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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998. COMMISSION FILE NUMBER 1-9718.
PNC BANK CORP.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1435979
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
ONE PNC PLAZA
249 FIFTH AVENUE
PITTSBURGH, PENNSYLVANIA 15222-2707
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code - (412) 762-1553
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
COMMON STOCK, PAR VALUE $5.00 New York Stock Exchange
$1.60 CUMULATIVE CONVERTIBLE PREFERRED STOCK-SERIES C, PAR VALUE $1.00 New York Stock Exchange
$1.80 CUMULATIVE CONVERTIBLE PREFERRED STOCK-SERIES D, PAR VALUE $1.00 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
$1.80 CUMULATIVE CONVERTIBLE PREFERRED STOCK - SERIES A, PAR VALUE $1.00
$1.80 CUMULATIVE CONVERTIBLE PREFERRED STOCK - SERIES B, PAR VALUE $1.00
8.25% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2008
9.875% SUBORDINATED CAPITAL NOTES DUE 1999
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _X_
The aggregate market value of the voting common equity held by non-affiliates of
the registrant amounted to approximately $15.1 billion at January 15, 1999.
There is no non-voting common equity of the registrant outstanding.
Number of shares of registrant's common stock outstanding at February 26, 1999:
302,103,797
DOCUMENTS INCORPORATED BY REFERENCE
Portions of PNC Bank Corp.'s 1998 Annual Report ("Annual Report to
Shareholders") are incorporated by reference into Parts I and II and portions of
the definitive Proxy Statement of PNC Bank Corp. for the annual meeting of
shareholders to be held on April 27, 1999 ("Proxy Statement") are incorporated
by reference into Part III of this Form 10-K. The incorporation by reference
herein of portions of the Proxy Statement shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
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TABLE OF CONTENTS
PART I Page
--------
Item 1 Business 2
Item 2 Properties 5
Item 3 Legal Proceedings 6
Item 4 Submission of Matters to a Vote of Security
Holders *
PART II
Item 5 Market for Registrant's Common Equity and
Related Stockholder Matters 6
Item 6 Selected Financial Data 6
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of 6
Operations
Item 7A Quantitative and Qualitative Disclosures
About Market Risk 6
Item 8 Financial Statements and Supplementary Data 6
Item 9 Changes in and Disagreements with
Accountants on Accounting and Financial *
Disclosure
PART III
Item 10 Directors and Executive Officers of the 6
Registrant
Item 11 Executive Compensation 7
Item 12 Security Ownership of Certain Beneficial
Owners and Management 7
Item 13 Certain Relationships and Related 7
Transactions
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K 7
SIGNATURES 8
EXHIBIT INDEX E-1
* Not applicable
PART I
Forward-Looking Statements: From time to time the Corporation has made and may
continue to make forward-looking statements about financial and business
matters. As stated under the caption "Forward-Looking Statements" in the
"Financial Review" on page 49 of the Annual Report to Shareholders, which is
incorporated herein by reference, many factors could cause actual results for
such matters to differ materially from such forward-looking statements. The
Corporation assumes no duty to update forward-looking statements.
ITEM 1 - BUSINESS
BUSINESS OVERVIEW PNC Bank Corp. ("PNC Bank" or "Corporation") is a bank holding
company registered under the Bank Holding Company Act of 1956, as amended ("BHC
Act"). PNC Bank was incorporated under the laws of the Commonwealth of
Pennsylvania in 1983 with the consolidation of Pittsburgh National Corporation
and Provident National Corporation. Since 1983, PNC Bank has diversified its
geographical presence and product capabilities through strategic bank and
nonbank acquisitions and the formation of various nonbanking subsidiaries.
The Corporation is one of the largest diversified financial services companies
in the United States operating retail banking, asset management and wholesale
businesses that provide products and services nationally and in PNC Bank's
primary geographic markets in Pennsylvania, New Jersey, Delaware, Ohio and
Kentucky. At December 31, 1998, the Corporation's consolidated total assets,
deposits and shareholders' equity were $77.2 billion, $47.5 billion and $6.0
billion, respectively.
REVIEW OF BUSINESSES Information relating to PNC Regional Community Bank, PNC
National Consumer Bank, PNC Advisors, BlackRock, PFPC Worldwide, PNC Corporate
Bank, PNC Secured Finance and PNC Mortgage is set forth under the captions
"Overview" and "Review of Businesses" in the "Financial Review" included on
pages 40 through 49 of the Annual Report to Shareholders, which is incorporated
herein by reference.
SUBSIDIARIES The corporate legal structure currently consists of five subsidiary
banks and over 100 active nonbank subsidiaries. PNC Bank, National Association
("PNC Bank, N.A."), headquartered in Pittsburgh, Pennsylvania, is the
Corporation's principal bank subsidiary. At December 31, 1998, PNC Bank, N.A.
had total consolidated assets of $71.2 billion, representing approximately 92%
of the Corporation's consolidated assets. For additional information on
subsidiaries, see Exhibit 21 to this Form 10-K, which is incorporated herein by
reference.
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STATISTICAL DISCLOSURES BY BANK HOLDING COMPANIES The following statistical
information is included on the indicated pages of the Annual Report to
Shareholders and is incorporated herein by reference:
Page of
Annual
Report
- ----------------------------------------------------------------
Analysis of Year-to-Year Changes in Net Interest 89
Income
Average Consolidated Balance Sheet and Net Interest
Analysis 90-91
Book Values of Securities 52 and 72
Maturities and Weighted-Average Yield of Securities 72
Loan Types 72
Loan Maturities and Interest Sensitivity 92
Nonaccrual, Past Due and Restructured Loans 73
Potential Problem Loans 54
Summary of Loan Loss Experience 92
Allocation of Allowance for Credit Losses 93
Average Amount and Average Rate Paid on Deposits 90-91
Time Deposits of $100,000 or More 93
Selected Consolidated Financial Data 39
Short-Term Borrowings 93
RISK MANAGEMENT The Corporation's ordinary course of business involves varying
degrees of risk taking, the most significant of which are credit, liquidity,
interest rate and market risk. Although it cannot eliminate these risks, PNC
Bank has risk management processes designed to provide for risk identification,
measurement, monitoring and control. Information relating to credit, liquidity,
interest rate and market risk and the Corporation's risk management processes is
set forth under the section "Risk Management" in the "Financial Review" included
on pages 54 through 57 of the Annual Report to Shareholders, which is
incorporated herein by reference.
EFFECT OF GOVERNMENTAL MONETARY AND OTHER POLICIES The earnings and operations
of bank holding companies and their subsidiaries are affected by monetary, tax
and other policies of the United States government and its agencies, including
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"). An important function of the Federal Reserve Board is to regulate the
national supply of bank credit. The Federal Reserve Board employs open market
operations in U.S. Government securities, changes in the discount rate on bank
borrowings and changes in reserve requirements on bank deposits to implement its
monetary policy objectives. These instruments of monetary policy are used in
varying combinations to influence the overall level of bank loans, investments
and deposits, the interest rates charged on loans and paid for deposits, the
price of the dollar in foreign exchange markets and the level of inflation. The
monetary policies of the Federal Reserve Board have had a significant effect on
the operating results of banking institutions in the past and are expected to
continue to do so in the future. It is not possible to predict the nature or
timing of future changes in monetary, tax and other policies or the effect that
they may have on the Corporation's business and earnings.
IMPACT OF INFLATION The assets and liabilities of the Corporation are primarily
monetary in nature. Accordingly, future changes in prices do not affect the
obligations to pay or receive fixed and determinable amounts of money. During
periods of inflation, monetary assets lose value in terms of purchasing power,
and monetary liabilities have corresponding purchasing power gains. The concept
of purchasing power, however, is not an adequate indicator of the effect of
inflation on banks, because it does not take into account changes in interest
rates, which are an important determinant of the Corporation's earnings. A
discussion of interest rate risk is set forth under the section "Interest Rate
Risk" in the "Financial Review" included on page 56 of the Annual Report to
Shareholders.
SUPERVISION AND REGULATION The Corporation and its subsidiaries are subject to
numerous governmental regulations, some of which are highlighted below and in
"Note 14 - Regulatory Matters" of the "Notes to Consolidated Financial
Statements" included on pages 75 and 76 of the Annual Report to Shareholders
("Note 14 - Regulatory Matters"), which is incorporated herein by reference. The
coverage of the regulations includes activity, investment and dividend
limitations on the bank holding company and its subsidiaries and
consumer-related protections for loan, deposit, brokerage, fiduciary and mutual
fund customers.
As a bank holding company registered under the BHC Act, the Corporation is
subject to the supervision and regular inspection by the Federal Reserve Board.
Under the BHC Act, the Federal Reserve Board's prior approval is required in any
case the Corporation proposes to acquire all or substantially all of the assets
of any bank, acquire direct or indirect ownership or control of more than 5% of
the voting shares of any bank, or merge or consolidate with any other bank
holding company. The BHC Act also prohibits, with certain exceptions, the
Corporation from acquiring direct or indirect ownership or control of more than
5% of any class of voting shares of any nonbanking corporation. Under the BHC
Act, the Corporation may not engage in any business other than managing and
controlling banks or furnishing certain specified services to subsidiaries and
may not acquire voting control of nonbanking corporations unless the Federal
Reserve Board determines such businesses and services to be closely related to
banking. When reviewing bank acquisition applications for approval, the Federal
Reserve Board considers, among other things, each subsidiary bank's record in
meeting the credit needs of the communities it serves in accordance with the
Community Reinvestment Act of 1977, as amended ("CRA"). At December 31, 1998,
the Corporation's principal bank subsidiary, PNC Bank, N.A., was rated
"Outstanding" with respect to CRA. Other bank subsidiaries were rated
"Satisfactory."
The Corporation's subsidiary banks are subject to supervision and examination by
applicable federal and state banking
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agencies, including such federal agencies as the Office of the Comptroller of
the Currency ("OCC") with respect to PNC Bank, National Association and PNC
National Bank, the Federal Deposit Insurance Corporation ("FDIC") with respect
to PNC Bank, Delaware and PNC Bank, New England, and the Office of Thrift
Supervision with respect to PNC Bank, FSB. The Corporation's subsidiary banks
are subject to various federal and state restrictions on their ability to pay
dividends to the Corporation, which constitutes the principal source of income
to the parent company as discussed under the caption "Liquidity Risk" in the
"Financial Review" on page 55 of the Annual Report to Shareholders, which is
incorporated herein by reference. The Corporation's subsidiary banks are also
subject to federal laws limiting extensions of credit to their parent holding
company and nonbank affiliates as discussed in "Note 14 - Regulatory Matters."
The federal banking agencies possess broad powers to take corrective action as
deemed appropriate for an insured depository institution and its holding
company. The extent of these powers depends upon whether the institution in
question is considered "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Generally, as an institution is deemed to be less well
capitalized, the scope and severity of the agencies' powers increase, ultimately
permitting the agency to appoint a receiver for the institution. Business
activities may also be influenced by an institution's capital classification.
For instance, only a "well capitalized" depository institution may accept
brokered deposits without prior regulatory approval and an "adequately
capitalized" depository institution may accept brokered deposits only with prior
regulatory approval. At December 31, 1998, all of the Corporation's subsidiary
banks exceeded the required ratios for classification as "well capitalized."
Additional discussion of capital adequacy requirements is set forth under the
caption "Capital" in the "Financial Review" on page 53 of the Annual Report to
Shareholders, which is incorporated herein by reference.
All of the subsidiary banks are insured by the FDIC and subject to premium
assessments. The amount of FDIC assessments is based on the institution's
relative risk as measured by regulatory capital ratios and certain other
factors. Under current regulations, the Corporation's subsidiary banks are not
assessed a premium on deposits insured by either the Bank Insurance Fund or the
Savings Association Insurance Fund. However, insured depository institutions
continue to pay premiums based on deposit levels to service debt on bonds issued
by a governmental entity. Under current law, these premiums are scheduled to
increase in the year 2000.
The Corporation's subsidiary banks are subject to "cross-guarantee" provisions
under federal law that provide if one FDIC-insured depository institution of a
multi-bank holding company fails or requires FDIC assistance, the FDIC may
assess a "commonly controlled" depository institution for the estimated losses
suffered by the FDIC. Such liability could have a material adverse effect on the
financial condition of any assessed bank and the Corporation. While the FDIC's
claim is junior to the claims of depositors, holders of secured liabilities,
general creditors and subordinated creditors; it is superior to the claims of
shareholders and affiliates.
Under Federal Reserve Board policy, a bank holding company is expected to act as
a source of financial strength to each of its subsidiary banks and to commit
resources to support each such bank. Consistent with the "source of strength"
policy for subsidiary banks, the Federal Reserve Board has stated that, as a
matter of prudent banking, a bank holding company generally should not maintain
a rate of cash dividends unless its net income available to common shareholders
has been sufficient to fully fund the dividends and the prospective rate of
earnings retention appears to be consistent with the corporation's capital
needs, asset quality and overall financial condition.
The Corporation's nonbank subsidiaries are subject to regulatory restrictions
imposed by the Federal Reserve Board and other federal and state agencies. The
Corporation's five registered broker-dealer subsidiaries are regulated by the
Securities and Exchange Commission ("SEC") and either by the OCC or the Federal
Reserve Board. They are also subject to rules and regulations promulgated by the
National Association of Securities Dealers, Inc., among others. Several nonbank
subsidiaries that are registered investment advisers are subject to the
regulations of the SEC and other agencies. Investment advisers that are national
bank subsidiaries are also subject to OCC supervision.
Over the past few years, the regulatory framework applicable to the Corporation
and its subsidiaries has been subject to extensive Congressional and agency
review, which has resulted in some liberalization and may result in further
reforms. Current proposals include easing restrictions on insurance and
investment banking activities and easing bank ownership requirements. There are
also proposals to further regulate banking and financial services, some of which
limit finance charges and other fees and charges earned by the Corporation.
Management currently cannot predict the outcome of these proposals or the
effect, if any, on the Corporation.
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Since 1995, the BHC Act has permitted bank holding companies from any state to
acquire banks and bank holding companies located in any other state, subject to
certain conditions. Effective June 1, 1997, the Federal Deposit Insurance Act
gave the Corporation's subsidiary banks the ability, subject to certain
restrictions, to consolidate with one another or to acquire by acquisition or
merger branches outside their home state. Pursuant to these provisions, the
Corporation merged certain subsidiary banks during 1997. Competition has
increased further as banks branch across state lines and enter new markets.
COMPETITION The Corporation and its subsidiaries are subject to vigorous and
intense competition from various financial institutions and increasingly from
"nonbank" entities that engage in similar activities without being subject to
bank regulatory supervision and restrictions. This is particularly true as the
Corporation expands nationally beyond its primary geographic footprint, where
expansion requires significant investments to penetrate new markets and respond
to competition.
In making loans, the subsidiary banks compete with traditional banking
institutions as well as consumer finance companies, leasing companies and other
nonbank lenders. Loan pricing and credit standards are under competitive
pressure as lenders seek to deploy capital and a broader range of borrowers has
access to capital markets. Traditional deposit activities are subject to pricing
pressures and customer migration as the competition for consumer investment
dollars intensifies among banks and other financial services companies. The
Corporation's subsidiary banks compete for deposits not only with other
commercial banks, savings banks, savings and loan associations and credit
unions, but also insurance companies and issuers of commercial paper and other
securities, including mutual funds. Various nonbank subsidiaries engaged in
investment banking and venture capital activities compete with commercial banks,
investment banking firms, insurance companies and venture capital firms. In
providing asset management services, the Corporation's subsidiaries compete with
many large banks, trust companies, brokerage houses, mutual fund managers, other
registered investment advisers and insurance companies.
The ability to access and use technology is an increasingly important
competitive factor in the financial services industry. Technology is not only
important with respect to delivery of financial services, but in processing
information. Each of the Corporation's businesses consistently must make
technological investments to remain competitive.
EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning each executive
officer of the Corporation as of March 1, 1999 is set forth below. Each
executive officer held the position indicated or another senior executive
position with the same entity or one of its affiliates or a predecessor
corporation for the past five years.
Year
Name Age Position with Corporation Employed(1)
- -------------------------------------------------------------------------
Thomas H. O'Brien (2) 62 Chairman, Chief Executive 1962
Officer and Director
James E. Rohr (2) 50 President, Chief 1972
Operating Officer and
Director
Walter E. Gregg, Jr. (2) 57 Senior Executive Vice 1974
President, Finance and
Administration and
Director
Joseph C. Guyaux 48 Executive Vice President 1972
and Chief Executive
Officer, PNC Regional
Community Bank
Frederick J. Gronbacher 56 Executive Vice President, 1976
PNC National Consumer
Bank
Robert L. Haunschild 49 Senior Vice President and 1990
Chief Financial Officer
Ralph S. Michael III 44 Executive Vice President 1979
and Chief Executive
Officer, PNC Corporate
Bank
Thomas E. Paisley III 51 Senior Vice President and 1972
Chairman, Corporate
Credit Policy Committee
Samuel R. Patterson 40 Senior Vice President 1986
and Controller
Helen P. Pudlin 49 Senior Vice President and 1989
General Counsel
Bruce E. Robbins 54 Executive Vice President 1973
and Chief Executive
Officer, PNC Secured
Finance
Thomas K. Whitford 42 Executive Vice President 1983
and Chief Executive
Officer, PNC Advisors
- -------------------------------------------------------------------------
(1) Where applicable, refers to year first employed by predecessor company or
acquired company.
(2) Office of the Chairman member.
ITEM 2 - PROPERTIES
The executive and administrative offices of the Corporation and PNC Bank, N.A.
are located at One PNC Plaza, Pittsburgh, Pennsylvania. The thirty-story
structure is owned by PNC Bank, N.A. The Corporation and PNC Bank, N.A. occupy
all of the building. In addition, PNC Bank, N.A. owns a thirty-four story
structure adjacent to One PNC Plaza, known as Two PNC Plaza, 620 Liberty Avenue,
Pittsburgh, Pennsylvania, that houses
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additional office space. PNC Bank, N.A. also owns a data processing and
telecommunications center located in a suburb of Pittsburgh, Pennsylvania.
The Corporation's subsidiaries own or lease numerous other premises for use in
conducting business activities. The facilities owned or occupied under lease by
the Corporation's subsidiaries are considered by management to be adequate.
Additional information pertaining to the Corporation's properties is set forth
in "Note 8 - Premises, Equipment and Leasehold Improvements" of the "Notes to
Consolidated Financial Statements" included on page 74 of the Annual Report to
Shareholders, which is incorporated herein by reference.
ITEM 3 - LEGAL PROCEEDINGS
The information set forth in "Note 22 - Litigation" of the "Notes to
Consolidated Financial Statements" included on page 84 of the Annual Report to
Shareholders is incorporated herein by reference.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Corporation's common stock is listed on the New York Stock Exchange and is
traded under the symbol "PNC". At the close of business on February 26, 1999,
there were 63,542 common shareholders of record.
Holders of common stock are entitled to receive dividends when declared by the
Board of Directors out of funds legally available therefor. The Board of
Directors may not pay or set apart dividends on the common stock until dividends
for all past dividend periods on any series of outstanding preferred stock have
been paid or declared and set apart for payment. The Board presently intends to
continue the policy of paying quarterly cash dividends. However, the amount of
any future dividends will depend on earnings, the financial condition of the
Corporation and other factors, including contractual restrictions and applicable
government regulations and policies (such as those relating to the ability of
the subsidiary banks and nonbank subsidiaries to upstream dividends to the
parent company). The Federal Reserve Board has the power to prohibit the
Corporation from paying dividends without prior regulatory approval. Further
discussion concerning dividend restrictions is set forth under the caption
"Supervision and Regulation" in Part I, Item 1 of this Form 10-K and in "Note 14
- - Regulatory Matters," which sections are incorporated herein by reference.
Additional information relating to the common stock is set forth under the
caption "Common Stock Prices/Dividends Declared" on page 94 of the Annual Report
to Shareholders, which is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
"Selected Consolidated Financial Data" on page 39 of the Annual Report to
Shareholders is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The discussion of the Corporation's financial position and results of operations
set forth under the section "Financial Review" on pages 39 through 62 of the
Annual Report to Shareholders is incorporated herein by reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The information set forth under the sections "Interest Rate Risk", "Market Risk"
and "Financial Derivatives" on pages 56 through 59 of the Annual Report to
Shareholders is incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The "Report of Ernst & Young LLP, Independent Auditors," "Consolidated Financial
Statements," "Notes to Consolidated Financial Statements" and "Selected
Quarterly Financial Data" on pages 63, 64 through 67, 68 through 87, and 88,
respectively, of the Annual Report to Shareholders are incorporated herein by
reference.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the principal occupations of directors of the
Corporation, their ages, directorships in other companies and respective terms
of office is set forth under the heading "Election of Directors - Information
Concerning Nominees" in the Proxy Statement and is incorporated herein by
reference.
Information regarding compliance with Section 16(a) of the Securities Exchange
Act of 1934 set forth under the heading "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Proxy Statement is incorporated herein by
reference.
Information regarding executive officers of the Corporation is included in Part
I of this Form 10-K under the caption "Executive Officers of the Registrant."
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ITEM 11 - EXECUTIVE COMPENSATION
Information regarding compensation of directors and executive officers under the
captions "Election of Directors - Compensation of Directors," "Election of
Directors - Common Stock Purchase Guideline" and "Compensation of Executive
Officers," excluding the "Personnel and Compensation Committee Report on
Executive Compensation," in the Proxy Statement is incorporated herein by
reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Information regarding the beneficial ownership of the equity securities of the
Corporation by all directors, each of the five highest compensated executive
officers and all directors and executive officers of the Corporation as a group
under the heading "Security Ownership of Directors and Executive Officers" in
the Proxy Statement is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding transactions and relationships with certain directors and
executive officers of the Corporation and their associates under the heading
"Compensation of Executive Officers-Compensation Committee Interlocks and
Insider Participation" in the Proxy Statement is incorporated herein by
reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
FINANCIAL STATEMENTS The following report of independent auditors and
consolidated financial information of the Corporation included in the Annual
Report to Shareholders are incorporated herein by reference.
Page of
Annual
Financial Statements Report
- ----------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors 63
Consolidated Statement of Income for the three
years ended December 31, 1998 64
Consolidated Balance Sheet as of December 31, 1998
and 1997 65
Consolidated Statement of Shareholders' Equity
for the three years ended December 31, 1998 66
Consolidated Statement of Cash Flows for the
three years ended December 31, 1998 67
Notes to Consolidated Financial Statements 68-87
Selected Quarterly Financial Data 88
- ----------------------------------------------------------------
No financial statement schedules are being filed.
REPORTS ON FORM 8-K The following reports on Form 8-K were filed during the
quarter ended December 31, 1998, or thereafter:
Form 8-K dated as of October 15, 1998, reporting the Corporation's consolidated
financial results for the three and nine months ended September 30, 1998, filed
pursuant to Item 5.
Form 8-K dated as of December 23, 1998, reporting developments regarding the
Corporation's credit card business, filed pursuant to Item 5.
Form 8-K dated as of January 19, 1999, reporting the Corporation's consolidated
financial results for the three months and year ended December 31, 1998, filed
pursuant to Item 5.
Form 8-K dated as of February 16, 1999, reporting the public offering of
$250,000,000 of 6-1/8% subordinated notes due 2009, filed pursuant to Item 5.
EXHIBITS The exhibits listed on the Exhibit Index on pages E-1 and E-2 of this
Form 10-K are filed herewith or are incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant, PNC Bank Corp., has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
PNC BANK CORP.
(Registrant)
By: /s/ Robert L. Haunschild
- -----------------------------------------------------
Robert L. Haunschild, Senior Vice President
and Chief Financial Officer
March 25, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of PNC Bank Corp. and
in the capacity indicated on March 25, 1999.
Signature Capacities
- ---------------------------------------------------- -----------------------------------------------
/s/ Thomas H. O'Brien Chairman, Chief Executive Officer
- ---------------------------------------------------- and Director (Principal Executive Officer)
Thomas H. O'Brien
/s/ Robert L. Haunschild Senior Vice President and Chief Financial
- ---------------------------------------------------- Officer (Principal Financial Officer)
Robert L. Haunschild
/s/ Samuel R. Patterson Senior Vice President and Controller
- ---------------------------------------------------- (Principal Accounting Officer)
Samuel R. Patterson
* Paul W. Chellgren; Robert N. Clay; George A. A Majority of the Directors
Davidson, Jr.; David F. Girard-diCarlo; Walter E.
Gregg, Jr.; William R. Johnson; Bruce C. Lindsay;
W. Craig McClelland; Jane G. Pepper; Jackson H.
Randolph; James E. Rohr; Roderic H. Ross; Richard
P. Simmons; Thomas J. Usher; Milton A. Washington;
and Helge H. Wehmeier
*By: /s/ Thomas R. Moore
------------------------------------------
Thomas R. Moore, Attorney-in-Fact,
pursuant to Power of Attorney filed
herewith
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EXHIBIT INDEX
Exhibit
No. Description Method of Filing +
- ------------------------------------------------------------------------------------------------------------------------------
3.1 Articles of Incorporation of the Corporation, as amended. Filed herewith.
3.2 By-Laws of the Corporation, as amended. Incorporated herein by reference to
Exhibit 99.2 of the Current Report on
Form 8-K dated January 15, 1998.
4.1 Instruments defining the rights of holders of long-term debt of
the Corporation and its subsidiaries are not filed as Exhibits
because the amount of debt under each instrument is less than
10 percent of the consolidated assets of the Corporation. The
Corporation undertakes to file these instruments with the
Commission on request.
4.2 Designation of Series: $1.80 Cumulative Convertible Preferred Incorporated herein as part of Exhibit 3.1.
Stock -- Series A.
4.3 Designation of Series: $1.80 Cumulative Convertible Preferred Incorporated herein as part of Exhibit 3.1.
Stock -- Series B.
4.4 Designation of Series: $1.60 Cumulative Convertible Preferred Incorporated herein as part of Exhibit 3.1.
Stock -- Series C.
4.5 Designation of Series: $1.80 Cumulative Convertible Preferred Incorporated herein as part of Exhibit 3.1.
Stock -- Series D.
4.6 Designation of Series: Fixed/Adjustable Rate Noncumulative Incorporated herein as part of Exhibit 3.1.
Preferred Stock - Series F.
10.1 Supplemental Executive Retirement Income and Disability Plan of Incorporated herein by reference to
the Corporation. Exhibit 10.2 of the Annual Report on
Form 10-K for the year ended December
31, 1990 ("1990 Form 10-K"). *
10.2 Amendments to Supplemental Executive Retirement Income and Incorporated herein by reference to
Disability Plan. Exhibit 10.2 of the Annual Report on
Form 10-K for the year ended December
31, 1996 ("1996 Form 10-K). *
10.3 Amendment to Supplemental Executive Retirement Income and Filed herewith. *
Disability Plan.
10.4 Supplemental Executive Life Insurance and Spouse's Benefit Plan of Incorporated herein by reference to
the Corporation. Exhibit 10.3 of the 1990 Form 10-K. *
10.5 November 21, 1996 Amendment to Supplemental Executive Life Incorporated herein by reference to
Insurance and Spouse's Benefit Plan. Exhibit 10.4 of the 1996 Form 10-K. *
10.6 1997 Long-Term Incentive Award Plan of the Corporation ("1997 Incorporated herein by reference to
Award Plan"). Exhibit 4.3 of the Corporation's
Post-Effective Amendment No. 1 to
Registration Statement on Form S-8 at
File No. 33-54960. *
10.7 Form of Nonstatutory Stock Option Agreement under 1997 Award Plan. Incorporated herein by reference to
Exhibit 10.6 of the 1997 Form 10-K. *
10.8 Form of Nonstatutory Stock Option Agreement under 1997 Award Plan Filed herewith. *
for options granted on or after February 17, 1999.
10.9 Form of Incentive Share Agreement under 1992 Award Plan (June Incorporated herein by reference to
1995), as amended November 21, 1996. Exhibit 10.7 of the 1996 Form 10-K. *
10.10 Form of Addendum to Nonstatutory Stock Option Agreement relating Incorporated herein by reference to
to Reload Nonstatutory Stock Options. Exhibit 10.8 of the 1997 Form 10-K. *
10.11 Form of Reload Nonstatutory Stock Option Agreement. Incorporated herein by reference to
Exhibit 10.9 of the 1997 Form 10-K. *
10.12 Form of Incentive Share Agreement - Share Price, RSR and ROCE Incorporated herein by reference to
Performance Goals. Exhibit 10.10 of the 1997 Form 10-K. *
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10
10.13 PNC Bank Corp. 1994 Annual Incentive Award Plan. Incorporated by reference to Exhibit 10.6
of the Annual Report on Form 10-K for
the year ended December 31, 1994 ("1994
Form 10-K"). *
10.14 PNC Bank Corp. 1996 Executive Incentive Award Plan. Incorporated by reference to Exhibit 10.2
of the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996
("3Q 1996 Form 10-Q"). *
10.15 PNC Bank Corp. and Affiliates Deferred Compensation Plan. Incorporated by reference to Exhibit 4.2
to the Corporation's Registration
Statement on Form S-8 at File No. 333-18069. *
10.16 Amendment to PNC Bank Corp. and Affiliates Deferred Compensation Filed herewith. *
Plan.
10.17 PNC Bank Corp. Supplemental Incentive Savings Plan as amended. Incorporated by reference to Exhibit 4.1
to the Corporation's Registration
Statement on Form S-8 at File No. 333-18069. *
10.18 PNC Bank Corp. Supplemental Pension Plan, as amended. Incorporated herein by reference to
Exhibit 10.12 of the 1996 Form 10-K. *
10.19 1992 Director Share Incentive Plan. Incorporated herein by reference to
Exhibit 10.6 of the Annual Report on
Form 10-K for the year ended December
31, 1992. *
10.20 PNC Bank Corp. Directors Retirement Plan. Incorporated by reference to Exhibit 10.7
of the 1994 Form 10-K. *
10.21 PNC Bank Corp. Directors Deferred Compensation Plan. Incorporated by reference to Exhibit 10.1
of the 3Q 1996 Form 10-Q. *
10.22 Form of Change in Control Severance Agreement. Incorporated herein by reference to
Exhibit 10.17 of the 1996 Form 10-K. *
10.23 Amended and Restated Trust Agreement between the Corporation, Incorporated herein by reference to
as Settlor, and NationsBank, N.A., as Trustee (which has been Exhibit 10.18 of the 1996 Form 10-K. *
replaced by Hershey Trust Company, as successor Trustee).
12.1 Computation of Ratio of Earnings to Fixed Charges. Filed herewith.
12.2 Computation of Ratio of Earnings to Fixed Charges and Preferred Filed herewith.
Dividends.
13 Excerpts from the Annual Report to Shareholders for the year ended Filed herewith.
December 31, 1998. Such Annual Report, except for those
portions thereof that are expressly incorporated by reference
herein, is furnished for information of the SEC only and is
not deemed to be "filed" as part of this Form 10-K.
21 Schedule of Certain Subsidiaries of the Corporation. Filed herewith.
23 Consent of Ernst & Young LLP, independent auditors for the Filed herewith.
Corporation.
24 Power of Attorney of directors and officers of the Corporation. Filed herewith.
27 Financial Data Schedule. Filed herewith.
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+ Except where otherwise expressly noted, incorporated document references are
to Commission File No. 1-9718.
* Denotes management contract or compensatory plan.
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