PNC Bank 2000 Annual Report Download - page 60

The decrease in corporate services revenue primarily
reflected the impact of $188 million of valuation adjust-
ments in 1999 associated with the exit of certain non-strate-
gic lending businesses. Excluding valuation adjustments in
both years, corporate services revenue was $321 million
and $275 million for 1999 and 1998, respectively, a 17%
increase primarily due to growth in commercial mortgage
banking, capital markets and treasury management fees.
Equity management income was $100 million for 1999
and $96 million for 1998. Both years benefited from strong
equity market conditions. Net securities gains for 1999 were
$22 million and included a $41 million gain from the sale
of Concord stock that was partially offset by a $28 million
write-down of an equity investment. Sale of subsidiary stock
of $64 million in 1999 reflected the gain from the
BlackRock IPO.
Other noninterest income included a $193 million gain
from the sale of the credit card business in the first quarter
of 1999. Also included in other noninterest income was a
$97 million gain from the sale of an equity interest in
Electronic Payment Services, Inc. (“EPS”), $27 million of
gains from the sale of retail branches and $7 million of val-
uation adjustments. During 1998, other noninterest income
included a $97 million gain from the sale of the corporate
trust business, $86 million of branch gains and a $21 mil-
lion loss from the sale of a credit card portfolio. Excluding
these items, other noninterest income increased $65 million
in the comparison primarily due to the Hilliard Lyons
acquisition.
NO N I N T E R E S T EX P E N S E
Noninterest expense was $2.843 billion for 1999 compared
with $2.698 billion in 1998. The increase was primarily to
support revenue growth in fee-based businesses. On a com-
parable basis, noninterest expense increased $81 million or
3% excluding $98 million of costs related to efficiency ini-
tiatives (compensation - $22 million, net occupancy - $35
million, equipment - $38 million and other - $3 million), a
$30 million contribution to the PNC Foundation and
$12 million of expense associated with the buyout of PNC’s
mall ATM marketing representative from 1999. For 1998,
$55 million of costs related to consumer banking initiatives
and $21 million of merger and acquisition integration costs
were excluded from the comparison. The efficiency ratio
was 55% for 1999 and 1998 reflecting a continued focus on
improving returns in traditional businesses. Average full-
time equivalent employees were relatively consistent in the
year-to-year comparison and totaled approximately 22,700
and 23,000 in 1999 and 1998, respectively.
CO N S O L I D AT E D BA L A N C E
SH E E T RE V I E W
LO A N S
Loans were $49.7 billion at December 31, 1999, an $8.0
billion decrease from year-end 1998 primarily due to the
impact of strategies designed to reduce balance sheet
leverage in lower-return businesses.
SE C U R I T I E S AV A I L A B L E F O R SA L E
Securities available for sale increased $1.5 billion from
December 31, 1998, to $6.0 billion at December 31, 1999.
The expected weighted-average life of securities available
for sale increased to 4 years and 7 months at December 31,
1999, compared with 2 years and 8 months at year-end 1998.
FU N D I N G SO U R C E S
Total funding sources were $60.0 billion at December 31,
1999, a decrease of $2.1 billion compared with December
31, 1998 primarily resulting from reduced wholesale fund-
ing related to the credit card business that was sold in the
first quarter of 1999.
Total demand, savings and money market deposits
decreased approximately $190 million in the year-to-year
comparison as increases in money market deposits were
more than offset by decreases in time deposits, primarily
due to decreases in higher-rate certificates of deposit.
AS S E T QU A L I T Y
The ratio of nonperforming assets to total loans, loans held
for sale and foreclosed assets was .61% at December 31,
1999 and .55% at December 31, 1998. Nonperforming
assets were $325 million at December 31, 1999 compared
with $319 million at December 31, 1998. The allowance for
credit losses was $674 million and represented 232% of
nonaccrual loans and 1.36% of total loans at December 31,
1999. The comparable ratios were 263% and 1.31% ,
respectively, at December 31, 1998.
CA P I TA L
Shareholders’ equity totaled $5.9 billion and $6.0 billion at
December 31, 1999 and 1998, respectively, and the lever-
age ratio was 6.61% and 7.28% in the comparison. Tier I
and total risk-based capital ratios were 7.05% and 11.08% ,
respectively, at December 31, 1999, compared with 7.80%
and 11.16% , respectively, at December 31, 1998, computed
on a basis including discontinued operations.
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