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,	2015

# 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.)

The	Tower	at	PNC	Plaza

300	Fifth	Avenue

Pittsburgh,	Pennsylvania	15222-2401 (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.	X

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,	2015,	determined	using	the	per	share	closing	price	on that	date	on	the	New	York	Stock	Exchange	of	$95.65,	was	approximately	$49.2	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	2016	annual	meeting	of shareholders	(Proxy	Statement)	are	incorporated	by	reference	into	Part	III	of	this	Form	10-K.

# Cross-Reference	Index	to	2015	Form	10-K

# Cross-Reference	Index	to	2015	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\t4\tPurchased\tLoans | \t140 |
|  | Note\t5\tAllowances\tfor\tLoan\tand\tLease\tLosses\tand\tUnfunded\tLoan\tCommitments\tand\tLetters\tof\tCredit | \t141 |
|  | Note\t6\tInvestment\tSecurities | \t144 |
|  | Note\t7\tFair\tValue | \t149 |
|  | Note\t8\tGoodwill\tand\tIntangible\tAssets | \t166 |
|  | Note\t9\tPremises,\tEquipment\tand\tLeasehold\tImprovements | \t169 |
|  | Note\t10\tTime\tDeposits | \t169 |
|  | Note\t11\tBorrowed\tFunds | \t169 |
|  | Note\t12\tEmployee\tBenefit\tPlans | \t170 |
|  | Note\t13\tStock\tBased\tCompensation\tPlans | \t177 |
|  | Note\t14\tFinancial\tDerivatives | \t180 |
|  | Note\t15\tEarnings\tPer\tShare | \t188 |
|  | Note\t16\tEquity | \t188 |
|  | Note\t17\tOther\tComprehensive\tIncome | \t192 |
|  | Note\t18\tIncome\tTaxes | \t193 |
|  | Note\t19\tRegulatory\tMatters | \t195 |
|  | Note\t20\tLegal\tProceedings | \t196 |
|  | Note\t21\tCommitments\tand\tGuarantees | \t205 |
|  | Note\t22\tParent\tCompany | \t209 |
|  | Note\t23\tSegment\tReporting | \t210 |
|  | Note\t24\tSubsequent\tEvents | \t212 |
|  | Statistical\tInformation\t(Unaudited) | \t213 |
| Item\t9 | Changes\tin\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure. | \t222 |
| Item\t9A | Controls\tand\tProcedures. | \t222 |
| Item\t9B | Other\tInformation. | \t222 |
| PART\tIII |  |  |
| Item\t10 | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance. | \t222 |
| Item\t11 | Executive\tCompensation. | \t223 |
| Item\t12 | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters. | \t223 |
| Item\t13 | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence. | \t223 |
| Item\t14 | Principal\tAccounting\tFees\tand\tServices. | \t223 |
| PART\tIV |  |  |
| Item\t15 | Exhibits,\tFinancial\tStatement\tSchedules. | \t223 |
| SIGNATURES |  | \t224 |

# MD&A	TABLE	REFERENCE

| Table | Description | Page |
| :--- | :--- | :--- |
| 1 | Summary\tFinancial\tResults | \t 35 |
| 2 | Summarized\tAverage\tBalance\tSheet | \t 37 |
| 3 | Results\tOf\tBusinesses\t–\tSummary | \t 38 |
| 4 | Net\tInterest\tIncome\tand\tNet\tInterest\tMargin | \t 38 |
| 5 | Noninterest\tIncome | \t 39 |
| 6 | Summarized\tBalance\tSheet\tData | \t 40 |
| 7 | Details\tOf\tLoans | \t 41 |
| 8 | Accretion\t–\tPurchased\tImpaired\tLoans | \t 42 |
| 9 | Purchased\tImpaired\tLoans\t–\tAccretable\tYield | \t 42 |
| 10 | Valuation\tof\tPurchased\tImpaired\tLoans | \t 42 |
| 11 | Weighted\tAverage\tLife\tof\tthe\tPurchased\tImpaired\tPortfolios | \t 43 |
| 12 | Accretable\tDifference\tSensitivity\t–\tTotal\tPurchased\tImpaired\tLoans | \t 43 |
| 13 | Commitments\tto\tExtend\tCredit | \t 44 |
| 14 | Investment\tSecurities | \t 44 |
| 15 | Weighted-Average\tExpected\tMaturity\tof\tMortgage\tand\tOther\tAsset-Backed\tDebt\tSecurities | \t 45 |
| 16 | Loans\tHeld\tFor\tSale | \t 45 |
| 17 | Details\tOf\tFunding\tSources | \t 46 |
| 18 | Shareholders'\tEquity | \t 47 |
| 19 | Basel\tIII\tCapital | \t 48 |
| 20 |  | \t 51 |
|  | Fair\tValue\tMeasurements\t–\tSummary |  |
| 21 | Retail\tBanking\tTable | \t 52 |
| 22 | Corporate\t&\tInstitutional\tBanking\tTable | \t 55 |
| 23 | Asset\tManagement\tGroup\tTable | \t 57 |
| 24 | Residential\tMortgage\tBanking\tTable | \t 59 |
| 25 | BlackRock\tTable | \t 60 |
| 26 | Non-Strategic\tAssets\tPortfolio\tTable | \t 61 |
| 27 | Pension\tExpense\t–\tSensitivity\tAnalysis | \t 67 |
| 28 | Nonperforming\tAssets\tBy\tType | \t 72 |
| 29 | Change\tin\tNonperforming\tAssets | \t 72 |
| 30 | OREO\tand\tForeclosed\tAssets | \t 73 |
| 31 | Accruing\tLoans\tPast\tDue | \t 73 |
| 32 | Home\tEquity\tLines\tof\tCredit\t–\tDraw\tPeriod\tEnd\tDates | \t 75 |
| 33 | Consumer\tReal\tEstate\tRelated\tLoan\tModifications | \t 76 |
| 34 | Summary\tof\tTroubled\tDebt\tRestructurings | \t 77 |
| 35 | Loan\tCharge-Offs\tAnd\tRecoveries | \t 77 |
| 36 | Allowance\tfor\tLoan\tand\tLease\tLosses | \t 79 |
| 37 | PNC\tBank\tNotes\tIssued\tDuring\t2015 | \t 84 |
| 38 | PNC\tBank\tSenior\tand\tSubordinated\tDebt | \t 85 |
| 39 | FHLB\tBorrowings | \t 85 |

# MD&A	TABLE	REFERENCE	(Continued)

| Table | Description | Page |
| :--- | :--- | :--- |
| 40 | Parent\tCompany\tSenior\tand\tSubordinated\tDebt\tand\tHybrid\tCapital\tInstruments | \t 86 |
| 41 | Credit\tRatings\tas\tof\tDecember\t31,\t2015\tfor\tPNC\tand\tPNC\tBank | \t 86 |
| 42 | Contractual\tObligations | \t 87 |
| 43 | Other\tCommitments | \t 87 |
| 44 | Interest\tSensitivity\tAnalysis | \t 88 |
| 45 | Net\tInterest\tIncome\tSensitivity\tto\tAlternative\tRate\tScenarios\t(Fourth\tQuarter\t2015) | \t 88 |
| 46 | Alternate\tInterest\tRate\tScenarios:\tOne\tYear\tForward | \t 89 |
| 47 | Enterprise-Wide\tGains/Losses\tVersus\tValue-at-Risk | \t 89 |
| 48 | Equity\tInvestments\tSummary | \t 90 |
| 49 | Financial\tDerivatives\tSummary | \t 91 |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS	TABLE	REFERENCE

NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS	TABLE	REFERENCE	(Continued)

| Table | Description | Page |
| :--- | :--- | :--- |
| 89 | Other\tIntangible\tAssets | \t168 |
| 90 | Summary\tof\tChanges\tin\tOther\tIntangible\tAssets | \t168 |
| 91 | Amortization\tExpense\ton\tExisting\tIntangible\tAssets | \t169 |
| 92 | Premises,\tEquipment\tand\tLeasehold\tImprovements | \t169 |
| 93 | Depreciation\tand\tAmortization\tExpense | \t169 |
| 94 | Lease\tRental\tExpense | \t169 |
| 95 | FHLB\tBorrowings,\tBank\tNotes,\tSenior\tDebt\tand\tSubordinated\tDebt | \t170 |
| 96 | Reconciliation\tof\tChanges\tin\tProjected\tBenefit\tObligation\tand\tChange\tin\tPlan\tAssets | \t171 |
| 97 | Asset\tStrategy\tAllocations | \t172 |
| 98 | Pension\tPlan\tAssets\t–\tFair\tValue\tHierarchy | \t174 |
| 99 | Rollforward\tof\tPension\tPlan\tLevel\t3\tAssets | \t174 |
| 100 | Estimated\tCash\tFlows | \t175 |
| 101 | Components\tof\tNet\tPeriodic\tBenefit\tCost | \t175 |
| 102 | Net\tPeriodic\tCosts\t–\tAssumptions | \t176 |
| 103 | Other\tPension\tAssumptions | \t176 |
| 104 | Effect\tof\tOne\tPercent\tChange\tin\tAssumed\tHealth\tCare\tCost | \t176 |
| 105 | Estimated\tAmortization\tof\tUnamortized\tActuarial\tGains\tand\tLosses\t–\t2016 | \t176 |
| 106 | Option\tPricing\tAssumptions | \t177 |
| 107 | Stock\tOption\tRollforward | \t178 |
| 108 | Nonvested\tIncentive/Performance\tUnit\tAwards\tand\tRestricted\tShare/Restricted\tShare\tUnit\tAwards\t–\tRollforward | \t179 |
| 109 | Nonvested\tCash-Payable\tIncentive/Performance\tUnits\tand\tRestricted\tShare\tUnits\t–\tRollforward | \t179 |
| 110 | Employee\tStock\tPurchase\tPlan\t–\tSummary | \t179 |
| 111 | Total\tGross\tDerivatives | \t180 |
| 112 | Derivatives\tDesignated\tAs\tHedging\tInstruments\tunder\tGAAP | \t181 |
| 113 | Gains\t(Losses)\ton\tDerivatives\tand\tRelated\tHedged\tItems\t–\tFair\tValue\tHedges | \t181 |
| 114 | Gains\t(Losses)\ton\tDerivatives\tand\tRelated\tCash\tFlows\t–\tCash\tFlow\tHedges | \t182 |
| 115 | Derivatives\tNot\tDesignated\tAs\tHedging\tInstruments\tunder\tGAAP | \t183 |
| 116 | Gains\t(Losses)\ton\tDerivatives\tNot\tDesignated\tAs\tHedging\tInstruments\tunder\tGAAP | \t185 |
| 117 | Derivative\tAssets\tand\tLiabilities\tOffsetting | \t186 |
| 118 | Basic\tand\tDiluted\tEarnings\tper\tCommon\tShare | \t188 |
| 119 | Preferred\tStock\t–\tAuthorized,\tIssued\tand\tOutstanding | \t188 |
| 120 | Terms\tof\tOutstanding\tPreferred\tStock | \t189 |
| 121 | Summary\tof\tReplacement\tCapital\tCovenants\tof\tPerpetual\tTrust\tSecurities | \t191 |
| 122 | Summary\tof\tContractual\tCommitments\tof\tPerpetual\tTrust\tSecurities | \t191 |
| 123 | Other\tComprehensive\tIncome | \t192 |
| 124 | Accumulated\tOther\tComprehensive\tIncome\t(Loss)\tComponents | \t193 |
| 125 | Components\tof\tIncome\tTax\tExpense | \t193 |
| 126 | Deferred\tTax\tAssets\tand\tLiabilities | \t193 |
| 127 | Reconciliation\tof\tStatutory\tand\tEffective\tTax\tRates | \t194 |

# 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	20	Legal	Proceedings	and	Note	21	Commitments	and	Guarantees	in	the	Notes To	Consolidated	Financial	Statements	included	in	Item	8	of	this	Report.	See	page	96	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,	Florida,	North	Carolina,	Kentucky,	Washington,	D.C., Delaware,	Virginia,	Alabama,	Georgia,	Missouri,	Wisconsin	and	South	Carolina. We	also	provide	certain	products	and	services	internationally.	At	December	31, 2015,	our	consolidated	total	assets,	total	deposits	and	total	shareholders'	equity were	$358.5	billion,	$249.0	billion	and	$44.7	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	23	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.	We	periodically	refine	our	internal	methodologies	as management	reporting	practices	are	enhanced.	To	the	extent	significant	and practicable,	retrospective	application	of	new	methodologies	is	made	to	prior period	reportable	business	segment	results	and	disclosures	to	create comparability	with	the	current	period.

See	Note	23	Segment	Reporting	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report	for	information	on	enhancements	made	in	the first	quarter	of	2015	to	PNC's	internal	funds	transfer	pricing	methodology.

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,	Florida,	North	Carolina,	Kentucky,	Washington, D.C.,	Delaware,	Virginia,	Alabama,	Georgia,	Missouri,	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	sales	and	underwriting, loan	syndications,	mergers	and	acquisitions	advisory,	equity	capital	markets advisory	and	related	services.	We	also	provide	commercial	loan	servicing	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	by	driving solutions-based	selling,	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.	Our	Hawthorn	unit	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.	The	business	also	offers	PNC	proprietary	mutual	funds.	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,	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.	Our	equity	investment	in	BlackRock	provides	us	with	an	additional source	of	noninterest	income	and	increases	our	overall	revenue	diversification. 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,	2015	consisted	of	one	domestic subsidiary	bank,	including	its	subsidiaries,	and	approximately	70	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:

Short-term	borrowings	–	not	included	as average	balances	during	2015,	2014,	and 2013	were	less	than	30%	of	total shareholders'	equity	at	the	end	of	each period.

# 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	19	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	and	liquidity	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,	risk	management	effectiveness,	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 substantial	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 the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	(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,	capital	and liquidity	management,	the	structure	and	effectiveness	of	enterprise	risk management	frameworks,	and	cyber-security.	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	sectors	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

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,	some	of	the	details	and	the	full	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	and	subject	to	certain	exceptions	and	exemptions,	from engaging	in	proprietary	trading,	as	well	as	acquiring	or	retaining	ownership interests	in,	sponsoring,	and	having	certain	types	of	relationships	with	hedge funds,	private	equity	funds,	and	other	private	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's	enhanced	prudential	standards	related	to	liquidity	risk management	and	overall	risk	management	took	effect	for	PNC	on	January	1, 2015.	These	rules,	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. These	standards	also	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	Federal Reserve	continues	to	work	towards	finalizing	the	other	enhanced	prudential standards	that	it	must	establish	under	Dodd-Frank,	including	counterparty	credit exposure	limits	and	early	remediation	requirements.	For	additional	information see	Item	1A	Risk	Factors	of	this	Report.

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.	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.	The foundation	of	the	agencies'	regulatory	capital	rules	is	the	international	regulatory capital	framework	developed	by	the	Basel	Committee	on	Banking	Supervision (Basel	Committee),	the	international	body	responsible	for	developing	global regulatory	standards	for	banking	organizations	for	consideration	and	adoption	by national	jurisdictions.	In	July	2013,	the	U.S.	banking	agencies	adopted	rules	to implement	the	new	international	regulatory	capital	standards	established	by	the Basel	Committee,	known	as	"Basel	III",	as	well	as	to	implement	certain provisions	of	Dodd-Frank.	Many	provisions	are	phased-in	over	a	period	of	years, with	the	rules	generally	fully	phased-in	as	of	January	1,	2019.

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	(CET1) 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	well	as	mortgage	servicing	rights	and

deferred	tax	assets,	be	deducted	from	CET1	regulatory	capital	to	the	extent	such items	individually	exceed	10%,	or	in	the	aggregate	exceed	15%,	of	the organization's	adjusted	Basel	III	CET1	regulatory	capital.	Our	common	stock investment	in	BlackRock	is	treated	as	a	significant	common	stock	investment	in an	unconsolidated	financial	institution	for	these	purposes.	We	previously referred	to	Basel	III	CET1	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	CET1	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.

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.	Advanced	approaches	risk- weighted	assets	take	account	of	credit,	market	and	operational	risk	and	rely	to	a significant	extent	on	internal	models.	The	advanced	approaches	modifications adopted	by	the	U.S.	banking	agencies	became	effective	on	January	1,	2014,	and generally	apply	to	banking	organizations	(such	as	PNC	and	PNC	Bank)	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	fourth	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	risk-weighted assets	takes	into	account	credit	and	market	risk.	Under	the	standardized	approach for	credit	risk,	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.	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:	CET1	capital, additional	Tier	1	capital	(which,	together	with	CET1	capital,	comprises	Tier	1 capital)	and	Tier	2	capital.	CET1	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	CET1	capital.	Additional	Tier	1	capital	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,	less	any	required deductions	from	Tier	2	capital.	Total	capital	is	the	sum	of	Tier	1	capital	and	Tier 2	capital,	less	the	deductions	required	from	total	capital.

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 2015	were	based	on	the	definitions	of,	and	deductions	from,	capital	under	Basel III	(as	such	definitions	and	deductions	were	phased-in	for	2015)	and	the standardized	approach	for	determining	risk-weighted	assets.	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	and	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,	2015	exceeded	the	applicable minimum	levels	in	effect	for	2015.	For	additional	information	regarding	the Transitional	Basel	III	capital	ratios	of	PNC	and	PNC	Bank	as	of	December	31, 2015,	as	well	as	the	levels	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	CET1	ratio	of	4.5%,	a	Tier	1	capital	ratio	of	6.0%,	and	a	total	capital ratio	of	8.0%	to	be	considered	"adequately	capitalized."	The	Basel	III	capital rule	also	includes	a	capital	conservation	buffer	requirement	above	the	minimum risk-based	capital	ratio	requirements	that	banking	organizations	must	meet	in order	to	avoid	limitations	on	capital	distributions	(including	dividends	and repurchases	of

any	Tier	1	capital	instrument,	including	common	and	qualifying	preferred	stock) and	certain	discretionary	incentive	compensation	payments.	The	multi-year phase-in	of	the	capital	conservation	buffer	requirement	began	on	January	1, 2016,	and,	for	2016,	banking	organizations	(including	PNC	and	PNC	Bank)	are required	to	maintain	a	CET1	capital	ratio	of	at	least	5.125%,	a	Tier	1	capital ratio	of	at	least	6.625%,	and	a	total	capital	ratio	of	at	least	8.625%	to	avoid limitations	on	capital	distributions	and	certain	discretionary	incentive compensation	payments.	When	fully	phased-in	on	January	1,	2019,	banking organizations	must	maintain	a	CET1	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	and	certain	discretionary	incentive compensation	payments.

For	banking	organizations	that	are	subject	to	the	advanced	approaches	(such	as PNC	and	PNC	Bank),	these	higher	capital	conservation	buffer	levels	above	the regulatory	minimums	could	be	supplemented	by	a	countercyclical	capital	buffer based	on	U.S.	credit	exposures	of	up	to	an	additional	2.5%	of	risk-weighted assets	(once	fully	phased-in),	although	this	buffer	is	currently	set	at	zero	in	the United	States.	In	December	2015,	the	Federal	Reserve	issued	for	public comment	a	proposed	policy	statement	on	the	framework	and	factors	the	Federal Reserve	would	use	in	setting	and	adjusting	the	amount	of	the	U.S. countercyclical	capital	buffer.	Under	the	Basel	III	rule,	covered	banking organizations	would	generally	have	12	months	after	the	announcement	of	any increase	in	the	countercyclical	capital	buffer	to	meet	the	increased	buffer requirement	amount,	unless	the	Federal	Reserve	determines	to	establish	an earlier	effective	date.	Under	the	phase-in	schedule	for	the	countercyclical	capital buffer,	the	maximum	potential	countercyclical	capital	buffer	amount	is	0.625% in	2016,	1.25%	in	2017,	1.875%	in	2018,	and	2.5%	in	2019	and	thereafter.	When fully	phased-in	and	if	the	full	buffer	amount	is	implemented,	covered	banking organizations	would	be	required	to	maintain	a	CET1	capital	ratio	of	at	least 9.5%,	a	Tier	1	capital	ratio	of	at	least	11%,	and	a	total	capital	ratio	of	at	least 13%	to	avoid	limitations	on	capital	distributions	and	certain	discretionary incentive	compensation	payments.

In	July	2015,	the	Federal	Reserve	adopted	final	rules	to	apply	an	additional	risk- based	CET1	capital	surcharge	of	between	1.0%	and	4.5%	(when	fully	phased-in on	January	1,	2019)	to	U.S.	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,	PNC is	not	subject	to	this	GSIB	surcharge.

In	October	2015,	the	Federal	Reserve	requested	public	comment	on	proposed rules	that	would	require	U.S.	GSIBs	and	the	U.S.	operations	of	foreign-based GSIBs	to	meet	a	new	minimum	long-term	debt	requirement	and	a	new	minimum

total	loss-absorbing	capacity	(TLAC)	requirement.	Under	the	proposed	rules, once	the	requirements	are	fully	phased-in,	U.S.	GSIBs	would	be	required	to maintain	at	a	minimum	(i)	a	long-term	debt	amount	of	the	greater	of	6	percent plus	its	GSIB	risk-based	surcharge	of	risk-weighted	assets	or	4.5	percent	of	total leverage	exposure;	and	(ii)	a	TLAC	amount	of	the	greater	of	18	percent	of	risk- weighted	assets	or	9.5	percent	of	total	leverage	exposure.	As	proposed,	these requirements	would	not	apply	to	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,	2015,	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. The	supplementary	leverage	ratio	is	calculated	by	dividing	Tier	1	capital	by	total leverage	exposure	and	takes	into	account	on	balance	sheet	assets	as	well	as certain	off-balance	sheet	items,	including	loan	commitments	and	potential	future exposure	under	derivative	contracts.	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,	are	subject	to	a	higher supplementary	leverage	ratio	requirement.	These	higher	supplementary	leverage requirements	do	not	apply	to	PNC	or	PNC	Bank.

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	Federal	Deposit Insurance	Corporation	(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.	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	for	PNC	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,	2015,	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	revised	thresholds,	among	other	things,	(i)	include	the CET1	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 19	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,	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,	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 scenario	and	severely	adverse	scenario	provided	by	the	Federal	Reserve.	The Federal	Reserve	can	object	to	a	BHC's	capital	plan	for	qualitative	or	quantitative reasons,	in	which	case	the	BHC	cannot	make	capital	distributions	without specific	Federal	Reserve	approval.

In	evaluating	a	BHC's	capital	plan,	the	Federal	Reserve	considers	a	number	of qualitative	factors,	which	have	become	increasingly	important	in	the	CCAR process	in	recent	years.	The	Federal	Reserve's	supervisory	expectations	for	the capital	planning	and	stress	testing	processes	at	large	and	complex	BHCs, including	PNC,	are	heightened	relative	to	smaller	and	less	complex	BHCs.	In assessing	a	BHC's	capital	planning	and	stress	testing	processes,	the	Federal Reserve	considers	whether	the	BHC	has	sound	and	effective	governance	to oversee	these	processes.	The	Federal	Reserve's	evaluation

focuses	on	whether	a	BHC's	capital	planning	and	stress	testing	processes	are supported	by	a	strong	risk	management	framework	to	identify,	measure	and assess	material	risks	and	to	provide	a	strong	foundation	to	capital	planning.	The Federal	Reserve	also	considers	the	comprehensiveness	of	a	BHC's	control framework	and	evaluates	a	BHC's	policy	guidelines	for	capital	planning	and assessing	capital	adequacy.	A	BHC's	scenario	design	processes	and	approaches for	estimating	the	impact	of	stress	on	its	capital	position	are	comprehensively reviewed	to	ensure	that	projections	reflect	the	impact	of	appropriately	stressful conditions	on	its	capital	position.	Significant	deficiencies	in	a	BHC's	capital planning	and	stress	testing	processes	may	result	in	a	qualitative	objection	by	the Federal	Reserve	to	its	capital	plan.

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,	projected	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	and	any	applicable phase-in	periods.	Failure	to	meet	a	minimum	regulatory	risk-based	or	leverage capital	requirement	on	a	projected	stress	basis	is	grounds	for	objection	to	a BHC's	capital	plan.	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.

In	connection	with	the	2016	CCAR	exercise,	PNC	must	file	its	capital	plan	and stress	testing	results	using	financial	data	as	of	December	31,	2015	with	the Federal	Reserve	by	April	5,	2016.	PNC	expects	to	receive	the	Federal	Reserve's response	(either	a	non-objection	or	objection)	to	the	capital	plan	submitted	as part	of	the	2016	CCAR	in	June	2016.

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	2016	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	company'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	stress	test	using	financial	data

as	of	June	30	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	2016	stress	test	cycle,	PNC	must	publish	its results	in	the	period	between	October	5	and	November	4,	2016.

The	Federal	Reserve's	capital	plan	rule	provides	that	a	BHC	must	resubmit	a new	capital	plan	prior	to	the	annual	submission	date	if,	among	other	things,	there has	been	or	will	be	a	material	change	in	the	BHC's	risk	profile,	financial condition,	or	corporate	structure	since	its	last	capital	plan	submission.	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.

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

The	rules	adopted	by	the	U.S.	banking	agencies	to	implement	the	LCR	took effect	on	January	1,	2015.	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).	A	company'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).	However,	the	minimum	required	LCR	is	subject	to	a	phase-in.	The minimum	LCR	PNC	and	PNC	Bank	must	maintain	was	80%	in	2015,	increased to	90%	in	2016	and	increases	to	100%	when	fully	phased-in	starting	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.	An institution	required	to	calculate	its	LCR	on	a	month-end	basis	must	consult	with its	primary	federal	regulator	if	its	LCR	falls	below	the	required	minimum	for three	consecutive	days	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.

The	Federal	Reserve	also	has	adopted	new	liquidity	risk	management requirements	for	BHCs	with	$50	billion	or	more	in	consolidated	total	assets	(like PNC)	that	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.

For	additional	discussion	of	regulatory	liquidity	requirements,	please	refer	to	the Liquidity	Risk	Management	portion	of	the	Risk	Management	section	of	Item	7 of	this	Report.

In	November	2015,	the	Federal	Reserve	issued	a	proposed	rule	for	public comment	that	would	require	large	BHCs,	including	PNC,	to	publicly	disclose quantitative	and	qualitative	measures	of	their	liquidity	profile.	The	proposed disclosure	would	include	a	common	disclosure	template	that	would	include	the components	used	to	calculate	the	LCR	(e.g.,	HQLA,	cash	outflows	and	inflows for	the	consolidated	parent	company),	and	a	qualitative	discussion	of	the	LCR results,	including,	among	other	things,	key	drivers	of	the	results,	composition	of HQLA	and	concentration	of	funding	sources.	As	proposed,	PNC	would	be required	to	make	these	disclosures	starting	with	the	third	quarter,	2017.

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	19	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	of	Item	7	of	this	Report,	and	in	Note	11 Borrowed	Funds	and	Note	16	Equity	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	2016 CCAR,	discussed	above,	the	Federal	Reserve	stated	that	it	expects	capital	plans submitted	in	2016	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.	PNC	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	authorized	by	the	GLB	Act,	or	acquire	a	company engaged	in	such	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	(other	than insurance	underwriting	activities,	insurance	company	investment	activities	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	authorized	by	the	GLB	Act,	or	acquire	a company	engaged	in	such	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	Volcker	Rule's	prohibitions	and	restrictions	generally	became	effective	on July	21,	2015.	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	securities	underwriting, market	making	and	risk-mitigating	hedging	purposes,	and	to	trade	in	U.S. government	and	municipal	securities.	We	currently	do	not	expect	the	proprietary trading	aspects	of	the	final	rules	to	have	a	material	effect	on	PNC's	businesses	or revenue.	However,	the	limits	and	restrictions	of	the	Volcker	Rule	could, depending	on	the	agencies'	approach	to	interpreting	the	rules,	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.

The	rules	also	prohibit	banking	entities	from	acquiring	and	retaining	ownership interests	in,	sponsoring,	and	having	certain	relationships	with	private	funds	(such as,	for	example,	private	equity	and	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	rules.

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	held	or	existed 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	subject	to	the	Volcker	Rule.	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.	Laws	and regulations	limit	the	scope	of	our	permitted	activities	and	investments.	The federal	banking	agencies	also	possess	broad	powers	to	take	corrective	action	as deemed	appropriate	for	an	insured	depository	institution	and	its	holding company.

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	established	certain	heightened	risk management	and	governance	standards	for	large	banks,	including	PNC	Bank,	as enforceable	guidelines	under	section	39	of	the	Federal	Deposit	Insurance	Act (FDI	Act).	The	guidelines,	among	other	things,	establish	minimum	standards	for the	design	and	implementation	of	a	risk	governance	framework,	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	covered	bank	should	have	a	comprehensive	written	statement	that articulates	its	risk	appetite	and	serves	as	a	basis	for	the	framework	(a	risk appetite	statement).	If	the	OCC	determines	that	a	covered	national	bank	is	not	in compliance	with	these	or	other	guidelines	established	under	section	39	of	the FDI	Act	(including	the	guidelines	relating	to	information	security	standards),	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.

Sections	23A	and	23B	of	the	Federal	Reserve	Act	and	the	Federal	Reserve's implementing	regulation,	Regulation	W,	place	quantitative	and	qualitative restrictions	on	covered	transactions	between	a	bank	and	its	affiliates	(for example	between	PNC	Bank,	on	the	one	hand,	and	PNC	and	its	nonbank subsidiaries,	on	the	other	hand).	In	general,	section	23A	and	Regulation	W	limit the	total	amount	of	covered	transactions	between	a	bank	and	any	single	affiliate to	10	percent	of	the	bank's	capital	stock	and	surplus,	limit	the	total	amount	of covered	transactions	between	a	bank	and	all	its	affiliates	to	20	percent	of	the bank's	capital	stock	and	surplus,	prohibit	a	bank	from	purchasing	low-quality assets	from	an	affiliate,	and	require	certain	covered	transactions	to	be	secured with	prescribed	amounts	of	collateral.	Section	23B	generally	requires	that transactions	between	a	bank	and	its	affiliates	be	on	terms	that	are	at	least	as favorable	to	the	bank	as	the	terms	that	would	apply	in	comparable	transactions between	the	bank	and	a	third	party.	Dodd-Frank	amended	section	23A	of	the Federal	Reserve	Act	to	include	as	a	covered	transaction	the	credit	exposure	of	a bank	to	an	affiliate	arising	from	a	derivative	transaction	with	the	affiliate.	The Federal	Reserve	has	yet	to	propose	rules	to	implement	these	revisions.

The	Federal	Reserve's	prior	approval	is	required	whenever	we	propose	to acquire	all	or	substantially	all	of	the	assets	of	any	bank	or	savings	association,	to acquire	direct	or	indirect	ownership	or	control	of	more	than	5%	of	any	class	of voting	securities	of	any	bank	or	savings	association,	or	to	merge	or	consolidate with	any	other	BHC	or	savings	and	loan	holding	company.	The	BHC	Act	and other	federal	law	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	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	savings	association	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.	Approval	of	the	FDIC	is required	to	merge	a	nonbank	entity	into	PNC	Bank.	Our	ability	to	grow	through acquisitions	or	reorganize	our	operations	could	be	limited	by	these	approval requirements.

At	December	31,	2015,	PNC	Bank	had	an	"Outstanding"	rating	with	respect	to the	CRA.

As	a	national	bank,	PNC	Bank	is	required	to	be	a	member	of	the	Federal Reserve	System.	A	member	bank	is	required	to	subscribe	to	stock	in	its	regional Federal	Reserve	Bank	and	receives	an	annual	dividend	on	the	amount	of	paid-in stock.	Effective	January	1,	2016,	the	annual	dividend	rate	paid	by	a	Federal Reserve	Bank	to	stockholders	with	total	consolidated	assets	of	$10	billion	or more,	such	as	PNC	Bank,	was	changed	(from	a	flat	6	percent	rate)	to	be	the lower	of	(i)	the	rate	equal	to	the	high	yield	of	the	10-year	Treasury	note auctioned	at	the	last	auction	before	the	dividend	is	paid,	or	(ii)	6	percent.

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	deposit	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,	an	insured	depository	institution's	examination	rating and	the	amount	of	brokered	deposits	(as	defined	under	the	FDI	Act)	held	by	an insured	depository	institution,	among	other	things,	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.

Federal	banking	laws	and	regulations	also	apply	a	variety	of	requirements	or restrictions	on	insured	depository	institutions	with	respect	to	brokered	deposits. For	example,	brokered	deposits	are	generally	subject	to	higher	outflow assumptions	than	other	types	of	deposits	for	purposes	of	the	LCR.	In	2015,	the FDIC	issued	a	set	of	frequently	asked	questions	(FAQs)	regarding	the	definition of	brokered	deposits	under	the	FDI	Act	and	then	requested	public	comment	on potential	revisions	to	the	FAQs.

The	Dodd-Frank	Act	mandated	an	increase	in	the	Designated	Reserve	Ratio	(the balance	in	the	Deposit	Insurance	Fund	divided	by	estimated	insured	deposits) from	1.15%	to	1.35%	by	September	30,	2020,	and	required	that	insured depository	institutions	with	$10	billion	or	more	in	total	assets,	such	as	PNC,	bear the	cost	of	the	increase.	In	October	2015,	the	FDIC	requested	comment	on	a proposed	rule	that	would	impose	a	surcharge,	equal	to	4.5	basis	points	of	an institution's	deposit	insurance	assessment	base,	on	the	quarterly	deposit insurance	assessments	of	all	insured	depository	institutions	with	total consolidated	assets	of	$10	billion	or	more	(including	PNC	Bank)	in	order	to fund	this	increase	in	the	Designated	Reserve	Ratio.	Under	the	proposal,	the surcharge	would	take	effect	for	assessments	billed	after	the	Designated	Reserve Ratio	reaches	1.15	percent	(estimated	by	the	FDIC	to	most	likely	occur	in	the first	quarter	of	2016)	or	such	later	date	as	the	proposed	rule	is	finalized,	and would	continue	until	the	reserve	ratio	reached	1.35	percent	(estimated	by	the FDIC	to	occur	under	the	proposal	before	the	end	of	2018).	Based	on	data	as	of December	31,	2015,	we	estimate	that	the	net	effect	of	the	proposed	surcharge, together	with	the	scheduled	reduction	of	regular	assessments	that	will	go	into effect	when	the	Designated	Reserve	Ratio	reaches	1.15	percent,	would	increase PNC	Bank's	quarterly	assessment	by	approximately	$20	million.	The	comment period	closed	on	January	5,	2016.

Recovery	and	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	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	2015	resolution	plans under	these	rules	in	December	2015.

In	December	2015,	the	OCC	issued	for	public	comment	proposed	enforceable guidelines	under	section	39	of	the	FDI

Act	that	would	establish	standards	for	recovery	planning	for	insured	national banks,	with	average	total	consolidated	assets	of	$50	billion	or	more,	including PNC	Bank.	The	proposed	guidelines	would	require	a	covered	bank	to	develop and	maintain	a	recovery	plan	that,	among	other	things,	identifies	a	range	of options	that	could	be	undertaken	by	the	banking	organization	to	restore	its financial	and	operational	strength	and	viability	should	identified	triggering events	reflecting	the	banking	organization's	vulnerabilities	occur.	The	proposal does	not	specify	an	effective	date	for	the	guidelines.	The	public	comment	period for	the	enforceable	guidelines	closed	on	February	16,	2016.

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	deposit	products,	credit	card,	mortgage,	automobile	and other	consumer	loans,	and	other	consumer	financial	products	and	services	we offer.	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.	In	addition	to	these	authorities,	on	July	21,	2011,	and	pursuant	to	Dodd- Frank,	the	CFPB	assumed	authorities	under	other	consumer	financial	laws	in effect	on	that	date	governing	the	provision	of	consumer	financial	products	and services.

The	CFPB	has	engaged	in	extensive	rulemaking	activities,	including	adopting comprehensive	new	rules	on	mortgage	related	topics	required	under	Dodd- Frank,	including	borrower	ability-to-repay	and	qualified	mortgage	standards, mortgage	servicing	standards	and	loan	originator	compensation	standards.

In	October	2015,	broad	new	regulations	took	effect	that	substantially	revised	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.	The	CFPB	is	also	engaged	or	expected	to	engage	in rulemakings	that	impact	products	and	services	offered	by	PNC	Bank,	including regulations	impacting	prepaid	cards,	overdraft	fees	charged	on	deposit	accounts and	arbitration	provisions	included	in	customer	account	agreements.

# 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	registered	with	the	SEC	and	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.	Our	investment	adviser	subsidiary	that serves	as	adviser	to	registered	investment	companies	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,	investment	adviser	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	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	(and	for	certain	delegated	responsibilities,	the	National	Futures Association)	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.	These	provisions,	as	amended,	do	not	prohibit	PNC Bank	from	engaging	in	its	current	swap	activities.

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 •	Insurance	companies.

Competitors	may	seek	to	compete	with	us	through	traditional	channels	(such	as physical	locations)	or	primarily	through	on-line	or	mobile	channels.	We	include here	by	reference	the	additional	information	regarding	competition	and	factors affecting	our	competitive	position	included	in	the	Item	1A	Risk	Factors	of	this Report.

# Employees

Employees	totaled	52,513	at	December	31,	2015.	This	total	includes	49,148	full- time	and	3,365	part-time	employees,	of	which	21,896	full-time	and	2,877	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	The Tower	at	PNC	Plaza,	300	Fifth	Avenue,	Pittsburgh,	Pennsylvania	15222-2401. 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."	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	under	"About	Us	–	Investor	Relations"	shortly before	or	promptly	following	its	first	use	or	release:	financially-related	press releases,	including	earnings	releases,	and	supplemental	financial	information, various	SEC	filings,	including	annual,	quarterly	and	current	reports	and	proxy statements,	presentation	materials	associated	with	earnings	and	other	investor conference	calls	or	events,	and	access	to	live	and	recorded	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.	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.	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.

PNC	is	required	to	provide	additional	public	disclosure	regarding	estimated income,	losses	and	pro	forma	regulatory	capital	ratios	under	supervisory	and PNC-developed	hypothetical	severely	adverse	economic	scenarios,	as	well	as information	concerning	its	capital	stress	testing	processes,	pursuant	to	the	stress testing	regulations	adopted	by	the	Federal	Reserve	and	the	OCC.	PNC	is	also required	to	make	certain	additional	regulatory	capital-related	public	disclosures about	PNC's	capital	structure,	risk	exposures,	risk	assessment	processes,	risk- weighted	assets	and	overall	capital	adequacy,	including	market	risk-related disclosures,	under	the	regulatory	capital	rules	adopted	by	the	Federal	banking agencies.	Under	these	regulations,	PNC	may	satisfy	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 SEC.

Other	information	posted	on	our	corporate	website	that	may	not	be	available	in our	filings	with	the	SEC	include	information	relating	to	our	corporate governance	and	quarterly	and	annual	communications	from	our	chairman	to shareholders.

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	late	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	2008-2009	recession	continued	in	2015,	but	at a	slower	pace	than	for	recoveries	from	prior	recessions.	Although unemployment	rates	have	dropped	significantly	from	the	highest	levels	during the	recession,	wage	growth	has	been	muted.	Consumer	and	business	confidence is	improving	but	remains	in	the	cautious	zone.

The	beginning	of	2016	has	seen	significant	market	volatility	driven	in	part	by concerns	related	to,	among	other	things,	the	Chinese	economy	and	the	impact	of low	commodity	prices,	including	oil	and	gas.	The	continued	impact	of	these issues,	including	related	market	volatility,	could	adversely	affect	the	U.S.	or global	economies,	with	direct	or	indirect	impacts	on	PNC	and	its	business. Results	could	include	drops	in	consumer	and	business	confidence,	credit deterioration,	diminished	capital	markets	activity,	delays	in	Federal	Reserve increases	in	interest	rates,	and	reduced	exports	related	to	further	strengthening	of the	U.S.	dollar.

Over	the	last	several	years,	there	have	been	several	instances	where	there	has been	uncertainty	regarding	the	ability	of	Congress	and	the	President	collectively to	reach	agreement	on	federal	budgetary,	taxing	and	spending	matters.	A continuation	of	divisions	within	government	on	these	subjects,	which	could	be exacerbated	as	a	result	of	the	upcoming	presidential	and	congressional	elections, could	lead	to	increased	concern	on	these	topics,	which	could	affect	business activity	and	consumer	and	business	confidence.	A	period	of	failure	to	reach agreement	on	these	matters,	particularly	if	accompanied	by	an	actual	or threatened	government	shutdown	or	default,	would	likely	have	at	least	a	short term	adverse	impact	on	the	U.S.	economy.

The	global	recession	and	disruption	of	the	financial	markets	in	2008-2009	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	securities	and	the	importance	of	lending	to	our	overall	business.	We manage	credit	risk	by	assessing	and	monitoring	the	creditworthiness	of	our customers	and	counterparties,	by	diversifying	our	loan	portfolio	and	by	investing primarily	in	high	quality	securities.	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	and	securities	portfolio,	in	the	ordinary course	of	business,	we	may	have	concentrated	credit	exposure	to	a	particular person	or	entity,	industry,	region,	market	or	counterparty.	Loans	secured	by commercial	and	residential	real	estate	represent	a	significant	percentage	of	our overall	credit	portfolio	as	well	as	of	the	assets	underlying	our	investment securities.	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.	Although	the	Federal	Reserve	increased	its	benchmark	interest	rate	in December	2015,	ending	approximately	seven	years	of	near	zero	rates,	and	is expected	to	continue	raising	rates	through	2016,	there	is	no	assurance	that	it	will do	so,	particularly	in	light	of	recent	market	turmoil.	The	failure	to	continue raising	rates	could	affect	consumer	and	business	behavior	in	ways	that	are

adverse	to	us	in	addition	to	continuing	to	affect	our	net	interest	income.	Even	if the	Federal	Reserve	continues	to	increase	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.

While	we	have	not	experienced	negative	interest	rates	in	the	United	States,	some central	banks	in	Europe	and	Asia	have	cut	interest	rates	below	zero.	It	is	unclear what	the	impact	of	these	actions	will	be.	If	U.S.	interest	rates	fell	below	zero,	it could	significantly	affect	our	businesses	and	results	of	operation.

# 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, particularly	in	the	United	States,	Europe	and	Asia,	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	provisions	designed	to	protect	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	19	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	final	rules	implementing	the	Volcker	Rule	provisions	of	Dodd- Frank.	The	Volcker	Rule	prohibits	banks	and	their	affiliates	from engaging	in	proprietary	trading	and	acquiring	and	retaining	ownership interests	in,	sponsoring,	or	having	specified	other	financial relationships	with	certain	types	of	private	funds	(referred	to	as	covered funds),	unless	the	activity	qualifies	for	an	exemption	or	exception under	the	Rule.	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.

•	As	of	December	31,	2015,	PNC	held	interests	in	private	equity	and hedge	funds	that	are	covered	funds	subject	to	the	final	Volcker	Rule totaling	approximately	$446	million,	including	$128	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,	2015,	PNC	also	held approximately	$1.1	billion	of	senior	debt	interests	in	collateralized loan	obligations	and	certain	other	investment	securities	that	may	be considered	ownership	interests	in	covered	funds.	The	net	unrealized gain	associated	with	these	securities	was	approximately	$13	million.	In December	2014,	the	Federal	Reserve	extended	the	conformance	period for	the	Volcker	Rule,	which	generally	went	into	effect	on	July	21, 2015,	to	give	all	banking	entities	until	July	21,	2016	to	conform	their ownership	interests	in,	and	relationships	with,	covered	funds	subject	to the	Volcker	Rule	that	were	held	or	existed,	respectively,	prior	to December	31,	2013	(legacy	covered	fund	interests	and	relationships). Moreover,	the	Federal	Reserve	also	indicated	its	intent	to	grant	an additional	one-year	extension	of	the	conformance	period	until	July	21, 2017	to	conform	their	legacy	covered	fund	interests	and	relationships. PNC's	remaining	ownership	interests	in	and	sponsorship	relationships with	covered	funds	qualify	for	this	legacy	covered	fund	extended conformance	period.	Moreover,	certain	of	PNC's	legacy	covered	fund interests	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	addition,	if	we	cannot	otherwise	bring	PNC's	REIT	preferred securities	into	compliance	with	the	Volcker	Rule	during	the	applicable conformance	period,	we	will	need	to	redeem	them.	The	next	par redemption	date	for	such	securities	is	in	March	2017.	For	additional information	regarding	the	redemption	terms	of	PNC's	REIT	preferred securities,	see	Note	16	Equity	in	the	Notes	To	the	Consolidated Financial	Statements	in	Item	8	of	this	Report. •	The	Federal	Reserve	continues	to	develop	certain	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 BHCs	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. •	Dodd-Frank	requires	that	the	Federal	Reserve,	OCC,	FDIC,	National Credit	Union	Administration,	SEC	and	Federal	Housing	Finance Agency	jointly	adopt	regulations	or	guidelines	to	prohibit	incentive- based	compensation	arrangements	that	are	determined	to	encourage inappropriate	risk-taking	and	require	that	a	covered	institution	(which would	include	PNC	and	PNC	Bank)	provide	its	appropriate	regulator information	concerning	the	structure	of	its	incentive-based compensation	arrangements.	The	agencies	in	April	2011,	requested public	comment	on	proposed	rules	to	implement	these	requirements, but	agency	officials	have	indicated	that	the	rules	will	likely	be	re- proposed	in	modified	form	for	public	comment.	The	nature,	scope	and terms	of	any	final	regulations	adopted	by	the	agencies	could	negatively affect	PNC's	ability	to	attract	and	retain	officers	and	employees	with appropriate	skills	and	experience	and	compete	with	non-bank	financial services	providers	that	would	not	be	subject	to	these	rules. •	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 took	effect	on	December	24,	2015

with	respect	to	new	securitization	transactions	backed	by	residential mortgages	and	will	take	effect	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.	Although	the	initial	impact	of	the	regulations	that	took effect	in	December	2015	has	not	been	material,	the	ultimate	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.

PNC	also	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	are	now	effective	for	PNC,	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	liquidity	standards	applicable	to	large	U.S.	banking	organizations	also	are expected	to	be	supplemented	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.	The	U.S.	banking	agencies have	not	yet	proposed	rules	to	implement	the	NSFR	and,	thus,	the	potential impact	of	the	rules	on	PNC	remains	unclear.

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	relate	to	the	potential	for	bad	acts	on	the part	of	hackers,	criminals,	foreign	governments	or	their	agents,	employees	and others,	and	to	some	extent	will	be	beyond	our	ability	to	prevent.	In	other	cases, our	systems	could	fail	to	operate	as	needed,	including	failures	to	prevent	access in	an	unauthorized	manner,	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,	or	destroy,	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	and	may	provide	their	PNC customer	information	(including	passwords)	to	a	third	party	in	connection	with obtaining	services	from	the	third	party.	We	have	limited	ability	to	assure	the safety	and	security	of	our	customers'	transactions	with	us	and	their	customer information	to	the	extent	they	are	utilizing	their	own	devices	or	providing	third parties	access	to	their	accounts.

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	few	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 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	one	or	more	adverse	events	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,	including	demands	for faster	and	more	secure	payment	services,	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	or	estimating	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	model	output	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	20	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	20 Legal	Proceedings	and	Note	21	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	their	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	20	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.	Banks	generally	are	facing	the	risk	of	increased competition	from	products	and	services	offered	by	non-bank	financial technology	companies,	particularly	related	to	payment	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	The Tower	at	PNC	Plaza,	Pittsburgh,	Pennsylvania.	The	33-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	20	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	22,	2016	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	2016	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.	Mr.	Guyaux	has	announced	that	he	will retire	in	the	spring	of	2016.

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.	Mr.	Hall	has	announced	that	he	will	retire on	July	1,	2016.

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.	In	February 2016,	Mr.	Jordan	was	also	appointed	Chief	Administrative	Officer.	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.	Ms.	Larrimer	will	become	head	of	PNC's Retail	Banking	later	this	year	in	addition	to	retaining	her	role	as	Chief	Customer Officer.

Michael	P.	Lyons	has	been	an	Executive	Vice	President	since	November	2011 and	is	head	of	PNC's	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.

E	William	Parsley,	III	has	served	as	Treasurer	and	Chief	Investment	Officer since	January	2004.	He	was	appointed	Executive	Vice	President	in	February 2009.	In	addition	to	retaining	his	current	roles,	Mr.	Parsley	will	become	head	of PNC	Mortgage	in	spring	2016	upon	Mr.	Guyaux's	retirement.

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	Controller	of	PNC	since	2011.	He	was appointed	as	Senior	Vice	President	in	November	2010.

# DIRECTORS	OF	THE	REGISTRANT

The	name,	age	and	principal	occupation	of	each	of	our	directors	as	of	February 22,	2016	and	the	year	he	or	she	first	became	a	director	is	set	forth	below:

•	Charles	E.	Bunch,	66,	Executive	Chairman	of	PPG	Industries,	Inc.

(coatings,	sealants	and	glass	products)	(2007)

•	Paul	W.	Chellgren,	73,	Operating	Partner,	Snow	Phipps	Group,	LLC

•	Marjorie	Rodgers	Cheshire,	47,	President	and	Chief	Operating	Officer,

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

•	William	S.	Demchak,	53,	Chairman,	Chief	Executive	Officer	and President	of	PNC	(2013)

•	Andrew	T.	Feldstein,	51,	Chief	Executive	Officer	and	Co-Chief

Investment	Officer	of	BlueMountain	Capital	Management,	LLC	(asset

•	Daniel	R.	Hesse,	62,	Retired	President	and	Chief	Executive	Officer	of Sprint	Corporation	(telecommunications)	(2016)

•	Kay	Coles	James,	66,	President	and	Founder	of	The	Gloucester Institute	(non-profit)	(2006)

•	Richard	B.	Kelson,	69,	Chairman,	President	and	Chief	Executive

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

•	Anthony	A.	Massaro,	71,	Retired	Chairman	and	Chief	Executive

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

•	Jane	G.	Pepper,	70,	Retired	President	of	the	Pennsylvania	Horticultural Society	(non-profit)	(1997)

•	Donald	J.	Shepard,	69,	Retired	Chairman	of	the	Executive	Board	and Chief	Executive	Officer	of	AEGON	N.V.	(insurance)	(2007) •	Lorene	K.	Steffes,	70,	Independent	Business	Advisor	(executive, business	management	and	technical	expertise)	(2000)

•	Dennis	F.	Strigl,	69,	Retired	President	and	Chief	Operating	Officer	of Verizon	Communications	Inc.	(telecommunications)	(2001) •	Thomas	J.	Usher,	73,	Non-executive	Chairman	of	Marathon	Petroleum Corporation	(oil	and	gas	industry)	(1992)

•	Michael	J.	Ward,	65,	Chairman	and	Chief	Executive	Officer	CSX Corporation	(railroads,	transportation)	(2016)

•	Gregory	D.	Wasson,	57,	Retired	President	and	Chief	Executive	Officer of	Walgreens	Boots	Alliance	(pharmacy,	health	and	wellbeing enterprise)	(2015)

# 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	17,	2016, there	were	64,309	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	and	certain	outstanding	capital	securities	issued	by	the	parent company	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	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	and	the Liquidity	Risk	Management	portion	of	the	Risk	Management	section	in	Item	7, and	Note	11	Borrowed	Funds,	Note	16	Equity	and	Note	19	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,	2015	in	the	table	(with	introductory	paragraph	and	notes)	that appears	under	the	caption	"Approval	of	2016	Incentive	Award	Plan	–	Item	3"	in our	Proxy	Statement	to	be	filed	for	the	2016	annual	meeting	of	shareholders	and is	incorporated	by	reference	herein	and	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	2015	are	included	in	the	following	table:

# In	thousands,	except	per	share	data

(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	12	Employee	Benefit	Plans	and	Note	13 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	March	11,	2015,	we	announced	that	our	Board	of	Directors	had	approved	the	establishment	of	a new	stock	repurchase	program	authorization	in	the	amount	of	100	million	shares	of	PNC	common stock,	effective	April	1,	2015.	Repurchases	are	made	in	open	market	or	privately	negotiated transactions	and	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	as part	of	the	CCAR	process.

Our	2015	capital	plan,	submitted	as	part	of	the	CCAR	process	and	accepted	by	the	Federal	Reserve, included	share	repurchase	programs	of	up	to	$2.875	billion	for	the	five	quarter	period	beginning with	the	second	quarter	of	2015.	This	amount	does	not	include	share	repurchases	in	connection	with various	employee	benefit	plans	referenced	in	note	(a).	In	the	fourth	quarter	of	2015,	in	accordance with	PNC's	2015	capital	plan	and	under	the	share	repurchase	authorization	in	effect	during	that period,	we	repurchased	5.8	million	shares	of	common	stock	on	the	open	market,	with	an	average price	of	$92.26	per	share	and	an	aggregate	repurchase	price	of	$.5	billion.

# 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,	2015,	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,	2011	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,\t2010 | Market\ton\tDecember\t31,\t2010 | Market\ton\tDecember\t31,\t2010 | 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.\t10\n\tDec.\t11 | \tDec.\t12 | \tDec.\t13 | \tDec.\t14 | \tDec.\t15 |  |
| PNC | 100 | 96.94\t\t\t\t100.49\t\t\t\t137.13\t\t\t\t164.99\t\t\t\t176.22 | 96.94\t\t\t\t100.49\t\t\t\t137.13\t\t\t\t164.99\t\t\t\t176.22 | 96.94\t\t\t\t100.49\t\t\t\t137.13\t\t\t\t164.99\t\t\t\t176.22 | 96.94\t\t\t\t100.49\t\t\t\t137.13\t\t\t\t164.99\t\t\t\t176.22 | 12.00% |
| S&P\t500\tIndex | 100\t\t\t\t102.11\t\t\t\t118.44\t\t\t\t156.78\t\t\t\t178.22\t\t\t\t180.67 | 100\t\t\t\t102.11\t\t\t\t118.44\t\t\t\t156.78\t\t\t\t178.22\t\t\t\t180.67 | 100\t\t\t\t102.11\t\t\t\t118.44\t\t\t\t156.78\t\t\t\t178.22\t\t\t\t180.67 | 100\t\t\t\t102.11\t\t\t\t118.44\t\t\t\t156.78\t\t\t\t178.22\t\t\t\t180.67 | 100\t\t\t\t102.11\t\t\t\t118.44\t\t\t\t156.78\t\t\t\t178.22\t\t\t\t180.67 | 12.56% |
| S&P\t500\tBanks | 100 | 89.28\t\t\t\t110.76\t\t\t\t150.33\t\t\t\t173.64\t\t\t\t175.12 | 89.28\t\t\t\t110.76\t\t\t\t150.33\t\t\t\t173.64\t\t\t\t175.12 | 89.28\t\t\t\t110.76\t\t\t\t150.33\t\t\t\t173.64\t\t\t\t175.12 | 89.28\t\t\t\t110.76\t\t\t\t150.33\t\t\t\t173.64\t\t\t\t175.12 | 11.86% |
| Peer\tGroup | 100 | 89.57\t\t\t\t108.81\t\t\t\t151.61\t\t\t\t164.35\t\t\t\t164.38 | 89.57\t\t\t\t108.81\t\t\t\t151.61\t\t\t\t164.35\t\t\t\t164.38 | 89.57\t\t\t\t108.81\t\t\t\t151.61\t\t\t\t164.35\t\t\t\t164.38 | 89.57\t\t\t\t108.81\t\t\t\t151.61\t\t\t\t164.35\t\t\t\t164.38 | 10.45% |

The	Peer	Group	for	the	preceding	chart	and	table	consists	of	the	following companies:	BB&T	Corporation;	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	2015	by	the	Board's	Personnel	and Compensation	Committee.	Such	Committee	has	approved	the	same	peer	group for	2016.

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, 2010	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 | 2015	(a) | 2014	(a) | 2013	(a) | 2012	(a) | 2011 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| SUMMARY\tOF\tOPERATIONS |  |  |  |  |  |
| Interest\tincome | \t\t $9,323 | $9,431 | $10,007 | $10,734 | $10,194 |
| Interest\texpense | 1,045 | 906 | 860 | 1,094 | 1,494 |
| Net\tinterest\tincome | 8,278 | 8,525 | 9,147 | 9,640 | 8,700 |
| Noninterest\tincome | 6,947 | 6,850 | 6,865 | 5,872 | 5,626 |
| Total\trevenue | \t 15,225 | \t 15,375 | \t 16,012 | \t 15,512 | \t 14,326 |
| Provision\tfor\tcredit\tlosses | 255 | 273 | 643 | 987 | 1,152 |
| Noninterest\texpense | 9,463 | 9,488 | 9,681 | \t 10,486 | 9,022 |
| Income\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | 5,507 | 5,614 | 5,688 | 4,039 | 4,152 |
| Income\ttaxes | 1,364 | 1,407 | 1,476 | 1,045 | 1,087 |
| Net\tincome | 4,143 | 4,207 | 4,212 | 2,994 | 3,065 |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 37 | 23 | 11 | (7) | 16 |
| Preferred\tstock\tdividends | 220 | 232 | 237 | 177 | 56 |
| Preferred\tstock\tdiscount\taccretion\tand\tredemptions | 5 | 5 | 12 | 4 | 2 |
| Net\tincome\tattributable\tto\tcommon\tshareholders | \t\t $3,881 | $3,947 | $3,952 | $2,820 | $2,991 |
| PER\tCOMMON\tSHARE |  |  |  |  |  |
| Basic\tearnings | \t\t $7.52 | $7.44 | $7.45 | $5.33 | $5.69 |
| Diluted\tearnings | \t\t $7.39 | $7.30 | $7.36 | $5.28 | $5.62 |
| Book\tvalue | \t\t $81.84 | $77.61 | $72.07 | $66.95 | $61.44 |
| Cash\tdividends\tdeclared | \t\t $2.01 | $1.88 | $1.72 | $1.55 | $1.15 |
| (a) |  |  |  |  |  |

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

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 | 2015\t(a) | 2014\t(a) | 2013\t(a) | 2012\t(a) | 2011 |
| BALANCE\tSHEET\tHIGHLIGHTS |  |  |  |  |  |
| Assets\t(b) | \t\t $358,493 | $345,072 | $320,192 | $305,029 | $271,141 |
| Loans\t(b)\t(c) | \t 206,696 | \t 204,817 | \t 195,613 | \t 185,856 | \t 159,014 |
| Allowance\tfor\tloan\tand\tlease\tlosses\t(b) | 2,727 | 3,331 | 3,609 | 4,036 | 4,347 |
| Interest-earning\tdeposits\twith\tbanks\t(b)\t(d) | 30,546 | 31,779 | 12,135 | 3,984 | 1,169 |
| Investment\tsecurities\t(b) | 70,528 | 55,823 | 60,294 | 61,406 | 60,634 |
| Loans\theld\tfor\tsale\t(c) | 1,540 | 2,262 | 2,255 | 3,693 | 2,936 |
| Goodwill | 9,103 | 9,103 | 9,074 | 9,072 | 8,285 |
| Mortgage\tservicing\trights | 1,589 | 1,351 | 1,636 | 1,071 | 1,117 |
| Equity\tinvestments\t(b)\t(e) | 10,587 | 10,728 | 10,560 | 10,799 | 10,070 |
| Other\tassets\t(b)\t(c) | 23,092 | 23,482 | 22,552 | 23,679 | 22,698 |
| Noninterest-bearing\tdeposits | 79,435 | 73,479 | 70,306 | 69,980 | 59,048 |
| Interest-bearing\tdeposits | \t 169,567 | \t 158,755 | \t 150,625 | \t 143,162 | \t 128,918 |
| Total\tdeposits | \t 249,002 | \t 232,234 | \t 220,931 | \t 213,142 | \t 187,966 |
| Borrowed\tfunds\t(b)\t(c)\t(f) | 54,532 | 56,768 | 46,105 | 40,907 | 36,704 |
| Total\tshareholders'\tequity | 44,710 | 44,551 | 42,334 | 38,948 | 34,010 |
| Common\tshareholders'\tequity | 41,258 | 40,605 | 38,392 | 35,358 | 32,374 |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | 130 | 503 | 436 | 834 | (105) |
| CLIENT\tINVESTMENT\tASSETS\t(billions) |  |  |  |  |  |
| Discretionary\tclient\tassets\tunder\tmanagement | \t\t $134 | $135 | $127 | $112 | $107 |
| Nondiscretionary\tclient\tassets\tunder\tmanagement | 125 | 128 | 120 | 112 | 103 |
| Total\tclient\tassets\tunder\tadministration | 259 | 263 | 247 | 224 | 210 |
| Brokerage\taccount\tclient\tassets | 43 | 43 | 41 | 38 | 34 |
| Total | \t\t $302 | $306 | $288 | $262 | $244 |
| SELECTED\tRATIOS |  |  |  |  |  |
| Net\tinterest\tmargin\t(g) | 2.74% | 3.08% | 3.57% | 3.94% | 3.92% |
| Noninterest\tincome\tto\ttotal\trevenue | 46 | 45 | 43 | 38 | 39 |
| Efficiency | 62 | 62 | 60 | 68 | 63 |
| Return\ton |  |  |  |  |  |
| Average\tcommon\tshareholders'\tequity | 9.50 | 9.91 | 10.85 | 8.29 | 9.56 |
| Average\tassets | 1.17 | 1.28 | 1.38 | 1.02 | 1.16 |
| Loans\tto\tdeposits | 83 | 88 | 89 | 87 | 85 |
| Dividend\tpayout | 27.0 | 25.3 | 23.1 | 29.1 | 20.2 |
| Transitional\tBasel\tIII\tcommon\tequity\tTier\t1\tcapital\tratio\t(h)\t(i)\t(j) | 10.6 | 10.9 | N/A | N/A | N/A |
| Transitional\tBasel\tIII\tTier\t1\trisk-based\tcapital\tratio\t(h)\t(i)\t(j) | 12.0 | 12.6 | N/A | N/A | N/A |
| Pro\tforma\tfully\tphased-in\tBasel\tIII\tcommon\tequity\tTier\t1\tcapital\tratio\t(i)\t(j)\t(k) | 10.0 | 10.0 | 9.4 | 7.5 | N/A |
| Basel\tI\tTier\t1\tcommon\tcapital\tratio\t(j) | N/A | N/A | 10.5 | 9.6 | 10.3 |
| Basel\tI\tTier\t1\trisk-based\tcapital\tratio\t(j) | N/A | N/A | 12.4 | 11.6 | 12.6 |
| Common\tshareholders'\tequity\tto\ttotal\tassets | 11.5 | 11.8 | 12.0 | 11.6 | 11.9 |
| Average\tcommon\tshareholders'\tequity\tto\taverage\tassets | 11.5 | 12.1 | 11.9 | 11.5 | 11.9 |
| SELECTED\tSTATISTICS |  |  |  |  |  |
| Employees | 52,513 | 53,587 | 54,433 | 56,285 | 51,891 |
| Retail\tBanking\tbranches | 2,616 | 2,697 | 2,714 | 2,881 | 2,511 |
| ATMs | 8,956 | 8,605 | 7,445 | 7,282 | 6,806 |
| Residential\tmortgage\tservicing\tportfolio\t–\tServiced\tfor\tThird\tParties\t(in\tbillions) | \t\t $123 | $108 | $114 | $119 | $118 |
| Commercial\tloan\tservicing\tportfolio\t–\tServiced\tfor\tPNC\tand\tOthers\t(in\tbillions) | \t\t $447 | $377 | $347 | $322 | $309 |
| (a) |  |  |  |  |  |

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

(c) 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.

(e) Amounts	include	our	equity	interest	in	BlackRock.

(g) 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 2015,	2014,	2013,	2012	and	2011	were	$196	million,	$189	million,	$168	million,	$144	million	and	$104	million,	respectively.

(h) Calculated	using	the	regulatory	capital	methodology	applicable	to	PNC	during	2015	and	2014,	respectively.

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

(j) See	additional	information	on	the	pro	forma	ratios,	the	2014	Transitional	Basel	III	ratios	and	Basel	I	ratios	in	the	Statistical	Information	(Unaudited)	section	in	Item	8	of	this	Report.

(k) Pro	forma	ratios	as	of	December	31,	2015,	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	2012	and	2013	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.

# 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	financial objectives.	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	to	meet	the	broad range	of	financial	needs	of	our	customers.

Our	strategic	priorities	are	designed	to	enhance	value	over	the	long	term.	A	key priority	is	to	build	a	leading	banking	franchise	in	our	underpenetrated geographic	markets.	In	addition,	we	are	seeking	to	attract	more	of	the	investable assets	of	new	and	existing	clients.	PNC	is	focused	on	redefining	the	retail banking	experience	by	transforming	to	a	more	customer-centric	and	sustainable model	while	lowering	delivery	costs	as	customer	banking	preferences	evolve. Additionally,	we	continue	to	focus	on	expense	management	while	investing	in technology	to	bolster	critical	business	infrastructure	and	streamline	core processes.

Our	capital	priorities	are	to	support	client	growth	and	business	investment, maintain	appropriate	capital	in	light	of	economic	conditions	and	the	Basel	III framework	and	return	excess	capital	to	shareholders,	in	accordance	with	the capital	plan	included	in	the	current	Comprehensive	Capital	Analysis	and	Review (CCAR)	submission	to	the	Board	of	Governors	of	the	Federal	Reserve	System (Federal	Reserve).	New	regulatory	short-term	liquidity	standards	became effective	for	PNC	and	PNC	Bank,	National	Association	(PNC	Bank)	beginning January	1,	2015.	For	more	detail,	see	the	Balance	Sheet,	Liquidity	and	Capital Highlights	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.

# Key	Factors	Affecting	Financial	Performance

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.

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

•	Domestic	and	global	economic	conditions,	including	the	continuity,

speed	and	stamina	of	the	current	U.S.	economic	expansion	in	general and	its	impact	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;

•	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	by	the	Dodd-Frank legislation	and	other	legislative,	regulatory	and	administrative initiatives	and	actions,	including	those	outlined	elsewhere	in	this Report	and	in	subsequent	filings	with	the	SEC;

•	The	impact	of	market	credit	spreads	on	asset	valuations;

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

•	Customer	demand	for	non-loan	products	and	services.

In	addition,	our	success	will	depend	upon,	among	other	things:

•	Focused	execution	of	our	strategic	priorities	and	achieving	targeted outcomes,	including	our	ability	to:

•	Build	a	leading	banking	franchise	in	our	underpenetrated geographic	markets;

•	Grow	profitability	through	the	acquisition	and	retention	of

customers	and	deepening	relationships	that	meet	our	risk/return measures;

•	Increase	revenue	from	fee	income	and	provide	innovative	and valued	products	and	services	to	our	customers;

•	Bolster	our	critical	infrastructure	and	streamline	our	core processes;

•	Utilize	technology	to	develop	and	deliver	products	and	services to	our	customers	and	protect	PNC's	systems	and	customer information;	and

•	Sustain	our	expense	management.

•	Effectively	managing	capital	and	liquidity	including:

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

•	Prudent	liquidity	and	capital	management	to	meet	evolving regulatory	capital,	capital	planning,	stress	testing	and	liquidity standards;	and

•	Actions	we	take	within	the	capital	and	other	financial	markets. •	Managing	credit	risk	in	our	portfolio;

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

•	The	impact	of	legal	and	regulatory-related	contingencies;	and •	The	appropriateness	of	reserves	needed	for	critical	accounting estimates	and	related	contingencies.

For	additional	information,	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 | 2015 | 2014 |
| :--- | :--- | :--- |
| Net\tincome\t(millions) | $4,143 | $4,207 |
| Diluted\tearnings\tper\tcommon\tshare\tfrom\tnet |  |  |
| income\nReturn\tfrom\tnet\tincome\ton: | $7.39 | $7.30 |
| Average\tcommon\tshareholders'\tequity | 9.50% | 9.91% |
| Average\tassets | 1.17% | 1.28% |

# Income	Statement	Highlights

Our	performance	in	2015	included	the	following: •	Net	income	for	2015	of	$4.1	billion	decreased	2%	compared	to	2014, as	a	1%	decline	in	revenue	was	partially	offset	by	reductions	in noninterest	expense	and	the	provision	for	credit	losses.	Lower	revenue was	driven	by	a	3%	decrease	in	net	interest	income,	offset	in	part	by	a 1%	increase	in	noninterest	income	reflecting	strong	fee	income growth.	For	additional	detail,	see	the	Consolidated	Income	Statement Review	section	in	this	Item	7.

•	Net	interest	income	of	$8.3	billion	for	2015	decreased	3%	compared	to 2014	due	to	lower	purchase	accounting	accretion	and	lower	interest- earning	asset	yields,	partially	offset	by	commercial	and	commercial real	estate	loan	growth	and	higher	securities	balances.

•	Net	interest	margin	decreased	to	2.74%	for	2015	compared	to	3.08% for	2014,	principally	due	to	the	impact	of	increasing	the	company's liquidity	position,	lower	benefit	from	purchase	accounting	accretion, and	lower	loan	and	securities	yields.

•	Noninterest	income	of	$6.9	billion	for	2015	increased	1%	compared with	2014,	primarily	driven	by	strong	growth	in	consumer	and corporate	services	fees	and	asset	management	revenue,	partially	offset by	lower	gains	on	asset	sales	and	lower	residential	mortgage	revenue. •	The	provision	for	credit	losses	decreased	to	$255	million	for	2015 compared	to	$273	million	for	2014	due	to	improved	credit	quality. •	Noninterest	expense	decreased	$25	million	to	$9.5	billion	for	2015 compared	to	2014,	reflecting	PNC's	focus	on	expense	management	as higher	personnel	expense	associated	with	higher	business	activity	and investments	in	technology	and	business	infrastructure	were	more	than offset	by	lower	legal	and	residential	mortgage	compliance	costs	and lower	third	party	expenses.

# Credit	Quality	Highlights

•	Overall	credit	quality	in	2015	improved	from	2014.	For	additional detail,	see	the	Credit	Risk	Management	portion	of	the	Risk Management	section	of	this	Item	7.

•	Overall	loan	delinquencies	of	$1.6	billion	at	December	31,	2015 decreased	$.3	billion,	or	16%,	compared	with	December	31,	2014. •	Net	charge-offs	of	$.4	billion	in	2015	declined	27%	compared	to	net charge-offs	of	$.5	billion	for	2014.	Net	charge-offs	were	0.19%	of average	loans	in	2015	and	0.27%	of	average	loans	in	2014. •	The	allowance	for	loan	and	lease	losses	was	1.32%	of	total	loans	and 128%	of	nonperforming	loans	at	December	31,	2015,	compared	with 1.63%	and	133%	at	December	31,	2014,	respectively.	The	decline	in these	ratios	reflected	PNC's	implementation	of	its	change	in	the derecognition	policy	for	purchased	impaired	pooled	consumer	and residential	real	estate	loans,	effective	December	31,	2015.	This	change resulted	in	the	derecognition	of	the	recorded	investment	balance included	in	total	loans	and	the	associated	allowance	for	loan	losses balance	each	by	$468	million.

For	additional	detail,	see	the	Credit	Risk	Management	portion	of	the	Risk Management	section	and	the	Purchase	Accounting	Accretion	and	Valuation	of Purchased	Impaired	Loans	portion	of	the	Consolidated	Balance	Sheet	Review	of this	Item	7.

# Balance	Sheet,	Liquidity	and	Capital	Highlights

PNC's	balance	sheet	was	well-positioned	at	December	31,	2015	reflecting	strong liquidity	and	capital	positions.

•	Total	commercial	lending	grew	$5.2	billion,	or	4%,	as	a	result	of increases	in	commercial	real	estate	and	commercial	loans.

•	Total	consumer	lending	decreased	$3.3	billion,	or	4%,	due	to declines	in	home	equity,	education,	and	automobile	loans,	and included	declines	in	the	non-strategic	consumer	loan	portfolio. •	Total	deposits	increased	$16.8	billion,	or	7%,	to	$249.0	billion	at December	31,	2015	compared	with	December	31,	2014,	reflecting overall	strong	deposit	growth.

•	PNC's	balance	sheet	remained	core	funded	with	a	loans	to	deposits ratio	of	83%	at	December	31,	2015.

•	PNC	maintained	a	strong	liquidity	position.

•	New	regulatory	short-term	liquidity	standards	became	effective for	PNC	and	PNC	Bank	as	advanced	approaches	banking organizations	beginning	January	1,	2015,	with	a	minimum

phased-in	Liquidity	Coverage	Ratio	(LCR)	requirement	of	80%

in	2015,	calculated	as	of	month	end.

•	The	Liquidity	Coverage	Ratio	at	December	31,	2015	exceeded

•	PNC	maintained	a	strong	capital	position.

•	The	Transitional	Basel	III	common	equity	Tier	1	capital	ratio was	10.6%	at	December	31,	2015	and	10.9%	at	December	31, 2014,	calculated	using	the	regulatory	capital	methodologies applicable	to	PNC	during	2015	and	2014,	respectively.

•	Pro	forma	fully	phased-in	Basel	III	common	equity	Tier	1 capital	ratio	was	an	estimated	10.0%	at	both	December	31,	2015 and	December	31,	2014	based	on	the	standardized	approach rules.	See	the	Capital	discussion	and	Table	19	in	the Consolidated	Balance	Sheet	Review	section	of	this	Item	7	and the	December	31,	2014	capital	ratio	tables	in	the	Statistical Information	(Unaudited)	section	in	Item	8	of	this	Report	for more	detail.

•	PNC	returned	capital	to	shareholders	during	2015.

•	For	full	year	2015,	PNC	repurchased	22.3	million	common shares	for	$2.1	billion.

•	In	April	2015,	the	Board	of	Directors	raised	the	quarterly	cash dividend	on	common	stock	to	51	cents	per	share,	an	increase	of 3	cents	per	share,	or	6%,	effective	with	the	May	dividend. •	In	May	2015,	we	redeemed	$500	million	of	PNC's	Fixed-to- Floating	Rate	Non-Cumulative	Perpetual	Preferred	Stock,	Series K,	as	well	as	all	Depositary	Shares	representing	interests	therein.

See	the	Capital	portion	of	the	Consolidated	Balance	Sheet	Review	for	more detail	on	the	2015	preferred	stock	redemption	and	common	share	repurchases, including	the	completion	of	share	repurchases	included	in	our	2014	capital	plan and	repurchases	authorized	by	our	2015	capital	plan,	and	the	Liquidity	Risk Management	portion	of	the	Risk	Management	section	of	this	Item	7	for	more detail	on	our	other	2015	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	as	part	of	the	CCAR	process.	For additional	information,	see	the	Supervision	and	Regulation	section	in	Item	1 Business	of	this	Report.

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	2015	and	2014	and	balances	at	December	31,	2015	and December	31,	2014,	respectively.

# Average	Consolidated	Balance	Sheet	Highlights

# Table	2:	Summarized	Average	Balance	Sheet

| Year	ended	December	31 |  |  | Change |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | 2015 | 2014 | $% | $% |
| Average\tassets |  |  |  |  |
| Interest-earning\tassets |  |  |  |  |
| Investment\tsecurities | $61,665\t\t\t$ | 55,820 | $5,845\t\t\t\t10% | $5,845\t\t\t\t10% |
| Loans | \t 205,349\t\t\t\t 199,648 | \t 205,349\t\t\t\t 199,648 | 5,701 | 3% |
| Interest-earning\tdeposits\twith\tbanks | 32,908 | 19,204 | \t 13,704\t\t\t\t71% | \t 13,704\t\t\t\t71% |
| Other | 8,903 | 8,633 | 270 | 3% |
| Total\tinterest-earning\tassets | \t 308,825\t\t\t\t 283,305 | \t 308,825\t\t\t\t 283,305 | \t 25,520 | 9% |
| Noninterest-earning\tassets | 46,139 | 44,548 | 1,591 | 4% |
| Total\taverage\tassets | $354,964\t\t\t$327,853 | $354,964\t\t\t$327,853 | $27,111 | 8% |
| Average\tliabilities\tand\tequity |  |  |  |  |
| Interest-bearing\tliabilities |  |  |  |  |
| Interest-bearing\tdeposits | $163,965\t\t\t$152,814 | $163,965\t\t\t$152,814 | $11,151 | 7% |
| Borrowed\tfunds | 56,513 | 48,817 | 7,696\t\t\t\t16% | 7,696\t\t\t\t16% |
| Total\tinterest-bearing\tliabilities | \t 220,478\t\t\t\t 201,631 | \t 220,478\t\t\t\t 201,631 | \t 18,847 | 9% |
| Noninterest-bearing\tdeposits | 76,398 | 70,108 | 6,290 | 9% |
| Other\tliabilities | 12,210 | 10,768 | 1,442\t\t\t\t13% | 1,442\t\t\t\t13% |
| Equity | 45,878 | 45,346 | 532 | 1% |
| Total\taverage\tliabilities\tand\tequity | $354,964\t\t\t$327,853 | $354,964\t\t\t$327,853 | $27,111 | 8% |

Total	assets	were	$358.5	billion	at	December	31,	2015	compared	with	$345.1 billion	at	December	31,	2014.	The	increase	from	year	end	2014	was	primarily due	to	higher	investment	securities	and	loan	growth.

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,	2015	compared	with December	31,	2014.

Average	investment	securities	increased	during	2015	compared	with	2014, primarily	due	to	increases	in	average	agency	residential	mortgage-backed securities	and	U.S.	Treasury	and	government	agency	securities,	partially	offset by	a	decrease	in	average	non-agency	residential	mortgage-backed	securities.

Total	investment	securities	comprised	20%	of	average	interest-earning	assets	in 2015	and	2014.

Average	loans	grew	in	2015,	driven	by	increases	in	average	commercial	loans	of $5.7	billion	and	average	commercial	real	estate	loans	of	$2.5	billion.	These increases	were	partially	offset	by	a	decrease	in	consumer	loans	of	$2.4	billion primarily	attributable	to	lower	home	equity	and	education	loans,	which	included declines	in	the	non-strategic	consumer	loan	portfolio.

Loans	represented	66%	of	average	interest-earning	assets	for	2015	and	70%	of average	interest-earning	assets	for	2014.

Average	interest-earning	deposits	with	banks,	which	are	primarily	maintained with	the	Federal	Reserve	Bank,	increased	significantly	in	the	comparison	to	the prior	year	in	part	due	to	regulatory	short-term	liquidity	standards	phased	in starting	January	1,	2015	and	also	due	to	deposit	growth.

Average	noninterest-earning	assets	increased	in	2015	compared	with	2014, primarily	driven	by	higher	receivables	from	unsettled	securities	sales,	which	are included	in	noninterest-earning	assets	for	average	balance	sheet	purposes,	and	an increase	in	trading	assets,	primarily	net	customer-related	derivatives	values.

Average	total	deposits	increased	$17.4	billion,	or	8%,	in	2015	compared	with	the prior	year,	primarily	due	to	increases	in	average	money	market	deposits,	average noninterest-bearing	deposits	and	average	interest-bearing	demand	deposits driven	by	both	commercial	and	retail	deposit	growth.

Average	total	deposits	represented	68%	of	average	total	assets	for	2015	and 2014.

Average	borrowed	funds	increased	in	2015	compared	with	2014	primarily	due	to increases	in	average	Federal	Home	Loan	Bank	(FHLB)	borrowings	and	average bank	notes	and	senior	debt.	These	increases	were	partially	offset	by	a	decline	in average	commercial	paper	balances,	in	part	due	to	actions	to	enhance	PNC's funding	structure	in	light	of	regulatory	liquidity	standards	and	a	rating	agency methodology	change.	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	$4.0	billion	in	2015	and	$3.9	billion	in	2014.	The	Business	Segments	Review	section	of	this	Item	7	includes	further	analysis	of	our business	segment	results	during	2015	and	2014,	including	presentation	differences	from	Note	23	Segment	Reporting	in	our	Notes	To	Consolidated	Financial	Statements in	Item	8	of	this	Report.	Note	23	Segment	Reporting	presents	results	of	businesses	for	2015,	2014	and	2013,	as	well	as	a	reconciliation	of	total	business	segment earnings	to	PNC	total	consolidated	net	income	as	reported	on	a	GAAP	basis.

# Table	3:	Results	Of	Businesses	–	Summary	(a)

# (Unaudited)

| Year	ended	December	31 | Net	Income |  | Revenue |  | Average	Assets	(b) | Average	Assets	(b) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 |
| Retail\tBanking | $907 | $728 | $6,449 | $6,049 | $73,240\t\t\t\t $ | 75,046 |
| Corporate\t&\tInstitutional\tBanking | \t 2,031 | \t 2,106 | 5,429 | 5,476 | \t 132,032 | \t 122,927 |
| Asset\tManagement\tGroup | 194 | 181 | 1,161 | 1,107 | 7,920 | 7,745 |
| Residential\tMortgage\tBanking | 26 | 35 | 734 | 800 | 6,840 | 7,857 |
| BlackRock | 548 | 530 | 717 | 703 | 6,983 | 6,640 |
| Non-Strategic\tAssets\tPortfolio | 301 | 367 | 445 | 587 | 6,706 | 8,338 |
| Total\tbusiness\tsegments | \t 4,007 | \t 3,947 | \t 14,935 | \t 14,722 | \t 233,721 | \t 228,553 |
| Other\t(c)\t(d)\t(e) | 136 | 260 | 290 | 653 | \t 121,243 | 99,300 |
| Total | $4,143 | $4,207 | $15,225 | $15,375 | $354,964\t\t\t\t $327,853 | $354,964\t\t\t\t $327,853 |
| (a) |  |  |  |  |  |  |

(a) Our	business	information	is	presented	based	on	our	internal	management	reporting	practices.	We	periodically	refine	our	internal	methodologies	as	management	reporting	practices	are	enhanced.	Net	interest income	in	business	segment	results	reflects	PNC's	internal	funds	transfer	pricing	methodology.	Assets	receive	a	funding	charge	and	liabilities	and	capital	receive	a	funding	credit	based	on	a	transfer	pricing methodology	that	incorporates	product	repricing	characteristics,	tenor	and	other	factors.	In	the	first	quarter	of	2015,	enhancements	were	made	to	PNC's	funds	transfer	pricing	methodology	primarily	for	costs related	to	the	new	regulatory	short-term	liquidity	standards.	The	enhancements	incorporate	an	additional	charge	assigned	to	assets,	including	for	unfunded	loan	commitments.	Conversely,	a	higher	transfer	pricing credit	has	been	assigned	to	those	deposits	that	are	accorded	higher	value	under	LCR	rules	for	liquidity	purposes.	These	adjustments	apply	to	business	segment	results,	primarily	favorably	impacting	Retail	Banking and	adversely	impacting	Corporate	&	Institutional	Banking,	prospectively	beginning	with	the	first	quarter	of	2015.	Prior	periods	have	not	been	adjusted	due	to	the	impracticability	of	estimating	the	impact	of	the change	for	prior	periods.

(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	23	Segment	Reporting	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report.

(e) The	decrease	in	net	income	during	2015	compared	to	2014	for	"Other"	primarily	reflected	lower	noninterest	income	and	net	interest	income,	partially	offset	by	lower	noninterest	expense.

# CONSOLIDATED	INCOME	STATEMENT	REVIEW

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

Net	income	for	2015	of	$4.1	billion	decreased	2%	compared	to	2014,	as	a	1% decline	in	revenue	was	partially	offset	by	reductions	in	noninterest	expense	and the	provision	for	credit	losses.	Lower	revenue	was	driven	by	a	3%	decrease	in net	interest	income,	offset	in	part	by	a	1%	increase	in	noninterest	income reflecting	strong	fee	income	growth.

# Net	Interest	Income

# Table	4:	Net	Interest	Income	and	Net	Interest	Margin

| Dollars	in	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Net\tinterest\tincome | $8,278 | $8,525 |
| Net\tinterest\tmargin | 2.74% | 3.08% |

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	section	in	this	Item	7	for	additional	information.

Net	interest	income	decreased	$247	million,	or	3%,	in	2015	compared	with	2014 due	to	lower	purchase	accounting	accretion	and	lower	interest-earning	asset yields	driven	by	the	ongoing	low	rate	environment,	partially	offset	by commercial	and	commercial	real	estate	loan	growth	and	higher	securities balances.	The	decline	also	reflected	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	32 basis	point	decline	in	the	yield	on	total	interest-earning	assets,	which	was principally	due	to	the	impact	of	increasing	the	company's	liquidity	position, lower	loan	and	securities	yields,	and	lower	benefit	from	purchase	accounting accretion.	The	decline	also	included	the	impact	of	the	second	quarter	2014 correction	to	reclassify	certain	commercial	facility	fees.

We	expect	net	interest	income	for	the	first	quarter	of	2016	to	be	stable,	compared with	fourth	quarter	2015	in	light	of	an	unlikely	increase	in	interest	rates	during the	first	quarter	of	2016.	For	full	year	2016,	we	expect	purchase	accounting accretion	to	be	down	approximately	$175	million	compared	to	2015.

# Noninterest	Income

# Table	5:	Noninterest	Income

| Year	ended	December	31 |  |  | Change |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | 2015 | 2014 | $\t% | $\t% |
| Noninterest\tincome |  |  |  |  |
| Asset\tmanagement | $1,567 | $1,513 | $54 | \t 4% |
| Consumer\tservices | \t 1,335 | \t 1,254 | 81 | \t 6% |
| Corporate\tservices | \t 1,491 | \t 1,415 | 76 | \t 5% |
| Residential\tmortgage | 566 | 618 | (52) | \t(8)% |
| Service\tcharges\ton\tdeposits | 651 | 662 | (11) | \t(2)% |
| Net\tgains\ton\tsales\tof\tsecurities | 43 | 4 | 39 | \t * |
| Other | \t 1,294 | \t 1,384 | (90) | \t(7)% |
| Total\tnoninterest\tincome | $6,947 | $6,850 | $97 | \t 1% |

*	–	Not	meaningful

Noninterest	income	in	2015	increased	compared	to	the	prior	year,	driven	by strong	growth	in	consumer	and	corporate	services	fees	and	asset	management revenue,	partially	offset	by	lower	gains	on	asset	sales	and	lower	residential mortgage	revenue.	Noninterest	income	as	a	percentage	of	total	revenue	was	46% for	2015,	up	from	45%	for	2014.

Asset	management	revenue	increased	in	2015	compared	to	2014,	driven	by	new sales	production	and	stronger	average	equity	markets,	as	well	as	the	benefit	from a	$30	million	trust	settlement	during	the	second	quarter	of	2015.	Discretionary client	assets	under	management	in	the	Asset	Management	Group	were	$134 billion	at	December	31,	2015	compared	with	$135	billion	at	December	31,	2014.

Consumer	service	fees	increased	in	the	comparison	to	the	prior	year,	primarily due	to	growth	in	customer-initiated	transaction	volumes	related	to	debit	card, credit	card	and	merchant	services	activity,	along	with	higher	brokerage	revenue.

Corporate	service	fees	increased	in	2015	compared	to	2014,	driven	by	higher treasury	management,	commercial	mortgage	servicing	and	equity	capital markets	advisory	fees,	partially	offset	by	lower	mergers	and	acquisition	advisory fees.	The	increase	also	reflected	the	impact	of	the	correction	to	reclassify	certain commercial	facility	fees	from	net	interest	income	to	noninterest	income beginning	in	the	second	quarter	of	2014.

Residential	mortgage	revenue	decreased	in	2015	compared	to	2014,	primarily due	to	lower	loan	sales	and	servicing	revenue,	partially	offset	by	higher	net hedging	gains	on	residential	mortgage	servicing	rights.

Other	noninterest	income	decreased	in	2015	compared	to	the	prior	year, primarily	attributable	to	lower	gains	on	asset	dispositions,	including	the	impact of	the	fourth	quarter	2014	gain	of	$94	million	on	the	sale	of	PNC's	Washington, D.C.	regional	headquarters	building	and	lower	gains	on	sales	of	Visa	Class	B common	shares.

Gains	on	sales	of	two	million	Visa	Class	B	Common	shares	equaled	$169 million	in	2015	compared	to	gains	of	$209	million	on	sales	of	3.5	million	shares in	2014.	As	of	December	31,	2015,	we	held	approximately	4.9	million	Visa Class	B	common	shares	with	a	fair	value	of	approximately	$622	million	and	a recorded	investment	of	approximately	$31	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	2016,	we	expect	fee	income,	consisting	of	asset management,	consumer	services,	corporate	services,	residential	mortgage	and service	charges	on	deposits,	to	be	down	mid-single	digits,	on	a	percentage	basis, compared	with	the	fourth	quarter	of	2015	due	to	seasonality	and	typically	lower first	quarter	client	activity.	Continued	volatility	in	the	equity	markets	in combination	with	other	economic	factors	could	add	to	pressure	on	noninterest income.	For	full	year	2016,	we	expect	modest	growth	in	revenue.

# Provision	For	Credit	Losses

The	provision	for	credit	losses	totaled	$255	million	in	2015	compared	with	$273 million	in	2014,	reflecting	improved	credit	quality.

We	expect	our	provision	for	credit	losses	in	the	first	quarter	of	2016	to	be between	$75	million	and	$125	million.	The	performance	of	certain	energy related	loans	during	the	first	quarter	could	result	in	provision	for	credit	losses	at the	high	end	of	this	range.

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	decreased	$25	million	to	$9.5	billion	in	2015	compared	to 2014,	reflecting	PNC's	focus	on	expense	management.	Higher	personnel expense	associated	with	higher	business	activity	and	investments	in	technology and	business	infrastructure	were	more	than	offset	by	lower	legal	and	residential mortgage	compliance	costs	and	third	party	expenses,	as	well	as	the	impact	of	the fourth	quarter	2014	contribution	to	the	PNC	Foundation.

During	2015,	we	completed	actions	and	exceeded	our	2015	continuous improvement	program	goal	of	$500	million	in	cost	savings.	The	program	focuses on	reducing	costs	in	part	to	fund	investments	in	technology	and	business infrastructure.	In	2016,	we	have	a	goal	of	$400	million	in	cost	savings	through our	continuous	improvement	program,	which	we	expect	will	help	to	fund	a significant	portion	of	our	business	and	technology	investments.

For	the	first	quarter	of	2016,	we	expect	noninterest	expense	to	be	down	low- single	digits,	on	a	percentage	basis,	compared	with	the	fourth	quarter	of	2015. For	full	year	2016,	we	expect	total	noninterest	expense	to	be	stable	compared	to 2015.

# Effective	Income	Tax	Rate

The	effective	income	tax	rate	was	24.8%	for	2015	compared	with	25.1%	for 2014.	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	rate	for	2015	included	tax	benefits	attributable	to	settling acquired	entity	tax	contingencies.

# CONSOLIDATED	BALANCE	SHEET	REVIEW

# Table	6:	Summarized	Balance	Sheet	Data

| Dollars	in	millions | December	31<br>2015 | December	31<br>2014 | Change<br>$% | Change<br>$% |
| :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |
| Interest-earning\tdeposits\twith\tbanks | $30,546 | $31,779 | $(1,233)\t(4)% | $(1,233)\t(4)% |
| Loans\theld\tfor\tsale | 1,540 | 2,262 | (722) | \t(32)% |
| Investment\tsecurities | 70,528 | 55,823 | 14,705 | \t26% |
| Loans | 206,696 | 204,817 | 1,879 | \t1% |
| Allowance\tfor\tloan\tand\tlease\tlosses | (2,727) | (3,331) | 604 | \t(18)% |
| Goodwill | 9,103 | 9,103 | – | \t–% |
| Mortgage\tservicing\trights | 1,589 | 1,351 | 238 | \t18% |
| Other\tintangible\tassets | 379 | 493 | (114) | \t(23)% |
| Other,\tnet | 40,839 | 42,775 | (1,936) | \t(5)% |
| Total\tassets | $358,493 | $345,072 | $13,421\t4% | $13,421\t4% |
| Liabilities |  |  |  |  |
| Deposits | $249,002 | $232,234 | $16,768\t7% | $16,768\t7% |
| Borrowed\tfunds | 54,532 | 56,768 | (2,236) | \t(4)% |
| Other | 8,979 | 9,996 | (1,017) | \t(10)% |
| Total\tliabilities | 312,513 | 298,998 | 13,515 | \t5% |
| Equity |  |  |  |  |
| Total\tshareholders'\tequity | 44,710 | 44,551 | 159 | \t–% |
| Noncontrolling\tinterests | 1,270 | 1,523 | (253) | \t(17)% |
| Total\tequity | 45,980 | 46,074 | (94) | \t–% |
| Total\tliabilities\tand\tequity | $358,493 | $345,072 | $13,421\t4% | $13,421\t4% |

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

PNC's	balance	sheet	reflected	asset	growth	and	strong	liquidity	and	capital	positions	at	December	31,	2015.

•Total	assets	increased	in	2015	compared	to	the	prior	year	primarily	due	to	an	increase	of	$14.7	billion	in	investment	securities	driven	by	deposit	growth.

•Total	liabilities	increased	in	2015	compared	to	2014	mainly	due	to	an	increase	in	deposits.

•Total	equity	in	2015	remained	relatively	stable	compared	to	the	prior	year	mainly	due	to	increased	retained	earnings	driven	by	net	income,	offset	by	share repurchases	and	the	redemption	of	preferred	stock.

# Loans

Outstanding	loan	balances	of	$206.7	billion	at	December	31,	2015	and	$204.8	billion	at	December	31,	2014	were	net	of	unearned	income,	net	deferred	loan	fees, unamortized	discounts	and	premiums,	and	purchase	discounts	and	premiums	totaling	$1.4	billion	at	December	31,	2015	and	$1.7	billion	at	December	31,	2014.	The balances	include	purchased	impaired	loans	but	do	not	include	future	accretable	net	interest	on	those	loans.

# Table	7:	Details	Of	Loans

|  | December	31 | December	31 | Change |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | 2015 | 2014 | $% |  |
| Commercial\tlending |  |  |  |  |
| Commercial |  |  |  |  |
| Manufacturing | $19,014 | $18,744 | $270 | 1% |
| Retail/wholesale\ttrade | 16,661 | 16,972 | (311) | (2)% |
| Service\tproviders | 13,970 | 14,103 | (133) | (1)% |
| Real\testate\trelated\t(a) | 11,659 | 10,812 | 847 | 8% |
| Health\tcare | 9,210 | 9,017 | 193 | 2% |
| Financial\tservices | 7,234 | 6,178 | 1,056 | \t 17% |
| Other\tindustries | 20,860 | 21,594 | (734) | (3)% |
| Total\tcommercial | 98,608 | 97,420 | 1,188 | 1% |
| Commercial\treal\testate |  |  |  |  |
| Real\testate\tprojects\t(b) | 15,697 | 14,577 | 1,120 | 8% |
| Commercial\tmortgage | 11,771 | 8,685 | 3,086 | \t 36% |
| Total\tcommercial\treal\testate | 27,468 | 23,262 | 4,206 | \t 18% |
| Equipment\tlease\tfinancing | 7,468 | 7,686 | (218) | (3)% |
| Total\tcommercial\tlending | 133,544 | 128,368 | 5,176 | 4% |
| Consumer\tlending |  |  |  |  |
| Home\tequity |  |  |  |  |
| Lines\tof\tcredit | 18,828 | 20,361 | (1,533) | (8)% |
| Installment | 13,305 | 14,316 | (1,011) | (7)% |
| Total\thome\tequity | 32,133 | 34,677 | (2,544) | (7)% |
| Residential\treal\testate |  |  |  |  |
| Residential\tmortgage | 14,162 | 13,885 | 277 | 2% |
| Residential\tconstruction | 249 | 522 | (273) | \t(52)% |
| Total\tresidential\treal\testate | 14,411 | 14,407 | 4 | –% |
| Credit\tcard | 4,862 | 4,612 | 250 | 5% |
| Other\tconsumer |  |  |  |  |
| Automobile | 11,157 | 11,616 | (459) | (4)% |
| Education | 5,881 | 6,626 | (745) | \t(11)% |
| Other | 4,708 | 4,511 | 197 | 4% |
| Total\tconsumer\tlending | 73,152 | 76,449 | (3,297) | (4)% |
| Total\tLoans | $206,696 | $204,817 | $1,879 | 1% |
| (a) |  |  |  |  |

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

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

The	increase	in	loans	was	the	result	of	an	increase	in	total	commercial	lending driven	by	commercial	real	estate	loans,	partially	offset	by	a	decline	in	consumer lending	due	to	lower	home	equity,	education,	and	automobile	loans.

Commercial	real	estate	loans	represented	13%	of	total	loans	at	December	31, 2015	and	11%	of	total	loans	at	December	31,	2014	and	represented	8%	and	7% of	total	assets	at	December	31,	2015	and	December	31,	2014,	respectively.	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.

For	the	first	quarter	of	2016,	we	expect	total	loans	to	be	stable	with	the	fourth quarter	of	2015.

# Allowance	for	Loan	and	Lease	Losses	(ALLL)

Information	regarding	our	higher	risk	loans	and	ALLL	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 2015	and	2014	follows.	Additional	information	on	our	policies	for	ALLL	for purchased	impaired	loans	is	provided	in	Note	1	Accounting	Policies	in	the	Notes To	Consolidated	Financial	Statements	included	in	Item	8	of	this	Report.	A description	of	our	purchased	impaired	loan	accounting	and	loan	data	is	included 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 | 2015 | 2014 |
| :--- | :--- | :--- |
| Accretion\ton\tpurchased\timpaired\tloans |  |  |
| Scheduled\taccretion | $360 | $460 |
| Reversal\tof\tcontractual\tinterest\ton\timpaired\tloans | (217) | (253) |
| Scheduled\taccretion\tnet\tof\tcontractual\tinterest | 143 | 207 |
| Excess\tcash\trecoveries\t(a) | 106 | 127 |
| Total | $249 | $334 |
| (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 | 2015 | 2014 |
| :--- | :--- | :--- |
| January\t1 | $1,558 | $2,055 |
| Accretion\t(including\texcess\tcash\trecoveries) | (466) | (587) |
| Net\treclassification\tto\taccretable\tfrom\tnon-accretable |  |  |
| and\tother\tactivity | 226 | 208 |
| Disposals | (68) | (118) |
| December\t31\t(a) | $1,250 | $1,558 |
| (a)\nAs\tof\tDecember\t31,\t2015,\twe\testimate\tthat\tthe\treversal\tof\tcontractual\tinterest\ton\tpurchased |  |  |

(a) As	of	December	31,	2015,	we	estimate	that	the	reversal	of	contractual	interest	on	purchased impaired	loans	will	total	approximately	$0.7	billion	in	future	periods.	This	will	offset	the	total	net accretable	interest	in	future	interest	income	of	$1.2	billion	on	purchased	impaired	loans.

Information	related	to	the	valuation	of	purchased	impaired	loans	at	December	31,	2015	and	December	31,	2014	follows.

# Table	10:	Valuation	of	Purchased	Impaired	Loans

|  | December	31,	2015 |  | December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | Balance | Net\tInvestment | Balance | Net\tInvestment |
| Total\tpurchased\timpaired\tloans: |  |  |  |  |
| Outstanding\tbalance | $3,933 |  | $5,007 |  |
| Recorded\tinvestment\t(a) | $3,522 |  | $4,858 |  |
| Allowance\tfor\tloan\tlosses\t(a) | (310) |  | (872) |  |
| Net\tinvestment/Carrying\tvalue | $3,212 | 82% | $3,986 | 80% |
| (a) |  |  |  |  |

(a) The	December	31,	2015	amounts	were	impacted	by	the	change	in	derecognition	policy	for	purchased	impaired	pooled	consumer	and	residential	real	estate	loans	as	of	December	31,	2015.	For	additional information,	see	the	discussion	below,	as	well	as	Note	4	Purchased	Loans	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report.

At	December	31,	2015,	our	largest	individual	purchased	impaired	loan	had	a	recorded	investment	of	$8	million.	We	currently	expect	to	collect	total	cash	flows	of	$4.4 billion	on	purchased	impaired	loans,	representing	the	$3.2	billion	net	investment	at	December	31,	2015	and	the	accretable	net	interest	of	$1.2	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,	2015.

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

| As	of	December	31,	2015<br>Dollars	in	millions | Recorded	Investment | WAL	(a) |
| :--- | :--- | :--- |
| Commercial | $36 | \t2.0\tyears |
| Commercial\treal\testate | 133 | \t1.6\tyears |
| Consumer\t(b) | 1,407 | \t3.9\tyears |
| Residential\treal\testate | 1,946 | \t4.5\tyears |
| Total | $3,522 | \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.

Through	the	National	City	Corporation	(National	City)	and	RBC	Bank	(USA) acquisitions,	we	acquired	purchased	impaired	loans	with	a	recorded	investment of	$14.7	billion.	As	noted	in	Table	11	above,	at	December	31,	2015,	those balances	are	now	$3.5	billion,	of	which	$3.4	billion	in	consumer	and	residential real	estate	loans	is	accounted	for	using	pool	accounting.	Prior	to	December	31, 2015,	upon	final	disposition	of	a	loan	within	a	pool	and	for	loans	that	had nominal	collateral	value/expected	cash	flows,	the	loan's	carrying	value	was removed	from	the	pool	and	any	gain	or	loss	associated	with	the	transaction	was retained	in	the	pool's	recorded	investment.	Effective	December	31,	2015,	in anticipation	of	the	end	of	the	life	of	our	purchased	impaired	pooled	consumer and	residential	real	estate	loans,	and	pursuant	to	supervisory	direction,	we changed	our	derecognition	policy	for	these	loans	such	that	we	will	write-off	the loan's	recorded	investment	and	derecognize	the	associated	ALLL	upon	final disposition.	Gains	and	losses	on	such	loans	will	be	recognized	as	either	an adjustment	to	the	pool's	associated	ALLL,	or	yield,	as	appropriate.	The transition	to	this	new	policy	on	December	31,	2015	resulted	in	a	$468	million derecognition	of	recorded	investment	and	associated	ALLL	on	such	loans,	which is	immaterial	to	our	financial	statements	taken	as	a	whole.

The	result	of	this	change	accelerated	the	derecognition	of	a	pool's	recorded investment	and	associated	ALLL	balance.	These	amounts	represented	the	net loss	from	loan	dispositions	or	expected	cash	flow	shortfalls	that	had	been retained	as	part	of	the	pools'	recorded	investment	per	our	accounting	for	the	pool as	a	single	asset.	The	recorded	investment	that	was	derecognized	effective December	31,	2015	had	been	fully	reserved	for.	Therefore,	there	was	no	impact to	the	net	carrying	values	of	the	pools,	or	accretion	accounting	and	no	additional provision	for	credit	losses	for	these	derecognized	loans	was	recorded,	as	the recorded	investment	and	associated	ALLL	balance	were	reduced	in	equal amounts.	We	expect	the

future	impact	of	this	policy	change	to	the	Consolidated	Income	Statement	and Consolidated	Balance	Sheet	to	be	immaterial.	See	Note	4	Purchased	Loans	and Note	5	Allowance	for	Loan	and	Lease	Losses	and	Unfunded	Commitments	and Letters	of	Credit	in	the	Notes	To	Consolidated	Financial	Statements	included	in Item	8	of	this	Report	for	additional	information.

# 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>2015 | Declining<br>Scenario	(a) | Improving<br>Scenario	(b) |
| :--- | :--- | :--- | :--- |
| Expected\tcash\tflows | $4.4 | $(.1) | $.1 |
| Accretable\tdifference | 1.2 | – | – |
| Allowance\tfor\tloan\tand |  |  |  |
| lease\tlosses | (.3) | (.1) | .1 |
| (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	resulting	in	a	provision	for	credit	losses	and	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.

# Commitments	to	Extend	Credit

Commitments	to	extend	credit	comprise	the	following:

# Table	13:	Commitments	to	Extend	Credit	(a)

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Total\tcommercial\tlending | $101,252 | $98,742 |
| Home\tequity\tlines\tof\tcredit | 17,268 | 17,839 |
| Credit\tcard | 19,937 | 17,833 |
| Other | 4,032 | 4,178 |
| Total | $142,489 | $138,592 |

(a) Commitments	to	extend	credit,	or	net	unfunded	loan	commitments,	represent	arrangements	to	lend funds	or	provide	liquidity	subject	to	specified	contractual	conditions.

In	addition	to	the	credit	commitments	set	forth	in	the	table	above,	our	net outstanding	standby	letters	of	credit	totaled	$8.8	billion	at	December	31,	2015 and	$10.0	billion	at	December	31,	2014.	Standby	letters	of	credit	commit	us	to make	payments	on	behalf	of	our	customers	if	specified	future	events	occur.

Information	regarding	our	commitments	to	extend	credit	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	21	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	by	credit	rating.	We	have	included	credit	ratings	information	because	we	believe	that 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	on	our	balance	sheet	at December	31,	2015,	where	during	our	quarterly	security-level	impairment	assessments	we	determined	losses	represented	other-than-temporary	impairment	(OTTI),	we have	recorded	cumulative	credit	losses	of	$1.1	billion	in	earnings	and	accordingly	have	reduced	the	amortized	cost	of	our	securities.	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,	2015 | December	31,	2015 | December	31,	2014 | December	31,	2014 |  | As	of	December	31,	2015 | 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 | $10,022 | $10,172 | $5,485 | $5,714 | \t100% |  |  |  |  |
| Agency\tresidential\tmortgage-backed | \t 34,250 | \t 34,408 | \t 23,382 | \t 23,935 | \t100 |  |  |  |  |
| Non-agency\tresidential\tmortgage-backed | 4,225 | 4,392 | 4,993 | 5,225 | 10 | 1% | 4% | 80% | 5% |
| Agency\tcommercial\tmortgage-backed | 3,045 | 3,086 | 3,378 | 3,440 | \t100 |  |  |  |  |
| Non-agency\tcommercial\tmortgage-backed\t(b) | 5,624 | 5,630 | 5,095 | 5,191 | 78 | \t10 | 2 | 3 | 7 |
| Asset-backed\t(c) | 6,134 | 6,130 | 5,900 | 5,940 | 89 | 3 |  | 7 | 1 |
| State\tand\tmunicipal | 3,936 | 4,126 | 3,995 | 4,191 | 88 | 6 |  |  | 6 |
| Other\tdebt | 2,211 | 2,229 | 2,099 | 2,142 | 56 | \t31 | \t 13 |  |  |
| Corporate\tstock\tand\tother | 590 | 589 | 442 | 441 |  |  |  |  | \t 100 |
| Total\tinvestment\tsecurities\t(d) | $70,037 | $70,762 | $54,769 | $56,219 | 89% | 2% | 1% | 6% | 2% |
| (a)\nRatings\tpercentages\tallocated\tbased\ton\tamortized\tcost. |  |  |  |  |  |  |  |  |  |

(a) Ratings	percentages	allocated	based	on	amortized	cost.

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

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

(d) 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,	2015,	89%	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	67%	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,	2015,	the	amortized	cost	and	fair	value	of	available	for	sale securities	totaled	$55.3	billion	and	$55.8	billion,	respectively,	compared	to	an amortized	cost	and	fair	value	as	of	December	31,	2014	of	$43.2	billion	and	$44.2 billion,	respectively.	The	amortized	cost	and	fair	value	of	held	to	maturity securities	were	$14.8	billion	and	$15.0	billion,	respectively,	at	December	31, 2015,	compared	to	$11.6	billion	and	$12.0	billion,	respectively,	at	December	31, 2014.

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,	2015	from	$1.5	billion	at	December	31,	2014.	The comparable	amounts	for	the	securities	available	for	sale	portfolio	were	$.5	billion at	December	31,	2015	and	$1.1	billion	at	December	31,	2014.

Unrealized	gains	and	losses	on	available	for	sale	debt	securities	do	not	impact liquidity;	however	these	gains	and	losses	do	affect	capital	under	the	regulatory capital	rules.	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	risk-based regulatory	capital	ratios	under	the	regulatory	capital	rules.	In	addition,	the amount	representing	the	credit-related	portion	of	OTTI	on	securities	would reduce	our	earnings	and	regulatory	capital	ratios.

The	duration	of	investment	securities	was	2.7	years	at	December	31,	2015.	We estimate	that,	at	December	31,	2015,	the	effective	duration	of	investment securities	was	2.8	years	for	an	immediate	50	basis	points	parallel	increase	in interest	rates	and	2.6	years	for	an	immediate	50	basis	points	parallel	decrease	in interest	rates.	Comparable	amounts	at	December	31,	2014	for	the	effective duration	of	investment	securities	were	2.2	years	and	2.1	years,	respectively.

Based	on	current	interest	rates	and	expected	prepayment	speeds,	the	weighed- average	expected	maturity	of	the	investment	securities	portfolio	(excluding corporate	stock	and	other)	was	4.8	years	at	December	31,	2015	compared	to	4.3 years	at	December	31,	2014.	The	weighted-average	expected	maturities	of mortgage	and	other	asset-backed	debt	securities	were	as	follows	as	of December	31,	2015:

# Table	15:	Weighted-Average	Expected	Maturity	of	Mortgage	and	Other	Asset- Backed	Debt	Securities

At	least	quarterly,	we	conduct	a	comprehensive	security-level	impairment assessment	on	all	securities.	If	economic	conditions,	including	home	prices, were	to	deteriorate	from	current	levels,	and	if	market	volatility	and	liquidity	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	16:	Loans	Held	For	Sale

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Commercial\tmortgages\tat\tfair\tvalue | $641 | $893 |
| Commercial\tmortgages\tat\tlower\tof\tcost\tor |  |  |
| fair\tvalue | 27 | 29 |
| Total\tcommercial\tmortgages | 668 | 922 |
| Residential\tmortgages\tat\tfair\tvalue | 843 | 1,261 |
| Residential\tmortgages\tat\tlower\tof\tcost\tor |  |  |
| fair\tvalue | 7 | 18 |
| Total\tresidential\tmortgages | 850 | 1,279 |
| Other | 22 | 61 |
| Total | $1,540 | $2,262 |

We	sold	$4.4	billion	of	commercial	mortgage	loans	to	agencies	during	2015 compared	to	$3.5	billion	during	2014.	Total	revenue	of	$99	million	was recognized	on	the	valuation	and	sale	of	commercial	mortgage	loans	held	for	sale, net	of	hedges,	during	2015	and	$80	million	in	2014.	These	amounts	are	included in	Other	noninterest	income	on	the	Consolidated	Income	Statement.

Residential	mortgage	loan	origination	volume	was	$10.5	billion	during	2015 compared	to	$9.5	billion	during	2014.	The	majority	of	such	loans	were originated	under	agency	or	Federal	Housing	Administration	(FHA)	standards. We	sold	$8.1	billion	of	loans	and	recognized	loan	sales	revenue	of	$342	million during	2015.	The	comparable	amounts	for	2014

were	$8.3	billion	and	$420	million,	respectively.	These	loan	sales	revenue amounts	are	included	in	Residential	mortgage	noninterest	income	on	the Consolidated	Income	Statement.

Interest	income	on	loans	held	for	sale	was	$90	million	and	$99	million	during 2015	and	2014,	respectively.	These	amounts	are	included	in	Other	interest income	on	the	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.

# Funding	Sources

# Table	17:	Details	Of	Funding	Sources

|  | December	31 | December	31 | Change |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | 2015 | 2014 | $% |  |
| Deposits |  |  |  |  |
| Money\tmarket | $118,079 | $115,438 | $2,641 | 2% |
| Demand | 90,038 | 82,829 | 7,209 | 9% |
| Savings | 20,375 | 12,571 | 7,804 | 62% |
| Retail\tcertificates\tof\tdeposit | 17,405 | 18,544 | (1,139) | (6)% |
| Time\tdeposits\tin\tforeign\toffices\tand\tother\ttime\tdeposits | 3,105 | 2,852 | 253 | 9% |
| Total\tdeposits | 249,002 | 232,234 | \t 16,768 | 7% |
| Borrowed\tfunds |  |  |  |  |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements | 1,777 | 3,510 | (1,733) | (49)% |
| FHLB\tborrowings | 20,108 | 20,005 | 103 | 1% |
| Bank\tnotes\tand\tsenior\tdebt | 21,298 | 15,750 | 5,548 | 35% |
| Subordinated\tdebt | 8,556 | 9,151 | (595) | (7)% |
| Commercial\tpaper | 14 | 4,995 | (4,981) | \t(100)% |
| Other | 2,779 | 3,357 | (578) | (17)% |
| Total\tborrowed\tfunds | 54,532 | 56,768 | (2,236) | (4)% |
| Total\tfunding\tsources | $303,534 | $289,002 | $14,532 | 5% |

See	the	Liquidity	Risk	Management	portion	of	the	Risk	Management	section	of this	Item	7	for	additional	information	regarding	our	2015	capital	and	liquidity activities.

Total	deposits	increased	in	the	comparison	due	to	strong	growth	in	savings, demand,	and	money	market	deposits,	partially	offset	by	a	decline	in	retail certificates	of	deposit.	Interest-bearing	deposits	represented	68%	of	total deposits	at	both	December	31,	2015	and	December	31,	2014.

Total	borrowed	funds	decreased	in	the	comparison	as	declines	in	commercial paper,	federal	funds	purchased,	repurchase	agreements	and	subordinated	debt were	partially	offset	by	higher	net	issuances	of	bank	notes	and	senior	debt.	The changes	in	the	composition	of	funding	sources	are	attributable	to	PNC's	actions to	enhance	its	funding	structure	in	light	of	regulatory	liquidity	standards	and	a rating	agency	methodology	change.

# Capital

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.

We	repurchase	shares	of	PNC	common	stock	under	common	stock	repurchase authorizations	approved	from	time	to	time	by	PNC's	Board	of	Directors	and consistent	with	capital	plans	submitted	to,	and	accepted	by,	the	Federal	Reserve. Through	the	first	quarter	of	2015,	we	repurchased	stock	under	our	2007	common stock	repurchase	program	authorization	that	permitted	us	to	purchase	up	to 25	million	shares	of	PNC	common	stock	on	the	open	market	or	in	privately negotiated	transactions.	Effective	as	of	March	31,	2015,	PNC's	Board	of

Directors	approved	the	termination	of	the	2007	common	stock	repurchase program	authorization,	and	replaced	it	with	a	new	stock	repurchase	program authorization	in	the	amount	of	100	million	shares	of	PNC	common	stock, effective	April	1,	2015.	The	extent	and	timing	of	share	repurchases	under	this authorization	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	future supervisory	assessments	of	capital	adequacy	and	capital	planning	processes undertaken	by	the	Federal	Reserve	as	part	of	the	CCAR	process.

In	the	first	quarter	of	2015,	we	repurchased	4.4	million	common	shares	for	$.4 billion	and	completed	our	common	stock	repurchase	programs	for	the	four quarter	period	that	began	in	second	quarter	2014	with	total	repurchases	over	that period	of	17	million	common	shares	for	$1.5	billion.	These	repurchases	were included	in	our	2014	capital	plan	accepted	by	the	Federal	Reserve	as	part	of	our 2014	CCAR	submission.

In	connection	with	the	2015	CCAR	process,	we	submitted	our	2015	capital	plan, as	approved	by	PNC's	Board	of	Directors,	to	the	Federal	Reserve	in	January 2015.	The	Federal	Reserve	accepted	the	capital	plan	and	did	not	object	to	our proposed	capital	actions	in	March	2015.	As	provided	for	in	the	2015	capital	plan, we	announced	new	share	repurchase	programs	of

up	to	$2.875	billion	for	the	five	quarter	period	beginning	in	the	second	quarter	of 2015.	These	programs	include	repurchases	of	up	to	$375	million	over	the	five quarter	period	related	to	stock	issuances	under	employee	benefit-related programs.

PNC	repurchased	17.9	million	common	shares	for	$1.7	billion	in	the	second through	fourth	quarters	of	2015	under	the	current	share	repurchase	programs described	above.

For	2015,	PNC	repurchased	a	total	of	22.3	million	common	shares	for	$2.1 billion.

On	May	4,	2015,	we	redeemed	$500	million	of	PNC's	Fixed-to-Floating	Rate Non-Cumulative	Perpetual	Preferred	Stock,	Series	K,	as	well	as	all	Depositary Shares	representing	interests	therein.	All	50,000	shares	of	Series	K	Preferred Stock,	as	well	as	all	500,000	Depositary	Shares	representing	interests	therein, were	redeemed.	The	redemption	price	was	$10,000	per	share	of	Series	K Preferred	Stock	equivalent	to	$1,000	per	Depositary	Share,	plus	declared	and unpaid	dividends	up	to	but	excluding	the	redemption	date.

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.

# Table	18:	Shareholders'	Equity

|  | December	31 | December	31 | Change |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | 2015 | 2014 | $% |  |
| Shareholders'\tequity |  |  |  |  |
| Preferred\tstock\t(a) |  |  |  |  |
| Common\tstock | $2,708 | $2,705 | $3 | –% |
| Capital\tsurplus\t–\tpreferred\tstock | 3,452 | 3,946 | (494) | (13)% |
| Capital\tsurplus\t–\tcommon\tstock\tand\tother | 12,745 | 12,627 | 118 | 1% |
| Retained\tearnings | 29,043 | 26,200 | 2,843 | 11% |
| Accumulated\tother\tcomprehensive\tincome | 130 | 503 | (373) | (74)% |
| Common\tstock\theld\tin\ttreasury\tat\tcost | (3,368) | (1,430) | (1,938) | \t(136)% |
| Total\tshareholders'\tequity | $44,710 | $44,551 | $159 | –% |
| (a)\nPar\tvalue\tless\tthan\t$.5\tmillion\tat\teach\tdate. |  |  |  |  |

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

The	increase	in	total	shareholders'	equity	compared	to	December	31,	2014	was	mainly	due	to	a	$2.8	billion	increase	in	retained	earnings,	partially	offset	by	common share	repurchases	of	$2.1	billion	and	the	redemption	of	$500	million	of	preferred	stock.	The	increase	in	retained	earnings	was	driven	by	net	income	of	$4.1	billion, reduced	by	$1.3	billion	of	common	and	preferred	dividends	declared.	Common	shares	outstanding	were	504	million	and	523	million	at	December	31,	2015	and	2014, respectively.

# Table	19:	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 | $12,085 | \t$12,085 |
| Retained\tearnings | 29,043 | 29,043 |
| Accumulated\tother\tcomprehensive\tincome\tfor\tsecurities\tcurrently\tand\tpreviously\theld\tas\tavailable\tfor\tsale | 141 | 353 |
| Accumulated\tother\tcomprehensive\tincome\tfor\tpension\tand\tother\tpostretirement\tplans | (222) | (554) |
| Goodwill,\tnet\tof\tassociated\tdeferred\ttax\tliabilities | (8,839) | (8,839) |
| Other\tdisallowed\tintangibles,\tnet\tof\tdeferred\ttax\tliabilities | (133) | (333) |
| Other\tadjustments/(deductions) | (112) | (182) |
| Total\tcommon\tequity\tTier\t1\tcapital\tbefore\tthreshold\tdeductions | 31,963 | 31,573 |
| Total\tthreshold\tdeductions | (470) | (1,294) |
| Common\tequity\tTier\t1\tcapital | 31,493 | 30,279 |
| Additional\tTier\t1\tcapital |  |  |
| Preferred\tstock\tplus\trelated\tsurplus | 3,452 | 3,452 |
| Trust\tpreferred\tcapital\tsecurities | 50 |  |
| Noncontrolling\tinterests\t(d) | 604 | 44 |
| Other\tadjustments/(deductions) | (77) | (109) |
| Tier\t1\tcapital | 35,522 | 33,666 |
| Additional\tTier\t2\tcapital |  |  |
| Qualifying\tsubordinated\tdebt | 4,597 | 4,253 |
| Trust\tpreferred\tcapital\tsecurities | 149 |  |
| Allowance\tfor\tloan\tand\tlease\tlosses\tincluded\tin\tTier\t2\tcapital | 2,988 | 2,988 |
| Other | 4 | 10 |
| Total\tBasel\tIII\tcapital | $43,260 | \t$40,917 |
| Risk-weighted\tassets |  |  |
| Basel\tIII\tstandardized\tapproach\trisk-weighted\tassets\t(e) | $295,905 | \t$303,707 |
| Estimated\tBasel\tIII\tadvanced\tapproaches\trisk-weighted\tassets\t(f) | N/A | 264,931 |
| Average\tquarterly\tadjusted\ttotal\tassets | \t 350,143 | 349,020 |
| Supplementary\tleverage\texposure\t(g) | \t 413,111 | 411,988 |
| Basel\tIII\trisk-based\tcapital\tand\tleverage\tratios |  |  |
| Common\tequity\tTier\t1 | 10.6% | 10.0%\t(h)(i) |
| Tier\t1 | 12.0 | 11.1\t(h)(j) |
| Total | 14.6 | 13.5\t(h)(k) |
| Leverage\t(l) | 10.1 | 9.6 |
| Supplementary\tleverage\tratio\t(m) | 8.6 | 8.2 |
| (a) |  |  |

(a) Calculated	using	the	regulatory	capital	methodology	applicable	to	PNC	during	2015.

(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.	Pro forma	fully	phased-in	capital	amounts,	ratios	and	risk-weighted	and	leverage-related	assets	are	estimated.

(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) Includes	credit	and	market	risk-weighted	assets.

(f) 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.	During	the	parallel	run qualification	phase	PNC	has	refined	the	data,	models	and	internal	processes	used	as	part	of	the	advanced	approaches	for	determining	risk-weighted	assets.	Refinements	implemented	in	the	fourth	quarter	of	2015 reduced	estimated	Basel	III	advanced	approaches	risk-weighted	assets.	We	anticipate	additional	refinements	may	result	in	increases	or	decreases	to	this	estimate	through	the	parallel	run	qualification	phase.

(g) Supplementary	leverage	exposure	is	the	sum	of	Adjusted	average	assets	and	certain	off-balance	sheet	exposures	including	undrawn	credit	commitments	and	derivative	potential	future	exposures.

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

(i) For	comparative	purposes	only,	the	pro	forma	fully	phased-in	advanced	approaches	Basel	III	Common	equity	Tier	1	capital	ratio	estimate	is	11.4%.	This	capital	ratio	is	calculated	using	pro	forma	fully	phased-in Common	equity	Tier	1	capital	and	dividing	by	estimated	Basel	III	advanced	approaches	risk-weighted	assets.

(j) For	comparative	purposes	only,	the	pro	forma	fully	phased-in	advanced	approaches	Basel	III	Tier	1	risk-based	capital	ratio	estimate	is	12.7%.	This	capital	ratio	is	calculated	using	fully	phased-in	Tier	1	capital	and dividing	by	estimated	Basel	III	advanced	approaches	risk-weighted	assets.

(k) For	comparative	purposes	only,	the	pro	forma	fully	phased-in	advanced	approaches	Basel	III	Total	capital	risk-based	capital	ratio	estimate	is	14.3%.	This	ratio	is	calculated	using	fully	phased-in	Total	Basel	III capital,	which	under	the	advanced	approaches,	Additional	Tier	2	capital	includes	allowance	for	loan	and	leases	losses	in	excess	of	Basel	expected	credit	losses,	if	any,	up	to	0.6%	of	credit	risk-weighted	assets,	and dividing	by	estimated	Basel	III	advanced	approaches	risk-weighted	assets.

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

(m) Supplementary	leverage	ratio	is	calculated	based	on	Tier	1	capital	divided	by	Supplementary	leverage	exposure.	As	advanced	approaches	banking	organizations,	PNC	and	PNC	Bank	will	be	subject	to	a	3% minimum	supplementary	leverage	ratio	effective	January	1,	2018.

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	of	this	Report	for	additional	information.	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.	advanced	approaches	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	capital	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.	Basel	III	regulatory capital	rules	(Basel	III	rules),	as	well	as	the	fact	that	PNC	remains	in	the	parallel run	qualification	phase	for	the	advanced	approaches,	PNC's	regulatory	risk- based	ratios	in	2015	were	calculated	using	the	standardized	approach,	effective January	1,	2015,	for	determining	risk-weighted	assets,	and	the	definitions	of,	and deductions	from,	regulatory	capital	under	the	Basel	III	rules	(as	such	definitions and	deductions	are	phased-in	for	2015).	We	refer	to	the	capital	ratios	calculated using	the	phased-in	Basel	III	provisions	in	effect	for	2015	and,	for	the	risk-based ratios,	standardized	approach	risk-weighted	assets	as	the	2015	Transitional	Basel III	ratios.	Under	the	standardized	approach	for	determining	credit	risk-weighted assets,	exposures	are	generally	assigned	a	pre-defined	risk	weight.	Exposures	to high	volatility	commercial	real	estate,	past	due	exposures,	equity	exposures	and securitization	exposures	are	generally	subject	to	higher	risk	weights	than	other types	of	exposures.

Under	the	Basel	III	rules	adopted	by	the	U.S.	banking	agencies,	significant common	stock	investments	in	unconsolidated	financial	institutions,	mortgage servicing	rights	and	deferred	tax	assets	must	be	deducted	from	capital	(subject	to a	phase-in	schedule)	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	III	regulatory	capital	includes	(subject	to	a	phase-in schedule)	accumulated	other	comprehensive	income	related	to	securities currently	and	previously	held	as	available	for	sale,	as	well	as	pension	and	other postretirement	plans.

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,	2015	capital levels	were	aligned	with	them.

At	December	31,	2015,	PNC	and	PNC	Bank,	our	sole	bank	subsidiary,	were both	considered	"well	capitalized,"	based	on	applicable	U.S.	regulatory	capital ratio	requirements.	Beginning	in	2015,	to	qualify	as	"well	capitalized",	PNC must	have	Transitional	Basel	III	capital	ratios	of	at	least	6%	for	Tier	1	risk-based capital	and	10%	for	Total	risk-based	capital,	and	PNC	Bank	must	have Transitional	Basel	III	capital	ratios	of	at	least	6.5%	for	Common	equity	Tier	1 risk-based	capital,	8%	for	Tier	1	risk-based	capital,	10%	for	Total	risk-based capital,	and	a	Leverage	ratio	of	at	least	5%.	To	qualify	as	"well	capitalized"	in 2014,	regulators	required	insured	depository	institutions,	such	as	PNC	Bank,	to maintain	Transitional	Basel	III	capital	ratios	of	at	least	6%	for	Tier	1	risk-based, 10%	for	Total	risk-based	and	5%	for	Leverage,	and	required	bank	holding companies,	such	as	PNC,	to	maintain	Transitional	Basel	III	regulatory	capital ratios	of	at	least	6%	Tier	1	risk-based	and	10%	for	Total	risk-based.

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	19	Regulatory Matters	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this Report.

# OFF-BALANCE	SHEET	ARRANGEMENTS	AND	VARIABLE INTEREST	ENTITIES

We	engage	in	a	variety	of	activities	that	involve	entities	that	are	not	consolidated or	otherwise	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,	and

•	Note	2	Loan	Sale	and	Servicing	Activities	and	Variable	Interest Entities,

•	Note	11	Borrowed	Funds,

•	Note	21	Commitments	and	Guarantees,	all	of	which	are	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,	2015	and	December	31,	2014	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

See	Note	11	Borrowed	Funds	and	Note	16	Equity	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report	for	additional	information	on	trust preferred	securities	issued	by	PNC	Capital	Trust	C	and	REIT	preferred	securities issued	by	PNC	Preferred	Funding	Trust	I	and	PNC	Preferred	Funding	Trust	II including	information	on	contractual	limitations	potentially	imposed	on payments	(including	dividends)	with	respect	to	PNC	and	PNC	Bank's	equity capital	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	on	a	recurring	basis	at	December	31,	2015	and	December	31,	2014,	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	20:	Fair	Value	Measurements	–	Summary

|  | December	31,	2015 |  | December	31,	2014 | December	31,	2014 |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | Total\nFair\tValue | Level\t3 | Total\nFair\tValue | Level\t3 |
| Total\tassets | $68,804 | \t\t $8,606 | $58,973 | $9,788 |
| Total\tassets\tat\tfair\tvalue\tas\ta\tpercentage\tof\tconsolidated\tassets | 19% |  | 17% |  |
| Level\t3\tassets\tas\ta\tpercentage\tof\ttotal\tassets\tat\tfair\tvalue |  | 13% |  | 17% |
| Level\t3\tassets\tas\ta\tpercentage\tof\tconsolidated\tassets |  | 2% |  | 3% |
| Total\tliabilities | $4,892 | \t\t $495 | $5,799 | $716 |
| 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 |  | 10% |  | 12% |
| 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	23	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	23,	primarily	due	to	the	presentation	in	Item	7 of	this	Report	of	business	net	interest	revenue	on	a	taxable-equivalent	basis.	Note	23	presents	results	of	businesses	for	2015,	2014	and	2013.

# Table	21:	Retail	Banking	Table

| Dollars	in	millions,	except	as	noted | 2015 | 2014 |
| :--- | :--- | :--- |
| INCOME\tSTATEMENT |  |  |
| Net\tinterest\tincome | $4,226 | $3,924 |
| Noninterest\tincome |  |  |
| Service\tcharges\ton\tdeposits | 623 | 633 |
| Brokerage | 284 | 240 |
| Consumer\tservices | 1,015 | 961 |
| Other | 301 | 291 |
| Total\tnoninterest\tincome | 2,223 | 2,125 |
| Total\trevenue | 6,449 | 6,049 |
| Provision\tfor\tcredit\tlosses | 259 | 277 |
| Noninterest\texpense | 4,761 | 4,625 |
| Pretax\tearnings | 1,429 | 1,147 |
| Income\ttaxes | 522 | 419 |
| Earnings | $907 | $728 |
| AVERAGE\tBALANCE\tSHEET |  |  |
| Loans |  |  |
| Consumer |  |  |
| Home\tequity | $27,657 | $28,852 |
| Indirect\tauto | 9,367 | 9,122 |
| Indirect\tother | 540 | 703 |
| Education | 6,307 | 7,208 |
| Credit\tcards | 4,527 | 4,364 |
| Other | 2,407 | 2,238 |
| Total\tconsumer | 50,805 | 52,487 |
| Commercial\tand\tcommercial\treal\testate | 10,520 | 10,867 |
| Floor\tplan | 2,185 | 2,215 |
| Residential\tmortgage | 680 | 601 |
| Total\tloans | 64,190 | 66,170 |
| Goodwill\tand\tother\tintangible\tassets | 5,968 | 6,034 |
| Other\tassets | 3,082 | 2,842 |
| Total\tassets | $73,240 | $75,046 |
| Deposits |  |  |
| Noninterest-bearing\tdemand | $24,119 | $22,134 |
| Interest-bearing\tdemand | 36,189 | 33,992 |
| Money\tmarket | 54,576 | 50,263 |
| Savings | 14,358 | 11,847 |
| Certificates\tof\tdeposit | 16,518 | 18,972 |
| Total\tdeposits | \t 145,760 | \t 137,208 |
| Other\tliabilities | 609 | 469 |
| Total\tliabilities | $146,369 | $137,677 |

| Dollars	in	millions,	except	as	noted | 2015 | 2014 |
| :--- | :--- | :--- |
| PERFORMANCE\tRATIOS |  |  |
| Return\ton\taverage\tassets | 1.24% | .97% |
| Noninterest\tincome\tto\ttotal\trevenue | 34 | 35 |
| Efficiency | 74 | 76 |
| OTHER\tINFORMATION\t(a) |  |  |
| Credit-related\tstatistics: |  |  |
| Commercial\tnonperforming\tassets | $111 | $139 |
| Consumer\tnonperforming\tassets | 934 | \t 1,059 |
| Total\tnonperforming\tassets\t(b) | $1,045 | $1,198 |
| Purchased\timpaired\tloans\t(c) | $462 | $575 |
| Commercial\tlending\tnet\t(recoveries)\tcharge-offs | $(1) | $31 |
| Credit\tcard\tlending\tnet\tcharge-offs | 138 | 142 |
| Consumer\tlending\t(excluding\tcredit\tcard)\tnet\tcharge-offs | 207 | 285 |
| Total\tnet\tcharge-offs | $344 | $458 |
| Commercial\tlending\tnet\t(recovery)\tcharge-off\tratio | (.01)% | .24% |
| Credit\tCard\tlending\tnet\tcharge-off\tratio | 3.06% | 3.25% |
| Consumer\tlending\t(excluding\tcredit\tcard)\tnet\tcharge-off\tratio | .44% | .58% |
| Total\tnet\tcharge-off\tratio | .54% | .69% |
| Home\tequity\tportfolio\tcredit\tstatistics:\t(d) |  |  |
| %\tof\tfirst\tlien\tpositions\tat\torigination\t(e) | 56% | 54% |
| Weighted-average\tloan-to-value\tratios\t(LTVs)\t(e)\t(f) | 73% | 77% |
| Weighted-average\tupdated\tFICO\tscores\t(g) | 752 | 748 |
| Net\tcharge-off\tratio | .30% | .54% |
| Delinquency\tdata\t–\t%\tof\ttotal\tloans:\t(h) |  |  |
| Loans\t30\t–\t59\tdays\tpast\tdue | .18% | .20% |
| Loans\t60\t–\t89\tdays\tpast\tdue | .09% | .09% |
| Accruing\tloans\tpast\tdue | .27% | .29% |
| Nonperforming\tloans | 2.96% | 3.13% |
| Other\tstatistics: |  |  |
| ATMs | \t 8,956 | \t 8,605 |
| Branches\t(i) | \t 2,616 | \t 2,697 |
| Brokerage\taccount\tclient\tassets\t(in\tbillions)\t(j) | $43 | $43 |
| Customer-related\tstatistics\t(average): |  |  |
| Non-teller\tdeposit\ttransactions\t(k) | 43% | 35% |
| Digital\tconsumer\tcustomers\t(l) | 52% | 46% |

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

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

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

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

(f) LTV	statistics	are	based	upon	current	information.

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

(h) 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.

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

(j) Amounts	include	cash	and	money	market	balances.

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

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

Retail	Banking	earned	$907	million	in	2015	compared	with	earnings	of	$728 million	in	2014.	The	increase	in	earnings	was	driven	by	increased	net	interest income	and	noninterest	income,	partially	offset	by	higher	noninterest	expense. Retail	Banking	continues	to	enhance	the	customer	experience	with	refinements to	product	offerings	that	drive	product	value	for	consumers	and	small	businesses. We	are	focused	on	growing	customer	share	of	wallet	through	the	sale	of liquidity,	banking,	and	investment	products	that	meet	the	broad	range	of financial	needs	of	our	customers.

Retail	Banking	continued	to	focus	on	the	strategic	priority	of	transforming	the customer	experience	through	transaction	migration,	branch	network transformation	and	multi-channel	sales	and	service	strategies. •	In	2015,	approximately	52%	of	consumer	customers	used	non-teller channels	for	the	majority	of	their	transactions	compared	with	46%	in 2014.

•	Deposit	transactions	via	ATM	and	mobile	channels	increased	to	43% of	total	deposit	transactions	in	2015	compared	with	35%	for	2014. •	Integral	to	PNC's	retail	branch	transformation	strategy,	more	than	375 branches	operate	under	the	universal	model	designed	to	enhance	sales opportunities	for	branch	personnel,	in	part,	by	driving	higher	ATM	and mobile	deposits.	During	2015,	the	total	branch	network	was	reduced	by 81	branches	and	the	ATM	network	was	increased	by	351	ATMs.	PNC had	a	network	of	2,616	branches	and	8,956	ATMs	at	December	31, 2015.

•	Instant	debit	card	issuance,	which	enables	us	to	print	a	customer's debit	card	in	a	matter	of	minutes,	is	now	available	in	nearly	700 branches,	over	26%	of	the	branch	network.

•	Apple	iPad™	technology	is	available	in	all	of	our	branches	to demonstrate	product	capabilities	to	customers	and	prospects.

Total	revenue	for	2015	increased	$400	million	compared	to	2014,	which included	a	$302	million	increase	in	net	interest	income	primarily	from	the enhancements	to	internal	funds	transfer	pricing	methodology	in	the	first	quarter of	2015,	as	well	as	increases	in	deposit	balances	and	interest	rate	spread	on	the value	of	deposits,	partially	offset	by	lower	loan	balances	and	interest	rate	spread compression	on	the	value	of	loans.

Noninterest	income	increased	$98	million	in	2015	compared	to	2014.	Execution on	our	share	of	wallet	strategy	resulted	in	strong	growth	in	consumer	service	fee income	from	payment-related	products,	specifically	in	debit,	credit	and	merchant services,	as	well	as	increased	brokerage	fees.	Noninterest	income	included	gains on	sales	of	Visa	Class	B	common	shares	of	$169	million	on	two	million	shares in	2015	compared	to	$209	million	on	3.5	million	shares	in	2014.	Excluding	these gains,	noninterest	income	increased	$138	million,	or	7%,	in	the	comparison.

Provision	for	credit	losses	and	net	charge-offs	in	2015	declined	by	$18	million and	$114	million,	respectively,	compared	to	2014	due	to	improved	credit	quality.

Noninterest	expense	in	2015	increased	$136	million	over	2014.	Increases	in technology	investments,	sales-related	and	other	compensation,	and	customer transaction-related	costs	were	partially	offset	by	reduced	third	party	service expense	and	non-credit	losses,	as	well	as	lower	branch	network	expenses	as	a result	of	transaction	migration	to	lower	cost	digital	and	ATM	channels.

The	deposit	strategy	of	Retail	Banking	is	to	remain	disciplined	on	pricing, focused	on	growing	and	retaining	relationship-based	balances,	executing	on market	specific	deposit	growth	strategies,	and	providing	a	source	of	low-cost funding	and	liquidity	to	PNC.

In	2015,	average	total	deposits	of	$145.8	billion	increased	$8.6	billion,	or	6%, compared	to	2014,	driven	by	organic	growth	in	the	following	deposit	categories: •	Money	market	deposits	increased	$4.3	billion,	or	9%,	to	$54.6	billion. •	Demand	deposits	increased	$4.2	billion,	or	7%,	to	$60.3	billion. •	Savings	deposits	increased	$2.5	billion,	or	21%,	to	$14.4	billion.

The	expected	run-off	of	maturing	certificates	of	deposit	partially	offset	these increases,	declining	$2.4	billion,	or	13%,	in	the	comparison.

Retail	Banking	continued	to	focus	on	a	relationship-based	lending	strategy	that targets	specific	products	and	markets	for	growth.	In	2015,	average	total	loans declined	$2.0	billion,	or	3%,	compared	to	2014,	driven	by	a	decline	in	home equity	loans	and	declines	from	run-off	of	non-strategic	portions	of	the	portfolios, as	more	fully	described	below.

•	Average	home	equity	loans	decreased	$1.2	billion,	or	4%,	as	pay- downs	and	payoffs	on	loans	exceeded	new	booked	volume,	consistent with	lower	mortgage	demand.	Retail	Banking's	home	equity	loan portfolio	is	relationship	based,	with	over	97%	of	the	portfolio attributable	to	borrowers	in	our	primary	geographic	footprint. •	Average	commercial	&	commercial	real	estate	loans	declined	$347 million,	or	3%,	as	pay-downs	and	payoffs	on	loans	exceeded	new volume.

•	Average	auto	dealer	floor	plan	loans	declined	$30	million,	or	1%, primarily	resulting	from	lower	dealer	line	utilization.

•	Average	indirect	auto	loans	increased	$245	million,	or	3%,	primarily due	to	portfolio	growth	in	previously	underpenetrated	markets.

•	Average	credit	card	balances	increased	$163	million,	or	4%,	as	a	result of	efforts	to	increase	credit	card	share	of	wallet	through	organic growth.

•	Average	residential	mortgage	balances	increased	$79	million,	or	13%, due	to	the	transfer	of	$198	million	in	CRA	mortgage	loans	from	the Residential	Mortgage	Banking	business	segment	in	January	2015. •	In	2015,	average	loan	balances	for	the	remainder	of	the	portfolio declined	$895	million,	compared	to	2014,	driven	by	declines	in	the education	and	indirect	other	portfolios	of	$901	million	and	$163 million,	respectively,	as	the	discontinued	government	guaranteed education	loan	and	indirect	other	balances	are	primarily	run-off portfolios.

Nonperforming	assets	declined	$153	million,	or	13%,	at	December	31,	2015 compared	to	December	31,	2014.	The	decrease	was	driven	by	declines	in	both consumer	and	commercial	non-performing	loans.

# Table	22:	Corporate	&	Institutional	Banking	Table

| Dollars	in	millions,	except	as	noted | 2015 | 2014 |
| :--- | :--- | :--- |
| INCOME\tSTATEMENT |  |  |
| Net\tinterest\tincome | \t\t$3,494 | \t$3,733 |
| Noninterest\tincome |  |  |
| Corporate\tservice\tfees | 1,383 | 1,295 |
| Other | 552 | 448 |
| Noninterest\tincome | 1,935 | 1,743 |
| Total\trevenue | 5,429 | 5,476 |
| Provision\tfor\tcredit\tlosses | 106 | 107 |
| Noninterest\texpense | 2,148 | 2,064 |
| Pretax\tearnings | 3,175 | 3,305 |
| Income\ttaxes | 1,144 | 1,199 |
| Earnings | \t\t$2,031 | \t$2,106 |
| AVERAGE\tBALANCE\tSHEET |  |  |
| Loans |  |  |
| Commercial | \t\t$85,416 | \t$78,688 |
| Commercial\treal\testate | 23,036 | 21,127 |
| Equipment\tlease\tfinancing | 6,940 | 6,892 |
| Total\tcommercial\tlending | \t\t\t 115,392 | \t\t 106,707 |
| Consumer | 866 | 1,198 |
| Total\tloans | \t\t\t 116,258 | \t\t 107,905 |
| Goodwill\tand\tother\tintangible\tassets | 3,847 | 3,826 |
| Loans\theld\tfor\tsale | 966 | 1,006 |
| Other\tassets | 10,961 | 10,190 |
| Total\tassets | \t\t$132,032 | \t$122,927 |
| Deposits |  |  |
| Noninterest-bearing\tdemand | \t\t$48,318 | \t$44,210 |
| Money\tmarket | 22,185 | 21,377 |
| Other | 10,189 | 7,958 |
| Total\tdeposits | 80,692 | 73,545 |
| Other\tliabilities | 7,746 | 7,551 |
| Total\tliabilities | \t\t$88,438 | \t$81,096 |
| PERFORMANCE\tRATIOS |  |  |
| Return\ton\taverage\tassets | 1.54% | 1.71% |
| Noninterest\tincome\tto\ttotal\trevenue | 36 | 32 |
| Efficiency | 40 | 38 |
| COMMERCIAL\tLOAN\tSERVICING\tPORTFOLIO\t–\tSERVICED\tFOR\tPNC\tAND |  |  |
| OTHERS\t(in\tbillions) |  |  |
| Beginning\tof\tperiod | \t\t$377 | \t$347 |
| Acquisitions/additions | 156 | 99 |
| Repayments/transfers | (86) | (69) |
| End\tof\tperiod | \t\t$447 | \t$377 |
| OTHER\tINFORMATION |  |  |
| Consolidated\trevenue\tfrom:\t(a) |  |  |
| Treasury\tManagement\t(b) | \t\t$1,388 | \t$1,288 |
| Capital\tMarkets\t(b)\nCommercial\tmortgage\tbanking\tactivities | \t\t$813 | \t$777 |
| Commercial\tmortgage\tloans\theld\tfor\tsale\t(c) | \t\t$140 | \t$126 |
| Commercial\tmortgage\tloan\tservicing\tincome\t(d) | 261 | 222 |
| Commercial\tmortgage\tservicing\trights\tvaluation,\tnet\tof\teconomic |  |  |
| hedge\t(e) | 28 | 38 |
| Total | \t\t$429 | \t$386 |

(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,	corporate	service	fees	and	other	noninterest income.

(c) 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.

(d) Includes	net	interest	income	and	noninterest	income	(primarily	in	corporate	services	fees)	from	loan servicing	net	of	reduction	in	commercial	mortgage	servicing	rights	due	to	time	decay	and	payoffs.

Commercial	mortgage	servicing	rights	valuation,	net	of	economic	hedge	is	shown	separately. (e) Amounts	reported	in	corporate	services	fees.

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

Corporate	&	Institutional	Banking	earned	$2.0	billion	in	2015,	a	decrease	of	$75 million,	or	4%,	compared	with	2014.	The	slight	decrease	in	earnings	was	due	to lower	net	interest	income	and	an	increase	in	noninterest	expense,	largely	offset by	higher	noninterest	income.	We	continue	to	focus	on	building	client relationships	where	the	risk-return	profile	is	attractive,	including	in	the Southeast.

Net	interest	income	decreased	$239	million,	or	6%,	in	2015	compared	with	2014, primarily	due	to	the	impact	of	first	quarter	2015	enhancements	to	internal	funds transfer	pricing	methodology,	continued	interest	rate	spread	compression	on loans	and	deposits	and	lower	purchase	accounting	accretion,	partially	offset	by the	impact	of	higher	average	loans	and	deposits.	Decreased	net	interest	income in	the	comparison	also	reflected	the	impact	from	the	second	quarter	2014 correction	to	reclassify	certain	commercial	facility	usage	fees	from	net	interest income	to	corporate	service	fees.

Corporate	service	fees	increased	$88	million,	or	7%,	in	2015	compared	with 2014,	primarily	due	to	an	increase	in	treasury	management,	commercial mortgage	servicing	and	equity	capital	markets	advisory	fees,	partially	offset	by lower	merger	and	acquisition	advisory	fees.	The	prior	year	comparison	also reflected	the	impact	of	the	second	quarter	2014	correction	to	reclassify	certain commercial	facility	fees	from	net	interest	income	to	corporate	service	fees.

Other	noninterest	income	increased	$104	million,	or	23%,	in	2015	compared	to 2014,	driven	by	higher	corporate	securities	underwriting	activity,	multifamily loans	originated	for	sale	to	agencies,	derivative	sales,	and	revenue	associated with	credit	valuations	for	customer-related	derivative	activities.

Overall	credit	quality	remained	generally	stable	in	2015.	The	provision	for	credit losses	was	essentially	unchanged	from	2014	and	net	charge-offs	continued	to	be low	relative	to	recent	historic	levels.	Nonperforming	assets	declined	7%	in	the year-over-year	comparison;	however,	there	was	an	increase	in	the	fourth	quarter of	2015,	compared	to	the	third	quarter	of	2015,	driven	by	deterioration	in	the	oil and	gas	sector.

Noninterest	expense	increased	$84	million,	or	4%,	in	2015	compared	to	2014, primarily	driven	by	investments	in	technology,	other	costs	associated	with business	activities	and	higher	asset	writedowns.

Average	loans	increased	$8.4	billion,	or	8%,	in	2015	compared	to	the	prior	year, and	period-end	loan	balances	increased	$4.7	billion,	or	4%,	at	December	31, 2015	compared	to	prior	year-end,	reflecting	solid	growth	in	Real	Estate, Corporate	Banking,	Business	Credit	and	Equipment	Finance: •	PNC	Real	Estate	provides	banking,	financing	and	servicing	solutions for	commercial	real	estate	clients	across	the	country.	Average	loans	for this	business	increased	$3.6	billion,	or	13%,	in	2015	compared	with 2014,	due	to	increased	originations	and	higher	utilization. •	Corporate	Banking	business	provides	lending,	treasury	management and	capital	markets-related	products	and	services	to	midsized	and	large corporations,	government	and	not-for-profit	entities.	Average	loans	for this	business	increased	$3.4	billion,	or	6%,	in	2015	compared	with 2014,	primarily	due	to	an	increase	in	loan	commitments	from	large corporate	clients	and	specialty	lending	businesses,	partially	offset	by the	impact	of	ongoing	capital	and	liquidity	management	activities. •	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	for	this	business	increased $1.3	billion,	or	10%,	in	2015	compared	with	2014,	due	to	new originations.

•	PNC	Equipment	Finance	provides	equipment	financing	solutions	for clients	throughout	the	U.S.	and	Canada.	Average	loans	and	operating leases	were	$11.8	billion	in	2015,	an	increase	of	$.6	billion,	or	5%, compared	with	2014.

Average	deposits	increased	$7.1	billion,	or	10%,	in	2015	compared	to	the	prior year,	as	a	result	of	business	growth	and	increases	in	demand,	money	market	and certificates	of	deposit	products.

The	commercial	loan	servicing	portfolio	increased	$70	billion,	or	19%,	at December	31,	2015	compared	to	December	31,	2014,	as	servicing	additions from	new	and	existing	customers	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.	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	22	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,	increased	$100	million,	or	8%,	in	2015	compared with	2014,	driven	by	growth	in	our	commercial	card,	wholesale	lockbox, PINACLE ®,	funds	transfer	fees	and	liquidity-related	revenue.

Capital	markets-related	products	and	services	include	foreign	exchange, derivatives,	securities,	loan	syndications,	mergers	and	acquisitions	advisory,	and equity	capital	markets	advisory	activities	and	related	services.	Revenue	from capital	markets-related	products	and	services	increased	$36	million,	or	5%,	in 2015	compared	with	2014.	The	increase	in	the	comparison	was	primarily	driven by	higher	derivative	sales	and	revenue	associated	with	credit	valuations	for customer-related	derivative	activities,	increased	corporate	securities	underwriting activity	and	higher	equity	capital	markets	advisory	fees,	partially	offset	by	lower merger	and	acquisition	advisory	fees.

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	increased	$43 million,	or	11%,	in	2015	compared	with	2014.	The	increase	in	the	comparison was	mainly	due	to	higher	mortgage	servicing	revenue	and	higher	multifamily loans	originated	for	sale	to	agencies,	partially	offset	by	lower	net	valuation adjustment	on	commercial	mortgage	servicing	rights.

# Table	23:	Asset	Management	Group	Table

| Dollars	in	millions,	except	as	noted | 2015 | 2014 |
| :--- | :--- | :--- |
| INCOME\tSTATEMENT |  |  |
| Net\tinterest\tincome | $292 | $289 |
| Noninterest\tincome | 869 | 818 |
| Total\trevenue | 1,161 | \t 1,107 |
| Provision\tfor\tcredit\tlosses\t(benefit) | 9 | (1) |
| Noninterest\texpense | 846 | 821 |
| Pretax\tearnings | 306 | 287 |
| Income\ttaxes | 112 | 106 |
| Earnings | $194 | $181 |
| AVERAGE\tBALANCE\tSHEET |  |  |
| Loans |  |  |
| Consumer | $5,655 | $5,457 |
| Commercial\tand\tcommercial\treal\testate | 880 | 986 |
| Residential\tmortgage | 919 | 809 |
| Total\tloans | 7,454 | \t 7,252 |
| Goodwill\tand\tother\tintangible\tassets | 226 | 259 |
| Other\tassets | 240 | 234 |
| Total\tassets | $7,920 | $7,745 |
| Deposits |  |  |
| Noninterest-bearing\tdemand | $1,272 | $1,366 |
| Interest-bearing\tdemand | 4,144 | \t 3,954 |
| Money\tmarket | 5,161 | \t 3,944 |
| CDs/IRAs/savings\tdeposits | 638 | 454 |
| Total\tdeposits | \t 11,215 | \t 9,718 |
| Other\tliabilities | 42 | 51 |
| Total\tliabilities | $11,257 | $9,769 |
| PERFORMANCE\tRATIOS |  |  |
| Return\ton\taverage\tassets | 2.45% | 2.34% |
| Noninterest\tincome\tto\ttotal\trevenue | 75 | 74 |
| Efficiency | 73 | 74 |
| OTHER\tINFORMATION |  |  |
| Total\tnonperforming\tassets\t(a)\t(b) | $53 | $66 |
| Purchased\timpaired\tloans\t(a)\t(c) | $72 | $83 |
| Total\tnet\tcharge-offs | $13 | $3 |

(d) Excludes	brokerage	account	client	assets.

Asset	Management	Group	earned	$194	million	in	2015	compared	to	$181 million	in	2014,	an	increase	of	$13	million,	or	7%.	Earnings	increased	due	to increases	in	net	interest	income	and	noninterest	income,	partially	offset	by	an increase	in	noninterest	expense.

Total	revenue	for	2015	increased	$54	million	compared	to	2014.	Noninterest income	increased	$51	million,	or	6%,	primarily	relating	to	the	impact	from	a	$30 million	trust	settlement	in	the	second	quarter	of	2015,	new	sales	production	and stronger	average	equity	markets.	Net	interest	income	increased	$3	million,	or 1%,	in	2015	compared	to	2014,	primarily	due	to	an	increase	in	average	loan	and deposit	balances,	partially	offset	by	continued	spread	compression.

Noninterest	expense	increased	by	$25	million,	or	3%,	in	2015	compared	to	the prior	year,	primarily	attributable	to	higher	compensation	expense	and investments	in	technology.	Asset	Management	Group	remains	focused	on disciplined	expense	management	as	it	invests	in	strategic	growth	opportunities.

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	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	and	investment strategies.	Institutional	Asset	Management	is	strengthening	its	partnership	with Corporate	and	Institutional	Banking	and	other	internal	channels	to	drive	growth and	is	focused	on	building	retirement	capabilities	and	expanding	product solutions	for	all	customers.

Assets	under	administration	were	$259	billion	as	of	December	31,	2015 compared	to	$263	billion	as	of	December	31,	2014,	largely	due	to	a	decline	in nondiscretionary	client	assets	under	administration.	Discretionary	client	assets under	management	decreased	$1	billion	at	December	31,	2015	compared	to December	31,	2014,	driven	by	lower	equity	markets	on	a	spot	basis,	partially offset	by	positive	net	flows,	after	adjustments	for	cyclical	client	activities.

Average	loan	balances	increased	$.2	billion,	or	3%,	in	2015	compared	to	the prior	year	due	to	continued	growth	in	the	consumer	loan	portfolio.	Asset Management	Group's	clients'	preference	for	liquidity	in	the	form	of	a	new	line of	credit	product	has	driven	significant	growth	in	the	loan	portfolio.	The	line	of credit	product	is	primarily	secured	by	the	market	value	of	the	client's	underlying investment	management	account	assets.	Average	deposits	for	2015	increased $1.5	billion,	or	15%,	compared	to	the	prior	year,	driven	by	an	increase	in	money market	products.

# Table	24:	Residential	Mortgage	Banking	Table

| Dollars	in	millions,	except	as	noted | 2015 | 2014 |
| :--- | :--- | :--- |
| INCOME\tSTATEMENT |  |  |
| Net\tinterest\tincome | $121 | $149 |
| Noninterest\tincome |  |  |
| Loan\tservicing\trevenue |  |  |
| Servicing\tfees | 201 | 224 |
| Mortgage\tservicing\trights\tvaluation,\tnet\tof |  |  |
| economic\thedge | 71 | 12 |
| Loan\tsales\trevenue | 342 | 420 |
| Other | (1) | (5) |
| Total\tnoninterest\tincome | 613 | 651 |
| Total\trevenue | 734 | 800 |
| Provision\tfor\tcredit\tlosses\t(benefit) | 2 | (2) |
| Noninterest\texpense | 691 | 746 |
| Pretax\tearnings | 41 | 56 |
| Income\ttaxes | 15 | 21 |
| Earnings | $26 | $35 |
| AVERAGE\tBALANCE\tSHEET |  |  |
| Portfolio\tloans | $1,140 | $1,689 |
| Loans\theld\tfor\tsale | \t 1,107 | \t 1,120 |
| Mortgage\tservicing\trights\t(MSR) | 991 | \t 1,014 |
| Other\tassets | \t 3,602 | \t 4,034 |
| Total\tassets | $6,840 | $7,857 |
| Deposits | $2,428 | $2,285 |
| Borrowings\tand\tother\tliabilities | \t 2,044 | \t 2,879 |
| Total\tliabilities | $4,472 | $5,164 |
| PERFORMANCE\tRATIOS |  |  |
| Return\ton\taverage\tassets | .38% | .45% |
| Noninterest\tincome\tto\ttotal\trevenue | 84 | 81 |
| Efficiency | 94 | 93 |

| Dollars	in	millions,	except	as	noted | 2015 | 2014 |
| :--- | :--- | :--- |
| RESIDENTIAL\tMORTGAGE\tSERVICING |  |  |
| PORTFOLIO\t–\tSERVICED\tFOR\tTHIRD\tPARTIES |  |  |
| (in\tbillions) |  |  |
| Beginning\tof\tperiod | $ 108 | $ 114 |
| Acquisitions | 29 | 4 |
| Additions | 8 | 8 |
| Repayments/transfers | (22) | (18) |
| End\tof\tperiod | $ 123 | $ 108 |
| Servicing\tportfolio\t–\tthird-party\tstatistics:\t(a) |  |  |
| Fixed\trate | 95% | 94% |
| Adjustable\trate/balloon | 5% | 6% |
| Weighted-average\tinterest\trate | \t 4.25% | \t 4.47% |
| MSR\tasset\tvalue\t(in\tbillions) | $1.1 | $0.8 |
| MSR\tcapitalization\tvalue\t(in\tbasis\tpoints) | 86 | 78 |
| Weighted-average\tservicing\tfee\t(in\tbasis\tpoints) | 27 | 27 |
| RESIDENTIAL\tMORTGAGE\tREPURCHASE |  |  |
| RESERVE |  |  |
| Beginning\tof\tperiod | $ 107 | $ 131 |
| Provision | 5 | – |
| Losses\t–\tloan\trepurchases | (18) | (24) |
| End\tof\tPeriod | $94 | $ 107 |
| OTHER\tINFORMATION |  |  |
| Loan\torigination\tvolume\t(in\tbillions) | $10.5 | $9.5 |
| Loan\tsale\tmargin\tpercentage | \t 3.32% | \t 4.41% |
| Percentage\tof\toriginations\trepresented\tby: |  |  |
| Purchase\tvolume\t(b) | 45% | 45% |
| Refinance\tvolume | 55% | 55% |
| Total\tnonperforming\tassets\t(a)\t(c) | $81 | $ 120 |
| (a)\nAs\tof\tDecember\t31. |  |  |

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

Residential	Mortgage	Banking	earned	$26	million	in	2015	compared	to	$35 million	in	2014.	Earnings	decreased	from	the	prior	year	as	higher	net	hedging gains	on	residential	mortgage	servicing	rights	and	lower	noninterest	expense were	more	than	offset	by	lower	loan	sales	and	servicing	revenue	and	decreased net	interest	income.

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	increased	$1	billion	in	2015	compared	to	2014.

Loans	continue	to	be	originated	primarily	through	direct	channels under	FNMA,	FHLMC	and	FHA/Department	of	Veterans	Affairs agency	guidelines.	Refinancings	were	55%	of	originations	for	both 2015	and	2014.	During	2015,	12%	of	loan	originations	were	under	the original	or	revised	Home	Affordable	Refinance	Program	(HARP	or HARP	2).

•	Residential	mortgage	loans	serviced	for	others	increased	$15	billion	at December	31,	2015	compared	to	December	31,	2014.	During	2015,

$29	billion	of	residential	mortgage	servicing	rights	were	acquired, compared	with	$4	billion	in	2014.

•	Net	interest	income	decreased	$28	million	in	2015	compared	to	2014,

primarily	due	to	lower	balances	of	portfolio	loans	held	for	investment.

•	Noninterest	income	declined	$38	million	in	2015	compared	with	the prior	year	period,	as	increased	net	hedging	gains	on	residential mortgage	servicing	rights	were	more	than	offset	by	decreased	loan sales	and	servicing	revenue.

•	Noninterest	expense	declined	$55	million	in	2015	compared	with	the

2014	period,	primarily	as	a	result	of	lower	legal	accruals	and	mortgage compliance	costs.

•	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,	2015,	the	liability	for	estimated	losses	on repurchase	and	indemnification	claims	for	the	Residential	Mortgage Banking	business	segment	was	$94	million,	compared	with	$107 million	at	December	31,	2014.	See	the	Recourse	and	Repurchase Obligations	section	of	this	Item	7	and	Note	21	Commitments	and Guarantees	in	the	Notes	To	Consolidated	Financial	Statements	of	this Report	for	additional	information.

# Table	25:	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.

| In	billions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Carrying\tvalue\tof\tPNC's\tinvestment |  |  |
| in\tBlackRock\t(c) | $6.7 | $6.3 |
| Market\tvalue\tof\tPNC's\tinvestment |  |  |
| in\tBlackRock\t(d) | 12.0 | 12.6 |

(c) PNC	accounts	for	its	investment	in	BlackRock	under	the	equity	method	of	accounting,	exclusive	of	a related	deferred	tax	liability	of	$2.2	billion	at	December	31,	2015	and	$2.1	billion	at	December	31, 2014.	Our	voting	interest	in	BlackRock	common	stock	was	approximately	21%	at	December	31, 2015.

(d) Does	not	include	liquidity	discount.

In	addition	to	our	investment	in	BlackRock	reflected	in	Table	25,	at December	31,	2015,	we	held	approximately	1.3	million	shares	of	BlackRock Series	C	Preferred	Stock	valued	at	$357	million,	which	are	available	to	fund	our obligation	in	connection	with	certain	BlackRock	long-term	incentive	plan (LTIP)	programs.	Additional	information	regarding	our	BlackRock	LTIP	share obligations	is	included	in	Note	13	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.

See	Note	24	Subsequent	Events	in	Item	8	of	this	Report	for	information	on	our February	1,	2016	transfer	of	0.5	million	shares	of	Series	C	Preferred	Stock	to BlackRock	to	satisfy	a	portion	of	our	LTIP	obligation.

# Table	26:	Non-Strategic	Assets	Portfolio	Table

(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.	This	segment	contained 81%	of	PNC's	purchased	impaired	loans	at	December	31,	2015	and	80%	at	December	31,	2014.

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	$301	million	in	2015	compared with	$367	million	in	2014.	Earnings	decreased	year-over-year	primarily	due	to	a declining	balance	in	the	loan	portfolio.

# Non-Strategic	Assets	Portfolio	overview:

•	Net	interest	income	declined	$155	million,	or	28%,	in	2015	compared with	2014,	resulting	from	lower	purchase	accounting	accretion	and	the impact	of	the	declining	average	balance	of	the	loan	portfolio.

•	Noninterest	income	increased	$13	million,	or	33%,	in	2015	compared to	2014	driven	by	lower	provision	for	estimated	losses	on	repurchase obligations.

•	Provision	for	credit	losses	was	a	benefit	in	both	2015	and	2014, reflecting	continued	improvements	in	credit	quality. •	Noninterest	expense	declined	$42	million,	or	34%,	in	2015	compared with	2014,	due	to	lower	costs	of	managing	and	servicing	the	loan portfolio	and	a	release	of	legal	reserves	in	December	2015. •	Average	portfolio	loans	declined	$1.7	billion,	or	18%,	in	2015 compared	to	2014,	due	to	customer	payment	activity	and	portfolio management	activities	to	reduce	under-performing	assets. •	Effective	December	31,	2015,	PNC	implemented	its	change	in	the derecognition	policy	for	purchased	impaired	pooled	consumer	and residential	real	estate	loans,	resulting	in	the	derecognition	of	the recorded	investment	balance	included	in	total	loans	and	the	associated allowance	for	loan	losses	balance	each	by	$468	million,	93%	of	which was	recorded	in	the	Non-Strategic	Assets	Portfolio.	The	decline	in average	loans	in	the	year-over-year	comparison	reflected	the	impact	of this	change.

# 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.

For	reporting	units	with	goodwill,	when	determining	the	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,	2015	(annual	impairment testing	date),	unallocated	excess	capital	(difference	between	shareholders'	equity minus	total	economic	capital	assigned	and	increased	by	the	incremental	targeted equity	net	capital	infusion)	represented	capital	reserved	for	potential	future capital	needs.

The	results	of	our	annual	2015	impairment	test	indicated	that	the	estimated	fair values	of	our	reporting	units	with	goodwill	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	2014	or	2013.

See	Note	8	Goodwill	and	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	and	commercial	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.	The	fair value	of	residential	and	commercial	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.	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.

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	and	commercial	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	MSR	portfolios.	The	hedge	relationships	are	actively managed	in	response	to	changing	market	conditions	over	the	life	of	the	MSRs. 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	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	May	2014,	the	Financial	Accounting	Standard	Board	(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.	In	August	2015, the	FASB	issued	guidance	deferring	the	mandatory	effective	date	of	the	ASU	for one	year,	to	annual	reporting	periods	beginning	after	December	15,	2017.	The requirements	within	ASU	2014-09	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	ASU 2014-09	recognized	at	the

date	of	initial	application.	We	plan	to	adopt	the	ASU	consistent	with	the	deferred mandatory	effective	date.	Based	on	our	evaluation	to	date,	we	do	not	expect	the adoption	of	this	standard	to	have	a	significant	impact	on	our	consolidated	results of	operations	or	our	consolidated	financial	position.	Additionally,	we	will continue	to	evaluate	this	standard's	impact	as	standard-setting,	regulatory	views and	interpretations	evolve.

In	February	2015,	the	FASB	issued	ASU	2015-02,	Consolidation	(Topic	810): Amendments	to	the	Consolidation	Analysis.	All	legal	entities	are	subject	to	re- evaluation	under	this	ASU,	including	investment	companies	and	certain	other entities	measured	in	a	manner	consistent	with	ASC	946	Financial	Services	– Investment	Companies	which	were	previously	excluded.	The	ASU	will	change the	analysis	that	a	reporting	entity	must	perform	to	determine	whether	it	should consolidate	certain	types	of	legal	entities.	Specifically,	the	ASU	modifies	the evaluation	of	whether	limited	partnerships	and	similar	legal	entities	are	variable interest	entities	(VIEs)	or	voting	interest	entities;	eliminates	the	presumption	that a	general	partner	should	consolidate	a	limited	partnership;	potentially	changes the	consolidation	conclusions	of	reporting	entities	that	are	involved	with	VIEs, in	particular	those	that	have	fee	arrangements	and	related	party	arrangements, and	provides	a	scope	exception	for	reporting	entities	with	interests	held	in certain	money	market	funds.	The	ASU	is	effective	for	public	business	entities	for annual	periods,	and	interim	periods	within	those	annual	periods,	beginning	after December	15,	2015	and	may	be	applied	through	a	retrospective	or	modified retrospective	approach.	We	adopted	this	standard	as	of	January	1,	2016	under	a modified	retrospective	approach.	The	impact	of	adoption	did	not	have	a significant	impact	on	our	consolidated	results	of	operations	or	our	consolidated financial	position.

In	January	2016,	the	FASB	issued	ASU	2016-01,	Financial	Instruments	– Overall	(Subtopic	825-10):	Recognition	and	Measurement	of	Financial	Assets and	Financial	Liabilities.	This	ASU	changes	the	accounting	for	certain	equity investments,	financial	liabilities	under	the	fair	value	option	and	presentation	and disclosure	requirements	for	financial	instruments.	Equity	investments	not accounted	for	under	the	equity	method	of	accounting	will	be	measured	at	fair value	with	any	changes	in	fair	value	recognized	in	net	income.	Equity investments	without	readily	determinable	fair	values	may	be	measured	at	cost, adjusted	for	impairment	and	other	changes	resulting	from	observable	price changes	in	orderly	transactions	for	a	similar	investment	of	the	same	issuer.	A qualitative	assessment	may	be	utilized	to	evaluate	equity	investments	without readily	determinable	fair	values	for	impairment.	If	impairment	exists,	the investment	is	required	to	be	measured	at	fair	value.	In	addition	to	the	changes	for certain	equity	investments,	the	ASU	also	1)	requires	that	instrument-specific credit	risk	changes	in	the	fair	value	of	a	financial	liability	accounted	for	under the	fair	value	option	be

presented	in	other	comprehensive	income,	2)	clarifies	that	an	entity	should consider	deferred	tax	assets	related	to	available-for-sale	securities	when evaluating	the	need	for	a	valuation	allowance	on	deferred	tax	assets,	3) eliminates	the	requirement	for	entities	to	disclose	the	methods	and	significant assumptions	used	to	estimate	disclosed	fair	values	for	financial	instruments measured	at	amortized	cost,	4)	requires	that	the	disclosed	fair	values	represent	an exit	price,	and	5)	requires	that	financial	assets	and	liabilities	be	presented	by measurement	category	and	form	of	instrument	on	the	balance	sheet	or	within	the accompanying	notes	to	the	financial	statements.	The	ASU	is	effective	for	annual periods,	and	interim	periods	within	those	annual	periods,	beginning	after December	15,	2017	and	should	be	applied	through	a	cumulative-effect adjustment	to	the	balance	sheet,	except	for	the	amendment	related	to	equity securities	without	readily	determinable	fair	values,	which	should	be	applied prospectively.	We	plan	to	adopt	all	provisions	consistent	with	the	effective	date and	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	12 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.	During	2015,	the	SOA	released an	updated	mortality	improvement	scale	that	generally	validated	the	information that	was	considered	when	setting	the	current	assumption,	which	remains unchanged	from	the	mortality	assumption	adopted	in	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	2015,

2014	and	2013	were	(.1%),	6.50%,	and	15.48%,	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	2015	was	6.75%,	down from	7.00%	for	2014.	This	reduction	was	made	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	maintaining	our	expected	long-term	return	on	assets	at 6.75%	for	determining	pension	cost	for	2016.

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	$8	million	as	the	impact	is	amortized	into	results	of	operations.

We	currently	estimate	pretax	pension	expense	of	$43	million	for	2016	compared with	pretax	expense	of	$9	million	in	2015.	This	year-over-year	expected	increase in	expense	is	mainly	due	to	lower	than	expected	asset	returns	during	2015,	which reduced	year-end	pension	asset	balances	and	increased	the	amortization	of actuarial	losses	in	2016.

The	table	below	reflects	the	estimated	effects	on	pension	expense	of	certain changes	in	annual	assumptions,	using	2016	estimated	expense	as	a	baseline.

# Table	27:	Pension	Expense	–	Sensitivity	Analysis

| Change	in	Assumption	(a)<br>(In	millions) | Estimated<br>Increase<br>to	2016<br>Pension<br>Expense |
| :--- | :--- |
| .5%\tdecrease\tin\tdiscount\trate | $18 |
| .5%\tdecrease\tin\texpected\tlong-term\treturn\ton\tassets | $21 |
| .5%\tincrease\tin\tcompensation\trate | $2 |

(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.	We	do	not	expect	to	be	required	to	make any	contributions	to	the	plan	during	2016.	In	February	2015,	PNC	made	a	$200 million	voluntary	contribution.

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	12	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/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.

# Commercial	Mortgage	Loan	Recourse	Obligations

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.	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	21	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	Loan	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	Loan	Sale	and	Servicing	Activities	and Variable	Interest	Entities	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	20	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");	(v)	the	availability	of	legal	defenses;	and (vi)	the	estimated	severity	of	loss	upon	repurchase	of	the	loan	or	collateral, make-whole	settlement	or	indemnification.

We	previously	reached	agreements	with	both	FNMA	and	FHLMC	to	resolve their	repurchase	claims	with	respect	to	loans	sold	between	2000	and	2008.	Thus, our	repurchase	obligations	involve	Agency	securitizations	and	other	loan	sales with	FNMA	and	FHLMC	subsequent	to	2008	only,	as	well	as	Agency securitizations	with	GNMA	and	Non-Agency	securitizations	and	other	loan	sales with	private	investors.	The	unpaid	principal	balance	of	loans	associated	with	our exposure	to	repurchase	obligations	totaled	$65.3	billion	at	December	31,	2015, of	which	$1.2	billion	was	90	days	or	more	delinquent.	The	comparative	amounts were	$68.3	billion	and	$1.5	billion,	respectively,	at	December	31,	2014.

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,	2015	and December	31,	2014.	In	making	these	estimates	we	consider	the	losses	that	we expect	to	incur	over	the	life	of	the	sold	loans.	See	Note	21	Commitments	and Guarantees	in	this	Report	for	additional	information	on	residential	mortgage repurchase	obligations.

# Home	Equity	Loan/Line	of	Credit	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	Loan/Line	of	Credit Repurchase	Obligations,	see	Note	21	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. PNC	manages	risk	in	light	of	our	risk	appetite	to	optimize	long	term	shareholder value	while	supporting	our	employees,	customers,	and	communities.

This	Risk	Management	section	describes	our	risk	framework,	including	risk appetite	and	strategy,	culture,	risk	organization	and	governance,	risk identification	and	quantification,	risk	controls	and	limits	and	risk	monitoring	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'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 and	incentives	for	employees	to	reinforce	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	risk	management	framework.

# Risk	Organization	and	Governance

PNC	employs	a	comprehensive	risk	management	governance	framework	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	framework	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.

# Risk	is	managed	across	three	lines	of	defense:

Business	Front	Line	Units	(BFLU)	–	As	the	first	line	of	defense,	business front	line	units	are	accountable	for	identifying,	owning	and	managing	risks to	within	acceptable	levels	while	adhering	to	the	risk	management framework	established	by	Independent	Risk	Management.	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.

Independent	Risk	Management	(IRM)	–	As	the	second	line	of	defense,	IRM oversees	risk	management	and	establishes	standards	at	the	enterprise	level to	support	business	management	in	meeting	their	responsibilities	for managing	risk.	IRM	is	independent	from	BFLUs	and	is	responsible	for identifying,	measuring,	monitoring	and	controlling	aggregate	risks.

Internal	Audit	–	As	the	third	line	of	defense,	Internal	Audit	is	independent from	BFLUs	and	IRM	and	develops	a	risk	based	audit	program	to	provide assurance	on	the	management	of	risk	throughout	the	organization.	This includes	auditing	business	processes	across	the	organization	and	reporting on	the	effectiveness	of	controls,	as	well	as	auditing	the	risk	management policy	and	infrastructure	implemented	by	IRM.

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.

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.

# 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	and	special investigations.

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	framework	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

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.

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	Monitoring	and	Reporting

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

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,	functional	risk	and	the enterprise	levels.	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	improved	overall	during	2015. •	Nonperforming	assets	at	December	31,	2015	decreased	$455	million compared	with	December	31,	2014	as	a	result	of	improvements	in	both consumer	lending	and	commercial	lending	nonperforming	loans. Consumer	lending	nonperforming	loans	decreased	$303	million	and commercial	lending	nonperforming	loans	decreased	$81	million. Nonperforming	assets	were	0.68%	of	total	assets	at	December	31, 2015	compared	with	0.83%	at	December	31,	2014.

•	Overall	loan	delinquencies	totaled	$1.6	billion	at	December	31,	2015, a	decrease	of	$306	million,	or	16%,	from	year-end	2014.	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	$174	million, 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	$386	million	in	2015,	down	27%,	or	$145 million,	from	net	charge-offs	in	2014.

•	Provision	for	credit	losses	for	the	year	ended	December	31,	2015 declined	to	$255	million	compared	to	$273	million	for	the	year	ended December	31,	2014.

•	The	level	of	ALLL	decreased	to	$2.7	billion	at	December	31,	2015	as compared	to	$3.3	billion	at	December	31,	2014,	primarily	due	to	a change	to	our	derecognition	policy	effective	December	31,	2015	for purchased	impaired	pooled	consumer	and	residential	real	estate	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.	A	summary	of	the	major	categories	of	nonperforming assets	are	presented	in	Table	28.	See	Note	3	Asset	Quality	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report	for	further	detail	of nonperforming	asset	categories.

# Table	28:	Nonperforming	Assets	By	Type

| Dollars	in	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Nonperforming\tloans |  |  |
| Commercial\tlending | \t\t$545 | \t$626 |
| Consumer\tlending\t(a)(b) | 1,581 | 1,884 |
| Total\tnonperforming\tloans\t(c) | 2,126 | 2,510 |
| OREO\tand\tforeclosed\tassets | 299 | 370 |
| Total\tnonperforming\tassets | \t\t$2,425 | \t$2,880 |
| Amount\tof\tTDRs\tincluded\tin\tnonperforming\tloans | \t\t$1,119 | \t$1,370 |
| Percentage\tof\ttotal\tnonperforming\tloans | 53% | 55% |
| Nonperforming\tloans\tto\ttotal\tloans | 1.03% | 1.23% |
| Nonperforming\tassets\tto\ttotal\tloans,\tOREO\tand |  |  |
| foreclosed\tassets | 1.17 | 1.40 |
| Nonperforming\tassets\tto\ttotal\tassets | .68 | .83 |
| Allowance\tfor\tloan\tand\tlease\tlosses\tto\ttotal |  |  |
| nonperforming\tloans\t(d) | 128 | 133 |
| (a)\nExcludes\tmost\tconsumer\tloans\tand\tlines\tof\tcredit,\tnot\tsecured\tby\tresidential\treal\testate,\twhich\tare |  |  |

(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) The	recorded	investment	of	loans	collateralized	by	residential	real	estate	property	that	are	in	process of	foreclosure	was	$.6	billion	and	$.8	billion	at	December	31,	2015	and	December	31,	2014, respectively,	and	included	$.3	billion	and	$.5	billion,	respectively,	of	loans	that	are	government insured/guaranteed.

(c) 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.

(d) The	December	31,	2015	ratio	was	impacted	by	the	change	in	derecognition	policy	for	purchased impaired	pooled	consumer	and	residential	real	estate	loans	as	of	December	31,	2015.	For	additional information	see	Note	4	Purchased	Loans	in	the	Notes	To	Consolidated	Financial	Statements	in Item	8	of	this	Report.

# Table	29:	Change	in	Nonperforming	Assets

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| January\t1 | $2,880 | $3,457 |
| New\tnonperforming\tassets | \t 1,459 | 2,127 |
| Charge-offs\tand\tvaluation\tadjustments | (499) | (585) |
| Principal\tactivity,\tincluding\tpaydowns\tand\tpayoffs | (687) | (1,001) |
| Asset\tsales\tand\ttransfers\tto\tloans\theld\tfor\tsale | (364) | (570) |
| Returned\tto\tperforming\tstatus | (364) | (548) |
| December\t31 | $2,425 | $2,880 |

Nonperforming	assets	decreased	$455	million	at	December	31,	2015	compared to	December	31,	2014.	Consumer	lending	nonperforming	loans	decreased	$303 million	and	commercial	lending	nonperforming	loans	decreased	$81	million.	As of	December	31,	2015,	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,	2015, commercial	lending	nonperforming	loans	were	carried	at	approximately	62%	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.

Within	consumer	nonperforming	loans,	residential	real	estate	TDRs	comprise 68%	of	total	residential	real	estate	nonperforming	loans	at	December	31,	2015, up	from	60%	at	December	31,	2014.	Home	equity	TDRs	comprise	51%	of	home equity	nonperforming	loans	at	December	31,	2015,	down	from	54%	at December	31,	2014.	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,	2015,	our	largest	nonperforming	asset	was	$33	million	in	the Real	Estate,	Rental	and	Leasing	Industry	and	our	average	nonperforming	loan associated	with	commercial	lending	was	less	than	$1	million.	The	ten	largest outstanding	nonperforming	assets	are	from	the	commercial	lending	portfolio	and represent	37%	and	8%	of	total	commercial	lending	nonperforming	loans	and total	nonperforming	assets,	respectively,	as	of	December	31,	2015.

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

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, including	the	accounting	treatment,	on	these	loans.

# Table	30:	OREO	and	Foreclosed	Assets

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Other\treal\testate\towned\t(OREO): |  |  |
| Residential\tproperties | $146 | $183 |
| Residential\tdevelopment\tproperties | 31 | 48 |
| Commercial\tproperties | 102 | 120 |
| Total\tOREO | 279 | 351 |
| Foreclosed\tand\tother\tassets | 20 | 19 |
| Total\tOREO\tand\tforeclosed\tassets | $299 | $370 |

Total	OREO	and	foreclosed	assets	decreased	$71	million	during	2015	and	is 12%	of	total	nonperforming	assets	at	December	31,	2015.	As	of	December	31, 2015	and	December	31,	2014,	59%	and	62%,	respectively,	of	our	OREO	and foreclosed	assets	were	comprised	of	residential	related	properties.

# 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.

# Table	31:	Accruing	Loans	Past	Due	(a)	(b)

|  | Amount |  | Percentage	of	Total	Outstandings |  |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | December\t31\n2015 | December\t31\n2014 | December\t31\n2015 | December\t31\n2014 |
| Early\tstage\tloan\tdelinquencies |  |  |  |  |
| Accruing\tloans\tpast\tdue\t30\tto\t59\tdays | $511 | $582 | .25% | .28% |
| Accruing\tloans\tpast\tdue\t60\tto\t89\tdays | 248 | 259 | .12% | .13% |
| Total | 759 | 841 | .37% | .41% |
| Late\tstage\tloan\tdelinquencies |  |  |  |  |
| Accruing\tloans\tpast\tdue\t90\tdays\tor\tmore | 881 | 1,105 | .43% | .54% |
| Total | $1,640 | $1,946 | .80% | .95% |
| (a)\nAmounts\tin\ttable\trepresent\trecorded\tinvestment. |  |  |  |  |

(a) Amounts	in	table	represent	recorded	investment.

(b) Past	due	loan	amounts	at	December	31,	2015	include	government	insured	or	guaranteed	loans	of	$172	million,	$120	million,	and	$765	million	for	accruing	loans	past	due	30	to	59	days,	past	due	60	to	89	days, and	past	due	90	days	or	more,	respectively.	The	comparative	amounts	as	of	December	31,	2014	were	$220	million,	$136	million,	and	$996	million,	respectively.

Total	early	stage	loan	delinquencies	(accruing	loans	past	due	30	to	89	days) decreased	$82	million,	or	10%,	at	December	31,	2015	compared	to December	31,	2014,	driven	by	reductions	in	consumer	early	stage	delinquencies.

Accruing	loans	past	due	90	days	or	more	decreased	$224	million,	or	20%,	at December	31,	2015	compared	to	December	31,	2014	due	to	declines	in government	insured	residential	real	estate	loans	of	$174	million,	the	majority	of which	we	took	possession	of	and	conveyed	the	real	estate,	or	are	in	the	process of	conveyance	and	claim	resolution.	Accruing	loans	past	due	90	days	or	more are	referred	to	as	late	stage	loan	delinquencies.	These	loans	are	not	included	in nonperforming	loans	and	continue	to	accrue	interest	because	they	are	well secured	by	collateral	and	are	in	the	process	of	collection,	or	are	managed	in homogenous	portfolios	with	specified	charge-off	timeframes	adhering	to regulatory	guidelines,	or	are	certain	government	insured	or	guaranteed	loans.

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	$.1	billion and	$.2	billion	at	December	31,	2015	and	December	31,	2014,	respectively.

See	Note	1	Accounting	Policies	and	Note	3	Asset	Quality	in	the	Notes	To Consolidated	Financial	Statements	in	Item	8	of	this	Report	for	additional information	regarding	our	nonperforming	loan	and	nonaccrual	policies	and further	information	on	loan	delinquencies.

# Home	Equity	Loan	Portfolio

Our	home	equity	loan	portfolio	totaled	$32.1	billion	as	of	December	31,	2015, or	16%	of	the	total	loan	portfolio.	Of	that	total,	$18.8	billion,	or	59%,	was outstanding	under	primarily	variable-rate	home	equity	lines	of	credit	and	$13.3 billion,	or	41%,	consisted	of	closed-end	home	equity	installment	loans. Approximately	4%	of	the	home	equity	portfolio	was	purchased	impaired	and	3% of	the	home	equity	portfolio	was	on	nonperforming	status	as	of	December	31, 2015.

As	of	December	31,	2015,	we	are	in	an	originated	first	lien	position	for approximately	53%	of	the	total	outstanding	portfolio	and,	where	originated	as	a second	lien,	we	currently	hold	or	service	the	first	lien	position	for	an	additional 2%	of	the	portfolio.	The	remaining	45%	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	loan	delinquency,	modification	status	and	bankruptcy	status,	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,	2015, the	following	table	presents	the	periods	when	home	equity	lines	of	credit	draw periods	are	scheduled	to	end.

# Table	32:	Home	Equity	Lines	of	Credit	–	Draw	Period	End	Dates

| In	millions | Interest	Only<br>Product | Principal	and<br>Interest	Product |
| :--- | :--- | :--- |
| 2016 | $1,121 | $369 |
| 2017 | 2,107 | 538 |
| 2018 | 927 | 734 |
| 2019 | 648 | 576 |
| 2020\tand\tthereafter | 3,321 | 5,758 |
| Total\t(a)\t(b) | $8,124 | $7,975 |

(a) Includes	all	home	equity	lines	of	credit	that	mature	in	2016	or	later,	including	those	with	borrowers where	we	have	terminated	borrowing	privileges.

(b) Includes	approximately	$40	million,	$48	million,	$34	million,	$26	million	and	$534	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	2016,	2017,	2018,	2019	and	2020	and thereafter,	respectively.

Based	upon	outstanding	balances,	and	excluding	purchased	impaired	loans,	at December	31,	2015,	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	in Item	8	of	this	Report	for	additional	information.

# Auto	Loan	Portfolio

The	auto	loan	portfolio	totaled	$11.2	billion	as	of	December	31,	2015,	or	5%	of our	total	loan	portfolio.	Of	that	total,	$9.6	billion	resides	in	the	indirect	auto portfolio,	$1.1	billion	in	the	direct	auto	portfolio,	and	$.5	billion	in	acquired	or securitized	portfolios,	which	has	been	declining	as	no	pools	have	been	recently acquired.	The	indirect	auto	portfolio	is	the	largest	segment	and	generates	auto loan	applications	from	franchised	automobile	dealers.	This	business	is strategically	aligned	with	our	core	retail	business.

We	have	elected	not	to	pursue	non-prime	auto	lending	as	evidenced	by	an average	new	loan	origination	FICO	score	over	the	last	twelve	months	of	758	for indirect	auto	loans	and	773	for	direct	auto	loans.	As	of	December	31,	2015, 0.3%	of	the	portfolio	was	nonperforming	and	0.5%	of	our	auto	loan	portfolio was	accruing	past	due.	We

offer	both	new	and	used	automobile	financing	to	customers	through	our	various channels.	The	portfolio	comprised	60%	new	vehicle	loans	and	40%	used	vehicle loans	at	December	31,	2015.

The	auto	loan	portfolio's	performance	is	measured	monthly,	including	updated collateral	values	that	are	obtained	monthly	and	updated	FICO	scores	that	are obtained	at	least	quarterly.	For	internal	reporting	and	risk	management,	we analyze	the	portfolio	by	product	channel	and	product	type,	and	regularly evaluate	default	and	delinquency	experience.	As	part	of	our	overall	risk	analysis and	monitoring,	we	segment	the	portfolio	by	loan	structure,	collateral	attributes, and	credit	metrics	which	include	FICO	score,	loan-to-value	and	term.

# Oil	and	Gas	Portfolio

Our	portfolio	in	the	oil	and	gas	industry	totaled	$2.6	billion	as	of	December	31, 2015,	or	1%	of	our	total	loan	portfolio	and	2%	of	our	total	commercial	lending portfolio.	This	portfolio	comprised	approximately	$1	billion	in	the	midstream and	downstream	sectors,	$.9	billion	of	oil	services	companies	and	$.7	billion related	to	energy	and	production	companies.

Of	the	oil	services	portfolio,	approximately	$.2	billion	is	not	asset-based	or investment	grade.	Our	ALLL	at	December	31,	2015	reflects	the	incremental impact	of	the	continued	decline	in	oil	and	gas	prices.

# 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	in	Item	8	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,	including	both	government-created	Home Affordable	Modification	Program	(HAMP)	and	PNC-developed	modification programs,	generally	result	in	principal	forgiveness,	interest	rate	reduction,	term extension,	capitalization	of	past	due	amounts,	interest	only	period	or	deferral	of principal.

We	also	monitor	the	success	rates	and	delinquency	status	of	our	loan modification	programs	to	assess	their	effectiveness	in	serving	our	borrowers'	and servicing	customers'	needs	while	mitigating	credit	losses.	Table	33	provides	the number	of	bank-owned	accounts	and	unpaid	principal	balance	of	modified consumer	real	estate	related	loans	at	the	end	of	each	year	presented.

# Table	33:	Consumer	Real	Estate	Related	Loan	Modifications

|  | December	31,	2015 | December	31,	2015 | December	31,	2014 | December	31,	2014 |
| :--- | :--- | :--- | :--- | :--- |
| Dollars\tin\tmillions | Number\tof\nAccounts | Unpaid\nPrincipal\nBalance | Number\tof\nAccounts | Unpaid\nPrincipal\nBalance |
| Temporary\tmodifications\t(a) | 4,469 | $337 | 5,346\t\t\t\t $ | 417 |
| Permanent\tmodifications |  |  |  |  |
| Home\tequity | 15,268 | \t 1,088 | 13,128 | 968 |
| Residential\treal\testate | 8,787 | \t 1,721 | 12,526 | \t 2,350 |
| Total\tpermanent\tmodifications | 24,055 | \t 2,809 | 25,654 | \t 3,318 |
| Total\tconsumer\treal\testate\trelated\tloan\tmodifications | 28,524 | $3,146 | 31,000\t\t\t\t $3,735 | 31,000\t\t\t\t $3,735 |
| (a)\nAll\ttemporary\tmodifications\tare\thome\tequity\tloans. |  |  |  |  |

# (a) All	temporary	modifications	are	home	equity	loans.

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.

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	in	Item	8	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,	2015	and	December	31,	2014, $23	million	and	$34	million,	respectively,	in	loan	balances	were	covered	under these	modification	and	payment	plan	programs.	Of	these	loan	balances,	$9 million	and	$12	million	have	been	determined	to	be	TDRs	as	of	December	31, 2015	and	December	31,	2014,	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.

# Table	34:	Summary	of	Troubled	Debt	Restructurings	(a)

|  | December	31 | December	31 |
| :--- | :--- | :--- |
| In\tmillions | 2015 | 2014 |
| Consumer\tlending: |  |  |
| Real\testate-related | $1,775 | $1,864 |
| Credit\tcard | 108 | 130 |
| Other\tconsumer | 34 | 47 |
| Total\tconsumer\tlending\t(b) | 1,917 | 2,041 |
| Total\tcommercial\tlending | 434 | 542 |
| Total\tTDRs | $2,351 | $2,583 |
| Nonperforming | $1,119 | $1,370 |
| Accruing | 1,232 | 1,213 |
| Total\tTDRs | $2,351 | $2,583 |

(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) Excludes	$1.2	billion	and	$.9	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	at	December	31,	2015	and	December	31,	2014,	respectively.

Total	TDRs	decreased	$232	million,	or	9%,	during	2015.	Nonperforming	TDRs were	approximately	53%	of	total	nonperforming	loans,	and	48%	of	total	TDRs.

TDRs	that	are	performing,	including	credit	card	loans,	are	excluded	from nonperforming	loans.	These	TDRs	remained	generally	flat	during	2015	at	$1.2 billion.	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 Item	8	of	this	Report	for	additional	information	on	loan	modifications	and TDRs.

# Table	35:	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 |
| :--- | :--- | :--- | :--- | :--- |
| 2015 |  |  |  |  |
| Commercial | $206 | $170 | $36 | .04% |
| Commercial\treal |  |  |  |  |
| estate | 44 | 66 | (22) | (.09) |
| Equipment\tlease |  |  |  |  |
| financing | 5 | 4 | 1 | .01 |
| Home\tequity | 181 | 93 | 88 | .26 |
| Residential\treal |  |  |  |  |
| estate | 24 | 13 | 11 | .08 |
| Credit\tcard | 160 | 21 | 139 | 3.06 |
| Other\tconsumer | 185 | 52 | 133 | .60 |
| Total | $805 | $419 | $386 | .19 |
| 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\nestate | 40 | 26 | 14 | .10 |
| Credit\tcard | 163 | 21 | 142 | 3.24 |
| Other\tconsumer | 183 | 60 | 123 | .54 |
| Total | $1,021 | $490 | $531 | .27 |

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.	Our	total	ALLL	of $2.7	billion	at	December	31,	2015	consisted	of	$1.6	billion	and	$1.1	billion established	for	the	commercial	lending	and	consumer	lending	categories, respectively.	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	generally	demonstrate	lower	LGD compared	to	loans	not	secured	by	collateral.	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	$44	million	as	of	December	31,	2015.	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	$24	million	at	December	31,	2015.

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,	2015,	we	had	established	reserves	of	$.3	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	59%,	of	the	ALLL	at	December	31,	2015	to	the	commercial lending	category.	Consumer	lending	allocations	are	made	based	on	historical loss	experience	adjusted	for	recent	activity.	Approximately	$1.1	billion,	or	41%, of	the	ALLL	at	December	31,	2015	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	36:	Allowance	for	Loan	and	Lease	Losses

| Dollars	in	millions | 2015 | 2014 |  |
| :--- | :--- | :--- | :--- |
| January\t1 | $3,331 | $3,609 |  |
| Total\tnet\tcharge-offs | (386) | (531) |  |
| Provision\tfor\tcredit\tlosses | 255 | 273 |  |
| Net\tchange\tin\tallowance\tfor\tunfunded\tloan |  |  |  |
| commitments\tand\tletters\tof\tcredit | (2) | (17) |  |
| Write-offs\tof\tpurchased\timpaired\tloans\t(a) | (468) |  |  |
| Other | (3) | (3) |  |
| December\t31 | $2,727 | $3,331 |  |
| Net\tcharge-offs\tto\taverage\tloans\t(for\tthe\tyear |  |  |  |
| ended) | .19% | .27% |  |
| Allowance\tfor\tloan\tand\tlease\tlosses\tto\ttotal\tloans |  |  | credit. |
| (a) | 1.32 | 1.63 |  |
| Commercial\tlending\tnet\tcharge-offs | $(15) | $(55) |  |
| Consumer\tlending\tnet\tcharge-offs | (371) | (476) |  |
| Total\tnet\tcharge-offs | $(386) | $(531) |  |
| Net\tcharge-offs\tto\taverage\tloans\t(for\tthe\tyear |  |  |  |
| ended) |  |  |  |
| Commercial\tlending | .01% | .04% |  |
| Consumer\tlending | .50 | .62 |  |
| (a)\nA\tportion\tof\tthe\tALLL\tassociated\twith\tpurchased\timpaired\tpooled\tconsumer\tand\tresidential\treal |  |  |  |

(a) A	portion	of	the	ALLL	associated	with	purchased	impaired	pooled	consumer	and	residential	real estate	loans	was	derecognized	on	December	31,	2015	due	to	the	change	in	the	derecognition	policy for	these	loans.	The	December	31,	2015	ratio	of	ALLL	to	total	loans	was	impacted	by	the derecognition.	For	additional	information	see	Note	4	Purchased	Loans	in	the	Notes	To	Consolidated Financial	Statements	in	Item	8	of	this	Report.

The	provision	for	credit	losses	decreased	to	$255	million	for	2015	compared	to $273	million	for	2014	due	to	improved	credit	quality.	For	2015,	the	provision	for commercial	lending	credit	losses	decreased	by	$45	million,	or	45%,	from	2014. The	provision	for	consumer	lending	credit	losses	increased	$27	million,	or	16%, from	2014.

At	December	31,	2015,	total	ALLL	to	total	nonperforming	loans	was	128%.	The comparable	amount	for	December	31,	2014	was	133%.	These	ratios	are	98%	and 85%,	respectively,	when	excluding	the	$.6	billion	and	$1.2	billion,	respectively, of	ALLL	at	December	31,	2015	and	December	31,	2014	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	28	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.	The	ALLL	balance	declined	$.6	billion, or	18%,	as	of	December	31,	2015	compared	to	December	31,	2014.	During 2015,	the	decline	was	driven	by	improved	asset	quality	trends,	including,	but	not limited	to,	delinquency	status	and	improving	economic	conditions,	as	well	as reduced	net	charge-offs,	coupled	with	the	derecognition	of	$468	million	of ALLL	related	to	purchased	impaired	pooled	consumer	and	residential	real	estate loans.	These	impacts	to	ALLL	were	partially	offset	by	continued	portfolio growth	over	the	recent	quarters.

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	subcommittee	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	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	LCR	rules,	by	its	estimated	net cash	outflow,	with	net	cash	outflows	determined	by	applying	the	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	will	be	phased-in	over	a	period	of	years.	The minimum	LCR	that	PNC	and	PNC	Bank	were	required	to	maintain	was	80%	in 2015	and	such	minimum	increased	to	90%	in	2016.	Between	January	1,	2016 and	June	30,	2016,	PNC	and	PNC	Bank	are	required	to	calculate	the	LCR	on	a month-end	basis.	Effective	July	1,	2016,	PNC	and	PNC	Bank	must	begin calculating	their	respective	LCR	ratios	on	a	daily	basis.

As	of	December	31,	2015,	the	LCR	for	PNC	and	PNC	Bank	exceeded	100 percent.	The	December	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,	2015,	there	were approximately	$8.3	billion	of	bank	borrowings	with	contractual	maturities	of	less than	one	year,	including	$1.8	billion	in	borrowings	from	an	affiliate.	We	also maintain	adequate	bank	liquidity	to	meet	future	potential	loan	demand	and provide	for	other	business	needs,	as	necessary.

# Bank	Level	Liquidity	–	Sources

Our	largest	source	of	bank	liquidity	on	a	consolidated	basis	is	the	deposit	base generated	by	our	retail	and	commercial	banking	businesses.	Total	deposits increased	to	$249.0	billion	at	December	31,	2015	from	$232.2	billion	at December	31,	2014,	driven	primarily	by	growth	in	savings	and	demand	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,	2015,	our	liquid	assets	consisted	of	short-term	investments (Federal	funds	sold,	resale	agreements,	trading	securities	and	interest-earning deposits	with	banks)	totaling	$33.6	billion	and	securities	available	for	sale totaling	$55.8	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	$89.4	billion,	we	had $3.2	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,	$6.5	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,	subordinated	debt	and	FHLB	advances)	and	short- term	borrowings	(Federal	funds	purchased,	securities	sold	under	repurchase agreements,	commercial	paper	and	other	short-term	borrowings).

Under	the	2014	bank	note	program,	PNC	Bank	may	from	time	to	time	offer	unsecured	senior	and	subordinated	notes	with	maturity	dates	more	than	nine	months	(in	the case	of	senior	notes)	and	five	years	or	more	(in	the	case	of	subordinated	notes).	On	May	22,	2015,	PNC	Bank	increased	the	capacity	of	this	program	by	$5.0	billion	to	a maximum	aggregate	principal	amount	at	any	one	time	outstanding	of	$30.0	billion.	The	$30.0	billion	of	notes	authorized	to	be	issued	and	outstanding	at	any	one	time includes	notes	issued	by	PNC	Bank	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	2014	bank	note	program	do	not	affect	any	of	the	bank	notes	issued	prior	to	January	16,	2014.	At December	31,	2015,	PNC	Bank	had	$24.1	billion	of	notes	outstanding	under	this	program	of	which	$17.9	billion	was	senior	bank	notes	and	$6.2	billion	was subordinated	bank	notes.	The	following	table	details	all	issuances	during	2015:

# Table	37:	PNC	Bank	Notes	Issued	During	2015

Total	senior	and	subordinated	debt	of	PNC	Bank	increased	to	$25.5	billion	at December	31,	2015	from	$17.5	billion	at	December	31,	2014	due	to	the following	activity	in	the	period.

# Table	38:	PNC	Bank	Senior	and	Subordinated	Debt

| In	billions | 2015 |
| :--- | :--- |
| January\t1 | $17.5 |
| Issuances | 8.8 |
| Calls\tand\tmaturities | (.8) |
| December\t31 | $25.5 |

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,	2015,	our	unused	secured	borrowing	capacity	was	$19.4 billion	with	the	FHLB-Pittsburgh.	Total	FHLB	borrowings	increased	to	$20.1 billion	at	December	31,	2015	from	$20.0	billion	at	December		31,	2014	due	to the	following	activity	in	the	period.

# Table	39:	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	for	these	purposes	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 December	31,	2015,	standby	letters	of	credit	issued	on	our	behalf	by	the	FHLB- Pittsburgh	totaled	$5.3	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,	2015,	there	was	$14	million outstanding	under	this	program.

PNC	Bank	can	also	borrow	from	the	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,	2015,	our	unused	secured	borrowing	capacity	was	$14.4 billion	with	the	Federal	Reserve	Bank.

# Parent	Company	Liquidity

As	of	December	31,	2015,	available	parent	company	liquidity	totaled	$4.6 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,	2015,	there	were	approximately	$1.3	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	Balance	Sheet,	Liquidity	and	Capital	Highlights	in	the	Executive	Summary section	of	this	Item	7	for	information	on	our	2015	capital	plan	that	was	accepted by	the	Federal	Reserve.	Our	capital	plan	included	a	recommendation	to	increase the	quarterly	common	stock	dividend	in	the	second	quarter	of	2015	and	the ability	to	redeem	the	Series	K	Preferred	Stock,	as	further	described	below,	and also	included	share	repurchase	programs	of	up	to	$2.875	billion	for	the	five quarter	period	beginning	in	the	second	quarter	of	2015.	See	the	Capital	portion of	the	Consolidated	Balance	Sheet	Review	in	this	Item	7	for	more	information on	our	share	repurchase	programs.

On	April	2,	2015,	consistent	with	our	2015	capital	plan,	our	Board	of	Directors approved	an	increase	to	PNC's	quarterly	common	stock	dividend	from	48	cents per	common	share	to	51	cents	per	common	share	beginning	with	the	May	5, 2015	dividend	payment.

On	May	4,	2015,	we	redeemed	$500	million	of	PNC's	Fixed-to-Floating	Rate Non-Cumulative	Perpetual	Preferred	Stock,	Series	K,	as	well	as	all	Depositary Shares	representing	interests	therein.	Each	Depositary	Share	represented	a	1/10 interest	in	a	share	of	the	Series	K	Preferred	Stock.	All	50,000	shares	of	Series	K Preferred	Stock,	as	well	as	all	500,000	Depositary	Shares	representing	interests therein,	were	redeemed.	The	redemption	price	was	$10,000	per	share	of	Series	K Preferred	Stock	equivalent	to	$1,000	per	Depositary	Share,	plus	declared	and unpaid	dividends	up	to	but	excluding	the	redemption	date.

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	37	for	information	on	an	affiliate	purchase	of	notes	issued	by	PNC Bank	during	2015.

# 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	a	national	bank	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	$1.7	billion	at	December	31,	2015.	See	Note	19 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	16	Equity	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.

Total	parent	company	senior	and	subordinated	debt	and	hybrid	capital instruments	decreased	to	$7.5	billion	at	December	31,	2015	from	$10.1	billion	at December	31,	2014	due	to	the	following	activity	in	the	period.

# Table	40:	Parent	Company	Senior	and	Subordinated	Debt	and	Hybrid	Capital Instruments

| In	billions | 2015 |
| :--- | :--- |
| January\t1 | $10.1 |
| Maturities | (2.5) |
| Other | (.1) |
| December\t31 | $7.5 |

The	parent	company	has	the	ability	to	offer	up	to	$5.0	billion	of	commercial paper	to	provide	additional	liquidity.	As	of	December	31,	2015,	there	were	no issuances	outstanding	under	this	program.

# 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 credit	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.

In	March	2015,	Moody's	Investors	Service	(Moody's)	published	a	new	bank ratings	methodology	which	has	been	implemented	on	a	global	basis	and	includes assessment	of	expected	loss	ratings	on	instruments	ranging	from	bank	deposits to	preferred	stock.	In	the	second	quarter	of	2015,	Moody's	concluded	its	review for	PNC	and	PNC	Bank	under	this	new	methodology.	As	a	result,	Moody's upgraded	PNC	Bank's	long-term	deposit	rating	three	notches	to	Aa2,	confirmed PNC	Bank's	senior	debt	and	issuer	ratings	at	A2,	and	confirmed	PNC	Bank's Prime-1	short-term	notes	rating.	The	Moody's	rating	outlook	for	PNC	and	PNC Bank	is	stable.

# Table	41:	Credit	Ratings	as	of	December	31,	2015	for	PNC	and	PNC	Bank

# Commitments

The	following	tables	set	forth	contractual	obligations	and	various	other	commitments	as	of	December	31,	2015	representing	required	and	potential	cash	outflows.

# Table	42:	Contractual	Obligations

|  |  |  | Payment	Due	By	Period | Payment	Due	By	Period |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2015\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) | $20,510 | $15,092 | $1,541 | $1,249\t\t\t\t $ | 2,628 |
| Borrowed\tfunds\t(a)\t(b) | \t 54,532 | \t 10,863 | 21,888 | \t 13,052 | 8,729 |
| Minimum\tannual\trentals\ton\tnoncancellable\tleases | 2,687 | 378 | 665 | 486 | 1,158 |
| Nonqualified\tpension\tand\tpostretirement\tbenefits | 491 | 51 | 105 | 102 | 233 |
| Purchase\tobligations\t(c) | 859 | 361 | 289 | 153 | 56 |
| Total\tcontractual\tcash\tobligations | $79,079 | $26,745 | $24,488 | $15,042\t\t\t\t $12,804 | $15,042\t\t\t\t $12,804 |
| (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,	2015,	we	had	unrecognized	tax	benefits	of	$26	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	18	Income	Taxes	in	the	Notes	To	Consolidated	Financial Statements	in	Item	8	of	this	Report	for	additional	information.

Our	contractual	obligations	totaled	$82.0	billion	at	December	31,	2014.	The	decrease	in	the	comparison	is	primarily	attributable	to	declines	in	borrowed	funds	and	time deposits.	See	Funding	Sources	in	the	Consolidated	Balance	Sheet	Review	section	of	this	Item		7	for	additional	information	regarding	our	funding	sources.

# Table	43:	Other	Commitments	(a)

| December	31,	2015	–	in	millions | Amounts<br>Committed | Less	than	one<br>year | One	to<br>three	years | Four	to<br>five	years | After<br>five	years |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Commitments\tto\textend\tcredit\t(b) | $142,489 | $54,840 | $48,291 | $38,750\t\t\t\t $ | 608 |
| Net\toutstanding\tstandby\tletters\tof\tcredit\t(c) | 8,765 | 4,808 | 3,323 | 633 | 1 |
| Reinsurance\tagreements\t(d) | 2,010 | 7 | 20 | 26 | 1,957 |
| Standby\tbond\tpurchase\tagreements | 911 | 209 | 677 | 25 |  |
| Other\tcommitments\t(e) | 966 | 666 | 258 | 42 |  |
| Total\tcommitments | $155,141 | $60,530 | $52,569 | $39,476\t\t\t\t $ 2,566 | $39,476\t\t\t\t $ 2,566 |
| (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) Commitments	to	extend	credit,	or	net	unfunded	loan	commitments,	represent	arrangements	to	lend	funds	or	provide	liquidity	subject	to	specified	contractual	conditions.

(c) Includes	$4.7	billion	of	standby	letters	of	credit	that	support	remarketing	programs	for	customers'	variable	rate	demand	notes.

(d) 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.

(e) Includes	other	commitments	of	$216	million	that	were	not	on	our	Consolidated	Balance	Sheet.	The	remaining	$750	million	of	other	commitments	were	included	in	Other	liabilities	on	our	Consolidated	Balance Sheet.

Our	total	commitments	were	$154.9	billion	at	December	31,	2014.	The	increase in	the	comparison	is	primarily	attributable	to	an	increase	in	commitments	to extend	credit,	partially	offset	by	declines	in	reinsurance	agreements	and	net outstanding	standby	letters	of	credit.	See	Note	21	Commitments	and	Guarantees in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of	this	Report	for additional	information	related	to	our	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,	commodity	prices	and	equity	prices.	We	are	exposed	to	market risk	primarily	by	our	involvement	in	the	following	activities,	among	others: •	Traditional	banking	activities	of	gathering	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	established	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 2015	and	2014	follow:

# Table	44:	Interest	Sensitivity	Analysis

|  | Fourth<br>Quarter<br>2015 | Fourth<br>Quarter<br>2014 |
| :--- | :--- | :--- |
| Net\tInterest\tIncome\tSensitivity\tSimulation\t(a) |  |  |
| Effect\ton\tnet\tinterest\tincome\tin\tfirst\tyear |  |  |
| from\tgradual\tinterest\trate\tchange\tover\tthe |  |  |
| following\t12\tmonths\tof: |  |  |
| 100\tbasis\tpoint\tincrease | 2.4% | 2.1% |
| 100\tbasis\tpoint\tdecrease | (1.9)% | (1.0)% |
| Effect\ton\tnet\tinterest\tincome\tin\tsecond\tyear |  |  |
| from\tgradual\tinterest\trate\tchange\tover\tthe |  |  |
| preceding\t12\tmonths\tof: |  |  |
| 100\tbasis\tpoint\tincrease | 5.3% | 5.8% |
| 100\tbasis\tpoint\tdecrease | (5.3)% | (5.7)% |
| Duration\tof\tEquity\tModel\t(a) |  |  |
| Base\tcase\tduration\tof\tequity\t(in\tyears) | (4.1) | (4.6) |
| Key\tPeriod-End\tInterest\tRates |  |  |
| One-month\tLIBOR | .43% | .17% |
| Three-year\tswap | 1.42% | 1.30% |

(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	45	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	45:	Net	Interest	Income	Sensitivity	to	Alternative	Rate	Scenarios (Fourth	Quarter	2015)

|  | PNC<br>Economist | Market<br>Forward | Slope<br>Flattening |
| :--- | :--- | :--- | :--- |
| First\tyear\tsensitivity | 4.1% | 2.1% | (1.7)% |
| Second\tyear\tsensitivity | 8.7% | 3.9% | (5.5)% |

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	44	and	45	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	46:	Alternate	Interest	Rate	Scenarios:	One	Year	Forward

The	fourth	quarter	2015	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	seven instances	during	2015	under	our	diversified	VaR	measure	where	actual	losses exceeded	the	prior	day	VaR	measure.	In	comparison,	there	were	two	such instance	during	2014.	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	47:	Enterprise-Wide	Gains/Losses	Versus	Value-at-Risk

Customer-related	trading	revenue	increased	to	$210	million	for	2015	compared with	$178	million	for	2014.	The	increase	was	primarily	due	to	higher	derivative client	sales	revenues	and	market	interest	rate	changes	impacting	credit	valuations for	customer-related	derivatives.

# 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	48:	Equity	Investments	Summary

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| BlackRock | $6,626 | $6,265 |
| Tax\tcredit\tinvestments | 2,254 | 2,616 |
| Private\tequity | 1,441 | 1,615 |
| Visa | 31 | 77 |
| Other | 235 | 155 |
| Total | $10,587 | $10,728 |

PNC	owned	approximately	35	million	common	stock	equivalent	shares	of BlackRock	equity	at	December	31,	2015,	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	$2.3	billion	at December	31,	2015	and	$2.6	billion	at	December	31,	2014.	These	equity investment	balances	include	unfunded	commitments	totaling	$669	million	and $717	million	at	December	31,	2015	and	December	31,	2014,	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	$1.4	billion	at December	31,	2015	and	$1.6	billion	at	December	31,	2014.	As	of	December	31, 2015,	$1.1	billion	was	invested	directly	in	a	variety	of	companies	and	$.3	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	$170	million	as	of	December	31,	2015.	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	of	private	funds	covered by	the	Volcker	Rule.

In	2015,	PNC	invested	with	six	other	banks	in	Early	Warning	Services	(EWS),	a provider	of	fraud	prevention	and	risk	management	solutions.	EWS	then	acquired ClearXchange,	a	network	through	which	customers	send	and	receive	person-to- person	payments.	Integrating	these	businesses	will	enable	us	to,	among	other things,	create	a	secure,	real-time	payments	network.

Our	unfunded	commitments	related	to	private	equity	totaled	$126	million	at December	31,	2015	compared	with	$140	million	at	December	31,	2014.

See	Note	7	Fair	Value,	Note	20	Legal	Proceedings	and	Note	21	Commitments and	Guarantees	in	the	Notes	To	Consolidated	Financial	Statements	in	Item	8	of this	Report	for	additional	information	regarding	the	October	2007	Visa restructuring,	our	involvement	with	judgment	and	loss	sharing	agreements	with Visa	and	certain	other	banks,	the	status	of	pending	interchange	litigation,	the sales	of	portions	of	our	Visa	Class	B	common	shares	and	the	related	swap agreements	with	the	purchasers.

During	2015,	we	sold	2.0	million	Visa	Class	B	common	shares,	in	addition	to	the 16.5	million	shares	sold	in	previous	years.	We	have	entered	into	swap agreements	with	the	purchasers	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,	2015,	our	investment	in	Visa Class	B	common	shares	totaled	approximately	4.9	million	shares	and	had	a carrying	value	of	$31	million.	Based	on	the	December	31,	2015	closing	price	of $77.55	for	the	Visa	Class	A	common	shares,	the	fair	value	of	our	total investment	was	approximately	$622	million	at	the	current	conversion	rate.	The Visa	Class	B	common	shares	that	we	own	are	transferable	only	under	limited circumstances	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.

# Other	Equity	Investments

We	also	have	certain	other	equity	investments,	the	majority	of	which	represent 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.	Given	the	nature	of	these investments,	if	market	conditions	affecting	their	valuation	were	to	worsen,	we could	incur	future	losses.	Net	gains	related	to	these	investments	were	not significant	during	2015	and	2014.

Our	unfunded	commitments	related	to	other	investments	at	December	31,	2015 and	December	31,	2014	were	not	significant.

# 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	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.	Periodic cash	payments	are	exchanged	for	interest	rate	swaps,	options	and	future contracts.	Premiums	are	also	exchanged	for	options	contracts.	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	14	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,	2015	and	December		31,	2014.

# Table	49:	Financial	Derivatives	Summary

|  | December	31,	2015 | December	31,	2015 | December	31,	2014 | December	31,	2014 |
| :--- | :--- | :--- | :--- | :--- |
| 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 | $52,074 | $985 | $49,061\t\t\t\t $1,075 | $49,061\t\t\t\t $1,075 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments\tunder\tGAAP |  |  |  |  |
| Total\tderivatives\tused\tfor\tresidential\tmortgage\tbanking\tactivities | $73,891 | $376 | $76,102\t\t\t\t $ | 409 |
| Total\tderivatives\tused\tfor\tcommercial\tmortgage\tbanking\tactivities | 24,091 | 36 | 26,290 | 26 |
| Total\tderivatives\tused\tfor\tcustomer-related\tactivities | \t 192,621 | 151 | \t 183,474 | 122 |
| Total\tderivatives\tused\tfor\tother\trisk\tmanagement\tactivities | 5,299 | (409) | 5,390 | (425) |
| Total\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | $295,902 | $154 | $291,256\t\t\t\t $ | 132 |
| Total\tDerivatives | $347,976 | $1,139 | $340,317\t\t\t\t $1,207 | $340,317\t\t\t\t $1,207 |
| (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	2014	of	$4.2	billion,	or	$7.30	per	diluted	common	share,	was stable	compared	with	2013	results	of	$4.2	billion,	or	$7.36	per	diluted	common share.	A	decrease	in	revenue	of	4%	mainly	due	to	lower	yields	on	loans	and investment	securities	was	mostly	offset	by	a	reduction	in	provision	for	credit losses	and	a	2%	decline	in	noninterest	expense.

Net	interest	income	was	$8.5	billion	in	2014	and	decreased	by	$622	million,	or 7%,	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	was	3.08%	in	2014	and	3.57%	in	2013.	The	decrease	in	the comparison	was	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.

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.	Noninterest	income	as	a	percentage	of total	revenue	was	45%	for	2014,	up	from	43%	for	2013.

Asset	management	revenue	increased	$171	million,	or	13%,	in	2014	to	$1.5 billion,	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	$1.3	billion	for	2014	and	2013,	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.

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,	as	the	impact	to	2014	was	not	significant.	This	net	release of	reserves	in	2013	was	largely	the	result	of	agreements	with	FHLMC	and FNMA	for	loans	sold	into	agency	securitizations.

Service	charges	on	deposits	increased	to	$662	million	in	2014	compared	to	$597 million	in	2013,	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,	which	were	primarily	driven	by	market	interest	rate changes	impacting	the	valuations.	These	decreases	were	partially	offset	by higher	gains	on	sales	of	other	assets.

Higher	gains	on	sales	of	other	assets	in	2014	included	the	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.

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.

Noninterest	expense	was	$9.5	billion	for	2014,	a	decrease	of	$.2	billion,	or	2%, compared	to	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	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	funded 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.

Loans	increased	$9.2	billion	to	$204.8	billion	as	of	December	31,	2014 compared	with	December	31,	2013.	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.

Average	total	loans	increased	by	$9.7	billion	to	$199.6	billion	in	2014,	which was	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.	Average	total	loans	were	70%	and	73%	of	average	interest- earning	assets	in	2014	and	2013,	respectively.

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.	Investment	securities	represented	16%	of	total	assets	at	December	31, 2014	and	19%	at	December	31,	2013.	Average	investment	securities	decreased to	$55.8	billion	during	2014	compared	to	$57.3	billion	during	2013.	Average investment	securities	were	20%	and	22%	of	average	interest-earning	assets	in 2014	and	2013,	respectively.

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.

During	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.

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.

For	commercial	mortgages	held	for	sale	designated	at	fair	value,	the	balance relating	to	these	loans	was	$893	million	at	December	31,	2014	compared	to	$586 million	at	December	31,	2013.	For	commercial	mortgages	held	for	sale	carried	at lower	of	cost	or	fair	value,	we	sold	$3.5	billion	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.

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,	respectively.

# Asset	Quality

The	net	charge-off	comparisons	above	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.

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.

Total	deposits	increased	$11.3	billion	to	$232.2	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.

Average	total	deposits	increased	$10.8	billion	to	$222.9	billion	in	2014 compared	with	the	prior	year.	Higher	average	money	market	deposits,	average noninterest-bearing	deposits,	and	average	interest-bearing	demand	deposits drove	the	increase	in	both	commercial	and	consumer	average	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.	Average	total deposits	represented	68%	of	average	total	assets	for	2014	and	69%	for	2013.

Total	borrowed	funds	increased	$10.7	billion	to	$56.8	billion	at	December	31, 2014	compared	with	December	31,	2013	as	higher	Federal	Home	Loan	Bank (FHLB)	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.

Average	borrowed	funds	were	$48.8	billion	in	2014	compared	with	$40.0	billion in	2013.	The	increase	was	primarily	due	to	increases	in	average	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.

# Shareholders'	Equity

Total	shareholders'	equity	increased	$2.2	billion,	to	$44.6	billion	at December	31,	2014	compared	with	December	31,	2013,	primarily	reflecting	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.

# Risk-Based	Capital

As	a	result	of	the	staggered	effective	dates	of	the	final	U.S.	Basel	III	regulatory capital	rules	(Basel	III	rules),	as	well	as	the	fact	that	PNC	remains	in	the	parallel run	qualification	phase	for	the	advanced	approaches,	PNC's	regulatory	risk- based	ratios	in	2014	were	based	on	the	definitions	of,	and	deductions	from, capital	under	Basel	III	(as	such	definitions	and	deductions	were	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	phased- in	Basel	III	provisions	in	effect	for	2014	and	applicable	risk-weighted	assets	as the	2014	Transitional	Basel	III	ratios.

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,	11.1% for	leverage,	12.4%	for	Tier	1	risk-based	and	15.8%	for	total	risk-based	capital.

We	provide	additional	information	on	our	2014	risk-based	capital	ratios	in	the Capital	portion	of	the	Balance	Sheet	Review	section	in	Item	7	of	our	2014	Form 10-K.	For	additional	information	on	our	2014	Transitional	Basel	III	ratios	and 2013	Basel	I	Tier	1	ratio,	see	also	the	Statistical	Information	(Unaudited)	section in	Item	8	of	this	Report.

# 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 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.	Assets	receive	a	funding charge	and	liabilities	and	capital	receive	a	funding	credit	based	on	a	transfer pricing	methodology	that	incorporates	product	repricing	characteristics,	tenor and	other	factors.

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,	and	other	factors.	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.	Excludes certain	assets	that	have	a	government-guarantee	which	are	classified	as	other receivables.

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	–	An	Asset	Management	Group	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.

Transitional	Basel	III	common	equity	–	Common	equity	calculated	under	Basel III	using	phased	in	definitions	and	deductions	applicable	to	PNC	during	the applicable	presentation	period.

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	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.

– 	Commodity	price	volatility.

– 	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.	economy	will	grow	moderately	again	in	2016,	boosted	by lower	oil/energy	prices,	improving	housing	activity	and	solid	job	gains,	and that	short-term	interest	rates	and	bond	yields	will	rise	very	gradually	during 2016.	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' 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	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	14	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,	2015	and	December	31,	2014,	and	the	results	of	their	operations and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31, 2015	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, 2015,	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	26,	2016

# CONSOLIDATED	INCOME	STATEMENT

|  |  | Year	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions,\texcept\tper\tshare\tdata | 2015 | 2014 | 2013 |
| Interest\tIncome |  |  |  |
| Loans | $7,203 | $7,427 | $7,866 |
| Investment\tsecurities | 1,679 | 1,624 | 1,749 |
| Other | 441 | 380 | 392 |
| Total\tinterest\tincome | 9,323 | 9,431 | \t 10,007 |
| Interest\tExpense |  |  |  |
| Deposits | 403 | 325 | 344 |
| Borrowed\tfunds | 642 | 581 | 516 |
| Total\tinterest\texpense | 1,045 | 906 | 860 |
| Net\tinterest\tincome | 8,278 | 8,525 | 9,147 |
| Noninterest\tIncome |  |  |  |
| Asset\tmanagement | 1,567 | 1,513 | 1,342 |
| Consumer\tservices | 1,335 | 1,254 | 1,253 |
| Corporate\tservices | 1,491 | 1,415 | 1,210 |
| Residential\tmortgage | 566 | 618 | 871 |
| Service\tcharges\ton\tdeposits | 651 | 662 | 597 |
| Net\tgains\ton\tsales\tof\tsecurities | 43 | 4 | 99 |
| Other | 1,294 | 1,384 | 1,493 |
| Total\tnoninterest\tincome | 6,947 | 6,850 | 6,865 |
| Total\trevenue | \t 15,225 | \t 15,375 | \t 16,012 |
| Provision\tFor\tCredit\tLosses | 255 | 273 | 643 |
| Noninterest\tExpense |  |  |  |
| Personnel | 4,831 | 4,611 | 4,743 |
| Occupancy | 842 | 833 | 833 |
| Equipment | 925 | 859 | 763 |
| Marketing | 249 | 253 | 246 |
| Other | 2,616 | 2,932 | 3,096 |
| Total\tnoninterest\texpense | 9,463 | 9,488 | 9,681 |
| Income\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | 5,507 | 5,614 | 5,688 |
| Income\ttaxes | 1,364 | 1,407 | 1,476 |
| Net\tincome | 4,143 | 4,207 | 4,212 |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 37 | 23 | 11 |
| \t\t\t\t\t\t\t\t\tPreferred\tstock\tdividends | 220 | 232 | 237 |
| \t\t\t\t\t\t\t\t\tPreferred\tstock\tdiscount\taccretion\tand\tredemptions | 5 | 5 | 12 |
| Net\tincome\tattributable\tto\tcommon\tshareholders | $3,881 | $3,947 | $3,952 |
| Earnings\tPer\tCommon\tShare |  |  |  |
| Basic | $7.52 | $7.44 | $7.45 |
| Diluted | $7.39 | $7.30 | $7.36 |
| Average\tCommon\tShares\tOutstanding |  |  |  |
| Basic | 514 | 529 | 528 |
| Diluted | 521 | 537 | 532 |

See	accompanying	Notes	To	Consolidated	Financial	Statements.

# CONSOLIDATED	STATEMENT	OF	COMPREHENSIVE	INCOME

|  | Year	ended	December	31 | Year	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2015 | 2014 | 2013 |
| Net\tincome | $4,143 | $4,207 | $4,212 |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax\tand\tnet\tof\treclassifications\tinto\tNet\tincome: |  |  |  |
| Net\tunrealized\tgains\t(losses)\ton\tnon-OTTI\tsecurities | (569) | 375 | (1,211) |
| Net\tunrealized\tgains\t(losses)\ton\tOTTI\tsecurities | (13) | 79 | 231 |
| Net\tunrealized\tgains\t(losses)\ton\tcash\tflow\thedge\tderivatives | 127 | 168 | (527) |
| Pension\tand\tother\tpostretirement\tbenefit\tplan\tadjustments | (54) | (446) | 852 |
| Other | (42) | (39) | 21 |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax\tand\tnet\tof\treclassifications\tinto\tNet\tincome | (551) | 137 | (634) |
| Income\ttax\tbenefit\t(expense)\trelated\tto\titems\tof\tother\tcomprehensive\tincome | 178 | (70) | 236 |
| Other\tcomprehensive\tincome\t(loss),\tafter\ttax\tand\tnet\tof\treclassifications\tinto\tNet\tincome | (373) | 67 | (398) |
| Comprehensive\tincome | \t 3,770 | \t 4,274 | 3,814 |
| Less:\tComprehensive\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 37 | 23 | 11 |
| Comprehensive\tincome\tattributable\tto\tPNC | $3,733 | $4,251 | $3,803 |

# CONSOLIDATED	BALANCE	SHEET

| In	millions,	except	par	value | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Assets |  |  |
| Cash\tand\tdue\tfrom\tbanks\t(a) | $4,065 | $4,360 |
| Federal\tfunds\tsold\tand\tresale\tagreements\t(b) | 1,369 | 1,852 |
| Trading\tsecurities | 1,726 | 2,353 |
| Interest-earning\tdeposits\twith\tbanks\t(a) | 30,546 | 31,779 |
| Loans\theld\tfor\tsale\t(b) | 1,540 | 2,262 |
| Investment\tsecurities | 70,528 | 55,823 |
| Loans\t(b) | 206,696 | 204,817 |
| Allowance\tfor\tloan\tand\tlease\tlosses | (2,727) | (3,331) |
| Net\tloans\t(a) | 203,969 | 201,486 |
| Goodwill | 9,103 | 9,103 |
| Mortgage\tservicing\trights | 1,589 | 1,351 |
| Other\tintangible\tassets | 379 | 493 |
| Equity\tinvestments\t(a) | 10,587 | 10,728 |
| Other\t(a)\t(b) | 23,092 | 23,482 |
| Total\tassets | $358,493 | $345,072 |
| Liabilities |  |  |
| Deposits |  |  |
| Noninterest-bearing | $79,435 | $73,479 |
| Interest-bearing | 169,567 | 158,755 |
| Total\tdeposits | 249,002 | 232,234 |
| Borrowed\tfunds |  |  |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements | 1,777 | 3,510 |
| Federal\tHome\tLoan\tBank\tborrowings | 20,108 | 20,005 |
| Bank\tnotes\tand\tsenior\tdebt | 21,298 | 15,750 |
| Subordinated\tdebt | 8,556 | 9,151 |
| Commercial\tpaper | 14 | 4,995 |
| Other\t(c)\t(d) | 2,779 | 3,357 |
| Total\tborrowed\tfunds | 54,532 | 56,768 |
| Allowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 261 | 259 |
| Accrued\texpenses\t(c) | 4,975 | 5,187 |
| Other\t(c) | 3,743 | 4,550 |
| Total\tliabilities | 312,513 | 298,998 |
| Equity |  |  |
| Preferred\tstock\t(e) |  |  |
| Common\tstock\t($5\tpar\tvalue,\tauthorized\t800\tshares,\tissued\t542\tand\t541\tshares) | 2,708 | 2,705 |
| Capital\tsurplus\t–\tpreferred\tstock | 3,452 | 3,946 |
| Capital\tsurplus\t–\tcommon\tstock\tand\tother | 12,745 | 12,627 |
| Retained\tearnings | 29,043 | 26,200 |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | 130 | 503 |
| Common\tstock\theld\tin\ttreasury\tat\tcost:\t38\tand\t18\tshares | (3,368) | (1,430) |
| Total\tshareholders'\tequity | 44,710 | 44,551 |
| Noncontrolling\tinterests | 1,270 | 1,523 |
| Total\tequity | 45,980 | 46,074 |
| Total\tliabilities\tand\tequity | $358,493 | $345,072 |

(a) Our	consolidated	assets	at	December	31,	2015	included	the	following	assets	of	certain	variable	interest	entities	(VIEs):	Cash	and	due	from	banks	of	$11	million,	Interest-earning	deposits	with	banks	of	$4	million, Net	loans	of	$1.3	billion,	Equity	investments	of	$183	million,	and	Other	assets	of	$402	million.	Our	consolidated	assets	at	December	31,	2014	included	the	following	assets	of	certain	VIEs:	Cash	and	due	from banks	of	$6	million,	Interest-earning	deposits	with	banks	of	$6	million,	Net	loans	of	$1.6	billion,	Equity	investments	of	$492	million,	and	Other	assets	of	$483	million.

(b) Our	consolidated	assets	at	December	31,	2015	included	the	following	for	which	we	have	elected	the	fair	value	option:	Federal	funds	sold	and	resale	agreements	of	$137	million,	Loans	held	for	sale	of	$1.5	billion, Loans	of	$.9	billion,	and	Other	assets	of	$521	million.	Our	consolidated	assets	at	December	31,	2014	included	the	following	for	which	we	have	elected	the	fair	value	option:	Federal	funds	sold	and	resale agreements	of	$155	million,	Loans	held	for	sale	of	$2.2	billion,	Loans	of	$1.0	billion,	and	Other	assets	of	$412	million.

(c) Our	consolidated	liabilities	at	December	31,	2015	included	the	following	liabilities	of	certain	VIEs:	Other	borrowed	funds	of	$148	million,	Accrued	expenses	of	$44	million,	and	Other	liabilities	of	$202	million.

Our	consolidated	liabilities	at	December	31,	2014	included	the	following	liabilities	of	certain	VIEs:	Other	borrowed	funds	of	$347	million,	Accrued	expenses	of	$70	million,	and	Other	liabilities	of	$206	million.

(d) Our	consolidated	liabilities	at	December	31,	2015	and	December	31,	2014	included	Other	borrowed	funds	of	$93	million	and	$273	million,	respectively,	for	which	we	have	elected	the	fair	value	option.

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

# CONSOLIDATED	STATEMENT	OF	CHANGES	IN	EQUITY

| In	millions | Shares<br>Outstanding<br>Common<br>Stock | Common<br>Stock | Capital<br>Surplus	-<br>Preferred<br>Stock | Surplus	-<br>Common<br>Stock	and<br>Other | Retained<br>Earnings | Accumulated<br>Other<br>Comprehensive<br>Income	(Loss) | Treasury<br>Stock | Noncontrolling<br>Interests | Total<br>Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2012\t(a) | 528 | $2,690 | $3,590 | $12,193 | $20,210 | $834 | $(569) | $2,772 | $41,720 |
| Net\tincome\t(loss) |  |  |  |  | 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(b) |  |  |  |  | (7) |  |  | (368) | (375) |
| Common\tstock\tactivity | 2 | 8 |  | 97 |  |  |  |  | 105 |
| Treasury\tstock\tactivity | 3 |  |  | (47) |  |  | 161 |  | 114 |
| Preferred\tstock\tredemption\t–\tSeries\tL\t(c) |  |  | (150) |  |  |  |  |  | (150) |
| Preferred\tstock\tissuance\t–\tSeries\tR\t(d) |  |  | 496 |  |  |  |  |  | 496 |
| Other\t(e) |  |  |  | 173 |  |  |  | (712) | (539) |
| Balance\tat\tDecember\t31,\t2013\t(a) | 533 | $2,698 | $3,941 | $12,416 | $23,251 | $436 | $(408) | $1,703 | $44,037 |
| Cumulative\teffect\tof\tadopting\tASC\t860-50\t(f) |  |  |  |  | 2 |  |  |  | 2 |
| Balance\tat\tJanuary\t1,\t2014 | 533 | $2,698 | $3,941 | $12,416 | $23,253 | $436 | $(408) | $1,703 | $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 | $2,705 | $3,946 | $12,627 | $26,200 | $503 | $(1,430) | $1,523 | $46,074 |
| Net\tincome |  |  |  |  | 4,106 |  |  | 37 | 4,143 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax |  |  |  |  |  | (373) |  |  | (373) |
| Cash\tdividends\tdeclared |  |  |  |  |  |  |  |  |  |
| Common |  |  |  |  | (1,038) |  |  |  | (1,038) |
| Preferred |  |  |  |  | (219) |  |  |  | (219) |
| Preferred\tstock\tdiscount\taccretion |  |  | 6 |  | (6) |  |  |  |  |
| Common\tstock\tactivity | 1 | 3 |  | 46 |  |  |  |  | 49 |
| Treasury\tstock\tactivity | (20) |  |  | (56) |  |  | (1,938) |  | (1,994) |
| Preferred\tstock\tredemption\t–\tSeries\tK\t(g) |  |  | (500) |  |  |  |  |  | (500) |
| Other |  |  |  | 128 |  |  |  | (290) | (162) |
| Balance\tat\tDecember\t31,\t2015\t(a) | 504 | $2,708 | $3,452 | $12,745 | $29,043 | $130 | $(3,368) | $1,270 | $45,980 |
| (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) Relates	to	the	redemption	of	REIT	preferred	securities	in	the	first	quarter	of	2013.	See	Note	16	Equity	for	additional	information.

(e) 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.

(f) 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	for	more	information on	this	election.

(g) On	May	4,	2015,	PNC	redeemed	all	50,000	shares	of	its	Series	K	Preferred	Stock,	as	well	as	all	500,000	Depositary	Shares	representing	fractional	interests	in	such	shares,	resulting	in	net	outflow	of	$500	million.

# CONSOLIDATED	STATEMENT	OF	CASH	FLOWS

|  |  | Year	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2015 | 2014 | 2013 |
| Operating\tActivities |  |  |  |
| Net\tincome | $4,143 | $4,207 | $4,212 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\t(used)\tby\toperating\tactivities |  |  |  |
| Provision\tfor\tcredit\tlosses | 255 | 273 | 643 |
| Depreciation\tand\tamortization | 1,088 | 988 | 1,146 |
| Deferred\tincome\ttaxes | 404 | 255 | 1,196 |
| Net\tgains\ton\tsales\tof\tsecurities | (43) | (4) | (99) |
| Changes\tin\tfair\tvalue\tof\tmortgage\tservicing\trights | 274 | 514 | (261) |
| Gain\ton\tsales\tof\tVisa\tClass\tB\tcommon\tshares | (169) | (209) | (168) |
| Noncash\tcharges\ton\ttrust\tpreferred\tsecurities\tredemptions |  |  | 57 |
| Undistributed\tearnings\tof\tBlackRock | (407) | (441) | (373) |
| Excess\ttax\tbenefits\tfrom\tshare-based\tpayment\tarrangements | (29) | (28) | (23) |
| Net\tchange\tin |  |  |  |
| Trading\tsecurities\tand\tother\tshort-term\tinvestments | 203 | 757 | (455) |
| Loans\theld\tfor\tsale | 393 | (405) | (94) |
| Other\tassets | 1,568 | (8) | 3,954 |
| Accrued\texpenses\tand\tother\tliabilities | (1,788) | 169 | (3,990) |
| Other | (396) | (511) | (190) |
| Net\tcash\tprovided\t(used)\tby\toperating\tactivities | 5,496 | 5,557 | 5,555 |
| Investing\tActivities |  |  |  |
| Sales |  |  |  |
| Securities\tavailable\tfor\tsale | 6,723 | 4,432 | 7,974 |
| Loans | 2,040 | 2,870 | 2,559 |
| Repayments/maturities |  |  |  |
| Securities\tavailable\tfor\tsale | 7,920 | 6,915 | 9,668 |
| Securities\theld\tto\tmaturity | 2,032 | 1,987 | 2,483 |
| Purchases |  |  |  |
| Securities\tavailable\tfor\tsale | (26,367) | (7,989) | (18,419) |
| Securities\theld\tto\tmaturity | (4,896) | (500) | (1,883) |
| Loans | (748) | (750) | (1,975) |
| Net\tchange\tin |  |  |  |
| Federal\tfunds\tsold\tand\tresale\tagreements | 481 | 131 | (530) |
| Interest-earning\tdeposits\twith\tbanks | 1,233 | (19,643) | (8,151) |
| Loans | (3,972) | (12,147) | (10,790) |
| Net\tcash\t(paid\tfor)\treceived\tfrom\tacquisition\tand\tdivestiture\tactivity |  | (62) |  |
| Other | (706) | (137) | 129 |
| Net\tcash\tprovided\t(used)\tby\tinvesting\tactivities | (16,260) | (24,893) | (18,935) |

(continued	on	following	page)

|  |  | Year	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2015 | 2014 | 2013 |
| Financing\tActivities |  |  |  |
| Net\tchange\tin |  |  |  |
| Noninterest-bearing\tdeposits | $5,765 | $3,182 | $341 |
| Interest-bearing\tdeposits | \t 10,812 | 8,130 | 7,463 |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements | (1,733) | (778) | 965 |
| Commercial\tpaper | (156) | (112) | (5,607) |
| Other\tborrowed\tfunds | 147 | 221 | 221 |
| Sales/issuances |  |  |  |
| Federal\tHome\tLoan\tBank\tborrowings | 2,250 | \t 15,685 | 16,435 |
| Bank\tnotes\tand\tsenior\tdebt | 8,173 | 6,184 | 3,938 |
| Subordinated\tdebt |  | 745 | 1,986 |
| Commercial\tpaper | 1,394 | 8,797 | 12,595 |
| Other\tborrowed\tfunds | 694 | 505 | 695 |
| Preferred\tstock |  |  | 496 |
| Common\tand\ttreasury\tstock | 139 | 252 | 244 |
| Repayments/maturities |  |  |  |
| Federal\tHome\tLoan\tBank\tborrowings | (2,147) | (8,592) | (12,960) |
| Bank\tnotes\tand\tsenior\tdebt | (2,624) | (3,089) | (1,420) |
| Subordinated\tdebt | (524) | 57 | (731) |
| Commercial\tpaper | (6,219) | (8,687) | (10,444) |
| Other\tborrowed\tfunds | (1,622) | (467) | (340) |
| Preferred\tstock\tredemption | (500) |  | (150) |
| Excess\ttax\tbenefits\tfrom\tshare-based\tpayment\tarrangements | 29 | 28 | 23 |
| Redemption\tof\tnoncontrolling\tinterests |  |  | (375) |
| Acquisition\tof\ttreasury\tstock | (2,152) | (1,176) | (24) |
| Preferred\tstock\tcash\tdividends\tpaid | (219) | (232) | (237) |
| Common\tstock\tcash\tdividends\tpaid | (1,038) | (1,000) | (911) |
| Net\tcash\tprovided\t(used)\tby\tfinancing\tactivities | \t 10,469 | \t 19,653 | 12,203 |
| Net\tIncrease\t(Decrease)\tIn\tCash\tAnd\tDue\tFrom\tBanks | (295) | 317 | (1,177) |
| Cash\tand\tdue\tfrom\tbanks\tat\tbeginning\tof\tperiod | 4,360 | 4,043 | 5,220 |
| Cash\tand\tdue\tfrom\tbanks\tat\tend\tof\tperiod | $4,065 | $4,360 | $4,043 |
| Supplemental\tDisclosures |  |  |  |
| Interest\tpaid | $1,005 | $863 | $891 |
| Income\ttaxes\tpaid | 919 | 1,102 | 234 |
| Income\ttaxes\trefunded | 286 | 12 | 3 |
| Non-cash\tInvesting\tand\tFinancing\tItems |  |  |  |
| Transfer\tfrom\t(to)\tloans\tto\t(from)\tloans\theld\tfor\tsale,\tnet | 285 | 724 | (119) |
| Transfer\tfrom\tloans\tto\tforeclosed\tassets | 435 | 604 | 703 |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# BUSINESS

The	PNC	Financial	Services	Group,	Inc.	(PNC)	is	one	of	the	largest	diversified financial	services	companies	in	the	United	States	and	is	headquartered	in Pittsburgh,	Pennsylvania.

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,	Florida,	North	Carolina,	Kentucky, Washington,	D.C.,	Delaware,	Virginia,	Alabama,	Georgia,	Missouri,	Wisconsin and	South	Carolina.	We	also	provide	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	2015	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.

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	14	Financial	Derivatives.

# 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	and certain	tax	credit	investments.	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,

•	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	and	commercial mortgage	servicing	rights	(MSRs).

We	recognize	revenue	from	servicing	residential	mortgages,	commercial mortgages	and	other	consumer	loans	as	earned	based	on	the	specific	contractual terms.	These	revenues	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	or	customer-related	trading	activities	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	in	Other	noninterest	income	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 selling	in	the	near	term	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.	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.

Prior	to	December	31,	2015,	upon	final	disposition	of	a	loan	within	a	pool	and for	loans	that	had	nominal	collateral	value/expected	cash	flows,	the	loan's carrying	value	was	removed	from	the	pool	and	any	gain	or	loss	associated	with the	transaction	was	retained	in	the	pool's	recorded	investment.	Effective December	31,	2015,	in	anticipation	of	the	end	of	the	life	of	our	purchased impaired	pooled	consumer	and	residential	real	estate	loans	and	pursuant	to supervisory	direction,	we	changed	our	derecognition	policy	for	these	loans	such that	we	will	write-off	the	loan's	recorded	investment	and	derecognize	the associated	ALLL	upon	final	disposition.	Gains	and	losses	on	such	loans	will	be recognized	as	either	an	adjustment	to	the	pool's	associated	ALLL,	or	yield	as appropriate.	The	transition	to	this	new	policy	on	December	31,	2015	resulted	in	a $468	million	derecognition	of	recorded	investment	and	associated	ALLL	on such	loans.	See	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.

# 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	21 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	originated	or	purchased for	held	for	sale	and	designated	at	fair	value	remain	at	fair	value	for	the	life	of the	loan.

# Nonperforming	Loans	and	Leases

The	matrix	below	summarizes	PNC's	policies	for	classifying	certain	loans	as	nonperforming	loans	and/or	discontinuing	the	accrual	of	loan	interest	income.

See	Note	3	Asset	Quality	in	this	Report	for	additional	detail	on	nonperforming assets	and	asset	quality	indicators	for	commercial	and	consumer	loans.

# Commercial	Loans

We	generally	charge	off	Commercial	Lending	(Commercial,	Commercial	Real Estate,	and	Equipment	Lease	Financing)	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	that are	placed	on	nonaccrual	status	when	they	become	90	days	or	more	past	due	are charged-off	at	180	days	past	due.

# Consumer	Loans

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.	At	that	time,	the	basis	in	the	loan is	reduced	to	the	fair	value	of	the	collateral	less	costs	to	sell.	In	addition	to	this policy,	the	bank	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.

For	loans	that	continue	to	meet	any	of	the	above	policies,	collateral	values	are updated	annually	and	subsequent	declines	in	collateral	values	are	charged-off resulting	in	incremental	provision	for	credit	loss.

Most	consumer	loans	and	lines	of	credit,	not	secured	by	residential	real	estate, are	charged	off	after	120-180	days	past	due.

# Accounting	for	Nonperforming	Assets	and	Leases	and	Other	Nonaccrual Loans

For	accrual	loans,	interest	income	is	accrued	on	a	monthly	basis	and	certain	fees and	costs	are	deferred	upon	origination	and	recognized	in	income	over	the	term of	the	loan	utilizing	an	effective	yield	method.	For	nonaccrual	loans,	interest income	accrual	and	deferred	fee/cost	recognition	is	discontinued.	Additionally, the	current	year	accrued	and	uncollected	interest	is	reversed	through	Net	interest income	and	prior	year	accrued	and	uncollected	interest	is	charged-off.

Nonaccrual	loans	may	also	be	charged-off	to	reduce	the	basis	to	the	fair	value	of collateral	less	costs	to	sell.

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.

For	TDRs,	payments	are	applied	based	upon	their	contractual	terms	unless	the related	loan	is	deemed	non-performing.	TDRs	are	generally	included	in nonperforming	and	nonaccrual	loans.	However,	after	a	reasonable	period	of	time in	which	the	loan	performs	under	restructured	terms	and	meets	other performance	indicators,	it	is	returned	to	performing/accruing	status.	This	return to	performing/accruing	status	demonstrates	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.

Other	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.

See	Note	3	Asset	Quality	and	Note	5	Allowances	for	Loan	and	Lease	Losses and	Unfunded	Loan	Commitments	and	Letters	of	Credit	in	this	Report	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	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	or	completion	of	deed	in	lieu	of	foreclosure,	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.	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.

For	certain	mortgage	loans	that	have	a	government	guarantee,	we	establish	a separate	other	receivable	upon	foreclosure.	The	receivable	is	measured	based	on the	loan	balance	(inclusive	of	principal	and	interest)	that	is	expected	to	be recovered	from	the	guarantor.

# 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),	facility	structure	and	other	factors.

# 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, •	Model	imprecision,

•	Timing	of	available	information,	including	the	performance	of	first	lien positions,	and

# 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	at	the	loan	level.	For	smaller	balance	pooled	loans,	pool	cash	flows	are estimated	using	cash	flow	models.	Pools	were	defined	at	acquisition	based	on	the risk	characteristics	of	the	loan.	Our	cash	flow	models	use	loan	data	including, but	not	limited	to,	contractual	loan	balance,	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.

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 incurred	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	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,

•	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	amortized these	servicing	assets	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.

# 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	7	Fair	Value.

# Goodwill	And	Other	Intangible	Assets

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	17	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 general	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	2015,	2014	or 2013	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.

We	use	the	deferral	method	of	accounting	on	investments	that	generate investment	tax	credits.	Under	this	method,	the	investment	tax	credits	are recognized	as	a	reduction	to	the	related	asset.

# 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. Distributed	dividends	and	dividend	equivalents	related	to	participating	securities and	an	allocation	of	undistributed	net	income	reduce	the	amount	of	income attributable	to	common	shareholders.	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	15	Earnings	Per	Share	for	additional information.

# Recently	Adopted	Accounting	Standards

In	May	2015,	the	Financial	Accounting	Standards	Board	(FASB)	issued	ASU 2015-07,	Fair	Value	Measurements	(Topic	820):	Disclosures	for	Investments	in Certain	Entities	That	Calculate	Net	Asset	Value	per	Share	(or	its	Equivalent).

The	ASU	was	issued	to	reduce	diversity	in	practice	related	to	how	certain investments	measured	at	net	asset	value	with	future	redemption	dates	are categorized	in	the	fair	value	hierarchy.	The	ASU	eliminates	the	requirement (i)	to	categorize	within	the	fair	value	hierarchy	investments	whose	fair	value	is measured	using	the	NAV	per	share	practical	expedient,	and	(ii)	to	make	certain disclosures	for	those	investments	for	which	an	entity	has	elected	to	measure	the fair	value	using	the	practical	expedient.	We	elected	to	early	adopt	the	ASU	as	of December	31,	2015	which	reduced	the	disclosure	of	level	3	assets	by	$347 million	and	$469	million	as	of	December	31,	2015	and	December	31,	2014, respectively.	Adoption	of	this	ASU	did	not	have	a	material	impact	on	our	results of	operations	or	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	impacts	the	accounting	for	repurchase-to-maturity transactions	and	transfers	executed	contemporaneously	with	a	repurchase agreement	with	the	same	counterparty	(i.e.,	a	repurchase	financing)	by	requiring secured	borrowing	accounting.	We	adopted	this	accounting	as	of	January	1, 2015.	Pursuant	to	this	guidance,	the	disclosure	requirements	were	adopted	in	the second	quarter	of	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	Accounting	Standards	Update	(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	(i)	the	loan	has	a	government guarantee	that	is	not	separable	from	the	loan	before	foreclosure;	(ii)	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	(iii)	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	January	2014,	the	FASB	issued	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.

# 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	carried	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	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,	2015	and	December	31,	2014,	these assets	and	liabilities	both	totaled	$120	million	and	$136	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.

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	21	Commitments	and Guarantees	for	further	discussion	of	our	repurchase	and	recourse	obligations.

The	following	table	provides	cash	flows	associated	with	PNC's	loan	sale	and	servicing	activities:

# Table	50:	Cash	Flows	Associated	with	Loan	Sale	and	Servicing	Activities

| In	millions | Residential<br>Mortgages | Commercial<br>Mortgages	(a) | Home	Equity<br>Loans/Lines	(b) |
| :--- | :--- | :--- | :--- |
| CASH\tFLOWS\t–\tYear\tended\tDecember\t31,\t2015 |  |  |  |
| Sales\tof\tloans\t(c) | $8,121 | $4,398 |  |
| Repurchases\tof\tpreviously\ttransferred\tloans\t(d) | 580 |  | $135 |
| Servicing\tfees\t(e) | 339 | 120 | 15 |
| Servicing\tadvances\trecovered/(funded),\tnet | 90 | 48 | 3 |
| Cash\tflows\ton\tmortgage-backed\tsecurities\theld\t(f) | 1,458 | 184 |  |
| CASH\tFLOWS\t–\tYear\tended\tDecember\t31,\t2014 |  |  |  |
| Sales\tof\tloans\t(c) | $8,344 | $3,469 |  |
| Repurchases\tof\tpreviously\ttransferred\tloans\t(d) | 744 |  | $14 |
| Servicing\tfees\t(e) | 346 | 132 | 19 |
| Servicing\tadvances\trecovered/(funded),\tnet | 70 | 113 | (20) |
| Cash\tflows\ton\tmortgage-backed\tsecurities\theld\t(f) | 934 | 308 |  |
| (a) |  |  |  |

(a) Represents	cash	flow	information	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.

(c) Gains/losses	recognized	on	sales	of	loans	were	insignificant	for	the	periods	presented.

(d) Includes	residential	mortgage	government	insured	or	guaranteed	loans	eligible	for	repurchase	through	the	exercise	of	our	ROAP	option,	and	loans	repurchased	due	to	alleged	breaches	of	origination	covenants	or representations	and	warranties	made	to	purchasers.	Includes	home	equity	lines	of	credit	repurchased	at	the	end	of	their	draw	periods	due	to	contractual	requirements.

(e) Includes	contractually	specified	servicing	fees,	late	charges	and	ancillary	fees.

(f) Represents	cash	flows	on	securities	we	hold	issued	by	a	securitization	SPE	in	which	PNC	transferred	to	and/or	services	loans.	The	carrying	value	of	such	securities	held	were	$6.6	billion	in	residential	mortgage- backed	securities	and	$1.3	billion	in	commercial	mortgage-backed	securities	at	December	31,	2015	and	$3.4	billion	in	residential	mortgage-backed	securities	and	$1.3	billion	in	commercial	mortgage-backed securities	at	December	31,	2014.

The	table	below	presents	information	about	the	principal	balances	of	transferred loans	that	we	service	and	are	not	recorded	on	our	Consolidated	Balance	Sheet. We	would	only	experience	a	loss	on	these	transferred	loans	if	we	were	required to	repurchase	a	loan	due	to	a	breach	in	representations	and	warranties	or	a	loss sharing	arrangement	associated	with	our	continuing	involvement	with	these loans.	For	more	information	regarding	our	recourse	and	repurchase	obligations, including	our	reserve	of	estimated	losses,	see	the	Recourse	and	Repurchase Obligations	section	of	Note	21	Commitments	and	Guarantees.

# Table	51:	Principal	Balance,	Delinquent	Loans,	and	Net	Charge-offs	Related to	Serviced	Loans	For	Others

|  | Residential | Commercial | Home	Equity |
| :--- | :--- | :--- | :--- |
| In\tmillions | Mortgages | Mortgages\t(a) | Loans/Lines\t(b) |
| December\t31,\t2015 |  |  |  |
| Total\tprincipal\tbalance | $72,898 | $53,789 | $2,806 |
| Delinquent\tloans\t(c) | 1,923 | 1,057 | 904 |
| December\t31,\t2014 |  |  |  |
| Total\tprincipal\tbalance | $79,108 | $60,873 | $3,833 |
| Delinquent\tloans\t(c) | 2,657 | 707 | 1,303 |
| Year\tended\nDecember\t31,\t2015 |  |  |  |
| Net\tcharge-offs\t(d) | $117 | $595 | $28 |
| Year\tended |  |  |  |
| December\t31,\t2014 |  |  |  |
| Net\tcharge-offs\t(d) | $136 | $1,288 | $61 |

(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) 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	commercial	mortgage	backed	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,	2015	and	December	31,	2014.	We	have	not	provided additional	financial	support	to	these	entities	which	we	are	not	contractually required	to	provide.

# Table	52:	Consolidated	VIEs	–	Carrying	Value	(a)	(b)

| In	millions | Credit	Card	and	Other<br>Securitization	Trusts | Tax	Credit<br>Investments | Total |
| :--- | :--- | :--- | :--- |
| December\t31,\t2015 |  |  |  |
| Assets |  |  |  |
| Cash\tand\tdue\tfrom |  |  |  |
| banks |  | $11 | $11 |
| Interest-earning |  |  |  |
| deposits\twith\tbanks |  | 4 | 4 |
| Loans | $1,335 | 6 | \t 1,341 |
| Allowance\tfor\tloan\tand |  |  |  |
| lease\tlosses | (48) |  | (48) |
| Equity\tinvestments |  | 183 | 183 |
| Other\tassets | 22 | 380 | 402 |
| Total\tassets | $1,309 | $584 | $1,893 |
| Liabilities |  |  |  |
| Other\tborrowed\tfunds |  | $148 | $148 |
| Accrued\texpenses |  | 44 | 44 |
| Other\tliabilities |  | 202 | 202 |
| Total\tliabilities |  | $394 | $394 |
| December\t31,\t2014 |  |  |  |
| Assets |  |  |  |
| Cash\tand\tdue\tfrom |  |  |  |
| banks |  | $6 | $6 |
| Interest-earning |  |  |  |
| deposits\twith\tbanks |  | 6 | 6 |
| Loans | $1,606 |  | \t 1,606 |
| Allowance\tfor\tloan\tand |  |  |  |
| lease\tlosses | (50) |  | (50) |
| Equity\tinvestments |  | 492 | 492 |
| Other\tassets | 31 | 452 | 483 |
| Total\tassets | $1,587 | $956 | $2,543 |
| Liabilities |  |  |  |
| Other\tborrowed\tfunds | $166 | $181 | $347 |
| Accrued\texpenses |  | 70 | 70 |
| Other\tliabilities |  | 206 | 206 |
| Total\tliabilities | $166 | $457 | $623 |
| (a)\nAmounts\trepresent\tcarrying\tvalue\ton\tPNC's\tConsolidated\tBalance\tSheet. |  |  |  |

(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.

# 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	2012,	the	last	series	issued	by	the	SPE,	Series	2007-1,	matured.	At December	31,	2015,	we	continued	to	consolidate	this	SPE	as	we	were	the primary	beneficiary	of	the	SPE	through	our	holding	of	seller's	interest	and	our role	as	the	primary	servicer.

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	52.

The	following	table	provides	a	summary	of	non-consolidated	VIEs	with	which we	have	significant	continuing	involvement	but	are	not	the	primary	beneficiary. We	do	not	consider	our	continuing	involvement	to	be	significant	when	it	relates to	a	VIE	where	we	only	invest	in	securities	issued	by	the	VIE	and	were	not involved	in	the	design	of	the	VIE	or	where	no	transfers	have	occurred	between PNC	and	the	VIE.	We	have	excluded	certain	transactions	with	non-consolidated VIEs	from	the	balances	presented	in	Table	53	where	we	have	determined	that our	continuing	involvement	is	not	significant.

# Table	53:	Non-Consolidated	VIEs

| In	millions | PNC	Risk<br>of	Loss	(a) | Carrying	Value	of<br>Assets	Owned	by	PNC | Carrying	Value	of<br>Liabilities	Owned	by	PNC |
| :--- | :--- | :--- | :--- |
| December\t31,\t2015 |  |  |  |
| Commercial\tMortgage-Backed\tSecuritizations\t(b) | $1,498 | $1,498\t(c) | $1\t(e) |
| Residential\tMortgage-Backed\tSecuritizations\t(b) | 6,680 | 6,680\t(c) | 1\t(e) |
| Tax\tCredit\tInvestments\tand\tOther | 2,551 | 2,622\t(d) | 836\t(f) |
| Total | $10,729 | $10,800 | $838 |
| December\t31,\t2014 |  |  |  |
| Commercial\tMortgage-Backed\tSecuritizations\t(b) | $1,550 | $1,550\t(c) | $1\t(e) |
| Residential\tMortgage-Backed\tSecuritizations\t(b) | 3,385 | 3,385\t(c) | 4\t(e) |
| Tax\tCredit\tInvestments\tand\tOther | 2,270 | 2,304\t(d) | 777\t(f) |
| Total | $7,205 | $7,239 | $782 |
| (a) |  |  |  |

(a) This	represents	loans,	investments	and	other	assets	related	to	non-consolidated	VIEs,	net	of	collateral	(if	applicable).

(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.	Values	disclosed	in	the	PNC	Risk	of	Loss	column represent	our	maximum	exposure	to	loss	for	those	securities'	holdings.

(c) Included	in	Trading	securities,	Investment	securities,	Other	intangible	assets	and	Other	assets	on	our	Consolidated	Balance	Sheet.

(d) Included	in	Loans,	Equity	investments	and	Other	assets	on	our	Consolidated	Balance	Sheet.

(e) Included	in	Other	liabilities	on	our	Consolidated	Balance	Sheet.

(f) Included	in	Deposits	and	Other	liabilities	on	our	Consolidated	Balance	Sheet.

# 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	53. 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.

# Tax	Credit	Investments	and	Other

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	53.	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,	2015,	we	had	a	liability	for	unfunded commitments	of	$.5	billion	related	to	investments	in	qualified	affordable	housing projects	which	is	reflected	in	Other	liabilities	on	our	Consolidated	Balance Sheet.

Table	53	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.

# 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.

Nonperforming	assets	include	nonperforming	loans	and	leases,	OREO	and foreclosed	assets,	and	nonperforming	TDRs.	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,	2015	and	December	31,	2014,	respectively.

# Table	54:	Analysis	of	Loan	Portfolio	(a)

|  |  | Accruing |  |  |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  |  | Fair\tValue |  |  |
|  | Current\tor\tLess | 30-59 | 60-89 | 90\tDays | Total |  | Option | Purchased |  |
|  | Than\t30\tDays | Days | Days | Or\tMore | Past | Nonperforming | Nonaccrual | Impaired | Total\tLoans |
| Dollars\tin\tmillions | Past\tDue | Past\tDue | Past\tDue | Past\tDue | Due\t(b) | Loans | Loans\t(c) | Loans | (d)\t(e) |
| December\t31,\t2015 |  |  |  |  |  |  |  |  |  |
| Commercial\tLending |  |  |  |  |  |  |  |  |  |
| Commercial | \t$98,075 | \t$69 | \t$32 | \t$45 | \t$146 | \t$351 |  | \t$36 | \t$98,608 |
| Commercial\treal\testate | 27,134 | 10 | 4 |  | 14 | 187 |  | 133 | 27,468 |
| Equipment\tlease\tfinancing | 7,440 | 19 | 2 |  | 21 | 7 |  |  | 7,468 |
| Total\tcommercial\tlending | 132,649 | 98 | 38 | 45 | 181 | 545 |  | 169 | 133,544 |
| Consumer\tLending |  |  |  |  |  |  |  |  |  |
| Home\tequity | 29,656 | 63 | 30 |  | 93 | 977 |  | 1,407 | 32,133 |
| Residential\treal\testate\t(f) | 10,918 | 142 | 65 | 566 | 773 | 549 | \t$225 | 1,946 | 14,411 |
| Credit\tcard | 4,779 | 28 | 19 | 33 | 80 | 3 |  |  | 4,862 |
| Other\tconsumer\t(g) | 21,181 | 180 | 96 | 237 | 513 | 52 |  |  | 21,746 |
| Total\tconsumer\tlending | 66,534 | 413 | 210 | 836 | 1,459 | 1,581 | 225 | 3,353 | 73,152 |
| Total | \t$199,183 | \t$511 | \t$248 | \t$881 | \t$1,640 | \t$2,126 | \t$225 | \t$3,522 | \t$206,696 |
| Percentage\tof\ttotal\tloans | 96.36% | .25% | .12% | .43% | .80% | 1.03% | .11% | 1.70% | 100.00% |
| December\t31,\t2014 |  |  |  |  |  |  |  |  |  |
| Commercial\tLending |  |  |  |  |  |  |  |  |  |
| Commercial | \t$96,922 | \t$73 | \t$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 | 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 | 1,068 | 1,775 | 1,884 | 269 | 4,548 | 76,449 |
| Total | \t$195,234 | \t$582 | \t$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% | .95% | 1.23% | .13% | 2.37% | 100.00% |
| (a) |  |  |  |  |  |  |  |  |  |

(a) Amounts	in	table	represent	recorded	investment	and	exclude	loans	held	for	sale.	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) 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	$1.4	billion	and	$1.7	billion	at	December	31,	2015	and	December	31,	2014, 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,	2015	include	government	insured	or	guaranteed	Residential	real	estate	mortgages	totaling	$56	million	for	30	to	59	days	past	due,	$45	million	for	60	to	89	days	past	due	and $545	million	for	90	days	or	more	past	due.	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.

(g) Past	due	loan	amounts	at	December	31,	2015	include	government	insured	or	guaranteed	Other	consumer	loans	totaling	$116	million	for	30	to	59	days	past	due,	$75	million	for	60	to	89	days	past	due	and	$220 million	for	90	days	or	more	past	due.	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.

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,	2015,	we	pledged	$20.2	billion	of	commercial	loans	to	the	Federal	Reserve	Bank	(FRB)	and	$56.4	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,	2014	were	$19.2	billion and	$52.8	billion,	respectively.

# Table	55:	Nonperforming	Assets

| Dollars	in	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Nonperforming\tloans |  |  |
| Total\tcommercial\tlending | $545 | $626 |
| Total\tconsumer\tlending\t(a) | 1,581 | 1,884 |
| Total\tnonperforming\tloans\t(b) | 2,126 | 2,510 |
| OREO\tand\tforeclosed\tassets |  |  |
| Other\treal\testate\towned\t(OREO) | 279 | 351 |
| Foreclosed\tand\tother\tassets | 20 | 19 |
| Total\tOREO\tand\tforeclosed\tassets\t(c) | 299 | 370 |
| Total\tnonperforming\tassets | $2,425 | $2,880 |
| Nonperforming\tloans\tto\ttotal\tloans | 1.03% | 1.23% |
| Nonperforming\tassets\tto\ttotal\tloans,\tOREO\tand\tforeclosed\tassets | 1.17 | 1.40 |
| Nonperforming\tassets\tto\ttotal\tassets | .68 | .83 |
| Interest\ton\tnonperforming\tloans |  |  |
| Computed\ton\toriginal\tterms | 115 | 125 |
| Recognized\tprior\tto\tnonperforming\tstatus | 22 | 25 |
| (a) |  |  |

(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) The	recorded	investment	of	loans	collateralized	by	residential	real	estate	property	that	are	in	process	of	foreclosure	was	$.6	billion	and	$.8	billion	at	December	31,	2015	and	December	31,	2014,	which	included	$.3 billion	and	$.5	billion,	respectively,	of	loans	that	are	government	insured/guaranteed.

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	within	this	Note.

Total	nonperforming	loans	in	the	nonperforming	assets	table	above	include TDRs	of	$1.1	billion	at	December	31,	2015	and	$1.4	billion	at	December	31, 2014.	TDRs	that	are	performing,	including	consumer	credit	card	TDR	loans, totaled	$1.2	billion	at	December	31,	2015	and	December	31,	2014	and	are excluded	from	nonperforming	loans.	These	include	TDRs	that	are	not	placed	on nonaccrual	status	as	permitted	by	regulatory	guidance.	Nonperforming	TDRs	are returned	to	accrual	and

classified	as	performing	after	demonstrating	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.

# 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,	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	an	estimate	of	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	56:	Commercial	Lending	Asset	Quality	Indicators	(a)(b)

| In	millions | Pass	Rated | Mention	(c) | Substandard	(d) | Doubtful	(e) | Total	Loans |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2015 |  |  |  |  |  |
| Commercial | $93,364 | $2,029 | $3,089 | $90 | $98,572 |
| Commercial\treal\testate | 26,729 | 120 | 481 | 5 | 27,335 |
| Equipment\tlease\tfinancing | 7,230 | 87 | 150 | 1 | 7,468 |
| Purchased\timpaired\tloans |  | 6 | 157 | 6 | 169 |
| Total\tcommercial\tlending | $127,323 | $2,242 | $3,877 | $102 | $133,544 |
| 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 |
| (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	57:	Home	Equity	and	Residential	Real	Estate	Balances

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Home\tequity\tand\tresidential\treal\testate\tloans\t–\texcluding\tpurchased\timpaired\tloans\t(a) | $42,268 | $43,348 |
| Home\tequity\tand\tresidential\treal\testate\tloans\t–\tpurchased\timpaired\tloans\t(b) | 3,684 | 4,541 |
| Government\tinsured\tor\tguaranteed\tresidential\treal\testate\tmortgages\t(a) | 923 | 1,188 |
| Difference\tbetween\toutstanding\tbalance\tand\trecorded\tinvestment\tin\tpurchased\timpaired\tloans\t(c) | (331) | 7 |
| Total\thome\tequity\tand\tresidential\treal\testate\tloans\t(a) | $46,544 | $49,084 |
| (a)\nRepresents\trecorded\tinvestment. |  |  |

(a) Represents	recorded	investment.

(b) Represents	outstanding	balance.

(c) The	December	31,	2015	amount	was	impacted	by	the	change	in	derecognition	policy	for	purchased	impaired	pooled	consumer	and	residential	real	estate	loans.	See	Note	4	Purchased	Loans	for	additional information.

# Table	58:	Home	Equity	and	Residential	Real	Estate	Asset	Quality	Indicators	–	Excluding	Purchased	Impaired	Loans	(a)	(b)

|  | Home	Equity | Home	Equity | Residential	Real	Estate |  |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2015\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 | $283 | $960 | $284 | $1,527 |
| Less\tthan\tor\tequal\tto\t660\t(d)\t(e) | 40 | 189 | 68 | 297 |
| Missing\tFICO | 1 | 8 | 5 | 14 |
| Greater\tthan\tor\tequal\tto\t100%\tto\tless\tthan\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 646 | 1,733 | 564 | 2,943 |
| Less\tthan\tor\tequal\tto\t660\t(d)\t(e) | 92 | 302 | 102 | 496 |
| Missing\tFICO | 3 | 4 | 8 | 15 |
| Greater\tthan\tor\tequal\tto\t90%\tto\tless\tthan\t100%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 698 | 1,492 | 615 | 2,805 |
| Less\tthan\tor\tequal\tto\t660 | 88 | 226 | 94 | 408 |
| Missing\tFICO | 1 | 3 | 10 | 14 |
| Less\tthan\t90%\tand\tupdated\tFICO\tscores:\nGreater\tthan\t660 | \t 13,895 | 7,808 | 9,117 | \t 30,820 |
| Less\tthan\tor\tequal\tto\t660 | 1,282 | 923 | 570 | 2,775 |
| Missing\tFICO | 31 | 18 | 105 | 154 |
| Total\thome\tequity\tand\tresidential\treal\testate\tloans | $17,060 | $13,666 | $11,542 | $42,268 |

(continued	from	previous	page)

|  | 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 |

(a) Excludes	purchased	impaired	loans	of	approximately	$3.4	billion	and	$4.5	billion	in	recorded	investment,	certain	government	insured	or	guaranteed	residential	real	estate	mortgages	of	approximately	$0.9	billion and	$1.2	billion,	and	loans	held	for	sale	at	December	31,	2015	and	December	31,	2014,	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.	We	generally	utilize	origination	lien	balances	provided	by	a	third-party,	where	applicable,	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	lien	balances	held	by others,	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,	2015:	New	Jersey	14%,	Pennsylvania	12%,	Illinois	11%,	Ohio	11%,	Florida	7%,	Maryland	7%	and	Michigan	5%.	The remainder	of	the	states	had	lower	than	4%	of	the	higher	risk	loans	individually,	and	collectively	they	represent	approximately	33%	of	the	higher	risk	loans.	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	high	risk	loans	individually,	and	collectively	they	represent	approximately	28%	of	the	higher	risk	loans.

# Table	59:	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,\t2015\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 | $6 | $164 | $147 | $317 |
| Less\tthan\tor\tequal\tto\t660 | 6 | 79 | 76 | 161 |
| Missing\tFICO |  | 7 | 5 | 12 |
| Greater\tthan\tor\tequal\tto\t100%\tto\tless\tthan\t125%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 12 | 331 | 186 | 529 |
| Less\tthan\tor\tequal\tto\t660 | 9 | 145 | 118 | 272 |
| Missing\tFICO |  | 8 | 7 | 15 |
| Greater\tthan\tor\tequal\tto\t90%\tto\tless\tthan\t100%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 10 | 167 | 133 | 310 |
| Less\tthan\tor\tequal\tto\t660 | 6 | 75 | 68 | 149 |
| Missing\tFICO |  | 4 | 3 | 7 |
| Less\tthan\t90%\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 106 | 345 | 665 | \t 1,116 |
| Less\tthan\tor\tequal\tto\t660 | 91 | 182 | 455 | 728 |
| Missing\tFICO | 1 | 13 | 31 | 45 |
| Missing\tLTV\tand\tupdated\tFICO\tscores: |  |  |  |  |
| Greater\tthan\t660 | 1 |  | 14 | 15 |
| Less\tthan\tor\tequal\tto\t660 | 1 |  | 6 | 7 |
| Missing\tFICO |  |  | 1 | 1 |
| Total\thome\tequity\tand\tresidential\treal\testate\tloans | $249 | $1,520 | $1,915 | $3,684 |

|  | 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 |
| (a) |  |  |  |  |

(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,	2015:	California	16%,	Florida	14%,	Illinois	11%,	Ohio	9%,	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	38%	of	the	purchased	impaired	portfolio.	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.

(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.	We	generally	utilize	origination	lien	balances	provided	by	a	third-party,	where	applicable,	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	lien	balances	held	by others,	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	60:	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,\t2015 |  |  |  |  |
| FICO\tscore\tgreater\tthan\t719 | $2,936 | 60% | $9,371 | 65% |
| 650\tto\t719 | \t 1,346 | 28 | 3,534 | 24 |
| 620\tto\t649 | 202 | 4 | 523 | 4 |
| Less\tthan\t620 | 227 | 5 | 604 | 4 |
| No\tFICO\tscore\tavailable\tor\trequired\t(c) | 151 | 3 | 501 | 3 |
| Total\tloans\tusing\tFICO\tcredit\tmetric | \t 4,862 | 100% | \t 14,533 | 100% |
| Consumer\tloans\tusing\tother\tinternal\tcredit\tmetrics\t(b) |  |  | 7,213 |  |
| Total\tloan\tbalance | $4,862 |  | $21,746 |  |
| Weighted-average\tupdated\tFICO\tscore\t(d) |  | 734 |  | 744 |
| 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 |
| (a) |  |  |  |  |

(a) At	December	31,	2015,	we	had	$34	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,	2015	balance	related	to	higher	risk	credit	card	loans	was	geographically	distributed	throughout	the	following	areas:	Ohio	17%,	Pennsylvania	15%,	Michigan	8%,	New	Jersey	8%,	Florida	7%,	Illinois 6%,	Indiana	6%,	Maryland	4%	and	North	Carolina	4%.	All	other	states	had	less	than	4%	individually	and	make	up	the	remainder	of	the	balance.	At	December	31,	2014,	we	had	$35	million	of	credit	card	loans	that are	higher	risk.	The	majority	of	the	December	31,	2014	balance	related	to	higher	risk	credit	card	loans	was	geographically	distributed	throughout	the	following	areas:	Ohio	17%,	Pennsylvania	16%,	Michigan	9%, Illinois	7%,	New	Jersey	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.

(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.

# 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	$.3	billion	and	$.4	billion at	December	31,	2015	and	December	31,	2014,	respectively,	for	the	total	TDR portfolio.

# Table	61:	Summary	of	Troubled	Debt	Restructurings

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Total\tconsumer\tlending | $1,917 | $2,041 |
| Total\tcommercial\tlending | 434 | 542 |
| Total\tTDRs | $2,351 | $2,583 |
| Nonperforming | $1,119 | $1,370 |
| Accruing\t(a) | 1,232 | 1,213 |
| Total\tTDRs | $2,351 | $2,583 |

(a) Accruing	loans	include	consumer	credit	card	loans	and	loans	that	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	62	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	the	years	2015,	2014	and	2013	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	62.	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	62:	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,\t2015\nDollars\tin\tmillions | Number\nof\tLoans | Recorded\nInvestment\t(b) | Principal\nForgiveness | Rate\nReduction | Other | Total |
| Commercial\tlending |  |  |  |  |  |  |
| Commercial | 130 | $246 | $15 | $3\t\t\t\t $186 | $3\t\t\t\t $186 | $204 |
| Commercial\treal\testate | 27 | 37 | 6 | 1 | 12 | 19 |
| Equipment\tlease\tfinancing | 1 | 1 | 1 |  |  | 1 |
| Total\tcommercial\tlending | 158 | 284 | 22 | 4 | \t 198 | \t 224 |
| Consumer\tlending |  |  |  |  |  |  |
| Home\tequity | 2,890 | 182 |  | 100 | 73 | \t 173 |
| Residential\treal\testate | 530 | 61 |  | 36 | 25 | 61 |
| Credit\tcard | 6,549 | 53 |  | 52 |  | 52 |
| Other\tconsumer | 993 | 15 |  | 2 | 8 | 10 |
| Total\tconsumer\tlending | \t10,962 | 311 |  | 190 | \t 106 | \t 296 |
| Total\tTDRs | \t11,120 | $595 | $22 | $194\t\t\t\t $304 | $194\t\t\t\t $304 | $520 |
| During\tthe\tyear\tended\tDecember\t31,\t2014\nDollars\tin\tmillions |  |  |  |  |  |  |
| 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 | \t 138 |
| Total\tcommercial\tlending\t(d) | 210 | 363 | 37 | 22 | \t 237 | \t 296 |
| Consumer\tlending |  |  |  |  |  |  |
| Home\tequity | 2,950 | 193 |  | 51 | \t 132 | \t 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 | \t 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 | \t 223 |
| Equipment\tlease\tfinancing | 1 | 3 |  |  |  |  |
| Total\tcommercial\tlending | 285 | 503 | 38 | 72 | \t 276 | \t 386 |
| Consumer\tlending |  |  |  |  |  |  |
| Home\tequity | 4,132 | 289 |  | 139 | \t 126 | \t 265 |
| Residential\treal\testate | 911 | 127 |  | 39 | 86 | \t 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 | \t 471 |
| Total\tTDRs | \t15,104 | $1,005 | $38 | $312\t\t\t\t $507 | $312\t\t\t\t $507 | $857 |
| (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.

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,	2015	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,	2015	and	2014,	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	63,	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,	2015,	2014,	and 2013	respectively,	and	(ii)	subsequently	defaulted	during	these	reporting	periods.

# Table	63:	TDRs	that	were	Modified	in	the	Past	Twelve	Months	which	have Subsequently	Defaulted

| Dollars	in	millions | Number	of	Contracts | Recorded	Investment |
| :--- | :--- | :--- |
| Commercial\tlending |  |  |
| Commercial | 23\t\t\t\t$ | 9 |
| Commercial\treal\testate | 13 | 13 |
| Equipment\tlease\tfinancing | 1 | 1 |
| Total\tcommercial\tlending | 37 | 23 |
| Consumer\tlending |  |  |
| Home\tequity | 458 | 26 |
| Residential\treal\testate | 150 | 22 |
| Credit\tcard | 3,045 | 24 |
| Other\tconsumer | 167 | 1 |
| Total\tconsumer\tlending | 3,820 | 73 |
| Total\tTDRs | 3,857\t\t\t\t$ | 96 |

| December	31,	2014<br>Dollars	in	millions | Number	of<br>Contracts | Recorded	Investment |
| :--- | :--- | :--- |
| Commercial\tlending |  |  |
| Commercial | 38\t\t\t\t$ | 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\t\t\t\t$ | 179 |

| Dollars	in	millions | Number	of	Contracts | Recorded	Investment |
| :--- | :--- | :--- |
| Commercial\tlending |  |  |
| Commercial | 67\t\t\t\t$ | 47 |
| Commercial\treal\testate | 38 | 59 |
| Total\tcommercial\tlending\t(a) | 105 | 106 |
| Consumer\tlending |  |  |
| 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\t\t\t\t$ | 218 |
| (a)\nDuring\tthe\ttwelve\tmonths\tended\tDecember\t31,\t2014\tand\t2013,\tthere\twere\tno\tloans\tclassified\tas |  |  |

(a) During	the	twelve	months	ended	December	31,	2014	and	2013,	there	were	no	loans	classified	as TDRs	in	the	Equipment	lease	financing	loan	class	that	have	subsequently	defaulted.

The	impact	to	the	ALLL	for	commercial	lending	TDRs	is	the	effect	of	moving	to the	specific	reserve	methodology	from	the	quantitative	reserve	methodology,	for those	loans	that	were	not	already	classified	as	nonaccrual.	There	is	generally	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,	subsequent	defaults	generally	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	$7	million	and	$2	million	at December	31,	2015	and	2014,	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,	2015	and	2014.	The	following table	provides	further	detail	on	impaired	loans	individually	evaluated	for	impairment	and	the	associated	ALLL.	Certain	commercial	and	consumer	impaired	loans	do	not have	a	related	ALLL	as	the	valuation	of	these	impaired	loans	exceeded	the	recorded	investment.

# Table	64:	Impaired	Loans

| In	millions | Unpaid<br>Principal<br>Balance | Recorded<br>Investment | Associated<br>Allowance	(a) | Average<br>Recorded<br>Investment	(b) |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2015 |  |  |  |  |
| Impaired\tloans\twith\tan\tassociated\tallowance |  |  |  |  |
| Commercial | $442 | $337 | $84 | $306 |
| Commercial\treal\testate | 254 | 130 | 35 | 197 |
| Home\tequity | 978 | 909 | 216 | 965 |
| Residential\treal\testate | 272 | 264 | 35 | 359 |
| Credit\tcard | 108 | 108 | 24 | 118 |
| Other\tconsumer | 31 | 26 | 1 | 32 |
| Total\timpaired\tloans\twith\tan\tassociated\tallowance | $2,085 | $1,774 | $395 | $1,977 |
| Impaired\tloans\twithout\tan\tassociated\tallowance |  |  |  |  |
| Commercial | $201 | $118 |  | $87 |
| Commercial\treal\testate | 206 | 158 |  | 168 |
| Home\tequity | 464 | 206 |  | 158 |
| Residential\treal\testate | 512 | 396 |  | 346 |
| Other\tconsumer | 24 | 8 |  | 8 |
| Total\timpaired\tloans\twithout\tan\tassociated\tallowance | $1,407 | $886 |  | $767 |
| Total\timpaired\tloans | $3,492 | $2,660 | $395 | $2,744 |
| 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 |
| 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 |
| Total\timpaired\tloans | $3,564 | $2,892 | $463 | $3,157 |
| (a) |  |  |  |  |

(a) Associated	allowance	amounts	include	$.3	billion	and	$.4	billion	for	TDRs	at	December	31,	2015	and	December	31,	2014,	respectively.

(b) Average	recorded	investment	is	for	the	years	ended	December	31,	2015	and	December	31,	2014,	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.

Prior	to	December	31,	2015,	upon	final	disposition	of	a	loan	within	a	pool	and for	loans	that	had	nominal	collateral	value/expected	cash	flows,	the	loan's carrying	value	was	removed	from	the	pool	and	any	gain	or	loss	associated	with the	transaction	was	retained	in	the	pool's	recorded	investment.	Effective December	31,	2015,	in	anticipation	of	the	end	of	the	life	of	our	purchased impaired	pooled	consumer	and	residential	real	estate	loans,	and	pursuant	to supervisory	direction,	we	changed	our	derecognition	policy	for	these	loans	such that	we	will	write-off	the	loan's	recorded	investment	and	derecognize	the associated	ALLL	upon	final	disposition.	Gains	and	losses	on	such	loans	will	be recognized	as	either	an	adjustment	to	the	pool's	associated	ALLL,	or	yield,	as appropriate.	The	transition	to	this	new	policy	on	December	31,	2015	resulted	in	a $468	million	derecognition	of	recorded	investment	and	associated	ALLL	on such	loans.	See	the	discussion	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,	2015	and	December	31,	2014:

# Table	65:	Purchased	Impaired	Loans	–	Balances

|  |  | December	31,	2015 |  |  | December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Outstanding | Recorded | Carrying | Outstanding | Recorded | Carrying |
| In\tmillions | Balance\t(a) | Investment | Value | Balance\t(a) | Investment | Value |
| Commercial\tlending |  |  |  |  |  |  |
| Commercial | $94 | $36 | $24 | $159 | $74\t\t\t\t $ | 57 |
| Commercial\treal\testate | 155 | 133 | 96 | 307 | 236 | 174 |
| Total\tcommercial\tlending | 249 | 169 | 120 | 466 | 310 | 231 |
| Consumer\tlending |  |  |  |  |  |  |
| Consumer | 1,769 | 1,407 | \t 1,392 | 2,145 | 1,989 | \t 1,661 |
| Residential\treal\testate | 1,915 | 1,946 | \t 1,700 | 2,396 | 2,559 | \t 2,094 |
| Total\tconsumer\tlending | 3,684 | 3,353 | \t 3,092 | 4,541 | 4,548 | \t 3,755 |
| Total | $3,933 | $3,522 | $3,212 | $5,007 | $4,858\t\t\t\t $3,986 | $4,858\t\t\t\t $3,986 |
| (a) |  |  |  |  |  |  |

(a) Outstanding	balance	represents	the	balance	on	the	loan	servicing	system.	Recorded	investment	may	be	greater	than	the	outstanding	balance	due	to	expected	recoveries	of	collateral.

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	ALLL,	and	a	reclassification	from	accretable	yield	to	non-accretable	difference.

During	2015,	$82	million	of	provision	recapture	was	recorded	for	purchased impaired	loans	compared	to	$91	million	of	provision	recapture	during	2014. Charge-offs	(which	were	specifically	for	commercial	loans	greater	than	a	defined threshold)	during	2015	were	$12	million	compared	to	$42	million	during	2014. At	December	31,	2015	and	December	31,	2014,	the	ALLL	on	total	purchased impaired	loans	was	$.3	billion	and	$.9	billion,	respectively.	The	decline	in	ALLL was	primarily	due	to	the	change	in	our	derecognition	policy.	For	purchased impaired	loan	pools	where	an	allowance	has	been	recognized,	subsequent increases	in	the	net	present	value	of	cash	flows	will	result	in	a	provision recapture	of	any	previously	recorded	ALLL	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	ALLL associated	with	the	purchased	impaired	loans.

Activity	for	the	accretable	yield	during	2015	and	2014	follows:

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| January\t1 | $1,558 | $2,055 |
| Accretion\t(including\texcess\tcash\trecoveries) | (466) | (587) |
| Net\treclassifications\tto\taccretable\tfrom\tnon-accretable | 226 | 208 |
| Disposals | (68) | (118) |
| December\t31 | $1,250 | $1,558 |

# 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	follows.

# Table	67:	Rollforward	of	Allowance	for	Loan	and	Lease	Losses	and	Associated	Loan	Data

| In	millions | Commercial<br>Lending | Consumer<br>Lending | Total |
| :--- | :--- | :--- | :--- |
| December\t31,\t2015 |  |  |  |
| Allowance\tfor\tLoan\tand\tLease\tLosses |  |  |  |
| January\t1 | $1,571 | $1,760 | $3,331 |
| Charge-offs | (255) | (550) | (805) |
| Recoveries | 240 | 179 | 419 |
| Net\t(charge-offs)\t/\trecoveries | (15) | (371) | (386) |
| Provision\tfor\tcredit\tlosses | 55 | 200 | 255 |
| Net\tchange\tin\tallowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | (3) | 1 | (2) |
| Write-offs\tof\tpurchased\timpaired\tloans\t(a) |  | (468) | (468) |
| Other | (3) |  | (3) |
| December\t31 | $1,605 | $1,122 | $2,727 |
| TDRs\tindividually\tevaluated\tfor\timpairment | $43 | $276 | $319 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 76 |  | 76 |
| Loans\tcollectively\tevaluated\tfor\timpairment | 1,437 | 585 | 2,022 |
| Purchased\timpaired\tloans | 49 | 261 | 310 |
| December\t31 | $1,605 | $1,122 | $2,727 |
| Loan\tPortfolio |  |  |  |
| TDRs\tindividually\tevaluated\tfor\timpairment\t(b) | $434 | $1,917 | $2,351 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 309 |  | 309 |
| Loans\tcollectively\tevaluated\tfor\timpairment\t(c) | \t 132,632 | \t 66,977 | \t 199,609 |
| Fair\tvalue\toption\tloans\t(d) |  | 905 | 905 |
| Purchased\timpaired\tloans | 169 | 3,353 | 3,522 |
| December\t31 | $133,544 | $73,152 | $206,696 |
| Portfolio\tsegment\tALLL\tas\ta\tpercentage\tof\ttotal\tALLL | 59% | 41% | 100% |
| Ratio\tof\tthe\tallowance\tfor\tloan\tand\tlease\tlosses\tto\ttotal\tloans\t(a) | 1.20% | 1.53% | 1.32% |
| 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(b) | $542 | $2,041 | $2,583 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 309 |  | 309 |
| Loans\tcollectively\tevaluated\tfor\timpairment\t(c) | \t 127,207 | \t 68,826 | \t 196,033 |
| Fair\tvalue\toption\tloans\t(d) |  | 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% |

| In	millions | Commercial<br>Lending | Consumer<br>Lending | Total |
| :--- | :--- | :--- | :--- |
| December\t31,\t2013 |  |  |  |
| Allowance\tfor\tLoan\tand\tLease\tLosses |  |  |  |
| January\t1 | $1,774 | $2,262 | $4,036 |
| Charge-offs\t(e) | (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(b) | $578 | $2,161 | $2,739 |
| Other\tloans\tindividually\tevaluated\tfor\timpairment | 649 |  | 649 |
| Loans\tcollectively\tevaluated\tfor\timpairment\t(c) | \t 115,245 | \t 69,724 | \t 184,969 |
| Fair\tvalue\toption\tloans\t(d) |  | 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% |

(a) A	portion	of	the	ALLL	associated	with	purchased	impaired	pooled	consumer	and	residential	real	estate	loans	was	derecognized	on	December	31,	2015	due	to	the	change	in	the	derecognition	policy	for	these	loans. The	December	31,	2015	ratio	of	ALLL	to	total	loans	was	impacted	by	the	derecognition.	See	Note	4	Purchased	Loans	for	additional	information.

(b) TDRs	individually	evaluated	for	impairment	exclude	TDRs	that	were	subsequently	accounted	for	as	held	for	sale	loans,	but	continue	to	be	disclosed	as	TDRs.

(c) Includes	$150	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,	2015.	Accordingly,	there	is no	allowance	recorded	for	these	loans.	The	comparative	amounts	as	of	December	31,	2014	and	December	31,	2013	were	$195	million	and	$252	million,	respectively.

(d) 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.

(e) 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	$8.0	billion	for	2015	compared	with	$8.3	billion	for	2014	and	$8.5	billion	for	2013.

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	incurred 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	68:	Rollforward	of	Allowance	for	Unfunded	Loan	Commitments	and	Letters	of	Credit

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| January\t1 | $259 | $242 | $250 |
| Net\tchange\tin\tallowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 2 | 17 | (8) |
| December\t31 | $261 | $259 | $242 |

# NOTE	6	INVESTMENT	SECURITIES

# Table	69:	Investment	Securities	Summary

|  | Amortized | Unrealized |  | Fair |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Cost | Gains | Losses | Value |
| December\t31,\t2015 |  |  |  |  |
| SECURITIES\tAVAILABLE\tFOR\tSALE |  |  |  |  |
| Debt\tsecurities |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | \t\t $9,764 | \t\t $152 | $(42) | $9,874 |
| Residential\tmortgage-backed |  |  |  |  |
| Agency | \t 24,698 | 250 | (128) | \t 24,820 |
| Non-agency | 3,992 | 247 | (88) | 4,151 |
| Commercial\tmortgage-backed |  |  |  |  |
| Agency | 1,917 | 11 | (10) | 1,918 |
| Non-agency | 4,902 | 30 | (29) | 4,903 |
| Asset-backed | 5,417 | 54 | (48) | 5,423 |
| State\tand\tmunicipal | 1,982 | 79 | (5) | 2,056 |
| Other\tdebt | 2,007 | 31 | (12) | 2,026 |
| Total\tdebt\tsecurities | \t 54,679 | 854 | (362) | \t 55,171 |
| Corporate\tstocks\tand\tother | 590 |  | (1) | 589 |
| Total\tsecurities\tavailable\tfor\tsale | \t\t $55,269 | \t\t $854 | $(363) | $55,760 |
| SECURITIES\tHELD\tTO\tMATURITY\t(a) |  |  |  |  |
| Debt\tsecurities |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | \t\t $258 | \t\t $40 |  | $298 |
| Residential\tmortgage-backed |  |  |  |  |
| Agency | 9,552 | 101 | $(65) | 9,588 |
| Non-agency | 233 | 8 |  | 241 |
| Commercial\tmortgage-backed |  |  |  |  |
| Agency | 1,128 | 40 |  | 1,168 |
| Non-agency | 722 | 6 | (1) | 727 |
| Asset-backed | 717 |  | (10) | 707 |
| State\tand\tmunicipal | 1,954 | 116 |  | 2,070 |
| Other\tdebt | 204 |  | (1) | 203 |
| Total\tsecurities\theld\tto\tmaturity | \t\t $14,768 | \t\t $311 | $(77) | $15,002 |
| 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 |

|  | Amortized | Unrealized |  | Fair |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Cost | Gains | Losses | Value |
| 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 | \t 111 |  | 2,153 |
| Other\tdebt | 323 | 6 |  | 329 |
| Total\tsecurities\theld\tto\tmaturity | \t\t $11,588 | \t\t $414 | $ (18) | $11,984 |
| (a) |  |  |  |  |

(a) Held	to	maturity	securities	transferred	from	available	for	sale	are	recorded	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 $97	million	and	$125	million	at	December	31,	2015	and	December	31,	2014,	respectively,	related	to	securities	transferred,	which	are	offset	in	Accumulated	Other	Comprehensive	Income,	net	of	tax.

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,	2015,	Accumulated	other	comprehensive	income	included	pretax gains	of	$98	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.

Table	70	presents	gross	unrealized	losses	on	securities	available	for	sale	at December	31,	2015	and	December	31,	2014.	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).	The increase	in	total	unrealized	losses	at	December	31,	2015	when	compared	to December	31,	2014	was	primarily	due	to	higher	interest	rates.

# Table	70:	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,\t2015 |  |  |  |  |  |  |
| Debt\tsecurities |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | $(40) | $5,885 | $(2) | $120 | $(42) | $6,005 |
| Residential\tmortgage-backed |  |  |  |  |  |  |
| Agency | (103) | \t 11,799 | (25) | \t 1,094 | (128) | \t 12,893 |
| Non-agency | (3) | 368 | (85) | \t 1,527 | (88) | 1,895 |
| Commercial\tmortgage-backed |  |  |  |  |  |  |
| Agency | (7) | 745 | (3) | 120 | (10) | 865 |
| Non-agency | (22) | 2,310 | (7) | 807 | (29) | 3,117 |
| Asset-backed | (30) | 3,477 | (18) | 494 | (48) | 3,971 |
| State\tand\tmunicipal | (3) | 326 | (2) | 60 | (5) | 386 |
| Other\tdebt | (8) | 759 | (4) | 188 | (12) | 947 |
| Total\tdebt\tsecurities | (216) | \t 25,669 | (146) | \t 4,410 | (362) | \t 30,079 |
| Corporate\tstocks\tand\tother | (a) | 46 | (1) | 15 | (1) | 61 |
| Total | $(216) | $25,715 | $(147) | $4,425 | $(363) | $30,140 |
| 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 | (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 |
| (a) |  |  |  |  |  |  |

(a) The	unrealized	loss	on	these	securities	was	less	than	$.5	million.

The	gross	unrealized	loss	on	debt	securities	held	to	maturity	was	$82	million	at December	31,	2015,	with	$59	million	of	the	loss	related	to	securities	with	a	fair value	of	$5.5	billion	that	had	been	in	a	continuous	loss	position	less	than	12 months	and	$23	million	of	the	loss	related	to	securities	with	a	fair	value	of	$	953 million	that	had	been	in	a	continuous	loss	position	for	more	than	12	months.	The gross	unrealized	loss	on	debt	securities	held	to	maturity	was	$22	million	at December	31,	2014,	with	$1	million	of	the	loss	related	to

securities	with	a	fair	value	of	$134	million	that	had	been	in	a	continuous	loss position	less	than	12	months	and	$21	million	of	the	loss	related	to	securities	with a	fair	value	of	$1.6	billion	that	had	been	in	a	continuous	loss	position	for	more than	12	months.	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	70,	as	of	December	31,	2015	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	investment	security.	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.

For	those	securities	on	our	balance	sheet	where	we	determined	losses represented	OTTI,	we	have	recorded	cumulative	credit	losses	of	$1.1	billion	at December	31,	2015.	During	2015	and	2014,	the	OTTI	credit	losses	recognized	in noninterest	income	and	the	OTTI	noncredit	losses	recognized	in	accumulated other	comprehensive	income	(loss),	net	of	tax,	on	securities	were	not	significant.

Information	relating	to	gross	realized	securities	gains	and	losses	from	the	sales	of	securities	is	set	forth	in	the	following	table.

# Table	71:	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 |  |  |  |  |  |
| 2015 | \t\t $6,829\t\t\t\t $ | 56\t\t\t\t $ (13) | 56\t\t\t\t $ (13) | $ 43\t\t\t\t$ | 15 |
| 2014 | \t 4,480 | 33 | (29) | 4 | 1 |
| 2013 | \t 8,178 | \t 146 | (47) | 99 | 35 |

The	following	table	presents,	by	remaining	contractual	maturity,	the	amortized	cost,	fair	value	and	weighted-average	yield	of	debt	securities	at	December	31,	2015.

# Table	72:	Contractual	Maturity	of	Debt	Securities

| December	31,	2015<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 | $586 | $4,172 | $4,234 | $772 | $9,764 |
| Residential\tmortgage-backed |  |  |  |  |  |
| Agency |  | 99 | 986 | \t 23,613 | \t 24,698 |
| Non-agency |  | 3 |  | 3,989 | 3,992 |
| Commercial\tmortgage-backed |  |  |  |  |  |
| Agency | 22 | 109 | 232 | 1,554 | 1,917 |
| Non-agency | 50 | 28 | 8 | 4,816 | 4,902 |
| Asset-backed | 9 | 1,526 | 1,787 | 2,095 | 5,417 |
| State\tand\tmunicipal | 1 | 127 | 336 | 1,518 | 1,982 |
| Other\tdebt | 186 | 1,377 | 289 | 155 | 2,007 |
| Total\tdebt\tsecurities\tavailable\tfor\tsale | $854 | $7,441 | $7,872 | $38,512 | $54,679 |
| Fair\tvalue | $861 | $7,497 | $7,926 | $38,887 | $55,171 |
| Weighted-average\tyield,\tGAAP\tbasis | 2.76% | 2.23% | 2.28% | 2.91% | 2.73% |
| Securities\tHeld\tto\tMaturity |  |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies |  |  |  | $258 | $258 |
| Residential\tmortgage-backed |  |  |  |  |  |
| Agency |  | $4 | $321 | 9,227 | 9,552 |
| Non-agency |  |  |  | 233 | 233 |
| Commercial\tmortgage-backed |  |  |  |  |  |
| Agency | $119 | 810 | 142 | 57 | 1,128 |
| Non-agency |  |  |  | 722 | 722 |
| Asset-backed |  | 3 | 590 | 124 | 717 |
| State\tand\tmunicipal |  | 62 | 938 | 954 | 1,954 |
| Other\tdebt |  | 204 |  |  | 204 |
| Total\tdebt\tsecurities\theld\tto\tmaturity | $119 | $1,083 | $1,991 | $11,575 | $14,768 |
| Fair\tvalue | $119 | $1,112 | $2,059 | $11,712 | $15,002 |
| Weighted-average\tyield,\tGAAP\tbasis | 3.02% | 3.41% | 3.18% | 3.46% | 3.42% |

Weighted-average	yields	are	based	on	historical	cost	with	effective	yields weighted	for	the	contractual	maturity	of	each	security.	At	December	31,	2015, there	were	no	securities	of	a	single	issuer,	other	than	FHLMC	and	FNMA,	that exceeded	10%	of	Total	shareholders'	equity.	The	FHLMC	investments	had	a total	amortized	cost	of	$4.9	billion	and	fair	value	of	$5.0	billion.	The	FNMA investments	had	a	total	amortized	cost	of	$21.0	billion	and	fair	value	of	$21.1 billion.

The	following	table	presents	the	fair	value	of	securities	that	have	been	either pledged	to	or	accepted	from	others	to	collateralize	outstanding	borrowings.

# Table	73:	Fair	Value	of	Securities	Pledged	and	Accepted	as	Collateral

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Pledged\tto\tothers | $9,674 | $10,874 |
| Accepted\tfrom\tothers: |  |  |
| Permitted\tby\tcontract\tor\tcustom\tto\tsell |  |  |
| or\trepledge | 1,100 | 1,658 |
| Permitted\tamount\trepledged\tto\tothers | 943 | 1,488 |

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

PNC	measures	certain	financial	assets	and	liabilities	at	fair	value	in	accordance with	GAAP.	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	also	establishes	a	fair	value	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,	OREO	and	foreclosed	assets	and	long- lived	assets	held	for	sale.	These	assets,	which	are	generally	classified	as	Level	3, are	included	in	Table	77	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.

# Assets	and	Liabilities	Measured	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,	2015,	87%	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	and	are	included	in	the	Insignificant	Level	3	assets,	net	of liabilities	line	item	in	Table	76	(for	the	2015	period).	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,	2015	and	2014	are	included	in	the	Insignificant	Level	3	assets,	net of	liabilities	line	item	in	Table	76	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,	2015	and	2014	are

included	in	the	Insignificant	Level	3	assets,	net	of	liabilities	line	item	in	Table	76 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, 2015	and	2014	are	included	in	the	Insignificant	Level	3	assets,	net	of	liabilities line	item	in	Table	76	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,	2015	and	2014	are	included	in	the	Insignificant	Level	3	assets,	net of	liabilities	line	item	in	Table	76	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	purchasers	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	20	Legal Proceedings	and	Note	21	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	$104	million	at	December	31,	2015	and	$135	million	at December	31,	2014,	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.

# 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	Servicing	Rights

Commercial	MSRs	are	carried	at	fair	value	on	a	recurring	basis.	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.

# 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	–	Direct	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. These	investments	are	classified	as	Level	3.

Unfunded	commitments	related	to	direct	investments	totaled	$23	million	and $28	million	at	December	31,	2015	and	December	31,	2014,	respectively. Outstanding	contractual	obligations	to	existing	direct	investments	totaled	$11 million	and	$9	million	at	December	31,	2015	and	December	31,	2014, respectively.	During	2015,	$5	million	of	financial	support	was	provided	to existing	direct	investments	compared	to	$39	million	during	2014.

# Equity	Investments	–	Indirect	Investments

We	value	indirect	investments	in	private	equity	funds	based	on	net	asset	value (NAV)	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.	In	accordance	with	ASC 820-10,	these	investments	are	not	classified	in	the	fair	value	hierarchy.

These	indirect	investments	are	not	redeemable,	however	PNC	receives distributions	over	the	life	of	the	partnerships	from	liquidation	of	the	underlying investments	by	the	investee,	which	we	expect	to	occur	over	the	next	twelve years.	The	forced	sale	or	restructuring	of	these	investments	would	likely	result	in PNC	receiving	less	value	than	it	would	otherwise	have	received	in	the	ordinary course	of	business.	Unfunded	commitments	related	to	indirect	investments totaled	$103	million	and	$112	million	at	of	December	31,	2015	and December	31,	2014,	respectively.	During	2015,	$17	million	of	financial	support was	provided	to	indirect	investments	to	satisfy	capital	calls	for	commitments. The	comparable	amount	was	$24	million	during	2014.

# 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.

Additionally,	we	have	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	76	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.	As	of	both December	31,	2015	and	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.	See	Note	24 Subsequent	Events	for	information	on	the	February	1,	2016	transfer	of 0.5	million	shares	of	the	Series	C	Preferred	Stock	to	BlackRock	to	satisfy	a portion	of	our	LTIP	obligation.	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,	and	certain	trading	loans which	are	classified	as	level	2.	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	76	in	this	Note	7.

# Other	Borrowed	Funds

We	have	elected	to	account	for	other	borrowed	funds	at	fair	value	consisting	of 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	76	in	this	Note	7.

Other	borrowed	funds	also	included	certain	liabilities	consisting	primarily	of secured	debt	at	fair	value.	As	of	December	31,	2015,	this	secured	debt	was	no longer	outstanding	due	to	repurchases.	These	other	borrowed	funds	were 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	input	assumptions	would	result	in significantly	lower	(higher)	fair	value	measurement.

# Table	74:	Fair	Value	Measurements	–	Recurring	Basis	Summary

|  |  | December	31,	2015 |  |  |  | December	31,	2014 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Level\t1 | Level\t2 | Level\t3 | Total\nFair\tValue | Level\t1 | Level\t2 | Level\t3 | Total\nFair\tValue |
| Assets |  |  |  |  |  |  |  |  |
| Securities\tavailable\tfor\tsale |  |  |  |  |  |  |  |  |
| U.S.\tTreasury\tand\tgovernment\tagencies | $9,267 | $607 |  | \t\t $9,874 | $4,795 | $627 |  | \t\t $5,422 |
| Residential\tmortgage-backed |  |  |  |  |  |  |  |  |
| Agency |  | \t 24,820 |  | \t 24,820 |  | \t 18,043 |  | \t 18,043 |
| Non-agency |  | 143 | $4,008 | 4,151 |  | 144 | $4,798 | 4,942 |
| Commercial\tmortgage-backed |  |  |  |  |  |  |  |  |
| Agency |  | 1,918 |  | 1,918 |  | 2,187 |  | 2,187 |
| Non-agency |  | 4,903 |  | 4,903 |  | 4,162 |  | 4,162 |
| Asset-backed |  | 4,941 | 482 | 5,423 |  | 4,624 | 563 | 5,187 |
| State\tand\tmunicipal |  | 2,041 | 15 | 2,056 |  | 1,904 | 134 | 2,038 |
| Other\tdebt |  | 1,996 | 30 | 2,026 |  | 1,783 | 30 | 1,813 |
| Total\tdebt\tsecurities | 9,267 | \t 41,369 | \t 4,535 | \t 55,171 | \t 4,795 | \t 33,474 | \t 5,525 | \t 43,794 |
| Corporate\tstocks\tand\tother | 527 | 62 |  | 589 | 426 | 15 |  | 441 |
| Total\tsecurities\tavailable\tfor\tsale | 9,794 | \t 41,431 | \t 4,535 | \t 55,760 | \t 5,221 | \t 33,489 | \t 5,525 | \t 44,235 |
| Financial\tderivatives\t(a)\t(b) |  |  |  |  |  |  |  |  |
| Interest\trate\tcontracts |  | 4,626 | 29 | 4,655 | 4 | 4,874 | 40 | 4,918 |
| Other\tcontracts |  | 284 | 2 | 286 |  | 314 | 2 | 316 |
| Total\tfinancial\tderivatives |  | 4,910 | 31 | 4,941 | 4 | 5,188 | 42 | 5,234 |
| Residential\tmortgage\tloans\theld\tfor\tsale\t(c) |  | 838 | 5 | 843 |  | 1,255 | 6 | 1,261 |
| Trading\tsecurities\t(d) |  |  |  |  |  |  |  |  |
| Debt\t(e) | 987 | 727 | 3 | 1,717 | \t 1,340 | 960 | 32 | 2,332 |
| Equity | 9 |  |  | 9 | 21 |  |  | 21 |
| Total\ttrading\tsecurities | 996 | 727 | 3 | 1,726 | \t 1,361 | 960 | 32 | 2,353 |
| Residential\tmortgage\tservicing\trights |  |  | \t 1,063 | 1,063 |  |  | 845 | 845 |
| Commercial\tmortgage\tservicing\trights |  |  | 526 | 526 |  |  | 506 | 506 |
| Commercial\tmortgage\tloans\theld\tfor\tsale\t(c) |  |  | 641 | 641 |  |  | 893 | 893 |
| Equity\tinvestments\t–\tdirect\tinvestments |  |  | \t 1,098 | 1,098 |  |  | \t 1,152 | 1,152 |
| Equity\tinvestments\t–\tindirect\tinvestments\t(f) |  |  |  | 347 |  |  |  | 469 |
| Customer\tresale\tagreements\t(g) |  | 137 |  | 137 |  | 155 |  | 155 |
| Loans\t(h) |  | 565 | 340 | 905 |  | 637 | 397 | 1,034 |
| Other\tassets\t(a) |  |  |  |  |  |  |  |  |
| BlackRock\tSeries\tC\tPreferred\tStock\t(i) |  |  | 357 | 357 |  |  | 375 | 375 |
| Other | 254 | 199 | 7 | 460 | 190 | 256 | 15 | 461 |
| Total\tother\tassets | 254 | 199 | 364 | 817 | 190 | 256 | 390 | 836 |
| Total\tassets | $11,044 | $48,807 | $8,606\t\t\t\t $68,804 | $8,606\t\t\t\t $68,804 | $6,776 | $41,940 | $9,788\t\t\t\t $58,973 | $9,788\t\t\t\t $58,973 |
| Liabilities |  |  |  |  |  |  |  |  |
| Financial\tderivatives\t(b)\t(j) |  |  |  |  |  |  |  |  |
| Interest\trate\tcontracts | $1 | $3,124 | $7 | $3,132 |  | $3,260 | $12 | $3,272 |
| BlackRock\tLTIP |  |  | 357 | 357 |  |  | 375 | 375 |
| Other\tcontracts |  | 204 | 109 | 313 |  | 241 | 139 | 380 |
| Total\tfinancial\tderivatives | 1 | 3,328 | 473 | 3,802 |  | 3,501 | 526 | 4,027 |
| Trading\tsecurities\tsold\tshort\t(k) |  |  |  |  |  |  |  |  |
| Debt | 960 | 27 |  | 987 | $1,479 | 11 |  | 1,490 |
| Total\ttrading\tsecurities\tsold\tshort | 960 | 27 |  | 987 | \t 1,479 | 11 |  | 1,490 |
| Other\tborrowed\tfunds\t(k) |  | 81 | 12 | 93 |  | 92 | 181 | 273 |
| Other\tliabilities\t(j) |  |  | 10 | 10 |  |  | 9 | 9 |
| Total\tliabilities | $961 | $3,436 | $495\t\t\t\t $ | 4,892 | $1,479 | $3,604 | $716\t\t\t\t $ | 5,799 |

(a) Included	in	Other	assets	on	the	Consolidated	Balance	Sheet.

(b) Amounts	at	December	31,	2015	and	December	31,	2014,	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.	At	December	31,	2015	and	December	31,	2014,	the	net	asset	amounts	were	$1.8	billion	and	$2.6	billion,	respectively,	and	the	net	liability amounts	were	$.6	billion	and	$1.4	billion,	respectively.

(c) Included	in	Loans	held	for	sale	on	the	Consolidated	Balance	Sheet.	PNC	has	elected	the	fair	value	option	for	certain	residential	and	commercial	mortgage	loans	held	for	sale.

(d) Fair	value	includes	net	unrealized	gains	of	$23	million	at	December	31,	2015	compared	with	net	unrealized	gains	of	$54	million	at	December	31,	2014.

(e) Approximately	28%	of	these	securities	are	residential	mortgage-backed	securities	and	57%	are	U.S.	Treasury	and	government	agencies	securities	at	December	31,	2015.	Comparable	amounts	at	December	31,	2014 were	34%	and	57%,	respectively.

(f) In	accordance	with	ASC	820-10,	certain	investments	that	are	measured	at	fair	value	using	the	NAV	per	share	(or	its	equivalent)	practical	expedient	have	not	been	classified	in	the	fair	value	hierarchy.	The	fair	value amounts	presented	in	this	table	are	intended	to	permit	reconciliation	of	the	fair	value	hierarchy	to	the	amounts	presented	on	the	Consolidated	Balance	Sheet.

(g) Included	in	Federal	funds	sold	and	resale	agreements	on	the	Consolidated	Balance	Sheet.	PNC	has	elected	the	fair	value	option	for	these	items.

(h) Included	in	Loans	on	the	Consolidated	Balance	Sheet.

(i) PNC	has	elected	the	fair	value	option	for	these	shares.

(j) Included	in	Other	liabilities	on	the	Consolidated	Balance	Sheet.

(k) Included	in	Other	borrowed	funds	on	the	Consolidated	Balance	Sheet.

Reconciliations	of	assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis	using	Level	3	inputs	for	2015	and	2014	follow.

# Table	75:	Reconciliation	of	Level	3	Assets	and	Liabilities

|  |  |  |  |  |  |  |  |  |  |  | liabilities	held	on |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Included |  |  |  |  |  |  |  | Consolidated |
| Level\t3\tInstruments\tOnly\nIn\tmillions | Fair\tValue\nDec.\t31,\n2014 | Included\tin\nEarnings | in\tOther\ncomprehensive\nincome | Purchases | Sales | Issuances | Settlements | Transfers\ninto\nLevel\t3 | Transfers\nout\tof\nLevel\t3 | Fair\tValue\nDec.\t31,\n2015 | Balance\tSheet\nat\tDec.\t31,\n2015\t(b) |
| Assets |  |  |  |  |  |  |  |  |  |  |  |
| Securities\tavailable\tfor\tsale |  |  |  |  |  |  |  |  |  |  |  |
| Residential\tmortgage-backed\tnon- |  |  |  |  |  |  |  |  |  |  |  |
| agency | $4,798 | $114 | $(58) |  |  |  | $(846) |  |  | \t $4,008 | \t$(2) |
| Commercial\tmortgage\tbacked\tnon- |  |  |  |  |  |  |  |  |  |  |  |
| agency |  | 8 |  |  |  |  | (8) |  |  |  |  |
| Asset-backed | 563 | 20 |  |  |  |  | (101) |  |  | 482 | (2) |
| State\tand\tmunicipal | 134 |  | (1) |  |  |  | (118) |  |  | 15 |  |
| Other\tdebt | 30 | 2 | (1) | $13 | $(7) |  | (7) |  |  | 30 |  |
| Total\tsecurities\tavailable\tfor\tsale | 5,525 | 144 | (60) | 13 | (7) |  | (1,080) |  |  | 4,535 | (4) |
| Financial\tderivatives | 42 | 135 |  | 3 |  |  | (149) |  |  | 31 | 126 |
| Residential\tmortgage\tloans\theld\tfor\tsale | 6 | 1 |  | 25 | (4) |  |  | $6 | $(29)\t(c) | 5 | 1 |
| Trading\tsecurities\t–\tDebt | 32 |  |  |  |  |  | (29) |  |  | 3 |  |
| Residential\tmortgage\tservicing\trights | 845 | 2 |  | 316 |  | $78 | (178) |  |  | 1,063 | 5 |
| Commercial\tmortgage\tservicing\trights | 506 | (9) |  | 55 |  | 63 | (89) |  |  | 526 | (10) |
| Commercial\tmortgage\tloans\theld\tfor\tsale | 893 | 76 |  |  | (56) | 4,163 | (4,435) |  |  | 641 | (5) |
| Equity\tinvestments\t–\tdirect\tinvestments | 1,152 | 120 |  | 274 | (448) |  |  |  |  | 1,098 | 86 |
| Loans | 397 | 23 |  | 114 | (26) |  | (122) | 25(c) | (71)\t(d) | 340 | 12 |
| Other\tassets |  |  |  |  |  |  |  |  |  |  |  |
| BlackRock\tSeries\tC\tPreferred\tStock | 375 | (18) |  |  |  |  |  |  |  | 357 | (18) |
| Other | 15 |  |  |  | (7) |  | (1) |  |  | 7 |  |
| Total\tother\tassets | 390 | (18) |  |  | (7) |  | (1) |  |  | 364 | (18) |
| Total\tassets | $9,788 | $474\t(e) | $(60) | $800 | $(548) | $4,304 | $(6,083) | $31 | $(100) | \t $8,606 | \t$193\t(f) |
| Liabilities |  |  |  |  |  |  |  |  |  |  |  |
| Financial\tderivatives\t(g) | $526 | $22 |  |  | $1 |  | $(76) |  |  | \t $473 | \t$4 |
| Other\tborrowed\tfunds | 181 | (3) |  |  |  | $92 | (258) |  |  | 12 |  |
| Other\tliabilities | 9 | 1 |  |  |  |  |  |  |  | 10 |  |
| Total\tliabilities | $716 | $20\t(e) |  |  | $1 | $92 | $(334) |  |  | \t $495 | \t$4\t(f) |

|  |  |  |  |  |  |  |  |  |  |  | liabilities	held	on |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Included\tin |  |  |  |  |  |  |  | Consolidated |
| Level\t3\tInstruments\tOnly\nIn\tmillions | Fair\tValue\nDec.\t31,\n2013 | Included\tin\nEarnings | Other\ncomprehensive\nincome | Purchases | Sales | Issuances | Settlements | Transfers\ninto\nLevel\t3 | Transfers\nout\tof\nLevel\t3 | Fair\tValue\nDec.\t31,\n2014 | Balance\tSheet\nat\tDec.\t31,\n2014\t(b) |
| Assets |  |  |  |  |  |  |  |  |  |  |  |
| Securities\tavailable\tfor\tsale |  |  |  |  |  |  |  |  |  |  |  |
| Residential\tmortgage-backed\tnon- |  |  |  |  |  |  |  |  |  |  |  |
| agency | $5,358 | $120 | $64 |  |  |  | $(821) | $77(h) |  | \t$4,798 | \t$(10) |
| Commercial\tmortgage-backed\tnon- |  |  |  |  |  |  |  |  |  |  |  |
| agency |  | 1 |  |  |  |  | (1) |  |  |  |  |
| Asset-backed | 641 | 13 | 23 |  |  |  | (114) |  |  | 563 | (1) |
| State\tand\tmunicipal | 333 | (2) | 15 |  |  |  | (198) |  | $(14) | 134 |  |
| Other\tdebt | 38 | 1 |  | $1 | $(8) |  | (2) |  |  | 30 |  |
| Total\tsecurities\tavailable\tfor\tsale | 6,370 | 133 | 102 | 1 | (8) |  | (1,136) | 77 | (14) | 5,525 | (11) |
| Financial\tderivatives | 36 | 226 |  | 3 |  |  | (223) |  |  | 42 | 142 |
| Residential\tmortgage\tloans\theld\tfor\tsale | 8 | 1 |  | 15 | (3) |  | (1) | 11 | (25)(c) | 6 | 1 |
| Trading\tsecurities\t–\tDebt | 32 | 2 |  |  |  |  | (31) | 29(h) |  | 32 | 2 |
| Residential\tmortgage\tservicing\trights | 1,087 | (238) |  | 45 |  | $85 | (134) |  |  | 845 | (231) |
| Commercial\tmortgage\tservicing\trights |  | (53) |  | 43 |  | 53 | 463\t(i) |  |  | 506 | (53) |
| Commercial\tmortgage\tloans\theld\tfor\tsale | 586 | 38 |  |  |  | 1,790 | (1,521) |  |  | 893 | 6 |
| Equity\tinvestments\t-direct\tinvestments | 1,069 | 184 |  | 306 | (407) |  |  |  |  | 1,152 | 134 |
| Loans | 527 | 74 |  | 120 | (153) |  | (86) | 20(c) | (105)(d) | 397 | 46 |
| Other\tassets |  |  |  |  |  |  |  |  |  |  |  |
| BlackRock\tSeries\tC\tPreferred\tStock | 332 | 43 |  |  |  |  |  |  |  | 375 | 43 |
| Other | 8 |  |  |  |  |  |  | 7 |  | 15 |  |
| Total\tother\tassets | 340 | 43 |  |  |  |  |  | 7 |  | 390 | 43 |
| Total\tassets | $10,055 | $410\t(e) | $102 | $533 | $(571) | $1,928 | $(2,669) | $144 | $(144) | \t$9,788 | \t$79\t(f) |
| Liabilities |  |  |  |  |  |  |  |  |  |  |  |
| Financial\tderivatives\t(g) | $439 | $222 |  |  | $1 |  | $(136) |  |  | \t$526 | \t$(51) |
| Other\tborrowed\tfunds | 199 | 5 |  |  |  | $57 | (80) |  |  | 181 |  |
| Other\tliabilities |  |  |  |  |  |  | 9 |  |  | 9 |  |
| Total\tliabilities | $638 | $227\t(e) |  |  | $1 | $57 | $(207) |  |  | \t$716 | \t$(51)\t(f) |
| (a) |  |  |  |  |  |  |  |  |  |  |  |

(a) Losses	for	assets	are	bracketed	while	losses	for	liabilities	are	not.

(b) 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.

(c) Primarily	reflects	the	reclassification	of	residential	mortgage	loans	from	held	for	sale	to	portfolio	loans.

(d) Reflects	transfers	out	of	Level	3	due	to	the	transfer	of	residential	mortgage	loans	to	OREO.

(e) Net	gains	(realized	and	unrealized)	included	in	earnings	relating	to	Level	3	assets	and	liabilities	were	$454	million	for	2015	compared	with	net	gains	(realized	and	unrealized)	of	$183	million	for	2014.	These amounts	also	included	amortization	and	accretion	of	$147	million	for	2015	compared	with	$146	million	for	2014.	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	losses	relating	to	those	assets	and	liabilities	held	at	the	end	of	the	reporting	period	were	$189	million	for	2015,	compared	with	net	unrealized	gains	of	$130	million	for	2014.	These	amounts	were included	in	Noninterest	income	on	the	Consolidated	Income	Statement.

(g) Includes	swaps	entered	into	in	connection	with	sales	of	certain	Visa	Class	B	common	shares.

(h) Reflects	transfers	from	Level	2	to	Level	3	due	to	valuation	inputs	that	were	deemed	to	be	unobservable.

(i) Settlements	relating	to	commercial	MSRs	include	$552	million,	which	represents	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	Intangible	Assets	for	additional	information	on	commercial	MSRs.

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.

Quantitative	information	about	the	significant	unobservable	inputs	within	Level	3	recurring	assets	and	liabilities	follows.

# Table	76:	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,	2015	totaling	$3,379	million	and	$448	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,	2014	were	$4,081	million	and	$532	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,	2015 of	$629	million	and	$34	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,	2014	were	$717	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) This	conversion	factor	reflects	the	4-for-1	split	of	Visa	Class	A	common	shares,	which	occurred	during	the	first	quarter	of	2015.

(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,	trading	securities	(for	the	2015	period),	state	and	municipal	securities	(for	the	2015	period),	other	debt	securities	(for	2015	period),	residential	mortgage	loans	held	for	sale,	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	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	77	and	Table	78.

# 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.

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

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.

# 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	77:	Fair	Value	Measurements	–	Nonrecurring

(a) All	Level	3	as	of	December	31,	2015	and	2014	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	78:	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	$10	million,	OREO	and	foreclosed	assets	of	$137	million	and	Long-lived	assets	held	for	sale	of	$23	million	as	of	December	31,	2015.	Comparably,	as	of	December	31,	2014, Other	included	Nonaccrual	loans	of	$25	million,	OREO	and	foreclosed	assets	of	$168	million	and	Long-lived	assets	held	for	sale	of	$22	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.

# 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	2015	and	2014	were	not	material.

Interest	income	on	these	loans	is	recorded	as	earned	and	reported	on	the Consolidated	Income	Statement	in	Other	interest	income.	Changes	in	fair	value due	to	instrument-specific	credit	risk	for	both	2015	and	2014	were	not	material.

Interest	income	on	these	loans	is	recorded	as	earned	and	reported	on	the Consolidated	Income	Statement	in	Other	interest	income.	Throughout	2015	and 2014,	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	2015	and	2014	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.

# Other	Assets

Interest	income	on	trading	loans	is	reported	on	the	Consolidated	Income Statement	in	Other	interest	income.	Changes	in	value	on	the	prepaid	forward contract	are	reported	on	the	Consolidated	Income	Statement	in	Other	noninterest expense.

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	for	items	for	which	we	elected	the	fair	value	option	and are	included	in	Noninterest	income	and	Noninterest	expense	on	the	Consolidated Income	Statement	are	as	follows.

# Table	79:	Fair	Value	Option	–	Changes	in	Fair	Value	(a)

(a) The	impact	on	earnings	of	offsetting	hedged	items	or	hedging	instruments	is	not	reflected	in	these amounts.

Fair	values	and	aggregate	unpaid	principal	balances	of	items	for	which	we	elected	the	fair	value	option	follow.

# Table	80:	Fair	Value	Option	–	Fair	Value	and	Principal	Balances

| In	millions | Fair	Value | Principal	Balance | Difference |
| :--- | :--- | :--- | :--- |
| December\t31,\t2015 |  |  |  |
| Assets |  |  |  |
| Customer\tresale\tagreements | $137 | $133 | $4 |
| Residential\tmortgage\tloans\theld\tfor\tsale |  |  |  |
| Performing\tloans | 832 | 804 | 28 |
| Accruing\tloans\t90\tdays\tor\tmore\tpast\tdue | 4 | 4 |  |
| Nonaccrual\tloans | 7 | 8 | (1) |
| Total | 843 | 816 | 27 |
| Commercial\tmortgage\tloans\theld\tfor\tsale\t(a) |  |  |  |
| Performing\tloans | 639 | 659 | (20) |
| Nonaccrual\tloans | 2 | 3 | (1) |
| Total | 641 | 662 | (21) |
| Residential\tmortgage\tloans\t–\tportfolio |  |  |  |
| Performing\tloans | 204 | 260 | (56) |
| Accruing\tloans\t90\tdays\tor\tmore\tpast\tdue | 475 | 478 | (3) |
| Nonaccrual\tloans | 226 | 361 | (135) |
| Total | 905 | 1,099 | (194) |
| Other\tassets | 164 | 159 | 5 |
| Liabilities |  |  |  |
| Other\tborrowed\tfunds | $93 | $95 | $(2) |
| December\t31,\t2014 |  |  |  |
| Assets |  |  |  |
| Customer\tresale\tagreements | $155 | $148 | $7 |
| 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 | 570 | 573 | (3) |
| Nonaccrual\tloans | 270 | 449 | (179) |
| Total | 1,034 | 1,278 | (244) |
| Other\tassets | 37 | 37 |  |
| Liabilities |  |  |  |
| Other\tborrowed\tfunds | $273 | $312 | $(39) |
| (a) |  |  |  |

(a) There	were	no	accruing	loans	90	days	or	more	past	due	within	this	category	at	December	31,	2015	or	December	31,	2014.

# 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,	2015	and	December	31,	2014.

# Table	81:	Additional	Fair	Value	Information	Related	to	Other	Financial	Instruments

|  | Carrying |  | Fair	Value |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Amount | Total | Level\t1 | Level\t2 | Level\t3 |
| December\t31,\t2015 |  |  |  |  |  |
| Assets |  |  |  |  |  |
| Cash\tand\tdue\tfrom\tbanks | \t\t $4,065 | $4,065 | \t\t $4,065 |  |  |
| Short-term\tassets | 32,959 | 32,959 | \t\t $32,959 | \t\t $32,959 |  |
| Securities\theld\tto\tmaturity | 14,768 | 15,002 | 298 | 14,698 | \t\t $6 |
| Loans\theld\tfor\tsale | 56 | 56 |  | 22 | 34 |
| Net\tloans\t(excludes\tleases) | \t 195,579 | \t 197,611 |  |  | \t 197,611 |
| Other\tassets | 1,817 | 2,408 |  | 1,786 | 622\t(a) |
| Total\tassets | \t\t $249,244 | $252,101 | \t\t $4,363 | \t\t $49,465 | \t\t $198,273 |
| Liabilities |  |  |  |  |  |
| Demand,\tsavings\tand\tmoney\tmarket\tdeposits | \t\t $228,492 | $228,492 | \t\t $228,492 | \t\t $228,492 |  |
| Time\tdeposits | 20,510 | 20,471 |  | 20,471 |  |
| Borrowed\tfunds | 53,761 | 54,002 |  | 52,578 | \t\t $1,424 |
| Unfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 245 | 245 |  |  | 245 |
| Total\tliabilities | \t\t $303,008 | $303,210 | \t\t $301,541 | \t\t $301,541 | \t\t $1,669 |
| December\t31,\t2014 |  |  |  |  |  |
| Assets |  |  |  |  |  |
| Cash\tand\tdue\tfrom\tbanks | \t\t $4,360 | $4,360 | \t\t $4,360 |  |  |
| Short-term\tassets | 34,380 | 34,380 | \t\t $34,380 | \t\t $34,380 |  |
| Securities\theld\tto\tmaturity | 11,588 | 11,984 | 292 | 11,683 | \t\t $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(a) |
| Total\tassets | \t\t $244,888 | $247,940 | \t\t $4,652 | \t\t $47,921 | \t\t $195,367 |
| Liabilities |  |  |  |  |  |
| Demand,\tsavings\tand\tmoney\tmarket\tdeposits | \t\t $210,838 | $210,838 | \t\t $210,838 | \t\t $210,838 |  |
| Time\tdeposits | 21,396 | 21,392 |  | 21,392 |  |
| Borrowed\tfunds | 55,329 | 56,011 |  | 54,574 | \t\t $1,437 |
| Unfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 240 | 240 |  |  | 240 |
| Total\tliabilities | \t\t $287,803 | $288,481 | \t\t $286,804 | \t\t $286,804 | \t\t $1,677 |
| (a) | Represents\testimated\tfair\tvalue\tof\tVisa\tClass\tB\tcommon\tshares,\twhich\twas\testimated\tsolely\tbased\tupon\tthe\tDecember\t31,\t2015\tand\tDecember\t31,\t2014\tclosing\tprice\tfor\tthe\tVisa\tClass\tA\tcommon\tshares, | Represents\testimated\tfair\tvalue\tof\tVisa\tClass\tB\tcommon\tshares,\twhich\twas\testimated\tsolely\tbased\tupon\tthe\tDecember\t31,\t2015\tand\tDecember\t31,\t2014\tclosing\tprice\tfor\tthe\tVisa\tClass\tA\tcommon\tshares, | Represents\testimated\tfair\tvalue\tof\tVisa\tClass\tB\tcommon\tshares,\twhich\twas\testimated\tsolely\tbased\tupon\tthe\tDecember\t31,\t2015\tand\tDecember\t31,\t2014\tclosing\tprice\tfor\tthe\tVisa\tClass\tA\tcommon\tshares, | Represents\testimated\tfair\tvalue\tof\tVisa\tClass\tB\tcommon\tshares,\twhich\twas\testimated\tsolely\tbased\tupon\tthe\tDecember\t31,\t2015\tand\tDecember\t31,\t2014\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,	2015	and	December	31,	2014	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	21	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	81	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	81.

# 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,	2015,	95%	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	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	as	shown	in	Table	81	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	both	December	31,	2015	and	December	31,	2014, which	approximates	fair	value	at	each	date.

Investments	accounted	for	under	the	equity	method,	including	our	investment	in BlackRock,	are	not	included	in	Table	81.

# 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	INTANGIBLE	ASSETS

Assets	and	liabilities	of	acquired	entities	are	recorded	at	estimated	fair	value	as of	the	acquisition	date.

Changes	in	goodwill	by	business	segment	during	2015	and	2014	follow:

# Table	82:	Goodwill	by	Business	Segment	(a)

| In	millions | Retail<br>Banking | Corporate	&amp;<br>Institutional<br>Banking | Asset<br>Management<br>Group | Total |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013 | \t\t$5,795\t\t\t\t$ | 3,215\t\t\t\t$ | 64\t\t\t\t$9,074 | 64\t\t\t\t$9,074 |
| Other |  | 29 |  | 29 |
| December\t31,\t2014 | \t\t$5,795\t\t\t\t$ | 3,244\t\t\t\t$ | 64\t\t\t\t$9,103 | 64\t\t\t\t$9,103 |
| December\t31,\t2015 | \t\t$5,795\t\t\t\t$ | 3,244\t\t\t\t$ | 64\t\t\t\t$9,103 | 64\t\t\t\t$9,103 |
| (a) | The\tResidential\tMortgage\tBanking,\tBlackRock\tand\tNon-Strategic\tAssets\tPortfolio\tbusiness | The\tResidential\tMortgage\tBanking,\tBlackRock\tand\tNon-Strategic\tAssets\tPortfolio\tbusiness | The\tResidential\tMortgage\tBanking,\tBlackRock\tand\tNon-Strategic\tAssets\tPortfolio\tbusiness |  |

(a) The	Residential	Mortgage	Banking,	BlackRock	and	Non-Strategic	Assets	Portfolio	business segments	did	not	have	any	goodwill	allocated	to	them	during	2015,	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	with	goodwill	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	2015	or	2014.

We	recognize	the	right	to	service	mortgage	loans	for	others	as	an	intangible asset.	MSRs	are	purchased	or	originated	when	loans	are	sold	with	servicing retained.	MSRs	totaled	$1.6	billion	and	$1.4	billion	at	December	31,	2015	and December	31,	2014,	respectively,	and	consisted	of	loan	servicing	contracts	for commercial	and	residential	mortgages	measured	at	fair	value.

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	defaults as	well	as	market	driven	changes	in	interest	rates.	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	the	commercial	MSRs	accounted	for	at	fair	value	during	2015	and 2014,	follow:

# Table	83:	Commercial	Mortgage	Servicing	Rights	Accounted	for	at	Fair	Value

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| January\t1 | $506 | $552 |
| Additions: |  |  |
| From\tloans\tsold\twith\tservicing\tretained | 63 | 53 |
| Purchases | 55 | 43 |
| Changes\tin\tfair\tvalue\tdue\tto: |  |  |
| Time\tand\tpayoffs\t(a) | (89) | (89) |
| Other\t(b) | (9) | (53) |
| December\t31 | $526 | $506 |
| Related\tunpaid\tprincipal\tbalance\tat |  |  |
| December\t31 | $145,823 | $143,738 |
| Servicing\tadvances\tat\tDecember\t31 | $251 | $299 |

(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,	prior	to	the	irrevocable	fair	value election,	follow:

# Table	84:	Commercial	Mortgage	Servicing	Rights	Accounted	for	Under	the Amortization	Method

(a) Additions	for	2013	included	$53	million	from	loans	sold	with	servicing	retained	and	$85	million from	purchases	of	servicing	rights	from	third	parties.

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	from	actual	or	expected	prepayment	of	the	underlying	loans and	defaults	as	well	as	market	driven	changes	in	interest	rates.	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	85:	Residential	Mortgage	Servicing	Rights

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| January\t1 | $845 | $1,087 | $650 |
| Additions: |  |  |  |
| From\tloans\tsold\twith\tservicing |  |  |  |
| retained | 78 | 85 | 158 |
| Purchases | 316 | 45 | 110 |
| Sales |  |  | (4) |
| Changes\tin\tfair\tvalue\tdue\tto: |  |  |  |
| Time\tand\tpayoffs\t(a) | (178) | (134) | (193) |
| Other\t(b) | 2 | (238) | 366 |
| December\t31 | $1,063 | $845 | $1,087 |
| Unpaid\tprincipal\tbalance\tof\tloans |  |  |  |
| serviced\tfor\tothers\tat |  |  |  |
| December\t31 | $123,466 | $108,010 | $113,994 |
| Servicing\tadvances\tat\tDecember\t31 | $411 | $501 | $571 |

# Sensitivity	Analysis

The	fair	value	of	commercial	and	residential	MSRs	and	significant	inputs	to	the valuation	models	as	of	December	31,	2015	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	86:	Commercial	Mortgage	Loan	Servicing	Rights	–	Key	Valuation Assumptions

# Table	87:	Residential	Mortgage	Loan	Servicing	Rights	–	Key	Valuation Assumptions

| Dollars	in	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Fair\tvalue | $1,063 | $845 |
| Weighted-average\tlife\t(years) | 6.3 | 6.1 |
| Weighted-average\tconstant |  |  |
| prepayment\trate | 10.61% | 11.16% |
| Decline\tin\tfair\tvalue\tfrom\t10% |  |  |
| adverse\tchange | $44 | $36 |
| Decline\tin\tfair\tvalue\tfrom\t20% |  |  |
| adverse\tchange | $85 | $69 |
| Weighted-average\toption\tadjusted |  |  |
| spread | 8.93% | 10.36% |
| Decline\tin\tfair\tvalue\tfrom\t10% |  |  |
| adverse\tchange | $34 | $31 |
| Decline\tin\tfair\tvalue\tfrom\t20% |  |  |
| adverse\tchange | $67 | $61 |

Fees	from	mortgage	loan	servicing,	which	includes	contractually	specified servicing	fees,	late	fees	and	ancillary	fees,	follows:

# Table	88:	Fees	from	Mortgage	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.

# Other	Intangible	Assets

Other	intangible	assets	consist	primarily	of	core	deposit	intangibles,	customer lists	and	non-compete	agreements.	Core	deposit	intangibles	are	amortized	on	an accelerated	basis,	whereas	the	remaining	other	intangible	assets	are	amortized	on a	straight-line	basis.	The	estimated	remaining	useful	lives	of	our	other	intangible assets	range	from	1	year	to	9	years,	with	a	weighted-average	remaining	useful life	of	6	years.

Other	intangible	assets	were	as	follows	at	December	31,	2015	and	December	31, 2014:

# Table	89:	Other	Intangible	Assets

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Gross\tcarrying\tamount | $1,499 | $1,502 |
| Accumulated\tamortization | (1,120) | (1,009) |
| Net\tcarrying\tamount | $379 | $493 |

Changes	in	other	intangible	assets	during	2015	and	2014	follow:

# Table	90:	Summary	of	Changes	in	Other	Intangible	Assets

| In	millions |  |
| :--- | :--- |
| December\t31,\t2013 | $580 |
| Additions | 41 |
| Amortization | (128) |
| December\t31,\t2014 | $493 |
| Amortization | (114) |
| December\t31,\t2015 | $379 |

Amortization	expense	on	existing	other	intangible	assets	for	2015,	2014	and 2013,	as	well	as	estimated	future	amortization	expense	for	the	next	five	fiscal years,	follows:

# Table	91:	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.

# NOTE	9	PREMISES,	EQUIPMENT	AND	LEASEHOLD IMPROVEMENTS

Premises,	equipment	and	leasehold	improvements,	stated	at	cost	less accumulated	depreciation	and	amortization,	were	as	follows:

# Table	92:	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,	primarily	for	capitalized internally	developed	software	was	as	follows:

# Table	93:	Depreciation	and	Amortization	Expense

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Depreciation | $643 | $618 | $546 |
| Amortization | 40 | 30 | 23 |
| Total\tdepreciation\tand\tamortization | \t 683 | \t 648 | \t 569 |

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	94:	Lease	Rental	Expense

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,	2015.	Future	minimum	annual	rentals	are	as	follows: •	2016:	$378	million,

# NOTE	10	TIME	DEPOSITS

Total	time	deposits	of	$20.5	billion	at	December	31,	2015	have	future contractual	maturities,	including	related	purchase	accounting	adjustments,	as follows:

The	following	shows	the	carrying	value	of	total	borrowed	funds	of	$54.5	billion at	December	31,	2015	(including	adjustments	related	to	purchase	accounting, accounting	hedges	and	unamortized	original	issuance	discounts)	by	remaining contractual	maturity:

The	following	table	presents	the	contractual	rates	and	maturity	dates	of	our FHLB	borrowings,	bank	notes,	senior	debt	and	subordinated	debt	as	of December	31,	2015.

# Table	95:	FHLB	Borrowings,	Bank	Notes,	Senior	Debt	and	Subordinated Debt

| in	millions | Carrying	Value | Stated	Rate | Maturity |
| :--- | :--- | :--- | :--- |
| FHLB\t(a) | $20,108 | zero-6.50% | \t2016-2030 |
| Bank\tnotes\tand\tsenior\tdebt |  |  |  |
| Bank\tnotes | $16,033 | zero-3.30% | \t2016-2043 |
| Senior\tdebt | 5,265 | \t2.70%-6.70% | \t2016-2022 |
| Total\tbank\tnotes\tand\tsenior |  |  |  |
| debt | $21,298 |  |  |
| Subordinated\tdebt |  |  |  |
| Junior | $205 | .98% | 2028 |
| Other | 8,351 | .82%-6.88% | \t2016-2025 |
| Total\tsubordinated\tdebt | $8,556 |  |  |

(a) FHLB	borrowings	are	generally	collateralized	by	residential	mortgage	loans,	other	mortgage-related loans	and	commercial	mortgage-backed	securities.

In	the	table	above,	the	carrying	values	for	bank	notes,	senior	debt	and subordinated	debt	include	basis	adjustments	of	$36	million,	$175	million	and $246	million,	respectively,	related	to	fair	value	accounting	hedges	as	of December	31,	2015.

Also	included	in	borrowed	funds	are	repurchase	agreements.	See	Note	21 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.

# Junior	Subordinated	Debentures

PNC	Capital	Trust	C,	a	wholly-owned	finance	subsidiary	of	PNC,	owns	junior subordinated	debentures	issued	by	PNC	with	a	carrying	value	of	$205	million.	In June	1998,	PNC	Capital	Trust	C	issued	$200	million	of	trust	preferred	securities which	bear	interest	at	an	annual	rate	of	3	month	LIBOR	plus	57	basis	points.	The trust	preferred	securities	are	due	June	1,	2028	and	are	currently	redeemable	by PNC	Capital	Trust	C	at	par.	At	December	31,	2015,	the	interest	rate	in	effect	was .98%.	This	carrying	value	and	related	net	discounts	of	$1	million	comprise	the $206	million	principal	amount	of	junior	subordinated	debentures	associated	with $200	million	of	trust	preferred	securities	that	were	issued	by	the	Trust.	In accordance	with	GAAP,	the	financial	statements	of	the	Trust	are	not	included	in PNC's	consolidated	financial	statements.

The	obligations	of	PNC,	as	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	trust	preferred	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,	see	Note	19	Regulatory Matters.	PNC	and	PNC	Bank	are	also	subject	to	restrictions	on	dividends	and other	provisions	potentially	imposed	by	the	REIT	preferred	securities,	including under	the	Exchange	Agreement	with	PNC	Preferred	Funding	Trust	II,	as described	in	Note	16	Equity.

PNC	is	subject	to	certain	restrictions,	including	restrictions	on	dividend payments,	in	connection	with	the	outstanding	junior	subordinated	debentures. 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	securities,	or	(iv)	there	is	a	default	under	PNC's guarantee	of	such	payment	obligations,	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,	as	described	in	Note	16 Equity.

# NOTE	12	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	the	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.	All	plan	participants	earn	interest	on	their	cash	balances based	on	30-year	Treasury	securities	rates	with	those	who	were	participants	at December	31,	2009	earning	a	minimum	rate.	New	participants	on	or	after January	1,	2010	are	not	subject	to	the	minimum	rate.	Any	pension	contributions to	the	plan	are	based	on	an	actuarially	determined	amount	necessary	to	fund	total benefits	payable	to	plan	participants.	In	February	2015,	PNC	made	a	voluntary contribution	of	$200	million	to	the	qualified	pension	plan.

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. PNC	reserves	the	right	to	terminate	or	make	changes	to	these	plans	at	any	time. The	nonqualified	pension	plan	is	unfunded.	In	November	of	2015,	PNC established	a	voluntary	employee	beneficiary	association	(VEBA)	to	partially fund	postretirement	medical	and	life	insurance	benefit	obligations.	PNC	made	a contribution	of	$200	million	to	the	VEBA	in	December	2015.

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	96:	Reconciliation	of	Changes	in	Projected	Benefit	Obligation	and	Change	in	Plan	Assets

|  | Qualified<br>Pension |  | Nonqualified<br>Pension |  | Postretirement<br>Benefits |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31\t(Measurement\tDate)\t–\tin\tmillions | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 |
| Accumulated\tbenefit\tobligation\tat\tend\tof\tyear | \t\t $4,330\t\t\t\t $4,427\t\t\t\t $ | \t\t $4,330\t\t\t\t $4,427\t\t\t\t $ | 292\t\t\t\t $ | 316 |  |  |
| Projected\tbenefit\tobligation\tat\tbeginning\tof\tyear | \t\t $4,499\t\t\t\t $3,966\t\t\t\t $ | \t\t $4,499\t\t\t\t $3,966\t\t\t\t $ | 322\t\t\t\t $ | 292\t\t\t\t $ | 379\t\t\t\t $ | 375 |
| Service\tcost | 107 | 103 | 3 | 3 | 5 | 5 |
| Interest\tcost | 177 | 187 | 11 | 12 | 15 | 16 |
| Plan\tamendments |  | (7) |  |  |  |  |
| Actuarial\t(gains)/losses\tand\tchanges\tin\tassumptions | (126) | 504 | (10) | 40 | (9) | 4 |
| Participant\tcontributions |  |  |  |  | 5 | 8 |
| Federal\tMedicare\tsubsidy\ton\tbenefits\tpaid |  |  |  |  | 2 | 2 |
| Benefits\tpaid | (260) | (254) | (28) | (25) | (28) | (31) |
| Settlement\tpayments |  |  |  |  | (1) |  |
| Projected\tbenefit\tobligation\tat\tend\tof\tyear | \t\t $4,397\t\t\t\t $4,499\t\t\t\t $ | \t\t $4,397\t\t\t\t $4,499\t\t\t\t $ | 298\t\t\t\t $ | 322\t\t\t\t $ | 368\t\t\t\t $ | 379 |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | \t\t $4,357\t\t\t\t $4,252 | \t\t $4,357\t\t\t\t $4,252 |  |  |  |  |
| Actual\treturn\ton\tplan\tassets | 19 | 359 |  |  |  |  |
| Employer\tcontribution | 200 |  | \t\t $28\t\t\t\t $ | 25\t\t\t\t $ | 222\t\t\t\t $ | 21 |
| Participant\tcontributions |  |  |  |  | 5 | 8 |
| Federal\tMedicare\tsubsidy\ton\tbenefits\tpaid |  |  |  |  | 2 | 2 |
| Benefits\tpaid | (260) | (254) | (28) | (25) | (28) | (31) |
| Settlement\tpayments |  |  |  |  | (1) |  |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | \t\t $4,316\t\t\t\t $4,357 | \t\t $4,316\t\t\t\t $4,357 |  |  | \t\t $200 |  |
| Funded\tstatus | \t\t $(81)\t\t\t $ | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) |
| Amounts\trecognized\ton\tthe\tconsolidated\tbalance\tsheet |  |  |  |  |  |  |
| Noncurrent\tasset |  |  |  |  |  |  |
| Current\tliability |  |  | \t\t $(27)\t\t\t $ | (31)\t\t\t $ | (2)\t\t\t $ | (25) |
| Noncurrent\tliability | \t\t $(81)\t\t\t $ | (142) | (271) | (291) | (166) | (354) |
| Net\tamount\trecognized\ton\tthe\tconsolidated\tbalance\tsheet | \t\t $(81)\t\t\t $ | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) | (142)\t\t\t $(298)\t\t\t $(322)\t\t\t $(168)\t\t\t $(379) |
| Amounts\trecognized\tin\taccumulated\tother\tcomprehensive\tincome\tconsist\tof: |  |  |  |  |  |  |
| Prior\tservice\tcost\t(credit) | $(13) | $(22) | $1 | $1 | $(3) | $(4) |
| Net\tactuarial\tloss | 794 | 673 | 71 | 88 | 22 | 31 |
| Amount\trecognized\tin\tAOCI | \t\t $781\t\t\t\t $ | 651\t\t\t\t $ | 72\t\t\t\t $ | 89\t\t\t\t $ | 19\t\t\t\t $ | 27 |

At	December	31,	2015,	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	96.

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.	PNC	did	not	receive	reimbursement	in	2014 related	to	the	2013	plan	year.	The	ERRP	terminated	effective	January	1,	2014.

# 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,	2015	and December	31,	2014.

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	2015	and	2014,	and	the target	allocation	range	at	the	end	of	2015,	by	asset	category,	are	as	follows.

# Table	97:	Asset	Strategy	Allocations

|  |  | Target	Percentage	of | Target	Percentage	of |
| :--- | :--- | :--- | :--- |
|  | Target\nAllocation\nRange | Plan\tAssets\tby\nStrategy\tat\nDecember\t31 | Plan\tAssets\tby\nStrategy\tat\nDecember\t31 |
| PNC\tPension\tPlan |  | 2015 | 2014 |
| Asset\tCategory |  |  |  |
| Domestic\tEquity | \t20\t–\t40% | 32% | 34% |
| International\tEquity | \t10\t–\t25% | 23% | 23% |
| Private\tEquity | 0\t–\t15% | 8% | 6% |
| Total\tEquity | \t40\t–\t70% | 63% | 63% |
| Domestic\tFixed\tIncome | \t10\t–\t40% | 17% | 17% |
| High\tYield\tFixed\tIncome | 0\t–\t25% | 12% | 13% |
| Total\tFixed\tIncome | \t10\t–\t65% | 29% | 30% |
| Real\testate | 0\t–\t15% | 5% | 5% |
| Other | 0\t–\t5% | 3% | 2% |
| Total | 100% | 100% | 100% |

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,	2015	for	equity	securities, fixed	income	securities,	real	estate	and	all	other	assets	are	70%,	21%,	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	2015,	2014	or	2013.	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,	2015	and	December	31,	2014	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.	Certain	collective	trust	fund investments	based	on	net	asset	value	are	not	classified	as	part	of	fair value	hierarchy,	in	accordance	with	ASU	2015-07. •	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. In	accordance	with	ASC	820-10,	these	investments	are	not	classified	in the	fair	value	hierarchy.

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,	2015	and	2014.

# Table	98:	Pension	Plan	Assets	–	Fair	Value	Hierarchy

| In	millions | December	31,<br>2015<br>Fair	Value | Quoted	Prices	in<br>Active	Markets<br>For	Identical<br>Assets<br>(Level	1) | Significant<br>Other<br>Observable<br>Inputs<br>(Level	2) | Significant<br>Unobservable<br>Inputs<br>(Level	3) |
| :--- | :--- | :--- | :--- | :--- |
| Money\tmarket\tfunds | $154 | $154 |  |  |
| U.S.\tgovernment\tand\tagency\tsecurities | 324 | 186 | $138 |  |
| Corporate\tdebt\t(a) | 575 |  | 568 | $7 |
| Common\tstock | 660 | 630 | 30 |  |
| Preferred\tstock | 7 |  | 7 |  |
| Mutual\tfunds | 213 | 5 | 208 |  |
| Interest\tin\tCollective\tFunds\t(b) | 1,888 |  | 1,888 |  |
| Other | 13 | 1 | 12 |  |
| Investments\tmeasured\tat\tnet\tasset\tvalue\t(d) | 482 |  |  |  |
| Total | $4,316 | $976 | $2,851 | $7 |

| In	millions | December	31,<br>2014<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 | $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(c) | 1,589 |  | 1,589 |  |
| Limited\tpartnerships | 2 |  | 2 |  |
| Other | 55 | (4) | 59 |  |
| Investments\tmeasured\tat\tnet\tasset\tvalue\t(d) | 381 |  |  |  |
| Total | $4,357 | $1,306 | $2,660 | $10 |
| (a) |  |  |  |  |

(a) Corporate	debt	includes	$29	million	and	$34	million	of	non-agency	mortgage-backed	securities	as	of	December	31,	2015	and	2014,	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.

(d) In	accordance	with	ASC	820-10,	certain	investments	that	are	measured	at	fair	value	using	the	NAV	per	share	(or	its	equivalent)	practical	expedient	have	not	been	classified	in	the	fair	value	hierarchy.	The	fair	value amounts	presented	in	this	table	are	intended	to	permit	reconciliation	of	the	fair	value	hierarchy	to	the	amounts	presented	on	the	Consolidated	Balance	Sheet.

The	following	summarizes	changes	in	the	fair	value	of	the	pension	plan's	Level	3	assets	during	2015	and	2014.

# Table	99:	Rollforward	of	Pension	Plan	Level	3	Assets

| In	millions | Corporate	Debt |
| :--- | :--- |
| January\t1,\t2015 | $10 |
| Net\trealized\tgain/(loss)\ton\tsale\tof\tinvestments | 1 |
| Net\tunrealized\tgain/(loss)\ton\tassets\theld\tat\tend\tof |  |
| year |  |
| Purchases | 4 |
| Sales | (8) |
| December\t31,\t2015 | $7 |

| In	millions | Corporate	Debt |
| :--- | :--- |
| January\t1,\t2014 | $13 |
| Net\trealized\tgain/(loss)\ton\tsale\tof\tinvestments | 3 |
| Net\tunrealized\tgain/(loss)\ton\tassets\theld\tat\tend\tof |  |
| year |  |
| Purchases |  |
| Sales | (6) |
| December\t31,\t2014 | $10 |

The	following	table	provides	information	regarding	our	estimated	future	cash	flows	related	to	our	various	plans.

# Table	100:	Estimated	Cash	Flows

| In	millions | Qualified<br>Pension | Nonqualified<br>Pension | Gross	PNC<br>Benefit	Payments | Due	to	Medicare<br>Part	D	Subsidy |
| :--- | :--- | :--- | :--- | :--- |
| Estimated\t2016\temployer\tcontributions |  | $27 | $2 |  |
| Estimated\tfuture\tbenefit\tpayments |  |  |  |  |
| 2016 | $273 | $27 | $25 | $1 |
| 2017 | 289 | 26 | 26 | 1 |
| 2018 | 305 | 28 | 27 | 1 |
| 2019 | 303 | 25 | 27 | 1 |
| 2020 | 304 | 24 | 28 | 1 |
| 2021-2025 | 1,560 | 105 | 133 | 5 |

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	2016	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.	Estimated	cash	flows	reflect	the partial	funding	of	postretirement	medical	and	life	insurance	obligations	in	the	VEBA.

The	components	of	net	periodic	benefit	cost/(income)	and	other	amounts	recognized	in	Other	comprehensive	income	(OCI)	were	as	follows.

# Table	101:	Components	of	Net	Periodic	Benefit	Cost

|  | Qualified	Pension	Plan | Qualified	Pension	Plan |  | Nonqualified	Pension	Plan | Nonqualified	Pension	Plan | Nonqualified	Pension	Plan | Postretirement<br>Benefits | Postretirement<br>Benefits |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Year\tended\tDecember\t31\t–\tin\tmillions | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 |
| Net\tperiodic\tcost\tconsists\tof: |  |  |  |  |  |  |  |  |  |
| Service\tcost | $107 | $103 | $113 | $3 | $3 | $3 | $5 | $5 | $6 |
| Interest\tcost | 177 | 187 | 170 | 11 | 12 | 12 | \t 15 | \t 16 | \t 14 |
| Expected\treturn\ton\tplan\tassets | (297) | (289) | (288) |  |  |  |  |  |  |
| Amortization\tof\tprior\tservice\tcost/(credit) | (9) | (8) | (8) |  |  |  | (1) | (2) | (3) |
| Amortization\tof\tactuarial\t(gain)/loss | 31 |  | 87 | 7 | 4 | 8 |  |  |  |
| Settlement\t(gain)/loss |  |  |  |  |  | 7 |  |  | 1 |
| Net\tperiodic\tcost\t(benefit) | 9 | (7) | 74 | 21 | 19 | 30 | \t 19 | \t 19 | \t 18 |
| 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 | 9 | 8 | 8 |  |  |  | 1 | 2 | 3 |
| Current\tyear\tactuarial\tloss/(gain) | 152 | 434 | (784) | (10) | 40 | (26) | (9) | 4 | (9) |
| Amortization\tof\tactuarial\tgain/(loss) | (31) |  | (87) | (7) | (4) | (15) |  |  | (1) |
| Total\trecognized\tin\tOCI | 130 | 435 | (863) | (17) | 36 | (41) | (8) | 6 | (7) |
| Total\tamounts\trecognized\tin\tnet\tperiodic\tcost\tand\tOCI | $139 | $428 | $(789) | $4 | $ 55 | $(11) | $11 | $25 | $11 |

The	weighted-average	assumptions	used	(as	of	the	beginning	of	each	year)	to determine	the	net	periodic	costs	shown	above	were	as	follows.

# Table	102:	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	103:	Other	Pension	Assumptions

| Year	ended	December	31 | 2015 | 2014 |
| :--- | :--- | :--- |
| Discount\trate |  |  |
| Qualified\tpension | \t 4.25% | \t 3.95% |
| Nonqualified\tpension | \t 3.95% | \t 3.65% |
| Postretirement\tbenefits | \t 4.15% | \t 3.80% |
| Rate\tof\tcompensation\tincrease\t(average) | \t 3.50% | \t 4.00% |
| Assumed\thealth\tcare\tcost\ttrend\trate |  |  |
| Initial\ttrend | \t 7.25% | \t 7.50% |
| 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.

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	104:	Effect	of	One	Percent	Change	in	Assumed	Health	Care	Cost

| Year	ended	December	31,	2015<br>In	millions | Increase | Decrease |
| :--- | :--- | :--- |
| Effect\ton\tyear\tend\tbenefit\tobligation | $10 | (9) |

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	2016	are	as	follows.

# Table	105:	Estimated	Amortization	of	Unamortized	Actuarial	Gains	and Losses	–	2016

| Year	ended	December	31<br>In	millions | Qualified<br>Pension | Nonqualified<br>Pension | Postretirement<br>Benefits |
| :--- | :--- | :--- | :--- |
| Prior\tservice\t(credit) | $(7) |  | $(1) |
| Net\tactuarial\tloss | 45 | $4 |  |
| Total | $38 | $4 | $(1) |

# Defined	Contribution	Plans

The	PNC	Incentive	Savings	Plan	(ISP)	is	a	qualified	defined	contribution	plan that	covers	all	eligible	PNC	employees.	Effective	January	1,	2015,	newly-hired full	time	employees	and	part-time	employees	who	became	eligible	to	participate in	the	ISP	after	that	date	are	automatically	enrolled	in	the	ISP	with	a	deferral	rate equal	to	4%	of	eligible	compensation	in	the	absence	of	an	affirmative	election otherwise.	Employee	benefits	expense	related	to	the	ISP	was	$126	million	in 2015,	$108	million	in	2014	and	$120	million	in	2013,	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%	once	an	employee	has	reached	match- eligibility,	subject	to	IRS	Code	limitations.	PNC	will	contribute	a	minimum matching	contribution	up	to	$2,000	annually	for	eligible	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.	Employees hired	prior	to	January	1,	2010,	became	100%	vested	in	employer	matching contributions	immediately,	while	employees	hired	on	or	after	January	1,	2010, generally	become	100%	vested	in	employer	matching	contributions	after	three years	of	service.	Minimum	matching	contributions	made	with	respect	to	the	2014 and	2013	plan	years	are	immediately	100%	vested.

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	13	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	shares, 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, 2015,	no	stock	appreciation	rights	were	outstanding.

Total	compensation	expense	recognized	related	to	all	share-based	payment arrangements	during	2015,	2014	and	2013	was	approximately	$173	million, $181	million	and	$154	million,	respectively.	The	total	tax	benefit	recognized related	to	compensation	expense	on	all	share-based	payment	arrangements during	2015,	2014	and	2013	was	approximately	$63	million,	$66	million	and $56	million,	respectively.	At	December	31,	2015,	there	was	$191	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	2015	and	2014.	Prior	to	2014, options	were	granted	at	exercise	prices	not	less	than	the	market	value	of	a	share of	common	stock	on	the	grant	date.	Generally,	options	become	exercisable	in installments	after	the	grant	date.	No	option	can	be	exercised	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,	we estimated	the	fair	value	of	stock	options	at	the	grant	date	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	Black-Scholes	option	pricing	model	to determine	2013	grant	date	fair	value:

•	The	risk-free	interest	rate	is	based	on	the	U.S.	Treasury	yield	curve, •	The	dividend	yield	is	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	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	106:	Option	Pricing	Assumptions	(a)

There	were	no	options	granted	in	2013	where	the	grant	date	fair	value	exceeded	the	market	value.	The	following	table	represents	the	stock	option	activity	for	2015.

# Table	107:	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,\t2015 |  | Exercise | Exercise | Exercise |  | Exercise | Contractual | Intrinsic |
| In\tthousands,\texcept\tweighted-average\tdata | Shares | Price | Shares | Price | Shares | Price | Life | Value |
| Outstanding,\tJanuary\t1 | 6,701 | $56.41 | \t 343 | $585.23 | 7,044 | $82.17 |  |  |
| Granted\t(a) |  |  |  |  |  |  |  |  |
| Exercised | \t(1,741) | 59.18 |  |  | \t(1,741) | 59.18 |  |  |
| Cancelled | (29) | 44.61 | \t(100) | \t 738.18 | (129) | \t 580.37 |  |  |
| Outstanding,\tDecember\t31 | 4,931 | $55.50 | \t 243 | $522.54 | 5,174 | $77.47 | \t3.2\tyears | \t\t\t\t $196,292 |
| Vested\tand\texpected\tto\tvest,\tDecember\t31\t(b) | 4,931 | $55.50 | \t 243 | $522.54 | 5,174 | $77.47 | \t3.2\tyears\t\t\t\t $196,286 | \t3.2\tyears\t\t\t\t $196,286 |
| Exercisable,\tDecember\t31 | 4,883 | $55.42 | \t 243 | $522.54 | 5,126 | $77.60 | \t3.2\tyears | \t\t\t\t $194,782 |
| (a) |  |  |  |  |  |  |  |  |

(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	2015,	2014 and	2013	was	approximately	$103	million,	$215	million	and	$208	million, respectively.	The	tax	benefit	realized	from	option	exercises	under	all	Incentive Plans	for	2015,	2014	and	2013	was	approximately	$23	million,	$33	million	and $31	million,	respectively.

Shares	of	common	stock	available	during	the	next	year	for	the	granting	of options	and	other	awards	under	the	Incentive	Plans	were	approximately 14	million	at	December	31,	2015.	Total	shares	of	PNC	common	stock authorized	for	future	issuance	under	equity	compensation	plans	totaled approximately	15	million	shares	at	December	31,	2015,	which	includes	shares available	for	issuance	under	the	Incentive	Plans	and	the	Employee	Stock Purchase	Plan	(ESPP)	as	described	below.

During	2015,	we	issued	approximately	1.2	million	common	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	2015,	2014	and	2013	include 18,048,	21,490	and	27,076	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	Awards	and	Restricted	Share/Restricted	Share Unit	Awards

The	fair	value	of	nonvested	incentive/performance	unit	awards	and	restricted share/restricted	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	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	awards.	These	awards	primarily	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	share/restricted	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	awards and	restricted	share/restricted	share	unit	awards	granted	in	2015,	2014	and	2013 was	$91.57,	$80.79	and	$64.77	per	share,	respectively.	The	total	intrinsic	value of	incentive/performance	unit	and	restricted	share/restricted	share	unit	awards vested	during	2015,	2014	and	2013	was	approximately	$175	million,	$119 million	and	$63	million,	respectively.	We	recognize	compensation	expense	for such	awards	ratably	over	the	corresponding	vesting	and/or	performance	periods for	each	type	of	program.

# Table	108:	Nonvested	Incentive/Performance	Unit	Awards	and	Restricted Share/Restricted	Share	Unit	Awards	–	Rollforward

| Shares	in	thousands | Nonvested<br>Incentive/<br>Performance<br>Units | Weighted-<br>Average<br>Grant	Date<br>Fair	Value | Nonvested<br>Restricted<br>Share/<br>Restricted<br>Share<br>Units | Weighted-<br>Average<br>Grant	Date<br>Fair	Value |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014 | 1,837 | $69.84 | 3,652 | $69.03 |
| Granted\t(a) | 711 | 90.77 | 1,112 | 92.08 |
| Vested/Released\t(a) | (682) | 66.17 | (1,259) | 61.15 |
| Forfeited | (36) | 73.56 | (172) | 79.25 |
| December\t31,\t2015 | 1,830 | $79.27 | 3,333 | $79.26 |
| (a)\nIncludes\tadjustments\tfor\tachieving\tspecific\tperformance\tgoals\tfor\tIncentive/Performance\tUnit |  |  |  |  |

(a) Includes	adjustments	for	achieving	specific	performance	goals	for	Incentive/Performance	Unit Awards	granted	in	prior	periods.

In	the	preceding	table,	the	units	and	related	weighted-average	grant	date	fair value	of	the	incentive/performance	unit	awards	exclude	the	effect	of	dividends on	the	underlying	shares,	as	those	dividends	will	be	paid	in	cash	if	and	when	the underlying	shares	are	issued	to	the	participants.

# Liability	Awards

A	summary	of	all	nonvested,	cash-payable	incentive/performance	units	and restricted	share	unit	activity	follows:

# Table	109:	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,\t2014 | 177 | 658 | \t\t\t 835 |
| Granted\t(a) | 81 | 364 | \t\t\t 445 |
| Vested\tand\tReleased\t(a) | (98) | (350)\t\t\t\t(448) | (350)\t\t\t\t(448) |
| Forfeited | (43) | (8) | (51) |
| Outstanding\tat\tDecember\t31,\t2015 | 117 | 664 | \t\t\t 781 |
| (a)\nIncludes\tadjustments\tfor\tachieving\tspecific\tperformance\tgoals\tfor\tCash-Payable |  |  |  |

(a) Includes	adjustments	for	achieving	specific	performance	goals	for	Cash-Payable Incentive/Performance	Units	granted	in	prior	periods.

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.	Prior	to	the	2015 grant,	compensation	expense	recognized	related	to	these	awards	was	recorded	in prior	periods	as	part	of	the	annual	cash	bonus	process.	Due	to	certain	requisite service	period	changes	in	the	award	agreements	starting	with	the	2015	grant	(for the	2014	performance	year),	compensation	expense	is	recognized	ratably	over	a four	year	period	commensurate	with	the	performance	year	plus	the	three	years	of service-based	vesting	requirements.	As	of	December	31,	2015,	the	aggregate intrinsic	value	of	all	outstanding	nonvested	cash-payable	incentive/performance units	and	restricted	share	units	was	$74	million.

The	total	of	all	share-based	liability	awards	paid	out	during	2015,	2014	and	2013 was	approximately	$41	million,	$38	million	and	$29	million,	respectively.

# Employee	Stock	Purchase	Plan

As	of	December	31,	2015,	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	110:	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.	In	2013,	we transferred	an	additional	.2	million	shares	to	BlackRock.	At	December	31,	2015, we	held	approximately	1.3	million	shares	of	BlackRock	Series	C	Preferred	Stock which	were	available	to	fund	our	obligation	in	connection	with	the	BlackRock LTIP	programs.	See	Note	24	Subsequent	Events	for	information	on	our February	1,	2016	transfer	of	0.5	million	shares	of	the	Series	C	Preferred	Stock	to BlackRock	to	satisfy	a	portion	of	our	LTIP	obligation.

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	14	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	111:	Total	Gross	Derivatives

|  |  | December	31,	2015 |  | December	31,	2014 | December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| 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 | $52,074 | $1,159 | $174 | $49,061 | $1,261\t\t\t\t $ | 186 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments\tunder\tGAAP | \t 295,902 | 3,782 | 3,628 | \t 291,256 | 3,973 | 3,841 |
| Total\tgross\tderivatives | $347,976 | $4,941 | $3,802 | $340,317 | $5,234\t\t\t\t $4,027 | $5,234\t\t\t\t $4,027 |
| (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,	when	appropriate,	any	related	cash	collateral	exchanged	with	counterparties.	Further discussion	regarding	the	offsetting	rights	associated	with	these	legally	enforceable	master	netting	agreements	is	included	in	the	Offsetting,	Counterparty	Credit	Risk,	and Contingent	Features	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	112:	Derivatives	Designated	As	Hedging	Instruments	under	GAAP

|  |  | December	31,	2015 |  |  | December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| 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) |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Fair\tvalue\thedges: |  |  |  |  |  |  |
| Receive-fixed\tswaps | $25,756 | $699 | $18 | $20,930 | $827\t\t\t\t $ | 38 |
| Pay-fixed\tswaps\t(c) | 5,934 | 13 | 153 | 4,233 | 3 | 138 |
| Subtotal | \t 31,690 | 712 | 171 | \t 25,163 | 830 | 176 |
| Cash\tflow\thedges: |  |  |  |  |  |  |
| Receive-fixed\tswaps | \t 17,879 | 412 | 2 | \t 19,991 | 400 | 10 |
| Forward\tpurchase\tcommitments | 1,400 | 4 | 1 | 2,778 | 25 |  |
| Subtotal | \t 19,279 | 416 | 3 | \t 22,769 | 425 | 10 |
| Foreign\texchange\tcontracts: |  |  |  |  |  |  |
| Net\tinvestment\thedges | 1,105 | 31 |  | 1,129 | 6 |  |
| Total\tderivatives\tdesignated\tas\thedging\tinstruments | $52,074 | $1,159 | $174 | $49,061 | $1,261\t\t\t\t $ | 186 |
| (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	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	113:	Gains	(Losses)	on	Derivatives	and	Related	Hedged	Items	–	Fair	Value	Hedges

|  |  |  |  |  | Year	ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | December\t31,\t2015 | December\t31,\t2015 | December\t31,\t2014 | December\t31,\t2014 | December\t31,\t2013 | December\t31,\t2013 |
|  |  |  |  | Gain |  | Gain |  | Gain |
|  |  |  |  | (Loss)\ton |  | (Loss)\ton |  | (Loss)\ton |
|  |  |  | Gain | Related | Gain | Related | Gain | Related |
|  |  |  | (Loss)\ton | Hedged | (Loss)\ton | Hedged | (Loss)\ton | Hedged |
|  |  |  | Derivatives | Items | Derivatives | Items | Derivatives | Items |
|  |  |  | Recognized\nin\tIncome | Recognized\nin\tIncome | Recognized\nin\tIncome | Recognized\nin\tIncome | Recognized\nin\tIncome | Recognized\nin\tIncome |
| In\tmillions | Hedged\tItems | Location | Amount | Amount | Amount | Amount | Amount | Amount |
|  | U.S.\tTreasury\tand\tGovernment |  |  |  |  |  |  |  |
|  | Agencies\tSecurities\tand\tOther | Investment\tsecurities\t(interest |  |  |  |  |  |  |
| Interest\trate\tcontracts | Debt\tSecurities | income) |  |  | \t\t$(111) | $116 | $111\t\t\t$ | (115) |
|  | Subordinated\tdebt\tand\tBank | Borrowed\tfunds\t(interest |  |  |  |  |  |  |
| Interest\trate\tcontracts | notes\tand\tsenior\tdebt | expense) | \t\t$(108) | $67 | 123 | (158) | (744) | 711 |
| Total\t(a) |  |  | \t\t$(108) | $67\t\t\t\t$ | 12 | $(42) | $(633)\t\t$ | 596 |
| (a) | The\tineffective\tportion\tof\tthe\tchange\tin\tvalue\tof\tour\tfair\tvalue\thedge\tderivatives\tresulted\tin\tnet\tlosses\tof\t$41\tmillion\tfor\t2015\tcompared\twith\tnet\tlosses\tof\t$30\tmillion\tfor\t2014\tand\tnet\tlosses\tof\t$37\tmillion\tfor | The\tineffective\tportion\tof\tthe\tchange\tin\tvalue\tof\tour\tfair\tvalue\thedge\tderivatives\tresulted\tin\tnet\tlosses\tof\t$41\tmillion\tfor\t2015\tcompared\twith\tnet\tlosses\tof\t$30\tmillion\tfor\t2014\tand\tnet\tlosses\tof\t$37\tmillion\tfor | The\tineffective\tportion\tof\tthe\tchange\tin\tvalue\tof\tour\tfair\tvalue\thedge\tderivatives\tresulted\tin\tnet\tlosses\tof\t$41\tmillion\tfor\t2015\tcompared\twith\tnet\tlosses\tof\t$30\tmillion\tfor\t2014\tand\tnet\tlosses\tof\t$37\tmillion\tfor | The\tineffective\tportion\tof\tthe\tchange\tin\tvalue\tof\tour\tfair\tvalue\thedge\tderivatives\tresulted\tin\tnet\tlosses\tof\t$41\tmillion\tfor\t2015\tcompared\twith\tnet\tlosses\tof\t$30\tmillion\tfor\t2014\tand\tnet\tlosses\tof\t$37\tmillion\tfor | The\tineffective\tportion\tof\tthe\tchange\tin\tvalue\tof\tour\tfair\tvalue\thedge\tderivatives\tresulted\tin\tnet\tlosses\tof\t$41\tmillion\tfor\t2015\tcompared\twith\tnet\tlosses\tof\t$30\tmillion\tfor\t2014\tand\tnet\tlosses\tof\t$37\tmillion\tfor | The\tineffective\tportion\tof\tthe\tchange\tin\tvalue\tof\tour\tfair\tvalue\thedge\tderivatives\tresulted\tin\tnet\tlosses\tof\t$41\tmillion\tfor\t2015\tcompared\twith\tnet\tlosses\tof\t$30\tmillion\tfor\t2014\tand\tnet\tlosses\tof\t$37\tmillion\tfor | The\tineffective\tportion\tof\tthe\tchange\tin\tvalue\tof\tour\tfair\tvalue\thedge\tderivatives\tresulted\tin\tnet\tlosses\tof\t$41\tmillion\tfor\t2015\tcompared\twith\tnet\tlosses\tof\t$30\tmillion\tfor\t2014\tand\tnet\tlosses\tof\t$37\tmillion\tfor | The\tineffective\tportion\tof\tthe\tchange\tin\tvalue\tof\tour\tfair\tvalue\thedge\tderivatives\tresulted\tin\tnet\tlosses\tof\t$41\tmillion\tfor\t2015\tcompared\twith\tnet\tlosses\tof\t$30\tmillion\tfor\t2014\tand\tnet\tlosses\tof\t$37\tmillion\tfor |

(a) The	ineffective	portion	of	the	change	in	value	of	our	fair	value	hedge	derivatives	resulted	in	net	losses	of	$41	million	for	2015	compared	with	net	losses	of	$30	million	for	2014	and	net	losses	of	$37	million	for 2013.

# 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,	2015,	we expect	to	reclassify	from	the	amount	currently	reported	in	Accumulated	other comprehensive	income,	net	derivative	gains	of	$190	million	pretax,	or	$124 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,	2015.	The	maximum	length	of	time	over	which	forecasted	loan cash	flows	are	hedged	is	7	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,	2015,	we	expect	to	reclassify	from	the	amount currently	reported	in	Accumulated	other	comprehensive	income,	net	derivative gains	of	$24	million	pretax,	or	$16	million	after-tax,	as	adjustments	of	yield	on investment	securities.	As	of	December	31,	2015,	the	maximum	length	of	time over	which	forecasted	purchase	contracts	are	hedged	is	2	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	2015,	2014	and	2013,	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	114:	Gains	(Losses)	on	Derivatives	and	Related	Cash	Flows	–	Cash	Flow	Hedges	(a)	(b)

|  |  | Year	ended |  |
| :--- | :--- | :--- | :--- |
|  |  | December\t31 |  |
| In\tmillions | 2015 | 2014 | 2013 |
| Gains\t(losses)\ton\tderivatives\trecognized\tin\tOCI\t–\t(effective\tportion) | $415 | $431\t\t\t\t $(141) | $431\t\t\t\t $(141) |
| Less:\tGains\t(losses)\treclassified\tfrom\taccumulated\tOCI\tinto\tincome\t–\t(effective\tportion) |  |  |  |
| Interest\tincome | \t 293 | \t 263 | 337 |
| Noninterest\tincome | (5) |  | 49 |
| Total\tgains\t(losses)\treclassified\tfrom\taccumulated\tOCI\tinto\tincome\t–\t(effective\tportion) | $288 | $263\t\t\t\t $ | 386 |
| Net\tunrealized\tgains\t(losses)\ton\tcash\tflow\thedge\tderivatives | $127 | $168\t\t\t\t $(527) | $168\t\t\t\t $(527) |
| (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.	Net	investment	hedge	derivatives	are classified	as	foreign	exchange	contracts.	There	were	no	components	of	derivative	gains	or	losses	excluded	from	the	assessment	of	the	hedge	effectiveness.	For	2015, 2014	and	2013,	there	was	no	net	investment	hedge	ineffectiveness.	Gains	(losses)	on	net	investment	hedge	derivatives	recognized	in	OCI	was	net	gains	of	$60	million	as of	December	31,	2015,	net	gains	of	$54	million	at	December	31,	2014	and	net	losses	of	$21	million	at	December	31,	2013.

# 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	115:	Derivatives	Not	Designated	As	Hedging	Instruments	under	GAAP

|  |  | December	31,	2015 |  |  | December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Notional |  |  | Notional |  |  |
|  | / | Asset | Liability | / | Asset | Liability |
|  | Contract | Fair | Fair | Contract | Fair | Fair |
| In\tmillions | Amount | Value\t(a) | Value\t(b) | Amount | Value\t(a) | Value\t(b) |
| Derivatives\tused\tfor\tresidential\tmortgage\tbanking\tactivities: |  |  |  |  |  |  |
| Residential\tmortgage\tservicing |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Swaps | $37,505 | $758 | $416 | $32,459 | $777\t\t\t\t $ | 394 |
| Swaptions | 650 | 27 | 14 | 1,498 | 29 | 22 |
| Futures\t(c) | 17,653 |  |  | 22,084 |  |  |
| Futures\toptions | 6,000 |  | 1 | 12,225 | 4 |  |
| Mortgage-backed\tsecurities\tcommitments | 3,920 | 4 | 8 | 710 | 4 |  |
| Subtotal | 65,728 | 789 | 439 | 68,976 | 814 | 416 |
| Loan\tsales |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Futures\t(c) | 20 |  |  | 58 |  |  |
| Bond\toptions | 200 | 2 |  | 300 |  |  |
| Mortgage-backed\tsecurities\tcommitments | 6,363 | 16 | 8 | 4,916 | 10 | 21 |
| Residential\tmortgage\tloan\tcommitments | 1,580 | 16 |  | 1,852 | 22 |  |
| Subtotal | 8,163 | 34 | 8 | 7,126 | 32 | 21 |
| Subtotal | $73,891 | $823 | $447 | $76,102 | $846\t\t\t\t $ | 437 |
| Derivatives\tused\tfor\tcommercial\tmortgage\tbanking\tactivities: |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Swaps | $3,945 | $77 | $46 | $3,801 | $67\t\t\t\t $ | 48 |
| Swaptions | 439 |  |  | 439 | 2 | 1 |
| Futures\t(c) | 18,454 |  |  | 19,913 |  |  |
| Commercial\tmortgage\tloan\tcommitments | 1,176 | 11 | 6 | 2,042 | 16 | 10 |
| Subtotal | 24,014 | 88 | 52 | 26,195 | 85 | 59 |
| Credit\tcontracts | 77 |  |  | 95 |  |  |
| Subtotal | $24,091 | $88 | $52 | $26,290 | $85\t\t\t\t $ | 59 |
| Derivatives\tused\tfor\tcustomer-related\tactivities: |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Swaps | $157,041 | $2,507 | $2,433 | $146,008 | $2,632\t\t\t\t $ | 2,559 |
| Caps/floors\t–\tSold | 5,337 |  | 11 | 4,846 |  | 16 |
| Caps/floors\t–\tPurchased | 6,383 | 18 |  | 6,339 | 34 |  |
| Swaptions | 4,363 | 86 | 13 | 3,361 | 62 | 12 |
| Futures\t(c) | 1,673 |  |  | 3,112 |  |  |
| Mortgage-backed\tsecurities\tcommitments | 1,910 | 5 | 2 | 2,137 | 3 | 3 |
| Subtotal | \t 176,707 | 2,616 | 2,459 | \t 165,803 | 2,731 | 2,590 |
| Foreign\texchange\tcontracts | 10,888 | 194 | 198 | 12,547 | 223 | 240 |
| Credit\tcontracts | 5,026 | 2 | 4 | 5,124 | 2 | 4 |
| Subtotal | $192,621 | $2,812 | $2,661 | $183,474 | $2,956\t\t\t\t $ | 2,834 |
| Derivatives\tused\tfor\tother\trisk\tmanagement\tactivities: |  |  |  |  |  |  |
| Interest\trate\tcontracts |  |  |  | $833 | $1 |  |
| Foreign\texchange\tcontracts | $2,742 | $59 | $6 | 2,661 | 85\t\t\t\t $ | 1 |
| Credit\tcontracts | 15 |  |  | 15 |  |  |
| Other\tcontracts\t(d) | 2,542 |  | 462 | 1,881 |  | 510 |
| Subtotal | 5,299 | 59 | 468 | 5,390 | 86 | 511 |
| Total\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | $295,902 | $3,782 | $3,628 | $291,256 | $3,973\t\t\t\t $ | 3,841 |
| (a)\nIncluded\tin\tOther\tassets\ton\tour\tConsolidated\tBalance\tSheet. |  |  |  |  |  |  |

(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.

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	and	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.

Further	detail	regarding	the	gains	(losses)	on	derivatives	not	designated	in	hedging	relationships	is	presented	in	the	following	table:

# Table	116:	Gains	(Losses)	on	Derivatives	Not	Designated	As	Hedging	Instruments	under	GAAP

|  | Year	ended	December	31 | Year	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| In\tmillions | 2015 | 2014 | 2013 |
| Derivatives\tused\tfor\tresidential\tmortgage\tbanking\tactivities: |  |  |  |
| Residential\tmortgage\tservicing |  |  |  |
| Interest\trate\tcontracts | $103 | $240 | $(223) |
| Loan\tsales |  |  |  |
| Interest\trate\tcontracts | 83 | (3) | 286 |
| Gains\t(losses)\tincluded\tin\tresidential\tmortgage\tbanking\tactivities\t(a) | $186 | $237 | $63 |
| Derivatives\tused\tfor\tcommercial\tmortgage\tbanking\tactivities: |  |  |  |
| Interest\trate\tcontracts\t(b)\t(c) | $34 | $82 | $12 |
| Credit\tcontracts\t(c) |  | (1) | (2) |
| Gains\t(losses)\tfrom\tcommercial\tmortgage\tbanking\tactivities | $34 | $81 | $10 |
| Derivatives\tused\tfor\tcustomer-related\tactivities: |  |  |  |
| Interest\trate\tcontracts | $71 | $41 | $149 |
| Foreign\texchange\tcontracts | 79 | 47 | 80 |
| Equity\tcontracts |  |  | (3) |
| Credit\tcontracts | (1) | (1) | (1) |
| Gains\t(losses)\tfrom\tcustomer-related\tactivities\t(c) | $149 | $87 | $225 |
| Derivatives\tused\tfor\tother\trisk\tmanagement\tactivities: |  |  |  |
| Interest\trate\tcontracts |  | $(19) | $3 |
| Foreign\texchange\tcontracts | $281 | 188 | 2 |
| Other\tcontracts\t(d) | 1 | (134) | (168) |
| Gains\t(losses)\tfrom\tother\trisk\tmanagement\tactivities\t(c) | $282 | $35 | $(163) |
| Total\tgains\t(losses)\tfrom\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | $651 | $440 | $135 |
| (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	–	Risk	Participation	Agreements

We	have	entered	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.	The	notional	amount	of	risk participation	agreements	sold	was	$2.5	billion	at	December	31,	2015	and	2.8 billion	at	December	31,	2014.	Assuming	all	underlying	third	party	customers referenced	in	the	swap	contracts	defaulted	at	December	31,	2015,	the	exposure from	these	agreements	would	be	$122	million	based	on	the	fair	value	of	the underlying	swaps,	compared	with	$124	million	at	December	31,	2014.

# 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	all	outstanding	derivative instruments	under	the	master	netting	agreement	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.	Collateral	representing	initial	margin,	which	is	based	on	potential	future exposure,	is	also	required	to	be	pledged	by	us	in	relation	to	derivative instruments	with	central	clearing	house	counterparties.	Any	cash	collateral exchanged	with	counterparties	under	these	master	netting	agreements	is	also netted,	when	appropriate,	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 derivative	instruments	under	a	master	netting	agreement	to	be	eligible	for closeout	netting	under	GAAP,	we	must	conduct	sufficient	legal	review	to conclude	with	a	well-founded	basis	that	the	offsetting	rights	included	in	the master	netting	agreement	would	be	legally	enforceable	upon	an	event	of	default, including	upon	an	event	of	bankruptcy,	insolvency,	or	a	similar	proceeding	of the	counterparty.	Enforceability	is	evidenced	by	a	legal	opinion	that	supports, with	sufficient	confidence,	the	enforceability	of	the	master	netting	agreement	in such	circumstances.

The	following	derivative	Table	117	shows	the	impact	legally	enforceable	master	netting	agreements	had	on	our	derivative	assets	and	derivative	liabilities	as	of December	31,	2015	and	December	31,	2014.	The	table	includes	cash	collateral	held	or	pledged	under	legally	enforceable	master	netting	agreements.	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	21	Commitments	and	Guarantees	for	additional	information	related	to	resale	and	repurchase	agreements	offsetting.

# Table	117:	Derivative	Assets	and	Liabilities	Offsetting

| December	31,	2015<br>In	millions | Gross<br>Fair	Value | Fair	Value<br>Offset	Amount | Cash<br>Collateral | Net<br>Fair	Value | Netting<br>Agreements | Net<br>Amounts |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Derivative\tassets |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Cleared | $1,003 | $779 | $195 | $29 |  | $29 |
| Over-the-counter | 3,652 | 1,645 | 342 | 1,665 | $178 | 1,487 |
| Foreign\texchange\tcontracts | 284 | 129 | 13 | 142 | 2 | 140 |
| Credit\tcontracts | 2 | 1 | 1 |  |  |  |
| Total\tderivative\tassets | $4,941 | $2,554 | $551 | $1,836\t(a) | $180 | $1,656 |
| Derivative\tliabilities |  |  |  |  |  |  |
| Interest\trate\tcontracts: |  |  |  |  |  |  |
| Cleared | $855 | $779 | $57 | $19 |  | $19 |
| Exchange-traded | 1 |  |  | 1 |  | 1 |
| Over-the-counter | 2,276 | 1,687 | 530 | 59 |  | 59 |
| Foreign\texchange\tcontracts | 204 | 85 | 20 | 99 |  | 99 |
| Credit\tcontracts | 4 | 3 | 1 |  |  |  |
| Other\tcontracts | 462 |  |  | 462 |  | 462 |
| Total\tderivative\tliabilities | $3,802 | $2,554 | $608 | $640\t(b) |  | $640 |
| December\t31,\t2014\nIn\tmillions |  |  |  |  |  |  |
| 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(c) | $5,234 | $2,141 | $506 | $2,587\t(a) | $144 | $2,443 |
| 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(c) | $4,027 | $2,141 | $503 | $1,383\t(b) |  | $1,383 |
| (a) |  |  |  |  |  |  |

(a) Represents	the	net	amount	of	derivative	assets	included	in	Other	assets	on	our	Consolidated	Balance	Sheet.

(b) Represents	the	net	amount	of	derivative	liabilities	included	in	Other	liabilities	on	our	Consolidated	Balance	Sheet.

(c) As	of	December	31,	2014,	cleared	derivatives	were	not	subject	to	offsetting.	Gross	derivative	assets	and	derivative	liabilities	for	cleared	derivatives	totaled	$807	million	and	$657	million,	respectively,	at	December 31,	2014.	Derivative	assets	and	liabilities	related	to	exchange-traded	contracts	were	not	material	at	December	31,	2014.

The	table	above	includes	over-the-counter	(OTC)	derivatives,	cleared derivatives,	and	exchange-traded	derivatives.	OTC	derivatives	represent contracts	executed	bilaterally	with	counterparties	that	are	not	settled	through	an organized	exchange	or	cleared	through	a	central	clearing	house.	Cleared derivatives	represent	contracts	executed	bilaterally	with	counterparties	in	the OTC	market	that	are	novated	to	a	central	clearing	house	who	then	becomes	our counterparty.	Exchange-traded	derivatives	represent	standardized	futures	and options	contracts	executed	directly	on	an	organized	exchange.

As	of	December	31,	2015,	derivative	fair	values	and	related	cash	collateral	for derivatives	cleared	through	a	central	clearing	house	are,	when	appropriate, presented	on	a	net	basis.

The	derivative	fair	values	in	the	table	not	identified	as	cleared	or	exchange- traded	represent	OTC	derivatives,	the	majority	of	which	are	governed	by	ISDA documentation	or	other	legally	enforceable	industry	standard	master	netting agreements	and	are	subject	to	offsetting.

In	addition	to	using	master	netting	agreements	and	other	collateral	agreements	to reduce	credit	risk	associated	with	derivative	instruments,	we	also	seek	to	manage credit	risk	by	evaluating	credit	ratings	of	counterparties	and	by	using	internal credit	analysis,	limits,	and	monitoring	procedures.

At	December	31,	2015,	we	held	cash,	U.S.	government	securities	and	mortgage- backed	securities	totaling	$.9	billion	under	master	netting	agreements	and	other collateral	agreements	to	collateralize	net	derivative	assets	due	from counterparties,	and	we	pledged	cash	totaling	$.9	billion	under	these	agreements to	collateralize	net	derivative	liabilities	owed

to	counterparties	and	to	meet	initial	margin	requirements.	These	totals	may	differ from	the	amounts	presented	in	the	preceding	offsetting	table	because	these	totals 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	values	with	the	counterparty	as	of	the balance	sheet	date	due	to	timing	or	other	factors,	such	as	initial	margin.	To	the extent	not	netted	against	the	derivative	fair	values	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	derivative	agreements	contain	various	credit-risk	related	contingent provisions,	such	as	those	that	require	PNC's	debt	to	maintain	a	specified	credit rating	from	one	or	more	of	the	major	credit	rating	agencies.	If	PNC's	debt ratings	were	to	fall	below	such	specified	ratings,	the	counterparties	to	the derivative	instruments	could	request	immediate	payment	or	demand	immediate and	ongoing	full	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, 2015	was	$.8	billion	for	which	PNC	had	posted	collateral	of	$.6	billion	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,	2015	would	be $.2	billion.

# NOTE	15	EARNINGS	PER	SHARE

# Table	118:	Basic	and	Diluted	Earnings	per	Common	Share

| In	millions,	except	per	share	data | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Basic |  |  |  |
| Net\tincome | $4,143 | $4,207\t\t\t\t $4,212 | $4,207\t\t\t\t $4,212 |
| Less: |  |  |  |
| Net\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 37 | 23 | 11 |
| Preferred\tstock\tdividends\tand\tdiscount\taccretion\tand\tredemptions | 225 | 237 | 249 |
| Net\tincome\tattributable\tto\tcommon\tshares | \t 3,881 | \t 3,947 | \t 3,952 |
| Less: |  |  |  |
| Dividends\tand\tundistributed\tearnings\tallocated\tto\tparticipating\tsecurities | 17 | 11 | 18 |
| Net\tincome\tattributable\tto\tbasic\tcommon\tshares | $3,864 | $3,936\t\t\t\t $3,934 | $3,936\t\t\t\t $3,934 |
| Basic\tweighted-average\tcommon\tshares\toutstanding | 514 | 529 | 528 |
| Basic\tearnings\tper\tcommon\tshare\t(a) | $7.52 | $7.44\t\t\t\t $ | 7.45 |
| Diluted |  |  |  |
| Net\tincome\tattributable\tto\tbasic\tcommon\tshares | $3,864 | $3,936\t\t\t\t $3,934 | $3,936\t\t\t\t $3,934 |
| Less:\tImpact\tof\tBlackRock\tearnings\tper\tshare\tdilution | 18 | 18 | 18 |
| Net\tincome\tattributable\tto\tdiluted\tcommon\tshares | $3,846 | $3,918\t\t\t\t $3,916 | $3,918\t\t\t\t $3,916 |
| Basic\tweighted-average\tcommon\tshares\toutstanding | 514 | 529 | 528 |
| Dilutive\tpotential\tcommon\tshares\t(b) | 7 | 8 | 4 |
| Diluted\tweighted-average\tcommon\tshares\toutstanding | 521 | 537 | 532 |
| Diluted\tearnings\tper\tcommon\tshare\t(a) | $7.39 | $7.30\t\t\t\t $ | 7.36 |

(a) 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	and	restricted	share	units	with nonforfeitable	dividends	and	dividend	rights	(participating	securities).

(b) Excludes	number	of	stock	options	considered	to	be	anti-dilutive	of	1	million	for	2013.	No	warrants	were	considered	to	be	anti-dilutive	for	2013.	No	stock	options	or	warrants	were	considered	to	be	anti-dilutive	for 2014	and	2015.

# NOTE	16	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	119:	Preferred	Stock	–	Authorized,	Issued	and	Outstanding

| December	31<br>Shares	in	thousands | value	per<br>share | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Authorized |  |  |  |
| $1\tpar\tvalue |  | \t16,588 | \t16,588 |
| Issued\tand\toutstanding |  |  |  |
| Series\tB | \t\t $40 | 1 | 1 |
| Series\tK | \t\t $10,000 |  | 50 |
| Series\tO | \t\t $100,000 | 10 | 10 |
| Series\tP | \t\t $100,000 | 15 | 15 |
| Series\tQ | \t\t $100,000 | 5 | 5 |
| Series\tR | \t\t $100,000 | 5 | 5 |
| Total\tissued\tand\toutstanding |  | 36 | 86 |

The	following	table	discloses	information	related	to	the	preferred	stock	outstanding	as	of	December	31,	2015.

# Table	120:	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	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	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.

Our	Series	K	preferred	stock	was	issued	on	May	21,	2008.	Dividends	were	paid at	a	rate	of	8.25%	until	May	21,	2013	and	at	a	rate	of	three-month	LIBOR	plus 422	basis	points	beginning	May	21,	2013.	On	May	4,	2015,	PNC	redeemed	all 500,000	depositary	shares	representing	interests	in	PNC's	Series	K	preferred stock	and	all	50,000	shares	of	Series	K	preferred	stock	underlying	such depositary	shares,	resulting	in	a	net	outflow	of	$500	million.

We	have	authorized	but	unissued	Series	H	and	Series	I	preferred	stock.	As described	below	in	the	Perpetual	Trust	Securities	portion	of	the	Noncontrolling Interests	section	of

this	Note,	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.

# Warrants

We	had	13.4	million	warrants	outstanding	as	of	December	31,	2015	compared	to 16.9	million	as	of	December	31,	2014.	The	reduction	was	due	to	3.5	million warrants	that	were	exercised	during	2015.	Each	warrant	entitles	the	holder	to purchase	one	share	of	PNC	common	stock	at	an	exercise	price	of	$67.33	per share.	In	accordance	with	the	terms	of	the	warrants,	the	warrants	are	exercised	on a	non-cash	net	basis	with	the	warrant	holder	receiving	PNC	common	shares determined	based	on	the	excess	of	the	market	price	of	PNC	common	stock	on	the exercise	date	over	the	exercise	price	of	the	warrant.	In	2015,	we	issued 1.1	million	common	shares	resulting	from	the	exercise	of	the	warrants.	The issuance	of	these	shares	resulted

in	a	reclassification	within	Capital	surplus	–	Common	stock	and	other	with	no impact	on	PNC's	Shareholders'	equity.	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	16.9	million	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:	0.3	million	shares	in	2015,	0.3	million	shares	in	2014 and	0.4	million	shares	in	2013.

At	December	31,	2015,	we	had	reserved	approximately	93	million	common shares	to	be	issued	in	connection	with	certain	stock	plans.

We	repurchased	4.4	million	shares	in	2015	and	13.5	million	shares	in	2014	under the	stock	repurchase	program	that	the	Board	of	Directors	approved	effective October	4,	2007.	Effective	March	31,	2015,	the	Board	of	Directors	terminated this	share	repurchase	program	and	effective	April	1,	2015	the	Board	of	Directors replaced	it	with	a	new	stock	repurchase	program	authorization	in	the	amount	of up	to	100	million	shares	of	PNC	common	stock	which	may	be	purchased	on	the open	market	or	in	privately	negotiated	transactions.	We	repurchased	17.9	million shares	under	this	program	in	2015	.	A	maximum	amount	of	82.1	million	shares remained	available	for	repurchase	under	this	program	at	December	31,	2015. This	program	will	remain	in	effect	until	fully	utilized	or	until	modified, superseded	or	terminated.

# Noncontrolling	Interests

# Perpetual	Trust	Securities

In	December	2006,	one	of	our	indirect	subsidiaries,	PNC	REIT	Corp.,	sold	$500 million	of	6.517%	Fixed-to-Floating	Rate	Non-Cumulative	Exchangeable Perpetual	Trust	Securities	(the	"Trust	Securities")	of	PNC	Preferred	Funding Trust	I	("Trust	I"),	in	a	private	placement.	PNC	REIT	Corp.	had	previously acquired	the	Trust	Securities	from	the	trust	in	exchange	for	an	equivalent	amount of	Fixed-to-Floating	Rate	Non-Cumulative	Perpetual	Preferred	Securities	(the "LLC	Preferred	Securities"),	of	PNC	Preferred	Funding	LLC,	(the	"LLC"),	held by	PNC	REIT	Corp.	The	LLC's	initial	material	assets	consist	of	indirect interests	in	mortgages	and	mortgage-related	assets	previously	owned	by	PNC REIT	Corp.	The	rate	on	these	securities	at	December	31,	2015	was	2.162%.

In	March	2007,	the	LLC,	sold	$500	million	of	6.113%	Fixed-to-Floating	Rate Non-Cumulative	Exchangeable	Perpetual	Trust	Securities	(the	"Trust	II Securities")	of	PNC	Preferred	Funding	Trust	II	("Trust	II")	in	a	private placement.	In	connection	with	the	private	placement,	Trust	II	acquired	$500 million	of	LLC	Preferred	Securities,	from	the	LLC.	The	rate	on	these	securities at	December	31,	2015	was	1.735%.

The	Trust	I	Securities	and	Trust	II	Securities	are	redeemable	in	whole	or	in	part at	par	($100,000	per	security),	plus	any	declared	and	unpaid	dividends	to	the redemption	date,	on	the	quarterly	dividend	payment	date	in	March	2017	and	on the	March	quarterly	dividend	payment	date	in	each	fifth	succeeding	year	(each,	a "Five	Year	Date").

The	Trust	I	Securities	and	Trust	II	Securities	are	also	redeemable	in	whole,	but not	in	part,	on	any	quarterly	dividend	payment	date	that	is	not	a	Five	Year	Date at	a	redemption	price	equal	to	the	sum	of:	(i)	the	greater	of	(A)	$100,000	per security	or	(B)	the	sum	of	present	values	of	$100,000	per	security	and	all undeclared	dividends	for	the	dividend	periods	from	the	redemption	date	to	and including	the	next	succeeding	Five	Year	Date,	discounted	to	the	redemption	date on	a	quarterly	basis	at	the	3-month	USD	LIBOR	rate	applicable	to	the	dividend period	immediately	preceding	such	redemption	date	plus	(ii)	any	declared	and unpaid	dividends	to	the	redemption	date.

The	Trust	I	Securities	and	Trust	II	Securities	are	also	redeemable	in	whole,	but not	in	part,	on	any	quarterly	dividend	payment	date	that	is	not	a	Five	Year	Date in	the	case	of	certain	tax,	investment	company	or	regulatory	capital	events	at	a redemption	price	of	par	plus	declared	and	unpaid	dividends	to	the	redemption date.

Upon	certain	conditions	relating	to	the	capitalization	or	the	financial	condition	of PNC	Bank	and	upon	the	direction	of	the	OCC,	the	Trust	I	Securities	are automatically	exchangeable	into	shares	of	Series	F	preferred	stock	of	PNC	Bank and	the	Trust	II	Securities	are	automatically	exchangeable	into	shares	of	Series	I preferred	stock	of	PNC.

Any	redemption	is	subject	to	compliance	with	the	applicable	Replacement Capital	Covenant	(see	below)	and	approval	of	the	OCC.

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	our Consolidated	Balance	Sheet.	Trust	I	and	Trust	II's	investment	in	the	LLC Preferred	Securities	is	characterized	as	a	noncontrolling	interest	on	our Consolidated	Balance	Sheet	since	we	are	not	the	primary	beneficiary	of	Trust	I and	Trust	II.	This	noncontrolling	interest	totaled	approximately	$981	million	at December	31,	2015.

Information	related	to	the	capital	covenants	and	contractual	commitments	of	the	perpetual	trust	securities,	including	limitations	potentially	imposed	on	PNC	and	PNC Bank's	payment	of	dividends	on	their	respective	equity	capital	securities,	follows.

# Table	121:	Summary	of	Replacement	Capital	Covenants	of	Perpetual	Trust	Securities

Replacement	Capital	Covenant	(RCC)	(a) Trust Description	of	Capital	Covenants Trust	I	RCC 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 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,	2015,	each	of	the	Trust	I	RCC	and	the	Trust	II	RCC	are	for	the	benefit	of	PNC	Capital	Trust	C	as	the	sole	holder	of	$200	million	of	junior	subordinated	debentures	issued	in	June	1998.	See Note	11	Borrowed	Funds	for	additional	information	regarding	these	debentures.

# Table	122:	Summary	of	Contractual	Commitments	of	Perpetual	Trust	Securities

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)

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.

On	March	15,	2013	we	redeemed	all	$375	million	of	the	PNC	Preferred	Funding	Trust	III	securities	with	a	distribution	rate	of	8.7%.

# NOTE	17	OTHER	COMPREHENSIVE	INCOME

Details	of	other	comprehensive	income	(loss)	are	as	follows:

# Table	123:	Other	Comprehensive	Income

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Net\tunrealized\tgains\t(losses)\ton\tnon-OTTI\tsecurities |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses)\ton\tnon-OTTI\tsecurities | $(494) | $410 | $(1,122) |
| Less:\tNet\tgains\t(losses)\trealized\tas\ta\tyield\tadjustment\treclassified\tto\tinvestment\tsecurities\tinterest\tincome | 27 | 31 | 39 |
| Less:\tNet\tgains\t(losses)\trealized\ton\tsales\tof\tsecurities\treclassified\tto\tnoninterest\tincome | 48 | 4 | 50 |
| Net\tincrease\t(decrease),\tpre-tax | (569) | 375 | (1,211) |
| Effect\tof\tincome\ttaxes | 208 | (137) | 443 |
| Net\tincrease\t(decrease),\tafter-tax | (361) | 238 | (768) |
| Net\tunrealized\tgains\t(losses)\ton\tOTTI\tsecurities |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses)\ton\tOTTI\tsecurities | (17) | 68 | 215 |
| Less:\tOTTI\tlosses\trealized\ton\tsecurities\treclassified\tto\tnoninterest\tincome | (4) | (11) | (16) |
| Net\tincrease\t(decrease),\tpre-tax | (13) | 79 | 231 |
| Effect\tof\tincome\ttaxes | 5 | (29) | (84) |
| Net\tincrease\t(decrease),\tafter-tax | (8) | 50 | 147 |
| Net\tunrealized\tgains\t(losses)\ton\tcash\tflow\thedge\tderivatives |  |  |  |
| Increase\tin\tnet\tunrealized\tgains\t(losses)\ton\tcash\tflow\thedge\tderivatives | 415 | 431 | (141) |
| Less:\tNet\tgains\t(losses)\trealized\tas\ta\tyield\tadjustment\treclassified\tto\tloan\tinterest\tincome | 270 | 251 | 284 |
| Less:\tNet\tgains\t(losses)\trealized\tas\ta\tyield\tadjustment\treclassified\tto\tinvestment\tsecurities\tinterest\tincome | 23 | 12 | 53 |
| Less:\tNet\tgains\t(losses)\trealized\ton\tsales\tof\tsecurities\treclassified\tto\tnoninterest\tincome | (5) |  | 49 |
| Net\tincrease\t(decrease),\tpre-tax | 127 | 168 | (527) |
| Effect\tof\tincome\ttaxes | (47) | (61) | 192 |
| Net\tincrease\t(decrease),\tafter-tax | 80 | 107 | (335) |
| Pension\tand\tother\tpostretirement\tbenefit\tplan\tadjustments |  |  |  |
| Net\tpension\tand\tother\tpostretirement\tbenefit\tactivity | (82) | (440) | 760 |
| Amortization\tof\tactuarial\tloss\t(gain)\treclassified\tto\tother\tnoninterest\texpense | 38 | 4 | 103 |
| Amortization\tof\tprior\tservice\tcost\t(credit)\treclassified\tto\tother\tnoninterest\texpense | (10) | (10) | (11) |
| Net\tincrease\t(decrease),\tpre-tax | (54) | (446) | 852 |
| Effect\tof\tincome\ttaxes | 20 | 163 | (312) |
| Net\tincrease\t(decrease),\tafter-tax | (34) | (283) | 540 |
| Other |  |  |  |
| PNC's\tportion\tof\tBlackRock's\tOCI | (39) | (36) | 15 |
| Net\tinvestment\thedge\tderivatives | 60 | 54 | (21) |
| Foreign\tcurrency\ttranslation\tadjustments\t(a) | (63) | (57) | 27 |
| Net\tincrease\t(decrease),\tpre-tax | (42) | (39) | 21 |
| Effect\tof\tincome\ttaxes\t(a) | (8) | (6) | (3) |
| Net\tincrease\t(decrease),\tafter-tax | (50) | (45) | 18 |
| Total\tother\tcomprehensive\tincome,\tpre-tax | (551) | 137 | (634) |
| Total\tother\tcomprehensive\tincome,\ttax\teffect | 178 | (70) | 236 |
| Total\tother\tcomprehensive\tincome,\tafter-tax | $(373) | $67 | $(398) |
| (a) |  |  |  |

(a) The	earnings	of	PNC's	Luxembourg-UK	lending	business	have	been	indefinitely	reinvested:	therefore,	no	U.S.	deferred	income	tax	has	been	recorded	on	the	foreign	currency	translation	of	the	investment.

# Table	124:	Accumulated	Other	Comprehensive	Income	(Loss)	Components

| In	millions,	after-tax | Net	unrealized	gains<br>(losses)		on	non-OTTI<br>securities | Net	unrealized	gains<br>(losses)	on	OTTI<br>securities | Net	unrealized	gains<br>(losses)	on	cash	flow<br>hedge	derivatives | Pension	and	other<br>postretirement	benefit<br>plan	adjustments | Other | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2012 | $1,177 | $(123) | $578 | $(777) | $(21) | $834 |
| Net\tactivity | (768) | 147 | (335) | 540 | 18 | (398) |
| Balance\tat\tDecember\t31,\t2013 | $409 | $24 | $243 | $(237) | $(3) | $436 |
| Net\tactivity | 238 | 50 | 107 | (283) | (45) | 67 |
| Balance\tat\tDecember\t31,\t2014 | $647 | $74 | $350 | $(520) | $(48) | $503 |
| Net\tActivity | (361) | (8) | 80 | (34) | (50) | (373) |
| Balance\tat\tDecember\t31,\t2015 | $286 | $66 | $430 | $(554) | $(98) | $130 |

# NOTE	18	INCOME	TAXES

The	components	of	income	tax	expense	are	as	follows:

# Table	125:	Components	of	Income	Tax	Expense

| Year	ended	December	31	In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Current |  |  |  |
| Federal | $927 | $1,084 | $263 |
| State | 33 | 68 | 17 |
| Total\tcurrent | 960 | \t 1,152 | 280 |
| Deferred |  |  |  |
| Federal | 320 | 220 | \t 1,119 |
| State | 84 | 35 | 77 |
| Total\tdeferred | 404 | 255 | \t 1,196 |
| Total | $1,364 | $1,407 | $1,476 |

Significant	components	of	deferred	tax	assets	and	liabilities	are	as	follows:

# Table	126:	Deferred	Tax	Assets	and	Liabilities

| December	31	–	in	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets |  |  |
| Allowance\tfor\tloan\tand\tlease\tlosses | $1,032 | $1,250 |
| Compensation\tand\tbenefits | 654 | 822 |
| Partnership\tinvestments | 295 | 247 |
| Loss\tand\tcredit\tcarryforward | 502 | 545 |
| Accrued\texpenses | 542 | 581 |
| Other | 320 | 290 |
| Total\tgross\tdeferred\ttax\tassets | \t 3,345 | \t 3,735 |
| Valuation\tallowance | (61) | (65) |
| Total\tdeferred\ttax\tassets | \t 3,284 | \t 3,670 |
| Deferred\ttax\tliabilities |  |  |
| Leasing | \t 1,413 | \t 1,494 |
| Goodwill\tand\tintangibles | 320 | 328 |
| Fixed\tassets | 391 | 381 |
| Net\tunrealized\tgains\ton\tsecurities\tand\tfinancial |  |  |
| instruments | 453 | 619 |
| BlackRock\tbasis\tdifference | \t 2,327 | \t 2,166 |
| Other | 542 | 619 |
| Total\tdeferred\ttax\tliabilities | \t 5,446 | \t 5,607 |
| Net\tdeferred\ttax\tliability | $2,162 | $1,937 |

A	reconciliation	between	the	statutory	and	effective	tax	rates	follows:

# Table	127:	Reconciliation	of	Statutory	and	Effective	Tax	Rates

| Year	ended	December	31 | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Statutory\ttax\trate | \t35.0% | \t35.0% | \t35.0% |
| Increases\t(decreases)\tresulting\tfrom |  |  |  |
| State\ttaxes\tnet\tof\tfederal\tbenefit | 1.4 | 1.2 | 1.1 |
| Tax-exempt\tinterest | \t(2.3) | \t(2.2) | \t(1.9) |
| Life\tinsurance | \t(1.7) | \t(1.7) | \t(1.7) |
| Dividend\treceived\tdeduction | \t(1.7) | \t(1.5) | \t(1.2) |
| Tax\tcredits | \t(3.9) | \t(4.4) | \t(3.7) |
| Other | \t(2.0)(a) | \t(1.3) | \t(1.7) |
| Effective\ttax\trate | \t24.8% | \t25.1% | \t25.9% |
| (a) |  |  |  |

# (a) Includes	tax	benefits	associated	with	settlement	of	acquired	entity	tax	contingencies.

The	net	operating	loss	carryforwards	at	December		31,	2015	and	2014	follow:

# Table	128:	Net	Operating	Loss	Carryforwards	and	Tax	Credit	Carryforwards

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Net\tOperating\tLoss\tCarryforwards: |  |  |
| Federal | $878 | $997 |
| State | $2,272 | $2,594 |
| Tax\tCredit\tCarryforwards: |  |  |
| Federal | $64 | $35 |
| State | $3 | $7 |

The	federal	net	operating	loss	carryforwards	expire	in	2032.	The	state	net operating	loss	carryforwards	will	expire	from	2016	to	2035.	The	majority	of	the tax	credit	carryforwards	expire	in	2032.

All	federal	and	most	state	net	operating	loss	and	credit	carryforwards	are	from acquired	entities	and	utilization	is	subject	to	various	statutory	limitations.	It	is anticipated	that	the	company	will	be	able	to	fully	utilize	its	carryforwards	for federal	tax	purposes,	but	a	valuation	allowance	of	$61	million	has	been	recorded against	certain	state	tax	carryforwards	as	of	December	31,	2015.	If	select uncertain	tax	positions	were	successfully	challenged	by	a	state,	the	state	net operating	losses	listed	above	could	be	reduced	by	$60	million.

As	of	December	31,	2015,	PNC	had	approximately	$110	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	$34	million.

Retained	earnings	at	both	December	31,	2015	and	December	31,	2014	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	$26	million	at	December	31,	2015	and $77	million	at	December	31,	2014.	At	December	31,	2015,	these	unrecognized tax	benefits,	if	recognized,	would	favorably	impact	the	effective	income	tax	rate by	$20	million.

A	reconciliation	of	the	beginning	and	ending	balance	of	unrecognized	tax benefits	is	as	follows:

# Table	129:	Change	in	Unrecognized	Tax	Benefits

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Balance\tof\tgross\tunrecognized\ttax\tbenefits\tat |  |  |  |
| January\t1 | $77 | $110 | $176 |
| Increases: |  |  |  |
| Positions\ttaken\tduring\ta\tprior\tperiod | 17 |  | 11 |
| Decreases: |  |  |  |
| Positions\ttaken\tduring\ta\tprior\tperiod | (9) | (27) | (22) |
| Settlements\twith\ttaxing\tauthorities | (52) | (1) | (48) |
| Reductions\tresulting\tfrom\tlapse\tof\tstatute |  |  |  |
| of\tlimitations | (7) | (5) | (7) |
| Balance\tof\tgross\tunrecognized\ttax\tbenefits\tat |  |  |  |
| December\t31 | $26 | $77 | $110 |

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	$4 million	within	the	next	twelve	months.

PNC	is	subject	to	U.S.	federal	income	tax	as	well	as	income	tax	in	most	states and	some	foreign	jurisdictions.	Examinations	were	completed	for	PNC's consolidated	federal	income	tax	returns	for	2007	through	2010	and	National City's	consolidated	federal	income	tax	returns	through	2008	and	were	settled with	the	IRS.	The	IRS	is	currently	examining	PNC's	consolidated	federal income	tax	returns	for	2011	through	2013.	In	addition,	we	are	under	continuous examinations	by	various	state	taxing	authorities.	With	few	exceptions,	we	are	no longer	subject	to	state	and	local	and	foreign	income	tax	examinations	by	taxing authorities	for	periods	before	2010.	For	all	open	audits,	any	potential adjustments	have	been	considered	in	establishing	our	unrecognized	tax	benefits as	of	December	31,	2015.

Our	policy	is	to	classify	interest	and	penalties	associated	with	income	taxes	as income	tax	expense.	For	2015,	we	had	a

benefit	of	$46	million	of	gross	interest	and	penalties,	decreasing	income	tax expense.	The	total	accrued	interest	and	penalties	at	December	31,	2014	was	$41 million.	At	December	31,	2015,	the	total	accrued	interest	and	penalties	was	not significant.

During	2015,	we	recognized	$202	million	of	amortization,	$224	million	of	tax credits	and	$74	million	of	other	tax	benefits	associated	with	qualified investments	in	low	income	housing	tax	credits	within	Income	taxes.

# NOTE	19	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,	2015	and	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.	Beginning	in	2015,	to qualify	as	"well	capitalized",	PNC	must	have	Transitional	Basel	III	capital	ratios of	at	least	6%	for	Tier	1	risk-based	capital	and	10%	for	Total	risk-based	capital, and	PNC	Bank	must	have	Transitional	Basel	III	capital	ratios	of	at	least	6.5%	for Common	equity	Tier	1	risk-based	capital,	8%	for	Tier	1	risk-based	capital,	10% for	Total	risk-based	capital,	and	a	Leverage	ratio	of	at	least	5%.	To	qualify	as "well	capitalized"	in	2014,	regulators	required	insured	depository	institutions, such	as	PNC	Bank,	to	maintain	Transitional	Basel	III	capital	ratios	of	at	least	6% for	Tier	1	risk-based,	10%	for	Total	risk-based	and	5%	for	Leverage,	and required	bank	holding	companies,	such	as	PNC,	to	maintain	Transitional	Basel III	regulatory	capital	ratios	of	at	least	6%	Tier	1	risk-based	and	10%	for	Total risk-based.

The	following	table	sets	forth	the	Transitional	Basel	III	regulatory	capital	ratios at	December	31,	2015	and	December	31,	2014	for	PNC	and	PNC	Bank.

# Table	130:	Basel	Regulatory	Capital	(a)

| Dollars	in	millions | 2015 | 2014 | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- |
| Risk-based\tcapital |  |  |  |  |
| Common\tequity\tTier\t1\t(b) |  |  |  |  |
| PNC | \t\t$31,493 | N/A\t\t\t\t\t10.6%\t\t\tN/A | N/A\t\t\t\t\t10.6%\t\t\tN/A | N/A\t\t\t\t\t10.6%\t\t\tN/A |
| PNC\tBank | \t\t\t 27,484 | N/A | 9.7 | \t\tN/A |
| Tier\t1 |  |  |  |  |
| PNC | \t\t\t 35,522\t\t\t\t$35,687\t\t\t\t\t12.0 | \t\t\t 35,522\t\t\t\t$35,687\t\t\t\t\t12.0 | \t\t\t 35,522\t\t\t\t$35,687\t\t\t\t\t12.0 | \t\t12.6% |
| PNC\tBank | \t\t\t 29,425\t\t\t\t\t 29,328\t\t\t\t\t10.4 | \t\t\t 29,425\t\t\t\t\t 29,328\t\t\t\t\t10.4 | \t\t\t 29,425\t\t\t\t\t 29,328\t\t\t\t\t10.4 | \t\t10.7 |
| Total |  |  |  |  |
| PNC | \t\t\t 43,260\t\t\t\t\t 44,782\t\t\t\t\t14.6 | \t\t\t 43,260\t\t\t\t\t 44,782\t\t\t\t\t14.6 | \t\t\t 43,260\t\t\t\t\t 44,782\t\t\t\t\t14.6 | \t\t15.8 |
| PNC\tBank | \t\t\t 36,482\t\t\t\t\t 37,559\t\t\t\t\t12.9 | \t\t\t 36,482\t\t\t\t\t 37,559\t\t\t\t\t12.9 | \t\t\t 36,482\t\t\t\t\t 37,559\t\t\t\t\t12.9 | \t\t13.7 |
| Leverage |  |  |  |  |
| PNC | \t\t\t 35,522\t\t\t\t\t 35,687\t\t\t\t\t10.1 | \t\t\t 35,522\t\t\t\t\t 35,687\t\t\t\t\t10.1 | \t\t\t 35,522\t\t\t\t\t 35,687\t\t\t\t\t10.1 | \t\t10.8 |
| PNC\tBank | \t\t\t 29,425\t\t\t\t\t 29,328 | \t\t\t 29,425\t\t\t\t\t 29,328 | 8.7 | 9.2 |

(a) Calculated	using	the	Transitional	Basel	III	regulatory	capital	methodology	applicable	to	PNC	during both	2015	and	2014.

(b) For	2014,	Common	equity	Tier	1	was	not	applicable	to	U.S.	regulatory	capital	ratio	requirements	for "well	capitalized."

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,

•	Corporate	policies,

•	Contractual	restrictions,	and

•	Other	factors.

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	$1.7	billion	at	December	31,	2015.

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,	2015,	the balance	outstanding	at	the	FRB	was	$30.0	billion.

# NOTE	20	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	20).	For	Disclosed Matters	where	we	are	able	to	estimate	such	possible	losses	or	ranges	of	possible losses,	as	of	December	31,	2015,	we	estimate	that	it	is	reasonably	possible	that we	could	incur	losses	in	excess	of	related	accrued	liabilities,	if	any,	in	an aggregate	amount	of	up	to	approximately	$550	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	are	reasonably	possible	to	be	incurred	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	U.S.	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	MasterCard ®.	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 U.S.	Court	of	Appeals	for	the	Second	Circuit,	which	appeal	was	argued	in September	2015	and	remains	pending.	In	addition,	in	July	2015	several	objectors filed	a	motion	with	the	district	court	to	vacate	the	court's	judgment,	including	the approval	of	the	settlement,	based	on	alleged	misconduct	by	one	of	the	counsel for	MasterCard	and	one	of	the	counsel	for	plaintiffs.	This	motion	remains pending.	As	a	result	of	the	previously	funded	litigation	escrow	(described	in Note	21	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.	Visa	has	reached settlements,	some	of	which	remain	subject	to	conditions,	with	some	of	these opting	out	merchants.	Visa	has	reported	that	these	settlements	covered,	as	of November	2015,	approximately	48%	of	the	Visa-branded	card	sales	volume	of the	merchants	that	opted	out.	These	settlements	have	been	or	will	be	paid	from the	Visa	litigation	escrow	account.

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	21	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.	The	Omnibus	Agreement,	in substance,	apportions	resolution	of	the	claims	in	this	litigation	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	U.S. 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,	which	have	subsequently	been	dismissed.

In	October	2011,	the	plaintiffs	in	the	MDL	proceeding	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 Residential	Funding	Company,	LLC	(RFC))	as	defendants.	(In	December	2013, the	Chapter	11	bankruptcy	proceeding	involving	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	26,500	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	July	2015,	the	U.S.	Court	of	Appeals	for	the Third	Circuit	affirmed	the	grant	of	class	certification	by	the	Pennsylvania	district court.	We	moved	for	a	rehearing	of	the	appeal,	which	was	denied	in	October 2015.	In	November	2015,	we	filed	a	petition	for	a	writ	of	certiorari	with	the	U.S. Supreme	Court	seeking	review	of	the	decision	of	the	court	of	appeals,	which remains	pending.

# 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	other	banks,	have	been	consolidated	for	pre-trial	proceedings	in the	U.S.	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	U.S.	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	U.S.	District	Court	for the	Eastern	District	of	North	Carolina	before	being	transferred	to	the	MDL Court.	A	consolidated	amended	complaint	was	filed	in	November	2014.

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	U.S.	Court	of	Appeals	for	the	Eleventh	Circuit.	While	this	appeal was	pending,	the	U.S.	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	U.S.	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	December	2014,	we filed	a	motion	to	compel	arbitration	as	to	the	claims	of	the	plaintiff	in	Dasher based	on	an	arbitration	provision	added	to	the	PNC	account	agreement	in	2013. In	August	2015,	the	district	court	denied	our	motion.	Later	in	August	2015,	we appealed	the	denial	of	our	arbitration	motion	to	the	court	of	appeals.	The	appeal is	pending.	In	December	2014,	we	filed	a	motion	to	dismiss	the	complaint.	In February	2016,	the	district	court	denied	our	motion.

The	consolidated	amended	complaint	alleges	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	breach	of	contract	and	the	covenant	of	good	faith and	fair	dealing;	unconscionability;	conversion;	unjust	enrichment;	and	violation of	the	consumer	protection	statute	of	North	Carolina.	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	U.S. 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,	which	are	pending.

# 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	U.S.	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	then	on	appeal	before	the	U.S.	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.	In March	2015,	the	parties	stipulated	to,	and	the	court	ordered,	a	stay	of	all proceedings	pending	the	outcome	of	a	new	other	matter	currently	on	appeal before	the	U.S.	Court	of	Appeals	for	the	Third	Circuit	that	also	involves overlapping	issues.	In	February	2016,	the	court	of	appeals	issued	a	decision favorable	to	our	position.

# 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	v.	PNC	Bank,	N.A.,	et	al.	(Case	No.	2:14-cv- 00230))	was	filed	in	the	U.S.	District	Court	for	the	Western	District	of Pennsylvania,	subsequently	transferred	to	the	U.S.	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.

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	U.S.	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	U.S. 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 complaints	in	each	of	these	lawsuits	made	similar	allegations	regarding	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.	In	May	2014,	the	Tighe	lawsuit	was	transferred	to	the	U.S. 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	September	2014,	the	Lauren	lawsuit	was	voluntarily	dismissed	and,	as described	below,	Lauren	was	added	to	the	Montoya	lawsuit	as	a	plaintiff.

In	their	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,	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	sought	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.	In	March	2015,	the	Montoya	court	denied	PNC's motion	to	dismiss,	except	that	it	granted	the	motion	as	to	the	Ohio	good	faith	and fair	dealing	claim.

In	May	2015,	the	parties	reached	an	agreement	to	settle	Montoya	on	a nationwide	settlement	class	basis.	The	agreement	is	subject	to,	among	other things,	notice	to	the	class	members	and	final	approval	by	the	court.	In	connection with	the	settlement	agreement,	the	plaintiffs	also	filed	a	fourth	amended complaint,	which,	among	other	things,	adds	claims	regarding	wind	and	flood insurance.	The	proposed	settlement	provides	for	certification	of	a	class	of borrowers	who	were	charged	by	PNC	under	a	hazard,	flood,	flood	gap	or	wind only	lender	placed	insurance	policy	for	residential	property	during	the	period January	1,	2008	through	the	date	of	preliminary	approval	of	the	settlement.	The overall	cost	of	the	settlement

is	not	expected	to	be	material	to	PNC.	The	court	granted	preliminary	approval	of the	settlement	in	September	2015	and	has	scheduled	a	hearing	with	respect	to final	approval	of	the	settlement	for	March	2016.

# 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)(IV	1))	was	filed	in	the	U.S.	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	had	previously	dismissed	the	plaintiffs' claims	with	respect	to	the	one	patent	not	selected	for	review	by	the	PTO.	In separate	decisions	issued	in	April	and	May	2015,	the	PTO	invalidated	all	claims with	respect	to	the	patents	that	were	still	at	issue	in	IV	1.	In	July	2015,	in	an appeal	arising	out	of	proceedings	against	a	different	defendant	relating	to	some of	the	same	patents,	the	U.S.	Court	of	Appeals	for	the	Federal	Circuit	affirmed the	invalidity	of	the	two	patents	at	issue	in	both	IV	1	and	the	Federal	Circuit appeal.	As	a	result,	all	of	the	patents	at	issue	in	IV	1	not	subject	to	the	prior dismissal	have	been	invalidated.	In	October	2015,	the	plaintiffs	moved	to dismiss	with	prejudice	their	claims	arising	from	the	patents	that	had	not	been subject	to	prior	dismissal	in	IV	1,	which	the	court	granted.

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)(IV	2))	in	the	same	court	as	IV	1.	This	lawsuit	alleges	that	PNC defendants	infringed	five	patents,	including	the	patent	dismissed	in	IV	1	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,	which	was consolidated	with	IV	1	in	August	2014,	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	IV	1	and	the appeals	from	any	PTO	decisions.	In	April	2015,	the	PTO,	in	a	proceeding brought	by	another	defendant,	upheld	the	patentability	of	one	of	the	patents	at issue	in	IV	2.	That	decision	was	appealed	to	the	Federal	Circuit,	which,	in February	2016,	affirmed	it.	After	decisions	adverse	to	the	patent	holder	in	the PTO	and	several	U.S.	District	Courts	on	three	of	the	remaining	patents,	in October	2015,	the	plaintiffs	voluntarily	dismissed	without	prejudice	their	claims with	respect	to	those	three	patents,	leaving	two	patents	at	issue	in	this	lawsuit. The	plaintiffs	moved	to	deconsolidate	IV	1	and	IV	2	and	to	lift	the	stay.	The	court denied	this	motion	in	October	2015,	continuing	the	stay	until	certain	court proceedings	against	other	defendants	related	to	the	same	patents	are	resolved.

# Mortgage	Repurchase	Litigation

In	December	2013,	Residential	Funding	Company,	LLC	(RFC)	filed	a	lawsuit	in the	U.S.	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	U.S.	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.	In	January	2015,	the	lawsuit	was	consolidated	for pre-trial	purposes	with	other	lawsuits	pending	in	the	District	of	Minnesota	filed by	RFC	against	other	originators	of	mortgage	loans	that	it	had	purchased.	The consolidated	action	is	captioned	In	Re:	RFC	and	RESCAP	Liquidating	Trust

Litigation,	(Civil	File	No.	13-cv-3451	(SRN/JJK/HB)).	In	September	2015,	RFC filed	a	motion	for	leave	to	file	a	second	amended	complaint	to	add	claims	based on	an	asserted	principle	that	loan	sellers	had	a	continuing	contractual	obligation to	provide	notice	of	loan	defects,	which	RFC	claims	should	allow	it	to	assert contract	claims	as	to	pre-May	14,	2006	loans	notwithstanding	the	prior	dismissal of	those	claims	with	prejudice.	In	November	2015,	the	court	granted	RFC's motion,	and	RFC	filed	its	second	amended	complaint	thereafter.

# Pre-need	Funeral	Arrangements

National	City	Bank	and	PNC	Bank	are	defendants	in	a	lawsuit	pending	in	the U.S.	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)	(the	PNC	defendants), 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	the	PNC	defendants	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	U.S.	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	the	PNC defendants'	affirmative	defense	relating	to	the	plaintiffs'	alleged	failure	to mitigate	damages.	In	July	2014,	the	PNC	defendants'	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	the	PNC defendants'	motion	for	summary	judgment.

In	March	2015,	following	a	jury	trial,	the	court	entered	a	judgment	against	the PNC	defendants	in	the	amount	of	$356	million	in	compensatory	damages	and $36	million	in	punitive	damages.	In	April	2015,	the	plaintiffs	filed	motions	with the	court	seeking	$179	million	in	pre-judgment	interest.	Also,	in	April	2015,	the PNC	defendants	filed	motions	with	the	court	to	reduce	the	compensatory damages	by	the	amounts	paid	in	settlement	by	other	defendants,	to	strike	the punitive	damages	award,	for	judgment	as	a	matter	of	law,	and	for	a	new	trial.	In November	2015,	the	court	granted	the	motion	to	reduce	the	compensatory damages	by	amounts	paid	in	settlement	by	other	defendants	and	denied	the	other motions	by	the	PNC	defendants,	with	the	judgment	being	reduced	as	a	result	to	a total	of	$289	million,	and	also	denied	the	plaintiffs'	motion	for	pre-judgment interest.	In	December	2015,	the	PNC	defendants	appealed	the	judgment	to	the U.S.	Court	of	Appeals	for	the	Eighth	Circuit.

# DD	Growth	Premium	Master	Fund

In	June	2014,	the	liquidators	of	the	DD	Growth	Premium	Master	Fund	(DD Growth)	issued	a	Plenary	Summons	in	the	High	Court,	Dublin,	Ireland,	in connection	with	the	provision	of	administration	services	to	DD	Growth	by	a European	subsidiary	(GIS	Europe)	of	PNC	Global	Investment	Servicing	(PNC GIS),	a	former	subsidiary	of	PNC.	The	Plenary	Summons	was	served	on	GIS Europe	in	June	2015.

In	July	2010,	PNC	completed	the	sale	of	PNC	GIS	to	The	Bank	of	New	York Mellon	Corporation	(BNY	Mellon).	Beginning	in	February	2014,	BNY	Mellon has	provided	notice	to	PNC	of	three	indemnification	claims	pursuant	to	the	stock purchase	agreement	related	to	DD	Growth.	PNC's	responsibility	for	this litigation	is	subject	to	the	terms	and	limitations	included	in	the	indemnification provisions	of	the	stock	purchase	agreement.

In	its	Statement	of	Claim,	which	the	liquidator	served	in	July	2015,	the liquidator	alleges,	among	other	things,	that	GIS	Europe	breached	its	contractual duties	to	DD	Growth	as	well	as	an	alleged	duty	of	care	to	DD	Growth,	and	to investors	in	DD	Growth,	and	makes	claims	of	breach	of	the	administration	and accounting	services	agreement,	breach	of	the	middle	office	agreement, negligence,	gross	negligence,	and	breach	of	duty.	The	statement	of	claim	further alleges	claims	for	loss	in	the	net	asset	value	of	the	fund	and	loss	of	certain subscriptions	paid	into	the	fund	in	the	amounts	of	$283	million	and	$134	million, respectively.	The	statement	of	claim	seeks,	among	other	things,	damages,	costs, and	interest.

# 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. 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	could	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.

In	June	2015,	the	OCC	issued	an	order	finding	that	PNC	Bank	had satisfied	all	of	its	obligations	under	the	OCC's	2013	amended consent	order	and	terminating	PNC	Bank's	2011	consent	order and	2013	amended	consent	order.	The	OCC	retained	jurisdiction over	the	distribution	of	remaining	funds	contributed	by	PNC	Bank under	its	2013	amended	consent	order.	PNC's	consent	order	with the	Federal	Reserve,	as	amended,	remains	open	and	does	not foreclose	the	potential	for	civil	money	penalties	from	the	Federal Reserve.	The	range	of	potential	penalties	communicated	to	PNC from	the	Federal	Reserve	in	connection	with	the	consent	orders	is not	material	and	we	do	not	otherwise	expect	any	additional financial	charges	from	the	Federal	Reserve	consent	orders	to	be material.

•	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	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.	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.

•	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	and	the	U.S. Attorney's	Office	are	in	discussions	regarding	a	possible	resolution	of the	investigation.

Our	practice	is	to	cooperate	fully	with	regulatory	and	governmental investigations,	audits	and	other	inquiries,	including	those	described	in	this	Note 20.

# 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	21	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	21	COMMITMENTS	AND	GUARANTEES

In	the	normal	course	of	business,	we	have	various	commitments	outstanding, certain	of	which	are	not	included	on	our	Consolidated	Balance	Sheet.	The following	table	presents	our	outstanding	commitments	to	extend	credit	along with	significant	other	commitments	as	of	December	31,	2015	and	December	31, 2014,	respectively.

# Table	131:	Commitments	to	Extend	Credit	and	Other	Commitments

| In	millions | December	31<br>2015 | December	31<br>2014 |
| :--- | :--- | :--- |
| Commitments\tto\textend\tcredit |  |  |
| Total\tcommercial\tlending | $101,252 | $98,742 |
| Home\tequity\tlines\tof\tcredit | 17,268 | 17,839 |
| Credit\tcard | 19,937 | 17,833 |
| Other | 4,032 | 4,178 |
| Total\tcommitments\tto\textend\tcredit | 142,489 | 138,592 |
| Net\toutstanding\tstandby\tletters\tof\tcredit\t(a) | 8,765 | 9,991 |
| Reinsurance\tagreements\t(b) | 2,010 | 4,297 |
| Standby\tbond\tpurchase\tagreements\t(c) | 911 | 1,095 |
| Other\tcommitments\t(d) | 966 | 962 |
| Total\tcommitments\tto\textend\tcredit\tand\nother\tcommitments | $155,141 | $154,937 |
| (a) |  |  |

(a) Net	outstanding	standby	letters	of	credit	include	$4.7	billion	and	$5.2	billion	which	support remarketing	programs	at	December	31,	2015	and	December	31,	2014,	respectively.

(b) Represents	aggregate	maximum	exposure	up	to	the	specified	limits	of	the	reinsurance	contracts,	and reflects	estimates	based	on	availability	of	financial	information	from	insurance	carriers.	As	of December	31,	2015	the	aggregate	maximum	exposure	amount	comprised	$1.6	billion	for	accidental death	&	dismemberment	contracts	and	$.4	billion	for	credit	life,	accident	&	health	contracts.	The comparative	amount	as	of	December	31,	2014	included	$1.8	billion	for	accidental	death	&

dismemberment,	$.5	billion	for	credit	life,	accident	&	health	and	$2.0	billion	related	to	lender	placed hazard	contracts.

(c) We	enter	into	standby	bond	purchase	agreements	to	support	municipal	bond	obligations. (d) Includes	$.5	billion	and	$.4	billion	related	to	investments	in	qualified	affordable	housing	projects	at December	31,	2015	and	December	31,	2014,	respectively.

Commitments	to	extend	credit,	or	net	unfunded	loan	commitments,	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	share	in	the	risk	of	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	132:	Internal	Credit	Ratings	Related	to	Net	Outstanding	Standby	Letters of	Credit

(a) Indicates	that	expected	risk	of	loss	is	currently	low.

(b) Indicates	a	higher	degree	of	risk	of	default.

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,	2015	had	terms	ranging	from	less	than	1 year	to	7	years.

As	of	December	31,	2015,	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	$.2	billion	at December	31,	2015	and	is	included	in	Other	liabilities	on	our	Consolidated Balance	Sheet.

# Reinsurance	Agreements

We	have	a	wholly-owned	captive	insurance	subsidiary	which	provides reinsurance	for	accidental	death	&	dismemberment,	credit	life,	accident	&	health and	lender	placed	hazard,	all	of	which	are	in	run-off.	This	subsidiary	previously entered	into	these	various	types	of	reinsurance	agreements	with	third-party insurers	where	the	subsidiary	assumed	the	risk	of	loss	through	quota	share agreements	up	to	100%	reinsurance.	In	quota	share	agreements,	the	subsidiary and	the	third-party	insurers	share	the	responsibility	for	payment	of	all	claims.

We	maintain	a	reserve	for	probable	losses	on	these	agreements,	which	totaled	$8 million	and	$13	million	as	of	December	31,	2015	and	December	31,	2014, respectively,	and	are	included	in	Other	Liabilities	on	the	Consolidated	Balance Sheet.	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,	2015,	the	reasonably	possible	loss	above	our accrual	was	not	material.

# 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	2015.	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.	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,	2015	and	December	31,	2014,	the	unpaid	principal	balance outstanding	of	loans	sold	as	a	participant	in	these	programs	was	$12.9	billion and	$12.3	billion,	respectively.	The	potential	maximum	exposure	under	the	loss share	arrangements	was	$3.8	billion	at	December	31,	2015	and	$3.7	billion	at December	31,	2014.

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.

We	maintain	a	reserve	for	estimated	losses	based	upon	our	exposure.	The	reserve for	losses	under	these	programs	totaled	$27	million	and	$35	million	at December	31,	2015	and	December	31,	2014,	respectively,	and	was	included	in Other	liabilities	on	the	Consolidated	Balance	Sheet.

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.

Indemnifications	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.

Management's	subsequent	evaluation	of	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,	2015	and	December	31,	2014,	the	residential	mortgage indemnification	and	repurchase	liability	for	estimated	losses	on	indemnification and	repurchase	claims	totaled	$94	million	and	$107	million,	respectively,	and was	included	in	Other	liabilities	on	the	Consolidated	Balance	Sheet.	The	unpaid principal	balance	of	loans	associated	with	our	exposure	to	this	repurchase obligation	totaled	$65.3	billion	and	$68.3	billion	at	December	31,	2015	and December	31,	2014,	respectively.

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,	2015.	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,	2015,	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	$77	million	for	our	portfolio	of residential	mortgage	loans	sold.	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.

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.

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	based	on	management	evaluation.	These adjustments	are	recognized	in	Other	noninterest	income	on	the	Consolidated Income	Statement.

At	December	31,	2015	and	December	31,	2014,	the	home	equity	indemnification and	repurchase	liability	for	estimated	losses	on	indemnification	and	repurchase claims	totaled	$20	million	and	$29	million,	respectively,	and	was	included	in Other	liabilities	on	the	Consolidated	Balance	Sheet.	The	unpaid	principal balance	of	the	sold	loan	portfolio	associated	with	this	repurchase	obligation totaled	$2.1	billion	and	$2.5	billion	at	December	31,	2015	and	December	31, 2014,	respectively.	At	December	31,	2015	the	reasonably	possible	loss	above	our accrual	for	our	portfolio	of	home	equity	loans/lines	of	credit	sold	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.	These	agreements	are entered	into	primarily	to	provide	short-term	financing	for	securities	inventory positions,	acquire	securities	to	cover	short	positions	and	accommodate customers'	investing	and	financing	needs.	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 offset	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.

Table	133	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	133.

Refer	to	Note	14	Financial	Derivatives	for	additional	information	related	to	offsetting	of	financial	derivatives.

# Table	133:	Resale	and	Repurchase	Agreements	Offsetting

(a) Resale	agreements	are	included	on	the	Consolidated	Balance	Sheet	in	Federal	funds	sold	and	resale	agreements.	Amounts	in	the	table	above	exclude	fair	value	adjustments	of	$4	million	and	$7	million	at December	31,	2015	and	December	31,	2014,	respectively,	related	to	structured	resale	agreements	that	we	have	elected	to	account	for	at	fair	value.	See	Note	7	Fair	Value	for	additional	information.	Repurchase agreements	are	included	on	the	Consolidated	Balance	Sheet	in	Federal	funds	purchased	and	repurchase	agreements.

(b) 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.

(c) Represents	certain	long	term	resale	agreements	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.

(d) Represents	overnight	repurchase	agreements	entered	into	with	municipalities,	pension	plans,	and	certain	trusts	and	insurance	companies	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,	2015 and	December	31,	2014.

(e) Repurchase	agreements	have	remaining	contractual	maturities	that	are	classified	as	overnight	or	continuous.	As	of	December	31,	2015,	the	collateral	pledged	under	these	agreements	consisted	primarily	of residential	mortgage	-backed	agency	securities.

# NOTE	22	PARENT	COMPANY

Summarized	financial	information	of	the	parent	company	is	as	follows:

# Table	134:	Parent	Company	–	Income	Statement

| Year	ended	December	31	–	in	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Operating\tRevenue |  |  |  |
| Dividends\tfrom: |  |  |  |
| Bank\tsubsidiaries\tand\tbank\tholding\tcompany | $3,110 | $3,115 | $3,105 |
| Non-bank\tsubsidiaries | 49 | 115 | 205 |
| Interest\tincome | 5 | 4 |  |
| Noninterest\tincome | 14 | 30 | 28 |
| Total\toperating\trevenue | \t 3,178 | \t 3,264 | \t 3,338 |
| Operating\tExpense |  |  |  |
| Interest\texpense | 78 | 97 | 107 |
| Other\texpense | 88 | 127 | 93 |
| Total\toperating\texpense | 166 | 224 | 200 |
| Income\tbefore\tincome\ttaxes\tand\tequity\tin\tundistributed\tnet |  |  |  |
| income\tof\tsubsidiaries | \t 3,012 | \t 3,040 | \t 3,138 |
| Income\ttax\tbenefits | (99) | (61) | (89) |
| Income\tbefore\tequity\tin\tundistributed\tnet\tincome\tof |  |  |  |
| subsidiaries | \t 3,111 | \t 3,101 | \t 3,227 |
| Equity\tin\tundistributed\tnet\tincome\tof\tsubsidiaries: |  |  |  |
| Bank\tsubsidiaries\tand\tbank\tholding\tcompany | 736 | 854 | 845 |
| Non-bank\tsubsidiaries | 259 | 229 | 129 |
| Net\tincome | $4,106 | $4,184 | $4,201 |
| Other\tcomprehensive\tincome,\tnet\tof\ttax: |  |  |  |
| Net\tpension\tand\tother\tpostretirement\tbenefit\tplan\tactivity\tarising |  |  |  |
| during\tthe\tperiod | (3) | (17) | 34 |
| Other\tcomprehensive\tincome\t(loss) | (3) | (17) | 34 |
| Comprehensive\tincome | $4,103 | $4,167 | $4,235 |

# Table	135:	Parent	Company	–	Balance	Sheet

| Cash	held	at	banking	subsidiary | $1 | $1 |
| :--- | :--- | :--- |
| Restricted\tdeposits\twith\tbanking\tsubsidiary |  | 400 |
| Nonrestricted\tinterest-earning\tdeposits | 1,147 | 2,013 |
| Restricted\tinterest-earning\tdeposits | 300 |  |
| Investments\tin: |  |  |
| Bank\tsubsidiaries\tand\tbank\tholding\tcompany | \t 41,919 | \t 41,537 |
| Non-bank\tsubsidiaries | 2,742 | 2,480 |
| Other\tassets | 1,460 | 1,399 |
| Total\tassets | $47,569 | $47,830 |
| Liabilities |  |  |
| Subordinated\tdebt\t(a) | $1,639 | $1,618 |
| Senior\tdebt | 497 | 889 |
| Bank\taffiliate\tborrowings | 95 | 102 |
| Accrued\texpenses\tand\tother\tliabilities | 628 | 670 |
| Total\tliabilities | 2,859 | 3,279 |
| Equity |  |  |
| Shareholders'\tequity | \t 44,710 | \t 44,551 |
| Total\tliabilities\tand\tequity | $47,569 | $47,830 |
| (a)\nAt\tDecember\t31,\t2015,\tdebt\tthat\tcontractually\tmatures\tin\t2016\tthrough\t2020\ttotaled\tzero,\tzero, |  |  |

(a) At	December	31,	2015,	debt	that	contractually	matures	in	2016	through	2020	totaled	zero,	zero, zero,	$700	million	(subordinated	debt)	and	zero.

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	136:	Parent	Company	–	Interest	Paid	and	Income	Tax	Refunds (Payments)

|  |  | Income	Tax |
| :--- | :--- | :--- |
| Year\tended\tDecember\t31\t–\tin\tmillions | Interest\nPaid | Refunds\t/\n(Payments) |
| 2015 | $106 | $72 |
| 2014 | $103 | $(13) |
| 2013 | $117 | $91 |

# Table	137:	Parent	Company	–	Statement	of	Cash	Flows

| Year	ended	December	31	–	in	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Operating\tActivities |  |  |  |
| Net\tincome | $4,106 | $4,184 | $4,201 |
| Adjustments\tto\treconcile\tnet\tincome\tto |  |  |  |
| net\tcash\tprovided\tby\toperating |  |  |  |
| activities: |  |  |  |
| Equity\tin\tundistributed\tnet |  |  |  |
| earnings\tof\tsubsidiaries | (995) | (1,083) | (974) |
| Other | 163 | 118 | 152 |
| Net\tcash\tprovided\t(used)\tby\toperating |  |  |  |
| activities | 3,274 | 3,219 | 3,379 |
| Investing\tActivities |  |  |  |
| Net\tcapital\treturned\tfrom\t(contributed |  |  |  |
| to)\tsubsidiaries\nNet\tchange\tin\tRestricted\tdeposits\twith\nbanking\tsubsidiary | 400 |  | 87 |
| Net\tchange\tin\tnonrestricted\tinterest- |  |  |  |
| earning\tdeposits | 866 | (1,792) | (214) |
| Net\tchange\tin\trestricted\tinterest- |  |  |  |
| earning\tdeposits | (300) |  |  |
| Other | (81) | (79) | (60) |
| Net\tcash\tprovided\t(used)\tby |  |  |  |
| investing\tactivities | 885 | (1,871) | (187) |
| Financing\tActivities |  |  |  |
| Borrowings\tfrom\tsubsidiaries | 1,593 | 2,430 | 3,624 |
| Repayments\ton\tborrowings\tfrom |  |  |  |
| subsidiaries | (1,599) | (2,392) | (5,767) |
| Other\tborrowed\tfunds | (382) | 770 | (467) |
| Preferred\tstock\t–\tOther\tissuances |  |  | 495 |
| Preferred\tstock\t–\tOther\tredemptions | (500) |  | (150) |
| Common\tand\ttreasury\tstock\tissuances | 139 | 252 | 244 |
| Acquisition\tof\ttreasury\tstock | (2,152) | (1,176) | (24) |
| Preferred\tstock\tcash\tdividends\tpaid | (219) | (232) | (237) |
| Common\tstock\tcash\tdividends\tpaid | (1,039) | (1,000) | (911) |
| Net\tcash\tprovided\t(used)\tby |  |  |  |
| financing\tactivities | (4,159) | (1,348) | (3,193) |
| Increase\t(decrease)\tin\tcash\tand\tdue |  |  |  |
| from\tbanks |  |  | (1) |
| Cash\theld\tat\tbanking\tsubsidiary\tat |  |  |  |
| beginning\tof\tyear | 1 | 1 | 2 |
| Cash\theld\tat\tbanking\tsubsidiary\tat |  |  |  |
| end\tof\tyear | $1 | $1 | $1 |

# NOTE	23	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 significant	and	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.

Net	interest	income	in	business	segment	results	reflects	PNC's	internal	funds transfer	pricing	methodology.	Assets	receive	a	funding	charge	and	liabilities	and capital	receive	a	funding	credit	based	on	a	transfer	pricing	methodology	that incorporates	product	repricing	characteristics,	tenor	and	other	factors.	In	the	first quarter	of	2015,	enhancements	were	made	to	PNC's	funds	transfer	pricing methodology	primarily	for	costs	related	to	the	new	regulatory	short-term liquidity	standards.	The	enhancements	incorporate	an	additional	charge	assigned to	assets,	including	for	unfunded	loan	commitments.	Conversely,	a	higher transfer	pricing	credit	has	been	assigned	to	those	deposits	that	are	accorded higher	value	under	Liquidity	Coverage	Ratio	(LCR)	rules	for	liquidity	purposes. 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	LCR.	These	adjustments	apply	to	business	segment	results,	primarily favorably	impacting	Retail	Banking	and	adversely	impacting	Corporate	& Institutional	Banking,	prospectively	beginning	with	the	first	quarter	of	2015. Prior	periods	have	not	been	adjusted	due	to	the	impracticability	of	estimating	the impact	of	the	change	for	prior	periods.

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

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.

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.	The	business	also	offers	PNC	proprietary	mutual	funds.	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	provides	us	with	an additional	source	of	noninterest	income	and	increases	our	overall	revenue diversification.	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,	2015,	our	economic	interest in	BlackRock	was	22%.

# Table	138:	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 | Consolidated |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| 2015 |  |  |  |  |  |  |  |  |
| Income\tStatement |  |  |  |  |  |  |  |  |
| Net\tinterest\tincome | $4,224 | $3,365 | $292 | $121 |  | $392 | $(116) | $8,278 |
| Noninterest\tincome | 2,223 | 1,935 | 869 | 613 | $717 | 53 | 537 | 6,947 |
| Total\trevenue | 6,447 | 5,300 | 1,161 | 734 | 717 | 445 | 421 | 15,225 |
| Provision\tfor\tcredit\tlosses\t(benefit) | 259 | 106 | 9 | 2 |  | (114) | (7) | 255 |
| Depreciation\tand\tamortization | 169 | 145 | 44 | 15 |  |  | 436 | 809 |
| Other\tnoninterest\texpense | 4,592 | 2,003 | 802 | 676 |  | 83 | 498 | 8,654 |
| Income\t(loss)\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | 1,427 | 3,046 | 306 | 41 | 717 | 476 | (506) | 5,507 |
| Income\ttaxes\t(benefit) | 520 | 1,015 | 112 | 15 | 169 | 175 | (642) | 1,364 |
| Net\tincome | $907 | $2,031 | $194 | $26 | $548 | $301 | $136 | $4,143 |
| Inter-segment\trevenue | $1 | $24 | $9 | $20 | $15 | $(8) | $(61) |  |
| Average\tAssets\t(a) | $73,240 | $132,032 | $7,920 | $6,840 | $6,983 | $6,706 | $121,243 | $354,964 |
| 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(a) | $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(a) | $74,971 | $112,970 | $7,366 | $9,896 | $6,272 | $9,987 | $84,202 | $305,664 |
| (a)\nPeriod-end\tbalances\tfor\tBlackRock. |  |  |  |  |  |  |  |  |

(a) Period-end	balances	for	BlackRock.

# NOTE	24	SUBSEQUENT	EVENTS

On	February	1,	2016,	PNC	transferred	0.5	million	shares	of	BlackRock	Series	C	Preferred	Stock	to	BlackRock	to	satisfy	a	portion	of	our	LTIP	obligation.	Upon transfer,	Other	assets	and	Other	liabilities	on	our	Consolidated	Balance	Sheet	were	each	reduced	by	$138	million,	representing	the	fair	value	of	the	shares	transferred. After	this	transfer,	we	hold	0.8	million	shares	of	BlackRock	Series	C	Preferred	Stock	which	are	available	to	fund	our	remaining	obligation	in	connection	with	the BlackRock	LTIP	programs.

# STATISTICAL	INFORMATION	(UNAUDITED)

# SELECTED	QUARTERLY	FINANCIAL	DATA

| Dollars	in	millions,<br>except	per	share	data | Fourth | 2015<br>Third | Second | First | Fourth | 2014<br>Third | Second | First |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Summary\tOf\tOperations |  |  |  |  |  |  |  |  |
| Interest\tincome | $2,358 | $2,341 | $2,305 | $2,319 | $2,337 | $2,328 | $2,356 | $2,410 |
| Interest\texpense | 266 | 279 | 253 | 247 | 240 | 224 | 227 | 215 |
| Net\tinterest\tincome | \t 2,092 | \t 2,062 | \t 2,052 | \t 2,072 | \t 2,097 | \t 2,104 | \t 2,129 | \t 2,195 |
| Noninterest\tincome\t(a) | \t 1,761 | \t 1,713 | \t 1,814 | \t 1,659 | \t 1,850 | \t 1,737 | \t 1,681 | \t 1,582 |
| Total\trevenue | \t 3,853 | \t 3,775 | \t 3,866 | \t 3,731 | \t 3,947 | \t 3,841 | \t 3,810 | \t 3,777 |
| Provision\tfor\tcredit\tlosses | 74 | 81 | 46 | 54 | 52 | 55 | 72 | 94 |
| Noninterest\texpense | \t 2,396 | \t 2,352 | \t 2,366 | \t 2,349 | \t 2,539 | \t 2,357 | \t 2,328 | \t 2,264 |
| Income\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterests | \t 1,383 | \t 1,342 | \t 1,454 | \t 1,328 | \t 1,356 | \t 1,429 | \t 1,410 | \t 1,419 |
| Income\ttaxes | 361 | 269 | 410 | 324 | 299 | 391 | 358 | 359 |
| Net\tincome | \t 1,022 | \t 1,073 | \t 1,044 | \t 1,004 | \t 1,057 | \t 1,038 | \t 1,052 | \t 1,060 |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 14 | 18 | 4 | 1 | 21 | 1 | 3 | (2) |
| Preferred\tstock\tdividends\tand\tdiscount\taccretion\tand\tredemptions | 43 | 64 | 48 | 70 | 48 | 71 | 48 | 70 |
| Net\tincome\tattributable\tto\tcommon\tshareholders | $965 | $991 | $992 | $933 | $988 | $966 | $1,001 | $992 |
| Per\tCommon\tShare\tData |  |  |  |  |  |  |  |  |
| Book\tvalue | $81.84 | $81.42 | $79.64 | $78.99 | $77.61 | $76.71 | $75.62 | $73.73 |
| Basic\tearnings\tfrom\tnet\tincome\t(b) | 1.90 | 1.93 | 1.92 | 1.79 | 1.88 | 1.82 | 1.88 | 1.86 |
| Diluted\tearnings\tfrom\tnet\tincome\t(b) | 1.87 | 1.90 | 1.88 | 1.75 | 1.84 | 1.79 | 1.85 | 1.82 |
| (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:

|  |  | 2015 |  |  |  | 2014 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| in\tmillions | Fourth | Third | Second | First | Fourth | Third | Second | First |
| Private\tequity\tgains/(losses) | $21 | $59 | $43 | $41 | $61 | $70 | $35 | $42 |
| Net\tgains\ton\tsales\tof\tsecurities | 2 | (9) | 8 | \t 42 | – | – | (6) | \t 10 |
| (b) |  |  |  |  |  |  |  |  |

(b) The	sum	of	the	quarterly	amounts	for	2015	and	2014	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)

|  |  | 2015 |  |  | 2014 |  |  | 2013 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| 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 | $21,371 | $540 | 2.53% | $18,935 | $503 | 2.66% | $22,746 | $562 | 2.47% |
| Non-agency | 4,374 | 207 | 4.73 | 5,106 | 244 | 4.78 | 5,828 | 317 | 5.44 |
| Commercial\tmortgage-backed | 6,372 | 195 | 3.06 | 5,461 | 192 | 3.52 | 5,228 | 222 | 4.25 |
| Asset-backed | 5,234 | 111 | 2.12 | 5,321 | 105 | 1.97 | 5,857 | 110 | 1.88 |
| U.S.\tTreasury\tand\tgovernment\tagencies | 6,486 | 79 | 1.22 | 4,837 | 57 | 1.18 | 2,326 | 37 | 1.59 |
| State\tand\tmunicipal | 1,982 | 93 | 4.69 | 2,148 | 96 | 4.47 | 2,250 | 97 | 4.31 |
| Other\tdebt | 1,844 | 52 | 2.82 | 2,016 | 52 | 2.58 | 2,632 | 64 | 2.43 |
| Corporate\tstocks\tand\tother | 518 | 1 | .19 | 402 | – | – | 342 | – | – |
| Total\tsecurities\tavailable\tfor\tsale | 48,181 | 1,278 | 2.65 | 44,226 | 1,249 | 2.82 | 47,209 | 1,409 | 2.98 |
| Securities\theld\tto\tmaturity |  |  |  |  |  |  |  |  |  |
| Residential\tmortgage-backed | 8,238 | 251 | 3.05 | 5,885 | 207 | 3.52 | 4,374 | 153 | 3.50 |
| Commercial\tmortgage-backed | 1,976 | 75 | 3.80 | 2,502 | 99 | 3.96 | 3,422 | 151 | 4.41 |
| Asset-backed | 738 | 11 | 1.49 | 908 | 14 | 1.54 | 983 | 16 | 1.63 |
| U.S.\tTreasury\tand\tgovernment\tagencies | 253 | 10 | 3.95 | 243 | 9 | 3.70 | 235 | 9 | 3.83 |
| State\tand\tmunicipal | 1,992 | 110 | 5.52 | 1,727 | 95 | 5.50 | 749 | 42 | 5.61 |
| Other | 287 | 9 | 3.14 | 329 | 10 | 3.04 | 347 | 11 | 3.17 |
| Total\tsecurities\theld\tto\tmaturity | 13,484 | 466 | 3.46 | 11,594 | 434 | 3.74 | 10,110 | 382 | 3.78 |
| Total\tinvestment\tsecurities | 61,665 | 1,744 | 2.83 | 55,820 | 1,683 | 3.02 | 57,319 | 1,791 | 3.12 |
| Loans |  |  |  |  |  |  |  |  |  |
| Commercial | 98,093 | 2,975 | 3.03 | 92,411 | 3,029 | 3.28 | 86,047 | 3,243 | 3.77 |
| Commercial\treal\testate | 25,177 | 896 | 3.56 | 22,646 | 919 | 4.06 | 19,469 | 937 | 4.81 |
| Equipment\tlease\tfinancing | 7,570 | 260 | 3.43 | 7,567 | 278 | 3.67 | 7,329 | 292 | 3.98 |
| Consumer | 60,094 | 2,505 | 4.17 | 62,529 | 2,609 | 4.17 | 62,125 | 2,744 | 4.42 |
| Residential\treal\testate | 14,415 | 697 | 4.84 | 14,495 | 721 | 4.97 | 15,003 | 773 | 5.15 |
| Total\tloans | \t 205,349 | 7,333 | 3.57 | \t 199,648 | 7,556 | 3.78 | \t 189,973 | 7,989 | 4.21 |
| Interest-earning\tdeposits\twith\tbanks | 32,908 | 86 | .26 | 19,204 | 49 | .26 | 4,910 | 12 | .24 |
| Loans\theld\tfor\tsale | 2,070 | 90 | 4.35 | 2,123 | 99 | 4.66 | 2,909 | 157 | 5.40 |
| Federal\tfunds\tsold\tand\tresale\tagreements | 1,669 | 4 | .24 | 1,446 | 5 | .35 | 960 | 8 | .83 |
| Other | 5,164 | 262 | 5.07 | 5,064 | 228 | 4.50 | 4,574 | 218 | 4.77 |
| Total\tinterest-earning\tassets/interest\tincome | \t 308,825 | 9,519 | 3.08 | \t 283,305 | 9,620 | 3.40 | \t 260,645 | 10,175 | 3.90 |
| Noninterest-earning\tassets: |  |  |  |  |  |  |  |  |  |
| Allowance\tfor\tloan\tand\tlease\tlosses | (3,273) |  |  | (3,482) |  |  | (3,796) |  |  |
| Cash\tand\tdue\tfrom\tbanks | 4,006 |  |  | 3,945 |  |  | 3,953 |  |  |
| Other | 45,406 |  |  | 44,085 |  |  | 44,862 |  |  |
| Total\tassets | $354,964 |  |  | $327,853 |  |  | $305,664 |  |  |
| Liabilities\tand\tEquity |  |  |  |  |  |  |  |  |  |
| Interest-bearing\tliabilities: |  |  |  |  |  |  |  |  |  |
| Interest-bearing\tdeposits |  |  |  |  |  |  |  |  |  |
| Money\tmarket | $81,911 | $214 | .26% | $75,513 | $140 | .19% | $70,567 | $128 | .18% |
| Demand | 46,649 | 26 | .06 | 43,367 | 22 | .05 | 40,144 | 18 | .04 |
| Savings | 14,719 | 32 | .22 | 11,990 | 14 | .12 | 10,954 | 10 | .09 |
| Retail\tcertificates\tof\tdeposit | 18,294 | 127 | .69 | 19,636 | 145 | .74 | 22,274 | 180 | .81 |
| Time\tdeposits\tin\tforeign\toffices\tand\tother\ttime | 2,392 | 4 | .17 | 2,308 | 4 | .17 | 2,061 | 8 | .39 |
| Total\tinterest-bearing\tdeposits | \t 163,965 | 403 | .25 | \t 152,814 | 325 | .21 | \t 146,000 | 344 | .24 |
| Borrowed\tfunds |  |  |  |  |  |  |  |  |  |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements | 2,510 | 3 | .12 | 3,560 | 3 | .08 | 3,884 | 6 | .15 |
| Federal\tHome\tLoan\tBank\tborrowings | 21,365 | 104 | .49 | 14,863 | 73 | .49 | 8,617 | 45 | .52 |
| Bank\tnotes\tand\tsenior\tdebt | 17,937 | 223 | 1.24 | 14,114 | 202 | 1.43 | 11,221 | 191 | 1.70 |
| Subordinated\tdebt | 8,796 | 236 | 2.68 | 8,559 | 219 | 2.56 | 7,373 | 205 | 2.78 |
| Commercial\tpaper | 2,684 | 10 | .37 | 4,861 | 14 | .29 | 6,902 | 16 | .23 |
| Other | 3,221 | 66 | 2.05 | 2,860 | 70 | 2.45 | 2,025 | 53 | 2.62 |
| Total\tborrowed\tfunds | 56,513 | 642 | 1.14 | 48,817 | 581 | 1.19 | 40,022 | 516 | 1.29 |
| Total\tinterest-bearing\tliabilities/interest\texpense | \t 220,478 | 1,045 | .47 | \t 201,631 | 906 | .45 | \t 186,022 | 860 | .46 |
| Noninterest-bearing\tliabilities\tand\tequity: |  |  |  |  |  |  |  |  |  |
| Noninterest-bearing\tdeposits | 76,398 |  |  | 70,108 |  |  | 66,168 |  |  |
| Allowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | 251 |  |  | 238 |  |  | 241 |  |  |
| Accrued\texpenses\tand\tother\tliabilities | 11,959 |  |  | 10,530 |  |  | 10,918 |  |  |
| Equity | 45,878 |  |  | 45,346 |  |  | 42,315 |  |  |
| Total\tliabilities\tand\tequity | $354,964 |  |  | $327,853 |  |  | $305,664 |  |  |
| Interest\trate\tspread |  |  | 2.61 |  |  | 2.95 |  |  | 3.44 |
| Impact\tof\tnoninterest-bearing\tsources |  |  | .13 |  |  | .13 |  |  | .13 |
| Net\tinterest\tincome/margin |  | $8,474 | 2.74% |  | $8,714 | 3.08% |  | $9,315 | 3.57% |

(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,	2015,	2014	and	2013	were	$196	million,	$189	million	and	$168	million,	respectively.

# ANALYSIS	OF	YEAR-TO-YEAR	CHANGES	IN	NET	INTEREST	INCOME	(a)	(b)

|  | 2015/2014 | 2015/2014 | 2015/2014 | 2014/2013 | 2014/2013 | 2014/2013 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 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 $63 | \t\t $(26) | \t\t $37 | \t\t $(99) | \t\t $40 | \t\t $(59) |
| Non-agency | (34) | (3) | (37) | (37) | (36) | (73) |
| Commercial\tmortgage-backed | 30 | (27) | 3 | 10 | (40) | (30) |
| Asset-backed | (2) | 8 | 6 | (10) | 5 | (5) |
| U.S.\tTreasury\tand\tgovernment\tagencies | 20 | 2 | 22 | 32 | (12) | 20 |
| State\tand\tmunicipal | (8) | 5 | (3) | (5) | 4 | (1) |
| Other\tdebt | (4) | 4 |  | (16) | 4 | (12) |
| Corporate\tstocks\tand\tother |  | 1 | 1 |  |  |  |
| Total\tsecurities\tavailable\tfor\tsale | 107 | (78) | 29 | (86) | (74) | (160) |
| Securities\theld\tto\tmaturity |  |  |  |  |  |  |
| Residential\tmortgage-backed | 75 | (31) | 44 | 53 | 1 | 54 |
| Commercial\tmortgage-backed | (20) | (4) | (24) | (38) | (14) | (52) |
| Asset-backed | (3) |  | (3) | (1) | (1) | (2) |
| U.S.\tTreasury\tand\tgovernment\tagencies |  | 1 | 1 |  |  |  |
| State\tand\tmunicipal | 15 |  | 15 | 54 | (1) | 53 |
| Other | (1) |  | (1) | (1) |  | (1) |
| Total\tsecurities\theld\tto\tmaturity | 66 | (34) | 32 | 56 | (4) | 52 |
| Total\tinvestment\tsecurities | 171 | (110) | 61 | (49) | (59) | (108) |
| Loans |  |  |  |  |  |  |
| Commercial | 182 | (236) | (54) | 228 | (442) | (214) |
| Commercial\treal\testate | 97 | (120) | (23) | 140 | (158) | (18) |
| Equipment\tlease\tfinancing |  | (18) | (18) | 9 | (23) | (14) |
| Consumer | (104) |  | (104) | 18 | (153) | (135) |
| Residential\treal\testate | (4) | (20) | (24) | (26) | (26) | (52) |
| Total\tloans | 209 | (432) | (223) | 399 | (832) | (433) |
| Interest-earning\tdeposits\twith\tbanks | 37 |  | 37 | 36 | 1 | 37 |
| Loans\theld\tfor\tsale | (2) | (7) | (9) | (38) | (20) | (58) |
| Federal\tfunds\tsold\tand\tresale\tagreements | 1 | (2) | (1) | 3 | (6) | (3) |
| Other | 5 | 29 | 34 | 22 | (12) | 10 |
| Total\tinterest-earning\tassets | \t\t $838 | \t\t $(939) | \t\t $(101) | \t\t $829 | \t\t $(1,384) | \t\t $(555) |
| Interest-Bearing\tLiabilities |  |  |  |  |  |  |
| Interest-bearing\tdeposits |  |  |  |  |  |  |
| Money\tmarket | \t\t $14 | \t\t $60 | \t\t $74 | \t\t $7 | \t\t $5 | \t\t $12 |
| Demand | 1 | 3 | 4 | 1 | 3 | 4 |
| Savings | 4 | 14 | 18 | 1 | 3 | 4 |
| Retail\tcertificates\tof\tdeposit | (9) | (9) | (18) | (20) | (15) | (35) |
| Time\tdeposits\tin\tforeign\toffices\tand\tother\ttime |  |  |  | 1 | (5) | (4) |
| Total\tinterest-bearing\tdeposits | 21 | 57 | 78 | 18 | (37) | (19) |
| Borrowed\tfunds |  |  |  |  |  |  |
| Federal\tfunds\tpurchased\tand\trepurchase\tagreements | (1) | 1 |  |  | (3) | (3) |
| Federal\tHome\tLoan\tBank\tborrowings | 31 |  | 31 | 31 | (3) | 28 |
| Bank\tnotes\tand\tsenior\tdebt | 50 | (29) | 21 | 44 | (33) | 11 |
| Subordinated\tdebt | 6 | 11 | 17 | 31 | (17) | 14 |
| Commercial\tpaper | (7) | 3 | (4) | (6) | 4 | (2) |
| Other | 8 | (12) | (4) | 20 | (3) | 17 |
| Total\tborrowed\tfunds | 86 | (25) | 61 | 107 | (42) | 65 |
| Total\tinterest-bearing\tliabilities | 95 | 44 | 139 | 66 | (20) | 46 |
| Change\tin\tnet\tinterest\tincome | \t\t $746 | \t\t $(986) | \t\t $(240) | \t\t $767 | \t\t $(1,368) | \t\t $(601) |
| (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,	2015,	2014	and	2013	were	$196	million,	$189	million	and	$168	million,	respectively.

# LOANS	SUMMARY

(b) 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.

# FEE	INCOME	RECONCILIATION	(NON-GAAP)

| Dollars	in	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Noninterest\tincome |  |  |  |
| Asset\tmanagement | $1,567 | $1,513\t\t\t\t $1,342 | $1,513\t\t\t\t $1,342 |
| Consumer\tservices | \t 1,335 | \t 1,254 | \t 1,253 |
| Corporate\tservices | \t 1,491 | \t 1,415 | \t 1,210 |
| Residential\tmortgage | 566 | 618 | 871 |
| Service\tcharges\ton\tdeposits | 651 | 662 | 597 |
| Total\tfee\tincome | \t 5,610 | \t 5,462 | \t 5,273 |
| Net\tgains\ton\tsales\tof\tsecurities | 43 | 4 | 99 |
| Other | \t 1,294 | \t 1,384 | \t 1,493 |
| Total\tnoninterest\tincome | $6,947 | $6,850\t\t\t\t $6,865 | $6,850\t\t\t\t $6,865 |

# NONPERFORMING	ASSETS	AND	RELATED	INFORMATION

| December	31	–	dollars	in	millions | 2015 | 2014 | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Nonperforming\tloans |  |  |  |  |  |
| Commercial | $351 | $290 | $457 | $590 | $899 |
| Commercial\treal\testate | 187 | 334 | 518 | 807 | \t 1,345 |
| Equipment\tlease\tfinancing | 7 | 2 | 5 | 13 | 22 |
| Total\tcommercial\tlending | 545 | 626 | 980 | \t 1,410 | \t 2,266 |
| Consumer\tlending\t(a) |  |  |  |  |  |
| Home\tequity\t(b)\t(c) | 977 | \t 1,112 | \t 1,139 | 951 | 529 |
| Residential\treal\testate\t(b) | 549 | 706 | 904 | 845 | 726 |
| Credit\tcard\t(d) | 3 | 3 | 4 | 5 | 8 |
| Other\tconsumer\t(b) | 52 | 63 | 61 | 43 | 31 |
| Total\tconsumer\tlending\t(e) | \t 1,581 | \t 1,884 | \t 2,108 | \t 1,844 | \t 1,294 |
| Total\tnonperforming\tloans\t(f) | \t 2,126 | \t 2,510 | \t 3,088 | \t 3,254 | \t 3,560 |
| OREO\tand\tforeclosed\tassets |  |  |  |  |  |
| Other\treal\testate\towned\t(OREO) | 279 | 351 | 360 | 507 | 561 |
| Foreclosed\tand\tother\tassets | 20 | 19 | 9 | 33 | 35 |
| Total\tOREO\tand\tforeclosed\tassets | 299 | 370 | 369 | 540 | 596 |
| Total\tnonperforming\tassets | $2,425 | $2,880 | $3,457 | $3,794 | $4,156 |
| Nonperforming\tloans\tto\ttotal\tloans | 1.03% | 1.23% | 1.58% | 1.75% | 2.24% |
| Nonperforming\tassets\tto\ttotal\tloans,\tOREO\tand\tforeclosed\tassets | 1.17 | 1.40 | 1.76 | 2.04 | 2.60 |
| Nonperforming\tassets\tto\ttotal\tassets | .68 | .83 | 1.08 | 1.24 | 1.53 |
| Interest\ton\tnonperforming\tloans |  |  |  |  |  |
| Computed\ton\toriginal\tterms | $115 | $125 | $163 | $212 | $278 |
| Recognized\tprior\tto\tnonperforming\tstatus | 22 | 25 | 30 | 30 | 47 |
| Troubled\tDebt\tRestructurings |  |  |  |  |  |
| Nonperforming | $1,119 | $1,370 | $1,511 | $1,589 | $1,141 |
| Performing | \t 1,232 | \t 1,213 | \t 1,228 | \t 1,270 | \t 1,062 |
| Past\tdue\tloans |  |  |  |  |  |
| Accruing\tloans\tpast\tdue\t90\tdays\tor\tmore\t(g) | $881 | $1,105 | $1,491 | $2,351 | $2,973 |
| As\ta\tpercentage\tof\ttotal\tloans | .43% | .54% | .76% | 1.26% | 1.87% |
| Past\tdue\tloans\theld\tfor\tsale |  |  |  |  |  |
| Accruing\tloans\theld\tfor\tsale\tpast\tdue\t90\tdays\tor\tmore\t(h) | $4 | $9 | $4 | $38 | $49 |
| As\ta\tpercentage\tof\ttotal\tloans\theld\tfor\tsale | .29% | .40% | .18% | 1.03% | 1.67% |
| (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.

(g) Amounts	include	certain	government	insured	or	guaranteed	consumer	loans	totaling	$765	million,	$996	million,	$995	million,	$2,236	million	and	$2,474	million	at	December	31,	2015,	December	31,

2014,	December	31,	2013,	December	31,	2012	and	December	31,	2011,	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 | 2015 | 2014 | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Allowance\tfor\tloan\tand\tlease\tlosses\t–\tJanuary\t1 | $3,331 | $3,609 | $4,036 | $4,347 | $4,887 |
| Charge-offs |  |  |  |  |  |
| Commercial | (206) | (276) | (395) | (474) | (700) |
| Commercial\treal\testate | (44) | (70) | (203) | (314) | (464) |
| Equipment\tlease\tfinancing | (5) | (14) | (8) | (16) | (35) |
| Home\tequity | (181) | (275) | (486) | (560) | (484) |
| Residential\treal\testate | (24) | (40) | (133) | (110) | (153) |
| Credit\tcard | (160) | (163) | (178) | (200) | (235) |
| Other\tconsumer | (185) | (183) | (185) | (196) | (193) |
| Total\tcharge-offs | (805) | (1,021) | (1,588) | (1,870) | (2,264) |
| Recoveries |  |  |  |  |  |
| Commercial | 170 | 207 | 248 | 300 | 332 |
| Commercial\treal\testate | 66 | 84 | 93 | 115 | 105 |
| Equipment\tlease\tfinancing | 4 | 14 | 16 | 30 | 50 |
| Home\tequity | 93 | 78 | 73 | 61 | 48 |
| Residential\treal\testate | 13 | 26 | 4 | (1) | 11 |
| Credit\tcard | 21 | 21 | 22 | 26 | 23 |
| Other\tconsumer | 52 | 60 | 55 | 50 | 56 |
| Total\trecoveries | 419 | 490 | 511 | 581 | 625 |
| Net\tcharge-offs | (386) | (531) | (1,077) | (1,289) | (1,639) |
| Provision\tfor\tcredit\tlosses | 255 | 273 | 643 | 987 | 1,152 |
| Net\tchange\tin\tallowance\tfor\tunfunded\tloan\tcommitments\tand\tletters\tof\tcredit | (2) | (17) | 8 | (10) | (52) |
| Write-off\tof\tpurchased\timpaired\tloans\t(a) | (468) |  |  |  |  |
| Other | (3) | (3) | (1) | 1 | (1) |
| Allowance\tfor\tloan\tand\tlease\tlosses\t–\tDecember\t31 | $2,727 | $3,331 | $3,609 | $4,036 | $4,347 |
| Allowance\tas\ta\tpercentage\tof\tDecember\t31: |  |  |  |  |  |
| Loans\t(a) | 1.32% | 1.63% | 1.84% | 2.17% | 2.73% |
| Nonperforming\tloans | 128 | 133 | 117 | 124 | 122 |
| As\ta\tpercentage\tof\taverage\tloans |  |  |  |  |  |
| Net\tcharge-offs | .19 | .27 | .57 | .73 | 1.08 |
| Provision\tfor\tcredit\tlosses | .12 | .14 | .34 | .56 | .76 |
| Allowance\tfor\tloan\tand\tlease\tlosses\t(a) | 1.33 | 1.67 | 1.90 | 2.28 | 2.86 |
| Allowance\tas\ta\tmultiple\tof\tnet\tcharge-offs | \t 7.06x | 6.27x | 3.35x | 3.13x | 2.65x |

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

|  |  | 2015 |  | 2014 |  | 2013 | 2012 |  | 2011 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31 |  | Loans\tto |  | Loans\tto |  | Loans\tto |  | Loans\tto |  | Loans\tto |
| Dollars\tin\tmillions | \t Allowance | Total\tLoans | \t Allowance | Total\tLoans | \t Allowance | Total\tLoans | \t Allowance | Total\tLoans | \t Allowance | Total\tLoans |
| Commercial | \t$1,286 | 47.7% | \t$1,209 | 47.6% | \t$1,100 | 45.2% | \t$1,131 | 44.7% | \t$1,180 | 41.3% |
| Commercial\treal\testate | 281 | 13.3 | 318 | 11.4 | 400 | 10.8 | 589 | 10.0 | 753 | 10.2 |
| Equipment\tlease\tfinancing | 38 | 3.6 | 44 | 3.7 | 47 | 3.9 | 54 | 3.9 | 62 | 4.0 |
| Home\tequity | 484 | 15.5 | 872 | 16.9 | 1,051 | 18.6 | 1,044 | 19.3 | 1,095 | 20.8 |
| Residential\treal\testate | 307 | 7.0 | 561 | 7.0 | 642 | 7.7 | 847 | 8.2 | 894 | 9.1 |
| Credit\tcard | 167 | 2.4 | 173 | 2.3 | 169 | 2.3 | 199 | 2.3 | 202 | 2.5 |
| Other\tconsumer | 164 | 10.5 | 154 | 11.1 | 200 | 11.5 | 172 | 11.6 | 161 | 12.1 |
| Total | \t$2,727 | 100.0% | \t$3,331 | 100.0% | \t$3,609 | 100.0% | \t$4,036 | 100.0% | \t$4,347 | 100.0% |

# SELECTED	LOAN	MATURITIES	AND	INTEREST	SENSITIVITY

| December	31,	2015<br>In	millions | 1	Year	or<br>Less | 1	Through<br>5	Years | After<br>5	Years | Gross<br>Loans |
| :--- | :--- | :--- | :--- | :--- |
| Commercial | $27,251 | $61,342 | $10,015 | $98,608 |
| Commercial\treal\testate\t–\tReal |  |  |  |  |
| estate\tprojects | 7,868 | \t 14,319 | 5,281 | 27,468 |
| Total | $35,119 | $75,661 | $15,296 | $126,076 |
| Loans\twith: |  |  |  |  |
| Predetermined\trate | $5,582 | $10,866 | $6,526 | $22,974 |
| Floating\tor\tadjustable\trate | \t 29,537 | \t 64,795 | 8,770 | \t 103,102 |
| Total | $35,119 | $75,661 | $15,296 | $126,076 |

At	December	31,	2015,	we	had	no	pay-fixed	interest	rate	swaps	designated	to commercial	loans	as	part	of	fair	value	hedge	strategies.	At	December	31,	2015, $17.9	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.

# TIME	DEPOSITS

# 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	(a) |
| :--- | :--- | :--- | :--- | :--- |
| 2015\tQuarter |  |  |  |  |
| First | $96.71 | $81.84 | $93.24 | $.48 |
| Second | 99.61 | \t 90.42 | \t 95.65 | .51 |
| Third | \t 100.52 | \t 82.77 | \t 89.20 | .51 |
| Fourth | 97.50 | \t 84.93 | \t 95.31 | .51 |
| Total |  |  |  | $2.01 |
| 2014\tQuarter |  |  |  |  |
| First | $87.80 | $76.06 | $87.00 | $.44 |
| Second | 89.85 | \t 79.80 | \t 89.05 | .48 |
| Third | 90.00 | \t 80.43 | \t 85.58 | .48 |
| Fourth | 93.45 | \t 76.69 | \t 91.23 | .48 |
| Total |  |  |  | $1.88 |
| (a) |  |  |  |  |

(a) Our	Board	approved	a	first	quarter	2016	cash	dividend	of	$.51	per	common	share,	which	was payable	on	February	5,	2016.

# TRANSITIONAL	BASEL	III	AND	PRO	FORMA	FULLY	PHASED-IN	BASEL	III	COMMON	EQUITY	TIER	1	CAPITAL	RATIOS	–	2012-2014	PERIODS

PNC's	regulatory	risk-based	capital	ratios	in	2014	were	based	on	the	definitions	of,	and	deductions	from,	regulatory	capital	under	the	Basel	III	rules	(as	such	definitions and	deductions	were	phased-in	for	2014)	and	Basel	I	risk-weighted	assets	(but	subject	to	certain	adjustments	as	defined	by	the	Basel	III	rules).	We	refer	to	the	2014 capital	ratios	calculated	using	these	phased-in	Basel	III	provisions	and	Basel	I	risk-weighted	assets	as	the	2014	Transitional	Basel	III	ratios.

|  | 2014	Transitional |  |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Basel\tIII | Pro\tforma\tFully\tPhased-In\tBasel\tIII\t(a)\t(b) | Pro\tforma\tFully\tPhased-In\tBasel\tIII\t(a)\t(b) |  |
|  | December\t31 | December\t31 | December\t31 | December\t31 |
| Dollars\tin\tmillions | 2014 | 2014 | 2013 | 2012 |
| Common\tstock,\trelated\tsurplus\tand\tretained\tearnings,\tnet\tof\ttreasury\tstock | $40,103 | $40,103 | $38,031 | $34,579 |
| Less\tregulatory\tcapital\tadjustments: |  |  |  |  |
| Goodwill\tand\tdisallowed\tintangibles,\tnet\tof\tdeferred\ttax\tliabilities | (8,939) | (9,276) | (9,321) | (9,445) |
| Basel\tIII\ttotal\tthreshold\tdeductions | (212) | (1,081) | (1,386) | (2,330) |
| Accumulated\tother\tcomprehensive\tincome\t(c) | 40 | 201 | 196 | 276 |
| All\tother\tadjustments | (63) | (121) | (64) | (579) |
| Estimated\tBasel\tIII\tCommon\tequity\tTier\t1\tcapital | $30,929 | $29,826 | $27,456 | $22,501 |
| Estimated\tBasel\tI\trisk-weighted\tassets\tcalculated\tin\taccordance\twith\ttransition |  |  |  |  |
| rules\t(d) | $284,018 | N/A | N/A | N/A |
| Estimated\tBasel\tIII\tstandardized\tapproach\trisk-weighted\tassets\t(e) | N/A | $298,786 | $291,977 | $N/A |
| Estimated\tBasel\tIII\tadvanced\tapproaches\trisk-weighted\tassets\t(f) | N/A | $285,870 | $290,080 | $301,006 |
| Estimated\tBasel\tIII\tCommon\tequity\tTier\t1\tcapital\tratio | 10.9% | 10.0% | 9.4% | 7.5% |

(a) 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.

(b) Basel	III	capital	ratios	and	estimates	may	be	impacted	by	additional	regulatory	guidance	and,	in	the	case	of	those	ratios	calculated	using	the	advanced	approaches,	may	be	subject	to	variability	based	on	the ongoing	evolution,	validation	and	regulatory	approval	of	PNC's	models	that	are	integral	to	the	calculation	of	advanced	approaches	risk-weighted	assets	as	PNC	moves	through	the	parallel	run	process.

(c) 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.

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

(e) 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.

(f) 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 |
| :--- | :--- | :--- | :--- |
| Basel\tI\tTier\t1\tcommon\tcapital | $28,484 | $24,951 | $23,732 |
| Basel\tI\trisk-weighted\tassets | 272,169 | 260,847 | 230,705 |
| Basel\tI\tTier\t1\tcommon\tcapital\tratio | 10.5% | 9.6% | 10.3% |
| (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.

# 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,	2015.	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,	2015.

PricewaterhouseCoopers	LLP,	the	independent	registered	public	accounting	firm that	audited	our	consolidated	financial	statements	as	of	and	for	the	year	ended December	31,	2015	included	in	this	Report,	has	also	audited	the	effectiveness	of PNC's	internal	control	over	financial	reporting	as	of	December	31,	2015.	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,	2015,	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,	2015,	and	that	there	has	been	no	change	in	PNC's	internal	control over	financial	reporting	that	occurred	during	the	fourth	quarter	of	2015	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,"	in	our	Proxy	Statement	to	be	filed	for	the	2016	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."

Information	regarding	our	compliance	with	Section	16(a)	of	the	Securities Exchange	Act	of	1934	is	included	under	the	caption	"Section	16(a)	Beneficial Ownership	Reporting	Compliance"	in	our	Proxy	Statement	to	be	filed	for	the 2016	annual	meeting	of	shareholders	and	is	incorporated	herein	by	reference.

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	2016	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	2016	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	2016	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,	2015	is	included	in	a table	(with	introductory	paragraph	and	notes)	under	the	caption	"Approval	of 2016	Incentive	Award	Plan	(Item	3)"	in	our	Proxy	Statement	to	be	filed	for	the 2016	annual	meeting	of	shareholders	and	is	incorporated	herein	by	reference. Included	in	the	notes	to	that	table,	and	incorporated	herein	by	reference,	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	13	Stock	Based	Compensation	Plans	in the	Notes	To	the	Consolidated	Financial	Statements	in	Item	8	of	this	Report.

# 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,	and	–	Indemnification	and	advancement of	costs"	and	"Related	Person	Transactions"	in	our	Proxy	Statement	to	be	filed for	the	2016	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,	–	Procedures	for	pre-approving	audit services,	audit-related	services	and	permitted	non-audit	services"	in	our	Proxy Statement	to	be	filed	for	the	2016	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,	2015	and	2014	and	for	each	of	the	three	years	in	the	period	ended December	31,	2015	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	26,	2016.

*By: /s/	Christi	Davis

Christi	Davis,	Attorney-in-Fact,

pursuant	to	Powers	of	Attorney	filed	herewith

# EXHIBIT	INDEX

Incorporated	herein	by	reference	to	the	senior	officer	change	in	control severance	agreements	portion	of	Exhibit	10.20	of	the	Corporation's Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2006	as filed	on	March	1,	2007	(2006	Form	10-K)*

10.27 2010	forms	of	employee	stock	option,	restricted	stock,	and	restricted	share unit	agreements

10.28 2011	forms	of	employee	stock	option,	restricted	stock,	restricted	share	unit and	performance	unit	agreements

Incorporated	by	reference	to	the	employee	stock	option,	restricted	stock	and restricted	share	unit	agreements	portions	of	Exhibit	10.61	to	the Corporation's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended March	31,	2009*

Incorporated	herein	by	reference	to	Exhibit	10.48	to	the	Corporation's	2009 Form	10-K*

Incorporated	herein	by	reference	to	Exhibit	10.71	of	the	Corporation's	1st Quarter	2011	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-

* 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 interest only products , what percent of the total was due in 2020 and thereafter?
Calculation: rent_2020 = 3321
rent_total = 8124
percent_2020 = rent_2020 / rent_total
answer = percent_2020 * 100
Answer: 40.9%