<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
JANUARY 13, 2000
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
Fourth Quarter and Full Year 1999 Financial Results
On January 13, 2000, PNC Bank Corp. ("Corporation") reported results
of operations for the three months and year ended December 31, 1999.
A copy of the earnings press release issued by the Corporation is
attached hereto as Exhibit 99.1 and incorporated herein by reference.
Financial information on the Corporation's businesses for the years
ended December 31, 1999 and 1998, which reflects organizational and
business changes made during 1999 as part of the Corporation's
operating strategy, is attached hereto 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: January 26, 2000 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 January 13, 2000,
with respect to results of operations for the three months and year
ended December 31, 1999, filed herewith.
99.2 Business financial information for the years ended December 31, 1999
and 1998 filed herewith.
3
<PAGE> 1
Exhibit 99.1
CONTACTS:
MEDIA:
R. Jeep Bryant
(412) 762-4550
[email protected]
INVESTORS:
William H. Callihan
(412) 762-8257
[email protected]
PNC BANK CORP. REPORTS
FOURTH QUARTER AND RECORD FULL YEAR 1999 EARNINGS
PITTSBURGH, Jan. 13, 2000 - PNC Bank Corp. (NYSE: PNC) today reported
fourth quarter 1999 earnings of $304 million or $1.01 per diluted share, a 9.8%
increase compared with the fourth quarter of 1998. Return on average common
shareholders' equity was 21.21% and return on average assets was 1.64% compared
with 20.25% and 1.46%, respectively, a year ago. Cash earnings per share, which
excludes goodwill amortization, were $1.09 for the fourth quarter of 1999, an
increase of 11.2% compared with the fourth quarter of 1998.
Full year 1999 earnings were $1.264 billion or $4.15 per diluted share
and included one-time gains partially offset by the cost of certain strategic
initiatives. Core earnings were a record $1.199 billion or $3.93 per diluted
share for 1999, a 9.2% increase compared with 1998. On a core basis, return on
average common shareholders' equity was 21.24% and return on average assets was
1.60% compared with 20.81% and 1.49%, respectively, in the prior year. Core cash
earnings per share were $4.21 for 1999, a 10.2% increase compared with 1998.
"Our record 1999 reinforces that our transition to a national,
diversified financial services company is beginning to drive very solid
performance," said Thomas H. O'Brien, PNC's chairman and chief executive
officer. "The consistency and strength of our performance was driven by a
diverse group of businesses, with solid and improved returns in our Regional
Bank and outstanding levels of growth in our fee-based asset management and
processing businesses. We will continue to focus on distinguishing PNC through
strategies designed to strengthen our business mix and generate consistent
top-tier returns."
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<PAGE> 2
PNC Bank Corp. Reports Fourth Quarter and Record Full Year 1999 Earnings--Page 2
HIGHLIGHTS
o PNC met or exceeded consensus earnings estimates and continued a transition
to a more valuable revenue and business mix.
o Noninterest income to total revenue increased to 55% for the fourth quarter
driven by strategic acquisitions and strong growth in fee-based businesses
and is expected to reach approximately 60% by the end of 2000.
o PFPC Worldwide, PNC's investment servicing subsidiary, completed the
acquisition of First Data Investor Services Group ("ISG") creating one of
the nation's leading full-service processors for pooled investment
products.
o To provide a public currency for continued growth, BlackRock, Inc., PNC's
investment management subsidiary, completed an initial public offering
("IPO") representing approximately a 15% equity interest.
o PNC implemented a number of strategic initiatives designed to improve the
risk and return characteristics of its lending businesses, including the
sale of the credit card business and a repositioning of the corporate,
commercial real estate, mortgage warehouse and indirect auto lending
portfolios.
The following table summarizes one-time gains and the cost of certain
strategic initiatives, and reconciles reported to core earnings for full year
1999:
<TABLE>
<CAPTION>
Year ended December 31, 1999 - in millions,
except per share data Pretax After-tax Per share
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reported Earnings $1,891 $1,264 $4.15
Gain on sale of credit card business (193) (125) (.41)
Gain on sale of equity interest in EPS (97) (63) (.21)
BlackRock IPO gain (64) (59) (.20)
Branch gains (27) (17) (.06)
Gain on sale of Concord stock, net of PNC
Foundation contribution (11) (16) (.05)
Wholesale lending repositioning 195 126 .42
Write-down of an equity investment 28 18 .06
Costs related to efficiency initiatives 98 64 .21
Mall ATM buyout 12 7 .02
- ------------------------------------------------------------------------------------------------------------
Core Earnings $1,832 $1,199 $3.93
============================================================================================================
</TABLE>
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<PAGE> 3
PNC Bank Corp. Reports Fourth Quarter and Record Full Year 1999 Earnings--Page 3
FOURTH QUARTER INCOME STATEMENT REVIEW
Fourth quarter 1999 earnings were $304 million or $1.01 per diluted
share and included an after-tax gain from the IPO of BlackRock, Inc. stock that
was offset by after-tax valuation adjustments associated with a repositioning of
wholesale lending businesses, the buyout of PNC's mall ATM marketing
representative and the write-down of an equity investment in Friedman, Billings
and Ramsey ("FBR"), with whom PNC maintains a strategic alliance to provide
customers with capital markets products.
The following table summarizes the one-time gain and the cost of
certain strategic initiatives in the fourth quarter of 1999:
<TABLE>
<CAPTION>
Three months ended December 31, 1999 -
in millions, except per share data Pretax After-tax Per share
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reported Earnings $433 $304 $1.01
BlackRock IPO gain (64) (59) (.20)
Wholesale lending repositioning 53 34 .12
Write-down of an equity investment 28 18 .06
Mall ATM buyout 12 7 .02
- -----------------------------------------------------------------------------------------------------------
Core Earnings $462 $304 $1.01
===========================================================================================================
</TABLE>
Taxable-equivalent net interest income was $580 million for the fourth
quarter of 1999, an $85 million decrease compared with the prior-year quarter.
The net interest margin was 3.54% for the fourth quarter of 1999 compared with
3.77% in the fourth quarter of 1998. These declines were primarily due to the
sale of the credit card business in the first quarter of 1999.
The provision for credit losses was $30 million in the fourth quarter
of 1999 and equaled net charge-offs.
Noninterest income was $699 million for the fourth quarter of 1999 and
represented 55% of total revenue compared with 51% in the prior-year quarter.
Core noninterest income increased $94 million or 15% compared with the
prior-year quarter driven by strong growth in fee-based businesses.
Asset management fees of $176 million for the fourth quarter of 1999
increased $19 million or 12%, excluding performance fees associated with
BlackRock Asset Investors, a pooled investment fund that was liquidated in the
third quarter of 1999, and revenue from the corporate
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<PAGE> 4
PNC Bank Corp. Reports Fourth Quarter and Record Full Year 1999 Earnings--Page 4
trust business that was sold in the fourth quarter of 1998. Assets under
management increased to approximately $213 billion at December 31, 1999 compared
with $174 billion at December 31, 1998. Mutual fund servicing fees were $92
million for the fourth quarter of 1999, a $44 million increase compared with the
fourth quarter of 1998 due to a one-month impact of the ISG acquisition and an
increase in assets serviced. At December 31, 1999, PFPC Worldwide provided
custody and accounting/administration services for $388 billion and $412 billion
of pooled investment assets, respectively. The comparable amounts were $315
billion and $252 billion, respectively, a year ago.
Consumer services revenue of $115 million for the fourth quarter of
1999 was consistent with 1998 as lower credit card fees were offset by an
increase in brokerage and other fees associated with the Hilliard Lyons
acquisition in December 1998. Excluding valuation adjustments in the fourth
quarter of 1999, corporate services revenue increased $11 million compared with
the prior-year quarter due to higher capital markets and treasury management
fees. The valuation adjustments related to $1.7 billion of loans and $4.0
billion of credit exposure which have been designated for exit in wholesale
lending businesses. The fourth quarter actions bring the full-year impact of
exit initiatives to $3.7 billion of outstandings and $10.5 billion of credit
exposure.
Net residential mortgage banking revenue of $67 million for the fourth
quarter of 1999 grew $10 million or 18% compared with the prior-year quarter
primarily due to growth in the servicing portfolio. At December 31, 1999,
approximately $75 billion of residential mortgages were serviced compared with
$62 billion a year ago. Residential mortgage originations, including both retail
and correspondent activity, totaled $4 billion for the fourth quarter of 1999
compared with $7 billion in the prior-year period.
Net securities losses for the fourth quarter were $22 million primarily
due to the write-down of an equity investment in FBR.
Other noninterest income increased $43 million compared with the fourth
quarter of 1998 primarily due to higher equity management income.
Noninterest expense of $810 million for the fourth quarter of 1999
increased 2% compared with the prior-year period primarily due to higher expense
to support growth in fee-based businesses and a $12 million expense for the
buyout of PNC's mall ATM marketing
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<PAGE> 5
PNC Bank Corp. Reports Fourth Quarter and Record Full Year 1999 Earnings--Page 5
representative, partially offset by the benefit of ongoing efficiency
initiatives in traditional businesses.
FOURTH QUARTER BALANCE SHEET REVIEW
Total assets were $75.4 billion at December 31, 1999 compared with
$77.2 billion at December 31, 1998. Average earning assets decreased $5.1
billion to $64.8 billion for the fourth quarter of 1999 compared with the
prior-year quarter. Average loans decreased $6.3 billion as a result of
strategic initiatives designed to improve the risk and return characteristics of
PNC's lending businesses. Excluding the impact of these initiatives, average
loans grew 4% in the comparison. Loans represented 79% of average earning assets
in the fourth quarter of 1999 compared with 82% a year ago. Partially offsetting
the decrease in average loans was a $.9 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 fourth quarter of 1999 and 1998,
respectively.
Average deposits were $44.5 billion for the fourth quarter of 1999
compared with $46.3 billion in the fourth quarter of 1998 and represented 60% of
total sources of funds in both periods. The decrease in average deposits was
primarily in wholesale and retail time deposits, partially offset by a $1.9
billion increase in transaction deposits. Average borrowed funds were $20.0
billion for the fourth quarter of 1999, a $2.7 billion decrease compared with
the prior-year quarter.
Shareholders' equity totaled $5.9 billion at December 31, 1999. The
leverage ratio was 6.63% and Tier I and total risk-based capital ratios are
estimated to be 7.0% and 11.0%, respectively.
ASSET QUALITY REVIEW
Overall asset quality improved during the fourth quarter of 1999. The
ratio of nonperforming assets to total loans, loans held for sale and foreclosed
assets was .61% at December 31, 1999 compared with .65% at September 30, 1999.
Nonperforming assets declined to $338 million at year-end compared with $361
million at September 30, 1999.
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<PAGE> 6
PNC Bank Corp. Reports Fourth Quarter and Record Full Year 1999 Earnings--Page 6
The allowance for credit losses was $674 million and represented 1.35% of
period-end loans and 225% of nonaccrual loans at December 31, 1999. The
comparable amounts were 1.31% and 215%, respectively, at September 30, 1999. Net
charge-offs were $30 million or .23% of average loans in the fourth quarter of
1999 compared with $29 million or .22%, respectively, in the third quarter of
1999. Net charge-offs for the year were $161 million or .30% of average loans
compared with $447 million or .80%, respectively, in the prior year. The
year-to-year decrease was primarily due to the sale of the credit card business
in the first quarter of 1999. Excluding credit cards, net charge-offs were .20%
of average loans for 1999 compared with .32% in 1998.
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 http://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 "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 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 inability 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> 7
PNC BANK CORP. Page 7
Consolidated Financial Highlights
<TABLE>
<CAPTION>
Three months ended December 31 Year ended December 31
------------------------------ ----------------------
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) $580 $665 $2,455 $2,599
Noninterest income 699 698 2,745 2,302
Total revenue 1,279 1,363 5,200 4,901
Net income 304 285 1,264 1,115
Per common share
Basic earnings 1.02 .93 4.19 3.64
Diluted earnings 1.01 .92 4.15 3.60
Cash earnings * 1.09 .98 4.42 3.82
Cash dividends declared .45 .41 1.68 1.58
*Excluding amortization of goodwill
- ------------------------------------------------------------------------------------------------------------------------------
SELECTED RATIOS
Return on
Average common shareholders' equity 21.21% 20.25% 22.41% 20.81%
Average assets 1.64 1.46 1.69 1.49
Net interest margin 3.54 3.77 3.68 3.85
Noninterest income to total revenue 54.65 51.21 52.79 46.97
Efficiency ** 58.07 52.82 54.82 54.76
** Excluding amortization, distributions on capital securities and residential mortgage banking hedging activities
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31 September 30 June 30 March 31 December 31
1999 1999 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Assets $75,413 $73,003 $75,558 $74,868 $77,207
Earning assets 64,671 64,782 66,889 66,710 69,027
Loans, net of unearned income 50,046 51,398 52,075 52,800 57,650
Securities available for sale 7,611 8,096 8,856 9,170 7,074
Deposits 46,668 45,146 47,685 45,799 47,496
Borrowed funds 19,347 18,898 18,464 19,935 20,946
Shareholders' equity 5,946 5,871 5,755 5,931 6,043
Common shareholders' equity 5,633 5,558 5,442 5,617 5,729
Book value per common share 19.23 18.90 18.40 18.78 18.86
CAPITAL RATIOS
Leverage 6.63% 7.74% 7.47% 7.28% 7.28%
Common shareholders' equity to total assets 7.47 7.61 7.20 7.50 7.42
ASSET QUALITY RATIOS
Nonperforming assets to total loans, loans held
for sale and foreclosed assets .61% .65% .59% .58% .55%
Allowance for credit losses to total loans 1.35 1.31 1.29 1.27 1.31
Allowance for credit losses to nonaccrual loans 225.42 214.65 224.33 230.93 255.25
Net charge-offs to average loans .23 .22 .18 .56 1.24
=================================================================================================================================
</TABLE>
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<PAGE> 8
PNC BANK CORP. Page 8
Consolidated Statement of Income
<TABLE>
<CAPTION>
Three months ended December 31 Year ended December 31
------------------------------ -----------------------
In millions, except per share data 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and fees on loans $991 $1,166 $4,077 $4,590
Securities available for sale 120 101 483 425
Other 104 87 361 298
- -------------------------------------------------------------------------------------------------------------------------
Total interest income 1,215 1,354 4,921 5,313
- -------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits 345 376 1,369 1,471
Borrowed funds 296 319 1,119 1,269
- -------------------------------------------------------------------------------------------------------------------------
Total interest expense 641 695 2,488 2,740
- -------------------------------------------------------------------------------------------------------------------------
Net interest income 574 659 2,433 2,573
Provision for credit losses 30 115 163 225
- -------------------------------------------------------------------------------------------------------------------------
Net interest income less provision for credit losses 544 544 2,270 2,348
- -------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Asset management 176 205 681 626
Mutual fund servicing 92 48 251 182
Service charges on deposits 53 52 207 203
Consumer services 115 117 455 390
Corporate services 36 78 133 245
Net residential mortgage banking 67 57 272 212
Net securities gains (losses) (22) 2 22 16
Other 182 139 724 428
- -------------------------------------------------------------------------------------------------------------------------
Total noninterest income 699 698 2,745 2,302
- -------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Staff expense 397 393 1,535 1,416
Net occupancy and equipment 113 108 494 409
Amortization 23 30 93 111
Marketing 25 18 75 96
Distributions on capital securities 17 17 65 60
Other 235 231 862 848
- -------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 810 797 3,124 2,940
- -------------------------------------------------------------------------------------------------------------------------
Income before income taxes 433 445 1,891 1,710
Income taxes 129 160 627 595
- -------------------------------------------------------------------------------------------------------------------------
Net income $304 $285 $1,264 $1,115
- -------------------------------------------------------------------------------------------------------------------------
Net income applicable to diluted earnings $299 $280 $1,246 $1,098
EARNINGS PER COMMON SHARE
Basic $1.02 $.93 $4.19 $3.64
Diluted 1.01 .92 4.15 3.60
Cash 1.09 .98 4.42 3.82
CASH DIVIDENDS DECLARED PER COMMON SHARE .45 .41 1.68 1.58
AVERAGE COMMON SHARES OUTSTANDING
Basic 293.4 301.5 296.9 300.8
Diluted 296.3 304.7 300.0 305.1
=========================================================================================================================
</TABLE>
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<PAGE> 9
PNC BANK CORP. Page 9
Details of Net Interest Income
<TABLE>
<CAPTION>
Net Interest Income Three months ended December 31 Year ended December 31
Taxable-equivalent basis ------------------------------ -----------------------
In millions 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans $996 $1,171 $4,094 $4,611
Securities available for sale 121 102 487 430
Other 104 87 362 298
- ----------------------------------------------------------------------------------------------------------------
Total interest income 1,221 1,360 4,943 5,339
Interest expense
Deposits 345 376 1,369 1,471
Borrowed funds 296 319 1,119 1,269
- ----------------------------------------------------------------------------------------------------------------
Total interest expense 641 695 2,488 2,740
- ----------------------------------------------------------------------------------------------------------------
Net interest income $580 $665 $2,455 $2,599
================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Taxable-equivalent basis December 31 September 30 June 30 March 31 December 31
Three months ended - in millions 1999 1999 1999 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income
Loans $996 $989 $992 $1,117 $1,171
Securities available for sale 121 128 131 107 102
Other 104 100 86 72 87
- -------------------------------------------------------------------------------------------------------------------
Total interest income 1,221 1,217 1,209 1,296 1,360
Interest expense
Deposits 345 340 333 351 376
Borrowed funds 296 278 264 281 319
- -------------------------------------------------------------------------------------------------------------------
Total interest expense 641 618 597 632 695
- -------------------------------------------------------------------------------------------------------------------
Net interest income $580 $599 $612 $664 $665
===================================================================================================================
</TABLE>
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<PAGE> 10
PNC BANK CORP. Page 10
Details of Net Interest Margin
<TABLE>
<CAPTION>
Net Interest Margin Three months ended December 31 Year ended December 31
------------------------------ ----------------------
Taxable-equivalent basis 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average yields/rates
Yield on earning assets
Loans 7.69% 8.06% 7.73% 8.28%
Securities available for sale 5.90 5.58 5.70 5.83
Other 7.51 6.70 7.09 6.82
Total yield on earning assets 7.45 7.70 7.42 7.92
Rate on interest-bearing liabilities
Deposits 3.80 4.03 3.73 4.13
Borrowed funds 5.81 5.51 5.43 5.82
Total rate on interest-bearing liabilities 4.52 4.59 4.34 4.77
- -----------------------------------------------------------------------------------------------------------------
Interest rate spread 2.93 3.11 3.08 3.15
Impact of noninterest-bearing sources .61 .66 .60 .70
- -----------------------------------------------------------------------------------------------------------------
Net interest margin 3.54% 3.77% 3.68% 3.85%
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Taxable-equivalent basis December 31 September 30 June 30 March 31 December 31
Three months ended 1999 1999 1999 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average yields/rates
Yield on earning assets
Loans 7.69% 7.55% 7.53% 7.91% 8.06%
Securities available for sale 5.90 5.79 5.56 5.55 5.58
Other 7.51 7.26 6.90 6.57 6.70
Total yield on earning assets 7.45 7.29 7.20 7.56 7.70
Rate on interest-bearing liabilities
Deposits 3.80 3.69 3.63 3.80 4.03
Borrowed funds 5.81 5.40 5.08 5.21 5.51
Total rate on interest-bearing liabilities 4.52 4.30 4.15 4.31 4.59
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 2.93 2.99 3.05 3.25 3.11
Impact of noninterest-bearing sources .61 .60 .59 .61 .66
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest margin 3.54% 3.59% 3.64% 3.86% 3.77%
===================================================================================================================================
</TABLE>
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<PAGE> 11
PNC BANK CORP. Page 11
Reconciliation of Reported to Core Noninterest Income
<TABLE>
<CAPTION>
Reconciliation of Reported to Core Noninterest Income
Three months ended December 31
------------------------------
Three months ended December 31 - in millions 1999 1998 Change
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reported noninterest income $699 $698 $1
Sale of credit card business 21 (21)
BlackRock IPO gain (64) (64)
Wholesale lending repositioning 53 53
Gain on sale of corporate trust business (97) 97
Write-down of an equity-investment in FBR 28 28
- ----------------------------------------------------------------------------------------------------------
Core noninterest income $716 $622 $94
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31
-----------------------
Year ended December 31 - in millions 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reported noninterest income $2,745 $2,302 $443
Sale of credit card business (193) 21 (214)
Gain on sale of equity interest in EPS (97) (97)
BlackRock IPO gain (64) (64)
Branch gains (27) (86) 59
Gain on sale of Concord EFS, Inc. stock (41) (41)
Wholesale lending repositioning 195 195
Write-down of an equity investment in FBR 28 28
Gain on sale of corporate trust business (97) 97
Valuation adjustments on certain
market sensitive asset positions 30 (30)
- ---------------------------------------------------------------------------------------------------------
Core noninterest income $2,546 $2,170 $376
=========================================================================================================
</TABLE>
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<PAGE> 12
PNC BANK CORP. Page 12
Details of Noninterest Income
<TABLE>
<CAPTION>
Details of Noninterest Income
Three months ended December 31 Year ended December 31
------------------------------ -----------------------
In millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset management $176 $205 $681 $626
Mutual fund servicing 92 48 251 182
Service charges on deposits 53 52 207 203
Consumer services
Credit card 3 36 35 129
Brokerage 58 34 219 91
Insurance 10 9 36 33
Other 44 38 165 137
- -----------------------------------------------------------------------------------------------------------
Total consumer services 115 117 455 390
Corporate services
Capital markets 27 16 72 52
Net commercial mortgage banking 16 22 61 26
Other (7) 40 167
- -----------------------------------------------------------------------------------------------------------
Total corporate services 36 78 133 245
Net residential mortgage banking
Mortgage servicing 81 54 288 167
Origination and securitization 27 56 172 190
MSR amortization, net of servicing hedge (41) (53) (188) (145)
- -----------------------------------------------------------------------------------------------------------
Total net residential mortgage banking 67 57 272 212
Net securities gains (losses) (22) 2 22 16
Other 182 139 724 428
- -----------------------------------------------------------------------------------------------------------
Total noninterest income $699 $698 $2,745 $2,302
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31 September 30 June 30 March 31 December 31
Three months ended - in millions 1999 1999 1999 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Asset management $176 $175 $169 $161 $205
Mutual fund servicing 92 55 53 51 48
Service charges on deposits 53 53 51 50 52
Consumer services
Credit card 3 3 2 27 36
Brokerage 58 52 53 56 34
Insurance 10 8 9 9 9
Other 44 42 41 38 38
- -------------------------------------------------------------------------------------------------------------------------
Total consumer services 115 105 105 130 117
Corporate services
Capital markets 27 14 15 16 16
Net commercial mortgage banking 16 12 23 10 22
Other (7) 50 46 (89) 40
- -------------------------------------------------------------------------------------------------------------------------
Total corporate services 36 76 84 (63) 78
Net residential mortgage banking
Mortgage servicing 81 77 70 60 54
Origination and securitization 27 31 56 58 56
MSR amortization, net of servicing hedge (41) (33) (56) (58) (53)
- -------------------------------------------------------------------------------------------------------------------------
Total net residential mortgage banking 67 75 70 60 57
Net securities gains (losses) (22) 2 42 2
Other 182 110 90 342 139
- -------------------------------------------------------------------------------------------------------------------------
Total noninterest income $699 $651 $664 $731 $698
=========================================================================================================================
</TABLE>
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<PAGE> 13
PNC BANK CORP. Page 13
Details of Noninterest Expense
<TABLE>
<CAPTION>
Details of Noninterest Expense
Three months ended December 31 Year ended December 31
------------------------------ ----------------------
In millions 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Staff expense
Compensation $352 $353 $1,339 $1,220
Employee benefits 45 40 196 196
- ----------------------------------------------------------------------------------------------------------------------------
Total staff expense 397 393 1,535 1,416
Net occupancy and equipment
Net occupancy 58 52 249 204
Equipment 55 56 245 205
- ----------------------------------------------------------------------------------------------------------------------------
Total net occupancy and equipment 113 108 494 409
Amortization
Goodwill 23 19 81 68
Other 11 12 43
- ----------------------------------------------------------------------------------------------------------------------------
Total amortization 23 30 93 111
Marketing 25 18 75 96
Distributions on capital securities 17 17 65 60
Other 235 231 862 848
- ----------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $810 $797 $3,124 $2,940
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31 September 30 June 30 March 31 December 31
Three months ended - in millions 1999 1999 1999 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Staff expense
Compensation $352 $317 $319 $351 $353
Employee benefits 45 45 45 61 40
- ------------------------------------------------------------------------------------------------------------------------------
Total staff expense 397 362 364 412 393
Net occupancy and equipment
Net occupancy 58 52 52 87 52
Equipment 55 51 51 88 56
- ------------------------------------------------------------------------------------------------------------------------------
Total net occupancy and equipment 113 103 103 175 108
Amortization
Goodwill 23 19 20 19 19
Other 2 1 9 11
- ------------------------------------------------------------------------------------------------------------------------------
Total amortization 23 21 21 28 30
Marketing 25 18 17 15 18
Distributions on capital securities 17 16 16 16 17
Other 235 204 246 177 231
- ------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $810 $724 $767 $823 $797
==============================================================================================================================
</TABLE>
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<PAGE> 14
PNC BANK CORP. Page 14
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31 December 31
In millions, except par value 1999 1998
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $3,097 $2,534
Short-term investments 1,148 1,014
Loans held for sale 5,798 3,226
Securities available for sale 7,611 7,074
Loans, net of unearned income of $732 and $554 50,046 57,650
Allowance for credit losses (674) (753)
- ------------------------------------------------------------------------------------------------------
Net loans 49,372 56,897
Goodwill and other amortizable assets 4,123 2,548
Other 4,264 3,914
- ------------------------------------------------------------------------------------------------------
Total assets $75,413 $77,207
======================================================================================================
LIABILITIES
Deposits
Noninterest-bearing $8,441 $9,943
Interest-bearing 38,227 37,553
- ------------------------------------------------------------------------------------------------------
Total deposits 46,668 47,496
Borrowed funds
Federal funds purchased 1,281 390
Repurchase agreements 1,122 1,669
Bank notes and senior debt 6,975 10,384
Other borrowed funds 7,642 6,722
Subordinated debt 2,327 1,781
- ------------------------------------------------------------------------------------------------------
Total borrowed funds 19,347 20,946
Other 2,604 1,874
- ------------------------------------------------------------------------------------------------------
Total liabilities 68,619 70,316
- ------------------------------------------------------------------------------------------------------
Mandatorily redeemable capital securities of subsidiary trusts 848 848
SHAREHOLDERS' EQUITY
Preferred stock 7 7
Common stock - $5 par value
Authorized 450 shares
Issued 353 shares 1,764 1,764
Capital surplus 1,274 1,250
Retained earnings 6,006 5,262
Deferred benefit expense (17) (36)
Accumulated other comprehensive loss (265) (43)
Common stock held in treasury at cost: 60 and 49 shares (2,823) (2,161)
- ------------------------------------------------------------------------------------------------------
Total shareholders' equity 5,946 6,043
- ------------------------------------------------------------------------------------------------------
Total liabilities, capital securities and shareholders' equity $75,413 $77,207
======================================================================================================
</TABLE>
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<PAGE> 15
PNC BANK CORP. Page 15
Consolidated Average Balance Sheet Data
<TABLE>
<CAPTION>
Three months ended December 31 Year ended December 31
------------------------------ ------------------------
In millions 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $8,211 $7,323 $8,554 $7,374
Loans, net of unearned income
Consumer 9,421 11,075 10,314 11,073
Credit card 3,570 672 3,849
Residential mortgage 12,667 12,193 12,451 12,496
Commercial 22,318 24,593 23,084 22,773
Commercial real estate 3,265 3,442 3,362 3,279
Other 3,399 2,493 3,096 2,223
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income 51,070 57,366 52,979 55,693
Loans held for sale 4,427 4,295 3,986 3,371
Other 1,132 881 1,117 1,001
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 64,840 69,865 66,636 67,439
Noninterest-earning assets 8,708 7,512 8,184 7,187
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $73,548 $77,377 $74,820 $74,626
==================================================================================================================================
LIABILITIES
Interest-bearing liabilities
Deposits
Demand $5,852 $5,044 $5,574 $4,831
Savings 2,212 2,551 2,390 2,620
Money market 12,374 10,931 12,123 9,989
Retail time 14,007 15,080 14,220 15,420
Wholesale time 1,597 3,442 2,387 2,721
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 36,042 37,048 36,694 35,581
Borrowed funds 20,029 22,723 20,594 21,809
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 56,071 59,771 57,288 57,390
Noninterest-bearing deposits 8,413 9,202 8,610 9,315
Other 2,312 1,756 2,204 1,578
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 66,796 70,729 68,102 68,283
Mandatorily redeemable capital securities of subsidiary trusts 848 848 848 762
SHAREHOLDERS' EQUITY 5,904 5,800 5,870 5,581
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities, capital securities and shareholders' equity $73,548 $77,377 $74,820 $74,626
==================================================================================================================================
COMMON SHAREHOLDERS' EQUITY $5,591 $5,486 $5,556 $5,267
==================================================================================================================================
</TABLE>
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<PAGE> 16
PNC BANK CORP. Page 16
Consolidated Average Balance Sheet Data
<TABLE>
<CAPTION>
December 31 September 30 June 30 March 31 December 31
Three months ended - in millions 1999 1999 1999 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Securities available for sale $8,211 $8,803 $9,437 $7,755 $7,323
Loans, net of unearned income
Consumer 9,421 10,171 10,729 10,955 11,075
Credit card 2,724 3,570
Residential mortgage 12,667 12,451 12,496 12,184 12,193
Commercial 22,318 22,631 22,846 24,574 24,593
Commercial real estate 3,265 3,389 3,396 3,398 3,442
Other 3,399 3,104 3,012 2,860 2,493
- -------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income 51,070 51,746 52,479 56,695 57,366
Loans held for sale 4,427 4,385 3,727 3,383 4,295
Other 1,132 1,102 1,236 1,005 881
- -------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 64,840 66,036 66,879 68,838 69,865
Noninterest-earning assets 8,708 7,727 8,181 8,120 7,512
- -------------------------------------------------------------------------------------------------------------------------------
Total assets $73,548 $73,763 $75,060 $76,958 $77,377
===============================================================================================================================
LIABILITIES
Interest-bearing liabilities
Deposits
Demand $5,852 $5,673 $5,484 $5,280 $5,044
Savings 2,212 2,345 2,472 2,535 2,551
Money market 12,374 12,361 12,202 11,545 10,931
Retail time 14,007 14,114 14,114 14,651 15,080
Wholesale time 1,597 2,088 2,514 3,370 3,442
- -------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 36,042 36,581 36,786 37,381 37,048
Borrowed funds 20,029 20,242 20,544 21,584 22,723
- -------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 56,071 56,823 57,330 58,965 59,771
Noninterest-bearing deposits 8,413 8,318 8,684 9,035 9,202
Other 2,312 2,042 2,325 2,135 1,756
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities 66,796 67,183 68,339 70,135 70,729
Mandatorily redeemable capital securities of
subsidiary trusts 848 848 848 848 848
SHAREHOLDERS' EQUITY 5,904 5,732 5,873 5,975 5,800
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities, capital securities and
shareholders' equity $73,548 $73,763 $75,060 $76,958 $77,377
===============================================================================================================================
COMMON SHAREHOLDERS' EQUITY $5,591 $5,419 $5,559 $5,661 $5,486
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
LOAN PORTFOLIO
December 31 September 30 June 30 March 31 December 31
Period ended - in millions 1999 1999 1999 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer $9,357 $9,522 $10,206 $10,893 $10,980
Credit card 2,958
Residential mortgage 12,869 12,567 12,657 12,579 12,265
Commercial 21,468 22,659 22,731 23,082 25,182
Commercial real estate 2,730 3,369 3,468 3,417 3,449
Other 4,354 3,882 3,541 3,360 3,370
- -------------------------------------------------------------------------------------------------------------------------------
Total loans 50,778 51,999 52,603 53,331 58,204
Unearned income (732) (601) (528) (531) (554)
- -------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income $50,046 $51,398 $52,075 $52,800 $57,650
===============================================================================================================================
</TABLE>
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<PAGE> 17
PNC BANK CORP. Page 17
Asset Quality Data
<TABLE>
<CAPTION>
ALLOWANCE FOR CREDIT LOSSES Year ended December 31 Three months ended
---------------------- ----------------------------------------------------------------
December 31 September 30 June 30 March 31 December 31
In millions 1999 1998 1999 1999 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning balance $753 $972 $674 $673 $672 $753 $816
Charge-offs
Consumer (63) (83) (14) (15) (16) (18) (21)
Credit card (60) (297) (60) (77)
Residential mortgage (8) (7) (1) (1) (2) (4) (1)
Commercial (72) (122) (24) (18) (18) (12) (101)
Commercial real estate (4) (8) (3) (1) (1)
Other (9) (7) (4) (2) (1) (2) (2)
- ---------------------------------------------------------------------------------------------------------------------------
Total charge-offs (216) (524) (43) (39) (37) (97) (203)
Recoveries
Consumer 25 34 5 6 7 7 8
Credit card 2 17 2 5
Residential mortgage 1 1 1
Commercial 22 20 5 4 6 7 8
Commercial real estate 4 3 3 1 1
Other 1 2 1 1
- ---------------------------------------------------------------------------------------------------------------------------
Total recoveries 55 77 13 10 13 19 23
Net charge-offs
Consumer (38) (49) (9) (9) (9) (11) (13)
Credit card (58) (280) (58) (72)
Residential mortgage (7) (6) (1) (1) (2) (3) (1)
Commercial (50) (102) (19) (14) (12) (5) (93)
Commercial real estate (5) 3 (3)
Other (8) (5) (4) (2) (1) (1) (1)
- ---------------------------------------------------------------------------------------------------------------------------
Total net charge-offs (161) (447) (30) (29) (24) (78) (180)
Provision for credit losses 163 225 30 30 25 78 115
(Divestitures) acquisitions (81) 3 (81) 2
- ---------------------------------------------------------------------------------------------------------------------------
Ending balance $674 $753 $674 $674 $673 $672 $753
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NONPERFORMING ASSETS
December 31 September 30 June 30 March 31 December 31
Period ended - in millions 1999 1999 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans
Commercial $220 $222 $197 $184 $188
Commercial real estate 21 32 42 45 50
Residential mortgage 56 57 57 58 51
Consumer 2 3 4 4 6
- ---------------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 299 314 300 291 295
Foreclosed and other assets
Commercial real estate 5 10 12 13 15
Residential mortgage 12 14 12 15 17
Other 22 23 9 9 5
- ---------------------------------------------------------------------------------------------------------------------------
Total foreclosed and other assets 39 47 33 37 37
- ---------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $338 $361 $333 $328 $332
===========================================================================================================================
</TABLE>
Other assets that meet the definition of nonperforming loans include $13 million
of equity management loans at December 31, 1999.
<PAGE> 1
Exhibit 99.2
BUSINESS INFORMATION
<TABLE>
<CAPTION>
Return on
Year ended December 31 - Earnings Revenue Assigned Capital Average Assets *
--------------------------------------------------------------------------------
Dollars in millions 1999 1998 1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PNC Regional Bank $641 $582 $2,307 $2,317 22% 20% $39,513 $38,848
Wholesale
PNC Institutional Bank 127 56 408 351 22 11 8,417 7,564
PNC Secured Finance 114 60 281 178 24 16 6,701 5,477
PNC Mortgage 62 35 421 339 14 10 6,906 5,350
- ------------------------------------------------------------------------------ ---------------------
Total wholesale 303 151 1,110 868 20 12 22,024 18,391
Asset Management
PNC Advisors 147 119 738 489 27 30 3,353 2,731
BlackRock 59 36 381 339 36 41 448 441
PFPC 45 38 257 191 40 41 308 229
- ------------------------------------------------------------------------------ ---------------------
Total asset management 251 193 1,376 1,019 30 34 4,109 3,401
- ------------------------------------------------------------------------------ ---------------------
Total businesses 1,195 926 4,793 4,204 23 19 65,646 60,640
Other 4 189 208 697 9,174 13,986
- ------------------------------------------------------------------------------ ---------------------
Total consolidated - core 1,199 1,115 5,001 4,901 21 21 74,820 74,626
Gain on sale of credit card business 125 193
Gain on sale of equity interest in
Electronic Payment Services 63 97
BlackRock IPO gain 59 64
Branch gains 17 27
Gain on sale of Concord stock,
net of PNC Bank Foundation
contribution 16 41
Wholesale lending repositioning (126) (195)
Costs related to efficiency
initiatives (64)
Write-down of an equity investment (18) (28)
Mall ATM buyout (7)
- ------------------------------------------------------------------------------ ---------------------
Total consolidated - reported $1,264 $1,115 $5,200 $4,901 22 21 $74,820 $74,626
========================================================================================================================
</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 54% of total business
earnings in 1999 compared with 63% in 1998. Earnings increased 10% 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 INSTITUTIONAL BANK - PNC Institutional Bank provides specialized credit,
capital markets and treasury management products and services to corporations,
institutions and government entities primarily within PNC's geographic
footprint. PNC Institutional Bank contributed 11% of total business earnings in
1999 compared with 6% in 1998. Earnings more than doubled 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 1999 compared with 6% in 1998.
Earnings nearly doubled in the comparison due to an increase in net commercial
mortgage banking revenue.
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 1999 compared with 4% in 1998. Earnings nearly
doubled in the comparison driven by revenue growth primarily attributable to a
larger servicing portfolio.
<PAGE> 2
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 12% of total business earnings in 1999 compared with
13% in 1998. Earnings increased 24% 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 1999 compared with 4% in 1998. Earnings increased
67% in the comparison as a result of significant new business. To provide a
public currency for continued growth, BlackRock completed an initial public
offering in October 1999 representing approximately a 15% equity interest. The
financial information presented for this business reflects the BlackRock legal
entity. The related minority interest is included in Other.
PFPC - PFPC provides technology-driven products for the investment management
community including fund accounting, administration, distribution, transfer
agency, shareholder services, custody, retirement plan services, integrated
banking transaction services, hedge products accounting, securities lending and
subaccounting services. PFPC clients include pension and investment managers,
brokerage firms, insurance companies and banks. PFPC contributed 4% of total
business earnings in 1999 and 1998. Earnings increased 18% in the comparison as
a result of an increase in assets and accounts serviced. PFPC completed the
acquisition of First Data Investor Services Group ("ISG") on December 1, 1999.
Results for 1999 include one month of activity for ISG.
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 businesses, equity management activities, minority interests,
eliminations and unassigned items. During 1999 there was a repositioning of the
corporate, commercial real estate and mortgage warehouse lending portfolios. The
results of exited activities related to this strategic initiative are included
in Other for all periods presented.
