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PNC FINANCIAL SERVICES GROUP, INC. Annual Report (Amendment), Year Ended Dec 31, 1997

Filing Date
Filed June 24, 1998
Period End
December 31, 1997
Security
PNC
In the record · 2016–202610-K1110-Q328-K210

PNC filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 210 current reports (8-K) between 2016 and 2026.

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01—Abstract

Summary

Summary of the 10-K/A filed June 24, 1998. Cited figures are marked; the original filing is the authoritative source.

This filing is Amendment No. 1 to PNC's 2007-era Form 10-K for fiscal 1997, filed June 24, 1998.

It does not contain PNC's consolidated financial statements, which are incorporated by reference from the Annual Report to Shareholders. Instead, it supplies the audited financial statements and Form 5500-related schedules for PNC Bank Corp.'s Incentive Savings Plan, a 401(k) and employee stock ownership plan (ESOP) for salaried employees. Ernst & Young issued an unqualified opinion dated June 5, 1998.

The plan's net assets available for benefits rose to $1.045 billiona at December 31, 1997, up about 51% from $690.1 million a year earlier. The growth came mainly from $256.7 million of net realized and unrealized appreciation and $87.3 million of assets received in mergers, chiefly Midlantic Bank ($85 million). Company stock (Fund D plus the ESOP allocated and unallocated accounts) made up most of the plan.

PNC Bank Corp. common stock held in Fund D and the ESOP was worth roughly $697 millionb, about two-thirds of total plan assets. Because participants are heavily concentrated in PNC stock, plan results are closely tied to the share price.

For investors, the main takeaways are the size of the employee ownership stake, the remaining ESOP debt of $47.6 millionc (due 1998 and 1999 at a 5.25% fixed rate), and planned changes effective July 1, 1998, when the plan expands from four to eleven investment funds with daily valuation. The filing gives no bank-level earnings, capital, or loan data, so investors need the full annual report for those.

02—Key points

Key Highlights

  1. Plan net assets available for benefits reached $1,044,954,603 at December 31, 1997, up from $690,102,714 at December 31, 1996 (about 51% growth).
  2. The PNC Bank Corp. stock fund and ESOP held about $697 million of PNC common stock, roughly two-thirds of plan assets, leaving employees heavily exposed to PNC's share price.
  3. Net realized and unrealized appreciation added $256.7 million in 1997, while participant distributions totaled $86.3 million.
  4. Acquisitions added $87.3 million of plan assets in 1997, mainly about $85 million from Midlantic Bank N.A. and $1.9 million from BancOne plans.
  5. The ESOP held 2,367,339 unallocated PNC shares (market value $134.8 million) and owed $47.6 million on its note, with principal due $23.9 million in 1998 and $23.7 million in 1999 at a 5.25% rate.
  6. The ESOP allocated 947,314 shares to participants in 1997, and employer matching contributions were made in PNC stock for participants aged 55 and under.
  7. Effective July 1, 1998, the plan expands from four to eleven investment options and moves to daily valuation; the Compass Capital Funds were also renamed BlackRock Funds effective January 31, 1998.

03—Questions

Frequently Asked Questions

  1. Does this filing contain PNC's consolidated financial statements?

    No. The consolidated statements of income, balance sheet, shareholders' equity, and cash flows are incorporated by reference from the 1997 Annual Report to Shareholders (Exhibit 13). This amendment contains only the audited financial statements of the Incentive Savings Plan, a separate employee benefit plan, and related schedules.

  2. How much of the plan's value is tied to PNC's own stock?

    A substantial share. At December 31, 1997, the PNC stock fund (Fund D) held $349.2 million and the ESOP's allocated and unallocated accounts held $349.5 million combined, out of total investments of about $1.09 billion. Fund D held 6,103,818 PNC shares, implying a year-end price of roughly $57 per share based on the reported fair value.

  3. What obligations does the ESOP carry?

    In January 1990, the ESOP borrowed $140 million from PNC Bank to buy about 7.35 million shares. At year-end 1997, $47.6 million remained outstanding, due $23.9 million in 1998 and $23.7 million in 1999. PNC Bank must make annual contributions to cover principal and interest, net of investment income in the unallocated fund. The unallocated shares are pledged as collateral on the note.

  4. What changed in the plan after 1997?

    Effective February 12, 1998, certain administrative costs, including trustee expenses, shifted from PNC Bank to the plan. Effective July 1, 1998, the investment options expand from four to eleven funds and are valued daily instead of periodically. Participants can invest in more options, and PNC stock remains one of them.

04—Continue

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