<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OCTOBER 15, 1998
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
PNC BANK CORP.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 1-9718
PENNSYLVANIA 25-1435979
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE PNC PLAZA
249 FIFTH AVENUE
PITTSBURGH, PENNSYLVANIA 15222-2707
(Address of principal executive offices)
(Zip Code)
(412) 762-1553
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
Third Quarter 1998 Financial Results
On October 15, 1998, PNC Bank Corp. ("Corporation") reported results
of operations for the three months and nine months ended September
30, 1998. A copy of the earnings press release issued by the
Corporation is attached as Exhibit 99 and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The exhibit listed on the Exhibit Index on page 3 of this Form 8-K is
filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PNC BANK CORP.
(Registrant)
Date: October 15, 1998 By: /s/ ROBERT L. HAUNSCHILD
-------------------------
Robert L. Haunschild
Senior Vice President and
Chief Financial Officer
2
<PAGE> 3
EXHIBIT INDEX
99 Earnings press release issued by the Corporation on October 15, 1998, with
respect to the results of operations for the three months and nine months
ended September 30, 1998, filed herewith.
3
<PAGE> 1
Exhibit 99
CONTACTS:
MEDIA:
Jonathan Williams
(412) 762-4550
[email protected]
INVESTORS:
William H. Callihan
(412) 762-8257
[email protected]
PNC BANK CORP. REPORTS
THIRD QUARTER 1998 EARNINGS
PITTSBURGH, October 15, 1998 - PNC Bank Corp. (NYSE: PNC) today reported
earnings of $281 million for the third quarter of 1998 compared with $262
million in the third quarter of 1997. Diluted earnings per share increased 10%
to $.91 in the third quarter of 1998 compared with $.83 in the prior-year
quarter driven by strong revenue growth and the impact of capital management
initiatives.
Returns on average common shareholders' equity and average assets were
20.52% and 1.48% in the third quarter of 1998 compared with 20.11% and 1.47%,
respectively, a year ago.
"Our diversified businesses continued to drive strong performance in a
time of turbulent financial markets," said Thomas H. O'Brien, chairman and chief
executive officer. "Fee-based revenues grew 22% led by asset management, mutual
fund servicing, consumer services, capital markets and mortgage banking. In this
rapidly changing economic environment, our overall risk profile remained strong
while we continued to focus our strategies on growing value-added businesses."
HIGHLIGHTS
* Total revenue grew 22% driven by fee-based revenues
* Despite a stock market decline, the asset management business grew
with a focus on fixed-income, liquidity and risk management
products
* The overall credit risk profile remained stable with no credit
exposure to hedge funds or in Russia and nominal credit exposure in
Latin America and Asia
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<PAGE> 2
PNC Bank Corp. Reports Third Quarter 1998 Earnings--Page 2
* Closed an innovative transaction to reduce required capital on
approximately $4 billion of commercial credit exposure
* Hedging activities offset the impact of refinancings on the
residential mortgage servicing portfolio
* Announced an agreement to sell approximately $1 billion of
non-affinity, non-relationship credit cards to further reduce PNC's
risk profile
* Announced an agreement to acquire Hilliard-Lyons, Inc., a high-end
retail brokerage firm with 90 offices in 12 Midwestern and
Southeastern states
* Agreed to sell the corporate trust and escrow business to Chase
Manhattan Trust Company, N.A.
INCOME STATEMENT REVIEW
Taxable-equivalent net interest income increased $25 million to $653
million in the third quarter of 1998 due to growth in earning assets. The net
interest margin was 3.81% for the third quarter of 1998 compared with 3.81% in
the prior quarter and 3.89% in the third quarter of 1997. The net interest
margin was lower than the prior year due to a change in balance sheet
composition and the financing cost of the Midland acquisition.
The provision for credit losses was $45 million in the third quarter of
1998 compared with $20 million last year.
Noninterest income was $676 million in the third quarter of 1998. Asset
management, mutual fund servicing, consumer services, corporate finance and
capital markets, and mortgage banking revenues each grew 20% or more compared
with the prior-year quarter. Noninterest income included $30 million of gains
from the sale of eight branches in Kentucky and Indiana that offset the impact
of valuation adjustments on certain market-sensitive asset positions.
Noninterest income also included $55 million of trading gains and $51 million of
net securities gains resulting from mortgage banking hedging activities that
offset an increase in the amortization of residential mortgage servicing rights
("MSR").
Asset management and mutual fund servicing fees grew 24% and 33%,
respectively, from the third quarter of 1997 primarily reflecting significant
new business. Assets under management increased to approximately $152 billion at
September 30, 1998 compared with $127 billion at September 30, 1997. At
September 30, 1998, custody and accounting/administration
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<PAGE> 3
PNC Bank Corp. Reports Third Quarter 1998 Earnings--Page 3
services were provided for $287 billion and $228 billion of mutual fund assets,
respectively. The comparable amounts were $212 billion and $175 billion,
respectively, a year ago.
Consumer services revenue increased $20 million or 25% compared with the
third quarter of 1997 primarily due to growth in credit card accounts. Corporate
finance and capital markets fees increased 25% to $57 million in the third
quarter of 1998 resulting from higher treasury management and capital markets
fees.
Mortgage banking revenue grew $14 million or 20% from the prior-year
quarter primarily due to higher servicing income reflecting the impact of
servicing portfolio acquisitions and significant mortgage refinance activity.
Residential mortgage originations totaled $3.1 billion compared with $1.7
billion in the year-earlier period. At September 30, 1998, approximately $60.3
billion of mortgages were serviced including $51.8 billion serviced for others.
Noninterest expense of $843 million increased $191 million compared with
the third quarter of 1997. The increase in noninterest expense was primarily due
to higher amortization of residential MSR, the impact of the Midland acquisition
and incentive compensation commensurate with revenue growth.
The managed efficiency ratio, which excludes amortization of intangibles,
distributions on capital securities and mortgage banking hedging activities,
improved to 53.3% in the third quarter of 1998 from 54.6% in the prior-year
quarter.
BALANCE SHEET REVIEW
Total assets were $76.2 billion at September 30, 1998. Average earning
assets increased $4.0 billion from the prior-year quarter to $68.0 billion
primarily due to higher loans and loans held for sale. Average loans grew $2.7
billion to $55.9 billion, a 5.1% increase from the prior year. Growth in
commercial loans more than offset the impact of loan securitizations, a decline
in residential mortgages and downsizing of the indirect automobile lending
portfolio. The increase in commercial loans was primarily in middle market and
secured lending. Loans represented 82.3% of average earning assets in the third
quarter of 1998 compared with 83.2% a year ago. Average loans held for sale
increased $2.3 billion from the prior year reflecting higher residential
mortgage originations and the commercial mortgage inventory of Midland. Average
securities available for sale decreased $1.1 billion to $7.0 billion or 10.4% of
average earning assets in the third quarter of 1998.
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<PAGE> 4
PNC Bank Corp. Reports Third Quarter 1998 Earnings--Page 4
Average deposits decreased slightly to $44.5 billion in the third quarter
of 1998 and represented 59.1% of total sources of funds. Average borrowed funds
increased $4.2 billion compared with the third quarter of last year. Liquidity
was strengthened as 42% of wholesale liabilities had a maturity beyond one year
at September 30, 1998 compared with 32% at September 30, 1997.
Shareholders' equity totaled $5.8 billion at the end of the third
quarter. At September 30, 1998 the leverage ratio was 7.20% and Tier I and total
risk-based capital ratios are estimated to be 7.4% and 10.8%, respectively.
The ratio of nonperforming assets to total loans and foreclosed assets
was 0.58%, 0.57% and 0.73% at September 30, 1998, June 30, 1998 and September
30, 1997, respectively. Nonperforming assets were $329 million at September 30,
1998 compared with $323 million at June 30, 1998 and $394 million a year ago.
Nonperforming assets included $40 million related to affiliates of the Allegheny
Health, Education and Research Foundation that became nonperforming in the third
quarter while all other nonperforming assets declined $34 million.
The allowance for credit losses was $816 million at September 30, 1998
and represented 289% of nonperforming loans compared with 315% at June 30, 1998
and 324% at September 30, 1997. Net charge-offs were $88 million in the third
quarter of 1998, $89 million in the second quarter of 1998, and $73 million in
the third quarter of last year. The corresponding ratios of net charge-offs as a
percentage of average loans were 0.62%, 0.64% and 0.54%, respectively.
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<PAGE> 5
PNC Bank Corp. Reports Third Quarter 1998 Earnings--Page 5
YEAR TO DATE RESULTS
Diluted earnings per share increased 10% to $2.68 for the first nine
months of 1998 from $2.44 for the same period of 1997. Returns on average common
shareholders' equity and average assets were 21.00% and 1.51%, respectively,
compared with 19.93% and 1.49%, respectively, in the first nine months of 1997.
PNC Bank Corp., headquartered in Pittsburgh, is one of the largest
diversified financial services organizations in the United States. Its major
businesses include Regional Community Banking, National Consumer Banking,
Mortgage Banking, Private Banking, Asset Management, Mutual Fund Servicing,
Corporate Banking and Secured Lending.
Visit PNC Bank on the World Wide Web at http://www.pncbank.com
PNC Bank Corp.'s SEC reports, accessible on its website, identify factors that
can affect forward-looking statements.
[TABULAR MATERIAL FOLLOWS]
<PAGE> 6
PNC BANK CORP. AND SUBSIDIARIES Page 6
Consolidated Financial Highlights
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
-------------------------------------------------------------
1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL PERFORMANCE (in thousands, except per share data)
Revenue
Net interest income (taxable-equivalent basis) $652,532 $627,431 $1,933,748 $1,885,295
Noninterest income 675,870 459,247 1,825,988 1,336,917
Total revenue 1,328,402 1,086,678 3,759,736 3,222,212
Net income 280,588 261,595 830,259 786,979
Per common share
Basic earnings .92 .84 2.71 2.47
Diluted earnings .91 .83 2.68 2.44
Cash dividends declared .39 .37 1.17 1.11
SELECTED RATIOS
Return on
Average common shareholders' equity 20.52% 20.11% 21.00% 19.93%
Average assets 1.48 1.47 1.51 1.49
Net interest margin 3.81 3.89 3.86 3.91
Noninterest income to total revenue 50.88 42.26 48.57 41.49
After-tax profit margin 21.12 24.07 22.08 24.42
Efficiency ratio* 53.28 54.57 55.50 55.82
Net charge-offs to average loans .62 .54 .65 .49
* Excluding amortization of intangibles, distributions on capital securities and
mortgage banking hedging activities
</TABLE>
<TABLE>
<CAPTION>
September 30 June 30 March 31 December 31 September 30
1998 1998 1998 1997 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (in millions)
Assets $76,238 $75,873 $72,355 $75,120 $71,828
Earning assets 68,638 68,353 65,210 66,688 64,208
Loans, net of unearned income 56,752 56,237 54,511 54,245 53,651
Securities available for sale 7,152 7,540 7,511 8,522 8,000
Deposits 46,875 47,096 46,068 47,649 44,788
Borrowed funds 19,972 20,488 18,375 19,622 19,052
Shareholders' equity 5,793 5,633 5,487 5,384 5,476
Common shareholders' equity 5,479 5,318 5,173 5,069 5,161
CAPITAL RATIOS
Leverage 7.20% 7.18% 7.36% 7.30% 7.43%
Common shareholders' equity to assets 7.19 7.01 7.15 6.75 7.18
ASSET QUALITY RATIOS
Nonperforming assets to loans and foreclosed assets .58% .57% .61% .61% .73%
Allowance for credit losses to loans 1.44 1.53 1.67 1.79 1.91
Allowance for credit losses to nonperforming loans 289.02 315.09 320.96 351.79 324.25
Book value per common share $18.21 $17.64 $17.20 $16.87 $16.92
===================================================================================================================================
</TABLE>
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<PAGE> 7
PNC BANK CORP. AND SUBSIDIARIES Page 7
Consolidated Statement of Income
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
-----------------------------------------------------
In thousands, except per share data 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and fees on loans $1,166,728 $1,101,508 $3,424,186 $3,236,193
Securities available for sale 102,569 125,347 323,816 420,587
Other 84,989 43,489 210,758 112,880
----------------------------------------------------
Total interest income 1,354,286 1,270,344 3,958,760 3,769,660
INTEREST EXPENSE
Deposits 371,563 372,860 1,095,409 1,087,015
Borrowed funds 336,676 277,567 949,450 819,628
----------------------------------------------------
Total interest expense 708,239 650,427 2,044,859 1,906,643
----------------------------------------------------
Net interest income 646,047 619,917 1,913,901 1,863,017
Provision for credit losses 45,000 20,000 110,000 45,000
----------------------------------------------------
Net interest income less provision for credit losses 601,047 599,917 1,803,901 1,818,017
NONINTEREST INCOME
Asset management 143,018 115,197 420,969 332,596
Mutual fund servicing 47,373 35,608 133,900 103,799
Service charges on deposits 52,598 50,899 150,307 152,231
Consumer services 97,966 78,260 273,638 224,421
Corporate finance and capital markets 57,414 45,987 174,733 143,012
Mortgage banking 85,988 71,956 246,873 155,453
Net securities gains (losses) 50,842 (2,657) 76,574 27,139
Other 140,671 63,997 348,994 198,266
----------------------------------------------------
Total noninterest income 675,870 459,247 1,825,988 1,336,917
NONINTEREST EXPENSE
Staff expense 335,260 308,492 1,023,230 918,757
Net occupancy and equipment 98,928 90,704 297,164 271,769
Amortization 175,068 48,459 303,350 117,817
Marketing 14,407 11,376 78,531 59,653
Distributions on capital securities 16,396 13,192 43,503 30,015
Other 203,121 179,932 619,301 548,327
----------------------------------------------------
Total noninterest expense 843,180 652,155 2,365,079 1,946,338
Income before income taxes 433,737 407,009 1,264,810 1,208,596
Income taxes 153,149 145,414 434,551 421,617
----------------------------------------------------
Net income $280,588 $261,595 $830,259 $786,979
- -------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders $276,054 $257,813 $817,522 $775,649
EARNINGS PER COMMON SHARE
Basic $.92 $.84 $2.71 $2.47
Diluted .91 .83 2.68 2.44
CASH DIVIDENDS DECLARED PER COMMON SHARE $.39 $.37 $1.17 $1.11
AVERAGE COMMON SHARES OUTSTANDING
Basic 300,640 305,920 300,521 312,487
Diluted 304,186 311,847 305,302 318,465
===============================================================================================================================
</TABLE>
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<PAGE> 8
PNC BANK CORP. AND SUBSIDIARIES Page 8
Details of Net Interest Income
<TABLE>
<CAPTION>
Three months ended Nine months ended
NET INTEREST INCOME September 30 September 30
Taxable-equivalent basis ----------------------------------------------------
In thousands 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans $1,171,965 $1,107,250 $3,440,161 $3,253,317
Securities available for sale 103,597 127,053 327,228 425,541
Other 85,209 43,555 211,218 113,080
----------------------------------------------------
Total interest income 1,360,771 1,277,858 3,978,607 3,791,938
Interest expense
Deposits 371,563 372,860 1,095,409 1,087,015
Borrowed funds 336,676 277,567 949,450 819,628
----------------------------------------------------
Total interest expense 708,239 650,427 2,044,859 1,906,643
----------------------------------------------------
Net interest income $652,532 $627,431 $1,933,748 $1,885,295
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Taxable-equivalent basis September 30 June 30 March 31 December 31 September 30
Three months ended - in thousands 1998 1998 1998 1997 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income
Loans $1,171,965 $1,144,084 $1,124,112 $1,123,127 $1,107,250
Securities available for sale 103,597 107,124 116,507 120,395 127,053
Other 85,209 68,295 57,714 44,532 43,555
-----------------------------------------------------------------
Total interest income 1,360,771 1,319,503 1,298,333 1,288,054 1,277,858
Interest expense
Deposits 371,563 362,324 361,522 369,572 372,860
Borrowed funds 336,676 320,193 292,581 279,570 277,567
-----------------------------------------------------------------
Total interest expense 708,239 682,517 654,103 649,142 650,427
-----------------------------------------------------------------
Net interest income $652,532 $636,986 $644,230 $638,912 $627,431
===============================================================================================================================
</TABLE>
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<PAGE> 9
PNC BANK CORP. AND SUBSIDIARIES Page 9
Details of Net Interest Margin
<TABLE>
<CAPTION>
NET INTEREST MARGIN
Three months ended Nine months ended
September 30 September 30
-----------------------------------------------------
Taxable-equivalent basis 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rates earned/paid
Yield on earning assets
Loans 8.28% 8.23% 8.29% 8.21%
Securities available for sale 5.85 6.17 5.91 6.23
Other 6.87 6.83 6.86 6.75
Total yield on earning assets 7.92 7.92 7.94 7.87
Rate on interest-bearing liabilities
Deposits 4.17 4.23 4.17 4.16
Borrowed funds 5.83 5.92 5.83 5.84
Total rate on interest-bearing liabilities 4.82 4.82 4.80 4.74
---------------------------------------------------
Interest rate spread 3.10 3.10 3.14 3.13
Impact of noninterest-bearing sources .71 .79 .72 .78
---------------------------------------------------
Net interest margin 3.81% 3.89% 3.86% 3.91%
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Taxable-equivalent basis September 30 June 30 March 31 December 31 September 30
Three months ended 1998 1998 1998 1997 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rates earned/paid
Yield on earning assets
Loans 8.28% 8.23% 8.36% 8.27% 8.23%
Securities available for sale 5.85 5.86 6.01 6.19 6.17
Other 6.87 6.80 6.96 6.68 6.83
Total yield on earning assets 7.92 7.89 8.00 7.96 7.92
Rate on interest-bearing liabilities
Deposits 4.17 4.15 4.19 4.23 4.23
Borrowed funds 5.83 5.81 5.85 5.91 5.92
Total rate on interest-bearing liabilities 4.82 4.79 4.79 4.82 4.82
-----------------------------------------------------------------
Interest rate spread 3.10 3.10 3.21 3.14 3.10
Impact of noninterest-bearing sources .71 .71 .75 .81 .79
-----------------------------------------------------------------
Net interest margin 3.81% 3.81% 3.96% 3.95% 3.89%
=================================================================================================================================
</TABLE>
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<PAGE> 10
PNC BANK CORP. AND SUBSIDIARIES Page 10
Details of Noninterest Income
<TABLE>
<CAPTION>
NONINTEREST INCOME
Three months ended Nine months ended
September 30 September 30
-----------------------------------------------------
In thousands 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset management $143,018 $115,197 $420,969 $332,596
Mutual fund servicing 47,373 35,608 133,900 103,799
Service charges on deposits 52,598 50,899 150,307 152,231
Consumer services
Credit card 35,109 23,292 93,386 64,356
Brokerage 16,226 14,138 48,654 40,111
Insurance 11,587 10,421 32,361 29,226
Other 35,044 30,409 99,237 90,728
----------------------------------------------------
Total consumer services 97,966 78,260 273,638 224,421
Corporate finance and capital markets 57,414 45,987 174,733 143,012
Mortgage banking
Servicing 43,952 30,316 106,208 85,728
Origination 18,162 13,597 55,369 32,744
Marketing 23,790 27,360 78,219 34,629
Sales of servicing 84 683 7,077 2,352
----------------------------------------------------
Total mortgage banking 85,988 71,956 246,873 155,453
Net securities gains (losses) 50,842 (2,657) 76,574 27,139
Other 140,671 63,997 348,994 198,266
----------------------------------------------------
Total noninterest income $675,870 $459,247 $1,825,988 $1,336,917
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
September 30 June 30 March 31 December 31 September 30
Three months ended - in thousands 1998 1998 1998 1997 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Asset management $143,018 $136,886 $141,065 $128,916 $115,197
Mutual fund servicing 47,373 46,006 40,521 37,493 35,608
Service charges on deposits 52,598 49,928 47,781 50,621 50,899
Consumer services
Credit card 35,109 31,785 26,492 28,802 23,292
Brokerage 16,226 17,272 15,156 14,230 14,138
Insurance 11,587 10,785 9,989 10,543 10,421
Other 35,044 33,625 30,568 33,611 30,409
------------------------------------------------------------------
Total consumer services 97,966 93,467 82,205 87,186 78,260
Corporate finance and capital markets 57,414 66,686 50,633 54,981 45,987
Mortgage banking
Servicing 43,952 33,025 29,231 30,503 30,316
Origination 18,162 20,080 17,127 14,070 13,597
Marketing 23,790 29,811 24,618 12,869 27,360
Sales of servicing 84 275 6,718 463 683
------------------------------------------------------------------
Total mortgage banking 85,988 83,191 77,694 57,905 71,956
Net securities gains (losses) 50,842 2,890 22,842 21,434 (2,657)
Other 140,671 132,149 76,174 79,527 63,997
------------------------------------------------------------------
Total noninterest income $675,870 $611,203 $538,915 $518,063 $459,247
===============================================================================================================================
</TABLE>
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<PAGE> 11
PNC BANK CORP. AND SUBSIDIARIES Page 11
Details of Noninterest Expense
<TABLE>
<CAPTION>
NONINTEREST EXPENSE
Three months ended Nine months ended
September 30 September 30
-----------------------------------------------------
In thousands 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Staff expense
Compensation $291,142 $260,351 $867,284 $762,051
Employee benefits 44,118 48,141 155,946 156,706
----------------------------------------------------
Total staff expense 335,260 308,492 1,023,230 918,757
Net occupancy and equipment
Net occupancy 47,425 46,221 148,543 139,532
Equipment 51,503 44,483 148,621 132,237
----------------------------------------------------
Total net occupancy and equipment 98,928 90,704 297,164 271,769
Amortization
Mortgage servicing rights 146,683 24,681 222,293 48,592
Goodwill 17,827 13,110 48,617 39,652
Other 10,558 10,668 32,440 29,573
----------------------------------------------------
Total amortization 175,068 48,459 303,350 117,817
Marketing 14,407 11,376 78,531 59,653
Distributions on capital securities 16,396 13,192 43,503 30,015
Other 203,121 179,932 619,301 548,327
----------------------------------------------------
Total noninterest expense $843,180 $652,155 $2,365,079 $1,946,338
================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
September 30 June 30 March 31 December 31 September 30
Three months ended - in thousands 1998 1998 1998 1997 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Staff expense
Compensation $291,142 $285,051 $291,091 $286,617 $260,351
Employee benefits 44,118 48,635 63,193 35,571 48,141
-----------------------------------------------------------------
Total staff expense 335,260 333,686 354,284 322,188 308,492
Net occupancy and equipment
Net occupancy 47,425 52,533 48,585 49,813 46,221
Equipment 51,503 49,894 47,224 47,798 44,483
-----------------------------------------------------------------
Total net occupancy and equipment 98,928 102,427 95,809 97,611 90,704
Amortization
Mortgage servicing rights 146,683 42,505 33,105 32,230 24,681
Goodwill 17,827 17,630 13,160 13,143 13,110
Other 10,558 10,968 10,914 10,731 10,668
-----------------------------------------------------------------
Total amortization 175,068 71,103 57,179 56,104 48,459
Marketing 14,407 26,728 37,396 10,742 11,376
Distributions on capital securities 16,396 13,914 13,193 13,123 13,192
Other 203,121 232,801 183,379 215,493 179,932
-----------------------------------------------------------------
Total noninterest expense $843,180 $780,659 $741,240 $715,261 $652,155
===============================================================================================================================
</TABLE>
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<PAGE> 12
PNC BANK CORP. AND SUBSIDIARIES Page 12
Consolidated Balance Sheet
<TABLE>
<CAPTION>
September 30 December 31 September 30
Dollars in millions, except par value 1998 1997 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $1,982 $4,303 $3,460
Short-term investments 832 1,526 1,084
Loans held for sale 3,833 2,324 1,398
Securities available for sale 7,152 8,522 8,000
Loans, net of unearned income of $445, $412 and $382 56,752 54,245 53,651
Allowance for credit losses (816) (972) (1,027)
---------------------------------------
Net loans 55,936 53,273 52,624
Other 6,503 5,172 5,262
---------------------------------------
Total assets $76,238 $75,120 $71,828
=======================================
LIABILITIES
Deposits
Noninterest-bearing $9,136 $10,158 $9,914
Interest-bearing 37,739 37,491 34,874
---------------------------------------
Total deposits 46,875 47,649 44,788
Borrowed funds
Bank notes and senior debt 10,558 9,826 10,469
Federal funds purchased 771 3,632 1,739
Repurchase agreements 1,041 714 889
Other borrowed funds 5,759 3,753 4,257
Subordinated debt 1,843 1,697 1,698
---------------------------------------
Total borrowed funds 19,972 19,622 19,052
Other 2,750 1,815 1,862
---------------------------------------
Total liabilities 69,597 69,086 65,702
Mandatorily redeemable capital securities of subsidiary trusts 848 650 650
SHAREHOLDERS' EQUITY
Preferred stock 7 7 7
Common stock - $5 par value
Authorized 450,000,000 shares
Issued 352,822,767; 348,447,600 and 347,914,081 shares 1,764 1,742 1,740
Capital surplus 1,178 1,042 1,024
Retained earnings 5,105 4,641 4,499
Deferred benefit expense (54) (41) (61)
Accumulated other comprehensive income 17 (23) (35)
Common stock held in treasury at cost: 51,937,391; 48,017,641 and 42,887,837 shares (2,224) (1,984) (1,698)
---------------------------------------
Total shareholders' equity 5,793 5,384 5,476
---------------------------------------
Total liabilities, capital securities and shareholders' equity $76,238 $75,120 $71,828
==================================================================================================================================
</TABLE>
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<PAGE> 13
PNC BANK CORP. AND SUBSIDIARIES Page 13
Consolidated Average Balance Sheet Data
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
-----------------------------------------------------
In millions 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $7,073 $8,216 $7,391 $9,113
Loans, net of unearned income
Consumer (excluding credit card) 11,038 10,996 11,073 11,352
Credit card 4,029 3,871 3,942 3,475
Residential mortgage 12,455 13,503 12,598 13,152
Commercial 23,359 18,839 22,159 18,737
Commercial real estate 2,850 4,041 3,224 4,067
Other 2,207 1,952 2,133 1,868
----------------------------------------------------
Total loans, net of unearned income 55,938 53,202 55,129 52,651
Loans held for sale 3,850 1,555 3,059 1,329
Other 1,097 981 1,042 900
----------------------------------------------------
Total interest-earning assets 67,958 63,954 66,621 63,993
Noninterest-earning assets 7,332 6,627 7,078 6,575
----------------------------------------------------
Total assets $75,290 $70,581 $73,699 $70,568
====================================================
LIABILITIES
Interest-bearing liabilities
Deposits $35,353 $34,952 $35,086 $34,934
Borrowed funds 22,642 18,484 21,501 18,584
----------------------------------------------------
Total interest-bearing liabilities 57,995 53,436 56,587 53,518
Noninterest-bearing deposits 9,169 9,654 9,353 9,585
Other 1,632 1,460 1,518 1,469
----------------------------------------------------
Total liabilities 68,796 64,550 67,458 64,572
Mandatorily redeemable capital securities of subsidiary trusts 848 650 733 498
SHAREHOLDERS' EQUITY 5,646 5,381 5,508 5,498
----------------------------------------------------
Total liabilities, capital securities and shareholders'
equity $75,290 $70,581 $73,699 $70,568
====================================================
COMMON SHAREHOLDERS' EQUITY $5,332 $5,065 $5,193 $5,182
================================================================================================================================
</TABLE>
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<PAGE> 14
PNC BANK CORP. AND SUBSIDIARIES Page 14
Consolidated Balance Sheet Data
<TABLE>
<CAPTION>
AVERAGE BALANCES
September 30 June 30 March 31 December 31 September 30
Three months ended - in thousands 1998 1998 1998 1997 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $7,073 $7,323 $7,784 $7,769 $8,216
Loans, net of unearned income
Consumer (excluding credit card) 11,038 10,995 11,186 11,108 10,996
Credit card 4,029 4,048 3,748 3,803 3,871
Residential mortgage 12,455 12,560 12,784 12,966 13,503
Commercial 23,359 22,425 20,665 19,838 18,839
Commercial real estate 2,850 3,206 3,624 4,067 4,041
Other 2,207 2,114 2,076 1,881 1,952
-----------------------------------------------------------------
Total loans, net of unearned income 55,938 55,348 54,083 53,663 53,202
Loans held for sale 3,850 2,948 2,363 1,680 1,555
Other 1,097 1,069 959 975 981
-----------------------------------------------------------------
Total interest-earning assets 67,958 66,688 65,189 64,087 63,954
Noninterest-earning assets 7,332 6,944 6,952 6,782 6,627
-----------------------------------------------------------------
Total assets $75,290 $73,632 $72,141 $70,869 $70,581
=================================================================
LIABILITIES
Interest-bearing liabilities
Deposits $35,353 $34,956 $34,945 $34,655 $34,952
Borrowed funds 22,642 21,844 19,989 18,624 18,484
-----------------------------------------------------------------
Total interest-bearing liabilities 57,995 56,800 54,934 53,279 53,436
Noninterest-bearing deposits 9,169 9,213 9,685 9,925 9,654
Other 1,632 1,445 1,474 1,601 1,460
-----------------------------------------------------------------
Total liabilities 68,796 67,458 66,093 64,805 64,550
Mandatorily redeemable capital securities of subsidiary trusts 848 698 650 650 650
SHAREHOLDERS' EQUITY 5,646 5,476 5,398 5,414 5,381
-----------------------------------------------------------------
Total liabilities, capital securities and shareholders'
equity $75,290 $73,632 $72,141 $70,869 $70,581
=================================================================
COMMON SHAREHOLDERS' EQUITY $5,332 $5,161 $5,083 $5,099 $5,066
================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
LOAN PORTFOLIO
September 30 June 30 March 31 December 31 September 30
Period ended - in millions 1998 1998 1998 1997 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer (excluding credit card) $11,120 $11,035 $11,106 $11,205 $11,206
Credit card 3,874 4,150 3,729 3,830 3,861
Residential mortgage 12,388 12,698 12,351 12,785 13,064
Commercial 24,239 23,359 21,823 19,989 19,536
Commercial real estate 2,838 2,872 3,467 3,974 4,085
Other 2,738 2,516 2,428 2,874 2,281
-----------------------------------------------------------------
Total loans 57,197 56,630 54,904 54,657 54,033
Unearned income (445) (393) (393) (412) (382)
-----------------------------------------------------------------
Total loans, net of unearned income $56,752 $56,237 $54,511 $54,245 $53,651
================================================================================================================================
</TABLE>
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<PAGE> 15
PNC BANK CORP. AND SUBSIDIARIES Page 15
Asset Quality Data
<TABLE>
<CAPTION>
ALLOWANCE FOR CREDIT LOSSES
September 30 June 30 March 31 December 31 September 30
Three months ended - in millions 1998 1998 1998 1997 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $859 $912 $972 $1,027 $1,075
Charge-offs
Consumer (excluding credit card) (21) (21) (25) (27) (25)
Credit card (73) (75) (72) (54) (53)
Residential mortgage (1) (3) (2) (1) (3)
Commercial (8) (7) (6) (18) (11)
Commercial real estate (4) (1) (2) (5) (3)
-----------------------------------------------------------------
Total charge-offs (107) (107) (107) (105) (95)
Recoveries
Consumer (excluding credit card) 8 9 10 10 9
Credit card 4 5 3 5 4
Residential mortgage 1
Commercial 6 3 3 4 7
Commercial real estate 1 1 6 2
-----------------------------------------------------------------
Total recoveries 19 18 17 25 22
-----------------------------------------------------------------
Net charge-offs (88) (89) (90) (80) (73)
Provision for credit losses 45 35 30 25 20
Acquisitions 1 5
-----------------------------------------------------------------
Ending balance $816 $859 $912 $972 $1,027
================================================================================================================================
NONPERFORMING ASSETS
September 30 June 30 March 31 December 31 September 30
Period ended - in millions 1998 1998 1998 1997 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans
Commercial $148 $129 $145 $128 $142
Commercial real estate 73 80 81 94 122
Residential mortgage 56 56 51 44 45
Consumer 5 7 7 10 6
-----------------------------------------------------------------
Total nonaccrual loans 282 272 284 276 315
Restructured loans 2
-----------------------------------------------------------------
Total nonperforming loans 282 272 284 276 317
Foreclosed assets
Commercial real estate 20 22 23 27 37
Residential mortgage 18 20 19 21 23
Other 9 9 9 9 17
-----------------------------------------------------------------
Total foreclosed assets 47 51 51 57 77
-----------------------------------------------------------------
Total nonperforming assets $329 $323 $335 $333 $394
================================================================================================================================
</TABLE>
