<PAGE>
Rule 424 (b) (2)
File Nos. 33-54049
Pricing Supplement No. 117 Dated January 10, 1996
(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: 21869EEY7
Principal Amount: $49,000,000.00
Settlement Date: 01/12/96
Base Rate: LIBOR (TELERATE PG.3750)
Index Maturity: 1 MONTH LIBOR
Initial Interest Rate: 5.715% (5.625% TELERATE PG.3750
1/10/96)
Spread or Spread Multiplier, if applicable: PLUS 9 BPS.
Interest Rate Reset Dates: THIRD WEDNESDAY OF EACH MONTH
Interest Payment Dates: THIRD WEDNESDAY OF EACH MONTH
First Coupon: 02/21/96
Day Count: ACTUAL/360
Stated Maturity Date: 11/19/97
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
<PAGE>
MTN Pricing Supplement
RECENT DEVELOPMENTS
The following is unaudited consolidated financial information for
CoreStates Financial Corp ("CoreStates") and its subsidiaries for the three and
nine-month periods ended September 30, 1995 and 1994. The following financial
information should be read in conjunction with the third 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 Nine Months Ended
September 30 September 30
--------------------- ---------------------
1995 1994 1995 1994
------- ------ ------- --------
<S> <C> <C> <C> <C>
Net interest income (taxable equivalent basis).............. $ 374.7 $ 357.1 $1,127.0 $1,046.2
======= ======= ======== ========
Income before the cumulative effect of
a change in accounting principle....................... $ 133.9 $ 104.2 $ 315.3 $ 137.4
Exclude:
After-tax restructuring charge (credit).................. (1.5) - 66.6 -
After-tax EPS gain....................................... - - (11.8) -
After-tax merger-related charges......................... - - - 167.4
------- ------- -------- --------
Operating earnings......................................... $ 132.4 $ 104.2 $ 370.1 $ 304.8
======= ======= ======== ========
Operating earnings per share............................... $ 0.95 $ 0.74 $ 2.62 $ 2.14
======= ======= ======== ========
Return on average equity (a)............................... 22.94% 18.91% 21.53% 17.95%
Return on average assets (a)................................ 1.85 1.50 1.74 1.47
Net interest margin........................................ 5.90 5.91 5.97 5.78
Average common shares outstanding.......................... 139,176 141,033 141,427 142,581
</TABLE>
(a) Calculated based on "operating earnings." See definition of operating
earnings in "Third Quarter Results."
The ratio of earnings from continuing operations before income taxes to
fixed charges of continuing operations for the nine months ended September 30,
1995 was as follows:
<TABLE>
<S> <C>
Combined CoreStates (parent company)
and CoreStates Capital................................... 2.67x
CoreStates consolidated:
Excluding interest on deposits........................... 3.55x
Including interest on deposits........................... 1.84x
</TABLE>
<PAGE>
MTN Pricing Supplement
RECENT DEVELOPMENTS - continued
Third Quarter Results
- ---------------------
In the third quarter of 1995, CoreStates Financial Corp ("CoreStates")
recorded net income of $133.9 million or $0.96 per share. "Operating earnings"
for the third quarter of 1995, which has been defined for purposes of this
discussion as net income excluding a restructuring credit, was $132.4 million,
or $0.95 per share. This represents a 28.4% increase on a per share basis when
compared to third quarter of 1994 operating earnings of $104.2 million, or $0.74
per share. The restructuring credit is discussed below.
The $28.2 million improvement in operating earnings for the third quarter
of 1995, as compared to the third quarter of 1994, was primarily due to a 4.9%
increase in taxable equivalent net interest income coupled with a 7.4% decrease
in expenses. The net interest margin for the third quarter of 1995 was 5.90%
compared to 5.91% for the third quarter of 1994. The increase in the level of
taxable equivalent net interest income was primarily related to improved
interest rate spreads on deposits and prime-based loans, higher earnings on
non-interest bearing funding and loan growth. Also contributing to the
improvement in third quarter operating earnings was an $11.4 million, or 8.6%
increase in non-interest income and a $19.8 million, or 6.6% decrease in
non-financial expenses excluding the restructuring credit. The financial impact
of those aspects of the process redesign implemented since March 31, 1995 was to
increase third quarter of 1995 operating income by $22.00 million pre-tax, or
$0.10 per share after-tax. This impact principally related to expense savings
and exceeded original projections by $0.05 per share due to timing.
Key performance measures, based on operating earnings, continued to improve
on already strong ratios. Returns on average equity and assets were 22.94% and
1.85%, respectively, in the third quarter of 1995 compared to 18.91% and 1.50%,
respectively, in the third quarter of 1994.
For the nine months ended September 30, 1995, CoreStates recorded net
income of $315.3 million or $2.23 per share. Operating earnings for the first
nine month period, defined as net income excluding the net restructuring charge
and a gain related to changes in an investment in an affiliate joint venture,
were $370.1 million, or $2.62 per share. This represents a 22.4% increase on a
per share basis when compared to operating earnings of $304.8 million, or $2.14
per share for the 1994 nine-month period. Operating earnings for the 1994 nine
month period exclude after-tax merger-related charges of $167.4 million
after-tax, or $1.17 per share, and the cumulative effect of a change in
accounting principle. The $65.3 million improvement in operating earnings for
the first nine months of 1995 was primarily due to an increase in taxable
equivalent net interest income. Taxable equivalent net interest income for the
1995 nine month period increased $80.8 million, or 7.7% over the 1994 nine-month
period.
Restructuring Charge/Credit - 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.
CoreStates recorded restructuring credits of $3.0 million, $1.9 million
after-tax or $0.01 per share, in the second quarter of 1995 and $2.4 million
after-tax, or $0.01 per share, in the third quarter of 1995, related to gains on
the curtailment of future pension benefits associated with employees terminated
during the second and third quarters. CoreStates anticipates the recognition of
an additional curtailment gain in the forth quarter of 1995, as more employees
reach their work-through dates.
Joint Venture - 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 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 in the first
quarter of 1995.
<PAGE>
MTN Pricing Supplement
RECENT DEVELOPMENTS - continued
Third Quarter Results - continued
- ----------------------------------
1994 Merger-Related Charges - Upon consummation of its acquisition by
---------------------------
CoreStates on June 27, 1994, Independence Bancorp, Inc. recorded merger-related
charges in the second 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. These merger-related charges totaled $39.6 million after-tax, or
$0.28 per share. On a pre-tax basis, the merger-related charges consisted of a
$25.0 million provision for loan losses, a $4.0 million addition to the OREO
reserve, and $29.7 million for expenses directly attributable to the acquisition
including $5.0 million of severance costs related to approximately 345
employees.
Upon consummation of its acquisition by CoreStates on March 16, 1994,
Constellation Bancorp 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. These
merger-related charges totaled $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.
1994 Accounting Change - 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 result of a writedown to fair value of these
securities, which were deemed to be impaired. This resulted from the Financial
Accounting Standards Board's ("FASB") 1994 interpretation of Statement of
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 of $207.8 million or 0.72% of assets at
September 30, 1995 decreased $103.1 million, or 33.2%, from December 31, 1994.
The decrease from December 31, 1994 was primarily divided between the
non-performing commercial loan portfolio, which decreased $41.0 million or
47.0%, and the non-performing real estate portfolio which declined by $52.7
million or 27.2%.
The provision for loan losses for the third quarter of 1995 was $27.5
million, up $2.5 million from the prior year third quarter and the 1995 second
quarter provisions. The allowance for loan losses at September 30, 1995 was
$501.4 million, or 2.37% of loans and 300.5% of non-performing loans.
Consolidated total assets at September 30, 1995 were $28.8 billion, down
$0.5 billion from the $29.3 billion at 1994 year-end. The September 30, 1995
tier 1 capital ratio, total capital ratio and tier 1 leverage ratio at 8.1%,
11.8% and 7.4%, respectively, were well in excess of regulatory guidelines.
