PROSPECTUS SUPPLEMENT
(To Prospectus Dated February 11, 1993)
$200,000,000
PNC FUNDING CORP
7 3/4% SUBORDINATED NOTES DUE 2004
UNCONDITIONALLY GUARANTEED, ON A SUBORDINATED BASIS,
AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
PNC BANK CORP.
The Notes will mature on June 1, 2004. Interest on the Notes is payable
semiannually on June 1 and December 1, commencing December 1, 1994. The Notes
may not be redeemed prior to their stated maturity.
The Notes will be unsecured and will be subordinate to Senior Indebtedness, and
effectively subordinated to Other Company Obligations, of PNC Funding Corp ("PNC
Funding"). The Notes will be guaranteed, on a subordinated basis, as to payment
of principal and interest by PNC Bank Corp. ("PNC").
Payment of principal of the Notes may be accelerated only in the case of the
bankruptcy or reorganization of PNC or a Principal Subsidiary Bank (as defined).
There is no right of acceleration in the case of the bankruptcy, insolvency or
reorganization of PNC Funding or of a default in the payment of interest on the
Notes or in the performance of any other covenant of PNC Funding or PNC.
The Notes will be represented by a global security ("Global Security")
registered in the name of the nominee of The Depository Trust Company ("DTC"),
which will act as the Depositary. Beneficial interests in the Notes represented
by the Global Security will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary (with respect to
participants' Notes) and its direct and indirect participants. Except as
described herein, Notes in definitive form will not be issued. Settlement for
the Notes will be made in immediately available funds. The Notes will trade in
DTC's Same-Day Funds Settlement System until maturity, and secondary market
trading activity for the Notes will therefore settle in immediately available
funds. All payments of principal and interest will be made by PNC Funding in
immediately available funds.
THE NOTES AND THE GUARANTEES OF THE NOTES ("GUARANTEES") ARE NOT DEPOSITS AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC") OR BY ANY
OTHER FEDERAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTARRY IS A CRIMINAL OFFENSE.
=======================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT PNC FUNDING (1)(2)
- -----------------------------------------------------------------------------------------------------------------------
Per Note 99.350% .650% 98.700%
- -----------------------------------------------------------------------------------------------------------------------
Total $198,700,000 $1,300,000 $197,400,000
=======================================================================================================================
(1) Plus accrued interest, if any, from June 1, 1994.
(2) Before deduction of expenses payable by PNC Funding, estimated to be
$125,000.
The Notes are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of a Global Security representing the Notes will be made through
the facilities of DTC on or about June 1, 1994.
SMITH BARNEY SHEARSON INC.
SALOMON BROTHERS INC
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
The date of this Prospectus Supplement is May 24, 1994.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
SUMMARY CONSOLIDATED FINANCIAL DATA
The following unaudited table sets forth certain consolidated financial data
for PNC and its subsidiaries and is qualified in its entirety by the detailed
information and financial statements included in the documents incorporated
herein by reference. See "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus. The financial data for the three months ended March
31, 1994 are not necessarily indicative of the results that may be expected for
the full year or for any other interim period.
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- ----------------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- ---------- ---------- ---------- ---------- ----------
SUMMARY OF OPERATIONS (in
thousands)
Interest income............. $895,104 $793,553 $3,201,120 $3,218,971 $3,657,533 $4,223,375 $4,064,440
Interest expense............ 397,763 339,862 1,372,087 1,561,679 2,222,335 2,874,118 2,758,385
Net interest income......... 497,341 453,691 1,829,033 1,657,292 1,435,198 1,349,257 1,306,055
Provision for credit
losses.................... 25,015 61,417 203,944 323,531 428,038 760,507 331,724
Noninterest income excluding
net
securities gains.......... 228,159 175,120 757,555 693,273 748,571 634,108 547,093
Net securities gains........ 30,392 105,161 187,694 193,503 63,454 22,425 33,545
Noninterest expenses........ 426,846 387,015 1,453,726 1,442,415 1,270,984 1,215,858 1,069,705
Applicable income taxes
(benefits)................ 98,342 98,529 371,349 248,682 158,415 (41,487) 107,824
Income before cumulative
effect of changes in
accounting principles..... 205,689 187,011 745,263 529,440 389,786 70,912 377,440
Cumulative effect of changes
in accounting principles,
net of tax benefits....... (19,393) (19,393) (102,501)
Net income.................. 205,689 167,618 725,870 426,939 389,786 70,912 377,440
PERIOD-END BALANCE SHEET DATA
(in millions)
Total assets................ $ 61,163 $ 51,124 $ 62,080 $ 51,380 $ 44,892 $ 45,533 $ 45,661
Loans, net of unearned
income.................... 33,294 25,127 33,308 25,817 25,443 27,633 28,107
Allowance for credit
losses.................... 980 911 972 897 797 785 616
Shareholders' equity........ 4,282 3,855 4,325 3,746 3,317 2,601 2,830
AVERAGE BALANCE SHEET DATA
(in millions)
Total assets................ $ 58,966 $ 47,794 $ 50,321 $ 44,744 $ 42,793 $ 45,716 $ 42,083
Loans, net of unearned
income.................... 32,023 25,214 25,959 24,520 26,954 27,867 26,539
Securities.................. 21,238 18,980 20,403 16,653 11,949 13,432 10,597
Earning assets.............. 55,182 44,980 47,340 42,192 40,096 42,544 38,822
Deposits.................... 31,737 28,090 28,442 28,476 31,202 30,791 28,801
Notes and debentures........ 10,142 4,744 6,486 2,948 1,334 991 654
Shareholders' equity........ 4,330 3,814 3,957 3,436 2,795 2,780 2,798
SELECTED RATIOS
Return on total assets...... 1.41% 1.42% 1.44% .95% .91% .16% .90%
Return on common
shareholders' equity...... 19.32 17.89 18.40 12.47 14.02 2.46 13.60
Average shareholders' equity
to average total assets... 7.34 7.98 7.86 7.68 6.53 6.08 6.65
Net interest margin......... 3.68 4.14 3.95 4.03 3.73 3.40 3.64
CREDIT QUALITY RATIOS
Nonperforming loans to
period-end loans(a)....... 1.09% 1.93% 1.15% 2.14% 2.99% 3.69% 1.74%
Nonperforming assets to
period-end loans and
foreclosed assets(b)...... 1.56 2.92 1.65 3.14 4.21 4.67 2.06
As a percent of average
loans
Net charge-offs........... .29 .76 .66 1.15 1.48 2.12 .98
Provision for credit
losses.................. .32 .99 .79 1.32 1.59 2.73 1.25
Allowance for credit
losses.................. 3.06 3.61 3.74 3.66 2.96 2.82 2.32
Allowance as a percent of
period-end
Loans..................... 2.94 3.62 2.92 3.47 3.13 2.84 2.19
Nonperforming loans....... 269.60 187.85 253.12 162.08 104.71 76.99 125.96
EARNINGS TO FIXED CHARGES
RATIO(c)
Excluding interest on
deposits.................. 2.53x 2.96x 2.72x 2.50x 2.07x 1.03x 1.56x
Including interest on
deposits.................. 1.77 1.83 1.80 1.49 1.24 1.01 1.17
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(a) Nonperforming loans are comprised of nonaccrual and restructured loans.
(b) Nonperforming assets are comprised of nonperforming loans and foreclosed
assets.
(c) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before income taxes and cumulative effect of changes in
accounting principles and fixed charges by fixed charges. Fixed charges
represent all interest expense (ratios are presented both excluding and
including interest on deposits), amortization of notes and debentures
expense and the portion of net rental expense which is deemed to be
equivalent to interest on debt. Interest expense (other than on deposits)
includes interest on notes and debentures, federal funds purchased and
securities sold under agreements to repurchase, mortgages, commercial paper
and other funds borrowed. Since PNC Funding is a provider of funds to PNC
and its subsidiaries, fixed charge ratios have been presented on a
consolidated basis.
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RECENT FINANCIAL RESULTS
SUMMARY OF OPERATIONS
Net income for the first quarter of 1994 was $205.7 million, or $.86 per
fully diluted share, compared with $167.6 million, or $.70 per share, for 1993.
Income before accounting changes in the prior-year period was $187.0 million or
$.78 per fully diluted share. Return on assets and return on common
shareholders' equity were 1.41 percent and 19.32 percent, respectively, in 1994,
compared with 1.42 percent and 17.89 percent, in 1993. The corresponding 1993
returns before accounting changes were 1.59 percent and 19.86 percent.
The results for the first three months of 1993 include the cumulative
effect of adopting Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," and a change in the method of accounting for
certain intangible assets, primarily purchased mortgage servicing rights. The
cumulative effect of these changes reduced net income by $9.0 million and $10.4
million, respectively.
On a fully taxable-equivalent basis, net interest income for the first
quarter of 1994 increased $42.2 million, or 9.1 percent, compared with the first
quarter of 1993. The increase was due to higher levels of average earning
assets. During the first three months of 1994, the net interest margin was 3.68
percent, compared with 4.14 percent in the year-earlier period, primarily due to
the acquisition of PNC Mortgage (formerly Sears Mortgage Banking Group).
The provision for credit losses was $25.0 million for the first quarter of
1994, compared with $61.4 million in the first quarter of 1993. Continuing
improvement in economic conditions combined with management's ongoing efforts to
improve asset quality resulted in lower nonperforming assets and charge-offs.
Consequently, reserve coverage of nonperforming loans increased to 269.6
percent.
Noninterest income totaled $258.6 million in the first quarter of 1994,
compared with $280.3 million in the corresponding 1993 period. Net security
gains for the quarter totaled $30.4 million, compared with $105.2 million in the
year-earlier period. Excluding net securities gains, noninterest income as a
percentage of total revenue was 31.1 percent in the first quarter of 1994,
compared with 27.4 percent a year earlier.
Investment management and trust income increased 10.1 percent to $73.0
million in the first quarter of 1994, as higher trust income and mutual fund
administrative fees were offset by lower investment advisory fees due to a
decline in the level of advised money market mutual fund assets. Service
charges, fees and commissions increased 7.9 percent, to $87.9 million, due to
higher transaction volume related to new business, acquisitions and increased
corporate finance activity. Mortgage banking income increased $30.0 million to
$37.9 million, primarily as a result of the acquisition of PNC Mortgage. Other
noninterest income increased due to higher gains from sales of assets and
venture capital activity.
Noninterest expenses totaled $426.8 million in the first quarter of 1994,
compared with $387.0 million in the year-earlier period. Noninterest expense
increased due to higher staff, net occupancy, equipment and intangible asset
amortization expenses related primarily to acquisitions completed in the second
half of 1993. The overhead ratio was 55.8 percent in the first quarter, compared
with 54.1 percent in 1993. The ratio increased due to higher relative operating
expenses associated with PNC Mortgage and lower security gains in 1994.
FINANCIAL POSITION
Total assets at March 31, 1994 were $61.2 billion compared with $62.1
billion at year end. Average earning assets increased $10.2 billion to $55.2
billion during the first quarter of 1994 when compared with the first quarter of
1993. Average loans increased 27.0 percent to $32.0 billion in the comparison
and average securities increased $2.3 billion to $21.2 billion. These changes in
the
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average balance sheet reflect the impact of acquisitions, stronger loan demand
and asset/liability management activities.
At March 31, 1994, PNC's leverage capital ratio and Tier I and total
risk-based capital ratios were 7.15 percent, 9.86 percent and 12.42 percent,
respectively. Also at March 31, 1994, each bank affiliate was classified as well
capitalized.
CREDIT QUALITY
Nonperforming assets, which are comprised of nonaccrual and restructured
loans and foreclosed assets, declined $33 million from year-end 1993 to $521
million. At March 31, 1994, nonperforming assets consisted of $355 million of
nonaccrual loans, $9 million of restructured loans and $157 million of
foreclosed assets. Nonperforming assets were 1.56 percent of total loans and
foreclosed assets at March 31, 1994, compared with 1.65 percent at year end.
The allowance for credit losses totaled $980 million at March 31, 1994,
compared with $972 million at December 31, 1993. The allowance as a percentage
of period-end loans and of nonperforming loans was 2.94 percent and 269.60
percent, respectively, at March 31, 1994. The comparable year-end amounts were
2.92 percent and 253.12 percent, respectively. Net charge-offs during the first
quarter of 1994 were $23 million compared with $47 million in 1993.
ACQUISITIONS
On November 30, 1993, PNC completed its acquisition of PNC Mortgage for
$328 million in cash. The purchase price is subject to certain post-closing
adjustments. With this acquisition, PNC added assets of $7.6 billion; a mortgage
servicing portfolio approximating $27 billion, including $21 billion serviced
for others; and a national residential mortgage production network consisting of
120 locations in 33 states.
On January 21, 1994, PNC consummated the acquisition of United Federal
Bancorp, Inc. ("United"), State College, Pennsylvania, for $156 million in cash.
United's assets totaled $900 million at closing. In addition, PNC has a pending
agreement to acquire First Eastern Corp. ("First Eastern"), Wilkes-Barre,
Pennsylvania, which had total assets of $2.0 billion at March 31, 1994. The
First Eastern acquisition, which has an indicated value of approximately $330
million, is expected to close in the second quarter of 1994.
CERTAIN UPDATING INFORMATION
The address of the New York regional office of the Securities and Exchange
Commission now is 7 World Trade Center, Suite 1300, New York, New York 10048.
The information under the caption "Statement of Available Information" in the
accompanying Prospectus should be read accordingly. Also, William F. Strome's
title has changed to Senior Vice President, Deputy General Counsel and Secretary
of PNC. The information under the caption "Legal Opinions" in the accompanying
Prospectus should be read accordingly.
The following information supplements and amends the description of PNC and
PNC Funding in the accompanying Prospectus. The executive offices of PNC are
located at One PNC Plaza, Fifth Avenue and Wood Street, Pittsburgh, Pennsylvania
15265, and its telephone number is (412) 762-2666. The executive offices of PNC
Funding are located at Broad and Chestnut Streets, Philadelphia, Pennsylvania
19110, and its telephone number is (215) 585-5343.
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CERTAIN TERMS OF THE NOTES
The Notes will constitute a series of Subordinated Debt Securities, as such
term is defined in the accompanying Prospectus. The following description of the
particular terms of the Notes supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Subordinated Debt Securities set forth in the accompanying Prospectus, to which
description reference is hereby made. The accompanying Prospectus sets forth the
meaning of certain capitalized terms used herein and not otherwise defined.
GENERAL
The Notes will be limited to $200,000,000 aggregate principal amount and
will be issued under an Indenture dated as of December 1, 1991, among PNC, PNC
Funding and Chemical Bank, as Trustee ("Trustee"), as amended by a Supplemental
Indenture dated as of February 15, 1993 (as amended, the "Indenture"), which are
more fully described in the accompanying Prospectus. The Notes are
unconditionally guaranteed, on a subordinated basis, as to payment of principal
and interest by PNC.
The Notes will bear interest at a rate of 7 3/4% per annum from June 1,
1994, which will be payable semiannually in arrears on June 1 and December 1,
commencing December 1, 1994 (each, an "Interest Payment Date") to the persons in
whose names the Notes are registered at the close of business on the May 15 or
November 15, as the case may be, next preceding such Interest Payment Dates.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months.
The Notes will mature on June 1, 2004. The Notes may not be redeemed prior
to their stated maturity. The Notes will not be subject to any sinking fund.
SUBORDINATION OF NOTES AND GUARANTEES
The Notes will be unsecured and will be subordinate in right of payment to
the prior payment in full of all Senior Indebtedness of PNC Funding (as defined
below). At March 31, 1994, the outstanding Senior Indebtedness of PNC Funding
was approximately $805.1 million.
The Notes will be unconditionally guaranteed by PNC, on a subordinated
basis, as to payment of principal and interest when and as the same shall become
due and payable. The Subordinated Guarantees will be unsecured and will be
subordinate and junior in right of payment to PNC's obligations to the holders
of Senior Indebtedness of PNC. At March 31, 1994, the outstanding Senior
Indebtedness of PNC was approximately $805.1 million, which is inclusive of the
guarantee of Senior Indebtedness of PNC Funding.
In certain events of insolvency, the payment of the principal of and
interest on the Notes will, to the extent set forth in the Indenture, also be
effectively subordinated in right of payment to the prior payment in full of all
Other Company Obligations (as defined in the Indenture). Other Company
Obligations means obligations of PNC Funding associated with derivative products
such as interest rate and currency exchange contracts, foreign exchange
contracts, commodity contracts or any similar arrangements, unless the
instrument by which PNC Funding incurred, assumed or guaranteed the obligation
expressly provides that it is subordinate or junior in right of payment to any
other indebtedness or obligations of PNC Funding. At March 31, 1994, there were
no Other Company Obligations of PNC Funding.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of PNC Funding, the holders of all Senior Indebtedness of PNC
Funding will first be entitled to receive payment in full of all amounts due or
to become due thereon before the Holders of the Notes will be entitled to
receive any payment in respect of the principal of or interest on the Notes. If
upon any such payment or distribution of assets to creditors
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there remain, after giving effect to such subordination provisions in favor of
the holders of Senior Indebtedness of PNC Funding, any amounts of cash, property
or securities available for payment or distribution in respect of the Notes (as
defined in the Indenture, as amended, "Excess Proceeds"), and if, at such time,
any creditors in respect of Other Company Obligations have not received payment
in full of all amounts due or to become due on or in respect of such Other
Company Obligations, then such Excess Proceeds shall first be applied to pay or
provide for the payment in full of such Other Company Obligations before any
payment or distribution may be made in respect of the Notes. In addition, no
payment may be made of the principal of or interest on the Notes, or in respect
of any retirement, purchase or other acquisition of any of the Notes at any time
when (i) there is a default in the payment of the principal of, or premium, if
any, or interest on or otherwise in respect of any Senior Indebtedness of PNC
Funding or (ii) any event of default with respect to any Senior Indebtedness of
PNC Funding has occurred and is continuing, or would occur as a result of such
payment on the Notes or any retirement, purchase or other acquisition of any of
the Notes permitting the holders of such Senior Indebtedness of PNC Funding to
accelerate the maturity thereof. Except as described above, the obligation of
PNC Funding to make payment of the principal of or interest on the Notes will
not be affected. By reason of such subordination, in the event of insolvency,
Holders of the Notes may recover less, ratably, than holders of Senior
Indebtedness of PNC Funding and Other Company Obligations and may also recover
less, ratably, than holders of Existing Company Subordinated Indebtedness and
other creditors of PNC Funding. Existing Company Subordinated Indebtedness means
PNC Funding's 9 7/8% Subordinated Notes Due 2001 and CCNB Corporation's 10.55%
Equity Commitment Notes Due 1998 assumed by PNC Funding and PNC in connection
with the acquisition of CCNB Corporation on October 23, 1992. At March 31, 1994,
the Existing Company Subordinated Indebtedness was approximately $102.7 million.
PNC Funding's obligations under the Notes shall rank PARI PASSU in right of
payment with the Existing Company Subordinated Indebtedness, subject to the
obligations of the Holders of Notes to pay over any Excess Proceeds to creditors
in respect of Other Company Obligations as provided in the Indenture, as
amended. The Notes shall also rank PARI PASSU in right of payment with PNC
Funding's 6 7/8% Subordinated Notes Due 2003 and 6 1/8% Subordinated Notes Due
2003, the holders of which are also subject to such obligation to pay over any
Excess Proceeds (as defined in the Indenture, as amended). Therefore, in the
event of insolvency, Holders of the Notes will recover the same, ratably, as
holders of PNC Funding's 6 7/8% Subordinated Notes Due 2003 and 6 1/8%
Subordinated Notes Due 2003, of which $200 million and $250 million,
respectively, in principal amounts were outstanding at March 31, 1994.
Senior Indebtedness of PNC Funding, defined in the Indenture as "Senior
Company Indebtedness," means the principal of, and premium, if any, and interest
on (i) all indebtedness for money borrowed, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, except
(A) such indebtedness as is by its terms expressly stated not to be superior in
right of payment to the Notes or to rank PARI PASSU with the Notes, and (B) PNC
Funding's 9 7/8% Subordinated Notes Due 2001, PNC Funding's 6 7/8% Subordinated
Notes Due 2003, PNC Funding's 6 1/8% Subordinated Notes due 2003 and CCNB
Corporation's 10.55% Equity Commitment Notes Due 1998 assumed by PNC Funding and
PNC in connection with the acquisition of CCNB Corporation on October 23, 1992
and (ii) any deferrals, renewals or extensions of any such Senior Indebtedness
of PNC Funding. The term "indebtedness for money borrowed" as used in the prior
sentence means any obligation of, or any obligation guaranteed by, PNC Funding
for the repayment of money borrowed, whether or not evidenced by bonds,
debentures, notes or other written instruments, any capitalized lease obligation
and any deferred obligation for payment of the purchase price of any property or
assets. There is no limitation on the issuance of additional Senior Indebtedness
of PNC Funding.
PNC's obligations under the Subordinated Guarantees shall rank PARI PASSU
in right of payment with each other and with Existing Guarantor Subordinated
Indebtedness (as defined below), subject to the obligations of the Holders of
Subordinated Guarantees to pay over any Excess
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Proceeds to creditors in respect of Other Guarantor Obligations as provided in
the Indenture, as amended. The Subordinated Guarantees shall also rank PARI
PASSU in right of payment with PNC's Guarantee of PNC Funding's 6 7/8%
Subordinated Notes Due 2003 and 6 1/8% Subordinated Notes Due 2003, the holders
of which are also subject to such obligations to pay over Excess Proceeds (as
defined in the Indenture, as amended). Therefore, in the event of insolvency,
Holders of the Subordinated Guarantees will recover the same, ratably, as
holders of PNC's Guarantee of PNC Funding's 6 7/8% Subordinated Notes Due 2003
and 6 1/8% Subordinated Notes Due 2003, of which $200 million and $250 million,
respectively, in principal amounts were outstanding at March 31, 1994. Existing
Guarantor Subordinated Indebtedness means PNC's 8 1/4% Convertible Subordinated
Debentures Due 2008, PNC's 8 1/2% Convertible Subordinated Debentures Due 2005
originally issued by Citizens Fidelity Corporation, PNC's Guarantee of PNC
Funding's 9 7/8% Subordinated Notes Due 2001 and CCNB Corporation's 10.55%
Equity Commitment Notes Due 1998 assumed by PNC Funding and PNC in connection
with the acquisition of CCNB Corporation on October 23, 1992. At March 31, 1994,
the Existing Guarantor Subordinated Indebtedness was approximately $103.6
million and there were no Other Guarantor Obligations of PNC.
Senior Indebtedness of PNC, defined in the Indenture as "Senior Guarantor
Indebtedness," means the principal of, and premium, if any, and interest on (i)
all indebtedness for money borrowed, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, except
(A) such indebtedness as is by its terms expressly stated not to be superior in
right of payment to the Subordinated Guarantees or to rank PARI PASSU with the
Subordinated Guarantees, (B) PNC's 8 1/4% Convertible Subordinated Debentures
Due 2008 and PNC's 8 1/2% Convertible Subordinated Debentures Due 2005
originally issued by Citizens Fidelity Corporation, and (C) PNC's Guarantee of
PNC Funding's 9 7/8% Subordinated Notes Due 2001, PNC's Guarantee of PNC
Funding's 6 7/8% Subordinated Notes Due 2003 and 6 1/8% Subordinated Notes Due
2003 and CCNB Corporation's 10.55% Equity Commitment Notes Due 1998 assumed by
PNC Funding and PNC in connection with the acquisition of CCNB Corporation on
October 23, 1992 and (ii) any deferrals, renewals or extensions of any such
Senior Indebtedness of PNC. The term "indebtedness for money borrowed" as used
in the prior sentence means any obligation of, or any obligation guaranteed by,
PNC for the repayment of money borrowed, whether or not evidenced by bonds,
debentures, notes or other written instruments, any capitalized lease obligation
and any deferred obligation for payment of the purchase price of any property or
assets. There is no limitation under the indenture on the issuance of additional
Senior Indebtedness of PNC.
LIMITED RIGHTS OF ACCELERATION
Payment of principal of the Notes may be accelerated only in case of the
bankruptcy or reorganization of PNC or a Principal Subsidiary Bank. There is no
right of acceleration in the case of events involving the bankruptcy, insolvency
or reorganization of PNC Funding or of a default in the payment of principal of
or interest on the Notes or the performance of any other covenant of PNC Funding
or PNC in the Indenture, as amended.
DELIVERY AND FORM
The Notes initially will be represented by a Global Security deposited with
DTC and registered in the name of a nominee of DTC, except as set forth below.
DTC currently limits the maximum denomination of any global security to
$150,000,000. Therefore, for purposes of this Prospectus Supplement, "Global
Security" refers to the Global Securities representing the entire issue of Notes
offered hereby. The Notes will be available for purchase in denominations of
$1,000 (representing 1/200,000 of the Global Security) and integral multiples
thereof in book-entry form only. Unless and until certificated Notes are issued
under the limited circumstances described below, no beneficial owner of a Note
shall be entitled to receive a definitive certificate representing a Note. So
long as DTC or any successor depositary (collectively, the "Depositary") or its
nominee is the registered
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owner of the Global Security, the Depositary, or such nominee, as the case may
be, will be considered to be the sole owner or holder of the Notes for all
purposes of the Indenture.
Principal of and interest on the Notes is payable at the office of the
corporate trust department of the Trustee, PNC Funding's Paying Agent in The
City of New York, presently located at 450 West 33rd Street, New York, New York
10001. Payment of interest, other than at maturity, may be made at the option of
PNC Funding by check mailed to the address of the registered holder entitled
thereto. So long as the Global Security represents the Notes, such payments of
interest and principal will be made to the Depositary or its nominee. Payments
to beneficial owners of the Notes will be made through the Depositary or its
nominee, as described below. None of PNC Funding, the Trustee, any Paying Agent,
or the Registrar for the Notes will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Global Security for such Notes or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
BOOK-ENTRY SYSTEM
DTC has advised PNC Funding that it is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for persons that have accounts with it ("Participants") and to
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other organizations
(including the Underwriters), some of which and/or their representatives own
DTC. Indirect access to the DTC system also is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). Beneficial owners of the Notes that are not
Participants or Indirect Participants but desire to purchase, sell or otherwise
transfer ownership of, or other interest in, the Notes may do so only through
Participants and Indirect Participants.
Payments with respect to any Global Security will be made by the Paying
Agent to DTC or any successor depositary, or its nominee. PNC Funding expects
that any such Depositary, or its nominee, upon receipt of any payment of
principal of or interest on the Global Security will credit the accounts of its
Participants with payments in amounts proportionate to such Participants'
ownership interest in the Global Security. Beneficial owners of the Notes,
directly or indirectly, will receive distributions of principal and interest in
proportion to their beneficial ownership through the Participants. Consequently,
any payments to beneficial owners of the Notes will be subject to the terms,
conditions and time of payment required by the Depositary, the Participants and
Indirect Participants, as applicable. PNC Funding expects that such payments
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers registered in "street
name." Such payments will be the responsibility of such Participants and
Indirect Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Notes and is required to receive and
transmit distributions of principal of and interest on the Notes. Participants
and Indirect Participants with which beneficial owners of the Notes have
accounts similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of their respective beneficial owners of the
Notes. Accordingly, although beneficial owners of the Notes will not possess
certificated Notes, beneficial owners will receive payments and will be able to
transfer their interests.
S-8
Since it is anticipated that the only Noteholder will be the Depositary or
its nominee, beneficial owners of the Notes will not be recognized as
Noteholders under the Indenture unless certificated definitive Notes are issued.
So long as the Notes are represented by the Global Security, beneficial owners
of the Notes will only be permitted to exercise the rights of Noteholders
indirectly through the Participants who in turn will exercise the rights of
Noteholders through the Depositary.
If DTC is at any time unwilling, unable or ineligible to continue as
Depositary and a successor depositary is not appointed by PNC Funding within 90
days, PNC Funding will issue certificated Notes in definitive form in exchange
for the Global Security. In addition, PNC Funding may at any time determine not
to have the Notes represented by the Global Security, and, in such event, will
issue certificated Notes in definitive form in exchange for the Global Security.
In either instance, an owner of a beneficial interest in the Global Security
will be entitled to physical delivery of certificated Notes in definitive form
equal in principal amount to such beneficial interest and to have such
certificated Notes registered in its name. Certificated Notes so issued in
definitive form will be issued in denominations of $1,000 and integral multiples
thereof and will be issued in registered form only, without coupons.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by PNC
Funding in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity, and
secondary market trading activity in the Notes will therefore be required by DTC
to settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading activity
in the Notes.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, PNC Funding has agreed to sell to each of the Underwriters named
below and each of the Underwriters has severally agreed to purchase the
principal amount of Notes set forth opposite its name.
PRINCIPAL AMOUNT
UNDERWRITERS OF NOTES
- -------------------------------------------------------------------------- ----------------
Smith Barney Shearson Inc................................................. $ 40,000,000
Salomon Brothers Inc...................................................... 40,000,000
CS First Boston Corporation............................................... 40,000,000
Goldman, Sachs & Co....................................................... 40,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................. 40,000,000
----------------
Total................................................................ $200,000,000
================
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the Notes
if any Notes are purchased. In the event of default by any Underwriter, the
Underwriting Agreement provides that, in certain circumstances, purchase
commitments by nondefaulting Underwriters may be increased or the Underwriting
Agreement may be terminated. PNC Funding has been advised by the several
Underwriters that they propose initially to offer the Notes to the public at the
public offering price set forth on the cover page of this Prospectus Supplement
and to certain dealers at such price less a concession not in excess of .40% of
the principal amount of the Notes. Underwriters may allow and such dealers may
reallow a concession not in excess of .25% of such principal amount. After the
initial public offering, the public offering price and such concessions may be
changed.
S-9
The Underwriting Agreement provides that PNC Funding and PNC will jointly
and severally indemnify the several Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or
contribute payments the Underwriters may be required to make in respect thereof.
Certain of the Underwriters and their associates and affiliates may be a
customer of, engage in transactions with, and perform investment banking and
other financial services (including commercial lending) for, PNC and its
subsidiaries in the ordinary course of business.
PNC Funding has been advised by the Underwriters that one or more of them
initially intend to make a market in the Notes but are not obligated to do so
and may discontinue any market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for the Notes offered
hereby.
LEGAL OPINIONS
The validity of the Notes and related Guarantees will be passed upon for
the Underwriters by Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New
York 10019.
S-10
PROSPECTUS
PNC FUNDING CORP
[PNC LOGO]
DEBT SECURITIES
PNC BANK CORP.
UNCONDITIONAL GUARANTEES OF PNC FUNDING CORP DEBT SECURITIES
AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
PREFERRED STOCK ($1.00 PAR VALUE)
PNC Funding Corp ("PNC Funding") from time to time may offer its unsecured
debt securities consisting of debentures, notes and/or other unsecured evidences
of indebtedness ("Debt Securities") and PNC Bank Corp., formerly PNC Financial
Corp, ("PNC") from time to time may offer shares of its preferred stock, $1.00
par value ("Preferred Stock") up to an amount resulting in combined net proceeds
to PNC Funding and PNC of approximately $1,300,000,000, of which not less than
$300,000,000 will be derived from the sale of Preferred Stock. The Debt
Securities may be either senior ("Senior Debt Securities") or subordinated in
priority of payment ("Subordinated Debt Securities") and all such Senior or
Subordinated Debt Securities will be unconditionally guaranteed on a senior or
subordinated basis, respectively, as to payment of principal, premium, if any,
and interest ("Guarantees") by PNC. The Debt Securities and the Preferred Stock
(together, the "Securities") may be offered separately or together, in separate
series in amounts, at prices and on terms to be set forth in supplements to this
Prospectus (a "Prospectus Supplement").
The Debt Securities and the Preferred Stock may be offered and sold to or
through underwriters or dealers, directly to other purchasers or through agents.
Underwritten offerings of the Securities may involve underwriting syndicates
represented by managing underwriters, or underwriters without a syndicate. See
"Plan of Distribution." The names of, and the principal amounts to be purchased
by, underwriters or agents, if any, and the compensation of such underwriters or
agents, including applicable commissions and discounts, will be set forth in the
Prospectus Supplement. The aggregate net proceeds to PNC Funding and PNC from
the sale of Debt Securities and of Preferred Stock will be the public offering
or purchase price of the Securities sold less the aggregate of any applicable
commissions and discounts and other expenses of issuance and distribution.
If Debt Securities are offered, the terms of the Debt Securities, including,
where applicable, the specific designation; priority; aggregate principal
amount; denominations; maturity; premium; interest rate (which may be fixed or
variable) and time of payment of interest; terms for redemption at the option of
PNC Funding or the holder, if any, terms for sinking fund payments, if any, the
initial public offering price; terms relating to temporary or permanent global
securities; provisions regarding repayment, if any; provisions regarding
convertibility, if any; special provisions and restrictions relating to Debt
Securities in bearer form or in registered form with coupons; provisions
regarding registration of transfer or exchange; special provisions and
restrictions relating to Debt Securities, the principal, premium, if any, and
interest of which is denominated and payable in a foreign currency or currency
unit; provisions regarding original issue discount securities; and other terms
in connection with the offering and sale of the Debt Securities in respect of
which this Prospectus is being delivered, will be set forth in the Prospectus
Supplement.
If Preferred Stock is issued, the terms of the Preferred Stock, including,
where applicable, the specific designation, number of shares, whether fractional
interests will be offered through depositary arrangements, dividend rate or
method of calculation, dividend periods, dividend payment dates, whether
dividends are cumulative or noncumulative, liquidation preference, any
redemption, sinking fund, or conversion or exchange provisions, voting or other
rights, and other terms in connection with the offering and sale of the
Preferred Stock in respect of which this Prospectus is being delivered, will be
set forth in the Prospectus Supplement.
THE SECURITIES AND THE GUARANTEES ARE NOT DEPOSITS AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC") OR BY ANY OTHER GOVERNMENT
AGENCY.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
The date of this Prospectus is February 11, 1993.
STATEMENT OF AVAILABLE INFORMATION
PNC is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended ("Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission ("Commission"). Such reports, proxy statements and other information
can be inspected and copied at the Commission's public reference room located at
45O Fifth Street, N.W., Washington, D.C. 20549, and the Commission's regional
offices located at: 75 Park Place, New York, New York 10007 and Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates. Copies of such material
can also be inspected at the office of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005, on which exchange PNC's Common Stock and
certain series of its Preferred Stock are listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by PNC are
incorporated herein by reference:
a. Annual Report on Form 10-K for the year ended December 31, 1991.
b. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1992; June 30, 1992
and September 30, 1992, each as amended by reports on Form 8 filed Feb
ruary 10, 1993.
c. Current Reports on Form 8-K dated as of January 3, 1992; June 22, 1992; July
22, 1992; October 1, 1992; November 20, 1992; December 22, 1992; and January 21,
1993.
d. Description of Securities contained in application for registration of securities on
Form 8-A filed September 24, 1987.
All documents filed by PNC pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act, subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities offered hereby, shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
PNC will provide without charge to each person to whom this Prospectus is
delivered, on the written or oral request of such person, a copy of any or all
documents incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents). Written requests should be directed to: PNC Bank Corp.,
Accounting Policy and Reporting Department, Fifth Avenue and Wood Street,
Pittsburgh, Pennsylvania 15265.
Telephone requests may be directed to PNC Bank Corp. at (412) 762-2661.
PNC BANK CORP.
On February 8, 1993, PNC Financial Corp changed its name to PNC Bank Corp.
PNC is a bank holding company formed upon the consolidation of Pittsburgh
National Corporation and Provident National Corporation in January 1983. Since
1983, PNC has diversified its geographical presence and product capabilities
through numerous strategic transactions and the formation of various non-banking
subsidiaries. Provident National Bank was merged into Pittsburgh National Bank
on
2
February 4, 1993, and the name of Pittsburgh National Bank changed to PNC Bank,
National Association ("PNC Bank") effective February 8, 1993. At September 30,
1992, PNC operated 13 banking subsidiaries ("Banks") in Pennsylvania, Kentucky,
Delaware, New Jersey, Ohio and Indiana, including Pittsburgh National Bank and
Provident National Bank and 83 non-banking subsidiaries. At September 30, 1992,
PNC's consolidated total assets and total shareholders' equity were
approximately $46.6 billion and $3.7 billion, respectively. Based on
consolidated total assets at September 30, 1992, PNC was the 13th largest bank
holding company in the United States and the largest in Pennsylvania.
The principal executive offices of PNC are located at the PNC Bank
Building, Fifth Avenue and Wood Street, Pittsburgh, Pennsylvania 15265, and its
telephone number is (412) 762-2666.
PNC FUNDING CORP
PNC Funding is a wholly owned subsidiary of PNC. PNC Funding was
incorporated under the laws of Pennsylvania in 1972 and is engaged in financing
the activities of PNC and its subsidiaries through the issuance of commercial
paper and other debt guaranteed by PNC. The executive offices of PNC Funding are
located at the Marine Bank Building, 717 State Street, Erie, Pennsylvania 16501
and its telephone number is (814) 871-3303.
CERTAIN REGULATORY CONSIDERATIONS
Bank holding companies, banks and many of their non-bank affiliates are
extensively regulated under both federal and state law. The following
information describes certain aspects of that regulation. To the extent that the
following information describes statutory provisions, it is qualified in its
entirety by reference to the particular statutory provisions. The following is
not intended to be an exhaustive description of the statutes and regulations
applicable to PNC's business. Additional information regarding supervision and
regulation is included in documents incorporated herein by reference. See
"Statement of Available Information."
PNC and PNC Funding are legal entities separate and distinct from the Banks
and PNC's other non-bank subsidiaries. Accordingly, the right of PNC, and
consequently the right of creditors and shareholders of PNC, to participate in
any distribution of the assets or earnings of any subsidiary is necessarily
subject to the prior claims of creditors of the subsidiary, except to the extent
that claims of PNC in its capacity as a creditor may be recognized. The
principal source of PNC's revenue and cash flows is dividends from its Banks and
non-bank subsidiaries. There are legal limitations on the extent to which the
Banks can finance or otherwise supply funds to PNC and its non-bank
subsidiaries, including PNC Funding.
PNC derives substantially all of its income from the payment of dividends
by the Banks and by PNC's non-bank subsidiaries. The Banks are subject to
various statutory and contractual restrictions on their ability to pay dividends
to PNC. Under such restrictions, the amount available for payment of dividends
to PNC by the Banks was $655.9 million at September 30, 1992. In addition, the
Office of the Comptroller of the Currency, in the case of national bank
subsidiaries, and the FDIC or the Board of Governors of the Federal Reserve
System ("Federal Reserve Board"), in the case of state bank subsidiaries, have
authority to prohibit any such Bank from engaging in an unsafe or unsound
practice in conducting its business. The payment of dividends, depending upon
the financial condition of the Bank in question, could be deemed to constitute
such an unsafe or unsound practice. The ability of the Banks to pay dividends in
the future is presently, and could be further, influenced by bank regulatory
requirements or agreements and capital guidelines.
In addition, consistent with its policy described below regarding bank
holding companies serving as a source of strength for their 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
fund
3
fully the dividends, and the prospective rate of earnings retention appears to
be consistent with such holding company's capital needs, asset quality and
overall financial condition.
The Banks are also subject to restrictions imposed by federal law on the
ability of any such Bank to extend credit to affiliates, including PNC and PNC
Funding, to purchase the assets thereof, to issue a guarantee, acceptance or
letter of credit on their behalf (including an endorsement or standby letter of
credit) or to purchase or invest in the stock or securities thereof or to take
such stock or securities as collateral for loans to any borrower. Such
extensions of credit and issuances generally must be secured by eligible
collateral and are generally limited, with respect to PNC or PNC Funding, to 10%
of such Bank's capital and surplus and, with respect to PNC Financial and all of
its non-bank subsidiaries, to an aggregate of 20% of such Bank's capital and
surplus.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989
contains a "cross-guarantee" provision which could result in insured depositary
institutions "commonly controlled" by PNC being liable for losses incurred by
the FDIC in connection with assistance provided to, or the failure of, any other
insured depositary institution owned by PNC. Such liability could have a
material adverse effect on the financial condition of any assessed Bank and PNC.
Under Federal Reserve Board policy, PNC is expected to act as a source of
strength to each subsidiary bank and to commit resources to support each
subsidiary bank in circumstances where it might not choose to do so absent such
policy.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following unaudited table presents the consolidated ratio of earnings
to fixed charges of PNC. The consolidated ratio of earnings to fixed charges has
been computed by dividing income before income taxes and cumulative effect of
change in accounting principle and fixed charges by fixed charges. Fixed charges
represent all interest expense (ratios are presented both excluding and
including interest on deposits), amortization of notes and debentures expense
and the portion of net rental expense which is deemed to be equivalent to
interest on debt. Interest expense (other than on deposits) includes interest on
notes and debentures, federal funds purchased and securities sold under
agreements to repurchase, mortgages, commercial paper and other funds borrowed.
Since PNC Funding is a provider of funds to PNC and its subsidiaries, fixed
charge ratios have been presented on a consolidated basis.
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED ----------------------------------------
SEPTEMBER 30, 1992 1991 1990 1989 1988 1987
------------------ ---- ---- ---- ---- ----
Excluding interest on
deposits.............. 2.55X 2.07X 1.03X 1.56X 1.84X 1.56X
Including interest on
deposits.............. 1.47X 1.24 1.01 1.17 1.27 1.19
CONSOLIDATED RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following unaudited table presents the consolidated ratio of earnings
to combined fixed charges and preferred stock dividends of PNC. The consolidated
ratio of earnings to combined fixed charges and preferred stock dividends has
been computed by dividing income before income taxes and cumulative effect of
change in accounting principle and fixed charges by fixed charges. Fixed charges
represent all interest expense (ratios are presented both excluding and
including interest on deposits), amortization of notes and debentures expense,
the portion of net rental expense which is deemed to be equivalent to interest
on debt and preferred stock dividends increased to an amount representing the
pretax earnings which would be required to cover such dividend requirements.
Interest expense (other than on deposits) includes interest on notes and
debentures,
4
federal funds purchased and securities sold under agreements to repurchase,
mortgages, commercial paper and other funds borrowed.
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED ----------------------------------------
SEPTEMBER 30, 1992 1991 1990 1989 1988 1987
------------------ ---- ---- ---- ---- ----
Excluding interest on
deposits.............. 2.53X 2.06X 1.03X 1.56X 1.83X 1.55X
Including interest on
deposits.............. 1.47X 1.24 1.01 1.17 1.27 1.19
APPLICATION OF PROCEEDS
Unless otherwise provided in the Prospectus Supplement, PNC Funding and PNC
will apply the net proceeds from the sale of the Securities offered hereby to
their general funds to be used for corporate financing purposes, including
advances to PNC (in the case of PNC Funding) and subsidiaries of PNC (including
the Banks), financing of possible future acquisitions, and repayment of
outstanding indebtedness. The amount and timing of these advances will depend
upon the future growth and financing requirements of PNC and its subsidiaries.
Pending ultimate application, the net proceeds may be used to make short-term
investments or reduce borrowed funds. In view of anticipated funding
requirements, PNC Funding or PNC may from time to time engage in additional
financings of a character and in amounts to be determined.
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The Debt Securities will constitute either Senior Debt Securities of PNC
Funding or Subordinated Debt Securities of PNC Funding. The following
description of the terms of the Debt Securities sets forth certain general terms
and provisions of the Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Debt Securities and Guarantees offered by
any Prospectus Supplement ("Offered Debt Securities") and the extent, if any, to
which such general provisions may apply to the Debt Securities and Guarantees so
offered will be described in the Prospectus Supplement relating to such Offered
Debt Securities.
The Offered Debt Securities are to be issued under an Indenture, dated as
of December 1, 1991, a copy of which has been filed with the Commission, as
amended by a Supplemental Indenture thereto, a form of which has been filed with
the Commission ("Indenture"). Chemical Bank, as successor by merger to
Manufacturers Hanover Trust Company, shall be Trustee under the Indenture
("Trustee") unless a different Trustee for a series of Debt Securities is named
in the Prospectus Supplement. For each series of Debt Securities, a supplemental
indenture may be entered into among PNC Funding, PNC and Chemical Bank or such
other Trustee as may be named in the Prospectus Supplement relating to such
series of Debt Securities. The following summaries of certain provisions of the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all the provisions of the Indenture, including
the definitions therein of certain terms. Wherever particular sections or
defined terms of the Indenture are referred to, it is intended that such
sections or defined terms shall be incorporated herein by reference.
GENERAL
The Debt Securities will be unsecured obligations of PNC Funding.
Although the amount of Offered Debt Securities will be limited to the
amount that will result in net proceeds to PNC Funding as described on the cover
page of this Prospectus, the Indenture does not limit the aggregate principal
amount of debt securities that may be issued thereunder from time to time in one
or more series.
5
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the terms of the Offered Debt
Securities, including, where applicable: (1) the form, title and denomination of
the Debt Securities; (2) the aggregate principal amount of the Debt Securities;
(3) the date or dates on which Debt Securities may be issued; (4) the date or
dates on which the principal of, and premium, if any, on the Debt Securities
shall be payable; (5) the rate or rates, or the method of determination thereof,
at which the Debt Securities shall bear interest, if any, the date or dates from
which such interest shall accrue, and the Interest Payment Dates on which such
interest shall be payable; (6) the priority of payment of such Debt Securities
and thus whether they shall be designated as Senior Debt Securities or
Subordinated Debt Securities; (7) the place or places where the principal of,
and premium, if any, and interest on Debt Securities of the series shall be
payable; (8) the provisions, if any, for optional or mandatory redemption of the
Debt Securities, including any sinking fund provisions; (9) if other than the
principal amount thereof, the portion of the principal amount of Debt Securities
which shall be payable upon declaration of acceleration of the Maturity thereof
in accordance with the provisions of the Indenture; (10) whether payment of the
principal of, premium, if any, and interest, if any, on the Debt Securities
shall be with or without deduction for taxes, assessments or governmental
charges, and with or without reimbursement of taxes, assessments or governmental
charges paid by Holders; (11) any Events of Default or Defaults with respect to
the Debt Securities that differ from those set forth in the Indenture; (12)
whether the securities of such series are to be issued in a form registered as
to principal ("Registered Securities") (with or without interest coupons
("Coupons")) or in a form registered with regard to principal and interest
("Fully Registered Securities") or in bearer form ("Unregistered Securities"),
or as both Registered Securities and Unregistered Securities; (13) the currency
or currencies, or currency unit or currency units in which the principal of, and
premium, if any, and interest, if any, on the Debt Securities are to be
denominated, payable, redeemable or repurchaseable, as the case may be; (14) if
other than as set forth in the Indenture, provisions for the satisfaction and
discharge of the indebtedness represented by the Debt Securities; (15) whether
the Debt Securities of such series are issuable as a global security and, in
such case, the identity of the depositary for such series; (16) any trustees,
paying agents, transfer agents or registrars for the Debt Securities; (17) with
regard to Debt Securities that do not bear interest, the dates for certain
required reports to the Trustee; and (18) any other terms of such Debt
Securities.
Any Subordinated Debt Securities offered are intended to be included as
regulatory capital under recent interpretations of the Federal Reserve Board
and, as a result, contain subordination and acceleration provisions different
from, and covenants more limited than in, prior issuances of PNC Funding's
Subordinated Securities.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of or any interest on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Debt Securities and such currencies or currency
units will be set forth in the Prospectus Supplement relating thereto.
Although the Indenture provides that Debt Securities may be issued as
Registered Securities, with or without Coupons, or Unregistered Securities, each
series of Debt Securities will be issued as Fully Registered Securities unless
the Prospectus Supplement provides otherwise. Debt Securities that are not
registered as to interest shall have Coupons attached, unless issued as Original
Issue Discount Securities. All references to the Debt Securities shall, where
applicable, include the Coupons, if any, appertaining thereto.
Principal of, and premium, if any, and interest on Fully Registered
Securities will be payable at the Place of Payment designated for such Debt
Securities; provided that payment of interest may, at the option of PNC Funding,
be made by check mailed to the address of the person entitled thereto as it
appears in the Security Register at the close of business on the day or days
specified in the Prospectus Supplement relating to such Debt Securities. The
principal of, and premium, if any, and interest on any Debt Securities in other
forms will be payable in such manner and at such place or
6
places as may be designated by PNC Funding and specified in the Prospectus
Supplement relating to such Debt Securities. (Sections 3.01 and 5.01)
The Debt Securities may be exchanged, and Registered Securities may be
transferred, at the Corporate Trust Office of the Trustee for such series of
Debt Securities or at any other office or agency maintained by PNC Funding or
PNC for such purposes. Unregistered Securities and Coupons shall be transferred
by delivery. No service charge will be made for any transfer or exchange of the
Debt Securities, but PNC Funding may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(Section 3.05)
Unless the Prospectus Supplement provides otherwise, each series of the
Debt Securities will be issued only in denominations of $1,000 or any integral
multiple thereof and payable in Dollars. Under the Indenture, however, Debt
Securities may be issued in any denomination and payable in a foreign currency
or currency unit. (Section 3.02)
Debt Securities may be issued with "original issue discount" (within the
meaning of the Internal Revenue Code). Federal income tax consequences and other
special considerations applicable to any such securities issued with original
issue discount will be described in the Prospectus Supplement relating thereto.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of a global security ("Global Security") that will be deposited with, or on
behalf of, a depositary (the "Depositary") identified in the Prospectus
Supplement relating to such series. A Global Security may be issued as either a
Registered or Unregistered Security and in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for individual certificates
evidencing Debt Securities in definitive form represented thereby, a Global
Security may not be transferred except as a whole by the Depositary for such
Global Security or any nominee thereof to a successor of such Depositary or a
nominee of such successor. (Section 2.05)
The specific terms of the depositary arrangement with respect to a series
of Debt Securities including the manner in which principal of, and premium, if
any, and interest on a permanent Global Security will be payable and interests
in such Global Security may be exchanged, and certain limitations and
restrictions relating to a series of Unregistered Securities, will be described
in the Prospectus Supplement relating to such series.
SENIOR DEBT SECURITIES
The Senior Debt Securities will rank equally with all Senior Indebtedness
of PNC Funding. At September 30, 1992, such outstanding Senior Indebtedness of
PNC Funding was approximately $1.274 billion.
Senior Indebtedness of PNC Funding, defined in the Indenture as "Senior
Company Indebtedness," means the principal of, and premium, if any, and interest
on (i) all indebtedness for money borrowed, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, except
(A) such indebtedness as is by its terms expressly stated not to be superior in
right of payment to the Subordinated Debt Securities or to rank PARI PASSU with
the Subordinated Debt Securities, and (B) PNC Funding's 9 7/8% Subordinated
Notes Due 2001 and (ii) any deferrals, renewals or extensions of any such Senior
Indebtedness of PNC Funding. The term "indebtedness for money borrowed" as used
in the prior sentence means any obligation of, or any obligation guaranteed by,
PNC Funding for the repayment of money borrowed, whether or not evidenced by
bonds, debentures, notes or other written instruments, any capitalized lease
obligation and any Deferred obligation for payment of the purchase price of any
property or assets. There is no limitation under the Indenture on the issuance
of additional Senior Indebtedness of PNC Funding.
7
SUBORDINATED DEBT SECURITIES
The payment of the principal of and interest on the Subordinated Debt
Securities will, to the extent set forth in the Indenture, be subordinated in
right of payment to the prior payment in full of all Senior Indebtedness of PNC
Funding. In certain events of insolvency, the payment of the principal of and
interest on the Subordinated Debt Securities will, to the extent set forth in
the Indenture, also be effectively subordinated in right of payment to the prior
payment in full of all Other Company Obligations (as defined in the Indenture).
Other Company Obligations means obligations of PNC Funding associated with
derivative products such as interest rate and currency exchange contracts,
foreign exchange contracts, commodity contracts or any similar arrangements,
unless the instrument by which PNC Funding incurred, assumed or guaranteed the
obligation expressly provides that it is subordinate or junior in right of
payment to any other indebtedness or obligations of PNC Funding. At September
30, 1992, there were no Other Company Obligations of PNC Funding.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of PNC Funding, the holders of all Senior Indebtedness of PNC
Funding will first be entitled to receive payment in full of all amounts due or
to become due thereon before the Holders of the Subordinated Debt Securities
will be entitled to receive any payment in respect of the principal of or
interest on the Subordinated Debt Securities. If upon any such payment or
distribution of assets to creditors there remain, after giving effect to such
subordination provisions in favor of the holders of Senior Indebtedness of PNC
Funding, any amounts of cash, property or securities available for payment or
distribution in respect of Subordinated Debt Securities (as defined in the
Indenture, "Excess Proceeds"), and if, at such time, any creditors in respect of
Other Company Obligations have not received payment in full of all amounts due
or to become due on or in respect of such Other Company Obligations, then such
Excess Proceeds shall first be applied to pay or provide for the payment in full
of such Other Company Obligations before any payment or distribution may be made
in respect of the Subordinated Debt Securities. In addition, no payment may be
made of the principal of or interest on the Subordinated Debt Securities, or in
respect of any retirement, purchase or other acquisition of any of the
Subordinated Debt Securities at any time when (i) there is a default in the
payment of the principal of, or premium, if any, or interest on or otherwise in
respect of any Senior Indebtedness of PNC Funding or (ii) any event of default
with respect to any Senior Indebtedness of PNC Funding has occurred and is
continuing, or would occur as a result of such payment on the Subordinated Debt
Securities or any retirement, purchase or other acquisition of any of the
Subordinated Debt Securities permitting the holders of such Senior Indebtedness
of PNC Funding to accelerate the maturity thereof. Except as described above,
the obligation of PNC Funding to make payment of the principal of or interest on
the Subordinated Debt Securities will not be affected. By reason of such
subordination, in the event of insolvency, holders of the Subordinated Debt
Securities may recover less, ratably, than holders of Senior Indebtedness of PNC
Funding and Other Company Obligations and may also recover less, ratably, than
holders of Existing Company Subordinated Indebtedness and other creditors of PNC
Funding. (Sections 12.01, 12.02, 12.03, and 12.13)
Existing Company Subordinated Indebtedness means the Company's 9 7/8%
Subordinated Notes Due 2001. (Section 101) At September 30, 1992, the Existing
Company Subordinated Indebtedness was approximately $100 million.
PNC Funding's obligations under the Subordinated Debt Securities shall rank
PARI PASSU in right of payment with each other and with the Existing Company
Subordinated Indebtedness, subject to the obligations of the Holders of
Subordinated Debt Securities to pay over any Excess Proceeds to creditors in
respect of Other Company Obligations as provided in the Indenture.
8
GUARANTEES
PNC will unconditionally guarantee the due and punctual payment of the
principal of, premium, if any, and interest on the Debt Securities when and as
the same shall become due and payable, whether at maturity, upon redemption or
otherwise.
GUARANTEES OF SENIOR DEBT SECURITIES
The Guarantees of Senior Debt Securities will rank equally with all Senior
Indebtedness of PNC. At September 30, 1992, the outstanding Senior Indebtedness
of PNC was approximately $1.274 billion, which is inclusive of the guarantee of
Senior Indebtedness of PNC Funding.
Senior Indebtedness of PNC, defined in the Indenture as "Senior Guarantor
Indebtedness," means the principal of, and premium, if any, and interest on (i)
all indebtedness for money borrowed, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, except
(A) such indebtedness as is by its terms expressly stated not to be superior in
right of payment to the Subordinated Guarantees or to rank PARI PASSU with the
Subordinated Guarantees, (B) PNC's 8 1/4% Convertible Subordinated Debentures
Due 2008 and the Citizens Fidelity Corporation's 8 1/2% Convertible Subordinated
Debentures Due 2005 and (C) PNC's Guarantee of PNC Funding's 9 7/8% Subordinated
Notes Due 2001 and (ii) any deferrals, renewals or extensions of any such Senior
Indebtedness of PNC. The term "indebtedness for money borrowed" as used in the
prior sentence means any obligation of, or any obligation guaranteed by, PNC for
the repayment of money borrowed, whether or not evidenced by bonds, debentures,
notes or other written instruments, any capitalized lease obligation and any
deferred obligation for payment of the purchase price of any property or assets.
There is no limitation under the Indenture on the issuance of additional Senior
Indebtedness of PNC.
GUARANTEES OF SUBORDINATED DEBT SECURITIES
The payment of the principal of and interest on the Subordinated Debt
Securities pursuant to the Guarantees of the Subordinated Debt Securities
("Subordinated Guarantees") will, to the extent set forth in the Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness of PNC. In certain events of insolvency, the payment of the
principal of and interest on the Subordinated Guarantees will, to the extent set
forth in the Indenture, also be effectively subordinated in right of payment to
the prior payment in full of all Other Guarantor Obligations (as defined in the
Indenture). Other Guarantor Obligations means obligations of PNC associated with
derivative products such as interest rate and currency exchange contracts,
foreign exchange contracts, commodity contracts or any similar arrangements,
unless the instrument by which PNC incurred, assumed or guaranteed the
obligation expressly provides that it is subordinate or junior in right of
payment to any other indebtedness or obligations of PNC. At September 30, 1992,
there were no Other Guarantor Obligations of PNC.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of PNC, the holders of all Senior Indebtedness of PNC will first be
entitled to receive payment in full of all amounts due or to become due thereon
before the Holders of the Subordinated Guarantees will be entitled to receive
any payment in respect of the principal of or interest on the Subordinated Debt
Securities pursuant to the Subordinated Guarantees. If upon any such payment or
distribution of assets to creditors there remain, after giving effect to such
subordination provisions in favor of the holders of Senior Indebtedness of PNC,
any amounts of cash, property or securities available for payment or
distribution in respect of Subordinated Guarantees (as defined in the Indenture,
"Excess Proceeds"), and if, at such time, any creditors in respect of Other
Guarantor Obligations have not received payment in full of all amounts due or to
become due on or in respect of such Other Guarantor Obligations, then such
Excess Proceeds shall first be applied to pay or provide for the
9
payment in full of such Other Guarantor Obligations before any payment or
distribution may be made in respect of the Subordinated Guarantees. In addition,
no payment may be made of the principal of or interest on the Subordinated Debt
Securities pursuant to the Subordinated Guarantees or in respect of any
retirement, purchase or other acquisition of any of the Subordinated Debt
Securities pursuant to the Subordinated Guarantees, at any time when (i) there
is a default in the payment of the principal of, premium, if any, or interest on
or otherwise in respect of any Senior Indebtedness of PNC or (ii) any event of
default with respect to any Senior Indebtedness of PNC has occurred and is
continuing, or would occur as a result of such payment on the Subordinated Debt
Securities pursuant to the Subordinated Guarantees or any retirement, purchase
or other acquisition of any of the Subordinated Debt Securities pursuant to the
Subordinated Guarantees, permitting the holders of such Senior Indebtedness of
PNC to accelerate the maturity thereof. Except as described above, the
obligation of PNC to make payment under the Subordinated Guarantees will not be
affected. By reason of such subordination, in the event of insolvency, holders
of Subordinated Guarantees of PNC may recover less, ratably, than holders of
Senior Indebtedness of PNC and Other Guarantor Obligations and may also recover
less, ratably, than holders of Existing Guarantor Subordinated Indebtedness (as
defined in the Indenture) and other creditors of PNC. (Section 3.12, 12.04,
12.05, 12.06 and 12.14)
Existing Guarantor Subordinated Indebtedness means the Guarantor's 8 1/4%
Convertible Subordinated Debentures Due 2008, the Citizens Fidelity Corporation
Convertible Subordinated Debentures Due 2005, and the Guarantor's Guarantee of
the Company's 9 7/8% Subordinated notes Due 2001. (Section 101) At September 30,
1992, the Existing Guarantor Subordinated Indebtedness was approximately $102
million.
PNC's obligations under the Subordinated Guarantees shall rank PARI PASSU
in right of payment with each other and with the Existing Guarantor Subordinated
Indebtedness, subject to the obligations of the Holders of Subordinated
Guarantees to pay over any Excess Proceeds to creditors in respect of Other
Guarantor Obligations as provided in the Indenture.
Since PNC is a holding company separate from its subsidiaries, the rights
of PNC to share in the distribution of the assets of any subsidiary upon the
subsidiary's liquidation, reorganization or otherwise will be subject to the
prior claims of the subsidiary's creditors (including in the case of any Bank,
its depositors), except to the extent that PNC may itself be a creditor with
recognized claims against the subsidiary. In addition, there are certain
regulatory and other limitations on the payment of dividends and on loans and
other transfers of funds to PNC by the Bank(s). See "Certain Regulatory
Considerations."
CERTAIN COVENANTS
The Indenture contains certain covenants that impose various restrictions
on PNC Funding and PNC and, as a result, afford the holders of Debt Securities
certain protections. Although statements have been included as to the general
purpose and effect of the covenants, investors must review the full text of the
covenants to be able to meaningfully evaluate the covenants.
RESTRICTION ON SALE OR ISSUANCE OF VOTING STOCK OF A PRINCIPAL SUBSIDIARY BANK
The covenant described below is designed to ensure that, for so long as any
Senior Debt Securities are issued and outstanding, PNC will continue directly or
indirectly to own and thus serve as the holding company for its Principal
Subsidiary Banks (defined as each of (i) PNC Bank, (ii) any other Subsidiary
Bank the assets of which constitute 20% or more of the consolidated assets of
PNC and its subsidiaries, (iii) any other Subsidiary Bank designated as a
Principal Subsidiary Bank by the board of directors of PNC, or (iv) any
Subsidiary that owns any Voting Shares or certain rights to acquire Voting
Shares of any Principal Subsidiary Bank, and their respective successors,
provided any such successor is a Subsidiary Bank or a Subsidiary, as
appropriate). Principal Subsidiary Banks, in the past, have provided PNC income
in the form of
10
dividends. See "Certain Regulatory Considerations." The Indenture prohibits PNC,
unless debtholder consent is obtained from the holders of Senior Debt
Securities, from (i) selling or otherwise disposing of, and permitting a
Principal Subsidiary Bank to issue, Voting Shares or certain rights to acquire
Voting Shares of a Principal Subsidiary Bank, (ii) permitting the merger or
consolidation of a Principal Subsidiary Bank with or into any other corporation,
or (iii) permitting the sale or other disposition of all or substantially all
the assets of any Principal Subsidiary Bank, if after giving effect to any one
of such transactions and the issuance of the maximum number of Voting Shares
issuable upon the exercise of all such rights to acquire Voting Shares of a
Principal Subsidiary Bank, PNC would own directly or indirectly less than 80% of
the Voting Shares of such Principal Subsidiary Bank, with the following
exceptions: (i) transactions required by any law, or any regulation or order of
any governmental authority; (ii) transactions required as a condition imposed by
any governmental authority to the acquisition by PNC, directly or indirectly, of
any other corporation or entity if thereafter, (a) PNC would own at least 80% of
the Voting Shares of such other corporation or entity, (b) the Consolidated
Banking Assets of PNC would be at least equal to those prior thereto, and (c)
the board of directors of PNC shall have designated such other corporation or
entity a Principal Subsidiary Bank; (iii) transactions that do not reduce the
percentage of Voting Shares of such Principal Subsidiary Bank owned directly or
indirectly by PNC; and (iv) transactions where the proceeds are invested within
180 days after such transaction in any one or more Subsidiary Banks. However,
the Indenture permits the merger of a Principal Subsidiary Bank with and into a
Principal Subsidiary Bank or the Guarantor, the consolidation of Principal
Subsidiary Banks into a Principal Subsidiary Bank or the Guarantor, or the sale
or other disposition of all or substantially all of the assets of any Principal
Subsidiary Bank to another Principal Subsidiary Bank or the Guarantor, if, in
any such case in which the surviving, resulting or acquiring entity is not the
Guarantor, the Guarantor would own, directly or indirectly, at least 80% of the
Voting Shares of the Principal Subsidiary Bank surviving such merger, resulting
from such consolidation or acquiring such assets. (Section 5.06)
OWNERSHIP OF PNC FUNDING
The Indenture contains a covenant that, so long as any of the Debt
Securities are outstanding and subject to certain rights described below under
"Consolidation or Merger," PNC will continue to own, directly or indirectly, all
of the outstanding voting shares of PNC Funding. (Section 5.07)
RESTRICTION ON LIENS
The purpose of the restriction on liens covenant is to preserve PNC's
direct or indirect interest in Voting Shares of Principal Subsidiary Banks free
of security interests of other creditors. The covenant permits certain specified
liens and liens where the Senior Debt Securities are equally secured. The
Indenture prohibits PNC and its subsidiaries from creating or permitting any
liens (other than certain tax and judgment liens) upon Voting Shares of any
Principal Subsidiary Bank to secure indebtedness for borrowed money without
making effective provision whereby the Senior Debt Securities shall be equally
and ratably secured, except that PNC may create or permit (i) purchase money
liens and liens on Voting Shares of any Principal Subsidiary Bank existing at
the time such Voting Shares are acquired or created within 120 days thereafter;
(ii) the acquisition of any Voting Shares of any Principal Subsidiary Bank
subject to liens at the time of acquisition or the assumption of obligations
secured by a lien on such Voting Shares; (iii) under certain circumstances,
renewals, extensions or refunding of the liens described in (i) and (ii) above;
and (iv) liens to secure loans or other extensions of credit under Section 23A
of the Federal Reserve Act or any successor or similar federal law or
regulation. (Section 5.08)
CONSOLIDATION OR MERGER
The covenant described below protects the holders of Debt Securities upon
certain transactions involving PNC Funding or PNC by requiring any successor to
PNC Funding or PNC to assume the
11
predecessor's obligations under the Indenture, and prohibits transactions that
would result in an Event of Default, a Default or an event which could become an
Event of Default or Default under the Indenture. PNC Funding or PNC may
consolidate with, merge into, or transfer substantially all of its properties
to, any other corporation organized under the laws of any domestic jurisdiction,
provided that the successor corporation assumes all obligations of PNC Funding
or PNC, as the case may be, under the Debt Securities and the Guarantees and
under the Indenture, that after giving effect to the transaction no Event of
Default or Default, and no event which, after notice or lapse of time, would
become an Event of Default or Default, shall have occurred and be continuing,
and that certain other conditions are met. (Sections 10.01 and 10.03)
Except as may be disclosed in a Prospectus Supplement and other than the
restrictions on liens on Voting Shares of Principal Subsidiary Banks and on
certain dispositions of Principal Subsidiary Banks described above, the
Indenture and the Debt Securities do not contain any covenants or other
provisions designed to afford holders of the Debt Securities protection in the
event of a highly leveraged transaction involving PNC.
MODIFICATION AND WAIVER
Modifications of the Indenture may be made by PNC Funding, PNC and the
Trustee with the consent of the Holders of the majority in aggregate principal
amount of Outstanding Debt Securities of each series affected thereby; provided,
however, that no such modification may, without the consent of the Holder of
each Outstanding Debt Security affected thereby: (i) change the Maturity of the
principal of, or the stated Maturity of any installment of interest on, any such
Debt Security; (ii) reduce the principal amount of, or the premium, if any, or
the interest on such Debt Security (including, in the case of an Original Issue
Discount Security, the amount payable upon acceleration of the maturity
thereof); (iii) change the place or currency of payment of principal of or
premium, if any, or interest on any such Debt Security; (iv) impair the right to
institute suit for the enforcement of any payment on or with respect to any such
Debt Security; (v) reduce the aforesaid percentage in principal amount of
Outstanding Debt Securities of any series necessary to modify the Indenture or
the percentage in principal amount of Outstanding Debt Securities necessary for
any waiver of compliance with conditions and defaults thereunder; or (vi) modify
or affect in any manner adverse to a Holder the terms and conditions of the
Guarantees. (Section 9.02)
Modification and amendment of the Indenture may be made by PNC Funding,
PNC, and the Trustee without the consent of any Holder of Debt Securities for
any of the following purposes: (i) to evidence the succession of another
corporation to PNC Funding or PNC; (ii) to provide for the acceptance of
appointment of a successor Trustee; (iii) to add to the covenants of PNC Funding
or PNC for the benefit of the Holders of Debt Securities; (iv) to cure any
ambiguity, defect or inconsistency in the Indenture, provided such action does
not adversely affect the Holders of Debt Securities in any material respect; (v)
to secure the Debt Securities under applicable provisions of the Indenture; (vi)
to establish the form or terms of Debt Securities; (vii) to permit the payment
in the United States of principal, premium or interest on Unregistered
Securities; or (viii) to provide for the issuance of uncertificated Debt
Securities in place of certificated Debt Securities. (Section 9.01)
The Holders of a majority in principal amount of Outstanding Debt
Securities of any series may waive, insofar as that series is concerned,
compliance with certain covenants, including those described under the captions
above entitled "Restriction on Sale or Issuance of Capital Stock of a Principal
Subsidiary Bank," "Ownership of PNC Funding" and "Restriction on Liens." No
waiver by the Holders of any series of Subordinated Debt Securities is required
with respect to the covenant described under the caption above entitled
"Restriction on Sale or issuance of Voting Stock of a Principal Subsidiary
Bank." (Sections 5.09 and 5.10) Covenants concerning the payment of principal,
premium, if any, and interest on the Debt Securities, compliance with the terms
of the Indenture, maintenance of an agency and certain monies held in trust, may
only be waived pursuant to a supplemental indenture executed with the consent of
each Holder of Debt Securities affected by such waiver. The covenant concerning
certain reports required by federal law may not be waived.
12
EVENTS OF DEFAULT, DEFAULTS, WAIVERS
The Indenture defines an Event of Default with respect to any series of
Senior Debt Securities as being any one of the following events and such other
event as may be established for the Debt Securities of a particular series: (i)
default for 30 days in the payment of interest on such series; (ii) default in
any payment of principal of or premium, if any, on such series; (iii) default in
the payment of any sinking fund installment with respect to such series; (iv)
default for 90 days after appropriate notice in performance of any other
covenant or warranty in the Indenture (other than a covenant or warranty
included in the Indenture solely for the benefit of a series of Debt Securities
other than that series); (v) the occurrence of certain events relating to
bankruptcy, insolvency or reorganization of PNC, PNC Funding or any Principal
Subsidiary Bank; or (vi) any other Event of Default provided in the supplemental
indenture under which such Senior Debt Securities are issued. (Section 7.01(a))
The Indenture defines an Event of Default with respect to any series of
Subordinated Debt Securities as certain events involving the bankruptcy or
reorganization of PNC or any Principal Subsidiary Bank. There is no right of
acceleration in the case of events involving the bankruptcy, insolvency or
reorganization of PNC Funding or of a default in the payment of principal,
interest, premium, if any, or any sinking fund payment with respect to a series
of Subordinated Debt Securities or in the case of a default in the performance
of any other covenant of PNC Funding or PNC in the Indenture. The Indenture
defines a Default with respect to any series of Subordinated Debt Securities as
any of the items listed in (i) through (iv) of the above paragraph, events
involving the bankruptcy, insolvency or reorganization of PNC Funding and such
other Default as may be established for the Subordinated Debt Securities of a
particular series. A breach of the covenant described under the caption above
entitled "Restriction on Sale or Issuance of Voting Stock of a Principal
Subsidiary Bank" will not result in a default with respect to any Series of
Subordinated Debt Securities. (Sections 7.01(b) and (c))
In case an Event of Default shall occur and be continuing with respect to
any series of Debt Securities, either the Trustee or the Holders of not less
than 25% in principal amount of Outstanding Debt Securities of that series may
declare the principal of such series (or if Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms of that series) to be due and payable immediately. At any
time after a declaration of acceleration has been made but before a judgment or
decree for payment of money due has been obtained by the Trustee, the Holders of
a majority in principal amount of the Outstanding Debt Securities of such series
may rescind any declaration of acceleration and its consequences, if all
payments due (other than those due as a result of acceleration) have been made
and all Events of Default and Defaults have been remedied or waived. Any Event
of Default or Default with respect to a particular series of Debt Securities may
be waived by the Holders of a majority in principal amount of the Outstanding
Debt Securities of such series, except in each case a failure to pay principal
of, or premium, if any, or interest on, or sinking fund installment in respect
of such Debt Securities or in respect of a covenant or provision of the
Indenture which cannot be modified without the consent of the Holder of each
Outstanding Debt Security affected. (Sections 7.02 and 7.08)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default or a Default shall occur and be continuing,
the Trustee will be under no obligation to exercise any of the rights or powers
in the Indenture at the request or direction of Holders of Debt Securities,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity. Subject to such provisions for indemnification and certain
limitations contained in the Indenture, the Holders of a majority in principal
amount of the Outstanding Debt Securities of any series shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to Debt Securities of such series.
(Sections 8.03 and 7.12)
The Indenture provides that in the event of a default of 30 days in the
payment of interest upon any Debt Security of any series, or defaults in the
payment of any principal of or premium, if any, or
13
any sinking fund installment with respect to any Debt Securities of any series,
PNC Funding will, upon demand of the Trustee, pay to it, for the benefit of the
Holder of any such Debt Security the whole amount then due and payable on such
Debt Security for principal and interest. The Indenture, as amended, further
provides that if PNC Funding fails to pay such amount forthwith upon such
demand, the Trustee may, among other things, institute a judicial proceeding for
the collection thereof. (Section 7.03)
The Indenture requires PNC Funding and PNC to file with the Trustee, on an
annual basis, certificates as to the absence of any default and as to compliance
with the terms of the Indenture. The Indenture provides that the Trustee may
withhold notice to the Holders of Debt Securities of any default (except in
payment of principal, premium, if any, interest or sinking fund installment) if
the Trustee considers it in the interest of Holders of Debt Securities to do so.
(Sections 5.04 and 8.02)
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default or Default with respect to Debt
Securities of that series and unless the Holders of at least 25% in principal
amount of the Outstanding Debt Securities of that series shall have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee, and the Trustee shall not have received from the Holders
of a majority in principal amount of the Outstanding Debt Securities of that
series a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. However, the Holder of any Debt
Security will have an absolute right to receive payment of the principal of, and
premium, if any, and interest on such Debt Security on the due dates expressed
in such Debt Security and to institute suit for the enforcement of any such
payment. (Sections 7.07 and 7.08)
DEFEASANCE
Except as may otherwise be provided in the applicable Prospectus Supplement
with respect to the Debt Securities of any series, the Indenture provides that
PNC Funding and PNC shall be discharged from their obligations under the Debt
Securities of a series at any time prior to the Stated Maturity or redemption
thereof when (a) PNC Funding or PNC has irrevocably deposited with the Trustee,
in trust, (i) sufficient funds to pay the principal of (and premium, if any),
and interest to Stated Maturity (or redemption) on, the Debt Securities of such
series, or (ii) such amount of government securities as will, together with the
predetermined and certain income to accrue thereon without consideration of any
reinvestment thereof, be sufficient to pay when due the principal of, and
premium, if any, and interest to Stated Maturity (or redemption) on, the Debt
Securities of such series, and (b) PNC Funding or PNC has paid all other sums
payable with respect to the Debt Securities of such series. Deposited funds
shall be in the currency or currency unit in which the Debt Securities are
denominated. Deposited government securities shall be direct obligations of, or
obligations the principal of and interest on which are fully guaranteed by, the
government which issued the currency in which the Debt Securities are
denominated, and which are not subject to prepayment, redemption or call. Upon
such discharge, the Holders of the Debt Securities of such series shall no
longer be entitled to the benefits of the Indenture, except for the purposes of
registration of transfer and exchange of the Debt Securities of such series, and
replacement of lost, stolen or mutilated Debt Securities, and shall look only to
such deposited funds or obligations for payment. (Sections 11.01 and 11.02)
Under federal income tax laws, the deposit and discharge may be treated as
an exchange of the affected Debt Securities for new securities. As a
consequence, each Holder of such Debt Securities might be required to recognize
gain or loss equal to the difference between the Holder's cost or other tax
basis for the Debt Securities and the value of the new securities received
pursuant to the exchange. Such Holders thereafter might be required to include
in income a different amount than would be includable in the absence of the
discharge. Prospective investors are urged to consult their
14
own tax advisers as to the specific consequences of such a deposit and
discharge, including the applicability and effect of tax laws other than federal
income tax laws.
REGARDING THE TRUSTEE
In the ordinary course of business, PNC Funding and PNC may maintain lines
of credit with one or more Trustees for a series of Debt Securities and the
Banks may maintain deposit accounts and conduct other banking transactions with
one or more Trustees for a series of Debt Securities.
TRUSTEE'S DUTY TO RESIGN UNDER CERTAIN CIRCUMSTANCES
PNC Funding may issue both Senior and Subordinated Debt Securities under
the Indenture. Because the Subordinated Debt Securities will rank junior in
right of payment to the Senior Debt Securities, the occurrence of a default
under the Indenture with respect to the Subordinated Debt Securities or any
Senior Debt Securities could create a conflicting interest under the Trust
Indenture Act of 1939, as amended ("1939 Act"), with respect to any Trustee who
serves as trustee for both Senior and Subordinated Debt Securities. In addition,
upon the occurrence of a default under the Indenture with respect to any series
of Debt Securities the Trustee of which maintains banking relationships with PNC
Funding or PNC, such Trustee would have a conflicting interest under the 1939
Act as a result of such business relationships. If a default has not been cured
or waived within 90 days after the Trustee has or acquires a conflicting
interest, the Trustee generally is required by the 1939 Act to eliminate such
conflicting interest or resign as Trustee with respect to the Subordinated Debt
Securities or the Senior Debt Securities. In the event of the Trustee's
resignation, PNC Funding and/or PNC shall promptly appoint a successor trustee
with respect to the affected securities.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The Board of Directors of PNC is authorized without further shareholder
action to cause the issuance, as of September 30, 1992, of up to 17,938,149
shares of Preferred Stock, and such Preferred Stock may be issued in one or more
series, each with such preferences, limitations, designations, conversion
rights, voting rights, dividend rights, voluntary and involuntary liquidation
rights and other rights as the Board may determine at the time of issuance.
Under such authority, PNC has previously designated five Series of
preferred stock of which, at September 30, 1992, 1,581,199 shares were issued
and outstanding as follows: 25,214 shares of $1.80 Cumulative Convertible
Preferred Stock-Series A ("Preferred Stock-A"); 10,653 shares of $1.80
Cumulative Convertible Preferred Stock-Series B ("Preferred Stock-B"); 513,395
shares of $1.60 Cumulative Convertible Preferred Stock-Series C ("Preferred
Stock-C"); 693,837 shares of $1.80 Cumulative Convertible Preferred Stock-Series
D ("Preferred Stock-D"); and 338,100 shares of $2.60 Cumulative Non-Voting
Preferred Stock-Series E ("Preferred Stock-E"). PNC redeemed the Preferred
Stock-E as of January 15, 1993. See "Preferred Stock Currently Outstanding"
below.
The rights of the holders of PNC common stock, $5.00 par value ("Common
Stock"), are subject to any rights and preferences of such outstanding series of
Preferred Stock, and the Preferred Stock herein offered, and would be subject to
the rights and preferences of any additional shares of Preferred Stock, or any
series thereof, which might be issued in the future.
PREFERRED STOCK OFFERED HEREIN
General
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The
15
particular terms of any series of Preferred Stock offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Preferred Stock so offered will be described in the Prospectus Supplement
relating to such Preferred Stock. If so specified in the applicable Prospectus
Supplement, the terms of any series of Preferred Stock may differ from the terms
set forth below. The description below and in any Prospectus Supplement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Designation of Series relating to the Preferred Stock the form
of which is incorporated by reference as Exhibit 4.4 to the Registration
Statement of which this Prospectus is a part and the definitive form of which
will be filed with the Commission.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the applicable Prospectus Supplement, the shares
of each series of Preferred Stock will upon issuance rank on a parity in all
respects with PNC's existing series of Preferred Stock, described below, and
each other then outstanding series of preferred stock of PNC. Holders of the
Preferred Stock will have no preemptive rights to subscribe for any additional
securities which may be issued by PNC. Unless otherwise specified in the
applicable Prospectus Supplement, Chemical Bank, New York, New York, will be the
transfer agent and registrar for the Preferred Stock.
Because PNC is a holding company, its rights and the rights of holders of
its securities, including the holders of Preferred Stock, to participate in the
assets of any PNC subsidiary upon the latter's liquidation or recapitalization
will be subject to the prior claims of such subsidiary's creditors and preferred
shareholders, except to the extent PNC may itself be a creditor with recognized
claims against such subsidiary or a holder of preferred shares of such
subsidiary. See "Certain Regulatory Considerations."
PNC may, at its option, elect to offer Depositary Shares ("Depositary
Shares") evidenced by depositary receipts ("Depositary Receipts"), each
representing a fractional interest (to be specified in the Prospectus Supplement
relating to the particular series of Preferred Stock) in a share of a particular
series of the Preferred Stock issued and deposited with a Depositary (as defined
below). See "Description of Depositary Shares" below.
DIVIDENDS
The holders of the Preferred Stock will be entitled to receive, when, as
and if declared by the Board of Directors of PNC or a duly authorized committee
thereof, out of funds legally available therefor, dividends at such rates and on
such dates as will be specified in the applicable Prospectus Supplement. Such
rates may be fixed or variable or both. If variable, the formula used for
determining the dividend rate for each dividend period will be specified in the
applicable Prospectus Supplement. Dividends will be payable to the holders of
record as they appear on the stock books of PNC on such record dates as will be
fixed by the Board of Directors of PNC or a duly authorized committee thereof.
Dividends may be paid in the form of cash, Preferred Stock (of the same or a
different series) or Common Stock of PNC, in each case as specified in the
applicable Prospectus Supplement.
Dividends on any series of Preferred Stock may be cumulative or
noncumulative, as specified in the applicable Prospectus Supplement. If the
Board of Directors of PNC fails to declare a dividend payable on a dividend
payment date on any Preferred Stock for which dividends are noncumulative
("Noncumulative Preferred Stock"), then the holders of such Preferred Stock will
have no right to receive a dividend in respect of the dividend period relating
to such dividend payment date, and PNC will have no obligation to pay the
dividend accrued for such period, whether or not dividends on such Preferred
Stock are declared or paid on any future dividend payment dates.
If dividends on a particular series shall have been determined to be
cumulative, no dividends shall be paid or set apart for payment or declared on
the Common Stock or on any class or series of stock of PNC ranking as to
dividends subordinate to such series (other than dividends payable in Common
Stock or in any class or series of stock of PNC ranking as to dividends and
assets
16
subordinate to such series) and no payment shall be made or set apart for the
purchase, redemption or other acquisition for value of any shares of Common
Stock or of any class or series of stock of PNC ranking as to dividends or
assets subordinate to such series, until dividends (to the extent cumulative)
for all past dividend periods on all outstanding shares of such series have been
paid, or declared and set apart for payment, in full. In case dividends for any
dividend period are not paid in full on all shares of Preferred Stock ranking
equally as to dividends, all such shares shall participate ratably in the
payment of dividends for such period in proportion to the full amounts of
dividends to which they are respectively entitled.
VOTING
Except as provided herein or in the applicable Prospectus Supplement, or as
required by applicable law, the holders of Preferred Stock have only such voting
rights with regard to matters submitted to a vote of the shareholders of PNC as
shall be fixed and determined by PNC's Board of Directors. Except as otherwise
required by law or provided by the Board of Directors and described in the
applicable Prospectus Supplement, holders of Preferred Stock having voting
rights and holders of Common Stock vote together as one class. Holders of
Preferred Stock do not have cumulative voting rights.
If PNC shall have failed to pay, or declare and set apart for payment,
dividends on all outstanding shares of Preferred Stock in an amount equal to six
quarterly dividends at the rates payable upon such shares (whether or not such
dividends are cumulative), the number of directors of PNC shall be increased by
two at the first annual meeting of the shareholders of PNC held thereafter, and
at such meeting and at each subsequent annual meeting until cumulative dividends
payable for all past dividend periods and continuous noncumulative dividends for
at least one year on all outstanding shares of Preferred Stock entitled thereto
shall have been paid, or declared and set apart for payment, in full, the
holders of shares of Preferred Stock of all series shall have the right, voting
as a class, to elect such two additional members of the Board of Directors to
hold office for a term of one year. Upon such payment, or such declaration and
setting apart for payment, in full, the terms of the two additional directors so
elected shall forthwith terminate, and the number of directors of PNC shall be
reduced by two, and such voting right of the holders of shares of Preferred
Stock shall cease, subject to increase in the number of directors as aforesaid
and to revesting of such voting right in the event of each and every additional
failure in the payment of dividends in an amount equal to six quarterly
dividends as aforesaid.
PNC shall not, without the affirmative vote at a meeting, or the written
consent with or without a meeting, of the holders of at least two-thirds of the
then outstanding shares of Preferred Stock of all series (a) create or increase
the authorized number of shares of any class of stock ranking as to dividends or
assets prior to the Preferred Stock; or (b) change the preferences,
qualifications, privileges, limitations, restrictions or special or relative
rights granted to or imposed upon the shares of Preferred Stock in any material
respect adverse to the holders thereof, provided that if any such change will
affect any particular series materially and adversely as contrasted with the
effect thereof upon any other series, no such change may be made without, in
addition, such vote or consent of the holders of at least two-thirds of the then
outstanding shares of the particular series which would be so affected.
Subject to such affirmative vote or consent of the holders of the
outstanding shares of Preferred Stock of any series, PNC may, by resolution of
its Board of Directors or as otherwise permitted by law, from time to time alter
or change the preferences, rights or powers of the Preferred Stock of such
series. The holders of the Preferred Stock of such series shall not be entitled
to participate in any such vote if, at or prior to the time when any such
alteration or change is to take effect, provision is made for the redemption of
all the Preferred Stock of such series at the time outstanding. See "REDEMPTION
BY PNC" below. Nothing in this section shall be taken to require a class vote or
consent in connection with the authorization, designation, increase or issuance
of any shares of any class or series (including additional Preferred Stock of
any series) that rank junior to or on a parity
17
with the Preferred Stock of such series as to dividends and liquidation rights
or in connection with the authorization, designation, increase or issuance of
any bonds, mortgages, debentures or other obligations of PNC.
Under interpretations adopted by the Federal Reserve Board or its staff, if
the holders of Preferred Stock of any series become entitled to vote for the
election of directors because dividends on such series are in arrears as
described above, such series may then be deemed a "class of voting securities"
and a holder of 25% or more of such series (or a holder of 5% or more if it
otherwise exercises a "controlling influence" over PNC) may then be subject to
regulation as a bank holding company in accordance with the Bank Holding Company
Act of 1956, as amended. In addition, at such time as such series is deemed a
class of voting securities, any other bank holding company may be required to
obtain the prior approval of the Federal Reserve Board to acquire 5% or more of
such series, and any person other than a bank holding company may be required to
obtain the prior approval of the Federal Reserve Board to acquire 10% or more of
such series.
LIQUIDATION OF PNC
In the event of voluntary or involuntary liquidation of PNC, the holders of
shares of each series of Preferred Stock shall be entitled to receive from the
assets of PNC (whether capital or surplus), prior to any payment to the holders
of Common Stock or of any class or series of stock of PNC ranking as to assets
subordinate to such series, the amount fixed by the Board of Directors for such
series and described in the applicable Prospectus Supplement, plus, in case
dividends on such series shall have been determined to be cumulative, an amount
equal to the accrued and unpaid dividends thereon (to the extent cumulative)
computed to the date on which payment thereof is made available, whether or not
earned or declared. After such payment to the holders of shares of such series,
any remaining balance shall be paid to the holders of Common Stock or of any
class or series of stock of PNC ranking as to assets subordinate to such series,
as they may be entitled. If, upon liquidation of PNC, its assets are not
sufficient to pay in full the amounts so payable to the holders of shares of all
series of Preferred Stock ranking equally as to assets, all such shares shall
participate ratably in the distribution of assets in proportion to the full
amounts to which they are respectively entitled. Neither a merger nor a
consolidation of PNC into or with any other corporation nor a sale, transfer or
lease of all or part of the assets of PNC shall be deemed a liquidation of PNC
within the meaning of this paragraph.
REDEMPTION BY PNC
Except as otherwise provided by the Board of Directors and described in the
applicable Prospectus Supplement, PNC, at its option to be exercised by its
Board of Directors, may redeem the whole or any part of the Preferred Stock or
of any series thereof at such times and at the applicable amount for each share
which shall have been fixed and determined, plus, in case dividends shall have
been determined to be cumulative, an amount equal to the accrued and unpaid
dividends thereon (to the extent cumulative) computed to the date fixed for
redemption, whether or not earned or declared (hereinafter collectively called
the "redemption price"). If at any time less than all of the Preferred Stock
then outstanding is to be called for redemption, the Board may select one or
more series to be redeemed, and if less than all the outstanding Preferred Stock
of any series is to be called for redemption, the shares to be redeemed may be
selected by lot or by such other equitable method as the Board in its discretion
may determine.
Notice of redemption shall be published at least once in a newspaper of
general circulation in Philadelphia, Pennsylvania, or in the Borough of
Manhattan, New York, New York, and copies of such notice shall be given by
mailing the same to each record holder of the Preferred Stock to be redeemed,
not less than 30 nor more than 60 days prior to the date fixed for redemption
thereof, to the respective addresses of such holders as the same shall appear on
the stock books of PNC. Each notice shall state: (i) the redemption date; (ii)
the number of shares and series of the Preferred Stock to be redeemed; (iii) the
redemption price; and (iv) the place or places where
18
certificates for such Preferred Stock are to be surrendered for payment of the
redemption price. If fewer than all the shares of Preferred Stock of any series
held by any holder are to be redeemed, the notice mailed to such holder shall
also specify the number of shares of Preferred Stock to be redeemed from such
holder.
If notice of redemption of any share of Preferred Stock has been given,
from and after the redemption date for such shares (unless default shall be made
by PNC in providing money for the payment of the redemption price of such
shares), dividends on such shares shall cease to accrue and such shares shall no
longer be deemed to be outstanding, and all rights of the holders thereof as
shareholders of PNC (except the right to receive the redemption price) shall
cease. Failure to give notice by mail or any defect therein or failure of any
addressee to receive it shall not affect the validity of the proceedings for
redemption. Conversion rights of shares called for redemption shall terminate at
the close of business on the date fixed for redemption or at such earlier time
as shall have been fixed by the Board of Directors. Upon surrender in accordance
with such notice of the certificates representing any such shares (properly
endorsed or assigned for transfer, if the Board of Directors of PNC shall so
require and the notice shall so state), the redemption price set forth above
shall be paid out of the funds provided by PNC. If fewer than all the shares
represented by any such certificate are redeemed, a new certificate representing
the unredeemed shares shall be issued without cost to the holder thereof.
Except as otherwise provided by the Board of Directors and described in the
applicable Prospectus Supplement, PNC shall have the right to acquire Preferred
Stock from time to time at such price or prices as PNC may determine, provided
that unless dividends (to the extent cumulative) payable for all past quarterly
dividend periods on all outstanding shares of Preferred Stock entitled to
cumulative dividends have been paid, or declared and set apart for payment, in
full, PNC shall not acquire for value any shares of Preferred Stock except in
accordance with an offer (which may vary as to terms offered with respect to
shares of different series but not with respect to shares of the same series)
made in writing or by publication (as determined by the Board of Directors) to
all holders of record of shares of Preferred Stock.
CONVERSION
The holders of any series of Preferred Stock will have such rights, if any,
to convert such shares into or to exchange such shares for, cash, shares of
PNC's Common Stock or any other class of capital securities of PNC as may be set
forth in the Prospectus Supplement relating to such series of Preferred Stock.
PREFERRED STOCK CURRENTLY OUTSTANDING
The following summaries of the outstanding Preferred Stock are qualified in
their entirety by reference to the corresponding Designations of Series and
description of preferred stock contained in PNC's Articles of Incorporation
attached as Exhibit 3.1 to the Registration Statement on Form S-4 at File No.
33-25003 and PNC's application for registration of securities on Form 8-A filed
September 24, 1987 (File No. 1-9718) and incorporated herein by reference.
Holders of outstanding Preferred Stock are entitled to cumulative dividends
at the annual rate of $1.80 per share for Preferred Stock-A, Preferred Stock-B
and Preferred Stock-D and $1.60 per share for Preferred Stock-C, payable
quarterly when and as declared by the Board of Directors of PNC. The Board of
Directors may not pay or set apart dividends on Common Stock until dividends for
the current period and all past dividend periods on all series of outstanding
Preferred Stock have been paid or declared and set apart for payment.
Holders of outstanding Preferred Stock are entitled to a number of votes
equal to the number of full shares of Common Stock into which their preferred
stock is at the time convertible. Holders of outstanding Preferred Stock
currently are entitled to the following conversion privileges: (i) one share of
Preferred Stock-A or Preferred Stock-B is convertible into eight shares of
Common Stock
19
and (ii) 2.4 shares of Preferred Stock-C or Preferred Stock-D are convertible
into four shares of Common Stock.
On the liquidation of PNC, holders of outstanding Preferred Stock would be
entitled to receive, before any payments are made with respect to Common Stock,
a specified amount for each share held by them, plus all dividends accrued and
unpaid thereon, or such lesser amount remaining after the claims of all
creditors have been satisfied, ratably with holders of other series of Preferred
Stock ranking equally as to assets. The liquidation preference is $40 per share
for Preferred Stock-A and Preferred Stock-B and $20 per share for Preferred
Stock-C and Preferred Stock-D.
Preferred Stock-A, -C and -D are redeemable at any time at the option of
PNC at redemption prices equal to the respective liquidation preference amounts
stated above, plus accrued and unpaid dividends, if any. Preferred Stock-B is
not redeemable.
All outstanding series of Preferred Stock are convertible (unless called
for redemption and not converted within the time allowed therefor), at any time
at the option of the holder. No adjustment will be made for dividends on
Preferred Stock converted or on Common Stock issuable upon conversion. The
conversion rate of each series of convertible Preferred Stock will be adjusted
in certain events, including payment of stock dividends on, or splits or
combinations of, the Common Stock or issuance to holders of Common Stock of
rights to purchase Common Stock at a price per share less than 90% of Current
Market Price as defined in the Articles of Incorporation of PNC. Appropriate
adjustments in the conversion provisions also will be made in the event of
certain reclassifications, consolidations or mergers or the sale of
substantially all of the assets of PNC.
PNC shall have the right to acquire outstanding Preferred Stock from time
to time at such price or prices as PNC may determine, provided that unless
dividends (to the extent cumulative) payable for all past quarterly dividend
periods on all outstanding shares of Preferred Stock entitled to cumulative
dividends have been paid, or declared and set apart for payment, in full, PNC
shall not acquire for value any shares of Preferred Stock except in accordance
with an offer (which may vary as to terms offered with respect to shares of
different series but not with respect to shares of the same series) made in
writing or by publication (as determined by the Board of Directors) to all
holders of record of shares of Preferred Stock.
Preferred Stock-A and -B are currently traded in the over-the-counter
market. Preferred Stock-C and -D are listed and traded on the New York Stock
Exchange. Chemical Bank, New York, New York, acts as transfer agent and
registrar for all outstanding series of Preferred Stock.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
Certain general terms and provisions of the Deposit Agreement (as described
below), the Depositary Shares and the Depositary Receipts to which a Prospectus
Supplement may relate are set forth below. The particular terms of the Preferred
Stock offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Depositary Shares will be described in the
Prospectus Supplement relating to such Preferred Stock. The descriptions below
and in any Prospectus Supplement do not purport to be complete and are subject
to and qualified in their entirety by reference to the Deposit Agreement and the
Depositary Receipts, the forms of which are incorporated by reference as
Exhibits 4.5 and 4.6, respectively, to the Registration Statement of which this
Prospectus is a part and the definitive forms of which will be filed with the
Commission.
PNC may, at its option, elect to offer fractional interests in the
Preferred Stock, rather than whole shares of such securities. In the event such
option is exercised, PNC will provide for the issuance by a Depositary to the
public of receipts for Depositary Shares, each of which will represent a
fractional interest (to be set forth in the Prospectus Supplement relating to a
particular
20
series of the Preferred Stock) in a share of a particular series of the
Preferred Stock as described below.
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement ("Deposit
Agreement") between PNC and a bank or trust company selected by PNC having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000 ("Depositary"). The Prospectus Supplement relating to a
series of Depositary Shares will set forth the name and address of the
Depositary, which may be one of the Banks. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fractional interest in a share of Preferred Stock underlying such
Depositary Share, to all the rights and preferences of the Preferred Stock
underlying such Depositary Share (including dividend, voting, redemption,
conversion and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Depositary Receipts will be distributed to
those persons purchasing the fractional shares of the related series of
Preferred Stock in accordance with the terms of the offering described in a
related Prospectus Supplement.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of PNC, issue temporary Depositary
Receipts substantially identical to (and entitling the holders thereof to all
the rights pertaining to) the definitive Depositary Receipts but not in
definitive form. Definitive Depositary Receipts will be prepared thereafter
without unreasonable delay and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at PNC's expense.
Upon surrender of Depositary Receipts at the office of the Depositary
(unless the Depositary Shares have been previously called for redemption) and
upon payment of the charges provided in the Deposit Agreement and subject to the
terms thereof, a holder of Depositary Shares is entitled to have the Depositary
deliver to such holder the number of whole shares of the related Preferred Stock
underlying the Depositary Shares evidenced by the surrendered Depositary
Receipts. Partial shares of Preferred Stock will not be issued. Holders of
Depositary Shares will be entitled to receive shares of the related series of
Preferred Stock as set forth in a related Prospectus Supplement, but holders of
such whole shares of such Preferred Stock thus withdrawn will not thereafter be
entitled to receive Depositary Shares therefor. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of the
related series of Preferred Stock to be withdrawn, the Depositary will deliver
to such holder at the same time a new Depositary Receipt evidencing such excess
number of Depositary Shares. PNC does not expect that there will be any public
trading market for the withdrawn shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a fraction of
one cent, and any balance not so distributed shall be added to and treated as
part of the next sum received by the Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
PNC, sell such property and distribute the net proceeds from such sale to such
holders.
21
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The Depositary
shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary Shares
to be so redeemed at their respective addresses appearing in the Depositary's
books. The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Stock. Whenever PNC redeems Preferred Stock held by the
Depositary, the Depositary will redeem as of the same redemption date the number
of Depositary Shares relating to the shares of Preferred Stock so redeemed. If
less than all the Depositary Shares are to be redeemed, the Depositary Shares to
be redeemed will be selected by lot or pro rata as may be determined by the
Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holder of the Depositary Shares will cease, except the right to receive the
monies payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the amount of Preferred Stock underlying such
holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the amount of Preferred Stock underlying such Depositary
Shares in accordance with such instructions, and PNC will agree to take all
action which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting Preferred Stock to
the extent it does not receive specific instructions from the holders of
Depositary Shares relating to such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between PNC and the Depositary. However, any amendment which materially and
adversely alters the rights of the existing holders of Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the Depositary Shares then outstanding. A Deposit
Agreement may be terminated by PNC or the Depositary only if (i) all outstanding
Depositary Shares relating thereto have been redeemed or (ii) there has been a
final distribution in respect of the Preferred Stock of the relevant series in
connection with any liquidation, dissolution or winding up of PNC.
CHARGES OF DEPOSITARY
PNC will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. PNC will also pay
charges of the Depositary in connection with the initial deposit of the
Preferred Stock and any redemption of the Preferred Stock. Holders of Depositary
Shares will pay other transfer and other taxes and governmental charges and such
other charges as are expressly provided in the Deposit Agreement to be for their
accounts.
22
TAXATION
Owners of Depositary Shares will be treated for Federal income tax purposes
as if they were owners of the Preferred Stock represented by such Depositary
Shares and, accordingly, will be entitled to take into account for Federal
income tax purposes income and deductions to which they would be entitled if
they were holders of such Preferred Stock. In addition, (i) no gain or loss will
be recognized for Federal income tax purposes upon the withdrawal of Preferred
Stock in exchange for Depositary Shares, (ii) the tax basis of each share of
Preferred Stock to an exchanging owner of Depositary Shares will, upon such
exchange, be the same as the aggregate tax basis of the Depositary Shares
exchanged therefor, and (iii) the holding period for Preferred Stock in the
hands of an exchanging owner of Depositary Shares who held such Depositary
Shares as a capital asset at the time of the exchange thereof for Preferred
Stock will include the period during which such person owned such Depositary
Shares.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all reports
and communications from PNC which are delivered to the Depositary and which PNC
is required to furnish to the holders of the Preferred Stock.
Neither the Depositary nor PNC will be liable if it is prevented or delayed
by law or any circumstance beyond its control in performing its obligations
under the Deposit Agreement. The obligations of PNC and the Depositary under the
Deposit Agreement will be limited to performance in good faith of their
respective duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or shares of
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Shares or other
persons believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to PNC notice of its
election to do so, and PNC may at any time remove the Depositary, any such
resignation or removal to take effect only upon the appointment of a successor
Depositary and its acceptance of such appointment. Such successor Depositary
must be a bank or trust company having its principal office in the United States
and having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF COMMON STOCK
PNC is authorized to issue 250,000,000 shares of its Common Stock.
Holders of Common Stock are entitled to one vote per share on all matters
submitted to shareholders. Holders of Common Stock have neither cumulative
voting rights nor any preemptive rights for the purchase of additional shares of
any class of stock of PNC, and are not subject to liability for further calls or
assessments.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors of PNC out of funds legally available
therefor. The Board of Directors may not pay or set apart dividends on 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.
In the event of dissolution or winding up of the affairs of PNC, holders of
Common Stock will be entitled to share ratably in all assets remaining after
payments to all creditors and payments required to be made in respect of
outstanding preferred stock (including accrued and unpaid dividends thereon).
23
The Board of Directors of PNC may, except as otherwise required by
applicable law, cause the issuance of authorized shares of Common Stock without
shareholder approval to such persons and for such consideration as the Board of
Directors may determine in connection with acquisitions by PNC or for other
corporate purposes.
Chemical Bank, New York, New York, is the transfer agent and registrar for
PNC Common Stock. The shares of PNC Common Stock are listed on the New York
Stock Exchange under the symbol "PNC". The outstanding shares of Common Stock
are, and the shares offered hereby will be, validly issued, fully paid and
nonassessable and the holders thereof are not and will not be subject to any
liability as shareholders.
CERTAIN TAX CONSIDERATIONS
PNC Funding will be required to withhold the Pennsylvania Corporate Loans
Tax from interest payments on Debt Securities held by or those subject to such
tax, principally individuals and partnerships resident in Pennsylvania and
resident trustees of trusts held for a resident beneficiary. The tax, at the
current annual rate of four mills on each dollar of nominal value ($4.00 per
$1,000), will be withheld, at any time when it is applicable, from each interest
payment to taxable holders of Debt Securities. The Debt Securities will be
exempt, under current law, from personal property taxes imposed by political
subdivisions in Pennsylvania.
Holders of Securities should consult their tax advisors as to the
applicability to the Securities and interest and dividends payable thereon of
federal, state and local taxes and of withholding on interest and dividends.
PLAN OF DISTRIBUTION
PNC Funding may offer and sell Debt Securities to or through underwriters,
acting as principals for their own accounts or as agents, and also may offer and
sell Debt Securities directly to other purchasers. PNC may offer and sell
Preferred Stock to or through underwriters, acting as principals for their own
accounts or as agents, and also may offer and sell Preferred Stock directly to
other purchasers. Any underwriters in connection with Offered Debt Securities or
with Preferred Stock will be named in the related Prospectus Supplement and any
underwriting compensation paid to such underwriters will be set forth therein.
Underwritten offerings may involve underwriting syndicates represented by
managing underwriters, or underwriters without a syndicate.
The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
In connection with the sale of Securities, underwriters or agents acting on
PNC's behalf may receive compensation from PNC Funding, PNC or from purchasers
of Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers or agents that participate
in the distribution of Securities may be deemed to be underwriters and any
discounts or commissions received by them and any profit on the resale of
Securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act of 1933, as amended ("Act"). Any such underwriter will
be identified and any such compensation will be described in the Prospectus
Supplement.
Under agreements which may be entered into with PNC Funding and PNC,
underwriters, dealers and agents may be entitled to indemnification by PNC
Funding or PNC against certain liabilities, including liabilities under the Act,
and to contributions from PNC Funding or PNC in respect of such liabilities.
Underwriters, dealers and agents may be customers of, engage in transactions
with, or perform services for PNC Funding or PNC in the ordinary course of
business.
24
If so indicated in the Prospectus Supplement, PNC Funding and/or PNC will
authorize underwriters or other persons acting as PNC Funding's agents and/or
PNC's agents to solicit offers by certain institutions to purchase Debt
Securities from PNC Funding and/or Preferred Stock from PNC pursuant to
contracts providing for payment and delivery on a future date or dates stated in
the applicable Prospectus Supplement. Institutions with which such contracts may
be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and others,
but in all cases such institutions must be approved by PNC Funding or PNC. The
obligations of any purchaser under any such contract will not be subject to any
conditions except that (i) the purchase of the Debt Securities or the Preferred
Stock shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject, and (ii) if Debt Securities or
the Preferred Stock are also being sold to underwriters, PNC Funding or PNC
shall have sold to such underwriters the Debt Securities or the Preferred Stock
not sold for delayed delivery. The underwriters and such other persons will not
have any responsibility in respect to the validity or performance of such
contracts.
LEGAL OPINIONS
The validity of the Securities and related Guarantees and the Preferred
Stock, Depositary Shares and Common Stock will be passed upon for PNC Funding
and PNC by William F. Strome, Esquire, Managing General Counsel and Secretary of
PNC, Fifth Avenue and Wood Street, Pittsburgh, Pennsylvania 15265. If the
Securities are being distributed in an underwritten offering, the validity of
the Securities and related Guarantees and the Preferred Stock, Depositary Shares
and Common Stock will be passed upon for the underwriters by counsel identified
in the Prospectus Supplement.
EXPERTS
The consolidated financial statements of PNC incorporated by reference into
the Annual Report on Form 10-K of PNC for the year ended December 31, 1991 have
been audited by Ernst & Young, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
Documents incorporated herein by reference in the future will include
financial statements, related schedules (if required) and auditors' reports,
which financial statements and schedules will have been audited to the extent
and for the periods set forth in such reports by the firm or firms rendering
such reports, and, to the extent so audited and consent to incorporation by
reference is given, will be incorporated herein by reference in reliance upon
such reports given upon the authority of such firms as experts in accounting and
auditing.
25
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE
OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF PNC FUNDING CORP OR PNC BANK CORP. SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Summary Consolidated Financial
Data............................... S-2
Recent Financial Results............. S-3
Acquisitions......................... S-4
Certain Updating Information......... S-4
Certain Terms of the Notes........... S-5
Underwriting......................... S-9
Legal Opinions....................... S-10
PROSPECTUS
Statement of Available Information... 2
Incorporation of Certain Documents by
Reference.......................... 2
PNC Bank Corp........................ 2
PNC Funding Corp..................... 3
Certain Regulatory Considerations.... 3
Consolidated Ratio of Earnings to
Fixed Charges...................... 4
Consolidated Ratio of Earnings to
Combined Fixed Charges and
Preferred Stock Dividends.......... 4
Application of Proceeds.............. 5
Description of Debt Securities and
Guarantees......................... 5
Description of Preferred Stock....... 15
Description of Depositary Shares..... 20
Description of Common Stock.......... 23
Certain Tax Considerations........... 24
Plan of Distribution................. 24
Legal Opinions....................... 25
Experts.............................. 25
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$200,000,000
PNC FUNDING CORP
7 3/4% SUBORDINATED NOTES
DUE 2004
UNCONDITIONALLY GUARANTEED, ON A
SUBORDINATED BASIS, AS TO PAYMENT OF
PRINCIPAL AND INTEREST BY
PNC BANK CORP.
[LOGO]
SMITH BARNEY SHEARSON INC.
SALOMON BROTHERS INC
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
PROSPECTUS SUPPLEMENT
DATED MAY 24, 1994
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