NOTE 19 SHAREHOLDERS’ EQUITY Preferred Stock Information related to preferred stock is as follows:
## Table 0 ##
On December 31, 2008, we issued $7.6 billion of Fixed Rate Cumulative Perpetual Preferred Stock, Series N, to the US Treasury under the US Treasury’s Troubled Asset Relief Program (“TARP”) Capital Purchase Program, together with a warrant to purchase shares of common stock of PNC described below.
Series N dividends are payable on the 15th of February, May, August and November beginning February 15, 2009.
Dividends will be paid at a rate of 5.00% through February 15, 2014 and 9.00% thereafter.
This preferred stock is redeemable at par plus accrued and unpaid dividends subject to the approval of our primary banking regulators.
Under the TARP Capital Purchase Program, there are restrictions on common and preferred dividends and common share repurchases associated with the preferred stock issued to the US Treasury.
As is typical with cumulative preferred stock, dividend payments for this preferred stock must be current before dividends can be paid on junior shares, including our common stock, or junior shares can be repurchased or redeemed.
Also, the US Treasury’s consent is required for any increase in common dividends per share above the most recent level prior to October 14, 2008 until the third anniversary of the preferred stock issuance as long as the US Treasury continues to hold any of the preferred stock.
Further, during that same period, the US Treasury’s consent is required, unless the preferred stock is no longer held by the US Treasury, for any share repurchases with limited exceptions, most significantly purchases of common shares in connection with any benefit plan in the ordinary course of business consistent with past practice.
As part of the National City transaction, we issued 9.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series L in exchange for National City’s Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series F.  Dividends are payable if and when declared each 1st of February, May, August and November.
Dividends will be 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.
The Series L is redeemable at PNC’s option, subject to a replacement capital covenant for the first ten years after issuance and subject to Federal Reserve approval, if then applicable, on or after February 1, 2013 at a redemption price per share equal to the liquidation preference plus any declared but unpaid dividends.
Also as part of the National City transaction, we established the PNC Non-Cumulative Perpetual Preferred Stock, Series M, which mirrors in all material respects the former National City Non-Cumulative Perpetual Preferred Stock, Series E.  PNC has designated 5,751preferred shares, liquidation value $100,000 per share, for this series.
No shares have yet been issued; however, National City issued stock purchase contracts for 5,001 shares of its Series E Preferred Stock (now replaced by the PNC Series M as part of the National City transaction) to the National City Preferred Capital Trust I in connection with the issuance by that Trust of $500 million of 12.000% Fixed-to-Floating Rate Normal Automatic Preferred Enhanced Capital Securities (the “Normal APEX Securities”) in January 2008 by the Trust.
It is expected that the Trust will purchase 5,001 of the Series M preferred shares pursuant to these stock purchase contracts on December 10, 2012 or on an earlier date and possibly as late as December 10, 2013.
The Trust has pledged the $500,100,000 principal amount of National City 8.729% Junior Subordinated Notes due 2043 held by the Trust and their proceeds to secure this purchase obligation.
If Series M shares are issued prior to December 10, 2012, any dividends on such shares will be calculated at a rate per annum equal to 12.000% until December 10, 2012, and thereafter, at a rate per annum that will be reset quarterly and will equal three-month LIBOR for the related dividend period plus 8.610%.
Dividends will be payable if and when declared by the Board at the dividend rate so indicated applied to the liquidation preference per share of the Series M Preferred Stock.
The Series M is redeemable at PNC’s option, subject to a replacement capital covenant for the first ten years after issuance and subject to Federal Reserve approval, if then applicable, on or after December 10, 2012 at a redemption price per share equal to the liquidation preference plus any declared but unpaid dividends.
As a result of the National City transaction, we assumed National City’s obligations under replacement capital covenants with respect to (i) the Normal APEX Securities and our Series M shares and (ii) National City’s 6,000,000 of Depositary Shares (each representing 1/4000th of an interest in a share of our 9.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series L), whereby we agreed not to cause the redemption or repurchase of the Normal APEX or Depositary Shares, as applicable, or the underlying Preferred Stock and/or junior subordinated notes, as applicable, unless such repurchases or redemptions are made from the proceeds of the issuance of certain qualified securities and pursuant to the other terms and conditions set
amount of unrecognized tax benefit related to permanent differences because a portion of those unrecognized benefits relate to state tax matters.
It is reasonably possible that the liability for uncertain tax positions 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 liability for uncertain tax positions could decrease by $5 million within the next twelve months.
The consolidated federal income tax returns of The PNC Financial Services Group, Inc.  and subsidiaries through 2003 have been audited by the Internal Revenue Service and we have resolved all disputed matters through the IRS appeals division.
The Internal Revenue Service is currently examining the 2004 through 2006 consolidated federal income tax returns of The PNC Financial Services Group, Inc.  and subsidiaries.
The consolidated federal income tax returns of National City Corporation and subsidiaries through 2004 have been audited by the Internal Revenue Service and we have reached agreement in principle on resolution of all disputed matters through the IRS appeals division.
However, because the agreement is still subject to execution of a closing agreement we have not treated it as effectively settled.
The Internal Revenue Service is currently examining the 2005 through 2007 consolidated federal income tax returns of National City Corporation and subsidiaries, and we expect the 2008 federal income tax return to begin being audited as soon as it is filed.
New York, New Jersey, Maryland and New York City are principally where we were subject to state and local income tax prior to our acquisition of National City.
The state of New York is currently in the process of closing the 2002 to 2004 audit and will begin auditing the years 2005 and 2006.
New York City is currently auditing 2004 and 2005.
However, years 2002 and 2003 remain subject to examination by New York City pending completion of the New York state audit.
Through 2006, BlackRock is included in our New York and New York City combined tax filings and constituted most of the tax liability.
Years subsequent to 2004 remain subject to examination by New Jersey and years subsequent to 2005 remain subject to examination by Maryland.
National City was principally subject to state and local income tax in California, Florida, Illinois, Indiana, and Missouri.
Audits currently in process for these states include: California (2003-2004), Illinois (2004-2006) and Missouri (2003-2005).
We will now also be principally subject to tax in those states.
In the ordinary course of business we are routinely subject to audit by the taxing authorities of these states and at any given time a number of audits will be in process.
Our policy is to classify interest and penalties associated with income taxes as income taxes.
At January 1, 2008, we had accrued $91 million of interest related to tax positions, most of which related to our cross-border leasing transactions.
The total accrued interest and penalties at December 31, 2008 was $164 million.
While the leasing related interest decreased with a payment to the IRS, the $73 million net increase primarily resulted from our acquisition of National City.
NOTE 22 SUMMARIZED FINANCIAL INFORMATION OF BLACKROCK As required by SEC Regulation S-X, summarized consolidated financial information of BlackRock follows (in millions).
## Table 1 ##
NOTE 23 REGULATORY MATTERS We are subject to the regulations of certain federal and state agencies and undergo periodic examinations by such regulatory authorities.
The access to and cost of funding new business initiatives including acquisitions, the ability to pay dividends, 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.
The minimum US regulatory capital ratios are 4% for tier 1 risk-based, 8% for total riskbased and 4% for leverage.
However, regulators may require higher capital levels when particular circumstances warrant.
To qualify as “well capitalized,” regulators require banks to maintain capital ratios of at least 6% for tier 1 risk-based, 10% for total risk-based and 5% for leverage.
At December 31, 2008 and December 31, 2007, each of our domestic bank subsidiaries met the “well capitalized” capital ratio requirements.
We recorded such loans at estimated fair value and considered them to be performing, even if contractually past due (or if we do not expect to receive payment in full based on the original contractual terms), since certain purchase accounting adjustments will be accreted to interest income over time.
The accretion will represent the discount associated with the difference between the expected cash flows and estimated fair value of the loans.
This accounting treatment resulted in the return to performing status of $3.2 billion of loans previously classified as nonperforming by National City.
The purchase accounting adjustments were estimated as of December 31, 2008 and such estimates may be refined during the first quarter of 2009.
At December 31, 2008, our largest nonperforming asset was approximately $36 million and our average nonperforming loan associated with commercial lending was less than $1 million.
The amount of nonperforming loans that was current as to principal and interest was $555 million at December 31, 2008 and $178 million at December 31, 2007.
Accruing Loans Past Due 90 Days Or More- Summary
## Table 2 ##
(a) Amounts include the impact of National City.
Loans that are not included in nonperforming or past due categories but cause us to be uncertain about the borrower’s ability to comply with existing repayment terms over the next six months totaled $745 million at December 31, 2008, compared with $134 million at December 31, 2007.
Allowances For Loan And Lease Losses And Unfunded Loan Commitments And Letters Of Credit We maintain an allowance for loan and lease losses to absorb losses from the loan portfolio.
We determine the allowance based on quarterly assessments of the probable estimated losses inherent in the loan portfolio.
While we make allocations to specific loans and pools of loans, the total reserve is available for all loan and lease losses.
In addition to the allowance for loan and lease losses, 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 determine this amount using estimates of the probability of the ultimate funding and losses related to those credit exposures.
This methodology is similar to the one we use for determining the adequacy of our allowance for loan and lease losses.
We refer you to Note 5 Asset Quality in the Notes To Consolidated Financial Statements in Item 8 of this Report regarding changes in the allowance for loan and lease losses and in the allowance for unfunded loan commitments and letters of credit.
Also see the Allocation Of Allowance For Loan And Lease Losses table in the Statistical Information (Unaudited) section of Item 8 of this Report for additional information included herein by reference.
We establish specific allowances for loans considered impaired using a method prescribed by SFAS 114, “Accounting by Creditors for Impairment of a Loan.
” All impaired loans except leases and large groups of smallerbalance homogeneous loans which may include but are not limited to credit card, residential mortgage, and consumer installment loans are subject to SFAS 114 analysis.
Specific allowances for individual loans over a set dollar threshold are determined by our Special Asset Committee 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.
We establish specific allowance on all other impaired loans based on the loss given default credit risk rating.
Allocations to non-impaired commercial and commercial real estate loans (pool reserve allocations) are assigned to pools of loans as defined by our business structure and are based on internal probability of default and loss given default credit risk ratings.
Key elements of the pool reserve methodology include: ?
Probability of default (“PD”), which is primarily based on historical default analyses and is derived from the borrower’s internal PD credit risk rating; ?
Exposure at default (“EAD”), which is derived from historical default data; and ?
Loss given default (“LGD”), which is based on historical loss data, collateral value and other structural factors that may affect our ultimate ability to collect on the loan and is derived from the loan’s internal LGD credit risk rating.
Our pool reserve methodology is sensitive to changes in key risk parameters such as PDs, LGDs and EADs.
In general, a given change in any of the major risk parameters will have a corresponding change in the pool reserve allocations for non-impaired commercial loans.
Our commercial loans are the largest category of credits and are most sensitive to changes in the key risk parameters and pool reserve loss rates.
To illustrate, if we increase the pool reserve loss rates by 5% for all categories of non-impaired commercial loans, then the

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Preferred Shares
December 31Shares in thousands	Liquidationvalue per share	2008	2007
Authorized
$1 par value	16,960	16,985
Issued and outstanding
Series A	$40	6	7
Series B	40	1	1
Series C	20	119	128
Series D	20	171	186
Series K	10,000	50
Series L	100,000	2
Series N	100,000	76
Total issued and outstanding	425	322

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December 31	2008	2007
Total assets	$19,924	$22,561
Total liabilities	$7,367	$10,387
Non-controlling interest	491	578
Stockholders’ equity	12,066	11,596
Total liabilities, non-controlling interest and stockholders’ equity	$19,924	$22,561
Year ended December 31	2008	2007
Total revenue	$5,064	$4,845
Total expenses	3,471	3,551
Operating income	1,593	1,294
Non-operating income (expense)	-574	529
Income before income taxes and non-controlling interest	1,019	1,823
Income taxes	388	464
Non-controlling interest	-155	364
Net income	$786	$995

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Amount	Percent of Total Outstandings
Dollars in millions	Dec. 31 2008 (a)	Dec. 312007	Dec. 31 2008 (a)	Dec. 312007
Commercial	$97	$14	.14%	.05%
Commercial real estate	723	18	2.81	.20
Equipment lease financing	2	.03
Consumer	419	49	.80	.27
Residential real estate	2,011	43	9.32	.45
Other	7	12	.37	2.91
Total	$3,259	$136	1.86%	.20%

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Question: What is the ratio of all amount that are smaller than 100 to the sum of amount, in 2008? (in %)
Answer: 0.03253