NOTE 4 LOANS AND COMMITMENTS TO EXTEND CREDIT Loans outstanding were as follows: LOANS OUTSTANDING
## Table 0 ##
(a) Net of unearned income, net deferred loan fees, unamortized discounts and premiums, and purchase discounts and premiums totaling $2.3 billion and $2.7 billion at December 31, 2011 and December 31, 2010, respectively.
(b) Future accretable yield related to purchased impaired loans is not included in loans outstanding.
We originate interest-only loans to commercial borrowers.
This is usually to match our borrowers’ asset conversion to cash expectations (i. e. , working capital lines, revolvers).
These products are standard in the financial services industry and are considered during the underwriting process to mitigate the increased risk that 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.
In the normal course of business, we originate or purchase loan products with contractual features, when concentrated, that 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, below-market interest rates and interest-only loans, among others.
We also originate home equity loans and lines of credit that are concentrated in our primary geographic markets.
At December 31, 2011, we pledged $21.8 billion of commercial loans to the Federal Reserve Bank and $27.7 billion of residential real estate and other loans to the Federal Home Loan Bank as collateral for the contingent ability to borrow, if necessary.
The comparable amounts at December 31, 2010 were $12.6 billion and $32.4 billion, respectively.
Net Unfunded Credit Commitments
## Table 1 ##
(a) Excludes standby letters of credit.
See Note 23 Commitments and Guarantees for additional information on standby letters of credit.
Commitments to extend credit represent arrangements to lend funds or provide liquidity subject to specified contractual conditions.
At December 31, 2011, commercial commitments reported above exclude $20.2 billion of syndications, assignments and participations, primarily to financial institutions.
The comparable amount at December 31, 2010 was $16.7 billion.
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, most commitments expire unfunded, and therefore cash requirements are substantially less than the total commitment.
NOTE 5 ASSET QUALITY AND ALLOWANCES FOR LOAN AND LEASE LOSSES AND UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT ASSET QUALITY We closely monitor economic conditions and loan performance trends to manage and evaluate our exposure to credit risk.
Trends in delinquency rates are 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 and purchased impaired loans, but include government insured or guaranteed loans.
The trends in nonperforming assets represent another key indicator of the potential for future credit losses.
Nonperforming assets include nonperforming loans, TDRs, and other real estate owned (OREO) and foreclosed assets, but exclude government insured or guaranteed loans, loans held for sale, loans accounted for under the fair value option and purchased impaired loans.
See Note 6 Purchased Impaired Loans for further information.
See Note 1 Accounting Policies for additional delinquency, nonperforming, and charge-off information.
RECOURSE AND REPURCHASE OBLIGATIONS As discussed in Note 3 Loans Sale and Servicing Activities and Variable Interest Entities, PNC has sold commercial mortgage and residential mortgage loans directly or indirectly in securitizations and whole-loan sale transactions with continuing involvement.
One form of continuing involvement includes certain recourse and loan repurchase obligations associated with the transferred assets in these transactions.
COMMERCIAL MORTGAGE LOAN RECOURSE OBLIGATIONS We originate, close and service certain multi-family commercial mortgage loans which are sold to FNMA under FNMA’s 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, 2011 and December 31, 2010, the unpaid principal balance outstanding of loans sold as a participant in these programs was $13.0 billion and $13.2 billion, respectively.
The potential maximum exposure under the loss share arrangements was $4.0 billion at both December 31, 2011 and December 31, 2010.
We maintain a reserve for estimated losses based upon our exposure.
The reserve for losses under these programs totaled $47 million and $54 million as of December 31, 2011 and December 31, 2010, respectively, and is included in Other liabilities on our Consolidated Balance Sheet.
If payment is required under these programs, we would not have a contractual interest in the collateral underlying the mortgage loans on which losses occurred, although the value of the collateral is taken into account in determining our share of such losses.
Our exposure and activity associated with these recourse obligations are reported in the Corporate & Institutional Banking segment.
Analysis of Commercial Mortgage Recourse Obligations
## Table 2 ##
RESIDENTIAL MORTGAGE LOAN AND HOME EQUITY 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 whole-loan sale transactions.
As discussed in Note 3 in this Report, Agency securitizations consist of mortgage loans sale transactions with FNMA, FHLMC, and GNMA, while Non-Agency securitizations and whole-loan sale transactions consist of mortgage loans sale transactions with 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.
Repurchase obligation activity associated with residential mortgages is reported in the Residential Mortgage Banking segment.
PNC’s repurchase obligations also include certain brokered home equity loans/lines that were sold to a limited number of private investors in the financial services industry by National City prior to our acquisition.
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 whole-loans sold in these transactions.
Repurchase activity associated with brokered home equity loans/lines is reported in the Non-Strategic Assets Portfolio segment.
Loan covenants and representations and warranties are established through loan sale agreements with various investors to provide assurance that PNC has sold loans to investors of sufficient investment quality.
Key aspects of such covenants and representations and warranties include the loan’s compliance with any applicable loan criteria established by the investor, 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.
These investor indemnification or repurchase claims are typically settled on an individual loan basis through makewhole payments or loan repurchases; however, on occasion we may negotiate pooled settlements with investors.
Indemnifications for loss or loan repurchases typically occur when, after review of the claim, we agree insufficient evidence exists to dispute the investor’s claim that a breach of a loan covenant and representation and warranty has occurred, such breach has not been cured, and the effect of such breach is deemed to have had a material and adverse effect on the value of the transferred loan.
Depending on the sale agreement and upon proper notice from the investor, we typically respond to such indemnification and repurchase requests within 60 days, although final resolution of the claim may take a longer period of time.
With the exception of the sales
(a) Includes the impact of National City, which we acquired on December 31, 2008.
(b) 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.
(c) Effective in 2011, nonperforming residential real estate excludes loans of $61 million accounted for under the fair value option as of December 31, 2011.
The comparable balances for prior periods presented were not material.
(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) Includes TDRs of $1,141 million at December 31, 2011, $784 million at December 31, 2010, $440 million at December 31, 2009 and $2 million at December 31, 2007.
Nonperforming loans do not include government insured or guaranteed loans, loans held for sale, loans accounted for under the fair value option and purchased impaired loans.
(f) Other real estate owned excludes $280 million, $178 million, $112 million, $81 million and zero at December 31, 2011, December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007, respectively, related to residential real estate that was acquired by us upon foreclosure of serviced loans because they are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).
(g) Amounts include government insured or guaranteed consumer loans totaling $2,474 million, $2,167 million, $1,814 million, $926 million and $8 million at December 31, 2011, December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007, respectively.
Past due loan amounts exclude purchased impaired loans as they are considered current loans due to the accretion of interest income.
(h) Amounts include government insured or guaranteed consumer loans held for sale totaling $15 million, $22 million, and $27 million at December 31, 2011, December 31, 2010, and December 31, 2009, respectively.
Government insured or guaranteed consumer loans held for sale were zero for the other periods presented.
SUMMARY OF LOAN LOSS EXPERIENCE
## Table 3 ##
(a) Includes home equity, credit card and other consumer.
(b) Amount for 2008 included a $504 million conforming provision for credit losses related to National City.

<table><tr><td>In millions</td><td> December 31 2011</td><td>December 31 2010</td></tr><tr><td>Commercial lending</td><td></td><td></td></tr><tr><td>Commercial</td><td>$65,694</td><td>$55,177</td></tr><tr><td>Commercial real estate</td><td>16,204</td><td>17,934</td></tr><tr><td>Equipment lease financing</td><td>6,416</td><td>6,393</td></tr><tr><td>TOTAL COMMERCIAL LENDING</td><td>88,314</td><td>79,504</td></tr><tr><td>Consumer lending</td><td></td><td></td></tr><tr><td>Home equity</td><td>33,089</td><td>34,226</td></tr><tr><td>Residential real estate</td><td>14,469</td><td>15,999</td></tr><tr><td>Credit card</td><td>3,976</td><td>3,920</td></tr><tr><td>Other consumer</td><td>19,166</td><td>16,946</td></tr><tr><td>TOTAL CONSUMER LENDING</td><td>70,700</td><td>71,091</td></tr><tr><td>Total loans (a) (b)</td><td>$159,014</td><td>$150,595</td></tr></table>
<table><tr><td>In millions</td><td> December 31 2011</td><td>December 31 2010</td></tr><tr><td>Commercial and commercial real estate</td><td>$64,955</td><td>$59,256</td></tr><tr><td>Home equity lines of credit</td><td>18,317</td><td>19,172</td></tr><tr><td>Credit card</td><td>16,216</td><td>14,725</td></tr><tr><td>Other</td><td>3,783</td><td>2,652</td></tr><tr><td>Total (a)</td><td>$103,271</td><td>$95,805</td></tr></table>
<table><tr><td>In millions</td><td>2011</td><td>2010</td></tr><tr><td>January 1</td><td>$54</td><td>$71</td></tr><tr><td>Reserve adjustments, net</td><td>1</td><td>9</td></tr><tr><td>Losses – loan repurchases and settlements</td><td>-8</td><td>-2</td></tr><tr><td>Loan sales</td><td></td><td>-24</td></tr><tr><td>December 31</td><td>$47</td><td>$54</td></tr></table>
<table><tr><td>Year ended December 31 - dollars in millions</td><td>2011</td><td>2010</td><td>2009</td><td>2008</td><td>2007</td></tr><tr><td>Allowance for loan and lease losses – January 1</td><td>$4,887</td><td>$5,072</td><td>$3,917</td><td>$830</td><td>$560</td></tr><tr><td>Charge-offs</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Commercial</td><td>-700</td><td>-1,227</td><td>-1,276</td><td>-301</td><td>-156</td></tr><tr><td>Commercial real estate</td><td>-464</td><td>-670</td><td>-510</td><td>-165</td><td>-16</td></tr><tr><td>Equipment lease financing</td><td>-35</td><td>-120</td><td>-149</td><td>-3</td><td></td></tr><tr><td>Consumer (a)</td><td>-912</td><td>-1,069</td><td>-961</td><td>-143</td><td>-73</td></tr><tr><td>Residential real estate</td><td>-153</td><td>-406</td><td>-259</td><td>-6</td><td></td></tr><tr><td>Total charge-offs</td><td>-2,264</td><td>-3,492</td><td>-3,155</td><td>-618</td><td>-245</td></tr><tr><td>Recoveries</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Commercial</td><td>332</td><td>294</td><td>181</td><td>53</td><td>30</td></tr><tr><td>Commercial real estate</td><td>105</td><td>77</td><td>38</td><td>10</td><td>1</td></tr><tr><td>Equipment lease financing</td><td>50</td><td>56</td><td>27</td><td>1</td><td></td></tr><tr><td>Consumer (a)</td><td>127</td><td>110</td><td>105</td><td>15</td><td>14</td></tr><tr><td>Residential real estate</td><td>11</td><td>19</td><td>93</td><td></td><td></td></tr><tr><td>Total recoveries</td><td>625</td><td>556</td><td>444</td><td>79</td><td>45</td></tr><tr><td>Net charge-offs</td><td>-1,639</td><td>-2,936</td><td>-2,711</td><td>-539</td><td>-200</td></tr><tr><td>Provision for credit losses (b)</td><td>1,152</td><td>2,502</td><td>3,930</td><td>1,517</td><td>315</td></tr><tr><td>Acquired allowance – National City</td><td></td><td></td><td>-112</td><td>2,224</td><td></td></tr><tr><td>Other</td><td>-1</td><td></td><td></td><td>20</td><td>152</td></tr><tr><td>Adoption of ASU 2009-17,<i>Consolidations</i></td><td></td><td>141</td><td></td><td></td><td></td></tr><tr><td>Net change in allowance for unfunded loan commitments and letters ofcredit</td><td>-52</td><td>108</td><td>48</td><td>-135</td><td>3</td></tr><tr><td>Allowance for loan and lease losses – December 31</td><td>$4,347</td><td>$4,887</td><td>$5,072</td><td>$3,917</td><td>$830</td></tr><tr><td>Allowance as a percent of December 31:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Loans</td><td>2.73%</td><td>3.25%</td><td>3.22%</td><td>2.23%</td><td>1.21%</td></tr><tr><td>Nonperforming loans</td><td>122</td><td>109</td><td>89</td><td>236</td><td>183</td></tr><tr><td>As a percent of average loans</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net charge-offs</td><td>1.08</td><td>1.91</td><td>1.64</td><td>.74</td><td>.32</td></tr><tr><td>Provision for credit losses</td><td>.76</td><td>1.63</td><td>2.37</td><td>2.09</td><td>.50</td></tr><tr><td>Allowance for loan and lease losses</td><td>2.86</td><td>3.18</td><td>3.06</td><td>5.38</td><td>1.33</td></tr><tr><td>Allowance as a multiple of net charge-offs</td><td>2.65x</td><td>1.66x</td><td>1.87x</td><td>7.27x</td><td>4.15x</td></tr></table>

Question: In the year ended December 31 where Total recoveries is the highest, what's the increasing rate of the Recoveries for Commercial real estate?
Answer: 0.36364