<PAGE> 1
Filed pursuant to Rule 424(b)(5)
Registration No. 33-55114
PROSPECTUS SUPPLEMENT
(To Prospectus Dated February 11, 1993)
LOGO
$350,000,000
PNC FUNDING CORP
6-7/8% SUBORDINATED NOTES DUE 2007
UNCONDITIONALLY GUARANTEED, ON A SUBORDINATED BASIS,
AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
PNC BANK CORP.
------------------------
The Notes will mature on July 15, 2007. Interest on the Notes is payable
semiannually on January 15 and July 15, commencing January 15, 1998. The Notes
may not be redeemed prior to their stated maturity.
The Notes will be unsecured and will be subordinate to Senior Indebtedness, and
effectively subordinated to Other Company Obligations, of PNC Funding Corp ("PNC
Funding"). The Notes will be guaranteed, on a subordinated basis, as to payment
of principal and interest by PNC Bank Corp. ("PNC" or the "Corporation").
Payment of principal of the Notes may be accelerated only in the case of the
bankruptcy or reorganization of PNC or a Principal Subsidiary Bank (as defined).
There is no right of acceleration in the case of the bankruptcy, insolvency or
reorganization of PNC Funding or of a default in the payment of interest on the
Notes or in the performance of any other covenant of PNC Funding or PNC.
The Notes will be represented by a global security ("Global Security")
registered in the name of the nominee of The Depository Trust Company ("DTC"),
which will act as the Depositary. Beneficial interests in the Notes represented
by the Global Security will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary (with respect to
participants' Notes) and its direct and indirect participants. Except as
described herein, Notes in definitive form will not be issued. Settlement for
the Notes will be made in immediately available funds. The Notes will trade in
DTC's Same-Day Funds Settlement System until maturity, and secondary market
trading activity for the Notes will therefore settle in immediately available
funds. All payments of principal and interest will be made by PNC Funding in
immediately available funds.
------------------------
THE NOTES AND THE GUARANTEES OF THE NOTES ("GUARANTEES") ARE NOT BANK DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC") OR BY
ANY OTHER INSURER OR GOVERNMENTAL AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
=======================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT(2) PNC FUNDING (1)(3)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.650% .334% 99.316%
- -----------------------------------------------------------------------------------------------------------------------
Total $348,775,000 $1,169,000 $347,606,000
=======================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from July 14, 1997.
(2) PNC Funding and PNC have each agreed to indemnify the Underwriter against
certain liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before deduction of expenses payable by PNC Funding, estimated to be
$125,000.
------------------------
The Notes are offered subject to receipt and acceptance by the Underwriter, to
prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of a Global Security representing the Notes will be made through
the facilities of DTC on or about July 14, 1997.
------------------------
SMITH BARNEY INC.
July 9, 1997
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED HEREBY,
INCLUDING OVER-ALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
CERTAIN INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT UPDATES AND
SUPERSEDES CERTAIN INFORMATION CONTAINED IN THE PROSPECTUS. IN THE EVENT OF A
CONFLICT OR INCONSISTENCY, THIS PROSPECTUS SUPPLEMENT SHALL PREVAIL. SEE
"CERTAIN UPDATING INFORMATION."
PNC BANK CORP.
PNC is a bank holding company organized under the laws of the Commonwealth
of Pennsylvania. PNC was incorporated in 1983 with the consolidation of
Pittsburgh National Corporation and Provident National Corporation. Since 1983,
the Corporation has diversified its geographical presence and product
capabilities through strategic bank and nonbank acquisitions and the formation
of various nonbanking subsidiaries.
PNC is one of the largest diversified financial services companies in the
United States and operates five lines of business: Consumer Banking, Corporate
Banking, Real Estate Banking, Mortgage Banking and Asset Management. Each line
of business focuses on specific customer segments and offers financial products
and services in the Corporation's primary geographic markets in Pennsylvania,
New Jersey, Delaware, Ohio and Kentucky and nationally through retail
distribution networks and alternative delivery channels. At March 31, 1997, the
Corporation's consolidated assets, deposits and shareholders' equity were $71.2
billion, $44.9 billion and $5.5 billion, respectively.
While the Corporation manages five lines of business, the corporate legal
structure currently consists of 10 subsidiary banks and over 140 active nonbank
subsidiaries. PNC Bank, National Association, headquartered in Pittsburgh,
Pennsylvania ("PNC Bank") is the Corporation's principal bank subsidiary. At
March 31, 1997, PNC Bank had total assets of $56.3 billion, representing
approximately 79% of the Corporation's consolidated assets.
PNC's principal executive offices are located at One PNC Plaza, 249 Fifth
Avenue, Pittsburgh, Pennsylvania 15222-2702 and its telephone number is (412)
762-1553.
S-2
<PAGE> 3
SUMMARY CONSOLIDATED FINANCIAL DATA
The following unaudited table sets forth certain consolidated financial data
for PNC and its subsidiaries and is qualified in its entirety by the detailed
information and financial statements included in the documents incorporated
herein by reference. See "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus. The financial data for the three months ended March
31, 1997 are not necessarily indicative of the results that may be expected for
the full year 1997 or for any other interim period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------ ---------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS (in millions)
Interest income............................. $1,242 $1,255 $4,938 $5,149 $4,724 $4,023 $4,281
Interest expense............................ 612 648 2,494 3,007 2,232 1,683 2,103
Net interest income......................... 630 607 2,444 2,142 2,492 2,340 2,178
Provision for credit losses................. 10 6 84 350 494
Noninterest income excluding net
securities gains (losses)................. 409 318 1,373 1,240 1,181 941 931
Net securities gains (losses)............... 16 3 22 (280) (142) 195 246
Noninterest expenses........................ 636 566 2,312 2,469 2,238 1,985 2,073
Applicable income taxes..................... 143 124 535 219 318 262 252
Income before cumulative effect of changes
in accounting principles.................. 266 238 992 408 891 879 536
Cumulative effect of changes in accounting
principles, net of tax benefits........... (7) 20 (148)
Net income.................................. $266 $238 $992 $408 $884 $899 $388
PERIOD-END BALANCE SHEET DATA (in millions)
Total assets................................ $71,166 $72,668 $73,260 $73,404 $77,461 $76,012 $65,802
Loans, net of unearned income............... 52,575 48,800 51,798 48,653 44,043 42,113 35,943
Allowance for credit losses................. 1,119 1,225 1,166 1,259 1,352 1,372 1,568
Shareholders' equity........................ 5,478 5,786 5,869 5,768 5,727 5,404 4,543
AVERAGE BALANCE SHEET DATA (in millions)
Total assets................................ 70,301 71,733 70,807 75,131 74,362 64,053 61,013
Earning assets.............................. 63,825 65,705 64,725 69,535 69,427 59,987 57,426
Loans, net of unearned income............... 51,922 48,625 49,116 45,624 42,599 35,541 36,273
Securities.................................. 10,089 14,818 13,550 22,140 24,355 22,334 19,395
Deposits.................................... 44,133 45,553 45,117 44,830 43,937 40,224 42,772
Borrowed funds.............................. 18,594 18,891 18,314 23,176 23,622 17,650 12,984
Shareholders' equity........................ 5,758 5,764 5,828 5,784 5,531 4,886 4,153
SELECTED RATIOS
Return on average shareholders' equity...... 19.48% 16.65% 17.18% 7.05% 16.09% 18.55% 9.38%
Return on average assets.................... 1.54 1.34 1.40 .54 1.19 1.40 .64
Average common shareholders' equity to
average total assets...................... 7.74 8.01 8.11 7.64 7.34 7.52 6.67
Net interest margin......................... 3.98 3.73 3.83 3.15 3.64 3.99 3.90
CREDIT QUALITY RATIOS
Nonperforming loans to period-end loans(a).. .61 .76 .67 .74 1.28 2.03 5.02
Nonperforming assets to period-end loans,
foreclosed assets and assets held for
accelerated disposition(b)................ .82 1.10 .88 1.10 1.73 3.01 6.16
As a percent of average loans
Net charge-offs........................... .47 .28 .33 .29 .40 1.65 1.62
Provision for credit losses............... .08 .01 .20 .99 1.36
Allowance for credit losses............... 2.15 2.52 2.37 2.76 3.17 3.86 4.32
Allowance as a percent of period-end
Loans..................................... 2.13 2.51 2.25 2.59 3.07 3.26 4.36
Nonperforming loans....................... 346.11 328.88 334.40 351.68 239.29 160.28 86.87
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS(c)
Excluding interest on deposits.............. 2.42x 2.27x 2.38x 1.42x 2.09x 2.60x 2.33x
Including interest on deposits.............. 1.65 1.55 1.60 1.21 1.53 1.66 1.37
</TABLE>
- ---------
(a) Nonperforming loans are comprised of nonaccrual and restructured loans.
(b) Nonperforming assets are comprised of nonperforming loans, foreclosed assets
and assets held for accelerated disposition.
(c) The consolidated ratio of earnings to combined fixed charges and preferred
stock dividends has been computed by dividing income before income taxes,
cumulative effect of changes in accounting principles and fixed charges by
combined fixed charges and preferred stock dividends. Fixed charges
represent all interest expense (ratios are presented both excluding and
including interest on deposits), borrowed funds discount amortization
expense and the portion of net rental expense which is deemed to be
equivalent to interest on debt. Interest expense (other than on deposits)
includes interest on bank notes and senior debt, federal funds purchased,
repurchase agreements, other funds borrowed and subordinated debt.
S-3
<PAGE> 4
CERTAIN UPDATING INFORMATION
The address of the New York regional office of the Securities and Exchange
Commission (the "SEC") is 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of documents filed by PNC with the SEC now may also be accessed
electronically by means of the SEC's home page on the Internet at
"http://www.sec.gov". The information under "Statement of Available information"
in the Prospectus should be read accordingly.
Written requests for copies of documents incorporated herein by reference
should be directed to Glenn Davies, Vice President-Financial Reporting, PNC Bank
Corp., One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2702 or
"[email protected]" on the Internet. Oral requests may be directed to (412)
762-1553. The information under "Incorporation of Certain Documents by
Reference" in the Prospectus should be read accordingly.
See "PNC Bank Corp." and "Summary Consolidated Financial Data" for updated
information on PNC Bank Corp., including the address of its principal executive
offices. The principal executive offices of PNC Funding are now located at 1600
Market Street, Philadelphia, Pennsylvania 19101, and its telephone number is
(215) 585-5000. The information under "PNC Bank Corp." and "PNC Funding Corp" in
the Prospectus should be read accordingly.
The Chase Manhattan Bank, formerly known as Chemical Bank, is the Trustee.
References to the Trustee in the Prospectus and this Prospectus Supplement
should be read accordingly.
CERTAIN TERMS OF THE NOTES
The Notes will constitute a series of Subordinated Debt Securities, as such
term is defined in the accompanying Prospectus. The following description of the
particular terms of the Notes supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Subordinated Debt Securities set forth in the accompanying Prospectus, to which
description reference is hereby made. The accompanying Prospectus sets forth the
meaning of certain capitalized terms used herein and not otherwise defined.
GENERAL
The Notes will be limited to $350,000,000 aggregate principal amount and
will be issued under an Indenture dated as of December 1, 1991, among PNC, PNC
Funding and the Trustee, as amended by a Supplemental Indenture dated as of
February 15, 1993 (as amended, the "Indenture"), which is more fully described
in the accompanying Prospectus. The Notes are unconditionally guaranteed, on a
subordinated basis, as to payment of principal and interest by PNC.
The Notes will bear interest at a rate of 6-7/8% per annum from July 14,
1997, which will be payable semiannually in arrears on January 15 and July 15 of
each year, commencing January 15, 1998 (each, an "Interest Payment Date") to the
persons in whose names the Notes are registered at the close of business on the
December 31 or June 30, as the case may be, next preceding such Interest Payment
Dates. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. The interest period relating to an Interest Payment Date
shall be the period from but not including the preceding Interest Payment Date
(or from but not including July 14, 1997, in the case of the first Interest
Payment Date).
The Notes will mature on July 15, 2007. The Notes may not be redeemed prior
to their stated maturity. The Notes will not be subject to any sinking fund.
SUBORDINATION OF NOTES AND GUARANTEES
The Notes will be unsecured and will be subordinate in right of payment to
the prior payment in full of all Senior Indebtedness of PNC Funding (as defined
below). At March 31, 1997, the outstanding Senior Indebtedness of PNC Funding
was approximately $623.9 million.
S-4
<PAGE> 5
The Notes will be unconditionally guaranteed by PNC, on a subordinated
basis, as to payment of principal and interest when and as the same shall become
due and payable. The Subordinated Guarantees will be unsecured and will be
subordinate and junior in right of payment to PNC's obligations to the holders
of Senior Indebtedness of PNC. At March 31, 1997, the outstanding Senior
Indebtedness of PNC was approximately $980.4 million.
In certain events of insolvency, the payment of the principal of and
interest on the Notes will, to the extent set forth in the Indenture, also be
effectively subordinated in right of payment to the prior payment in full of all
Other Company Obligations (as defined in the Indenture). Other Company
Obligations means obligations of PNC Funding associated with derivative products
such as interest rate and currency exchange contracts, foreign exchange
contracts, commodity contracts or any similar arrangements, unless the
instrument by which PNC Funding incurred, assumed or guaranteed the obligation
expressly provides that it is subordinate or junior in right of payment to any
other indebtedness or obligations of PNC Funding. At March 31, 1997, there were
no Other Company Obligations of PNC Funding.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of PNC Funding, the holders of all Senior Indebtedness of PNC
Funding will first be entitled to receive payment in full of all amounts due or
to become due thereon before the Holders of the Notes will be entitled to
receive any payment in respect of the principal of or interest on the Notes. If
upon any such payment or distribution of assets to creditors there remain, after
giving effect to such subordination provisions in favor of the holders of Senior
Indebtedness of PNC Funding, any amounts of cash, property or securities
available for payment or distribution in respect of the Notes (as defined in the
Indenture, as amended, "Excess Proceeds"), and if, at such time, any creditors
in respect of Other Company Obligations have not received payment in full of all
amounts due or to become due on or in respect of such Other Company Obligations,
then such Excess Proceeds shall first be applied to pay or provide for the
payment in full of such Other Company Obligations before any payment or
distribution may be made in respect of the Notes. In addition, no payment may be
made of the principal of or interest on the Notes, or in respect of any
retirement, purchase or other acquisition of any of the Notes at any time when
(i) there is a default in the payment of the principal of, or premium, if any,
or interest on or otherwise in respect of any Senior Indebtedness of PNC Funding
or (ii) any event of default with respect to any Senior Indebtedness of PNC
Funding has occurred and is continuing, or would occur as a result of such
payment on the Notes or any retirement, purchase or other acquisition of any of
the Notes permitting the holders of such Senior Indebtedness of PNC Funding to
accelerate the maturity thereof. Except as described above, the obligation of
PNC Funding to make payment of the principal of or interest on the Notes will
not be affected. By reason of such subordination, in the event of insolvency,
Holders of the Notes may recover less, ratably, than holders of Senior
Indebtedness of PNC Funding and Other Company Obligations and may also recover
less, ratably, than holders of Existing Company Subordinated Indebtedness and
other creditors of PNC Funding. Existing Company Subordinated Indebtedness means
PNC Funding's 9-7/8% Subordinated Notes Due 2001 and CCNB Corporation's 10.55%
Equity Commitment Notes Due 1998 assumed by PNC Funding and PNC in connection
with the acquisition of CCNB Corporation on October 23, 1992. At March 31, 1997,
the Existing Company Subordinated Indebtedness was approximately $101.3 million.
PNC Funding's obligations under the Notes shall rank pari passu in right of
payment with the Existing Company Subordinated Indebtedness, subject to the
obligations of the Holders of Notes to pay over any Excess Proceeds to creditors
in respect of Other Company Obligations as provided in the Indenture, as
amended. The Notes shall also rank pari passu in right of payment with PNC
Funding's 6-7/8% Subordinated Notes Due 2003, 6-1/8% Subordinated Notes Due 2003
and 7-3/4% Subordinated Notes Due 2004, the holders of which are also subject to
such obligation to pay over any Excess Proceeds (as defined in the Indenture, as
amended). Therefore, in the event of insolvency, Holders of the Notes will
recover the same, ratably, as holders of PNC Funding's 6-7/8%
S-5
<PAGE> 6
Subordinated Notes Due 2003, 6-1/8% Subordinated Notes Due 2003 and 7-3/4%
Subordinated Notes Due 2004 of which $200 million, $250 million and $200
million, respectively, in principal amounts were outstanding at March 31, 1997.
Senior Indebtedness of PNC Funding, defined in the Indenture as "Senior
Company Indebtedness," means the principal of, and premium, if any, and interest
on (i) all indebtedness for money borrowed, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, except
(A) such indebtedness as is by its terms expressly stated not to be superior in
right of payment to the Notes or to rank pari passu with the Notes, and (B) PNC
Funding's 9-7/8% Subordinated Notes Due 2001, 6-7/8% Subordinated Notes Due
2003, 6-1/8% Subordinated Notes Due 2003 and 7-3/4% Subordinated Notes Due 2004
and CCNB Corporation's 10.55% Equity Commitment Notes Due 1998 assumed by PNC
Funding and PNC in connection with the acquisition of CCNB Corporation on
October 23, 1992 and (ii) any deferrals, renewals or extensions of any such
Senior Indebtedness of PNC Funding. The term "indebtedness for money borrowed"
as used in the prior sentence means any obligation of, or any obligation
guaranteed by, PNC Funding for the repayment of money borrowed, whether or not
evidenced by bonds, debentures, notes or other written instruments, any
capitalized lease obligation and any deferred obligation for payment of the
purchase price of any property or assets. Senior Indebtedness of PNC Funding
would include any borrowings under the $500 million credit facility under an
Amended and Restated Credit Agreement dated as of March 18, 1996 (the "$500
Million Credit Facility"), under which no amounts are currently outstanding.
There is no limitation on the issuance of additional Senior Indebtedness of PNC
Funding.
PNC's obligations under the Subordinated Guarantees shall rank pari passu
in right of payment with each other and with Existing Guarantor Subordinated
Indebtedness (as defined below), subject to the obligations of the Holders of
Subordinated Guarantees to pay over any Excess Proceeds to creditors in respect
of Other Guarantor Obligations as provided in the Indenture, as amended. The
Subordinated Guarantees shall also rank pari passu in right of payment with
PNC's Guarantee of PNC Funding's 6-7/8% Subordinated Notes Due 2003, 6-1/8%
Subordinated Notes Due 2003 and 7-3/4% Subordinated Notes Due 2004, the holders
of which are also subject to such obligations to pay over Excess Proceeds (as
defined in the Indenture, as amended). Therefore, in the event of insolvency,
Holders of the Subordinated Guarantees will recover the same, ratably, as
holders of PNC's Guarantee of PNC Funding's 6-7/8% Subordinated Notes Due 2003,
6-1/8% Subordinated Notes Due 2003 and 7-3/4% Subordinated Notes Due 2004, of
which $200 million, $250 million and $200 million, respectively, in principal
amounts were outstanding at March 31, 1997. Existing Guarantor Subordinated
Indebtedness means PNC's 8-1/4% Convertible Subordinated Debentures Due 2008,
PNC's 8-1/2% Convertible Subordinated Debentures Due 2005 originally issued by
Citizens Fidelity Corporation, PNC's Guarantee of PNC Funding's 9-7/8%
Subordinated Notes Due 2001, and CCNB Corporation's 10.55% Equity Commitment
Notes Due 1998 assumed by PNC Funding and PNC in connection with the acquisition
of CCNB Corporation on October 23, 1992. At March 31, 1997, the Existing
Guarantor Subordinated Indebtedness was approximately $102.2 million and there
were no Other Guarantor Obligations of PNC. PNC's 8.315% Junior Subordinated
Debentures Due 2027, in the aggregate principal amount of $300 million, issued
on May 12, 1997 are subordinated to the Notes and the Existing Guarantor
Subordinated Indebtedness.
Senior Indebtedness of PNC, defined in the Indenture as "Senior Guarantor
Indebtedness," means the principal of, and premium, if any, and interest on (i)
all indebtedness for money borrowed, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, except
(A) such indebtedness as is by its terms expressly stated not to be superior in
right of payment to the Subordinated Guarantees or to rank pari passu with the
Subordinated Guarantees, (B) PNC's 8-1/4% Convertible Subordinated Debentures
Due 2008 and PNC's 8-1/2% Convertible Subordinated Debentures Due 2005
originally issued by Citizens Fidelity Corporation, (C) PNC's Guarantee of PNC
Funding's 9-7/8% Subordinated Notes Due 2001, 6-7/8% Subordinated Notes Due
2003, 6-1/8% Subordinated Notes Due 2003 and 7-3/4% Subordinated Notes
S-6
<PAGE> 7
Due 2004 and CCNB Corporation's 10.55% Equity Commitment Notes Due 1998 assumed
by PNC Funding and PNC in connection with the acquisition of CCNB Corporation on
October 23, 1992, and (ii) any deferrals, renewals or extensions of any such
Senior Indebtedness of PNC. The term "indebtedness for money borrowed" as used
in the prior sentence means any obligation of, or any obligation guaranteed by,
PNC for the repayment of money borrowed, whether or not evidenced by bonds,
debentures, notes or other written instruments, any capitalized lease obligation
and any deferred obligation for payment of the purchase price of any property or
assets. Senior Indebtedness of PNC includes PNC's Guarantee of PNC Funding's
4.93% Senior Notes Due 1998, 5.43% Senior Notes Due 2000 and 5.18% Senior Notes
Due 1999 and the following joint and several obligations of PNC and PNC Bancorp,
Inc. assumed in connection with the merger of Midlantic Corporation with PNC
Bancorp, Inc. at December 31, 1995: 8-1/4% Convertible Subordinated Debentures
Due 2010, 9.875% Subordinated Capital Notes Due 1999, 9.20% Subordinated Capital
Notes Due 2001 and 9.25% Senior Notes Due 1999. Senior Indebtedness of PNC would
also include PNC's Guarantee of any borrowings under the $500 Million Credit
Facility. There is no limitation under the Indenture on the issuance of
additional Senior Indebtedness of PNC.
LIMITED RIGHTS OF ACCELERATION
Payment of principal of the Notes may be accelerated only in case of the
bankruptcy or reorganization of PNC or a Principal Subsidiary Bank. There is no
right of acceleration in the case of events involving the bankruptcy, insolvency
or reorganization of PNC Funding or of a default in the payment of principal of
or interest on the Notes or the performance of any other covenant of PNC Funding
or PNC in the Indenture, as amended.
DELIVERY AND FORM
The Notes initially will be represented by a Global Security deposited with
DTC and registered in the name of Cede & Co. (DTC's partnership nominee), except
as set forth below. DTC currently limits the maximum denomination of any global
security to $200,000,000. Therefore, for purposes of this Prospectus Supplement,
"Global Security" refers to the Global Securities representing the entire issue
of Notes offered hereby. The Notes will be available for purchase in
denominations of $1,000 (representing 1/350,000 of the Global Security) and
integral multiples thereof in book-entry form only. Unless and until
certificated Notes are issued under the limited circumstances described below,
no beneficial owner of a Note shall be entitled to receive a definitive
certificate representing a Note. So long as DTC or any successor depositary
(collectively, the "Depositary") or its nominee is the registered owner of the
Global Security, the Depositary, or such nominee, as the case may be, will be
considered to be the sole owner or holder of the Notes for all purposes of the
Indenture.
Principal of and interest on the Notes is payable at the office of the
corporate trust department of the Trustee, PNC Funding's Paying Agent in The
City of New York, presently located at 450 West 33rd Street, New York, New York
10001. Payment of interest, other than at maturity, may be made at the option of
PNC Funding by check mailed to the address of the registered holder entitled
thereto. So long as the Global Security represents the Notes, such payments of
interest and principal will be made to the Depositary or its nominee. Payments
to beneficial owners of the Notes will be made through the Depositary or its
nominee, as described below. None of PNC Funding, the Trustee, any Paying Agent,
or the Registrar for the Notes will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Global Security for such Notes or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
BOOK-ENTRY SYSTEM
DTC has advised PNC Funding that it is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New
S-7
<PAGE> 8
York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). DTC was created to hold securities for persons that have
accounts with it ("Participants") and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Direct Participants include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations (including the Underwriter), some of which
and/or their representatives own DTC. DTC is owned by a number of Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants"). Beneficial owners of the Notes that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interest in, the Notes may do so only through
Participants and Indirect Participants. The Rules applicable to DTC and its
Participants are on file with the SEC.
Payments with respect to any Global Security will be made by the Paying
Agent to DTC or any successor depositary, or its nominee. PNC Funding expects
that any such Depositary, or its nominee, upon receipt of any payment of
principal of or interest on the Global Security will credit the accounts of its
Participants with payments in amounts proportionate to such Participants'
ownership interest in the Global Security. Beneficial owners of the Notes,
directly or indirectly, will receive distributions of principal and interest in
proportion to their beneficial ownership through the Participants. Consequently,
any payments to beneficial owners of the Notes will be subject to the terms,
conditions and time of payment required by the Depositary, the Participants and
Indirect Participants, as applicable. PNC Funding expects that such payments
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers registered in "street
name." Such payments will be the responsibility of such Participants and
Indirect Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Notes and is required to receive and
transmit distributions of principal of and interest on the Notes. Participants
and Indirect Participants with which beneficial owners of the Notes have
accounts similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of their respective beneficial owners of the
Notes. Accordingly, although beneficial owners of the Notes will not possess
certificated Notes, beneficial owners will receive payments and will be able to
transfer their interests.
Since it is anticipated that the only Noteholder will be the Depositary or
its nominee, beneficial owners of the Notes will not be recognized as
Noteholders under the Indenture unless certificated definitive Notes are issued.
So long as the Notes are represented by the Global Security, beneficial owners
of the Notes will only be permitted to exercise the rights of Noteholders
indirectly through the Participants who in turn will exercise the rights of
Noteholders through the Depositary.
If DTC is at any time unwilling, unable or ineligible to continue as
Depositary and a successor depositary is not appointed by PNC Funding within 90
days, PNC Funding will issue certificated Notes in definitive form in exchange
for the Global Security. In addition, PNC Funding may at any time determine not
to have the Notes represented by the Global Security, and, in such event, will
issue certificated Notes in definitive form in exchange for the Global Security.
In either instance, an owner of a beneficial interest in the Global Security
will be entitled to physical delivery of certificated Notes in definitive form
equal in principal amount to such beneficial interest and to have such
certificated Notes registered in its name. Certificated Notes so issued in
definitive form will be issued in denominations of $1,000 and integral multiples
thereof and will be issued in registered form only, without coupons.
S-8
<PAGE> 9
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriter in immediately
available funds. All payments of principal and interest will be made by PNC
Funding in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity, and
secondary market trading activity in the Notes will therefore be required by DTC
to settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading activity
in the Notes.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, PNC Funding has agreed to sell to Smith Barney Inc. (the
"Underwriter") and the Underwriter has agreed to purchase all $350,000,000
principal amount of Notes at the aggregate principal amount thereof less the
underwriting discount set forth on the cover page of this Prospectus Supplement.
In the Underwriting Agreement, the Underwriter has agreed, subject to the
terms and conditions set forth therein, to purchase all the Notes if any Notes
are purchased. PNC Funding has been advised by the Underwriter that the
Underwriter proposes initially to offer the Notes to the public at the public
offering price set forth on the cover page of this Prospectus Supplement and to
certain dealers at such price less a concession not in excess of .30% of the
principal amount of the Notes. The Underwriter may allow and such dealers may
reallow a concession not in excess of .25% of such principal amount. After the
initial public offering, the public offering price and such concessions may be
changed.
The Underwriting Agreement provides that PNC Funding and PNC will jointly
and severally indemnify the Underwriter against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, or contribute to any
payments the Underwriter may be required to make in respect thereof.
In connection with this offering and in compliance with applicable law, the
Underwriter may overallot (i.e., sell more than the principal amount of Notes
shown in the first paragraph above) and may effect transactions which stabilize,
maintain or otherwise affect the market price of the Notes at levels above those
which might otherwise prevail in the open market. Such transactions may include
placing bids for the Notes or effecting purchases of the Notes for the purpose
of pegging, fixing or maintaining the price of the Notes or for the purpose of
reducing a short position created in connection with the offering. In addition,
if the Underwriter purchases Notes in the open market and the securities
purchased can be traced to a particular member of the selling group, the
Underwriter may require the selling group member in question to purchase the
Notes in question at the cost price to the Underwriter or may recover from (or
decline to pay to) the selling group member in question the selling concession
applicable to the securities in question. The Underwriter is not required to
engage in any of these activities and any such activities, if commenced, may be
discontinued at any time.
The Underwriter and its associates and affiliates may be a customer of,
engage in transactions with, and perform investment banking and other financial
services (including commercial lending) for, PNC and its subsidiaries in the
ordinary course of business.
The Notes are new securities with no established trading market and there
can be no assurance as to the liquidity of any markets that may develop for the
Notes, the ability of the holders to sell their Notes or at what price holders
of the Notes will be able to sell their Notes. Future trading prices of the
Notes will depend on many factors, including, among other things, prevailing
interest rates, PNC's operating results, and the market for similar securities.
PNC Funding has been advised by the
S-9
<PAGE> 10
Underwriter that it initially intends to make a market in the Notes but is not
obligated to do so and may discontinue any market making at any time without
notice.
LEGAL OPINIONS
The validity of the Notes and related Guarantees will be passed upon for
PNC Funding and PNC by Melanie S. Cibik, Senior Counsel to PNC. As of July 9,
1997, Miss Cibik beneficially owned 904 shares of PNC's Common Stock under PNC's
employee plans.
The validity of the Notes and related Guarantees will be passed upon for
the Underwriter by Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New
York 10019.
S-10
<PAGE> 11
===============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF PNC FUNDING CORP OR PNC BANK CORP. SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
PNC Bank Corp........................ S-2
Summary Consolidated Financial
Data............................... S-3
Certain Updating Information......... S-4
Certain Terms of the Notes........... S-4
Underwriting......................... S-9
Legal Opinions....................... S-10
PROSPECTUS
Statement of Available Information... 2
Incorporation of Certain Documents by
Reference.......................... 2
PNC Bank Corp........................ 2
PNC Funding Corp..................... 3
Certain Regulatory Considerations.... 3
Consolidated Ratio of Earnings to
Fixed Charges...................... 4
Consolidated Ratio of Earnings to
Combined Fixed Charges and
Preferred Stock Dividends.......... 4
Application of Proceeds.............. 5
Description of Debt Securities and
Guarantees......................... 5
Description of Preferred Stock....... 15
Description of Depositary Shares..... 20
Description of Common Stock.......... 23
Certain Tax Considerations........... 24
Plan of Distribution................. 24
Legal Opinions....................... 25
Experts.............................. 25
</TABLE>
===============================================================================
===============================================================================
$350,000,000
PNC FUNDING CORP
6-7/8% SUBORDINATED NOTES
DUE 2007
UNCONDITIONALLY GUARANTEED, ON A
SUBORDINATED BASIS, AS TO PAYMENT OF
PRINCIPAL AND INTEREST BY
PNC BANK CORP.
---------------------------------------------
PROSPECTUS SUPPLEMENT
JULY 9, 1997
---------------------------------------------
SMITH BARNEY INC.
===============================================================================
