<PAGE>
Rule 424 (b) (2)
File Nos. 33-54049
Pricing Supplement No. 108 Dated July 26, 1995
(To Prospectus dated September 15, 1994 and Prospectus Supplement dated
September 15, 1994).
$1,000,000,000
CORESTATES CAPITAL CORP
Senior Medium-Term Floating Rate Notes Due
Nine Months or More From Date of Issue
Unconditionally Guaranteed as to Payment of Principal, Premium,
if any, and Interest by
CORESTATES FINANCIAL CORP
Cusip: 21869EEN1
Principal Amount: $25,000,000.00
Settlement Date: 7/28/95
Base Rate: LIBOR (TELERATE PG. 3750)
Index Maturity: 1 MONTH LIBOR FLAT
Initial Interest Rate: 5.875%
Spread or Spread Multiplier, if applicable: -0-
Interest Rate Reset Dates: THIRD WEDNESDAY OF EACH MONTH
Interest Payment Dates: THIRD WEDNESDAY OF EACH MONTH
First Coupon: 8/16/95
Day Count: ACTUAL/360
Stated Maturity Date: 7/28/98
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Alternate Rate Event Spread, if any:
Initial Redemption Date, if any:
Initial Redemption Percentage, if any:
Annual Redemption Percentage Reduction, if any:
Optional Repayment Dates, if any:
PAGE 1 OF 3
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MTN Pricing Supplement
RECENT DEVELOPMENTS
The following is unaudited consolidated financial information for
CoreStates Financial Corp ("CoreStates") and its subsidiaries for the
three-month periods ended March 31, 1995 and 1994. The following financial
information should be read in conjunction with the first quarter of 1995 Form
10-Q and with the financial information for the twelve months ended December
31, 1994 contained in CoreStates' Annual Report on Form 10-K. These reports are
incorporated by reference in the accompanying prospectus. See "Incorporation of
Certain Documents by Reference" in the accompanying prospectus.
Operating results, key financial ratios and per share information are
summarized in the following table (in millions, except per share):
<TABLE>
<CAPTION>
Three Months Ended Percentage
March 31, Increase
------------------ ----------
1995 1994
------ ------
<S> <C> <C> <C>
Net interest income (taxable
equivalent basis)......................... $369.3 $334.0 10.6%
====== ======
Income (loss) before the cumulative
effect of a change in accounting
principle................................. $ 55.4 $(30.0)
Add back after-tax restructuring
charge.................................... 70.0 -
Less after-tax EPS gain.................... (11.8) -
Add back after-tax merger-related
charges................................... - 127.8
------ ------
Operating earnings......................... $113.6 $ 97.8 16.2
====== ======
Operating earnings per share............... $ 0.79 $ 0.68 16.2
====== ======
Return on average equity (a)............... 19.63% 16.45%
Return on average assets (a)............... 1.63 1.43
Net interest margin........................ 5.93 5.56
Average common shares outstanding.......... 144.246 144.612
</TABLE>
(a) Calculated based on "operating earnings". See definition of operating
earnings in "First Quarter Results".
The ratio of earnings from continuing operations before income taxes to
fixed charges of continuing operations for the three months ended March 31, 1995
was as follows:
<TABLE>
<S> <C>
Combined CoreStates (parent company)
and CoreStates Capital........................... 1.65X
CoreStates consolidated:
Excluding interest on deposits................... 2.40X
Including interest on deposits................... 1.46X
</TABLE>
<PAGE>
MTN Pricing Supplement
RECENT DEVELOPMENTS - continued
First Quarter Results
- ---------------------
In the first quarter of 1995, CoreStates Financial Corp ("CoreStates")
recorded net income of $55.4 million or $0.38 per share. "Operating earnings"
for the first quarter of 1995, which has been defined for purposes of this
discussion as net income excluding a restructuring charge and a gain related to
changes in an investment in an affiliate joint venture, was $113.6 million, or
$0.79 per share. This represents a 16.2% increase when compared to first quarter
of 1994 operating earnings of $97.8 million, or $0.68 per share. Operating
earnings for the first quarter of 1994 excludes merger-related charges of $127.8
million after-tax, or $0.89 per share, and the cumulative effect of a change in
accounting principle.
The $15.8 million improvement in operating earnings for the first quarter
of 1995, as compared to the first quarter of 1994, was primarily due to an
increase in taxable equivalent net interest income of $35.3 million, or 10.6%.
The net interest margin for the first quarter of 1995 was 5.93%, an increase of
37 basis points when compared to first quarter of 1994 operating earnings of
$97.8 million, or $0.68 per share. Operating earnings for the first quarter of
1994 excludes merger-related charges of $127.8 million after-tax, or 0.89 per
share, and the cumulative effect of a change in accounting principle.
Key performance measures, based on operating earnings, continued to be
strong. Returns on average equity and assets were 19.63% and 1.63%,
respectively, in the first quarter of 1995, compared to 16.45% and 1.43%,
respectively, in the first quarter of 1994.
In March 1995, CoreStates completed an intensive review of its operations
and businesses and announced a corporate-wide process redesign plan, which
restructures its banking services around customers and enhances employees'
authority to make decisions to benefit customers. As a result of this process
redesign, CoreStates recorded a $110.0 million pre-tax restructuring charge,
$70.0 million after-tax or $0.49 per share in March 1995. The process redesign
is expected to generate by late 1996, annual run-rate efficiencies which will
reduce expenses by approximately $180 million and revenue enhancements which
will net an addition of approximately $30 million to revenues, combining to
improve net income at an annual rate of $0.90 per share.
Also in March 1995, Electronic Payment Services, Inc. ("EPS") an affiliate
joint venture formed in 1992 to combine the consumer electronic transaction
processing businesses of CoreStates and three partners, admitted a fifth partner
and increased the ownership interest of an existing partner. As a direct result
of this change in its ownership interest, CoreStates recognized a pre-tax gain
of $19.0 million, $11.8 million after-tax or $0.08 per share.
<PAGE>
MTN Pricing Supplement
RECENT DEVELOPMENTS - continued
First Quarter Results - continued
- ---------------------------------
Upon consummation of its acquisition by CoreStates on March 16, 1994,
Constellation Bancorp ("Constellation") recorded merger-related charges in the
first quarter of 1994 in connection with a change in strategic direction related
to problem assets and to conform consumer lending charge-off policies to those
of CoreStates, and for expenses directly attributable to the acquisition. In the
first quarter of 1994, Constellation recorded merger-related charges totalling
$127.8 million after-tax, or $0.89 per share. On a pre-tax basis, these
merger-related charges consisted of a $120.0 million provision for loan losses,
a $28.0 million addition to the OREO reserve, $13.0 million for the writedown of
purchased mortgage servicing rights and related assets, and $34.0 million for
expenses directly attributable to the acquisition including $8.0 million of
severance costs related to approximately 370 employees.
During the first quarter of 1994, CoreStates recognized a $3.4 million
after-tax, or $0.02 per share, impairment loss on certain mortgage securities as
a cumulative effect of a change in accounting principle. The loss was the
results of a writedown to fair value of these securities, which were deemed to
be impaired. This resulted from the Financial Accounting Standards No. 115 ("FAS
115"). The interpretation, reached by a consensus of the FASB Emerging Issues
Task Force in March 1994, provides more definitive criteria for recognition of
impairment losses on these types of securities.
Total non-performing assets at March 31, 1995 decreased $12.2 million, or
3.9%, from December 31, 1994. Most of the decrease from December 31, 1994 was in
the non-performing real estate portfolio which declined by $9.8 million.
The provision for loan losses for the first quarter of 1995 was $25.0
million, a $1.9 million decline from the $26.9 million provision (excluding the
$120.0 million Constellation merger-related provision) recorded in the prior
year first quarter and unchanged from the 1994 fourth quarter provision. In the
first quarter of 1994, Constellation recorded a $120.0 million provision for
loan losses in connection with a change in strategy related to problem assets,
and to conform its consumer lending charge-off policies to those of CoreStates.
Consolidated total assets at March 31, 1995 were $26.2 billion, down
slightly from the $27.0 billion at 1994 year-end. The March 31, 1995 tier 1
capital ratio, total capital ratio and tier 1 leverage ratio at 8.3%, 12.1% and
7.4%, respectively, were well in excess of regulatory guidelines.
