange	contracts	–	Contracts	that	provide	for	the	future	receipt	and delivery	of	foreign	currency	at	previously	agreed-upon	terms.

Funds	transfer	pricing	–	A	management	accounting	methodology	designed	to recognize	the	net	interest	income	effects	of	sources	and	uses	of	funds	provided by	the	assets	and	liabilities	of	a	business	segment.	We	assign	these	balances LIBOR-based	funding	rates	at	origination	that	represent	the	interest	cost	for	us	to raise/invest	funds	with	similar	maturity	and	repricing	structures.

Futures	and	forward	contracts	–	Contracts	in	which	the	buyer	agrees	to	purchase and	the	seller	agrees	to	deliver	a	specific	financial	instrument	at	a	predetermined price	or	yield.	May	be	settled	either	in	cash	or	by	delivery	of	the	underlying financial	instrument.

GAAP	–	Accounting	principles	generally	accepted	in	the	United	States	of America.

Home	price	index	(HPI)	–	A	broad	measure	of	the	movement	of	single-family house	prices	in	the	U.S.

Impaired	loans	–	Loans	are	determined	to	be	impaired	when,	based	on	current information	and	events,	it	is	probable	that	all	contractually	required	payments will	not	be	collected.	Impaired	loans	include	commercial	nonperforming	loans and	consumer	and	commercial	TDRs,	regardless	of	nonperforming	status. Excluded	from	impaired	loans	are	nonperforming	leases,	loans	held	for	sale, loans	accounted	for	under	the	fair	value	option,	smaller	balance	homogenous type	loans	and	purchased	impaired	loans.

Interest	rate	floors	and	caps	–	Interest	rate	protection	instruments	that	involve payment	from	the	protection	seller	to	the	protection	buyer	of	an	interest differential,	which	represents	the	difference	between	a	short-term	rate	(e.g., three-month	LIBOR)	and	an	agreed-upon	rate	(the	strike	rate)	applied	to	a notional	principal	amount.

Interest	rate	swap	contracts	–	Contracts	that	are	entered	into	primarily	as	an asset/liability	management	strategy	to	reduce	interest	rate	risk.	Interest	rate	swap contracts	are	exchanges	of	interest	rate	payments,	such	as	fixed-rate	payments	for floating-rate	payments,	based	on	notional	principal	amounts.

Intrinsic	value	–	The	difference	between	the	price,	if	any,	required	to	be	paid	for stock	issued	pursuant	to	an	equity	compensation	arrangement	and	the	fair	market value	of	the	underlying	stock.

Leverage	ratio	–	Tier	1	capital	divided	by	average	quarterly	adjusted	total	assets.

LIBOR	–	Acronym	for	London	InterBank	Offered	Rate.	LIBOR	is	the	average interest	rate	charged	when	banks	in	the	London	wholesale	money	market	(or interbank	market)	borrow	unsecured	funds	from	each	other.	LIBOR	rates	are used	as	a	benchmark	for	interest	rates	on	a	global	basis.	PNC's	product	set includes	loans	priced	using	LIBOR	as	a	benchmark.

Loan-to-value	ratio	(LTV)	–	A	calculation	of	a	loan's	collateral	coverage	that	is used	both	in	underwriting	and	assessing	credit	risk	in	our	lending	portfolio.	LTV is	the	sum	total	of	loan	obligations	secured	by	collateral	divided	by	the	market value	of	that	same	collateral.	Market	values	of	the	collateral	are	based	on	an independent	valuation	of	the	collateral.	For	example,	a	LTV	of	less	than	90%	is better	secured	and	has	less	credit	risk	than	a	LTV	of	greater	than	or	equal	to 90%.

Loss	given	default	(LGD)	–	An	estimate	of	loss,	net	of	recovery	based	on collateral	type,	collateral	value,	loan	exposure,	or	the	guarantor(s)	quality	and guaranty	type	(full	or	partial).	Each	loan	has	its	own	LGD.	The	LGD	risk	rating measures	the	percentage	of	exposure	of	a	specific	credit	obligation	that	we expect	to	lose	if	default	occurs.	LGD	is	net	of	recovery,	through	any	means, including	but	not	limited	to	the	liquidation	of	collateral	or	deficiency	judgments rendered	from	foreclosure	or	bankruptcy	proceedings.

Net	interest	margin	–	Annualized	taxable-equivalent	net	interest	income	divided by	average	earning	assets.

Nonaccretable	difference	–	Contractually	required	payments	receivable	on	a purchased	impaired	loan	in	excess	of	the	cash	flows	expected	to	be	collected.

Nonaccrual	loans	–	Loans	for	which	we	do	not	accrue	interest	income. Nonaccrual	loans	include	nonperforming	loans,	in	addition	to	loans	accounted for	under	fair	value	option	and	loans	accounted	for	as	held	for	sale	for	which	full collection	of	contractual	principal	and/or	interest	is	not	probable.

Nondiscretionary	client	assets	under	administration	–	Assets	we	hold	for	our customers/clients	in	a	nondiscretionary,	custodial	capacity.	We	do	not	include these	assets	on	our	Consolidated	Balance	Sheet.

Nonperforming	assets	–	Nonperforming	assets	include	nonperforming	loans	and OREO	and	foreclosed	assets,	but	exclude	certain	government	insured	or guaranteed	loans	for	which	we	expect	to	collect	substantially	all	principal	and interest,	loans	held	for	sale,	loans	accounted	for	under	the	fair	value	option	and purchased	impaired	loans.	We	do	not	accrue	interest	income	on	assets	classified as	nonperforming.

Nonperforming	loans	–	Loans	accounted	for	at	amortized	cost	for	which	we	do not	accrue	interest	income.	Nonperforming	loans	include	loans	to	commercial, commercial	real	estate,	equipment	lease	financing,	home	equity,	residential	real estate,	credit	card	and	other	consumer	customers	as	well	as	TDRs	which	have not	returned	to	performing	status.	Nonperforming	loans	exclude	certain government	insured	or	guaranteed	loans	for	which	we	expect	to	collect substantially	all	principal	and	interest,	loans	held	for	sale,	loans	accounted	for under	the	fair	value	option	and	purchased	impaired	loans.	Nonperforming	loans exclude	purchased	impaired	loans	as	we	are	currently	accreting	interest	income over	the	expected	life	of	the	loans.

Notional	amount	–	A	number	of	currency	units,	shares,	or	other	units	specified in	a	derivative	contract.

Operating	leverage	–	The	period	to	period	dollar	or	percentage	change	in	total revenue	(GAAP	basis)	less	the	dollar	or	percentage	change	in	noninterest expense.	A	positive	variance	indicates	that	revenue	growth	exceeded	expense growth	(i.e.,	positive	operating	leverage)	while	a	negative	variance	implies expense	growth	exceeded	revenue	growth	(i.e.,	negative	operating	leverage).

Options	–	Contracts	that	grant	the	purchaser,	for	a	premium	payment,	the	right, but	not	the	obligation,	to	either	purchase	or	sell	the	associated	financial instrument	at	a	set	price	during	a	specified	period	or	at	a	specified	date	in	the future.

Other	real	estate	owned	(OREO)	and	foreclosed	assets	–	Assets	taken	in settlement	of	troubled	loans	primarily	through	deed-in-lieu	of	foreclosure	or foreclosure.	Foreclosed	assets	include	real	and	personal	property,	equity interests	in	corporations,	partnerships,	and	limited	liability	companies.

Other-than-temporary	impairment	(OTTI)	–	When	the	fair	value	of	a	security	is less	than	its	amortized	cost	basis,	an	assessment	is	performed	to	determine whether	the	impairment	is	other-than-temporary.	If	we	intend	to	sell	the	security or	more	likely	than	not	will	be	required	to	sell	the	security	before	recovery	of	its amortized	cost	basis	less	any	current-period	credit	loss,	an	other-than-temporary impairment	is	considered	to	have	occurred.	In	such	cases,	an	other-than- temporary	impairment	is	recognized	in	earnings	equal	to	the	entire	difference between	the	investment's	amortized	cost	basis	and	its	fair	value	at	the	balance sheet	date.	Further,	if	we	do	not	expect	to	recover	the	entire	amortized	cost	of	the security,	an	other-than-temporary	impairment	is	considered	to	have	occurred. However	for	debt	securities,	if	we	do	not	intend	to	sell	the	security	and	it	is	not more	likely	than	not	that	we	will	be	required	to	sell	the	security	before	its recovery,	the	other-than-temporary	loss	is	separated	into	(a)	the	amount representing	the	credit	loss,	and	(b)	the	amount	related	to	all	other	factors.	The other-than-temporary	impairment	related	to	credit	losses	is	recognized	in earnings	while	the	amount	related	to	all	other	factors	is	recognized	in	other comprehensive	income,	net	of	tax.

Parent	company	liquidity	coverage	–	Liquid	assets	divided	by	funding obligations	within	a	two	year	period.

Pretax	earnings	–	Income	before	income	taxes	and	noncontrolling	interests.

Pretax,	pre-provision	earnings	–	Total	revenue	less	noninterest	expense.

Primary	client	relationship	–	A	corporate	banking	client	relationship	with	annual revenue	generation	of	$10,000	to	$50,000	or	more,	and	for	Asset	Management Group,	a	client	relationship	with	annual	revenue	generation	of	$10,000	or	more.

Probability	of	default	(PD)	–	An	internal	risk	rating	that	indicates	the	likelihood that	a	credit	obligor	will	enter	into	default	status.

Purchase	accounting	accretion	–	Accretion	of	the	discounts	and	premiums	on acquired	assets	and	liabilities.	The	purchase	accounting	accretion	is	recognized in	net	interest	income	over	the	weighted-average	life	of	the	financial	instruments using	the	constant	effective	yield	method.	Accretion	for	a	single	purchased impaired	loan	not	included	within	a	pool	of	loans	includes	any	cash	recoveries on	that	loan	received	in	excess	of	the	recorded	investment.

Purchased	impaired	loans	–	Acquired	loans	(or	pools	of	loans)	determined	to	be credit	impaired	under	FASB	ASC	310-30	(AICPA	SOP	03-3).	Loans	(or	pools of	loans)	are	determined	to	be	impaired	if	there	is	evidence	of	credit deterioration	since	origination	and	for	which	it	is	probable	that	all	contractually required	payments	will	not	be	collected.

Recorded	investment	(purchased	impaired	loans)	–	The	initial	investment	of	a purchased	impaired	loan	plus	interest	accretion	and	less	any	cash	payments	and writedowns	to	date.	The	recorded	investment	excludes	any	valuation	allowance which	is	included	in	our	allowance	for	loan	and	lease	losses.

Recovery	–	Cash	proceeds	received	on	a	loan	that	we	had	previously	charged off.	We	credit	the	amount	received	to	the	allowance	for	loan	and	lease	losses.

Residential	development	loans	–	Project-specific	loans	to	commercial	customers for	the	construction	or	development	of	residential	real	estate	including	land, single	family	homes,	condominiums	and	other	residential	properties.

Return	on	average	assets	–	Annualized	net	income	divided	by	average	assets.

Return	on	average	capital	–	Annualized	net	income	divided	by	average	capital.

Return	on	average	common	shareholders'	equity	–	Annualized	net	income attributable	to	common	shareholders	divided	by	average	common	shareholders' equity.

Risk	–	The	potential	that	an	event	or	series	of	events	could	occur	that	would threaten	PNC's	ability	to	achieve	its	strategic	objectives,	thereby	negatively affecting	shareholder	value	or	reputation.

Risk	appetite	–	A	dynamic,	forward-looking	view	on	the	aggregate	amount	of risk	PNC	is	willing	and	able	to	take	in	executing	business	strategy	in	light	of	the current	business	environment.

Risk	limits	–	Quantitative	measures	based	on	forward	looking	assumptions	that allocate	the	firm's	aggregate	risk	appetite	(e.g.	measure	of	loss	or	negative events)	to	business	lines,	legal	entities,	specific	risk	categories,	concentrations and	as	appropriate,	other	levels.

Risk	profile	–	The	risk	profile	is	a	point-in-time	assessment	of	risk.	The	profile represents	overall	risk	position	in	relation	to	the	desired	risk	appetite.	The determination	of	the	risk	profile's	position	is	based	on	qualitative	and quantitative	analysis	of	reported	risk	limits,	metrics,	operating	guidelines	and qualitative	assessments.

Risk-weighted	assets	–	Computed	by	the	assignment	of	specific	risk-weights	(as defined	by	the	Board	of	Governors	of	the	Federal	Reserve	System)	to	assets	and off-balance	sheet	instruments.

Securitization	–	The	process	of	legally	transforming	financial	assets	into securities.

Servicing	rights	–	An	intangible	asset	or	liability	created	by	an	obligation	to service	assets	for	others.	Typical	servicing	rights	include	the	right	to	receive	a fee	for	collecting	and	forwarding	payments	on	loans	and	related	taxes	and insurance	premiums	held	in	escrow.

Swaptions	–	Contracts	that	grant	the	purchaser,	for	a	premium	payment,	the right,	but	not	the	obligation,	to	enter	into	an	interest	rate	swap	agreement	during a	specified	period	or	at	a	specified	date	in	the	future.

Taxable-equivalent	interest	–	The	interest	income	earned	on	certain	assets	is completely	or	partially	exempt	from	Federal	income	tax.	As	such,	these	tax- exempt	instruments	typically	yield	lower	returns	than	taxable	investments.	To provide	more	meaningful	comparisons	of	yields	and	margins	for	all	interest- earning	assets,	we	use	interest	income	on	a	taxable-equivalent	basis	in calculating	average	yields	and	net	interest	margins	by	increasing	the	interest income	earned	on	tax-exempt	assets	to	make	it	fully	equivalent	to	interest	income earned	on	other	taxable	investments.	This	adjustment	is	not	permitted	under GAAP	on	the	Consolidated	Income	Statement.

Total	equity	–	Total	shareholders'	equity	plus	noncontrolling	interests.

Total	return	swap	–	A	non-traditional	swap	where	one	party	agrees	to	pay	the other	the	"total	return"	of	a	defined	underlying	asset	(e.g.,	a	loan),	usually	in return	for	receiving	a	stream	of	LIBOR-based	cash	flows.	The	total	returns	of	the asset,	including	interest	and	any	default	shortfall,	are	passed	through	to	the counterparty.	The	counterparty	is,	therefore,	assuming	the	credit	and	economic risk	of	the	underlying	asset.

Transaction	deposits	–	The	sum	of	interest-bearing	money	market	deposits, interest-bearing	demand	deposits,	and	noninterest-bearing	deposits.

Transitional	Basel	III	common	equity	–	Common	equity	calculated	under	Basel III	using	phased	in	definitions	and	deductions	applicable	to	PNC	for	2014.

Troubled	debt	restructuring	(TDR)	–	A	loan	whose	terms	have	been	restructured in	a	manner	that	grants	a	concession	to	a	borrower	experiencing	financial difficulties.

Value-at-risk	(VaR)	–	A	statistically-based	measure	of	risk	that	describes	the amount	of	potential	loss	which	may	be	incurred	due	to	adverse	market movements.	The	measure	is	of	the	maximum	loss	which	should	not	be	exceeded on	95	out	of	100	days	for	a	95%	VaR.

Watchlist	–	A	list	of	criticized	loans,	credit	exposure	or	other	assets	compiled for	internal	monitoring	purposes.	We	define	criticized	exposure	for	this	purpose as	exposure	with	an	internal	risk	rating	of	other	assets	especially	mentioned, substandard,	doubtful	or	loss.

Yield	curve	–	A	graph	showing	the	relationship	between	the	yields	on	financial instruments	or	market	indices	of	the	same	credit	quality	with	different	maturities. For	example,	a	"normal"	or	"positive"	yield	curve	exists	when	long-term	bonds have	higher	yields	than	short-term	bonds.	A	"flat"	yield	curve	exists	when	yields are	the	same	for	short-term	and	long-term	bonds.	A	"steep"	yield	curve	exists when	yields	on	long-term	bonds	are	significantly	higher	than	on	short-term bonds.	An	"inverted"	or	"negative"	yield	curve	exists	when	short-term	bonds have	higher	yields	than	long-term	bonds.

# CAUTIONARY	STATEMENT	REGARDING	FORWARD-LOOKING INFORMATION

We	make	statements	in	this	Report,	and	we	may	from	time	to	time	make	other statements,	regarding	our	outlook	for	earnings,	revenues,	expenses,	capital	and liquidity	levels	and	ratios,	asset	levels,	asset	quality,	financial	position,	and	other matters	regarding	or	affecting	PNC	and	its	future	business	and	operations	that are	forward-looking	statements	within	the	meaning	of	the	Private	Securities Litigation	Reform	Act.	Forward-looking	statements	are	typically	identified	by words	such	as	"believe,"	"plan,"	"expect,"	"anticipate,"	"see,"	"look,"	"intend," "outlook,"	"project,"	"forecast,"	"estimate,"	"goal,"	"will,"	"should"	and	other similar	words	and	expressions.	Forward-looking	statements	are	subject	to numerous	assumptions,	risks	and	uncertainties,	which	change	over	time.

Forward-looking	statements	speak	only	as	of	the	date	made.	We	do	not	assume any	duty	and	do	not	undertake	to	update	forward-looking	statements.	Actual results	or	future	events	could	differ,	possibly	materially,	from	those	anticipated in	forward-looking	statements,	as	well	as	from	historical	performance.

Our	forward-looking	statements	are	subject	to	the	following	principal	risks	and uncertainties.

•	Our	businesses,	financial	results	and	balance	sheet	values	are	affected	by business	and	economic	conditions,	including	the	following:

– 	Changes	in	interest	rates	and	valuations	in	debt,	equity	and	other financial	markets.

– 	Disruptions	in	the	liquidity	and	other	functioning	of	U.S.	and	global financial	markets.

– 	The	impact	on	financial	markets	and	the	economy	of	any	changes	in the	credit	ratings	of	U.S.	Treasury	obligations	and	other	U.S. government-backed	debt,	as	well	as	issues	surrounding	the	levels	of U.S.	and	European	government	debt	and	concerns	regarding	the creditworthiness	of	certain	sovereign	governments,	supranationals	and financial	institutions	in	Europe.

– 	Actions	by	the	Federal	Reserve,	U.S.	Treasury	and	other	government agencies,	including	those	that	impact	money	supply	and	market interest	rates.

– 	Changes	in	customers',	suppliers'	and	other	counterparties' performance	and	creditworthiness.

– 	Slowing	or	reversal	of	the	current	U.S.	economic	expansion.

– 	Continued	residual	effects	of	recessionary	conditions	and	uneven spread	of	positive	impacts	of	recovery	on	the	economy	and	our counterparties,	including	adverse	impacts	on	levels	of	unemployment, loan	utilization	rates,	delinquencies,	defaults	and	counterparty	ability	to meet	credit	and	other	obligations.

– 	Changes	in	customer	preferences	and	behavior,	whether	due	to changing	business	and	economic	conditions,	legislative	and	regulatory initiatives,	or	other	factors.

•	Our	forward-looking	financial	statements	are	subject	to	the	risk	that economic	and	financial	market	conditions	will	be	substantially	different than	we	are	currently	expecting.	These	statements	are	based	on	our	current view	that	the	U.S.	economic	expansion	will	speed	up	to	an	above	trend growth	rate	near	3.5	percent	in	2015,	boosted	by	lower	oil/energy	prices, and	that	short-term	interest	rates	and	bond	yields	will	rise	only	slowly	in	the latter	half	of	2015.	These	forward-looking	statements	also	do	not,	unless otherwise	indicated,	take	into	account	the	impact	of	potential	legal	and regulatory	contingencies.

•	PNC's	ability	to	take	certain	capital	actions,	including	paying	dividends	and any	plans	to	increase	common	stock	dividends,	repurchase	common	stock under	current	or	future	programs,	or	issue	or	redeem	preferred	stock	or other	regulatory	capital	instruments,	is	subject	to	the	review	of	such proposed	actions	by	the	Federal	Reserve	as	part	of	PNC's	comprehensive capital	plan	for	the	applicable	period	in	connection	with	the	regulators' Comprehensive	Capital	Analysis	and	Review	(CCAR)	process	and	to	the acceptance	of	such	capital	plan	and	non-objection	to	such	capital	actions	by the	Federal	Reserve.

•	PNC's	regulatory	capital	ratios	in	the	future	will	depend	on,	among	other things,	the	company's	financial	performance,	the	scope	and	terms	of	final capital	regulations	then	in	effect	(particularly	those	implementing	the	Basel Capital	Accords),	and	management	actions	affecting	the	composition	of PNC's	balance	sheet.	In	addition,	PNC's	ability	to	determine,	evaluate	and

forecast	regulatory	capital	ratios,	and	to	take	actions	(such	as	capital distributions)	based	on	actual	or	forecasted	capital	ratios,	will	be	dependent at	least	in	part	on	the	development,	validation	and	regulatory	approval	of related	models.

•	Legal	and	regulatory	developments	could	have	an	impact	on	our	ability	to operate	our	businesses,	financial	condition,	results	of	operations, competitive	position,	reputation,	or	pursuit	of	attractive	acquisition opportunities.	Reputational	impacts	could	affect	matters	such	as	business generation	and	retention,	liquidity,	funding,	and	ability	to	attract	and	retain management.	These	developments	could	include:

– 	Changes	resulting	from	legislative	and	regulatory	reforms,	including major	reform	of	the	regulatory	oversight	structure	of	the	financial services	industry	and	changes	to	laws	and	regulations	involving	tax, pension,	bankruptcy,	consumer	protection,	and	other	industry	aspects, and	changes	in	accounting	policies	and	principles.	We	will	be impacted	by	extensive	reforms	provided	for	in	the	Dodd-Frank	Wall Street	Reform	and	Consumer	Protection	Act	(the	"Dodd-Frank	Act") and	otherwise	growing	out	of	the	most	recent	financial	crisis,	the precise	nature,	extent	and	timing	of	which,	and	their	impact	on	us, remains	uncertain.

– 	Changes	to	regulations	governing	bank	capital	and	liquidity	standards, including	due	to	the	Dodd-Frank	Act	and	to	Basel-related	initiatives.

– 	Unfavorable	resolution	of	legal	proceedings	or	other	claims	and regulatory	and	other	governmental	investigations	or	other	inquiries.	In addition	to	matters	relating	to	PNC's	current	and	historical	business and	activities,	such	matters	may	include	proceedings,	claims, investigations,	or	inquiries	relating	to	pre-acquisition	business	and activities	of	acquired	companies,	such	as	National	City.	These	matters may	result	in	monetary	judgments	or	settlements	or	other	remedies, including	fines,	penalties,	restitution	or	alterations	in	our	business practices,	and	in	additional	expenses	and	collateral	costs,	and	may cause	reputational	harm	to	PNC.

– 	Results	of	the	regulatory	examination	and	supervision	process, including	our	failure	to	satisfy	requirements	of	agreements	with governmental	agencies.

– 	Impact	on	business	and	operating	results	of	any	costs	associated	with obtaining	rights	in	intellectual	property	claimed	by	others	and	of adequacy	of	our	intellectual	property	protection	in	general. •	Business	and	operating	results	are	affected	by	our	ability	to	identify	and effectively	manage	risks	inherent	in	our	businesses,	including,	where appropriate,	through	effective	use	of	third-party	insurance,	derivatives,	and capital	management	techniques,	and	to	meet	evolving	regulatory	capital and	liquidity	standards.	In	particular,	our	results	currently	depend	on	our ability	to	manage	elevated	levels	of	impaired	assets.

•	Business	and	operating	results	also	include	impacts	relating	to	our	equity interest	in	BlackRock,	Inc.	and	rely	to	a	significant	extent	on	information provided	to	us	by	BlackRock.	Risks	and	uncertainties	that	could	affect BlackRock	are	discussed	in	more	detail	by	BlackRock	in	its	SEC	filings. •	We	grow	our	business	in	part	by	acquiring	from	time	to	time	other	financial services	companies,	financial	services	assets	and	related	deposits	and	other liabilities.	Acquisition	risks	and	uncertainties	include	those	presented	by the	nature	of	the	business	acquired,	including	in	some	cases	those associated	with	our	entry	into	new	businesses	or	new	geographic	or	other markets	and	risks	resulting	from	our	inexperience	in	those	new	areas,	as well	as	risks	and	uncertainties	related	to	the	acquisition	transactions themselves,	regulatory	issues,	and	the	integration	of	the	acquired	businesses into	PNC	after	closing.

•	Competition	can	have	an	impact	on	customer	acquisition,	growth	and retention	and	on	credit	spreads	and	product	pricing,	which	can	affect	market share,	deposits	and	revenues.	Industry	restructuring	in	the	current environment	could	also	impact	our	business	and	financial	performance through	changes	in	counterparty	creditworthiness	and	performance	and	in the	competitive	and	regulatory	landscape.	Our	ability	to	anticipate	and respond	to	technological	changes	can	also	impact	our	ability	to	respond	to customer	needs	and	meet	competitive	demands.

•	Business	and	operating	results	can	also	be	affected	by	widespread	natural and	other	disasters,	pandemics,	dislocations,	terrorist	activities,	cyberattacks or	international	hostilities	through	impacts	on	the	economy	and	financial markets	generally	or	on	us	or	our	counterparties	specifically.

We	provide	greater	detail	regarding	these	as	well	as	other	factors	elsewhere	in this	Report,	including	in	the	Risk	Factors	and	Risk	Management	sections	and	the Legal	Proceedings	and	Commitments	and	Guarantees	Notes	of	the	Notes	To Consolidated	Financial	Statements	in	this	Report.	Our	forward-looking statements	may	also	be	subject	to	other	risks	and	uncertainties,	including	those discussed	elsewhere	in	this	Report	or	in	our	other	filings	with	the	SEC.

# ITEM	7A	–	QUANTITATIVE	AND	QUALITATIVE DISCLOSURES	ABOUT	MARKET	RISK

This	information	is	set	forth	in	the	Risk	Management	section	of	Item	7	and	in Note	1	Accounting	Policies,	Note	7	Fair	Value,	and	Note	15	Financial Derivatives	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this Report.

# ITEM	8	–	FINANCIAL	STATEMENTS	AND SUPPLEMENTARY	DATA

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING FIRM

To	the	Board	of	Directors	and	Shareholders	of	The	PNC	Financial	Services Group,	Inc.

In	our	opinion,	the	accompanying	consolidated	balance	sheets	and	the	related consolidated	statements	of	income,	of	comprehensive	income,	of	changes	in equity,	and	of	cash	flows	present	fairly,	in	all	material	respects,	the	financial position	of	The	PNC	Financial	Services	Group,	Inc.	and	its	subsidiaries	at December	31,	2014	and	December	31,	2013,	and	the	results	of	their	operations and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31, 2014	in	conformity	with	accounting	principles	generally	accepted	in	the	United States	of	America.	Also	in	our	opinion,	the	Company	maintained,	in	all	material respects,	effective	internal	control	over	financial	reporting	as	of	December	31, 2014,	based	on	criteria	established	in	Internal	Control	–	Integrated	Framework (2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway Commission	(COSO).	The	Company's	management	is	responsible	for	these financial	statements,	for	maintaining	effective	internal	control	over	financial reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over financial	reporting,	included	in	Management's	Report	on	Internal	Control	over Financial	Reporting	under	Item	9A.	Our	responsibility	is	to	express	opinions	on these	financial	statements	and	on	the	Company's	internal	control	over	financial reporting	based	on	our	integrated	audits.	We	conducted	our	audits	in	accordance with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United States).	Those	standards	require	that	we	plan	and	perform	the	audits	to	obtain reasonable	assurance	about	whether	the	financial	statements	are	free	of	material misstatement	and	whether	effective	internal	control	over	financial	reporting	was maintained	in	all	material	respects.	Our	audits	of	the	financial	statements included	examining,	on	a	test	basis,	evidence	supporting	the	amounts	and disclosures	in	the	financial	statements,	assessing	the	accounting	principles

used	and	significant	estimates	made	by	management,	and	evaluating	the	overall financial	statement	presentation.	Our	audit	of	internal	control	over	financial reporting	included	obtaining	an	understanding	of	internal	control	over	financial reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing	and evaluating	the	design	and	operating	effectiveness	of	internal	control	based	on	the assessed	risk.	Our	audits	also	included	performing	such	other	procedures	as	we considered	necessary	in	the	circumstances.	We	believe	that	our	audits	provide	a reasonable	basis	for	our	opinions.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and the	preparation	of	financial	statements	for	external	purposes	in	accordance	with generally	accepted	accounting	principles.	A	company's	internal	control	over financial	reporting	includes	those	policies	and	procedures	that	(i)	pertain	to	the maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the transactions	and	dispositions	of	the	assets	of	the	company;	(ii)	provide reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit preparation	of	financial	statements	in	accordance	with	generally	accepted accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are being	made	only	in	accordance	with	authorizations	of	management	and	directors of	the	company;	and	(iii)	provide	reasonable	assurance	regarding	prevention	or timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance with	the	policies	or	procedures	may	deteriorate.

/s/	PricewaterhouseCoopers	LLP

Pittsburgh,	Pennsylvania February	27,	2015

# CONSOLIDATED	INCOME	STATEMENT

|  |  |  | Year	ended	December	31 |  |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions,\texcept\tper\tshare\tdata | In\tmillions,\texcept\tper\tshare\tdata | 2014 | 2013 | 2012 |
| Interest\tIncome |  |  |  |  |
| Loans |  | $7,427 | $7,866 | $8,284 |
| Investment\tsecurities | Investment\tsecurities | 1,624 | 1,749 | 2,035 |
| Other |  | 380 | 392 | 415 |
| Total\tinterest\tincome | Total\tinterest\tincome | 9,431 | \t 10,007 | \t 10,734 |
| Interest\tExpense |  |  |  |  |
| Deposits | Deposits | 325 | 344 | 386 |
| Borrowed\tfunds | Borrowed\tfunds | 581 | 516 | 708 |
| Total\tinterest\texpense | Total\tinterest\texpense | 906 | 860 | 1,094 |
| Net\tinterest\tincome | Net\tinterest\tincome | 8,525 | 9,147 | 9,640 |
| Noninterest\tIncome |  |  |  |  |
| Asset\tmanagement | Asset\tmanagement | 1,513 | 1,342 | 1,169 |
| Consumer\tservices | Consumer\tservices | 1,254 | 1,253 | 1,136 |
| Corporate\tservices | Corporate\tservices | 1,415 | 1,210 | 1,166 |
| Residential\tmortgage | Residential\tmortgage | 618 | 871 | 284 |
| Service\tcharges\ton\tdeposits | Service\tcharges\ton\tdeposits | 662 | 597 | 573 |
| Net\tgains\ton\tsales\tof\tsecurities | Net\tgains\ton\tsales\tof\tsecurities | 4 | 99 | 204 |
| Other-than-temporary\timpairments | Other-than-temporary\timpairments | (35) | (14) | (79) |
| Less:\tNoncredit\tportion\tof\tother-than-temporary\timpairments\t(a) | Less:\tNoncredit\tportion\tof\tother-than-temporary\timpairments\t(a) | (24) | 2 | 32 |
| Net\tother-than-temporary\timpairments | Net\tother-than-temporary\timpairments | (11) | (16) | (111) |
| Other | Other | 1,395 | 1,509 | 1,451 |
| Total\tnoninterest\tincome | Total\tnoninterest\tincome | 6,850 | 6,865 | 5,872 |
| Total\trevenue | Total\trevenue | \t 15,375 | \t 16,012 | \t 15,512 |
| Provision\tFor\tCredit\tLosses | Provision\tFor\tCredit\tLosses | 273 | 643 | 987 |
| Noninterest\tExpense |  |  |  |  |
| Personnel | Personnel | 4,611 | 4,743 | 4,617 |
| Occupancy | Occupancy | 833 | 833 | 827 |
| Equipment | Equipment | 859 | 763 | 735 |
| Marketing | Marketing | 253 | 246 | 279 |
| Other\t(b) | Other\t(b) | 2,932 | 3,096 | 4,028 |
| Total\tnoninterest\texpense | Total\tnoninterest\texpense | 9,488 | 9,681 | \t 10,486 |
| Income\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | Income\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | 5,614 | 5,688 | 4,039 |
| Income\ttaxes\t(b) | Income\ttaxes\t(b) | 1,407 | 1,476 | 1,045 |
| Net\tincome\t(b) | Net\tincome\t(b) | 4,207 | 4,212 | 2,994 |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests\t(b) | Less:\tNet\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests\t(b) | 23 | 11 | (7) |
| \t\t\t\t\t\t\t\t\tPreferred\tstock\tdividends | \t\t\t\t\t\t\t\t\tPreferred\tstock\tdividends | 232 | 237 | 177 |
| \t\t\t\t\t\t\t\t\tPreferred\tstock\tdiscount\taccretion\tand\tredemptions | \t\t\t\t\t\t\t\t\tPreferred\tstock\tdiscount\taccretion\tand\tredemptions | 5 | 12 | 4 |
| Net\tincome\tattributable\tto\tcommon\tshareholders | Net\tincome\tattributable\tto\tcommon\tshareholders | $3,947 | $3,952 | $2,820 |
| Earnings\tPer\tCommon\tShare |  |  |  |  |
| Basic | Basic | $7.44 | $7.45 | $5.33 |
| Diluted | Diluted | $7.30 | $7.36 | $5.28 |
| Average\tCommon\tShares\tOutstanding |  |  |  |  |
| Basic | Basic | 529 | 528 | 526 |
| Diluted | Diluted | 537 | 532 | 529 |
| (a) | Included\tin\taccumulated\tother\tcomprehensive\tincome\t(loss). |  |  |  |

(a) Included	in	accumulated	other	comprehensive	income	(loss).

(b) Amounts	for	2012	and	2013	periods	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	Accounting	Standards	Update	(ASU)	2014-01	related	to	investments	in	low	income	housing	tax	credits.

See	accompanying	Notes	To	Consolidated	Financial	Statements.

# CONSOLIDATED	STATEMENT	OF	COMPREHENSIVE	INCOME

|  | Year	ended	December	31 | Year	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2014 | 2013 | 2012 |
| Net\tincome\t(a) | $4,207 | $4,212 | $2,994 |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax\tand\tnet\tof\treclassifications\tinto\tNet\tincome: |  |  |  |
| Net\tunrealized\tgains\t(losses)\ton\tnon-OTTI\tsecurities | 375 | (1,211) | 760 |
| Net\tunrealized\tgains\t(losses)\ton\tOTTI\tsecurities | 79 | 231 | 971 |
| Net\tunrealized\tgains\t(losses)\ton\tcash\tflow\thedge\tderivatives | 168 | (527) | (220) |
| Pension\tand\tother\tpostretirement\tbenefit\tplan\tadjustments | (446) | 852 | (35) |
| Other | (39) | 21 | 10 |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax\tand\tnet\tof\treclassifications\tinto\tNet\tincome | 137 | (634) | \t 1,486 |
| Income\ttax\tbenefit\t(expense)\trelated\tto\titems\tof\tother\tcomprehensive\tincome | (70) | 236 | (547) |
| Other\tcomprehensive\tincome\t(loss),\tafter\ttax\tand\tnet\tof\treclassifications\tinto\tNet\tincome | 67 | (398) | 939 |
| Comprehensive\tincome\t(a) | \t 4,274 | 3,814 | \t 3,933 |
| Less:\tComprehensive\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests\t(a) | 23 | 11 | (7) |
| Comprehensive\tincome\tattributable\tto\tPNC\t(a) | $4,251 | $3,803 | $3,940 |
| (a) |  |  |  |

(a) Amounts	for	2013	and	2012	periods	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.

# CONSOLIDATED	BALANCE	SHEET

| In	millions,	except	par	value | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Assets |  |  |
| Cash\tand\tdue\tfrom\tbanks\t(includes\t$6\tand\t$5\tfor\tVIEs)\t(a) | $4,360 | $4,043 |
| Federal\tfunds\tsold\tand\tresale\tagreements\t(includes\t$155\tand\t$207\tmeasured\tat\tfair\tvalue)\t(b) | 1,852 | 1,986 |
| Trading\tsecurities | 2,353 | 3,073 |
| Interest-earning\tdeposits\twith\tbanks\t(includes\t$6\tand\t$7\tfor\tVIEs)\t(a) | 31,779 | 12,135 |
| Loans\theld\tfor\tsale\t(includes\t$2,154\tand\t$1,901\tmeasured\tat\tfair\tvalue)\t(b) | 2,262 | 2,255 |
| Investment\tsecurities | 55,823 | 60,294 |
| Loans\t(includes\t$1,606\tand\t$1,736\tfor\tVIEs)\t(a)\t(includes\t$1,034\tand\t$1,150\tmeasured\tat\tfair\tvalue)\t(b) | 204,817 | 195,613 |
| Allowance\tfor\tloan\tand\tlease\tlosses\t(includes\t$(50)\tand\t$(58)\tfor\tVIEs)\t(a) | (3,331) | (3,609) |
| Net\tloans | 201,486 | 192,004 |
| Goodwill | 9,103 | 9,074 |
| Other\tintangible\tassets | 1,844 | 2,216 |
| Equity\tinvestments\t(includes\t$492\tand\t$582\tfor\tVIEs)\t(a)(c) | 10,728 | 10,560 |
| Other\t(includes\t$483\tand\t$591\tfor\tVIEs)\t(a)\t(includes\t$412\tand\t$338\tmeasured\tat\tfair\tvalue)\t(b) | 23,482 | 22,552 |
| Total\tassets | $345,072 | $320,192 |
| Liabilities |  |  |
| Deposits |  |  |
| Noninterest-bearing | $73,479 | $70,306 |
| Interest-bearing | 158,755 | 150,625 |
| Total\tdeposits | 232,234 | 220,931 |
| Borrowed\tfunds |  |  |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements | 3,510 | 4,289 |
| Federal\tHome\tLoan\tBank\tborrowings | 20,005 | 12,912 |
| Bank\tnotes\tand\tsenior\tdebt | 15,750 | 12,603 |
| Subordinated\tdebt | 9,151 | 8,244 |
| Commercial\tpaper | 4,995 | 4,997 |
| Other\t(includes\t$347\tand\t$414\tfor\tVIEs)\t(a)\t(includes\t$273\tand\t$309\tmeasured\tat\tfair\tvalue)\t(b) | 3,357 | 3,060 |
| Total\tborrowed\tfunds | 56,768 | 46,105 |
| Allowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 259 | 242 |
| Accrued\texpenses\t(includes\t$70\tand\t$83\tfor\tVIEs)\t(a)\t(c) | 5,187 | 4,690 |
| Other\t(includes\t$206\tand\t$252\tfor\tVIEs)\t(a) | 4,550 | 4,187 |
| Total\tliabilities | 298,998 | 276,155 |
| Equity |  |  |
| Preferred\tstock\t(d) |  |  |
| Common\tstock\t($5\tpar\tvalue,\tauthorized\t800\tshares,\tissued\t541\tand\t540\tshares) | 2,705 | 2,698 |
| Capital\tsurplus\t–\tpreferred\tstock | 3,946 | 3,941 |
| Capital\tsurplus\t–\tcommon\tstock\tand\tother | 12,627 | 12,416 |
| Retained\tearnings\t(c) | 26,200 | 23,251 |
| Accumulated\tother\tcomprehensive\tincome | 503 | 436 |
| Common\tstock\theld\tin\ttreasury\tat\tcost:\t18\tand\t7\tshares | (1,430) | (408) |
| Total\tshareholders'\tequity | 44,551 | 42,334 |
| Noncontrolling\tinterests\t(c) | 1,523 | 1,703 |
| Total\tequity | 46,074 | 44,037 |
| Total\tliabilities\tand\tequity | $345,072 | $320,192 |
| (a) |  |  |

(a) Amounts	represent	the	assets	or	liabilities	of	consolidated	variable	interest	entities	(VIEs).

(b) Amounts	represent	items	for	which	we	have	elected	the	fair	value	option.

(c) Amounts	for	2013	period	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.

(d) Par	value	less	than	$.5	million	at	each	date.

# CONSOLIDATED	STATEMENT	OF	CHANGES	IN	EQUITY

|  | Shares |  | Capital | Surplus	- |  | Accumulated |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Outstanding |  | Surplus\t- | Common |  | Other |  |  |  |
|  | Common | Common | Preferred | Stock\tand | Retained | Comprehensive | Treasury | Noncontrolling | Total |
| In\tmillions | Stock | Stock | Stock | Other | Earnings | Income\t(Loss) | Stock | Interests | Equity |
| Balance\tat\tDecember\t31,\t2011\t(a) | 527 | \t$2,683\t\t\t $1,637\t\t\t $12,072\t\t\t $18,253\t\t\t $ | \t$2,683\t\t\t $1,637\t\t\t $12,072\t\t\t $18,253\t\t\t $ | \t$2,683\t\t\t $1,637\t\t\t $12,072\t\t\t $18,253\t\t\t $ | \t$2,683\t\t\t $1,637\t\t\t $12,072\t\t\t $18,253\t\t\t $ | (105)\t\t$ | (487)\t\t$ | 3,193\t\t\t$37,246 | 3,193\t\t\t$37,246 |
| Cumulative\teffect\tof\tadopting\tASU\t2014-01\t(b) |  |  |  |  | (43) |  |  | 5 | (38) |
| Balance\tat\tJanuary\t1,\t2012 | 527 | \t$2,683\t\t\t $1,637\t\t\t $12,072\t\t\t $18,210\t\t\t $ | \t$2,683\t\t\t $1,637\t\t\t $12,072\t\t\t $18,210\t\t\t $ | \t$2,683\t\t\t $1,637\t\t\t $12,072\t\t\t $18,210\t\t\t $ | \t$2,683\t\t\t $1,637\t\t\t $12,072\t\t\t $18,210\t\t\t $ | (105)\t\t$ | (487)\t\t$ | 3,198\t\t\t$37,208 | 3,198\t\t\t$37,208 |
| Net\tincome\t(b) |  |  |  |  | 3,001 |  |  | (7) | 2,994 |
| Other\tcomprehensive\tincome,\tnet\tof\ttax |  |  |  |  |  | 939 |  |  | 939 |
| Cash\tdividends\tdeclared |  |  |  |  |  |  |  |  |  |
| Common |  |  |  |  | (820) |  |  |  | (820) |
| Preferred |  |  |  |  | (177) |  |  |  | (177) |
| Preferred\tstock\tdiscount\taccretion |  |  | 4 |  | (4) |  |  |  |  |
| Common\tstock\tactivity | 1 | 7 |  | 45 |  |  |  |  | 52 |
| Treasury\tstock\tactivity\t(c) |  |  |  | 51 |  |  | (82) |  | (31) |
| Preferred\tstock\tissuance\t–\tSeries\tP\t(d) |  |  | 1,482 |  |  |  |  |  | 1,482 |
| Preferred\tstock\tissuance\t–\tSeries\tQ\t(e) |  |  | 467 |  |  |  |  |  | 467 |
| Other |  |  |  | 25 |  |  |  | (419) | (394) |
| Balance\tat\tDecember\t31,\t2012\t(a)\t(f) | 528 | \t$2,690\t\t\t $3,590\t\t\t $12,193\t\t\t $20,210\t\t\t $ | \t$2,690\t\t\t $3,590\t\t\t $12,193\t\t\t $20,210\t\t\t $ | \t$2,690\t\t\t $3,590\t\t\t $12,193\t\t\t $20,210\t\t\t $ | \t$2,690\t\t\t $3,590\t\t\t $12,193\t\t\t $20,210\t\t\t $ | 834\t\t\t$ | (569)\t\t$ | 2,772\t\t\t$41,720 | 2,772\t\t\t$41,720 |
| Net\tincome\t(loss)\t(b) |  |  |  |  | 4,201 |  |  | 11 | 4,212 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax |  |  |  |  |  | (398) |  |  | (398) |
| Cash\tdividends\tdeclared |  |  |  |  |  |  |  |  |  |
| Common |  |  |  |  | (911) |  |  |  | (911) |
| Preferred |  |  |  |  | (237) |  |  |  | (237) |
| Preferred\tstock\tdiscount\taccretion |  |  | 5 |  | (5) |  |  |  |  |
| Redemption\tof\tnoncontrolling\tinterests\t(g) |  |  |  |  | (7) |  |  | (368) | (375) |
| Common\tstock\tactivity | 2 | 8 |  | 97 |  |  |  |  | 105 |
| Treasury\tstock\tactivity | 3 |  |  | (47) |  |  | 161 |  | 114 |
| Preferred\tstock\tredemption\t–\tSeries\tL\t(h) |  |  | (150) |  |  |  |  |  | (150) |
| Preferred\tstock\tissuance\t–\tSeries\tR\t(i) |  |  | 496 |  |  |  |  |  | 496 |
| Other\t(j) |  |  |  | 173 |  |  |  | (712) | (539) |
| Balance\tat\tDecember\t31,\t2013\t(a) | 533 | \t$2,698\t\t\t $3,941\t\t\t $12,416\t\t\t $23,251\t\t\t $ | \t$2,698\t\t\t $3,941\t\t\t $12,416\t\t\t $23,251\t\t\t $ | \t$2,698\t\t\t $3,941\t\t\t $12,416\t\t\t $23,251\t\t\t $ | \t$2,698\t\t\t $3,941\t\t\t $12,416\t\t\t $23,251\t\t\t $ | 436\t\t\t$ | (408)\t\t$ | 1,703\t\t\t$44,037 | 1,703\t\t\t$44,037 |
| Cumulative\teffect\tof\tadopting\tASC\t860-50\t(k) |  |  |  |  | 2 |  |  |  | 2 |
| Balance\tat\tJanuary\t1,\t2014 | 533 | \t$2,698\t\t\t $3,941\t\t\t $12,416 | \t$2,698\t\t\t $3,941\t\t\t $12,416 | \t$2,698\t\t\t $3,941\t\t\t $12,416 | \t 23,253\t\t\t $ | 436\t\t\t$ | (408)\t\t$ | 1,703\t\t\t\t 44,039 | 1,703\t\t\t\t 44,039 |
| Net\tincome |  |  |  |  | 4,184 |  |  | 23 | 4,207 |
| Other\tcomprehensive\tincome,\tnet\tof\ttax |  |  |  |  |  | 67 |  |  | 67 |
| Cash\tdividends\tdeclared |  |  |  |  |  |  |  |  |  |
| Common |  |  |  |  | (1,000) |  |  |  | (1,000) |
| Preferred |  |  |  |  | (232) |  |  |  | (232) |
| Preferred\tstock\tdiscount\taccretion |  |  | 5 |  | (5) |  |  |  |  |
| Common\tstock\tactivity | 1 | 7 |  | 81 |  |  |  |  | 88 |
| Treasury\tstock\tactivity | (11) |  |  | 14 |  |  | (1,022) |  | (1,008) |
| Other |  |  |  | 116 |  |  |  | (203) | (87) |
| Balance\tat\tDecember\t31,\t2014\t(a) | 523 | \t$2,705\t\t\t $3,946\t\t\t $12,627\t\t\t $26,200\t\t\t $ | \t$2,705\t\t\t $3,946\t\t\t $12,627\t\t\t $26,200\t\t\t $ | \t$2,705\t\t\t $3,946\t\t\t $12,627\t\t\t $26,200\t\t\t $ | \t$2,705\t\t\t $3,946\t\t\t $12,627\t\t\t $26,200\t\t\t $ | 503\t\t\t$(1,430)\t\t$ | 503\t\t\t$(1,430)\t\t$ | 1,523\t\t\t$46,074 | 1,523\t\t\t$46,074 |
| (a) |  |  |  |  |  |  |  |  |  |

(a) The	par	value	of	our	preferred	stock	outstanding	was	less	than	$.5	million	at	each	date	and,	therefore,	is	excluded	from	this	presentation.

(b) Amounts	for	2012	and	2013	periods	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.	See	Note	1	Accounting	Policies	for further	detail	of	the	adoption.

(c) Net	treasury	stock	activity	totaled	less	than	.5	million	shares	issued	or	redeemed.

(f) 5,001	Series	M	preferred	shares	with	a	$1	par	value	were	issued	and	redeemed	on	December	10,	2012.

(g) Relates	to	the	redemption	of	REIT	preferred	securities	in	the	first	quarter	of	2013.	See	Note	12	Capital	Securities	of	a	Subsidiary	Trust	and	Perpetual	Trust	Securities	for	additional	information.

(j) Includes	an	impact	to	noncontrolling	interests	for	deconsolidation	of	limited	partnership	or	non-managing	member	interests	related	to	tax	credit	investments	in	the	amount	of	$675	million	during	the	second	quarter of	2013.

(k) Amount	represents	the	cumulative	impact	of	our	January	1,	2014	irrevocable	election	to	prospectively	measure	all	classes	of	commercial	MSRs	at	fair	value.	See	Note	1	Accounting	Policies	and	Note	8	Goodwill and	Other	Intangible	Assets	for	more	information	on	this	election.

# CONSOLIDATED	STATEMENT	OF	CASH	FLOWS

|  | Year	ended	December	31 | Year	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2014 | 2013 | 2012 |
| Operating\tActivities |  |  |  |
| Net\tincome\t(a) | $4,207 | $4,212 | $2,994 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\t(used)\tby\toperating\tactivities |  |  |  |
| Provision\tfor\tcredit\tlosses | 273 | 643 | 987 |
| Depreciation\tand\tamortization | 988 | 1,146 | 1,159 |
| Deferred\tincome\ttaxes\t(a) | 255 | 1,196 | 563 |
| Net\tgains\ton\tsales\tof\tsecurities | (4) | (99) | (204) |
| Net\tother-than-temporary\timpairments | 11 | 16 | 111 |
| Charge\tfor\tgoodwill\timpairment |  |  | 45 |
| Changes\tin\tfair\tvalue\tof\tmortgage\tservicing\trights | 514 | (261) | 284 |
| Gain\ton\tsales\tof\tVisa\tClass\tB\tcommon\tshares | (209) | (168) | (267) |
| Noncash\tcharges\ton\ttrust\tpreferred\tsecurities\tredemptions |  | 57 | 295 |
| Undistributed\tearnings\tof\tBlackRock | (441) | (373) | (302) |
| Excess\ttax\tbenefits\tfrom\tshare-based\tpayment\tarrangements | (28) | (23) | (18) |
| Net\tchange\tin |  |  |  |
| Trading\tsecurities\tand\tother\tshort-term\tinvestments | 757 | (455) | 1,350 |
| Loans\theld\tfor\tsale | (405) | (94) | (1,125) |
| Other\tassets | (8) | 3,954 | 1,928 |
| Accrued\texpenses\tand\tother\tliabilities\t(a) | 169 | (3,990) | (690) |
| Other\t(a) | (522) | (206) | (301) |
| Net\tcash\tprovided\t(used)\tby\toperating\tactivities | 5,557 | 5,555 | 6,809 |
| Investing\tActivities |  |  |  |
| Sales |  |  |  |
| Securities\tavailable\tfor\tsale | 4,432 | 7,974 | 9,358 |
| Loans | 2,870 | 2,559 | 1,611 |
| Repayments/maturities |  |  |  |
| Securities\tavailable\tfor\tsale | 6,915 | 9,668 | 9,195 |
| Securities\theld\tto\tmaturity | 1,987 | 2,483 | 3,174 |
| Purchases |  |  |  |
| Securities\tavailable\tfor\tsale | (7,989) | (18,419) | (17,164) |
| Securities\theld\tto\tmaturity | (500) | (1,883) | (1,479) |
| Loans | (750) | (1,975) | (1,796) |
| Net\tchange\tin |  |  |  |
| Federal\tfunds\tsold\tand\tresale\tagreements | 131 | (530) | 732 |
| Interest-earning\tdeposits\twith\tbanks | (19,643) | (8,151) | (2,526) |
| Loans | (12,147) | (10,790) | (14,333) |
| Net\tcash\t(paid\tfor)\treceived\tfrom\tacquisition\tand\tdivestiture\tactivity | (62) |  | (4,130) |
| Other\t(b) | (137) | 129 | 97 |
| Net\tcash\tprovided\t(used)\tby\tinvesting\tactivities | (24,893) | (18,935) | (17,261) |

(continued	on	following	page)

|  |  | Year	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2014 | 2013 | 2012 |
| Financing\tActivities |  |  |  |
| Net\tchange\tin |  |  |  |
| Noninterest-bearing\tdeposits | $3,182 | $341 | $7,149 |
| Interest-bearing\tdeposits | 8,130 | 7,463 | 902 |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements | (778) | 965 | (2) |
| Federal\tHome\tLoan\tBank\tborrowings |  |  | (1,000) |
| Commercial\tpaper | (112) | (5,607) | 4,762 |
| Other\tborrowed\tfunds | 221 | 221 | (279) |
| Sales/issuances |  |  |  |
| Federal\tHome\tLoan\tBank\tborrowings | \t 15,685 | 16,435 | 13,000 |
| Bank\tnotes\tand\tsenior\tdebt | 6,184 | 3,938 | 2,093 |
| Subordinated\tdebt | 745 | 1,986 | 995 |
| Commercial\tpaper | 8,797 | 12,595 | 16,480 |
| Other\tborrowed\tfunds | 505 | 695 | 1,011 |
| Preferred\tstock |  | 496 | 2,449 |
| Common\tand\ttreasury\tstock | 252 | 244 | 158 |
| Repayments/maturities |  |  |  |
| Federal\tHome\tLoan\tBank\tborrowings | (8,592) | (12,960) | (10,500) |
| Bank\tnotes\tand\tsenior\tdebt | (3,089) | (1,420) | (4,037) |
| Subordinated\tdebt | 57 | (731) | (1,769) |
| Commercial\tpaper | (8,687) | (10,444) | (17,060) |
| Other\tborrowed\tfunds | (467) | (340) | (1,090) |
| Preferred\tstock |  | (150) |  |
| Excess\ttax\tbenefits\tfrom\tshare-based\tpayment\tarrangements | 28 | 23 | 18 |
| Redemption\tof\tnoncontrolling\tinterests |  | (375) | (500) |
| Acquisition\tof\ttreasury\tstock | (1,176) | (24) | (216) |
| Preferred\tstock\tcash\tdividends\tpaid | (232) | (237) | (177) |
| Common\tstock\tcash\tdividends\tpaid | (1,000) | (911) | (820) |
| Net\tcash\tprovided\t(used)\tby\tfinancing\tactivities | \t 19,653 | 12,203 | 11,567 |
| Net\tIncrease\t(Decrease)\tIn\tCash\tAnd\tDue\tFrom\tBanks | 317 | (1,177) | 1,115 |
| Cash\tand\tdue\tfrom\tbanks\tat\tbeginning\tof\tperiod | 4,043 | 5,220 | 4,105 |
| Cash\tand\tdue\tfrom\tbanks\tat\tend\tof\tperiod | $4,360 | $4,043 | $5,220 |
| Supplemental\tDisclosures |  |  |  |
| Interest\tpaid | $863 | $891 | $1,208 |
| Income\ttaxes\tpaid | 1,102 | 234 | 39 |
| Income\ttaxes\trefunded | 12 | 3 | 16 |
| Non-cash\tInvesting\tand\tFinancing\tItems |  |  |  |
| Transfer\tfrom\t(to)\tloans\tto\t(from)\tloans\theld\tfor\tsale,\tnet | 724 | (119) | 665 |
| Transfer\tfrom\tloans\tto\tforeclosed\tassets | 604 | 703 | 1,042 |
| Exchange\tof\tjunior\tsubordinated\tdebentures\tfor\tsenior\tnotes |  |  | 500 |
| (a) |  |  |  |

(a) Amounts	for	2013	and	2012	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.

(b) Includes	the	impact	of	the	consolidation	of	a	variable	interest	entity	as	of	March	31,	2013.

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# BUSINESS

PNC	is	one	of	the	largest	diversified	financial	services	companies	in	the	United States	and	is	headquartered	in	Pittsburgh,	Pennsylvania.

PNC	has	businesses	engaged	in	retail	banking,	corporate	and	institutional banking,	asset	management,	and	residential	mortgage	banking,	providing	many of	its	products	and	services	nationally,	as	well	as	other	products	and	services	in PNC's	primary	geographic	markets	located	in	Pennsylvania,	Ohio,	New	Jersey, Michigan,	Illinois,	Maryland,	Indiana,	North	Carolina,	Florida,	Kentucky, Washington,	D.C.,	Delaware,	Virginia,	Alabama,	Missouri,	Georgia,	Wisconsin and	South	Carolina.	PNC	also	provides	certain	products	and	services internationally.

# NOTE	1	ACCOUNTING	POLICIES

# Basis	Of	Financial	Statement	Presentation

Our	consolidated	financial	statements	include	the	accounts	of	the	parent company	and	its	subsidiaries,	most	of	which	are	wholly-owned,	and	certain partnership	interests	and	variable	interest	entities.

We	prepared	these	consolidated	financial	statements	in	accordance	with accounting	principles	generally	accepted	in	the	United	States	of	America (GAAP).	We	have	eliminated	intercompany	accounts	and	transactions.	We	have also	reclassified	certain	prior	year	amounts	to	conform	to	the	2014	presentation, which	did	not	have	a	material	impact	on	our	consolidated	financial	condition	or results	of	operations.	Additionally,	we	evaluate	the	materiality	of	identified errors	in	the	financial	statements	using	both	an	income	statement	and	a	balance sheet	approach,	based	on	relevant	quantitative	and	qualitative	factors.	The consolidated	financial	statements	include	certain	adjustments	to	correct immaterial	errors	related	to	previously	reported	periods.	The	current	year financial	statements	reflect	a	second	quarter	2014	correction	to	reclassify	certain commercial	facility	fees	from	net	interest	income	to	noninterest	income.	The impact	of	this	reclassification	to	prior	periods	was	not	significant,	and	as	such, prior	periods	were	not	adjusted.	In	addition,	as	disclosed	in	certain	Notes	to	the Consolidated	Financial	Statements,	we	made	adjustments	to	previously	reported periods	for	immaterial	errors.	Prior	period	financial	statements	also	reflect	the retrospective	application	of	Accounting	Standards	Update	(ASU)	2014-01, Investments	–	Equity	Method	and	Joint	Ventures	(Topic	323):	Accounting	for Investments	in	Qualified	Affordable	Housing	Projects.

We	have	also	considered	the	impact	of	subsequent	events	on	these	consolidated financial	statements.

# Use	Of	Estimates

We	prepared	these	consolidated	financial	statements	using	financial	information available	at	the	time	of	preparation,	which	requires	us	to	make	estimates	and assumptions	that	affect	the	amounts	reported.	Our	most	significant	estimates pertain	to	our	fair	value	measurements,	allowances	for	loan	and	lease	losses	and unfunded	loan	commitments	and	letters	of	credit,	and	accretion	on	purchased impaired	loans.	Actual	results	may	differ	from	the	estimates	and	the	differences may	be	material	to	the	consolidated	financial	statements.

# Investment	In	BlackRock,	Inc.

We	account	for	our	investment	in	the	common	stock	and	Series	B	Preferred Stock	of	BlackRock	(deemed	to	be	in-substance	common	stock)	under	the equity	method	of	accounting.	The	investment	in	BlackRock	is	reflected	on	our Consolidated	Balance	Sheet	in	Equity	investments,	while	our	equity	in	earnings of	BlackRock	is	reported	on	our	Consolidated	Income	Statement	in	Asset management	revenue.

We	also	hold	shares	of	Series	C	Preferred	Stock	of	BlackRock	pursuant	to	our obligation	to	partially	fund	a	portion	of	certain	BlackRock	long-term	incentive plan	(LTIP)	programs.	Since	these	preferred	shares	are	not	deemed	to	be	in- substance	common	stock,	we	have	elected	to	account	for	these	preferred	shares at	fair	value	and	the	changes	in	fair	value	will	offset	the	impact	of	marking-to- market	the	obligation	to	deliver	these	shares	to	BlackRock.	Our	investment	in	the BlackRock	Series	C	Preferred	Stock	is	included	on	our	Consolidated	Balance Sheet	in	Other	assets.	Our	obligation	to	transfer	these	shares	to	BlackRock	is classified	as	a	derivative	not	designated	as	a	hedging	instrument	under	GAAP	as disclosed	in	Note	15	Financial	Derivatives.

# Business	Combinations

We	record	the	net	assets	of	companies	that	we	acquire	at	their	estimated	fair value	at	the	date	of	acquisition	and	we	include	the	results	of	operations	of	the acquired	companies	on	our	Consolidated	Income	Statement	from	the	date	of acquisition.	We	recognize,	as	goodwill,	the	excess	of	the	acquisition	price	over the	estimated	fair	value	of	the	net	assets	acquired.

# Special	Purpose	Entities

Special	purpose	entities	(SPEs)	are	defined	as	legal	entities	structured	for	a particular	purpose.	We	use	special	purpose	entities	in	various	legal	forms	to conduct	normal	business	activities.	We	review	the	structure	and	activities	of special	purpose	entities	for	possible	consolidation	under	the	applicable	GAAP guidance.

A	variable	interest	entity	(VIE)	is	a	corporation,	partnership,	limited	liability company,	or	any	other	legal	structure	used	to	conduct	activities	or	hold	assets that	either:

•	Does	not	have	equity	investors	with	voting	rights	that	can	directly	or indirectly	make	decisions	about	the	entity's	activities	through	those voting	rights	or	similar	rights,	or

•	Has	equity	investors	that	do	not	provide	sufficient	equity	for	the	entity to	finance	its	activities	without	additional	subordinated	financial support.

A	VIE	often	holds	financial	assets,	including	loans	or	receivables,	real	estate	or other	property.

VIEs	are	assessed	for	consolidation	under	ASC	810	–	Consolidation	when	we hold	a	variable	interest	in	these	entities.	We	consolidate	a	VIE	if	we	are	its primary	beneficiary.	The	primary	beneficiary	of	a	VIE	is	determined	to	be	the party	that	meets	both	of	the	following	criteria:	(i)	has	the	power	to	make decisions	that	most	significantly	affect	the	economic	performance	of	the	VIE; and	(ii)	has	the	obligation	to	absorb	losses	or	the	right	to	receive	benefits	that	in either	case	could	potentially	be	significant	to	the	VIE.	Upon	consolidation	of	a VIE,	we	recognize	all	of	the	VIE's	assets,	liabilities	and	noncontrolling	interests on	our	Consolidated	Balance	Sheet.	On	a	quarterly	basis,	we	determine	whether any	changes	occurred	requiring	a	reassessment	of	whether	PNC	is	the	primary beneficiary	of	an	entity.

In	applying	this	guidance,	we	consolidate	a	credit	card	securitization	trust,	a	non- agency	securitization	trust,	and	certain	tax	credit	investments	and	other arrangements.	See	Note	2	Loan	Sale	and	Servicing	Activities	and	Variable Interest	Entities	for	information	about	VIEs	that	we	consolidate	as	well	as	those that	we	do	not	consolidate	but	in	which	we	hold	a	significant	variable	interest.

We	earn	interest	and	noninterest	income	from	various	sources,	including: •	Lending, •	Securities	portfolio, •	Asset	management, •	Customer	deposits,

•	Loan	sales	and	servicing, •	Brokerage	services,

We	earn	fees	and	commissions	from:

•	Issuing	loan	commitments,	standby	letters	of	credit	and	financial guarantees,

•	Selling	various	insurance	products,

•	Providing	treasury	management	services,

•	Providing	merger	and	acquisition	advisory	and	related	services,	and •	Participating	in	certain	capital	markets	transactions.

Revenue	earned	on	interest-earning	assets,	including	unearned	income	and	the amortization/accretion	of	premiums	or	discounts	recognized	on	acquired	loans and	debt	securities,	is	recognized	based	on	the	constant	effective	yield	of	the financial	instrument	or	based	on	other	applicable	accounting	guidance.

The	Consolidated	Income	Statement	caption	Asset	management	includes	asset management	fees,	which	are	generally	based	on	a	percentage	of	the	fair	value	of the	assets	under	management.	Additionally,	Asset	management	noninterest income	includes	our	share	of	the	earnings	of	BlackRock	recognized	under	the equity	method	of	accounting.

Service	charges	on	deposit	accounts	are	recognized	when	earned.	Brokerage	fees and	gains	and	losses	on	the	sale	of	securities	and	certain	derivatives	are recognized	on	a	trade-date	basis.

We	record	private	equity	income	or	loss	based	on	changes	in	the	valuation	of	the underlying	investments	or	when	we	dispose	of	our	interest.

We	recognize	gain/(loss)	on	changes	in	the	fair	value	of	certain	financial instruments	where	we	have	elected	the	fair	value	option.	These	financial instruments	include	certain	commercial	and	residential	mortgage	loans originated	for	sale,	certain	residential	mortgage	portfolio	loans,	resale agreements	and	our	investment	in	BlackRock	Series	C	preferred	stock.	We	also recognize	gain/(loss)	on	changes	in	the	fair	value	of	residential	mortgage servicing	rights	(MSRs)	and	commercial	mortgage	servicing	rights.

We	recognize	revenue	from	servicing	residential	mortgages,	commercial mortgages	and	other	consumer	loans	as	earned	based	on	the	specific	contractual terms.	These	revenues,	as	well	as	changes	in	fair	value	and	impairment	on servicing	rights	prior	to	2014,	are	reported	on	the	Consolidated	Income Statement	in	the	line	items	Residential	mortgage,	Corporate	services	and Consumer	services.	We	recognize	revenue	from	securities,	derivatives	and foreign	exchange	customer-related	trading,	as	well	as	securities	underwriting activities,	as	these	transactions	occur	or	as	services	are	provided.	We	generally recognize	gains	from	the	sale	of	loans	upon	receipt	of	cash.	Mortgage	revenue recognized	is	reported	net	of	mortgage	repurchase	reserves.

When	appropriate,	revenue	is	reported	net	of	associated	expenses	in	accordance with	GAAP.

# Cash	And	Cash	Equivalents

Cash	and	due	from	banks	are	considered	"cash	and	cash	equivalents"	for financial	reporting	purposes.

# Investments

We	hold	interests	in	various	types	of	investments.	The	accounting	for	these investments	is	dependent	on	a	number	of	factors	including,	but	not	limited	to, items	such	as:

•	Ownership	interest,

•	Our	plans	for	the	investment,	and

•	The	nature	of	the	investment.

# Debt	Securities

Debt	securities	are	recorded	on	a	trade-date	basis.	We	classify	debt	securities	as held	to	maturity	and	carry	them	at	amortized	cost	if	we	have	the	positive	intent and	ability	to	hold	the	securities	to	maturity.	Debt	securities	that	we	purchase	for certain	risk	management	activities,	customer-related	trading	activities,	or	those with	embedded	derivatives	that	otherwise	may	require	bifurcation	are	carried	at fair	value	and	classified	as	Trading	securities	on	our	Consolidated	Balance	Sheet. Realized	and	unrealized	gains	and	losses	on	trading	securities	are	included	in Other	noninterest	income.

Debt	securities	not	classified	as	held	to	maturity	or	trading	are	designated	as securities	available	for	sale	and	carried	at	fair	value	with	unrealized	gains	and losses,	net	of	income	taxes,	reflected	in	Accumulated	other	comprehensive income	(loss).

On	at	least	a	quarterly	basis,	we	review	all	debt	securities	that	are	in	an unrealized	loss	position	for	other	than	temporary	impairment	(OTTI).	An investment	security	is	deemed	impaired	if	the	fair	value	of	the	investment	is	less than	its	amortized	cost.	Amortized	cost	includes	adjustments	(if	any)	made	to	the cost	basis	of	an	investment	for	accretion,	amortization,	previous	other-than- temporary	impairments	and	hedging	gains	and	losses.	After	an	investment security	is	determined	to	be	impaired,	we	evaluate	whether	the	decline	in	value is	other-than-temporary.	As	part	of	this	evaluation,	we	take	into	consideration whether	we	intend	to	sell	the	security	or	whether	it	is	more	likely	than	not	that we	will	be	required	to	sell	the	security	before	expected	recovery	of	its	amortized cost.	We	also	consider	whether	or	not	we	expect	to	receive	all	of	the	contractual cash	flows	from	the	investment	based	on	factors	that	include,	but	are	not	limited to:	the	creditworthiness	of	the	issuer	and,	in	the	case	of	securities	collateralized by	consumer	and	commercial	loan	assets,	the	historical	and	projected performance	of	the	underlying	collateral.	In	addition,	we	may	also	evaluate	the business	and	financial	outlook	of	the	issuer,	as	well	as	broader	industry	and sector	performance	indicators.	Declines	in	the	fair	value	of	available	for	sale	debt securities	that	are	deemed	other-than-temporary	and	are	attributable	to	credit deterioration	are	recognized	on	our	Consolidated	Income	Statement	in	the	period in	which	the	determination	is	made.	Declines	in	fair	value	which	are	deemed other-than-temporary	and	attributable	to	factors	other	than	credit	deterioration are	recognized	in	Accumulated	other	comprehensive	income	(loss)	on	our Consolidated	Balance	Sheet.

We	include	all	interest	on	debt	securities,	including	amortization	of	premiums and	accretion	of	discounts	on	investment	securities,	in	net	interest	income	using the	constant	effective	yield	method.	Effective	yields	reflect	either	the	effective interest	rate	implicit	in	the	security	at	the	date	of	acquisition	or	the	effective interest	rate	determined	based	on	improved	cash	flows	subsequent	to impairment.	We	compute	gains	and	losses	realized	on	the	sale	of	available	for sale	debt	securities	on	a	specific	security	basis.	These	securities	gains/(losses)	are included	in	the	caption	Net	gains	on	sales	of	securities	on	the	Consolidated Income	Statement.

In	certain	situations,	management	may	elect	to	transfer	certain	debt	securities from	the	securities	available	for	sale	to	the	held	to	maturity	classification.	In	such cases,	the	securities	are	reclassified	at	fair	value	at	the	time	of	transfer.	Any unrealized	gain	or	loss	included	in	Accumulated	other	comprehensive	income (loss)	at	the	time	of	transfer	is	retained	therein	and	amortized	over	the	remaining life	of	the	security	as	a	yield	adjustment,	such	that	only	the	remaining	initial discount/premium	from	the	purchase	date	is	recognized	in	income.

# Equity	Securities	and	Partnership	Interests

We	account	for	equity	securities	and	equity	investments	other	than	BlackRock and	private	equity	investments	under	one	of	the	following	methods: •	Marketable	equity	securities	are	recorded	on	a	trade-date	basis	and	are accounted	for	based	on	the	securities'	quoted	market	prices	from	a national	securities	exchange.	Those	purchased	with	the	intention	of recognizing	short-term	profits	are	classified	as	trading	and	included	in Trading	securities	on	our	Consolidated	Balance	Sheet.	Both	realized and	unrealized	gains	and	losses	on	trading	securities	are	included	in Noninterest	income.	Marketable	equity	securities	not	classified	as trading	are	designated	as	securities	available	for	sale	with	unrealized gains	and	losses,	net	of	income	taxes,	reflected	in	Accumulated	other comprehensive	income	(loss).	Any	unrealized	losses	that	we	have determined	to	be	other-than-temporary	on	securities	classified	as available	for	sale	are	recognized	in	current	period	earnings. •	For	investments	in	limited	partnerships,	limited	liability	companies	and other	investments	that	are	not	required	to	be	consolidated,	we	use either	the	equity	method	or	the	cost	method	of	accounting.	We	use	the equity	method	for	general	and	limited	partner	ownership	interests	and limited	liability	companies	in	which	we	are	considered	to	have significant	influence	over	the	operations	of	the	investee	and	when	the net	asset	value	of	our	investment	reflects	our	economic	interest	in	the underlying	investment.	Under	the	equity	method,	we	record	our	equity ownership	share	of	net	income	or	loss	of	the	investee	in	Noninterest income.	We	use	the	cost	method	for	all	other	investments.	Under	the cost	method,	there	is	no

change	to	the	cost	basis	unless	there	is	an	other-than-temporary	decline in	value	or	dividends	received	are	considered	a	return	on	investment.	If the	decline	is	determined	to	be	other-than-temporary,	we	write	down the	cost	basis	of	the	investment	to	a	new	cost	basis	that	represents realizable	value.	The	amount	of	the	write-down	is	accounted	for	as	a loss	included	in	Noninterest	income.	Distributions	received	from	the income	of	an	investee	on	cost	method	investments	are	included	in Noninterest	income.	Investments	described	above	are	included	in	the caption	Equity	investments	on	the	Consolidated	Balance	Sheet.

# Private	Equity	Investments

We	report	private	equity	investments,	which	include	direct	investments	in companies,	affiliated	partnership	interests	and	indirect	investments	in	private equity	funds,	at	estimated	fair	value.	These	estimates	are	based	on	available information	and	may	not	necessarily	represent	amounts	that	we	will	ultimately realize	through	distribution,	sale	or	liquidation	of	the	investments.	Fair	values	of publicly	traded	direct	investments	are	determined	using	quoted	market	prices and	are	subject	to	various	discount	factors	for	lack	of	marketability,	when appropriate.	The	valuation	procedures	applied	to	direct	investments	in	private companies	include	techniques	such	as	multiples	of	adjusted	earnings	of	the entity,	independent	appraisals,	anticipated	financing	and	sale	transactions	with third	parties,	or	the	pricing	used	to	value	the	entity	in	a	recent	financing transaction.	We	value	affiliated	partnership	interests	based	on	the	underlying investments	of	the	partnership	using	procedures	consistent	with	those	applied	to direct	investments.	We	value	indirect	investments	in	private	equity	funds	based on	net	asset	value	as	provided	in	the	financial	statements	that	we	receive	from their	managers.	Due	to	the	time	lag	in	our	receipt	of	the	financial	information and	based	on	a	review	of	investments	and	valuation	techniques	applied, adjustments	to	the	manager-provided	values	are	made	when	available	recent portfolio	company	information	or	market	information	indicates	significant changes	in	value	from	that	provided	by	the	manager	of	the	fund.	We	include	all private	equity	investments	on	the	Consolidated	Balance	Sheet	in	the	caption Equity	investments.	Changes	in	the	fair	value	of	private	equity	investments	are recognized	in	Noninterest	income.

We	consolidate	affiliated	partnerships	when	we	are	the	general	partner	and	have determined	that	we	have	control	of	the	partnership	or	are	the	primary	beneficiary if	the	entity	is	a	VIE.	The	portion	we	do	not	own	is	reflected	in	the	caption Noncontrolling	interests	on	the	Consolidated	Balance	Sheet.

Loans	are	classified	as	held	for	investment	when	management	has	both	the	intent and	ability	to	hold	the	loan	for	the	foreseeable	future,	or	until	maturity	or	payoff. Management's

intent	and	view	of	the	foreseeable	future	may	change	based	on	changes	in business	strategies,	the	economic	environment,	market	conditions	and	the availability	of	government	programs.

Measurement	of	delinquency	status	is	based	on	the	contractual	terms	of	each loan.	Loans	that	are	30	days	or	more	past	due	in	terms	of	payment	are	considered delinquent.

Except	as	described	below,	loans	held	for	investment	are	stated	at	the	principal amounts	outstanding,	net	of	unearned	income,	unamortized	deferred	fees	and costs	on	originated	loans,	and	premiums	or	discounts	on	purchased	loans. Interest	on	performing	loans	(excluding	interest	on	purchased	impaired	loans, which	is	further	discussed	below)	is	accrued	based	on	the	principal	amount outstanding	and	recorded	in	Interest	income	as	earned	using	the	constant effective	yield	method.	Loan	origination	fees,	direct	loan	origination	costs,	and loan	premiums	and	discounts	are	deferred	and	accreted	or	amortized	into	Net interest	income,	over	periods	not	exceeding	the	contractual	life	of	the	loan.

When	loans	are	redesignated	from	held	for	investment	to	held	for	sale,	specific reserves	and	allocated	pooled	reserves	included	in	the	Allowance	for	loan	and lease	losses	(ALLL)	are	charged-off	to	reduce	the	basis	of	the	loans	to	the	lower of	cost	or	estimated	fair	value	less	cost	to	sell.

In	addition	to	originating	loans,	we	also	acquire	loans	through	portfolio purchases	or	acquisitions	of	other	financial	services	companies.	For	certain acquired	loans	that	have	experienced	a	deterioration	of	credit	quality,	we	follow the	guidance	contained	in	ASC	310-30	–	Loans	and	Debt	Securities	Acquired with	Deteriorated	Credit	Quality.	Under	this	guidance,	acquired	purchased impaired	loans	are	to	be	recorded	at	fair	value	without	the	carryover	of	any existing	valuation	allowances.	Evidence	of	credit	quality	deterioration	may include	information	and	statistics	regarding	bankruptcy	events,	updated borrower	credit	scores,	such	as	Fair	Isaac	Corporation	scores	(FICO),	past	due status,	and	updated	loan-to-value	(LTV)	ratios.	We	review	the	loans	acquired	for evidence	of	credit	quality	deterioration	and	determine	if	it	is	probable	that	we will	be	unable	to	collect	all	contractual	amounts	due,	including	both	principal and	interest.	When	both	conditions	exist,	we	estimate	the	amount	and	timing	of undiscounted	expected	cash	flows	at	acquisition	for	each	loan	either	individually or	on	a	pool	basis.	We	estimate	the	cash	flows	expected	to	be	collected	using internal	models	that	incorporate	management's	best	estimate	of	current	key assumptions,	such	as	default	rates,	loss	severity	and	payment	speeds.	Collateral values	are	also	incorporated	into	cash	flow	estimates.	Late	fees,	which	are contractual	but	not	expected	to	be	collected,	are	excluded	from	expected	future cash	flows.

The	excess	of	cash	flows	expected	to	be	collected	on	a	purchased	impaired	loan (or	pool	of	loans)	over	its	carrying	value	represents	the	accretable	yield	which	is recognized	into

interest	income	over	the	remaining	life	of	the	loan	(or	pool	of	loans)	using	the constant	effective	yield	method.	The	accretable	yield	is	calculated	based	upon the	difference	between	the	undiscounted	expected	future	cash	flows	of	the	loans and	the	recorded	investment	in	the	loans.	Subsequent	decreases	in	expected	cash flows	that	are	attributable,	at	least	in	part,	to	credit	quality	are	recognized	as impairments	through	a	charge	to	the	provision	for	credit	losses	resulting	in	an increase	in	the	ALLL.	Subsequent	increases	in	expected	cash	flows	are recognized	as	a	provision	recapture	of	previously	recorded	ALLL	or prospectively	through	an	adjustment	of	the	loan's	or	pool's	yield	over	its remaining	life.

# Leases

We	provide	financing	for	various	types	of	equipment,	including	aircraft,	energy and	power	systems,	and	vehicles	through	a	variety	of	lease	arrangements.	Direct financing	leases	are	carried	at	the	aggregate	of	lease	payments	plus	estimated residual	value	of	the	leased	property,	less	unearned	income.	Leveraged	leases,	a form	of	financing	lease,	are	carried	net	of	nonrecourse	debt.	We	recognize income	over	the	term	of	the	lease	using	the	constant	effective	yield	method. Lease	residual	values	are	reviewed	for	impairment	at	least	annually.	Gains	or losses	on	the	sale	of	leased	assets	are	included	in	Other	noninterest	income	while valuation	adjustments	on	lease	residuals	are	included	in	Other	noninterest expense.

# Loan	Sales,	Loan	Securitizations	And	Retained	Interests

We	recognize	the	sale	of	loans	or	other	financial	assets	when	the	transferred assets	are	legally	isolated	from	our	creditors	and	the	appropriate	accounting criteria	are	met.	We	have	sold	mortgage,	credit	card	and	other	loans	through securitization	transactions.	In	a	securitization,	financial	assets	are	transferred into	trusts	or	to	SPEs	in	transactions	to	effectively	legally	isolate	the	assets	from PNC.

ASC	860	–	Transfers	and	Servicing	requires	a	true	sale	legal	analysis	to	address several	relevant	factors,	such	as	the	nature	and	level	of	recourse	to	the	transferor, and	the	amount	and	nature	of	retained	interests	in	the	loans	sold	to	support whether	the	transferred	loans	would	be	legally	isolated	from	the	transferor's assets	in	the	case	of	bankruptcy.	Once	the	legal	isolation	test	has	been	met,	other factors	concerning	the	nature	and	extent	of	the	transferor's	control	and	the	rights of	the	transferee	over	the	transferred	assets	are	taken	into	account	in	order	to determine	whether	derecognition	of	assets	is	warranted.

In	a	securitization,	the	trust	or	SPE	issues	beneficial	interests	in	the	form	of senior	and	subordinated	securities	backed	or	collateralized	by	the	assets	sold	to the	trust.	The	senior	classes	of	the	asset-backed	securities	typically	receive investment	grade	credit	ratings	at	the	time	of	issuance.	These	ratings	are generally	achieved	through	the	creation	of	lower-rated	subordinated

classes	of	asset-backed	securities,	as	well	as	subordinated	or	residual	interests.	In certain	cases,	we	may	retain	a	portion	or	all	of	the	securities	issued,	interest-only strips,	one	or	more	subordinated	tranches,	servicing	rights	and,	in	some	cases, cash	reserve	accounts.	Securitized	loans	are	removed	from	the	balance	sheet	and a	net	gain	or	loss	is	recognized	in	Noninterest	income	at	the	time	of	initial	sale. Gains	or	losses	recognized	on	the	sale	of	the	loans	depend	on	the	fair	value	of	the loans	sold	and	the	retained	interests	at	the	date	of	sale.	We	generally	estimate	the fair	value	of	the	retained	interests	based	on	the	present	value	of	future	expected cash	flows	using	assumptions	as	to	discount	rates,	interest	rates,	prepayment speeds,	credit	losses	and	servicing	costs,	if	applicable.

With	the	exception	of	loan	sales	to	certain	U.S.	government-chartered	entities, our	loan	sales	and	securitizations	are	generally	structured	without	recourse	to	us except	for	representations	and	warranties	and	with	no	restrictions	on	the	retained interests.	We	originate,	sell	and	service	commercial	mortgage	loans	under	the Federal	National	Mortgage	Association	(FNMA)	Delegated	Underwriting	and Servicing	(DUS)	program.	Under	the	provisions	of	the	DUS	program,	we participate	in	a	loss-sharing	arrangement	with	FNMA.	We	participated	in	a similar	program	with	the	Federal	Home	Loan	Mortgage	Corporation	(FHLMC). When	we	are	obligated	for	loss-sharing	or	recourse,	our	policy	is	to	record	such liabilities	initially	at	fair	value	and	subsequently	reserve	for	estimated	losses	in accordance	with	guidance	contained	in	applicable	GAAP.	Refer	to	Note	22 Commitments	and	Guarantees	for	more	information	about	our	obligations related	to	sales	of	loans	under	these	programs.

We	designate	loans	as	held	for	sale	when	we	have	the	intent	to	sell	them.	We transfer	loans	to	the	Loans	held	for	sale	category	at	the	lower	of	cost	or estimated	fair	value	less	cost	to	sell.	At	the	time	of	transfer,	write-downs	on	the loans	are	recorded	as	charge-offs.	We	establish	a	new	cost	basis	upon	transfer. Any	subsequent	lower-of-cost-or-market	adjustment	is	determined	on	an individual	loan	basis	and	is	recognized	as	a	valuation	allowance	with	any charges	included	in	Other	noninterest	income.	Sale	proceeds	that	are	in	excess	of the	new	cost	basis	upon	transfer	and	are	received	within	90	days	of	classifying the	loan	as	held	for	sale	are	recorded	as	a	recovery	to	the	ALLL	up	to	the	amount previously	charged	off.	Any	remaining	proceeds	that	exist	after	recovery	are recorded	as	a	gain	on	sale	included	in	Other	noninterest	income.	Sale	proceeds that	are	less	than	the	new	cost	basis	upon	transfer	and	are	received	within	90 days	of	classifying	the	loan	as	held	for	sale	are	recorded	as	a	charge	off	to	the ALLL.	Any	proceeds	received	after	90	days	of	classifying	the	loan	as	held	for sale	are	recorded	as	a	gain	or	loss	on	sale	and	included	in	Other	noninterest income.

We	have	elected	to	account	for	certain	commercial	and	residential	mortgage loans	held	for	sale	at	fair	value.	The

changes	in	the	fair	value	of	the	commercial	mortgage	loans	are	measured	and recorded	in	Other	noninterest	income	while	the	residential	mortgage	loans	are measured	and	recorded	in	Residential	mortgage	noninterest	income	each	period. See	Note	7	Fair	Value	for	additional	information.

Interest	income	with	respect	to	loans	held	for	sale	is	accrued	based	on	the principal	amount	outstanding	and	the	loan's	contractual	interest	rate.

In	certain	circumstances,	loans	designated	as	held	for	sale	may	be	transferred	to held	for	investment	based	on	a	change	in	strategy.	We	transfer	these	loans	at	the lower	of	cost	or	estimated	fair	value;	however,	any	loans	held	for	sale	and designated	at	fair	value	remain	at	fair	value	for	the	life	of	the	loan.

# Nonperforming	Assets

Nonperforming	assets	consists	of	nonperforming	loans	and	leases,	other	real estate	owned	(OREO)	and	foreclosed	assets.	Nonperforming	loans	and	leases include	nonperforming	troubled	debt	restructurings	(TDRs).

Nonperforming	loans	are	those	loans	accounted	for	at	amortized	cost	that	have deteriorated	in	credit	quality	to	the	extent	that	full	collection	of	contractual principal	and	interest	is	not	probable.	These	loans	are	also	classified	as nonaccrual.	For	these	loans,	the	current	year	accrued	and	uncollected	interest	is reversed	through	Net	interest	income	and	prior	year	accrued	and	uncollected interest	is	charged-off.	Additionally,	these	loans	may	be	charged-off	to	reduce the	basis	to	the	fair	value	of	collateral	less	costs	to	sell.

Loans	acquired	and	accounted	for	under	ASC	310-30	–	Loans	and	Debt Securities	Acquired	with	Deteriorated	Credit	Quality	are	reported	as	performing and	accruing	loans	due	to	the	accretion	of	interest	income.

Loans	accounted	for	under	the	fair	value	option	and	loans	accounted	for	as	held for	sale	that	would	otherwise	be	classified	as	nonperforming,	based	on	the nonaccrual	policies	discussed	below,	are	reported	as	performing	loans	as	these loans	are	accounted	for	at	fair	value	and	the	lower	of	carrying	value	or	the	fair value	less	costs	to	sell,	respectively.	However,	based	upon	these	nonaccrual policies,	interest	income	is	not	accrued	on	those	loans.	Additionally,	based	upon the	nonaccrual	policies	discussed	below,	certain	government	insured	loans accounted	for	at	amortized	cost	for	which	we	do	not	expect	to	collect substantially	all	principal	and	interest	are	reported	as	nonperforming	and	do	not accrue	interest.	Alternatively,	certain	government	insured	loans	accounted	for	at amortized	cost	for	which	we	expect	to	collect	substantially	all	principal	and interest	are	not	reported	as	nonperforming	loans	and	continue	to	accrue	interest.

# Commercial	Loans

We	generally	classify	Commercial	Lending	(Commercial,	Commercial	Real Estate,	and	Equipment	Lease	Financing)	loans	as	nonperforming	and	place	them on	nonaccrual	status	when	we	determine	that	the	full	collection	of	interest	or principal	is	not	probable,	including	when	delinquency	of	interest	or	principal payments	has	existed	for	90	days	or	more	and	the	loans	are	not	well-secured and/or	in	the	process	of	collection.	A	loan	is	considered	well-secured	when	the collateral	in	the	form	of	liens	on	(or	pledges	of)	real	or	personal	property, including	marketable	securities,	has	a	realizable	value	sufficient	to	discharge	the debt	in	full,	including	accrued	interest.	Such	factors	that	would	lead	to nonperforming	status	would	include,	but	are	not	limited	to,	the	following: •	Deterioration	in	the	financial	position	of	the	borrower	resulting	in	the loan	moving	from	accrual	to	cash	basis	accounting;

•	The	collection	of	principal	or	interest	is	90	days	or	more	past	due unless	the	asset	is	well-secured	and/or	in	the	process	of	collection; •	Reasonable	doubt	exists	as	to	the	certainty	of	the	borrower's	future debt	service	ability,	according	to	the	terms	of	the	credit	arrangement, regardless	of	whether	90	days	have	passed	or	not;

•	The	borrower	has	filed	or	will	likely	file	for	bankruptcy;

•	The	bank	advances	additional	funds	to	cover	principal	or	interest; •	We	are	in	the	process	of	liquidating	a	commercial	borrower;	or •	We	are	pursuing	remedies	under	a	guarantee.

We	charge	off	commercial	nonperforming	loans	when	we	determine	that	a specific	loan,	or	portion	thereof,	is	uncollectible.	This	determination	is	based	on the	specific	facts	and	circumstances	of	the	individual	loans.	In	making	this determination,	we	consider	the	viability	of	the	business	or	project	as	a	going concern,	the	past	due	status	when	the	asset	is	not	well-secured,	the	expected	cash flows	to	repay	the	loan,	the	value	of	the	collateral,	and	the	ability	and	willingness of	any	guarantors	to	perform.

Additionally,	in	general,	for	smaller	dollar	commercial	loans	of	$1	million	or less,	a	partial	or	full	charge-off	occurs	at	120	days	past	due	for	term	loans	and 180	days	past	due	for	revolvers.

Certain	small	business	credit	card	balances	are	placed	on	nonaccrual	status	when they	become	90	days	or	more	past	due.	Such	loans	are	charged-off	at	180	days past	due.

# Consumer	Loans

A	consumer	loan	is	considered	well-secured	when	the	collateral	in	the	form	of liens	on	(or	pledges	of)	real	or

personal	property,	including	marketable	securities,	has	a	realizable	value sufficient	to	discharge	the	debt	in	full,	including	accrued	interest.	Home	equity installment	loans	and	lines	of	credit,	whether	well-secured	or	not,	are	classified as	nonaccrual	at	90	days	past	due.	Well-secured	residential	real	estate	loans	are classified	as	nonaccrual	at	180	days	past	due.	In	addition	to	these	delinquency- related	policies,	a	consumer	loan	may	also	be	placed	on	nonaccrual	status	when: •	The	loan	has	been	modified	and	classified	as	a	TDR,	as	further	discussed below;

•	Notification	of	bankruptcy	has	been	received	and	the	loan	is	30	days	or more	past	due;

•	The	bank	holds	a	subordinate	lien	position	in	the	loan	and	the	first	lien	loan is	seriously	stressed	(i.e.,	90	days	or	more	past	due);

•	Other	loans	within	the	same	borrower	relationship	have	been	placed	on nonaccrual	or	charge-offs	have	been	taken	on	them; •	The	bank	has	repossessed	non-real	estate	collateral	securing	the	loan;	or •	The	bank	has	charged-off	the	loan	to	the	value	of	the	collateral.

Most	consumer	loans	and	lines	of	credit,	not	secured	by	residential	real	estate, are	charged	off	after	120	to	180	days	past	due.	Generally,	they	are	not	placed	on nonaccrual	status	as	permitted	by	regulatory	guidance.

Home	equity	installment	loans,	home	equity	lines	of	credit,	and	residential	real estate	loans	that	are	not	well-secured	and	in	the	process	of	collection	are charged-off	at	no	later	than	180	days	past	due	to	reduce	the	basis	to	the	fair	value of	collateral	less	costs	to	sell.	In	addition	to	this	policy,	the	bank	also	recognizes a	charge-off	on	a	secured	consumer	loan	when:

•	The	bank	holds	a	subordinate	lien	position	in	the	loan	and	a	foreclosure notice	has	been	received	on	the	first	lien	loan;

•	The	bank	holds	a	subordinate	lien	position	in	the	loan	which	is	30	days	or more	past	due	with	a	combined	loan	to	value	ratio	of	greater	than	or	equal to	110%	and	the	first	lien	loan	is	seriously	stressed	(i.e.,	90	days	or	more past	due);

•	The	loan	is	modified	or	otherwise	restructured	in	a	manner	that	results	in the	loan	becoming	collateral	dependent;

•	Notification	of	bankruptcy	has	been	received	within	the	last	60	days	and the	loan	is	60	days	or	more	past	due;

•	The	borrower	has	been	discharged	from	personal	liability	through	Chapter 7	bankruptcy	and	has	not	formally	reaffirmed	his	or	her	loan	obligation	to PNC;	or

•	The	collateral	securing	the	loan	has	been	repossessed	and	the	value	of	the collateral	is	less	than	the	recorded	investment	of	the	loan	outstanding.

Loans	where	a	borrower	has	been	discharged	from	personal	liability	in bankruptcy	and	has	not	formally	reaffirmed	its	loan	obligation	to	PNC	are classified	as	nonperforming	TDRs.

These	loans	are	charged	off	to	reduce	the	basis	to	the	fair	value	of	collateral	less costs	to	sell,	and	any	associated	allowance	at	the	time	of	charge-off	is	reduced	to zero.	The	charge-off	activity	results	in	a	reduction	in	the	allowance,	an	increase in	provision	for	credit	losses,	if	the	related	loan	charge-off	exceeds	the associated	allowance,	as	well	as	a	difference	in	the	pre-TDR	recorded	investment to	the	post-TDR	recorded	investment	reflected	in	Table	68.	Collateral	values	are updated	annually.	Subsequent	declines	in	collateral	values	are	charged-off	and incremental	provision	for	credit	loss	is	incurred.	PNC	does	not	return	these TDRs	or	loans	to	borrowers	not	currently	obligated	to	make	principal	and interest	payments	under	the	restructured	terms	to	performing	status.

# Accounting	for	Nonperforming	Assets	and	Other	Nonaccrual	Loans

If	payment	is	received	on	a	nonaccrual	loan,	generally	the	payment	is	first applied	to	the	recorded	investment;	payments	are	then	applied	to	recover	any charged-off	amounts	related	to	the	loan.	Finally,	if	both	recorded	investment	and any	charge-offs	have	been	recovered,	then	the	payment	will	be	recorded	as	fee and	interest	income.

Nonaccrual	loans	are	generally	not	returned	to	accrual	status	until	the	borrower has	performed	in	accordance	with	the	contractual	terms	and	other	performance indicators	for	at	least	six	months,	the	period	of	time	which	was	determined	to demonstrate	the	expected	collection	of	the	loan's	remaining	contractual	principal and	interest.	When	a	nonperforming	loan	is	returned	to	accrual	status,	it	is	then considered	a	performing	loan.

A	TDR	is	a	loan	whose	terms	have	been	restructured	in	a	manner	that	grants	a concession	to	a	borrower	experiencing	financial	difficulties.	TDRs	may	include restructuring	certain	terms	of	loans,	receipts	of	assets	from	debtors	in	partial satisfaction	of	loans,	or	a	combination	thereof.	For	TDRs,	payments	are	applied based	upon	their	contractual	terms	unless	the	related	loan	is	deemed	non- performing.	TDRs	are	generally	included	in	nonperforming	loans	until	returned to	performing	status	through	the	fulfilling	of	restructured	terms	and	other performance	indicators	for	a	reasonable	period	of	time	demonstrating	that	the bank	expects	to	collect	all	of	the	loan's	remaining	contractual	principal	and interest.	TDRs	resulting	from	1)	borrowers	that	have	been	discharged	from personal	liability	through	Chapter	7	bankruptcy	and	have	not	formally reaffirmed	their	loan	obligations	to	PNC	and	2)	borrowers	that	are	not	currently obligated	to	make	both	principal	and	interest	payments	under	the	restructured terms	are	not	returned	to	accrual	status.

See	Note	3	Asset	Quality	and	Note	5	Allowances	for	Loan	and	Lease	Losses and	Unfunded	Loan	Commitments	and	Letters	of	Credit	for	additional	TDR information.

Foreclosed	assets	are	comprised	of	any	asset	seized	or	property	acquired	through a	foreclosure	proceeding	or	acceptance	of	a	deed-in-lieu	of	foreclosure.	Other real	estate	owned	is	comprised	principally	of	commercial	real	estate	and residential	real	estate	properties	obtained	in	partial	or	total	satisfaction	of	loan obligations.	After	obtaining	a	foreclosure	judgment,	or	in	some	jurisdictions	the initiation	of	proceedings	under	a	power	of	sale	in	the	loan	instruments,	the property	will	be	sold.	When	we	are	awarded	title,	we	transfer	the	loan	to foreclosed	assets	included	in	Other	assets	on	our	Consolidated	Balance	Sheet. Property	obtained	in	satisfaction	of	a	loan	is	initially	recorded	at	estimated	fair value	less	cost	to	sell.	Based	upon	the	estimated	fair	value	less	cost	to	sell,	the recorded	investment	of	the	loan	is	adjusted	and,	typically,	a	charge-off/recovery is	recognized	to	the	Allowance	for	Loan	and	Lease	Losses	(ALLL).	We	estimate fair	values	primarily	based	on	appraisals,	or	sales	agreements	with	third	parties. Fair	value	also	considers	the	proceeds	expected	from	government	insurance	and guarantees	upon	the	conveyance	of	the	other	real	estate	owned	(OREO).

Subsequently,	foreclosed	assets	are	valued	at	the	lower	of	the	amount	recorded at	acquisition	date	or	estimated	fair	value	less	cost	to	sell.	Valuation	adjustments on	these	assets	and	gains	or	losses	realized	from	disposition	of	such	property	are reflected	in	Other	noninterest	expense.

See	Note	3	Asset	Quality	and	Note	5	Allowances	for	Loan	and	Lease	Losses and	Unfunded	Loan	Commitments	and	Letters	of	Credit	for	additional	data	and application	of	the	policies	disclosed	herein.

# Allowance	for	Loan	and	Lease	Losses

We	maintain	the	ALLL	at	a	level	that	we	believe	to	be	appropriate	to	absorb estimated	probable	credit	losses	incurred	in	the	loan	and	lease	portfolios	as	of the	balance	sheet	date.	Our	determination	of	the	allowance	is	based	on	periodic evaluations	of	these	loan	and	lease	portfolios	and	other	relevant	factors.	This critical	estimate	includes	significant	use	of	PNC's	own	historical	data	and complex	methods	to	interpret	this	data.	These	evaluations	are	inherently subjective,	as	they	require	material	estimates	and	may	be	susceptible	to significant	change,	and	include,	among	others:

For	all	loans,	except	purchased	impaired	loans,	the	ALLL	is	the	sum	of	three components:	(i)	asset	specific/individual

impaired	reserves,	(ii)	quantitative	(formulaic	or	pooled)	reserves	and (iii)	qualitative	(judgmental)	reserves.

The	reserve	calculation	and	determination	process	is	dependent	on	the	use	of	key assumptions.	Key	reserve	assumptions	and	estimation	processes	react	to	and	are influenced	by	observed	changes	in	loan	portfolio	performance	experience,	the financial	strength	of	the	borrower,	and	economic	conditions.	Key	reserve assumptions	are	periodically	updated.

# Asset	Specific/Individual	Component

Nonperforming	loans	that	are	considered	impaired	under	ASC	310	– Receivables,	which	include	all	commercial	and	consumer	TDRs,	are	evaluated for	a	specific	reserve.	Specific	reserve	allocations	are	determined	as	follows: •	For	commercial	nonperforming	loans	and	commercial	TDRs	greater than	or	equal	to	a	defined	dollar	threshold,	specific	reserves	are	based on	an	analysis	of	the	present	value	of	the	loan's	expected	future	cash flows,	the	loan's	observable	market	price	or	the	fair	value	of	the collateral.

•	For	commercial	nonperforming	loans	and	commercial	TDRs	below	the defined	dollar	threshold,	the	individual	loan's	loss	given	default	(LGD) percentage	is	multiplied	by	the	loan	balance	and	the	results	are aggregated	for	purposes	of	measuring	specific	reserve	impairment. •	Consumer	nonperforming	loans	are	collectively	reserved	for	unless classified	as	consumer	TDRs.	For	consumer	TDRs,	specific	reserves are	determined	through	an	analysis	of	the	present	value	of	the	loan's expected	future	cash	flows,	except	for	those	instances	where	loans have	been	deemed	collateral	dependent,	including	loans	where borrowers	have	been	discharged	from	personal	liability	through Chapter	7	bankruptcy	and	have	not	formally	reaffirmed	their	loan obligations	to	PNC.	Once	that	determination	has	been	made,	those TDRs	are	charged	down	to	the	fair	value	of	the	collateral	less	costs	to sell	at	each	period	end.

# Commercial	Lending	Quantitative	Component

The	estimates	of	the	quantitative	component	of	ALLL	for	incurred	losses	within the	commercial	lending	portfolio	segment	are	determined	through	statistical	loss modeling	utilizing	PD,	LGD	and	outstanding	balance	of	the	loan.	Based	upon loan	risk	ratings,	we	assign	PDs	and	LGDs.	Each	of	these	statistical	parameters is	determined	based	on	internal	historical	data	and	market	data.	PD	is	influenced by	such	factors	as	liquidity,	industry,	obligor	financial	structure,	access	to	capital and	cash	flow.	LGD	is	influenced	by	collateral	type,	original	and/or	updated loan-to-value	ratio	(LTV)	and	guarantees	by	related	parties.

# Consumer	Lending	Quantitative	Component

Quantitative	estimates	within	the	consumer	lending	portfolio	segment	are calculated	primarily	using	a	roll-rate	model	based	on	statistical	relationships, calculated	from	historical	data	that	estimate	the	movement	of	loan	outstandings through	the	various	stages	of	delinquency	and	ultimately	charge-off	over	our	loss emergence	period.

# Qualitative	Component

While	our	reserve	methodologies	strive	to	reflect	all	relevant	risk	factors,	there continues	to	be	uncertainty	associated	with,	but	not	limited	to,	potential imprecision	in	the	estimation	process	due	to	the	inherent	time	lag	of	obtaining information	and	normal	variations	between	estimates	and	actual	outcomes.	We provide	additional	reserves	that	are	designed	to	provide	coverage	for	losses attributable	to	such	risks.	The	ALLL	also	includes	factors	that	may	not	be directly	measured	in	the	determination	of	specific	or	pooled	reserves.	Such qualitative	factors	may	include:

•	Industry	concentrations	and	conditions, •	Recent	credit	quality	trends,

•	Recent	loss	experience	in	particular	portfolios, •	Recent	macro-economic	factors,

# Allowance	for	Purchased	Non-Impaired	Loans

ALLL	for	purchased	non-impaired	loans	is	determined	based	upon	a	comparison between	the	methodologies	described	above	and	the	remaining	acquisition	date fair	value	discount	that	has	yet	to	be	accreted	into	interest	income.	After	making the	comparison,	an	ALLL	is	recorded	for	the	amount	greater	than	the	discount, or	no	ALLL	is	recorded	if	the	discount	is	greater.

# Allowance	for	Purchased	Impaired	Loans

ALLL	for	purchased	impaired	loans	is	determined	in	accordance	with	ASC	310- 30	by	comparing	the	net	present	value	of	the	cash	flows	expected	to	be	collected to	the	recorded	investment	for	a	given	loan	(or	pool	of	loans).	In	cases	where	the net	present	value	of	expected	cash	flows	is	lower	than	the	recorded	investment, ALLL	is	established.	Cash	flows	expected	to	be	collected	represent management's	best	estimate	of	the	cash	flows	expected	over	the	life	of	a	loan	(or pool	of	loans).	For	large	balance	commercial	loans,	cash	flows	are	separately estimated	and	compared	to	the	recorded	investment	at	the	loan	level.	For	smaller balance	pooled	loans,	cash	flows	are	estimated	using	cash	flow	models	and compared	at	the	risk	pool	level,	which	was	defined	at	acquisition	based	on	the risk	characteristics	of	the	loan.	Our	cash	flow	models	use	loan	data	including, but	not	limited	to,

delinquency	status	of	the	loan,	updated	borrower	FICO	credit	scores,	geographic information,	historical	loss	experience,	and	updated	LTVs,	as	well	as	best estimates	for	changes	in	unemployment	rates,	home	prices	and	other	economic factors,	to	determine	estimated	cash	flows.

See	Note	3	Asset	Quality,	Note	4	Purchased	Loans,	and	Note	5	Allowances	for Loan	and	Lease	Losses	and	Unfunded	Loan	Commitments	and	Letters	of	Credit for	additional	loan	data	and	application	of	the	policies	disclosed	herein.

Our	credit	risk	management	policies,	procedures	and	practices	are	designed	to promote	sound	lending	standards	and	prudent	credit	risk	management.	We	have policies,	procedures	and	practices	that	address	financial	statement	requirements, collateral	review	and	appraisal	requirements,	advance	rates	based	upon	collateral types,	appropriate	levels	of	exposure,	cross-border	risk,	lending	to	specialized industries	or	borrower	type,	guarantor	requirements,	and	regulatory	compliance.

# Allowance	for	Unfunded	Loan	Commitments	and	Letters	of	Credit

We	maintain	the	allowance	for	unfunded	loan	commitments	and	letters	of	credit at	a	level	we	believe	is	appropriate	to	absorb	estimated	probable	credit	losses	on these	unfunded	credit	facilities	as	of	the	balance	sheet	date.	We	determine	the allowance	based	on	periodic	evaluations	of	the	unfunded	credit	facilities, including	an	assessment	of	the	probability	of	commitment	usage,	credit	risk factors,	and,	solely	for	commercial	lending,	the	terms	and	expiration	dates	of	the unfunded	credit	facilities.	Other	than	the	estimation	of	the	probability	of	funding, the	reserve	for	unfunded	loan	commitments	is	estimated	in	a	manner	similar	to the	methodology	used	for	determining	reserves	for	funded	exposures.	The allowance	for	unfunded	loan	commitments	and	letters	of	credit	is	recorded	as	a liability	on	the	Consolidated	Balance	Sheet.	Net	adjustments	to	the	allowance	for unfunded	loan	commitments	and	letters	of	credit	are	included	in	the	provision	for credit	losses.

See	Note	3	Asset	Quality	and	Note	5	Allowances	for	Loan	and	Lease	Losses and	Unfunded	Loan	Commitments	and	Letters	of	Credit	for	additional	loan	data and	application	of	the	policies	disclosed	herein.

# Mortgage	And	Other	Servicing	Rights

We	provide	servicing	under	various	loan	servicing	contracts	for	commercial, residential	and	other	consumer	loans.	These	contracts	are	either	purchased	in	the open	market	or	retained	as	part	of	a	loan	securitization	or	loan	sale.	All	newly acquired	or	originated	servicing	rights	are	initially	measured	at	fair	value.	Fair value	is	based	on	the	present	value	of	the	expected	future	net	cash	flows, including	assumptions	as	to:

•	Deposit	balances	and	interest	rates	for	escrow	and	commercial	reserve earnings,

•	Discount	rates,

•	Stated	note	rates,

•	Estimated	prepayment	speeds,	and •	Estimated	servicing	costs.

As	of	January	1,	2014,	PNC	made	an	irrevocable	election	to	subsequently measure	all	classes	of	commercial	MSRs	at	fair	value	in	order	to	eliminate	any potential	measurement	mismatch	between	our	economic	hedges	and	the commercial	MSRs.	The	impact	was	not	material.	As	a	result	of	that	election, changes	in	the	fair	value	of	commercial	MSRs	are	recognized	as	gains/(losses).

Prior	to	January	1,	2014,	we	elected	to	utilize	the	amortization	method	for subsequent	measurement	of	our	commercial	mortgage	loan	servicing	rights.	This election	was	made	based	on	the	unique	characteristics	of	the	commercial mortgage	loans	underlying	these	servicing	rights.	Specific	risk	characteristics	of commercial	mortgages	include	loan	type,	currency	or	exchange	rate,	interest rates,	expected	cash	flows	and	changes	in	the	cost	of	servicing.	We	record	these servicing	assets	as	Other	intangible	assets	and	amortized	them	over	their estimated	lives	based	on	estimated	net	servicing	income.	On	a	quarterly	basis, we	tested	the	assets	for	impairment	by	categorizing	the	pools	of	assets underlying	the	servicing	rights	into	various	strata.	If	the	estimated	fair	value	of the	assets	was	less	than	the	carrying	value,	an	impairment	loss	was	recognized and	a	valuation	reserve	was	established.

For	servicing	rights	related	to	residential	real	estate	loans,	we	apply	the	fair	value method.	This	election	was	made	to	be	consistent	with	our	risk	management strategy	to	hedge	changes	in	the	fair	value	of	these	assets.	We	manage	this	risk by	hedging	the	fair	value	of	this	asset	with	derivatives	and	securities	which	are expected	to	increase	in	value	when	the	value	of	the	servicing	right	declines.	The fair	value	of	these	servicing	rights	is	estimated	by	using	a	cash	flow	valuation model	which	calculates	the	present	value	of	estimated	future	net	servicing	cash flows,	taking	into	consideration	actual	and	expected	mortgage	loan	prepayment rates,	discount	rates,	servicing	costs,	and	other	economic	factors	which	are determined	based	on	current	market	conditions.

Revenue	from	the	various	loan	servicing	contracts	for	commercial,	residential and	other	consumer	loans	is	reported	on	the	Consolidated	Income	Statement	in line	items	Corporate	services,	Residential	mortgage	and	Consumer	services.

# Fair	Value	Of	Financial	Instruments

The	fair	value	of	financial	instruments	and	the	methods	and	assumptions	used	in estimating	fair	value	amounts	and	financial	assets	and	liabilities	for	which	fair value	was	elected	are	detailed	in	Note	9	Fair	Value.

We	assess	goodwill	for	impairment	at	least	annually,	in	the	fourth	quarter,	or when	events	or	changes	in	circumstances

indicate	the	assets	might	be	impaired.	Finite-lived	intangible	assets	are amortized	to	expense	using	accelerated	or	straight-line	methods	over	their respective	estimated	useful	lives.	We	review	finite-lived	intangible	assets	for impairment	when	events	or	changes	in	circumstances	indicate	that	the	asset's carrying	amount	may	not	be	recoverable	from	undiscounted	future	cash	flows	or that	it	may	exceed	its	fair	value.

# Depreciation	And	Amortization

For	financial	reporting	purposes,	we	depreciate	premises	and	equipment,	net	of salvage	value,	principally	using	the	straight-line	method	over	their	estimated useful	lives.

We	use	estimated	useful	lives	for	furniture	and	equipment	ranging	from	one	to 10	years,	and	depreciate	buildings	over	an	estimated	useful	life	of	up	to	40	years. We	amortize	leasehold	improvements	over	their	estimated	useful	lives	of	up	to 15	years	or	the	respective	lease	terms,	whichever	is	shorter.

We	purchase,	as	well	as	internally	develop	and	customize,	certain	software	to enhance	or	perform	internal	business	functions.	Software	development	costs incurred	in	the	planning	and	post-development	project	stages	are	charged	to Noninterest	expense.	Costs	associated	with	designing	software	configuration	and interfaces,	installation,	coding	programs	and	testing	systems	are	capitalized	and amortized	using	the	straight-line	method	over	periods	ranging	from	one	to	10 years.

# Repurchase	And	Resale	Agreements

Repurchase	and	resale	agreements	are	treated	as	collateralized	financing transactions	and	are	carried	at	the	amounts	at	which	the	securities	will	be subsequently	reacquired	or	resold,	including	accrued	interest,	as	specified	in	the respective	agreements.	Our	policy	is	to	take	possession	of	securities	purchased under	agreements	to	resell.	We	monitor	the	market	value	of	securities	to	be repurchased	and	resold	and	additional	collateral	may	be	obtained	where considered	appropriate	to	protect	against	credit	exposure.	We	have	elected	to account	for	structured	resale	agreements	at	fair	value.

# Other	Comprehensive	Income

Other	comprehensive	income	consists,	on	an	after-tax	basis,	primarily	of unrealized	gains	or	losses,	excluding	OTTI	attributable	to	credit	deterioration,	on investment	securities	classified	as	available	for	sale,	unrealized	gains	or	losses	on derivatives	designated	as	cash	flow	hedges,	and	changes	in	pension	and	other postretirement	benefit	plan	liability	adjustments.	Details	of	each	component	are included	in	Note	18	Other	Comprehensive	Income.

# Treasury	Stock

We	record	common	stock	purchased	for	treasury	at	cost.	At	the	date	of subsequent	reissue,	the	treasury	stock	account	is	reduced	by	the	cost	of	such stock	on	the	first-in,	first-out	basis.

# Derivative	Instruments	And	Hedging	Activities

We	use	a	variety	of	financial	derivatives	as	part	of	our	overall	asset	and	liability risk	management	process	to	help	manage	exposure	to	interest	rate,	market	and credit	risk	inherent	in	our	business	activities.	Interest	rate	and	total	return	swaps, swaptions,	interest	rate	caps	and	floors,	options,	forwards,	and	futures	contracts are	the	primary	instruments	we	use	for	interest	rate	risk	management.

Financial	derivatives	involve,	to	varying	degrees,	interest	rate,	market	and	credit risk.	We	manage	these	risks	as	part	of	our	asset	and	liability	management process	and	through	credit	policies	and	procedures.

We	recognize	all	derivative	instruments	at	fair	value	as	either	Other	assets	or Other	liabilities	on	the	Consolidated	Balance	Sheet	and	the	related	cash	flows	in the	Operating	Activities	section	of	the	Consolidated	Statement	Of	Cash	Flows. Adjustments	for	counterparty	credit	risk	are	included	in	the	determination	of	fair value.	The	accounting	for	changes	in	the	fair	value	of	a	derivative	instrument depends	on	whether	it	has	been	designated	and	qualifies	as	part	of	a	cash	flow	or net	investment	hedging	relationship.	For	all	other	derivatives,	changes	in	fair value	are	recognized	in	earnings.

We	utilize	a	net	presentation	for	derivative	instruments	on	the	Consolidated Balance	Sheet	taking	into	consideration	the	effects	of	legally	enforceable	master netting	agreements.	Cash	collateral	exchanged	with	counterparties	is	also	netted against	the	applicable	derivative	exposures	by	offsetting	obligations	to	return,	or rights	to	reclaim,	cash	collateral	against	the	fair	values	of	the	net	derivatives being	collateralized.

For	those	derivative	instruments	that	are	designated	and	qualify	as	accounting hedges,	we	designate	the	hedging	instrument,	based	on	the	exposure	being hedged,	as	a	fair	value	hedge,	a	cash	flow	hedge	or	a	hedge	of	the	net	investment in	a	foreign	operation.

We	formally	document	the	relationship	between	the	hedging	instruments	and hedged	items,	as	well	as	the	risk	management	objective	and	strategy,	before undertaking	an	accounting	hedge.	To	qualify	for	hedge	accounting,	the derivatives	and	related	hedged	items	must	be	designated	as	a	hedge	at	inception of	the	hedge	relationship.	For	accounting	hedge	relationships,	we	formally assess,	both	at	the	inception	of	the	hedge	and	on	an	ongoing	basis,	if	the derivatives	are	highly	effective	in	offsetting	designated	changes	in	the	fair	value or	cash	flows	of	the	hedged	item.	If	it	is	determined	that	the	derivative instrument	is	not	highly	effective,	hedge	accounting	is	discontinued.

For	derivatives	that	are	designated	as	fair	value	hedges	(i.e.,	hedging	the exposure	to	changes	in	the	fair	value	of	an	asset	or	a	liability	attributable	to	a particular	risk,	such	as	changes	in	LIBOR),	changes	in	the	fair	value	of	the hedging

instrument	are	recognized	in	earnings	and	offset	by	also	recognizing	in	earnings the	changes	in	the	fair	value	of	the	hedged	item	attributable	to	the	hedged	risk. To	the	extent	the	change	in	fair	value	of	the	derivative	does	not	offset	the	change in	fair	value	of	the	hedged	item,	the	difference	or	ineffectiveness	is	reflected	in the	Consolidated	Income	Statement	in	the	same	financial	statement	category	as the	hedged	item.

For	derivatives	designated	as	cash	flow	hedges	(i.e.,	hedging	the	exposure	to variability	in	expected	future	cash	flows),	the	effective	portions	of	the	gain	or loss	on	derivatives	are	reported	as	a	component	of	Accumulated	other comprehensive	income	(loss)	and	subsequently	reclassified	to	income	in	the same	period	or	periods	during	which	the	hedged	transaction	affects	earnings. The	change	in	fair	value	attributable	to	the	ineffective	portion	of	the	hedging instrument	is	recognized	immediately	in	Noninterest	income.

For	derivatives	designated	as	a	hedge	of	net	investment	in	a	foreign	operation, the	effective	portions	of	the	gain	or	loss	on	the	derivatives	are	reported	as	a component	of	Accumulated	other	comprehensive	income	(loss).	The	change	in fair	value	attributable	to	the	ineffective	portion	of	the	hedging	instrument	is recognized	immediately	in	Noninterest	income.

We	discontinue	hedge	accounting	when	it	is	determined	that	the	derivative	no longer	qualifies	as	an	effective	hedge;	the	derivative	expires	or	is	sold, terminated	or	exercised;	or	the	derivative	is	de-designated	as	a	fair	value	or	cash flow	hedge	or,	for	a	cash	flow	hedge,	it	is	no	longer	probable	that	the	forecasted transaction	will	occur	by	the	end	of	the	originally	specified	time	period.	If	we determine	that	the	derivative	no	longer	qualifies	as	a	fair	value	or	cash	flow hedge	and	hedge	accounting	is	discontinued,	the	derivative	will	continue	to	be recorded	on	the	balance	sheet	at	its	fair	value	with	changes	in	fair	value	included in	current	earnings.	For	a	discontinued	fair	value	hedge,	the	previously	hedged item	is	no	longer	adjusted	for	changes	in	fair	value.

When	hedge	accounting	is	discontinued	because	it	is	no	longer	probable	that	a forecasted	transaction	will	occur,	the	derivative	will	continue	to	be	recorded	on the	balance	sheet	at	its	fair	value	with	changes	in	fair	value	included	in	current earnings,	and	the	gains	and	losses	in	Accumulated	other	comprehensive	income (loss)	will	be	recognized	immediately	into	earnings.	When	we	discontinue	hedge accounting	because	the	hedging	instrument	is	sold,	terminated	or	no	longer designated,	the	amount	reported	in	Accumulated	other	comprehensive	income (loss)	up	to	the	date	of	sale,	termination	or	de-designation	continues	to	be reported	in	Other	comprehensive	income	or	loss	until	the	forecasted	transaction affects	earnings.	We	did	not	terminate	any	cash	flow	hedges	in	2014,	2013	or 2012	due	to	a	determination	that	a	forecasted	transaction	was	no	longer	probable of	occurring.

We	purchase	or	originate	financial	instruments	that	contain	an	embedded derivative.	At	the	inception	of	the	transaction,	we	assess	if	the	economic characteristics	of	the	embedded	derivative	are	clearly	and	closely	related	to	the economic	characteristics	of	the	host	contract,	whether	the	hybrid	financial instrument	is	measured	at	fair	value	with	changes	in	fair	value	reported	in earnings,	and	whether	a	separate	instrument	with	the	same	terms	as	the embedded	derivative	would	be	a	derivative.	If	the	embedded	derivative	does	not meet	all	of	these	conditions,	the	embedded	derivative	is	recorded	separately from	the	host	contract	with	changes	in	fair	value	recorded	in	earnings,	unless	we elect	to	account	for	the	hybrid	instrument	at	fair	value.

We	have	elected	on	an	instrument-by-instrument	basis,	fair	value	measurement for	certain	financial	instruments	with	embedded	derivatives.

We	enter	into	commitments	to	originate	residential	and	commercial	mortgage loans	for	sale.	We	also	enter	into	commitments	to	purchase	or	sell	commercial and	residential	real	estate	loans.	These	commitments	are	accounted	for	as	free- standing	derivatives	which	are	recorded	at	fair	value	in	Other	assets	or	Other liabilities	on	the	Consolidated	Balance	Sheet.	Any	gain	or	loss	from	the	change in	fair	value	after	the	inception	of	the	commitment	is	recognized	in	Noninterest income.

We	account	for	income	taxes	under	the	asset	and	liability	method.	Deferred	tax assets	and	liabilities	are	determined	based	on	differences	between	the	financial reporting	and	tax	bases	of	assets	and	liabilities	and	are	measured	using	the enacted	tax	rates	and	laws	that	we	expect	will	apply	at	the	time	when	we	believe the	differences	will	reverse.	The	recognition	of	deferred	tax	assets	requires	an assessment	to	determine	the	realization	of	such	assets.	Realization	refers	to	the incremental	benefit	achieved	through	the	reduction	in	future	taxes	payable	or refunds	receivable	from	the	deferred	tax	assets,	assuming	that	the	underlying deductible	differences	and	carryforwards	are	the	last	items	to	enter	into	the determination	of	future	taxable	income.	We	establish	a	valuation	allowance	for tax	assets	when	it	is	more	likely	than	not	that	they	will	not	be	realized,	based upon	all	available	positive	and	negative	evidence.

# Earnings	Per	Common	Share

Basic	earnings	per	common	share	is	calculated	using	the	two-class	method	to determine	income	attributable	to	common	shareholders.	Unvested	share-based payment	awards	that	contain	nonforfeitable	rights	to	dividends	or	dividend equivalents	are	considered	participating	securities	under	the	two-class	method. Income	attributable	to	common	shareholders	is	then	divided	by	the	weighted- average	common	shares	outstanding	for	the	period.

Diluted	earnings	per	common	share	is	calculated	under	the	more	dilutive	of either	the	treasury	method	or	the	two-class	method.	For	the	diluted	calculation, we	increase	the	weighted-average	number	of	shares	of	common	stock outstanding	by	the	assumed	conversion	of	outstanding	convertible	preferred stock	from	the	beginning	of	the	year	or	date	of	issuance,	if	later,	and	the	number of	shares	of	common	stock	that	would	be	issued	assuming	the	exercise	of	stock options	and	warrants	and	the	issuance	of	incentive	shares	using	the	treasury stock	method.	These	adjustments	to	the	weighted-average	number	of	shares	of common	stock	outstanding	are	made	only	when	such	adjustments	will	dilute earnings	per	common	share.	See	Note	16	Earnings	Per	Share	for	additional information.

# Recently	Adopted	Accounting	Standards

In	January	2014,	the	Financial	Accounting	Standards	Board	(FASB)	issued	ASU 2014-01,	Investments	–	Equity	Method	and	Joint	Ventures	(Topic	323):

Accounting	for	Investments	in	Qualified	Affordable	Housing	Projects.	This	ASU provided	guidance	on	accounting	for	investments	in	flow-through	limited liability	entities	that	manage	or	invest	in	affordable	housing	projects	that	qualify for	the	low	income	housing	tax	credit.	If	certain	criteria	are	satisfied,	investment amortization,	net	of	tax	credits,	may	be	recognized	in	the	income	statement	as	a component	of	income	taxes	attributable	to	continuing	operations	under	either	the proportional	amortization	method	or	the	practical	expedient	method	to	the proportional	amortization	method.	This	ASU	was	effective	for	annual	periods beginning	after	December	15,	2014.	Retrospective	application	was	required	and early	adoption	was	permitted.	We	early	adopted	this	guidance	in	the	first	quarter of	2014	for	interim	and	annual	reporting	periods	because	we	believe	the presentation	more	accurately	reflects	the	economics	of	tax	credit	investments. We	elected	to	amortize	our	qualifying	investments	in	low	income	housing	tax credits	under	the	practical	expedient	method	to	the	proportional	amortization method	while	continuing	to	account	for	our	other	tax	credit	investments	under the	equity	method.

For	prior	periods,	pursuant	to	ASU	2014-01,	(a)	amortization	expense	related	to our	qualifying	investments	in	low	income	housing	tax	credits	was	reclassified from	Other	noninterest	expense	to	Income	taxes,	and	(b)	additional	amortization, net	of	the	associated	tax	benefits	was	recognized	in	Income	taxes	as	a	result	of our	adoption	of	the	practical	expedient	to	the	proportional	amortization	method. The	cumulative	effect	to	retained	earnings	as	of	January	1,	2012	of	adopting	this guidance	was	a	reduction	of	$43	million	as	presented	in	the	Consolidated Statement	of	Changes	in	Equity.	The	2012	and	2013	periods	within	the Consolidated	Income	Statement	have	been	updated	to	reflect	the	retrospective application.

During	2014,	we	recognized	$181	million	of	amortization,	$212	million	of	tax credits,	and	$66	million	of	other	tax	benefits	associated	with	these	investments within	Income	taxes.	At	December	31,	2014,	the	amount	of	investments	in

low	income	housing	tax	credits	that	were	accounted	for	under	ASU	2014-01	was $1.8	billion.	These	investments	are	reflected	in	Equity	investments	on	our Consolidated	Balance	Sheet.

# In	July	2013,	the	FASB	issued	ASU	2013-11,	Income	Taxes	(Topic	740): Presentation	of	an	Unrecognized	Tax	Benefit	When	a	Net	Operating	Loss Carryforward,	a	Similar	Tax	Loss,	or	a	Tax	Credit	Carryforward	Exists.	This

ASU	clarified	existing	guidance	to	require	that	an	unrecognized	tax	benefit	or	a portion	thereof	be	presented	in	the	statement	of	financial	position	as	a	reduction to	a	deferred	tax	asset	for	a	net	operating	loss	(NOL)	carryforward,	similar	tax loss,	or	a	tax	credit	carryforward	except	when	an	NOL	carryforward,	similar	tax loss,	or	tax	credit	carryforward	is	not	available	under	the	tax	law	of	the applicable	jurisdiction	to	settle	any	additional	income	taxes	that	would	result from	the	disallowance	of	a	tax	position.	In	such	a	case,	the	unrecognized	tax benefit	should	be	presented	in	the	statement	of	financial	position	as	a	liability. This	ASU	was	effective	for	fiscal	years,	and	interim	periods	within	those	years, beginning	after	December	15,	2013.	We	adopted	ASU	2013-11	in	the	first quarter	of	2014	using	prospective	application	to	all	unrecognized	tax	benefits that	existed	at	the	effective	date.	Adoption	of	this	ASU	did	not	have	a	material effect	on	our	results	of	operations	or	financial	position.

In	June	2013,	the	FASB	issued	ASU	2013-08,	Financial	Services	–	Investment Companies	(Topic	946):	Amendments	to	the	Scope,	Measurement	and

Disclosure	Requirements.	This	ASU	modified	the	guidance	in	ASC	946	for determining	whether	an	entity	is	an	investment	company,	as	well	as	the measurement	and	disclosure	requirements	for	investment	companies.	The	ASU does	not	change	current	accounting	where	a	noninvestment	company	parent retains	the	specialized	accounting	applied	by	an	investment	company	subsidiary in	consolidation.	We	prospectively	adopted	ASU	2013-08	in	the	first	quarter	of 2014.	Adoption	of	the	ASU	did	not	have	a	material	effect	on	our	results	of operations	or	financial	position.	See	Note	7	Fair	Value	for	the	new	required disclosures.

# NOTE	2	LOAN	SALE	AND	SERVICING	ACTIVITIES	AND VARIABLE	INTEREST	ENTITIES

# Loan	Sale	and	Servicing	Activities

We	have	transferred	residential	and	commercial	mortgage	loans	in	securitization or	sales	transactions	in	which	we	have	continuing	involvement.	These	transfers have	occurred	through	Agency	securitization,	Non-agency	securitization,	and loan	sale	transactions.	Agency	securitizations	consist	of	securitization transactions	with	Federal	National	Mortgage	Association	(FNMA),	Federal Home	Loan	Mortgage	Corporation	(FHLMC)	and	Government	National Mortgage	Association	(GNMA)	(collectively	the	Agencies).	FNMA	and FHLMC	generally	securitize	our	transferred	loans	into	mortgage-backed securities	for	sale	into	the	secondary	market	through	special	purpose	entities (SPEs)	that	they	sponsor.	We,	as	an	authorized	GNMA	issuer/servicer,	pool Federal	Housing	Administration	(FHA)	and	Department	of	Veterans	Affairs

(VA)	insured	loans	into	mortgage-backed	securities	for	sale	into	the	secondary market.	In	Non-agency	securitizations,	we	have	transferred	loans	into securitization	SPEs.	In	other	instances,	third-party	investors	have	also	purchased our	loans	in	loan	sale	transactions	and	in	certain	instances	have	subsequently sold	these	loans	into	securitization	SPEs.	Securitization	SPEs	utilized	in	the Agency	and	Non-agency	securitization	transactions	are	variable	interest	entities (VIEs).

Our	continuing	involvement	in	the	FNMA,	FHLMC,	and	GNMA	securitizations, Non-agency	securitizations,	and	loan	sale	transactions	generally	consists	of servicing,	repurchasing	previously	transferred	loans	under	certain	conditions	and loss	share	arrangements,	and,	in	limited	circumstances,	holding	of	mortgage- backed	securities	issued	by	the	securitization	SPEs.

Depending	on	the	transaction,	we	may	act	as	the	master,	primary,	and/or	special servicer	to	the	securitization	SPEs	or	third-party	investors.	Servicing responsibilities	typically	consist	of	collecting	and	remitting	monthly	borrower principal	and	interest	payments,	maintaining	escrow	deposits,	performing	loss mitigation	and	foreclosure	activities,	and,	in	certain	instances,	funding	of servicing	advances.	Servicing	advances,	which	are	reimbursable,	are	made	for principal	and	interest	and	collateral	protection	and	are	recognized	in	Other	assets at	cost.

We	earn	servicing	and	other	ancillary	fees	for	our	role	as	servicer	and,	depending on	the	contractual	terms	of	the	servicing	arrangement,	we	can	be	terminated	as servicer	with	or	without	cause.	At	the	consummation	date	of	each	type	of	loan transfer	where	PNC	retains	the	servicing,	we	recognize	a	servicing	right	at	fair value.	See	Note	7	Fair	Value	and	Note	8	Goodwill	and	Other	Intangible	Assets for	further	discussion	of	our	servicing	rights.

Certain	loans	transferred	to	the	Agencies	contain	removal	of	account	provisions (ROAPs).	Under	these	ROAPs,	we	hold	an	option	to	repurchase	at	par	individual delinquent	loans	that	meet	certain	criteria.	In	other	limited	cases,	the	U.S. Department	of	Housing	and	Urban	Development	(HUD)	has	granted	us	the	right to	repurchase	current	loans	when	we	intend	to	modify	the	borrower's	interest rate	under	established	guidelines.	When	we	have	the	unilateral	ability	to repurchase	a	loan,	effective	control	over	the	loan	has	been	regained	and	we recognize	an	asset	(in	either	Loans	or	Loans	held	for	sale)	and	a	corresponding liability	(in	Other	borrowed	funds)	on	the	balance	sheet	regardless	of	our	intent to	repurchase	the	loan.	At	December	31,	2014	and	December	31,	2013,	these assets	and	liabilities	both	totaled	$136	million	and	$128	million,	respectively.

The	Agency	and	Non-agency	mortgage-backed	securities	issued	by	the securitization	SPEs	that	are	purchased	and	held	on	our	balance	sheet	are typically	purchased	in	the	secondary	market.	PNC	does	not	retain	any	credit	risk on	its	Agency	mortgage-backed	security	positions	as	FNMA,	FHLMC,	and	the U.S.	Government	(for	GNMA)	guarantee	losses	of	principal	and	interest. Substantially	all	of	the	Non-agency	mortgage-backed	securities	acquired	and held	on	our	balance	sheet	are	senior	tranches	in	the	securitization	structure.

We	also	have	involvement	with	certain	Agency	and	Non-agency	commercial securitization	SPEs	where	we	have	not	transferred	commercial	mortgage	loans. These	SPEs	were	sponsored	by	independent	third-parties	and	the	loans	held	by these	entities	were	purchased	exclusively	from	other	third-parties.	Generally,	our involvement	with	these	SPEs	is	as	servicer	with	servicing	activities	consistent with	those	described	above.

We	recognize	a	liability	for	our	loss	exposure	associated	with	contractual obligations	to	repurchase	previously	transferred	loans	due	to	breaches	of representations	and	warranties	and	also	for	loss	sharing	arrangements	(recourse obligations)	with	the	Agencies.	Other	than	providing	temporary	liquidity	under servicing	advances	and	our	loss	exposure	associated	with	our	repurchase	and recourse	obligations,	we	have	not	provided	nor	are	we	required	to	provide	any type	of	credit	support,	guarantees,	or	commitments	to	the	securitization	SPEs	or third-party	investors	in	these	transactions.	See	Note	22	Commitments	and Guarantees	for	further	discussion	of	our	repurchase	and	recourse	obligations.

The	following	table	provides	certain	financial	information	and	cash	flows	associated	with	PNC's	loan	sale	and	servicing	activities:

# Table	56:	Certain	Financial	Information	and	Cash	Flows	Associated	with	Loan	Sale	and	Servicing	Activities

| In	millions | Residential<br>Mortgages | Commercial<br>Mortgages	(a) | Home	Equity<br>Loans/Lines	(b) |
| :--- | :--- | :--- | :--- |
| FINANCIAL\tINFORMATION\t–\tDecember\t31,\t2014 |  |  |  |
| Servicing\tportfolio\t(c) | $108,010 | $186,032 | $3,833 |
| Carrying\tvalue\tof\tservicing\tassets\t(d) | 845 | 506 |  |
| Servicing\tadvances\t(e) | 501 | 299 | 31 |
| Repurchase\tand\trecourse\tobligations\t(f) | 107 | 35 | 29 |
| Carrying\tvalue\tof\tmortgage-backed\tsecurities\theld\t(g) | 3,365 | 1,269 |  |
| FINANCIAL\tINFORMATION\t–\tDecember\t31,\t2013 |  |  |  |
| Servicing\tportfolio\t(c) | $113,994 | $176,510 | $4,321(h) |
| Carrying\tvalue\tof\tservicing\tassets\t(d) | 1,087 | 549 |  |
| Servicing\tadvances\t(e) | 571 | 412 | 11 |
| Repurchase\tand\trecourse\tobligations\t(f) | 131 | 33 | 22 |
| Carrying\tvalue\tof\tmortgage-backed\tsecurities\theld\t(g) | 4,144 | 1,475 |  |

| In	millions | Residential<br>Mortgages | Commercial<br>Mortgages	(a) | Home	Equity<br>Loans/Lines	(b) |
| :--- | :--- | :--- | :--- |
| CASH\tFLOWS\t–\tYear\tended\tDecember\t31,\t2014 |  |  |  |
| Sales\tof\tloans\t(i) | $8,344 | $3,469 |  |
| Repurchases\tof\tpreviously\ttransferred\tloans\t(j) | 744 |  | $14 |
| Servicing\tfees\t(k) | 346 | 132 | 19 |
| Servicing\tadvances\trecovered/(funded),\tnet | 70 | 113 | (20) |
| Cash\tflows\ton\tmortgage-backed\tsecurities\theld\t(g) | 934 | 308 |  |
| CASH\tFLOWS\t–\tYear\tended\tDecember\t31,\t2013 |  |  |  |
| Sales\tof\tloans\t(i) | $14,650 | $2,754 |  |
| Repurchases\tof\tpreviously\ttransferred\tloans\t(j) | 1,191 |  | $9 |
| Servicing\tfees\t(k) | 362 | 176 | 21 |
| Servicing\tadvances\trecovered/(funded),\tnet | 11 | 93 | (6) |
| Cash\tflows\ton\tmortgage-backed\tsecurities\theld\t(g) | 1,456 | 411 |  |
| (a) |  |  |  |

(a) Represents	financial	information	and	cash	flows	associated	with	both	commercial	mortgage	loan	transfer	and	servicing	activities.

(b) These	activities	were	part	of	an	acquired	brokered	home	equity	lending	business	in	which	PNC	is	no	longer	engaged.	See	Note	22	Commitments	and	Guarantees	for	further	information.

(c) For	our	continuing	involvement	with	residential	mortgages,	this	amount	represents	the	outstanding	balance	of	loans	we	service,	including	loans	transferred	by	us	and	loans	originated	by	others	where	we	have purchased	the	associated	servicing	rights.	For	home	equity	loan/line	of	credit	transfers,	this	amount	represents	the	outstanding	balance	of	loans	transferred	and	serviced.	For	commercial	mortgages,	this	amount represents	our	overall	servicing	portfolio	in	which	loans	have	been	transferred	by	us	or	third	parties	to	VIEs.

(d) See	Note	7	Fair	Value	and	Note	8	Goodwill	and	Other	Intangible	Assets	for	further	information.

(e) Pursuant	to	certain	contractual	servicing	agreements,	represents	outstanding	balance	of	funds	advanced	(i)	to	investors	for	monthly	collections	of	borrower	principal	and	interest,	(ii)	for	borrower	draws	on	unused home	equity	lines	of	credit,	and	(iii)	for	collateral	protection	associated	with	the	underlying	mortgage	collateral.

(f) Represents	liability	for	our	loss	exposure	associated	with	loan	repurchases	for	breaches	of	representations	and	warranties	for	our	Residential	Mortgage	Banking	and	Non-Strategic	Assets	Portfolio	segments,	and our	commercial	mortgage	loss	share	arrangements	for	our	Corporate	&	Institutional	Banking	segment.	See	Note	22	Commitments	and	Guarantees	for	further	information. (Continued	on	following	page)

(g) Represents	securities	held	where	PNC	transferred	to	and/or	services	loans	for	a	securitization	SPE	and	we	hold	securities	issued	by	that	SPE.

(h) In	prior	periods,	the	unpaid	principal	balance	reflected	the	outstanding	balance	at	the	time	of	charge-off.	During	the	second	quarter	of	2014,	we	corrected	the	outstanding	principal	balance	to	reflect	the	unpaid principal	balance	as	of	the	reporting	date.	Amounts	reported	in	prior	periods	were	decreased	by	approximately	$581	million.

(i) Gains/losses	recognized	on	sales	of	loans	were	insignificant	for	the	periods	presented.

(j) Includes	government	insured	or	guaranteed	loans	eligible	for	repurchase	through	the	exercise	of	our	ROAP	option	and	loans	repurchased	due	to	breaches	of	origination	covenants	or	representations	and	warranties made	to	purchasers.

(k) Includes	contractually	specified	servicing	fees,	late	charges	and	ancillary	fees.

The	table	below	presents	information	about	the	principal	balances	of	transferred loans	that	we	service	and	are	not	recorded	on	our	balance	sheet.

# Table	57:	Principal	Balance,	Delinquent	Loans,	and	Net	Charge-offs	Related to	Serviced	Loans

|  | Residential | Commercial | Home	Equity |
| :--- | :--- | :--- | :--- |
| In\tmillions | Mortgages | Mortgages\t(a) | Loans/Lines\t(b) |
| December\t31,\t2014 |  |  |  |
| Total\tprincipal\tbalance | $79,108 | $60,873 | $3,833 |
| Delinquent\tloans\t(c) | 2,657 | 707 | 1,303 |
| December\t31,\t2013 |  |  |  |
| Total\tprincipal\tbalance | $85,758 | $62,872 | $4,321(d) |
| Delinquent\tloans\t(c) | 3,562 | 2,353 | 1,404(d) |

| In	millions | Residential<br>Mortgages | Commercial<br>Mortgages	(a) | Home	Equity<br>Loans/Lines	(b) |
| :--- | :--- | :--- | :--- |
| Year\tended |  |  |  |
| December\t31,\t2014 |  |  |  |
| Net\tcharge-offs\t(e) | $136 | $1,288 | $61 |
| Year\tended |  |  |  |
| December\t31,\t2013 |  |  |  |
| Net\tcharge-offs\t(e) | $213 | $916 | $119 |

(a) Represents	information	at	the	securitization	level	in	which	PNC	has	sold	loans	and	is	the	servicer for	the	securitization.

(c) Serviced	delinquent	loans	are	90	days	or	more	past	due	or	are	in	process	of	foreclosure.

(d) In	prior	periods,	the	unpaid	principal	balance	reflected	the	outstanding	balance	at	the	time	of	charge- off.	During	the	second	quarter	of	2014,	we	corrected	the	outstanding	principal	balance	to	reflect	the unpaid	principal	balance	as	of	the	reporting	date.	Amounts	reported	in	prior	periods	were	decreased by	approximately	$581	million.

(e) Net	charge-offs	for	Residential	mortgages	and	Home	equity	loans/lines	represent	credit	losses	less recoveries	distributed	and	as	reported	to	investors	during	the	period.	Net	charge-offs	for Commercial	mortgages	represent	credit	losses	less	recoveries	distributed	and	as	reported	by	the trustee	for	CMBS	securitizations.	Realized	losses	for	Agency	securitizations	are	not	reflected	as	we do	not	manage	the	underlying	real	estate	upon	foreclosure	and,	as	such,	do	not	have	access	to	loss information.

# Variable	Interest	Entities	(VIEs)

We	are	involved	with	various	entities	in	the	normal	course	of	business	that	are deemed	to	be	VIEs.	We	assess	VIEs	for	consolidation	based	upon	the	accounting policies	described	in	Note	1	Accounting	Policies.	The	following	provides	a summary	of	VIEs,	including	those	that	we	have	consolidated	and	those	in	which we	hold	variable	interests	but	have	not	consolidated	into	our	financial	statements as	of	December	31,	2014	and	December	31,	2013.	We	have	not	provided additional	financial	support	to	these	entities	which	we	are	not	contractually required	to	provide.

# Table	58:	Consolidated	VIEs	–	Carrying	Value	(a)	(b)

| banks |  | $6 | $6 |
| :--- | :--- | :--- | :--- |
| Interest-earning |  |  |  |
| deposits\twith |  |  |  |
| banks |  | 6 | 6 |
| Loans | $1,606 |  | \t 1,606 |
| Allowance\tfor\tloan\nand\tlease\tlosses | (50) |  | (50) |
| Equity\tinvestments |  | 492 | 492 |
| Other\tassets | 31 | 452 | 483 |
| Total\tassets | $1,587 | $956 | $2,543 |
| Liabilities |  |  |  |
| Other\tborrowed |  |  |  |
| funds | $166 | $181 | $347 |
| Accrued\texpenses |  | 70 | 70 |
| Other\tliabilities |  | 206 | 206 |
| Total\tliabilities | $166 | $457 | $623 |

| banks |  | $5 | $5 |
| :--- | :--- | :--- | :--- |
| Interest-earning |  |  |  |
| deposits\twith |  |  |  |
| banks |  | 7 | 7 |
| Loans | $1,736 |  | \t 1,736 |
| Allowance\tfor\tloan\nand\tlease\tlosses | (58) |  | (58) |
| Equity\tinvestments |  | 582 | 582 |
| Other\tassets | 25 | 566 | 591 |
| Total\tassets\nLiabilities | $1,703 | $1,160 | $2,863 |
| Other\tborrowed |  |  |  |
| funds | $184 | $230 | $414 |
| Accrued\texpenses |  | 83 | 83 |
| Other\tliabilities |  | 252 | 252 |
| Total\tliabilities | $184 | $565 | $749 |

(a) Amounts	represent	carrying	value	on	PNC's	Consolidated	Balance	Sheet.

(b) Difference	between	total	assets	and	total	liabilities	represents	the	equity	portion	of	the	VIE	or intercompany	assets	and	liabilities	which	are	eliminated	in	consolidation.

# Table	59:	Non-Consolidated	VIEs

| In	millions | Aggregate<br>Assets | Aggregate<br>Liabilities | PNC	Risk<br>of	Loss	(a) | Carrying	Value	of<br>Assets	Owned	by	PNC | Carrying	Value	of<br>Liabilities	Owned	by	PNC |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |  |  |
| Commercial\tMortgage-Backed\tSecuritizations\t(b) | $53,436 | $53,436 | $1,550 | $1,550\t(d) | $1\t(f) |
| Residential\tMortgage-Backed\tSecuritizations\t(b) | 62,236 | 62,236 | 3,385 | 3,385\t(d) | 4\t(f) |
| Tax\tCredit\tInvestments\tand\tOther\t(c) | 7,493 | 2,933 | 2,270 | 2,304\t(e) | 777\t(g) |
| Total | $123,165 | $118,605 | $7,205 | $7,239 | $782 |

| In	millions | Aggregate<br>Assets | Aggregate<br>Liabilities | PNC	Risk<br>of	Loss	(a) | Carrying	Value	of<br>Assets	Owned	by	PNC | Carrying	Value	of<br>Liabilities	Owned	by	PNC |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013 |  |  |  |  |  |
| Commercial\tMortgage-Backed\tSecuritizations\t(b) | $65,757 | $65,757 | $1,747 | $1,747\t(d) |  |
| Residential\tMortgage-Backed\tSecuritizations\t(b) | 37,962 | 37,962 | 4,171 | 4,171\t(d) | $5\t(f) |
| Tax\tCredit\tInvestments\tand\tOther\t(c)\t(h) | 7,086 | 2,622 | 2,030 | 2,055\t(e) | 826\t(g) |
| Total | $110,805 | $106,341 | $7,948 | $7,973 | $831 |

(a) This	represents	loans,	investments	and	other	assets	related	to	non-consolidated	VIEs,	net	of	collateral	(if	applicable).	Our	total	exposure	related	to	our	involvement	in	loan	sale	and	servicing	activities	is	disclosed in	Table	56.	Additionally,	we	also	invest	in	other	mortgage	and	asset-backed	securities	issued	by	third-party	VIEs	with	which	we	have	no	continuing	involvement.	Further	information	on	these	securities	is	included in	Note	6	Investment	Securities	and	values	disclosed	represent	our	maximum	exposure	to	loss	for	those	securities'	holdings.

(b) Amounts	reflect	involvement	with	securitization	SPEs	where	PNC	transferred	to	and/or	services	loans	for	an	SPE	and	we	hold	securities	issued	by	that	SPE.	Asset	amounts	equal	outstanding	liability	amounts	of the	SPEs	due	to	limited	availability	of	SPE	financial	information.

(c) Aggregate	assets	and	aggregate	liabilities	are	based	on	limited	availability	of	financial	information	associated	with	certain	acquired	partnerships	and	certain	LLCs	engaged	in	solar	power	generation	to	which	PNC provides	lease	financing.	The	aggregate	assets	and	aggregate	liabilities	of	LLCs	engaged	in	solar	power	generation	may	not	be	reflective	of	the	size	of	these	VIEs	due	to	differences	in	classification	of	leases	by these	entities.

(d) Included	in	Trading	securities,	Investment	securities,	Other	intangible	assets	and	Other	assets	on	our	Consolidated	Balance	Sheet.

(e) Included	in	Loans,	Equity	investments	and	Other	assets	on	our	Consolidated	Balance	Sheet.

(f) Included	in	Other	liabilities	on	our	Consolidated	Balance	Sheet.

(g) Included	in	Deposits	and	Other	liabilities	on	our	Consolidated	Balance	Sheet.

(h) PNC	Risk	of	Loss	and	Carrying	Value	of	Assets	Owned	by	PNC	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.

# Credit	Card	Securitization	Trust

We	were	the	sponsor	of	several	credit	card	securitizations	facilitated	through	a trust.	This	bankruptcy-remote	SPE	was	established	to	purchase	credit	card receivables	from	the	sponsor	and	to	issue	and	sell	asset-backed	securities	created by	it	to	independent	third-parties.	The	SPE	was	financed	primarily	through	the sale	of	these	asset-backed	securities.	These	transactions	were	originally structured	to	provide	liquidity	and	to	afford	favorable	capital	treatment.

Our	continuing	involvement	in	these	securitization	transactions	consisted primarily	of	holding	certain	retained	interests	and	acting	as	the	primary	servicer. We	consolidated	the	SPE	as	we	were	deemed	the	primary	beneficiary	of	the entity	based	upon	our	level	of	continuing	involvement.	Our	role	as	primary servicer	gave	us	the	power	to	direct	the	activities	of	the	SPE	that	most significantly	affect	its	economic	performance	and	our	holding	of	retained interests	gave	us	the	obligation	to	absorb	expected	losses,	or	the	ability	to	receive residual	returns	that	could	be	potentially	significant	to	the	SPE.	The	underlying assets	of	the	consolidated	SPE	were	restricted	only	for	payment	of	the	beneficial interests	issued	by	the	SPE.	Additionally,	creditors	of	the	SPE	have	no	direct recourse	to	PNC.

During	the	first	quarter	of	2012,	the	last	series	issued	by	the	SPE,	Series	2007-1, matured.	At	December	31,	2014,	the	SPE	continued	to	exist	and	we	consolidated the	entity	as	we

continued	to	be	the	primary	beneficiary	of	the	SPE	through	our	holding	of seller's	interest	and	our	role	as	the	primary	servicer.

# Tax	Credit	Investments	and	Other

We	make	certain	equity	investments	in	various	tax	credit	limited	partnerships	or limited	liability	companies	(LLCs).	The	purpose	of	these	investments	is	to achieve	a	satisfactory	return	on	capital	and	to	assist	us	in	achieving	goals associated	with	the	Community	Reinvestment	Act.

Also,	we	are	a	national	syndicator	of	affordable	housing	equity.	In	these syndication	transactions,	we	create	funds	in	which	our	subsidiaries	are	the general	partner	or	managing	member	and	sell	limited	partnership	or	non- managing	member	interests	to	third	parties.	In	some	cases	PNC	may	also purchase	a	limited	partnership	or	non-managing	member	interest	in	the	fund.	The purpose	of	this	business	is	to	generate	income	from	the	syndication	of	these funds,	generate	servicing	fees	by	managing	the	funds,	and	earn	tax	credits	to reduce	our	tax	liability.	General	partner	or	managing	member	activities	include identifying,	evaluating,	structuring,	negotiating,	and	closing	the	fund investments	in	operating	limited	partnerships	or	LLCs,	as	well	as	oversight	of the	ongoing	operations	of	the	fund	portfolio.

Typically,	the	general	partner	or	managing	member	will	be	the	party	that	has	the right	to	make	decisions	that	will	most

significantly	impact	the	economic	performance	of	the	entity.	However,	certain partnership	or	LLC	agreements	provide	the	limited	partner	or	non-managing member	the	ability	to	remove	the	general	partner	or	managing	member	without cause.	This	results	in	the	limited	partner	or	non-managing	member	being	the party	that	has	the	right	to	make	decisions	that	will	most	significantly	impact	the economic	performance	of	the	entity.	The	primary	sources	of	benefits	for	these investments	are	the	tax	credits	and	passive	losses	which	reduce	our	tax	liability. We	have	consolidated	investments	in	which	we	have	the	power	to	direct	the activities	that	most	significantly	impact	the	entity's	performance,	and	have	an obligation	to	absorb	expected	losses	or	receive	benefits	that	could	be	potentially significant.	The	assets	are	primarily	included	in	Equity	investments	and	Other assets	on	our	Consolidated	Balance	Sheet	with	the	liabilities	classified	in	Other borrowed	funds,	Accrued	expenses,	and	Other	liabilities	and	the	third-party investors'	interests	included	in	the	Equity	section	as	Noncontrolling	interests. Neither	creditors	nor	equity	investors	in	these	investments	have	any	recourse	to our	general	credit.	The	consolidated	assets	and	liabilities	of	these	investments	are provided	in	Table	58	and	are	reflected	in	the	"Other"	business	segment.

For	tax	credit	investments	in	which	we	do	not	have	the	right	to	make	decisions that	will	most	significantly	impact	the	economic	performance	of	the	entity,	we are	not	the	primary	beneficiary	and	thus	they	are	not	consolidated.	These investments	are	disclosed	in	Table	59.	The	table	also	reflects	our	maximum exposure	to	loss	exclusive	of	any	potential	tax	credit	recapture.	Our	maximum exposure	to	loss	is	equal	to	our	legally	binding	equity	commitments	adjusted	for recorded	impairment,	partnership	results,	or	amortization	for	qualifying	low income	housing	tax	credit	investments	when	applicable.	For	all	legally	binding unfunded	equity	commitments,	we	increase	our	recognized	investment	and recognize	a	liability.	As	of	December	31,	2014,	we	had	a	liability	of	$441 million	related	to	investments	in	qualified	affordable	housing	projects	which	is reflected	in	Other	liabilities	on	our	Consolidated	Balance	Sheet.

Table	59	also	includes	our	involvement	in	lease	financing	transactions	with LLCs	engaged	in	solar	power	generation	that	to	a	large	extent	provided	returns in	the	form	of	tax	credits.	The	outstanding	financings	and	operating	lease	assets are	reflected	as	Loans	and	Other	assets,	respectively,	on	our	Consolidated Balance	Sheet,	whereas	related	liabilities	are	reported	in	Deposits	and	Other liabilities.

# Residential	and	Commercial	Mortgage-Backed	Securitizations

In	connection	with	each	Agency	and	Non-agency	securitization	discussed	above, we	evaluate	each	SPE	utilized	in	these	transactions	for	consolidation.	In performing	these	assessments,	we	evaluate	our	level	of	continuing	involvement in	these	transactions	as	the	nature	of	our	involvement

ultimately	determines	whether	or	not	we	hold	a	variable	interest	and/or	are	the primary	beneficiary	of	the	SPE.	Factors	we	consider	in	our	consolidation assessment	include	the	significance	of	(i)	our	role	as	servicer,	(ii)	our	holdings	of mortgage-backed	securities	issued	by	the	securitization	SPE,	and	(iii)	the	rights of	third-party	variable	interest	holders.

The	first	step	in	our	assessment	is	to	determine	whether	we	hold	a	variable interest	in	the	securitization	SPE.	We	hold	variable	interests	in	Agency	and	Non- agency	securitization	SPEs	through	our	holding	of	mortgage-backed	securities issued	by	the	SPEs	and/or	our	recourse	obligations.	Each	SPE	in	which	we	hold	a variable	interest	is	evaluated	to	determine	whether	we	are	the	primary beneficiary	of	the	entity.	For	Agency	securitization	transactions,	our	contractual role	as	servicer	does	not	give	us	the	power	to	direct	the	activities	that	most significantly	affect	the	economic	performance	of	the	SPEs.	Thus,	we	are	not	the primary	beneficiary	of	these	entities.	For	Non-agency	securitization	transactions, we	would	be	the	primary	beneficiary	to	the	extent	our	servicing	activities	give	us the	power	to	direct	the	activities	that	most	significantly	affect	the	economic performance	of	the	SPE	and	we	hold	a	more	than	insignificant	variable	interest in	the	entity.

Details	about	the	Agency	and	Non-agency	securitization	SPEs	where	we	hold	a variable	interest	and	are	not	the	primary	beneficiary	are	included	in	Table	59. Our	maximum	exposure	to	loss	as	a	result	of	our	involvement	with	these	SPEs	is the	carrying	value	of	the	mortgage-backed	securities,	servicing	assets,	servicing advances,	and	our	liabilities	associated	with	our	recourse	obligations.	Creditors of	the	securitization	SPEs	have	no	recourse	to	PNC's	assets	or	general	credit.

# NOTE	3	ASSET	QUALITY

We	closely	monitor	economic	conditions	and	loan	performance	trends	to	manage and	evaluate	our	exposure	to	credit	risk.	Trends	in	delinquency	rates	may	be	a key	indicator,	among	other	considerations,	of	credit	risk	within	the	loan portfolios.	The	measurement	of	delinquency	status	is	based	on	the	contractual terms	of	each	loan.	Loans	that	are	30	days	or	more	past	due	in	terms	of	payment are	considered	delinquent.	Loan	delinquencies	exclude	loans	held	for	sale, purchased	impaired	loans,	nonperforming	loans	and	loans	accounted	for	under the	fair	value	option	which	are	on	nonaccrual	status,	but	include	government insured	or	guaranteed	loans	and	accruing	loans	accounted	for	under	the	fair	value option.

The	trends	in	nonperforming	assets	represent	another	key	indicator	of	the potential	for	future	credit	losses.	Nonperforming	assets	include	nonperforming loans,	OREO	and	foreclosed	assets.	Nonperforming	loans	are	those	loans

accounted	for	at	amortized	cost	whose	credit	quality	has	deteriorated	to	the	extent	that	full	collection	of	contractual	principal	and	interest	is	not	probable.	Interest	income is	not	recognized	on	these	loans.	Loans	accounted	for	under	the	fair	value	option	are	reported	as	performing	loans	as	these	loans	are	accounted	for	at	fair	value. However,	when	nonaccrual	criteria	is	met,	interest	income	is	not	recognized	on	these	loans.	Additionally,	certain	government	insured	or	guaranteed	loans	for	which	we expect	to	collect	substantially	all	principal	and	interest	are	not	reported	as	nonperforming	loans	and	continue	to	accrue	interest.	Purchased	impaired	loans	are	excluded from	nonperforming	loans	as	we	are	currently	accreting	interest	income	over	the	expected	life	of	the	loans.	See	Note	4	Purchased	Loans	for	further	information.

See	Note	1	Accounting	Policies	for	additional	delinquency,	nonperforming,	and	charge-off	information.

The	following	tables	display	the	delinquency	status	of	our	loans	and	our	nonperforming	assets	at	December	31,	2014	and	December	31,	2013,	respectively.

# Table	60:	Analysis	of	Loan	Portfolio	(a)

|  |  | Accruing |  |  |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  |  | Fair\tValue |  |  |
|  | Current\tor\tLess | 30-59 | 60-89 | 90\tDays | Total |  | Option | Purchased |  |
| Dollars\tin\tmillions | Than\t30\tDays\nPast\tDue | Days\nPast\tDue | Days\nPast\tDue | Or\tMore\nPast\tDue | Past\nDue\t(b) | Nonperforming\nLoans | Nonaccrual\nLoans\t(c) | Impaired\nLoans | Total\tLoans\n(d)\t(e) |
| December\t31,\t2014 |  |  |  |  |  |  |  |  |  |
| Commercial\tLending |  |  |  |  |  |  |  |  |  |
| Commercial | $96,922 | $73 | $24 | \t$37 | \t$134 | \t$290 |  | \t$74 | \t$97,420 |
| Commercial\treal\testate | 22,667 | 23 | 2 |  | 25 | 334 |  | 236 | 23,262 |
| Equipment\tlease\tfinancing | 7,672 | 11 | 1 |  | 12 | 2 |  |  | 7,686 |
| Total\tcommercial\tlending | 127,261 | 107 | 27 | 37 | 171 | 626 |  | 310 | \t\t 128,368 |
| Consumer\tLending |  |  |  |  |  |  |  |  |  |
| Home\tequity | 31,474 | 70 | 32 |  | 102 | 1,112 |  | 1,989 | 34,677 |
| Residential\treal\testate\t(f) | 9,900 | 163 | 68 | 742 | 973 | 706 | \t$269 | 2,559 | 14,407 |
| Credit\tcard | 4,528 | 28 | 20 | 33 | 81 | 3 |  |  | 4,612 |
| Other\tconsumer\t(g) | 22,071 | 214 | 112 | 293 | 619 | 63 |  |  | 22,753 |
| Total\tconsumer\tlending | 67,973 | 475 | 232 | \t\t 1,068 | \t\t 1,775 | 1,884 | 269 | 4,548 | 76,449 |
| Total | $195,234 | $582 | $259 | \t$1,105 | \t$1,946 | \t$2,510 | \t$269 | \t$4,858 | \t$204,817 |
| Percentage\tof\ttotal\tloans | 95.32% | .28% | .13% | .54% | 0.95% | 1.23% | .13% | 2.37% | 100.00% |
| December\t31,\t2013 |  |  |  |  |  |  |  |  |  |
| Commercial\tLending |  |  |  |  |  |  |  |  |  |
| Commercial | $87,621 | $81 | $20 | \t$42 | \t$143 | \t$457 |  | \t$157 | \t$88,378 |
| Commercial\treal\testate | 20,090 | 54 | 11 | 2 | 67 | 518 |  | 516 | 21,191 |
| Equipment\tlease\tfinancing | 7,538 | 31 | 2 |  | 33 | 5 |  |  | 7,576 |
| Total\tcommercial\tlending | 115,249 | 166 | 33 | 44 | 243 | 980 |  | 673 | \t\t 117,145 |
| Consumer\tLending |  |  |  |  |  |  |  |  |  |
| Home\tequity | 32,877 | 86 | 34 |  | 120 | 1,139 |  | 2,311 | 36,447 |
| Residential\treal\testate\t(f) | 9,311 | 217 | 87 | \t\t 1,060 | \t\t 1,364 | 904 | \t$365 | 3,121 | 15,065 |
| Credit\tcard | 4,339 | 29 | 19 | 34 | 82 | 4 |  |  | 4,425 |
| Other\tconsumer\t(g) | 21,788 | 216 | 112 | 353 | 681 | 61 |  | 1 | 22,531 |
| Total\tconsumer\tlending | 68,315 | 548 | 252 | \t\t 1,447 | \t\t 2,247 | 2,108 | 365 | 5,433 | 78,468 |
| Total | $183,564 | $714 | $285 | \t$1,491 | \t$2,490 | \t$3,088 | \t$365 | \t$6,106 | \t$195,613 |
| Percentage\tof\ttotal\tloans | 93.83% | .37% | .15% | .76% | 1.28% | 1.58% | .19% | 3.12% | 100.00% |
| (a) |  |  |  |  |  |  |  |  |  |

(a) Amounts	in	table	represent	recorded	investment	and	exclude	loans	held	for	sale.

(b) Past	due	loan	amounts	exclude	purchased	impaired	loans,	even	if	contractually	past	due	(or	if	we	do	not	expect	to	receive	payment	in	full	based	on	the	original	contractual	terms),	as	we	are	currently	accreting interest	income	over	the	expected	life	of	the	loans.

(c) Consumer	loans	accounted	for	under	the	fair	value	option	for	which	we	do	not	expect	to	collect	substantially	all	principal	and	interest	are	subject	to	nonaccrual	accounting	and	classification	upon	meeting	any	of our	nonaccrual	policies.	Given	that	these	loans	are	not	accounted	for	at	amortized	cost,	these	loans	have	been	excluded	from	the	nonperforming	loan	population.

(d) Net	of	unearned	income,	net	deferred	loan	fees,	unamortized	discounts	and	premiums,	and	purchase	discounts	and	premiums	totaling	$1.7	billion	and	$2.1	billion	at	December	31,	2014	and	December	31,	2013, respectively.

(e) Future	accretable	yield	related	to	purchased	impaired	loans	is	not	included	in	the	analysis	of	loan	portfolio.

(f) Past	due	loan	amounts	at	December	31,	2014	include	government	insured	or	guaranteed	Residential	real	estate	mortgages	totaling	$68	million	for	30	to	59	days	past	due,	$43	million	for	60	to	89	days	past	due	and $719	million	for	90	days	or	more	past	due.	Past	due	loan	amounts	at	December	31,	2013	include	government	insured	or	guaranteed	Residential	real	estate	mortgages	totaling	$105	million	for	30	to	59	days	past due,	$57	million	for	60	to	89	days	past	due	and	$1,025	million	for	90	days	or	more	past	due.

(g) Past	due	loan	amounts	at	December	31,	2014	include	government	insured	or	guaranteed	Other	consumer	loans	totaling	$152	million	for	30	to	59	days	past	due,	$93	million	for	60	to	89	days	past	due	and	$277 million	for	90	days	or	more	past	due.	Past	due	loan	amounts	at	December	31,	2013	include	government	insured	or	guaranteed	Other	consumer	loans	totaling	$154	million	for	30	to	59	days	past	due,	$94	million	for 60	to	89	days	past	due	and	$339	million	for	90	days	or	more	past	due.

In	the	normal	course	of	business,	we	originate	or	purchase	loan	products	with	contractual	characteristics	that,	when	concentrated,	may	increase	our	exposure	as	a	holder of	those	loan	products.	Possible	product	features	that	may	create	a	concentration	of	credit	risk	would	include	a	high	original	or	updated	LTV	ratio,	terms	that	may expose	the	borrower	to	future	increases	in	repayments	above	increases	in	market	interest	rates,	and	interest-only	loans,	among	others.	We	also	originate	home	equity	and residential	real	estate	loans	that	are	concentrated	in	our	primary	geographic	markets.

We	originate	interest-only	loans	to	commercial	borrowers.	Such	credit	arrangements	are	usually	designed	to	match	borrower	cash	flow	expectations	(e.g.,	working capital	lines,	revolvers).	These	products	are	standard	in	the	financial	services	industry	and	product	features	are	considered	during	the	underwriting	process	to	mitigate	the increased	risk	that	the	interest-only	feature	may	result	in	borrowers	not	being	able	to	make	interest	and	principal	payments	when	due.	We	do	not	believe	that	these product	features	create	a	concentration	of	credit	risk.

At	December	31,	2014,	we	pledged	$19.2	billion	of	commercial	loans	to	the	Federal	Reserve	Bank	(FRB)	and	$52.8	billion	of	residential	real	estate	and	other	loans	to the	Federal	Home	Loan	Bank	(FHLB)	as	collateral	for	the	contingent	ability	to	borrow,	if	necessary.	The	comparable	amounts	at	December	31,	2013	were	$23.4	billion and	$40.4	billion,	respectively.

# Table	61:	Nonperforming	Assets

| Dollars	in	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Nonperforming\tloans |  |  |
| Commercial\tlending |  |  |
| Commercial | $290 | $457 |
| Commercial\treal\testate | 334 | 518 |
| Equipment\tlease\tfinancing | 2 | 5 |
| Total\tcommercial\tlending | 626 | 980 |
| Consumer\tlending\t(a) |  |  |
| Home\tequity | 1,112 | 1,139 |
| Residential\treal\testate | 706 | 904 |
| Credit\tcard | 3 | 4 |
| Other\tconsumer | 63 | 61 |
| Total\tconsumer\tlending | 1,884 | 2,108 |
| Total\tnonperforming\tloans\t(b) | 2,510 | 3,088 |
| OREO\tand\tforeclosed\tassets |  |  |
| Other\treal\testate\towned\t(OREO)\t(c) | 351 | 360 |
| Foreclosed\tand\tother\tassets | 19 | 9 |
| Total\tOREO\tand\tforeclosed\tassets | 370 | 369 |
| Total\tnonperforming\tassets | $2,880 | $3,457 |
| Nonperforming\tloans\tto\ttotal\tloans | 1.23% | 1.58% |
| Nonperforming\tassets\tto\ttotal\tloans,\tOREO\tand\tforeclosed\tassets | 1.40 | 1.76 |
| Nonperforming\tassets\tto\ttotal\tassets | .83 | 1.08 |
| Interest\ton\tnonperforming\tloans |  |  |
| Computed\ton\toriginal\tterms | 125 | 163 |
| Recognized\tprior\tto\tnonperforming\tstatus | 25 | 30 |
| (a) |  |  |

(a) Excludes	most	consumer	loans	and	lines	of	credit,	not	secured	by	residential	real	estate,	which	are	charged	off	after	120	to	180	days	past	due	and	are	not	placed	on	nonperforming	status.

(b) Nonperforming	loans	exclude	certain	government	insured	or	guaranteed	loans,	loans	held	for	sale,	loans	accounted	for	under	the	fair	value	option	and	purchased	impaired	loans.

(c) OREO	excludes	$194	million	and	$245	million	at	December	31,	2014	and	December	31,	2013,	respectively,	related	to	residential	real	estate	that	was	acquired	by	us	upon	foreclosure	of	serviced	loans	because	they are	insured	by	the	Federal	Housing	Administration	(FHA)	or	guaranteed	by	the	Department	of	Veterans	Affairs	(VA)	or	guaranteed	by	the	Department	of	Housing	and	Urban	Development	(HUD).

Nonperforming	loans	also	include	certain	loans	whose	terms	have	been restructured	in	a	manner	that	grants	a	concession	to	a	borrower	experiencing financial	difficulties.	In	accordance	with	applicable	accounting	guidance,	these loans	are	considered	TDRs.	See	Note	1	Accounting	Policies	and	the	TDR section	of	this	Note	3	for	additional	information.	For	the	twelve	months	ended December	31,	2014,	$1.2	billion	of	Consumer	loans	held	for	sale,	loans accounted	for	under	the	fair	value	option,	pooled	purchased	impaired	loans,	as well	as	certain	government	insured	or	guaranteed	loans	which	were	evaluated	for TDR	consideration,	are	not	classified	as	TDRs.	The	comparable	amount	for	the twelve	months	ended	December	31,	2013	was	$2.3	billion.

Total	nonperforming	loans	in	the	nonperforming	assets	table	above	include TDRs	of	$1.4	billion	at	December	31,	2014	and	$1.5	billion	at	December	31, 2013.	TDRs	that	are	performing,	including	all	credit	card	TDR	loans,	totaled $1.2	billion	at	December	31,	2014	and	December	31,	2013,	respectively,	and	are excluded	from	nonperforming	loans.	These	performing	TDR	loans,	excluding credit	cards	which	are	not	placed	on	nonaccrual	status	as	permitted	by	regulatory guidance,	have	demonstrated	a	period	of	at	least	six	months	of	consecutive performance	under	the	restructured	terms.	Loans	where	borrowers	have	been discharged	from	personal	liability	through	Chapter	7	bankruptcy	and	have	not formally	reaffirmed	their	loan	obligations	to	PNC	and	loans	to	borrowers	not currently	obligated	to	make	both	principal	and	interest	payments	under	the restructured	terms	are	not	returned	to	accrual	status.

# Additional	Asset	Quality	Indicators

We	have	two	overall	portfolio	segments	–	Commercial	Lending	and	Consumer Lending.	Each	of	these	two	segments	is	comprised	of	multiple	loan	classes. Classes	are	characterized	by	similarities	in	initial	measurement,	risk	attributes and	the	manner	in	which	we	monitor	and	assess	credit	risk.	The	Commercial Lending	segment	is	comprised	of	the	commercial,	commercial	real	estate, equipment	lease	financing,	and	commercial	purchased	impaired	loan	classes. The	Consumer	Lending	segment	is	comprised	of	the	home	equity,	residential real	estate,	credit	card,	other	consumer,	and	consumer	purchased	impaired	loan classes.	Asset	quality	indicators	for	each	of	these	loan	classes	are	discussed	in more	detail	below.

# Commercial	Lending	Asset	Classes

# Commercial	Loan	Class

For	commercial	loans,	we	monitor	the	performance	of	the	borrower	in	a disciplined	and	regular	manner	based	upon	the	level	of	credit	risk	inherent	in	the loan.	To	evaluate	the	level	of	credit	risk,	we	assign	an	internal	risk	rating reflecting	the	borrower's	PD	and	LGD.	This	two-dimensional	credit	risk	rating methodology	provides	granularity	in	the	risk	monitoring	process	on	an	ongoing basis.	These	ratings	are	reviewed	and	updated	on	a	risk-adjusted	basis,	generally at	least	once	per	year.	Additionally,	no	less	frequently	than	on	an	annual	basis, we	review	PD	rates	related	to	each	rating	grade	based	upon	internal	historical data.	These	rates	are	updated	as	needed	and	augmented	by	market	data	as deemed	necessary.	For	small	balance	homogenous	pools	of	commercial	loans, mortgages	and	leases,	we	apply	statistical	modeling	to	assist	in	determining	the probability	of	default	within	these	pools.	Further,	on	a	periodic	basis,	we	update our	LGD	estimates	associated	with	each	rating	grade	based	upon	historical	data. The	combination	of	the	PD	and	LGD	ratings	assigned	to	a	commercial	loan, capturing	both	the	combination	of	expectations	of	default	and	loss	severity	in event	of	default,	reflects	the	relative	estimated	likelihood	of	loss	for	that	loan	at the	reporting	date.	In	general,	loans	with	better	PD	and	LGD	tend	to	have	a lower	likelihood	of	loss	compared	to	loans	with	worse	PD	and	LGD.	The	loss amount	also	considers	exposure	at	date	of	default,	which	we	also	periodically update	based	upon	historical	data.

Based	upon	the	amount	of	the	lending	arrangement	and	our	risk	rating assessment,	we	follow	a	formal	schedule	of	written	periodic	review.	Quarterly, we	conduct	formal	reviews	of	a	market's	or	business	unit's	entire	loan	portfolio, focusing	on	those	loans	which	we	perceive	to	be	of	higher	risk,	based	upon	PDs and	LGDs,	or	loans	for	which	credit	quality	is	weakening.	If	circumstances warrant,	it	is	our	practice	to	review	any	customer	obligation	and	its	level	of credit	risk	more	frequently.	We	attempt	to	proactively	manage	our	loans	by using	various	procedures	that	are	customized	to	the	risk	of	a	given	loan, including	ongoing	outreach,	contact,	and	assessment	of	obligor	financial conditions,	collateral	inspection	and	appraisal.

# Commercial	Real	Estate	Loan	Class

We	manage	credit	risk	associated	with	our	commercial	real	estate	projects	and commercial	mortgage	activities	similar	to	commercial	loans	by	analyzing	PD and	LGD.	Additionally,	risks	connected	with	commercial	real	estate	projects	and commercial	mortgage	activities	tend	to	be	correlated	to	the	loan	structure	and collateral	location,	project	progress	and	business	environment.	As	a	result,	these attributes	are	also	monitored	and	utilized	in	assessing	credit	risk.

As	with	the	commercial	class,	a	formal	schedule	of	periodic	review	is	also performed	to	assess	market/geographic	risk	and	business	unit/industry	risk. Often	as	a	result	of	these	overviews,	more	in-depth	reviews	and	increased scrutiny	are	placed	on	areas	of	higher	risk,	including	adverse	changes	in	risk ratings,	deteriorating	operating	trends,	and/or	areas	that	concern	management. These	reviews	are	designed	to	assess	risk	and	take	actions	to	mitigate	our exposure	to	such	risks.

# Equipment	Lease	Financing	Loan	Class

We	manage	credit	risk	associated	with	our	equipment	lease	financing	loan	class similar	to	commercial	loans	by	analyzing	PD	and	LGD.

Based	upon	the	dollar	amount	of	the	lease	and	of	the	level	of	credit	risk,	we follow	a	formal	schedule	of	periodic	review.	Generally,	this	occurs	quarterly, although	we	have	established	practices	to	review	such	credit	risk	more frequently	if	circumstances	warrant.	Our	review	process	entails	analysis	of	the following	factors:	equipment	value/residual	value,	exposure	levels,	jurisdiction risk,	industry	risk,	guarantor	requirements,	and	regulatory	compliance.

# Commercial	Purchased	Impaired	Loan	Class

Estimates	of	the	expected	cash	flows	primarily	determine	the	valuation	of commercial	purchased	impaired	loans.	Commercial	cash	flow	estimates	are influenced	by	a	number	of	credit	related	items,	which	include	but	are	not	limited to:	estimated	collateral	value,	receipt	of	additional	collateral,	secondary	trading prices,	circumstances	of	possible	and/or	ongoing	liquidation,	capital	availability, business	operations	and	payment	patterns.

We	attempt	to	proactively	manage	these	factors	by	using	various	procedures	that are	customized	to	the	risk	of	a	given	loan.	These	procedures	include	a	review	by our	Special	Asset	Committee	(SAC),	ongoing	outreach,	contact,	and	assessment of	obligor	financial	conditions,	collateral	inspection	and	appraisal.

See	Note	4	Purchased	Loans	for	additional	information.

# Table	62:	Commercial	Lending	Asset	Quality	Indicators	(a)(b)

| In	millions | Pass	Rated | Mention	(c) | Substandard	(d) | Doubtful	(e) | Total	Loans |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |  |  |
| Commercial | $92,884 | $1,984 | $2,424 | $55 | $97,347 |
| Commercial\treal\testate | 22,066 | 285 | 639 | 35 | 23,025 |
| Equipment\tlease\tfinancing | 7,518 | 73 | 93 | 2 | 7,686 |
| Purchased\timpaired\tloans |  | 4 | 280 | 26 | 310 |
| Total\tcommercial\tlending | $122,468 | $2,346 | $3,436 | $118 | $128,368 |
| December\t31,\t2013 |  |  |  |  |  |
| Commercial | $83,903 | $1,894 | $2,352 | $72 | $88,221 |
| Commercial\treal\testate | 19,175 | 301 | 1,113 | 86 | 20,675 |
| Equipment\tlease\tfinancing | 7,403 | 77 | 93 | 3 | 7,576 |
| Purchased\timpaired\tloans | 10 | 31 | 469 | 163 | 673 |
| Total\tcommercial\tlending | $110,491 | $2,303 | $4,027 | $324 | $117,145 |
| (a) |  |  |  |  |  |

(a) Based	upon	PDs	and	LGDs.	We	apply	a	split	rating	classification	to	certain	loans	meeting	threshold	criteria.	By	assigning	a	split	classification,	a	loan's	exposure	amount	may	be	split	into	more	than	one classification	category	in	the	above	table.

(b) Loans	are	included	above	based	on	the	Regulatory	Classification	definitions	of	"Pass",	"Special	Mention",	"Substandard"	and	"Doubtful".

(c) Special	Mention	rated	loans	have	a	potential	weakness	that	deserves	management's	close	attention.	If	left	uncorrected,	these	potential	weaknesses	may	result	in	deterioration	of	repayment	prospects	at	some	future date.	These	loans	do	not	expose	us	to	sufficient	risk	to	warrant	a	more	adverse	classification	at	this	time.

(d) Substandard	rated	loans	have	a	well-defined	weakness	or	weaknesses	that	jeopardize	the	collection	or	liquidation	of	debt.	They	are	characterized	by	the	distinct	possibility	that	we	will	sustain	some	loss	if	the deficiencies	are	not	corrected.

(e) Doubtful	rated	loans	possess	all	the	inherent	weaknesses	of	a	Substandard	loan	with	the	additional	characteristics	that	the	weakness	makes	collection	or	liquidation	in	full	improbable	due	to	existing	facts, conditions,	and	values.

# Consumer	Lending	Asset	Classes

# Home	Equity	and	Residential	Real	Estate	Loan	Classes

We	use	several	credit	quality	indicators,	including	delinquency	information, nonperforming	loan	information,	updated	credit	scores,	originated	and	updated LTV	ratios,	and	geography,	to	monitor	and	manage	credit	risk	within	the	home equity	and	residential	real	estate	loan	classes.	We	evaluate	mortgage	loan performance	by	source	originators	and	loan	servicers.	A	summary	of	asset quality	indicators	follows:

Delinquency/Delinquency	Rates:	We	monitor	trending	of delinquency/delinquency	rates	for	home	equity	and	residential	real	estate	loans. See	the	Asset	Quality	section	of	this	Note	3	for	additional	information.

Nonperforming	Loans:	We	monitor	trending	of	nonperforming	loans	for	home equity	and	residential	real	estate	loans.	See	the	Asset	Quality	section	of	this	Note 3	for	additional	information.

Credit	Scores:	We	use	a	national	third-party	provider	to	update	FICO	credit scores	for	home	equity	loans	and	lines	of	credit	and	residential	real	estate	loans at	least	quarterly.	The	updated	scores	are	incorporated	into	a	series	of	credit management	reports,	which	are	utilized	to	monitor	the	risk	in	the	loan	classes.

LTV	(inclusive	of	combined	loan-to-value	(CLTV)	for	first	and	subordinate	lien positions):	At	least	annually,	we	update	the	property	values	of	real	estate collateral	and	calculate	an	updated	LTV	ratio.	For	open-end	credit	lines	secured by	real	estate	in	regions	experiencing	significant	declines	in	property	values, more	frequent	valuations	may	occur.	We	examine	LTV	migration	and	stratify LTV	into	categories	to	monitor	the	risk	in	the	loan	classes.

Historically,	we	used,	and	we	continue	to	use,	a	combination	of	original	LTV and	updated	LTV	for	internal	risk	management	and	reporting	purposes	(e.g.,	line management,	loss	mitigation	strategies).	In	addition	to	the	fact	that	estimated property	values	by	their	nature	are	estimates,	given	certain	data	limitations	it	is important	to	note	that	updated	LTVs	may	be	based	upon	management's assumptions	(e.g.,	if	an	updated	LTV	is	not	provided	by	the	third-party	service provider,	home	price	index	(HPI)	changes	will	be	incorporated	in	arriving	at management's	estimate	of	updated	LTV).

Geography:	Geographic	concentrations	are	monitored	to	evaluate	and	manage exposures.	Loan	purchase	programs	are	sensitive	to,	and	focused	within,	certain regions	to	manage	geographic	exposures	and	associated	risks.

A	combination	of	updated	FICO	scores,	originated	and	updated	LTV	ratios	and geographic	location	assigned	to	home	equity	loans	and	lines	of	credit	and residential	real	estate	loans	is	used	to	monitor	the	risk	in	the	loan	classes.	Loans with	higher	FICO	scores	and	lower	LTVs	tend	to	have	a	lower	level	of	risk. Conversely,	loans	with	lower	FICO	scores,	higher	LTVs,	and	in	certain geographic	locations	tend	to	have	a	higher	level	of	risk.

# Consumer	Purchased	Impaired	Loan	Class

Estimates	of	the	expected	cash	flows	primarily	determine	the	valuation	of consumer	purchased	impaired	loans.	Consumer	cash	flow	estimates	are influenced	by	a	number	of	credit	related	items,	which	include,	but	are	not limited	to:	estimated	real	estate	values,	payment	patterns,	updated	FICO	scores, the	current	economic	environment,	updated	LTV	ratios	and	the	date	of origination.	These	key	factors	are	monitored	to	help	ensure	that	concentrations of	risk	are	managed	and	cash	flows	are	maximized.

# Table	63:	Home	Equity	and	Residential	Real	Estate	Balances

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Home\tequity\tand\tresidential\treal\testate\tloans\t–\texcluding\tpurchased\timpaired\tloans\t(a) | $43,348 | $44,376 |
| Home\tequity\tand\tresidential\treal\testate\tloans\t–\tpurchased\timpaired\tloans\t(b) | 4,541 | 5,548 |
| Government\tinsured\tor\tguaranteed\tresidential\treal\testate\tmortgages\t(a) | 1,188 | 1,704 |
| Purchase\taccounting\tadjustments\t–\tpurchased\timpaired\tloans | 7 | (116) |
| Total\thome\tequity\tand\tresidential\treal\testate\tloans\t(a) | $49,084 | $51,512 |
| (a)\nRepresents\trecorded\tinvestment. |  |  |

(a) Represents	recorded	investment.

(b) Represents	outstanding	balance.

# Table	64:	Home	Equity	and	Residential	Real	Estate	Asset	Quality	Indicators	–	Excluding	Purchased	Impaired	Loans	(a)	(b)

|  | Home	Equity | Home	Equity | Residential	Real	Estate |  |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014\t–\tin\tmillions | 1st\tLiens | 2nd\tLiens |  | Total |
| Current\testimated\tLTV\tratios\t(c) |  |  |  |  |
| Greater\tthan\tor\tequal\tto\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | $333 | $1,399 | $360 | $2,092 |
| Less\tthan\tor\tequal\tto\t660\t(d)\t(e) | 57 | 273 | 92 | 422 |
| Missing\tFICO | 1 | 9 | 8 | 18 |
| Greater\tthan\tor\tequal\tto\t100%\tto\tless\tthan\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 839 | 2,190 | 772 | 3,801 |
| Less\tthan\tor\tequal\tto\t660\t(d)\t(e) | 118 | 383 | 153 | 654 |
| Missing\tFICO | 1 | 5 | 12 | 18 |
| Greater\tthan\tor\tequal\tto\t90%\tto\tless\tthan\t100%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 891 | 1,703 | 755 | 3,349 |
| Less\tthan\tor\tequal\tto\t660 | 103 | 271 | 118 | 492 |
| Missing\tFICO | 2 | 3 | 5 | 10 |
| Less\tthan\t90%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | \t 13,878 | 7,874 | 7,703 | \t 29,455 |
| Less\tthan\tor\tequal\tto\t660 | 1,319 | 995 | 573 | 2,887 |
| Missing\tFICO | 27 | 14 | 109 | 150 |
| Total\thome\tequity\tand\tresidential\treal\testate\tloans | $17,569 | $15,119 | $10,660 | $43,348 |

|  | Home	Equity | Home	Equity | Residential	Real	Estate |  |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013\t–\tin\tmillions | 1st\tLiens | 2nd\tLiens |  | Total |
| Current\testimated\tLTV\tratios\t(c) |  |  |  |  |
| Greater\tthan\tor\tequal\tto\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | $438 | $1,914 | $563 | $2,915 |
| Less\tthan\tor\tequal\tto\t660\t(d)\t(e) | 74 | 399 | 185 | 658 |
| Missing\tFICO | 1 | 11 | 20 | 32 |
| Greater\tthan\tor\tequal\tto\t100%\tto\tless\tthan\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 987 | 2,794 | 1,005 | 4,786 |
| Less\tthan\tor\tequal\tto\t660\t(d)\t(e) | 150 | 501 | 210 | 861 |
| Missing\tFICO | 2 | 5 | 32 | 39 |
| Greater\tthan\tor\tequal\tto\t90%\tto\tless\tthan\t100%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 1,047 | 1,916 | 844 | 3,807 |
| Less\tthan\tor\tequal\tto\t660 | 134 | 298 | 131 | 563 |
| Missing\tFICO | 2 | 3 | 22 | 27 |
| Less\tthan\t90%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | \t 13,445 | 7,615 | 6,309 | \t 27,369 |
| Less\tthan\tor\tequal\tto\t660 | 1,349 | 1,009 | 662 | 3,020 |
| Missing\tFICO | 25 | 17 | 256 | 298 |
| Missing\tLTV\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 |  |  | 1 | 1 |
| Total\thome\tequity\tand\tresidential\treal\testate\tloans | $17,654 | $16,482 | $10,240 | $44,376 |

(a) Excludes	purchased	impaired	loans	of	approximately	$4.5	billion	and	$5.4	billion	in	recorded	investment,	certain	government	insured	or	guaranteed	residential	real	estate	mortgages	of	approximately	$1.2	billion and	$1.7	billion,	and	loans	held	for	sale	at	December	31,	2014	and	December	31,	2013,	respectively.	See	the	Home	Equity	and	Residential	Real	Estate	Asset	Quality	Indicators	–	Purchased	Impaired	Loans	table below	for	additional	information	on	purchased	impaired	loans.

(b) Amounts	shown	represent	recorded	investment.

(c) Based	upon	updated	LTV	(inclusive	of	combined	loan-to-value	(CLTV)	for	first	and	subordinate	lien	positions).	Updated	LTV	is	estimated	using	modeled	property	values.	These	ratios	are	updated	at	least	semi- annually.	The	related	estimates	and	inputs	are	based	upon	an	approach	that	uses	a	combination	of	third-party	automated	valuation	models	(AVMs),	broker	price	opinions	(BPOs),	HPI	indices,	property	location, internal	and	external	balance	information,	origination	data	and	management	assumptions.	In	cases	where	we	are	in	an	originated	second	lien	position,	we	generally	utilize	origination	balances	provided	by	a	third- party	which	do	not	include	an	amortization	assumption	when	calculating	updated	LTV.

Accordingly,	the	results	of	these	calculations	do	not	represent	actual	appraised	loan	level	collateral	or	updated	LTV	based	upon	a	current	first	lien	balance,	and	as	such,	are	necessarily	imprecise	and	subject	to change	as	we	enhance	our	methodology.

(d) Higher	risk	loans	are	defined	as	loans	with	both	an	updated	FICO	score	of	less	than	or	equal	to	660	and	an	updated	LTV	greater	than	or	equal	to	100%.

(e) The	following	states	had	the	highest	percentage	of	higher	risk	loans	at	December	31,	2014:	New	Jersey	14%,	Pennsylvania	12%,	Illinois	12%,	Ohio	12%,	Florida	8%,	Maryland	6%,	Michigan	5%	and	North Carolina	4%.	The	remainder	of	the	states	had	lower	than	4%	of	the	higher	risk	loans	individually,	and	collectively	they	represent	approximately	28%	of	the	higher	risk	loans.	The	following	states	had	the	highest percentage	of	higher	risk	loans	at	December	31,	2013:	New	Jersey	13%,	Illinois	12%,	Pennsylvania	12%,	Ohio	11%,	Florida	9%,	Maryland	5%,	Michigan	5%,	and	California	4%.	The	remainder	of	the	states	had lower	than	4%	of	the	high	risk	loans	individually,	and	collectively	they	represent	approximately	29%	of	the	higher	risk	loans.

# Table	65:	Home	Equity	and	Residential	Real	Estate	Asset	Quality	Indicators	–	Purchased	Impaired	Loans	(a)

|  | Home	Equity	(b)	(c) | Home	Equity	(b)	(c) | Residential	Real	Estate	(b)	(c) |  |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014\t–\tin\tmillions | 1st\tLiens | 2nd\tLiens |  | Total |
| Current\testimated\tLTV\tratios\t(d) |  |  |  |  |
| Greater\tthan\tor\tequal\tto\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | $8 | $243 | $276 | $527 |
| Less\tthan\tor\tequal\tto\t660 | 9 | 125 | 144 | 278 |
| Missing\tFICO |  | 8 | 6 | 14 |
| Greater\tthan\tor\tequal\tto\t100%\tto\tless\tthan\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 15 | 426 | 272 | 713 |
| Less\tthan\tor\tequal\tto\t660 | 12 | 194 | 200 | 406 |
| Missing\tFICO |  | 11 | 5 | 16 |
| Greater\tthan\tor\tequal\tto\t90%\tto\tless\tthan\t100%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 12 | 207 | 186 | 405 |
| Less\tthan\tor\tequal\tto\t660 | 9 | 93 | 123 | 225 |
| Missing\tFICO |  | 5 | 3 | 8 |
| Less\tthan\t90%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 102 | 339 | 626 | \t 1,067 |
| Less\tthan\tor\tequal\tto\t660 | 109 | 200 | 515 | 824 |
| Missing\tFICO | 1 | 12 | 15 | 28 |
| Missing\tLTV\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 1 |  | 14 | 15 |
| Less\tthan\tor\tequal\tto\t660 |  |  |  |  |
|  | 4 |  | 10 | 14 |
| Missing\tFICO |  |  | 1 | 1 |
| Total\thome\tequity\tand\tresidential\treal\testate\tloans | $282 | $1,863 | $2,396 | $4,541 |

|  | Home	Equity	(b)	(c) | Home	Equity	(b)	(c) | Residential	Real	Estate	(b)	(c) |  |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013\t–\tin\tmillions | 1st\tLiens | 2nd\tLiens |  | Total |
| Current\testimated\tLTV\tratios\t(d) |  |  |  |  |
| Greater\tthan\tor\tequal\tto\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | $13 | $435 | $361 | $809 |
| Less\tthan\tor\tequal\tto\t660 | 15 | 215 | 296 | 526 |
| Missing\tFICO |  | 12 | 24 | 36 |
| Greater\tthan\tor\tequal\tto\t100%\tto\tless\tthan\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 21 | 516 | 373 | 910 |
| Less\tthan\tor\tequal\tto\t660 | 15 | 239 | 281 | 535 |
| Missing\tFICO |  | 14 | 14 | 28 |
| Greater\tthan\tor\tequal\tto\t90%\tto\tless\tthan\t100%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 15 | 202 | 197 | 414 |
| Less\tthan\tor\tequal\tto\t660 | 12 | 101 | 163 | 276 |
| Missing\tFICO |  | 7 | 6 | 13 |
| Less\tthan\t90%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 93 | 261 | 646 | \t 1,000 |
| Less\tthan\tor\tequal\tto\t660 | 126 | 198 | 590 | 914 |
| Missing\tFICO | 1 | 11 | 47 | 59 |
| Missing\tLTV\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 1 |  | 11 | 12 |
| Less\tthan\tor\tequal\tto\t660 |  |  | 13 | 13 |
| Missing\tFICO |  |  | 3 | 3 |
| Total\thome\tequity\tand\tresidential\treal\testate\tloans | $312 | $2,211 | $3,025 | $5,548 |

(a) Amounts	shown	represent	outstanding	balance.	See	Note	4	Purchased	Loans	for	additional	information.

(b) For	the	estimate	of	cash	flows	utilized	in	our	purchased	impaired	loan	accounting,	other	assumptions	and	estimates	are	made,	including	amortization	of	first	lien	balances,	pre-payment	rates,	etc.,	which	are	not reflected	in	this	table.

(c) The	following	states	had	the	highest	percentage	of	purchased	impaired	loans	at	December	31,	2014:	California	17%,	Florida	15%,	Illinois	11%,	Ohio	8%,	North	Carolina	7%,	and	Michigan	5%.	The	remainder	of the	states	had	lower	than	a	4%	concentration	of	purchased	impaired	loans	individually,	and	collectively	they	represent	approximately	37%	of	the	purchased	impaired	portfolio.	The	following	states	had	the	highest percentage	of	purchased	impaired	loans	at	December	31,	2013:	California	17%,	Florida	16%,	Illinois	11%,	Ohio	8%,	North	Carolina	8%	and	Michigan	5%.	The	remainder	of	the	states	had	lower	than	a	4% concentration	of	purchased	impaired	loans	individually,	and	collectively	they	represent	approximately	35%	of	the	purchased	impaired	portfolio.

(d) Based	upon	updated	LTV	(inclusive	of	combined	loan-to-value	(CLTV)	for	first	and	subordinate	lien	positions).	Updated	LTV	is	estimated	using	modeled	property	values.	These	ratios	are	updated	at	least	semi- annually.	The	related	estimates	and	inputs	are	based	upon	an	approach	that	uses	a	combination	of	third-party	automated	valuation	models	(AVMs),	broker	price	opinions	(BPOs),	HPI	indices,	property	location, internal	and	external	balance	information,	origination	data	and	management	assumptions.	In	cases	where	we	are	in	an	originated	second	lien	position,	we	generally	utilize	origination	balances	provided	by	a	third- party	which	do	not	include	an	amortization	assumption	when	calculating	updated	LTV.	Accordingly,	the	results	of	these	calculations	do	not	represent	actual	appraised	loan	level	collateral	or	updated	LTV	based upon	a	current	first	lien	balance,	and	as	such,	are	necessarily	imprecise	and	subject	to	change	as	we	enhance	our	methodology.

# Credit	Card	and	Other	Consumer	Loan	Classes

We	monitor	a	variety	of	asset	quality	information	in	the	management	of	the	credit	card	and	other	consumer	loan	classes.	Other	consumer	loan	classes	include	education, automobile,	and	other	secured	and	unsecured	lines	and	loans.	Along	with	the	trending	of	delinquencies	and	losses	for	each	class,	FICO	credit	score	updates	are	generally obtained	monthly,	as	well	as	a	variety	of	credit	bureau	attributes.	Loans	with	high	FICO	scores	tend	to	have	a	lower	likelihood	of	loss.	Conversely,	loans	with	low	FICO scores	tend	to	have	a	higher	likelihood	of	loss.

# Table	66:	Credit	Card	and	Other	Consumer	Loan	Classes	Asset	Quality	Indicators

|  | Credit	Card	(a) |  | Other	Consumer	(b) |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | Amount | %\tof\tTotal\tLoans\nUsing\tFICO\nCredit\tMetric | Amount | %\tof\tTotal\tLoans\nUsing\tFICO\nCredit\tMetric |
| December\t31,\t2014 |  |  |  |  |
| FICO\tscore\tgreater\tthan\t719 | $2,717 | 59% | $9,156 | 64% |
| 650\tto\t719 | \t 1,288 | 28 | 3,459 | 24 |
| 620\tto\t649 | 203 | 4 | 528 | 4 |
| Less\tthan\t620 | 239 | 5 | 619 | 4 |
| No\tFICO\tscore\tavailable\tor\trequired\t(c) | 165 | 4 | 557 | 4 |
| Total\tloans\tusing\tFICO\tcredit\tmetric | \t 4,612 | 100% | \t 14,319 | 100% |
| Consumer\tloans\tusing\tother\tinternal\tcredit\tmetrics\t(b) |  |  | 8,434 |  |
| Total\tloan\tbalance | $4,612 |  | $22,753 |  |
| Weighted-average\tupdated\tFICO\tscore\t(d) |  | 732 |  | 744 |
| December\t31,\t2013\t(e) |  |  |  |  |
| FICO\tscore\tgreater\tthan\t719 | $2,546 | 58% | $8,596 | 63% |
| 650\tto\t719 | \t 1,253 | 28 | 3,511 | 26 |
| 620\tto\t649 | 203 | 4 | 527 | 4 |
| Less\tthan\t620 | 258 | 6 | 628 | 4 |
| No\tFICO\tscore\tavailable\tor\trequired\t(c) | 165 | 4 | 474 | 3 |
| Total\tloans\tusing\tFICO\tcredit\tmetric | \t 4,425 | 100% | \t 13,736 | 100% |
| Consumer\tloans\tusing\tother\tinternal\tcredit\tmetrics\t(b) |  |  | 8,795 |  |
| Total\tloan\tbalance | $4,425 |  | $22,531 |  |
| Weighted-average\tupdated\tFICO\tscore\t(d) |  | 730 |  | 741 |
| (a) |  |  |  |  |

(a) At	December	31,	2014,	we	had	$35	million	of	credit	card	loans	that	are	higher	risk	(i.e.,	loans	with	both	updated	FICO	scores	less	than	660	and	in	late	stage	(90+	days)	delinquency	status).	The	majority	of	the December	31,	2014	balance	related	to	higher	risk	credit	card	loans	is	geographically	distributed	throughout	the	following	areas:	Ohio	17%,	Pennsylvania	16%,	Michigan	9%,	New	Jersey	7%,	Illinois	7%,	Indiana 6%,	Florida	6%	and	North	Carolina	4%.	All	other	states	had	less	than	4%	individually	and	make	up	the	remainder	of	the	balance.	At	December	31,	2013,	we	had	$35	million	of	credit	card	loans	that	are	higher risk.	The	majority	of	the	December	31,	2013	balance	related	to	higher	risk	credit	card	loans	is	geographically	distributed	throughout	the	following	areas:	Ohio	18%,	Pennsylvania	17%,	Michigan	11%,	Illinois	7%, New	Jersey	7%,	Indiana	6%,	Florida	6%	and	Kentucky	4%.	All	other	states	had	less	than	4%	individually	and	make	up	the	remainder	of	the	balance.

(b) Other	consumer	loans	for	which	updated	FICO	scores	are	used	as	an	asset	quality	indicator	include	non-government	guaranteed	or	insured	education	loans,	automobile	loans	and	other	secured	and	unsecured	lines and	loans.	Other	consumer	loans	for	which	other	internal	credit	metrics	are	used	as	an	asset	quality	indicator	include	primarily	government	guaranteed	or	insured	education	loans,	as	well	as	consumer	loans	to	high net	worth	individuals.	Other	internal	credit	metrics	may	include	delinquency	status,	geography	or	other	factors.

(c) Credit	card	loans	and	other	consumer	loans	with	no	FICO	score	available	or	required	generally	refers	to	new	accounts	issued	to	borrowers	with	limited	credit	history,	accounts	for	which	we	cannot	obtain	an updated	FICO	score	(e.g.,	recent	profile	changes),	cards	issued	with	a	business	name,	and/or	cards	secured	by	collateral.	Management	proactively	assesses	the	risk	and	size	of	this	loan	portfolio	and,	when necessary,	takes	actions	to	mitigate	the	credit	risk.

(d) Weighted-average	updated	FICO	score	excludes	accounts	with	no	FICO	score	available	or	required.

(e) In	the	second	quarter	of	2014,	we	corrected	our	credit	card	FICO	score	determination	process	by	further	refining	the	data.	This	impacted	FICO	scores	greater	than	719,	650	to	719,	620	to	649,	less	than	620	and	no FICO	score	available.	This	resulted	in	an	adjustment	to	amounts	previously	reported	in	2013	of	$242	million	from	"No	FICO	score	available	or	required"	to	the	other	line	items.	The	majority	of	the	adjustment	to amounts	previously	reported	in	2013	went	to	the	"FICO	score	greater	than	719"	category.

# Troubled	Debt	Restructurings	(TDRs)

A	TDR	is	a	loan	whose	terms	have	been	restructured	in	a	manner	that	grants	a concession	to	a	borrower	experiencing	financial	difficulty.	TDRs	result	from	our loss	mitigation	activities,	and	include	rate	reductions,	principal	forgiveness, postponement/reduction	of	scheduled	amortization,	and	extensions,	which	are intended	to	minimize	economic	loss	and	to	avoid	foreclosure	or	repossession	of collateral.	Additionally,	TDRs	also	result	from	borrowers	that	have	been discharged	from	personal	liability	through	Chapter	7	bankruptcy	and	have	not formally	reaffirmed	their	loan	obligations	to	PNC.	In	those	situations	where principal	is	forgiven,	the	amount	of	such	principal	forgiveness	is	immediately charged	off.

Some	TDRs	may	not	ultimately	result	in	the	full	collection	of	principal	and interest,	as	restructured,	and	result	in	potential	incremental	losses.	These potential	incremental	losses	have	been	factored	into	our	overall	ALLL	estimate. The	level	of	any	subsequent	defaults	will	likely	be	affected	by	future	economic conditions.	Once	a	loan	becomes	a	TDR,	it	will	continue	to	be	reported	as	a	TDR until	it	is	ultimately	repaid	in	full,	the	collateral	is	foreclosed	upon,	or	it	is	fully charged	off.	We	held	specific	reserves	in	the	ALLL	of	$.4	billion	and	$.5	billion at	December	31,	2014	and	December	31,	2013,	respectively,	for	the	total	TDR portfolio.

# Table	67:	Summary	of	Troubled	Debt	Restructurings

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Total\tconsumer\tlending | $2,041 | $2,161 |
| Total\tcommercial\tlending | 542 | 578 |
| Total\tTDRs | $2,583 | $2,739 |
| Nonperforming | $1,370 | $1,511 |
| Accruing\t(a) | 1,083 | 1,062 |
| Credit\tcard | 130 | 166 |
| Total\tTDRs | $2,583 | $2,739 |
| (a)\nAccruing\tTDR\tloans\thave\tdemonstrated\ta\tperiod\tof\tat\tleast\tsix\tmonths\tof\tperformance\tunder\tthe |  |  |

(a) Accruing	TDR	loans	have	demonstrated	a	period	of	at	least	six	months	of	performance	under	the restructured	terms	and	are	excluded	from	nonperforming	loans.	Loans	where	borrowers	have	been discharged	from	personal	liability	through	Chapter	7	bankruptcy	and	have	not	formally	reaffirmed their	loan	obligations	to	PNC	and	loans	to	borrowers	not	currently	obligated	to	make	both	principal and	interest	payments	under	the	restructured	terms	are	not	returned	to	accrual	status.

Table	68	quantifies	the	number	of	loans	that	were	classified	as	TDRs	as	well	as the	change	in	the	recorded	investments	as	a	result	of	the	TDR	classification during	2014,	2013,	and	2012,	respectively.	Additionally,	the	table	provides information	about	the	types	of	TDR	concessions.	The	Principal	Forgiveness TDR	category	includes	principal	forgiveness	and	accrued	interest	forgiveness. These	types	of	TDRs	result	in	a	write	down	of	the	recorded	investment	and	a charge-off	if	such	action	has	not	already	taken	place.	The	Rate	Reduction	TDR category	includes	reduced	interest	rate	and	interest	deferral.	The	TDRs	within this	category	result	in	reductions	to	future	interest	income.	The	Other	TDR category	primarily	includes	consumer	borrowers	that	have	been	discharged	from personal	liability	through	Chapter	7	bankruptcy	and	have	not	formally reaffirmed	their	loan	obligations	to	PNC,	as	well	as	postponement/reduction	of scheduled	amortization	and	contractual	extensions	for	both	consumer	and commercial	borrowers.

In	some	cases,	there	have	been	multiple	concessions	granted	on	one	loan.	This	is most	common	within	the	commercial	loan	portfolio.	When	there	have	been multiple	concessions	granted	in	the	commercial	loan	portfolio,	the	principal forgiveness	concession	was	prioritized	for	purposes	of	determining	the	inclusion in	Table	68.	For	example,	if	there	is	principal	forgiveness	in	conjunction	with lower	interest	rate	and	postponement	of	amortization,	the	type	of	concession	will be	reported	as	Principal	Forgiveness.	Second	in	priority	would	be	rate	reduction. For	example,	if	there	is	an	interest	rate	reduction	in	conjunction	with postponement	of	amortization,	the	type	of	concession	will	be	reported	as	a	Rate Reduction.	In	the	event	that	multiple	concessions	are	granted	on	a	consumer loan,	concessions	resulting	from	discharge	from	personal	liability	through Chapter	7	bankruptcy	without	formal	affirmation	of	the	loan	obligations	to	PNC would	be	prioritized	and	included	in	the	Other	type	of	concession	in	the	table below.	After	that,	consumer	loan	concessions	would	follow	the	previously discussed	priority	of	concessions	for	the	commercial	loan	portfolio.

# Table	68:	Financial	Impact	and	TDRs	by	Concession	Type	(a)

|  |  | Pre-TDR | Post-TDR	Recorded	Investment	(c) | Post-TDR	Recorded	Investment	(c) | Post-TDR	Recorded	Investment	(c) |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| During\tthe\tyear\tended\tDecember\t31,\t2014\nDollars\tin\tmillions | Number\nof\tLoans | Recorded\nInvestment\t(b) | Principal\nForgiveness | Rate\nReduction | Other | Total |
| Commercial\tlending |  |  |  |  |  |  |
| Commercial | 131 | $192 | $10 | $11\t\t\t\t $137 | $11\t\t\t\t $137 | $158 |
| Commercial\treal\testate | 79 | 171 | 27 | 11 | \t 100 | 138 |
| Total\tcommercial\tlending\t(d) | 210 | 363 | 37 | 22 | \t 237 | 296 |
| Consumer\tlending |  |  |  |  |  |  |
| Home\tequity | 2,950 | 193 |  | 51 | \t 132 | 183 |
| Residential\treal\testate | 527 | 73 |  | 26 | 45 | 71 |
| Credit\tcard | 7,720 | 60 |  | 57 |  | 57 |
| Other\tconsumer | 1,092 | 18 |  | 1 | 13 | 14 |
| Total\tconsumer\tlending | \t12,289 | 344 |  | 135 | \t 190 | 325 |
| Total\tTDRs | \t12,499 | $707 | $37 | $157\t\t\t\t $427 | $157\t\t\t\t $427 | $621 |
| During\tthe\tyear\tended\tDecember\t31,\t2013\nDollars\tin\tmillions |  |  |  |  |  |  |
| Commercial\tlending |  |  |  |  |  |  |
| Commercial | 168 | $216 | $10 | $21\t\t\t\t $132 | $21\t\t\t\t $132 | $163 |
| Commercial\treal\testate | 116 | 284 | 28 | 51 | \t 144 | 223 |
| Equipment\tlease\tfinancing | 1 | 3 |  |  |  |  |
| Total\tcommercial\tlending | 285 | 503 | 38 | 72 | \t 276 | 386 |
| Consumer\tlending |  |  |  |  |  |  |
| Home\tequity | 4,132 | 289 |  | 139 | \t 126 | 265 |
| Residential\treal\testate | 911 | 127 |  | 39 | 86 | 125 |
| Credit\tcard | 8,397 | 64 |  | 61 |  | 61 |
| Other\tconsumer | 1,379 | 22 |  | 1 | 19 | 20 |
| Total\tconsumer\tlending | \t14,819 | 502 |  | 240 | \t 231 | 471 |
| Total\tTDRs | \t15,104 | $1,005 | $38 | $312\t\t\t\t $507 | $312\t\t\t\t $507 | $857 |
| During\tthe\tyear\tended\tDecember\t31,\t2012\nDollars\tin\tmillions |  |  |  |  |  |  |
| Commercial\tlending |  |  |  |  |  |  |
| Commercial\t(e) | 220 | $335 | $19 | $58\t\t\t\t $206 | $58\t\t\t\t $206 | $283 |
| Commercial\treal\testate\t(e) | 68 | 244 | 19 | 77 | \t 121 | 217 |
| Equipment\tlease\tfinancing\t(e) | 1 | 1 |  |  | 1 | 1 |
| Total\tcommercial\tlending | 289 | 580 | 38 | 135 | \t 328 | 501 |
| Consumer\tlending |  |  |  |  |  |  |
| Home\tequity | 4,813 | 313 |  | 200 | \t 110 | 310 |
| Residential\treal\testate | 754 | 147 |  | 60 | 83 | 143 |
| Credit\tcard | \t13,306 | 93 |  | 90 |  | 90 |
| Other\tconsumer | 835 | 20 |  | 2 | 19 | 21 |
| Total\tconsumer\tlending | \t19,708 | 573 |  | 352 | \t 212 | 564 |
| Total\tTDRs | \t19,997 | $1,153 | $38 | $487\t\t\t\t $540 | $487\t\t\t\t $540 | $1,065 |
| (a) |  |  |  |  |  |  |

(a) Impact	of	partial	charge-offs	at	TDR	date	are	included	in	this	table.

(b) Represents	the	recorded	investment	of	the	loans	as	of	the	quarter	end	prior	to	TDR	designation,	and	excludes	immaterial	amounts	of	accrued	interest	receivable.

(c) Represents	the	recorded	investment	of	the	TDRs	as	of	the	end	of	the	quarter	in	which	the	TDR	occurs,	and	excludes	immaterial	amounts	of	accrued	interest	receivable.

(d) During	the	twelve	months	ended	December	31,	2014,	there	were	no	loans	classified	as	TDRs	in	the	Equipment	lease	financing	loan	class.

(e) Certain	amounts	within	the	Commercial	lending	portfolio	for	2012	were	reclassified	to	conform	to	the	presentation	in	2013.

TDRs	may	result	in	charge-offs	and	interest	income	not	being	recognized.	The amount	of	principal	balance	charged	off	at	or	around	the	time	of	modification	for the	twelve	months	ended	December	31,	2014	was	not	material.	A	financial	effect of	rate	reduction	TDRs	is	that	interest	income	is	not	recognized	for	the difference	between	the	original	contractual	interest	rate	terms	and	the restructured	terms.	Interest	income	not	recognized	that	otherwise	would	have been	earned	in	the	twelve	months	ended	December	31,	2014	and	2013,	related	to all	commercial	TDRs	and	consumer	TDRs,	was	not	material.

After	a	loan	is	determined	to	be	a	TDR,	we	continue	to	track	its	performance under	its	most	recent	restructured	terms.	In	Table	69,	we	consider	a	TDR	to	have subsequently	defaulted	when	it	becomes	60	days	past	due	after	the	most	recent date	the	loan	was	restructured.	The	following	table	presents	the	recorded investment	of	loans	that	both	(i)	were	classified	as	TDRs	or	were	subsequently modified	during	each	12-month	period	preceding	January	1,	2014,	2013,	and 2012,	respectively,	and	(ii)	subsequently	defaulted	during	2014,	2013,	and	2012, respectively.

# Table	69:	TDRs	that	were	Modified	in	the	Past	Twelve	Months	which	have Subsequently	Defaulted

| Dollars	in	millions | Number	of	Contracts | Recorded	Investment |
| :--- | :--- | :--- |
| Commercial\tlending |  |  |
| Commercial | 38 | $26 |
| Commercial\treal\testate | 43 | 80 |
| Total\tcommercial\tlending\t(a) | 81 | 106 |
| Consumer\tlending |  |  |
| Home\tequity | 400 | 21 |
| Residential\treal\testate | 155 | 24 |
| Credit\tcard | 3,397 | 27 |
| Other\tconsumer | 132 | 1 |
| Total\tconsumer\tlending | 4,084 | 73 |
| Total\tTDRs | 4,165 | $179 |

| December	31,	2013<br>Dollars	in	millions | Number	of<br>Contracts | Recorded	Investment |
| :--- | :--- | :--- |
| Commercial\tlending |  |  |
| Commercial | 67 | $47 |
| Commercial\treal\testate | 38 | 59 |
| Total\tcommercial\tlending\t(a) | 105 | 106 |
| Consumer\tlending\t(b) |  |  |
| Home\tequity | 592 | 39 |
| Residential\treal\testate | 255 | 35 |
| Credit\tcard | 4,598 | 34 |
| Other\tconsumer | 249 | 4 |
| Total\tconsumer\tlending | 5,694 | 112 |
| Total\tTDRs | 5,799 | $218 |

| Dollars	in	millions | Number	of	Contracts | Recorded	Investment |
| :--- | :--- | :--- |
| Commercial\tlending |  |  |
| Commercial\t(c) | 112 | $67 |
| Commercial\treal\testate |  |  |
| (c) | 42 | 69 |
| Equipment\tlease |  |  |
| financing | 1 | 1 |
| Total\tcommercial\tlending | 155 | 137 |
| Consumer\tlending |  |  |
| Home\tequity | 542 | 50 |
| Residential\treal\testate | 482 | 70 |
| Credit\tcard | 4,551 | 32 |
| Other\tconsumer | 118 | 4 |
| Total\tconsumer\tlending | 5,693 | 156 |
| Total\tTDRs | 5,848 | $293 |

(a) During	2014	and	2013,	there	were	no	loans	classified	as	TDRs	in	the	Equipment	lease	financing loan	class	that	have	subsequently	defaulted.

(b) In	the	second	quarter	of	2014,	we	corrected	our	Consumer	lending	subsequent	default	(excluding credit	card)	determination	process	by	further	refining	the	data.	For	the	twelve	months	ended December	31,	2013,	this	correction	removed	1,426	contracts	for	approximately	$130	million	from Total	consumer	lending	(excluding	credit	card).

(c) Certain	amounts	within	the	2012	Commercial	lending	portfolio	were	reclassified	during	the	fourth quarter	of	2013.

The	impact	to	the	ALLL	for	commercial	lending	TDRs	is	the	effect	of	moving	to the	specific	reserve	methodology	from	the	quantitative	reserve	methodology, described	below,	for	those	loans	that	were	not	already	classified	as	nonaccrual. There	is	an	impact	to	the	ALLL	as	a	result	of	the	concession	made,	which generally	results	in	a	reduction	of	expected	future	cash	flows.	The	decline	in expected	future	cash	flows,	consideration	of	collateral	value,	and/or	the application	of	a	present	value	discount	rate,	when	compared	to	the	recorded investment,	results	in	either	an	increased	ALLL	or	a	charge-off.	As	TDRs	are individually	evaluated	under	the	specific	reserve	methodology,	which	builds	in expectations	of	future	performance,	generally	subsequent	defaults	do	not significantly	impact	the	ALLL.

For	consumer	lending	TDRs,	except	TDRs	resulting	from	borrowers	that	have been	discharged	from	personal	liability	through	Chapter	7	bankruptcy	and	have not	formally	reaffirmed	their	loan	obligations	to	PNC	as	discussed	in	Note	1 Accounting	Policies	under	the	Allowance	for	Loans	and	Lease	Losses	section, the	ALLL	is	calculated	using	a	discounted	cash	flow	model,	which	leverages subsequent	default,	prepayment,	and	severity	rate	assumptions	based	upon historically	observed	data.	Similar	to	the	commercial	lending	specific	reserve methodology,	the	reduced	expected	cash	flows	resulting	from	the	concessions granted	impact	the	consumer	lending	ALLL.	The	decline	in	expected	cash	flows due	to	the	application	of	a	present	value	discount	rate	or	the	consideration	of collateral	value,	when	compared	to	the	recorded	investment,	results	in	either	an increased	ALLL	or	a	charge-off.	Loans	where	a	borrower	has	been	discharged from	personal	liability	in	bankruptcy	and	has	not	formally

reaffirmed	its	loan	obligation	to	PNC	are	charged	off	to	collateral	value	less	costs	to	sell,	and	any	associated	allowance	at	the	time	of	charge-off	is	reduced	to	zero.

# Impaired	Loans

Impaired	loans	include	commercial	nonperforming	loans	and	consumer	and	commercial	TDRs,	regardless	of	nonperforming	status.	TDRs	that	were	previously	recorded at	amortized	cost	and	are	now	classified	and	accounted	for	as	held	for	sale	are	also	included.	Excluded	from	impaired	loans	are	nonperforming	leases,	loans	accounted for	as	held	for	sale	other	than	the	TDRs	described	in	the	preceding	sentence,	loans	accounted	for	under	the	fair	value	option,	smaller	balance	homogeneous	type	loans and	purchased	impaired	loans.	See	Note	4	Purchased	Loans	for	additional	information.	Nonperforming	equipment	lease	financing	loans	of	$2	million	and	$5	million	at December	31,	2014	and	December	31,	2013,	respectively,	are	excluded	from	impaired	loans	pursuant	to	authoritative	lease	accounting	guidance.	We	did	not	recognize any	interest	income	on	impaired	loans	that	have	not	returned	to	performing	status,	while	they	were	impaired	during	the	years	ended	December	31,	2014	and December	31,	2013.	The	following	table	provides	further	detail	on	impaired	loans	individually	evaluated	for	impairment	and	the	associated	ALLL.	Certain	commercial impaired	loans	and	loans	to	consumers	discharged	from	bankruptcy	and	not	formally	reaffirmed	do	not	have	a	related	ALLL	as	the	valuation	of	these	impaired	loans exceeded	the	recorded	investment.

# Table	70:	Impaired	Loans

| In	millions | Unpaid<br>Principal<br>Balance | Recorded<br>Investment	(a) | Associated<br>Allowance	(b) | Average<br>Recorded<br>Investment	(c) |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |  |
| Impaired\tloans\twith\tan\tassociated\tallowance |  |  |  |  |
| Commercial | $432 | $318 | $74 | $360 |
| Commercial\treal\testate | 418 | 262 | 65 | 283 |
| Home\tequity | \t 1,021 | 984 | 215 | 986 |
| Residential\treal\testate | 397 | 420 | 75 | 422 |
| Credit\tcard | 130 | 130 | 32 | 147 |
| Other\tconsumer | 64 | 47 | 2 | 51 |
| Total\timpaired\tloans\twith\tan\tassociated\tallowance | $2,462 | $2,161 | $463 | $2,249 |
| Impaired\tloans\twithout\tan\tassociated\tallowance |  |  |  |  |
| Commercial | $106 | $84 | $$133 | $$133 |
| Commercial\treal\testate | 249 | 187 |  | 276 |
| Home\tequity | 403 | 145 |  | 134 |
| Residential\treal\testate | 344 | 315 |  | 365 |
| Total\timpaired\tloans\twithout\tan\tassociated\tallowance | $1,102 | $731 | $$908 | $$908 |
| Total\timpaired\tloans | $3,564 | $2,892 | $463 | $3,157 |
| December\t31,\t2013 |  |  |  |  |
| Impaired\tloans\twith\tan\tassociated\tallowance |  |  |  |  |
| Commercial | $549 | $400 | $90 | $442 |
| Commercial\treal\testate | 517 | 349 | 89 | 478 |
| Home\tequity | 999 | 992 | 334 | 900 |
| Residential\treal\testate | 573 | 436 | 74 | 645 |
| Credit\tcard | 166 | 166 | 36 | 189 |
| Other\tconsumer | 71 | 57 | 2 | 68 |
| Total\timpaired\tloans\twith\tan\tassociated\tallowance | $2,875 | $2,400 | $625 | $2,722 |
| Impaired\tloans\twithout\tan\tassociated\tallowance |  |  |  |  |
| Commercial | $309 | $163 | $$161 | $$161 |
| Commercial\treal\testate | 421 | 315 |  | 354 |
| Home\tequity | 366 | 124 |  | 166 |
| Residential\treal\testate | 415 | 386 |  | 267 |
| Total\timpaired\tloans\twithout\tan\tassociated\tallowance | $1,511 | $988 | $$948 | $$948 |
| Total\timpaired\tloans | $4,386 | $3,388 | $625 | $3,670 |
| (a) |  |  |  |  |

(a) Recorded	investment	in	a	loan	includes	the	unpaid	principal	balance	plus	accrued	interest	and	net	accounting	adjustments,	less	any	charge-offs.	Recorded	investment	does	not	include	any	associated	valuation allowance.

(b) Associated	allowance	amounts	include	$.4	billion	and	$.5	billion	for	TDRs	at	December	31,	2014	and	December	31,	2013,	respectively.

(c) Average	recorded	investment	is	for	the	years	ended	December	31,	2014	and	December	31,	2013,	respectively.

# NOTE	4	PURCHASED	LOANS

# Purchased	Impaired	Loans

Purchased	impaired	loan	accounting	addresses	differences	between	contractual cash	flows	and	cash	flows	expected	to	be	collected	from	the	initial	investment	in loans	if	those	differences	are	attributable,	at	least	in	part,	to	credit	quality. Several	factors	were	considered	when	evaluating	whether	a	loan	was	considered a	purchased	impaired	loan,	including	the	delinquency	status	of	the	loan,	updated borrower	credit	status,	geographic	information,	and	updated	LTV.	GAAP	allows purchasers	to	account	for	loans	individually	or	to	aggregate	purchased	impaired loans	acquired	in	the	same	fiscal	quarter	into	one	or	more	pools,	provided	that the	loans	have	common	risk	characteristics.	A	pool	is	then	accounted	for	as	a single	asset	with	a	single	composite	interest	rate	and	an	aggregate	expectation	of cash	flows.	Purchased	impaired	homogeneous	consumer,	residential	real	estate and	smaller	balance	commercial	loans	with	common	risk	characteristics	are aggregated	into	pools	where	appropriate,	whereas	commercial	loans	with	a	total commitment	greater	than	a	defined	threshold	are	accounted	for	individually.	For pooled	loans,	proceeds	of	individual	loans	are	not	applied	individually	to	each loan	within	a	pool,	but	to	the	pool's	recorded	investment	since	it	is

accounted	for	as	a	single	asset.	Upon	final	disposition	of	a	loan	within	a	pool (e.g.,	payoff,	short-sale,	foreclosure,	etc.),	the	loan's	carrying	value	is	removed from	the	pool	and	any	gain	or	loss	associated	with	the	transaction	is	retained	in the	pool's	recorded	investment.	For	example,	upon	final	disposition	of	a	loan	by short-sale,	the	proceeds	of	the	short-sale	may	be	less	(or	more)	than	the	loan's recorded	investment.	This	shortfall	or	loss	(excess	or	gain)	is	not	accounted	for as	an	individual	loan	sale	in	our	income	statement	and	is	instead	retained	as	part of	the	pool's	recorded	investment	consistent	with	our	accounting	for	the	pool	as a	single	asset.	This	treatment	is	designed	to	maintain	a	constant	effective	yield for	recognition	of	interest	income.	Accordingly,	a	pool's	recorded	investment includes	the	net	accumulation	of	realized	losses	or	gains	attributable	to	these final	dispositions.	As	there	are	no	future	expected	cash	flows	related	to	these dispositions,	their	net	carrying	value	is	$0.	The	recorded	investment,	including these	realized	losses	and	gains,	is	evaluated	for	collectability	based	upon	the	net present	value	of	the	pool's	remaining	expected	cash	flows	when	establishing	our allowance	for	loan	losses.	See	below	and	Note	1	Accounting	Policies	and	Note	5 Allowances	for	Loan	and	Lease	Losses	and	Unfunded	Loan	Commitments	and Letters	of	Credit	for	additional	information.

The	following	table	provides	balances	of	purchased	impaired	loans	at	December	31,	2014	and	December	31,	2013:

# Table	71:	Purchased	Impaired	Loans	–	Balances

|  |  | December	31,	2014 |  |  | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Outstanding | Recorded | Carrying | Outstanding | Recorded | Carrying |
| In\tmillions | Balance\t(a) | Investment | Value | Balance\t(a) | Investment | Value |
| Commercial\tlending |  |  |  |  |  |  |
| Commercial | $159 | $74 | $57 | $282 | $157\t\t\t\t $ | 131 |
| Commercial\treal\testate | 307 | 236 | 174 | 655 | 516 | 409 |
| Total\tcommercial\tlending | 466 | 310 | 231 | 937 | 673 | 540 |
| Consumer\tlending |  |  |  |  |  |  |
| Consumer | 2,145 | 1,989 | \t 1,661 | 2,523 | 2,312 | \t 1,971 |
| Residential\treal\testate | 2,396 | 2,559 | \t 2,094 | 3,025 | 3,121 | \t 2,591 |
| Total\tconsumer\tlending | 4,541 | 4,548 | \t 3,755 | 5,548 | 5,433 | \t 4,562 |
| Total | $5,007 | $4,858 | $3,986 | $6,485 | $6,106\t\t\t\t $5,102 | $6,106\t\t\t\t $5,102 |
| (a) |  |  |  |  |  |  |

(a) Outstanding	balance	represents	the	balance	on	the	loan	servicing	system	for	active	loans.	It	is	possible	for	the	outstanding	balance	to	be	lower	than	the	recorded	investment	for	certain	loans	due	to	the	use	of	pool accounting.

The	excess	of	undiscounted	cash	flows	expected	at	acquisition	over	the	estimated	fair	value	is	referred	to	as	the	accretable	yield	and	is	recognized	as	interest	income	over the	remaining	life	of	the	loan	using	the	constant	effective	yield	method.	The	difference	between	contractually	required	payments	at	acquisition	and	the	cash	flows expected	to	be	collected	at	acquisition	is	referred	to	as	the	non-accretable	difference	and	is	not	recognized	in	income.	Subsequent	changes	in	the	expected	cash	flows	of individual	or	pooled	purchased	impaired	loans	will	either	impact	the	accretable	yield	or	result	in	an	impairment	charge	to	provision	for	credit	losses	in	the	period	in which	the	changes	become	probable.	Decreases	to	the	net	present	value	of	expected	cash	flows	will	generally	result	in	an	impairment	charge	recorded	as	a	provision	for credit	losses,	resulting	in	an	increase	to	the	allowance	for	loan	and	lease	losses,	and	a	reclassification	from	accretable	yield	to	non-accretable	difference.

During	2014,	$91	million	of	provision	recapture	was	recorded	for	purchased impaired	loans	compared	to	$11	million	of	provision	expense	for	2013.	The charge-offs	(which	were	specifically	for	commercial	loans	greater	than	a	defined threshold)	during	2014	were	$42	million	compared	to	$104	million	for	2013.	At December	31,	2014,	the	allowance	for	loan	and	lease	losses	was	$.9	billion	on $4.4	billion	of	purchased	impaired	loans	while	the	remaining	$.5	billion	of purchased	impaired	loans	required	no	allowance	as	the	net	present	value	of expected	cash	flows	equaled	or	exceeded	the	recorded	investment.	As	of December	31,	2013,	the	allowance	for	loan	and	lease	losses	related	to	purchased impaired	loans	was	$1.0	billion.	If	any	allowance	for	loan	losses	is	recognized	on a	purchased	impaired	pool,	which	is	accounted	for	as	a	single	asset,	the	entire balance	of	that	pool	would	be	disclosed	as	requiring	an	allowance.	Subsequent increases	in	the	net	present	value	of	cash	flows	will	result	in	a	provision recapture	of	any	previously	recorded	allowance	for	loan	and	lease	losses,	to	the extent	applicable,	and/or	a	reclassification	from	non-accretable	difference	to accretable	yield,	which	will	be	recognized	prospectively.	Individual	loan transactions	where	final	dispositions	have	occurred	(as	noted	above)	result	in removal	of	the	loans	from	their	applicable	pools	for	cash	flow	estimation purposes.	The	cash	flow	re-estimation	process	is	completed	quarterly	to	evaluate the	appropriateness	of	the	allowance	associated	with	the	purchased	impaired loans.

Activity	for	the	accretable	yield	during	2014	and	2013	follows:

| In	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| January\t1 | $2,055 | $2,166 |
| Accretion\t(including\texcess\tcash\trecoveries) | (587) | (695) |
| Net\treclassifications\tto\taccretable\tfrom\tnon-accretable |  |  |
| (a) | 208 | 613 |
| Disposals | (118) | (29) |
| December\t31 | $1,558 | $2,055 |
| (a)\nApproximately\t93%\tof\tnet\treclassifications\tfor\tthe\tyear\tended\tDecember\t31,\t2014\twere\twithin\tthe |  |  |

(a) Approximately	93%	of	net	reclassifications	for	the	year	ended	December	31,	2014	were	within	the commercial	portfolio	as	compared	to	37%	for	year	ended	December	31,	2013.

# NOTE	5	ALLOWANCES	FOR	LOAN	AND	LEASE	LOSSES	AND UNFUNDED	LOAN	COMMITMENTS	AND	LETTERS	OF	CREDIT

We	maintain	the	ALLL	at	levels	that	we	believe	to	be	appropriate	to	absorb estimated	probable	credit	losses	incurred	in	the	portfolios	as	of	the	balance	sheet date.	We	use	the	two	main	portfolio	segments	–	Commercial	Lending	and Consumer	Lending	–	and	develop	and	document	the	ALLL	under	separate methodologies	for	each	of	these	segments	as	discussed	in	Note	1	Accounting Policies.	A	rollforward	of	the	ALLL	and	associated	loan	data	is	presented	below.

# Table	73:	Rollforward	of	Allowance	for	Loan	and	Lease	Losses	and	Associated	Loan	Data

| In	millions | Commercial<br>Lending | Consumer<br>Lending | Total |
| :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |
| Allowance\tfor\tLoan\tand\tLease\tLosses |  |  |  |
| January\t1 | $1,547 | $2,062 | $3,609 |
| Charge-offs | (360) | (661) | (1,021) |
| Recoveries | 305 | 185 | 490 |
| Net\tcharge-offs | (55) | (476) | (531) |
| Provision\tfor\tcredit\tlosses | 100 | 173 | 273 |
| Net\tchange\tin\tallowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | (18) | 1 | (17) |
| Other | (3) |  | (3) |
| December\t31 | $1,571 | $1,760 | $3,331 |
| TDRs\tindividually\tevaluated\tfor\timpairment | $62 | $324 | $386 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 77 |  | 77 |
| Loans\tcollectively\tevaluated\tfor\timpairment | 1,353 | 643 | 1,996 |
| Purchased\timpaired\tloans | 79 | 793 | 872 |
| December\t31 | $1,571 | $1,760 | $3,331 |
| Loan\tPortfolio |  |  |  |
| TDRs\tindividually\tevaluated\tfor\timpairment\t(a) | $542 | $2,041 | $2,583 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 309 |  | 309 |
| Loans\tcollectively\tevaluated\tfor\timpairment\t(b) | \t 127,207 | \t 68,826 | \t 196,033 |
| Fair\tvalue\toption\tloans\t(c) |  | 1,034 | 1,034 |
| Purchased\timpaired\tloans | 310 | 4,548 | 4,858 |
| December\t31 | $128,368 | $76,449 | $204,817 |
| Portfolio\tsegment\tALLL\tas\ta\tpercentage\tof\ttotal\tALLL | 47% | 53% | 100% |
| Ratio\tof\tthe\tallowance\tfor\tloan\tand\tlease\tlosses\tto\ttotal\tloans | 1.22% | 2.30% | 1.63% |
| December\t31,\t2013 |  |  |  |
| Allowance\tfor\tLoan\tand\tLease\tLosses |  |  |  |
| January\t1 | $1,774 | $2,262 | $4,036 |
| Charge-offs\t(d) | (606) | (982) | (1,588) |
| Recoveries | 357 | 154 | 511 |
| Net\tcharge-offs | (249) | (828) | (1,077) |
| Provision\tfor\tcredit\tlosses | 36 | 607 | 643 |
| Net\tchange\tin\tallowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | (13) | 21 | 8 |
| Other | (1) |  | (1) |
| December\t31 | $1,547 | $2,062 | $3,609 |
| TDRs\tindividually\tevaluated\tfor\timpairment | $24 | $446 | $470 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 155 |  | 155 |
| Loans\tcollectively\tevaluated\tfor\timpairment | 1,235 | 745 | 1,980 |
| Purchased\timpaired\tloans | 133 | 871 | 1,004 |
| December\t31 | $1,547 | $2,062 | $3,609 |
| Loan\tPortfolio |  |  |  |
| TDRs\tindividually\tevaluated\tfor\timpairment\t(a) | $578 | $2,161 | $2,739 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 649 |  | 649 |
| Loans\tcollectively\tevaluated\tfor\timpairment\t(b) | \t 115,245 | \t 69,724 | \t 184,969 |
| Fair\tvalue\toption\tloans\t(c) |  | 1,150 | 1,150 |
| Purchased\timpaired\tloans | 673 | 5,433 | 6,106 |
| December\t31 | $117,145 | $78,468 | $195,613 |
| Portfolio\tsegment\tALLL\tas\ta\tpercentage\tof\ttotal\tALLL | 43% | 57% | 100% |
| Ratio\tof\tthe\tallowance\tfor\tloan\tand\tlease\tlosses\tto\ttotal\tloans | 1.32% | 2.63% | 1.84% |

| In	millions | Commercial<br>Lending | Consumer<br>Lending | Total |
| :--- | :--- | :--- | :--- |
| December\t31,\t2012 |  |  |  |
| Allowance\tfor\tLoan\tand\tLease\tLosses |  |  |  |
| January\t1 | $1,995 | $2,352 | $4,347 |
| Charge-offs | (804) | (1,066) | (1,870) |
| Recoveries | 445 | 136 | 581 |
| Net\tcharge-offs | (359) | (930) | (1,289) |
| Provision\tfor\tcredit\tlosses | 138 | 849 | 987 |
| Net\tchange\tin\tallowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | (1) | (9) | (10) |
| Other | 1 |  | 1 |
| December\t31 | $1,774 | $2,262 | $4,036 |
| TDRs\tindividually\tevaluated\tfor\timpairment | $40 | $547 | $587 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 253 |  | 253 |
| Loans\tcollectively\tevaluated\tfor\timpairment | 1,242 | 857 | 2,099 |
| Purchased\timpaired\tloans | 239 | 858 | 1,097 |
| December\t31 | $1,774 | $2,262 | $4,036 |
| Loan\tPortfolio |  |  |  |
| TDRs\tindividually\tevaluated\tfor\timpairment\t(a) | $541 | $2,318 | $2,859 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 1,057 |  | 1,057 |
| Loans\tcollectively\tevaluated\tfor\timpairment | \t 106,095 | \t 68,014 | \t 174,109 |
| Fair\tvalue\toption\tloans\t(c) |  | 425 | 425 |
| Purchased\timpaired\tloans | 1,249 | 6,157 | 7,406 |
| December\t31 | $108,942 | $76,914 | $185,856 |
| Portfolio\tsegment\tALLL\tas\ta\tpercentage\tof\ttotal\tALLL | 44% | 56% | 100% |
| Ratio\tof\tthe\tallowance\tfor\tloan\tand\tlease\tlosses\tto\ttotal\tloans | 1.63% | 2.94% | 2.17% |
| (a) |  |  |  |

(a) TDRs	individually	evaluated	for	impairment	exclude	TDRs	that	were	subsequently	accounted	for	as	held	for	sale	loans,	but	continue	to	be	disclosed	as	TDRs.

(b) Includes	$195	million	of	loans	collectively	evaluated	for	impairment	based	upon	collateral	values	and	written	down	to	the	respective	collateral	value	less	costs	to	sell	at	December	31,	2014.	Accordingly,	there	is no	allowance	recorded	for	these	loans.	The	comparative	amount	as	of	December	31,	2013	was	$252	million.

(c) Loans	accounted	for	under	the	fair	value	option	are	not	evaluated	for	impairment	as	these	loans	are	accounted	for	at	fair	value.	Accordingly	there	is	no	allowance	recorded	on	these	loans.

(d) Pursuant	to	alignment	with	interagency	guidance	on	practices	for	loans	and	lines	of	credit	related	to	consumer	lending	in	the	first	quarter	of	2013,	additional	charge-offs	of	$134	million	were	taken.

Net	interest	income	less	the	provision	for	credit	losses	was	$8.3	billion	for	2014	compared	with	$8.5	billion	for	2013	and	$8.7	billion	for	2012.

We	maintain	the	allowance	for	unfunded	loan	commitments	and	letters	of	credit	at	a	level	we	believe	is	appropriate	to	absorb	estimated	probable	credit	losses	on	these unfunded	credit	facilities	as	of	the	balance	sheet	date	as	discussed	in	Note	1	Accounting	Policies.	A	rollforward	of	the	allowance	is	presented	below.

# Table	74:	Rollforward	of	Allowance	for	Unfunded	Loan	Commitments	and	Letters	of	Credit

| In	millions | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| January\t1 | \t\t $242 | $250 | $240 |
| Net\tchange\tin\tallowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 17 | (8) | 10 |
| December\t31 | \t\t $259 | $242 | $250 |

# NOTE	6	INVESTMENT	SECURITIES

# Table	75:	Investment	Securities	Summary

|  | Amortized | Unrealized |  | Fair |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Cost | Gains | Losses | Value |
| December\t31,\t2014 |  |  |  |  |
| SECURITIES\tAVAILABLE\tFOR\tSALE |  |  |  |  |
| Debt\tsecurities |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | \t\t $5,237 | \t\t $186 | $(1) | $5,422 |
| Residential\tmortgage-backed |  |  |  |  |
| Agency | \t 17,646 | 438 | (41) | \t 18,043 |
| Non-agency | 4,723 | 318 | (99) | 4,942 |
| Commercial\tmortgage-backed |  |  |  |  |
| Agency | 2,178 | 23 | (14) | 2,187 |
| Non-agency | 4,085 | 88 | (11) | 4,162 |
| Asset-backed | 5,141 | 78 | (32) | 5,187 |
| State\tand\tmunicipal | 1,953 | 88 | (3) | 2,038 |
| Other\tdebt | 1,776 | 43 | (6) | 1,813 |
| Total\tdebt\tsecurities | \t 42,739 | \t 1,262 | (207) | \t 43,794 |
| Corporate\tstocks\tand\tother | 442 |  | (1) | 441 |
| Total\tsecurities\tavailable\tfor\tsale | \t\t $43,181 | \t\t $1,262 | $(208) | $44,235 |
| SECURITIES\tHELD\tTO\tMATURITY\t(a) |  |  |  |  |
| Debt\tsecurities |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | \t\t $248 | \t\t $44 |  | $292 |
| Residential\tmortgage-backed |  |  |  |  |
| Agency | 5,736 | 166 | $(10) | 5,892 |
| Non-agency | 270 | 13 |  | 283 |
| Commercial\tmortgage-backed |  |  |  |  |
| Agency | 1,200 | 53 |  | 1,253 |
| Non-agency | 1,010 | 19 |  | 1,029 |
| Asset-backed | 759 | 2 | (8) | 753 |
| State\tand\tmunicipal | 2,042 | 111 |  | 2,153 |
| Other\tdebt | 323 | 6 |  | 329 |
| Total\tsecurities\theld\tto\tmaturity | \t\t $11,588 | \t\t $414 | $(18) | $11,984 |
| December\t31,\t2013 |  |  |  |  |
| SECURITIES\tAVAILABLE\tFOR\tSALE |  |  |  |  |
| Debt\tsecurities |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | \t\t $3,990 | \t\t $135 | $(7) | $4,118 |
| Residential\tmortgage-backed |  |  |  |  |
| Agency\t(b) | \t 21,556 | 367 | (209) | \t 21,714 |
| Non-agency | 5,457 | 308 | (160) | 5,605 |
| Commercial\tmortgage-backed |  |  |  |  |
| Agency\t(b) | 1,745 | 32 | (14) | 1,763 |
| Non-agency |  |  |  |  |
|  | 3,937 | 123 | (18) | 4,042 |
| Asset-backed | 5,754 | 66 | (48) | 5,772 |
| State\tand\tmunicipal | 2,609 | 52 | (44) | 2,617 |
| Other\tdebt | 2,506 | 55 | (18) | 2,543 |
| Total\tdebt\tsecurities | \t 47,554 | \t 1,138 | (518) | \t 48,174 |
| Corporate\tstocks\tand\tother | 434 |  | (1) | 433 |
| Total\tsecurities\tavailable\tfor\tsale | \t\t $47,988 | \t\t $1,138 | $(519) | $48,607 |
| SECURITIES\tHELD\tTO\tMATURITY\t(a) |  |  |  |  |
| Debt\tsecurities |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | \t\t $239 | \t\t $8 | $(4) | $243 |
| Residential\tmortgage-backed |  |  |  |  |
| Agency | 5,814 | 71 | (64) | 5,821 |
| Non-agency | 293 |  | (4) | 289 |

|  | Amortized | Unrealized |  | Fair |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Cost | Gains | Losses | Value |
| Commercial\tmortgage-backed |  |  |  |  |
| Agency | 1,251 | 49 |  | 1,300 |
| Non-agency | 1,687 | 20 | (5) | 1,702 |
| Asset-backed | 1,009 | 2 | (10) | 1,001 |
| State\tand\tmunicipal | 1,055 | 10 | (4) | 1,061 |
| Other\tdebt | 339 | 9 |  | 348 |
| Total\tsecurities\theld\tto\tmaturity | \t\t $11,687 | \t\t $169 | $ (91) | $11,765 |
| (a) |  |  |  |  |

(a) Held	to	maturity	securities	transferred	from	available	for	sale	are	included	in	held	to	maturity	at	fair	value	at	the	time	of	transfer.	The	amortized	cost	of	held	to	maturity	securities	included	net	unrealized	gains	of $125	million	and	$111	million	at	December	31,	2014	and	2013,	respectively,	related	to	securities	transferred,	which	are	offset	in	Accumulated	Other	Comprehensive	Income,	net	of	tax.

(b) These	line	items	were	corrected	for	the	prior	periods	due	to	a	misclassification	of	Government	National	Mortgage	Association	(GNMA)	securities	collateralized	by	project	loans.	$1.1	billion	was	previously reported	as	residential	mortgage-backed	agency	securities	at	December	31,	2013,	and	was	reclassified	to	commercial	mortgage-backed	agency	securities.

The	fair	value	of	investment	securities	is	impacted	by	interest	rates,	credit spreads,	market	volatility	and	liquidity	conditions.	Net	unrealized	gains	and losses	in	the	securities	available	for	sale	portfolio	are	included	in	Shareholders' equity	as	Accumulated	other	comprehensive	income	or	loss,	net	of	tax,	unless credit-related.	Securities	held	to	maturity	are	carried	at	amortized	cost.	At December	31,	2014,	Accumulated	other	comprehensive	income	included	pretax gains	of	$63	million	from	derivatives	that	hedged	the	purchase	of	investment securities	classified	as	held	to	maturity.	The	gains	will	be	accreted	into	interest income	as	an	adjustment	of	yield	on	the	securities.

During	the	second	quarter	of	2014,	we	transferred	securities	with	a	fair	value	of $1.4	billion	from	available	for	sale	to	held	to	maturity.	The	securities	transferred included	$1.0	billion	of	state	and	municipal	securities,	$.2	billion	of	agency residential	and	commercial	mortgage-backed	securities,	and	$.2	billion	of	non- agency	commercial	mortgage-backed	securities.	The	non-agency	commercial mortgage-backed	and	state	and	municipal	securities	were	all	rated	either	AAA	or AA.	We	changed	our	intent	and	committed	to	hold	these	high-quality	securities to	maturity	in	order	to	reduce	the	impact	of	price	volatility	on	Accumulated	other comprehensive	income	and	certain	capital	measures,	after	taking	into consideration	market	conditions.	The	securities	were	reclassified	at	fair	value	at the	time	of	transfer	and	the	transfer	represented	a	non-cash	transaction. Accumulated	other	comprehensive	income	included	net	pretax	unrealized	gains of	$44	million	at	transfer,	which	are	being	accreted	over	the	remaining	life	of	the related	securities	as	an	adjustment	of	yield	in	a	manner	consistent	with	the amortization	of	the	net	premium	on	the	same	transferred	securities,	resulting	in no	impact	on	net	income.

Table	76	presents	gross	unrealized	losses	on	securities	available	for	sale	at December	31,	2014	and	December	31,	2013.	The	securities	are	segregated between	investments	that	have	been	in	a	continuous	unrealized	loss	position	for less	than	twelve	months	and	twelve	months	or	more	based	on	the	point	in	time that	the	fair	value	declined	below	the	amortized	cost	basis.	The	table	includes debt	securities	where	a	portion	of	other-than-temporary	impairment	(OTTI)	has been	recognized	in	Accumulated	other	comprehensive	income	(loss).

# Table	76:	Gross	Unrealized	Loss	and	Fair	Value	of	Securities	Available	for	Sale

| In	millions | Unrealized	loss	position<br>less	than	12	months<br>Unrealized<br>Loss | Fair<br>Value | Unrealized	loss	position<br>12	months	or	more<br>Unrealized<br>Loss | Fair<br>Value | Total<br>Unrealized<br>Loss | Fair<br>Value |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |  |  |  |
| Debt\tsecurities |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | $(1) | $1,426 |  |  | $(1) | $1,426 |
| Residential\tmortgage-backed |  |  |  |  |  |  |
| Agency | (4) | 644 | $(37) | $1,963 | (41) | 2,607 |
| Non-agency | (5) | 276 | (94) | \t 1,487 | (99) | 1,763 |
| Commercial\tmortgage-backed |  |  |  |  |  |  |
| Agency | (2) | 681 | (12) | 322 | (14) | 1,003 |
| Non-agency | (4) | 928 | (7) | 335 | (11) | 1,263 |
| Asset-backed | (4) | 913 | (28) | \t 1,133 | (32) | 2,046 |
| State\tand\tmunicipal | \t\t\t(a) | 41 | (3) | 77 | (3) | 118 |
| Other\tdebt | (2) | 314 | (4) | 186 | (6) | 500 |
| Total\tdebt\tsecurities | (22) | 5,223 | (185) | \t 5,503 | (207) | \t 10,726 |
| Corporate\tstocks\tand\tother |  |  | (1) | 15 | (1) | 15 |
| Total | $(22) | $5,223 | $(186) | $5,518 | $(208) | $10,741 |
| December\t31,\t2013 |  |  |  |  |  |  |
| Debt\tsecurities |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | $(7) | $1,066 |  |  | $(7) | $1,066 |
| Residential\tmortgage-backed |  |  |  |  |  |  |
| Agency\t(b) | (198) | 7,519 | $(11) | $287 | (209) | 7,806 |
| Non-agency | (18) | 855 | (142) | \t 1,719 | (160) | 2,574 |
| Commercial\tmortgage-backed |  |  |  |  |  |  |
| Agency\t(b) | (13) | 454 | (1) | 6 | (14) | 460 |
| Non-agency | (18) | 1,315 | \t\t\t(a) | 14 | (18) | 1,329 |
| Asset-backed | (11) | 1,752 | (37) | 202 | (48) | 1,954 |
| State\tand\tmunicipal | (23) | 897 | (21) | 286 | (44) | 1,183 |
| Other\tdebt | (17) | 844 | (1) | 12 | (18) | 856 |
| Total\tdebt\tsecurities | (305) | \t 14,702 | (213) | \t 2,526 | (518) | \t 17,228 |
| Corporate\tstocks\tand\tother | (1) | 15 |  |  | (1) | 15 |
| Total | $(306) | $14,717 | $(213) | $2,526 | $(519) | $17,243 |
| (a) |  |  |  |  |  |  |

(a) The	unrealized	loss	on	these	securities	was	less	than	$.5	million.

The	gross	unrealized	loss	on	debt	securities	held	to	maturity	was	$22	million	at December	31,	2014	and	$98	million	at	December	31,	2013.	The	majority	of	the gross	unrealized	loss	at	December	31,	2014	related	to	agency	residential mortgage-backed	securities.	The	fair	value	of	debt	securities	held	to	maturity	that were	in	a	continuous	loss	position	for	less	than	12	months	was	$134	million	and $3.6	billion	at	December	31,	2014	and	December	31,	2013,	respectively,	and	for positions	that	were	in	a	continuous	loss	position	for	12	months	or	more	was	$1.6 billion	and	$48	million	at	December	31,	2014	and	December	31,	2013, respectively.	For	securities	transferred	to	held	to	maturity	from	available	for	sale, the	unrealized	loss	for	purposes	of	this	analysis	is	determined	by	comparing	the security's	original	amortized	cost	to	its	current	estimated	fair	value.

# Evaluating	Investment	Securities	for	Other-than-Temporary	Impairments

For	the	securities	in	the	preceding	Table	76,	as	of	December	31,	2014	we	do	not intend	to	sell	and	believe	we	will	not	be	required	to	sell	the	securities	prior	to recovery	of	the	amortized	cost	basis.

At	least	quarterly,	we	conduct	a	comprehensive	security-level	assessment	on	all securities.	For	those	securities	in	an	unrealized	loss	position	we	determine	if OTTI	exists.	An	unrealized	loss	exists	when	the	current	fair	value	of	an individual	security	is	less	than	its	amortized	cost	basis.	An	OTTI	loss	must	be recognized	for	a	debt	security	in	an	unrealized	loss	position	if	we	intend	to	sell the	security	or	it	is	more	likely	than	not	we	will	be	required	to	sell	the	security

prior	to	recovery	of	its	amortized	cost	basis.	In	this	situation,	the	amount	of	loss recognized	in	income	is	equal	to	the	difference	between	the	fair	value	and	the amortized	cost	basis	of	the	security.	Even	if	we	do	not	expect	to	sell	the	security, we	must	evaluate	the	expected	cash	flows	to	be	received	to	determine	if	we believe	a	credit	loss	has	occurred.	In	the	event	of	a	credit	loss,	only	the	amount of	impairment	associated	with	the	credit	loss	is	recognized	in	income.	The portion	of	the	unrealized	loss	relating	to	other	factors,	such	as	liquidity conditions	in	the	market	or	changes	in	market	interest	rates,	is	recorded	in accumulated	other	comprehensive	income	(loss).

The	security-level	assessment	is	performed	on	each	security,	regardless	of	the classification	of	the	security	as	available	for	sale	or	held	to	maturity.	Our assessment	considers	the	security	structure,	recent	security	collateral performance	metrics	if	applicable,	external	credit	ratings,	failure	of	the	issuer	to make	scheduled	interest	or	principal	payments,	our	judgment	and	expectations	of future	performance,	and	relevant	independent	industry	research,	analysis	and forecasts.	Results	of	the	periodic	assessment	are	reviewed	by	a	cross-functional senior	management	team	representing	Asset	&	Liability	Management,	Finance, and	Market	Risk	Management.	The	senior	management	team	considers	the results	of	the	assessments,	as	well	as	other	factors,	in	determining	whether	the impairment	is	other-than-temporary.

Substantially	all	of	the	credit	impairment	we	have	recognized	relates	to	non- agency	residential	mortgage-backed	securities	and	asset-backed	securities collateralized	by	first-lien	and	second-lien	non-agency	residential	mortgage loans.	Potential	credit	losses	on	these	securities	are	evaluated	on	a	security-by- security	basis.	Collateral	performance	assumptions	are	developed	for	each security	after	reviewing	collateral	composition	and	collateral	performance statistics.	This	includes	analyzing	recent	delinquency	roll	rates,	loss	severities, voluntary	prepayments	and	various	other	collateral	and	performance	metrics. This	information	is	then	combined	with	general	expectations	on	the	housing market,	employment	and	other	macroeconomic	factors	to	develop	estimates	of future	performance.

Security	level	assumptions	for	prepayments,	loan	defaults	and	loss	given	default are	applied	to	each	non-agency	residential	mortgage-backed	security	and	asset- backed	security	collateralized	by	first-lien	and	second-lien	non-agency residential	mortgage	loans	using	a	third-party	cash	flow	model.	The	third-party cash	flow	model	then	generates	projected	cash	flows	according	to	the	structure of	each	security.	Based	on	the	results	of	the	cash	flow	analysis,	we	determine whether	we	expect	that	we	will	recover	the	amortized	cost	basis	of	our	security.

The	following	table	provides	detail	on	the	significant	assumptions	used	to determine	credit	impairment	for	non-agency	residential	mortgage-backed	and asset-backed	securities	collateralized	by	first-lien	and	second-lien	non-agency residential	mortgage	loans.

# Table	77:	Credit	Impairment	Assessment	Assumptions	–	Non-Agency Residential	Mortgage-Backed	and	Asset-Backed	Securities

| December	31,	2014 | Range | average	(a) |
| :--- | :--- | :--- |
| Long-term\tprepayment\trate\t(annual\tCPR) |  |  |
| Prime | 7\t–\t20% | 13% |
| Alt-A | 5\t–\t12 | 6 |
| Option\tARM\nRemaining\tcollateral\texpected\tto\tdefault | 3\t–\t6 | 3 |
| Prime | 0\t–\t32% | 13% |
| Alt-A | 6\t–\t50 | 27 |
| Option\tARM\nLoss\tseverity | \t 11\t–53 | 36 |
| Prime | \t20\t–\t70% | 41% |
| Alt-A | \t30\t–\t83 | 60 |
| Option\tARM | \t45\t–\t71 | 62 |
| (a)\nCalculated\tby\tweighting\tthe\trelevant\tassumption\tfor\teach\tindividual\tsecurity\tby\tthe\tcurrent |  |  |

(a) Calculated	by	weighting	the	relevant	assumption	for	each	individual	security	by	the	current outstanding	cost	basis	of	the	security.

The	following	table	presents	a	rollforward	of	the	cumulative	OTTI	credit	losses recognized	in	earnings	for	all	debt	securities	for	which	a	portion	of	an	OTTI	loss was	recognized	in	Accumulated	other	comprehensive	income	(loss).

# Table	78:	Rollforward	of	Cumulative	OTTI	Credit	Losses	Recognized	in Earnings

Information	relating	to	gross	realized	securities	gains	and	losses	from	the	sales	of	securities	is	set	forth	in	the	following	table.

# Table	79:	Gains	(Losses)	on	Sales	of	Securities	Available	for	Sale

| In	millions | Proceeds | Gross<br>Gains | Gross<br>Losses | Net<br>Gains | Tax<br>Expense |
| :--- | :--- | :--- | :--- | :--- | :--- |
| For\tthe\tyear\tended\tDecember\t31 |  |  |  |  |  |
| 2014 | \t\t $4,480\t\t\t\t $ | 33\t\t\t\t $ (29) | 33\t\t\t\t $ (29) | $4\t\t\t\t$ | 1 |
| 2013 | \t 8,178 | \t 146 | (47) | 99 | 35 |
| 2012 | \t 9,441 | \t 214 | (10) | \t 204 | 71 |

The	following	table	presents,	by	remaining	contractual	maturity,	the	amortized	cost,	fair	value	and	weighted-average	yield	of	debt	securities	at	December	31,	2014.

# Table	80:	Contractual	Maturity	of	Debt	Securities

| December	31,	2014<br>Dollars	in	millions | 1	Year	or<br>Less | through	5<br>Years | After	5	Years<br>through	10	Years | After	10<br>Years | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| SECURITIES\tAVAILABLE\tFOR\tSALE |  |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | $2 | $1,312 | $3,437 | $486 | $5,237 |
| Residential\tmortgage-backed |  |  |  |  |  |
| Agency |  | 120 | 456 | \t 17,070 | \t 17,646 |
| Non-agency |  | 6 | 1 | 4,716 | 4,723 |
| Commercial\tmortgage-backed |  |  |  |  |  |
| Agency | 128 | 206 | 20 | 1,824 | 2,178 |
| Non-agency |  | 50 |  | 4,035 | 4,085 |
| Asset-backed | 4 | 1,014 | 1,977 | 2,146 | 5,141 |
| State\tand\tmunicipal | 5 | 134 | 324 | 1,490 | 1,953 |
| Other\tdebt | 91 | 1,045 | 437 | 203 | 1,776 |
| Total\tdebt\tsecurities\tavailable\tfor\tsale | $230 | $3,887 | $6,652 | $31,970 | $42,739 |
| Fair\tvalue | $231 | $3,976 | $6,760 | $32,827 | $43,794 |
| Weighted-average\tyield,\tGAAP\tbasis | 3.49% | 2.55% | 2.36% | 2.99% | 2.85% |
| SECURITIES\tHELD\tTO\tMATURITY |  |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies |  |  |  | $248 | $248 |
| Residential\tmortgage-backed |  |  |  |  |  |
| Agency |  |  |  | 5,736 | 5,736 |
| Non-agency |  |  |  | 270 | 270 |
| Commercial\tmortgage-backed |  |  |  |  |  |
| Agency |  | $996 | $145 | 59 | 1,200 |
| Non-agency |  | 6 |  | 1,004 | 1,010 |
| Asset-backed |  | 17 | 408 | 334 | 759 |
| State\tand\tmunicipal | $20 | 26 | 809 | 1,187 | 2,042 |
| Other\tdebt |  |  | 323 |  | 323 |
| Total\tdebt\tsecurities\theld\tto\tmaturity | $20 | $1,045 | $1,685 | $8,838 | $11,588 |
| Fair\tvalue | $20 | $1,085 | $1,751 | $9,128 | $11,984 |
| Weighted-average\tyield,\tGAAP\tbasis | 4.42% | 3.44% | 3.29% | 3.72% | 3.63% |

Based	on	current	interest	rates	and	expected	prepayment	speeds,	the	weighted- average	expected	maturity	of	the	investment	securities	portfolio	(excluding corporate	stocks	and	other)	was	4.3	years	at	December	31,	2014	and	4.9	years	at December	31,	2013.	The	weighted-average	expected	maturities	of	mortgage	and other	asset-backed	debt	securities	were	as	follows	as	of	December	31,	2014:

# Table	81:	Weighted-Average	Expected	Maturity	of	Mortgage	and	Other	Asset- Backed	Debt	Securities

Weighted-average	yields	are	based	on	historical	cost	with	effective	yields weighted	for	the	contractual	maturity	of	each	security.	At	December	31,	2014, there	were	no	securities	of	a	single	issuer,	other	than	FNMA,	that	exceeded	10% of	Total	shareholders'	equity.

The	following	table	presents	the	fair	value	of	securities	that	have	been	either pledged	to	or	accepted	from	others	to	collateralize	outstanding	borrowings.

# Table	82:	Fair	Value	of	Securities	Pledged	and	Accepted	as	Collateral

(a) In	the	prior	period,	the	pledged	to	others	balance	incorrectly	included	FHLB	standby	letters	of credit.	During	the	fourth	quarter	of	2014,	we	corrected	the	pledged	to	others	balance	to	exclude	the FHLB	standby	letters	of	credit.	Accordingly,	the	prior	period	amount	as	of	December	31,	2013	was reduced	by	$6.2	billion.

The	securities	pledged	to	others	include	positions	held	in	our	portfolio	of investment	securities,	trading	securities,	and	securities	accepted	as	collateral from	others	that	we	are	permitted	by	contract	or	custom	to	sell	or	repledge,	and were	used	to	secure	public	and	trust	deposits,	repurchase	agreements,	and	for other	purposes.

# NOTE	7	FAIR	VALUE

# Fair	Value	Measurement

Fair	value	is	defined	in	GAAP	as	the	price	that	would	be	received	to	sell	an	asset or	the	price	that	would	be	paid	to	transfer	a	liability	on	the	measurement	date. GAAP	focuses	on	the	exit	price	in	the	principal	or	most	advantageous	market	for the	asset	or	liability	in	an	orderly	transaction	between	market	participants. GAAP	establishes	a	fair	value	reporting	hierarchy	to	maximize	the	use	of observable	inputs	when	measuring	fair	value	and	defines	the	three	levels	of inputs	as	noted	below.

# Level	1

Fair	value	is	determined	using	a	quoted	price	in	an	active	market	for	identical assets	or	liabilities.	Level	1	assets	and	liabilities	may	include	debt	securities, equity	securities	and	listed	derivative	contracts	that	are	traded	in	an	active exchange	market	and	certain	U.S.	Treasury	securities	that	are	actively	traded	in over-the-counter	markets.

Fair	value	is	estimated	using	inputs	other	than	quoted	prices	included	within Level	1	that	are	observable	for	assets	or	liabilities,	either	directly	or	indirectly. The	majority	of	Level	2	assets	and	liabilities	include	debt	securities,	equity securities	and	listed	derivative	contracts	with	quoted	prices	that	are	traded	in markets	that	are	not	active,	and	certain	debt	and	equity	securities	and	over-the- counter	derivative	contracts	whose	fair	value	is	determined	using	a	pricing	model without	significant	unobservable	inputs.

Fair	value	is	estimated	using	unobservable	inputs	that	are	significant	to	the	fair value	of	the	assets	or	liabilities.	Level	3	assets	and	liabilities	include	financial instruments	whose	value	is	determined	using	pricing	models	and	discounted	cash flow	methodologies,	or	similar	techniques	for	which	the	significant	valuation inputs	are	not	observable	and	the	determination	of	fair	value	requires	significant management	judgment	or	estimation.

Certain	assets	which	have	been	adjusted	due	to	impairment	are	accounted	for	at lower	of	amortized	cost	or	fair	value	on	a	nonrecurring	basis	and	consist primarily	of	certain	nonaccrual	loans,	loans	held	for	sale,	commercial	mortgage servicing	rights	(in	years	prior	to	2014),	equity	investments	and	other	assets. These	assets,	which	are	generally	classified	as	Level	3,	are	included	in	Table	86 in	this	Note	7.

We	characterize	active	markets	as	those	where	transaction	volumes	are	sufficient to	provide	objective	pricing	information,	with	reasonably	narrow	bid/ask	spreads and	where	dealer	quotes	received	do	not	vary	widely	and	are	based	on	current information.	Inactive	markets	are	typically	characterized	by	low	transaction volumes,	price	quotations	that	vary	substantially	among	market	participants	or are	not	based	on	current	information,	wide	bid/ask	spreads,	a

significant	increase	in	implied	liquidity	risk	premiums,	yields,	or	performance indicators	for	observed	transactions	or	quoted	prices	compared	to	historical periods,	a	significant	decline	or	absence	of	a	market	for	new	issuance,	or	any combination	of	the	above	factors.	We	also	consider	nonperformance	risks including	credit	risk	as	part	of	our	valuation	methodology	for	all	assets	and liabilities	measured	at	fair	value.

Any	models	used	to	determine	fair	values	or	to	validate	dealer	quotes	based	on the	descriptions	below	are	subject	to	review	and	independent	testing	as	part	of our	model	validation	and	internal	control	testing	processes.	Our	Model	Risk Management	Committee	reviews	significant	models	on	at	least	an	annual	basis. In	addition,	the	Valuation	Committee	approves	valuation	methodologies	and reviews	the	results	of	independent	valuation	reviews	and	processes	for	assets	and liabilities	measured	at	fair	value	on	a	recurring	basis.

Assets	and	liabilities	measured	at	fair	value,	by	their	nature,	result	in	a	higher degree	of	financial	statement	volatility.	Assets	and	liabilities	classified	within Level	3	inherently	require	the	use	of	various	assumptions,	estimates	and judgments	when	measuring	their	fair	value.	As	observable	market	activity	is commonly	not	available	to	use	when	estimating	the	fair	value	of	Level	3	assets and	liabilities,	we	must	estimate	fair	value	using	various	modeling	techniques. These	techniques	include	the	use	of	a	variety	of	inputs/assumptions	including credit	quality,	liquidity,	interest	rates	or	other	relevant	inputs	across	the	entire population	of	our	Level	3	assets	and	liabilities.	Changes	in	the	significant underlying	factors	or	assumptions	(either	an	increase	or	a	decrease)	in	any	of these	areas	underlying	our	estimates	may	result	in	a	significant	increase/decrease in	the	Level	3	fair	value	measurement	of	a	particular	asset	and/or	liability	from period	to	period.

# Financial	Instruments	Accounted	For	at	Fair	Value	on	a	Recurring	Basis

# Securities	Available	for	Sale	and	Trading	Securities

Securities	accounted	for	at	fair	value	include	both	the	available	for	sale	and trading	portfolios.	We	primarily	use	prices	obtained	from	pricing	services,	dealer quotes,	or	recent	trades	to	determine	the	fair	value	of	securities.	As	of December	31,	2014,	78%	of	the	positions	in	these	portfolios	were	priced	by using	pricing	services	provided	by	third-party	vendors.	The	third-party	vendors use	a	variety	of	methods	when	pricing	securities	that	incorporate	relevant	market data	to	arrive	at	an	estimate	of	what	a	buyer	in	the	marketplace	would	pay	for	a security	under	current	market	conditions.	One	of	the	vendor's	prices	are	set	with reference	to	market	activity	for	highly	liquid	assets,	such	as	U.S.	Treasury	and agency	securities	and	agency	residential	mortgage-backed	securities,	and	matrix pricing	for	other	asset	classes,	such	as	commercial	mortgage-backed	and	other asset-backed	securities.	Another	vendor	primarily	uses	discounted	cash	flow pricing	models	considering	adjustments	for	spreads	and	prepayments	for	the instruments	we	value	using	this	service,	such	as	non-agency

residential	mortgage-backed	securities,	agency	adjustable	rate	mortgage securities,	agency	collateralized	mortgage	obligations	(CMOs),	commercial mortgage-backed	securities	and	municipal	bonds.	The	vendors	we	use	provide pricing	services	on	a	global	basis	and	have	quality	management	processes	in place	to	monitor	the	integrity	of	the	valuation	inputs	and	the	prices	provided	to users,	including	procedures	to	consider	and	incorporate	information	received from	pricing	service	users	who	may	challenge	a	price.	We	monitor	and	validate the	reliability	of	vendor	pricing	on	an	ongoing	basis	through	pricing methodology	reviews,	by	performing	detailed	reviews	of	the	assumptions	and inputs	used	by	the	vendor	to	price	individual	securities,	and	through	price validation	testing.	Price	validation	testing	is	performed	independent	of	the	risk- taking	function	and	involves	corroborating	the	prices	received	from	third-party vendors	with	prices	from	another	third-party	source,	by	reviewing	valuations	of comparable	instruments,	by	comparison	to	internal	valuations,	or	by	reference	to recent	sales	of	similar	securities.	Securities	not	priced	by	one	of	our	pricing vendors	may	be	valued	using	a	dealer	quote.	Dealer	quotes	received	are	typically non-binding.	Securities	priced	using	a	dealer	quote	are	subject	to	corroboration either	with	another	dealer	quote,	by	comparison	to	similar	securities	priced	by either	a	third-party	vendor	or	another	dealer,	or	through	internal	valuation	in order	to	validate	that	the	quote	is	representative	of	the	market.	Security	prices	are also	validated	through	actual	cash	settlement	upon	sale	of	a	security.

Securities	are	classified	within	the	fair	value	hierarchy	after	giving	consideration to	the	activity	level	in	the	market	for	the	security	type	and	the	observability	of the	inputs	used	to	determine	the	fair	value.	When	a	quoted	price	in	an	active market	exists	for	the	identical	security,	this	price	is	used	to	determine	fair	value and	the	security	is	classified	within	Level	1	of	the	hierarchy.	Level	1	securities include	certain	U.S.	Treasury	securities	and	exchange-traded	equities.	When	a quoted	price	in	an	active	market	for	the	identical	security	is	not	available,	fair value	is	estimated	using	either	an	alternative	market	approach,	such	as	a	recent trade	or	matrix	pricing,	or	an	income	approach,	such	as	a	discounted	cash	flow pricing	model.	If	the	inputs	to	the	valuation	are	based	primarily	on	market observable	information,	then	the	security	is	classified	within	Level	2	of	the hierarchy.	Level	2	securities	include	agency	debt	securities,	agency	residential mortgage-backed	securities,	agency	and	non-agency	commercial	mortgage- backed	securities,	certain	non-agency	residential	mortgage-backed	securities, asset-backed	securities	collateralized	by	non-mortgage-related	consumer	loans, municipal	securities,	and	other	debt	securities.	Level	2	securities	are predominantly	priced	by	third	parties,	either	a	pricing	vendor	or	dealer.

In	certain	cases	where	there	is	limited	activity	or	less	transparency	around	the inputs	to	the	valuation,	securities	are	classified	within	Level	3	of	the	hierarchy. Securities	classified	as	Level	3	consist	primarily	of	non-agency	residential mortgage-backed	and	asset-backed	securities	collateralized	by	first-	and	second- lien	residential	mortgage	loans.	Fair	value

for	these	securities	is	primarily	estimated	using	pricing	obtained	from	third-party vendors.	In	some	cases,	fair	value	is	estimated	using	a	dealer	quote,	by	reference to	prices	of	securities	of	a	similar	vintage	and	collateral	type	or	by	reference	to recent	sales	of	similar	securities.	Market	activity	for	these	security	types	is limited	with	little	price	transparency.	As	a	result,	these	securities	are	generally valued	by	the	third-party	vendor	using	a	discounted	cash	flow	approach	that incorporates	observable	market	activity	where	available.	Significant	inputs	to	the valuation	include	prepayment	projections	and	credit	loss	assumptions	(default rate	and	loss	severity)	and	discount	rates	that	are	deemed	representative	of current	market	conditions.	The	discount	rates	used	incorporate	a	spread	over	the benchmark	curve	that	takes	into	consideration	liquidity	risk	and	potential	credit risk	not	already	included	in	the	credit	loss	assumptions.	Significant	increases (decreases)	in	any	of	those	assumptions	in	isolation	would	result	in	a significantly	lower	(higher)	fair	value	measurement.	Prepayment	estimates generally	increase	when	market	interest	rates	decline	and	decrease	when	market interest	rates	rise.	Credit	loss	estimates	are	driven	by	the	ability	of	borrowers	to pay	their	loans	and	housing	market	prices	and	are	impacted	by	changes	in	overall macroeconomic	conditions,	typically	increasing	when	economic	conditions worsen	and	decreasing	when	conditions	improve.	An	increase	in	the	estimated prepayment	rate	typically	results	in	a	decrease	in	estimated	credit	losses	and	vice versa.	Discount	rates	typically	increase	when	market	interest	rates	increase and/or	credit	and	liquidity	risks	increase.	Similarly,	discount	rates	typically decrease	when	market	interest	rates	decline	and/or	credit	and	liquidity	conditions improve.	Price	validation	procedures	performed	for	these	securities	include comparing	current	prices	to	historical	pricing	trends	by	collateral	type	and vintage,	and	by	obtaining	corroborating	prices	from	another	third-party	source.

Certain	infrequently	traded	debt	securities	within	the	State	and	municipal	and Other	debt	securities	available-for-sale	and	Trading	securities	categories	are	also classified	in	Level	3.	The	significant	unobservable	inputs	used	to	estimate	the fair	value	of	these	securities	include	an	estimate	of	expected	credit	losses	and	a discount	for	liquidity	risk.	These	inputs	are	incorporated	into	the	fair	value measurement	by	either	increasing	the	spread	over	the	benchmark	curve	or	by applying	a	credit	and	liquidity	discount	to	the	par	value	of	the	security. Significant	increases	(decreases)	in	credit	and/or	liquidity	risk	could	result	in	a significantly	lower	(higher)	fair	value	estimate.

Exchange-traded	derivatives	are	valued	using	quoted	market	prices	and	are classified	as	Level	1.	However,	the	majority	of	derivatives	that	we	enter	into	are executed	over-the-counter	and	are	valued	using	internal	models.	These derivatives	are	primarily	classified	as	Level	2	as	the	readily	observable	market inputs	to	these	models	are	validated	to	external	sources.	The	external	sources	for these	inputs	include	industry

pricing	services,	or	are	corroborated	through	recent	trades,	dealer	quotes,	yield curves,	implied	volatility	or	other	market-related	data.	Level	2	financial derivatives	are	primarily	estimated	using	a	combination	of	Eurodollar	future prices	and	observable	benchmark	interest	rate	swaps	to	construct	projected discounted	cash	flows.	Financial	derivatives	that	are	priced	using	significant management	judgment	or	assumptions	are	classified	as	Level	3.

Fair	value	information	for	Level	3	financial	derivatives	is	presented	separately for	interest	rate	contracts	and	other	contracts.	Interest	rate	contracts	include residential	and	commercial	mortgage	interest	rate	lock	commitments	and	certain interest	rate	options.	Other	contracts	include	risk	participation	agreements, swaps	related	to	the	sale	of	certain	Visa	Class	B	common	shares	and	other	types of	contracts.

The	fair	values	of	residential	mortgage	loan	commitment	assets	as	of December	31,	2014	and	2013	are	included	in	the	Insignificant	Level	3	assets,	net of	liabilities	line	item	in	Table	85	in	this	Note	7.	Significant	unobservable	inputs for	these	commitments	include	the	probability	of	funding	and	embedded servicing.	The	probability	of	funding	for	residential	mortgage	loan	commitments represents	the	expected	proportion	of	loan	commitments	in	the	pipeline	that	will fund.	Additionally,	embedded	in	the	market	price	of	the	underlying	loan	is	a value	for	retaining	servicing	of	the	loan	once	it	is	sold.	Significant	increases (decreases)	in	the	fair	value	of	a	residential	mortgage	loan	commitment	asset (liability)	result	when	the	probability	of	funding	increases	(decreases)	and	when the	embedded	servicing	value	increases	(decreases).

The	fair	values	of	commercial	mortgage	loan	commitment	assets	and	liabilities as	of	December	31,	2014	and	2013	are	included	in	the	Insignificant	Level	3 assets,	net	of	liabilities	line	item	in	Table	85	in	this	Note	7.	Significant unobservable	inputs	for	these	commitments	include	spread	over	the	benchmark interest	rate	and	the	estimated	servicing	cash	flows	for	loans	sold	to	the	agencies with	servicing	retained.	The	spread	over	the	benchmark	curve	reflects management	assumptions	regarding	credit	and	liquidity	risks.	Significant increases	(decreases)	in	the	fair	value	of	commercial	mortgage	loan commitments	result	when	the	spread	over	the	benchmark	curve	decreases (increases)	or	the	estimated	servicing	cash	flows	for	loans	sold	to	the	agencies with	servicing	retained	increases	(decreases).

The	fair	values	of	interest	rate	option	assets	and	liabilities	as	of	December	31, 2014	and	2013	are	included	in	the	Insignificant	Level	3	assets,	net	of	liabilities line	item	in	Table	85	in	this	Note	7.	The	significant	unobservable	input	used	in the	fair	value	measurement	of	the	interest	rate	options	is	expected	interest	rate volatility.	Significant	increases	(decreases)	in	interest	rate	volatility	would	result in	a	significantly	higher	(lower)	fair	value	measurement.

The	fair	values	of	risk	participation	agreement	assets	and	liabilities	as	of December	31,	2014	and	2013	are	included	in	the	Insignificant	Level	3	assets,	net of	liabilities	line	item	in	Table	85	in	this	Note	7.	The	significant	unobservable inputs	used	in	the	fair	value	measurement	of	risk	participation	agreements	are probability	of	default	and	loss	severity.	Significant	increases	(decreases)	in probability	of	default	and	loss	severity	would	result	in	a	significantly	higher (lower)	fair	value	measurement.

In	connection	with	the	sales	of	portions	of	our	Visa	Class	B	common	shares,	we entered	into	swap	agreements	with	the	purchaser	of	the	shares	to	account	for	any future	risk	of	converting	Class	B	common	shares	to	Class	A	common	shares	and to	account	for	the	corresponding	change	in	value	to	the	Class	B	shares.	These adjustments	result	from	resolution	of	the	specified	litigation	or	the	changes	in	the amount	in	the	litigation	escrow	account	funded	by	Visa	as	well	as	from	changes in	the	estimated	litigation	resolution	date	(see	Note	21	Legal	Proceedings	and Note	22	Commitments	and	Guarantees	for	additional	information).	These	swaps also	require	payments	calculated	by	reference	to	the	market	price	of	the	Class	A common	shares	and	a	fixed	rate	of	interest.	The	swaps	are	classified	as	Level	3 instruments	and	the	fair	values	of	the	liability	positions	totaled	$135	million	at December	31,	2014	and	$90	million	at	December	31,	2013,	respectively.	The fair	values	of	the	swap	agreements	are	determined	using	a	discounted	cash	flow methodology.	The	significant	unobservable	inputs	to	the	valuations	are	estimated changes	in	the	conversion	rate	of	the	Class	B	common	shares	into	Class	A common	shares	and	the	estimated	growth	rate	of	the	Class	A	share	price.	A decrease	in	the	conversion	rate	will	have	a	negative	impact	on	the	fair	value	of the	swaps	and	vice	versa.	Independent	of	changes	in	the	conversion	rate,	an increase	in	the	estimated	growth	rate	of	the	Class	A	share	price	will	have	a negative	impact	on	the	fair	value	of	the	swaps	and	vice	versa,	through	its	impact on	periodic	payments	due	to	the	counterparty	until	the	maturity	dates	of	the swaps.

The	fair	values	of	our	derivatives	include	a	credit	valuation	adjustment	(CVA)	to reflect	our	own	and	our	counterparties'	nonperformance	risk.	Our	CVA	is computed	using	new	loan	pricing	and	considers	externally	available	bond spreads,	in	conjunction	with	internal	historical	recovery	observations.

# Residential	Mortgage	Loans	Held	for	Sale

We	account	for	certain	residential	mortgage	loans	originated	for	sale	at	fair	value on	a	recurring	basis.	The	election	of	the	fair	value	option	aligns	the	accounting for	the	residential	mortgages	with	the	related	hedges.	Additionally,	we	have elected	to	account	for	loans	repurchased	due	to	breaches	of	representations	and warranties	at	fair	value.

Residential	mortgage	loans	are	valued	based	on	quoted	market	prices,	where available,	prices	for	other	traded	mortgage	loans	with	similar	characteristics,	and purchase	commitments	and	bid	information	received	from	market	participants. The	prices

are	adjusted	as	necessary	to	include	the	embedded	servicing	value	in	the	loans and	to	take	into	consideration	the	specific	characteristics	of	certain	loans	that	are priced	based	on	the	pricing	of	similar	loans.	These	adjustments	represent unobservable	inputs	to	the	valuation	but	are	not	considered	significant	given	the relative	insensitivity	of	the	value	to	changes	in	these	inputs	to	the	fair	value	of the	loans.	Accordingly,	the	majority	of	residential	mortgage	loans	held	for	sale are	classified	as	Level	2.	This	category	also	includes	repurchased	and temporarily	unsalable	residential	mortgage	loans.	These	loans	are	repurchased due	to	a	breach	of	representations	and	warranties	in	the	loan	sales	agreement	and typically	occur	after	the	loan	is	in	default.	The	temporarily	unsalable	loans	have an	origination	defect	that	makes	them	currently	unable	to	be	sold	into	the performing	loan	sales	market.	Because	transaction	details	regarding	sales	of	this type	of	loan	are	often	unavailable,	unobservable	bid	information	from	brokers and	investors	is	heavily	relied	upon.	Accordingly,	based	on	the	significance	of unobservable	inputs,	these	loans	are	classified	as	Level	3.

# Trading	Loans

We	have	elected	to	account	for	certain	trading	loans	at	fair	value.	The	fair	value for	trading	loans	is	based	on	pricing	from	average	bid	broker	quotes	received from	a	loan	pricing	service,	sale	commitments,	or	a	model	based	on	indications received	in	marketing	the	credit	or	on	the	loan's	characteristics	in	comparison	to market	data	on	similar	loans.	These	instruments	are	primarily	classified	as	Level 2.

# Commercial	Mortgage	Servicing	Rights

As	of	January	1,	2014,	PNC	made	an	irrevocable	election	to	subsequently measure	all	classes	of	commercial	mortgage	servicing	rights	(MSRs)	at	fair	value in	order	to	eliminate	any	potential	measurement	mismatch	between	our economic	hedges	and	the	commercial	MSRs.	We	recognize	recurring gains/(losses)	on	changes	in	the	fair	value	of	commercial	MSRs	as	a	result	of	the election.	Assumptions	incorporated	into	the	commercial	valuation	model	reflect management's	best	estimate	of	factors	that	a	market	participant	would	use	in valuing	the	commercial	MSRs.	Although	sales	of	commercial	MSRs	do	occur, commercial	MSRs	do	not	trade	in	an	active,	open	market	with	readily	observable prices	so	the	precise	terms	and	conditions	of	sales	are	not	available.	Due	to	the nature	of	the	valuation	inputs	and	the	limited	availability	of	market	pricing, commercial	MSRs	are	classified	as	Level	3.

The	fair	value	of	commercial	MSRs	is	estimated	by	using	a	discounted	cash	flow model	incorporating	unobservable	inputs	for	assumptions	such	as	constant prepayment	rates,	discount	rates	and	other	factors.	Significant increases/(decreases)	in	constant	prepayment	rates	and	discount	rates	would result	in	significantly	lower/(higher)	commercial	MSR	value	determined	based on	current	market	conditions	and	expectations.

# Residential	Mortgage	Servicing	Rights

Residential	MSRs	are	carried	at	fair	value	on	a	recurring	basis.	Assumptions incorporated	into	the	residential	MSRs	valuation	model	reflect	management's best	estimate	of	factors	that	a	market	participant	would	use	in	valuing	the residential	MSRs.	Although	sales	of	residential	MSRs	do	occur,	residential MSRs	do	not	trade	in	an	active,	open	market	with	readily	observable	prices	so the	precise	terms	and	conditions	of	sales	are	not	available.	As	a	benchmark	for the	reasonableness	of	its	residential	MSRs	fair	value,	PNC	obtained	opinions	of value	from	independent	parties	("brokers").	These	brokers	provided	a	range	(+/- 10	bps)	based	upon	their	own	discounted	cash	flow	calculations	of	our	portfolio that	reflect	conditions	in	the	secondary	market	and	any	recently	executed servicing	transactions.	PNC	compares	its	internally-developed	residential	MSRs value	to	the	ranges	of	values	received	from	the	brokers.	If	our	residential	MSRs fair	value	falls	outside	of	the	brokers'	ranges,	management	will	assess	whether	a valuation	adjustment	is	warranted.	For	the	periods	presented,	PNC's	residential MSRs	value	did	not	fall	outside	of	the	brokers'	ranges.	We	consider	our residential	MSRs	value	to	represent	a	reasonable	estimate	of	fair	value.	Due	to the	nature	of	the	unobservable	valuation	inputs,	residential	MSRs	are	classified as	Level	3.

The	significant	unobservable	inputs	used	in	the	fair	value	measurement	of residential	MSRs	are	constant	prepayment	rates	and	spread	over	the	benchmark curve.	Significant	increases	(decreases)	in	prepayment	rates	and	spread	over	the benchmark	curve	would	result	in	lower	(higher)	fair	market	value	of	residential MSRs.

# Commercial	Mortgage	Loans	Held	for	Sale

We	account	for	certain	commercial	mortgage	loans	classified	as	held	for	sale	in whole	loan	transactions	at	fair	value.	In	addition,	as	of	September	1,	2014,	we have	elected	to	apply	the	fair	value	option	to	commercial	mortgage	loans	held	for sale	to	agencies.	This	election	applies	to	all	new	commercial	mortgage	loans	held for	sale	originated	for	sale	to	the	agencies	effective	on	or	after	September	1, 2014.	The	election	of	the	fair	value	option	aligns	the	accounting	for	the commercial	mortgages	with	the	related	commitments	to	sell	the	loans.

We	determine	the	fair	value	of	commercial	mortgage	loans	held	for	sale	based upon	discounted	cash	flows.	Fair	value	is	determined	using	sale	valuation assumptions	that	management	believes	a	market	participant	would	use	in	pricing the	loans.	Valuation	assumptions	may	include	observable	inputs	based	on	the benchmark	interest	rate	swap	curves,	whole	loan	sales	and	agency	sales transactions.	The	significant	unobservable	inputs	are	management's	assumption of	the	spread	applied	to	the	benchmark	rate	and	the	estimated	servicing	cash flows	for	loans	sold	to	the	agencies	with	servicing	retained.	The	spread	over	the benchmark	curve	includes	management's	assumptions	of	the	impact	of	credit and	liquidity	risk.	Significant	increases	(decreases)	in	the	spread	applied	to	the benchmark	would	result	in	a	significantly	lower	(higher)	asset

value.	The	wide	range	of	the	spread	over	the	benchmark	curve	is	due	to	the varying	risk	and	underlying	property	characteristics	within	our	portfolio. Significant	increases	(decreases)	in	the	estimated	servicing	cash	flows	would result	in	significantly	higher	(lower)	asset	value.	Based	on	the	significance	of unobservable	inputs,	we	classified	this	portfolio	as	Level	3.

# Equity	Investments

The	valuation	of	direct	and	indirect	private	equity	investments	requires significant	management	judgment	due	to	the	absence	of	quoted	market	prices, inherent	lack	of	liquidity	and	the	long-term	nature	of	such	investments.	The carrying	values	of	direct	and	affiliated	partnership	interests	reflect	the	expected exit	price	and	are	based	on	various	techniques	including	multiples	of	adjusted earnings	of	the	entity,	independent	appraisals,	anticipated	financing	and	sale transactions	with	third	parties,	or	the	pricing	used	to	value	the	entity	in	a	recent financing	transaction.	A	multiple	of	adjusted	earnings	calculation	is	the valuation	technique	utilized	most	frequently	and	the	multiple	of	earnings	is	the primary	and	most	significant	unobservable	input	used	in	such	calculation.	The multiple	of	earnings	is	utilized	in	conjunction	with	portfolio	company	financial results	and	our	ownership	interest	in	portfolio	company	securities	to	determine PNC's	interest	in	the	enterprise	value	of	the	portfolio	company.	Significant decreases	(increases)	in	the	multiple	of	earnings	could	result	in	a	significantly lower	(higher)	fair	value	measurement.	The	magnitude	of	the	change	in	fair	value is	dependent	on	the	significance	of	the	change	in	the	multiple	of	earnings	and	the significance	of	portfolio	company	adjusted	earnings.	Valuation	inputs	or analysis	are	supported	by	portfolio	company	or	market	documentation.	Due	to the	size,	private	and	unique	nature	of	each	portfolio	company,	lack	of	liquidity and	the	long-term	nature	of	investments,	relevant	benchmarking	is	not	always feasible.	A	valuation	committee	reviews	the	portfolio	company	valuations	on	a quarterly	basis	and	oversight	is	provided	by	senior	management	of	the	business.

We	value	indirect	investments	in	private	equity	funds	based	on	net	asset	value	as provided	in	the	financial	statements	that	we	receive	from	their	managers.	Due	to the	time	lag	in	our	receipt	of	the	financial	information	and	based	on	a	review	of investments	and	valuation	techniques	applied,	adjustments	to	the	manager- provided	value	are	made	when	available	recent	portfolio	company	information	or market	information	indicates	a	significant	change	in	value	from	that	provided	by the	manager	of	the	fund.	These	investments	are	classified	as	Level	3.

# Customer	Resale	Agreements

We	have	elected	to	account	for	structured	resale	agreements,	which	are economically	hedged	using	free-standing	financial	derivatives,	at	fair	value.	The fair	value	for	structured	resale	agreements	is	determined	using	a	model	that includes	observable	market	data	such	as	interest	rates	as	inputs.	Readily observable	market	inputs	to	this	model	can	be

validated	to	external	sources,	including	yield	curves,	implied	volatility	or	other market-related	data.	These	instruments	are	classified	as	Level	2.

Loans	accounted	for	at	fair	value	consist	primarily	of	residential	mortgage	loans. These	loans	are	generally	valued	similarly	to	residential	mortgage	loans	held	for sale	and	are	classified	as	Level	2.	However,	similar	to	residential	mortgage	loans held	for	sale,	if	these	loans	are	repurchased	and	unsalable,	they	are	classified	as Level	3.	In	addition,	repurchased	VA	loans,	where	only	a	portion	of	the	principal will	be	reimbursed,	are	classified	as	Level	3.	The	fair	value	is	determined	using	a discounted	cash	flow	calculation	based	on	our	historical	loss	rate.	Due	to	the unobservable	nature	of	this	pool	level	approach,	these	loans	are	classified	as Level	3.	Significant	increases	(decreases)	in	these	assumptions	would	result	in	a significantly	lower	(higher)	fair	value	measurement.

During	2013,	we	elected	to	account	for	certain	home	equity	lines	of	credit	at	fair value.	These	loans	are	classified	as	Level	3.	This	category	also	includes repurchased	brokered	home	equity	loans.	These	loans	are	repurchased	due	to	a breach	of	representations	or	warranties	in	the	loan	sales	agreement	and	occur typically	after	the	loan	is	in	default.	Similar	to	existing	loans	classified	as	Level 3	due	to	being	repurchased	and	unsalable,	the	fair	value	price	is	based	on	bids and	market	observations	of	transactions	of	similar	vintage.	Because	transaction details	regarding	the	credit	and	underwriting	quality	are	often	unavailable, unobservable	bid	information	from	brokers	and	investors	is	heavily	relied	upon. Accordingly,	based	on	the	significance	of	unobservable	inputs,	these	loans	are classified	as	Level	3.	The	fair	value	of	these	loans	is	included	in	the	Loans	– Home	equity	line	item	in	Table	85	in	this	Note	7.

Significant	inputs	to	the	valuation	of	residential	mortgage	loans	include	credit and	liquidity	discount,	cumulative	default	rate,	loss	severity	and	gross	discount rate	and	are	deemed	representative	of	current	market	conditions.	Significant increases	(decreases)	in	an	assumption	would	result	in	a	significantly	lower (higher)	fair	value	measurement.

# BlackRock	Series	C	Preferred	Stock

We	have	elected	to	account	for	the	shares	of	BlackRock	Series	C	Preferred Stock	received	in	a	stock	exchange	with	BlackRock	at	fair	value.	On	January	31, 2013,	we	transferred	.2	million	shares	to	BlackRock	pursuant	to	our	obligation	to partially	fund	a	portion	of	certain	BlackRock	LTIP	programs.	After	this	transfer and	at	December	31,	2014,	we	hold	approximately	1.3	million	shares	of BlackRock	Series	C	Preferred	Stock,	which	are	available	to	fund	our	obligation in	connection	with	the	BlackRock	LTIP	programs.	The	Series	C	Preferred	Stock economically	hedges	the	BlackRock	LTIP	liability	that	is	accounted	for	as	a derivative.	The	fair	value	of	the	Series	C	Preferred	Stock	is	determined	using	a third-party	modeling	approach,	which	includes	both	observable	and

unobservable	inputs.	This	approach	considers	expectations	of	a default/liquidation	event	and	the	use	of	liquidity	discounts	based	on	our	inability to	sell	the	security	at	a	fair,	open	market	price	in	a	timely	manner.	Although dividends	are	equal	to	common	shares	and	other	preferred	series,	significant transfer	restrictions	exist	on	our	Series	C	shares	for	any	purpose	other	than	to satisfy	the	BlackRock	LTIP	obligation.	Due	to	the	significance	of	unobservable inputs,	this	security	is	classified	as	Level	3.	Significant	increases	(decreases)	in the	liquidity	discount	would	result	in	a	significantly	lower	(higher)	asset	value for	the	BlackRock	Series	C	and	vice	versa	for	the	BlackRock	LTIP	liability.

# Other	Assets	and	Liabilities

We	have	entered	into	a	prepaid	forward	contract	with	a	financial	institution	to mitigate	the	risk	on	a	portion	of	PNC's	deferred	compensation,	supplemental incentive	savings	plan	liabilities	and	certain	stock	based	compensation	awards that	are	based	on	PNC's	stock	price	and	are	subject	to	market	risk.	The	prepaid forward	contract	is	initially	valued	at	the	transaction	price	and	is	subsequently valued	by	reference	to	the	market	price	of	PNC's	stock	and	is	recorded	in	either Other	Assets	or	Other	Liabilities	at	fair	value	and	is	classified	as	Level	2.	In addition,	deferred	compensation	and	supplemental	incentive	savings	plan participants	may	also	invest	based	on	fixed	income	and	equity-based	funds.	PNC utilizes	a	Rabbi	Trust	to	hedge	the	returns	by	purchasing	similar	funds	on	which the	participant	returns	are	based.	The	Rabbi	Trust	balances	are	recorded	in	Other Assets	at	fair	value	using	the	quoted	market	price.	These	assets	are	primarily being	classified	in	Levels	1	and	2.	The	other	asset	category	also	includes	FHLB interests	and	the	retained	interests	related	to	the	Small	Business	Administration (SBA)	securitizations	which	are	classified	as	Level	3.	The	other	liabilities category	includes	a	contingent	liability	which	is	classified	as	Level	3.	All	Level 3	other	assets	and	liabilities	are	included	in	the	Insignificant	Level	3	assets,	net of	liabilities	line	item	in	Table	85	in	this	Note	7.

# Other	Borrowed	Funds

During	the	first	quarter	of	2013,	we	elected	to	account	for	certain	other	borrowed funds	consisting	primarily	of	secured	debt	at	fair	value.	These	other	borrowed funds	are	classified	as	Level	3.	Significant	unobservable	inputs	for	these borrowed	funds	include	credit	and	liquidity	discount	and	spread	over	the benchmark	curve.	Significant	increases	(decreases)	in	these	assumptions	would result	in	significantly	lower	(higher)	fair	value	measurement.

Other	borrowed	funds	also	includes	the	related	liability	for	transferred	loans over	which	PNC	regained	effective	control	pursuant	to	ASC	860.	These	other borrowed	funds	are	classified	as	either	Level	2	or	Level	3	consistent	with	the corresponding	loans	described	above.	All	Level	3	amounts	are	included	in	the Insignificant	Level	3	assets,	net	of	liabilities	line	item	in	Table	85	in	this	Note	7.

Assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis,	including	instruments	for	which	PNC	has	elected	the	fair	value	option,	follow.

# Table	83:	Fair	Value	Measurements	–	Recurring	Basis	Summary

|  |  | December	31,	2014 |  |  |  | December	31,	2013 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | Total |  |  |  | Total |
| In\tmillions | Level\t1 | Level\t2 | Level\t3 | Fair\tValue | Level\t1 | Level\t2 | Level\t3 | Fair\tValue |
| Assets |  |  |  |  |  |  |  |  |
| Securities\tavailable\tfor\tsale |  |  |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | $4,795 | $627 |  | \t\t $5,422 | $3,460 | $658 |  | \t\t $4,118 |
| Residential\tmortgage-backed |  |  |  |  |  |  |  |  |
| Agency\t(a) |  | \t 18,043 |  | \t 18,043 |  | \t 21,714 |  | \t 21,714 |
| Non-agency |  | 144 | $4,798 | 4,942 |  | 247 | $5,358 | 5,605 |
| Commercial\tmortgage-backed |  |  |  |  |  |  |  |  |
| Agency\t(a) |  | 2,187 |  | 2,187 |  | 1,763 |  | 1,763 |
| Non-agency |  | 4,162 |  | 4,162 |  | 4,042 |  | 4,042 |
| Asset-backed |  | 4,624 | 563 | 5,187 |  | 5,131 | 641 | 5,772 |
| State\tand\tmunicipal |  | 1,904 | 134 | 2,038 |  | 2,284 | 333 | 2,617 |
| Other\tdebt |  | 1,783 | 30 | 1,813 |  | 2,505 | 38 | 2,543 |
| Total\tdebt\tsecurities | \t 4,795 | \t 33,474 | 5,525 | \t 43,794 | \t 3,460 | \t 38,344 | 6,370 | \t 48,174 |
| Corporate\tstocks\tand\tother | 426 | 15 |  | 441 | 417 | 16 |  | 433 |
| Total\tsecurities\tavailable\tfor\tsale | \t 5,221 | \t 33,489 | 5,525 | \t 44,235 | \t 3,877 | \t 38,360 | 6,370 | \t 48,607 |
| Financial\tderivatives\t(b)\t(c) |  |  |  |  |  |  |  |  |
| Interest\trate\tcontracts | 4 | 4,874 | 40 | 4,918 | 25 | 4,540 | 34 | 4,599 |
| Other\tcontracts |  | 314 | 2 | 316 |  | 192 | 2 | 194 |
| Total\tfinancial\tderivatives | 4 | 5,188 | 42 | 5,234 | 25 | 4,732 | 36 | 4,793 |
| Residential\tmortgage\tloans\theld\tfor\tsale\t(d) |  | 1,255 | 6 | 1,261 |  | 1,307 | 8 | 1,315 |
| Trading\tsecurities\t(e) |  |  |  |  |  |  |  |  |
| Debt\t(f) | \t 1,340 | 960 | 32 | 2,332 | \t 2,159 | 862 | 32 | 3,053 |
| Equity | 21 |  |  | 21 | 20 |  |  | 20 |
| Total\ttrading\tsecurities | \t 1,361 | 960 | 32 | 2,353 | \t 2,179 | 862 | 32 | 3,073 |
| Trading\tloans\t(b) |  | 30 | 7 | 37 |  | 6 |  | 6 |
| Residential\tmortgage\tservicing\trights\t(g) |  |  | 845 | 845 |  |  | 1,087 | 1,087 |
| Commercial\tmortgage\tservicing\trights\t(g)\t(h) |  |  | 506 | 506 |  |  |  |  |
| Commercial\tmortgage\tloans\theld\tfor\tsale\t(d) |  |  | 893 | 893 |  |  | 586 | 586 |
| Equity\tinvestments\t(b)\t(i) |  |  |  |  |  |  |  |  |
| Direct\tinvestments |  |  | 1,152 | 1,152 |  |  | 1,069 | 1,069 |
| Indirect\tinvestments\t(j) |  |  | 469 | 469 |  |  | 595 | 595 |
| Total\tequity\tinvestments |  |  | 1,621 | 1,621 |  |  | 1,664 | 1,664 |
| Customer\tresale\tagreements\t(k) |  | 155 |  | 155 |  | 207 |  | 207 |
| Loans\t(l)\t(m) |  | 637 | 397 | 1,034 |  | 623 | 527 | 1,150 |
| Other\tassets\t(b) |  |  |  |  |  |  |  |  |
| BlackRock\tSeries\tC\tPreferred\tStock\t(n) |  |  | 375 | 375 |  |  | 332 | 332 |
| Other | 190 | 226 | 8 | 424 | 209 | 184 | 8 | 401 |
| Total\tother\tassets | 190 | 226 | 383 | 799 | 209 | 184 | 340 | 733 |
| Total\tassets | $6,776 | $41,940 | $10,257\t\t\t\t $58,973 | $10,257\t\t\t\t $58,973 | $6,290 | $46,281 | $10,650\t\t\t\t $63,221 | $10,650\t\t\t\t $63,221 |
| Liabilities |  |  |  |  |  |  |  |  |
| Financial\tderivatives\t(c)\t(o) |  |  |  |  |  |  |  |  |
| Interest\trate\tcontracts |  | $3,260 | $12\t\t\t\t $ | 3,272 | $6 | $3,307 | $13\t\t\t\t $ | 3,326 |
| BlackRock\tLTIP |  |  | 375 | 375 |  |  | 332 | 332 |
| Other\tcontracts |  | 241 | 139 | 380 |  | 182 | 94 | 276 |
| Total\tfinancial\tderivatives |  | 3,501 | 526 | 4,027 | 6 | 3,489 | 439 | 3,934 |
| Trading\tsecurities\tsold\tshort\t(p) |  |  |  |  |  |  |  |  |
| Debt | $1,479 | 11 |  | 1,490 | \t 1,341 | 1 |  | 1,342 |
| Total\ttrading\tsecurities\tsold\tshort | \t 1,479 | 11 |  | 1,490 | \t 1,341 | 1 |  | 1,342 |
| Other\tborrowed\tfunds\t(m)\t(p) |  | 92 | 181 | 273 |  | 110 | 199 | 309 |
| Other\tliabilities\t(o) |  |  | 9 | 9 |  |  |  |  |
| Total\tliabilities | $1,479 | $3,604 | $716\t\t\t\t $ | 5,799 | $1,347 | $3,600 | $638\t\t\t\t $ | 5,585 |

(a) In	our	third	quarter	2014	10-Q,	these	line	items	were	corrected	as	of	December	31,	2013	due	to	a	misclassification	of	Government	National	Mortgage	Association	(GNMA)	securities	collateralized	by	project loans.	$1.1	billion	was	previously	reported	as	residential	mortgage-backed	agency	securities	and	was	reclassified	to	commercial	mortgage-backed	agency	securities.

(b) Included	in	Other	assets	on	our	Consolidated	Balance	Sheet.

(c) Amounts	at	December	31,	2014	and	December	31,	2013	are	presented	gross	and	are	not	reduced	by	the	impact	of	legally	enforceable	master	netting	agreements	that	allow	PNC	to	net	positive	and	negative positions	and	cash	collateral	held	or	placed	with	the	same	counterparty.	The	net	asset	amounts	were	$2.6	billion	at	December	31,	2014	and	$1.7	billion	at	December	31,	2013,	and	the	net	liability	amounts	were $1.4	billion	and	$.9	billion,	respectively.

(d) Included	in	Loans	held	for	sale	on	our	Consolidated	Balance	Sheet.	PNC	has	elected	the	fair	value	option	for	certain	residential	and	commercial	mortgage	loans	held	for	sale.

(e) Fair	value	includes	net	unrealized	gains	of	$54	million	at	December	31,	2014	compared	with	net	unrealized	gains	of	$11	million	at	December	31,	2013.

(f) Approximately	34%	of	these	securities	are	residential	mortgage-backed	securities	and	57%	are	U.S.	Treasury	and	government	agencies	securities	at	December	31,	2014.	Comparable	amounts	at	December	31,	2013 were	17%	and	69%,	respectively.

(g) Included	in	Other	intangible	assets	on	our	Consolidated	Balance	Sheet.

(h) As	of	January	1,	2014,	PNC	made	an	irrevocable	election	to	subsequently	measure	all	classes	of	commercial	MSRs	at	fair	value.	Accordingly,	beginning	with	the	first	quarter	of	2014,	commercial	MSRs	are measured	at	fair	value	on	a	recurring	basis.

(i) Our	adoption	of	ASU	2013-08,	Financial	Services	–	Investment	Companies	(Topic	946): Amendments	to	the	Scope,	Measurement	and	Disclosure	Requirements ,	did	not	result	in	a	change	in	classification	or	status of	our	accounting	for	investment	companies.

(j) The	indirect	equity	funds	are	not	redeemable,	but	PNC	receives	distributions	over	the	life	of	the	partnership	from	liquidation	of	the	underlying	investments	by	the	investee,	which	we	expect	to	occur	over	the	next twelve	years.	The	amount	of	unfunded	contractual	commitments	as	of	December	31,	2014	related	to	indirect	equity	investments	was	$112	million	and	related	to	direct	equity	investments	was	$28	million, respectively.	Comparable	amounts	at	December	31,	2013	were	$128	million	and	$36	million,	respectively.

(k) Included	in	Federal	funds	sold	and	resale	agreements	on	our	Consolidated	Balance	Sheet.	PNC	has	elected	the	fair	value	option	for	these	items.

(l) Included	in	Loans	on	our	Consolidated	Balance	Sheet.

(m) In	our	third	quarter	2014	10-Q,	these	line	items	were	corrected	as	of	December	31,	2013	to	include	transferred	loans	over	which	PNC	regained	effective	control	and	the	related	liabilities	that	are	recorded	pursuant to	ASC	860.	This	resulted	in	a	$125	million	increase	of	both	Loans	and	Other	borrowed	funds	as	of	December	31,	2013.

(n) PNC	has	elected	the	fair	value	option	for	these	shares.

(o) Included	in	Other	liabilities	on	our	Consolidated	Balance	Sheet.

(p) Included	in	Other	borrowed	funds	on	our	Consolidated	Balance	Sheet.

Reconciliations	of	assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis	using	Level	3	inputs	for	2014	and	2013	follow.

# Table	84:	Reconciliation	of	Level	3	Assets	and	Liabilities

|  |  | Total	realized	/	unrealized | Total	realized	/	unrealized |  |  |  |  |  |  |  |  | gains	(losses) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | gains\tor\tlosses\tfor\tthe\tperiod\t(a) | gains\tor\tlosses\tfor\tthe\tperiod\t(a) |  |  |  |  |  |  |  |  | on\tassets\tand |
|  |  |  |  |  |  |  |  |  |  |  |  | liabilities\theld\ton |
|  |  |  | Included |  |  |  |  |  |  |  |  | Consolidated |
| Level\t3\tInstruments\tOnly\nIn\tmillions | Fair\tValue\nDec.\t31,\n2013 | Included\tin\nEarnings | in\tOther\ncomprehensive\nincome | \t Purchases | Sales | Sales | Issuances | \tSettlements | Transfers\ninto\nLevel\t3\t(b) | Transfers\nout\tof\nLevel\t3\t(b) | Fair\tValue\nDec.\t31,\n2014 | Balance\tSheet\nat\tDec.\t31,\n2014\t(c) |
| Assets |  |  |  |  |  |  |  |  |  |  |  |  |
| Securities\tavailable\tfor\tsale |  |  |  |  |  |  |  |  |  |  |  |  |
| Residential\tmortgage-\tbacked\tnon-agency | \t $5,358\t\t\t$ | 120 | \t $64 |  |  |  |  | \t$(821) | \t $77 |  | \t$4,798 | \t$(10) |
| Commercial\tmortgage\tbacked\tnon-agency |  | 1 |  |  |  |  |  | (1) |  |  |  |  |
| Asset-backed | 641 | 13 | 23 | 23 |  |  |  | (114) |  |  | 563 | (1) |
| State\tand\tmunicipal | 333 | (2) | 15 | 15 |  |  |  | (198) |  | \t $(14) | 134 |  |
| Other\tdebt | 38 | 1 |  | \t $1\t\t\t $ | (8) | (8) |  | (2) |  |  | 30 |  |
| Total\tsecurities\tavailable\tfor\tsale | 6,370 | 133 | 102 | 102 | 1 | (8) |  | (1,136) | 77 | (14) | 5,525 | (11) |
| Financial\tderivatives | 36 | 226 |  | 3 | 3 |  |  | (223) |  |  | 42 | 142 |
| Residential\tmortgage\tloans\theld\tfor\tsale | 8 | 1 |  | 15 | 15 | (3) |  | (1) | 11 | (25) | 6 | 1 |
| Trading\tsecurities\t–\tDebt | 32 | 2 |  |  |  |  |  | (31) | 29 |  | 32 | 2 |
| Trading\tloans |  |  |  |  |  |  |  |  | 7 |  | 7 |  |
| Residential\tmortgage\tservicing\trights | 1,087 | (238) |  | 45 | 45 |  | \t $85 | (134) |  |  | 845 | (231) |
| Commercial\tmortgage\tservicing\trights |  | (53) |  | 43 | 43 |  | 53 | 463\t(g) |  |  | 506 | (53) |
| Commercial\tmortgage\tloans\theld\tfor\tsale | 586 | 38 |  |  |  |  | 1,790 | (1,521) |  |  | 893 | 6 |
| Equity\tinvestments |  |  |  |  |  |  |  |  |  |  |  |  |
| Direct\tinvestments | 1,069 | 184 |  | 306 | 306 | (407) |  |  |  |  | 1,152 | 134 |
| Indirect\tinvestments | 595 | 78 |  | 23 | 23 | (223) |  | (4) |  |  | 469 | 74 |
| Total\tequity\tinvestments | 1,664 | 262 |  | 329 | 329 | (630) |  | (4) |  |  | 1,621 | 208 |
| Loans | 527 | 74 |  | 120 | 120 | (153) |  | (86) | 20 | (105) | 397 | 46 |
| Other\tassets |  |  |  |  |  |  |  |  |  |  |  |  |
| BlackRock\tSeries\tC\tPreferred\tStock | 332 | 43 |  |  |  |  |  |  |  |  | 375 | 43 |
| Other | 8 |  |  |  |  |  |  |  |  |  | 8 |  |
| Total\tother\tassets | 340 | 43 |  |  |  |  |  |  |  |  | 383 | 43 |
| Total\tassets | \t $10,650\t\t\t$ | 488 | (e)\t\t $ | 102\t\t\t $ | 556\t\t\t $(794)\t\t $ | 556\t\t\t $(794)\t\t $ | 1,928\t\t\t$ | (2,673) | \t $144\t\t\t $ | (144)\t\t$ | 10,257 | \t$153\t(f) |
| Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |
| Financial\tderivatives\t(d) | \t $439\t\t\t$ | 222 |  |  | \t $1 | \t $1 |  | \t$(136) |  |  | \t$526 | \t$(51) |
| Other\tborrowed\tfunds | 199 | 5 |  |  |  |  | \t $57 | (80) |  |  | 181 |  |
| Other\tliabilities |  |  |  |  |  |  |  | 9 |  |  | 9 |  |
| Total\tliabilities | \t $638\t\t\t$ | 227\t(e) |  |  | \t $1\t\t\t $ | \t $1\t\t\t $ | 57\t\t\t$ | (207) |  |  | \t$716 | \t$(51)\t(f) |

|  |  | Total	realized	/	unrealized | Total	realized	/	unrealized |  |  |  |  |  |  |  | gains	(losses)	on |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | gains\tor\tlosses\tfor\tthe\tperiod\t(a) | gains\tor\tlosses\tfor\tthe\tperiod\t(a) |  |  |  |  |  |  |  | assets\tand |
|  |  |  |  |  |  |  |  |  |  |  | liabilities\theld\ton |
|  |  | Included\tin | Included\tin |  |  |  |  |  |  |  | Consolidated |
| Level\t3\tInstruments\tOnly\nIn\tmillions | Fair\tValue\nDec.\t31,\n2012 | Included\tin\nEarnings | Other\ncomprehensive\nincome | Purchases | Sales | Issuances | Settlements | Transfers\ninto\nLevel\t3\t(b) | Transfers\nout\tof\nLevel\t3\t(b) | Fair\tValue\nDec.\t31,\n2013 | Balance\tSheet\nat\tDec.\t31,\n2013\t(c) |
| Assets |  |  |  |  |  |  |  |  |  |  |  |
| Securities\tavailable\tfor\tsale |  |  |  |  |  |  |  |  |  |  |  |
| Residential\tmortgage-backed\tnon-agency | $6,107 | $189 | $147 |  |  |  | $(1,085) |  |  | $5,358 | \t$(10) |
| Commercial\tmortgage-backed\tnon- |  |  |  |  |  |  |  |  |  |  |  |
| agency |  | 3 |  |  |  |  | (3) |  |  |  |  |
| Asset-backed | 708 | 9 | 53 |  |  |  | (129) |  |  | 641 | (6) |
| State\tand\tmunicipal | 339 | 1 | 2 | $4 |  |  | (13) |  |  | 333 |  |
| Other\tdebt | 48 |  |  | 3 | $(10) |  | (3) |  |  | 38 |  |
| Total\tsecurities\tavailable\tfor\tsale | 7,202 | 202 | 202 | 7 | (10) |  | (1,233) |  |  | 6,370 | (16) |
| Financial\tderivatives | 106 | 297 |  | 4 |  |  | (369) |  | $(2) | 36 | 166 |
| Residential\tmortgage\tloans\theld\tfor\tsale | 27 | 2 |  | 61 | (3) |  | 4 | $13 | (96) | 8 | 2 |
| Trading\tsecurities\t–\tDebt | 32 |  |  |  |  |  |  |  |  | 32 |  |
| Residential\tmortgage\tservicing\trights | 650 | 366 |  | 110 | (4) | $158 | (193) |  |  | 1,087 | 354 |
| Commercial\tmortgage\tloans\theld\tfor\tsale | 772 | (11) |  |  | (130) |  | (45) |  |  | 586 | (12) |
| Equity\tinvestments |  |  |  |  |  |  |  |  |  |  |  |
| Direct\tinvestments | 1,171 | 141 |  | 177 | (420) |  |  |  |  | 1,069 | 62 |
| Indirect\tinvestments | 642 | 81 | (3) | 26 | (151) |  |  |  |  | 595 | 76 |
| Total\tequity\tinvestments | 1,813 | 222 | (3) | 203 | (571) |  |  |  |  | 1,664 | 138 |
| Loans\t(h) | 134 | 46 |  | 1 | (1) |  | 83 | 292 | (28) | 527 | 34 |
| Other\tassets |  |  |  |  |  |  |  |  |  |  |  |
| BlackRock\tSeries\tC\tPreferred\tStock | 243 | 122 |  |  |  |  | (33) |  |  | 332 | 122 |
| Other | 9 |  | (1) |  |  |  |  |  |  | 8 |  |
| Total\tother\tassets | 252 | 122 | (1) |  |  |  | (33) |  |  | 340 | 122 |
| Total\tassets | $10,988 | $1,246\t(e) | $198 | $386 | $(719) | $158 | $(1,786) | $305 | $(126) | $10,650 | \t$788\t(f) |
| Liabilities |  |  |  |  |  |  |  |  |  |  |  |
| Financial\tderivatives\t(d) | $376 | $317 |  |  | $2 |  | $(256) |  |  | $439 | \t$181 |
| Other\tborrowed\tfunds\t(h) |  | 9 |  |  |  |  | 175 | $15 |  | 199 |  |
| Total\tliabilities | $376 | $326\t(e) |  |  | $2 |  | $(81) | $15 |  | $638 | \t$181\t(f) |
| (a) |  |  |  |  |  |  |  |  |  |  |  |

(a) Losses	for	assets	are	bracketed	while	losses	for	liabilities	are	not.

(b) PNC's	policy	is	to	recognize	transfers	in	and	transfers	out	as	of	the	end	of	the	reporting	period.

(c) The	amount	of	the	total	gains	or	losses	for	the	period	included	in	earnings	that	is	attributable	to	the	change	in	unrealized	gains	or	losses	related	to	those	assets	and	liabilities	held	at	the	end	of	the	reporting	period.

(d) Includes	swaps	entered	into	in	connection	with	sales	of	certain	Visa	Class	B	common	shares.

(e) Net	gains	(realized	and	unrealized)	included	in	earnings	relating	to	Level	3	assets	and	liabilities	were	$261	million	for	2014	compared	with	net	gains	(realized	and	unrealized)	of	$920	million	for	2013.	These amounts	also	included	amortization	and	accretion	of	$146	million	for	2014	compared	with	$217	million	for	2013.	The	amortization	and	accretion	amounts	were	included	in	Interest	income	on	the	Consolidated Income	Statement,	and	the	remaining	net	gains/(losses)	(realized	and	unrealized)	were	included	in	Noninterest	income	on	the	Consolidated	Income	Statement.

(f) Net	unrealized	gains	relating	to	those	assets	and	liabilities	held	at	the	end	of	the	reporting	period	were	$204	million	for	2014,	compared	with	net	unrealized	gains	of	$607	million	for	2013.	These	amounts	were included	in	Noninterest	income	on	the	Consolidated	Income	Statement.

(g) Settlements	relating	to	commercial	MSRs	of	$552	million	represent	the	fair	value	as	of	January	1,	2014	as	a	result	of	an	irrevocable	election	to	measure	all	classes	of	commercial	MSRs	at	fair	value.	Refer	to	Note 8	Goodwill	and	Other	Intangible	Assets	for	additional	information	on	commercial	MSRs.

(h) These	line	items	were	corrected	for	the	year	ended	December	31,	2013	to	include	transferred	loans	over	which	PNC	regained	effective	control	and	the	related	liabilities	that	are	recorded	pursuant	to	ASC	860.	This resulted	in	additional	transfers	into	Level	3	of	$15	million	for	both	Loans	and	Other	borrowed	funds.

An	instrument's	categorization	within	the	hierarchy	is	based	on	the	lowest	level of	input	that	is	significant	to	the	fair	value	measurement.	Changes	from	one quarter	to	the	next	related	to	the	observability	of	inputs	to	a	fair	value measurement	may	result	in	a	reclassification	(transfer)	of	assets	or	liabilities between	hierarchy	levels.	PNC's	policy	is	to	recognize	transfers	in	and	transfers out	as	of	the	end	of	the	reporting	period.

During	2014,	there	were	transfers	of	one	available	for	sale	residential	mortgage- backed	non-agency	security	and	one	debt	trading	security	of	$77	million	and	$29 million,	respectively,	from	Level	2	to	Level	3	due	to	valuation	inputs	that	were deemed	to	be	unobservable.	Additionally,	there	were	transfers	of	available	for sale	state	and	municipal	securities	from	Level	3	to	Level	2	of	$14	million	due	to an	increase	in	valuation	inputs	that	were	deemed	to	be	observable.	Also	during 2014,	there	were	transfers	of	residential	mortgage	loans	held	for	sale	from	Level 2	to	Level	3	of	$11	million	as	a	result	of	reduced	marketability	in	the	secondary residential	mortgage	sales	market	which	reduced	the	observability	of	valuation inputs.	In	addition,	there	were	also	transfers	out	of	Level	3	residential	mortgage loans	held	for	sale	and	loans	of	$5	million	and	$105	million,	respectively, primarily	due	to	the	transfer	of	residential	mortgage	loans	held	for	sale	and	loans to	OREO.	Finally,	there	was	approximately	$20	million	of	Level	3	residential mortgage	loans	held	for	sale	reclassified	to	Level	3	loans	during	2014	due	to	the loans	being	reclassified	from	held	for	sale	loans	to	held	in	portfolio	loans.	This amount	was	included	in	Transfers	out	of	Level	3	residential	mortgages	loans held	for	sale	and	Transfers	into	Level	3	loans	within	Table	84.

During	2013,	there	were	transfers	of	residential	mortgage	loans	held	for	sale	and loans	from	Level	2	to	Level	3	of	$13	million	and	$29	million,	respectively,	as	a result	of	reduced	marketability	in	the	secondary	residential	mortgage	sales market	which	reduced	the	observability	of	valuation	inputs.	In	addition,	there were	transfers	of	residential	mortgage	loans	of	$164	million	that	were reclassified	from	Level	2	to	Level	3	due	to	the	unobservable	nature	of	the	pool level	pricing	methodology.	Also	during	2013,	there	were	transfers	out	of	Level	3 residential	mortgage	loans	held	for	sale	and	loans	of	$12	million	and	$28 million,	respectively,	primarily	due	to	the	transfer	of	residential	mortgage	loans held	for	sale	and	loans	to	OREO.	In	addition,	there	was	approximately	$84 million	of	Level	3	residential	mortgage	loans	held	for	sale	reclassified	to	Level	3 loans	during	2013	due	to	the	loans	being	reclassified	from	held	for	sale	loans	to held	in	portfolio	loans.	This	amount	was	included	in	Transfers	out	of	Level	3 residential	mortgage	loans	held	for	sale	and	Transfers	into	Level	3	loans	within Table	84.	Furthermore,	there	were	transfers	of	$15	million	into	Level	3	loans and	other	borrowed	funds	reflecting	the	correction	to	include	transferred	loans over	which	PNC	regained	effective	control	and	the	related	liabilities	recorded pursuant	to	ASC	860.

Quantitative	information	about	the	significant	unobservable	inputs	within	Level	3	recurring	assets	and	liabilities	follows.

# Table	85:	Fair	Value	Measurements	–	Recurring	Quantitative	Information

(a) Level	3	residential	mortgage-backed	non-agency	and	asset-backed	securities	with	fair	values	as	of	December	31,	2014	totaling	$4,081	million	and	$532	million,	respectively,	were	priced	by	a	third-party	vendor using	a	discounted	cash	flow	pricing	model	that	incorporates	consensus	pricing,	where	available.	The	comparable	amounts	as	of	December	31,	2013	were	$4,672	million	and	$610	million,	respectively.	The significant	unobservable	inputs	for	these	securities	were	provided	by	the	third-party	vendor	and	are	disclosed	in	the	table.	Our	procedures	to	validate	the	prices	provided	by	the	third-party	vendor	related	to	these securities	are	discussed	further	in	the	Fair	Value	Measurement	section	of	this	Note	7.	Certain	Level	3	residential	mortgage-backed	non-agency	and	asset-backed	securities	with	fair	values	as	of	December	31,	2014 of	$717	million	and	$31	million,	respectively,	were	valued	using	a	pricing	source,	such	as	a	dealer	quote	or	comparable	security	price,	for	which	the	significant	unobservable	inputs	used	to	determine	the	price	were not	reasonably	available.	The	comparable	amounts	as	of	December	31,	2013	were	$686	million	and	$31	million,	respectively.

(b) The	assumed	yield	spread	over	the	benchmark	curve	for	each	instrument	is	generally	intended	to	incorporate	non-interest-rate	risks,	such	as	credit	and	liquidity	risks.

(c) Consensus	pricing	refers	to	fair	value	estimates	that	are	generally	internally	developed	using	information	such	as	dealer	quotes	or	other	third-party	provided	valuations	or	comparable	asset	prices.

(d) The	range	on	these	indirect	equity	investments	has	not	been	disclosed	since	these	investments	are	recorded	at	their	net	asset	redemption	values.

(e) Represents	the	aggregate	amount	of	Level	3	assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis	that	are	individually	and	in	the	aggregate	insignificant.	The	amount	includes	certain	financial	derivative assets	and	liabilities,	residential	mortgage	loans	held	for	sale,	trading	loans,	other	assets,	other	borrowed	funds	(ROAPs)	and	other	liabilities.	For	additional	information,	please	see	the	Fair	Value	Measurement discussion	included	in	this	Note	7.

# Financial	Assets	Accounted	for	at	Fair	Value	on	a	Nonrecurring	Basis

We	may	be	required	to	measure	certain	other	financial	assets	at	fair	value	on	a nonrecurring	basis.	These	adjustments	to	fair	value	usually	result	from	the application	of	lower	of	amortized	cost	or	fair	value	accounting	or	write-downs	of individual	assets	due	to	impairment	and	are	included	in	Table	86	and	Table	87.

# Nonaccrual	Loans

Nonaccrual	loans	represent	the	fair	value	of	those	loans	which	have	been adjusted	due	to	impairment.	The	impairment	is	primarily	based	on	the	appraised value	of	the	collateral	or	LGD	percentage.	The	LGD	percentage	is	used	to determine	the	weighted	average	loss	severity	of	the	nonaccrual	loans.

As	part	of	the	appraisal	process,	persons	ordering	or	reviewing	appraisals	are independent	of	the	asset	manager.	Appraisals	must	be	provided	by	licensed	or certified	appraisers	and	conform	to	the	Uniform	Standards	of	Professional Appraisal	Practice.	For	loans	secured	by	commercial	properties	where	the underlying	collateral	is	in	excess	of	$250,000,	appraisals	are	obtained	at	least annually.	In	certain	instances	(e.g.,	physical	changes	in	the	property),	a	more recent	appraisal	is	obtained.	Additionally,	borrower	ordered	appraisals	are	not permitted,	and	PNC	ordered	appraisals	are	regularly	reviewed.	For	loans	secured by	commercial	properties	where	the	underlying	collateral	is	$250,000	and	less, there	is	no	requirement	to	obtain	an	appraisal.	In	instances	where	an	appraisal	is not	obtained,	the	collateral	value	is	determined	consistent	with	external	third- party	appraisal	standards	by	an	internal	person	independent	of	the	asset	manager. PNC	has	a	real	estate	valuation	services	group	whose	sole	function	is	to	manage the	real	estate	appraisal	solicitation	and	evaluation	process	for	commercial	loans. All	third-party	appraisals	are	reviewed	by	this	group,	including	consideration	of comments/questions	on	the	appraisal	by	the	reviewer,	customer	relationship manager,	credit	officer,	and	underwriter.	Upon	resolving	these comments/questions	through	discussions	with	the	third-party	appraiser, adjustments	to	the	initial	appraisal	may	occur	and	be	incorporated	into	the	final issued	appraisal	report.

If	an	appraisal	is	outdated	due	to	changed	project	or	market	conditions,	or	if	the net	book	value	is	utilized,	management	uses	an	LGD	percentage	which represents	the	exposure	PNC	expects	to	lose	in	the	event	a	borrower	defaults	on an	obligation.	Accordingly,	LGD,	which	represents	the	loss	severity,	is	a function	of	collateral	recovery	rates	and	loan-to-value.	Those	rates	are established	based	upon	actual	PNC	loss	experience	and	external	market	data.	In instances	where	we	have	agreed	to	sell	the	property	to	a	third	party,	the	fair	value is	based	on	the	contractual	sales	price	adjusted	for	costs	to	sell.	In	these instances,	the	most	significant	unobservable	input	is	the	appraised	value	or	the sales	price.	The	estimated	costs	to	sell	are	incremental	direct	costs	to	transact	a sale	such	as	broker	commissions,	legal,	closing	costs	and	title	transfer	fees.	The costs	must	be	essential	to	the	sale	and	would	not	have	been	incurred	if	the decision	to	sell	had	not	been	made.	The	costs	to	sell	are	based	on	costs	associated with	our	actual	sales	of	commercial	and	residential	OREO	and	foreclosed	assets, which	are	assessed	annually.

Loans	held	for	sale	includes	syndicated	commercial	loan	inventory.	The	fair value	of	the	syndicated	commercial	loan	inventory	is	primarily	determined based	on	prices	provided	by	a	third-party	vendor.	The	third-party	vendor	prices are	based	upon	dealer	quotes.	For	nonrecurring	fair	value	measurements,	these instruments	are	classified	within	Level	2.	There	were	no	loans	held	for	sale categorized	as	Level	2	at	December	31,	2013.

Prior	to	September	1,	2014,	loans	held	for	sale	also	included	the	carrying	value of	commercial	mortgage	loans	which	are	intended	to	be	sold	to	agencies	with servicing	retained.	The	fair	value	of	the	commercial	mortgage	loans	held	for	sale is	determined	using	discounted	cash	flows.	Significant	observable	market	data includes	the	applicable	benchmark	interest	rates.	These	instruments	are	classified within	Level	3.	Significant	unobservable	inputs	include	a	spread	over	the benchmark	curve	and	the	estimated	servicing	cash	flows	for	loans	sold	to	the agencies	with	servicing	retained.	Significant	increases	(decreases)	to	the	spread over	the	benchmark	curve	would	result	in	a	significantly	lower	(higher)	carrying value	of	the	assets.	Significant	increases	(decreases)	in	the	estimated	servicing cash	flows	for	loans	sold	to	the	agencies	with	servicing	retained	would	result	in significantly	higher	(lower)	carrying	value.

Refer	to	the	Fair	Value	Measurement	section	of	this	Note	7	for	information	on commercial	mortgages	held	for	sale	to	agencies	subsequent	to	our	September	1, 2014	election	of	fair	value	option.

Equity	investments	represent	the	carrying	value	of	Low	Income	Housing	Tax Credit	(LIHTC)	investments	held	for	sale	calculated	using	a	discounted	cash flow	model.	The	significant	unobservable	input	is	management's	estimate	of required	market	rate	of	return.	The	market	rate	of	return	is	based	on	comparison to	recent	LIHTC	sales	in	the	market.	Significant	increases	(decreases)	in	this input	would	result	in	a	significantly	lower	(higher)	carrying	value	of	the investments.

As	of	January	1,	2014,	PNC	made	an	irrevocable	election	to	subsequently measure	all	classes	of	commercial	MSRs	at	fair	value	in	order	to	eliminate	any potential	measurement	mismatch	between	our	economic	hedges	and	the commercial	MSRs.	Refer	to	the	Fair	Value	Measurement	section	of	this	Note	7 regarding	the	fair	value	of	commercial	MSRs.

Prior	to	2014,	commercial	MSRs	were	initially	recorded	at	fair	value	and subsequently	accounted	for	at	the	lower	of	amortized	cost	or	fair	value.	They were	periodically	evaluated	for	impairment	and	the	amounts	in	Table	86	reflect an	impairment	of	three	strata	at	December	31,	2013	and	two	strata	at December	31,	2012,	respectively.	For	purposes	of	impairment,	the	commercial MSRs	were	stratified	based	on	asset	type,	which	characterizes	the	predominant risk	of	the	underlying	financial	asset.	The	fair	value	of	commercial	MSRs	was estimated	by	using	a	discounted	cash	flow	model	incorporating	unobservable inputs	for	assumptions	as	to	constant	prepayment	rates,	discount	rates	and	other factors.	Significant	increases	(decreases)	in	constant	prepayment	rates	and discount	rates	would	result	in	significantly	lower	(higher)	commercial	MSR value	determined	based	on	current	market	conditions	and	expectations.

# OREO	and	Foreclosed	Assets

OREO	and	foreclosed	assets	represent	the	carrying	value	of	OREO	and foreclosed	assets	for	which	valuation	adjustments	were	recorded	subsequent	to the	transfer	to	OREO	and	foreclosed	assets.	Valuation	adjustments	are	based	on the	fair	value	less	cost	to	sell	of	the	property.	Fair	value	is	based	on	appraised value	or	sales	price.

The	appraisal	process	for	OREO	and	foreclosed	properties	is	the	same	as described	above	for	nonaccrual	loans.	In	instances	where	we	have	agreed	to	sell the	property	to	a	third	party,	the	fair	value	is	based	on	the	contractual	sale	price adjusted	for	costs	to	sell.	The	significant	unobservable	inputs	for	OREO	and foreclosed	assets	are	the	appraised	value	or	the	sales	price.	The	estimated	costs	to sell	are	incremental	direct	costs	to	transact	a	sale	such	as	broker	commissions, legal,	closing	costs	and	title	transfer	fees.	The	costs	must	be	essential	to	the	sale and	would	not	have	been	incurred	if	the	decision	to	sell	had	not	been	made.	The costs	to	sell	are	based	on	costs	associated	with	our	sales	of	commercial	and residential	OREO	and	foreclosed	assets,	which	are	assessed	annually.

# Long-Lived	Assets	Held	for	Sale

Long-lived	assets	held	for	sale	represent	the	carrying	value	of	the	asset	for	which valuation	adjustments	were	recorded	during	the	current	year	and	subsequent	to the	transfer	to	Long-lived	assets	held	for	sale.	Valuation	adjustments	are	based on	the	fair	value	of	the	property	less	an	estimated	cost	to	sell.	Fair	value	is determined	either	by	a	recent	appraisal,	recent	sales	offer	or	changes	in	market	or property	conditions.	Appraisals	are	provided	by	licensed	or	certified	appraisers. Where	we	have	agreed	to	sell	the	property	to	a	third	party,	the	fair	value	is	based on	the	contractual	sale	price.	The	significant	unobservable	inputs	for	Long-lived assets	held	for	sale	are	the	appraised	value,	the	sales	price	or	the	changes	in market	or	property	conditions.	Changes	in	market	or	property	conditions	are subjectively	determined	by	management	through	observation	of	the	physical condition	of	the	property	along	with	the	condition	of	properties	in	the surrounding	market	place.	The	availability	and	recent	sales	of	similar	properties is	also	considered.	The	range	of	fair	values	can	vary	significantly	as	this	category often	includes	smaller	properties	such	as	offsite	ATM	locations	and	smaller	rural branches	up	to	large	commercial	buildings,	operation	centers	or	urban	branches.

# Table	86:	Fair	Value	Measurements	–	Nonrecurring

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Assets\t(a) |  |  |
| Nonaccrual\tloans | $54 | $35 |
| Loans\theld\tfor\tsale\t(b) | 8 | 224 |
| Equity\tinvestments | 17 | 6 |
| Commercial\tmortgage\tservicing\trights |  |  |
| (c) |  | 543 |
| OREO\tand\tforeclosed\tassets | 168 | 181 |
| Long-lived\tassets\theld\tfor\tsale | 22 | 51 |
| Total\tassets | $269 | $1,040 |

| Year	ended	December	31<br>In	millions | 2014 | Gains	(Losses)<br>2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Assets |  |  |  |
| Nonaccrual\tloans | $(19) | $(8) | $(68) |
| Loans\theld\tfor\tsale\t(b) |  | (7) | (4) |
| Equity\tinvestments | (2) | (1) |  |
| Commercial\tmortgage\tservicing\trights\t(c) |  | 88 | (5) |
| OREO\tand\tforeclosed\tassets | (19) | (26) | (73) |
| Long-lived\tassets\theld\tfor\tsale | (14) | (40) | (20) |
| Total\tassets | $(54) | $6 | $(170) |

(a) All	Level	3	as	of	December	31,	2014	and	2013	except	for	$8	million	included	in	Loans	held	for	sale which	was	categorized	as	Level	2	as	of	December	31,	2014.

(b) As	of	September	1,	2014,	PNC	elected	to	account	for	agency	loans	held	for	sale	at	fair	value. Accordingly,	beginning	on	September	1,	2014,	all	new	commercial	mortgage	loans	held	for	sale originated	for	sale	to	the	agencies	are	measured	at	fair	value	on	a	recurring	basis.

(c) As	of	January	1,	2014,	PNC	made	an	irrevocable	election	to	subsequently	measure	all	classes	of commercial	MSRs	at	fair	value.	Accordingly,	beginning	with	the	first	quarter	of	2014,	commercial MSRs	are	measured	at	fair	value	on	a	recurring	basis.

Quantitative	information	about	the	significant	unobservable	inputs	within	Level	3	nonrecurring	assets	follows.

# Table	87:	Fair	Value	Measurements	–	Nonrecurring	Quantitative	Information

(a) The	fair	value	of	nonaccrual	loans	included	in	this	line	item	is	determined	based	on	internal	loss	rates.	The	fair	value	of	nonaccrual	loans	where	the	fair	value	is	determined	based	on	the	appraised	value	or	sales price	is	included	within	Other,	below.

(b) LGD	percentage	represents	the	amount	that	PNC	expects	to	lose	in	the	event	a	borrower	defaults	on	an	obligation.

(c) Other	included	Nonaccrual	loans	of	$25	million,	OREO	and	foreclosed	assets	of	$168	million	and	Long-lived	assets	held	for	sale	of	$22	million	as	of	December	31,	2014.	Comparably,	as	of	December	31,	2013, Other	included	Nonaccrual	loans	of	$14	million,	OREO	and	foreclosed	assets	of	$181	million	and	Long-lived	assets	held	for	sale	of	$51	million.	The	fair	value	of	these	assets	is	determined	based	on	appraised value	or	sales	price,	the	range	of	which	is	not	meaningful	to	disclose.

(d) As	of	September	1,	2014,	PNC	elected	to	account	for	agency	loans	held	for	sale	at	fair	value.	Accordingly,	beginning	on	September	1,	2014,	all	new	commercial	mortgage	loans	held	for	sale	originated	for	sale	to the	agencies	are	measured	at	fair	value	on	a	recurring	basis.

(e) The	assumed	yield	spread	over	benchmark	curve	for	each	instrument	is	generally	intended	to	incorporate	non-interest-rate	risks	such	as	credit	and	liquidity	risks.

(f) As	of	January	1,	2014,	PNC	made	an	irrevocable	election	to	subsequently	measure	all	classes	of	commercial	MSRs	at	fair	value.	Accordingly,	beginning	with	the	first	quarter	of	2014,	commercial	MSRs	are measured	at	fair	value	on	a	recurring	basis.

# Financial	Instruments	Accounted	For	Under	Fair	Value	Option

We	elect	the	fair	value	option	to	account	for	certain	financial	instruments.	For more	information	on	these	financial	instruments	for	which	the	fair	value	option election	has	been	made,	please	refer	to	the	Fair	Value	Measurement	section	of this	Note	7.	These	financial	instruments	are	initially	measured	at	fair	value, gains	and	losses	from	initial	measurement	and	any	changes	in	fair	value	are subsequently	recognized	in	earnings.	Additional	information	about	the	financial instruments	for	which	we	elected	the	fair	value	option	follows.

Interest	income	on	structured	resale	agreements	is	reported	on	the	Consolidated Income	Statement	in	Other	interest	income.	Changes	in	fair	value	due	to instrument-specific	credit	risk	for	2014	and	2013	were	not	material.

# Residential	Mortgage-Backed	Agency	Securities	with	Embedded Derivatives

Interest	income	on	these	securities	is	reported	on	the	Consolidated	Income Statement	in	Other	interest	income.

Interest	income	on	trading	loans	is	reported	on	the	Consolidated	Income Statement	in	Other	interest	income.

Interest	income	on	these	loans	is	recorded	as	earned	and	reported	on	the Consolidated	Income	Statement	in	Other	interest	income.	The	impact	on earnings	of	offsetting	economic	hedges	is	not	reflected	in	these	amounts. Changes	in	fair	value	due	to	instrument-specific	credit	risk	for	both	2014	and 2013	were	not	material.

Interest	income	on	these	loans	is	recorded	as	earned	and	reported	on	the Consolidated	Income	Statement	in	Other	interest	income.	Throughout	2014	and 2013,	certain	residential	mortgage	loans	for	which	we	elected	the	fair	value option	were	subsequently	reclassified	to	portfolio	loans.	Changes	in	fair	value due	to	instrument-specific	credit	risk	for	2014	and	2013	were	not	material.

# Residential	Mortgage	Loans	–	Portfolio

Interest	income	on	these	loans	is	recorded	as	earned	and	reported	on	the Consolidated	Income	Statement	in	either	Loan	interest	income	or	Other	interest income.	Interest	income	on	the	Home	Equity	Lines	of	Credit	for	which	we elected	the	fair	value	option	during	first	quarter	2013	is	reported	on	the Consolidated	Income	Statement	in	Loan	interest	income.

Interest	expense	on	the	Other	borrowed	funds	for	which	we	have	elected	the	fair value	option	is	reported	on	the	Consolidated	Income	Statement	in	Borrowed funds	interest	expense.

The	changes	in	fair	value	included	in	Noninterest	income	for	items	for	which	we elected	the	fair	value	option	follow.

# Table	88:	Fair	Value	Option	–	Changes	in	Fair	Value	(a)

| Year	ended	December	31<br>In	millions | 2014 | Gains	(Losses)<br>2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Assets |  |  |  |
| Customer\tresale\tagreements | $(3) | $(7) | $(10) |
| Residential\tmortgage-backed\tagency |  |  |  |
| securities\twith\tembedded\tderivatives |  |  |  |
| (b) |  |  | 13 |
| Trading\tloans | 2 | 3 | 2 |
| Commercial\tmortgage\tloans\theld\tfor\tsale | 50 | (10) | (5) |
| Residential\tmortgage\tloans\theld\tfor\tsale |  |  |  |
| (c) | \t 212 | \t 213 | (223) |
| Residential\tmortgage\tloans\t–\tportfolio\t(c) | \t 157 | 60 | 7 |
| BlackRock\tSeries\tC\tPreferred\tStock | 43 | \t 122 | 33 |
| Liabilities |  |  |  |
| Other\tborrowed\tfunds | (5) | (9) |  |

(a) The	impact	on	earnings	of	offsetting	hedged	items	or	hedging	instruments	is	not	reflected	in	these amounts.

(b) At	December	31,	2014,	2013	and	2012,	the	balance	of	residential	mortgage-backed	agency securities	with	embedded	derivatives	carried	in	Trading	securities	was	zero.

(c) Prior	periods	were	corrected	for	the	allocation	between	Residential	mortgage	loans	held	for	sale	and Residential	mortgage	loans	–	portfolio.	This	resulted	in	a	decrease	of	$34	million	from	gains	on Residential	mortgage	loans	held	for	sale	and	an	increase	of	$33	million	to	gains	on	Residential mortgage	loans	–	portfolio	for	2013.	Comparable	amounts	for	2012	were	a	decrease	of	$43	million from	gains	on	Residential	mortgage	loans	held	for	sale	and	an	increase	of	$43	million	to	gains	on Residential	mortgage	loans	–	portfolio.

Fair	values	and	aggregate	unpaid	principal	balances	of	items	for	which	we	elected	the	fair	value	option	follow.

# Table	89:	Fair	Value	Option	–	Fair	Value	and	Principal	Balances

| In	millions | Fair	Value | Principal	Balance | Difference |
| :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |
| Assets |  |  |  |
| Customer\tresale\tagreements | $155 | $148 | $7 |
| Trading\tloans | 37 | 37 |  |
| Residential\tmortgage\tloans\theld\tfor\tsale |  |  |  |
| Performing\tloans | 1,236 | 1,176 | 60 |
| Accruing\tloans\t90\tdays\tor\tmore\tpast\tdue | 9 | 9 |  |
| Nonaccrual\tloans | 16 | 17 | (1) |
| Total | 1,261 | 1,202 | 59 |
| Commercial\tmortgage\tloans\theld\tfor\tsale\t(a) |  |  |  |
| Performing\tloans | 873 | 908 | (35) |
| Nonaccrual\tloans | 20 | 64 | (44) |
| Total | 893 | 972 | (79) |
| Residential\tmortgage\tloans\t–\tportfolio |  |  |  |
| Performing\tloans | 194 | 256 | (62) |
| Accruing\tloans\t90\tdays\tor\tmore\tpast\tdue\t(b) | 570 | 573 | (3) |
| Nonaccrual\tloans | 270 | 449 | (179) |
| Total | 1,034 | 1,278 | (244) |
| Liabilities |  |  |  |
| Other\tborrowed\tfunds | $273 | $312 | $(39) |
| December\t31,\t2013 |  |  |  |
| Assets |  |  |  |
| Customer\tresale\tagreements | $207 | $196 | $11 |
| Trading\tloans | 6 | 6 |  |
| Residential\tmortgage\tloans\theld\tfor\tsale |  |  |  |
| Performing\tloans | 1,298 | 1,260 | 38 |
| Accruing\tloans\t90\tdays\tor\tmore\tpast\tdue | 2 | 2 |  |
| Nonaccrual\tloans | 15 | 18 | (3) |
| Total | 1,315 | 1,280 | 35 |
| Commercial\tmortgage\tloans\theld\tfor\tsale\t(a) |  |  |  |
| Performing\tloans | 583 | 669 | (86) |
| Nonaccrual\tloans | 3 | 9 | (6) |
| Total | 586 | 678 | (92) |
| Residential\tmortgage\tloans\t–\tportfolio\t(c) |  |  |  |
| Performing\tloans | 233 | 332 | (99) |
| Accruing\tloans\t90\tdays\tor\tmore\tpast\tdue\t(b) | 552 | 626 | (74) |
| Nonaccrual\tloans | 365 | 598 | (233) |
| Total | 1,150 | 1,556 | (406) |
| Liabilities |  |  |  |
| Other\tborrowed\tfunds\t(c) | $309 | $353 | $(44) |
| (a) |  |  |  |

(a) There	were	no	accruing	loans	90	days	or	more	past	due	within	this	category	at	December	31,	2014	or	December	31,	2013.

(b) Included	in	this	population	are	government	insured	loans	and	non-government	insured	home	equity	loans.	Loans	that	are	insured	by	the	government	result	in	a	higher	fair	value	than	those	that	do	not	have	that guarantee.

(c) Prior	period	amounts	were	corrected	in	our	third	quarter	2014	10-Q	to	include	transferred	loans	over	which	PNC	regained	effective	control	and	the	related	liabilities	that	are	recorded	pursuant	to	ASC	860.	This resulted	in	increases	of	$125	million	in	fair	value	and	$128	million	in	aggregate	unpaid	principal	balance	for	both	Residential	mortgage	loans	–	portfolio	and	Other	borrowed	funds	as	of	December	31,	2013.

# Additional	Fair	Value	Information	Related	to	Other	Financial	Instruments

The	following	table	presents	the	carrying	amounts	and	estimated	fair	values,	including	the	level	within	the	fair	value	hierarchy,	of	all	other	financial	instruments	that	are not	measured	on	the	consolidated	financial	statements	at	fair	value	as	of	December		31,	2014	and	2013.

# Table	90:	Additional	Fair	Value	Information	Related	to	Other	Financial	Instruments

| In	millions | Carrying<br>Amount | Total | Level	1 | Fair	Value<br>Level	2 | Level	3 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014 |  |  |  |  |  |
| Assets |  |  |  |  |  |
| Cash\tand\tdue\tfrom\tbanks | \t\t $4,360 | $4,360 | $4,360 |  |  |
| Short-term\tassets | 34,380 | 34,380 |  | $34,380 |  |
| Securities\theld\tto\tmaturity | 11,588 | 11,984 | 292 | 11,683 | $9 |
| Loans\theld\tfor\tsale | 108 | 108 |  | 56 | 52 |
| Net\tloans\t(excludes\tleases) | \t 192,573 | \t 194,564 |  |  | \t 194,564 |
| Other\tassets | 1,879 | 2,544 |  | 1,802 | 742\t\t\t\t(a) |
| Total\tAssets | \t\t $244,888 | $247,940 | $4,652 | $47,921 | $195,367 |
| Liabilities |  |  |  |  |  |
| Demand,\tsavings\tand\tmoney\tmarket\tdeposits | \t\t $210,838 | $210,838 |  | $210,838 |  |
| Time\tdeposits | 21,396 | 21,392 |  | 21,392 |  |
| Borrowed\tfunds | 55,329 | 56,011 |  | 54,574 | $1,437 |
| Unfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 240 | 240 |  |  | 240 |
| Total\tLiabilities | \t\t $287,803 | $288,481 |  | $286,804 | $1,677 |
| December\t31,\t2013 |  |  |  |  |  |
| Assets |  |  |  |  |  |
| Cash\tand\tdue\tfrom\tbanks | \t\t $4,043 | $4,043 | $4,043 |  |  |
| Short-term\tassets | 14,906 | 14,906 |  | $14,906 |  |
| Securities\theld\tto\tmaturity | 11,687 | 11,765 | 243 | 11,505 | $17 |
| Loans\theld\tfor\tsale | 354 | 355 |  |  | 355 |
| Net\tloans\t(excludes\tleases) | \t 183,155 | \t 184,737 |  |  | \t 184,737 |
| Other\tassets | 1,765 | 2,578 |  | 1,607 | 971\t\t\t\t(a) |
| Total\tAssets | \t\t $215,910 | $218,384 | $4,286 | $28,018 | $186,080 |
| Liabilities |  |  |  |  |  |
| Demand,\tsavings\tand\tmoney\tmarket\tdeposits | \t\t $197,465 | $197,465 |  | $197,465 |  |
| Time\tdeposits | 23,466 | 23,487 |  | 23,487 |  |
| Borrowed\tfunds | 44,776 | 45,607 |  | 44,320 | $1,287 |
| Unfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 224 | 224 |  |  | 224 |
| Total\tLiabilities | \t\t $265,931 | $266,783 |  | $265,272 | $1,511 |
| (a)\nRepresents\testimated\tfair\tvalue\tof\tVisa\tClass\tB\tcommon\tshares,\twhich\twas\testimated\tsolely\tbased\tupon\tthe\tDecember\t31,\t2014\tand\tDecember\t31,\t2013\tclosing\tprice\tfor\tthe\tVisa\tClass\tA\tcommon\tshares, |  |  |  |  |  |

(a) Represents	estimated	fair	value	of	Visa	Class	B	common	shares,	which	was	estimated	solely	based	upon	the	December	31,	2014	and	December	31,	2013	closing	price	for	the	Visa	Class	A	common	shares, respectively,	and	the	Visa	Class	B	common	share	conversion	rate,	which	reflects	adjustments	in	respect	of	all	litigation	funding	by	Visa	as	of	that	date.	The	transfer	restrictions	on	the	Visa	Class	B	common	shares could	impact	the	aforementioned	estimate,	until	they	can	be	converted	to	Class	A	common	shares.	See	Note	22	Commitments	and	Guarantees	for	additional	information.

The	aggregate	fair	values	in	the	preceding	table	represent	only	a	portion	of	the total	market	value	of	PNC's	assets	and	liabilities	as,	in	accordance	with	the guidance	related	to	fair	values	of	financial	instruments,	Table	90	excludes	the following:

•	financial	instruments	recorded	at	fair	value	on	a	recurring	basis, •	real	and	personal	property, •	lease	financing,

•	loan	customer	relationships, •	deposit	customer	intangibles,

•	mortgage	servicing	rights, •	retail	branch	networks,

•	fee-based	businesses,	such	as	asset	management	and	brokerage,	and •	trademarks	and	brand	names.

We	used	the	following	methods	and	assumptions	to	estimate	the	fair	value amounts	for	financial	instruments	included	in	Table	90.

# General

For	short-term	financial	instruments	realizable	in	three	months	or	less,	the carrying	amount	reported	on	our	Consolidated	Balance	Sheet	approximates	fair value.	Unless	otherwise	stated,	the	rates	used	in	discounted	cash	flow	analyses are	based	on	market	yield	curves.

# Cash	and	due	from	banks

The	carrying	amounts	reported	on	our	Consolidated	Balance	Sheet	for	cash	and due	from	banks	approximate	fair	values.	For	purposes	of	this	disclosure	only, cash	and	due	from	banks	includes	the	following:

•	due	from	banks,	and

•	non-interest-earning	deposits	with	banks.

# Short-Term	Assets

The	carrying	amounts	reported	on	our	Consolidated	Balance	Sheet	for	short- term	investments	approximate	fair	values	primarily	due	to	their	short-term nature.	For	purposes	of	this	disclosure	only,	short-term	assets	include	the following:

•	federal	funds	sold	and	resale	agreements, •	cash	collateral,

•	customers'	acceptances,

•	accrued	interest	receivable,	and

•	interest-earning	deposits	with	banks.

# Securities	held	to	maturity

We	primarily	use	prices	obtained	from	pricing	services,	dealer	quotes	or	recent trades	to	determine	the	fair	value	of	securities.	As	of	December	31,	2014,	94%	of the	positions	in	the	held	to	maturity	portfolio	were	priced	by	pricing	services provided	by	third-party	vendors.	Refer	to	the	Fair	Value	Measurement	section	of this	Note	7	for	additional	information	relating	to	our	pricing	processes	and procedures.

# Net	Loans	And	Loans	Held	For	Sale

Fair	values	are	estimated	based	on	the	discounted	value	of	expected	net	cash flows	incorporating	assumptions	about	prepayment	rates,	net	credit	losses	and servicing	fees.	For	purchased	impaired	loans,	fair	value	is	assumed	to	equal PNC's	carrying	value,	which	represents	the	present	value	of	expected	future principal	and	interest	cash	flows,	as	adjusted	for	any	ALLL	recorded	for	these loans.	See	Note	4	Purchased	Loans	for	additional	information.	For	revolving home	equity	loans	and	commercial	credit	lines,	this	fair	value	does	not	include any	amount	for	new	loans	or	the	related	fees	that	will	be	generated	from	the existing	customer	relationships.	Nonaccrual	loans	are	valued	at	their	estimated recovery	value.	Loans	are	presented	net	of	the	ALLL	and	do	not	include	future accretable	discounts	related	to	purchased	impaired	loans.

# Other	Assets

Other	assets	as	shown	in	Table	90	includes	equity	investments	carried	at	cost	as well	as	FHLB	and	FRB	stock.	The	aggregate	carrying	value	of	our	FHLB	and FRB	stock	was	$1.8	billion	at	December	31,	2014	and	was	$1.6	billion	at December	31,	2013,	which	approximates	fair	value	at	each	date.

Investments	accounted	for	under	the	equity	method,	including	our	investment	in BlackRock,	are	not	included	in	Table	90.

# Deposits

For	deposits	with	no	defined	maturity,	such	as	noninterest-bearing	and	interest- bearing	demand	and	interest-bearing	money	market	and	savings	deposits, carrying	values	approximate	fair	values.	For	time	deposits,	fair	values	are estimated	by	discounting	contractual	cash	flows	using	current	market	rates	for instruments	with	similar	maturities.	The	value	of	long-term	relationships	with depositors	was	not	taken	into	account	in	estimating	fair	values.

# Borrowed	Funds

For	short-term	borrowings,	including	Federal	funds	purchased,	commercial paper,	repurchase	agreements,	and	certain	other	short-term	borrowings	and payables,	carrying	values	approximated	fair	values.	For	long-term	borrowed funds,	quoted	market	prices	are	used,	when	available,	to	estimate	fair	value. When	quoted	market	prices	are	not	available,	fair	value	is	estimated	based	on current	market	interest	rates	and	credit	spreads	for	debt	with	similar	terms	and maturities.

# Unfunded	Loan	Commitments	And	Letters	Of	Credit

The	fair	value	of	unfunded	loan	commitments	and	letters	of	credit	is	determined from	a	market	participant's	view	including	the	impact	of	changes	in	interest	rates and	credit.	Because	our	obligation	on	substantially	all	unfunded	loan commitments	and	letters	of	credit	varies	with	changes	in	interest	rates,	these instruments	are	subject	to	little	fluctuation	in	fair	value	due	to	changes	in	interest rates.	We	establish	a	liability	on	these	facilities	related	to	the	creditworthiness	of our	counterparty.

# NOTE	8	GOODWILL	AND	OTHER	INTANGIBLE	ASSETS

Assets	and	liabilities	of	acquired	entities	are	recorded	at	estimated	fair	value	as of	the	acquisition	date.

(a) The	Residential	Mortgage	Banking	and	Non-Strategic	Assets	Portfolio	business	segments	did	not have	any	goodwill	allocated	to	them	during	2014	and	2013.

We	conduct	a	goodwill	impairment	test	on	our	reporting	units	at	least	annually, in	the	fourth	quarter,	or	more	frequently	if	events	occur	or	circumstances	have changed	significantly	from	the	annual	test	date.	The	fair	value	of	our	reporting units	is	determined	by	using	discounted	cash	flow	and,	when	applicable,	market comparability	methodologies.	Based	on	the	results	of	our	analysis,	there	were	no impairment	charges	related	to	goodwill	in	2014	or	2013.

# Other	Intangible	Assets

As	of	January	1,	2014,	PNC	made	an	irrevocable	election	to	measure	all	classes of	commercial	MSRs	at	fair	value,	which	precludes	the	recognition	of	valuation allowance	or	accumulated	amortization.	Refer	to	the	Mortgage	Servicing	Rights section	of	this	Note	8	for	additional	information	regarding	commercial	mortgage servicing	rights.

The	gross	carrying	amount,	accumulated	amortization	and	net	carrying	amount of	other	intangible	assets	by	major	category	consisted	of	the	following:

# Table	92:	Other	Intangible	Assets

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Customer-related\tand\tother\tintangibles |  |  |
| Gross\tcarrying\tamount\t(a) | $1,502 | $1,676 |
| Accumulated\tamortization\t(a) | (1,009) | (1,096) |
| Net\tcarrying\tamount | $493 | $580 |
| Mortgage\tservicing\trights\t(b) |  |  |
| Gross\tcarrying\tamount | $1,351 | $2,620 |
| Valuation\tallowance |  | (88) |
| Accumulated\tamortization |  | (896) |
| Net\tcarrying\tamount | $1,351 | $1,636 |
| Total | $1,844 | $2,216 |

(a) The	decrease	in	the	gross	carrying	amount	and	accumulated	amortization	from	December	31,	2013 was	due	to	the	removal	of	fully	amortized	assets.

(b) Upon	the	first	quarter	2014	irrevocable	election	of	fair	value	for	commercial	MSRs,	the	gross carrying	amount	of	MSRs	as	of	December	31,	2014	represents	the	fair	value	of	commercial	and residential	MSRs.

Amortization	expense	on	existing	intangible	assets	follows:

# Table	93:	Amortization	Expense	on	Existing	Intangible	Assets

(a) Amounts	include	amortization	expense	related	to	commercial	MSRs.	As	of	January	1,	2014,	PNC made	an	irrevocable	election	to	measure	commercial	MSRs	at	fair	value,	and,	accordingly, amortization	expense	for	commercial	MSRs	is	no	longer	recorded.

# Customer-Related	and	Other	Intangible	Assets

Our	customer-related	and	other	intangible	assets	have	finite	lives.	Core	deposit intangibles	are	amortized	on	an	accelerated	basis,	whereas	the	remaining	other intangible	assets	are	amortized	on	a	straight-line	basis.	For	customer-related	and other	intangibles,	the	estimated	remaining	useful	lives	range	from	less	than	1 year	to	10	years,	with	a	weighted-average	remaining	useful	life	of	7	years.

Changes	in	customer-related	intangible	assets	during	2014	and	2013	follow:

# Table	94:	Summary	of	Changes	in	Customer-Related	and	Other	Intangible Assets

# Mortgage	Servicing	Rights

We	recognize	as	an	other	intangible	asset	the	right	to	service	mortgage	loans	for others.	MSRs	are	purchased	or	originated	when	loans	are	sold	with	servicing retained.

As	of	January	1,	2014,	PNC	made	an	irrevocable	election	to	subsequently measure	all	classes	of	commercial	MSRs	at	fair	value	in	order	to	eliminate	any potential	measurement	mismatch	between	our	economic	hedges	and	the commercial	MSRs.	The	impact	of	the	cumulative-effect	adjustment	to	retained earnings	was	not	material,	and	the	valuation	allowance	associated	with	the commercial	MSRs	was

reclassified	to	the	gross	carrying	amount	of	commercial	MSRs.	We	recognize gains/(losses)	on	changes	in	the	fair	value	of	commercial	MSRs	as	a	result	of	the election.	Commercial	MSRs	are	subject	to	declines	in	value	from	actual	or expected	prepayment	of	the	underlying	loans	and	also	from	defaults.	We manage	this	risk	by	economically	hedging	the	fair	value	of	commercial	MSRs with	securities	and	derivative	instruments	which	are	expected	to	increase	(or decrease)	in	value	when	the	value	of	commercial	MSRs	declines	(or	increases).

The	fair	value	of	commercial	MSRs	is	estimated	by	using	a	discounted	cash	flow model	incorporating	inputs	for	assumptions	as	to	constant	prepayment	rates, discount	rates	and	other	factors	determined	based	on	current	market	conditions and	expectations.

Changes	in	commercial	MSRs	accounted	for	at	fair	value	during	2014	follow:

# Table	95:	Commercial	Mortgage	Servicing	Rights	Accounted	for	at	Fair	Value

| In	millions | 2014 |
| :--- | :--- |
| January\t1 | $552 |
| Additions: |  |
| From\tloans\tsold\twith\tservicing\tretained | 53 |
| Purchases | 43 |
| Changes\tin\tfair\tvalue\tdue\tto: |  |
| Time\tand\tpayoffs\t(a) | (89) |
| Other\t(b) | (53) |
| December\t31 | $506 |
| Unpaid\tprincipal\tbalance\tof\tloans\tserviced\tfor\tothers\tat |  |
| December\t31 | $143,738 |

(a) Represents	decrease	in	MSR	value	due	to	passage	of	time,	including	the	impact	from	both	regularly scheduled	loan	principal	payments	and	loans	that	were	paid	down	or	paid	off	during	the	period.

(b) Represents	MSR	value	changes	resulting	primarily	from	market-driven	changes	in	interest	rates.

Prior	to	2014,	commercial	MSRs	were	initially	recorded	at	fair	value	and subsequently	accounted	for	at	the	lower	of	amortized	cost	or	fair	value.	These rights	were	substantially	amortized	in	proportion	to	and	over	the	period	of estimated	net	servicing	income	of	5	to	10	years.	Commercial	MSRs	were periodically	evaluated	for	impairment.	For	purposes	of	impairment,	the commercial	MSRs	were	stratified	based	on	asset	type,	which	characterized	the predominant	risk	of	the	underlying	financial	asset.	If	the	carrying	amount	of	any individual	stratum	exceeded	its	fair	value,	a	valuation	reserve	was	established with	a	corresponding	charge	to	Corporate	services	on	our	Consolidated	Income Statement.

Changes	in	commercial	MSRs	during	2013	and	2012,	prior	to	the	irrevocable fair	value	election,	follow:

# Table	96:	Commercial	Mortgage	Servicing	Rights	Accounted	for	Under	the Amortization	Method

| In	millions | 2013 | 2012 |
| :--- | :--- | :--- |
| Commercial\tMortgage\tServicing\tRights\t–\tNet |  |  |
| Carrying\tAmount | Carrying\tAmount |  |
| January\t1 | $420 | $468 |
| Additions\t(a) | 138 | 73 |
| Amortization\texpense\t(b) | (97) | (142) |
| Change\tin\tvaluation\tallowance | 88 | 21 |
| December\t31 | $549 | $420 |
| Commercial\tMortgage\tServicing\tRights\t–\tValuation |  |  |
| Allowance | Allowance |  |
| January\t1 | $(176) | $(197) |
| Provision | (21) | (46) |
| Recoveries | 108 | 43 |
| Other\t(b) | 1 | 24 |
| December\t31 | $(88) | $(176) |
| (a) | Additions\tfor\t2013\tincluded\t$53\tmillion\tfrom\tloans\tsold\twith\tservicing\tretained\tand\t$85\tmillion | Additions\tfor\t2013\tincluded\t$53\tmillion\tfrom\tloans\tsold\twith\tservicing\tretained\tand\t$85\tmillion |

(a) Additions	for	2013	included	$53	million	from	loans	sold	with	servicing	retained	and	$85	million from	purchases	of	servicing	rights	from	third	parties.	Comparable	amounts	were	$45	million	and $28	million,	respectively,	for	2012.

(b) Includes	a	direct	write-down	of	servicing	rights	for	$24	million	recognized	in	the	first	quarter	of 2012	primarily	due	to	market-driven	changes	in	interest	rates.

We	recognize	mortgage	servicing	right	assets	on	residential	real	estate	loans when	we	retain	the	obligation	to	service	these	loans	upon	sale	and	the	servicing fee	is	more	than	adequate	compensation.	Residential	MSRs	are	subject	to declines	in	value	principally	from	actual	or	expected	prepayment	of	the underlying	loans	and	also	from	defaults.	We	manage	this	risk	by	economically hedging	the	fair	value	of	residential	MSRs	with	securities	and	derivative instruments	which	are	expected	to	increase	(or	decrease)	in	value	when	the	value of	residential	MSRs	declines	(or	increases).

The	fair	value	of	residential	MSRs	is	estimated	by	using	a	discounted	cash	flow valuation	model	which	calculates	the	present	value	of	estimated	future	net servicing	cash	flows,	taking	into	consideration	actual	and	expected	mortgage loan	prepayment	rates,	discount	rates,	servicing	costs,	and	other	economic factors	which	are	determined	based	on	current	market	conditions.

Changes	in	the	residential	MSRs	follow:

# Table	97:	Residential	Mortgage	Servicing	Rights

| In	millions | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| January\t1 | $1,087 | $650 | $647 |
| Additions:\nFrom\tloans\tsold\twith\tservicing\nretained | 85 | 158 | 117 |
| RBC\tBank\t(USA)\tacquisition\t(a) |  |  | 16 |
| Purchases | 45 | 110 | 175 |
| Sales |  | (4) |  |
| Changes\tin\tfair\tvalue\tdue\tto: |  |  |  |
| Time\tand\tpayoffs\t(b) | (134) | (193) | (167) |
| Other\t(c) | (238) | 366 | (138) |
| December\t31 | $845 | $1,087 | $650 |
| Unpaid\tprincipal\tbalance\tof\tloans |  |  |  |
| serviced\tfor\tothers\tat\tDecember |  |  |  |
| 31 | $108,010 | $113,994 | $119,262 |

(a) See	Note	2	Acquisition	and	Divestiture	Activity	in	our	2013	Form	10-K	for	additional	discussion	of our	2012	acquisition	of	RBC	Bank	(USA).

(b) Represents	decrease	in	MSR	value	due	to	passage	of	time,	including	the	impact	from	both	regularly scheduled	loan	principal	payments	and	loans	that	were	paid	down	or	paid	off	during	the	period.

(c) Represents	MSR	value	changes	resulting	primarily	from	market-driven	changes	in	interest	rates.

The	fair	value	of	commercial	and	residential	MSRs	and	significant	inputs	to	the valuation	models	as	of	December	31,	2014	are	shown	in	the	tables	below.	The expected	and	actual	rates	of	mortgage	loan	prepayments	are	significant	factors driving	the	fair	value.	Management	uses	both	internal	proprietary	models	and	a third-party	model	to	estimate	future	commercial	mortgage	loan	prepayments	and a	third-party	model	to	estimate	future	residential	mortgage	loan	prepayments. These	models	have	been	refined	based	on	current	market	conditions	and management	judgment.	Future	interest	rates	are	another	important	factor	in	the valuation	of	MSRs.	Management	utilizes	market	implied	forward	interest	rates	to estimate	the	future	direction	of	mortgage	and	discount	rates.	The	forward	rates utilized	are	derived	from	the	current	yield	curve	for	U.S.	dollar	interest	rate swaps	and	are	consistent	with	pricing	of	capital	markets	instruments.	Changes	in the	shape	and	slope	of	the	forward	curve	in	future	periods	may	result	in	volatility in	the	fair	value	estimate.

A	sensitivity	analysis	of	the	hypothetical	effect	on	the	fair	value	of	MSRs	to adverse	changes	in	key	assumptions	is	presented	below.	These	sensitivities	do not	include	the	impact	of	the	related	hedging	activities.	Changes	in	fair	value generally	cannot	be	extrapolated	because	the	relationship	of	the	change	in	the assumption	to	the	change	in	fair	value	may	not	be	linear.	Also,	the	effect	of	a variation	in	a	particular	assumption	on	the	fair	value	of	the	MSRs	is	calculated independently	without	changing	any	other	assumption.	In	reality,	changes	in	one factor	may	result	in	changes	in	another	(for	example,	changes	in	mortgage interest	rates,	which	drive	changes	in	prepayment	rate	estimates,	could	result	in changes	in	the	interest	rate	spread),	which	could	either	magnify	or	counteract	the sensitivities.

The	following	tables	set	forth	the	fair	value	of	commercial	and	residential	MSRs and	the	sensitivity	analysis	of	the	hypothetical	effect	on	the	fair	value	of	MSRs to	immediate	adverse	changes	of	10%	and	20%	in	those	assumptions:

# Table	98:	Commercial	Mortgage	Loan	Servicing	Rights	–	Key	Valuation Assumptions

| Dollars	in	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Fair\tvalue | $506 | $552 |
| Weighted-average\tlife\t(years) | 4.7 | 5.3 |
| Weighted-average\tconstant |  |  |
| prepayment\trate | 8.03% | 7.52% |
| Decline\tin\tfair\tvalue\tfrom\t10% |  |  |
| adverse\tchange | $10 | $12 |
| Decline\tin\tfair\tvalue\tfrom\t20% |  |  |
| adverse\tchange | $19 | $23 |
| Effective\tdiscount\trate | 6.59% | 6.91% |
| Decline\tin\tfair\tvalue\tfrom\t10% |  |  |
| adverse\tchange | $13 | $18 |
| Decline\tin\tfair\tvalue\tfrom\t20% |  |  |
| adverse\tchange | $26 | $35 |

# Table	99:	Residential	Mortgage	Loan	Servicing	Rights	–	Key	Valuation Assumptions

| Dollars	in	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Fair\tvalue | $845 | $1,087 |
| Weighted-average\tlife\t(years) | 6.1 | 7.9 |
| Weighted-average\tconstant |  |  |
| prepayment\trate | 11.16% | 7.61% |
| Decline\tin\tfair\tvalue\tfrom\t10% |  |  |
| adverse\tchange | $36 | $34 |
| Decline\tin\tfair\tvalue\tfrom\t20% |  |  |
| adverse\tchange | $69 | $67 |
| Weighted-average\toption\tadjusted |  |  |
| spread | 10.36% | 10.24% |
| Decline\tin\tfair\tvalue\tfrom\t10% |  |  |
| adverse\tchange | $31 | $47 |
| Decline\tin\tfair\tvalue\tfrom\t20% |  |  |
| adverse\tchange | $61 | $91 |

Fees	from	mortgage	and	other	loan	servicing,	comprised	of	contractually specified	servicing	fees,	late	fees	and	ancillary	fees,	follows:

# Table	100:	Fees	from	Mortgage	and	Other	Loan	Servicing

We	also	generate	servicing	fees	from	fee-based	activities	provided	to	others	for which	we	do	not	have	an	associated	servicing	asset.

Fees	from	commercial	and	residential	MSRs	are	reported	on	our	Consolidated Income	Statement	in	the	line	items	Corporate	services	and	Residential	mortgage, respectively.

# NOTE	9	PREMISES,	EQUIPMENT	AND	LEASEHOLD IMPROVEMENTS

Premises,	equipment	and	leasehold	improvements,	stated	at	cost	less accumulated	depreciation	and	amortization,	were	as	follows:

# Table	101:	Premises,	Equipment	and	Leasehold	Improvements

# (a) Primarily	relates	to	equipment	and	buildings.

Depreciation	expense	on	premises,	equipment	and	leasehold	improvements	and amortization	expense,	excluding	intangible	assets	and	primarily	for	capitalized internally	developed	software,	was	as	follows:

# Table	102:	Depreciation	and	Amortization	Expense

| In	millions | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Continuing\toperations: |  |  |  |
| Depreciation | $618 | $546 | $521 |
| Amortization | 30 | 23 | 19 |

We	lease	certain	facilities	and	equipment	under	agreements	expiring	at	various dates	through	the	year	2081.	We	account	for	these	as	operating	leases.	Rental expense	on	such	leases	was	as	follows:

# Table	103:	Lease	Rental	Expense

| Year	ended	December	31<br>In	millions | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Continuing\toperations: | $414 | $412 | $405 |

Required	minimum	annual	rentals	that	we	owe	on	noncancelable	leases	having initial	or	remaining	terms	in	excess	of	one	year	totaled	$2.7	billion	at December	31,	2014.	Future	minimum	annual	rentals	are	as	follows: •	2015:	$376	million,

# NOTE	10	TIME	DEPOSITS

Total	time	deposits	of	$21.4	billion	at	December	31,	2014	have	future contractual	maturities,	including	related	purchase	accounting	adjustments,	as follows:

# NOTE	11	BORROWED	FUNDS

The	following	shows	the	carrying	value	of	total	borrowed	funds	of	$56.8	billion at	December	31,	2014	(including	adjustments	related	to	purchase	accounting, accounting	hedges	and	unamortized	original	issuance	discounts)	by	remaining contractual	maturity:

Included	in	the	following	table	are	balances	of	long-term	bank	notes	along	with senior	and	subordinated	debt	and	the	related	contractual	rates	and	maturity	dates at	December	31,	2014.

# Table	104:	Bank	Notes,	Senior	Debt	and	Subordinated	Debt

| December	31,	2014	–	Dollars<br>in	millions | Carrying	Value | Stated	Rate | Maturity |
| :--- | :--- | :--- | :--- |
| Bank\tnotes | \t\t $8,574 | zero-3.30%\t\t\t2015-2043 | zero-3.30%\t\t\t2015-2043 |
| Senior\tdebt | 7,176\t\t\t\t\t2.70%-6.70%\t\t\t2015-2022 | 7,176\t\t\t\t\t2.70%-6.70%\t\t\t2015-2022 | 7,176\t\t\t\t\t2.70%-6.70%\t\t\t2015-2022 |
| Bank\tnotes\tand\tsenior\tdebt | \t\t $15,750 |  |  |
| Subordinated\tdebt |  |  |  |
| Junior | \t\t $205 | .81% | 2028 |
| Other | 8,946 | .61%-6.88%\t\t\t2015-2025 | .61%-6.88%\t\t\t2015-2025 |

In	the	table	above,	the	carrying	values	for	senior	debt,	subordinated	debt	and bank	notes	include	basis	adjustments	of	$193	million,	$317	million	and	$20 million,	respectively,	related	to	fair	value	accounting	hedges	as	of	December	31, 2014.

The	$205	million	of	junior	subordinated	debt	included	in	the	above	table	represents	the	carrying	value	of	debt	redeemable	prior	to	maturity.	This	carrying	value	and related	net	discounts	of	$1	million	comprise	the	$206	million	principal	amount	of	junior	subordinated	debentures	that	are	discussed	in	Note	12	Capital	Securities	of	a Subsidiary	Trust	and	Perpetual	Trust	Securities.

Included	in	borrowed	funds	are	FHLB	borrowings	of	$20.0	billion	at	December	31,	2014,	which	are	generally	collateralized	by	residential	mortgage	loans,	other mortgage-related	loans	and	commercial	mortgage-backed	securities.	FHLB	borrowings	have	balances	that	will	mature	from	2015	–	2030,	with	interest	rates	ranging from	zero	to	7.33%.	There	were	no	short-term	FHLB	advances	as	of	December	31,	2014.

Also	included	in	borrowed	funds	are	repurchase	agreements.	See	Note	22	Commitments	and	Guarantees	for	additional	information	on	those	agreements.	Additionally, certain	borrowings	are	reported	at	fair	value.	Refer	to	Note	7	Fair	Value	for	more	information	on	those	borrowings.

# NOTE	12	CAPITAL	SECURITIES	OF	A	SUBSIDIARY	TRUST	AND	PERPETUAL	TRUST	SECURITIES

At	December	31,	2014,	PNC	had	$206	million	in	principal	amount	of	an	outstanding	junior	subordinated	debenture	associated	with	$200	million	of	trust	preferred securities	that	were	issued	by	a	subsidiary	statutory	trust.	These	trust	preferred	securities	represented	non-voting	preferred	beneficial	interests	in	the	assets	of	the following	Trust:

# Table	105:	Capital	Securities	of	a	Subsidiary	Trust

This	Trust	is	a	wholly-owned	finance	subsidiary	of	PNC.	In	the	event	of	certain	changes	or	amendments	to	regulatory	requirements	or	federal	tax	rules,	the	capital securities	are	redeemable	in	whole.	In	accordance	with	GAAP,	the	financial	statements	of	the	Trust	are	not	included	in	PNC's	consolidated	financial	statements.

At	December	31,	2014,	PNC's	junior	subordinated	debt	with	a	carrying	value	of	$205	million	represented	debentures	purchased	and	held	as	assets	by	the	Trust	and redeemable	prior	to	maturity.

The	obligations	of	the	parent	of	the	Trust,	when	taken	collectively,	are	the	equivalent	of	a	full	and	unconditional	guarantee	of	the	obligations	of	the	Trust	under	the	terms of	the	Capital	Securities.	Such	guarantee	is	subordinate	in	right	of	payment	in	the	same	manner	as	other	junior	subordinated	debt.	There	are	certain	restrictions	on	PNC's overall	ability	to	obtain	funds	from	its	subsidiaries.	For	additional	disclosure	on	these	funding	restrictions,	including	an	explanation	of	dividend	and	intercompany	loan limitations,	see	Note	20	Regulatory	Matters.	PNC	is	also	subject	to	restrictions	on	dividends	and	other	provisions	potentially	imposed	under	the	Exchange	Agreement with	PNC	Preferred	Funding	Trust	II,	as	described	in	the	following	Perpetual	Trust	Securities	section,	and	to	other	provisions	similar	to	or	in	some	ways	more	restrictive than	those	potentially	imposed	under	that	agreement.

# Table	106:	Perpetual	Trust	Securities	Summary

We	have	issued	certain	hybrid	capital	vehicles,	and	the	following	table	lists	those	that	are	outstanding	as	of	December	31,	2014.

| Date | Entity	(a) | Private	Placement	(b) | Rate	(c) | Trust	Issuing	Notes	(d) |
| :--- | :--- | :--- | :--- | :--- |
| March\t2007 | PNC\tPreferred\tFunding\tLLC | $500\tmillion | \t\t 1.463% | \t\t PNC\tPreferred\tFunding\tTrust\tII\t(e) |
| December\t2006 | PNC\tPreferred\tFunding\tLLC | $500\tmillion | \t\t 1.891% | \t\t PNC\tPreferred\tFunding\tTrust\tI\t(f) |

(a) PNC	REIT	Corp.	owns	100%	of	the	LLC's	common	voting	securities.	As	a	result,	the	LLC	is	an	indirect	subsidiary	of	PNC	and	is	consolidated	on	PNC's	Consolidated	Balance	Sheet.

(b) Fixed-to-Floating	Rate	Non-cumulative	Exchangeable	Perpetual	Trust	Securities.

(d) The	trusts'	investments	in	the	LLC's	preferred	securities	are	characterized	as	a	noncontrolling	interest	on	our	Consolidated	Balance	Sheet.	This	noncontrolling	interest	totaled	approximately	$981	million	at December	31,	2014.

(e) Automatically	exchangeable	into	a	share	of	Series	I	Non-Cumulative	Perpetual	Preferred	Stock	of	PNC	(Series	I	Preferred	Stock).

(f) Automatically	exchangeable	into	a	share	of	Series	F	Non-Cumulative	Perpetual	Preferred	Stock	of	PNC	Bank	(PNC	Bank	Preferred	Stock).

These	Trust	Securities	are	automatically	exchangeable	as	set	forth	above	under	certain	conditions	relating	to	the	capitalization	or	the	financial	condition	of	PNC	Bank,

National	Association	(PNC	Bank)	and	upon	the	direction	of	the	Office	of	the	Comptroller	of	the	Currency.

On	March	15,	2013	we	redeemed	all	$375	million	of	the	PNC	Preferred	Funding	Trust	III	securities	with	a	distribution	rate	of	8.7%.

# Table	107:	Summary	of	Replacement	Capital	Covenants	of	Perpetual	Trust	Securities

Replacement	Capital	Covenant		(RCC)	(a) Trust Description	of	Capital	Covenants Trust	I	RCC PNC	Preferred	Funding	Trust	I Neither	we	nor	our	subsidiaries	(other	than	PNC	Bank	and	its	subsidiaries)	would purchase	the	Trust	Securities,	the	LLC	Preferred	Securities	or	the	PNC	Bank Preferred	Stock	unless	such	repurchases	or	redemptions	are	made	from	proceeds	of the	issuance	of	certain	qualified	securities	and	pursuant	to	the	other	terms	and conditions	set	forth	in	the	Trust	I	RCC. Trust	II	RCC PNC	Preferred	Funding	Trust	II Until	March	29,	2017,	neither	we	nor	our	subsidiaries	would	purchase	or	redeem	the Trust	II	Securities,	the	LLC	Preferred	Securities	or	the	Series	I	Preferred	Stock	unless such	repurchases	or	redemptions	are	made	from	proceeds	of	the	issuance	of	certain qualified	securities	and	pursuant	to	the	other	terms	and	conditions	set	forth	in	the Trust	II	RCC.

(a) As	of	December	31,	2014,	each	of	the	Trust	I	RCC	and	the	Trust	II	RCC	are	for	the	benefit	of	holders	of	our	$200	million	of	Floating	Rate	Junior	Subordinated	Notes	issued	in	June	1998.

# Table	108:	Summary	of	Contractual	Commitments	of	Perpetual	Trust	Securities

# Trust Description	of	Restrictions	on	Dividend	Payments	(c)

PNC	Preferred	Funding	Trust	I	(a) If	full	dividends	are	not	paid	in	a	dividend	period,	neither	PNC	Bank	nor	its	subsidiaries	will	declare	or	pay dividends	or	other	distributions	with	respect	to,	or	redeem,	purchase	or	acquire	or	make	a	liquidation	payment	with respect	to,	any	of	its	equity	capital	securities	during	the	next	succeeding	period	(other	than	to	holders	of	the	LLC Preferred	Securities	and	any	parity	equity	securities	issued	by	the	LLC).	(d)

PNC	Preferred	Funding	Trust	II	(b) If	full	dividends	are	not	paid	in	a	dividend	period,	PNC	will	not	declare	or	pay	dividends	with	respect	to,	or	redeem, purchase	or	acquire,	any	of	its	equity	capital	securities	during	the	next	succeeding	dividend	period.	(e)

(a) Contractual	commitments	made	by	PNC	Bank.

(b) Contractual	commitments	made	by	PNC.

(c) Applies	to	the	applicable	Trust	Securities	and	the	LLC	Preferred	Securities.

(d) Except:	(i)	in	the	case	of	dividends	payable	to	subsidiaries	of	PNC	Bank,	to	PNC	Bank	or	another	wholly-owned	subsidiary	of	PNC	Bank	or	(ii)	in	the	case	of	dividends	payable	to	persons	that	are	not	subsidiaries of	PNC	Bank,	to	such	persons	only	if,	(A)	in	the	case	of	a	cash	dividend,	PNC	has	first	irrevocably	committed	to	contribute	amounts	at	least	equal	to	such	cash	dividend	or	(B)	in	the	case	of	in-kind	dividends payable	by	PNC	REIT	Corp.,	PNC	has	committed	to	purchase	such	in-kind	dividend	from	the	applicable	PNC	REIT	Corp.	holders	in	exchange	for	a	cash	payment	representing	the	market	value	of	such	in-kind dividend,	and	PNC	has	committed	to	contribute	such	in-kind	dividend	to	PNC	Bank.

(e) Except	for:	(i)	purchases,	redemptions	or	other	acquisitions	of	shares	of	capital	stock	of	PNC	in	connection	with	any	employment	contract,	benefit	plan	or	other	similar	arrangement	with	or	for	the	benefit	of employees,	officers,	directors	or	consultants,	(ii)	purchases	of	shares	of	common	stock	of	PNC	pursuant	to	a	contractually	binding	requirement	to	buy	stock	existing	prior	to	the	commencement	of	the	extension period,	including	under	a	contractually	binding	stock	repurchase	plan,	(iii)	any	dividend	in	connection	with	the	implementation	of	a	shareholders'	rights	plan,	or	the	redemption	or	repurchase	of	any	rights	under	any such	plan,	(iv)	as	a	result	of	any	exchange	or	conversion	of	any	class	or	series	of	PNC's	capital	stock	for	any	other	class	or	series	of	PNC's	capital	stock,	(v)	the	purchase	of	fractional	interests	in	shares	of	PNC capital	stock	pursuant	to	the	conversion	or	exchange	provisions	of	such	stock	or	the	security	being	converted	or	exchanged	or	(vi)	any	stock	dividends	paid	by	PNC	where	the	dividend	stock	is	the	same	stock	as that	on	which	the	dividend	is	being	paid.

# NOTE	13	EMPLOYEE	BENEFIT	PLANS

# Pension	And	Postretirement	Plans

We	have	a	noncontributory,	qualified	defined	benefit	pension	plan	covering	eligible	employees.	Benefits	are	determined	using	a	cash	balance	formula	where	earnings credits	are	a	percentage	of	eligible	compensation.	Earnings	credit	percentages	for	those	employees	who	were	plan	participants	on	December	31,	2009	are	frozen	at	their level	earned	to	that	point.	Earnings	credits	for	all	employees	who	become	participants	on	or	after	January	1,	2010	are	a	flat	3%	of	eligible	compensation.	Plan participants	at	December	31,	2009	earn	interest	based	on	30-year	Treasury	securities	with	a	minimum	rate,	while	new	participants	on	or	after	January	1,	2010	are	not subject	to	the	minimum	rate.	Pension	contributions	are	based	on	an	actuarially	determined	amount	necessary	to	fund	total	benefits	payable	to	plan	participants.

We	also	maintain	nonqualified	supplemental	retirement	plans	for	certain	employees	and	provide	certain	health	care	and	life	insurance	benefits	for	qualifying	retired employees	(postretirement	benefits)	through	various	plans.	The	nonqualified	pension	and	postretirement	benefit	plans	are	unfunded.	PNC	currently	intends	to	begin funding	some	or	all	of	the	postretirement	medical	benefit	obligations	through	a	voluntary	employee	beneficiary	association	(VEBA)	in	mid-to-late	2015.	PNC	reserves the	right	to	terminate	plans	or	make	plan	changes	at	any	time.

We	use	a	measurement	date	of	December	31	for	plan	assets	and	benefit	obligations.	A	reconciliation	of	the	changes	in	the	projected	benefit	obligation	for	qualified pension,	nonqualified	pension	and	postretirement	benefit	plans	as	well	as	the	change	in	plan	assets	for	the	qualified	pension	plan	follows.

# Table	109:	Reconciliation	of	Changes	in	Projected	Benefit	Obligation	and	Change	in	Plan	Assets

At	December	31,	2014,	the	fair	value	of	the	qualified	pension	plan	assets	was less	than	both	the	accumulated	benefit	obligation	and	the	projected	benefit obligation.

The	nonqualified	pension	plan	is	unfunded.	Contributions	from	PNC	and,	in	the case	of	the	postretirement	benefit	plans,	participant	contributions	cover	all benefits	paid	under	the	nonqualified	pension	plan	and	postretirement	benefit plans.	The	postretirement	plan	provides	benefits	to	certain	retirees	that	are	at least	actuarially	equivalent	to	those	provided	by	Medicare	Part	D	and accordingly,	we	receive	a	federal	subsidy	as	shown	in	Table	109.

In	March	2010,	the	Patient	Protection	and	Affordable	Care	Act	(PPACA)	was enacted.	Key	aspects	of	the	PPACA	which	are	reflected	in	our	consolidated financial	statements	include	the	excise	tax	on	high-cost	health	plans	beginning	in 2018	and	fees	for	the	Transitional	Reinsurance	Program	and	the	Patient-Centered Outcomes	Research	Institute.	These	provisions	did	not	have	a	significant	effect on	our	postretirement	medical	liability	or	costs.	The	Early	Retiree	Reinsurance Program	(ERRP)	was	established	by	the	PPACA.	Congress	appropriated	funding of	$5.0	billion	for	this	temporary	ERRP	to	provide	financial	assistance	to employers,	unions,	and	state	and	local	governments	to	help	them	maintain coverage	for	early	retirees	age	55	and	older	who	are	not	yet	eligible	for Medicare,	including	their	spouses,	surviving	spouses,	and	dependents.	In	2014, PNC	did	not	receive	reimbursement	related	to	the	2013	plan	year	and	did	not receive	reimbursement	in	2013	related	to	the	2012	plan	year.	In	2012,	the amount	of	reimbursement	PNC	received	related	to	the	2011	plan	year	was	not significant.

# PNC	Pension	Plan	Assets

Assets	related	to	our	qualified	pension	plan	(the	Plan)	are	held	in	trust	(the Trust).	Effective	July	1,	2011,	the	trustee	is	The	Bank	of	New	York	Mellon.	The Trust	is	exempt	from	tax	pursuant	to	section	501(a)	of	the	Internal	Revenue Code	(the	Code).	The	Plan	is	qualified	under	section	401(a)	of	the	Code.	Plan assets	consist	primarily	of	listed	domestic	and	international	equity	securities, U.S.	government	and	agency	securities,	corporate	debt	securities,	and	real	estate investments.	The	Plan	held	no	PNC	common	stock	as	of	December	31,	2014	and December	31,	2013.

The	PNC	Financial	Services	Group,	Inc.	Administrative	Committee	(the Administrative	Committee)	adopted	the	Pension	Plan	Investment	Policy Statement,	including	target	allocations	and	allowable	ranges,	on	August	13, 2008.	On	February	25,	2010,	the	Administrative	Committee	amended	the investment	policy	to	include	a	dynamic	asset	allocation	approach	and	also updated	target	allocation	ranges	for	certain	asset	categories.	On	February	24, 2014,	the	Administrative	Committee	amended	the	investment	policy	to	update the	target	allocation	ranges	for	certain	asset	categories.

The	long-term	investment	strategy	for	pension	plan	assets	is	to:      •	Meet	present	and	future	benefit	obligations	to	all	participants	and beneficiaries,

•	Cover	reasonable	expenses	incurred	to	provide	such	benefits,	including expenses	incurred	in	the	administration	of	the	Trust	and	the	Plan, •	Provide	sufficient	liquidity	to	meet	benefit	and	expense	payment requirements	on	a	timely	basis,	and

•	Provide	a	total	return	that,	over	the	long	term,	maximizes	the	ratio	of trust	assets	to	liabilities	by	maximizing	investment	return,	at	an appropriate	level	of	risk.

Under	the	dynamic	asset	allocation	strategy,	scenarios	are	outlined	in	which	the Administrative	Committee	has	the	ability	to	make	short	to	intermediate	term asset	allocation	shifts	based	on	factors	such	as	the	Plan's	funded	status,	the Administrative	Committee's	view	of	return	on	equities	relative	to	long	term expectations,	the	Administrative	Committee's	view	on	the	direction	of	interest rates	and	credit	spreads,	and	other	relevant	financial	or	economic	factors	which would	be	expected	to	impact	the	ability	of	the	Trust	to	meet	its	obligation	to participants	and	beneficiaries.	Accordingly,	the	allowable	asset	allocation	ranges have	been	updated	to	incorporate	the	flexibility	required	by	the	dynamic allocation	policy.

The	Plan's	specific	investment	objective	is	to	meet	or	exceed	the	investment policy	benchmark	over	the	long	term.	The	investment	policy	benchmark compares	actual	performance	to	a	weighted	market	index,	and	measures	the contribution	of	active	investment	management	and	policy	implementation.	This investment	objective	is	expected	to	be	achieved	over	the	long	term	(one	or	more market	cycles)	and	is	measured	over	rolling	five-year	periods.	Total	return calculations	are	time-weighted	and	are	net	of	investment-related	fees	and expenses.

The	asset	strategy	allocations	for	the	Trust	at	the	end	of	2014	and	2013,	and	the target	allocation	range	at	the	end	of	2014,	by	asset	category,	are	as	follows.

# Table	110:	Asset	Strategy	Allocations

The	asset	category	represents	the	allocation	of	Plan	assets	in	accordance	with	the investment	objective	of	each	of	the	Plan's	investment	managers.	Certain domestic	equity	investment	managers	utilize	derivatives	and	fixed	income securities	as	described	in	their	Investment	Management	Agreements	to	achieve their	investment	objective	under	the	Investment	Policy	Statement.	Other investment	managers	may	invest	in	eligible	securities	outside	of	their	assigned asset	category	to	meet	their	investment	objectives.	The	actual	percentage	of	the fair	value	of	total	Plan	assets	held	as	of	December	31,	2014	for	equity	securities, fixed	income	securities,	real	estate	and	all	other	assets	are	69%,	22%,	5%	and 4%,	respectively.

We	believe	that,	over	the	long	term,	asset	allocation	is	the	single	greatest determinant	of	risk.	Asset	allocation	will	deviate	from	the	target	percentages	due to	market	movement,	cash	flows,	investment	manager	performance	and implementation	of	shifts	under	the	dynamic	allocation	policy.	Material deviations	from	the	asset	allocation	targets	can	alter	the	expected	return	and	risk of	the	Trust.	On	the	other	hand,	frequent	rebalancing	to	the	asset	allocation targets	may	result	in	significant	transaction	costs,	which	can	impair	the	Trust's ability	to	meet	its	investment	objective.	Accordingly,	the	Trust	portfolio	is periodically	rebalanced	to	maintain	asset	allocation	within	the	target	ranges described	above.

In	addition	to	being	diversified	across	asset	classes,	the	Trust	is	diversified within	each	asset	class.	Secondary	diversification	provides	a	reasonable	basis	for the	expectation	that	no	single	security	or	class	of	securities	will	have	a disproportionate	impact	on	the	total	risk	and	return	of	the	Trust.

The	Administrative	Committee	selects	investment	managers	for	the	Trust	based on	the	contributions	that	their	respective	investment	styles	and	processes	are expected	to	make	to	the	investment	performance	of	the	overall	portfolio.	The managers'	Investment	Objectives	and	Guidelines,	which	are	a	part	of	each manager's	Investment	Management	Agreement,	document	performance expectations	and	each	manager's	role	in	the	portfolio.	The	Administrative Committee	uses	the	Investment	Objectives	and	Guidelines	to	establish,	guide, control	and	measure	the	strategy	and	performance	for	each	manager.

The	purpose	of	investment	manager	guidelines	is	to:

•	Establish	the	investment	objective	and	performance	standards	for	each manager,

•	Provide	the	manager	with	the	capability	to	evaluate	the	risks	of	all

financial	instruments	or	other	assets	in	which	the	manager's	account	is invested,	and

•	Prevent	the	manager	from	exposing	its	account	to	excessive	levels	of risk,	undesired	or	inappropriate	risk,	or	disproportionate	concentration of	risk.

The	guidelines	also	indicate	which	investments	and	strategies	the	manager	is permitted	to	use	to	achieve	its	performance	objectives,	and	which	investments and	strategies	it	is	prohibited	from	using.

Where	investment	strategies	permit	the	use	of	derivatives	and/or	currency management,	language	is	incorporated	in	the	managers'	guidelines	to	define allowable	and	prohibited	transactions	and/or	strategies.	Derivatives	are	typically employed	by	investment	managers	to	modify	risk/return	characteristics	of	their portfolio(s),	implement	asset	allocation	changes	in	a	cost-effective	manner,	or reduce	transaction	costs.	Under	the	managers'	investment	guidelines,	derivatives may	not	be	used	solely	for	speculation	or	leverage.	Derivatives	are	to	be	used only	in	circumstances	where	they	offer	the	most	efficient	economic	means	of improving	the	risk/reward	profile	of	the	portfolio.

BlackRock	receives	compensation	for	providing	investment	management services.	The	Asset	Management	Group	business	segment	also	receives compensation	for	payor-related	services.	Compensation	for	such	services	is	paid by	PNC	and	was	not	significant	for	2014,	2013	or	2012.	Non-affiliate	service providers	for	the	Trust	are	compensated	from	Plan	assets.

As	further	described	in	Note	7	Fair	Value,	GAAP	establishes	the	framework	for measuring	fair	value,	including	a	hierarchy	used	to	classify	the	inputs	used	in measuring	fair	value.

A	description	of	the	valuation	methodologies	used	for	assets	measured	at	fair value	at	both	December	31,	2014	and	December	31,	2013	follows:

•	Money	market	and	mutual	funds	are	valued	at	the	net	asset	value	of	the shares	held	by	the	pension	plan	at	year	end.

•	U.S.	government	and	agency	securities,	corporate	debt,	common	stock and	preferred	stock	are	valued	at	the	closing	price	reported	on	the active	market	on	which	the	individual	securities	are	traded.	If	quoted market	prices	are	not	available	for	the	specific	security,	then	fair	values are	estimated	by	using	pricing	models	or	quoted	prices	of	securities with	similar	characteristics.	Such	securities	are	generally	classified within	Level	2	of	the	valuation	hierarchy	but	may	be	a	Level	3 depending	on	the	level	of	liquidity	and	activity	in	the	market	for	the security.

•	The	collective	trust	fund	investments	are	valued	based	upon	the	units of	such	collective	trust	fund	held	by	the	Plan	at	year	end	multiplied	by the	respective	unit	value.	The	unit	value	of	the	collective	trust	fund	is based	upon	significant	observable	inputs,	although	it	is	not	based	upon quoted	marked	prices	in	an	active	market.	The	underlying	investments of	the	collective	trust	funds	consist	primarily	of	equity

securities,	debt	obligations,	short-term	investments,	and	other marketable	securities.	Due	to	the	nature	of	these	securities,	there	are	no unfunded	commitments	or	redemption	restrictions. •	Limited	partnerships	are	valued	by	investment	managers	based	on recent	financial	information	used	to	estimate	fair	value.	Other investments	held	by	the	pension	plan	include	derivative	financial instruments	and	real	estate,	which	are	recorded	at	estimated	fair	value as	determined	by	third-party	appraisals	and	pricing	models,	and	group annuity	contracts,	which	are	measured	at	fair	value	by	discounting	the related	cash	flows	based	on	current	yields	of	similar	instruments	with comparable	durations	considering	the	credit-worthiness	of	the	issuer.

These	methods	may	result	in	fair	value	calculations	that	may	not	be	indicative	of net	realizable	values	or	future	fair	values.	Furthermore,	while	the	pension	plan believes	its	valuation	methods	are	appropriate	and	consistent	with	other	market participants,	the	use	of	different	methodologies	or	assumptions	to	determine	the fair	value	of	certain	financial	instruments	could	result	in	a	different	fair	value measurement	at	the	reporting	date.

The	following	table	sets	forth	by	level,	within	the	fair	value	hierarchy,	the	Plan's	assets	at	fair	value	as	of	December		31,	2014	and	2013.

# Table	111:	Pension	Plan	Assets	–	Fair	Value	Hierarchy

|  |  | Fair	Value	Measurements	Using: |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Quoted\tPrices\tin | Significant |  |
|  |  | Active\tMarkets | Other | Significant |
|  | December\t31 | For\tIdentical | Observable | Unobservable |
|  | 2014 | Assets | Inputs | Inputs |
| In\tmillions | Fair\tValue | (Level\t1) | (Level\t2) | (Level\t3) |
| Money\tmarket\tfunds | $121 | $121 |  |  |
| U.S.\tgovernment\tand\tagency\tsecurities | 294 | 147 | $147 |  |
| Corporate\tdebt\t(a) | 648 |  | 638 | $10 |
| Common\tstock | 1,041 | 1,040 | 1 |  |
| Preferred\tstock | 6 |  | 6 |  |
| Mutual\tfunds | 220 | 2 | 218 |  |
| Interest\tin\tCollective\tFunds\t(b) | 1,698 |  | 1,589 | 109 |
| Limited\tpartnerships | 274 |  | 2 | 272 |
| Other | 55 | (4) | 59 |  |
| Total | $4,357 | $1,306 | $2,660 | $391 |

| In	millions | December	31<br>2013<br>Fair	Value | Quoted	Prices	in<br>Active	Markets<br>For	Identical<br>Assets	(Level	1) | Other<br>Observable<br>Inputs<br>(Level	2) | Significant<br>Unobservable<br>Inputs<br>(Level	3) |
| :--- | :--- | :--- | :--- | :--- |
| Money\tmarket\tfunds | $130 | $130 |  |  |
| U.S.\tgovernment\tand\tagency\tsecurities | 316 | 192 | $124 |  |
| Corporate\tdebt\t(a) | 751 |  | 738 | $13 |
| Common\tstock | 1,055 | 1,053 | 2 |  |
| Preferred\tStock | 15 |  | 15 |  |
| Mutual\tfunds | 199 | 4 | 195 |  |
| Interest\tin\tCollective\tFunds\t(c) | 1,572 |  | 1,474 | 98 |
| Limited\tpartnerships | 184 |  | 2 | 182 |
| Other | 30 |  | 30 |  |
| Total | $4,252 | $1,379 | $2,580 | $293 |
| (a) |  |  |  |  |

(a) Corporate	debt	includes	$63	million	and	$84	million	of	non-agency	mortgage-backed	securities	as	of	December	31,	2014	and	2013,	respectively.

(b) The	benefit	plans	own	commingled	funds	that	invest	in	equity	securities.	The	funds	seek	to	mirror	the	benchmark	of	the	S&P	500	Index,	Morgan	Stanley	Capital	International	ACWI	X	US	Index,	Morgan	Stanley Capital	EAFE	Index,	Morgan	Stanley	Capital	Emerging	Markets	Index	and	the	NCREIF	ODCE	NOF	Index	with	the	exception	of	the	BlackRock	Index	Fund.

(c) The	benefit	plans	own	commingled	funds	that	invest	in	equity	and	fixed	income	securities.	The	funds	seek	to	mirror	the	performance	of	the	S&P	500	Index,	Russell	3000	Index,	Morgan	Stanley	Capital International	ACWI	X	US	Index	and	the	Dow	Jones	U.S.	Select	Real	Estate	Securities	Index.	The	commingled	fund	that	holds	fixed	income	securities	invests	in	domestic	investment	grade	securities	and	seeks	to mimic	the	performance	of	the	Barclays	Aggregate	Bond	Index.

The	following	summarizes	changes	in	the	fair	value	of	the	pension	plan's	Level	3	assets	during	2014	and	2013.

# Table	112:	Rollforward	of	Pension	Plan	Level	3	Assets

| In	millions | Interest	in<br>Collective<br>Funds | Corporate<br>Debt | Limited<br>Partnerships |
| :--- | :--- | :--- | :--- |
| January\t1,\t2014 | $98 | $13 | $182 |
| Net\trealized\tgain/(loss)\ton\tsale\tof\tinvestments | 3 | 3 | 48 |
| Net\tunrealized\tgain/(loss)\ton\tassets\theld\tat\tend\tof\tyear | 4 |  | 58 |
| Purchases | 5 |  | 92 |
| Sales | (1) | (6) | (108) |
| December\t31,\t2014 | $109 | $10 | $272 |

| In	millions | Interest	in<br>Collective<br>Funds | Corporate<br>Debt | Limited<br>Partnerships |
| :--- | :--- | :--- | :--- |
| January\t1,\t2013 | $88 | $22 | $127 |
| Net\trealized\tgain/(loss)\ton\tsale\tof\tinvestments | 7 | 7 | 10 |
| Net\tunrealized\tgain/(loss)\ton\tassets\theld\tat\tend\tof\tyear | 3 | (1) | 21 |
| Purchases | 87 | 40 | 48 |
| Sales | (87) | (55) | (24) |
| December\t31,\t2013 | $98 | $13 | $182 |

The	following	table	provides	information	regarding	our	estimated	future	cash	flows	related	to	our	various	plans.

# Table	113:	Estimated	Cash	Flows

| In	millions | Qualified<br>Pension | Nonqualified<br>Pension | Gross	PNC<br>Benefit	Payments | Due	to	Medicare<br>Part	D	Subsidy |
| :--- | :--- | :--- | :--- | :--- |
| Estimated\t2015\temployer\tcontributions | $200 | $31 | $200 | $2 |
| Estimated\tfuture\tbenefit\tpayments |  |  |  |  |
| 2015 | $259 | $31 | $27 | $2 |
| 2016 | 265 | 29 | 28 | 2 |
| 2017 | 277 | 27 | 29 | 2 |
| 2018 | 281 | 27 | 30 | 2 |
| 2019 | 282 | 25 | 30 | 2 |
| 2020-2024 | 1,474 | 112 | 141 | 7 |

The	qualified	pension	plan	contributions	are	deposited	into	the	Trust,	and	the	qualified	pension	plan	benefit	payments	are	paid	from	the	Trust.	In	February	2015,	PNC made	a	$200	million	voluntary	contribution	to	the	Trust.	Notwithstanding	the	contribution,	we	do	not	expect	to	be	required	to	make	a	contribution	to	the	qualified	plan for	2015	based	on	the	funding	calculations	under	the	Pension	Protection	Act	of	2006.	For	the	other	plans,	total	contributions	and	the	benefit	payments	are	the	same	and represent	expected	benefit	amounts,	which	are	paid	from	general	assets.	Postretirement	benefits	are	net	of	participant	contributions.	If	PNC	decides	to	fund,	or	partially fund,	postretirement	medical	benefits	in	the	future,	as	is	its	current	intention,	this	will	also	be	reflected	in	estimated	cash	flows	at	that	time.

The	components	of	net	periodic	benefit	cost/(income)	and	other	amounts	recognized	in	Other	comprehensive	income	(OCI)	were	as	follows.

# Table	114:	Components	of	Net	Periodic	Benefit	Cost

|  |  |  |  |  |  |  |  | Postretirement |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Qualified\tPension\tPlan | Qualified\tPension\tPlan |  | Nonqualified\tPension\tPlan | Nonqualified\tPension\tPlan | Nonqualified\tPension\tPlan |  | Benefits |  |
| Year\tended\tDecember\t31\t–\tin\tmillions | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 |
| Net\tperiodic\tcost\tconsists\tof: |  |  |  |  |  |  |  |  |  |
| Service\tcost | $103 | $113 | $101 | $3 | $3 | $4 | $5 | $6 | $5 |
| Interest\tcost | 187 | 170 | 191 | 12 | 12 | 14 | \t 16 | \t 14 | 16 |
| Expected\treturn\ton\tplan\tassets | (289) | (288) | (284) |  |  |  |  |  |  |
| Amortization\tof\tprior\tservice\tcost/(credit) | (8) | (8) | (8) |  |  |  | (2) | (3) | (3) |
| Amortization\tof\tactuarial\t(gain)/loss |  | 87 | 89 | 4 | 8 | 6 |  |  | (1) |
| Settlement\t(gain)/loss |  |  |  |  | 7 |  |  | 1 |  |
| Net\tperiodic\tcost\t(benefit) | (7) | 74 | 89 | 19 | 30 | 24 | \t 19 | \t 18 | 17 |
| Other\tchanges\tin\tplan\tassets\tand\tbenefit\tobligations\trecognized\tin\tOther |  |  |  |  |  |  |  |  |  |
| comprehensive\tincome: |  |  |  |  |  |  |  |  |  |
| Current\tyear\tprior\tservice\tcost/(credit) | (7) |  |  |  |  |  |  |  |  |
| Amortization\tof\tprior\tservice\t(cost)/credit | 8 | 8 | 8 |  |  |  | 2 | 3 | 3 |
| Current\tyear\tactuarial\tloss/(gain) | 434 | (784) | 112 | 40 | (26) | 27 | 4 | (9) | (18) |
| Amortization\tof\tactuarial\tgain/(loss) |  | (87) | (89) | (4) | (15) | (6) |  | (1) |  |
| Total\trecognized\tin\tOCI | 435 | (863) | 31 | 36 | (41) | 21 | 6 | (7) | (15) |
| Total\trecognized\tin\tnet\tperiodic\tcost\tand\tOCI | $428 | $(789) | $120 | $55 | $(11) | $45 | $25 | $11 | $2 |

The	weighted-average	assumptions	used	(as	of	the	beginning	of	each	year)	to determine	the	net	periodic	costs	shown	above	were	as	follows.

# Table	115:	Net	Periodic	Costs	–	Assumptions

The	weighted-average	assumptions	used	(as	of	the	end	of	each	year)	to	determine year	end	obligations	for	pension	and	postretirement	benefits	were	as	follows.

# Table	116:	Other	Pension	Assumptions

| Year	ended	December	31 | 2014 | 2013 |
| :--- | :--- | :--- |
| Discount\trate |  |  |
| Qualified\tpension | \t 3.95% | \t 4.75% |
| Nonqualified\tpension | \t 3.65 | \t 4.35 |
| Postretirement\tbenefits | \t 3.80 | \t 4.50 |
| Rate\tof\tcompensation\tincrease\t(average) | \t 4.00 | \t 4.00 |
| Assumed\thealth\tcare\tcost\ttrend\trate |  |  |
| Initial\ttrend | \t 7.50 | \t 7.75 |
| Ultimate\ttrend | \t 5.00 | \t 5.00 |
| Year\tultimate\treached | \t2025 | \t2025 |

The	discount	rates	are	determined	independently	for	each	plan	by	comparing	the expected	future	benefits	that	will	be	paid	under	each	plan	with	yields	available on	high	quality	corporate	bonds	of	similar	duration.	For	this	analysis,	10%	of bonds	with	the	highest	yields	and	40%	with	the	lowest	yields	were	removed	from the	bond	universe.

The	expected	return	on	plan	assets	is	a	long-term	assumption	established	by considering	historical	and	anticipated	returns	of	the	asset	classes	invested	in	by the	pension	plan	and	the	allocation	strategy	currently	in	place	among	those classes.	We	review	this	assumption	at	each	measurement	date	and	adjust	it	if warranted.	This	assumption	will	be	changed	from	7.00%	to	6.75%	for determining	2015	net	periodic	cost.

The	health	care	cost	trend	rate	assumptions	shown	in	the	preceding	tables	relate only	to	the	postretirement	benefit	plans.	A	one-percentage-point	change	in assumed	health	care	cost	trend	rates	would	have	the	following	effects.

# Table	117:	Effect	of	One	Percent	Change	in	Assumed	Health	Care	Cost

Unamortized	actuarial	gains	and	losses	and	prior	service	costs	and	credits	are recognized	in	AOCI	each	December	31,	with	amortization	of	these	amounts through	net	periodic	benefit	cost.	The	estimated	amounts	that	will	be	amortized in	2015	are	as	follows.

# Table	118:	Estimated	Amortization	of	Unamortized	Actuarial	Gains	and Losses	–	2015

|  |  | 2015	Estimate |  |
| :--- | :--- | :--- | :--- |
| Year\tended\tDecember\t31\nIn\tmillions | \t\tQualified\nPension | \tNonqualified\nPension | \t\tPostretirement\nBenefits |
| Prior\tservice\t(credit) | \t\t$(9) |  | \t\t$(1) |
| Net\tactuarial\tloss | 29\t\t\t$ | 8 |  |
| Total | \t\t$20\t\t\t$ | 8\t\t\t\t$ | (1) |

PNC	has	historically	utilized	a	version	of	the	Society	of	Actuaries'	(SOA) published	mortality	tables	in	developing	its	best	estimate	of	mortality.	On October	27,	2014,	the	SOA	published	updated	mortality	tables	and	an	updated mortality	improvement	scale,	which	both	reflect	longer	life	expectancy.	Based on	an	evaluation	of	the	mortality	experience	of	PNC's	qualified	pension	plan and	the	updated	SOA	study,	PNC	adopted	an	adjusted	version	of	the	SOA's	new mortality	table	and	improvement	scale	for	purposes	of	measuring	pension	and other	postretirement	benefit	obligations	at	year-end	2014.	The	change	to	the mortality	assumption	increased	the	total	year-end	obligations	by	approximately $145	million.

# Defined	Contribution	Plans

Our	PNC	Incentive	Savings	Plan	(ISP)	is	a	qualified	defined	contribution	plan that	covers	all	eligible	PNC	employees.	Employees	hired	prior	to	January	1, 2010	became	100%	vested	immediately,	while	employees	hired	on	or	after January	1,	2010	become	100%	vested	after	three	years	of	service.	Employee benefits	expense	related	to	the	ISP	was	$108	million	in	2014,	$120	million	in 2013	and	$111	million	in	2012,	representing	cash	contributed	to	the	ISP	by	PNC.

Under	the	ISP,	employee	contributions	up	to	4%	of	eligible	compensation	as defined	by	the	ISP	are	matched	100%,	subject	to	IRS	Code	limitations.	PNC	will contribute	a	minimum	matching	contribution	of	$2,000	annually	for	employees who	contribute	at	least	4%	of	eligible	compensation	every	pay	period	he	or	she is	eligible	during	the	year.	This	amount	is	prorated	for	certain	employees, including	part-time	employees	and	those	who	are	eligible	for	the	company	match for	less	than	a	full	year.	Additionally,	PNC	makes	an	annual	true-up	matching contribution	to	ensure	that	eligible	participants	receive	the	full	company	match available.	Effective	January	1,	2012,	in	the	case	of	both	the	minimum	and	true- up	matching	contributions,	eligible	employees	must	remain	employed	on	the	last day	of	the	applicable	plan	year	in	order	to	receive	the	contribution.	Minimum matching	contributions	made	with	respect	to	the	2014	and	2013	plan	years	are immediately	100%	vested.	Effective	January	1,	2015,	newly-hired	full-time employees	and	part-time	employees	who	become	eligible	to	participate	in	the ISP	after	that	date	will	be	automatically	enrolled	in	the	ISP	with	a	deferral	rate equal	to	4%	of	eligible	compensation	in	the	absence	of	an	affirmative	election otherwise.

The	ISP	is	a	401(k)	Plan	and	includes	an	employee	stock	ownership	(ESOP) feature.	Employee	contributions	are	invested	in	a	number	of	investment	options, including	pre	mixed	portfolios	and	individual	core	funds,	available	under	the	ISP at	the	direction	of	the	employee.	Although	employees	were	also	historically permitted	to	direct	the	investment	of	their	contributions	into	the	PNC	common stock	fund,	this	fund	was	frozen	to	future	investments	of	such	contributions effective	January	1,	2010.	All	shares	of	PNC	common	stock	held	by	the	ISP	are part	of	the	ESOP.	Effective	January	1,	2011,	employer	matching	contributions were	made	in	cash.

We	also	maintain	a	nonqualified	supplemental	savings	plan	for	certain employees,	known	as	The	PNC	Financial	Services	Group,	Inc.	Supplemental Incentive	Savings	Plan.	Effective	January	1,	2012,	the	Supplemental	Incentive Savings	Plan	was	frozen	to	new	participants	and	for	any	deferrals	of	amounts earned	on	or	after	such	date.	It	was	replaced	by	a	new	plan	called	The	PNC Financial	Services	Group,	Inc.	Deferred	Compensation	and	Incentive	Plan.

# NOTE	14	STOCK	BASED	COMPENSATION	PLANS

We	have	long-term	incentive	award	plans	(Incentive	Plans)	that	provide	for	the granting	of	incentive	stock	options,	nonqualified	stock	options,	stock appreciation	rights,	incentive	shares/performance	units,	restricted	stock, restricted	share	units,	other	share-based	awards	and	dollar-denominated	awards to	executives	and,	other	than	incentive	stock	options,	to	non-employee	directors. Certain	Incentive	Plan	awards	may	be	paid	in	stock,	cash	or	a	combination	of stock	and	cash.	We	typically	grant	a	substantial	portion	of	our	stock-based compensation	awards	during	the	first	quarter	of	the	year.	As	of	December	31, 2014,	no	stock	appreciation	rights	were	outstanding.

Total	compensation	expense	recognized	related	to	all	share-based	payment arrangements	during	2014,	2013	and	2012	was	approximately	$181	million, $154	million	and	$101	million,	respectively.	The	total	tax	benefit	recognized related	to	compensation	expense	on	all	share-based	payment	arrangements during	2014,	2013	and	2012	was	approximately	$66	million,	$56	million	and $37	million,	respectively.	At	December	31,	2014,	there	was	$153	million	of unamortized	share-based	compensation	expense	related	to	nonvested	equity compensation	arrangements	granted	under	the	Incentive	Plans.	This	unamortized cost	is	expected	to	be	recognized	as	expense	over	a	period	of	no	longer	than	five years.

# Nonqualified	Stock	Options

Beginning	in	2014,	PNC	discontinued	the	use	of	stock	options	as	a	standard element	of	our	long-term	equity	incentive	compensation	programs	under	our Incentive	Plans	and	did	not	grant	any	options	in	2014.	Prior	to	2014,	options were	granted	at	exercise	prices	not	less	than	the	market	value	of	common	stock on	the	grant	date.	Generally,	options	become	exercisable	in	installments	after	the grant	date.	No	option	may	be	exercisable	after	10	years	from	its	grant	date. Payment	of	the	option	exercise

price	may	be	in	cash	or	by	surrendering	shares	of	common	stock	at	market	value on	the	exercise	date.	The	exercise	price	may	also	be	paid	by	using	previously owned	shares.

# Option	Pricing	Assumptions

For	purposes	of	computing	stock	option	expense	for	grants	made	in	2013	and 2012,	we	estimated	the	fair	value	of	stock	options	at	the	grant	date	primarily	by using	the	Black-Scholes	option-pricing	model.	Option	pricing	models	require	the use	of	numerous	assumptions,	many	of	which	are	subjective.

We	used	the	following	assumptions	in	the	option	pricing	models	to	determine 2013	and	2012	grant	date	fair	value:

•	The	risk-free	interest	rate	is	based	on	the	U.S.	Treasury	yield	curve, •	The	dividend	yield	typically	represents	average	yields	over	the previous	three-year	period,	however	starting	with	the	grants	made	after the	first	quarter	of	2009,	we	used	a	yield	indicative	of	our	current dividend	rate,

•	Volatility	is	measured	using	the	fluctuation	in	month-end	closing	stock prices	over	a	period	which	corresponds	with	the	average	expected option	life,	but	in	no	case	less	than	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.

# Table	119:	Option	Pricing	Assumptions	(a)

(a) PNC	did	not	grant	any	stock	options	in	2014.

There	were	no	options	granted	in	2013	and	2012	where	the	grant	date	fair	value	exceeded	the	market	value.

# Table	120:	Stock	Option	Rollforward

|  | PNC |  | National	City | National	City |  | Total |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  |  | Weighted- |  |
|  |  | Weighted- | Weighted- | Weighted- |  | Weighted- | Average |  |
|  |  | Average | Average | Average |  | Average | Remaining | Aggregate |
| Year\tended\tDecember\t31,\t2014 |  | Exercise | Exercise | Exercise |  | Exercise | Contractual | Intrinsic |
| In\tthousands,\texcept\tweighted-average\tdata | Shares | Price | Shares | Price | Shares | Price | Life | Value |
| Outstanding,\tJanuary\t1 | \t10,354 | $57.57 | \t 544 | $662.28 | \t10,898 | $87.75 |  |  |
| Granted\t(a) |  |  |  |  |  |  |  |  |
| Exercised | \t(3,589) | 59.80 |  |  | \t(3,589) | 59.80 |  |  |
| Cancelled | (64) | 53.42 | \t(201) | \t 793.93 | (265) | \t 615.70 |  |  |
| Outstanding,\tDecember\t31 | 6,701 | $56.41 | \t 343 | $585.23 | 7,044 | $82.17 | \t3.9\tyears | \t\t\t\t $233,345 |
| Vested\tand\texpected\tto\tvest,\tDecember\t31\t(b) | 6,699 | $56.41 | \t 343 | $585.23 | 7,042 | $82.18 | \t3.9\tyears\t\t\t\t $233,277 | \t3.9\tyears\t\t\t\t $233,277 |
| Exercisable,\tDecember\t31 | 6,467 | $56.21 | \t 343 | $585.23 | 6,810 | $82.86 | \t3.8\tyears | \t\t\t\t $226,506 |
| (a)\nPNC\tdid\tnot\tgrant\tany\tstock\toptions\tin\t2014. |  |  |  |  |  |  |  |  |

(b) Adjusted	for	estimated	forfeitures	on	unvested	options.

To	determine	stock-based	compensation	expense,	the	grant	date	fair	value	is applied	to	the	options	granted	with	a	reduction	for	estimated	forfeitures.	We recognize	compensation	expense	for	stock	options	on	a	straight-line	basis	over the	specified	vesting	period.

Cash	received	from	option	exercises	under	all	Incentive	Plans	for	2014,	2013 and	2012	was	approximately	$215	million,	$208	million	and	$118	million, respectively.	The	tax	benefit	realized	from	option	exercises	under	all	Incentive Plans	for	2014,	2013	and	2012	was	approximately	$33	million,	$31	million	and $14	million,	respectively.

Shares	of	common	stock	available	during	the	next	year	for	the	granting	of options	and	other	awards	under	the	Incentive	Plans	were	17,997,353	at December	31,	2014.	Total	shares	of	PNC	common	stock	authorized	for	future issuance	under	equity	compensation	plans	totaled	19,017,057	shares	at December	31,	2014,	which	includes	shares	available	for	issuance	under	the Incentive	Plans	and	the	Employee	Stock	Purchase	Plan	(ESPP)	as	described below.

During	2014,	we	issued	approximately	2.4	million	shares	from	treasury	stock	in connection	with	stock	option	exercise	activity.	As	with	past	exercise	activity,	we currently	intend	to	utilize	primarily	treasury	stock	for	any	future	stock	option exercises.

Awards	granted	to	non-employee	directors	in	2014,	2013	and	2012	include 21,490,	27,076	and	25,620	deferred	stock	units,	respectively,	awarded	under	the Outside	Directors	Deferred	Stock	Unit	Plan.	A	deferred	stock	unit	is	a	phantom share	of	our	common	stock,	which	is	accounted	for	as	a	liability	until	such awards	are	paid	to	the	participants	in	cash.	As	there	are	no	vesting	or	service requirements	on	these	awards,	total	compensation	expense	is	recognized	in	full for	these	awards	on	the	date	of	grant.

# Incentive/Performance	Unit	Share	Awards	and	Restricted	Stock/Share	Unit Awards

The	fair	value	of	nonvested	incentive/performance	unit	share	awards	and restricted	stock/share	unit	awards	is	initially	determined	based	on	prices	not	less than	the	market	value	of	our	common	stock	on	the	date	of	grant.	The	value	of certain	incentive/performance	unit	share	awards	is	subsequently	remeasured based	on	the	achievement	of	one	or	more	financial	and	other	performance	goals. The	Personnel	and	Compensation	Committee	("P&CC")	of	the	Board	of Directors	approves	the	final	award	payout	with	respect	to	certain incentive/performance	unit	share	awards.	These	awards	have	either	a	three-year or	a	four-year	performance	period	and	are	payable	in	either	stock	or	a combination	of	stock	and	cash.	Restricted	stock/share	unit	awards	have	various vesting	periods	generally	ranging	from	3	years	to	5	years.

Beginning	in	2013,	we	incorporated	several	enhanced	risk-related	performance changes	to	certain	long-term	incentive	compensation	programs.	In	addition	to achieving	certain	financial	performance	metrics	on	both	an	absolute	basis	and relative	to	our	peers,	final	payout	amounts	will	be	subject	to	reduction	if	PNC fails	to	meet	certain	risk-related	performance	metrics	as	specified	in	the	award agreements.	However,	the	P&CC	has	the	discretion	to	waive	any	or	all	of	this reduction	under	certain	circumstances.

The	weighted-average	grant	date	fair	value	of	incentive/performance	unit	share awards	and	restricted	stock/unit	awards	granted	in	2014,	2013	and	2012	was $80.79,	$64.77	and	$60.68	per	share,	respectively.	The	total	fair	value	of incentive/performance	unit	share	and	restricted	stock/unit	awards	vested	during 2014,	2013	and	2012	was	approximately	$119	million,	$63	million	and	$55 million,	respectively.	We	recognize	compensation	expense	for	such	awards ratably	over	the	corresponding	vesting	and/or	performance	periods	for	each	type of	program.

# Table	121:	Nonvested	Incentive/Performance	Unit	Share	Awards	and Restricted	Stock/Share	Unit	Awards	–	Rollforward

| Shares	in	thousands | Nonvested<br>Incentive/<br>Performance<br>Unit	Shares | Weighted-<br>Average<br>Grant	Date<br>Fair	Value | Nonvested<br>Restricted<br>Stock/<br>Share<br>Units | Weighted-<br>Average<br>Grant	Date<br>Fair	Value |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013 | 1,647 | $63.49 | 3,483 | $62.70 |
| Granted | 723 | 79.90 | 1,276 | 81.29 |
| Vested/Released | (513) | 63.64 | (962) | 62.32 |
| Forfeited | (20) | 69.18 | (145) | 69.44 |
| December\t31,\t2014 | 1,837 | $69.84 | 3,652 | $69.03 |

In	the	preceding	table,	the	unit	shares	and	related	weighted-average	grant	date fair	value	of	the	incentive/performance	awards	exclude	the	effect	of	dividends	on the	underlying	shares,	as	those	dividends	will	be	paid	in	cash	if	and	when	the underlying	unit	shares	are	released	to	the	participants.

# Liability	Awards

A	summary	of	all	nonvested,	cash-payable	incentive/performance	units	and restricted	share	unit	activity	follows:

# Table	122:	Nonvested	Cash-Payable	Incentive/Performance	Units	and Restricted	Share	Units	–	Rollforward

| In	thousands | Cash-Payable<br>Incentive/<br>Performance<br>Units | Cash-Payable<br>Restricted<br>Share	Units | Total |
| :--- | :--- | :--- | :--- |
| Outstanding\tat\tDecember\t31,\t2013 | 116 | 825 | \t\t\t 941 |
| Granted | 100 | 269 | \t\t\t 369 |
| Vested\tand\tReleased | (39) | (425)\t\t\t\t(464) | (425)\t\t\t\t(464) |
| Forfeited |  | (11) | (11) |
| Outstanding\tat\tDecember\t31,\t2014 | 177 | 658 | \t\t\t 835 |

Included	in	the	preceding	table	are	cash-payable	restricted	share	units	granted	to certain	executives.	These	grants	were	made	primarily	as	part	of	an	annual	bonus incentive	deferral	plan.	While	there	are	time-based	and	other	vesting	criteria, there	are	generally	no	market	or	performance	criteria	associated	with	these awards.	Compensation	expense	recognized	related	to	these	awards	was	recorded in	prior	periods	as	part	of	the	annual	cash	bonus	process.	As	of	December	31, 2014,	the	aggregate	intrinsic	value	of	all	outstanding	nonvested	cash-payable incentive/performance	units	and	restricted	share	units	was	$76	million.

The	total	of	all	share-based	liability	awards	paid	out	during	2014,	2013	and	2012 was	approximately	$38	million,	$29	million	and	$39	million,	respectively.

# Employee	Stock	Purchase	Plan

As	of	December	31,	2014,	our	ESPP	had	approximately	1	million	shares available	for	issuance.	Full-time	employees	with	six	months	and	part-time employees	with	12	months	of	continuous	employment	with	a	participating	PNC entity	are	eligible	to	participate	in	the	ESPP	at	the	commencement	of	the	next six-month	offering	period.	Eligible	participants	may	purchase	our	common	stock at	95%	of	the	fair	market	value	on	the	last	day	of	each	six-month	offering	period. No	charge	to	earnings	is	recorded	with	respect	to	the	ESPP.

# Table	123:	Employee	Stock	Purchase	Plan	–	Summary

# BlackRock	LTIP	and	Exchange	Agreements

BlackRock	adopted	the	2002	LTIP	program	to	help	attract	and	retain	qualified professionals.	At	that	time,	PNC	agreed	to	transfer	up	to	4	million	shares	of BlackRock	common	stock	to	fund	a	portion	of	the	2002	LTIP	program	and future	LTIP	programs	approved	by	BlackRock's	Board	of	Directors,	subject	to certain	conditions	and	limitations.	Approximately	1.1	million	shares	of BlackRock	common	stock	were	transferred	by	PNC	and	distributed	to	LTIP participants	in	connection	with	the	2002	LTIP	program.

In	2009,	PNC's	obligation	to	deliver	its	BlackRock	common	shares	to BlackRock	under	LTIP	programs	was	replaced	with	an	obligation	to	deliver shares	of	BlackRock's	Series	C	Preferred	Stock.	This	change	was	part	of	an Exchange	Agreement	with	BlackRock	whereby	PNC	acquired	2.9	million	shares of	Series	C	Preferred	Stock	from	BlackRock	in	exchange	for	common	shares.

In	2011,	we	transferred	approximately	1.3	million	shares	of	BlackRock	Series	C Preferred	Stock	to	BlackRock	in	connection	with	our	obligation.	On	January	31, 2013,	we	transferred	an	additional	.2	million	shares	to	BlackRock.	After	this transfer	and	at	December	31,	2014,	we	hold	approximately	1.3	million	shares	of BlackRock	Series	C	Preferred	Stock	which	are	available	to	fund	our	obligation in	connection	with	the	BlackRock	LTIP	programs.

PNC	accounts	for	its	BlackRock	Series	C	Preferred	Stock	at	fair	value,	which offsets	the	impact	of	marking-to-market	the	obligation	to	deliver	these	shares	to BlackRock.	The	fair	value	of	the	BlackRock	Series	C	Preferred	Stock	is	included on	our	Consolidated	Balance	Sheet	in	the	caption	Other	assets.	Additional information	regarding	the	valuation	of	the	BlackRock	Series	C	Preferred	Stock is	included	in	Note	7	Fair	Value.

# NOTE	15	FINANCIAL	DERIVATIVES

We	use	derivative	financial	instruments	(derivatives)	primarily	to	help	manage	exposure	to	interest	rate,	market	and	credit	risk	and	reduce	the	effects	that	changes	in interest	rates	may	have	on	net	income,	the	fair	value	of	assets	and	liabilities,	and	cash	flows.	We	also	enter	into	derivatives	with	customers	to	facilitate	their	risk management	activities.

Derivatives	represent	contracts	between	parties	that	usually	require	little	or	no	initial	net	investment	and	result	in	one	party	delivering	cash	or	another	type	of	asset	to	the other	party	based	on	a	notional	amount	and	an	underlying	as	specified	in	the	contract.	Derivative	transactions	are	often	measured	in	terms	of	notional	amount,	but	this amount	is	generally	not	exchanged	and	it	is	not	recorded	on	the	balance	sheet.	The	notional	amount	is	the	basis	to	which	the	underlying	is	applied	to	determine	required payments	under	the	derivative	contract.	The	underlying	is	a	referenced	interest	rate	(commonly	LIBOR),	security	price,	credit	spread	or	other	index.	Residential	and commercial	real	estate	loan	commitments	associated	with	loans	to	be	sold	also	qualify	as	derivative	instruments.

The	following	table	presents	the	notional	amounts	and	gross	fair	values	of	all	derivative	assets	and	liabilities	held	by	PNC:

# Table	124:	Total	Gross	Derivatives

|  |  | December	31,	2014 |  | December	31,	2013 | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Notional/\nContract\nAmount | Asset\nFair\nValue\t(a) | Liability\nFair\nValue\t(b) | Notional/\nContract\nAmount | Asset\nFair\nValue\t(a) | Liability\nFair\nValue\t(b) |
| Derivatives\tdesignated\tas\thedging\tinstruments\tunder\tGAAP | $49,061 | $1,261 | $186 | $36,197 | $1,189\t\t\t\t $ | 364 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments\tunder\tGAAP | \t 291,256 | 3,973 | 3,841 | \t 345,059 | 3,604 | 3,570 |
| Total\tgross\tderivatives | $340,317 | $5,234 | $4,027 | $381,256 | $4,793\t\t\t\t $3,934 | $4,793\t\t\t\t $3,934 |
| (a)\nIncluded\tin\tOther\tassets\ton\tour\tConsolidated\tBalance\tSheet. |  |  |  |  |  |  |

(a) Included	in	Other	assets	on	our	Consolidated	Balance	Sheet.

(b) Included	in	Other	liabilities	on	our	Consolidated	Balance	Sheet.

All	derivatives	are	carried	on	our	Consolidated	Balance	Sheet	at	fair	value.	Derivative	balances	are	presented	on	the	Consolidated	Balance	Sheet	on	a	net	basis	taking into	consideration	the	effects	of	legally	enforceable	master	netting	agreements	and	any	related	cash	collateral	exchanged	with	counterparties.	Further	discussion regarding	the	rights	of	setoff	associated	with	these	legally	enforceable	master	netting	agreements	is	included	in	the	Offsetting,	Counterparty	Credit	Risk,	and	Contingent Features	section	below.	Our	exposure	related	to	risk	participations	where	we	sold	protection	is	discussed	in	the	Credit	Derivatives	section	below.	Any	nonperformance risk,	including	credit	risk,	is	included	in	the	determination	of	the	estimated	net	fair	value	of	the	derivatives.

Further	discussion	on	how	derivatives	are	accounted	for	is	included	in	Note	1	Accounting	Policies.

# Derivatives	Designated	As	Hedging	Instruments	under	GAAP

Certain	derivatives	used	to	manage	interest	rate	and	foreign	exchange	risk	as	part	of	our	asset	and	liability	risk	management	activities	are	designated	as	accounting hedges	under	GAAP.	Derivatives	hedging	the	risks	associated	with	changes	in	the	fair	value	of	assets	or	liabilities	are	considered	fair	value	hedges,	derivatives	hedging the	variability	of	expected	future	cash	flows	are	considered	cash	flow	hedges,	and	derivatives	hedging	a	net	investment	in	a	foreign	subsidiary	are	considered	net investment	hedges.	Designating	derivatives	as	accounting	hedges	allows	for	gains	and	losses	on	those	derivatives,	to	the	extent	effective,	to	be	recognized	in	the	income statement	in	the	same	period	the	hedged	items	affect	earnings.

Further	detail	regarding	the	notional	amounts	and	fair	values	related	to	derivatives	designated	in	hedge	relationships	is	presented	in	the	following	table:

# Table	125:	Derivatives	Designated	As	Hedging	Instruments	under	GAAP

|  |  | December	31,	2014 |  |  | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Notional/ | Asset | Liability | Notional/ | Asset | Liability |
|  | Contract | Fair | Fair | Contract | Fair | Fair |
| In\tmillions | Amount | Value\t(a) | Value\t(b) | Amount | Value\t(a) | Value\t(b) |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Fair\tvalue\thedges: |  |  |  |  |  |  |
| Receive-fixed\tswaps | $20,930 | $827 | $38 | $16,446 | $871\t\t\t\t $ | 230 |
| Pay-fixed\tswaps\t(c) | 4,233 | 3 | 138 | 4,076 | 54 | 66 |
| Subtotal | $25,163 | $830 | $176 | $20,522 | $925\t\t\t\t $ | 296 |
| Cash\tflow\thedges: |  |  |  |  |  |  |
| Receive-fixed\tswaps | $19,991 | $400 | $10 | $14,737 | $264\t\t\t\t $ | 58 |
| Forward\tpurchase\tcommitments | 2,778 | 25 |  |  |  |  |
| Subtotal | $22,769 | $425 | $10 | $14,737 | $264\t\t\t\t $ | 58 |
| Foreign\texchange\tcontracts: |  |  |  |  |  |  |
| Net\tinvestment\thedges | 1,129 | 6 |  | 938 |  | 10 |
| Total\tderivatives\tdesignated\tas\thedging\tinstruments | $49,061 | $1,261 | $186 | $36,197 | $1,189\t\t\t\t $ | 364 |
| (a)\nIncluded\tin\tOther\tassets\ton\tour\tConsolidated\tBalance\tSheet. |  |  |  |  |  |  |

(c) Includes	zero-coupon	swaps.

# Fair	Value	Hedges

We	enter	into	receive-fixed,	pay-variable	interest	rate	swaps	to	hedge	changes	in	the	fair	value	of	outstanding	fixed-rate	debt	and	borrowings	caused	by	fluctuations	in market	interest	rates.	We	also	enter	into	pay-fixed,	receive-variable	interest	rate	swaps	and	zero-coupon	swaps	to	hedge	changes	in	the	fair	value	of	fixed	rate	and	zero- coupon	investment	securities	caused	by	fluctuations	in	market	interest	rates.	For	these	hedge	relationships,	we	use	statistical	regression	analysis	to	assess	hedge effectiveness	at	both	the	inception	of	the	hedge	relationship	and	on	an	ongoing	basis.	There	were	no	components	of	derivative	gains	or	losses	excluded	from	the assessment	of	hedge	effectiveness.

Further	detail	regarding	gains	(losses)	on	fair	value	hedge	derivatives	and	related	hedged	items	is	presented	in	the	following	table:

# Table	126:	Gains	(Losses)	on	Derivatives	and	Related	Hedged	Items	–	Fair	Value	Hedges

(a) The	ineffective	portion	of	the	change	in	value	of	our	fair	value	hedge	derivatives	resulted	in	net	losses	of	$30	million	for	2014	compared	with	net	losses	of	$37	million	for	2013	and	net	losses	of	$54	million	for 2012.

# Cash	Flow	Hedges

We	enter	into	receive-fixed,	pay-variable	interest	rate	swaps	to	modify	the interest	rate	characteristics	of	designated	commercial	loans	from	variable	to fixed	in	order	to	reduce	the	impact	of	changes	in	future	cash	flows	due	to	market interest	rate	changes.	For	these	cash	flow	hedges,	any	changes	in	the	fair	value	of the	derivatives	that	are	effective	in	offsetting	changes	in	the	forecasted	interest cash	flows	are	recorded	in	Accumulated	other	comprehensive	income	and	are reclassified	to	interest	income	in	conjunction	with	the	recognition	of	interest received	on	the	loans.	In	the	12	months	that	follow	December	31,	2014,	we expect	to	reclassify	from	the	amount	currently	reported	in	Accumulated	other comprehensive	income,	net	derivative	gains	of	$245	million	pretax,	or	$159 million	after-tax,	in	association	with	interest	received	on	the	hedged	loans.	This amount	could	differ	from	amounts	actually	recognized	due	to	changes	in	interest rates,	hedge	de-designations,	and	the	addition	of	other	hedges	subsequent	to December	31,	2014.	The	maximum	length	of	time	over	which	forecasted	loan cash	flows	are	hedged	is	10	years.	We	use	statistical	regression	analysis	to	assess the	effectiveness	of	these	hedge	relationships	at	both	the	inception	of	the	hedge relationship	and	on	an	ongoing	basis.

We	also	periodically	enter	into	forward	purchase	and	sale	contracts	to	hedge	the variability	of	the	consideration	that	will	be	paid	or	received	related	to	the purchase	or	sale	of	investment	securities.	The	forecasted	purchase	or	sale	is consummated	upon	gross	settlement	of	the	forward	contract	itself.	As	a	result, hedge	ineffectiveness,	if	any,	is	typically	minimal.	Gains	and	losses	on	these forward	contracts	are	recorded	in	Accumulated	other	comprehensive	income	and are	recognized	in	earnings	when	the	hedged	cash	flows	affect	earnings.	In	the	12 months	that	follow	December	31,	2014,	we	expect	to	reclassify	from	the	amount currently	reported	in	Accumulated	other	comprehensive	income,	net	derivative gains	of	$26	million	pretax,	or	$17	million	after-tax,	as	adjustments	of	yield	on investment	securities.	As	of	December	31,	2014,	the	maximum	length	of	time over	which	forecasted	purchase	contracts	are	hedged	is	two	months.

There	were	no	components	of	derivative	gains	or	losses	excluded	from	the assessment	of	hedge	effectiveness	related	to	either	cash	flow	hedge	strategy.

During	2014,	2013,	and	2012,	there	were	no	gains	or	losses	from	cash	flow hedge	derivatives	reclassified	to	earnings	because	it	became	probable	that	the original	forecasted	transaction	would	not	occur.

Further	detail	regarding	gains	(losses)	on	derivatives	and	related	cash	flows	is	presented	in	the	following	table:

# Table	127:	Gains	(Losses)	on	Derivatives	and	Related	Cash	Flows	–	Cash	Flow	Hedges	(a)	(b)

|  |  | Year	ended<br>December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2014 | 2013 | 2012 |
| Gains\t(losses)\ton\tderivatives\trecognized\tin\tOCI\t–\t(effective\tportion) | $431 | $(141) | $312 |
| Less:\tGains\t(losses)\treclassified\tfrom\taccumulated\tOCI\tinto\tincome\t–\t(effective\tportion) |  |  |  |
| Interest\tincome | \t 263 | 337 | 456 |
| Noninterest\tincome | – | 49 | 76 |
| Total\tgains\t(losses)\treclassified\tfrom\taccumulated\tOCI\tinto\tincome\t–\t(effective\tportion) | \t 263 | 386 | 532 |
| Net\tunrealized\tgains\t(losses)\ton\tcash\tflow\thedge\tderivatives | $168 | $(527) | $(220) |
| (a) |  |  |  |

(b) The	amount	of	cash	flow	hedge	ineffectiveness	recognized	in	income	was	not	material	for	the	periods	presented.

# Net	Investment	Hedges

We	enter	into	foreign	currency	forward	contracts	to	hedge	non-U.S.	Dollar	(USD)	net	investments	in	foreign	subsidiaries	against	adverse	changes	in	foreign	exchange rates.	We	assess	whether	the	hedging	relationship	is	highly	effective	in	achieving	offsetting	changes	in	the	value	of	the	hedge	and	hedged	item	by	qualitatively	verifying that	the	critical	terms	of	the	hedge	and	hedged	item	match	at	the	inception	of	the	hedging	relationship	and	on	an	ongoing	basis.	There	were	no	components	of	derivative gains	or	losses	excluded	from	the	assessment	of	the	hedge	effectiveness.

Further	detail	on	gains	(losses)	on	net	investment	hedge	derivatives	is	presented	in	the	following	table:

# Table	128:	Gains	(Losses)	on	Derivatives	–	Net	Investment	Hedges

|  |  | Year	ended<br>December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2014 | 2013 | 2012 |
| Gains\t(losses)\ton\tderivatives\trecognized\tin\tOCI\t(effective\tportion) |  |  |  |
| Foreign\texchange\tcontracts | $54 | $(21) | $(27) |

# Derivatives	Not	Designated	As	Hedging	Instruments	under	GAAP

We	also	enter	into	derivatives	that	are	not	designated	as	accounting	hedges	under	GAAP.

Further	detail	regarding	the	notional	amounts	and	fair	values	related	to	derivatives	not	designated	in	hedge	relationships	is	presented	in	the	following	table:

# Table	129:	Derivatives	Not	Designated	As	Hedging	Instruments	under	GAAP

|  |  | December	31,	2014 |  |  | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Notional/ | Asset | Liability | Notional/ | Asset | Liability |
| In\tmillions | Contract\nAmount | Fair\nValue\t(a) | Fair\nValue\t(b) | Contract\nAmount | Fair\nValue\t(a) | Fair\nValue\t(b) |
| Derivatives\tused\tfor\tresidential\tmortgage\tbanking\tactivities: |  |  |  |  |  |  |
| Residential\tmortgage\tservicing |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Swaps | $32,459 | $777 | $394 | $37,424 | $654\t\t\t\t $ | 360 |
| Swaptions | 1,498 | 29 | 22 | 845 | 18 | 18 |
| Futures\t(c) | 22,084 |  |  | 49,250 |  |  |
| Futures\toptions | 12,225 | 4 |  | 24,000 | 10 | 2 |
| Mortgage-backed\tsecurities\tcommitments | 710 | 4 |  | 832 |  | 3 |
| Subtotal | $68,976 | $814 | $416 | $112,351 | $682\t\t\t\t $ | 383 |
| Loan\tsales |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Futures\t(c) | $58 |  |  | $350 |  |  |
| Bond\toptions | 300 |  |  | 200 | $1 |  |
| Mortgage-backed\tsecurities\tcommitments | 4,916 | $10 | $21 | 5,173 | 26\t\t\t\t $ | 9 |
| Residential\tmortgage\tloan\tcommitments | 1,852 | 22 |  | 1,605 | 13 |  |
| Subtotal | $7,126 | $32 | $21 | $7,328 | $40\t\t\t\t $ | 9 |
| Subtotal | $76,102 | $846 | $437 | $119,679 | $722\t\t\t\t $ | 392 |
| Derivatives\tused\tfor\tcommercial\tmortgage\tbanking\tactivities: |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Swaps | $3,801 | $67 | $48 | $2,158 | $23\t\t\t\t $ | 52 |
| Swaptions | 439 | 2 | 1 | 125 |  | 3 |
| Futures\t(c) | 19,913 |  |  | 4,598 |  |  |
| Futures\toptions |  |  |  | 45,500 | 15 | 4 |
| Commercial\tmortgage\tloan\tcommitments | 2,042 | 16 | 10 | 673 | 20 | 11 |
| Subtotal | $26,195 | $85 | $59 | $53,054 | $58\t\t\t\t $ | 70 |
| Credit\tcontracts: |  |  |  |  |  |  |
| Credit\tdefault\tswaps | 95 |  |  | 95 |  |  |
| Subtotal | $26,290 | $85 | $59 | $53,149 | $58\t\t\t\t $ | 70 |
| Derivatives\tused\tfor\tcustomer-related\tactivities: |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Swaps | $146,008 | $2,632 | $2,559 | $134,408 | $2,540\t\t\t\t $ | 2,445 |
| Caps/floors\t–\tSold | 4,846 |  | 16 | 4,789 |  | 11 |
| Caps/floors\t–\tPurchased | 6,339 | 34 |  | 5,519 | 37 |  |
| Swaptions | 3,361 | 62 | 12 | 2,354 | 49 | 51 |
| Futures\t(c) | 3,112 |  |  | 1,856 |  |  |
| Mortgage-backed\tsecurities\tcommitments | 2,137 | 3 | 3 | 1,515 | 4 | 3 |
| Subtotal | $165,803 | $2,731 | $2,590 | $150,441 | $2,630\t\t\t\t $ | 2,510 |
| Foreign\texchange\tcontracts | 12,547 | 223 | 240 | 14,316 | 192 | 172 |
| Credit\tcontracts: |  |  |  |  |  |  |
| Risk\tparticipation\tagreements | 5,124 | 2 | 4 | 4,777 | 2 | 4 |
| Subtotal | $183,474 | $2,956 | $2,834 | $169,534 | $2,824\t\t\t\t $ | 2,686 |
| Derivatives\tused\tfor\tother\trisk\tmanagement\tactivities: |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Swaps | $225 |  |  | $511 |  |  |
| Futures\t(c) | 533 |  |  | 838 |  |  |
| Mortgage-backed\tsecurities\tcommitments | 75 | $1 |  |  |  |  |
| Subtotal | $833 | $1 |  | $1,349 |  |  |
| Foreign\texchange\tcontracts | 2,661 | 85 | $1 | 8 |  |  |
| Credit\tcontracts: |  |  |  |  |  |  |
| Credit\tdefault\tswaps | 15 |  |  |  |  |  |
| Other\tcontracts\t(d) | 1,881 |  | 510 | 1,340 |  | \t\t $422 |
| Subtotal | $5,390 | $86 | $511 | $2,697 |  | \t\t $422 |
| Total\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | $291,256 | $3,973 | $3,841 | $345,059 | $3,604\t\t\t\t $ | 3,570 |

(c) Futures	contracts	settle	in	cash	daily	and,	therefore,	no	derivative	asset	or	derivative	liability	is	recognized	on	our	Consolidated	Balance	Sheet.

(d) Includes	PNC's	obligation	to	fund	a	portion	of	certain	BlackRock	LTIP	programs	and	the	swaps	entered	into	in	connection	with	sales	of	a	portion	of	Visa	Class	B	common	shares.	Refer	to	Note	7	Fair	Value	for additional	information	on	the	Visa	swaps.

Our	residential	mortgage	banking	activities	consist	of	originating,	selling	and servicing	mortgage	loans.	Residential	mortgage	loans	that	will	be	sold	in	the secondary	market,	and	the	related	loan	commitments,	which	are	considered derivatives,	are	accounted	for	at	fair	value.	Changes	in	the	fair	value	of	the	loans and	commitments	due	to	interest	rate	risk	are	hedged	with	forward	contracts	to sell	mortgage-backed	securities,	as	well	as	U.S.	Treasury	and	Eurodollar	futures and	options.	Gains	and	losses	on	the	loans	and	commitments	held	for	sale	and the	derivatives	used	to	economically	hedge	them	are	included	in	Residential mortgage	noninterest	income	on	the	Consolidated	Income	Statement.

We	typically	retain	the	servicing	rights	related	to	residential	mortgage	loans	that we	sell.	Residential	mortgage	servicing	rights	are	accounted	for	at	fair	value	with changes	in	fair	value	influenced	primarily	by	changes	in	interest	rates. Derivatives	used	to	hedge	the	fair	value	of	residential	mortgage	servicing	rights include	interest	rate	futures,	swaps,	options,	and	forward	contracts	to	purchase mortgage-backed	securities.	Gains	and	losses	on	residential	mortgage	servicing rights	and	the	related	derivatives	used	for	hedging	are	included	in	Residential mortgage	noninterest	income.

Commercial	mortgage	loans	held	for	sale	and	the	related	loan	commitments, which	are	considered	derivatives,	are	accounted	for	at	fair	value.	Derivatives used	to	economically	hedge	these	loans	and	commitments	from	changes	in	fair value	due	to	interest	rate	risk	and	credit	risk	include	forward	loan	sale	contracts, interest	rate	swaps,	and	credit	default	swaps.	Gains	and	losses	on	the commitments,	loans	and	derivatives	are	included	in	Other	noninterest	income. Derivatives	used	to	economically	hedge	the	change	in	value	of	commercial mortgage	servicing	rights	include	interest	rate	futures,	swaps	and	options.	Gains or	losses	on	these	derivatives	are	included	in	Corporate	services	noninterest income.

The	residential	and	commercial	mortgage	loan	commitments	associated	with loans	to	be	sold	which	are	accounted	for	as	derivatives	are	valued	based	on	the estimated	fair	value	of	the	underlying	loan	and	the	probability	that	the	loan	will fund	within	the	terms	of	the	commitment.	The	fair	value	also	takes	into	account the	fair	value	of	the	embedded	servicing	right.

We	offer	derivatives	to	our	customers	in	connection	with	their	risk	management needs.	These	derivatives	primarily	consist	of	interest	rate	swaps,	interest	rate caps,	floors,	swaptions	and	foreign	exchange	contracts.	We	primarily	manage our	market	risk	exposure	from	customer	transactions	by	entering	into	a	variety	of hedging	transactions	with	third-party	dealers.	Gains	and	losses	on	customer- related	derivatives	are	included	in	Other	noninterest	income.

Included	in	the	customer,	mortgage	banking	risk	management,	and	other	risk management	portfolios	are	written	interest-rate	caps	and	floors	entered	into	with customers	and	for	risk	management	purposes.	We	receive	an	upfront	premium from	the	counterparty	and	are	obligated	to	make	payments	to	the	counterparty	if the	underlying	market	interest	rate	rises	above	or	falls	below	a	certain	level designated	in	the	contract.	Our	ultimate	obligation	under	written	options	is	based on	future	market	conditions.

The	derivatives	portfolio	also	includes	derivatives	used	for	other	risk management	activities.	These	derivatives	are	entered	into	based	on	stated	risk management	objectives	and	include	credit	default	swaps	(CDSs)	used	to	mitigate the	risk	of	economic	loss	on	a	portion	of	our	loan	exposure.	We	enter	into	credit default	swaps	under	which	we	buy	loss	protection	from	or	sell	loss	protection	to a	counterparty	for	the	occurrence	of	a	credit	event	related	to	a	referenced	entity or	index.	The	fair	values	of	these	derivatives	typically	are	based	on	related	credit spreads.	Gains	and	losses	on	the	derivatives	entered	into	for	other	risk management	are	included	in	Other	noninterest	income.	CDSs	are	included	in these	derivative	tables:	Tables	129,	130,	131,	132	and	133.

Further	detail	regarding	the	gains	(losses)	on	derivatives	not	designated	in	hedging	relationships	is	presented	in	the	following	table:

# Table	130:	Gains	(Losses)	on	Derivatives	Not	Designated	As	Hedging	Instruments	under	GAAP

|  | Year	ended	December	31 | Year	ended	December	31 | Year	ended	December	31 |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2014 | 2013 | 2012 |
| Derivatives\tused\tfor\tresidential\tmortgage\tbanking\tactivities: |  |  |  |
| Residential\tmortgage\tservicing |  |  |  |
| Interest\trate\tcontracts | $240 | $(223) | $269 |
| Loan\tsales |  |  |  |
| Interest\trate\tcontracts | (3) | 286 | 127 |
| Gains\t(losses)\tincluded\tin\tresidential\tmortgage\tbanking\tactivities\t(a) | $237 | $63 | $396 |
| Derivatives\tused\tfor\tcommercial\tmortgage\tbanking\tactivities: |  |  |  |
| Interest\trate\tcontracts\t(b)\t(c) | $82 | $12 | $35 |
| Credit\tcontracts\t(c) | (1) | (2) | (3) |
| Gains\t(losses)\tfrom\tcommercial\tmortgage\tbanking\tactivities | $81 | $10 | $32 |
| Derivatives\tused\tfor\tcustomer-related\tactivities: |  |  |  |
| Interest\trate\tcontracts | $41 | $149 | $106 |
| Foreign\texchange\tcontracts | 47 | 80 | 83 |
| Equity\tcontracts |  | (3) | (4) |
| Credit\tcontracts | (1) | (1) | (3) |
| Gains\t(losses)\tfrom\tcustomer-related\tactivities\t(c) | $87 | $225 | $182 |
| Derivatives\tused\tfor\tother\trisk\tmanagement\tactivities: |  |  |  |
| Interest\trate\tcontracts | $(19) | $3 | $(11) |
| Foreign\texchange\tcontracts | 188 | 2 | (2) |
| Credit\tcontracts |  |  | (1) |
| Other\tcontracts\t(d) | (134) | (168) | (94) |
| Gains\t(losses)\tfrom\tother\trisk\tmanagement\tactivities\t(c) | $35 | $(163) | $(108) |
| Total\tgains\t(losses)\tfrom\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | $440 | $135 | $502 |
| (a)\nIncluded\tin\tResidential\tmortgage\tnoninterest\tincome. |  |  |  |

(a) Included	in	Residential	mortgage	noninterest	income.

(b) Included	in	Corporate	services	noninterest	income.

(c) Included	in	Other	noninterest	income.

(d) Includes	BlackRock	LTIP	funding	obligation	and	the	swaps	entered	into	in	connection	with	sales	of	a	portion	of	Visa	Class	B	common	shares.

# Credit	Derivatives

We	enter	into	credit	derivatives,	specifically	credit	default	swaps	and	risk	participation	agreements,	as	part	of	our	commercial	mortgage	banking	hedging	activities	and for	customer	and	other	risk	management	purposes.	The	credit	derivative	underlying	is	based	on	the	credit	risk	of	a	specific	entity,	entities,	or	an	index.	Detail	regarding credit	default	swaps	purchased	and	risk	participations	sold	follows.

# Table	131:	Credit	Default	Swaps	(a)

|  | December	31,	2014 |  | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | Notional\nAmount | Weighted-\nAverage\nRemaining\nMaturity\nIn\tYears | Notional\nAmount | Weighted-\nAverage\nRemaining\nMaturity\nIn\tYears |
| Credit\tDefault\tSwaps\t–\tPurchased\t(b) |  |  |  |  |
| Single\tname | $50 | 5.7 | $35 | 7.3 |
| Index\ttraded | 60 | 34.2 | 60 | 35.2 |
| Total | $110 | 21.3 | $95 | 24.9 |
| (a) |  |  |  |  |

(b) The	fair	value	of	credit	default	swaps	purchased	was	less	than	$1	million	as	of	December	31,	2014	and	December	31,	2013.

The	notional	amount	of	these	credit	default	swaps	by	credit	rating	is	presented	in the	following	table:

# Table	132:	Credit	Ratings	of	Credit	Default	Swaps	(a)

(b) Investment	grade	with	a	rating	of	BBB-/Baa3	or	above	based	on	published	rating	agency information.

(c) There	were	no	subinvestment	grade	credit	default	swaps	purchased	as	of	December	31,	2013. Subinvestment	grade	represents	a	rating	below	BBB-/Baa3	based	on	published	rating	agency information.

The	referenced/underlying	assets	for	these	credit	default	swaps	are	presented	in the	following	table:

# Table	133:	Referenced/Underlying	Assets	of	Credit	Default	Swaps

|  | December	31,<br>2014 | December	31,<br>2013 |
| :--- | :--- | :--- |
| Corporate\tdebt | 45% | 37% |
| Commercial\tmortgage-backed |  |  |
| securities | 55% | 63% |

# Risk	Participation	Agreements

We	also	periodically	enter	into	risk	participation	agreements	to	share	some	of	the credit	exposure	with	other	counterparties	related	to	interest	rate	derivative contracts	or	to	take	on	credit	exposure	to	generate	revenue.	We	will make/receive	payments	under	these	agreements	if	a	customer	defaults	on	its obligation	to	perform	under	certain	derivative	swap	contracts.	Risk	participation agreements	purchased	and	sold	are	included	in	these	derivative	tables:	Tables 129,	130,	134	and	135.

Further	detail	regarding	the	notional	amount,	fair	value	and	weighted-average remaining	maturities	in	years	for	risk	participation	agreements	sold	is	presented in	the	following	table:

# Table	134:	Risk	Participation	Agreements	Sold

|  | December	31,	2014 | December	31,	2014 |  | December	31,	2013 | December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Weighted- |  |  | Weighted- |
|  |  |  | Average |  |  | Average |
|  |  |  | Remaining |  |  | Remaining |
| Dollars\tin\tmillions | Notional\nAmount | Fair\nValue | Maturity\nIn\tYears | Notional\nAmount | Fair\nValue | Maturity\nIn\tYears |
| Risk\tParticipation\tAgreements\tSold | \t $2,796\t\t\t $ | (4) | 5.4\t\t\t $ | 2,770\t\t\t $ | (4) | 6.1 |

Based	on	our	internal	risk	rating	process	of	the	underlying	third	party	customers referenced	in	the	swap	contracts,	the	percentages	of	the	exposure	amount	of	risk participation	agreements	sold	by	internal	credit	rating	follow:

# Table	135:	Internal	Credit	Ratings	of	Risk	Participation	Agreements	Sold

(a) Indicates	the	expected	risk	of	default	is	currently	low.

(b) Indicates	a	higher	degree	of	risk	of	default.

We	have	sold	risk	participation	agreements	with	terms	ranging	from	less	than	1 year	to	22	years.	We	will	be	required	to	make	payments	under	these	agreements if	a	customer	defaults	on	its	obligation	to	perform	under	certain	derivative	swap contracts	with	third	parties.	Assuming	all	underlying	third	party	customers referenced	in	the	swap	contracts	defaulted	at	December	31,	2014,	the	exposure from	these	agreements	would	be	$124	million	based	on	the	fair	value	of	the underlying	swaps,	compared	with	$77	million	at	December	31,	2013.

# Offsetting,	Counterparty	Credit	Risk,	and	Contingent	Features

We,	generally,	utilize	a	net	presentation	on	the	Consolidated	Balance	Sheet	for those	derivative	financial	instruments	entered	into	with	counterparties	under legally	enforceable	master	netting	agreements.	The	master	netting	agreements reduce	credit	risk	by	permitting	the	closeout	netting	of	various	types	of derivative	instruments	with	the	same	counterparty	upon	the	occurrence	of	an event	of	default.	The	master	netting	agreement	also	may	require	the	exchange	of cash	or	marketable	securities	to	collateralize	either	party's	net	position.	In	certain cases,	minimum	thresholds	must	be	exceeded	before	any	collateral	is exchanged.	Collateral	is	typically	exchanged	daily	based	on	the	net	fair	value	of the	positions	with	the	counterparty	as	of	the	preceding	day.	Any	cash	collateral exchanged	with	counterparties	under	these	master	netting	agreements	is	also netted	against	the	applicable	derivative	fair	values	on	the	Consolidated	Balance Sheet.	However,	the	fair	value	of	any	securities	held	or	pledged	is	not	included	in the	net	presentation	on	the	balance	sheet.	In	order	for	an	arrangement	to	be eligible	for	netting	under	GAAP	(ASC	210-20),	we	must	obtain	the	requisite assurance	that	the	offsetting	rights	included	in	the	master	netting	agreement would	be	legally	enforceable	in	the	event	of	bankruptcy,	insolvency,	or	a	similar proceeding	of	such	third	party.	Enforceability	is	evidenced	by	obtaining	a	legal opinion	that	supports,	with	sufficient	confidence,	the	enforceability	of	the	master netting	agreement	in	bankruptcy.

The	following	derivative	Table	136	shows	the	impact	legally	enforceable	master	netting	agreements	had	on	our	derivative	assets	and	derivative	liabilities	as	of December	31,	2014	and	December	31,	2013.	The	table	also	includes	the	fair	value	of	any	securities	collateral	held	or	pledged	under	legally	enforceable	master	netting agreements.	Cash	and	securities	collateral	amounts	are	included	in	the	table	only	to	the	extent	of	the	related	net	derivative	fair	values.

Refer	to	Note	22	Commitments	and	Guarantees	for	additional	information	related	to	resale	and	repurchase	agreements	offsetting.

# Table	136:	Derivative	Assets	and	Liabilities	Offsetting

|  |  | Amounts |  |  | Securities |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross | Offset\ton\tthe |  | Net | Collateral |  |
|  | Fair\tValue | Consolidated\tBalance\tSheet | Consolidated\tBalance\tSheet | Fair\tValue | Held\tUnder |  |
| December\t31,\t2014\nIn\tmillions | Derivative\nAssets | Fair\tValue\nOffset\tAmount | Cash\nCollateral | Derivative\nAssets | Master\tNetting\nAgreements | Net\nAmounts |
| Derivative\tassets |  |  |  |  |  |  |
| Interest\trate\tcontracts | $4,918 | $1,981 | $458 | $2,479 | $143 | $2,336 |
| Foreign\texchange\tcontracts | 314 | 159 | 47 | 108 | 1 | 107 |
| Credit\tcontracts | 2 | 1 | 1 |  |  |  |
| Total\tderivative\tassets\t(a)\t(b) | $5,234 | $2,141 | $506 | $2,587\t(c) | $144 | $2,443 |

|  |  | Amounts |  |  | Securities |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross | Offset\ton\tthe |  | Net | Collateral |  |
|  | Fair\tValue | Consolidated\tBalance\tSheet |  | Fair\tValue | Pledged\tUnder |  |
| December\t31,\t2014\nIn\tmillions | Derivative\nLiabilities | Fair\tValue\nOffset\tAmount | Cash\nCollateral | Derivative\nLiabilities | Master\tNetting\nAgreements | Net\nAmounts |
| Derivative\tliabilities |  |  |  |  |  |  |
| Interest\trate\tcontracts | $3,272 | $2,057 | $483 | $732 |  | $732 |
| Foreign\texchange\tcontracts | 241 | 80 | 20 | 141 |  | 141 |
| Credit\tcontracts | 4 | 4 |  |  |  |  |
| Other\tcontracts | 510 |  |  | 510 |  | 510 |
| Total\tderivative\tliabilities\t(a)\t(b) | $4,027 | $2,141 | $503 | $1,383\t(d) |  | $1,383 |

|  |  | Amounts |  |  | Securities |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross | Offset\ton\tthe |  | Net | Collateral |  |
|  | Fair\tValue | Consolidated\tBalance\tSheet | Consolidated\tBalance\tSheet | Fair\tValue | Held\tUnder |  |
| December\t31,\t2013\nIn\tmillions | Derivative\nAssets | Fair\tValue\nOffset\tAmount | Cash\nCollateral | Derivative\nAssets | Master\tNetting\nAgreements | Net\nAmounts |
| Derivative\tassets |  |  |  |  |  |  |
| Interest\trate\tcontracts | $4,599 | $2,468 | $556 | $1,575 | $115 | $1,460 |
| Foreign\texchange\tcontracts | 192 | 64 | 9 | 119 |  | 119 |
| Credit\tcontracts | 2 | 1 |  | 1 |  | 1 |
| Total\tderivative\tassets\t(a)\t(b) | $4,793 | $2,533 | $565 | $1,695\t(c) | $115 | $1,580 |

|  |  | Amounts |  |  | Securities |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross | Offset\ton\tthe |  | Net\tFair | Collateral |  |
|  | Fair\tValue | Consolidated\tBalance\tSheet |  | Value | Pledged\tUnder |  |
| December\t31,\t2013\nIn\tmillions | Derivative\nLiabilities | Fair\tValue\nOffset\tAmount | Cash\nCollateral | Derivative\nLiabilities | Master\tNetting\nAgreements | Net\nAmounts |
| Derivative\tliabilities |  |  |  |  |  |  |
| Interest\trate\tcontracts | $3,326 | $2,447 | $473 | $406 |  | $406 |
| Foreign\texchange\tcontracts | 182 | 83 | 23 | 76 |  | 76 |
| Credit\tcontracts | 4 | 3 | 1 |  |  |  |
| Other\tcontracts | 422 |  |  | 422 |  | 422 |
| Total\tderivative\tliabilities\t(a)\t(b) | $3,934 | $2,533 | $497 | $904\t(d) |  | $904 |
| (a) |  |  |  |  |  |  |

(a) There	were	no	derivative	assets	or	derivative	liabilities	equity	contracts	as	of	December	31,	2014	and	December	31,	2013.

(b) Included	derivative	assets	and	derivative	liabilities	as	of	December	31,	2014	totaling	$807	million	and	$657	million,	respectively,	related	to	interest	rate	contracts	executed	bilaterally	with	counterparties	in	the	U.S. over-the-counter	market	and	novated	to	and	cleared	through	a	central	clearing	house.	The	comparable	amounts	as	of	December	31,	2013	totaled	$331	million	and	$224	million,	respectively.	Derivative	assets	and liabilities	as	of	December	31,	2014	and	December	31,	2013	related	to	exchange-traded	interest	rate	contracts	were	not	material.	As	of	December	31,	2014	and	December	31,	2013,	these	contracts	were	not	subject to	offsetting.	The	remaining	gross	and	net	derivative	assets	and	liabilities	relate	to	contracts	executed	bilaterally	with	counterparties	that	are	not	settled	through	an	organized	exchange	or	central	clearing	house.

(c) Represents	the	net	amount	of	derivative	assets	included	in	Other	assets	on	our	Consolidated	Balance	Sheet.

(d) Represents	the	net	amount	of	derivative	liabilities	included	in	Other	liabilities	on	our	Consolidated	Balance	Sheet.

In	addition	to	using	master	netting	and	related	collateral	agreements	to	reduce credit	risk	associated	with	derivative	instruments,	we	also	seek	to	manage	credit risk	by	evaluating	credit	ratings	of	counterparties,	by	taking	collateral	and	by using	internal	credit	analysis,	limits,	and	monitoring	procedures.	Collateral	may also	be	exchanged	under	certain	derivative	agreements	that	are	not	considered master	netting	agreements.

At	December	31,	2014,	we	held	cash,	U.S.	government	securities	and	mortgage- backed	securities	totaling	$815	million	under	master	netting	and	other	collateral agreements	to	collateralize	net	derivative	assets	due	from	counterparties,	and	we have	pledged	cash	totaling	$514	million	under	these	agreements	to	collateralize net	derivative	liabilities	owed	to	counterparties.	These	totals	may	differ	from	the amounts	presented	in	the	preceding	offsetting	table	because	they	may	include collateral	exchanged	under	an	agreement	that	does	not	qualify	as	a	master netting	agreement	or	because	the	total	amount	of	collateral	held	or	pledged exceeds	the	net	derivative	fair	value	with	the	counterparty	as	of	the	balance	sheet date	due	to	timing	or	other	factors.	To	the	extent	not	netted	against	the	derivative fair	value	under	a	master	netting	agreement,	the	receivable	for	cash	pledged	is included	in	Other	assets	and	the

obligation	for	cash	held	is	included	in	Other	borrowed	funds	on	our Consolidated	Balance	Sheet.	Securities	held	from	counterparties	are	not recognized	on	our	balance	sheet.	Likewise	securities	we	have	pledged	to counterparties	remain	on	our	balance	sheet.

Certain	of	the	master	netting	agreements	and	certain	other	derivative	agreements also	contain	provisions	that	require	PNC's	debt	to	maintain	an	investment	grade credit	rating	from	each	of	the	major	credit	rating	agencies.	If	PNC's	debt	ratings were	to	fall	below	investment	grade,	we	would	be	in	violation	of	these	provisions and	the	counterparties	to	the	derivative	instruments	could	request	immediate payment	or	demand	immediate	and	ongoing	full	overnight	collateralization	on derivative	instruments	in	net	liability	positions.	The	aggregate	fair	value	of	all derivative	instruments	with	credit-risk-related	contingent	features	that	were	in	a net	liability	position	on	December	31,	2014	was	$681	million	for	which	PNC had	posted	collateral	of	$508	million	in	the	normal	course	of	business.	The maximum	additional	amount	of	collateral	PNC	would	have	been	required	to	post if	the	credit-risk-related	contingent	features	underlying	these	agreements	had been	triggered	on	December	31,	2014	would	be	$173	million.

# NOTE	16	EARNINGS	PER	SHARE

# Table	137:	Basic	and	Diluted	Earnings	per	Common	Share

| In	millions,	except	per	share	data | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Basic |  |  |  |
| Net\tincome\t(a) | $4,207 | $4,212\t\t\t\t $2,994 | $4,212\t\t\t\t $2,994 |
| Less: |  |  |  |
| Net\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests\t(a) | 23 | 11 | (7) |
| Preferred\tstock\tdividends\tand\tdiscount\taccretion\tand\tredemptions | 237 | 249 | 181 |
| Net\tincome\tattributable\tto\tcommon\tshares | \t 3,947 | \t 3,952 | \t 2,820 |
| Less: |  |  |  |
| Dividends\tand\tundistributed\tearnings\tallocated\tto\tnonvested\trestricted\tshares | 11 | 18 | 14 |
| Net\tincome\tattributable\tto\tbasic\tcommon\tshares | $3,936 | $3,934\t\t\t\t $2,806 | $3,934\t\t\t\t $2,806 |
| Basic\tweighted-average\tcommon\tshares\toutstanding | 529 | 528 | 526 |
| Basic\tearnings\tper\tcommon\tshare\t(a)\t(b) | $7.44 | $7.45\t\t\t\t $ | 5.33 |
| Diluted |  |  |  |
| Net\tincome\tattributable\tto\tbasic\tcommon\tshares\t(a) | $3,936 | $3,934\t\t\t\t $2,806 | $3,934\t\t\t\t $2,806 |
| Less:\tImpact\tof\tBlackRock\tearnings\tper\tshare\tdilution | 18 | 18 | 14 |
| Net\tincome\tattributable\tto\tdiluted\tcommon\tshares | $3,918 | $3,916\t\t\t\t $2,792 | $3,916\t\t\t\t $2,792 |
| Basic\tweighted-average\tcommon\tshares\toutstanding | 529 | 528 | 526 |
| Dilutive\tpotential\tcommon\tshares\t(c)\t(d) | 8 | 4 | 3 |
| Diluted\tweighted-average\tcommon\tshares\toutstanding | 537 | 532 | 529 |
| Diluted\tearnings\tper\tcommon\tshare\t(a)\t(b) | $7.30 | $7.36\t\t\t\t $ | 5.28 |
| (a) |  |  |  |

(b) Basic	and	diluted	earnings	per	share	under	the	two-class	method	are	determined	on	net	income	reported	on	the	income	statement	less	earnings	allocated	to	nonvested	restricted	shares	(participating	securities).

(c) Excludes	number	of	stock	options	considered	to	be	anti-dilutive	of	1	million	for	2013	and	4	million	for	2012.	No	stock	options	were	considered	to	be	anti-dilutive	for	2014.

(d) Excludes	number	of	warrants	considered	to	be	anti-dilutive	of	17	million	for	2012.	No	warrants	were	considered	to	be	anti-dilutive	for	2013	and	2014.

# NOTE	17	EQUITY

# Preferred	Stock

The	following	table	provides	the	number	of	preferred	shares	issued	and	outstanding,	the	liquidation	value	per	share	and	the	number	of	authorized	preferred	shares	that are	available	for	future	use.

# Table	138:	Preferred	Stock	–	Authorized,	Issued	and	Outstanding

| December	31<br>Shares	in	thousands | value	per<br>share | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Authorized |  |  |  |
| $1\tpar\tvalue |  | \t16,588 | \t16,588 |
| Issued\tand\toutstanding |  |  |  |
| Series\tB | $40 | 1 | 1 |
| Series\tK | 10,000 | 50 | 50 |
| Series\tO | \t 100,000 | 10 | 10 |
| Series\tP | \t 100,000 | 15 | 15 |
| Series\tQ | \t 100,000 | 5 | 5 |
| Series\tR | \t 100,000 | 5 | 5 |
| Total\tissued\tand\toutstanding |  | 86 | 86 |

The	following	table	discloses	information	related	to	the	preferred	stock	outstanding	as	of	December	31,	2014.

# Table	139:	Terms	of	Outstanding	Preferred	Stock

(a) Dividends	are	payable	when,	as,	and	if	declared	by	our	Board	of	Directors	or	an	authorized	committee	of	our	Board.

(b) Redeemable	at	PNC's	option	on	or	after	the	date	stated.	With	the	exception	of	the	Series	B	and	Series	K	preferred	stock,	redeemable	at	PNC's	option	within	90	days	of	a	regulatory	capital	treatment	event	as defined	in	the	designations.

(c) Cumulative	preferred	stock.	Holders	of	Series	B	preferred	stock	are	entitled	to	8	votes	per	share,	which	is	equal	to	the	number	of	full	shares	of	common	stock	into	which	the	Series	B	preferred	stock	is	convertible. The	Series	B	preferred	stock	was	issued	in	connection	with	the	consolidation	of	Pittsburgh	National	Corporation	and	Provident	National	Corporation	in	1983.

(d) Non-Cumulative	preferred	stock.

Our	Series	L	preferred	stock	was	issued	in	connection	with	the	National	City transaction	in	exchange	for	National	City's	Fixed-to-Floating	Rate	Non- Cumulative	Preferred	Stock,	Series	F.	Dividends	on	the	Series	L	preferred	stock were	payable	if	and	when	declared	each	1 	of	February,	May,	August	and November.	Dividends	were	paid	at	a	rate	of	9.875%	prior	to	February	1,	2013 and	at	a	rate	of	three-month	LIBOR	plus	633	basis	points	beginning	February	1, 2013.	On	April	19,	2013,	PNC	redeemed	all	6,000,000	depositary	shares representing	interests	in	PNC's	Series	L	preferred	stock	and	all	1,500	shares	of Series	L	preferred	stock	underlying	such	depositary	shares,	resulting	in	a	net outflow	of	$150	million. st

We	have	authorized	but	unissued	Series	H	and	Series	I	preferred	stock.	As described	in	Note	12	Capital	Securities	of	a	Subsidiary	Trust	and	Perpetual	Trust Securities,	the	PNC	Preferred	Funding	Trust	II	securities	are	automatically exchangeable	into	shares	of	PNC	Series	I	preferred	stock	under	certain conditions	relating	to	the	capitalization	or	the	financial	condition	of	PNC	Bank and	upon	the	direction	of	the	Office	of	the	Comptroller	of	the	Currency.	The Series	A	preferred	stock	of	PNC	REIT	Corp.	is	also	automatically	exchangeable under	similar	conditions	into	shares	of	PNC	Series	H	preferred	stock.	On March	15,	2013,	we	redeemed	all	$375	million	of	the	PNC	Preferred	Funding Trust	III	securities	that	had	been	exchangeable	under	certain	conditions	into PNC	Series	J	preferred	stock.

# Warrants

We	have	outstanding	16,885,192	warrants,	each	to	purchase	one	share	of	PNC common	stock	at	an	exercise	price	of	$67.33	per	share.	These	warrants	were	sold by	the	U.S.	Treasury	in	a	secondary	public	offering	that	closed	on	May	5,	2010 after	the	U.S.	Treasury	exchanged	its	TARP	Warrant	(issued	on	December	31, 2008	under	the	TARP	Capital	Purchase	Program)	for	16,885,192	warrants.	These warrants	expire	December	31,	2018.

# Other	Shareholders'	Equity	Matters

We	have	a	dividend	reinvestment	and	stock	purchase	plan.	Holders	of	preferred stock	and	PNC	common	stock	may	participate	in	the	plan,	which	provides	that additional	shares	of	common	stock	may	be	purchased	at	market	value	with reinvested	dividends	and	voluntary	cash	payments.	Common	shares	issued pursuant	to	this	plan	were:	293,552	shares	in	2014,	368,982	shares	in	2013	and 422,642	shares	in	2012.

At	December	31,	2014,	we	had	reserved	approximately	99	million	common shares	to	be	issued	in	connection	with	certain	stock	plans.

Effective	October	4,	2007,	our	Board	of	Directors	approved	a	stock	repurchase program	to	purchase	up	to	25	million	shares	of	PNC	common	stock	on	the	open market	or	in	privately	negotiated	transactions.	A	maximum	of	8.086	million shares	remained	available	for	repurchase	under	this	program	at	December	31, 2014.	This	program	will	remain	in	effect	until	fully	utilized	or	until	modified, superseded	or	terminated.	We	repurchased	13.5	million	shares	in	2014	and 3.2	million	shares	in	2012.	We	did	not	repurchase	any	shares	during	2013	under this	program.

# NOTE	18	OTHER	COMPREHENSIVE	INCOME

Details	of	other	comprehensive	income	(loss)	are	as	follows	(in	millions):

# Table	140:	Other	Comprehensive	Income

| In	millions | Pretax | Tax | After-tax |
| :--- | :--- | :--- | :--- |
| Net\tunrealized\tgains\t(losses)\ton\tnon- |  |  |  |
| OTTI\tsecurities |  |  |  |
| Balance\tat\tDecember\t31,\t2011 | $1,098 | $(402) | $696 |
| 2012\tactivity |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses) |  |  |  |
| on\tnon-OTTI\tsecurities | 931 | (341) | 590 |
| Less:\tNet\tgains\t(losses)\trealized\tas\ta |  |  |  |
| yield\tadjustment\treclassified\tto |  |  |  |
| investment\tsecurities\tinterest\tincome | 37 | (13) | 24 |
| Less:\tNet\tgains\t(losses)\trealized\ton\tsale |  |  |  |
| of\tsecurities\treclassified\tto |  |  |  |
| noninterest\tincome | 134 | (49) | 85 |
| Net\tunrealized\tgains\t(losses)\ton\tnon- |  |  |  |
| OTTI\tsecurities | 760 | (279) | 481 |
| Balance\tat\tDecember\t31,\t2012 | 1,858 | (681) | \t 1,177 |
| 2013\tactivity |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses) |  |  |  |
| on\tnon-OTTI\tsecurities | (1,122) | 411 | (711) |
| Less:\tNet\tgains\t(losses)\trealized\tas\ta |  |  |  |
| yield\tadjustment\treclassified\tto |  |  |  |
| investment\tsecurities\tinterest\tincome | 39 | (14) | 25 |
| Less:\tNet\tgains\t(losses)\trealized\ton\tsale |  |  |  |
| of\tsecurities\treclassified\tto |  |  |  |
| noninterest\tincome | 50 | (18) | 32 |
| Net\tunrealized\tgains\t(losses)\ton\tnon- |  |  |  |
| OTTI\tsecurities | (1,211) | 443 | (768) |
| Balance\tat\tDecember\t31,\t2013 | 647 | (238) | 409 |
| 2014\tactivity |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses) |  |  |  |
| on\tnon-OTTI\tsecurities | 410 | (150) | 260 |
| Less:\tNet\tgains\t(losses)\trealized\tas\ta |  |  |  |
| yield\tadjustment\treclassified\tto |  |  |  |
| investment\tsecurities\tinterest\tincome |  |  |  |
|  | 31 | (11) | 20 |
| Less:\tNet\tgains\t(losses)\trealized\ton\tsale |  |  |  |
| of\tsecurities\treclassified\tto |  |  |  |
| noninterest\tincome | 4 | (2) | 2 |
| Net\tunrealized\tgains\t(losses)\ton\tnon- |  |  |  |
| OTTI\tsecurities | 375 | (137) | 238 |
| Balance\tat\tDecember\t31,\t2014 | $1,022 | $(375) | $647 |

| In	millions | Pretax | Tax | After-tax |
| :--- | :--- | :--- | :--- |
| Net\tunrealized\tgains\t(losses)\ton\tOTTI |  |  |  |
| securities |  |  |  |
| Balance\tat\tDecember\t31,\t2011 | $(1,166) | $428 | $(738) |
| 2012\tactivity |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses) |  |  |  |
| on\tOTTI\tsecurities | 854 | (313) | 541 |
| Less:\tNet\tgains\t(losses)\trealized\ton |  |  |  |
| sales\tof\tsecurities\treclassified\tto |  |  |  |
| noninterest\tincome | (6) | 2 | (4) |
| Less:\tOTTI\tlosses\trealized\ton\tsecurities |  |  |  |
| reclassified\tto\tnoninterest\tincome | (111) | 41 | (70) |
| Net\tunrealized\tgains\t(losses)\ton\tOTTI |  |  |  |
| securities | 971 | (356) | 615 |
| Balance\tat\tDecember\t31,\t2012 | (195) | 72 | (123) |
| 2013\tactivity |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses) |  |  |  |
| on\tOTTI\tsecurities | 215 | (78) | 137 |
| Less:\tOTTI\tlosses\trealized\ton\tsecurities |  |  |  |
| reclassified\tto\tnoninterest\tincome | (16) | 6 | (10) |
| Net\tunrealized\tgains\t(losses)\ton\tOTTI |  |  |  |
| securities | 231 | (84) | 147 |
| Balance\tat\tDecember\t31,\t2013 | 36 | (12) | 24 |
| 2014\tactivity |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses) |  |  |  |
| on\tOTTI\tsecurities | 68 | (25) | 43 |
| Less:\tOTTI\tlosses\trealized\ton\tsecurities |  |  |  |
| reclassified\tto\tnoninterest\tincome | (11) | 4 | (7) |
| Net\tunrealized\tgains\t(losses)\ton\tOTTI |  |  |  |
| securities | 79 | (29) | 50 |
| Balance\tat\tDecember\t31,\t2014 | $115 | $(41) | $74 |
| Net\tunrealized\tgains\t(losses)\ton\tcash |  |  |  |
| flow\thedge\tderivatives |  |  |  |
| Balance\tat\tDecember\t31,\t2011 | $1,131 | $(414) | $717 |
| 2012\tactivity |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses) |  |  |  |
| on\tcash\tflow\thedge\tderivatives | 312 | (114) | 198 |
| Less:\tNet\tgains\t(losses)\trealized\tas\ta |  |  |  |
| yield\tadjustment\treclassified\tto\tloan |  |  |  |
| interest\tincome\t(a) | 388 | (142) | 246 |
| Less:\tNet\tgains\t(losses)\trealized\tas\ta |  |  |  |
| yield\tadjustment\treclassified\tto |  |  |  |
| investment\tsecurities\tinterest\tincome |  |  |  |
| (a) | 68 | (25) | 43 |
| Less:\tNet\tgains\t(losses)\trealized\ton |  |  |  |
| sales\tof\tsecurities\treclassified\tto |  |  |  |
| noninterest\tincome\t(a) | 76 | (28) | 48 |
| Net\tunrealized\tgains\t(losses)\ton\tcash |  |  |  |
| flow\thedge\tderivatives | (220) | 81 | (139) |
| Balance\tat\tDecember\t31,\t2012 | 911 | (333) | 578 |

The	accumulated	balances	related	to	each	component	of	other	comprehensive income	(loss)	are	as	follows:

# Table	141:	Accumulated	Other	Comprehensive	Income	(Loss)	Components

|  | 2014 |  | 2013 |  |
| :--- | :--- | :--- | :--- | :--- |
| At\tDecember\t31\t–\tIn\tmillions | Pretax | After-tax | Pretax | After-tax |
| Net\tunrealized\tgains\t(losses)\non\tnon-OTTI\tsecurities | $1,022 | $647 | $647 | $409 |
| Net\tunrealized\tgains\t(losses) |  |  |  |  |
| on\tOTTI\tsecurities | 115 | 74 | 36 | 24 |
| Net\tunrealized\tgains\t(losses) |  |  |  |  |
| on\tcash\tflow\thedge |  |  |  |  |
| derivatives | 552 | 350 | 384 | 243 |
| Pension\tand\tother |  |  |  |  |
| postretirement\tbenefit\tplan |  |  |  |  |
| adjustments | (820) | (520) | (374) | (237) |
| Other | (59) | (48) | (20) | (3) |
| Accumulated\tother |  |  |  |  |
| comprehensive\tincome |  |  |  |  |
| (loss) | $810 | $503 | $673 | $436 |

# NOTE	19	INCOME	TAXES

The	components	of	Income	tax	expense	are	as	follows:

# Table	142:	Components	of	Income	Tax	Expense

| In	millions | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Current |  |  |  |
| Federal\t(a) | $1,084 | $263 | $453 |
| State | 68 | 17 | 29 |
| Total\tcurrent | \t 1,152 | 280 | 482 |
| Deferred |  |  |  |
| Federal\t(a) | 220 | \t 1,119 | 515 |
| State | 35 | 77 | 48 |
| Total\tdeferred | 255 | \t 1,196 | 563 |
| Total | $1,407 | $1,476 | $1,045 |
| (a)\nAmounts\tfor\t2013\tand\t2012\thave\tbeen\tupdated\tto\treflect\tthe\tfirst\tquarter\t2014\tadoption\tof\tASU |  |  |  |

Significant	components	of	deferred	tax	assets	and	liabilities	are	as	follows:

# Table	143:	Deferred	Tax	Assets	and	Liabilities

| December	31	–	in	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets |  |  |
| Allowance\tfor\tloan\tand\tlease\tlosses | $1,250 | $1,343 |
| Compensation\tand\tbenefits | 822 | 581 |
| Loss\tand\tcredit\tcarryforward | 545 | 797 |
| Accrued\texpenses | 581 | 575 |
| Other\t(a) | 537 | 580 |
| Total\tgross\tdeferred\ttax\tassets | \t 3,735 | \t 3,876 |
| Valuation\tallowance | (65) | (61) |
| Total\tdeferred\ttax\tassets | \t 3,670 | \t 3,815 |
| Deferred\ttax\tliabilities |  |  |
| Leasing | \t 1,494 | \t 1,498 |
| Goodwill\tand\tintangibles | 328 | 342 |
| Basis\tdifference\tin\tloans | 44 | 48 |
| Fixed\tassets | 381 | 397 |
| Net\tunrealized\tgains\ton\tsecurities\tand\tfinancial |  |  |
| instruments | 619 | 391 |
| BlackRock\tbasis\tdifference | \t 2,166 | \t 2,031 |
| Other | 575 | 730 |
| Total\tdeferred\ttax\tliabilities | \t 5,607 | \t 5,437 |
| Net\tdeferred\ttax\tliability | $1,937 | $1,622 |
| (a)\nAmounts\tfor\t2013\thave\tbeen\tupdated\tto\treflect\tthe\tfirst\tquarter\t2014\tadoption\tof\tASU\t2014-01 |  |  |

(a) Amounts	for	2013	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01 related	to	investments	in	low	income	housing	tax	credits.

A	reconciliation	between	the	statutory	and	effective	tax	rates	follows:

# Table	144:	Reconciliation	of	Statutory	and	Effective	Tax	Rates

| Year	ended	December	31 | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Statutory\ttax\trate | \t35.0% | \t35.0% | \t35.0% |
| Increases\t(decreases)\tresulting\tfrom |  |  |  |
| State\ttaxes\tnet\tof\tfederal\tbenefit | 1.2 | 1.1 | 1.3 |
| Tax-exempt\tinterest\t(a) | \t(2.2) | \t(1.9) | \t(2.3) |
| Life\tinsurance | \t(1.7) | \t(1.7) | \t(2.3) |
| Dividend\treceived\tdeduction\t(a) | \t(1.5) | \t(1.2) | \t(1.6) |
| Tax\tcredits\t(a) | \t(4.4) | \t(3.7) | \t(4.6) |
| Other\t(a) | \t(1.3) | \t(1.7) | .4 |
| Effective\ttax\trate | \t25.1% | \t25.9% | \t25.9% |
| (a)\nAmounts\tfor\t2013\tand\t2012\thave\tbeen\tupdated\tto\treflect\tthe\tfirst\tquarter\t2014\tadoption\tof\tASU |  |  |  |

The	net	operating	loss	carryforwards	at	December	31,	2014	and	2013	follow:

# Table	145:	Net	Operating	Loss	Carryforwards	and	Tax	Credit	Carryforwards

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Net\tOperating\tLoss\tCarryforwards: |  |  |
| Federal | $997 | $1,116 |
| State | 2,594 | 2,958 |
| Tax\tCredit\tCarryforwards: |  |  |
| Federal | $35 | $221 |
| State | 7 | 7 |

The	federal	net	operating	loss	carryforwards	expire	in	2032.	The	state	net operating	loss	carryforwards	will	expire	from	2015	to	2031.	The	majority	of	the tax	credit	carryforwards	expire	in	2032.

The	federal	net	operating	loss	carryforwards	and	tax	credit	carryforwards	above are	substantially	from	the	2012	acquisition	of	RBC	Bank	(USA)	and	are	subject to	a	federal	annual	Section	382	limitation	under	the	Internal	Revenue	Code	of 1986;	and	acquired	state	operating	loss	carryforwards	are	subject	to	similar limitations	that	exist	for	state	tax	purposes.	The	majority	of	the	decrease	to	state net	operating	loss	carryforwards	is	attributable	to	the	estimated	utilization	on 2014	tax	return	filings.	It	is	anticipated	that	the	company	will	be	able	to	fully utilize	its	carryforwards	for	federal	tax	purposes,	but	a	valuation	allowance	of $65	million	has	been	recorded	against	certain	state	tax	carryforwards	as	of December	31,	2014.	See	Note	2	Acquisition	and	Divestiture	Activity	in	our 2013	Form	10-K	for	additional	discussion	of	our	2012	acquisition	of	RBC	Bank (USA).

As	of	December	31,	2014,	PNC	had	approximately	$77	million	of	earnings attributed	to	foreign	subsidiaries	that	have	been	indefinitely	reinvested	for	which no	incremental	U.S.	income	tax	provision	has	been	recorded.	If	a	U.S.	deferred tax	liability	were	to	be	recorded,	the	estimated	tax	liability	on	those undistributed	earnings	would	be	approximately	$24	million.

Retained	earnings	at	both	December	31,	2014	and	December	31,	2013	included $117	million	in	allocations	for	bad	debt	deductions	of	former	thrift	subsidiaries for	which	no	income	tax	has	been	provided.	Under	current	law,	if	certain subsidiaries	use	these	bad	debt	reserves	for	purposes	other	than	to	absorb	bad debt	losses,	they	will	be	subject	to	Federal	income	tax	at	the	current	corporate tax	rate.

PNC	had	unrecognized	tax	benefits	of	$77	million	at	December	31,	2014	and $110	million	at	December	31,	2013.	At	December	31,	2014,	$64	million	of unrecognized	tax	benefits,	if	recognized,	would	favorably	impact	the	effective income	tax	rate.

A	reconciliation	of	the	beginning	and	ending	balance	of	unrecognized	tax benefits	is	as	follows:

# Table	146:	Change	in	Unrecognized	Tax	Benefits

| In	millions | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Balance\tof\tgross\tunrecognized\ttax\tbenefits\tat |  |  |  |
| January\t1 | $110 | $176 | $209 |
| Increases: |  |  |  |
| Positions\ttaken\tduring\ta\tprior\tperiod |  | 11 | 23 |
| Positions\ttaken\tduring\tthe\tcurrent\tperiod |  |  | 1 |
| Decreases: |  |  |  |
| Positions\ttaken\tduring\ta\tprior\tperiod | (27) | (22) | (51) |
| Settlements\twith\ttaxing\tauthorities | (1) | (48) | (1) |
| Reductions\tresulting\tfrom\tlapse\tof\tstatute\tof |  |  |  |
| limitations | (5) | (7) | (5) |
| Balance\tof\tgross\tunrecognized\ttax\tbenefits\tat |  |  |  |
| December\t31 | $77 | $110 | $176 |

It	is	reasonably	possible	that	the	balance	of	unrecognized	tax	benefits	could increase	or	decrease	in	the	next	twelve	months	due	to	completion	of	tax authorities'	exams	or	the	expiration	of	statutes	of	limitations.	Management estimates	that	the	balance	of	unrecognized	tax	benefits	could	decrease	by	$54 million	within	the	next	twelve	months.

Examinations	are	substantially	completed	for	PNC's	consolidated	federal	income tax	returns	for	2007	through	2010	and	are	effectively	settled.	The	Internal Revenue	Service	(IRS)	is	currently	examining	PNC's	2011	through	2013	returns. National	City's	consolidated	federal	income	tax	returns	through	2008	have	been audited	by	the	IRS.	Certain	adjustments	remain	under	review	by	the	IRS	Appeals Division	for	years	2004	through	2008.

PNC	files	tax	returns	in	most	states	and	some	non-U.S.	jurisdictions	each	year and	is	under	continuous	examination	by	various	state	taxing	authorities.	With few	exceptions,	we	are	no	longer	subject	to	state	and	local	and	non-U.S.	income tax	examinations	by	taxing	authorities	for	periods	before	2009.	For	all	open audits,	any	potential	adjustments	have	been	considered	in	establishing	our unrecognized	tax	benefits	as	of	December	31,	2014.

Our	policy	is	to	classify	interest	and	penalties	associated	with	income	taxes	as income	tax	expense.	For	2014,	we	had	a	benefit	of	$5	million	of	gross	interest and	penalties,	decreasing	income	tax	expense.	The	total	accrued	interest	and penalties	at	December	31,	2014	and	December	31,	2013	was	$41	million	and $45	million,	respectively.

ASU	2014-01	was	adopted	effective	January	1,	2014.	Under	this	standard, amortization	of	investments	in	qualified	low	income	housing	tax	credits	is reported	within	income	tax	expense.	Certain	amounts	for	2013	and	2012	periods including	income	tax	provision	have	been	updated	to	reflect	the	adoption.

# NOTE	20	REGULATORY	MATTERS

We	are	subject	to	the	regulations	of	certain	federal,	state,	and	foreign	agencies and	undergo	periodic	examinations	by	such	regulatory	authorities.

The	ability	to	undertake	new	business	initiatives	(including	acquisitions),	the access	to	and	cost	of	funding	for	new	business	initiatives,	the	ability	to	pay dividends,	the	ability	to	repurchase	shares	or	other	capital	instruments,	the	level of	deposit	insurance	costs,	and	the	level	and	nature	of	regulatory	oversight depend,	in	large	part,	on	a	financial	institution's	capital	strength.

At	December	31,	2014,	PNC	and	PNC	Bank,	our	domestic	banking	subsidiary, were	both	considered	"well	capitalized,"	based	on	applicable	U.S.	regulatory capital	ratio	requirements.	To	qualify	as	"well	capitalized,"	PNC	and	PNC	Bank were	required	during	2014	to	maintain	Transitional	Basel	III	capital	ratios	of	at least	6%	for	Tier	1	risk-based	and	10%	for	Total	risk-based,	and	PNC	Bank	was required	to	have	a	Transitional	Basel	III	leverage	ratio	of	at	least	5%.

The	minimum	U.S.	regulatory	capital	ratios	in	effect	during	2013	under	Basel	I, the	applicable	U.S.	regulatory	capital	ratio	requirements	during	2013,	were	4% for	Tier	1	risk-based,	8%	for	Total	risk-based	and	4%	for	Leverage.	To	qualify as	"well	capitalized"	under	Basel	I,	bank	holding	companies	and	banks	had	to maintain	capital	ratios	of	at	least	6%	for	Tier	1	risk-based,	10%	for	Total	risk- based	and	5%	for	Leverage.	At	December	31,	2013,	PNC	and	PNC	Bank	met the	"well	capitalized"	capital	ratio	requirements	based	on	U.S.	regulatory	capital ratio	requirements	under	Basel	I.

The	following	table	sets	forth	the	Transitional	Basel	III	regulatory	capital	ratios at	December	31,	2014,	and	the	Basel	I	regulatory	capital	ratios	at	December	31, 2013,	for	PNC	and	PNC	Bank.

# Table	147:	Basel	Regulatory	Capital

| December	31<br>Dollars	in	millions | 2014	(a) | 2013	(b)<br>(c) | 2014	(a) | 2013	(b)<br>(c) |
| :--- | :--- | :--- | :--- | :--- |
| Risk-based\tcapital |  |  |  |  |
| Tier\t1 |  |  |  |  |
| PNC | \t\t$35,687\t\t\t\t$33,612 | \t\t$35,687\t\t\t\t$33,612 | 12.6% | 12.4% |
| PNC\tBank | \t\t\t 29,328\t\t\t\t\t 28,731 | \t\t\t 29,328\t\t\t\t\t 28,731 | 10.7 | 11.0 |
| Total |  |  |  |  |
| PNC | \t\t\t 44,782\t\t\t\t\t 42,950 | \t\t\t 44,782\t\t\t\t\t 42,950 | 15.8 | 15.8 |
| PNC\tBank | \t\t\t 37,559\t\t\t\t\t 37,575 | \t\t\t 37,559\t\t\t\t\t 37,575 | 13.7 | 14.3 |
| Leverage |  |  |  |  |
| PNC | \t\t\t 35,687\t\t\t\t\t 33,612 | \t\t\t 35,687\t\t\t\t\t 33,612 | 10.8 | 11.1 |
| PNC\tBank | \t\t\t 29,328\t\t\t\t\t 28,731 | \t\t\t 29,328\t\t\t\t\t 28,731 | 9.2 | 9.8 |

(a) Calculated	using	the	Transitional	Basel	III	regulatory	capital	methodology	applicable	to	PNC	during 2014.

(b) Calculated	using	the	Basel	I	regulatory	capital	methodology	applicable	to	PNC	during	2013.

(c) Amounts	for	2013	period	have	not	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU 2014-01	related	to	investments	in	low	income	housing	tax	credits.

The	principal	source	of	parent	company	cash	flow	is	the	dividends	it	receives from	its	subsidiary	bank,	which	may	be	impacted	by	the	following:

•	Capital	needs,

•	Laws	and	regulations,

Also,	there	are	statutory	and	regulatory	limitations	on	the	ability	of	national banks	to	pay	dividends	or	make	other	capital	distributions.	The	amount	available for	dividend	payments	to	the	parent	company	by	PNC	Bank	without	prior regulatory	approval	was	approximately	$1.5	billion	at	December	31,	2014.

Under	federal	law,	a	bank	subsidiary	generally	may	not	extend	credit	to,	or engage	in	other	types	of	covered	transactions	(including	the	purchase	of	assets) with,	the	parent	company	or	its	non-bank	subsidiaries	on	terms	and	under circumstances	that	are	not	substantially	the	same	as	comparable	transactions with	nonaffiliates.	A	bank	subsidiary	may	not	extend	credit	to,	or	engage	in	a covered	transaction	with,	the	parent	company	or	a	non-bank	subsidiary	if	the aggregate	amount	of	the	bank's	extensions	of	credit	and	other	covered transactions	with	the	parent	company	or	non-bank	subsidiary	exceeds	10%	of	the capital	stock	and	surplus	of	such	bank	subsidiary	or	the	aggregate	amount	of	the bank's	extensions	of	credit	and	other	covered	transactions	with	the	parent company	and	all	non-bank	subsidiaries	exceeds	20%	of	the	capital	and	surplus	of such	bank	subsidiary.	Such	extensions	of	credit,	with	limited	exceptions,	must be	at	least	fully	collateralized	in	accordance	with	specified	collateralization thresholds,	with	the	thresholds	varying	based	on	the	type	of	assets	serving	as collateral.	In	certain	circumstances,	federal	regulatory	authorities	may	impose more	restrictive	limitations.

Federal	Reserve	Board	regulations	require	depository	institutions	to	maintain cash	reserves	with	a	Federal	Reserve	Bank	(FRB).	At	December	31,	2014,	the balance	outstanding	at	the	FRB	was	$31.4	billion.

# NOTE	21	LEGAL	PROCEEDINGS

We	establish	accruals	for	legal	proceedings,	including	litigation	and	regulatory and	governmental	investigations	and	inquiries,	when	information	related	to	the loss	contingencies	represented	by	those	matters	indicates	both	that	a	loss	is probable	and	that	the	amount	of	loss	can	be	reasonably	estimated.	Any	such accruals	are	adjusted	thereafter	as	appropriate	to	reflect	changed	circumstances. When	we	are	able	to	do	so,	we	also	determine	estimates	of	possible	losses	or ranges	of	possible	losses,	whether	in	excess	of	any	related	accrued	liability	or where	there	is	no	accrued	liability,	for	disclosed	legal	proceedings	("Disclosed Matters,"	which	are	those	matters	disclosed	in	this	Note	21).	For	Disclosed Matters	where	we	are	able	to	estimate	such	possible	losses	or	ranges	of	possible losses,	as	of	December	31,	2014,	we	estimate	that	it	is	reasonably	possible	that we	could	incur	losses	in	an	aggregate	amount	of	up	to	approximately	$650 million.	The	estimates	included	in	this	amount	are	based	on	our	analysis	of currently	available	information	and	are	subject	to	significant	judgment	and	a variety	of	assumptions	and	uncertainties.	As	new	information	is	obtained	we may	change	our	estimates.	Due	to	the	inherent	subjectivity	of	the	assessments and	unpredictability	of	outcomes	of	legal	proceedings,	any	amounts	accrued	or included	in	this	aggregate	amount	may	not	represent	the	ultimate	loss	to	us	from the	legal	proceedings	in	question.	Thus,	our	exposure	and	ultimate	losses	may	be higher,	and	possibly	significantly	so,	than	the	amounts	accrued	or	this	aggregate amount.

In	our	experience,	legal	proceedings	are	inherently	unpredictable.	One	or	more of	the	following	factors	frequently	contribute	to	this	inherent	unpredictability: the	proceeding	is	in	its	early	stages;	the	damages	sought	are	unspecified, unsupported	or	uncertain;	it	is	unclear	whether	a	case	brought	as	a	class	action will	be	allowed	to	proceed	on	that	basis	or,	if	permitted	to	proceed	as	a	class action,	how	the	class	will	be	defined;	the	other	party	is	seeking	relief	other	than or	in	addition	to	compensatory	damages	(including,	in	the	case	of	regulatory	and governmental	investigations	and	inquiries,	the	possibility	of	fines	and	penalties); the	matter	presents	meaningful	legal	uncertainties,	including	novel	issues	of	law; we	have	not	engaged	in	meaningful	settlement	discussions;	discovery	has	not started	or	is	not	complete;	there	are	significant	facts	in	dispute;	the	possible outcomes	may	not	be	amenable	to	the	use	of	statistical	or	quantitative	analytical tools;	predicting	possible	outcomes	depends	on	making	assumptions	about	future decisions	of	courts	or	regulatory	bodies	or	the	behavior	of	other	parties;	and there	are	a	large	number	of	parties	named	as	defendants	(including	where	it	is uncertain	how	damages	or	liability,	if	any,	will	be	shared	among	multiple defendants).	Generally,	the	less	progress	that	has	been	made	in	the	proceedings or	the	broader	the	range	of	potential	results,	the	harder	it	is	for	us	to	estimate losses	or	ranges	of	losses	that	it	is	reasonably	possible	we	could	incur.

As	a	result	of	these	types	of	factors,	we	are	unable,	at	this	time,	to	estimate	the losses	that	it	is	reasonably	possible	that	we	could	incur	or	ranges	of	such	losses with	respect	to	some	of	the	matters	disclosed,	and	the	aggregate	estimated amount	provided	above	does	not	include	an	estimate	for	every	Disclosed	Matter. Therefore,	as	the	estimated	aggregate	amount	disclosed	above	does	not	include all	of	the	Disclosed	Matters,	the	amount	disclosed	above	does	not	represent	our maximum	reasonably	possible	loss	exposure	for	all	of	the	Disclosed	Matters.	The estimated	aggregate	amount	also	does	not	reflect	any	of	our	exposure	to	matters not	so	disclosed,	as	discussed	below	under	"Other."

We	include	in	some	of	the	descriptions	of	individual	Disclosed	Matters	certain quantitative	information	related	to	the	plaintiff's	claim	against	us	as	alleged	in the	plaintiff's	pleadings	or	other	public	filings	or	otherwise	publicly	available information.	While	information	of	this	type	may	provide	insight	into	the potential	magnitude	of	a	matter,	it	does	not	necessarily	represent	our	estimate	of reasonably	possible	loss	or	our	judgment	as	to	any	currently	appropriate	accrual.

Some	of	our	exposure	in	Disclosed	Matters	may	be	offset	by	applicable insurance	coverage.	We	do	not	consider	the	possible	availability	of	insurance coverage	in	determining	the	amounts	of	any	accruals	(although	we	record	the amount	of	related	insurance	recoveries	that	are	deemed	probable	up	to	the amount	of	the	accrual)	or	in	determining	any	estimates	of	possible	losses	or ranges	of	possible	losses.

# Interchange	Litigation

Beginning	in	June	2005,	a	series	of	antitrust	lawsuits	were	filed	against	Visa ®, MasterCard ®,	and	several	major	financial	institutions,	including	cases	naming National	City	(since	merged	into	PNC)	and	its	subsidiary,	National	City	Bank	of Kentucky	(since	merged	into	National	City	Bank	which	in	turn	was	merged	into PNC	Bank,	N.A.).	The	cases	have	been	consolidated	for	pretrial	proceedings	in the	United	States	District	Court	for	the	Eastern	District	of	New	York	under	the caption	In	re	Payment	Card	Interchange	Fee	and	Merchant-Discount	Antitrust Litigation	(Master	File	No.	1:05-md-1720-JG-JO).	Those	cases	naming	National City	were	brought	as	class	actions	on	behalf	of	all	persons	or	business	entities who	have	accepted	Visa ®	or	Master	Card ®.	The	plaintiffs,	merchants	operating commercial	businesses	throughout	the	U.S.	and	trade	associations,	allege,	among other	things,	that	the	defendants	conspired	to	fix	the	prices	for	general	purpose card	network	services	and	otherwise	imposed	unreasonable	restraints	on	trade, resulting	in	the	payment	of	inflated	interchange	fees,	in	violation	of	the	antitrust laws.	In	January	2009,	the	plaintiffs	filed	amended	and	supplemental	complaints adding,	among	other	things,	allegations	that	the	restructuring	of	Visa	and MasterCard,	each	of	which	included	an	initial	public	offering,	violated	the antitrust	laws.	In	their	complaints,	the	plaintiffs	seek,	among	other	things, injunctive

relief,	unspecified	damages	(trebled	under	the	antitrust	laws)	and	attorneys'	fees.

In	July	2012,	the	parties	entered	into	a	memorandum	of	understanding	with	the class	plaintiffs	and	an	agreement	in	principle	with	certain	individual	plaintiffs with	respect	to	a	settlement	of	these	cases,	under	which	the	defendants	will collectively	pay	approximately	$6.6	billion	to	the	class	and	individual	settling plaintiffs	and	have	agreed	to	changes	in	the	terms	applicable	to	their	respective card	networks	(including	an	eight-month	reduction	in	default	credit	interchange rates).	The	parties	entered	into	a	definitive	agreement	with	respect	to	this settlement	in	October	2012.	The	court	granted	final	approval	of	the	settlement	in December	2013.	Several	objectors	have	appealed	the	order	of	approval	to	the United	States	Court	of	Appeals	for	the	Second	Circuit,	which	appeal	is	pending. As	a	result	of	the	previously	funded	litigation	escrow	(described	in	Note	22 Commitments	and	Guarantees),	which	will	cover	substantially	all	of	our	share	of the	Visa	portion	of	this	settlement,	we	anticipate	no	material	financial	impact from	the	monetary	amount	of	this	settlement.	Numerous	merchants,	including some	large	national	merchants,	have	objected	to	or	requested	exclusion	(opted out)	from	the	proposed	class	settlements,	and	some	of	those	opting	out	have lawsuits	pending	in	federal	and	state	courts	against	Visa,	MasterCard	and,	in some	instances,	one	or	more	of	the	other	issuing	banks	(including	PNC).

National	City	and	National	City	Bank	entered	into	judgment	and	loss	sharing agreements	with	Visa	and	certain	other	banks	with	respect	to	all	of	the	above referenced	litigation.	All	of	the	litigation	against	Visa	is	also	subject	to	the indemnification	obligations	described	in	Note	22	Commitments	and	Guarantees. PNC	Bank,	N.A.	is	not	named	a	defendant	in	any	of	the	Visa	or	MasterCard related	antitrust	litigation	nor	was	it	initially	a	party	to	the	judgment	or	loss sharing	agreements,	but	it	has	been	subject	to	these	indemnification	obligations and	became	responsible	for	National	City	Bank's	position	in	the	litigation	and responsibilities	under	the	agreements	upon	completion	of	the	merger	of	National City	Bank	into	PNC	Bank,	N.A.	In	March	2011,	we	entered	into	a	MasterCard Settlement	and	Judgment	Sharing	Agreement	with	MasterCard	and	other financial	institution	defendants	and	an	Omnibus	Agreement	Regarding Interchange	Litigation	Sharing	and	Settlement	Sharing	with	Visa,	MasterCard and	other	financial	institution	defendants.	If	there	is	a	resolution	of	all	claims against	all	defendants,	the	Omnibus	Agreement,	in	substance,	apportions	that resolution	into	a	Visa	portion	and	a	MasterCard	portion,	with	the	Visa	portion being	two-thirds	and	the	MasterCard	portion	being	one-third.	This apportionment	only	applies	in	the	case	of	either	a	global	settlement	involving	all defendants	or	an	adverse	judgment	against	the	defendants,	to	the	extent	that damages	either	are	related	to	the	merchants'	inter-network	conspiracy	claims	or are	otherwise	not	attributed	to	specific	MasterCard	or	Visa	conduct	or	damages. The	MasterCard	portion	(or	any	MasterCard-related	liability	not	subject	to	the Omnibus

Agreement)	will	then	be	apportioned	under	the	MasterCard	Settlement	and Judgment	Sharing	Agreement	among	MasterCard	and	PNC	and	the	other financial	institution	defendants	that	are	parties	to	this	agreement.	The responsibility	for	the	Visa	portion	(or	any	Visa-related	liability	not	subject	to	the Omnibus	Agreement)	will	be	apportioned	under	the	pre-existing	indemnification responsibilities	and	judgment	and	loss	sharing	agreements.

# CBNV	Mortgage	Litigation

Between	2001	and	2003,	on	behalf	of	either	individual	plaintiffs	or	proposed classes	of	plaintiffs,	several	separate	lawsuits	were	filed	in	state	and	federal courts	against	Community	Bank	of	Northern	Virginia	(CBNV),	a	PNC	Bank predecessor,	and	other	defendants	asserting	claims	arising	from	second	mortgage loans	made	to	the	plaintiffs.	The	state	lawsuits	were	removed	to	federal	court and,	with	the	lawsuits	that	had	been	filed	in	federal	court,	were	consolidated	for pre-trial	proceedings	in	a	multidistrict	litigation	(MDL)	proceeding	in	the	United States	District	Court	for	the	Western	District	of	Pennsylvania	under	the	caption In	re:	Community	Bank	of	Northern	Virginia	Lending	Practices	Litigation	(No. 03-0425	(W.D.	Pa.),	MDL	No.	1674).	In	January	2008,	the	Pennsylvania	district court	issued	an	order	sending	back	to	the	General	Court	of	Justice,	Superior Court	Division,	for	Wake	County,	North	Carolina	the	claims	of	two	proposed class	members.	These	claims	are	asserted	in	a	case	originally	filed	in	2001	and captioned	Bumpers,	et	al.	v.	Community	Bank	of	Northern	Virginia	(01-CVS- 011342).

MDL	Proceedings	in	Pennsylvania.	In	October	2011,	the	plaintiffs	filed	a	joint consolidated	amended	class	action	complaint	covering	all	of	the	class	action lawsuits	pending	in	this	proceeding.	The	amended	complaint	names	CBNV, another	bank,	and	purchasers	of	loans	originated	by	CBNV	and	the	other	bank (including	the	Residential	Funding	Company,	LLC	("RFC"))	as	defendants.	(In December	2013,	the	Chapter	11	bankruptcy	proceeding	involving	the	RFC	was completed	with	the	company	being	liquidated	and	claims	against	the	company being	resolved,	including,	through	a	settlement	between	the	plaintiffs	and	RFC approved	in	November	2013,	the	claims	in	these	lawsuits.)	The	principal allegations	in	the	amended	complaint	are	that	a	group	of	persons	and	entities collectively	characterized	as	the	"Shumway/Bapst	Organization"	referred prospective	second	residential	mortgage	loan	borrowers	to	CBNV	and	the	other bank,	that	CBNV	and	the	other	bank	charged	these	borrowers	improper	title	and loan	fees	at	loan	closings,	that	the	disclosures	provided	to	the	borrowers	at	loan closings	were	inaccurate,	and	that	CBNV	and	the	other	bank	paid	some	of	the loan	fees	to	the	Shumway/Bapst	Organization	as	purported	"kickbacks"	for	the referrals.	The	amended	complaint	asserts	claims	for	violations	of	the	Real	Estate Settlement	Procedures	Act	(RESPA),	the	Truth	in	Lending	Act	(TILA),	as amended	by	the	Home	Ownership	and	Equity	Protection	Act	(HOEPA),

and	the	Racketeer	Influenced	and	Corrupt	Organizations	Act	(RICO).

The	amended	complaint	seeks	to	certify	a	class	of	all	borrowers	who	obtained	a second	residential	non-purchase	money	mortgage	loan,	secured	by	their	principal dwelling,	from	either	CBNV	or	the	other	defendant	bank,	the	terms	of	which made	the	loan	subject	to	HOEPA.	The	plaintiffs	seek,	among	other	things, unspecified	damages	(including	treble	damages	under	RICO	and	RESPA), rescission	of	loans,	declaratory	and	injunctive	relief,	interest,	and	attorneys'	fees. In	November	2011,	the	defendants	filed	a	motion	to	dismiss	the	amended complaint.	In	June	2013,	the	court	granted	in	part	and	denied	in	part	the	motion, dismissing	the	claims	of	any	plaintiff	whose	loan	did	not	originate	or	was	not assigned	to	CBNV,	narrowing	the	scope	of	the	RESPA	claim,	and	dismissing several	of	the	named	plaintiffs	for	lack	of	standing.	The	court	also	dismissed	the claims	against	the	other	lender	defendant	on	jurisdictional	grounds.	The limitation	of	the	potential	class	to	CBNV	borrowers	reduces	its	size	to approximately	22,500	from	the	50,000	members	alleged	in	the	amended complaint.	Also	in	June	2013,	the	plaintiffs	filed	a	motion	for	class	certification, which	was	granted	in	July	2013.	In	August	2013,	we	filed	a	motion	seeking leave	to	appeal	the	granting	of	the	motion	for	class	certification.	The	court granted	the	motion	in	October	2013,	and	our	appeal	is	pending.

North	Carolina	Proceedings.	The	plaintiffs	in	Bumpers	make	similar	allegations to	those	included	in	the	amended	complaint	in	the	MDL	proceedings.	Following the	remand	to	North	Carolina	state	court,	the	plaintiffs	in	Bumpers	sought	to represent	a	class	of	North	Carolina	borrowers	in	state	court	proceedings	in	North Carolina.	The	plaintiffs	claim	that	this	class	consists	of	approximately	650 borrowers.	The	district	court	in	Pennsylvania	handling	the	MDL	proceedings enjoined	class	proceedings	in	Bumpers	in	March	2008.	In	April	2008,	the	North Carolina	Superior	Court	granted	the	Bumpers	plaintiffs'	motion	for	summary judgment	on	their	individual	claims	and	awarded	them	approximately	$11,000 each	plus	interest.	CBNV	appealed	the	grant	of	the	motion	for	summary judgment.	In	September	2011,	the	North	Carolina	Court	of	Appeals	affirmed	in part	and	reversed	in	part	the	granting	of	the	plaintiffs'	motion	for	summary judgment.	The	court	affirmed	the	judgment	on	the	plaintiffs'	claim	that	they	paid a	loan	discount	fee	but	were	not	provided	a	loan	discount.	It	reversed	the judgment	on	the	plaintiffs'	claim	that	they	were	overcharged	for	settlement services	and	remanded	that	claim	for	trial.	The	court	also	held	that,	in	light	of	the Pennsylvania	district	court's	injunction	against	class	proceedings	having	been vacated	in	September	2010,	the	trial	court	may	on	remand	consider	the	issue	of class	certification.	In	August	2012,	the	North	Carolina	Supreme	Court	granted our	petition	for	discretionary	review	of	the	decision	of	the	North	Carolina	Court of	Appeals.	The	appeal	was	argued	in	January	2013.	In	August	2013,	the	North Carolina	Supreme	Court	reversed	the	decision	of	the	Court	of	Appeals	and remanded	the	case	to	the	Superior	Court	for	further	proceedings.	In	September 2013,

after	the	other	plaintiff	voluntarily	dismissed	his	case,	the	remaining	plaintiff filed	a	motion	for	leave	to	amend	his	complaint	in	the	trial	court.	The	plaintiff's remaining	claims,	as	reflected	in	the	proposed	amended	complaint,	relate exclusively	to	the	loan	discount	fee.

# Overdraft	Litigation

Beginning	in	October	2009,	PNC	Bank,	National	City	Bank	and	RBC	Bank (USA)	have	been	named	in	lawsuits	brought	as	class	actions	relating	to	the manner	in	which	they	charged	overdraft	fees	on	ATM	and	debit	transactions	to customers	and	related	matters.	All	but	two	of	these	lawsuits,	both	pending against	RBC	Bank	(USA),	have	been	settled.	The	following	is	a	description	of the	remaining	pending	lawsuits.

The	pending	lawsuits	naming	RBC	Bank	(USA),	along	with	similar	lawsuits pending	against	numerous	other	banks,	have	been	consolidated	for	pre-trial proceedings	in	the	United	States	District	Court	for	the	Southern	District	of Florida	(the	"MDL	Court")	under	the	caption	In	re	Checking	Account	Overdraft Litigation	(MDL	No.	2036,	Case	No.	1:09-MD-02036-JLK	).	A	consolidated amended	complaint	was	filed	in	December	2010	that	consolidated	all	of	the claims	in	these	MDL	Court	cases.	The	first	case	against	RBC	Bank	(USA) pending	in	the	MDL	Court	(Dasher	v.	RBC	Bank	(10-cv-22190-JLK))	was	filed in	July	2010	in	the	United	States	District	Court	for	the	Southern	District	of Florida.	The	other	case	against	RBC	Bank	(USA)	(	Avery	v.	RBC	Bank	(Case No.	10-cv-329))	was	originally	filed	in	North	Carolina	state	court	in	July	2010 and	was	removed	to	the	United	States	District	Court	for	the	Eastern	District	of North	Carolina	before	being	transferred	to	the	MDL	Court.	An	amended complaint	was	filed	in	Avery	in	August	2010.

These	cases	seek	to	certify	multi-state	classes	of	customers	for	the	common	law claims	described	below	(covering	all	states	in	which	RBC	Bank	(USA)	had	retail branch	operations	during	the	class	periods),	and	subclasses	of	RBC	Bank	(USA) customers	with	accounts	in	North	Carolina	branches,	with	each	subclass	being asserted	for	purposes	of	claims	under	those	states'	consumer	protection	statutes. No	class	periods	are	stated	in	any	of	the	complaints,	other	than	for	the	applicable statutes	of	limitations,	which	vary	by	state	and	claim.

The	customer	agreements	with	the	plaintiffs	in	these	two	cases	contain arbitration	provisions.	RBC	Bank	(USA)'s	original	motion	in	Dasher	to	compel arbitration	under	these	provisions	was	denied	by	the	MDL	Court.	This	denial	was appealed	to	the	United	States	Court	of	Appeals	for	the	Eleventh	Circuit.	While this	appeal	was	pending,	the	United	States	Supreme	Court	issued	its	decision	in AT&T	Mobility	v.	Concepcion,	following	which	the	court	of	appeals	vacated	the MDL	Court's	denial	of	the	arbitration	motion	and	remanded	to	the	MDL	Court for	further	consideration	in	light	of	the	Concepcion	decision.	RBC	Bank	(USA)'s motion	to	compel	arbitration,	now	covering	both	Dasher	and	Avery,	was	denied

in	January	2013.	We	appealed	the	denial	of	the	motion	to	the	United	States	Court of	Appeals	for	the	Eleventh	Circuit,	which,	in	February	2014,	affirmed	the	order of	the	district	court	denying	arbitration.	We	filed	a	motion	asking	the	court	of appeals	to	reconsider	its	decision,	which	it	denied	in	March	2014.	In	April	2014, we	filed	a	motion	asking	the	court	of	appeals	to	stay	its	ruling	pending	the	filing of	a	petition	for	a	writ	of	certiorari	with	the	U.S.	Supreme	Court.	The	court	of appeals	granted	our	motion	later	in	April	2014	and	stayed	its	ruling	until	July 2014.	We	filed	a	petition	for	a	writ	of	certiorari	in	June	2014,	which	was	denied in	October	2014.	Accordingly,	the	stay	of	the	court	of	appeals'	ruling	is	no longer	in	effect.	In	December	2014,	we	filed	a	motion	to	dismiss	the	complaint.

The	complaints	in	each	of	these	lawsuits	allege	that	the	banks	engaged	in unlawful	practices	in	assessing	overdraft	fees	arising	from	electronic	point-of- sale	and	ATM	debits.	The	principal	practice	challenged	in	these	lawsuits	is	the banks'	purportedly	common	policy	of	posting	debit	transactions	on	a	daily	basis from	highest	amount	to	lowest	amount,	thereby	allegedly	inflating	the	number	of overdraft	fees	assessed.	Other	practices	challenged	include	the	failure	to	decline to	honor	debit	card	transactions	where	the	account	has	insufficient	funds	to	cover the	transactions.

The	plaintiffs	assert	claims	for	unconscionability;	unjust	enrichment;	and violation	of	the	consumer	protection	statute	of	North	Carolina.	In	the	Dasher complaint,	the	plaintiffs	also	assert	claims	for	a	breach	of	the	covenant	of	good faith	and	fair	dealing	and	for	conversion.	The	plaintiffs	seek,	among	other things,	restitution	of	overdraft	fees	paid,	unspecified	actual	and	punitive damages	(with	actual	damages,	in	some	cases,	trebled	under	state	law),	pre- judgment	interest,	attorneys'	fees,	and	declaratory	relief	finding	the	overdraft policies	to	be	unfair	and	unconscionable.

# Fulton	Financial

In	2009,	Fulton	Financial	Advisors,	N.A.	filed	lawsuits	against	PNC	Capital Markets,	LLC	and	NatCity	Investments,	Inc.	in	the	Court	of	Common	Pleas	of Lancaster	County,	Pennsylvania	arising	out	of	Fulton's	purchase	of	auction	rate certificates	(ARCs)	through	PNC	and	NatCity.	Each	of	the	lawsuits	alleges violations	of	the	Pennsylvania	Securities	Act,	negligent	misrepresentation, negligence,	breach	of	fiduciary	duty,	common	law	fraud,	and	aiding	and	abetting common	law	fraud	in	connection	with	the	purchase	of	the	ARCs	by	Fulton. Specifically,	Fulton	alleges	that,	as	a	result	of	the	decline	of	financial	markets	in 2007	and	2008,	the	market	for	ARCs	became	illiquid;	that	PNC	and	NatCity knew	or	should	have	known	of	the	increasing	threat	of	the	ARC	market becoming	illiquid;	and	that	PNC	and	NatCity	did	not	inform	Fulton	of	this increasing	threat,	but	allowed	Fulton	to	continue	to	purchase	ARCs,	to	Fulton's detriment.	In	its	complaints,	Fulton	alleges	that	it	then	held	ARCs	purchased through	PNC	for	a	price	of	more	than	$123	million	and	purchased	through

NatCity	for	a	price	of	more	than	$175	million.	In	each	complaint,	Fulton	seeks, among	other	things,	unspecified	actual	and	punitive	damages,	rescission, attorneys'	fees	and	interest.

In	the	case	against	PNC	(Fulton	Financial	Advisors,	N.A.	v.	PNC	Capital Markets,	LLC	(CI	09-10838)),	PNC	filed	preliminary	objections	to	Fulton's complaint,	which	were	denied.	NatCity	removed	the	case	against	it	to	the	United States	District	Court	for	the	Eastern	District	of	Pennsylvania	(	Fulton	Financial Advisors,	N.A.	v.	NatCity	Investments,	Inc.	(No.	5:09-cv-04855)),	and	in November	2009	filed	a	motion	to	dismiss	the	complaint.	In	October	2013,	the court	granted	the	motion	to	dismiss	with	respect	to	claims	under	the Pennsylvania	Securities	Act	and	for	negligent	misrepresentation,	common	law fraud,	and	aiding	and	abetting	common	law	fraud	and	denied	the	motion	with respect	to	claims	for	negligence	and	breach	of	fiduciary	duty.	Fulton	filed	an amended	complaint	in	December	2013,	reasserting	its	negligence	and	breach	of fiduciary	duty	claims	and	adding	a	new	claim	under	the	Pennsylvania	Securities Act.	Fulton	and	NatCity	filed	motions	for	summary	judgment	in	February	2015.

# Weavering	Macro	Fixed	Income	Fund

In	July	2009,	the	liquidators	of	the	Weavering	Macro	Fixed	Income	Fund Limited	("Weavering")	issued	a	Plenary	Summons	in	the	High	Court,	Dublin, Ireland,	in	connection	with	the	provision	of	administration	services	to	Weavering by	a	European	subsidiary	of	PNC	Global	Investment	Servicing	("PNC	GIS"), then	a	subsidiary	of	PNC.	The	Plenary	Summons	was	served	on	the	PNC	GIS subsidiary	("GIS	Europe")	on	or	about	June	30,	2010.

In	July	2010,	PNC	completed	the	sale	of	PNC	GIS	to	The	Bank	of	New	York Mellon	Corporation	("BNY	Mellon"),	pursuant	to	a	stock	purchase	agreement dated	February	1,	2010.	In	May	2011,	BNY	Mellon	provided	notice	to	PNC	of an	indemnification	claim	pursuant	to	the	stock	purchase	agreement	related	to	this litigation.	PNC's	responsibility	for	this	litigation	was	subject	to	the	terms	and limitations	included	in	the	indemnification	provisions	of	the	stock	purchase agreement.

In	November	2014,	the	parties	reached	a	settlement	of	this	litigation.	The settlement	is	conditioned	on	court	approval	in	the	Cayman	Islands,	where Weavering	was	organized.	The	Cayman	Islands	court	approved	the	settlement	in February	2015.	The	amount	of	the	settlement	is	not	material	to	PNC.

In	its	Notice	of	Intention	to	Proceed	and	Statement	of	Claim,	which	the liquidator	served	in	May	2011,	the	liquidator	alleged,	among	other	things,	that GIS	Europe	breached	its	contractual	duties	to	Weavering	as	well	as	an	alleged duty	of	care	to	Weavering,	and	investors	in	Weavering,	and	made	claims	of breach	of	the	administration	and	accounting	services	agreement,	negligence, gross	negligence,	breach	of	duty,

misrepresentation	and	negligent	misstatement.	The	statement	of	claim	further alleged	that	investors	in	Weavering	lost	approximately	€282,000,000	and	that,	in addition,	expended	approximately	€98,000,000	in	brokerage	and	exchange commissions,	interest,	and	fees	as	a	result	of	the	transactions	at	issue.	The statement	of	claim	sought,	among	other	things,	damages,	costs,	and	interest.	In January	2014,	in	response	to	a	motion	made	by	GIS	Europe,	the	court	entered	a consent	order	adjourning	the	motion	and	staying	the	plaintiff's	claims	until	the plaintiff	complies	in	full	with	its	discovery	obligations.	The	plaintiff	was required	to	complete	its	production	by	early	July	2014,	but,	in	that	month,	the court	extended	the	deadline	for	doing	so	until	December	2014.

# Captive	Mortgage	Reinsurance	Litigation

In	December	2011,	a	lawsuit	(White,	et	al.	v.	The	PNC	Financial	Services Group,	Inc.,	et	al.	(Civil	Action	No.	11-7928))	was	filed	against	PNC	(as successor	in	interest	to	National	City	Corporation	and	several	of	its	subsidiaries) and	several	mortgage	insurance	companies	in	the	United	States	District	Court	for the	Eastern	District	of	Pennsylvania.	This	lawsuit,	which	was	brought	as	a	class action,	alleges	that	National	City	structured	its	program	of	reinsurance	of	private mortgage	insurance	in	such	a	way	as	to	avoid	a	true	transfer	of	risk	from	the mortgage	insurers	to	National	City's	captive	reinsurer.	The	plaintiffs	allege	that the	payments	from	the	mortgage	insurers	to	the	captive	reinsurer	constitute kickbacks,	referral	payments,	or	unearned	fee	splits	prohibited	under	the	Real Estate	Settlement	Procedures	Act	(RESPA),	as	well	as	common	law	unjust enrichment.	The	plaintiffs	claim,	among	other	things,	that	from	the	beginning	of 2004	until	the	end	of	2010	National	City's	captive	reinsurer	collected	from	the mortgage	insurance	company	defendants	at	least	$219	million	as	its	share	of borrowers'	private	mortgage	insurance	premiums	and	that	its	share	of	paid claims	during	this	period	was	approximately	$12	million.	The	plaintiffs	seek	to certify	a	nationwide	class	of	all	persons	who	obtained	residential	mortgage	loans originated,	funded	or	originated	through	correspondent	lending	by	National	City or	any	of	its	subsidiaries	or	affiliates	between	January	1,	2004	and	the	present and,	in	connection	with	these	mortgage	loans,	purchased	private	mortgage insurance	and	whose	residential	mortgage	loans	were	included	within	National City's	captive	mortgage	reinsurance	arrangements.	Plaintiffs	seek,	among	other things,	statutory	damages	under	RESPA	(which	include	treble	damages), restitution	of	reinsurance	premiums	collected,	disgorgement	of	profits,	and attorneys'	fees.	In	August	2012,	the	district	court	directed	the	plaintiffs	to	file	an amended	complaint,	which	the	plaintiffs	filed	in	September	2012.	In	November 2012,	we	filed	a	motion	to	dismiss	the	amended	complaint.	The	court	dismissed, without	prejudice,	the	amended	complaint	in	June	2013	on	statute	of	limitations grounds.	A	second	amended	complaint,	in	response	to	the	court's	dismissal order,	was	filed	in	July	2013.	We	filed	a	motion	to	dismiss	the	second	amended complaint,	also	in	July	2013.	In	August	2014,	the	court	denied	the	motion	to dismiss.

We	then	filed	an	uncontested	motion	to	stay	all	proceedings	pending	the outcome	of	another	matter	currently	on	appeal	before	the	United	States	Court	of Appeals	for	the	Third	Circuit	that	involves	overlapping	issues.	In	September 2014,	the	district	court	granted	the	stay.	In	October	2014,	the	court	of	appeals decided	that	other	matter,	holding	that	the	RESPA	claims	in	that	case	were barred	by	the	statute	of	limitations.	We	then	filed	a	motion	for	reconsideration	of the	denial	of	our	motion	to	dismiss	in	light	of	the	court	of	appeals'	decision.	In January	2015,	the	district	court	denied	our	motion.

# Residential	Mortgage-Backed	Securities	Indemnification	Demands

We	have	received	indemnification	demands	from	several	entities	sponsoring residential	mortgage-backed	securities	and	their	affiliates	where	purchasers	of the	securities	have	brought	litigation	against	the	sponsors	and	other	parties involved	in	the	securitization	transactions.	National	City	Mortgage	had	sold whole	loans	to	the	sponsors	or	their	affiliates	that	were	allegedly	included	in certain	of	these	securitization	transactions.	According	to	the	indemnification demands,	the	plaintiffs'	claims	in	these	lawsuits	are	based	on	alleged misstatements	and	omissions	in	the	offering	documents	for	these	transactions. The	indemnification	demands	assert	that	agreements	governing	the	sale	of	these loans	or	the	securitization	transactions	to	which	National	City	Mortgage	was	a party	require	us	to	indemnify	the	sponsors	and	their	affiliates	for	losses	suffered in	connection	with	these	lawsuits.	The	parties	have	settled	several	of	these	cases. There	has	not	been	any	determination	that	the	parties	seeking	indemnification have	any	liability	to	the	plaintiffs	in	the	other	lawsuits	and	the	amount,	if	any	for which	we	are	responsible	in	the	settled	cases	has	not	been	determined.

# Lender	Placed	Insurance	Litigation

In	June	2013,	a	lawsuit	(Lauren	vs.	PNC	Bank,	N.A.,	et	al.(Case	No.	2:14-cv- 00230))	was	filed	in	the	United	States	District	Court	for	the	Western	District	of Pennsylvania,	subsequently	transferred	to	the	United	States	District	Court	for	the Southern	District	of	Ohio,	against	PNC	Bank	and	American	Security	Insurance Company	("ASIC"),	a	provider	of	property	and	casualty	insurance	to	PNC	for certain	residential	mortgages.	This	lawsuit,	which	was	brought	as	a	class	action, alleges,	with	respect	to	PNC	Bank,	that	it	breached	alleged	contractual (including	the	implied	covenant	of	good	faith	and	fair	dealing)	and	fiduciary duties	to	residential	mortgage	borrowers,	and,	as	to	Ohio	borrowers,	violated	the Ohio	Consumer	Sales	Practice	Act,	all	in	connection	with	the	administration	of PNC	Bank's	program	for	placement	of	insurance	for	borrowers	who	fail	to obtain	hazard	insurance	coverages	required	by	the	terms	of	their	mortgages.	The plaintiff	alleges,	among	other	things,	that	defendants	placed	insurance	in unnecessary	and	excessive	amounts	and	that	PNC	Bank	improperly	profited from	these	arrangements,	principally	as	a	result	of	the	payment	of

commissions	to	PNC	Bank	and	of	reinsurance	arrangements	between	PNC	and the	insurance	provider.	The	plaintiff	originally	sought	to	certify	a	nationwide class	and	an	Ohio	sub-class	of	all	persons	who,	during	applicable	periods,	have or	had	a	residential	mortgage	loan	or	line	of	credit	with	PNC	Bank,	and	had hazard	insurance	placed	upon	the	property	by	PNC	Bank.	The	plaintiff	seeks, among	other	things,	damages,	restitution	or	disgorgement	of	profits	improperly obtained,	injunctive	relief,	interest,	and	attorneys'	fees.	In	October	2013,	the court	ruled	on	our	motion	to	dismiss	the	complaint,	granting	our	motion	with respect	to	the	Ohio	Consumer	Sales	Practice	Act	claim	and	otherwise	denying the	motion.	We	filed	a	motion	seeking	reconsideration	of	the	denial	as	to	the fiduciary	duty	claim,	which	motion	was	denied	in	November	2013.	In	January 2014,	the	court	granted	ASIC's	motion	to	dismiss	the	nationwide	class	action allegations	with	respect	to	the	state	common	law	claim	of	unjust	enrichment pending	against	ASIC.	Later	in	January	2014,	PNC	Bank	filed	a	similar	motion to	dismiss	the	nationwide	class	action	allegations,	on	the	same	grounds	as asserted	in	ASIC's	motion	to	dismiss,	with	respect	to	the	state	common	law claims	of	breach	of	contract,	breach	of	the	implied	covenant	of	good	faith	and fair	dealing,	and	breach	of	fiduciary	duty	pending	against	PNC	Bank.	The plaintiff	thereafter	agreed	to	withdraw	those	allegations.	In	February	2014,	the court	entered	an	order	dismissing	the	plaintiff's	nationwide	class	action allegations	with	regard	to	all	remaining	claims	against	PNC,	thereby	leaving	an Ohio-only	class	sought	by	plaintiff	as	to	those	claims.	Also	in	February	2014,	the court	on	its	own	motion	transferred	the	matter	to	the	United	States	District	Court for	the	Southern	District	of	Ohio,	and	the	plaintiff	moved	to	amend	her complaint	to,	among	other	things,	assert	a	nationwide	RICO	claim	on	behalf	of the	class.	In	May	2014,	the	court	granted	the	plaintiff's	motion	to	amend	her complaint,	with	the	understanding	that	defendants	may	pursue	their	arguments against	the	viability	of	this	claim	by	way	of	a	motion	to	dismiss.	In	June	2014, the	defendants	moved	to	dismiss	the	amended	complaint.	The	motion	is	pending.

In	February	and	March	2014,	two	additional	class	action	lawsuits	were	filed. One	of	them	(Montoya,	et	al.	v.	PNC	Bank,	N.A.,	et	al.,	Case	No.	1:14-cv- 20474-JEM)	was	filed	in	the	United	States	District	Court	for	the	Southern District	of	Florida	against	PNC	Bank,	ASIC	and	its	parent,	Assurant,	Inc.	The other	case	(Tighe	v.	PNC	Bank,	N.A.,	et	al.,	Case	No.	14-CV-2017)	was	filed	in the	United	States	District	Court	for	the	Southern	District	of	New	York	against these	same	parties	as	well	as	Alpine	Indemnity	Limited,	a	reinsurance	subsidiary of	PNC.	The	allegations	of	these	complaints	are	similar	to	those	found	in	the Lauren	complaint.	In	May	2014,	the	Tighe	lawsuit	was	transferred	to	the	United States	District	Court	for	the	Southern	District	of	Ohio.	In	June	2014,	the	Tighe plaintiff	filed	a	notice	of	voluntary	dismissal	without	prejudice,	thereby terminating	that	action.

In	the	complaint,	the	plaintiffs	in	Montoya	assert	breach	of	contract	by	PNC, breach	of	its	duty	of	good	faith	and	fair	dealing,	unjust	enrichment,	breach	of	a fiduciary	duty,	and

violations	of	Florida	and	New	Jersey	statutes	pertaining	to	deceptive	and	unfair trade	practices.	These	plaintiffs	also	assert	claims	under	the	federal	TILA	and RICO	statutes.	The	plaintiffs	seek	a	nationwide	class	on	all	claims	except	the state	law	statutory	claims,	for	which	they	seek	to	certify	subclasses	of	Florida and	New	Jersey	residents,	respectively.	The	plaintiffs	seek,	among	other	things, damages	(including	treble	damages),	disgorgement	of	"unjust	benefits," injunctive	relief,	interest	and	attorneys'	fees.	PNC	filed	a	motion	to	dismiss	the complaint	in	Montoya	in	May	2014.	In	August	2014,	the	court	in	Montoya granted	in	part	and	denied	in	part	PNC's	motion	to	dismiss.	Specifically,	the court	dismissed	the	breach	of	contract,	Florida	deceptive	and	unfair	trade practices,	and	federal	TILA	and	RICO	claims,	although	it	allowed	the	RICO claims	to	be	re-pled.	The	remaining	claims	are	state	claims	for	breach	of	the covenant	of	good	faith,	unjust	enrichment,	the	New	Jersey	Consumer	Fraud	Act, and	breach	of	fiduciary	duty.	Thereafter,	in	September	2014,	on	plaintiffs' uncontested	motions,	the	Lauren	lawsuit	was	voluntarily	dismissed	and	a	third amended	complaint	in	Montoya	was	filed	adding	Lauren	as	a	plaintiff	there.	In October	2014,	PNC	moved	to	partially	dismiss	the	third	amended	complaint. The	motion	to	dismiss	seeks	dismissal	of	the	re-pleaded	RICO	claims	and plaintiff	Lauren's	state	law	claims	for	breach	of	the	covenant	of	good	faith	and fair	dealing	and	breach	of	fiduciary	duty.	At	the	same	time,	PNC	also	moved	to strike	nationwide	class	allegations	with	respect	to	the	state	law	claims.	Shortly thereafter,	the	plaintiffs	stipulated	to	this	relief,	as	a	result	of	which	the	plaintiffs' state	law	claims	are	now	being	brought	solely	as	statewide	class	action	claims	in the	three	states	in	which	the	plaintiffs	reside.	In	January	2015,	the	plaintiffs	filed a	motion	for	class	certification.

# Patent	Infringement	Litigation

In	June	2013,	a	lawsuit	(Intellectual	Ventures	I	LLC	and	Intellectual	Ventures	II LLC	vs.	PNC	Financial	Services	Group,	Inc.,	and	PNC	Bank,	NA,	Case No.	2:13-cv-00740-AJS)	was	filed	in	the	United	States	District	Court	for	the Western	District	of	Pennsylvania	against	PNC	and	PNC	Bank	for	patent infringement.	The	plaintiffs	allege	that	multiple	systems	by	which	PNC	and	PNC Bank	provide	online	banking	services	and	other	services	via	electronic	means infringe	five	patents	owned	by	the	plaintiffs.	The	plaintiffs	seek,	among	other things,	a	declaration	that	PNC	and	PNC	Bank	are	infringing	each	of	the	patents, damages	for	past	and	future	infringement,	and	attorneys'	fees.	In	July	2013,	we filed	an	answer	with	counterclaims,	denying	liability	and	seeking	declarations that	the	asserted	patents	are	invalid	and	that	PNC	has	not	infringed	them.	In November	2013,	PNC	filed	Covered	Business	Method/Post	Grant	Review petitions	in	the	U.S.	Patent	&	Trademark	Office	("PTO")	seeking	to	invalidate	all five	of	the	patents.	In	December	2013,	the	court	dismissed	the	plaintiffs'	claims as	to	two	of	the	patents	and	entered	a	stay	of	the	lawsuit	pending	the	PTO's consideration	of	PNC's	review	petitions,	including	any	appeals	from	decisions of	the	PTO.	The	PTO	instituted	review	proceedings

in	May	2014	on	four	of	the	five	patents	at	issue,	finding	that	the	subject	matter	of those	patents	was	"more	likely	than	not"	unpatentable.	The	court	previously dismissed	the	plaintiffs'	claims	with	respect	to	the	one	patent	not	selected	for review	by	the	PTO.

In	June	2014,	Intellectual	Ventures	filed	a	second	lawsuit	(Intellectual	Ventures I	LLC	and	Intellectual	Ventures	II	LLC	v.	PNC	Bank	Financial	Services	Group, Inc.,	PNC	Bank	NA,	and	PNC	Merchant	Services	Company,	LP,	Case	No.	2:14- cv-00832-AKS)	in	the	same	court	as	the	first	lawsuit.	This	lawsuit	alleges	that PNC	defendants	infringed	five	patents,	including	the	patent	dismissed	in	the	first lawsuit	that	is	not	subject	to	PTO	review,	and	relates	generally	to	the	same technology	and	subject	matter	as	the	first	lawsuit.	The	court	has	stayed	this	case pending	the	PTO's	consideration	of	various	review	petitions	of	the	patents	at issue	in	this	case,	as	well	as	the	review	of	the	patents	at	issue	in	the	first	lawsuit and	the	appeals	from	any	PTO	decisions.

# Mortgage	Repurchase	Litigation

In	December	2013,	Residential	Funding	Company,	LLC	("RFC")	filed	a	lawsuit in	the	United	States	District	Court	for	the	District	of	Minnesota	against	PNC Bank,	N.A.,	as	alleged	successor	in	interest	to	National	City	Mortgage	Co., NCMC	Newco,	Inc.,	and	North	Central	Financial	Corporation	(Residential Funding	Company,	LLC	v.	PNC	Bank,	N.A.,	et	al.	(Civil	No.	13-3498-	JRT- JSM)).	In	its	complaint,	RFC	alleges	that	PNC	Bank	(through	predecessors)	sold $6.5	billion	worth	of	residential	mortgage	loans	to	RFC	during	the	timeframe	at issue	(approximately	May	2006	through	September	2008),	a	portion	of	which were	allegedly	materially	defective,	resulting	in	damages	and	losses	to	RFC. RFC	alleges	that	PNC	Bank	breached	representations	and	warranties	made	under seller	contracts	in	connection	with	these	sales.	The	complaint	asserts	claims	for breach	of	contract	and	indemnification.	RFC	seeks,	among	other	things, monetary	damages,	costs,	and	attorney's	fees.	In	March	2014,	we	filed	a	motion to	dismiss	the	complaint.	RFC	then	filed	an	amended	complaint,	as	well	as	a motion	to	transfer	the	lawsuit	to	the	United	States	Bankruptcy	Court	for	the Southern	District	of	New	York.	In	April	2014,	we	moved	to	dismiss	the amended	complaint.	In	June	2014,	RFC	withdrew	its	motion	to	transfer	the lawsuit.	In	October	2014,	the	court	granted	our	motion	to	dismiss	with	prejudice the	breach	of	contract	claims	in	the	complaint	with	respect	to	loans	sold	before May	14,	2006	and	otherwise	denied	our	motion	to	dismiss.

# Pre-need	Funeral	Arrangements

National	City	Bank	and	PNC	Bank	are	defendants	in	a	lawsuit	pending	in	the United	States	District	Court	for	the	Eastern	District	of	Missouri	under	the	caption Jo	Ann	Howard,	P.C.,	et	al.	v.	Cassity,	et	al.	(No.	4:09-CV-1252-ERW)	arising out	of	trustee	services	provided	by	Allegiant	Bank,	a	National	City	Bank	and PNC	Bank	predecessor,	with	respect	to	Missouri	trusts	that	held	pre-need	funeral contract	assets.	Under	a	pre-

need	funeral	contract,	a	customer	pays	an	amount	up	front	in	exchange	for payment	of	funeral	expenses	following	the	customer's	death.	In	a	number	of states,	including	Missouri,	pre-need	funeral	contract	sellers	are	required	to deposit	a	portion	of	the	proceeds	of	the	sale	of	pre-need	funeral	contracts	in	a trust	account.

The	lawsuit	was	filed	in	August	2009	by	the	Special	Deputy	Receiver	for	three insolvent	affiliated	companies,	National	Prearranged	Services,	Inc.	a	seller	of pre-need	funeral	contracts	(NPS),	Lincoln	Memorial	Life	Insurance	Company (Lincoln),	and	Memorial	Service	Life	Insurance	Company	(Memorial).	Seven individual	state	life	and	health	insurance	guaranty	associations,	who	claim	they are	liable	under	state	law	for	payment	of	certain	benefits	under	life	insurance policies	sold	by	Lincoln	and	Memorial,	and	the	National	Organization	of	Life	& Health	Guaranty	Associations	have	also	joined	the	action	as	plaintiffs.	In addition	to	National	City	Bank	and	PNC	Bank	(added	following	filing	of	the lawsuit	as	successor-in-interest	to	National	City	Bank),	other	defendants included	members	of	the	Cassity	family,	who	controlled	NPS,	Lincoln,	and Memorial;	officers	and	directors	of	NPS,	Lincoln,	and	Memorial;	auditors	and attorneys	for	NPS,	Lincoln,	and	Memorial;	the	trustees	of	each	of	the	trusts	that held	pre-need	funeral	contract	assets;	and	the	investment	advisor	to	the	Pre-need Trusts.	NPS	retained	several	banks	to	act	as	trustees	for	the	trusts	holding	NPS pre-need	funeral	contract	assets	(the	"NPS	Trusts"),	with	Allegiant	Bank	acting as	one	of	these	trustees	with	respect	to	seven	Missouri	NPS	Trusts.	All	of	the other	defendants	have	settled	with	the	plaintiffs,	are	otherwise	no	longer	a	party to	the	lawsuit,	or	are	insolvent.

In	their	Third	Amended	Complaint,	filed	in	2012	following	the	granting	by	the court	in	part	of	motions	to	dismiss	made	by	National	City	Bank	and	the	other NPS	Trust	trustees,	the	plaintiffs	allege	that	Allegiant	Bank	breached	its fiduciary	duties	and	acted	negligently	as	the	trustee	for	the	Missouri	NPS	Trusts. In	part	as	a	result	of	these	breaches,	the	plaintiffs	allege,	members	of	the	Cassity family,	acting	in	concert	with	other	defendants,	were	able	to	improperly	remove millions	of	dollars	from	the	NPS	Trusts,	which	in	turn	caused	NPS,	Lincoln,	and Memorial	to	become	insolvent.	The	complaint	alleges	$600	million	in	present and	future	losses	to	the	plaintiffs	due	to	the	insolvency	of	NPS,	Lincoln,	and Memorial.	The	lawsuit	seeks,	among	other	things,	unspecified	actual	and punitive	damages,	various	equitable	remedies	including	restitution,	attorneys' fees,	costs	of	suit	and	interest.

In	July	2013,	five	of	the	six	defendants	in	a	parallel	federal	criminal	action, including	two	members	of	the	Cassity	family,	entered	into	plea	agreements	with the	United	States	to	resolve	criminal	charges	arising	out	of	their	conduct	at	NPS, Lincoln	and	Memorial.	In	August	2013,	after	a	jury	trial,	the	sixth	defendant,	the investment	advisor	to	the	NPS	Trusts,	was	convicted	on	all	criminal	counts against	him.	The	criminal	charges	against	the	defendants	alleged,	among	other thing,	a

scheme	to	defraud	Allegiant	Bank	and	the	other	trustees	of	the	NPS	Trusts.

In	May	2014,	the	court	granted	the	plaintiffs'	motion	to	disallow	National	City Bank's	affirmative	defense	relating	to	the	plaintiffs'	alleged	failure	to	mitigate damages.	In	July	2014,	National	City	Bank's	motion	for	reconsideration	was denied.	In	September	2014,	the	plaintiffs	filed	a	motion	seeking	leave	to	amend their	complaint	to	reassert	aiding	and	abetting	claims,	previously	dismissed	by the	court	in	2012.	The	court	denied	this	motion	in	December	2014.	Also	in December	2014,	the	court	granted	in	part	and	denied	in	part	National	City Bank's	motion	for	summary	judgment.

A	jury	trial	in	this	case	began	in	February	2015.

# Other	Regulatory	and	Governmental	Inquiries

PNC	is	the	subject	of	investigations,	audits	and	other	forms	of	regulatory	and governmental	inquiry	covering	a	broad	range	of	issues	in	our	banking,	securities and	other	financial	services	businesses,	in	some	cases	as	part	of	reviews	of specified	activities	at	multiple	industry	participants.	Over	the	last	few	years,	we have	experienced	an	increase	in	regulatory	and	governmental	investigations, audits	and	other	inquiries.	Areas	of	current	regulatory	or	governmental	inquiry with	respect	to	PNC	include	consumer	protection,	fair	lending,	mortgage origination	and	servicing,	mortgage	and	non	mortgage-related	insurance	and reinsurance,	municipal	finance	activities,	conduct	by	broker-dealers,	automobile lending	practices,	and	participation	in	government	insurance	or	guarantee programs,	some	of	which	are	described	below.	These	inquiries,	including	those described	below,	may	lead	to	administrative,	civil	or	criminal	proceedings,	and possibly	result	in	remedies	including	fines,	penalties,	restitution,	or	alterations	in our	business	practices,	and	in	additional	expenses	and	collateral	costs. •	One	area	of	significant	regulatory	and	governmental	focus	has	been mortgage	lending	and	servicing.	Numerous	federal	and	state governmental,	legislative	and	regulatory	authorities	are	investigating practices	in	this	area.	PNC	has	received	inquiries	from,	or	is	the subject	of	investigations	by,	a	broad	range	of	governmental,	legislative and	regulatory	authorities	relating	to	our	activities	in	this	area	and	is cooperating	with	these	investigations	and	inquiries.	As	a	result	of	the number	and	range	of	authorities	conducting	the	investigations	and inquiries,	as	well	as	the	nature	of	these	types	of	investigations	and inquiries,	among	other	factors,	PNC	cannot	at	this	time	predict	the ultimate	overall	cost	to	or	effect	on	PNC	from	potential	governmental, legislative	or	regulatory	actions	arising	out	of	these	investigations	and inquiries.

•	In	April	2011,	as	a	result	of	a	publicly-disclosed	interagency horizontal	review	of	residential	mortgage	servicing	operations	at fourteen	federally	regulated	mortgage	servicers,	PNC	entered	into a	consent	order	with	the	Board	of

Governors	of	the	Federal	Reserve	System	and	PNC	Bank	entered into	a	consent	order	with	the	Office	of	the	Comptroller	of	the Currency.	Collectively,	these	consent	orders	describe	certain foreclosure-related	practices	and	controls	that	the	regulators	found to	be	deficient	and	require	PNC	and	PNC	Bank	to,	among	other things,	develop	and	implement	plans	and	programs	to	enhance PNC's	residential	mortgage	servicing	and	foreclosure	processes, retain	an	independent	consultant	to	review	certain	residential mortgage	foreclosure	actions,	take	certain	remedial	actions,	and oversee	compliance	with	the	orders	and	the	new	plans	and programs.	The	two	orders	do	not	foreclose	the	potential	for	civil money	penalties	from	either	of	these	regulators,	although	the range	of	potential	penalties	communicated	to	PNC	by	the regulators	in	connection	with	the	agreements	described	below	is not	material	to	PNC.

In	connection	with	these	orders,	PNC	established	a	Compliance Committee	of	the	Boards	of	PNC	and	PNC	Bank	to	monitor	and coordinate	PNC's	and	PNC	Bank's	implementation	of	the commitments	under	the	orders.	PNC	and	PNC	Bank	are	executing Action	Plans	designed	to	meet	the	requirements	of	the	orders. Consistent	with	the	orders,	PNC	also	engaged	an	independent consultant	to	conduct	a	review	of	certain	residential	foreclosure actions,	including	those	identified	through	borrower	complaints, and	identify	whether	any	remedial	actions	for	borrowers	are necessary.

In	early	2013,	PNC	and	PNC	Bank,	along	with	twelve	other residential	mortgage	servicers,	reached	agreements	with	the	OCC and	the	Federal	Reserve	to	amend	these	consent	orders.	Pursuant to	the	amended	consent	orders,	in	order	to	accelerate	the remediation	process,	PNC	agreed	to	make	a	payment	of approximately	$70	million	for	distribution	to	potentially	affected borrowers	in	the	review	population	and	to	provide	approximately $111	million	in	additional	loss	mitigation	or	other	foreclosure prevention	relief,	which	may	be	satisfied	pursuant	to	the	amended consent	orders	by	a	variety	of	borrower	relief	actions	or	by additional	cash	payments	or	resource	commitments	to	borrower counseling	or	education.	Fulfillment	of	these	commitments	will satisfy	all	of	PNC's	and	PNC	Bank's	obligations	under	the	consent orders	in	connection	with	the	independent	foreclosure	review.	We do	not	expect	any	additional	financial	charges	related	to	the amendment	to	the	consent	orders	to	be	material.	PNC's	and	PNC Bank's	obligations	to	comply	with	the	remaining	provisions	of	the consent	orders	remain.

•	In	February	2012,	the	Department	of	Justice,	other	federal regulators	and	49	state	attorneys	general	announced	agreements with	the	five	largest	mortgage	servicers.	Written	agreements	were filed	with	the	U.S.	District	Court	for	the	Southern	District	of	New York	in	March	2012.	Under	these	agreements,	the	mortgage servicers	will	make	cash	payments	to	federal	and	state governments,	provide	various	forms	of	financial	relief	to borrowers,	and	implement	new	mortgage	servicing	standards. These	governmental	authorities	are	continuing	their	review	of,	and have	engaged	in	discussions	with,	other	mortgage	servicers, including	PNC,	that	were	subject	to	the	interagency	horizontal review,	which	could	result	in	the	imposition	of	substantial payments	and	other	forms	of	relief	(similar	to	that	agreed	to	by	the five	largest	servicers)	on	some	or	all	of	these	mortgage	servicers, including	PNC.	Whether	and	to	what	extent	any	such	relief	may be	imposed	on	PNC	is	not	yet	known.

•	PNC	has	received	subpoenas	from	the	U.S.	Attorney's	Office	for the	Southern	District	of	New	York.	The	first	two	subpoenas, served	in	2011,	concern	National	City	Bank's	lending	practices	in connection	with	loans	insured	by	the	Federal	Housing Administration	(FHA)	as	well	as	certain	non-FHA-insured	loan origination,	sale	and	securitization	practices,	and	a	third,	served	in 2013,	seeks	information	regarding	claims	for	costs	that	are incurred	by	foreclosure	counsel	in	connection	with	the	foreclosure of	loans	insured	or	guaranteed	by	FHA,	FNMA,	or	FHLMC.	PNC is	cooperating	with	the	investigations.

•	The	Department	of	Justice,	Consumer	Protection	Bureau,	served	a subpoena	on	PNC	in	2013	seeking	information	concerning	the	return rate	for	certain	merchant	and	payment	processor	customers	with	whom PNC	has	a	depository	relationship.	We	believe	that	the	subpoena	is intended	to	determine	whether,	and	to	what	extent,	PNC	may	have facilitated	fraud	committed	by	third-parties	against	consumers.	We	are cooperating	with	the	subpoena.

•	Through	the	U.S.	Attorney's	Office	for	the	District	of	Maryland,	the office	of	the	Inspector	General	for	the	Small	Business	Administration ("SBA")	served	a	subpoena	on	PNC	in	2012	requesting	documents concerning	PNC's	relationship	with,	including	SBA-guaranteed	loans made	through,	a	broker	named	Jade	Capital	Investments,	LLC ("Jade"),	as	well	as	information	regarding	other	PNC-originated	SBA guaranteed	loans	made	to	businesses	located	in	the	State	of	Maryland, the	Commonwealth	of	Virginia,

and	Washington,	DC.	Certain	of	the	Jade	loans	have	been	identified	in an	indictment	and	subsequent	superseding	indictment	charging	persons associated	with	Jade	with	conspiracy	to	commit	bank	fraud, substantive	violations	of	the	federal	bank	fraud	statute,	and	money laundering.	PNC	is	cooperating	with	the	U.S.	Attorney's	Office	for	the District	of	Maryland.

Our	practice	is	to	cooperate	fully	with	regulatory	and	governmental investigations,	audits	and	other	inquiries,	including	those	described	in	this	Note 21.

# Other

In	addition	to	the	proceedings	or	other	matters	described	above,	PNC	and persons	to	whom	we	may	have	indemnification	obligations,	in	the	normal	course of	business,	are	subject	to	various	other	pending	and	threatened	legal proceedings	in	which	claims	for	monetary	damages	and	other	relief	are	asserted. We	do	not	anticipate,	at	the	present	time,	that	the	ultimate	aggregate	liability,	if any,	arising	out	of	such	other	legal	proceedings	will	have	a	material	adverse effect	on	our	financial	position.	However,	we	cannot	now	determine	whether	or not	any	claims	asserted	against	us	or	others	to	whom	we	may	have indemnification	obligations,	whether	in	the	proceedings	or	other	matters described	above	or	otherwise,	will	have	a	material	adverse	effect	on	our	results of	operations	in	any	future	reporting	period,	which	will	depend	on,	among	other things,	the	amount	of	the	loss	resulting	from	the	claim	and	the	amount	of	income otherwise	reported	for	the	reporting	period.

See	Note	22	Commitments	and	Guarantees	for	additional	information	regarding the	Visa	indemnification	and	our	other	obligations	to	provide	indemnification, including	to	current	and	former	officers,	directors,	employees	and	agents	of	PNC and	companies	we	have	acquired.

# NOTE	22	COMMITMENTS	AND	GUARANTEES

# Credit	Extension	Commitments

# Table	148:	Credit	Commitments

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Net\tunfunded\tloan\tcommitments |  |  |
| Total\tcommercial\tlending | \t $99,837\t\t\t$ | 90,104 |
| Home\tequity\tlines\tof\tcredit | 17,839 | 18,754 |
| Credit\tcard | 17,833 | 16,746 |
| Other | 4,178 | 4,266 |
| Total\tnet\tunfunded\tloan\tcommitments | 139,687 | 129,870 |
| Net\toutstanding\tstandby\tletters\tof\tcredit\t(a) | 9,991 | 10,521 |
| Total\tcredit\tcommitments | \t $149,678\t\t\t$ | 140,391 |
| (a) |  |  |

(a) Net	outstanding	standby	letters	of	credit	include	$5.2	billion	and	$6.6	billion	which	support remarketing	programs	at	December	31,	2014	and	December	31,	2013,	respectively.

# Net	Unfunded	Loan	Commitments

Commitments	to	extend	credit	represent	arrangements	to	lend	funds	or	provide liquidity	subject	to	specified	contractual	conditions.	These	commitments generally	have	fixed	expiration	dates,	may	require	payment	of	a	fee,	and	contain termination	clauses	in	the	event	the	customer's	credit	quality	deteriorates.	Based on	our	historical	experience,	some	commitments	expire	unfunded,	and	therefore cash	requirements	are	substantially	less	than	the	total	commitment.

# Net	Outstanding	Standby	Letters	of	Credit

We	issue	standby	letters	of	credit	and	have	risk	participations	in	standby	letters of	credit	issued	by	other	financial	institutions,	in	each	case	to	support	obligations of	our	customers	to	third	parties,	such	as	insurance	requirements	and	the facilitation	of	transactions	involving	capital	markets	product	execution.	Internal credit	ratings	related	to	our	net	outstanding	standby	letters	of	credit	were	as follows:

# Table	149:	Internal	Credit	Ratings	Related	to	Net	Outstanding	Standby	Letters of	Credit

(a) Indicates	that	expected	risk	of	loss	is	currently	low.

If	the	customer	fails	to	meet	its	financial	or	performance	obligation	to	the	third party	under	the	terms	of	the	contract	or	there	is	a	need	to	support	a	remarketing program,	then	upon	a	draw	by	a	beneficiary,	subject	to	the	terms	of	the	letter	of credit,	we	would	be	obligated	to	make	payment	to	them.	The	standby	letters	of credit	outstanding	on	December	31,	2014	had	terms	ranging	from	less	than	1 year	to	8	years.

As	of	December	31,	2014,	assets	of	$1.0	billion	secured	certain	specifically identified	standby	letters	of	credit.	In	addition,	a	portion	of	the	remaining standby	letters	of	credit	issued	on	behalf	of	specific	customers	is	also	secured	by collateral	or	guarantees	that	secure	the	customers'	other	obligations	to	us.	The carrying	amount	of	the	liability	for	our	obligations	related	to	standby	letters	of credit	and	participations	in	standby	letters	of	credit	was	$182	million	at December	31,	2014	and	is	included	in	Other	liabilities	on	our	Consolidated Balance	Sheet.

# Other	Commitments

# Equity	Funding	and	Other	Commitments

During	2014,	financial	support	to	private	equity	investments	including	existing direct	portfolio	companies	and	indirect	private	equity	investments	of	$63	million was	provided.	This	amount	is	included	in	Equity	Investments	on	our Consolidated	Balance	Sheet.	Of	this	amount,	$24	million	was	provided	to

satisfy	contingent	fundings	to	various	direct	investments	and	capital	calls	for commitments	to	various	indirect	private	equity	investments.	Support	to	direct investments	is	generally	to	provide	for	growth	financing	or	to	support acquisitions	or	recapitalizations.

Other	commitments	related	to	equity	investments	at	December	31,	2014	were $962	million,	of	which	$169	million	were	unfunded	commitments	that	were	not recorded	on	our	Consolidated	Balance	Sheet.	The	remaining	$793	million	of commitments	were	included	in	Other	liabilities	on	our	Consolidated	Balance Sheet,	of	which	$717	million	related	to	tax	credit	investments.

# Standby	Bond	Purchase	Agreements	and	Other	Liquidity	Facilities

We	enter	into	standby	bond	purchase	agreements	to	support	municipal	bond obligations.	At	December	31,	2014,	the	aggregate	of	our	commitments	under these	facilities	was	$1.1	billion.	We	also	enter	into	certain	other	liquidity facilities	to	support	individual	pools	of	receivables	acquired	by	commercial paper	conduits.	There	were	no	commitments	under	these	facilities	at December	31,	2014.

# Indemnifications

We	are	a	party	to	numerous	acquisition	or	divestiture	agreements	under	which we	have	purchased	or	sold,	or	agreed	to	purchase	or	sell,	various	types	of	assets. These	agreements	can	cover	the	purchase	or	sale	of	entire	businesses,	loan portfolios,	branch	banks,	partial	interests	in	companies,	or	other	types	of	assets.

These	agreements	generally	include	indemnification	provisions	under	which	we indemnify	the	third	parties	to	these	agreements	against	a	variety	of	risks	to	the indemnified	parties	as	a	result	of	the	transaction	in	question.	When	PNC	is	the seller,	the	indemnification	provisions	will	generally	also	provide	the	buyer	with protection	relating	to	the	quality	of	the	assets	we	are	selling	and	the	extent	of	any liabilities	being	assumed	by	the	buyer.	Due	to	the	nature	of	these	indemnification provisions,	we	cannot	quantify	the	total	potential	exposure	to	us	resulting	from them.

We	provide	indemnification	in	connection	with	securities	offering	transactions	in which	we	are	involved.	When	we	are	the	issuer	of	the	securities,	we	provide indemnification	to	the	underwriters	or	placement	agents	analogous	to	the indemnification	provided	to	the	purchasers	of	businesses	from	us,	as	described above.	When	we	are	an	underwriter	or	placement	agent,	we	provide	a	limited indemnification	to	the	issuer	related	to	our	actions	in	connection	with	the offering	and,	if	there	are	other	underwriters,	indemnification	to	the	other underwriters	intended	to	result	in	an	appropriate	sharing	of	the	risk	of participating	in	the	offering.	Due	to	the	nature	of	these	indemnification provisions,	we	cannot	quantify	the	total	potential	exposure	to	us	resulting	from them.

In	the	ordinary	course	of	business,	we	enter	into	certain	types	of	agreements	that include	provisions	for	indemnifying	third	parties.	We	also	enter	into	certain	types of	agreements,	including	leases,	assignments	of	leases,	and	subleases,	in	which we	agree	to	indemnify	third	parties	for	acts	by	our	agents,	assignees	and/or sublessees,	and	employees.	We	also	enter	into	contracts	for	the	delivery	of technology	service	in	which	we	indemnify	the	other	party	against	claims	of patent	and	copyright	infringement	by	third	parties.	Due	to	the	nature	of	these indemnification	provisions,	we	cannot	calculate	our	aggregate	potential	exposure under	them.

In	the	ordinary	course	of	business,	we	enter	into	contracts	with	third	parties under	which	the	third	parties	provide	services	on	behalf	of	PNC.	In	many	of these	contracts,	we	agree	to	indemnify	the	third	party	service	provider	under certain	circumstances.	The	terms	of	the	indemnity	vary	from	contract	to	contract and	the	amount	of	the	indemnification	liability,	if	any,	cannot	be	determined.

We	are	a	general	or	limited	partner	in	certain	asset	management	and	investment limited	partnerships,	many	of	which	contain	indemnification	provisions	that would	require	us	to	make	payments	in	excess	of	our	remaining	unfunded commitments.	While	in	certain	of	these	partnerships	the	maximum	liability	to	us is	limited	to	the	sum	of	our	unfunded	commitments	and	partnership	distributions received	by	us,	in	the	others	the	indemnification	liability	is	unlimited.	As	a result,	we	cannot	determine	our	aggregate	potential	exposure	for	these indemnifications.

In	some	cases,	indemnification	obligations	of	the	types	described	above	arise under	arrangements	entered	into	by	predecessor	companies	for	which	we	become responsible	as	a	result	of	the	acquisition.

Pursuant	to	their	bylaws,	PNC	and	its	subsidiaries	provide	indemnification	to directors,	officers	and,	in	some	cases,	employees	and	agents	against	certain liabilities	incurred	as	a	result	of	their	service	on	behalf	of	or	at	the	request	of PNC	and	its	subsidiaries.	PNC	and	its	subsidiaries	also	advance	on	behalf	of covered	individuals	costs	incurred	in	connection	with	certain	claims	or proceedings,	subject	to	written	undertakings	by	each	such	individual	to	repay	all amounts	advanced	if	it	is	ultimately	determined	that	the	individual	is	not	entitled to	indemnification.	We	generally	are	responsible	for	similar	indemnifications and	advancement	obligations	that	companies	we	acquire	had	to	their	officers, directors	and	sometimes	employees	and	agents	at	the	time	of	acquisition.	We advanced	such	costs	on	behalf	of	several	such	individuals	with	respect	to pending	litigation	or	investigations	during	2014.	It	is	not	possible	for	us	to determine	the	aggregate	potential	exposure	resulting	from	the	obligation	to provide	this	indemnity	or	to	advance	such	costs.

# Visa	Indemnification

Our	payment	services	business	issues	and	acquires	credit	and	debit	card transactions	through	Visa	U.S.A.	Inc.	card	association	or	its	affiliates	(Visa).

In	October	2007,	Visa	completed	a	restructuring	and	issued	shares	of	Visa	Inc. common	stock	to	its	financial	institution	members	(Visa	Reorganization)	in contemplation	of	its	initial	public	offering	(IPO).	As	part	of	the	Visa Reorganization,	we	received	our	proportionate	share	of	Class	B	Visa	Inc. common	stock	allocated	to	the	U.S.	members.	Prior	to	the	IPO,	the	U.S. members,	which	included	PNC,	were	obligated	to	indemnify	Visa	for	judgments and	settlements	related	to	certain	specified	litigation.

As	a	result	of	the	acquisition	of	National	City,	we	became	party	to	judgment	and loss	sharing	agreements	with	Visa	and	certain	other	banks.	The	judgment	and loss	sharing	agreements	were	designed	to	apportion	financial	responsibilities arising	from	any	potential	adverse	judgment	or	negotiated	settlements	related	to the	specified	litigation.

In	September	2014,	Visa	funded	$450	million	into	its	litigation	escrow	account and	reduced	the	conversion	rate	of	Visa	B	to	A	shares.	We	continue	to	have	an obligation	to	indemnify	Visa	for	judgments	and	settlements	for	the	remaining specified	litigation.

As	discussed	in	Note	2	Loan	Sale	and	Servicing	Activities	and	Variable	Interest Entities,	PNC	has	sold	commercial	mortgage,	residential	mortgage	and	home equity	loans/	lines	of	credit	directly	or	indirectly	through	securitization	and	loan sale	transactions	in	which	we	have	continuing	involvement.	One	form	of continuing	involvement	includes	certain	recourse	and	loan	repurchase obligations	associated	with	the	transferred	assets.

We	originate	and	service	certain	multi-family	commercial	mortgage	loans	which are	sold	to	FNMA	under	FNMA's	Delegated	Underwriting	and	Servicing	(DUS) program.	We	participated	in	a	similar	program	with	the	FHLMC.

Under	these	programs,	we	generally	assume	up	to	a	one-third	pari	passu	risk	of loss	on	unpaid	principal	balances	through	a	loss	share	arrangement.	At December	31,	2014	and	December	31,	2013,	the	unpaid	principal	balance outstanding	of	loans	sold	as	a	participant	in	these	programs	was	$12.3	billion and	$11.7	billion,	respectively.	The	potential	maximum	exposure	under	the	loss share	arrangements	was	$3.7	billion	at	December	31,	2014	and	$3.6	billion	at December	31,	2013.

We	maintain	a	reserve	for	estimated	losses	based	upon	our	exposure.	The	reserve for	losses	under	these	programs	totaled	$35	million	and	$33	million	as	of December	31,	2014	and

December	31,	2013,	respectively,	and	is	included	in	Other	liabilities	on	our Consolidated	Balance	Sheet.

If	payment	is	required	under	these	programs,	we	would	not	have	a	contractual interest	in	the	collateral	underlying	the	mortgage	loans	on	which	losses	occurred, although	the	value	of	the	collateral	is	taken	into	account	in	determining	our	share of	such	losses.	Our	exposure	and	activity	associated	with	these	recourse obligations	are	reported	in	the	Corporate	&	Institutional	Banking	segment.

# Table	150:	Analysis	of	Commercial	Mortgage	Recourse	Obligations

| In	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| January\t1 | $33 | $43 |
| Reserve\tadjustments,\tnet | 2 | (9) |
| Losses\t–\tloan\trepurchases\tand\tsettlements |  | (1) |
| December\t31 | $35 | $33 |

# Residential	Mortgage	Loan	and	Home	Equity	Loan/	Line	of	Credit Repurchase	Obligations

While	residential	mortgage	loans	are	sold	on	a	non-recourse	basis,	we	assume certain	loan	repurchase	obligations	associated	with	mortgage	loans	we	have	sold to	investors.	These	loan	repurchase	obligations	primarily	relate	to	situations where	PNC	is	alleged	to	have	breached	certain	origination	covenants	and representations	and	warranties	made	to	purchasers	of	the	loans	in	the	respective purchase	and	sale	agreements.	Repurchase	obligation	activity	associated	with residential	mortgages	is	reported	in	the	Residential	Mortgage	Banking	segment.

In	the	fourth	quarter	of	2013,	PNC	reached	agreements	with	both	FNMA	and FHLMC	to	resolve	their	repurchase	claims	with	respect	to	loans	sold	between 2000	and	2008.	PNC	paid	a	total	of	$191	million	related	to	these	settlements.

PNC's	repurchase	obligations	also	include	certain	brokered	home	equity loans/lines	of	credit	that	were	sold	to	a	limited	number	of	private	investors	in	the financial	services	industry	by	National	City	prior	to	our	acquisition	of	National City.	PNC	is	no	longer	engaged	in	the	brokered	home	equity	lending	business, and	our	exposure	under	these	loan	repurchase	obligations	is	limited	to repurchases	of	loans	sold	in	these	transactions.	Repurchase	activity	associated with	brokered	home	equity	loans/lines	of	credit	is	reported	in	the	Non-Strategic Assets	Portfolio	segment.

Indemnification	and	repurchase	liabilities	are	initially	recognized	when	loans	are sold	to	investors	and	are	subsequently	evaluated	by	management.	Initial recognition	and	subsequent	adjustments	to	the	indemnification	and	repurchase liability	for	the	sold	residential	mortgage	portfolio	are	recognized	in	Residential mortgage	revenue	on	the	Consolidated	Income	Statement.	Since	PNC	is	no longer	engaged	in	the	brokered	home	equity	lending	business,	only	subsequent adjustments	are	recognized	to	the	home	equity	loans/lines	indemnification	and repurchase	liability.	These	adjustments	are	recognized	in	Other	noninterest income	on	the	Consolidated	Income	Statement.

Management's	subsequent	evaluation	of	these	indemnification	and	repurchase liabilities	is	based	upon	trends	in	indemnification	and	repurchase	requests,	actual loss	experience,	risks	in	the	underlying	serviced	loan	portfolios,	and	current economic	conditions.	As	part	of	its	evaluation,	management	considers	estimated loss	projections	over	the	life	of	the	subject	loan	portfolio.	At	December	31,	2014 and	December	31,	2013,	the	total	indemnification	and	repurchase	liability	for estimated	losses	on	indemnification	and	repurchase	claims	totaled	$136	million and	$153	million,	respectively,	and	was	included	in	Other	liabilities	on	the Consolidated	Balance	Sheet.	An	analysis	of	the	changes	in	this	liability	during 2014	and	2013	follows:

# Table	151:	Analysis	of	Indemnification	and	Repurchase	Liability	for	Asserted	Claims	and	Unasserted	Claims

|  |  | 2014 |  |  | 2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Residential\nMortgages\t(a) | Home\nEquity\nLoans/\nLines\t(b) | Total | Residential\nMortgages\t(a) | Home\nEquity\nLoans/\nLines\t(b)\t(c) | Total |
| January\t1 | $131 | $22 | $153 | $614 | $58 | $672 |
| Reserve\tadjustments,\tnet |  | 20 | 20 | (53) |  | (53) |
| Losses\t–\tloan\trepurchases\tand\tprivate\tinvestor\tsettlements | (24) | (13) | (37) | (239) | (36) | (275) |
| Agency\tsettlements |  |  |  | (191) |  | (191) |
| December\t31 | $107 | $29 | $136 | $131 | $22 | $153 |
| (a) |  |  |  |  |  |  |

(a) Repurchase	obligation	associated	with	sold	loan	portfolios	of	$57.4	billion	and	$91.9	billion	at	December	31,	2014	and	December	31,	2013,	respectively.	The	decrease	at	December	31,	2014	compared	to December	31,	2013	reflects	the	exclusion	of	loans	sold	between	2000	and	2008	that	were	included	in	agency	settlements	and	thus	repurchase	risk	was	mitigated.

(b) Repurchase	obligation	associated	with	sold	loan	portfolios	of	$2.5	billion	and	$2.8	billion	at	December	31,	2014	and	December	31,	2013,	respectively.	PNC	is	no	longer	engaged	in	the	brokered	home	equity lending	business,	which	was	acquired	with	National	City.

(c) In	prior	periods,	the	unpaid	principal	balance	of	loans	serviced	for	home	equity	loans/lines	of	credit	in	(b)	above	reflected	the	outstanding	balance	at	the	time	of	charge-off.	During	the	second	quarter	of	2014,	we corrected	the	outstanding	principal	balance	to	reflect	the	unpaid	principal	balance	as	of	the	reporting	date.	Accordingly,	the	prior	period	amount	as	of	December	31,	2013	was	reduced	by	$.8	billion.

Management	believes	the	indemnification	and	repurchase	liabilities appropriately	reflect	the	estimated	probable	losses	on	indemnification	and repurchase	claims	for	all	loans	sold	and	outstanding	as	of	December	31,	2014.	In making	these	estimates,	we	consider	the	losses	that	we	expect	to	incur	over	the life	of	the	sold	loans.	While	management	seeks	to	obtain	all	relevant	information in	estimating	the	indemnification	and	repurchase	liability,	the	estimation	process is	inherently	uncertain	and	imprecise	and,	accordingly,	it	is	reasonably	possible that	future	indemnification	and	repurchase	losses	could	be	more	or	less	than	our established	liability.	Factors	that	could	affect	our	estimate	include	the	volume	of valid

claims	driven	by	investor	strategies	and	behavior,	our	ability	to	successfully negotiate	claims	with	investors,	housing	prices	and	other	economic	conditions. At	December	31,	2014,	we	estimate	that	it	is	reasonably	possible	that	we	could incur	additional	losses	in	excess	of	our	accrued	indemnification	and	repurchase liability	of	up	to	approximately	$99	million	for	our	portfolio	of	residential mortgage	loans	sold.	At	December	31,	2014,	the	reasonably	possible	loss	above our	accrual	for	our	portfolio	of	home	equity	loans/lines	of	credit	sold	was	not material.	This	estimate	of	potential	additional	losses	in	excess	of	our	liability	is based	on	assumed	higher	repurchase	claims	and	lower	claim	rescissions	than	our current	assumptions.

# Reinsurance	Agreements

We	have	two	wholly-owned	captive	insurance	subsidiaries	which	provide reinsurance	to	third-party	insurers	related	to	insurance	sold	to	or	placed	on	behalf of	our	customers.	These	subsidiaries	enter	into	various	types	of	reinsurance agreements	with	third-party	insurers	where	the	subsidiary	assumes	the	risk	of loss	through	either	an	excess	of	loss	or	quota	share	agreement	up	to	100% reinsurance.	In	excess	of	loss	agreements,	these	subsidiaries	assume	the	risk	of loss	for	an	excess	layer	of	coverage	up	to	specified	limits,	once	a	defined	first loss	percentage	is	met.	In	quota	share	agreements,	the	subsidiaries	and	third- party	insurers	share	the	responsibility	for	payment	of	all	claims.

These	subsidiaries	provide	reinsurance	for	accidental	death	&	dismemberment, credit	life,	accident	&	health,	lender	placed	hazard	and	borrower	and	lender	paid mortgage	insurance,	of	which	all	programs	are	in	run-off.	Aggregate	maximum exposure	up	to	the	specified	limits	for	all	reinsurance	contracts	is	as	follows:

# Table	152:	Reinsurance	Agreements	Exposure	(a)

| In	millions | December	31<br>2014 | December	31<br>2013 |
| :--- | :--- | :--- |
| Accidental\tDeath\t&amp;\tDismemberment | $1,774 | $1,902 |
| Credit\tLife,\tAccident\t&amp;\tHealth | 467 | 621 |
| Lender\tPlaced\tHazard\t(b)\t(c) | 2,056 | 2,679 |
| Borrower\tand\tLender\tPaid\tMortgage |  |  |
| Insurance | 45 | 133 |
| Maximum\tExposure | $4,342 | $5,335 |
| Percentage\tof\treinsurance\tagreements: |  |  |
| Excess\tof\tLoss\t–\tMortgage\tInsurance | 1% | 2% |
| Quota\tShare | 99% | 98% |
| Maximum\tExposure\tto\tQuota\tShare |  |  |
| Agreements\twith\t100%\tReinsurance | $466 | $620 |
| (a)\nReinsurance\tagreements\texposure\tbalances\trepresent\testimates\tbased\ton\tavailability\tof\tfinancial |  |  |

(a) Reinsurance	agreements	exposure	balances	represent	estimates	based	on	availability	of	financial information	from	insurance	carriers.

(b) Through	the	purchase	of	catastrophe	reinsurance	connected	to	the	Lender	Placed	Hazard	Exposure,

should	a	catastrophic	event	occur,	PNC	will	benefit	from	this	reinsurance.	No	credit	for	the catastrophe	reinsurance	protection	is	applied	to	the	aggregate	exposure	figure.

(c) Program	has	been	placed	into	run-off	for	coverage	issued	or	renewed	on	or	after	June	1,	2014	with policy	terms	one	year	or	less.

A	rollforward	of	the	reinsurance	reserves	for	probable	losses	for	2014	and	2013 follows:

# Table	153:	Reinsurance	Reserves	–	Rollforward

| In	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| January\t1 | $32 | $61 |
| Paid\tLosses | (20) | (45) |
| Net\tProvision | 11 | 16 |
| Changes\tto\tAgreements | (10) |  |
| December\t31 | $13 | $32 |

The	reinsurance	reserves	are	declining	as	the	programs	are	in	run-off.	Existing reinsurance	agreements	with	a	single	third-party	insurer	of	Borrower	Paid Mortgage	Insurance	were	terminated	resulting	in	release	of	reinsurance	reserves. The	Lender	Placed	Hazard	program	has	been	placed	in	run-off	as	of	June	1, 2014,	but	there	was	no	material	impact	to	reinsurance	reserves.	There	were	no other	changes	to	existing	agreements	nor	did	we	enter	into	any	new	relationships.

There	is	a	reasonable	possibility	that	losses	could	be	more	than	or	less	than	the amount	reserved	due	to	ongoing	uncertainty	in	various	economic,	social	and other	factors	that	could	impact	the	frequency	and	severity	of	claims	covered	by these	reinsurance	agreements.	At	December	31,	2014,	the	reasonably	possible loss	above	our	accrual	was	not	material.

# Resale	and	Repurchase	Agreements

We	enter	into	repurchase	and	resale	agreements	where	we	transfer	investment securities	to/from	a	third	party	with	the	agreement	to	repurchase/resell	those investment	securities	at	a	future	date	for	a	specified	price.	Repurchase	and	resale agreements	are	treated	as	collateralized	financing	transactions	for	accounting purposes	and	are	generally	carried	at	the	amounts	at	which	the	securities	will	be subsequently	reacquired	or	resold,	including	accrued	interest.	Our	policy	is	to take	possession	of	securities	purchased	under	agreements	to	resell.	We	monitor the	market	value	of	securities	to	be	repurchased	and	resold	and	additional collateral	may	be	obtained	where	considered	appropriate	to	protect	against	credit exposure.

Repurchase	and	resale	agreements	are	typically	entered	into	with	counterparties under	industry	standard	master	netting	agreements	which	provide	for	the	right	to setoff	amounts	owed	to	one	another	with	respect	to	multiple	repurchase	and resale	agreements	under	such	master	netting	agreement	(referred	to	as	netting arrangements)	and	liquidate	the	purchased	or	borrowed	securities	in	the	event	of counterparty	default.	In	order	for	an	arrangement	to	be	eligible	for	netting	under GAAP,	we	must	obtain	the	requisite	assurance	that	the

offsetting	rights	included	in	the	master	netting	agreement	would	be	legally enforceable	in	the	event	of	bankruptcy,	insolvency,	or	a	similar	proceeding	of such	third	party.	Enforceability	is	evidenced	by	obtaining	a	legal	opinion	that supports,	with	sufficient	confidence,	the	enforceability	of	the	master	netting agreement	in	bankruptcy.

In	accordance	with	the	disclosure	requirements	of	ASU	2011-11,	Balance	Sheet (Topic	210):	Disclosures	about	Offsetting	Assets	and	Liabilities,	Table	154 shows	the	amounts	owed	under	resale	and	repurchase	agreements	and	the securities	collateral	associated	with	those	agreements	where	a	legal	opinion supporting	the	enforceability	of	the	offsetting	rights	has	been	obtained.	We	do not	present	resale	and	repurchase	agreements	entered	into	with	the	same counterparty	under	a	legally	enforceable	master	netting	agreement	on	a	net	basis on	our	Consolidated	Balance	Sheet	or	within	Table	154.	The	amounts	reported	in Table	154	exclude	the	fair	value	adjustment	on	the	structured	resale	agreements of	$7	million	and	$11	million	at	December	31,	2014	and	December	31,	2013, respectively,	that	we	have	elected	to	account	for	at	fair	value.	Refer	to	Note	7 Fair	Value	for	additional	information	regarding	the	structured	resale	agreements at	fair	value.

Refer	to	Note	15	Financial	Derivatives	for	additional	information	related	to offsetting	of	financial	derivatives.

# Table	154:	Resale	and	Repurchase	Agreements	Offsetting

(a) Represents	the	resale	agreement	amount	included	in	Federal	funds	sold	and	resale	agreements	on	our	Consolidated	Balance	Sheet	and	the	related	accrued	interest	income	in	the	amount	of	$1	million	at	both December	31,	2014	and	December	31,	2013,	respectively,	which	is	included	in	Other	Assets	on	the	Consolidated	Balance	Sheet.

(b) These	amounts	include	certain	long	term	resale	agreements	of	$77	million	at	December	31,	2014	and	$89	million	at	December	31,	2013,	respectively,	which	are	fully	collateralized	but	do	not	have	the	benefits	of	a netting	opinion	and,	therefore,	might	be	subject	to	a	stay	in	insolvency	proceedings	and	therefore	are	not	eligible	under	ASC	210-20	for	netting.

(c) In	accordance	with	the	requirements	of	ASU	2011-11,	represents	the	fair	value	of	securities	collateral	purchased	or	sold,	up	to	the	amount	owed	under	the	agreement,	for	agreements	supported	by	a	legally enforceable	master	netting	agreement.

(d) Represents	the	repurchase	agreement	amount	included	in	Federal	funds	purchased	and	repurchase	agreements	on	our	Consolidated	Balance	Sheet	and	the	related	accrued	interest	expense	in	the	amount	of	less	than $1	million	at	both	December	31,	2014	and	December	31,	2013,	which	is	included	in	Other	Liabilities	on	the	Consolidated	Balance	Sheet.

(e) These	amounts	include	overnight	repurchase	agreements	of	$826	million	and	$966	million	at	December	31,	2014	and	December	31,	2013,	respectively,	entered	into	with	municipalities,	pension	plans,	and	certain trusts	and	insurance	companies	as	well	as	certain	long	term	repurchase	agreements	of	$50	million	at	December	31,	2013,	which	are	fully	collateralized	but	do	not	have	the	benefits	of	a	netting	opinion	and, therefore,	might	be	subject	to	a	stay	in	insolvency	proceedings	and	therefore	are	not	eligible	under	ASC	210-20	for	netting.	There	were	no	long	term	repurchase	agreements	as	of	December	31,	2014.

# NOTE	23	PARENT	COMPANY

Summarized	financial	information	of	the	parent	company	is	as	follows:

# Table	155:	Parent	Company	–	Income	Statement

| Year	ended	December	31	–	in	millions | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Operating\tRevenue |  |  |  |
| Dividends\tfrom: |  |  |  |
| Bank\tsubsidiaries\tand\tbank\tholding\tcompany | $3,115 | $3,105 | $2,660 |
| Non-bank\tsubsidiaries | 115 | 205 | 91 |
| Interest\tincome | 4 |  |  |
| Noninterest\tincome | 30 | 28 | 22 |
| Total\toperating\trevenue | \t 3,264 | \t 3,338 | \t 2,773 |
| Operating\tExpense |  |  |  |
| Interest\texpense | 97 | 107 | 242 |
| Other\texpense | 127 | 93 | 359 |
| Total\toperating\texpense | 224 | 200 | 601 |
| Income\tbefore\tincome\ttaxes\tand\tequity\tin\tundistributed\tnet |  |  |  |
| income\tof\tsubsidiaries | \t 3,040 | \t 3,138 | \t 2,172 |
| Income\ttax\tbenefits | (61) | (89) | (175) |
| Income\tbefore\tequity\tin\tundistributed\tnet\tincome\tof |  |  |  |
| subsidiaries | \t 3,101 | \t 3,227 | \t 2,347 |
| Equity\tin\tundistributed\tnet\tincome\tof\tsubsidiaries: |  |  |  |
| Bank\tsubsidiaries\tand\tbank\tholding\tcompany\t(a) | 854 | 845 | 413 |
| Non-bank\tsubsidiaries\t(a) | 229 | 129 | 241 |
| Net\tincome\t(a) | $4,184 | $4,201 | $3,001 |
| Other\tcomprehensive\tincome,\tnet\tof\ttax: |  |  |  |
| Net\tpension\tand\tother\tpostretirement\tbenefit\tplan\tactivity\tarising |  |  |  |
| during\tthe\tperiod | (17) | 34 | (40) |
| Other\tcomprehensive\tincome\t(loss) | (17) | 34 | (40) |
| Comprehensive\tincome\t(a) | $4,167 | $4,235 | $2,961 |
| (a)\nAmounts\tfor\t2013\tand\t2012\tperiods\thave\tbeen\tupdated\tto\treflect\tthe\tfirst\tquarter\t2014\tadoption\tof |  |  |  |

(a) Amounts	for	2013	and	2012	periods	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.	See	Note	1	Accounting Policies	for	further	detail	of	the	adoption.

# Table	156:	Parent	Company	–	Balance	Sheet

| December	31	–	in	millions | 2014 | 2013 |
| :--- | :--- | :--- |
| Assets |  |  |
| Cash\theld\tat\tbanking\tsubsidiary | $1 | $1 |
| Restricted\tdeposits\twith\tbanking\tsubsidiary | 400 | 400 |
| Interest-earning\tdeposits | 2,013 | 221 |
| Investments\tin: |  |  |
| Bank\tsubsidiaries\tand\tbank\tholding\tcompany\t(a) | \t 41,537 | \t 40,611 |
| Non-bank\tsubsidiaries\t(a) | 2,480 | 2,250 |
| Other\tassets | 1,399 | 1,201 |
| Total\tassets | $47,830 | $44,684 |
| Liabilities |  |  |
| Subordinated\tdebt\t(b) | $1,618 | $824 |
| Senior\tdebt\t(b) | 889 | 856 |
| Bank\taffiliate\tborrowings | 102 | 63 |
| Accrued\texpenses\tand\tother\tliabilities\t(a) | 670 | 607 |
| Total\tliabilities | 3,279 | 2,350 |
| Equity |  |  |
| Shareholders'\tequity\t(a) | \t 44,551 | \t 42,334 |
| Total\tliabilities\tand\tequity | $47,830 | $44,684 |
| (a)\nAmounts\tfor\t2013\tperiods\thave\tbeen\tupdated\tto\treflect\tthe\tfirst\tquarter\t2014\tadoption\tof\tASU |  |  |

(a) Amounts	for	2013	periods	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU 2014-01	related	to	investments	in	low	income	housing	tax	credits.	See	Note	1	Accounting	Policies for	further	detail	of	the	adoption.

(b) At	December	31,	2014,	debt	that	contractually	matures	in	2015	through	2019	totaled	$400	million (senior	debt),	zero,	zero,	zero	and	$700	million	(subordinated	debt).

Debt	issued	by	PNC	Funding	Corp,	a	wholly-owned	finance	subsidiary,	is	fully and	unconditionally	guaranteed	by	the	parent	company.	In	addition,	in connection	with	certain	affiliates'	commercial	and	residential	mortgage	servicing operations,	the	parent	company	has	committed	to	maintain	such	affiliates'	net worth	above	minimum	requirements.

# Table	157:	Parent	Company	–	Interest	Paid	and	Income	Tax	Refunds (Payments)

|  |  | Income	Tax |
| :--- | :--- | :--- |
|  | Interest | Refunds\t/ |
| Year\tended\tDecember\t31\t–\tin\tmillions | Paid | (Payments) |
| 2014 | $103 | $(13) |
| 2013 | 117 | 91 |
| 2012 | 255 | 453 |

# Table	158:	Parent	Company	–	Statement	of	Cash	Flows

| Year	ended	December	31	–	in	millions | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Operating\tActivities |  |  |  |
| Net\tincome\t(a) | $4,184 | $4,201 | $3,001 |
| Adjustments\tto\treconcile\tnet\tincome\tto |  |  |  |
| net\tcash\tprovided\tby\toperating |  |  |  |
| activities: |  |  |  |
| Equity\tin\tundistributed\tnet |  |  |  |
| earnings\tof\tsubsidiaries\t(a) | (1,083) | (974) | (654) |
| Other | 118 | 152 | 566 |
| Net\tcash\tprovided\t(used)\tby\toperating |  |  |  |
| activities | 3,219 | 3,379 | 2,913 |
| Investing\tActivities |  |  |  |
| Net\tcapital\treturned\tfrom\t(contributed |  |  |  |
| to)\tsubsidiaries |  | 87 |  |
| Net\tcash\tpaid\tfor\tacquisition\tactivity |  |  | (3,432) |
| Net\tchange\tin\tinterest-earning\tdeposits | (1,792) | (214) |  |
| Other | (79) | (60) | (50) |
| Net\tcash\tprovided\t(used)\tby |  |  |  |
| investing\tactivities | (1,871) | (187) | (3,482) |
| Financing\tActivities |  |  |  |
| Borrowings\tfrom\tsubsidiaries | 2,430 | 3,624 | 8,374 |
| Repayments\ton\tborrowings\tfrom\nsubsidiaries | (2,392) | (5,767) | (6,943) |
| Other\tborrowed\tfunds | 770 | (467) | (1,753) |
| Preferred\tstock\t–\tOther\tissuances |  | 495 | 2,446 |
| Preferred\tstock\t–\tOther\tredemptions |  | (150) | (500) |
| Common\tand\ttreasury\tstock\tissuances | 252 | 244 | 158 |
| Acquisition\tof\ttreasury\tstock | (1,176) | (24) | (216) |
| Preferred\tstock\tcash\tdividends\tpaid | (232) | (237) | (177) |
| Common\tstock\tcash\tdividends\tpaid | (1,000) | (911) | (820) |
| Net\tcash\tprovided\t(used)\tby |  |  |  |
| financing\tactivities | (1,348) | (3,193) | 569 |
| Increase\t(decrease)\tin\tcash\tand\tdue |  |  |  |
| from\tbanks |  | (1) |  |
| Cash\theld\tat\tbanking\tsubsidiary |  |  |  |
| at\tbeginning\tof\tyear | 1 | 2 | 2 |
| Cash\theld\tat\tbanking\tsubsidiary |  |  |  |
| at\tend\tof\tyear | $1 | $1 | $2 |

# NOTE	24	SEGMENT	REPORTING

Results	of	individual	businesses	are	presented	based	on	our	internal	management reporting	practices.	There	is	no	comprehensive,	authoritative	body	of	guidance for	management	accounting	equivalent	to	GAAP;	therefore,	the	financial	results of	our	individual	businesses	are	not	necessarily	comparable	with	similar information	for	any	other	company.	We	periodically	refine	our	internal methodologies	as	management	reporting	practices	are	enhanced.	To	the	extent practicable,	retrospective	application	of	new	methodologies	is	made	to	prior period	reportable	business	segment	results	and	disclosures	to	create comparability	with	the	current	period.

Financial	results	are	presented,	to	the	extent	practicable,	as	if	each	business operated	on	a	stand-alone	basis.	Additionally,	we	have	aggregated	the	results	for corporate	support	functions	within	"Other"	for	financial	reporting	purposes.

Assets	receive	a	funding	charge	and	liabilities	and	capital	receive	a	funding credit	based	on	a	transfer	pricing	methodology	that	incorporates	product maturities,	duration	and	other	factors.	Starting	in	the	first	quarter	of	2015,	we will	enhance	the	funding	charge	to	include	consideration	of	the	cost	related	to the	Liquidity	Coverage	Ratio.	Please	see	the	Supervision	and	Regulation	section in	Item	1	and	the	Liquidity	Risk	Management	section	in	Item	7	of	this	Report	for more	information	about	the	ratio.	A	portion	of	capital	is	intended	to	cover unexpected	losses	and	is	assigned	to	our	business	segments	using	our	risk-based economic	capital	model,	including	consideration	of	the	goodwill	at	those business	segments,	as	well	as	the	diversification	of	risk	among	the	business segments,	ultimately	reflecting	PNC's	portfolio	risk	adjusted	capital	allocation.

We	have	allocated	the	allowances	for	loan	and	lease	losses	and	for	unfunded loan	commitments	and	letters	of	credit	based	on	the	loan	exposures	within	each business	segment's	portfolio.	Key	reserve	assumptions	and	estimation	processes react	to	and	are	influenced	by	observed	changes	in	loan	portfolio	performance experience,	the	financial	strength	of	the	borrower,	and	economic	conditions.	Key reserve	assumptions	are	periodically	updated.

Our	allocation	of	the	costs	incurred	by	operations	and	other	shared	support	areas not	directly	aligned	with	the	businesses	is	primarily	based	on	the	use	of	services.

Total	business	segment	financial	results	differ	from	total	consolidated	net income.	The	impact	of	these	differences	is	reflected	in	the	"Other"	category	in the	business	segment	tables.	"Other"	includes	residual	activities	that	do	not	meet the	criteria	for	disclosure	as	a	separate	reportable	business,	such	as	gains	or losses	related	to	BlackRock	transactions,	integration	costs,	asset	and	liability management	activities	including	net	securities	gains	or	losses,	other-than- temporary	impairment	of	investment	securities	and	certain	trading	activities, exited	businesses,	private	equity	investments,	intercompany	eliminations,	most corporate	overhead,	tax	adjustments	that	are	not	allocated	to	business	segments, and	differences	between	business	segment	performance	reporting	and	financial statement	reporting	(GAAP),	including	the	presentation	of	net	income attributable	to	noncontrolling	interests	as	the	segments'	results	exclude	their portion	of	net	income	attributable	to	noncontrolling	interests.	Assets,	revenue and	earnings	attributable	to	foreign	activities	were	not	material	in	the	periods presented	for	comparative	purposes.

# Business	Segment	Products	and	Services

Asset	Management	Group	includes	personal	wealth	management	for	high	net worth	and	ultra	high	net	worth	clients	and	institutional	asset	management. Wealth	management	products	and	services	include	investment	and	retirement planning,	customized	investment	management,	private	banking,	tailored	credit solutions,	and	trust	management	and

administration	for	individuals	and	their	families.	Hawthorn	provides	multi- generational	family	planning	including	wealth	strategy,	investment	management, private	banking,	tax	and	estate	planning	guidance,	performance	reporting	and personal	administration	services	to	ultra	high	net	worth	families.	Institutional asset	management	provides	investment	management,	custody	administration	and retirement	administration	services.	Institutional	clients	include	corporations, unions,	municipalities,	non-profits,	foundations	and	endowments,	primarily located	in	our	geographic	footprint.

Residential	Mortgage	Banking	directly	originates	first	lien	residential	mortgage loans	on	a	nationwide	basis	with	a	significant	presence	within	the	retail	banking footprint.	Mortgage	loans	represent	loans	collateralized	by	one-to-four	family residential	real	estate.	These	loans	are	typically	underwritten	to	government agency	and/or	third-party	standards,	and	either	sold,	servicing	retained,	or	held on	PNC's	balance	sheet.	Loan	sales	are	primarily	to	secondary	mortgage conduits	of	FNMA,	FHLMC,	Federal	Home	Loan	Banks	and	third-party investors,	or	are	securitized	and	issued	under	the	GNMA	program.	The	mortgage servicing	operation	performs	all	functions	related	to	servicing	mortgage	loans, primarily	those	in	first	lien	position,	for	various	investors	and	for	loans	owned	by PNC.

BlackRock,	is	a	leading	publicly	traded	investment	management	firm	providing a	broad	range	of	investment	and	risk	management	services	to	institutional	and retail	clients	worldwide.	Using	a	diverse	platform	of	active	and	index	investment strategies	across	asset	classes,	BlackRock	develops	investment	outcomes	and asset	allocation	solutions	for	clients.	Product	offerings	include	single-	and	multi- asset	class	portfolios	investing	in	equities,	fixed	income,	alternatives	and	money market	instruments.	BlackRock	also	offers	an	investment	and	risk	management technology	platform,	risk	analytics	and	advisory	services	and	solutions	to	a broad	base	of	institutional	investors.

We	hold	an	equity	investment	in	BlackRock,	which	is	a	key	component	of	our diversified	revenue	strategy.	BlackRock	is	a	publicly	traded	company,	and additional	information	regarding	its	business	is	available	in	its	filings	with	the Securities	and	Exchange	Commission	(SEC).	At	December	31,	2014,	our economic	interest	in	BlackRock	was	22%.

# Table	159:	Results	Of	Businesses

| Year	ended	December	31<br>In	millions | Retail<br>Banking | Corporate	&amp;<br>Institutional<br>Banking | Asset<br>Management<br>Group | Residential<br>Mortgage<br>Banking | BlackRock | Non-Strategic<br>Assets<br>Portfolio | Other	(a) | Consolidated	(a) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| 2014 |  |  |  |  |  |  |  |  |
| INCOME\tSTATEMENT |  |  |  |  |  |  |  |  |
| Net\tinterest\tincome | $3,923 | $3,605 | $289 | $149 |  | $547 | $12 | $8,525 |
| Noninterest\tincome | 2,125 | 1,743 | 818 | 651 | $703 | 40 | 770 | 6,850 |
| Total\trevenue | 6,048 | 5,348 | 1,107 | 800 | 703 | 587 | 782 | 15,375 |
| Provision\tfor\tcredit\tlosses\t(benefit) | 277 | 107 | (1) | (2) |  | (119) | 11 | 273 |
| Depreciation\tand\tamortization | 176 | 135 | 42 | 12 |  |  | 411 | 776 |
| Other\tnoninterest\texpense | 4,449 | 1,929 | 779 | 734 |  | 125 | 696 | 8,712 |
| Income\t(loss)\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | 1,146 | 3,177 | 287 | 56 | 703 | 581 | (336) | 5,614 |
| Income\ttaxes\t(benefit) | 418 | 1,071 | 106 | 21 | 173 | 214 | (596) | 1,407 |
| Net\tincome | $728 | $2,106 | $181 | $35 | $530 | $367 | $260 | $4,207 |
| Inter-segment\trevenue | $2 | $23 | $11 | $17 | $16 | $(10) | $(59) |  |
| Average\tAssets\t(b) | $75,046 | $122,927 | $7,745 | $7,857 | $6,640 | $8,338 | $99,300 | $327,853 |
| 2013 |  |  |  |  |  |  |  |  |
| INCOME\tSTATEMENT |  |  |  |  |  |  |  |  |
| Net\tinterest\tincome | $4,077 | $3,680 | $288 | $194 |  | $689 | $219 | $9,147 |
| Noninterest\tincome | 2,021 | 1,702 | 752 | 906 | $621 | 53 | 810 | 6,865 |
| Total\trevenue | 6,098 | 5,382 | 1,040 | 1,100 | 621 | 742 | 1,029 | 16,012 |
| Provision\tfor\tcredit\tlosses\t(benefit) | 657 | (25) | 10 | 21 |  | (21) | 1 | 643 |
| Depreciation\tand\tamortization | 186 | 128 | 42 | 11 |  |  | 348 | 715 |
| Other\tnoninterest\texpense | 4,390 | 1,871 | 732 | 834 |  | 163 | 976 | 8,966 |
| Income\t(loss)\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | 865 | 3,408 | 256 | 234 | 621 | 600 | (296) | 5,688 |
| Income\ttaxes\t(benefit) | 315 | 1,144 | 94 | 86 | 152 | 221 | (536) | 1,476 |
| Net\tincome | $550 | $2,264 | $162 | $148 | $469 | $379 | $240 | $4,212 |
| Inter-segment\trevenue | $3 | $28 | $12 | $8 | $17 | $(10) | $(58) |  |
| Average\tAssets\t(b) | $74,971 | $112,970 | $7,366 | $9,896 | $6,272 | $9,987 | $84,202 | $305,664 |
| 2012 |  |  |  |  |  |  |  |  |
| INCOME\tSTATEMENT |  |  |  |  |  |  |  |  |
| Net\tinterest\tincome | $4,314 | $3,991 | $297 | $209 |  | $830 | $(1) | $9,640 |
| Noninterest\tincome | 2,012 | 1,598 | 676 | 317 | $512 | 13 | 744 | 5,872 |
| Total\trevenue | 6,326 | 5,589 | 973 | 526 | 512 | 843 | 743 | 15,512 |
| Provision\tfor\tcredit\tlosses\t(benefit) | 800 |  | 11 | (5) |  | 181 |  | 987 |
| Depreciation\tand\tamortization | 194 | 141 | 41 | 11 |  |  | 320 | 707 |
| Other\tnoninterest\texpense | 4,392 | 1,887 | 691 | 981 |  | 287 | 1,541 | 9,779 |
| Income\t(loss)\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | 940 | 3,561 | 230 | (461) | 512 | 375 | (1,118) | 4,039 |
| Income\ttaxes\t(benefit) | 344 | 1,233 | 85 | (153) | 117 | 138 | (719) | 1,045 |
| Net\tincome\t(loss) | $596 | $2,328 | $145 | $(308) | $395 | $237 | $(399) | $2,994 |
| Inter-segment\trevenue | $1 | $33 | $12 | $7 | $15 | $(10) | $(58) |  |
| Average\tAssets\t(b) | $72,573 | $102,962 | $6,735 | $11,529 | $5,857 | $12,050 | $83,248 | $294,954 |
| (a) |  |  |  |  |  |  |  |  |

# NOTE	25	SUBSEQUENT	EVENTS

•$750	million	of	senior	notes	with	a	maturity	date	of	February	23,	2025.	Interest	is	payable	semi-annually	at	a	fixed	rate	of	2.950%	on	February	23	and August	23	of	each	year,	beginning	on	August	23,	2015,	and

•$1.0	billion	of	senior	notes	with	a	maturity	date	of	February	23,	2018.	Interest	is	payable	semi-annually	at	a	fixed	rate	of	1.500%	on	February	23	and	August 23	of	each	year,	beginning	on	August	23,	2015.

# STATISTICAL	INFORMATION	(UNAUDITED)

# Selected	Quarterly	Financial	Data

| Dollars	in	millions,<br>except	per	share	data | Fourth | 2014<br>Third | Second | First | Fourth | 2013<br>Third | Second | First |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Summary\tOf\tOperations |  |  |  |  |  |  |  |  |
| Interest\tincome | $2,337 | $2,328 | $2,356 | $2,410 | $2,479 | $2,448 | $2,469 | $2,611 |
| Interest\texpense | 240 | 224 | 227 | 215 | 213 | 214 | 211 | 222 |
| Net\tinterest\tincome | \t 2,097 | \t 2,104 | \t 2,129 | \t 2,195 | \t 2,266 | \t 2,234 | \t 2,258 | \t 2,389 |
| Noninterest\tincome\t(a) | \t 1,850 | \t 1,737 | \t 1,681 | \t 1,582 | \t 1,807 | \t 1,686 | \t 1,806 | \t 1,566 |
| Total\trevenue | \t 3,947 | \t 3,841 | \t 3,810 | \t 3,777 | \t 4,073 | \t 3,920 | \t 4,064 | \t 3,955 |
| Provision\tfor\tcredit\tlosses | 52 | 55 | 72 | 94 | 113 | 137 | 157 | 236 |
| Noninterest\texpense\t(b) | \t 2,539 | \t 2,357 | \t 2,328 | \t 2,264 | \t 2,514 | \t 2,394 | \t 2,405 | \t 2,368 |
| Income\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | \t 1,356 | \t 1,429 | \t 1,410 | \t 1,419 | \t 1,446 | \t 1,389 | \t 1,502 | \t 1,351 |
| Income\ttaxes\t(b) | 299 | 391 | 358 | 359 | 372 | 361 | 387 | 356 |
| Net\tincome\t(b) | \t 1,057 | \t 1,038 | \t 1,052 | \t 1,060 | \t 1,074 | \t 1,028 | \t 1,115 | 995 |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests\t(b) | 21 | 1 | 3 | (2) | 13 | 2 | 4 | (8) |
| Preferred\tstock\tdividends\tand\tdiscount\taccretion\tand\tredemptions | 48 | 71 | 48 | 70 | 50 | 71 | 53 | 75 |
| Net\tincome\tattributable\tto\tcommon\tshareholders | $988 | $966 | $1,001 | $992 | $1,011 | $955 | $1,058 | $928 |
| Per\tCommon\tShare\tData |  |  |  |  |  |  |  |  |
| Book\tvalue\t(b) | $77.61 | $76.71 | $75.62 | $73.73 | $72.07 | $69.75 | $68.32 | $68.10 |
| Basic\tearnings\tfrom\tnet\tincome\t(b)\t(c) | 1.88 | 1.82 | 1.88 | 1.86 | 1.90 | 1.80 | 2.00 | 1.76 |
| Diluted\tearnings\tfrom\tnet\tincome\t(b)\t(c) | 1.84 | 1.79 | 1.85 | 1.82 | 1.87 | 1.77 | 1.98 | 1.74 |
| (a) | Noninterest\tincome\tincluded\tprivate\tequity\tgains/(losses)\tand\tnet\tgains\ton\tsales\tof\tsecurities\tin\teach\tquarter\tas\tfollows: |  |  |  |  |  |  |  |

(a) Noninterest	income	included	private	equity	gains/(losses)	and	net	gains	on	sales	of	securities	in	each	quarter	as	follows:

|  |  | 2014 |  |  |  | 2013 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| in\tmillions | Fourth | Third | Second | First | Fourth | Third | Second | First |
| Private\tequity\tgains/(losses) | $61 | $70 | $35\t\t\t\t $42 | $35\t\t\t\t $42 | $99 | $43 | $33 | $27 |
| Net\tgains\ton\tsales\tof\tsecurities | – | – | (6) | \t 10 | 3 | 21 | 61 | \t 14 |
| (b) |  |  |  |  |  |  |  |  |

(b) Amounts	for	2013	periods	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	Accounting	Standards	Update	(ASU)	2014-01	related	to	investments	in	low	income	housing	tax	credits.

(c) The	sum	of	the	quarterly	amounts	for	2014	and	2013	does	not	equal	the	respective	year's	amount	because	the	quarterly	calculations	are	based	on	a	changing	number	of	average	shares.

# Average	Consolidated	Balance	Sheet	And	Net	Interest	Analysis	(a)	(b)	(c)

|  |  | 2014 |  |  | 2013 |  |  | 2012 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Taxable-equivalent\tbasis\nDollars\tin\tmillions | Average\nBalances | Interest\nIncome/\nExpense | Average\nYields/\nRates | Average\nBalances | Interest\nIncome/\nExpense | Average\nYields/\nRates | Average\nBalances | Interest\nIncome/\nExpense | Average\nYields/\nRates |
| Assets |  |  |  |  |  |  |  |  |  |
| Interest-earning\tassets: |  |  |  |  |  |  |  |  |  |
| Investment\tsecurities |  |  |  |  |  |  |  |  |  |
| Securities\tavailable\tfor\tsale |  |  |  |  |  |  |  |  |  |
| Residential\tmortgage-backed |  |  |  |  |  |  |  |  |  |
| Agency\t(d) | $18,935 | $503 | 2.66% | $22,746 | $562 | 2.47% | $24,976 | $725 | 2.90% |
| Non-agency | 5,106 | 244 | 4.78 | 5,828 | 317 | 5.44 | 6,506 | 350 | 5.38 |
| Commercial\tmortgage-backed\t(d) | 5,461 | 192 | 3.52 | 5,228 | 222 | 4.25 | 5,228 | 246 | 4.71 |
| Asset-backed | 5,321 | 105 | 1.97 | 5,857 | 110 | 1.88 | 5,227 | 106 | 2.03 |
| U.S.\tTreasury\tand\tgovernment\tagencies | 4,837 | 57 | 1.18 | 2,326 | 37 | 1.59 | 2,733 | 55 | 2.01 |
| State\tand\tmunicipal | 2,148 | 96 | 4.47 | 2,250 | 97 | 4.31 | 1,920 | 91 | 4.74 |
| Other\tdebt | 2,016 | 52 | 2.58 | 2,632 | 64 | 2.43 | 3,019 | 82 | 2.72 |
| Corporate\tstocks\tand\tother | 402 | – | – | 342 | – | – | 350 | – | – |
| Total\tsecurities\tavailable\tfor\tsale | 44,226 | 1,249 | 2.82 | 47,209 | 1,409 | 2.98 | 49,959 | 1,655 | 3.31 |
| Securities\theld\tto\tmaturity |  |  |  |  |  |  |  |  |  |
| Residential\tmortgage-backed | 5,885 | 207 | 3.52 | 4,374 | 153 | 3.50 | 4,423 | 156 | 3.53 |
| Commercial\tmortgage-backed | 2,502 | 99 | 3.96 | 3,422 | 151 | 4.41 | 4,288 | 195 | 4.55 |
| Asset-backed | 908 | 14 | 1.54 | 983 | 16 | 1.63 | 892 | 17 | 1.91 |
| U.S.\tTreasury\tand\tgovernment\tagencies | 243 | 9 | 3.70 | 235 | 9 | 3.83 | 226 | 9 | 3.98 |
| State\tand\tmunicipal | 1,727 | 95 | 5.50 | 749 | 42 | 5.61 | 670 | 28 | 4.18 |
| Other | 329 | 10 | 3.04 | 347 | 11 | 3.17 | 358 | 10 | 2.79 |
| Total\tsecurities\theld\tto\tmaturity | 11,594 | 434 | 3.74 | 10,110 | 382 | 3.78 | 10,857 | 415 | 3.82 |
| Total\tinvestment\tsecurities | 55,820 | 1,683 | 3.02 | 57,319 | 1,791 | 3.12 | 60,816 | 2,070 | 3.40 |
| Loans |  |  |  |  |  |  |  |  |  |
| Commercial | 92,411 | 3,029 | 3.28 | 86,047 | 3,243 | 3.77 | 76,654 | 3,447 | 4.50 |
| Commercial\treal\testate | 22,646 | 919 | 4.06 | 19,469 | 937 | 4.81 | 18,115 | 1,005 | 5.55 |
| Equipment\tlease\tfinancing | 7,567 | 278 | 3.67 | 7,329 | 292 | 3.98 | 6,674 | 307 | 4.60 |
| Consumer | 62,529 | 2,609 | 4.17 | 62,125 | 2,744 | 4.42 | 59,752 | 2,801 | 4.69 |
| Residential\treal\testate | 14,495 | 721 | 4.97 | 15,003 | 773 | 5.15 | 15,423 | 832 | 5.39 |
| Total\tloans | \t 199,648 | 7,556 | 3.78 | \t 189,973 | 7,989 | 4.21 | \t 176,618 | 8,392 | 4.75 |
| Interest-earning\tdeposits\twith\tbanks | 19,204 | 49 | .26 | 4,910 | 12 | .24 | 1,913 | 4 | .21 |
| Loans\theld\tfor\tsale | 2,123 | 99 | 4.66 | 2,909 | 157 | 5.40 | 2,977 | 168 | 5.64 |
| Federal\tfunds\tsold\tand\tresale\tagreements | 1,446 | 5 | .35 | 960 | 8 | .83 | 1,594 | 22 | 1.38 |
| Other | 5,064 | 228 | 4.50 | 4,574 | 218 | 4.77 | 4,636 | 222 | 4.79 |
| Total\tinterest-earning\tassets/interest\tincome | \t 283,305 | 9,620 | 3.40 | \t 260,645 | 10,175 | 3.90 | \t 248,554 | 10,878 | 4.38 |
| Noninterest-earning\tassets: |  |  |  |  |  |  |  |  |  |
| Allowance\tfor\tloan\tand\tlease\tlosses | (3,482) |  |  | (3,796) |  |  | (4,157) |  |  |
| Cash\tand\tdue\tfrom\tbanks | 3,945 |  |  | 3,953 |  |  | 3,877 |  |  |
| Other | 44,085 |  |  | 44,862 |  |  | 46,680 |  |  |
| Total\tassets | $327,853 |  |  | $305,664 |  |  | $294,954 |  |  |
| Liabilities\tand\tEquity |  |  |  |  |  |  |  |  |  |
| Interest-bearing\tliabilities: |  |  |  |  |  |  |  |  |  |
| Interest-bearing\tdeposits |  |  |  |  |  |  |  |  |  |
| Money\tmarket | $75,513 | $140 | .19% | $70,567 | $128 | .18% | $65,933 | $138 | .21% |
| Demand | 43,367 | 22 | .05 | 40,144 | 18 | .04 | 34,342 | 14 | .04 |
| Savings | 11,990 | 14 | .12 | 10,954 | 10 | .09 | 9,863 | 9 | .09 |
| Retail\tcertificates\tof\tdeposit | 19,636 | 145 | .74 | 22,274 | 180 | .81 | 26,609 | 210 | .79 |
| Time\tdeposits\tin\tforeign\toffices\tand\tother\ttime | 2,308 | 4 | .17 | 2,061 | 8 | .39 | 3,195 | 15 | .47 |
| Total\tinterest-bearing\tdeposits | \t 152,814 | 325 | .21 | \t 146,000 | 344 | .24 | \t 139,942 | 386 | .28 |
| Borrowed\tfunds |  |  |  |  |  |  |  |  |  |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements | 3,560 | 3 | .08 | 3,884 | 6 | .15 | 4,542 | 10 | .22 |
| Federal\tHome\tLoan\tBank\tborrowings | 14,863 | 73 | .49 | 8,617 | 45 | .52 | 9,678 | 72 | .74 |
| Bank\tnotes\tand\tsenior\tdebt | 14,114 | 202 | 1.43 | 11,221 | 191 | 1.70 | 10,275 | 236 | 2.30 |
| Subordinated\tdebt | 8,559 | 219 | 2.56 | 7,373 | 205 | 2.78 | 7,019 | 320 | 4.56 |
| Commercial\tpaper | 4,861 | 14 | .29 | 6,902 | 16 | .23 | 8,383 | 23 | .27 |
| Other | 2,860 | 70 | 2.45 | 2,025 | 53 | 2.62 | 1,947 | 47 | 2.41 |
| Total\tborrowed\tfunds | 48,817 | 581 | 1.19 | 40,022 | 516 | 1.29 | 41,844 | 708 | 1.69 |
| Total\tinterest-bearing\tliabilities/interest\texpense | \t 201,631 | 906 | .45 | \t 186,022 | 860 | .46 | \t 181,786 | 1,094 | .60 |
| Noninterest-bearing\tliabilities\tand\tequity: |  |  |  |  |  |  |  |  |  |
| Noninterest-bearing\tdeposits | 70,108 |  |  | 66,168 |  |  | 61,610 |  |  |
| Allowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 238 |  |  | 241 |  |  | 237 |  |  |
| Accrued\texpenses\tand\tother\tliabilities | 10,530 |  |  | 10,918 |  |  | 11,321 |  |  |
| Equity | 45,346 |  |  | 42,315 |  |  | 40,000 |  |  |
| Total\tliabilities\tand\tequity | $327,853 |  |  | $305,664 |  |  | $294,954 |  |  |
| Interest\trate\tspread |  |  | 2.95 |  |  | 3.44 |  |  | 3.78 |
| Impact\tof\tnoninterest-bearing\tsources |  |  | .13 |  |  | .13 |  |  | .16 |
| Net\tinterest\tincome/margin |  | $8,714 | 3.08% |  | $9,315 | 3.57% |  | $9,784 | 3.94% |

(a) Nonaccrual	loans	are	included	in	loans,	net	of	unearned	income.	The	impact	of	financial	derivatives	used	in	interest	rate	risk	management	is	included	in	the	interest	income/expense	and	average	yields/rates	of	the related	assets	and	liabilities.	Basis	adjustments	related	to	hedged	items	are	included	in	noninterest-earning	assets	and	noninterest-bearing	liabilities.	Average	balances	of	securities	are	based	on	amortized	historical cost	(excluding	adjustments	to	fair	value,	which	are	included	in	other	assets).	Average	balances	for	certain	loans	and	borrowed	funds	accounted	for	at	fair	value,	with	changes	in	fair	value	recorded	in	trading noninterest	income,	are	included	in	noninterest-earning	assets	and	noninterest-bearing	liabilities.

(c) Interest	income	includes	the	effects	of	taxable-equivalent	adjustments	using	a	statutory	federal	income	tax	rate	of	35%	to	increase	tax-exempt	interest	income	to	a	taxable-equivalent	basis.	The	taxable-equivalent adjustments	to	interest	income	for	the	years	ended	December	31,	2014,	2013	and	2012	were	$189	million,	$168	million	and	$144	million,	respectively.

(d) These	line	items	were	corrected	for	all	periods	presented	due	to	a	misclassification	of	Government	National	Mortgage	Association	(GNMA)	securities	collateralized	by	project	loans,	which	were	previously reported	as	residential	mortgage-backed	agency	securities	and	have	been	reclassified	to	commercial	mortgage-backed	securities.

# Analysis	Of	Year-To-Year	Changes	In	Net	Interest	Income	(a)	(b)

|  | 2014/2013 | 2014/2013 | 2014/2013 | 2013/2012 | 2013/2012 | 2013/2012 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Increase/(Decrease)\tin\tIncome/\nExpense\tDue\tto\tChanges\tin: | Increase/(Decrease)\tin\tIncome/\nExpense\tDue\tto\tChanges\tin: | Increase/(Decrease)\tin\tIncome/\nExpense\tDue\tto\tChanges\tin: | Increase/(Decrease)\tin\tIncome/\nExpense\tDue\tto\tChanges\tin: | Increase/(Decrease)\tin\tIncome/\nExpense\tDue\tto\tChanges\tin: | Increase/(Decrease)\tin\tIncome/\nExpense\tDue\tto\tChanges\tin: |
| Taxable-equivalent\tbasis\t–\tin\tmillions | Volume | Rate | Total | Volume | Rate | Total |
| Interest-Earning\tAssets |  |  |  |  |  |  |
| Investment\tsecurities |  |  |  |  |  |  |
| Securities\tavailable\tfor\tsale |  |  |  |  |  |  |
| Residential\tmortgage-backed |  |  |  |  |  |  |
| Agency | \t\t $(99) | \t\t $40 | \t\t $(59) | \t\t $(62) | \t\t $(101) | \t\t $(163) |
| Non-agency | (37) | (36) | (73) | (37) | 4 | (33) |
| Commercial\tmortgage-backed | 10 | (40) | (30) |  | (24) | (24) |
| Asset-backed | (10) | 5 | (5) | 12 | (8) | 4 |
| U.S.\tTreasury\tand\tgovernment\tagencies | 32 | (12) | 20 | (8) | (10) | (18) |
| State\tand\tmunicipal | (5) | 4 | (1) | 15 | (9) | 6 |
| Other\tdebt | (16) | 4 | (12) | (10) | (8) | (18) |
| Total\tsecurities\tavailable\tfor\tsale | (86) | (74) | (160) | (87) | (159) | (246) |
| Securities\theld\tto\tmaturity |  |  |  |  |  |  |
| Residential\tmortgage-backed | 53 | 1 | 54 | (2) | (1) | (3) |
| Commercial\tmortgage-backed | (38) | (14) | (52) | (38) | (6) | (44) |
| Asset-backed | (1) | (1) | (2) | 2 | (3) | (1) |
| State\tand\tmunicipal | 54 | (1) | 53 | 3 | 11 | 14 |
| Other | (1) |  | (1) |  | 1 | 1 |
| Total\tsecurities\theld\tto\tmaturity | 56 | (4) | 52 | (29) | (4) | (33) |
| Total\tinvestment\tsecurities | (49) | (59) | (108) | (115) | (164) | (279) |
| Loans |  |  |  |  |  |  |
| Commercial | 228 | (442) | (214) | 394 | (598) | (204) |
| Commercial\treal\testate | 140 | (158) | (18) | 72 | (140) | (68) |
| Equipment\tlease\tfinancing | 9 | (23) | (14) | 28 | (43) | (15) |
| Consumer | 18 | (153) | (135) | 108 | (165) | (57) |
| Residential\treal\testate | (26) | (26) | (52) | (23) | (36) | (59) |
| Total\tloans | 399 | (832) | (433) | 601 | (1,004) | (403) |
| Interest-earning\tdeposits\twith\tbanks | 36 | 1 | 37 | 7 | 1 | 8 |
| Loans\theld\tfor\tsale | (38) | (20) | (58) | (4) | (7) | (11) |
| Federal\tfunds\tsold\tand\tresale\tagreements | 3 | (6) | (3) | (7) | (7) | (14) |
| Other | 22 | (12) | 10 | 3 | (1) | (4) |
| Total\tinterest-earning\tassets | \t\t $829 | \t\t $(1,384) | \t\t $(555) | \t\t $518 | \t\t $(1,221) | \t\t $(703) |
| Interest-Bearing\tLiabilities |  |  |  |  |  |  |
| Interest-bearing\tdeposits |  |  |  |  |  |  |
| Money\tmarket | \t\t $7 | \t\t $5 | \t\t $12 | \t\t $10 | \t\t $(20) | \t\t $(10) |
| Demand | 1 | 3 | 4 | 4 |  | 4 |
| Savings | 1 | 3 | 4 | 1 |  | 1 |
| Retail\tcertificates\tof\tdeposit | (20) | (15) | (35) | (35) | 5 | (30) |
| Time\tdeposits\tin\tforeign\toffices\tand\tother\ttime | 1 | (5) | (4) | (4) | (3) | (7) |
| Total\tinterest-bearing\tdeposits | 18 | (37) | (19) | 16 | (58) | (42) |
| Borrowed\tfunds |  |  |  |  |  |  |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements |  | (3) | (3) | (1) | (3) | (4) |
| Federal\tHome\tLoan\tBank\tborrowings | 31 | (3) | 28 | (7) | (20) | (27) |
| Bank\tnotes\tand\tsenior\tdebt | 44 | (33) | 11 | 21 | (66) | (45) |
| Subordinated\tdebt | 31 | (17) | 14 | 15 | (130) | (115) |
| Commercial\tpaper | (6) | 4 | (2) | (4) | (3) | (7) |
| Other | 20 | (3) | 17 | 2 | 4 | 6 |
| Total\tborrowed\tfunds | 107 | (42) | 65 | (30) | (162) | (192) |
| Total\tinterest-bearing\tliabilities | 66 | (20) | 46 | 25 | (259) | (234) |
| Change\tin\tnet\tinterest\tincome | \t\t $767 | \t\t $(1,368) | \t\t $(601) | \t\t $461 | \t\t $(930) | \t\t $(469) |
| (a) |  |  |  |  |  |  |

(a) Changes	attributable	to	rate/volume	are	prorated	into	rate	and	volume	components.

(b) Interest	income	includes	the	effects	of	taxable-equivalent	adjustments	using	a	statutory	federal	income	tax	rate	of	35%	to	increase	tax-exempt	interest	income	to	a	taxable-equivalent	basis.	The	taxable-equivalent adjustments	to	interest	income	for	the	years	ended	December	31,	2014,	2013	and	2012	were	$189	million,	$168	million	and	$144	million,	respectively.

# Loans	Summary

| December	31	–	in	millions | 2014 | 2013 | 2012	(a) | 2011 | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Commercial\tlending |  |  |  |  |  |
| Commercial | $97,420 | $88,378 | $83,040 | $65,694\t\t\t\t $ | 55,177 |
| Commercial\treal\testate | 23,262 | 21,191 | 18,655 | 16,204 | 17,934 |
| Equipment\tlease\tfinancing | 7,686 | 7,576 | 7,247 | 6,416 | 6,393 |
| Total\tcommercial\tlending | \t 128,368 | \t 117,145 | \t 108,942 | 88,314 | 79,504 |
| Consumer\tlending |  |  |  |  |  |
| Home\tequity | 34,677 | 36,447 | 35,920 | 33,089 | 34,226 |
| Residential\treal\testate | 14,407 | 15,065 | 15,240 | 14,469 | 15,999 |
| Credit\tcard | 4,612 | 4,425 | 4,303 | 3,976 | 3,920 |
| Other\tconsumer | 22,753 | 22,531 | 21,451 | 19,166 | 16,946 |
| Total\tconsumer\tlending | 76,449 | 78,468 | 76,914 | 70,700 | 71,091 |
| Total\tloans | $204,817 | $195,613 | $185,856 | $159,014\t\t\t\t $150,595 | $159,014\t\t\t\t $150,595 |
| (a) |  |  |  |  |  |

(a) Includes	the	impact	of	the	RBC	Bank	(USA)	acquisition,	which	we	acquired	on	March	2,	2012.

# Impact	to	2013	and	2012	Periods	from	Adoption	of	ASU	2014-01	(Investments	in	Low	Income	Housing	Tax	Credits)	(a)

# Income	Statement

| In	millions | December	31<br>2013 | December	31<br>2012 |
| :--- | :--- | :--- |
| Noninterest\tExpense |  |  |
| Previously\treported | $9,801 | $10,582 |
| Adjustment\tfrom\tadoption\tof\tASU\t2014-01 | (120) | (96) |
| Revised | $9,681 | $10,486 |
| Net\tIncome |  |  |
| Previously\treported | $4,227 | $3,001 |
| Adjustment\tfrom\tadoption\tof\tASU\t2014-01 | (15) | (7) |
| Revised | $4,212 | $2,994 |
| Diluted\tEarnings\tper\tShare |  |  |
| Previously\treported | $7.39 | $5.36 |
| Adjustment\tfrom\tadoption\tof\tASU\t2014-01 | (.03) | (.03) |
| Revised | $7.36 | $5.33 |
| Efficiency |  |  |
| Previously\treported | 61% | 68% |
| Adjustment\tfrom\tadoption\tof\tASU\t2014-01 | (1) |  |
| Revised | 60% | 68% |
| Effective\tTax\tRate |  |  |
| Previously\treported | 24.1% | 23.9% |
| Adjustment\tfrom\tadoption\tof\tASU\t2014-01 | 1.8 | 2.0 |
| Revised | 25.9% | 25.9% |

# Balance	Sheet

(a) We	adopted	the	guidance	in	ASU	2014-01,	Investments	–	Equity	Method	and	Joint	Ventures	(Topic	323): Accounting	For	Investments	in	Qualified	Affordable	Housing	Projects 	in	the	first	quarter	of	2014. Retrospective	application	is	required.

# Tangible	Book	Value	per	Common	Share	Ratio	(Non-GAAP)

| December	31	–	dollars	in	millions,	except	per	share	data | 2014 | 2013 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Book\tvalue\tper\tcommon\tshare\t(a) | \t\t $77.61 | $72.07 | $66.95 | $61.44\t\t\t$ | 56.22 |
| Tangible\tbook\tvalue\tper\tcommon\tshare |  |  |  |  |  |
| Common\tshareholders'\tequity\t(a) | \t\t $40,605 | $38,392 | $35,358 | $32,374\t\t\t$29,560 | $32,374\t\t\t$29,560 |
| Goodwill\tand\tOther\tIntangible\tAssets\t(b) | (9,595) | (9,654) | (9,798) | (9,027) | (9,052) |
| Deferred\ttax\tliabilities\ton\tGoodwill\tand\tOther |  |  |  |  |  |
| Intangible\tAssets\t(b) | 320 | 333 | 354 | 431 | 461 |
| Tangible\tcommon\tshareholders'\tequity | \t\t $31,330 | $29,071 | $25,914 | $23,778\t\t\t$20,969 | $23,778\t\t\t$20,969 |
| Period-end\tcommon\tshares\toutstanding\t(in\tmillions) | 523 | 533 | 528 | 527 | 526 |
| Tangible\tbook\tvalue\tper\tcommon\tshare\t(Non-GAAP)\t(c) | \t\t $59.88 | $54.57 | $49.07 | $45.13\t\t\t$ | 39.88 |
| (a) |  |  |  |  |  |

(a) Amounts	for	prior	periods	have	been	updated	to	reflect	the	first	quarter	2014	adoption	of	Accounting	Standards	Update	(ASU)	2014-01	related	to	investments	in	low	income	housing	tax	credits.

(c) We	believe	this	non-GAAP	financial	measure	serves	as	a	useful	tool	to	help	evaluate	the	strength	and	discipline	of	a	company's	capital	management	strategies	and	as	an	additional	conservative	measure	of	total company	value.

# Estimated	Pro	forma	Fully	Phased-In	Basel	III	Common	Equity	Tier	1	Capital	Ratio	(a)

|  | Pro	forma	Fully	Phased-In	Basel	III | Pro	forma	Fully	Phased-In	Basel	III |
| :--- | :--- | :--- |
| Dollars\tin\tmillions | December\t31\n2013 | December\t31\n2012 |
| Common\tstock,\trelated\tsurplus\tand\tretained\tearnings,\tnet\tof\ttreasury\tstock | $38,031 | $34,579 |
| Less\tregulatory\tcapital\tadjustments: |  |  |
| Goodwill\tand\tdisallowed\tintangibles,\tnet\tof\tdeferred\ttax\tliabilities | (9,321) | (9,445) |
| Basel\tIII\ttotal\tthreshold\tdeductions | (1,386) | (2,330) |
| Accumulated\tother\tcomprehensive\tincome\t(b) | 196 | 276 |
| All\tother\tadjustments\t(c) | (64) | (579) |
| Estimated\tBasel\tIII\tCommon\tequity\tTier\t1\tcapital | $27,456 | $22,501 |
| Estimated\tBasel\tIII\tstandardized\tapproach\trisk-weighted\tassets\t(d) | $291,977 | N/A |
| Estimated\tBasel\tIII\tadvanced\tapproaches\trisk-weighted\tassets\t(e) | $290,080 | $301,006 |
| Estimated\tBasel\tIII\tCommon\tequity\tTier\t1\tcapital\tratio | 9.4% | 7.5% |
| Risk-weighted\tassets\tutilized | \t Standardized | \t Advanced |
| (a) |  |  |

(a) Amounts	have	not	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.

(b) Represents	net	adjustments	related	to	accumulated	other	comprehensive	income	for	securities	currently	and	previously	held	as	available	for	sale,	as	well	as	pension	and	other	postretirement	plans.

(c) Includes	adjustments	as	required	based	on	whether	the	standardized	approach	or	advanced	approaches	is	utilized.

(d) Basel	III	standardized	approach	risk-weighted	assets	were	estimated	based	on	the	Basel	III	standardized	approach	rules	and	include	credit	and	market	risk-weighted	assets.

(e) Basel	III	advanced	approaches	risk-weighted	assets	were	estimated	based	on	the	Basel	III	advanced	approaches	rules,	and	include	credit,	market	and	operational	risk-weighted	assets.

# Basel	I	Tier	1	Common	Capital	Ratio	(a)	(b)

| Dollars	in	millions | December	31<br>2013 | December	31<br>2012 | December	31<br>2011 | December	31<br>2010 |
| :--- | :--- | :--- | :--- | :--- |
| Basel\tI\tTier\t1\tcommon\tcapital | $28,484 | $24,951 | $23,732 | $21,188 |
| Basel\tI\trisk-weighted\tassets | 272,169 | 260,847 | 230,705 | 216,283 |
| Basel\tI\tTier\t1\tcommon\tcapital\tratio | 10.5% | 9.6% | 10.3% | 9.8% |
| (a) |  |  |  |  |

(a) Effective	January	1,	2014,	the	Basel	I	Tier	1	common	capital	ratio	no	longer	applies	to	PNC	(except	for	stress	testing	purposes).	Our	2013	Form	10-K	included	additional	information	regarding	our	Basel	I	capital ratios.

(b) Amounts	have	not	been	updated	to	reflect	the	first	quarter	2014	adoption	of	ASU	2014-01	related	to	investments	in	low	income	housing	tax	credits.

# Nonperforming	Assets	and	Related	Information

| December	31	–	dollars	in	millions | 2014 | 2013 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Nonperforming\tloans |  |  |  |  |  |
| Commercial | $290 | $457 | $590 | $899 | $1,253 |
| Commercial\treal\testate | 334 | 518 | 807 | \t 1,345 | \t 1,835 |
| Equipment\tlease\tfinancing | 2 | 5 | 13 | 22 | 77 |
| Total\tcommercial\tlending | 626 | 980 | \t 1,410 | \t 2,266 | \t 3,165 |
| Consumer\tlending\t(a) |  |  |  |  |  |
| Home\tequity\t(b)\t(c) | \t 1,112 | \t 1,139 | 951 | 529 | 448 |
| Residential\treal\testate\t(b) | 706 | 904 | 845 | 726 | 818 |
| Credit\tcard\t(d) | 3 | 4 | 5 | 8 |  |
| Other\tconsumer\t(b) | 63 | 61 | 43 | 31 | 35 |
| Total\tconsumer\tlending\t(e) | \t 1,884 | \t 2,108 | \t 1,844 | \t 1,294 | \t 1,301 |
| Total\tnonperforming\tloans\t(f) | \t 2,510 | \t 3,088 | \t 3,254 | \t 3,560 | \t 4,466 |
| OREO\tand\tforeclosed\tassets |  |  |  |  |  |
| Other\treal\testate\towned\t(OREO)\t(g) | 351 | 360 | 507 | 561 | 589 |
| Foreclosed\tand\tother\tassets | 19 | 9 | 33 | 35 | 68 |
| Total\tOREO\tand\tforeclosed\tassets | 370 | 369 | 540 | 596 | 657 |
| Total\tnonperforming\tassets | $2,880 | $3,457 | $3,794 | $4,156 | $5,123 |
| Nonperforming\tloans\tto\ttotal\tloans | 1.23% | 1.58% | 1.75% | 2.24% | 2.97% |
| Nonperforming\tassets\tto\ttotal\tloans,\tOREO\tand\tforeclosed\tassets | 1.40 | 1.76 | 2.04 | 2.60 | 3.39 |
| Nonperforming\tassets\tto\ttotal\tassets | 0.83 | 1.08 | 1.24 | 1.53 | 1.94 |
| Interest\ton\tnonperforming\tloans |  |  |  |  |  |
| Computed\ton\toriginal\tterms | $125 | $163 | $212 | $278 | $329 |
| Recognized\tprior\tto\tnonperforming\tstatus | 25 | 30 | 30 | 47 | 53 |
| Troubled\tDebt\tRestructurings |  |  |  |  |  |
| Nonperforming | $1,370 | $1,511 | $1,589 | $1,141 | $784 |
| Performing | \t 1,213 | \t 1,228 | \t 1,270 | \t 1,062 | 874 |
| Past\tdue\tloans |  |  |  |  |  |
| Accruing\tloans\tpast\tdue\t90\tdays\tor\tmore\t(h) | $1,105 | $1,491 | $2,351 | $2,973 | $2,709 |
| As\ta\tpercentage\tof\ttotal\tloans | .54% | .76% | 1.26% | 1.87% | 1.80% |
| Past\tdue\tloans\theld\tfor\tsale |  |  |  |  |  |
| Accruing\tloans\theld\tfor\tsale\tpast\tdue\t90\tdays\tor\tmore\t(i) | $9 | $4 | $38 | $49 | $65 |
| As\ta\tpercentage\tof\ttotal\tloans\theld\tfor\tsale | .40% | .18% | 1.03% | 1.67% | 1.86% |
| (a) |  |  |  |  |  |

(b) Pursuant	to	alignment	with	interagency	supervisory	guidance	on	practices	for	loans	and	lines	of	credit	related	to	consumer	lending	in	the	first	quarter	of	2013,	nonperforming	home	equity	loans	increased	$214 million,	nonperforming	residential	mortgage	loans	increased	$187	million	and	nonperforming	other	consumer	loans	increased	$25	million.	Charge-offs	were	taken	on	these	loans	where	the	fair	value	less	costs	to sell	the	collateral	was	less	than	the	recorded	investment	of	the	loan	and	were	$134	million.

(c) In	the	first	quarter	of	2012,	we	adopted	a	policy	stating	that	Home	equity	loans	past	due	90	days	or	more	would	be	placed	on	nonaccrual	status.	Prior	policy	required	that	these	loans	be	past	due	180	days	before being	placed	on	nonaccrual	status.

(d) Effective	in	the	second	quarter	2011,	the	commercial	nonaccrual	policy	was	applied	to	certain	small	business	credit	card	balances.	This	change	resulted	in	loans	being	placed	on	nonaccrual	status	when	they become	90	days	or	more	past	due.	We	continue	to	charge	off	these	loans	at	180	days	past	due.

(e) Pursuant	to	regulatory	guidance,	issued	in	the	third	quarter	of	2012,	nonperforming	consumer	loans,	primarily	home	equity	and	residential	mortgage,	increased	$288	million	in	2012	related	to	changes	in	treatment of	certain	loans	classified	as	TDRs,	net	of	charge-offs,	resulting	from	bankruptcy	where	no	formal	reaffirmation	was	provided	by	the	borrower	and	therefore	a	concession	has	been	granted	based	upon	discharge from	personal	liability.	Charge-offs	have	been	taken	where	the	fair	value	less	costs	to	sell	the	collateral	was	less	than	the	recorded	investment	of	the	loan	and	were	$128	million.

(f) Nonperforming	loans	exclude	certain	government	insured	or	guaranteed	loans,	loans	held	for	sale,	loans	accounted	for	under	the	fair	value	option	and	purchased	impaired	loans.

respectively,	related	to	residential	real	estate	that	was	acquired	by	us	upon	foreclosure	of	serviced	loans	because	they	are	insured	by	the	Federal	Housing	Administration	(FHA)	or	guaranteed	by	the	Department	of Veterans	Affairs	(VA)	or	guaranteed	by	the	Department	of	Housing	and	Urban	Development.

(h) Amounts	include	certain	government	insured	or	guaranteed	consumer	loans	totaling	$996	million,	$995	million,	$2,236	million,	$2,474	million	and	$2,167	million	at	December	31,	2014,	December	31, 2013,	December	31,	2012,	December	31,	2011	and	December	31,	2010,	respectively.	Past	due	loan	amounts	exclude	purchased	impaired	loans	as	they	are	considered	current	loans	due	to	the	accretion	of	interest income.

# Summary	of	Loan	Loss	Experience

| Year	ended	December	31	–	dollars	in	millions | 2014 | 2013 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Allowance\tfor\tloan\tand\tlease\tlosses\t–\tJanuary\t1 | $3,609 | $4,036 | $4,347 | $4,887 | $5,072 |
| Charge-offs |  |  |  |  |  |
| Commercial | (276) | (395) | (474) | (700) | (1,227) |
| Commercial\treal\testate | (70) | (203) | (314) | (464) | (670) |
| Equipment\tlease\tfinancing | (14) | (8) | (16) | (35) | (120) |
| Home\tequity | (275) | (486) | (560) | (484) | (488) |
| Residential\treal\testate | (40) | (133) | (110) | (153) | (406) |
| Credit\tcard | (163) | (178) | (200) | (235) | (335) |
| Other\tconsumer | (183) | (185) | (196) | (193) | (246) |
| Total\tcharge-offs | (1,021) | (1,588) | (1,870) | (2,264) | (3,492) |
| Recoveries |  |  |  |  |  |
| Commercial | 207 | 248 | 300 | 332 | 294 |
| Commercial\treal\testate | 84 | 93 | 115 | 105 | 77 |
| Equipment\tlease\tfinancing | 14 | 16 | 30 | 50 | 56 |
| Home\tequity | 78 | 73 | 61 | 48 | 41 |
| Residential\treal\testate | 26 | 4 | (1) | 11 | 19 |
| Credit\tcard | 21 | 22 | 26 | 23 | 20 |
| Other\tconsumer | 60 | 55 | 50 | 56 | 49 |
| Total\trecoveries | 490 | 511 | 581 | 625 | 556 |
| Net\tcharge-offs | (531) | (1,077) | (1,289) | (1,639) | (2,936) |
| Provision\tfor\tcredit\tlosses | 273 | 643 | 987 | 1,152 | 2,502 |
| Net\tchange\tin\tallowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | (17) | 8 | (10) | (52) | 108 |
| Adoption\tof\tASU\t2009-17,\tConsolidations |  |  |  |  | 141 |
| Other | (3) | (1) | 1 | (1) |  |
| Allowance\tfor\tloan\tand\tlease\tlosses\t–\tDecember\t31 | $3,331 | $3,609 | $4,036 | $4,347 | $4,887 |
| Allowance\tas\ta\tpercent\tof\tDecember\t31: |  |  |  |  |  |
| Loans | 1.63% | 1.84% | 2.17% | 2.73% | 3.25% |
| Nonperforming\tloans | 133 | 117 | 124 | 122 | 109 |
| As\ta\tpercent\tof\taverage\tloans |  |  |  |  |  |
| Net\tcharge-offs | .27 | .57 | .73 | 1.08 | 1.91 |
| Provision\tfor\tcredit\tlosses | .14 | .34 | .56 | .76 | 1.63 |
| Allowance\tfor\tloan\tand\tlease\tlosses | 1.67 | 1.90 | 2.28 | 2.86 | 3.18 |
| Allowance\tas\ta\tmultiple\tof\tnet\tcharge-offs | 6.27x | 3.35x | 3.13x | 2.65x | 1.66x |

The	following	table	presents	the	assignment	of	the	allowance	for	loan	and	lease	losses	and	the	categories	of	loans	as	a	percentage	of	total	loans.	Changes	in	the allocation	over	time	reflect	the	changes	in	loan	portfolio	composition,	risk	profile	and	refinements	to	reserve	methodologies.

# Allocation	of	Allowance	for	Loan	and	Lease	Losses

|  |  | 2014 |  | 2013 |  | 2012 | 2011 |  | 2010 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31 |  | Loans\tto |  | Loans\tto |  | Loans\tto |  | Loans\tto |  | Loans\tto |
| Dollars\tin\tmillions | \t Allowance | Total\tLoans | \t\t\t\t Allowance | Total\tLoans | \t\t\t\t Allowance | Total\tLoans | \t\t\t\t Allowance | Total\tLoans | \t\t\t\t Allowance | Total\tLoans |
| Commercial | \t$1,209 | 47.6% | \t$1,100 | 45.2% | \t$1,131 | 44.7% | \t$1,180 | 41.3% | \t$1,387 | 36.7% |
| Commercial\treal\testate | 318 | 11.4 | 400 | 10.8 | 589 | 10.0 | 753 | 10.2 | 1,086 | 11.9 |
| Equipment\tlease\tfinancing | 44 | 3.7 | 47 | 3.9 | 54 | 3.9 | 62 | 4.0 | 94 | 4.2 |
| Home\tequity | 872 | 16.9 | 1,051 | 18.6 | 1,044 | 19.3 | 1,095 | 20.8 | 684 | 22.7 |
| Residential\treal\testate | 561 | 7.0 | 642 | 7.7 | 847 | 8.2 | 894 | 9.1 | 1,093 | 10.6 |
| Credit\tcard | 173 | 2.3 | 169 | 2.3 | 199 | 2.3 | 202 | 2.5 | 361 | 2.6 |
| Other\tconsumer | 154 | 11.1 | 200 | 11.5 | 172 | 11.6 | 161 | 12.1 | 182 | 11.3 |
| Total | \t$3,331 | 100.0% | \t$3,609 | 100.0% | \t$4,036 | 100.0% | \t$4,347 | 100.0% | \t$4,887 | 100.0% |

# Selected	Loan	Maturities	and	Interest	Sensitivity

| December	31,	2014<br>In	millions | 1	Year	or<br>Less | 1	Through<br>5	Years | After<br>5	Years | Gross<br>Loans |
| :--- | :--- | :--- | :--- | :--- |
| Commercial | $26,245 | $60,715 | $10,460 | $97,420 |
| Commercial\treal\testate\t–\tReal |  |  |  |  |
| estate\tprojects | 6,613 | \t 12,290 | 4,359 | 23,262 |
| Total | $32,858 | $73,005 | $14,819 | $120,682 |
| Loans\twith: |  |  |  |  |
| Predetermined\trate | $5,454 | $10,623 | $7,275 | $23,352 |
| Floating\tor\tadjustable\trate | \t 27,404 | \t 62,382 | 7,544 | 97,330 |
| Total | $32,858 | $73,005 | $14,819 | $120,682 |

At	December	31,	2014,	we	had	no	pay-fixed	interest	rate	swaps	designated	to commercial	loans	as	part	of	fair	value	hedge	strategies.	At	December	31,	2014, $20.0	billion	notional	amount	of	receive-fixed	interest	rate	swaps	were designated	as	part	of	cash	flow	hedging	strategies	that	converted	the	floating	rate (1	month	and	3	month	LIBOR)	on	the	underlying	commercial	loans	to	a	fixed rate	as	part	of	risk	management	strategies.

The	aggregate	amount	of	time	deposits	with	a	denomination	of	$100,000	or	more was	$8.8	billion	at	December	31,	2014,	which	included	time	deposits	in	foreign offices	totaling	$2.4	billion	at	December	31,	2014.	Domestic	time	deposits	of $100,000	or	more	were	$6.4	billion	with	the	following	maturities:

# Common	Stock	Prices/Dividends	Declared

The	table	below	sets	forth	by	quarter	the	range	of	high	and	low	sale	and	quarter- end	closing	prices	for	The	PNC	Financial	Services	Group,	Inc.	common	stock and	the	cash	dividends	declared	per	common	share.

|  | High | Low | Close | Declared |
| :--- | :--- | :--- | :--- | :--- |
| 2014\tQuarter |  |  |  |  |
| First | $87.80 | $76.06 | $87.00 | $.44 |
| Second | \t 89.85 | \t 79.80 | \t 89.05 | .48 |
| Third | \t 90.00 | \t 80.43 | \t 85.58 | .48 |
| Fourth | \t 93.45 | \t 76.69 | \t 91.23 | .48 |
| Total |  |  |  | $1.88 |
| 2013\tQuarter |  |  |  |  |
| First | $66.93 | $58.96 | $66.50 | $.40 |
| Second | \t 74.19 | \t 63.69 | \t 72.92 | .44 |
| Third | \t 77.93 | \t 71.48 | \t 72.45 | .44 |
| Fourth | \t 78.36 | \t 70.63 | \t 77.58 | .44 |
| Total |  |  |  | $1.72 |

# ITEM	9	–	CHANGES	IN	AND	DISAGREEMENTS	WITH ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL DISCLOSURE

None.

# ITEM	9A	–	CONTROLS	AND	PROCEDURES

# MANAGEMENT'S	REPORT	ON	INTERNAL	CONTROL	OVER FINANCIAL	REPORTING

The	management	of	The	PNC	Financial	Services	Group,	Inc.	and	subsidiaries (PNC)	is	responsible	for	establishing	and	maintaining	adequate	internal	control over	financial	reporting,	as	such	term	is	defined	in	the	Exchange	Act	Rule	13a- 15(f).

Because	of	inherent	limitations,	internal	control	over	financial	reporting	may	not prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance with	the	policies	or	procedures	may	deteriorate.

We	performed	an	evaluation	under	the	supervision	and	with	the	participation	of our	management,	including	the	Chairman,	President	and	Chief	Executive	Officer and	the	Executive	Vice	President	and	Chief	Financial	Officer,	of	the effectiveness	of	PNC's	internal	control	over	financial	reporting	as	of December	31,	2014.	This	assessment	was	based	on	criteria	for	effective	internal control	over	financial	reporting	described	in	Internal	Control-Integrated Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the Treadway	Commission.	Based	on	this	assessment,	management	concluded	that PNC	maintained	effective	internal	control	over	financial	reporting	as	of December	31,	2014.

PricewaterhouseCoopers	LLP,	the	independent	registered	public	accounting	firm that	audited	our	consolidated	financial	statements	as	of	and	for	the	year	ended December	31,	2014	included	in	this	Report,	has	also	audited	the	effectiveness	of PNC's	internal	control	over	financial	reporting	as	of	December	31,	2014.	The report	of	PricewaterhouseCoopers	LLP	is	included	under	Item	8	of	this	Report.

# DISCLOSURE	CONTROLS	AND	PROCEDURES	AND	CHANGES	IN INTERNAL	CONTROL	OVER	FINANCIAL	REPORTING

As	of	December	31,	2014,	we	performed	an	evaluation	under	the	supervision	and with	the	participation	of	our	management,	including	the	Chairman,	President	and Chief	Executive	Officer	and	the	Executive	Vice	President	and	Chief	Financial Officer,	of	the	effectiveness	of	the	design	and	operation	of	our	disclosure controls	and	procedures	and	of	changes	in	our	internal	control	over	financial reporting.

Based	on	that	evaluation,	our	Chairman,	President	and	Chief	Executive	Officer and	our	Executive	Vice	President	and	Chief	Financial	Officer	concluded	that our	disclosure	controls	and	procedures	(as	defined	in	Rule	13a-15(e)	under	the Securities	and	Exchange	Act	of	1934,	as	amended)	were	effective	as	of December	31,	2014,	and	that	there	has	been	no	change	in	PNC's	internal	control over	financial	reporting	that	occurred	during	the	fourth	quarter	of	2014	that	has materially	affected,	or	is	reasonably	likely	to	materially	affect,	our	internal control	over	financial	reporting.

# ITEM	9B	–	OTHER	INFORMATION

# PART	III

# ITEM	10	–	DIRECTORS,	EXECUTIVE	OFFICERS	AND CORPORATE	GOVERNANCE

Certain	of	the	information	regarding	our	directors	(or	nominees	for	director), executive	officers	and	Audit	Committee	(and	Audit	Committee	financial experts),	required	by	this	item	is	included	under	the	captions	"Election	of Directors	(Item	1),"	and	"Corporate	Governance	–	Board	committees	–	Audit Committee,"	and	"Director	and	Executive	Officer	Relationships	–	Family relationships"	in	our	Proxy	Statement	to	be	filed	for	the	2015	annual	meeting	of shareholders	and	is	incorporated	herein	by	reference.

Information	regarding	our	compliance	with	Section	16(a)	of	the	Securities Exchange	Act	of	1934	is	included	under	the	caption	"Director	and	Executive Officer	Relationships	–	Section	16(a)	beneficial	ownership	reporting compliance"	in	our	Proxy	Statement	to	be	filed	for	the	2015	annual	meeting	of shareholders	and	is	incorporated	herein	by	reference.

Additional	information	regarding	our	executive	officers	and	our	directors	is included	in	Part	I	of	this	Report	under	the	captions	"Executive	Officers	of	the Registrant"	and	"Directors	of	the	Registrant."

Certain	information	regarding	our	PNC	Code	of	Business	Conduct	and	Ethics required	by	this	item	is	included	under	the	caption	"Corporate	Governance	–	Our code	of	ethics"	in	our	Proxy	Statement	to	be	filed	for	the	2015	annual	meeting	of shareholders	and	is	incorporated	herein	by	reference.	Our	PNC	Code	of	Business Conduct	and	Ethics	is	available	on	our	corporate	website	at www.pnc.com/corporategovernance.	In	addition,	any	future	amendments	to,	or waivers	from,	a	provision	of	the	PNC	Code	of	Business	Conduct	and	Ethics	that applies	to	our	directors	or	executive	officers	(including	our	principal	executive officer,	principal	financial	officer,	and	principal	accounting	officer	or	controller) will	be	posted	at	this	internet	address.

# ITEM	11	–	EXECUTIVE	COMPENSATION

The	information	required	by	this	item	is	included	under	the	captions	"Corporate	Governance	–	Board	committees	–	Personnel	and	Compensation	Committee	– Compensation	committee	interlocks	and	insider	participation,"	"Director	Compensation,"	"Compensation	Discussion	and	Analysis,"	"Compensation	Committee Report,"	"Compensation	and	Risk,"	"Compensation	Tables,"	and	"Change	in	Control	and	Termination	of	Employment"	in	our	Proxy	Statement	to	be	filed	for	the	2015 annual	meeting	of	shareholders	and	is	incorporated	herein	by	reference.	In	accordance	with	Item	407(e)(5)	of	Regulation	S-K,	the	information	set	forth	under	the caption	"Compensation	Committee	Report"	in	such	Proxy	Statement	will	be	deemed	to	be	furnished	in	this	Report	and	will	not	be	deemed	to	be	incorporated	by reference	into	any	filing	under	the	Securities	Act	or	the	Exchange	Act	as	a	result	of	furnishing	the	disclosure	in	this	manner.

# ITEM	12	–	SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL	OWNERS	AND	MANAGEMENT	AND	RELATED STOCKHOLDER	MATTERS

The	information	required	by	this	item	regarding	security	ownership	of	certain	beneficial	owners	and	management	is	included	under	the	caption	"Security	Ownership	of Directors	and	Executive	Officers"	in	our	Proxy	Statement	to	be	filed	for	the	2015	annual	meeting	of	shareholders	and	is	incorporated	herein	by	reference.

Information	regarding	our	compensation	plans	under	which	PNC	equity	securities	are	authorized	for	issuance	as	of	December	31,	2014	is	included	in	the	table	which follows.	Also	included	in	the	notes	to	the	table	is	information	regarding	awards	or	portions	of	awards	under	our	2006	Incentive	Award	Plan	that,	by	their	terms,	are payable	only	in	cash.	Additional	information	regarding	these	plans	is	included	in	Note	14	Stock	Based	Compensation	Plans	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report.

# Equity	Compensation	Plan	Information

|  |  | (a)<br>Number	of	securities<br>to	be	issued	upon<br>exercise	of<br>outstanding	options,<br>warrants	and	rights | (b)<br>Weighted-average<br>exercise	price	of<br>outstanding<br>options,	warrants<br>and	rights | (c)<br>Number	of	securities<br>remaining	available<br>for	future	issuance<br>under	equity<br>compensation	plans<br>(excluding	securities<br>reflected	in	column	(a)) |
| :--- | :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\tholders |  |  |  |  |
| 1997\tLong-Term\tIncentive\tAward\tPlan |  |  |  | (Note\t1) |
| Stock\tOptions |  | 524,723 | $66.56 |  |
| 2006\tIncentive\tAward\tPlan | (Note\t2\tand\tNote\t3) |  |  |  |
| Stock\tOptions |  | 6,163,632 | $55.50 | 17,997,353 |
| Incentive\tPerformance\tUnit\tAwards | (Note\t4) | 596,991 | N/A |  |
| Stock-Payable\tRestricted\tStock\tUnits | (Note\t5) | 3,773,079 | N/A |  |
| 1996\tExecutive\tIncentive\tAward\tPlan |  |  |  |  |
| Incentive\tAwards |  |  | N/A | (Note\t6) |
| Employee\tStock\tPurchase\tPlan | (Note\t7) |  |  | 1,019,704 |
| Total\tapproved\tby\tsecurity\tholders |  | 11,058,425 |  | 19,017,057 |
| Equity\tcompensation\tplans\tnot\tapproved\tby\tsecurity\tholders | (Note\t8) |  |  |  |
| Former\tNational\tCity\tCorporation\tEquity-Based\tCompensation |  |  |  |  |
| Plans,\tincluding\tstock\toptions |  | 1,817,776 | $585.23 |  |
| Former\tSterling\tFinancial\tCorporation\tStock\tOption\tPlan |  | 12,948 | $78.56 |  |
| Total\tnot\tapproved\tby\tsecurity\tholders |  | 1,830,724 |  |  |
| Total |  | 12,889,149 |  | 19,017,057 |

Note	1	–	After	shareholder	approval	of	the	2006	Incentive	Award	Plan	at	the 2006	annual	meeting	of	PNC's	shareholders	on	April	25,	2006	(see	Note	2 below),	no	further	grants	were	permitted	under	the	1997	Long-Term	Incentive Award	Plan,	with	certain	exceptions	that	are	no	longer	applicable.

Note	2	–	The	2006	Incentive	Award	Plan	was	adopted	by	the	Board	on February	15,	2006	and	approved	by	the	PNC	shareholders	at	the	2006	annual meeting	on	April	25,	2006.	The	plan	initially	authorized	up	to	40,000,000	shares of	common	stock	for	issuance	under	the	plan,	subject	to	adjustment	in	certain circumstances.	If	and	to	the	extent	that	stock	options	and	stock	appreciation rights	("SARs")	granted	under	the	plan,	or	granted	under	the	prior	plan	and outstanding	on	the	approval	date	of	the	plan,	terminate,	expire	or	are	cancelled, forfeited,	exchanged	or	surrendered	after	the	effective	date	of	the	plan	without being	exercised	or	if	any	share	awards,	share	units,	dividend	equivalents	or	other share-based	awards	are	forfeited	or	terminated,	or	otherwise	not	paid	in	full, after	the	effective	date	of	the	plan,	the	shares	subject	to	such	grants	become available	again	for	purposes	of	the	plan.	Shares	available	for	issuance	under	this plan	are	also	reduced	by	the	number	of	any	shares	used	in	payment	of	bonuses under	the	1996	Executive	Incentive	Award	Plan.

The	plan	was	most	recently	amended	and	restated	incorporating	amendments adopted	by	the	Board	and	approved	by	PNC's	shareholders	at	the	2011	annual meeting	of	shareholders,	effective	as	of	March	11,	2011.	These	amendments incorporate,	among	other	things,	an	increase	to	the	overall	limit	on	the	number	of shares	that	may	be	awarded	under	the	plan	to	46,000,000,	and	a	new	requirement that	each	award	of	a	share	(other	than	pursuant	to	a	stock	option	or	SAR)	granted under	the	plan	after	that	effective	date	will	reduce	the	aggregate	plan	limit	by 2.5	shares,	while	each	award	of	a	share	pursuant	to	a	stock	option	or	SAR	will reduce	the	aggregate	plan	limit	by	one	share.

Note	3	–	Under	the	2006	Incentive	Award	Plan,	awards	or	portions	of	awards that,	by	their	terms,	are	payable	only	in	cash	do	not	reduce	the	number	of	shares that	remain	available	for	issuance	under	the	plan	(the	number	in	column	(c)). During	2014,	a	total	of	397,929	cash-payable	share	units	plus	cash-payable dividend	equivalents	with	respect	to	268,488	of	those	share	units	were	granted under	the	plan.	This	number	includes	an	incremental	change	in	the	cash-payable portion	of	the	2012	incentive	performance	unit	award	grant	described	in	Note	4 below	(net	of	forfeitures),	a	separate	2014

incentive	performance	unit	award	grant	payable	solely	in	cash,	2013	and	2014 grants	of	share	units	(all	of	which	include	rights	to	cash	dividend	equivalents) payable	solely	in	cash	and	fractional	units	payable	solely	in	cash.	Payments	are subject	to	the	conditions	of	the	individual	grants,	including,	where	applicable, the	achievement	of	any	performance	goals	or	service	requirement	established	for such	grants.	The	comparable	amount	for	2013	was	505,343	cash-payable	share units	plus	cash-payable	dividend	equivalents	with	respect	to

391,520	cash-payable	restricted	share	units,	and	the	comparable	amount	for	2012 was	543,959	cash-payable	share	units	plus	cash-payable	dividend	equivalents with	respect	to	418,665	cash-payable	restricted	share	units.

Note	4	–	These	incentive	performance	unit	awards	provide	for	the	issuance	of shares	of	common	stock	(up	to	a	target	number	of	shares)	based	on	the	degree	to which	corporate	performance	goals	established	by	the	Personnel	and Compensation	Committee	have	been	achieved,	subject	to	potential	negative adjustment	based	on	certain	risk-related	performance	metrics,	and,	if	a	premium level	of	such	performance	is	achieved,	for	further	payment	in	cash.	The	numbers in	column	(a)	of	this	table	for	these	awards	reflect	the	maximum	number	of shares	that	could	be	issued	pursuant	to	grants	outstanding	at	December	31,	2014 upon	achievement	of	the	performance	goals	and	other	conditions	of	the	grants. At	the	premium	level	of	performance,	a	further	maximum	payout	of	cash equivalents	for	100%,	25%	and	25%,	respectively,	of	the	same	number	of	share units	for	the	2012	grant,	2013	grant	and	2014	grant,	respectively,	plus	the incremental	change	described	in	Note	3,	could	also	be	payable	subject	to	the other	conditions	of	the	grants.	Grants	under	the	2006	Incentive	Award	Plan	were made	in	the	first	quarter	of	2012,	2013	and	2014.

Note	5	–	These	stock-payable	restricted	stock	units	include	2011,	2012,	2013 and	2014	grants	of	performance-based	restricted	share	units	(with	the	units payable	solely	in	stock	and	related	dividend	equivalents	payable	solely	in	cash) that	have	a	service	condition,	an	external	and	also	in	the	later	grants	an	internal risk-related	performance	condition	and	a	market	condition	and	also	include grants	of	other	stock-payable	restricted	share	units,	some	of	which	are	time- based,	others	which	are	performance-based	and	some	of	which	also	include related	dividend	equivalents	payable	solely	in	cash.	The	number	in	column (a)	includes	the	maximum	number	of	shares	that	could	be	issued	pursuant	to grants	of	this	type	of	award	outstanding	at	December	31,	2014	upon achievement	of	the	performance	and	market	conditions,	where	applicable,	and other	conditions	of	the	grants.	Cash-payable	dividend	equivalents	were	granted with	respect	to	most	of	these	stock-payable	restricted	stock	units.	Where	stock- payable	restricted	share	units	include	a	fractional	share	interest,	such	fractional share	interest	is	payable	only	in	cash	share	equivalents.	During	2014,	a	total	of 39	cash	share	equivalents	were	paid	in	the	aggregate	for	fractional	share interests,	including	any	for	award	grants	described	in	Note	4.

Note	6	–	The	1996	Executive	Incentive	Award	Plan	is	a	shareholder-approved plan	that	enables	PNC	to	pay	annual	bonuses	to	its	senior	executive	officers based	upon	the	achievement	of	specified	levels	of	performance.	The	plan	as amended	and	restated	as	of	January	1,	2007	was	adopted	by	the	Board	on February	14,	2007	and	approved	by	the	PNC	shareholders	at	the	2007	annual meeting	on	April	24,	2007.	The	plan	does	not	specify	a	fixed	share	amount	for awards	under	the	plan.	Rather,	it	provides	for	maximum	bonus	awards

for	a	given	period	(generally	a	year)	for	each	individual	plan	participant	of	0.2% of	incentive	income	for	that	period.	Incentive	income	is	based	on	PNC's consolidated	pre-tax	net	income	as	further	adjusted	for	the	impact	of	changes	in tax	law,	extraordinary	items,	discontinued	operations,	acquisition	and	merger integration	costs,	and	for	the	impact	of	PNC's	obligation	to	fund	a	portion	of certain	BlackRock	long-term	incentive	programs.	Although	the	size	of	awards under	the	plan	is	dollar-denominated,	payment	may	be	made	in	cash,	in	shares	of PNC	common	stock,	or	in	a	combination	of	cash	and	stock.

Note	7	–	The	purchase	price	for	shares	of	PNC	common	stock	sold	under	the plan	represents	95%	of	the	fair	market	value	on	the	last	day	of	each	six-month offering	period.

Note	8	–	The	plans	in	this	section	of	the	table	reflect	awards	under	pre- acquisition	plans	of	National	City	Corporation	and	Sterling	Financial Corporation,	respectively.	National	City	was	merged	into	PNC	on	December	31, 2008	and	Sterling	was	merged	into	PNC	on	April	4,	2008.	Pursuant	to	the respective	merger	agreements	for	these	acquisitions,	common	shares	of	National City	or	Sterling,	as	the	case	may	be,	issuable	upon	the	exercise	or	settlement	of various	equity	awards	granted	under	the	National	City	or	Sterling	plans	were converted	into	corresponding	awards	covering	PNC	common	stock.	Additional information	is	included	in	Note	14	Stock	Based	Compensation	Plans	in	the	Notes To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	and	in	Note	16 Stock	Based	Compensation	Plans	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	our	2008	10-K.

# ITEM	13	–	CERTAIN	RELATIONSHIPS	AND	RELATED TRANSACTIONS,	AND	DIRECTOR	INDEPENDENCE

The	information	required	by	this	item	is	included	under	the	captions	"Director and	Executive	Officer	Relationships	–	Director	independence,	–	Transactions with	directors,	–	Family	relationships,	–	Indemnification	and	advancement	of costs,	and	–	Related	person	transactions	policies	and	procedures"	in	our	Proxy Statement	to	be	filed	for	the	2015	annual	meeting	of	shareholders	and	is incorporated	herein	by	reference.

# ITEM	14	–	PRINCIPAL	ACCOUNTING	FEES	AND SERVICES

The	information	required	by	this	item	is	included	under	the	caption	"Ratification of	Independent	Registered	Public	Accounting	Firm	(Item	2)	–	Audit,	audit- related	and	permitted	non-audit	fees"	in	our	Proxy	Statement	to	be	filed	for	the 2015	annual	meeting	of	shareholders	and	is	incorporated	herein	by	reference.

# PART	IV

# ITEM	15	–	EXHIBITS,	FINANCIAL	STATEMENT SCHEDULES

# FINANCIAL	STATEMENTS,	FINANCIAL	STATEMENT SCHEDULES

Our	consolidated	financial	statements	required	in	response	to	this	Item	are incorporated	by	reference	from	Item	8	of	this	Report.

Audited	consolidated	financial	statements	of	BlackRock,	Inc.	as	of December	31,	2014	and	2013	and	for	each	of	the	three	years	in	the	period	ended December	31,	2014	are	filed	with	this	Report	as	Exhibit	99.1	and	incorporated herein	by	reference.

# EXHIBITS

Our	exhibits	listed	on	the	Exhibit	Index	on	pages	E-1	through	E-8	of	this	Form 10-K	are	filed	with	this	Report	or	are	incorporated	herein	by	reference.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its	behalf	by	the undersigned,	thereunto	duly	authorized.

# (Registrant)

By: /s/	Robert	Q.	Reilly

	 Robert	Q.	Reilly

	 Executive	Vice	President	and	Chief	Financial	Officer

Pursuant	to	the	requirements	of	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	February	27,	2015.

*By: /s/	Christi	Davis

Christi	Davis,	Attorney-in-Fact,

pursuant	to	Powers	of	Attorney	filed	herewith

# EXHIBIT	INDEX

Incorporated	herein	by	reference	to	the	employee	stock	option	and restricted	deferral	agreements	portions	of	Exhibit	10.28	of	the Corporation's	Annual	Report	on	Form	10-K	for	the	year	ended December	31,	2004	(2004	Form	10-K)*

10.29 2010	forms	of	employee	stock	option,	restricted	stock,	and	restricted	share	unit agreements

10.30 2011	forms	of	employee	stock	option,	restricted	stock,	restricted	share	unit	and performance	unit	agreements

Incorporated	herein	by	reference	to	Exhibit	10.71	of	the Corporation's	1st	Quarter	2011	Form	10-Q*

10.31 2012	forms	of	employee	stock	option,	restricted	stock	and	restricted	share	unit agreements Incorporated	herein	by	reference	to	Exhibit	10.77	of	the Corporation's	Quarterly	Report	on	Form	10-Q	for	the	quarter ended	March	31,	2012	(1st	Quarter	2012	Form	10-Q)*

+ Incorporated	document	references	to	filings	by	the	Corporation	are	to	SEC	File	No.	001-09718,	to	filings	by	National	City	Corporation	are	to	SEC	File	No.	001- 10074,	to	filings	by	BlackRock	through	its	second	quarter	2006	Form	10-Q	(referred	to	herein	as	Old	BlackRock)	are	to	BlackRock	Holdco	2,	Inc.	SEC	File No.	001-15305,	and	to	filings	by	BlackRock,	Inc.	are	to	SEC	File	No.	001-33099.

* Denotes	management	contract	or	compensatory	plan.

You	can	obtain	copies	of	these	Exhibits	electronically	at	the	SEC's	website	at	www.sec.gov	or	by	mail	from	the	Public	Reference	Section	of	the	SEC	at	100	F	Street, N.E.,	Washington,	D.C.	20549	at	prescribed	rates.	The	Exhibits	are	also	available	as	part	of	this	Form	10-K	on	PNC's	corporate	website	at	www.pnc.com/secfilings. Shareholders	and	bondholders	may	also	obtain	copies	of	Exhibits	without	charge	by	contacting	Shareholder	Relations	at	(800)	843-2206	or	via	e-mail	at investor.relations@pnc.com.	The	Interactive	Data	File	(XBRL)	exhibit	is	only	available	electronically.



Question: for equity investment balances including unfunded commitments what was the change in millions between december 31 , 2014 and december 31 , 2013/
Calculation:     unfunded_commitments = 717 - 802
 change = unfunded_commitments
 answer = change
Answer: -85