Exhibit 99.1
PNC BANK CORP.
Public Relations
One PNC Plaza
249 Fifth Avenue
Pittsburgh, PA 15222-2707
412 762-8221
News Release PNCBANK
CONTACTS:
MEDIA:
- ------
Brian E. Goerke
(412) 762-4304
brian.goerke@pncbank.com
INVESTORS:
- ----------
William H. Callihan
(412) 762-8257
invrela@pncmail.com
PNC BANK CORP. REPORTS RECORD
FIRST QUARTER 1999 EARNINGS
PITTSBURGH, Apr. 22, 1999 - PNC Bank Corp. (NYSE: PNC) today reported
first quarter 1999 earnings of $325 million or $1.05 per diluted share. Core
earnings for the quarter were $293 million or $0.94 per diluted share, return on
average common shareholders' equity was 20.63% and return on average assets was
1.54%. Earnings for the first quarter of 1998 were $269 million or $0.87 per
diluted share.
Reported first quarter 1999 results included $290 million of pretax gains
on the sales of the credit card business and an equity interest in Electronic
Payment Services, Inc. (EPS). The current quarter also included $142 million of
valuation adjustments associated with exiting certain institutional lending
businesses and $98 million of costs related to efficiency initiatives.
"Our record first quarter earnings reflected continuing momentum across
a broad range of businesses," said Thomas H. O'Brien, chairman and chief
executive officer. "Our Regional Bank reported significant improvements in
efficiency and double digit growth in earnings. Asset management businesses,
including BlackRock, PFPC Worldwide and PNC Advisors, continued to deliver
outstanding growth and returns. Also, we completed the sale of the credit card
business during the quarter and continued to aggressively pursue strategic
initiatives focused on improving shareholder returns."
Diluted earnings per share increased 15% in the first quarter of 1999
compared with the prior-year quarter, excluding the credit card business and
assuming the provision for credit losses was equal to net charge-offs in 1998.
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PNC Bank Corp. Reports Record First Quarter 1999 Earnings--Page 2
HIGHLIGHTS
o Total revenue increased 8% and noninterest income increased 15%,
excluding the first quarter gains and valuation adjustments.
o Asset management, mutual fund servicing, consumer services and net
mortgage banking revenues all grew significantly at double digit
rates.
o BlackRock was awarded approximately $17 billion in new asset
management business during the first quarter. BlackRock also announced
a joint venture with a Japanese firm, Nomura Asset Management Co., an
important strategic step in expanding BlackRock's international
presence.
o PNC Bank completed the sale of its credit card subsidiary to MBNA
Corporation, further strengthening the risk profile.
o PNC Institutional Bank aggressively pursued initiatives to exit
capital intensive, lower return segments of its lending business and
reduce reliance on spread income.
o The efficiency ratio improved to 52% from 57% last year reflecting the
benefit from ongoing efficiency initiatives.
CORE EARNINGS
Three months ended March 31, 1999 -
in millions, except per share data Pretax After-tax Per share
- ------------------------------------------------------------------------------------------------------
Reported earnings $488 $325 $1.05
Gain on sale of credit card business (193) (125) (.41)
Gain on sale of equity interest in EPS (97) (63) (.21)
Valuation adjustments 142 92 .30
Costs related to efficiency initiatives 98 64 .21
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Core earnings $438 $293 $.94
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PNC Bank Corp. Reports Record First Quarter 1999 Earnings--Page 3
INCOME STATEMENT REVIEW
Taxable-equivalent net interest income increased $20 million compared
with the first quarter of 1998 to $664 million in the first quarter of 1999 due
to growth in earning assets. The net interest margin was 3.86% for the first
quarter of 1999 compared with 3.96% in the first quarter of 1998. The decline in
the margin was primarily associated with the change in balance sheet
composition.
The provision for credit losses was equal to net charge-offs at $78
million in the first quarter of 1999, compared with a provision of $30 million a
year ago.
Noninterest income was $731 million in the first quarter of 1999 and
included $290 million of gains on the sales of the credit card business and an
equity interest in EPS. Noninterest income also included $142 million of
valuation adjustments primarily related to the decision to exit out-of-footprint
large corporate, national healthcare and other non-strategic lending businesses
in PNC Institutional Bank. Total exposure and outstandings for these businesses
were $6.5 billion and $2.0 billion, respectively, at March 31, 1999. These
actions will result in reduced balance sheet leverage, a greater focus on higher
return corporate business in the Regional Bank footprint and additional capital
available for reinvestment in higher growth businesses and share repurchases.
Excluding the gains and valuation adjustments, noninterest income was $583
million in the first quarter of 1999, a $77 million or 15% increase from the
prior-year quarter driven by higher fee income. Consumer services, mutual fund
servicing, net residential mortgage banking and asset management revenues each
grew 14% or more compared with the first quarter of 1998.
Asset management fees grew 14% primarily reflecting significant new
business and market appreciation. Assets under management increased to
approximately $182 billion at March 31, 1999 compared with $149 billion at March
31, 1998. Mutual fund servicing fees grew 24% compared with the first quarter of
1998 due to an increase in assets serviced. At March 31, 1999, PFPC Worldwide
provided custody and accounting/administration services for $338 billion and
$266 billion of mutual fund assets, respectively. The comparable amounts were
$248 billion and $218 billion, respectively, a year ago.
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PNC Bank Corp. Reports Record First Quarter 1999 Earnings--Page 4
Consumer services revenue increased $48 million or 59% compared with
the first quarter of 1998 primarily due to an increase in brokerage accounts
associated with the Hilliard Lyons acquisition. Corporate services revenue
decreased $111 million reflecting the valuation adjustments in PNC Institutional
Bank. Excluding the valuation adjustments, corporate services revenue increased
47% compared with the prior-year quarter primarily due to the acquisition of
Midland Loan Services.
Net residential mortgage banking revenue grew $8 million or 15%
compared with the prior-year quarter primarily due to higher servicing income
reflecting growth in the servicing portfolio. Residential mortgage originations,
including both retail and correspondent activity, totaled $6 billion compared
with $3 billion in the prior-year period. At March 31, 1999, approximately $65.6
billion of residential mortgages were serviced, including $58.2 billion serviced
for others.
Other noninterest income increased $261 million in the
quarter-to-quarter comparison primarily due to the gains on the sales of the
credit card business and an equity interest in EPS.
Noninterest expense of $823 million included $98 million of costs
related to efficiency initiatives. Excluding these costs, noninterest
expense increased $17 million or 2% compared with the first quarter of
1998. Excluding the impact of gains, valuation adjustments and costs
associated with efficiency initiatives, the efficiency ratio improved to
52.0% compared with 57.1% in the prior-year quarter.
BALANCE SHEET REVIEW
Total assets were $74.9 billion at March 31, 1999 compared with $72.4
billion at March 31, 1998. Average earning assets increased $3.6 billion from
the prior year to $68.8 billion. Average loans grew $2.6 billion to $56.7
billion, a 4.8% increase from the prior year. Growth in commercial loans,
primarily real estate and middle market, more than offset lower credit card
loans. Loans represented 82% of average earning assets in the first quarter of
1999 compared with 83% a year ago. Average loans held for sale increased $1.0
billion from the prior year, reflecting higher residential mortgage
originations. Average securities available for sale of $7.8 billion were
consistent with the prior year and represented 11% and 12% of average earning
assets in the first quarter of 1999 and 1998, respectively.
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PNC Bank Corp. Reports Record First Quarter 1999 Earnings--Page 5
Average deposits were $46.4 billion and represented 60% of total sources
of funds in the first quarter of 1999 compared with $44.6 billion and 62%,
respectively, in the first quarter of 1998. The increase in deposits was
generated by growth in PNC Regional Bank through both its branch and alternative
delivery channels. Average borrowed funds increased $1.6 billion compared with
last year. Liquidity was strengthened as 50% of wholesale liabilities had a
maturity beyond one year at March 31, 1999, compared with 36% at March 31, 1998.
Shareholders' equity totaled $5.9 billion at March 31, 1999. The leverage
ratio was 7.28% and Tier I and total risk-based capital ratios are estimated to
be 8.1% and 11.7%, respectively.
The ratio of nonperforming assets to total loans and foreclosed assets
was 0.62% at March 31, 1999 compared with 0.58% and 0.61% at Dec. 31, 1998 and
March 31, 1998, respectively. Nonperforming assets were $328 million at March
31, 1999 compared with $332 million and $335 million at Dec. 31, 1998 and March
31, 1998, respectively.
The allowance for credit losses was $672 million at March 31, 1999, and
represented 231% of nonaccrual loans compared with 255% and 321% at Dec. 31,
1998 and March 31, 1998, respectively. Net charge-offs were $78 million or .56%
of average loans in the first quarter of 1999 compared with $90 million or .67%,
respectively, a year ago. Excluding credit cards, net charge-offs were $20
million or .15% of average loans in the first quarter of 1999 compared with $21
million or .17% of average loans in the first quarter of 1998.
PNC Bank Corp., headquartered in Pittsburgh, is one of the largest
diversified financial services organizations in the United States. Its major
businesses include PNC Regional Bank, PNC Advisors, BlackRock, PFPC Worldwide,
PNC Institutional Bank, PNC Secured Finance and PNC Mortgage.
Visit PNC Bank on the World Wide Web at www.pncbank.com
PNC Bank Corp.'s 1998 Annual Report, accessible on its website,
identifies factors that can affect forward-looking statements.
[TABULAR MATERIAL FOLLOWS]
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PNC BANK CORP. Page 6
Consolidated Financial Highlights
March 31 December 31 March 31
Three months ended - dollars in millions, except per share data 1999 1998 1998
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FINANCIAL PERFORMANCE
Revenue
Net interest income (taxable-equivalent basis) $664 $665 $644
Noninterest income 731 698 506
Total revenue 1,395 1,363 1,150
Net income 325 285 269
Per common share
Basic earnings 1.06 .93 .88
Diluted earnings 1.05 .92 .87
Book value 18.78 18.86 17.20
Cash dividends declared .41 .41 .39
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SELECTED RATIOS
Return on
Average common shareholders' equity 22.94% 20.25% 21.10%
Average assets 1.71 1.46 1.51
Net interest margin 3.86 3.77 3.96
Noninterest income to total revenue 52.40 51.21 44.00
Efficiency * 53.45 52.88 57.05
* Excluding amortization, distributions on capital securities and residential mortgage banking hedging activities
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March 31 December 31 September 30 June 30 March 31
1999 1998 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Assets $74,868 $77,207 $76,238 $75,873 $72,355
Earning assets 66,710 69,027 68,638 68,353 65,210
Loans, net of unearned income 52,800 57,650 56,752 56,237 54,511
Securities available for sale 9,170 7,074 7,152 7,540 7,511
Deposits 45,799 47,496 46,875 47,096 46,068
Borrowed funds 19,935 20,946 19,972 20,488 18,375
Shareholders' equity 5,931 6,043 5,793 5,633 5,487
Common shareholders' equity 5,617 5,729 5,479 5,318 5,173
CAPITAL RATIOS
Leverage 7.28% 7.22% 7.18% 7.18% 7.36%
Common shareholders' equity to total assets 7.50 7.42 7.19 7.01 7.15
ASSET QUALITY RATIOS
Nonperforming assets to total loans and foreclosed assets .62% .58% .58% .57% .61%
Allowance for credit losses to total loans 1.27 1.31 1.44 1.53 1.67
Allowance for credit losses to nonaccrual loans 230.93 255.25 289.36 315.81 321.13
Net charge-offs to average loans .56 1.24 .62 .64 .67
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PNC BANK CORP. Page 7
Consolidated Statement of Income
March 31 December 31 March 31
Three months ended - in millions, except per share data 1999 1998 1998
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INTEREST INCOME
Loans and fees on loans $1,112 $1,166 $1,119
Securities available for sale 106 101 115
Other 72 87 57
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Total interest income 1,290 1,354 1,291
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INTEREST EXPENSE
Deposits 351 376 361
Borrowed funds 281 319 293
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Total interest expense 632 695 654
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Net interest income 658 659 637
Provision for credit losses 78 115 30
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Net interest income less provision for credit losses 580 544 607
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NONINTEREST INCOME
Asset management 161 205 141
Mutual fund servicing 51 48 41
Service charges on deposits 50 52 48
Consumer services 130 117 82
Corporate services (60) 78 51
Net residential mortgage banking 60 57 52
Net securities gains 2 13
Other 339 139 78
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Total noninterest income 731 698 506
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NONINTEREST EXPENSE
Staff expense 412 393 354
Net occupancy and equipment 175 108 96
Amortization 28 30 24
Marketing 15 18 37
Distributions on capital securities 16 17 13
Other 177 231 184
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Total noninterest expense 823 797 708
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Income before income taxes 488 445 405
Income taxes 163 160 136
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Net income $325 $285 $269
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Net income applicable to common shareholders $320 $280 $265
EARNINGS PER COMMON SHARE
Basic $1.06 $.93 $.88
Diluted 1.05 .92 .87
CASH DIVIDENDS DECLARED PER COMMON SHARE .41 .41 .39
AVERAGE COMMON SHARES OUTSTANDING
Basic 302.3 301.5 300.6
Diluted 305.5 304.7 306.1
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PNC BANK CORP. Page 8
Details of Net Interest Income and Net Interest Margin
NET INTEREST INCOME
Taxable-equivalent basis March 31 December 31 September 30 June 30 March 31
Three months ended - in millions 1999 1998 1998 1998 1998
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Interest income
Loans $1,117 $1,171 $1,172 $1,144 $1,124
Securities available for sale 107 102 104 107 117
Other 72 87 85 69 57
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Total interest income 1,296 1,360 1,361 1,320 1,298
Interest expense
Deposits 351 376 371 363 361
Borrowed funds 281 319 337 320 293
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Total interest expense 632 695 708 683 654
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Net interest income $664 $665 $653 $637 $644
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NET INTEREST MARGIN
Taxable-equivalent basis March 31 December 31 September 30 June 30 March 31
Three months ended 1999 1998 1998 1998 1998
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Average yields/rates
Yield on earning assets
Loans 7.91% 8.06% 8.28% 8.23% 8.36%
Securities available for sale 5.55 5.58 5.85 5.86 6.01
Other 6.57 6.70 6.87 6.80 6.96
Total yield on earning assets 7.56 7.70 7.92 7.89 8.00
Rate on interest-bearing liabilities
Deposits 3.80 4.03 4.17 4.15 4.19
Borrowed funds 5.21 5.51 5.83 5.81 5.85
Total rate on interest-bearing liabilities 4.31 4.59 4.82 4.79 4.79
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Interest rate spread 3.25 3.11 3.10 3.10 3.21
Impact of noninterest-bearing sources .61 .66 .71 .71 .75
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Net interest margin 3.86% 3.77% 3.81% 3.81% 3.96%
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PNC BANK CORP. Page 9
Details of Noninterest Income and Noninterest Expense
DETAILS OF NONINTEREST INCOME
March 31 December 31 September 30 June 30 March 31
Three months ended - in millions 1999 1998 1998 1998 1998
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Asset management $161 $205 $143 $137 $141
Mutual fund servicing 51 48 47 46 41
Service charges on deposits 50 52 53 50 48
Consumer services
Credit card 27 36 35 32 26
Brokerage 46 27 16 17 15
Insurance 19 16 12 11 10
Other 38 38 35 33 31
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Total consumer services 130 117 98 93 82
Corporate services
Capital markets 19 16 13 14 9
Net commercial mortgage banking 10 22 (4) 8
Other (89) 40 45 40 42
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Total corporate services (60) 78 54 62 51
Net residential mortgage banking
Mortgage servicing 60 54 44 33 29
Origination and securitization 58 56 42 50 42
Sales of servicing and other 7
MSR amortization (12) (95) (143) (38) (33)
Hedging activities (46) 42 104 11 7
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Total net residential mortgage banking 60 57 47 56 52
Net securities gains 2 1 13
Other 339 139 86 125 78
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Total noninterest income $731 $698 $529 $569 $506
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DETAILS OF NONINTEREST EXPENSE
March 31 December 31 September 30 June 30 March 31
Three months ended - in millions 1999 1998 1998 1998 1998
- ----------------------------------------------------------------------------------------------------------------------------
Staff expense
Compensation $351 $353 $291 $285 $291
Employee benefits 61 40 44 49 63
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Total staff expense 412 393 335 334 354
Net occupancy and equipment
Net occupancy 87 52 49 54 49
Equipment 88 56 52 50 47
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Total net occupancy and equipment 175 108 101 104 96
Amortization
Goodwill 19 19 18 18 13
Other 9 11 10 11 11
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Total amortization 28 30 28 29 24
Marketing 15 18 14 27 37
Distributions on capital securities 16 17 16 14 13
Other 177 231 202 231 184
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Total noninterest expense $823 $797 $696 $739 $708
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PNC BANK CORP. Page 10
Consolidated Balance Sheet
March 31 December 31 March 31
In millions, except par value 1999 1998 1998
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ASSETS
Cash and due from banks $2,322 $2,534 $2,581
Short-term investments 984 1,014 718
Loans held for sale 3,599 3,226 2,399
Securities available for sale 9,170 7,074 7,511
Loans, net of unearned income of $531, $554 and $393 52,800 57,650 54,511
Allowance for credit losses (672) (753) (912)
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Net loans 52,128 56,897 53,599
Goodwill and other amortizable assets 2,457 2,548 1,636
Other 4,208 3,914 3,911
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Total assets $74,868 $77,207 $72,355
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LIABILITIES
Deposits
Noninterest-bearing $9,070 $9,943 $10,117
Interest-bearing 36,729 37,553 35,951
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Total deposits 45,799 47,496 46,068
Borrowed funds
Federal funds purchased 245 390 9,503
Repurchase agreements 2,316 1,669 773
Bank notes and senior debt 9,899 10,384 1,827
Other borrowed funds 5,445 6,722 4,591
Subordinated debt 2,030 1,781 1,681
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Total borrowed funds 19,935 20,946 18,375
Other 2,355 1,874 1,775
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Total liabilities 68,089 70,316 66,218
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Mandatorily redeemable capital securities of subsidiary trusts 848 848 650
SHAREHOLDERS' EQUITY
Preferred stock 7 7 7
Common stock - $5 par value
Authorized 450.0 shares
Issued 352.8; 352.8 and 350.4 shares 1,764 1,764 1,752
Capital surplus 1,251 1,250 1,088
Retained earnings 5,458 5,262 4,788
Deferred benefit expense (36) (36) (43)
Accumulated other comprehensive loss (89) (43) (32)
Common stock held in treasury at cost: 53.7, 49.1 and 49.5 shares (2,424) (2,161) (2,073)
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Total shareholders' equity 5,931 6,043 5,487
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Total liabilities, capital securities and shareholders' equity $74,868 $77,207 $72,355
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PNC BANK CORP. Page 11
Consolidated Balance Sheet Data
AVERAGE BALANCES
March 31 December 31 September 30 June 30 March 31
Three months ended - in millions 1999 1998 1998 1998 1998
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ASSETS
Interest-earning assets
Securities available for sale $7,755 $7,323 $7,073 $7,323 $7,784
Loans, net of unearned income
Consumer (excluding credit card) 10,955 11,075 11,038 10,995 11,186
Credit card 2,724 3,570 4,029 4,048 3,748
Residential mortgage 12,184 12,193 12,455 12,560 12,784
Commercial 24,574 24,593 23,359 22,425 20,665
Commercial real estate 3,398 3,442 2,850 3,206 3,624
Other 2,860 2,493 2,207 2,114 2,076
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Total loans, net of unearned income 56,695 57,366 55,938 55,348 54,083
Loans held for sale 3,383 4,295 3,850 2,948 2,363
Other 1,005 881 1,097 1,069 959
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Total interest-earning assets 68,838 69,865 67,958 66,688 65,189
Noninterest-earning assets 8,120 7,512 7,332 6,944 6,952
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Total assets $76,958 $77,377 $75,290 $73,632 $72,141
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LIABILITIES
Interest-bearing liabilities
Deposits $37,381 $37,048 $35,353 $34,956 $34,945
Borrowed funds 21,584 22,723 22,642 21,844 19,989
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Total interest-bearing liabilities 58,965 59,771 57,995 56,800 54,934
Noninterest-bearing deposits 9,035 9,202 9,169 9,213 9,685
Other 2,135 1,756 1,632 1,445 1,474
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Total liabilities 70,135 70,729 68,796 67,458 66,093
Mandatorily redeemable capital securities of subsidiary trusts 848 848 848 698 650
SHAREHOLDERS' EQUITY 5,975 5,800 5,646 5,476 5,398
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Total liabilities, capital securities and
shareholders' equity $76,958 $77,377 $75,290 $73,632 $72,141
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COMMON SHAREHOLDERS' EQUITY $5,661 $5,486 $5,332 $5,161 $5,083
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LOAN PORTFOLIO
March 31 December 31 September 30 June 30 March 31
Period ended - in millions 1999 1998 1998 1998 1998
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Consumer (excluding credit card) $10,893 $10,980 $11,120 $11,035 $11,106
Credit card 2,958 3,874 4,150 3,729
Residential mortgage 12,579 12,265 12,388 12,698 12,351
Commercial 23,082 25,182 24,239 23,359 21,823
Commercial real estate 3,417 3,449 2,838 2,872 3,467
Other 3,360 3,370 2,738 2,516 2,428
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Total loans 53,331 58,204 57,197 56,630 54,904
Unearned income (531) (554) (445) (393) (393)
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Total loans, net of unearned income $52,800 $57,650 $56,752 $56,237 $54,511
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PNC BANK CORP. Page 12
Asset Quality Data
ALLOWANCE FOR CREDIT LOSSES
March 31 December 31 September 30 June 30 March 31
Three months ended - in millions 1999 1998 1998 1998 1998
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Beginning balance $753 $816 $859 $912 $972
Charge-offs
Consumer (excluding credit card) (18) (21) (19) (19) (24)
Credit card (60) (77) (73) (75) (72)
Residential mortgage (4) (1) (1) (3) (2)
Commercial (12) (101) (8) (7) (6)
Commercial real estate (1) (1) (4) (1) (2)
Other (2) (2) (2) (2) (1)
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Total charge-offs (97) (203) (107) (107) (107)
Recoveries
Consumer (excluding credit card) 7 8 8 8 10
Credit card 2 5 4 5 3
Residential mortgage 1 1
Commercial 7 8 6 3 3
Commercial real estate 1 1 1 1
Other 1 1 1
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Total recoveries 19 23 19 18 17
Net charge-offs
Consumer (excluding credit card) (11) (13) (11) (11) (14)
Credit card (58) (72) (69) (70) (69)
Residential mortgage (3) (1) (1) (2) (2)
Commercial (5) (93) (2) (4) (3)
Commercial real estate (3) (1) (1)
Other (1) (1) (2) (1) (1)
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Total net charge-offs (78) (180) (88) (89) (90)
Provision for credit losses 78 115 45 35 30
(Divestitures) acquisitions (81) 2 1
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Ending balance $672 $753 $816 $859 $912
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NONPERFORMING ASSETS
March 31 December 31 September 30 June 30 March 31
Period ended - in millions 1999 1998 1998 1998 1998
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Nonaccrual loans
Commercial $184 $188 $148 $129 $145
Commercial real estate 45 50 73 80 81
Residential mortgage 58 51 56 56 51
Consumer 4 6 5 7 7
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Total nonaccrual loans 291 295 282 272 284
Foreclosed assets
Commercial real estate 13 15 20 22 23
Residential mortgage 15 17 18 20 19
Other 9 5 9 9 9
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Total foreclosed assets 37 37 47 51 51
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Total nonperforming assets $328 $332 $329 $323 $335
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