What is the primary reason for this Amendment No. 1 filing?

This Amendment No. 1 is filed primarily to restate the Consolidated Statement of Cash Flows for the year ended December 31, 2006, due to a misclassification of cash flows related to the issuance of perpetual trust securities. It also includes audited consolidated financial statements of BlackRock, Inc. for 2006.

What was the impact of the BlackRock/MLIM transaction on PNC's financial reporting?

The BlackRock/MLIM transaction, completed on September 29, 2006, led to PNC deconsolidating BlackRock and adopting the equity method of accounting for its reduced ownership stake (approximately 34%). This resulted in BlackRock's financial results no longer being fully consolidated into PNC's statements, with PNC now reporting its proportionate share of BlackRock's earnings within asset management noninterest income.

What is the significance of the Mercantile Bankshares Corporation acquisition?

The planned acquisition of Mercantile Bankshares Corporation for approximately $6.0 billion, expected to close in March 2007, represents a significant strategic move to expand PNC's footprint, particularly in the Washington, D.C. metropolitan area and surrounding regions, enhancing its retail and commercial banking presence.

How did PNC's financial performance change in 2006 compared to 2005?

PNC demonstrated a substantial improvement in financial performance in 2006. Net income more than doubled to $2.595 billion from $1.325 billion in 2005. This growth was driven by strong performance across its business segments and a significant gain from the BlackRock/MLIM transaction, despite a portfolio rebalancing that resulted in net securities losses.

PNC 10-K FY2006 Annual Report — Revenue, Net Income, EPS

Summary

PNC Financial Services Group, Inc. (PNC) filed this Amendment No. 1 to its Form 10-K for the fiscal year ended December 31, 2006, primarily to restate its Consolidated Statement of Cash Flows for 2006 due to a reclassification of cash flows related to perpetual trust securities. The filing also includes audited consolidated financial statements of BlackRock, Inc. for 2006, as required by SEC regulations. The report details a significant strategic move in 2006: the deconsolidation of BlackRock, Inc., effective September 29, 2006. This transaction, where Merrill Lynch contributed its investment management business to BlackRock in exchange for stock, reduced PNC's ownership in BlackRock to approximately 34% and resulted in the adoption of the equity method of accounting for this investment. Despite this shift, PNC reported strong financial performance in 2006, with net income increasing substantially year-over-year, driven partly by a significant gain related to the BlackRock/MLIM transaction and growth across its core business segments. Investors should note the significant change in accounting for BlackRock, which impacts how its results are presented. The company also announced a major acquisition agreement for Mercantile Bankshares Corporation, valued at approximately $6.0 billion, expected to close in March 2007, indicating continued strategic expansion.

Key Highlights

1Restatement of the 2006 Consolidated Statement of Cash Flows due to reclassification of perpetual trust securities issuance.
2Deconsolidation of BlackRock, Inc. effective September 29, 2006, with PNC adopting the equity method of accounting for its reduced stake.
3Significant increase in Net Income for 2006 ($2.595 billion) compared to 2005 ($1.325 billion), largely influenced by the BlackRock/MLIM transaction gain.
4Announcement of an agreement to acquire Mercantile Bankshares Corporation for approximately $6.0 billion, expected to close in March 2007.
5Continued strength in core banking segments: Retail Banking and Corporate & Institutional Banking, both showing increased revenue and earnings.
6Adoption of SFAS 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans," as of December 31, 2006, impacting accumulated other comprehensive loss.
7The company maintained strong regulatory capital ratios, meeting 'well capitalized' requirements for its bank subsidiaries.

PNC FINANCIAL SERVICES GROUP, INC. Annual Report (Amendment), Year Ended Dec 31, 2006

Summary

Key Highlights

Frequently Asked Questions