After a dreary first half, PNC Bank Corp. is finally getting credit for an improved balance sheet and a potentially profitable joint venture with the Automobile Association of America.

The Pittsburgh-based bank's shares leapt to a 52-week high of $32.75 Thursday after winning upgrades from three brokerage houses.

"The bank has gotten its house in order and is displaying a new shareholder-driven attitude," said Carole S. Berger, an analyst at Salomon Brothers. She upgraded PNC stock to "buy" from "hold" on Aug. 15. That move was followed by similar endorsements last week from Merrill Lynch and Dean Witter Reynolds.

Analysts like the reduction in PNC's securities-to-assets ratio from 34% to 22%, as well as its 3% share buy-back program. They also predict a bright future for the $72 billion-asset bank's program with AAA, under which PNC will offer financial services to the association's 34 million members.

Dean Witter Reynolds analyst Anthony Davis said he expects earnings to reach $3 per share this year, up from $2.29 in 1995. The positive forecast for the year was echoed by Merrill Lynch at $2.95 a share and Salomon Brothers at $3 a share. The AAA program will help boost earnings to $3.40 a share in 1997, Mr. Davis said.

PNC stock slipped Friday to $32 during a selloff of banking stocks that followed a government report of stronger-than-expected orders of durable goods.

But the recent rally represented quite a turnaround for the bank's stock, which fell 5% while the regional banks on Dean Witter's coverage list rose 10% for the year through mid-August.

The trouble dates back to 1993 when the bank, seeing few opportunities for growth in its native markets in the East, began investing heavily in derivatives contracts. The strategy backfired when interest rates rose in early 1994, creating losses on the derivatives contracts.

Seeking to expand its bank locations in Philadelphia's suburbs, PNC bought Midlantic Corp. of New Jersey for $3 billion last November.

PNC decided to pay off its securities contracts and merger costs all at once. Analysts approved, but the decision drove down earnings by 52% for 1995.

But now the PNC ship seems to have steadied. Merrill Lynch forecasts a recovery in the bank's earnings this year to a level 13% higher than 1994. The bank is also resuming a popular share buyback that it had to suspend in order to buy Midlantic.

In the long term, analysts say the bank will prosper under its contract to market financial services to AAA's customers for the next 10 years.

The program is just beginning in Tennessee and Virginia. But Merrill Lynch analyst Sandra Flannigan is enthusiastic about PNC's opportunity to generate business nationwide without building new branches or buying another major bank.

Analysts believe the automobile association deal, signed in January, offers a chance for the bank to expand on its strengths: telebanking and financial management. PNC's telebanking operation, PNC Direct, is considered one of the most advanced in the industry. The bank handles one- fifth of its consumer loans this way.

PNC ranks third among banks in managing people's money. It is also a leader in selling mutual funds and managing trust and pension funds.

"There are a lot of triple-A customers out there who will look to PNC to help with loans, buying mutual funds or managing their money," said Mr. Davis. "It's a perfect situation for them."

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