CLEVELAND -- Three weeks after the announcement that National City Corp. was being sold, two things are apparent: PNC Financial Services Group got a really sweet deal to buy Ohio's largest bank. And National City was in far worse shape than the public knew.

Several questions surround the deal:

• How can PNC pay $5.6 billion for National City and get back more than $5 billion in tax breaks?

• Why can PNC pay nearly 20 percent less for National City than the bank's stock traded for the day before?

• How did loss estimates on National City's risky loans jump by 200 percent in three days?

The questions arise because PNC got what some analysts describe as the deal of a lifetime: Buying one of the nation's 10 largest banks, with nearly $100 billion in deposits and $150 billion in assets, for free, or, at least, really cheap. The acquisition will make PNC the nation's fifth-largest bank.

PNC is getting National City at a good price, but it's also getting more than $1 billion in National City's holdings in Visa stock, not to mention all of its branches and businesses.

The tax break was triggered by a Sept. 30 IRS notice dealing with the purchase of banks that had loan losses. It allows a bank that buys another bank to immediately offset its taxable profits up to the amount of losses suffered by the bank that's purchased.

Within days of the IRS announcement, Wells Fargo outbid Citibank for limping Wachovia -- offering three times what Citi had offered. Three weeks later, PNC agreed to pay nearly twice what U.S. Bank had offered for National City, at a time when no one else would buy the bank, according to a regulatory filing last week.

The IRS didn't target any particular bank with the Sept. 30 decision, said Andrew DeSouza, spokesman for the Treasury Department.

The result, though, was awesome for banks like PNC, said LeRoy Brooks, a professor of finance at John Carroll University in suburban Cleveland. When you look at a $5.6 billion purchase price and a $5 billion tax break, "the numbers seem clear," he said. "That's a darn good deal."

The purchase price of $2.23 per share was 19 percent less than the closing price of National City's stock the day before and was far less than the $4 to $5 per share that most analysts thought National City was worth.

Kevin Jacques, associate professor of finance at Baldwin-Wallace College in Berea, Ohio, who served for 14 years as an economist for the U.S. Treasury, said some might argue that PNC isn't getting National City free. There is still risk, he said, of more loan losses that go beyond PNC's estimates.

"I don't know about free. PNC is getting National City for cheap," Jacques said.

PNC may have justified that price, in part, by determining that National City's $113 billion loan portfolio could be expected to lose $20 billion over the life of the loans.

Of that, $11 billion was coming from the bank's $17 billion in risky loans, PNC said on Oct. 24. Three days earlier, National City estimated the risky $17 billion portfolio would lose $3.5 billion to $4 billion. That works out to a loss of 24 percent.

In early October, when Wells Fargo said it was buying Wachovia, it estimated that 21 percent of Wachovia's riskiest loans -- its pick-a-payment adjustable loans and home equity loans -- would go bad.

PNC, however, calculated that 65 percent of National City's risky loans would go bad.

Banking analyst Steve Fockens of Neuberger Berman is among those who wonder how that extra $7 billion in losses materialized in three days.

Banking expert Fred Cummings, president of Elizabeth Park Capital Management in Beachwood, Ohio, agreed. "I can't understand how they got these numbers," he said.

Residents of Northeast Ohio also have been angered by the fact that PNC bought National City, in part, by using the share of federal bailout money that National City was denied.

Mr. Jacques said the rejection might hurt, but regulators probably were using hard numbers to judge National City. Regulators grade banks using the acronym CAEL, which stands for capital adequacy, asset quality, earnings and liquidity.

National City scores 2 out of a possible 5 on the CAEL scale compiled by Bankrate. By comparison, PNC scores 3.

In evaluating National City's finances, Mr. Jacques said, "the examiner probably said, 'This doesn't look good. This is not pretty.' " After a few big banks failed in recent months, "Treasury may have feared that National City would be next in line," he said.

In last week's regulatory filing, PNC said National City in September was losing customer deposits and that companies didn't want to do business with it without being paid up front.

In the end, regulators told National City that it could be shut down as early as Oct. 24 if it didn't find a buyer, the filing said. The U.S. Treasury may be trying to save the companies it can save, Mr. Brooks said. In killing off some companies by denying them bailout money, "this was the traditional emergency room triage," he said.

"You say, 'These injured people each need one doctor and this one guy needs five doctors.' Maybe you let the ones go who need five doctors," Mr. Brooks said.

"Maybe Treasury just let National City go because it needed too much help."

However, Mr. Cummings of Elizabeth Park Capital believes Mr. Cummings said National City was stronger than some banks that got bailout money. He stressed that National City didn't actually need money -- it had raised $7 billion in April. "Any amount [from Treasury] would have been OK. It was the vote of confidence that National City needed."

The $2.23 per share offer that National City received from PNC at a time when the stock was trading at $2.75 was no ringing vote of confidence, either.

Despite the low price, it's not likely -- especially at this point -- that another buyer could emerge. A precedent was set last month when Wells Fargo came in behind Citigroup and put in a winning bid for Wachovia that was three times higher than Citi's.

But virtually every possible buyer already has passed on National City, according to PNC's regulatory filing.

"Is it possible? Absolutely it is. But I don't expect that to happen. It's not that National City doesn't have some good businesses," Mr. Jacques said. It's just that other banks may be too afraid of the risk, especially since the economy seems to be getting worse, he added.

The only other obstacle to the deal being completed would appear to shareholder rejection. At this point, that's just not likely to happen, analysts say. Shareholders may feel that $2.23 a share is better than the $1.25 per share U.S. Bank was offering, and better than the big zero they'd get if the bank had failed.

While there's talk in Congress and other circles of undoing the deal, one can't rewind history and pretend people don't now know what they know, Mr. Brooks said. That includes the details of how National City tried desperately to find a buyer and was on the verge of being seized.

The bank could actually fail if the deal fell through at this point, Mr. Brooks said. "They'd be the biggest risk on the block."