The Merger Agreement, which has been included to provide investors with information regarding its terms, contains representations and warranties of each of PNC and Bankshares. The assertions embodied in those representations and warranties were made for purposes of the Merger Agreement and are subject to qualifications and limitations agreed by the respective parties in connection with negotiating the terms of the Merger Agreement. In addition, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what a stockholder might view as material, or may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts. Investors should read the Merger Agreement together with the other information concerning PNC and Bankshares that each company publicly files in reports and statements with the Securities and Exchange Commission.

     Prior to execution of the Merger Agreement, Bankshares amended its Rights Agreement on October 8, 2006 to permit execution of the Merger Agreement and the consummation of the Merger, without triggering the separation or exercise of the stockholder rights or any adverse event under the Rights Agreement. In particular, neither PNC, nor any of its affiliates or associates shall be deemed to be an Acquiring Person (as defined in the Rights Agreement) solely by virtue of the execution and delivery of the Merger Agreement or the consummation of the Merger.

     The foregoing description of the Rights Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement Amendment, which is filed as Exhibit 4.1 hereto, and is incorporated into this report by reference.

     On October 8, 2006 Bankshares and Edward J. Kelly, III, its President and Chief Executive Officer, entered into Amendment Number One to Restricted Stock Unit Award Agreement (the “RSU Agreement Amendment”), thereby amending the Restricted Stock Unit Award Agreement dated as of March 29, 2006 by and between Bankshares and Edward J. Kelly (the “RSU Agreement”). The RSU Agreement Amendment provides for the restricted stock units granted under the RSU Agreement to be converted to Merger Consideration at the Effective Time on the same basis as all outstanding restricted stock units of Bankshares under Section 1.5 of the Merger Agreement.

     The foregoing description of the RSU Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the RSU Agreement Amendment, which is filed as Exhibit 10.1 hereto, and is incorporated into this report by reference.

Item 3.03. Material Modification to Rights of Security Holders.

See Item 1.01 above.

Item 8.01. Other Events.

     On October 9, 2006, PNC and Bankshares issued a joint press release announcing the execution of the Merger Agreement. The press release is attached as Exhibit 99.1 and is incorporated herein by reference.

     On October 9, 2006, PNC and Bankshares held a joint conference call in connection with the announcement of the Merger Agreement. The presentation slides used in connection with the conference call are attached as Exhibit 99.2 and are incorporated herein by reference. As clarification of certain information contained on page 23 of the slide presentation:

1. The line labeled “Synergies” includes anticipated cost savings and synergies as described on page 14. The line labeled “Other” principally reflects the financing costs for the acquisition of Bankshares and intangible amortization expense.

2. The amounts shown as “Mercantile projected net income” were derived from IBES estimated EPS amounts using current fully diluted shares of approximately 127 million. PNC deemed the implied growth rate to be reasonable based on its due diligence.

3. Amounts on this page relating to the impact of the acquisition of Bankshares on PNC reflect an assumed closing date of March 1, 2007. Thus, the amounts shown as “Mercantile projected net income” for 2007 only represent ten seasonally adjusted months out of the full year amount derived from the IBES estimated EPS amount for 2007. The amounts shown as “Synergies” and “Other” also reflect proration for 2007 as a result of the assumed closing date, as does the number of shares shown as “Proforma shares outstanding (millions)” for 2007, which is an assumed average share number for the year.

4. The amounts shown as “PNC shares outstanding (millions)” reflect, among other things, assumed share repurchases under PNC’s outstanding share repurchase authorization. PNC believes that it will have the capacity to engage in shares repurchases over this period of time at least to the level that results in the average shares outstanding shown for 2008 (before giving effect to the acquisition of Bankshares) of approximately 280 million shares. The actual number of shares repurchased may vary from the amounts assumed for these purposes due to, among other factors, changes in market conditions, the amount of PNC’s earnings over this period, and the availability of other, more attractive options for deployment of any capital in excess of PNC’s target levels.