<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 20, 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
Third Quarter 1999 Financial Results
On October 20, 1999, PNC Bank Corp. ("Corporation") reported results
of operations for the three and nine months ended September 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 nine months ended
September 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: October 28, 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 October 20, 1999,
with respect to results of operations for the three and nine months
ended September 30, 1999, filed herewith.
99.2 Business information for the nine months ended September 30, 1999 and
1998 filed herewith.
3
<PAGE> 1
Exhibit 99.1
PNC BANK CORP.
Public Relations
One PNC Plaza [PNC BANK LOGO]
249 Fifth Avenue
Pittsburgh, PA 15222-2707
412 762-8221
News Release
CONTACTS:
MEDIA:
- ------
R. Jeep Bryant
(412) 762-4550
[email protected]
INVESTORS:
- ----------
William H. Callihan
(412) 762-8257
[email protected]
PNC BANK CORP. REPORTS
HIGHER THIRD QUARTER 1999 EARNINGS
PITTSBURGH, October 20, 1999 - PNC Bank Corp. ("PNC Bank" - NYSE: PNC)
today reported third quarter 1999 earnings of $320 million or $1.06 per diluted
share. Excluding $27 million of pretax gains from the sale of branches, earnings
for the quarter were $303 million or $1.00 per diluted share and, on that basis,
return on average common shareholders' equity was 21.81% and return on average
assets was 1.63%. Earnings for the third quarter of 1998 were $281 million or
$0.91 per diluted share.
"We continue to deliver strong financial performance driven by a mix of
businesses that we believe can deliver long-term value for our shareholders,"
said Thomas H. O'Brien, chairman and chief executive officer of PNC Bank Corp.
"We are especially pleased with the continued growth at BlackRock, PFPC
Worldwide, PNC Advisors, PNC Mortgage and treasury management services, which
has increased our noninterest income to 51% of total revenue."
THIRD QUARTER 1999 HIGHLIGHTS
o Diluted earnings per share excluding the branch gains increased 10%
compared with the prior-year quarter.
o Noninterest income to total revenue excluding the effect of the
branch gains was 51% driven by double-digit growth in revenue at
BlackRock, PFPC Worldwide, PNC Advisors, PNC Mortgage and treasury
management services.
o The quarterly dividend payable on October 24, 1999 was increased 10%
to $.45 per common share.
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<PAGE> 2
PNC Bank Corp. Reports Third Quarter 1999 Earnings -- Page 2
o PNC Bank announced a definitive agreement to purchase First Data
Investor Services Group ("ISG"). The combination of ISG with PFPC
Worldwide, PNC Bank's investment servicing subsidiary, will make
PFPC Worldwide one of the nation's leading full-service processors
for investment products. This transaction is expected to close in
the fourth quarter of 1999, subject to regulatory approvals and
customary conditions to closing.
o BlackRock, PNC Bank's investment management subsidiary, issued 9
million shares of class A common stock at $14.00 per share in an
initial public offering on October 1, 1999. PNC Bank will continue
to own approximately 70% of BlackRock's stock and expects to record
an after-tax gain in the fourth quarter of 1999 of $60 to $70
million depending on whether the underwriters exercise their option
to purchase additional shares to cover over-allotments.
INCOME STATEMENT REVIEW
Taxable-equivalent net interest income was $599 million in the third
quarter of 1999, a $54 million decrease compared with the prior-year quarter.
The net interest margin was 3.59% for the third quarter of 1999 compared with
3.81% in the third 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, net interest income increased $29 million or 5% and the
net interest margin widened six basis points compared with the third quarter of
1998.
The provision for credit losses was $30 million in the third quarter of
1999 and net charge-offs were $29 million.
Noninterest income was $651 million in the third quarter of 1999 a 23%
increase compared with the third quarter of 1998 and included $27 million of
gains from the sale of branches. Excluding the branch gains, noninterest income
increased 18% compared with the prior-year quarter driven by growth in fee-based
revenue.
Asset management fees grew 22% compared with the prior-year quarter
primarily reflecting new business. Assets under management increased to
approximately $193 billion at September 30, 1999 compared with $152 billion at
September 30, 1998. Mutual fund servicing fees grew 17% compared with the third
quarter of 1998 due to an increase in assets serviced. At September 30, 1999,
PFPC Worldwide provided custody and accounting/administration services for $353
billion and $246 billion of mutual fund assets, respectively. The comparable
amounts were $287 billion and $228 billion, respectively, a year ago.
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<PAGE> 3
PNC Bank Corp. Reports Third Quarter 1999 Earnings -- Page 3
Consumer services revenue of $105 million for the third quarter of 1999
increased 7% compared with the third quarter of 1998 primarily due to an
increase in brokerage fees associated with the Hilliard Lyons acquisition that
was substantially offset by lower credit card fees. Corporate services revenue
increased $30 million compared with the prior-year quarter due to higher
commercial mortgage banking, capital markets and treasury management fees.
Net residential mortgage banking revenue grew $28 million or 60%
compared with the prior-year quarter primarily due to growth in the servicing
portfolio. At September 30, 1999, approximately $73 billion of residential
mortgages were serviced compared with $60 billion a year ago. Residential
mortgage originations, including both retail and correspondent activity, totaled
$4 billion for the third quarter of 1999 compared with $7 billion in the
prior-year period.
Other noninterest income increased $16 million compared with the third
quarter of 1998 due to various operating items.
Noninterest expense of $724 million for the third quarter of 1999
increased 4% compared with the third quarter of 1998 primarily to support growth
in fee-based businesses. The efficiency ratio of 53.3% remained consistent in
the third quarter of 1999 compared with the prior-year quarter reflecting the
continued focus on improving returns in traditional businesses.
BALANCE SHEET REVIEW
Total assets were $73.0 billion at September 30, 1999 compared with
$76.2 billion at September 30, 1998. Average earning assets decreased $2.0
billion to $66.0 billion for the third quarter of 1999 compared with the
prior-year quarter of $68.0 billion. The decrease was primarily due to a $4.2
billion decrease in average loans in the period-to-period comparison that
resulted from the sale of the credit card business and the decision to exit
certain institutional lending businesses. Loans represented 78% of average
earning assets in the third quarter of 1999 compared with 82% a year ago.
Partially offsetting the decrease in average loans was a $1.7 billion increase
in average securities available for sale that was attributable to securities
held to hedge residential mortgage servicing rights. Average securities
available for sale represented 13% and 10% of average earning assets in the
third quarter of 1999 and 1998, respectively.
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<PAGE> 4
PNC Bank Corp. Reports Third Quarter 1999 Earnings -- Page 4
Average deposits were $44.9 billion and represented 61% of total
sources of funds for the third quarter of 1999 compared with $44.5 billion and
59%, respectively, in the third quarter of 1998. The increase in average
deposits was primarily in consumer deposits. Average borrowed funds decreased
$2.4 billion to $20.2 billion compared with the third quarter of 1998.
Shareholders' equity totaled $5.9 billion at September 30, 1999. The
leverage ratio was 7.76% and Tier I and total risk-based capital ratios are
estimated to be 8.4% and 11.8%, respectively.
Overall asset quality characteristics remained relatively stable during
the third quarter of 1999. The ratio of nonperforming assets to total loans,
loans held for sale and foreclosed assets was 0.65% at September 30, 1999
compared with 0.59% and 0.54% at June 30, 1999 and September 30, 1998,
respectively. Nonperforming assets were $361 million at September 30, 1999
compared with $333 million and $329 million at June 30, 1999 and September 30,
1998, respectively.
The allowance for credit losses was $674 million and represented 1.31%
of period-end loans and 215% of nonaccrual loans at September 30, 1999. The
comparable amounts were 1.29% and 224% at June 30, 1999 and 1.44% and 289% at
September 30, 1998, respectively. Net charge-offs were $29 million or 0.22% of
average loans in the third quarter of 1999 compared with $24 million or 0.18% in
the second quarter of 1999 and $88 million or 0.62% a year ago.
YEAR TO DATE RESULTS
Earnings were $960 million or $3.14 per diluted share for the nine
months ended September 30, 1999. Results for the first nine months of 1999
included $331 million of pretax gains on the sales of PNC Bank's credit card
business, an equity interest in Electronic Payment Services, Inc. and Concord
EFS Inc. stock. The first nine months of 1999 also included $142 million of
valuation adjustments associated with exiting certain institutional lending
businesses, $98 million of costs related to efficiency initiatives and a $30
million contribution to the PNC Bank Foundation. Excluding these items and the
branch gains recorded in the third quarter of 1999, year-to-date core earnings
were $895 million or $2.92 per diluted share and, on that basis, return on
average common shareholders' equity was 21.24% and return on average assets was
1.59%. Earnings for the nine months ended September 30, 1998 were $830 million
or $2.68 per diluted share.
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<PAGE> 5
PNC Bank Corp. Reports Third Quarter 1999 Earnings -- Page 5
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
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act with respect to
financial performance and other financial and business matters. Forward-looking
statements are typically identified by words such as "believe" or "expect", or
future or conditional verbs such as "will" or similar expressions. These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties, all of which change over time, and PNC Bank assumes no duty to
update these forward-looking statements. The following factors, among others,
could cause actual results to differ materially from forward-looking statements:
increased credit risk: the introduction, withdrawal, success and timing of
business initiatives and strategies; the ability to realize cost savings or
revenues and implement integration plans associated with acquisitions and
divestitures; changes in economic conditions, interest rates, and financial and
capital markets; inflation; customer borrowing, repayment, investment, and
deposit practices; customer acceptance of PNC Bank products and services; the
inability of PNC Bank or others to remediate year 2000 concerns; and the impact,
extent, and timing of technological changes, capital management activities,
actions of the Federal Reserve Board, and legislative and regulatory actions and
reforms. Our SEC reports, accessible on our website, identify additional factors
that can affect forward-looking statements.
[TABULAR MATERIAL FOLLOWS]
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<PAGE> 6
PNC BANK CORP.
Consolidated Financial Highlights Page 6
<TABLE>
<CAPTION>
Three months ended September 30 Nine months ended September 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) $599 $653 $1,875 $1,934
Noninterest income 651 529 2,046 1,604
Total revenue 1,250 1,182 3,921 3,538
Net income 320 281 960 830
Per common share
Basic earnings 1.07 .92 3.17 2.71
Diluted earnings 1.06 .91 3.14 2.68
Cash dividends declared .41 .39 1.23 1.17
- -----------------------------------------------------------------------------------------------------------------------------------
SELECTED RATIOS
Return on
Average common shareholders' equity 23.07% 20.52% 22.81% 21.00%
Average assets 1.72 1.48 1.71 1.51
Net interest margin 3.59 3.81 3.70 3.86
Noninterest income to total revenue 52.08 44.75 52.18 45.34
Efficiency * 53.34 53.28 53.78 55.50
* Excluding amortization, distributions on capital securities and residential mortgage banking hedging activities
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
September 30 June 30 March 31 December 31 September 30
1999 1999 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Assets $73,003 $75,558 $74,868 $77,207 $76,238
Earning assets 64,782 66,889 66,710 69,027 68,638
Loans, net of unearned income 51,398 52,075 52,800 57,650 56,752
Securities available for sale 8,096 8,856 9,170 7,074 7,152
Deposits 45,146 47,685 45,799 47,496 46,875
Borrowed funds 18,898 18,464 19,935 20,946 19,972
Shareholders' equity 5,871 5,755 5,931 6,043 5,793
Common shareholders' equity 5,558 5,442 5,617 5,729 5,479
Book value per common share 18.90 18.40 18.78 18.86 18.21
CAPITAL RATIOS
Leverage 7.76% 7.47% 7.28% 7.28% 7.18%
Common shareholders' equity to total assets 7.61 7.20 7.50 7.42 7.19
ASSET QUALITY RATIOS
Nonperforming assets to total loans, loans held for sale and
foreclosed assets .65% .59% .58% .55% .54%
Allowance for credit losses to total loans 1.31 1.29 1.27 1.31 1.44
Allowance for credit losses to nonaccrual loans 214.65 224.33 230.93 255.25 289.36
Net charge-offs to average loans .22 .18 .56 1.24 .62
===================================================================================================================================
</TABLE>
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<PAGE> 7
PNC BANK CORP.
Consolidated Statement of Income Page 7
<TABLE>
<CAPTION>
Three months ended September 30 Nine months ended September 30
--------------------------------- --------------------------------
In millions, except per share data 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and fees on loans $985 $1,166 $3,086 $3,424
Securities available for sale 127 103 363 324
Other 100 85 257 211
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,212 1,354 3,706 3,959
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits 340 371 1,024 1,095
Borrowed funds 278 337 823 950
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 618 708 1,847 2,045
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 594 646 1,859 1,914
Provision for credit losses 30 45 133 110
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income less provision for credit losses 564 601 1,726 1,804
- -----------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Asset management 175 143 505 421
Mutual fund servicing 55 47 159 134
Service charges on deposits 53 53 154 151
Consumer services 105 98 340 273
Corporate services 84 54 112 167
Net residential mortgage banking 75 47 205 155
Net securities gains 2 1 44 14
Other 102 86 527 289
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 651 529 2,046 1,604
- -----------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Staff expense 362 335 1,138 1,023
Net occupancy and equipment 103 101 381 301
Amortization 21 28 70 81
Marketing 18 14 50 78
Distributions on capital securities 16 16 48 43
Other 204 202 627 617
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 724 696 2,314 2,143
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 491 434 1,458 1,265
Income taxes 171 153 498 435
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $320 $281 $960 $830
- -----------------------------------------------------------------------------------------------------------------------------------
Net income applicable to diluted earnings $315 $276 $946 $817
EARNINGS PER COMMON SHARE
Basic $1.07 $.92 $3.17 $2.71
Diluted 1.06 .91 3.14 2.68
CASH DIVIDENDS DECLARED PER COMMON SHARE .41 .39 1.23 1.17
AVERAGE COMMON SHARES OUTSTANDING
Basic 294.5 300.6 298.0 300.5
Diluted 297.6 304.2 301.3 305.3
===================================================================================================================================
</TABLE>
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<PAGE> 8
PNC BANK CORP.
Details of Net Interest Income Page 8
<TABLE>
<CAPTION>
NET INTEREST INCOME Three months ended September 30 Nine months ended September 30
Taxable-equivalent basis --------------------------------- --------------------------------
In millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans $989 $1,172 $3,098 $3,440
Securities available for sale 128 104 366 327
Other 100 85 258 212
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,217 1,361 3,722 3,979
Interest expense
Deposits 340 371 1,024 1,095
Borrowed funds 278 337 823 950
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 618 708 1,847 2,045
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income $599 $653 $1,875 $1,934
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Taxable-equivalent basis September 30 June 30 March 31 December 31 September 30
Three months ended - in millions 1999 1999 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income
Loans $989 $992 $1,117 $1,171 $1,172
Securities available for sale 128 131 107 102 104
Other 100 86 72 87 85
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,217 1,209 1,296 1,360 1,361
Interest expense
Deposits 340 333 351 376 371
Borrowed funds 278 264 281 319 337
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 618 597 632 695 708
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income $599 $612 $664 $665 $653
===================================================================================================================================
</TABLE>
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<PAGE> 9
PNC BANK CORP.
Details of Net Interest Margin Page 9
NET INTEREST MARGIN
<TABLE>
<CAPTION>
Three months ended September 30 Nine months ended September 30
--------------------------------- --------------------------------
Taxable-equivalent basis 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average yields/rates
Yield on earning assets
Loans 7.55% 8.28% 7.67% 8.29%
Securities available for sale 5.79 5.85 5.64 5.91
Other 7.26 6.87 6.93 6.86
Total yield on earning assets 7.29 7.92 7.35 7.94
Rate on interest-bearing liabilities
Deposits 3.69 4.17 3.71 4.17
Borrowed funds 5.40 5.83 5.23 5.83
Total rate on interest-bearing liabilities 4.30 4.82 4.25 4.80
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 2.99 3.10 3.10 3.14
Impact of noninterest-bearing sources .60 .71 .60 .72
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest margin 3.59% 3.81% 3.70% 3.86%
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Taxable-equivalent basis September 30 June 30 March 31 December 31 September 30
Three months ended 1999 1999 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average yields/rates
Yield on earning assets
Loans 7.55% 7.53% 7.91% 8.06% 8.28%
Securities available for sale 5.79 5.56 5.55 5.58 5.85
Other 7.26 6.90 6.57 6.70 6.87
Total yield on earning assets 7.29 7.20 7.56 7.70 7.92
Rate on interest-bearing liabilities
Deposits 3.69 3.63 3.80 4.03 4.17
Borrowed funds 5.40 5.08 5.21 5.51 5.83
Total rate on interest-bearing liabilities 4.30 4.15 4.31 4.59 4.82
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 2.99 3.05 3.25 3.11 3.10
Impact of noninterest-bearing sources .60 .59 .61 .66 .71
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest margin 3.59% 3.64% 3.86% 3.77% 3.81%
===================================================================================================================================
</TABLE>
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<PAGE> 10
PNC BANK CORP.
Details Of Noninterest Income Page 10
DETAILS OF NONINTEREST INCOME
<TABLE>
<CAPTION>
Three months ended September 30 Nine months ended September 30
-------------------------------- -------------------------------
In millions 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset management $175 $143 $505 $421
Mutual fund servicing 55 47 159 134
Service charges on deposits 53 53 154 151
Consumer services
Credit card 3 35 32 93
Brokerage 47 16 138 48
Insurance 13 12 49 33
Other 42 35 121 99
- ----------------------------------------------------------------------------------------------------------------------------------
Total consumer services 105 98 340 273
Corporate services
Capital markets 22 13 60 36
Net commercial mortgage banking 12 (4) 45 4
Other 50 45 7 127
- ----------------------------------------------------------------------------------------------------------------------------------
Total corporate services 84 54 112 167
Net residential mortgage banking
Mortgage servicing 77 44 207 113
Origination and securitization 31 42 145 134
MSR amortization 41 (143) 25 (214)
Hedging activities (74) 104 (172) 122
- ----------------------------------------------------------------------------------------------------------------------------------
Total net residential mortgage banking 75 47 205 155
Net securities gains 2 1 44 14
Other 102 86 527 289
- ----------------------------------------------------------------------------------------------------------------------------------
Total noninterest income $651 $529 $2,046 $1,604
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
September 30 June 30 March 31 December 31 September 30
Three months ended - in millions 1999 1999 1999 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Asset management $175 $169 $161 $205 $143
Mutual fund servicing 55 53 51 48 47
Service charges on deposits 53 51 50 52 53
Consumer services
Credit card 3 2 27 36 35
Brokerage 47 45 46 27 16
Insurance 13 17 19 16 12
Other 42 41 38 38 35
- ------------------------------------------------------------------------------------------------------------------------------------
Total consumer services 105 105 130 117 98
Corporate services
Capital markets 22 19 19 16 13
Net commercial mortgage banking 12 23 10 22 (4)
Other 50 46 (89) 40 45
- ------------------------------------------------------------------------------------------------------------------------------------
Total corporate services 84 88 (60) 78 54
Net residential mortgage banking
Mortgage servicing 77 70 60 54 44
Origination and securitization 31 56 58 56 42
MSR amortization 41 (4) (12) (95) (143)
Hedging activities (74) (52) (46) 42 104
- ------------------------------------------------------------------------------------------------------------------------------------
Total net residential mortgage banking 75 70 60 57 47
Net securities gains 2 42 2 1
Other 102 86 339 139 86
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest income $651 $664 $731 $698 $529
====================================================================================================================================
</TABLE>
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<PAGE> 11
PNC BANK CORP.
Details of Noninterest Expense Page 11
DETAILS OF NONINTEREST EXPENSE
<TABLE>
<CAPTION>
Three months ended September 30 Nine months ended September 30
--------------------------------- --------------------------------
In millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Staff expense
Compensation $317 $291 $987 $867
Employee benefits 45 44 151 156
- -----------------------------------------------------------------------------------------------------------------------------------
Total staff expense 362 335 1,138 1,023
Net occupancy and equipment
Net occupancy 52 49 191 152
Equipment 51 52 190 149
- -----------------------------------------------------------------------------------------------------------------------------------
Total net occupancy and equipment 103 101 381 301
Amortization
Goodwill 19 18 58 49
Other 2 10 12 32
- -----------------------------------------------------------------------------------------------------------------------------------
Total amortization 21 28 70 81
Marketing 18 14 50 78
Distributions on capital securities 16 16 48 43
Other 204 202 627 617
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $724 $696 $2,314 $2,143
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
September 30 June 30 March 31 December 31 September 30
Three months ended - in millions 1999 1999 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Staff expense
Compensation $317 $319 $351 $353 $291
Employee benefits 45 45 61 40 44
- -----------------------------------------------------------------------------------------------------------------------------------
Total staff expense 362 364 412 393 335
Net occupancy and equipment
Net occupancy 52 52 87 52 49
Equipment 51 51 88 56 52
- -----------------------------------------------------------------------------------------------------------------------------------
Total net occupancy and equipment 103 103 175 108 101
Amortization
Goodwill 19 20 19 19 18
Other 2 1 9 11 10
- -----------------------------------------------------------------------------------------------------------------------------------
Total amortization 21 21 28 30 28
Marketing 18 17 15 18 14
Distributions on capital securities 16 16 16 17 16
Other 204 246 177 231 202
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $724 $767 $823 $797 $696
===================================================================================================================================
</TABLE>
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<PAGE> 12
PNC BANK CORP.
Consolidated Balance Sheet Page 12
<TABLE>
<CAPTION>
September 30 December 31 September 30
In millions, except par value 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $2,194 $2,534 $1,982
Short-term investments 1,102 1,014 832
Loans held for sale 4,117 3,226 3,833
Securities available for sale 8,096 7,074 7,152
Loans, net of unearned income of $601, $554 and $445 51,398 57,650 56,752
Allowance for credit losses (674) (753) (816)
- -----------------------------------------------------------------------------------------------------------------------------------
Net loans 50,724 56,897 55,936
Goodwill and other amortizable assets 2,943 2,548 2,302
Other 3,827 3,914 4,201
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $73,003 $77,207 $76,238
===================================================================================================================================
LIABILITIES
Deposits
Noninterest-bearing $8,660 $9,943 $9,136
Interest-bearing 36,486 37,553 37,739
- -----------------------------------------------------------------------------------------------------------------------------------
Total deposits 45,146 47,496 46,875
Borrowed funds
Federal funds purchased 472 390 771
Repurchase agreements 857 1,669 1,041
Bank notes and senior debt 7,379 10,384 10,558
Other borrowed funds 7,563 6,722 5,759
Subordinated debt 2,627 1,781 1,843
- -----------------------------------------------------------------------------------------------------------------------------------
Total borrowed funds 18,898 20,946 19,972
Other 2,240 1,874 2,750
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 66,284 70,316 69,597
- -----------------------------------------------------------------------------------------------------------------------------------
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 1,764
Capital surplus 1,270 1,250 1,178
Retained earnings 5,839 5,262 5,105
Deferred benefit expense (33) (36) (54)
Accumulated other comprehensive loss (236) (43) 17
Common stock held in treasury at cost: 59, 49 and 52 shares (2,740) (2,161) (2,224)
- -----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 5,871 6,043 5,793
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities, capital securities and shareholders' equity $73,003 $77,207 $76,238
===================================================================================================================================
</TABLE>
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<PAGE> 13
PNC BANK CORP.
Consolidated Average Balance Sheet Data Page 13
<TABLE>
<CAPTION>
Three months ended September 30 Nine months ended September 30
------------------------------- ------------------------------
In millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $8,803 $7,073 $8,669 $7,391
Loans, net of unearned income
Consumer (excluding credit card) 10,171 11,038 10,615 11,073
Credit card 4,029 899 3,942
Residential mortgage 12,451 12,455 12,378 12,598
Commercial 22,631 23,359 23,343 22,159
Commercial real estate 3,389 2,850 3,394 3,224
Other 3,104 2,207 2,993 2,133
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income 51,746 55,938 53,622 55,129
Loans held for sale 4,385 3,850 3,838 3,059
Other 1,102 1,097 1,112 1,042
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 66,036 67,958 67,241 66,621
Noninterest-earning assets 7,727 7,332 8,007 7,078
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $73,763 $75,290 $75,248 $73,699
===================================================================================================================================
LIABILITIES
Interest-bearing liabilities
Deposits $36,581 $35,353 $36,913 $35,086
Borrowed funds 20,242 22,642 20,785 21,501
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 56,823 57,995 57,698 56,587
Noninterest-bearing deposits 8,318 9,169 8,676 9,353
Other 2,042 1,632 2,167 1,518
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 67,183 68,796 68,541 67,458
Mandatorily redeemable capital securities of subsidiary trusts 848 848 848 733
SHAREHOLDERS' EQUITY 5,732 5,646 5,859 5,508
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities, capital securities and shareholders' equity $73,763 $75,290 $75,248 $73,699
===================================================================================================================================
COMMON SHAREHOLDERS' EQUITY $5,419 $5,332 $5,545 $5,193
===================================================================================================================================
</TABLE>
-more-
<PAGE> 14
PNC BANK CORP.
Consolidated Balance Sheet Data Page 14
<TABLE>
<CAPTION>
AVERAGE BALANCES
September 30 June 30 March 31 December 31 September 30
Three months ended - in millions 1999 1999 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $8,803 $9,437 $7,755 $7,323 $7,073
Loans, net of unearned income
Consumer (excluding credit card) 10,171 10,729 10,955 11,075 11,038
Credit card 2,724 3,570 4,029
Residential mortgage 12,451 12,496 12,184 12,193 12,455
Commercial 22,631 22,846 24,574 24,593 23,359
Commercial real estate 3,389 3,396 3,398 3,442 2,850
Other 3,104 3,012 2,860 2,493 2,207
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income 51,746 52,479 56,695 57,366 55,938
Loans held for sale 4,385 3,727 3,383 4,295 3,850
Other 1,102 1,236 1,005 881 1,097
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 66,036 66,879 68,838 69,865 67,958
Noninterest-earning assets 7,727 8,181 8,120 7,512 7,332
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $73,763 $75,060 $76,958 $77,377 $75,290
===================================================================================================================================
LIABILITIES
Interest-bearing liabilities
Deposits $36,581 $36,786 $37,381 $37,048 $35,353
Borrowed funds 20,242 20,544 21,584 22,723 22,642
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 56,823 57,330 58,965 59,771 57,995
Noninterest-bearing deposits 8,318 8,684 9,035 9,202 9,169
Other 2,042 2,325 2,135 1,756 1,632
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 67,183 68,339 70,135 70,729 68,796
Mandatorily redeemable capital securities of subsidiary trusts 848 848 848 848 848
SHAREHOLDERS' EQUITY 5,732 5,873 5,975 5,800 5,646
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities, capital securities and shareholders'
equity $73,763 $75,060 $76,958 $77,377 $75,290
===================================================================================================================================
COMMON SHAREHOLDERS' EQUITY $5,419 $5,559 $5,661 $5,486 $5,332
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
LOAN PORTFOLIO
September 30 June 30 March 31 December 31 September 30
Period ended - in millions 1999 1999 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer (excluding credit card) $9,522 $10,206 $10,893 $10,980 $11,120
Credit card 2,958 3,874
Residential mortgage 12,567 12,657 12,579 12,265 12,388
Commercial 22,659 22,731 23,082 25,182 24,239
Commercial real estate 3,369 3,468 3,417 3,449 2,838
Other 3,882 3,541 3,360 3,370 2,738
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans 51,999 52,603 53,331 58,204 57,197
Unearned income (601) (528) (531) (554) (445)
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income $51,398 $52,075 $52,800 $57,650 $56,752
===================================================================================================================================
</TABLE>
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<PAGE> 15
PNC BANK CORP.
Asset Quality Data Page 15
<TABLE>
<CAPTION>
ALLOWANCE FOR CREDIT LOSSES
September 30 June 30 March 31 December 31 September 30
Three months ended - in millions 1999 1999 1999 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $673 $672 $753 $816 $859
Charge-offs
Consumer (excluding credit card) (15) (16) (18) (21) (19)
Credit card (60) (77) (73)
Residential mortgage (1) (2) (4) (1) (1)
Commercial (18) (18) (12) (101) (8)
Commercial real estate (3) (1) (1) (4)
Other (2) (1) (2) (2) (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Total charge-offs (39) (37) (97) (203) (107)
Recoveries
Consumer (excluding credit card) 6 7 7 8 8
Credit card 2 5 4
Residential mortgage 1
Commercial 4 6 7 8 6
Commercial real estate 1 1 1
Other 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total recoveries 10 13 19 23 19
Net charge-offs
Consumer (excluding credit card) (9) (9) (11) (13) (11)
Credit card (58) (72) (69)
Residential mortgage (1) (2) (3) (1) (1)
Commercial (14) (12) (5) (93) (2)
Commercial real estate (3) (3)
Other (2) (1) (1) (1) (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Total net charge-offs (29) (24) (78) (180) (88)
Provision for credit losses 30 25 78 115 45
(Divestitures) acquisitions (81) 2
- ------------------------------------------------------------------------------------------------------------------------------------
Ending balance $674 $673 $672 $753 $816
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NONPERFORMING ASSETS
September 30 June 30 March 31 December 31 September 30
Period ended - in millions 1999 1999 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans
Commercial $222 $197 $184 $188 $148
Commercial real estate 32 42 45 50 73
Residential mortgage 57 57 58 51 56
Consumer 3 4 4 6 5
- -----------------------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 314 300 291 295 282
Foreclosed and other assets
Commercial real estate 10 12 13 15 20
Residential mortgage 14 12 15 17 18
Other 23 9 9 5 9
- -----------------------------------------------------------------------------------------------------------------------------------
Total foreclosed and other assets 47 33 37 37 47
- -----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $361 $333 $328 $332 $329
====================================================================================================================================
</TABLE>
<PAGE> 1
Exhibit 99.2
<TABLE>
<CAPTION>
BUSINESS INFORMATION
Return on
Earnings Revenue Assigned Capital Average Assets*
Nine months ended September 30- ------------------- ------------------ ------------------ --------------------
Dollars in millions 1999 1998 1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PNC Regional Bank $490 $451 $1,734 $1,746 22% 21% $39,485 $38,741
Asset Management
PNC Advisors 111 87 551 348 27 31 3,299 2,646
BlackRock 42 23 280 210 44 38 443 302
PFPC Worldwide 34 29 170 141 42 43 257 229
- ------------------------------------------------------------------------------ ---------------------
Total asset management 187 139 1,001 699 32 34 3,999 3,177
Wholesale
PNC Institutional Bank 84 58 313 280 17 13 9,660 8,459
PNC Secured Finance 79 52 224 147 19 15 8,038 6,766
PNC Mortgage 45 23 327 243 13 10 7,092 4,634
- ------------------------------------------------------------------------------ ---------------------
Total wholesale 208 133 864 670 16 13 24,790 19,859
- ------------------------------------------------------------------------------ ---------------------
Total businesses 885 723 3,599 3,115 22 20 68,274 61,777
Other 10 107 106 423 6,974 11,922
- ------------------------------------------------------------------------------ ---------------------
Total consolidated - core 895 830 3,705 3,538 21 21 75,248 73,699
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)
Gain on sale of branches 17 27
- ------------------------------------------------------------------------------ ---------------------
Total consolidated - reported $960 $830 $3,921 $3,538 23 21 $75,248 $73,699
========================================================================================================================
</TABLE>
* BlackRock's assets are presented as of period end.
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 55% of total business
earnings in the first nine months of 1999 compared with 63% in the first nine
months of 1998. Earnings increased 9% in the comparison driven by improved
efficiency and growth in deposits. Excluding the impact of branch gains and
costs related to consumer delivery initiatives in 1998, earnings increased 16%.
PNC ADVISORS - PNC Advisors offers personalized investment management, high-end
brokerage, 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 nine months
of 1999 comprised with 12% in the first nine months of 1998. Earnings increased
28% in the comparison due to strong revenue growth attributable to new business.
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 5%
of total business earnings in the first nine months of 1999 compared with 3% a
year ago. Earnings nearly doubled in the comparison as a result of new business.
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. PFPC Worldwide
contributed 4% of total business earnings in the first nine months of 1999 and
1998. Earnings increased 17% in the comparison as a result of an increase in
assets serviced.
PNC INSTITUTIONAL BANK - PNC Institutional Bank provides specialized credit,
capital markets and treasury management products and services to corporations,
institutions and government entities nationwide. PNC Institutional Bank
contributed 9% of total business earnings in the first nine months of 1999
compared with 8% in the prior-year period. Earnings increased 45% in the
comparison due to higher revenue and a lower provision for credit losses.
PNC SECURED FINANCE - PNC Secured Finance is engaged in commercial real estate
finance, including loan origination, securitization and servicing; asset-based
financing, including lending, syndication and treasury management services; and
equipment lease financing to corporate clients nationwide. PNC Secured
Finance contributed 9% of total business earnings in the first nine months of
1999 compared with 7% a year ago. Earnings increased 52% in the comparison
driven by revenue attributable to Midland Loan Services, L.P.
PNC MORTGAGE - PNC Mortgage originates, purchases and services residential
mortgages and related products. PNC Mortgage also acquires and securitizes
residential mortgages as private-label mortgage-backed securities and performs
the master servicing of those securities for investors. PNC Mortgage contributed
5% of total business earnings in the first nine months of 1999 compared with 3%
in the prior-year period. Earnings nearly doubled in the comparison 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 and minority interests in subsidiaries, eliminations and unassigned
items.
