<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 15, 1999
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 1999 Financial Results
On July 15, 1999, PNC Bank Corp. ("Corporation") reported results of
operations for the three and six months ended June 30, 1999. A copy
of the earnings press release issued by the Corporation is attached
as Exhibit 99.1 and incorporated herein by reference.
Information on the Corporation's businesses for the six months ended
June 30, 1999 and 1998, which reflects organizational and business
changes made during 1999 as part of the Corporation's operating
strategy, is attached as Exhibit 99.2 and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The exhibits listed on the Exhibit Index on page 3 of this Form 8-K
are 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 26, 1999 By: /s/ Robert L. Haunschild
--------------------------------
Robert L. Haunschild
Senior Vice President and
Chief Financial Officer
2
<PAGE> 3
EXHIBIT INDEX
99.1 Earnings press release issued by the Corporation on July 15, 1999, with
respect to results of operations for the three and six months ended
June 30, 1999, filed herewith.
99.2 Business information for the six months ended June 30, 1999 and 1998
filed herewith.
3
<PAGE> 1
Exhibit 99.1
[PNC BANK LOGO]
CONTACTS:
MEDIA:
- ------
Brian E. Goerke
(412) 762-4304
[email protected]
INVESTORS:
- ----------
William H. Callihan
(412) 762-8257
[email protected]
PNC BANK CORP. REPORTS
HIGHER SECOND QUARTER 1999 CORE EARNINGS
PITTSBURGH, July 15, 1999 - PNC Bank Corp. (NYSE: PNC) today reported
second quarter 1999 earnings of $315 million or $1.03 per diluted share. Core
earnings for the quarter were $299 million or $0.98 per diluted share and, on
that basis, return on average common shareholders' equity was 21.21% and return
on average assets was 1.60%. Reported results included a $16 million net
after-tax gain or $.05 per diluted share resulting from the sale of Concord EFS,
Inc. (Concord) stock partially offset by a contribution to the PNC Bank
Foundation. Earnings for the second quarter of 1998 were $280 million or $0.90
per diluted share.
"Our second quarter performance was strong by every major measure,"
said Thomas H. O'Brien, chairman and chief executive officer. "We have seen
continued growth across a broad range of businesses, particularly asset
management, treasury management, capital markets and other fee-driven areas.
This has further strengthened our revenue mix, with core noninterest income
increasing 21% over 1998 levels."
SECOND QUARTER 1999 HIGHLIGHTS
o Putting the business on a comparable basis in each period,
core diluted earnings per share increased 13% compared with
the prior-year quarter (excluding the credit card business and
assuming the provision for credit losses was equal to net
charge-offs in 1998).
o PNC's revenue mix continued to improve over 1998 levels fueled
by double-digit growth in asset management, mutual fund
servicing, consumer services, mortgage banking and corporate
services revenues.
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<PAGE> 2
PNC Bank Corp. Reports Second Quarter 1999 Earnings -- Page 2
o Average deposits increased $1.3 billion in the year-to-year
comparison primarily reflecting growth in the regional bank.
o The efficiency ratio improved to 54.6% from 56.3% a year ago
reflecting a continued focus on improving returns in
traditional businesses.
o Net charge-offs declined to 0.18% of average loans while
nonperforming assets remained stable.
INCOME STATEMENT REVIEW
Taxable-equivalent net interest income was $612 million in the second
quarter of 1999, a $25 million decrease compared with the prior-year quarter.
The net interest margin was 3.64% for the second quarter of 1999 compared with
3.81% in the second quarter of 1998. These declines were primarily due to the
sale of the credit card business in the first quarter of 1999. Excluding the
credit card business, second quarter 1998 net interest income was $563 million
and the net interest margin was 3.59%.
The provision for credit losses was $25 million in the second quarter
of 1999 and net charge-offs were $24 million.
Noninterest income increased 17% compared with the second quarter of
1998 to $664 million in the second quarter of 1999 and included a $41 million
gain related to the sale of PNC Bank's investment in Concord. Excluding this
gain from the current year and $56 million of branch gains recorded in the
second quarter of 1998, core noninterest income increased $110 million or 21%
compared with the prior-year quarter driven by higher fee income.
Asset management fees grew 23% primarily reflecting new business and
market appreciation. Assets under management increased to approximately $189
billion at June 30, 1999 compared with $151 billion at June 30, 1998. Mutual
fund servicing fees grew 15% compared with the second quarter of 1998 due to an
increase in assets serviced. At June 30, 1999, PFPC Worldwide provided custody
and accounting/administration services for $349 billion and $244 billion of
mutual fund assets, respectively. The comparable amounts were $281 billion and
$226 billion, respectively, a year ago.
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<PAGE> 3
PNC Bank Corp. Reports Second Quarter 1999 Earnings -- Page 3
Consumer services revenue increased $12 million or 13% compared with
the second quarter of 1998 primarily due to an increase in brokerage and other
fees associated with the Hilliard Lyons acquisition, partly offset by lower
credit card fees. Corporate services revenue increased $26 million or 42%
compared with the prior-year quarter primarily due to growth in commercial
mortgage, capital markets and treasury management fees.
Net residential mortgage banking revenue grew $14 million or 25%
compared with the prior-year quarter primarily due to growth in the servicing
portfolio. Residential mortgage originations, including both retail and
correspondent activity, totaled $12 billion compared with $8 billion in the
prior-year period. At June 30, 1999, approximately $71.3 billion of residential
mortgages were serviced, including $64.2 billion serviced for others.
Net securities gains were $42 million in the second quarter of 1999
primarily related to the sale of Concord stock.
Other noninterest income decreased $39 million compared with the second
quarter of 1998 primarily due to $56 million of gains on sales of branches in
the prior-year quarter.
Noninterest expense of $767 million increased 4% compared with the
second quarter of 1998 commensurate with revenue growth in fee-based businesses.
The efficiency ratio improved to 54.6% compared with 56.3% in the prior-year
quarter due to a continued focus on improving returns in traditional businesses.
BALANCE SHEET REVIEW
Total assets were $75.6 billion at June 30, 1999 compared with $75.9
billion at June 30, 1998. Average earning assets were relatively consistent with
the prior-year quarter at $66.9 billion. Average loans decreased $2.8 billion to
$52.5 billion primarily due to the impact of the sale of the credit card
business. Loans represented 78% of average earning assets in the second quarter
of 1999 compared with 83% a year ago. Average loans held for sale increased to
$3.7 billion in the second quarter of 1999 compared with $2.9 billion in the
prior-year quarter primarily as a result of the decision in the first quarter of
1999 to exit certain institutional lending businesses. Average securities
available for sale increased $2.1 billion to $9.4 billion and represented 14%
and 11% of average earning assets in the second quarter of 1999 and 1998,
respectively. The increase was attributable to securities held to hedge
residential mortgage servicing rights.
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<PAGE> 4
PNC Bank Corp. Reports Second Quarter 1999 Earnings -- Page 4
Average deposits were $45.5 billion and represented 61% of total sources
of funds in the second quarter of 1999 compared with $44.2 billion and 60%,
respectively, in the second quarter of 1998. The increase in average deposits
was primarily in consumer deposits. Average borrowed funds decreased $1.3
billion to $20.5 billion compared with the second quarter of 1998.
Shareholders' equity totaled $5.8 billion at June 30, 1999. The
leverage ratio was 7.49% and Tier I and total risk-based capital ratios are
estimated to be 8.1% and 11.6%, respectively.
The ratio of nonperforming assets to total loans, loans held for sale and
foreclosed assets was 0.59% at June 30, 1999 compared with 0.58% and 0.55% at
March 31, 1999 and June 30, 1998, respectively. Nonperforming assets were $333
million at June 30, 1999 compared with $328 million and $323 million at March
31, 1999 and June 30, 1998, respectively.
The allowance for credit losses was $673 million at June 30, 1999, and
represented 224% of nonaccrual loans compared with 231% and 316% at March 31,
1999 and June 30, 1998, respectively. Net charge-offs were $24 million or 0.18%
of average loans in the second quarter of 1999 compared with $78 million or
0.56% in the first quarter of 1999 and $89 million or 0.64% a year ago.
YEAR TO DATE RESULTS
Earnings were $640 million or $2.08 per diluted share for the six months
ended June 30, 1999. Core earnings for the six month period ended June 30, 1999
were $592 million or $1.92 per diluted share and, on that basis, return on
average common shareholders' equity was 20.92% and return on average assets was
1.57%. Earnings for the six months ended June 30, 1998 were $550 million or
$1.77 per share.
PNC Bank Corp., headquartered in Pittsburgh, is one of the largest
diversified financial services organizations in the United States. Its major
businesses include PNC Regional Bank, PNC Advisors, BlackRock, PFPC Worldwide,
PNC Institutional Bank, PNC Secured Finance and PNC Mortgage.
Visit PNC Bank on the World Wide Web at www.pncbank.com
Our SEC reports, accessible on our website, identify
factors that can affect forward-looking statements.
[TABULAR MATERIAL FOLLOWS]
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<PAGE> 5
PNC BANK CORP. Page 5
Consolidated Financial Highlights
<TABLE>
<CAPTION>
Three months ended June 30 Six months ended June 30
-------------------------- --------------------------
Dollars in millions, except per share data 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL PERFORMANCE
Revenue
Net interest income (taxable-equivalent basis) $612 $637 $1,276 $1,281
Noninterest income 664 569 1,395 1,075
Total revenue 1,276 1,206 2,671 2,356
Net income 315 280 640 550
Per common share
Basic earnings 1.04 .92 2.10 1.80
Diluted earnings 1.03 .90 2.08 1.77
Cash dividends declared .41 .39 .82 .78
- -----------------------------------------------------------------------------------------------------------------------------------
SELECTED RATIOS
Return on
Average common shareholders' equity 22.38% 21.42% 22.66% 21.26%
Average assets 1.68 1.53 1.70 1.52
Net interest margin 3.64 3.81 3.75 3.88
Noninterest income to total revenue 52.04 47.18 52.23 45.63
Efficiency * 54.60 56.27 54.01 56.65
* Excluding amortization, distributions on capital securities and residential mortgage banking hedging activities
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
June 30 March 31 December 31 September 30 June 30
1999 1999 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
<S> <C> <C> <C> <C> <C>
Assets $75,558 $74,868 $77,207 $76,238 $75,873
Earning assets 66,889 66,710 69,027 68,638 68,353
Loans, net of unearned income 52,075 52,800 57,650 56,752 56,237
Securities available for sale 8,856 9,170 7,074 7,152 7,540
Deposits 47,685 45,799 47,496 46,875 47,096
Borrowed funds 18,464 19,935 20,946 19,972 20,488
Shareholders' equity 5,755 5,931 6,043 5,793 5,633
Common shareholders' equity 5,442 5,617 5,729 5,479 5,318
Book value per common share 18.40 18.78 18.86 18.21 17.64
CAPITAL RATIOS
Leverage 7.49% 7.28% 7.22% 7.18% 7.18%
Common shareholders' equity to total assets 7.20 7.50 7.42 7.19 7.01
ASSET QUALITY RATIOS
Nonperforming assets to total loans, loans held for sale and
foreclosed assets .59% .58% .55% .54% .55%
Allowance for credit losses to total loans 1.29 1.27 1.31 1.44 1.53
Allowance for credit losses to nonaccrual loans 224.33 230.93 255.25 289.36 315.81
Net charge-offs to average loans .18 .56 1.24 .62 .64
===================================================================================================================================
</TABLE>
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<PAGE> 6
PNC BANK CORP. Page 6
Consolidated Statement of Income
<TABLE>
<CAPTION>
Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
In millions, except per share data 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and fees on loans $989 $1,139 $2,101 $2,258
Securities available for sale 130 106 236 221
Other 85 69 157 126
- -------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,204 1,314 2,494 2,605
===============================================================================================================================
INTEREST EXPENSE
Deposits 333 363 684 724
Borrowed funds 264 320 545 613
- -------------------------------------------------------------------------------------------------------------------------------
Total interest expense 597 683 1,229 1,337
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income 607 631 1,265 1,268
Provision for credit losses 25 35 103 65
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income less provision for credit losses 582 596 1,162 1,203
- -------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Asset management 169 137 330 278
Mutual fund servicing 53 46 104 87
Service charges on deposits 51 50 101 98
Consumer services 105 93 235 175
Corporate services 88 62 28 113
Net residential mortgage banking 70 56 130 108
Net securities gains 42 42 13
Other 86 125 425 203
- -------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 664 569 1,395 1,075
- -------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Staff expense 364 334 776 688
Net occupancy and equipment 103 104 278 200
Amortization 21 29 49 53
Marketing 17 27 32 64
Distributions on capital securities 16 14 32 27
Other 246 231 423 415
- -------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 767 739 1,590 1,447
===============================================================================================================================
Income before income taxes 479 426 967 831
Income taxes 164 146 327 281
- -------------------------------------------------------------------------------------------------------------------------------
Net income $315 $280 $640 $550
- -------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders $311 $276 $631 $541
EARNINGS PER COMMON SHARE
Basic $1.04 $.92 $2.10 $1.80
Diluted 1.03 .90 2.08 1.77
CASH DIVIDENDS DECLARED PER COMMON SHARE .41 .39 .82 .78
AVERAGE COMMON SHARES OUTSTANDING
Basic 297.4 300.4 299.9 300.5
Diluted 300.9 305.7 303.2 305.9
===============================================================================================================================
</TABLE>
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<PAGE> 7
PNC BANK CORP. Page 7
Details of Net Interest Income
<TABLE>
<CAPTION>
NET INTEREST INCOME
Taxable-equivalent basis Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
In millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans $992 $1,144 $2,109 $2,268
Securities available for sale 131 107 238 224
Other 86 69 158 126
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,209 1,320 2,505 2,618
Interest expense
Deposits 333 363 684 724
Borrowed funds 264 320 545 613
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 597 683 1,229 1,337
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income $612 $637 $1,276 $1,281
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Taxable-equivalent basis June 30 March 31 December 31 September 30 June 30
Three months ended - in millions 1999 1999 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income
Loans $992 $1,117 $1,171 $1,172 $1,144
Securities available for sale 131 107 102 104 107
Other 86 72 87 85 69
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,209 1,296 1,360 1,361 1,320
Interest expense
Deposits 333 351 376 371 363
Borrowed funds 264 281 319 337 320
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 597 632 695 708 683
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income $612 $664 $665 $653 $637
===================================================================================================================================
</TABLE>
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<PAGE> 8
PNC BANK CORP. Page 8
Details of Net Interest Margin
<TABLE>
<CAPTION>
NET INTEREST MARGIN
Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
Taxable-equivalent basis 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average yields/rates
Yield on earning assets
Loans 7.53% 8.23% 7.73% 8.29%
Securities available for sale 5.56 5.86 5.56 5.94
Other 6.90 6.80 6.74 6.86
Total yield on earning assets 7.20 7.89 7.38 7.94
Rate on interest-bearing liabilities
Deposits 3.63 4.15 3.72 4.17
Borrowed funds 5.08 5.81 5.15 5.83
Total rate on interest-bearing liabilities 4.15 4.79 4.23 4.79
- ------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.05 3.10 3.15 3.15
Impact of noninterest-bearing sources 0.59 0.71 0.60 0.73
- ------------------------------------------------------------------------------------------------------------------------------
Net interest margin 3.64% 3.81% 3.75% 3.88%
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Taxable-equivalent basis June 30 March 31 December 31 September 30 June 30
Three months ended 1999 1999 1998 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average yields/rates
Yield on earning assets
Loans 7.53% 7.91% 8.06% 8.28% 8.23%
Securities available for sale 5.56 5.55 5.58 5.85 5.86
Other 6.90 6.57 6.70 6.87 6.80
Total yield on earning assets 7.20 7.56 7.70 7.92 7.89
Rate on interest-bearing liabilities
Deposits 3.63 3.80 4.03 4.17 4.15
Borrowed funds 5.08 5.21 5.51 5.83 5.81
Total rate on interest-bearing liabilities 4.15 4.31 4.59 4.82 4.79
- ------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.05 3.25 3.11 3.10 3.10
Impact of noninterest-bearing sources 0.59 0.61 0.66 0.71 0.71
- ------------------------------------------------------------------------------------------------------------------------------
Net interest margin 3.64% 3.86% 3.77% 3.81% 3.81%
==============================================================================================================================
</TABLE>
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<PAGE> 9
PNC BANK CORP. Page 9
Details of Noninterest Income
<TABLE>
<CAPTION>
DETAILS OF NONINTEREST INCOME
Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
In millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset management $169 $137 $330 $278
Mutual fund servicing 53 46 104 87
Service charges on deposits 51 50 101 98
Consumer services
Credit card 2 32 29 58
Brokerage 45 17 91 32
Insurance 17 11 36 21
Other 41 33 79 64
- -----------------------------------------------------------------------------------------------------------------------------
Total consumer services 105 93 235 175
Corporate services
Capital markets 19 14 38 23
Net commercial mortgage banking 23 8 33 8
Other 46 40 (43) 82
- -----------------------------------------------------------------------------------------------------------------------------
Total corporate services 88 62 28 113
Net residential mortgage banking
Mortgage servicing 70 33 130 69
Origination and securitization 56 50 114 92
MSR amortization (4) (38) (16) (71)
Hedging activities (52) 11 (98) 18
- -----------------------------------------------------------------------------------------------------------------------------
Total net residential mortgage banking 70 56 130 108
Net securities gains 42 42 13
Other 86 125 425 203
- -----------------------------------------------------------------------------------------------------------------------------
Total noninterest income $664 $569 $1,395 $1,075
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
June 30 March 31 December 31 September 30 June 30
Three months ended - in millions 1999 1999 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Asset management $169 $161 $205 $143 $137
Mutual fund servicing 53 51 48 47 46
Service charges on deposits 51 50 52 53 50
Consumer services
Credit card 2 27 36 35 32
Brokerage 45 46 27 16 17
Insurance 17 19 16 12 11
Other 41 38 38 35 33
- -----------------------------------------------------------------------------------------------------------------------------
Total consumer services 105 130 117 98 93
Corporate services
Capital markets 19 19 16 13 14
Net commercial mortgage banking 23 10 22 (4) 8
Other 46 (89) 40 45 40
- -----------------------------------------------------------------------------------------------------------------------------
Total corporate services 88 (60) 78 54 62
Net residential mortgage banking
Mortgage servicing 70 60 54 44 33
Origination and securitization 56 58 56 42 50
MSR amortization (4) (12) (95) (143) (38)
Hedging activities (52) (46) 42 104 11
- -----------------------------------------------------------------------------------------------------------------------------
Total net residential mortgage banking 70 60 57 47 56
Net securities gains 42 2 1
Other 86 339 139 86 125
- -----------------------------------------------------------------------------------------------------------------------------
Total noninterest income $664 $731 $698 $529 $569
=============================================================================================================================
</TABLE>
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<PAGE> 10
PNC BANK CORP. Page 10
Details of Noninterest Expense
<TABLE>
<CAPTION>
DETAILS OF NONINTEREST EXPENSE
Three months ended June 30 Six months ended June 30
--------------------------- ------------------------
In millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Staff expense
Compensation $319 $285 $670 $576
Employee benefits 45 49 106 112
- -----------------------------------------------------------------------------------------------------------------------------
Total staff expense 364 334 776 688
Net occupancy and equipment
Net occupancy 52 54 139 103
Equipment 51 50 139 97
- -----------------------------------------------------------------------------------------------------------------------------
Total net occupancy and equipment 103 104 278 200
Amortization
Goodwill 20 18 39 31
Other 1 11 10 22
- -----------------------------------------------------------------------------------------------------------------------------
Total amortization 21 29 49 53
Marketing 17 27 32 64
Distributions on capital securities 16 14 32 27
Other 246 231 423 415
- -----------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $767 $739 $1,590 $1,447
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
June 30 March 31 December 31 September 30 June 30
Three months ended - in millions 1999 1999 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Staff expense
Compensation $319 $351 $353 $291 $285
Employee benefits 45 61 40 44 49
- -----------------------------------------------------------------------------------------------------------------------------
Total staff expense 364 412 393 335 334
Net occupancy and equipment
Net occupancy 52 87 52 49 54
Equipment 51 88 56 52 50
- -----------------------------------------------------------------------------------------------------------------------------
Total net occupancy and equipment 103 175 108 101 104
Amortization
Goodwill 20 19 19 18 18
Other 1 9 11 10 11
- -----------------------------------------------------------------------------------------------------------------------------
Total amortization 21 28 30 28 29
Marketing 17 15 18 14 27
Distributions on capital securities 16 16 17 16 14
Other 246 177 231 202 231
- -----------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $767 $823 $797 $696 $739
=============================================================================================================================
</TABLE>
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<PAGE> 11
PNC BANK CORP. Page 11
Consolidated Balance Sheet
<TABLE>
<CAPTION>
June 30 December 31 June 30
In millions, except par value 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $2,188 $2,534 $2,094
Short-term investments 1,380 1,014 1,551
Loans held for sale 4,507 3,226 2,955
Securities available for sale 8,856 7,074 7,540
Loans, net of unearned income of $528, $554 and $393 52,075 57,650 56,237
Allowance for credit losses (673) (753) (859)
- -----------------------------------------------------------------------------------------------------------------------------------
Net loans 51,402 56,897 55,378
Goodwill and other amortizable assets 2,769 2,548 2,152
Other 4,456 3,914 4,203
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $75,558 $77,207 $75,873
===================================================================================================================================
LIABILITIES
Deposits
Noninterest-bearing $9,088 $9,943 $9,972
Interest-bearing 38,597 37,553 37,124
- -----------------------------------------------------------------------------------------------------------------------------------
Total deposits 47,685 47,496 47,096
Borrowed funds
Federal funds purchased 320 390 11,788
Repurchase agreements 2,038 1,669 897
Bank notes and senior debt 8,479 10,384 1,658
Other borrowed funds 5,597 6,722 4,302
Subordinated debt 2,030 1,781 1,843
- -----------------------------------------------------------------------------------------------------------------------------------
Total borrowed funds 18,464 20,946 20,488
Other 2,806 1,874 1,808
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 68,955 70,316 69,392
- -----------------------------------------------------------------------------------------------------------------------------------
Mandatorily redeemable capital securities of subsidiary trusts 848 848 848
SHAREHOLDERS' EQUITY
Preferred stock 7 7 7
Common stock - $5 par value
Authorized 450 shares
Issued 353 shares 1,764 1,764 1,763
Capital surplus 1,260 1,250 1,164
Retained earnings 5,646 5,262 4,947
Deferred benefit expense (34) (36) (55)
Accumulated other comprehensive loss (248) (43) (16)
Common stock held in treasury at cost: 57, 49 and 51 shares (2,640) (2,161) (2,177)
- -----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 5,755 6,043 5,633
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities, capital securities and shareholders' equity $75,558 $77,207 $75,873
===================================================================================================================================
</TABLE>
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<PAGE> 12
PNC BANK CORP. Page 12
Consolidated Average Balance Sheet Data
<TABLE>
<CAPTION>
Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
In millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $9,437 $7,323 $8,601 $7,552
Loans, net of unearned income
Consumer (excluding credit card) 10,729 10,995 10,841 11,090
Credit card 4,048 1,355 3,899
Residential mortgage 12,496 12,560 12,341 12,671
Commercial 22,846 22,425 23,705 21,550
Commercial real estate 3,396 3,206 3,397 3,414
Other 3,012 2,114 2,937 2,095
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income 52,479 55,348 54,576 54,719
Loans held for sale 3,727 2,948 3,555 2,657
Other 1,236 1,069 1,121 1,015
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 66,879 66,688 67,853 65,943
Noninterest-earning assets 8,181 6,944 8,150 6,948
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $75,060 $73,632 $76,003 $72,891
===================================================================================================================================
LIABILITIES
Interest-bearing liabilities
Deposits $36,786 $34,956 $37,082 $34,951
Borrowed funds 20,544 21,844 21,061 20,922
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 57,330 56,800 58,143 55,873
Noninterest-bearing deposits 8,684 9,213 8,858 9,448
Other 2,325 1,445 2,231 1,459
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 68,339 67,458 69,232 66,780
Mandatorily redeemable capital securities of subsidiary trusts 848 698 848 674
SHAREHOLDERS' EQUITY 5,873 5,476 5,923 5,437
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities, capital securities and shareholders' equity $75,060 $73,632 $76,003 $72,891
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON SHAREHOLDERS' EQUITY $5,559 $5,161 $5,609 $5,122
===================================================================================================================================
</TABLE>
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<PAGE> 13
PNC BANK CORP. Page 13
Consolidated Balance Sheet Data
<TABLE>
<CAPTION>
AVERAGE BALANCES
June 30 March 31 December 31 September 30 June 30
Three months ended - in millions 1999 1999 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $9,437 $7,755 $7,323 $7,073 $7,323
Loans, net of unearned income
Consumer (excluding credit card) 10,729 10,955 11,075 11,038 10,995
Credit card 2,724 3,570 4,029 4,048
Residential mortgage 12,496 12,184 12,193 12,455 12,560
Commercial 22,846 24,574 24,593 23,359 22,425
Commercial real estate 3,396 3,398 3,442 2,850 3,206
Other 3,012 2,860 2,493 2,207 2,114
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income 52,479 56,695 57,366 55,938 55,348
Loans held for sale 3,727 3,383 4,295 3,850 2,948
Other 1,236 1,005 881 1,097 1,069
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 66,879 68,838 69,865 67,958 66,688
Noninterest-earning assets 8,181 8,120 7,512 7,332 6,944
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $75,060 $76,958 $77,377 $75,290 $73,632
===================================================================================================================================
LIABILITIES
Interest-bearing liabilities
Deposits $36,786 $37,381 $37,048 $35,353 $34,956
Borrowed funds 20,544 21,584 22,723 22,642 21,844
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 57,330 58,965 59,771 57,995 56,800
Noninterest-bearing deposits 8,684 9,035 9,202 9,169 9,213
Other 2,325 2,135 1,756 1,632 1,445
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 68,339 70,135 70,729 68,796 67,458
Mandatorily redeemable capital securities of subsidiary trusts 848 848 848 848 698
SHAREHOLDERS' EQUITY 5,873 5,975 5,800 5,646 5,476
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities, capital securities and shareholders' equity $75,060 $76,958 $77,377 $75,290 $73,632
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON SHAREHOLDERS' EQUITY $5,559 $5,661 $5,486 $5,332 $5,161
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
LOAN PORTFOLIO
June 30 March 31 December 31 September 30 June 30
Period ended - in millions 1999 1999 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer (excluding credit card) $10,206 $10,893 $10,980 $11,120 $11,035
Credit card 2,958 3,874 4,150
Residential mortgage 12,657 12,579 12,265 12,388 12,698
Commercial 22,731 23,082 25,182 24,239 23,359
Commercial real estate 3,468 3,417 3,449 2,838 2,872
Other 3,541 3,360 3,370 2,738 2,516
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans 52,603 53,331 58,204 57,197 56,630
Unearned income (528) (531) (554) (445) (393)
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income $52,075 $52,800 $57,650 $56,752 $56,237
===================================================================================================================================
</TABLE>
-more-
<PAGE> 14
PNC BANK CORP. 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 1999 1999 1998 1998 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $672 $753 $ 816 $ 859 $ 912
Charge-offs
Consumer (excluding credit card) (16) (18) (21) (19) (19)
Credit card (60) (77) (73) (75)
Residential mortgage (2) (4) (1) (1) (3)
Commercial (18) (12) (101) (8) (7)
Commercial real estate (1) (1) (4) (1)
Other (1) (2) (2) (2) (2)
- ---------------------------------------------------------------------------------------------------------------------------------
Total charge-offs (37) (97) (203) (107) (107)
Recoveries
Consumer (excluding credit card) 7 7 8 8 8
Credit card 2 5 4 5
Residential mortgage 1 1
Commercial 6 7 8 6 3
Commercial real estate 1 1 1
Other 1 1 1
- ---------------------------------------------------------------------------------------------------------------------------------
Total recoveries 13 19 23 19 18
Net charge-offs
Consumer (excluding credit card) (9) (11) (13) (11) (11)
Credit card (58) (72) (69) (70)
Residential mortgage (2) (3) (1) (1) (2)
Commercial (12) (5) (93) (2) (4)
Commercial real estate (3) (1)
Other (1) (1) (1) (2) (1)
- ---------------------------------------------------------------------------------------------------------------------------------
Total net charge-offs (24) (78) (180) (88) (89)
Provision for credit losses 25 78 115 45 35
(Divestitures) acquisitions (81) 2 1
- ---------------------------------------------------------------------------------------------------------------------------------
Ending balance $673 $672 $ 753 $ 816 $ 859
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NONPERFORMING ASSETS
June 30 March 31 December 31 September 30 June 30
Period ended - in millions 1999 1999 1998 1998 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans
Commercial $197 $184 $ 188 $ 148 $ 129
Commercial real estate 42 45 50 73 80
Residential mortgage 57 58 51 56 56
Consumer 4 4 6 5 7
- ---------------------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 300 291 295 282 272
Foreclosed assets
Commercial real estate 12 13 15 20 22
Residential mortgage 12 15 17 18 20
Other 9 9 5 9 9
- ---------------------------------------------------------------------------------------------------------------------------------
Total foreclosed assets 33 37 37 47 51
- ---------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $333 $328 $ 332 $ 329 $ 323
=================================================================================================================================
</TABLE>
<PAGE> 1
Exhibit 99.2
<TABLE>
<CAPTION>
BUSINESS INFORMATION
Return on
Earnings Revenue Assigned Capital Average Assets
Six months ended June 30 - ------------------- ------------------ ------------------ --------------------
Dollars in millions 1999 1998 1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PNC Regional Bank $321 $296 $1,152 $1,159 22% 21% $39,441 $38,806
Asset Management
PNC Advisors 75 58 365 228 27 31 3,304 2,654
BlackRock 26 14 180 131 44 37 416 304
PFPC Worldwide 22 18 111 91 42 42 263 214
- ------------------------------------------------------------------------------ ---------------------
Total asset management 123 90 656 450 32 34 3,983 3,172
Wholesale
PNC Institutional Bank 53 53 202 181 16 18 9,622 8,321
PNC Secured Finance 58 44 153 104 21 20 8,086 6,203
PNC Mortgage 24 15 217 159 11 11 7,050 4,166
- ------------------------------------------------------------------------------ ---------------------
Total wholesale 135 112 572 444 16 18 24,758 18,690
- ------------------------------------------------------------------------------ ---------------------
Total businesses 579 498 2,380 2,053 21 21 68,182 60,668
Other 13 52 102 303 7,821 12,223
- ------------------------------------------------------------------------------ ---------------------
Total consolidated - core 592 550 2,482 2,356 21 21 76,003 72,891
Gain on sale of credit card business 125 193
Gain on sale of equity interest in
Electronic Payment Services 63 97
Gain on sale of Concord EFS stock
net of PNC Bank Foundation
contribution 16 41
Valuation adjustments (92) (142)
Costs related to efficiency
initiatives (64)
Total consolidated - reported $640 $550 $2,671 $2,356 23 21 $76,003 $72,891
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
PNC REGIONAL BANK - PNC Regional Bank provides credit, deposit, branch-based
brokerage and electronic banking products and services to retail customers as
well as credit, leasing, treasury management and capital markets products and
services to mid-sized and small businesses primarily within PNC Bank's
geographic footprint. PNC Regional Bank contributed 56% of total business
earnings in the first six months of 1999 compared with 59% in the first six
months of 1998. Earnings increased 8% driven by improved efficiency. Excluding
the impact of branch gains and costs related to consumer delivery initiatives in
1998, earnings increased 12%.
PNC ADVISORS - PNC Advisors offers personalized investment management, high-end
brokerage services, personal trust, estate planning and traditional banking
services to affluent and wealthy individuals; and investment management, trust
and administrative services to pensions, 401(k) plans and charitable
organizations. PNC Advisors contributed 13% of total business earnings in the
first six months of 1999 compared with 12% in the prior-year period. Earnings
increased 29% due to strong revenue growth attributable to new business and
market appreciation.
BLACKROCK - BlackRock offers fixed income, domestic and international equity and
liquidity investment products, and utilizes technology-based risk management
capabilities to provide investment advisory and asset management capabilities
for a wide range of institutional and retail customers. BlackRock contributed 4%
of total business earnings in the first six months of 1999 compared with 3% a
year ago. Earnings nearly doubled in the comparison as a result of new business
and market appreciation.
PFPC WORLDWIDE - PFPC Worldwide provides a wide range of accounting,
administration, transfer agency, custody, securities lending and integrated
banking transaction services to mutual funds, pension and money fund managers,
partnerships, brokerage firms, insurance companies and banks, both domestically
and globally. PFPC Worldwide contributed 4% of total business earnings in the
first six months of 1999 and 1998. Earnings increased 22% as a result of an
increase in assets serviced.
PNC INSTITUTIONAL BANK - PNC Institutional Bank provides credit, treasury
management and capital markets products and services to corporations,
institutions and government agencies. PNC Institutional Bank contributed 9% of
total business earnings in the first six months of 1999 compared with 10% in the
prior-year period. Earnings in the first six months of 1999 included a $16
million provision for credit losses compared with no provision a year ago.
PNC SECURED FINANCE - PNC Secured Finance is engaged in commercial real estate
finance, including loan origination, securitization and servicing; asset-based
financing, including lending, syndications and treasury management services; and
equipment lease financing to a wide range of customers nationally. PNC Secured
Finance contributed 10% of total business earnings in the first six months of
1999 compared with 9% a year ago. Earnings increased 32% driven by revenue
attributable to Midland Loan Services, L.P.
PNC MORTGAGE - PNC Mortgage originates, purchases and services residential
mortgages and related products, and securitizes and sells residential mortgages
as private-label mortgage-backed securities and performs master servicing of
those securities for investors. PNC Mortgage contributed 4% of total business
earnings in the first six months of 1999 compared with 3% in the prior-year
period. Earnings increased 60% driven by revenue growth primarily attributable
to a larger servicing portfolio.
OTHER - Other reflects differences between total business results and
consolidated core financial results primarily due to differences between
management accounting practices and generally accepted accounting principles,
divested and exited businesses, venture capital activities, sales of equity
interests in subsidiaries, eliminations and unassigned items.
