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. The standard 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 establishes a fair value reporting hierarchy to maximize the use of observable inputs when measuring fair value and defines the three levels of inputs as noted below.

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 US 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. Level 2 assets and liabilities may 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. This category generally includes US government agency debt securities, agency residential and commercial mortgage-backed debt securities, asset-backed debt securities, corporate debt securities, residential mortgage loans held for sale, corporate trading loans and derivative contracts.

Fair value is estimated using unobservable inputs that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities may include financial instruments whose value is determined using pricing services, pricing models with internally developed assumptions, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain available for sale and trading securities, commercial mortgage loans held for sale, private equity investments, residential mortgage servicing rights, BlackRock Series C Preferred Stock and certain financial derivative contracts. The available for sale and trading securities within Level 3 include non-agency residential mortgage-backed securities, auction rate securities, certain private-issuer asset-backed securities and corporate debt securities. Nonrecurring items, primarily certain nonaccrual and other loans held for sale, commercial mortgage servicing rights, equity investments and other assets are also included in this category.

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, we have teams, independent of the traders, verify marks and assumptions used for valuations at each period end.

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.

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 September 30, 2012, 81% 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 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.

A cross-functional team comprised of representatives from Asset & Liability Management, Finance, and Market Risk Management oversees the governance of the processes and methodologies used to estimate the fair value of securities and the price validation testing that is performed. This management team reviews pricing sources and trends and the results of validation testing.

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, 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 and decrease when market interest rates decline and/or credit and liquidity conditions improve. Price validation procedures are performed and the results are reviewed for these Level 3 securities by a cross-functional Asset & Liability Management, Finance, and Market Risk Management team. Specific price validation procedures performed for these securities include comparing current prices to historical pricing trends by collateral type and vintage, comparing prices by product type to indicative pricing grids published by market makers, and by obtaining corroborating dealer prices for a sample of securities.

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. 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, certain equity options and other types of contracts.

Significant unobservable inputs for residential mortgage loan commitments include the probability of funding and embedded servicing. The fair value of residential mortgage loan commitments assets as of September 30, 2012 was $123 million. 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). Significant increases (decreases) in the fair value of a residential mortgage loan commitment result when the embedded servicing value increases (decreases).

The fair value of commercial mortgage loan commitments assets as of September 30, 2012 was $13 million compared to liabilities of $13 million which are included in the Insignificant Level 3 assets, net of liabilities line item in Table 95: Fair Value Measurement – Recurring Quantitative Information in this Note 9. Significant unobservable inputs for commercial mortgage loan commitments include spread over the benchmark curve U.S. Treasury interest rate and embedded servicing value. The spread over the benchmark curve reflects management assumptions regarding credit and liquidity risks. Embedded servicing value reflects the estimated value for retaining the right to service the underlying loan once it is sold. Significant increases (decreases) in the fair value of commercial mortgage loan commitments result when the spread over the benchmark curve decreases (increases) or the embedded servicing value increases (decreases).

The fair value of interest rate options assets as of September 30, 2012 was $4 million compared to liabilities of $3 million which are included in the Insignificant Level 3 assets, net of liabilities line item in Table 95: Fair Value Measurement – Recurring Quantitative Information in this Note 9. 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 value of risk participation agreement assets as of September 30, 2012 was $7 million compared to liabilities of $6 million which are included in the Insignificant Level 3 assets, net of liabilities line item in Table 95: Fair Value Measurement – Recurring Quantitative Information in this Note 9. 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.

The fair value of the other contracts liabilities as of September 30, 2012 was $77 million. The significant unobservable inputs for the other contracts for derivative liabilities include credit and liquidity discount and spread over the benchmark curve that are deemed representative of current market conditions. Significant increases (decreases) in these assumptions would result in significantly lower (higher) fair value measurement.

In connection with the sale of certain Visa Class B common shares, we entered into a swap agreement with the purchaser of the shares to account for future changes in the value of the Class B common shares resulting from changes in the settlement of certain specified litigation and its effect on the conversion rate of Class B common shares into Visa Class A common shares and to make payments calculated by reference to the market price of the Class A common shares. At September 30, 2012, the estimated fair value of the swap liability was $22 million and is classified as a Level 3 instrument and included in the Insignificant Level 3 assets, net of liabilities line item in Table 95: Fair Value Measurement – Recurring Quantitative Information in this Note 9.

The fair values of our derivatives are adjusted for nonperformance risk through the calculation of our Credit Valuation Adjustment (CVA). Our CVA is computed using new loan pricing and considers externally available bond spreads, in conjunction with internal historical recovery observations.

We account for certain residential mortgage loans originated for sale on a recurring basis at fair value. We have elected to account for certain RBC Bank (USA) residential mortgage loans held for sale at fair value. The election of the fair value option aligns the accounting for the residential mortgages with related hedges.

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. These loans are regularly traded in active markets and observable pricing information is available 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, residential mortgage loans held for sale are classified as Level 2.

Residential mortgage servicing rights (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 obtains 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 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.

We account for certain commercial mortgage loans classified as held for sale at fair value. The election of the fair value option aligns the accounting for the commercial mortgages with related hedges.

We determine the fair value of commercial mortgage loans held for sale by using a discounted cash flow model. Fair value is determined using sale valuation assumptions that management believes a market participant would use in pricing the loans. When available, valuation assumptions include observable inputs based on the benchmark LIBOR interest rate swap curve and whole loan sales. The significant unobservable input is management's assumption of the spread applied to the benchmark rate. 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. Based on the significance of unobservable inputs, we classified this portfolio as Level 3.

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.

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 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. These investments are classified as Level 3.

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 include residential mortgage loans held for sale that were subsequently reclassified to portfolio loans. These loans are transferred to portfolio loans if they are deemed unsaleable. These loans are valued similarly to residential mortgage loans held for sale and are classified as Level 2. 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 agreements and occur typically after the loan is in default. 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, bid information from brokers and investors is heavily relied upon. Accordingly, these loans are classified as Level 3. The fair value of these loans as of September 30, 2012 was $7 million and is included in the Insignificant Level 3 assets, net of liabilities line item in Table 95: Fair Value Measurement – Recurring Quantitative Information in this Note 9. A significant input to the valuation includes a credit and liquidity discount that is deemed representative of current market conditions. Significant increases (decreases) in this assumption would result in a significantly lower (higher) fair value measurement.

We have elected to account for the shares of BlackRock Series C Preferred Stock received in a stock exchange with BlackRock at fair value. We own approximately 1.5 million of these shares after delivery of approximately 1.3 million shares in September 2011 pursuant to our obligation to partially fund a portion of certain BlackRock LTIP programs. 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 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.

We have entered into a prepaid forward contract with a financial institution to mitigate the risk of offsetting a portion of the Company's deferred compensation, supplemental incentive savings plan liabilities and certain stock based compensation awards that are based on the Company'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 the Company's stock in Other Assets at fair value. In addition, deferred compensation and supplemental incentive savings plan participants may also invest based on fixed income and equity-based funds. The Company utilizes a Rabbi Trust to hedge the returns by purchasing the same 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 asset category also includes FHLB interests and the retained interest only interests related to the Small Business Administration (SBA) securitizations which are classified as Level 3. All Level 3 other assets are included in the Insignificant Level 3 assets, net of liabilities line item in Table 95: Fair Value Measurement – Recurring Quantitative Information in this Note 9.

Assets and liabilities measured at fair value on a recurring basis, including instruments for which PNC has elected the fair value option, follow.

Table 93: Fair Value Measurements - Summary

					September 30, 2012								December 31, 2011
											Total								Total
In millions				Level 1		Level 2		Level 3		Fair Value			Level 1	Level 2		Level 3		Fair Value
Assets
	Securities available for sale
		US Treasury and government agencies		$	2,130	$	894			$	3,024	$	1,659	$	2,058			$	3,717
		Residential mortgage-backed
			Agency				27,930				27,930				26,792				26,792
			Non-agency					$	6,220		6,220					$	5,557		5,557
		Commercial mortgage-backed
			Agency				651				651				1,140				1,140
			Non-agency				3,281				3,281				2,756				2,756
		Asset-backed					4,825		714		5,539				2,882		787		3,669
		State and municipal					1,708		341		2,049				1,471		336		1,807
		Other debt					3,066		52		3,118				2,713		49		2,762
			Total debt securities		2,130		42,355		7,327		51,812		1,659		39,812		6,729		48,200
		Corporate stocks and other			305		16				321		368						368
			Total securities available for sale		2,435		42,371		7,327		52,133		2,027		39,812		6,729		48,568
	Financial derivatives (a) (b)
		Interest rate contracts			19		9,504		140		9,663				9,150		60		9,210
		Other contracts					163		7		170				246		7		253
			Total financial derivatives		19		9,667		147		9,833				9,396		67		9,463
	Residential mortgage loans held for sale (c)						1,477				1,477				1,522				1,522
	Trading securities (d)
		Debt (e) (f)			1,424		1,153		32		2,609		1,058		1,371		39		2,468
		Equity			46		9				55		42		3				45
			Total trading securities		1,470		1,162		32		2,664		1,100		1,374		39		2,513
	Trading loans						22				22
	Residential mortgage servicing rights (g)								594		594						647		647
	Commercial mortgage loans held for sale (c)								811		811						843		843
	Equity investments
		Direct investments							1,094		1,094						856		856
		Indirect investments (h)							658		658						648		648
			Total equity investments						1,752		1,752						1,504		1,504
	Customer resale agreements (i)						462				462				732				732
	Loans (j)						307		7		314				222		5		227
	Other assets
		BlackRock Series C Preferred Stock (k)							210		210						210		210
		Other			279		199		9		487				422		7		429
			Total other assets		279		199		219		697				422		217		639
		Total assets		$	4,203	$	55,667	$	10,889	$	70,759	$	3,127	$	53,480	$	10,051	$	66,658
Liabilities
	Financial derivatives (b) (l)
		Interest rate contracts		$	6	$	7,169	$	16	$	7,191			$	7,065	$	6	$	7,071
		BlackRock LTIP							210		210						210		210
		Other contracts					191		104		295				233		92		325
			Total financial derivatives		6		7,360		330		7,696				7,298		308		7,606
	Trading securities sold short (m)
		Debt			688		15				703	$	997		19				1,016
			Total trading securities sold short		688		15				703		997		19				1,016
	Other liabilities						2				2				3				3
		Total liabilities		$	694	$	7,377	$	330	$	8,401	$	997	$	7,320	$	308	$	8,625
(a)		Included in Other assets on our Consolidated Balance Sheet.
(b)		Amounts at September 30, 2012 and December 31, 2011 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 September 30, 2012 and December 31, 2011,
		respectively, the net asset amounts were $2.8 billion and $2.4 billion and the net liability amounts were $.7 billion and $.7 billion.
(c)		Included in Loans held for sale on our Consolidated Balance Sheet. PNC has elected the fair value option for certain commercial and residential
		mortgage loans held for sale.
(d)		Fair value includes net unrealized gains of $107 million at September 30, 2012 compared with net unrealized gains of $102 million at December 31, 2011.
(e)		Approximately 27% of these securities are residential mortgage-backed securities and 53% are US Treasury and government agencies securities at September 30, 2012.
		Comparable amounts at December 31, 2011 were 57% and 34%, respectively.
(f)		At December 31, 2011, $1.1 billion of residential mortgage-backed agency securities with embedded derivatives were carried in Trading securities. At September 30, 2012, the balance was zero.
(g)		Included in Other intangible assets on our Consolidated Balance Sheet.
(h)		The indirect equity funds are not redeemable, but PNC receives distributions over the life of the partnership from liquidation of the underlying investments by the
		investee, which we expect to occur over the next twelve years. The amount of unfunded contractual commitments related to indirect equity investments was $164 million
		and related to direct equity investments was $37 million as of September 30, 2012, respectively.
(i)		Included in Federal funds sold and resale agreements on our Consolidated Balance Sheet. PNC has elected the fair value option for these items.
(j)		Included in Loans on our Consolidated Balance Sheet.
(k)		PNC has elected the fair value option for these shares.
(l)		Included in Other liabilities on our Consolidated Balance Sheet.
(m)		Included in Other borrowed funds on our Consolidated Balance Sheet.

Reconciliations of assets and liabilities measured at fair value on a recurring basis using Level 3 inputs for the three months and
nine months ended September 30, 2012 and 2011 follow.

Table 94: Reconciliation of Level 3 Assets and Liabilities

Three Months Ended September 30, 2012

																									Unrealized
																									gains (losses)
								Total realized / unrealized																	on assets and
							gains or losses for the period (a)																		liabilities held on
											Included														Consolidated
Level 3 Instruments					Fair Value						in Other										Transfers		Fair Value		Balance Sheet
	Only				June 30,			Included in			comprehensive										into		Sept. 30,		at Sept. 30,
In millions					2012			Earnings			income		Purchases		Sales		Issuances		Settlements		Level 3 (b)		2012		2012 (c)
Assets
	Securities available for
		sale
		Residential mortgage-
			backed non-agency		$	5,887		$	26		$	592							$	(285)			$	6,220	$	(23)
		Asset-backed				688			1			55								(30)				714		(1)
		State and municipal				337						4												341
		Other debt				55							$	5	$	(8)								52
			Total securities
				available for sale		6,967			27			651		5		(8)				(315)				7,327		(24)
	Financial derivatives					117			145											(115)				147		122
	Trading securities - Debt					41			5											(14)				32
	Residential mortgage
		servicing rights				581			(45)					70			$	32		(44)				594		(44)
	Commercial mortgage
		loans held for sale				837			(2)							(26)				2				811		(4)
	Equity investments
		Direct investments				957			26					135		(24)								1,094		21
		Indirect investments				677			8					12		(39)								658		8
			Total equity
				investments		1,634			34					147		(63)								1,752		29
	Loans					7								1						(1)				7
	Other assets
		BlackRock Series C
			Preferred Stock			200			10															210		10
		Other				7															$	2		9
			Total other assets			207			10													2		219		10
				Total assets	$	10,391		$	174	(e)	$	651	$	223	$	(97)	$	32	$	(487)	$	2	$	10,889	$	89	(f)
				Total liabilities (d)	$	289		$	62	(e)					$	1			$	(22)			$	330	$	21	(f)

Three Months Ended September 30, 2011

																									Unrealized
																									gains (losses)
								Total realized / unrealized																	on assets and
							gains or losses for the period (a)																		liabilities held on
											Included														Consolidated
Level 3 Instruments					Fair Value						in Other										Transfers		Fair Value		Balance Sheet
	Only				June 30,			Included in			comprehensive										out of		Sept. 30,		at Sept. 30,
In millions					2011			Earnings			income		Purchases		Sales		Issuances		Settlements		Level 3 (b)		2011		2011 (c)
Assets
	Securities available for
		sale
		Residential mortgage-
			backed non-agency		$	6,454		$	(7)		$	(183)							$	(276)			$	5,988	$	(30)
		Asset-backed				951			(2)			(8)	$	48						(93)				896		(5)
		State and municipal				341														(9)				332
		Other debt				75						2		1							$	(26)		52
			Total securities
				available for sale		7,821			(9)			(189)		49						(378)		(26)		7,268		(35)
	Financial derivatives					60			89					1						(62)				88		84
	Trading securities - Debt					56			1											(6)		(4)		47
	Residential mortgage
		servicing rights				996			(298)								$	24		(38)				684		(294)
	Commercial mortgage
		loans held for sale				856			4											(29)				831		4
	Equity investments
		Direct investments				849			39					40	$	(67)								861		29
		Indirect investments				664			26					15		(46)								659		27
			Total equity
				investments		1,513			65					55		(113)								1,520		56
	Loans					4																		4
	Other assets
		BlackRock Series C
			Preferred Stock			426			(80)											(172)				174		(80)
		Other				8														(1)				7
			Total other assets			434			(80)											(173)				181		(80)
				Total assets	$	11,740		$	(228)	(e)	$	(189)	$	105	$	(113)	$	24	$	(686)	$	(30)	$	10,623	$	(265)	(f)
				Total liabilities (d)	$	444		$	(86)	(e)					$	1			$	(167)			$	192	$	(76)	(f)

Nine Months Ended September 30, 2012

																												Unrealized
																												gains (losses)
								Total realized / unrealized																				on assets and
								gains or losses for the period (a)																				liabilities held on
												Included																Consolidated
Level 3 Instruments					Fair Value							in Other										Transfers		Transfers		Fair Value		Balance Sheet
	Only				Dec. 31,				Included in			comprehensive										into		out of		Sept. 30,		at Sept. 30,
In millions					2011				Earnings			income		Purchases		Sales		Issuances		Settlements		Level 3 (b)		Level 3 (b)		2012		2012 (c)
Assets
	Securities available for
		sale
		Residential mortgage-
			backed non-agency			$	5,557		$	38		$	1,078	$	49	$	(163)			$	(797)	$	458			$	6,220	$	(86)
		Commercial mortgage-
			backed non-agency							2											(2)
		Asset-backed					787			(6)			114				(87)				(94)						714		(9)
		State and municipal					336						7								(2)						341
		Other debt					49			(1)			1		14		(11)										52		(1)
			Total securities
				available for sale			6,729			33			1,200		63		(261)				(895)		458				7,327		(96)
	Financial derivatives						67			339					4						(264)		3	$	(2)		147		291
	Trading securities - Debt						39			8											(15)						32		3
	Residential mortgage
		servicing rights					647			(151)					134			$	85		(121)						594		(140)
	Commercial mortgage
		loans held for sale					843			(4)							(30)				2						811		(7)
	Equity investments
		Direct investments					856			68					294		(124)										1,094		62
		Indirect investments					648			76					42		(108)										658		73
			Total equity
				investments			1,504			144					336		(232)										1,752		135
	Loans						5								3						(1)						7
	Other assets
		BlackRock Series C
			Preferred Stock				210																				210
		Other					7																2				9
			Total other assets				217																2				219
				Total assets		$	10,051		$	369	(e)	$	1,200	$	540	$	(523)	$	85	$	(1,294)	$	463	$	(2)	$	10,889	$	186	(f)
				Total liabilities (d)		$	308		$	83	(e)					$	2			$	(62)	$	1	$	(2)	$	330	$	13	(f)


Nine Months Ended September 30, 2011

																									Unrealized
																									gains (losses)
								Total realized / unrealized																	on assets and
							gains or losses for the period (a)																		liabilities held on
											Included														Consolidated
Level 3 Instruments					Fair Value						in Other										Transfers		Fair Value		Balance Sheet
	Only				Dec. 31,			Included in			comprehensive										out of		Sept. 30,		at Sept. 30,
In millions					2010			Earnings			income		Purchases		Sales		Issuances		Settlements		Level 3 (b)		2011		2011 (c)
Assets
	Securities available for
		sale
		Residential mortgage-
			backed non-agency		$	7,233		$	(71)		$	(1)	$	45	$	(280)			$	(938)			$	5,988	$	(93)
		Asset-backed				1,045			(5)			35		48						(227)				896		(14)
		State and municipal				228						3		121						(20)				332
		Other debt				73			(2)			6		3		(3)				1	$	(26)		52		(1)
		Corporate stocks
			and other			4														(4)
			Total securities
				available for sale		8,583			(78)			43		217		(283)				(1,188)		(26)		7,268		(108)
	Financial derivatives					77			195					4						(188)				88		153
	Trading securities - Debt					69			(2)											(16)		(4)		47		(5)
	Residential mortgage
		servicing rights				1,033			(369)					48			$	94		(122)				684		(360)
	Commercial mortgage
		loans held for sale				877			4							(13)				(37)				831		3
	Equity investments
		Direct investments				749			73					142		(103)								861		60
		Indirect investments				635			96					40		(112)								659		98
			Total equity
				investments		1,384			169					182		(215)								1,520		158
	Loans					2								2										4
	Other assets
		BlackRock Series C
			Preferred Stock			396			(50)											(172)				174		(50)
		Other				7								1						(1)				7
			Total other assets			403			(50)					1						(173)				181		(50)
				Total assets	$	12,428		$	(131)	(e)	$	43	$	454	$	(511)	$	94	$	(1,724)	$	(30)	$	10,623	$	(209)	(f)
				Total liabilities (d)	$	460		$	(36)	(e)					$	9			$	(241)			$	192	$	(47)	(f)
(a)			Losses for assets are bracketed while losses for liabilities are not.
(b)			PNC's policy is to recognize transfers in and transfers out as of the end of the reporting period.
(c)			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.
(d)			Financial derivatives.
(e)			Net gains (realized and unrealized) included in earnings relating to Level 3 assets and liabilities were $112 million for the third quarter of 2012, while for the first nine months
			of 2012 there were $286 million of net gains (realized and unrealized) included in earnings. The comparative amounts included net losses (realized and unrealized) of $142 million
			for third quarter 2011 and net losses (realized and unrealized) of $95 million for the first nine months of 2011. These amounts also included amortization and accretion of
			$51 million for the third quarter of 2012 and $137 million for the first nine months of 2012. The comparative amounts were $26 million for the third quarter of 2011 and $81
			million for the first nine months of 2011. 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 gains relating to those assets and liabilities held at the end of the reporting period were $68 million for the third quarter of 2012, while for the first nine months
			of 2012 there were $173 million of net unrealized gains. The comparative amounts included net unrealized losses of $189 million for the third quarter of 2011 and
			net unrealized losses of $162 million for the first nine months of 2011. These amounts were included in Noninterest income on the Consolidated Income Statement.

An instrument's categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. PNC reviews and updates fair value hierarchy classifications quarterly. 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. During the first nine months of 2012, there were transfers of assets and liabilities from Level 2 to Level 3 of $462 million consisting primarily of mortgage-backed securities as a result of a ratings downgrade which reduced the observability of valuation inputs. Also during the first nine months of 2012, $279 million of assets in the Rabbi Trust were classified as Level 1 based upon a refinement in our methodology. This reclassification has been reflected as if it were a transfer from Level 2 to Level 1. During the first nine months of 2011, there were no material transfers of assets or liabilities between the hierarchy levels.

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

Table 95: Fair Value Measurement - Recurring Quantitative Information

Fair Value

Level 3 Instruments Only

Sept. 30

Dollars in millions

2012

Valuation Techniques

Unobservable Inputs

Range (Weighted Average)

Residential mortgage-backed

non-agency

6,220

Priced by a third-party vendor

Constant prepayment rate (CPR)

1.0%-30.0% (5.0%)

(a)

using a discounted cash flow

Constant default rate (CDR)

0.0%-24.0% (7.0%)

(a)

pricing model (a)

Loss Severity

10.0%-92.0% (51.0%)

(a)

Spread over the benchmark curve (b)

350bps weighted average

(a)

Asset-backed

714

Priced by a third-party vendor

Constant prepayment rate (CPR)

1.0%-15.0% (3.0%)

(a)

using a discounted cash flow

Constant default rate (CDR)

1.0%-25.0% (9.0%)

(a)

pricing model (a)

Loss Severity

10.0%-100.0% (72.0%)

(a)

Spread over the benchmark curve (b)

518bps weighted average

(a)

State and municipal

158

Discounted cash flow

Spread over the benchmark curve (b)

110bps - 275bps (162bps)

183

Consensus pricing (c)

Credit and Liquidity discount

0.0%-30.0% (9.0%)

Other debt

Consensus pricing (c)

Credit and Liquidity discount

7.0%-95.0% (86.0%)

Residential mortgage loan

commitments

123

Discounted cash flow

Probability of funding

5.0% - 99.0% (65.2%)

Embedded servicing value

.4% - 1.2% (.8%)

Trading securities - Debt

Consensus pricing (c)

Credit and Liquidity discount

8.0%-40.0% (16.0%)

Residential mortgage servicing rights

594

Discounted cash flow

Constant prepayment rate (CPR)

3.9% - 57.8% (20.8%)

Spread over the benchmark curve (b)

939bps - 1,937bps (1,125 bps)

Commercial mortgage loans held

for sale

811

Discounted cash flow

Spread over the benchmark curve (b)

495bps - 3,320bps (962bps)

Equity investments - Direct investments

1,094

Multiple of adjusted earnings

Multiple of earnings

4.5 - 11.0 (6.5)

Equity investments - Indirect (d)

658

Net asset value

BlackRock Series C Preferred Stock

210

Consensus pricing (c)

Liquidity discount

22.5%

BlackRock LTIP

(210)

Consensus pricing (c)

Liquidity discount

22.5%

Other derivative contracts

(77)

Discounted cash flow

Credit and Liquidity discount

39.0% - 99.0% (48.0%)

Spread over the benchmark curve (b)

94bps

Insignificant Level 3 assets, net of

liabilities (e)

(3)

Total Level 3 assets, net of liabilities (f)

10,559

(a)

Level 3 residential mortgage-backed non-agency and asset-backed securities with fair values as of September 30, 2012 totaling $5,246 million and $686 million, respectively, were

priced by a third-party vendor using a discounted cash flow pricing model, that incorporates consensus pricing, where available. 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 9. Certain Level 3 residential mortgage-backed non-agency and asset-backed

securities with fair value as of September 30, 2012 of $974 million and $28 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.

(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)

The range on these indirect equity investments has not been disclosed due to the diverse nature of the underlying investments.

(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 loans, and certain financial derivative assets and liabilities and other assets.

(f)

Consists of total Level 3 assets of $10,889 million and total Level 3 liabilities of $330 million.

We may be required to measure certain other financial assets at fair value on a nonrecurring basis. These adjustments to fair value usually result from the application of lower-of-cost-or-fair value accounting or write-downs of individual assets due to impairment.

The amounts below for nonaccrual loans represent the fair value of loans which 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. We have 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.

The amounts below for loans held for sale include the carrying value of commercial mortgage loans which are intended to be sold with servicing retained. The fair value of the commercial mortgage loans is determined using discounted cash flows. Significant observable market data includes the applicable benchmark U.S. Treasury interest rates. These instruments are classified within Level 3. Significant unobservable inputs include a spread over the benchmark curve and the embedded servicing value. 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 embedded servicing value would result in significantly higher (lower) carrying value.

Loans held for sale also 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. These instruments are classified within Level 2.

The amounts below for 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.

Commercial MSRs are periodically evaluated for impairment and the amounts below reflect an impairment of three strata at September 30, 2012 and December 31, 2011, respectively. For purposes of impairment, the commercial MSRs are stratified based on asset type, which characterizes the predominant risk of the underlying financial asset. The fair value of commercial MSRs is estimated by using a discounted cash flow model incorporating unobservable inputs for assumptions as to 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.

The amounts below for 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 actual sales of commercial and residential OREO and foreclosed assets which are assessed annually.

The amounts below for 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.

Quantitative information about the significant unobservable inputs within Level 3 nonrecurring assets follows.

Table 97: Fair Value Measurements - Nonrecurring Quantitative Information

Fair Value

Level 3 Instruments Only

September 30,

Dollars in millions

2012

Valuation Techniques

Unobservable Inputs

Range (Weighted Average)

Assets

Nonaccrual loans (a)

Fair value of collateral

Loss severity

1.8% - 98.3% (58.6%)

Loans held for sale

Discounted cash flow

Spread over the benchmark curve (b)

25bps - 235bps (119bps)

Embedded servicing value

.8% - 2.6% (1.7%)

Commercial mortgage

394

Discounted cash flow

Constant prepayment rate (CPR)

5.3% - 20.6% (6.9%)

servicing rights

Discount rate

5.4% - 7.9% (7.6%)

Other (c)

392

Fair value of property or collateral

Appraised value/sales price

Not meaningful

Total Assets

880

(a)

The fair value of nonaccrual loans included in this line item is determined based on internal loss rates. Nonaccrual loans where the fair value is determined based on the appraised value or sales price is included within Other, below.

(b)

The assumed yield spread over benchmark curve for each instrument is generally intended to incorporate non-interest-rate risks such as credit and liquidity risks.

(c)

Other includes nonaccrual loans of $128 million, OREO and foreclosed assets of $242 million and Long-lived assets held for sale of $22 million as of September 30, 2012. The fair value of these assets are determined based on appraised value or sales price, the range of which is not meaningful to disclose.

Refer to the Fair Value Measurement section of this Note 9 regarding the fair value of commercial mortgage loans held for sale, residential mortgage loans held for sale, certain portfolio loans, customer resale agreements, and BlackRock Series C Preferred Stock.

Interest income on these loans is recorded as earned and reported on the Consolidated Income Statement in Other interest income. The impact on earnings of offsetting economic hedges is not reflected in these amounts. Changes in fair value due to instrument-specific credit risk for both the first nine months of 2012 and 2011 were not material.

Interest income on these loans is recorded as earned and reported on the Consolidated Income Statement in Other interest income. Throughout 2011 and the first nine months of 2012, 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 the first nine months of 2012 and 2011 were not material.

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 both the first nine months of 2012 and 2011 were not material.

Interest income on securities is reported on the Consolidated Income Statement in Interest income.

The changes in fair value included in Noninterest income for items for which we elected the fair value option follow.

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

Table 99: Fair Value Option - Fair Value and Principal Balances

						Aggregate Unpaid
In millions			Fair Value			Principal Balance		Difference
September 30, 2012
Customer resale agreements				$	462	$	430	$	32
Trading loans					22		22
Residential mortgage loans held for sale
	Performing loans				1,430		1,361		69
	Loans 90 days or more past due				31		37		(6)
	Nonaccrual loans				16		34		(18)
		Total			1,477		1,432		45
Commercial mortgage loans held for sale (a)
	Performing loans				805		940		(135)
	Nonaccrual loans				6		12		(6)
		Total			811		952		(141)
Residential mortgage loans - portfolio
	Performing loans				83		114		(31)
	Loans 90 days or more past due (b)				169		194		(25)
	Nonaccrual loans				62		195		(133)
		Total		$	314	$	503	$	(189)
December 31, 2011
Customer resale agreements				$	732	$	686	$	46
Residential mortgage-backed agency securities with embedded derivatives (c)					1,058		864		194
Residential mortgage loans held for sale
	Performing loans				1,501		1,439		62
	Loans 90 days or more past due				19		25		(6)
	Nonaccrual loans				2		4		(2)
		Total			1,522		1,468		54
Commercial mortgage loans held for sale (a)
	Performing loans				829		962		(133)
	Nonaccrual loans				14		27		(13)
		Total			843		989		(146)
Residential mortgage loans - portfolio
	Performing loans				74		97		(23)
	Loans 90 days or more past due (b)				90		95		(5)
	Nonaccrual loans				63		176		(113)
		Total		$	227	$	368	$	(141)
(a)	There were no loans 90 days or more past due within this category at September 30, 2012 or December 31, 2011.
(b)	The majority of these loans are government insured loans, which positively impacts the fair value.
(c)	These residential mortgage-backed agency securities with embedded derivatives were carried as Trading securities.

Table 100: Additional Fair Value Information Related to Financial Instruments

		September 30, 2012											December 31, 2011
			Carrying		Fair Value								Carrying			Fair
In millions			Amount			Total		Level 1		Level 2		Level 3	Amount			Value
Assets
Cash and due from banks			$	4,284	$	4,284	$	4,284					$	4,105	$	4,105
Short-term assets				5,219		5,219			$	5,219				4,462		4,462
Trading securities				2,664		2,664		1,470		1,162	$	32		2,513		2,513
Investment securities				62,814		63,365		2,713		53,299		7,353		60,634		61,018
Trading loans				22		22				22
Loans held for sale				2,737		2,742				1,477		1,265		2,936		2,939
Net loans (excludes leases)				170,904		173,445				307		173,138		148,254		151,167
Other assets				4,327		4,327				2,356		1,971		4,019		4,019
Mortgage servicing rights				996		1,004						1,004		1,115		1,118
Financial derivatives
	Designated as hedging instruments under GAAP			2,023		2,023				2,023				1,888		1,888
	Not designated as hedging instruments under GAAP			7,810		7,810		19		7,644		147		7,575		7,575
	Total Assets		$	263,800	$	266,905	$	8,486	$	73,509	$	184,910	$	237,501	$	240,804

Liabilities
Demand, savings and money market deposits			$	178,471	$	178,471			$	178,471			$	156,335	$	156,335
Time deposits				27,792		28,109				28,109				31,632		31,882
Borrowed funds				43,359		44,607	$	688		42,882	$	1,037		36,966		39,064
Financial derivatives
	Designated as hedging instruments under GAAP			172		172				172				116		116
	Not designated as hedging instruments under GAAP			7,524		7,524		6		7,188		330		7,490		7,490
Unfunded loan commitments and letters of credit				220		220						220		223		223
	Total Liabilities		$	257,538	$	259,103	$	694	$	256,822	$	1,587	$	232,762	$	235,110

The aggregate fair values in the table above do not represent the total market value of PNC's assets and liabilities as the table excludes the following:

We used the following methods and assumptions to estimate fair value amounts for financial instruments.

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.

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:

Securities include both the investment securities (comprised of available for sale and held to maturity securities) and trading securities portfolios. We primarily use prices obtained from pricing services, dealer quotes or recent trades to determine the fair value of securities. As of September 30, 2012, 84% of the positions in these portfolios were priced by 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 mortgage-backed securities, and matrix pricing for other asset classes, such as commercial mortgage and other asset-backed securities. Another vendor primarily uses pricing models considering adjustments for ratings, spreads, matrix pricing and prepayments for the instruments we value using this service, such as non-agency residential mortgage-backed securities, agency adjustable rate mortgage securities, agency CMOs, commercial mortgage-backed securities, and municipal bonds. Management uses various methods and techniques to validate prices obtained from pricing services and dealers, including reference to another third-party source, by reviewing valuations of comparable instruments, or by comparison to internal valuations.

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 purchased impaired loans, fair value is assumed to equal PNC's carrying value, which represents the present value of expected future principal and interest cash flows, as adjusted for any ALLL recorded for these loans. See Note 6 Purchased Loans for additional information. 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. Also refer to the Fair Value Measurement and Fair Value Option sections of this Note 9 regarding the fair value of commercial and residential mortgage loans held for sale. Loans are presented net of the ALLL and do not include future accretable discounts related to purchased impaired loans.

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

Refer to the Fair Value Measurement section of this Note 9 regarding the fair value of equity investments.

The aggregate carrying value of our investments that are carried at cost and FHLB and FRB stock was $1.9 billion at both September 30, 2012 and December 31, 2011, both of which approximate fair value at each date.

Fair value is based on the present value of the estimated future cash flows, incorporating assumptions as to prepayment rates, discount rates, default rates, escrow balances, interest rates, cost to service and other factors.

The key valuation assumptions for commercial and residential mortgage loan servicing assets at September 30, 2012 and December 31, 2011 are included in Note 10 Goodwill and Other Intangible Assets.

Refer to the Fair Value Measurement section of this Note 9 regarding the fair value of customer resale agreements.

The carrying amounts of noninterest-bearing and interest-bearing demand, interest-bearing money market and savings deposits approximate fair values. For time deposits, which include foreign deposits, fair values are estimated based on the discounted value of expected net cash flows assuming current interest rates. All deposits are classified as Level 2.

The carrying amounts of Federal funds purchased, commercial paper, repurchase agreements, trading securities sold short, cash collateral, other short-term borrowings, acceptances outstanding and accrued interest payable are considered to be their fair value because of their short-term nature. For all other borrowed funds, fair values are estimated using either prices obtained from third-party vendors or an internally developed discounted cash flow approach taking into consideration our current incremental borrowing rates for similar instruments.

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, credit and other factors. 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 their creditworthiness. These instruments are classified as Level 3.

Refer to the Fair Value Measurement section of this Note 9 regarding the fair value of financial derivatives.