<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
JULY 16, 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
Second Quarter 1998 Financial Results
On July 16, 1998, PNC Bank Corp. ("Corporation") reported results of
operations for the three months and six months ended June 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: July 16, 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 July 16, 1998, with
respect to the results of operations for the three months and six months
ended June 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 RECORD
SECOND QUARTER 1998 EARNINGS
PITTSBURGH, July 16, 1998 - PNC Bank Corp. (NYSE: PNC) today
reported record earnings of $280 million or $0.90 per diluted share for the
second quarter of 1998 compared with $259 million or $0.81 per diluted share in
the second quarter of 1997.
Returns on average common shareholders' equity and average assets
were 21.42% and 1.53% for the second quarter of 1998 compared with 20.21% and
1.47% for the prior-year quarter.
"Our record earnings reflect strong performance across a broad range
of distinct financial services businesses," said Thomas H. O'Brien, chairman and
chief executive officer. "Outstanding growth in asset management, mutual fund
servicing, mortgage banking and other businesses fueled a significant increase
in revenue and the continued improvement of our earnings composition. These
results are consistent with our ongoing strategy to focus resources on
businesses with superior return characteristics and potential for growth."
HIGHLIGHTS
* Revenue increased 17% in the quarter-to-quarter comparison driven
by growth in noninterest income which accounted for 49% of total
revenue.
* Fee-based revenue grew 30% from the prior-year quarter.
* Asset quality remained stable as net charge-offs and
nonperforming assets were comparable with the first quarter of
1998.
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<PAGE> 2
PNC Bank Corp. Reports Record Second Quarter 1998 Earnings--Page 2
* The acquisition of Midland Loan Services, Inc. created one of the
largest commercial real estate loan servicing organizations in
the nation with a total servicing portfolio of $27.9 billion,
including $19.5 billion of commercial mortgage-backed securities.
* PNC enhanced its national presence in business credit with the
acquisition of the asset-based finance business of BTM Capital
Corp. and now ranks seventh in the U.S. with a loan portfolio
totaling $1.4 billion.
* The residential mortgage servicing portfolio grew 15% from a year
ago to $46.6 billion at June 30, 1998 driven by strong
origination volumes and $8.6 billion of servicing acquisitions.
INCOME STATEMENT REVIEW
Diluted earnings per share increased 11% in the second quarter of
1998 driven by strong revenue growth and the impact of capital management
initiatives.
Taxable-equivalent net interest income increased $16 million to $637
million in the second quarter of 1998. The net interest margin was 3.81%
compared with 3.84% in the second quarter of 1997 and 3.96% in the first quarter
of 1998. The decrease from the first quarter was primarily due to an increase in
commercial loans, growth in credit cards at introductory rates and the financing
of the Midland acquisition. The provision for credit losses was $35 million in
the second quarter of 1998 compared with $15 million last year.
Noninterest income was $611 million in the second quarter of 1998,
an increase of 38% compared with the second quarter of 1997. Asset management,
mutual fund servicing, consumer services, corporate finance and capital markets,
and mortgage banking revenues all grew in excess of 20%. In addition,
noninterest income included $56 million of gains from the sales of 16 branches
in Western Pennsylvania that offset one-time costs related to consumer delivery
initiatives and improvements in credit card operations. Excluding these gains,
noninterest income increased $110 million or 25% from the prior-year quarter.
Asset management and mutual fund servicing fees grew 24% and 30%,
respectively, from the second quarter of 1997 reflecting significant new
business and strong financial markets. Managed assets increased to approximately
$151 billion at June 30, 1998 compared with $122 billion a year ago.
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<PAGE> 3
PNC Bank Corp. Reports Record Second Quarter 1998 Earnings--Page 3
Consumer services revenue increased $17 million or 23% compared with
the second quarter of 1997 primarily due to higher credit card and brokerage
fees related to growth in account volumes. Corporate finance and capital markets
fees increased 33% to $67 million in the second quarter of 1998 including $12
million of commercial mortgage servicing revenue from Midland.
Mortgage banking revenue grew $40 million from the prior-year
quarter primarily due to higher marketing gains and origination volumes
reflecting significant mortgage refinance activity and new business from an
expanded national distribution network. Residential mortgage originations
totaled $3.0 billion compared with $1.3 billion in the year-earlier period. At
June 30, 1998, approximately $46.6 billion of mortgages were serviced including
$37.9 billion serviced for others.
The increase in other income was primarily due to the branch gains
and higher venture capital income.
Noninterest expense of $781 million increased $131 million compared
with the second quarter of 1997. Approximately $55 million of the increase
related to one-time costs for consumer delivery initiatives, employee
displacements and the streamlining of credit card operations. The remaining
increase in noninterest expense was primarily due to higher amortization of
residential mortgage servicing rights, the impact of the Midland acquisition and
incentive compensation commensurate with revenue growth.
BALANCE SHEET REVIEW
Total assets were $75.9 billion at June 30, 1998. Average earning
assets increased $2.5 billion from the prior-year quarter to $66.7 billion as
higher loans and loans held for sale more than offset reductions in the
securities portfolio. Average loans grew $2.5 billion to $55.3 billion, a 4.8%
increase from the prior year. Growth in commercial loans and credit cards more
than offset the impact of loan securitizations and the downsizing of the
indirect automobile lending portfolio. The increase in commercial loans was
primarily in middle market and secured lending, which includes approximately
$230 million from BTM. Loans represented 83.0% of average earning assets in the
second quarter of 1998 compared with 82.3% a year ago. Average loans held for
sale increased $1.5 billion reflecting higher residential mortgage originations
and the commercial mortgage inventory of Midland. Average securities available
for sale decreased $1.7 billion to $7.3 billion or 11.0% of average earning
assets.
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<PAGE> 4
PNC Bank Corp. Reports Record Second Quarter 1998 Earnings--Page 4
Average deposits declined $645 million to $44.2 billion in the
second quarter of 1998 representing 60.0% of total sources of funds. The ratio
of wholesale funds to total sources of funds was 30.1% for the second quarter of
1998 compared with 28.9% a year ago.
Shareholders' equity totaled $5.6 billion at June 30, 1998. The
leverage ratio was 7.23% and Tier I and total risk-based capital ratios are
estimated to be 7.3% and 10.8%, respectively.
The ratio of nonperforming assets to total loans and foreclosed assets
was 0.57% at June 30, 1998, 0.61% at March 31, 1998 and 0.83% at June 30, 1997.
Nonperforming assets were $323 million at June 30, 1998 compared with $335
million at March 31, 1998 and $442 million a year ago.
The allowance for credit losses was $859 million at June 30, 1998, and
represented 315% of nonperforming loans compared with 310% at June 30, 1997. Net
charge-offs were $89 million in the second quarter of 1998 compared with $90
million in the first quarter of 1998 and $59 million in the year-earlier period.
The corresponding ratios of net charge-offs as a percentage of average loans
were 0.64%, 0.67% and 0.44%, respectively. The increase in net charge-offs from
the prior year was primarily associated with credit cards reflecting a higher
level of consumer bankruptcies and higher outstandings.
YEAR TO DATE RESULTS
Earnings per diluted share increased 10% to $1.77 for the first six
months of 1998 from $1.61 in 1997. Returns on average common shareholders'
equity and average assets were 21.26% and 1.52%, respectively, compared with
19.84% and 1.50%, respectively, for the first six 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
Our SEC reports, accessible on our website, identify factors that can affect
forward-looking statements.
[TABULAR MATERIAL FOLLOWS]
<PAGE> 5
PNC BANK CORP. AND SUBSIDIARIES Page 5
Consolidated Financial Highlights
<TABLE>
<CAPTION>
Three months ended June 30 Six months ended June 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) $636,986 $620,581 $1,281,216 $1,257,864
Noninterest income 611,203 444,367 1,150,118 877,670
Total revenue 1,248,189 1,064,948 2,431,334 2,135,534
Net income 280,411 259,075 549,671 525,384
Per common share
Basic earnings .92 .82 1.80 1.63
Diluted earnings .90 .81 1.77 1.61
Cash dividends declared .39 .37 .78 .74
SELECTED RATIOS
Return on
Average common shareholders' equity 21.42% 20.21% 21.26% 19.84%
Average assets 1.53 1.47 1.52 1.50
Net interest margin 3.81 3.84 3.88 3.92
Noninterest income to total revenue 48.97 41.73 47.30 41.10
After-tax profit margin 22.47 24.33 22.61 24.60
Efficiency ratio (excluding distributions on capital securities) 61.43 60.09 61.48 59.81
Net charge-offs to average loans .64 .44 .66 .46
</TABLE>
<TABLE>
<CAPTION>
June 30 March 31 December 31 September 30 June 30
1998 1998 1997 1997 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (in millions)
Assets $75,873 $72,355 $75,120 $71,828 $71,973
Earning assets 68,353 65,210 66,688 64,208 64,297
Loans, net of unearned income 56,237 54,511 54,245 53,651 53,497
Securities available for sale 7,540 7,511 8,522 8,000 8,396
Deposits 47,096 46,068 47,649 44,788 45,216
Borrowed funds 20,488 18,375 19,622 19,052 19,066
Shareholders' equity 5,633 5,487 5,384 5,476 5,384
Common shareholders' equity 5,318 5,173 5,069 5,161 5,068
CAPITAL RATIOS
Leverage 7.23% 7.36% 7.30% 7.43% 7.35%
Common shareholders' equity to assets 7.01 7.15 6.75 7.18 7.04
ASSET QUALITY RATIOS
Nonperforming assets to loans and foreclosed assets .57% .61% .61% .73% .83%
Allowance for credit losses to loans 1.53 1.67 1.79 1.91 2.01
Allowance for credit losses to nonperforming loans 315.09 320.96 351.79 324.25 310.34
Book value per common share $17.64 $17.20 $16.87 $16.92 $16.51
====================================================================================================================================
</TABLE>
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<PAGE> 6
PNC BANK CORP. AND SUBSIDIARIES Page 6
Consolidated Statement of Income
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
----------------------------------------------------
In thousands, except per share data 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and fees on loans $1,138,813 $1,078,776 $2,257,458 $2,134,685
Securities available for sale 105,993 139,036 221,247 295,240
Other 68,161 39,348 125,769 69,391
----------------------------------------------------
Total interest income 1,312,967 1,257,160 2,604,474 2,499,316
INTEREST EXPENSE
Deposits 362,324 368,000 723,846 714,155
Borrowed funds 320,193 275,985 612,774 542,061
----------------------------------------------------
Total interest expense 682,517 643,985 1,336,620 1,256,216
----------------------------------------------------
Net interest income 630,450 613,175 1,267,854 1,243,100
Provision for credit losses 35,000 15,000 65,000 25,000
----------------------------------------------------
Net interest income less provision for credit losses 595,450 598,175 1,202,854 1,218,100
NONINTEREST INCOME
Asset management 136,886 110,500 277,951 217,399
Mutual fund servicing 46,006 35,518 86,527 68,191
Service charges on deposits 49,928 50,757 97,709 101,332
Consumer services 93,467 76,190 175,672 146,161
Corporate finance and capital markets 66,686 50,150 117,319 97,025
Mortgage banking 83,191 43,265 160,885 83,497
Net securities gains 2,890 13,370 25,732 29,796
Other 132,149 64,617 208,323 134,269
----------------------------------------------------
Total noninterest income 611,203 444,367 1,150,118 877,670
NONINTEREST EXPENSE
Staff expense 333,686 301,833 687,970 610,265
Net occupancy and equipment 102,427 91,781 198,236 181,065
Amortization 71,103 39,527 128,282 69,358
Marketing 26,728 25,436 64,124 48,277
Distributions on capital securities 13,914 9,867 27,107 16,823
Other 232,801 181,348 416,180 368,395
----------------------------------------------------
Total noninterest expense 780,659 649,792 1,521,899 1,294,183
Income before income taxes 425,994 392,750 831,073 801,587
Income taxes 145,583 133,675 281,402 276,203
----------------------------------------------------
Net income $280,411 $259,075 $549,671 $525,384
- -------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders $276,219 $255,295 $541,468 $517,836
EARNINGS PER COMMON SHARE
Basic .92 .82 1.80 1.63
Diluted .90 .81 1.77 1.61
CASH DIVIDENDS DECLARED PER COMMON SHARE .39 .37 .78 .74
AVERAGE COMMON SHARES OUTSTANDING
Basic 300,354 309,962 300,460 315,824
Diluted 305,702 315,818 305,920 321,836
===============================================================================================================================
</TABLE>
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<PAGE> 7
PNC BANK CORP. AND SUBSIDIARIES Page 7
Details of Net Interest Income
<TABLE>
<CAPTION>
NET INTEREST INCOME
Taxable-equivalent basis Three months ended Six months ended
June 30 June 30
----------------------------------------------------
In thousands 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans $1,144,084 $1,084,532 $2,268,196 $2,146,067
Securities available for sale 107,124 140,618 223,631 298,488
Other 68,295 39,416 126,009 69,525
----------------------------------------------------
Total interest income 1,319,503 1,264,566 2,617,836 2,514,080
Interest expense
Deposits 362,324 368,000 723,846 714,155
Borrowed funds 320,193 275,985 612,774 542,061
----------------------------------------------------
Total interest expense 682,517 643,985 1,336,620 1,256,216
----------------------------------------------------
Net interest income $636,986 $620,581 $1,281,216 $1,257,864
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Taxable-equivalent basis June 30 March 31 December 31 September 30 June 30
Three months ended - in thousands 1998 1998 1997 1997 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income
Loans $1,144,084 $1,124,112 $1,123,127 $1,107,250 $1,084,532
Securities available for sale 107,124 116,507 120,395 127,053 140,618
Other 68,295 57,714 44,532 43,555 39,416
----------------------------------------------------------------
Total interest income 1,319,503 1,298,333 1,288,054 1,277,858 1,264,566
Interest expense
Deposits 362,324 361,522 369,572 372,860 368,000
Borrowed funds 320,193 292,581 279,570 277,567 275,985
----------------------------------------------------------------
Total interest expense 682,517 654,103 649,142 650,427 643,985
----------------------------------------------------------------
Net interest income $636,986 $644,230 $638,912 $627,431 $620,581
===============================================================================================================================
</TABLE>
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<PAGE> 8
PNC BANK CORP. AND SUBSIDIARIES Page 8
Details of Net Interest Margin
<TABLE>
<CAPTION>
NET INTEREST MARGIN
Three months ended Six months ended
June 30 June 30
------------------------- -------------------------
Taxable-equivalent basis 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rates earned/paid
Yield on earning assets
Loans 8.23% 8.19% 8.29% 8.20%
Securities available for sale 5.86 6.21 5.94 6.25
Other 6.80 6.76 6.86 6.72
Total yield on earning assets 7.89 7.85 7.94 7.86
Rate on interest-bearing liabilities
Deposits 4.15 4.18 4.17 4.12
Borrowed funds 5.81 5.88 5.83 5.82
Total rate on interest-bearing liabilities 4.79 4.77 4.79 4.71
---------------------------------------------------
Interest rate spread 3.10 3.08 3.15 3.15
Impact of noninterest-bearing sources .71 .76 .73 .77
---------------------------------------------------
Net interest margin 3.81% 3.84% 3.88% 3.92%
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NET INTEREST MARGIN
Taxable-equivalent basis June 30 March 31 December 31 September 30 June 30
Three months ended 1998 1998 1997 1997 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rates earned/paid
Yield on earning assets
Loans 8.23% 8.36% 8.27% 8.23% 8.19%
Securities available for sale 5.86 6.01 6.19 6.17 6.21
Other 6.80 6.96 6.68 6.83 6.76
Total yield on earning assets 7.89 8.00 7.96 7.92 7.85
Rate on interest-bearing liabilities
Deposits 4.15 4.19 4.23 4.23 4.18
Borrowed funds 5.81 5.85 5.91 5.92 5.88
Total rate on interest-bearing liabilities 4.79 4.79 4.82 4.82 4.77
----------------------------------------------------------------
Interest rate spread 3.10 3.21 3.14 3.10 3.08
Impact of noninterest-bearing sources .71 .75 .81 .79 .76
----------------------------------------------------------------
Net interest margin 3.81% 3.96% 3.95% 3.89% 3.84%
===============================================================================================================================
</TABLE>
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<PAGE> 9
PNC BANK CORP. AND SUBSIDIARIES Page 9
Details of Noninterest Income
<TABLE>
<CAPTION>
NONINTEREST INCOME
Three months ended Six months ended
June 30 June 30
----------------------------------------------------
In thousands 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset management $136,886 $110,500 $277,951 $217,399
Mutual fund servicing 46,006 35,518 86,527 68,191
Service charges on deposits 49,928 50,757 97,709 101,332
Consumer services
Credit card 31,785 21,960 58,277 41,064
Brokerage 17,272 12,731 32,428 25,973
Insurance 10,785 9,659 20,774 18,805
Other 33,625 31,840 64,193 60,319
----------------------------------------------------
Total consumer services 93,467 76,190 175,672 146,161
Corporate finance and capital markets 66,686 50,150 117,319 97,025
Mortgage banking
Servicing 33,025 27,963 62,256 55,412
Origination 20,080 10,960 37,207 19,147
Marketing 29,811 3,848 54,429 7,269
Sales of servicing 275 494 6,993 1,669
----------------------------------------------------
Total mortgage banking 83,191 43,265 160,885 83,497
Net securities gains 2,890 13,370 25,732 29,796
Other 132,149 64,617 208,323 134,269
----------------------------------------------------
Total noninterest income $611,203 $444,367 $1,150,118 $877,670
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
June 30 March 31 December 31 September 30 June 30
Three months ended - in thousands 1998 1998 1997 1997 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Asset management $136,886 $141,065 $128,916 $115,197 $110,500
Mutual fund servicing 46,006 40,521 37,493 35,608 35,518
Service charges on deposits 49,928 47,781 50,621 50,899 50,757
Consumer services
Credit card 31,785 26,492 28,802 23,292 21,960
Brokerage 17,272 15,156 14,230 14,138 12,731
Insurance 10,785 9,989 10,543 10,421 9,659
Other 33,625 30,568 33,611 30,409 31,840
------------------------------------------------------------------
Total consumer services 93,467 82,205 87,186 78,260 76,190
Corporate finance and capital markets 66,686 50,633 54,981 45,987 50,150
Mortgage banking
Servicing 33,025 29,231 30,503 30,316 27,963
Origination 20,080 17,127 14,070 13,597 10,960
Marketing 29,811 24,618 12,869 27,360 3,848
Sales of servicing 275 6,718 463 683 494
------------------------------------------------------------------
Total mortgage banking 83,191 77,694 57,905 71,956 43,265
Net securities gains (losses) 2,890 22,842 21,434 (2,657) 13,370
Other 132,149 76,174 79,527 63,997 64,617
------------------------------------------------------------------
Total noninterest income $611,203 $538,915 $518,063 $459,247 $444,367
===============================================================================================================================
</TABLE>
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<PAGE> 10
PNC BANK CORP. AND SUBSIDIARIES Page 10
Details of Noninterest Expense
<TABLE>
<CAPTION>
NONINTEREST EXPENSE
Three months ended Six months ended
June 30 June 30
----------------------------------------------------
In thousands 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Staff expense
Compensation $285,051 $251,274 $576,142 $501,700
Employee benefits 48,635 50,559 111,828 108,565
----------------------------------------------------
Total staff expense 333,686 301,833 687,970 610,265
Net occupancy and equipment
Net occupancy 52,533 46,071 101,118 93,311
Equipment 49,894 45,710 97,118 87,754
----------------------------------------------------
Total net occupancy and equipment 102,427 91,781 198,236 181,065
Amortization
Mortgage servicing rights 42,505 16,556 75,610 23,911
Goodwill 17,630 13,274 30,790 26,542
Other 10,968 9,697 21,882 18,905
----------------------------------------------------
Total amortization 71,103 39,527 128,282 69,358
Marketing 26,728 25,436 64,124 48,277
Distributions on capital securities 13,914 9,867 27,107 16,823
Other 232,801 181,348 416,180 368,395
----------------------------------------------------
Total noninterest expense $780,659 $649,792 $1,521,899 $1,294,183
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
June 30 March 31 December 31 September 30 June 30
Three months ended - in thousands 1998 1998 1997 1997 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Staff expense
Compensation $285,051 $291,091 $286,617 $260,351 $251,274
Employee benefits 48,635 63,193 35,571 48,141 50,559
-----------------------------------------------------------------
Total staff expense 333,686 354,284 322,188 308,492 301,833
Net occupancy and equipment
Net occupancy 52,533 48,585 49,813 46,221 46,071
Equipment 49,894 47,224 47,798 44,483 45,710
-----------------------------------------------------------------
Total net occupancy and equipment 102,427 95,809 97,611 90,704 91,781
Amortization
Mortgage servicing rights 42,505 33,105 32,230 24,681 16,556
Goodwill 17,630 13,160 13,143 13,110 13,274
Other 10,968 10,914 10,731 10,668 9,697
-----------------------------------------------------------------
Total amortization 71,103 57,179 56,104 48,459 39,527
Marketing 26,728 37,396 10,742 11,376 25,436
Distributions on capital securities 13,914 13,193 13,123 13,192 9,867
Other 232,801 183,379 215,493 179,932 181,348
-----------------------------------------------------------------
Total noninterest expense $780,659 $741,240 $715,261 $652,155 $649,792
===============================================================================================================================
</TABLE>
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<PAGE> 11
PNC BANK CORP. AND SUBSIDIARIES Page 11
Consolidated Balance Sheet
<TABLE>
<CAPTION>
June 30 December 31 June 30
Dollars in millions, except par value 1998 1997 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $2,094 $4,303 $3,676
Short-term investments 1,551 1,526 1,159
Loans held for sale 2,955 2,324 1,235
Securities available for sale 7,540 8,522 8,396
Loans, net of unearned income of $393; $412 and $392 56,237 54,245 53,497
Allowance for credit losses (859) (972) (1,075)
---------------------------------------
Net loans 55,378 53,273 52,422
Other 6,355 5,172 5,085
---------------------------------------
Total assets $75,873 $75,120 $71,973
=======================================
LIABILITIES
Deposits
Noninterest-bearing $9,972 $10,158 $10,662
Interest-bearing 37,124 37,491 34,554
---------------------------------------
Total deposits 47,096 47,649 45,216
Borrowed funds
Bank notes and senior debt 11,788 9,826 9,192
Federal funds purchased 897 3,632 2,516
Repurchase agreements 1,658 714 757
Other borrowed funds 4,302 3,753 5,250
Subordinated debt 1,843 1,697 1,351
---------------------------------------
Total borrowed funds 20,488 19,622 19,066
Other 1,808 1,815 1,657
---------------------------------------
Total liabilities 69,392 69,086 65,939
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 352,684,081; 348,447,600 and 347,384,145 shares 1,763 1,742 1,737
Capital surplus 1,164 1,042 1,004
Retained earnings 4,947 4,641 4,356
Deferred benefit expense (55) (41) (62)
Accumulated other comprehensive income (16) (23) (83)
Common stock held in treasury at cost: 51,146,435; 48,017,641 and 40,407,600 shares (2,177) (1,984) (1,575)
------------- ------------ ------------
Total shareholders' equity 5,633 5,384 5,384
------------- ------------ ------------
Total liabilities, capital securities and shareholders' equity $75,873 $75,120 $71,973
==================================================================================================================================
</TABLE>
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<PAGE> 12
PNC BANK CORP. AND SUBSIDIARIES Page 12
Consolidated Average Balance Sheet Data
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
----------------------------------------------------
In millions 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $7,323 $9,055 $7,552 $9,569
Loans, net of unearned income
Consumer (excluding credit card) 10,995 11,239 11,090 11,531
Credit card 4,048 3,502 3,899 3,274
Residential mortgage 12,560 13,164 12,671 12,974
Commercial 22,425 18,964 21,550 18,686
Commercial real estate 3,206 4,060 3,414 4,080
Other 2,114 1,884 2,095 1,825
----------------------------------------------------
Total loans, net of unearned income 55,348 52,813 54,719 52,370
Loans held for sale 2,948 1,408 2,657 1,215
Other 1,069 925 1,015 860
----------------------------------------------------
Total interest-earning assets 66,688 64,201 65,943 64,014
Noninterest-earning assets 6,944 6,620 6,948 6,548
----------------------------------------------------
Total assets $73,632 $70,821 $72,891 $70,562
====================================================
LIABILITIES
Interest-bearing liabilities
Deposits $34,956 $35,313 $34,951 $34,925
Borrowed funds 21,844 18,675 20,922 18,635
----------------------------------------------------
Total interest-bearing liabilities 56,800 53,988 55,873 53,560
Noninterest-bearing deposits 9,213 9,501 9,448 9,550
Other 1,445 1,480 1,459 1,473
----------------------------------------------------
Total liabilities 67,458 64,969 66,780 64,583
Mandatorily redeemable capital securities of subsidiary 698 492 674 421
trusts
SHAREHOLDERS' EQUITY 5,476 5,360 5,437 5,558
----------------------------------------------------
Total liabilities, capital securities and shareholders' equity $73,632 $70,821 $72,891 $70,562
====================================================
COMMON SHAREHOLDERS' EQUITY $5,161 $5,044 $5,122 $5,242
================================================================================================================================
</TABLE>
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<PAGE> 13
PNC BANK CORP. AND SUBSIDIARIES Page 13
Consolidated Balance Sheet Data
<TABLE>
<CAPTION>
AVERAGE BALANCES
June 30 March 31 December 31 September 30 June 30
Three months ended - in thousands 1998 1998 1997 1997 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $7,323 $7,784 $7,769 $8,216 $9,055
Loans, net of unearned income
Consumer (excluding credit card) 10,995 11,186 11,108 10,996 11,239
Credit card 4,048 3,748 3,803 3,871 3,502
Residential mortgage 12,560 12,784 12,966 13,503 13,164
Commercial 22,425 20,665 19,838 18,839 18,964
Commercial real estate 3,206 3,624 4,067 4,041 4,060
Other 2,114 2,076 1,881 1,952 1,884
-----------------------------------------------------------------
Total loans, net of unearned income 55,348 54,083 53,663 53,202 52,813
Loans held for sale 2,948 2,363 1,680 1,555 1,408
Other 1,069 959 975 981 925
-----------------------------------------------------------------
Total interest-earning assets 66,688 65,189 64,087 63,954 64,201
Noninterest-earning assets 6,944 6,952 6,782 6,627 6,620
-----------------------------------------------------------------
Total assets $73,632 $72,141 $70,869 $70,581 $70,821
=================================================================
LIABILITIES
Interest-bearing liabilities
Deposits $34,956 $34,945 $34,655 $34,952 $35,313
Borrowed funds 21,844 19,989 18,624 18,484 18,675
-----------------------------------------------------------------
Total interest-bearing liabilities 56,800 54,934 53,279 53,436 53,988
Noninterest-bearing deposits 9,213 9,685 9,925 9,654 9,501
Other 1,445 1,474 1,601 1,460 1,480
-----------------------------------------------------------------
Total liabilities 67,458 66,093 64,805 64,550 64,969
Mandatorily redeemable capital securities of subsidiary trusts 698 650 650 650 492
SHAREHOLDERS' EQUITY 5,476 5,398 5,414 5,381 5,360
-----------------------------------------------------------------
Total liabilities, capital securities and
shareholders' equity $73,632 $72,141 $70,869 $70,581 $70,821
=================================================================
COMMON SHAREHOLDERS' EQUITY $5,161 $5,083 $5,099 $5,066 $5,044
================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
LOAN PORTFOLIO
June 30 March 31 December 31 September 30 June 30
Period ended - in millions 1998 1998 1997 1997 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer (excluding credit card) $11,035 $11,106 $11,205 $11,206 $10,983
Credit card 4,150 3,729 3,830 3,861 3,693
Residential mortgage 12,698 12,351 12,785 13,064 13,494
Commercial 23,359 21,823 19,989 19,536 19,266
Commercial real estate 2,872 3,467 3,974 4,085 4,003
Other 2,516 2,428 2,874 2,281 2,450
-----------------------------------------------------------------
Total loans 56,630 54,904 54,657 54,033 53,889
Unearned income (393) (393) (412) (382) (392)
-----------------------------------------------------------------
Total loans, net of unearned income $56,237 $54,511 $54,245 $53,651 $53,497
================================================================================================================================
</TABLE>
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<PAGE> 14
PNC BANK CORP. AND SUBSIDIARIES Page 14
Asset Quality Data
<TABLE>
<CAPTION>
ALLOWANCE FOR CREDIT LOSSES
June 30 March 31 December 31 September 30 June 30
Three months ended - in millions 1998 1998 1997 1997 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $912 $972 $1,027 $1,075 $1,119
Charge-offs
Consumer (excluding credit card) (21) (25) (27) (25) (25)
Credit card (75) (72) (54) (53) (55)
Residential mortgage (3) (2) (1) (3) (3)
Commercial (7) (6) (18) (11) (10)
Commercial real estate (1) (2) (5) (3) (3)
-----------------------------------------------------------------
Total charge-offs (107) (107) (105) (95) (96)
Recoveries
Consumer (excluding credit card) 9 10 10 9 9
Credit card 5 3 5 4 9
Residential mortgage 1
Commercial 3 3 4 7 18
Commercial real estate 1 6 2 1
-----------------------------------------------------------------
Total recoveries 18 17 25 22 37
-----------------------------------------------------------------
Net charge-offs (89) (90) (80) (73) (59)
Provision for credit losses 35 30 25 20 15
Acquisitions 1 5
-----------------------------------------------------------------
Ending balance $859 $912 $972 $1,027 $1,075
================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NONPERFORMING ASSETS
June 30 March 31 December 31 September 30 June 30
Period ended - in millions 1998 1998 1997 1997 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans
Commercial $129 $145 $128 $142 $155
Commercial real estate 80 81 94 122 139
Residential mortgage 56 51 44 45 46
Consumer 7 7 10 6 5
-----------------------------------------------------------------
Total nonaccrual loans 272 284 276 315 345
Restructured loans 2 1
-----------------------------------------------------------------
Total nonperforming loans 272 284 276 317 346
Foreclosed assets
Commercial real estate 22 23 27 37 55
Residential mortgage 20 19 21 23 23
Other 9 9 9 17 18
-----------------------------------------------------------------
Total foreclosed assets 51 51 57 77 96
-----------------------------------------------------------------
Total nonperforming assets $323 $335 $333 $394 $442
================================================================================================================================
</TABLE>
