Purchased impaired loans are accounted for under ASC 310-30, which addresses accounting for 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 loan-to-values (LTV). GAAP allows purchasers 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 loans with homogeneous consumer, residential real estate and smaller balance commercial loans with common risk characteristics are aggregated into pools where appropriate. Commercial loans with a total commitment greater than a defined threshold are accounted for individually. The excess of 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 nonaccretable difference. Subsequent changes in the expected cash flows of individual or pooled purchased impaired loans from the date of acquisition will either impact the accretable yield or result in an impairment charge to provision for credit losses in the period in which the changes become probable. Decreases to the net present value of expected cash flows will generally result in an impairment charge recorded as a provision for credit losses, resulting in an increase to the allowance for loan and lease losses, and a reclassification from accretable yield to nonaccretable difference. Prepayments and interest rate decreases for variable rate notes are treated as a reduction of cash flows expected to be collected and a reduction of projections of contractual cash flows such that the nonaccretable difference is not affected. Thus, for decreases in cash flows expected to be collected resulting from prepayments and interest rate decreases for variable rate notes, the effect will be to reduce the yield prospectively.

The following table provides purchased impaired loans at September 30, 2012 and December 31, 2011:

Table 75: Purchased Impaired Loans - Balances

			September 30, 2012 (a)				December 31, 2011 (b)
In millions			Recorded Investment		Outstanding Balance		Recorded Investment		Outstanding Balance
Commercial Lending
	Commercial	$	354	$	603	$	140	$	245
	Commercial real estate		1,048		1,334		712		743
Total Commercial Lending			1,402		1,937		852		988
Consumer Lending
	Consumer		2,697		3,143		2,766		3,405
	Residential real estate		3,650		3,833		3,049		3,128
Total Consumer Lending			6,347		6,976		5,815		6,533
Total		$	7,749	$	8,913	$	6,667	$	7,521
(a)	Represents National City and RBC Bank (USA) acquisitions.
(b)	Represents National City acquisition.

As of December 31, 2011, the allowance for loan and lease losses related to purchased impaired loans was $998 million. During the first nine months of 2012, $131 million of provision and $61 million of charge-offs were recorded on purchased impaired loans. At September 30, 2012, the allowance for loan and lease losses was $1.1 billion on $7.1 billion of purchased impaired loans while the remaining $.6 billion of purchased impaired loans required no allowance as the net present value of expected cash flows equaled or exceeded the recorded investment. If any allowance for loan losses is recognized on a purchased impaired pool, which is accounted for as a single asset, the entire balance of that pool would be disclosed as requiring an allowance. Subsequent increases in the net present value of cash flows will result in a recovery of any previously recorded allowance for loan and lease losses, to the extent applicable, and/or a reclassification from non-accretable difference to accretable yield, which will be recognized prospectively. Disposals of loans, which may include sales of loans or foreclosures, result in removal of the loan from the purchased impaired loan portfolio. The cash flow re-estimation process is completed quarterly to evaluate the appropriateness of the allowance associated with the purchased impaired loans.

Activity for the accretable yield for the first nine months of 2012 follows:

Table 76: Accretable Yield		(a)

In millions			2012
January 1			$	2,109
Addition of accretable yield due to RBC Bank (USA) acquisition on March 2, 2012				587
Accretion (including excess cash recoveries)				(623)
Net reclassifications to accretable from non-accretable (b)				211
Disposals				(20)
September 30			$	2,264
(a)	The table above has been updated to reflect certain immaterial adjustments.
(b)	Over ninety percent of the net reclassifications were driven by the commercial portfolio. Over half of the commercial portfolio impact related to excess cash recoveries recognized
	during the period, with the remaining due to improvements of cash expected to be collected on both RBC Bank (USA) and National City loans in future periods. The remaining net
	reclassifications were due to future cash flow changes in the consumer portfolio.

Loans acquired as part of the RBC Bank (USA) acquisition on March 2, 2012 had an outstanding balance of $16.7 billion. At purchase, acquired loans were recorded at fair value. No separate valuation allowance was carried over and no allowance was created at acquisition. Fair values were determined by discounting both principal and interest cash flows expected to be collected using a market discount rate for similar instruments with adjustments that management believes a market participant would consider in determining fair value. Cash flows expected to be collected as of the acquisition date were estimated using internal models and third party data that incorporate management's best estimate of key assumptions, such as default rates, loss severity, prepayment speeds, and timing of disposition upon default. In addition, each loan was reviewed to determine if it should be classified as a purchased impaired loan accounted for under ASC 310-30. Loans with evidence of credit quality deterioration since origination and for which it was probable at purchase that PNC will be unable to collect all contractually required payments were considered purchased impaired. 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 loan-to-values (LTV). In accordance with ASC 310-30, excluded from the purchased impaired loans were leases, revolving credit arrangements and loans held for sale.

As of March 2, 2012, loans were classified as purchased impaired or purchased non-impaired and had a fair value of $2.0 billion and $12.5 billion, respectively, and an outstanding balance of $3.0 billion and $13.7 billion, respectively.

Table 77: RBC Bank (USA) Acquisition - Purchased Loans Balances		(a)

			Purchased Impaired Loans				Other Purchased Loans
As of March 2, 2012 In millions			Fair Value		Outstanding Balance		Fair Value		Outstanding Balance
Commercial Lending
	Commercial	$	330	$	564	$	5,954	$	6,298
	Commercial real estate		597		1,018		2,101		2,340
	Equipment lease financing						86		92
Total Commercial Lending			927		1,582		8,141		8,730
Consumer Lending
	Home equity		175		215		2,827		3,346
	Residential real estate		896		1,214		1,168		1,202
	Credit card and other consumer						376		385
Total Consumer Lending			1,071		1,429		4,371		4,933
Total		$	1,998	$	3,011	$	12,512	$	13,663
(a)	The table above has been updated to reflect certain immaterial adjustments and reclassifications between commercial and commercial real estate.

The table below details the contractually required payments, non-accretable difference, accretable yield, and fair value for purchased impaired loans acquired in the RBC Bank (USA) acquisition as of March 2, 2012.


Table 78 : Purchased Impaired Loans - RBC Bank (USA) Acquisition		(a)

In millions				March 2, 2012
Contractually required payments including interest			$	3,769
Less: Nonaccretable difference				1,184
Cash flows expected to be collected				2,585
Less: Accretable yield				587
Fair value of loans acquired			$	1,998
(a)	The table above has been updated to reflect certain immaterial adjustments.

Other purchased loans acquired in the RBC Bank (USA) acquisition were recorded at fair value as provided in the table below. The difference between the acquisition date fair value and the outstanding balance represents the fair value adjustment for a loan and includes both credit and interest rate considerations. Fair values were determined by discounting both principal and interest cash flows expected to be collected using a market discount rate for similar instruments with adjustments that management believes a market participant would consider in determining fair value. Fair value adjustments may be discounts (or premiums) to a loan's cost basis and are accreted (or amortized) to net interest income (or expense) over the loan's remaining life in accordance with ASC 310-20. Fair value adjustments for revolving loans are accreted (or amortized) using a straight line method. Term loans are accreted (or amortized) using the constant effective yield method.

Table 79: Purchased Non-Impaired Loans - Fair Value						(a)


As of March 2,2012					Commercial		Equipment				Residential		Credit Card and
In millions			Commercial		Real Estate		Lease Finance		Home Equity		Real Estate		Other Consumer		Total
Outstanding Balance		$	6,298	$	2,340	$	92	$	3,346	$	1,202	$	385	$	13,663
Less: Fair value adjustment			344		239		6		519		34		9		1,151
Fair value of loans acquired		$	5,954	$	2,101	$	86	$	2,827	$	1,168	$	376	$	12,512
(a)	The table above has been updated to reflect certain immaterial adjustments.

The table below details contractually required payments, cash flows not expected to be collected and cash flows expected to
be collected on other purchased loans acquired in connection with the RBC Bank (USA) transaction.

Table 80: Purchased Non-Impaired Loans - Cash Flows						(a)


As of March 2,2012					Commercial		Equipment				Residential		Credit Card and
In millions			Commercial		Real Estate		Lease Finance		Home Equity		Real Estate		Other Consumer		Total
Contractually required repayments
	including interest (b)	$	6,857	$	2,473	$	101	$	5,003	$	1,869	$	414	$	16,717
Less: Contractual cash flows not
	expected to be collected		102		129		6		1,501		538		189		2,465
Cash flows expected to be collected		$	6,755	$	2,344	$	95	$	3,502	$	1,331	$	225	$	14,252
(a)	The table above has been updated to reflect certain immaterial adjustments.
(b)	Denotes required payments based on a loan's contractual schedule assuming no loss or prepayment.