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FITCH CHANGES PNC FINANCIAL, LEAD BANKS CREDIT TRENDS TO STABLE -- FITCH FINANCIAL WIRE --

 FITCH CHANGES PNC FINANCIAL, LEAD BANKS CREDIT TRENDS TO STABLE
 -- FITCH FINANCIAL WIRE --
 NEW YORK, May 14 /PRNewswire/ -- The credit trends of PNC Financial Corp. and its lead banks, Pittsburgh National Bank and Provident National Bank, are changed to stable from declining by Fitch. The rating on Provident National Bank's 7 3/4 percent capital notes due 1997 is lowered to 'AA-' from 'AA'. Fitch's implied rating on PNC Financial is unchanged at 'A+'. Pittsburgh National Bank's 'AA-/F-1+' long- and short-term ratings for structured transactions are affirmed.
 The credit trend adjustments were prompted by PNC's improving credit risks. Specific problems have been primarily related to the commercial real estate sector and highly leveraged borrowers. Since 1990, PNC has experienced decreasing nonperforming assets (NPA), higher reserve coverage protection, and strong capital ratios. While the ratio of NPAs to loans and foreclosed assets (OREO) remained high at 3.99 percent at March 31, with OREO increasing to 30 percent of NPAs, strengthened reserves provided a 114 percent cushion against nonperforming loans.
 PNC's core revenue base and superior overhead controls allow it to address credit expenses, including ongoing OREO valuations, and aggressive charge-offs. Although a large $81 million securities gain was taken during 1992's first quarter, PNC deployed the gains for reserve building and restructuring expenses. Fitch does not expect PNC to rely on nonrecurring gains to boost profitability.
 As the regional and national economies improve, PNC's problem assets are expected to decline further, resulting in more normalized provisions in the $50 million to $60 million range, compared with $90 million in 1992's first quarter. This should gradually lead to a sustainable 1 percent or better return on assets (ROA).
 Provident National Bank is based in Philadelphia, with $7.6 billion in total assets in 1991. Its 'AA-' rating reflects the bank's weaker financial condition due to exposure to the commercial construction real estate sector, which caused 1990's NPA ratio to rise to 7 percent, and a $49 million net loss. Consequently, new management was installed during 1991, along with greater centralized controls. Results are positive thus far and are expected to continue to improve. The NPA ratio has fallen to 3 percent with 123 percent of nonperforming loans covered by reserves. Profitability in 1991, while still low at $35 million or an ROA of 0.44 percent, is a solid improvement over 1990's results.
 Funding and liquidity at the parent company and the lead banks are good. While Pittsburgh National Bank tends to have a greater dependence upon large liabilities (jumbo CDs and other large time deposits) due to its wholesale banking orientation, centralized asset and liability management at the corporation level assures prudent funding approaches. The parent has no double leverage and ample cashflows to service a modest level of debt.
 Capital at PNC Financial and its lead banks is strong. PNC's Tier 1 and total risk-adjusted ratios were approximately 10.1 percent and 12.4 percent, respectively, at March 31, improving from year-end 1991's ratios of 9.7 percent and 12.1 percent. The banks' Tier 1 and total risk-adjusted capital ratios at year-end 1991 were approximately 8 percent and 10 percent, respectively. In view of existing credit risks, management is committed to maintaining strong capital ratios. Finally, Fitch expects PNC to maintain strong capital ratios in anticipation of acquisitions given the ongoing consolidation trends of the industry.
 -0- 5/14/92
 /CONTACT: Fay Wong of Fitch, 212-908-0531/ CO: PNC Financial Corp. ST: Pennsylvania IN: FIN SU: RTG


KD -- NY031 -- 0096 05/14/92 10:09 EDT
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Date:May 14, 1992
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