-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B+6aHevRKgrYXEwBMl6X3Tjicyr0Psa7PTjt+Uo9XudjIrUJVW50d6OCi+361wVE mIfxbmn8b/scUK2aarMBYA== 0000950135-96-001769.txt : 19960422 0000950135-96-001769.hdr.sgml : 19960422 ACCESSION NUMBER: 0000950135-96-001769 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960418 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960419 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAYBANKS INC CENTRAL INDEX KEY: 0000010497 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 042008039 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-00959 FILM NUMBER: 96548894 BUSINESS ADDRESS: STREET 1: 175 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174821040 MAIL ADDRESS: STREET 1: 175 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 FORMER COMPANY: FORMER CONFORMED NAME: BAYSTATE CORP DATE OF NAME CHANGE: 19760602 8-K 1 BAYBANKS, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): APRIL 18, 1996 BAYBANKS, INC. (Exact name of registrant as specified in its charter) MASSACHUSETTS 0-959 04-2008039 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 175 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (617) 482-1040 Page 1 of 16 Exhibit Index appears on Page 4 2 ITEM 5. OTHER EVENTS. On April 18, 1996, the Registrant issued a press release containing its operating results for the first quarter of 1996. A complete copy of the full text of this press release, together with certain supplemental financial information, is attached as Exhibit 99 hereto. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits: Exhibit No. Description - -------- ----------- 99 BayBanks, Inc. press release dated April 18, 1996, together with certain supplemental financial information. - 2 - 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: April 18, 1996 BAYBANKS, INC. By: /s/ Michael W. Vasily --------------------------- Michael W. Vasily Executive Vice President - 3 - 4 EXHIBIT INDEX EXHIBIT NO. -------- 99 BayBanks, Inc. press release dated April 18, 1996, together with certain supplemental financial information. - 4 - EX-99 2 PRESS RELEASE 1 Exhibit 99 Media: or Investor: Bruce Spitzer Michael W. Vasily Vice President Executive Vice President Public Relations and Chief Financial Officer (617) 788-7812 (617) 482-1040
FOR IMMEDIATE RELEASE BAYBANKS ANNOUNCES FIRST QUARTER EARNINGS BOSTON, Apr. 18, 1996 -- BayBanks, Inc. (Nasdaq: BBNK) today reported net income for the first quarter of 1996 of $38.4 million, or $1.92 per share, compared with $30.5 million, or $1.58 per share, in the first quarter of 1995, an increase of 22 percent on a per share basis. Reflected in the Company's earnings for the first quarter of 1996 are the results of operations of BayBank FSB and BayBank NH, the two New Hampshire banks that became subsidiaries of the Company during the second half of 1995. Earnings for the first quarter of 1996 included the effect of a favorable court decision on a Company tax refund claim, resulting in an after-tax benefit of $2.5 million, or $.13 per share. Operating income for the quarter, before net securities gains and the provisions for loan losses and OREO reserves and on a fully taxable basis, was $71.3 million, up 18 percent from the $60.6 million reported in 1995. Included in operating income was $2.6 million of interest related to the tax claim noted above. Residential real estate lending was the primary source of new loan volume during the first quarter of 1996. Commercial real estate, international, indirect auto, and student loans also grew during the quarter while general commercial lending, home equity credit, and credit card loans experienced declines. -more- 2 BayBanks, Inc. Earnings Announcement Page Two The Company's net interest margin for the first quarter was 5.14 percent,up from the previous quarter's 5.07 percent. This improvement was aided by the maturity of lower-yielding securities which were not reinvested, but used instead to reduce the level of borrowed funds. Operating expenses increased 6% from the first quarter of 1995 reflecting the addition of the two New Hampshire banks mentioned above and higher marketing costs related to the promotion of new products and services. These costs were partially offset by a reduction in Federal Deposit Insurance premiums and lower provisions for certain compensation programs. Credit costs were $6.5 million in the first quarter of 1996 compared with $5.4 million in the fourth quarter of 1995 and $7.5 million in the first quarter of 1995. At Mar. 31, 1996, nonperforming assets were $87 million, compared with $83 million at Dec. 31, 1995 and $112 million at Mar. 31, 1995. Reserves for loan losses at $152 million were 215 percent of nonperforming loans. BayBanks' preliminary consolidated risk-based capital ratios were 12.04 percent for core capital and 13.30 percent for total capital at Mar. 31, 1996. The Company's preliminary leverage ratio was 7.96 percent as of the same date. All capital ratios have increased since year- end 1995. As previously announced, on Dec. 12, 1995, BayBanks, Inc. and Bank of Boston Corporation entered into an agreement and plan of merger. The merger is subject to approval by the shareholders of both companies at meetings scheduled for April 25, 1996 and by bank regulators and is expected to be completed around mid-year. -more- 3 BayBanks, Inc. Earnings Announcement Page Three BayBanks, Inc., headquartered in Boston, is one of New England's largest bank holding companies with total assets of $11.6 billion at Mar. 31, 1996. BayBanks provides a full range of commercial products and lending services, as well as an extensive consumer banking network that includes 238 full service offices and 456 remote banking facilities serving 174 cities and towns in Massachusetts, 14 in New Hampshire, and two in Connecticut. -more- 4 BayBanks, Inc. Earnings Announcement Page Four BAYBANKS, INC. FINANCIAL INFORMATION (Dollars in thousands, except share amounts)
Quarter Ended ---------------------------------------- March 31 December 31 March 31 1996 1995 1995 ----------- ----------- ----------- PER SHARE INFORMATION Net income per share $ 1.92 $ 1.90 $ 1.58 Dividends paid per share $ 0.60 $ 0.60 $ 0.50 Average shares outstanding 19,978,541 19,933,899 19,261,941 CONDENSED SUMMARY OF OPERATIONS (Tax equivalent basis) Net interest income $ 135,151 $ 134,459 $ 125,749 Noninterest income 59,170 54,714 51,441 ----------- ----------- ----------- Total income from operations 194,321 189,173 177,190 Operating expenses 123,017 117,288 116,552 ----------- ----------- ----------- Operating income before provisions for loan losses and other real estate owned reserve, and net securities gains (losses) 71,304 71,885 60,638 ----------- ----------- ----------- Provision for loan losses 6,900 6,000 6,500 Provision for other real estate owned reserve, net (398) (592) 1,000 ----------- ----------- ----------- Credit provisions 6,502 5,408 7,500 Net securities gains (losses) 5 (3) 1 ----------- ----------- ----------- Pre-tax income 64,807 66,474 53,139 Income taxes and tax equivalent adjustment 26,428 28,652 22,664 ----------- ----------- ----------- Net income $ 38,379 $ 37,822 $ 30,475 =========== =========== =========== FINANCIAL RATIOS Return on average stockholders' equity(1) 16.0% 16.3% 15.5% Return on average assets(1) 1.33 1.29 1.15 Net interest margin 5.14 5.07 5.16
(1) Includes average unrealized gains on securities available for sale, net of tax.
CAPITAL RATIOS Risk-based capital ratios (March 31, 1996 preliminary) Core 12.04% 11.41% 11.81% Total 13.30 12.80 13.36 Leverage capital ratio 7.96 7.66 7.55
- more - 5 BayBanks, Inc. Earnings Announcement Page Five BAYBANKS, INC. FINANCIAL INFORMATION (Dollars in thousands, except per share amounts)
March 31 December 31 March 31 BALANCE SHEET INFORMATION 1996 1995 1995 ----------- ----------- ------------ Condensed Period-End Balance Sheet - ---------------------------------- Securities portfolios $ 2,502,703 $ 3,015,444 $ 3,112,617 Loans Commercial 1,570,836 1,604,031 1,580,403 Commercial real estate 1,202,729 1,167,043 977,986 Residential mortgage 2,163,366 2,053,635 1,376,372 Instalment 2,932,918 2,946,384 2,839,733 ----------- ----------- ----------- Total loans, gross 7,869,849 7,771,093 6,774,494 Less allowance for loan losses 151,680 153,688 146,348 ----------- ----------- ----------- Net loans 7,718,169 7,617,405 6,628,146 Total earning assets 10,372,552 10,786,537 9,887,111 All other assets 1,372,307 1,430,652 1,102,995 ----------- ----------- ----------- Total assets $11,593,179 $12,063,501 $10,843,758 =========== =========== =========== Deposits Noninterest-bearing $ 2,209,027 $ 2,383,823 $ 2,100,424 Interest-bearing 7,892,369 7,833,584 6,843,531 ----------- ----------- ----------- Total deposits 10,101,396 10,217,407 8,943,955 Borrowings 430,499 783,790 1,013,029 Other liabilities 85,532 111,120 73,104 Total stockholders' equity 975,752 951,184 813,670 ----------- ----------- ----------- Total liabilities and stockholders' equity $11,593,179 $12,063,501 $10,843,758 =========== =========== =========== Book value per share $ 49.46 $ 48.43 $ 42.81 Tangible book value per share 46.69 45.64 42.59 First Quarter Fourth Quarter First Quarter 1996 1995 1995 Condensed Average Balance Sheet ------------- ------------ ----------- - ------------------------------ Securities portfolios(1) $ 2,756,300 $ 2,997,150 $ 3,123,247 Loans Commercial 1,546,064 1,587,409 1,533,471 Commercial real estate 1,191,466 1,084,655 979,525 Residential mortgage 2,096,957 1,990,957 1,356,933 Instalment 2,940,667 2,895,323 2,840,258 ----------- ----------- ----------- Total loans, gross 7,775,154 7,558,344 6,710,187 Total earning assets 10,531,454 10,555,494 9,833,434 All other assets, net 1,050,223 1,037,719 920,803 ----------- ----------- ----------- Total assets $11,581,677 $11,593,213 $10,754,237 =========== =========== =========== Deposits Noninterest-bearing $ 2,122,303 $ 2,133,765 $ 1,997,837 Interest-bearing 7,748,904 7,556,622 6,709,968 ----------- ----------- ----------- Total deposits 9,871,207 9,690,387 8,707,805 Borrowings 659,665 871,535 1,165,384 Other liabilities 103,447 115,222 81,427 Total stockholders' equity(1) 947,358 916,069 799,621 ----------- ----------- ----------- Total liabilities and stockholders' equity $11,581,677 $11,593,213 $10,754,237 =========== =========== ===========
(1) Average balances exclude the impact of average unrealized gains on securities available for sale, net of tax. - more - 6 BayBanks, Inc. Earnings Announcement Page Six BAYBANKS, INC. FINANCIAL INFORMATION (Dollars in thousands)
March 31 December 31 March 31 CREDIT QUALITY INFORMATION 1996 1995 1995 -------- ----------- -------- Allowance for loan losses $151,680 $153,688 $146,348 ======== ======== ======== Net charge-offs for the quarter $ 8,908 $ 8,185 $ 6,987 ======== ======== ======== Nonperforming loans Nonaccrual loans $ 61,529 $ 63,830 $ 75,512 Restructured, accruing loans(1) 9,009 - - -------- -------- -------- 70,538 63,830 75,512 Other real estate owned (OREO) In-substance foreclosures 4,864 5,272 11,617 Foreclosed property 21,219 23,688 41,418 -------- -------- -------- 26,083 28,960 53,035 Less OREO reserve 9,280 10,164 16,542 -------- -------- -------- OREO, net of reserve 16,803 18,796 36,493 -------- -------- -------- Total nonperforming assets $ 87,341 $ 82,626 $112,005 ======== ======== ======== Restructured, accruing loans(2) $ 2,332 $ 5,949 $ 6,765 ======== ======== ======== Accruing loans 90 days or more past due $ 38,009 $ 40,472 $ 30,427 ======== ======== ======== Total nonperforming loans; restructured, accruing loans; and accruing loans 90 days or more past due $110,879 $110,251 $112,704 ======== ======== ======== Allowance for loan losses as a percentage of nonperforming loans 215% 241% 194% Allowance for loan losses as a percentage of nonperforming loans; restructured, accruing loans; and accruing loans 90 days or more past due 137 139 130 Nonperforming assets as a percentage of total assets 0.8 0.7 1.0
(1) In accordance with Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan," included in nonperforming loans at March 31, 1996 are loans totaling $9.0 million which were restructured during the first quarter of 1996. These loans, which are on accrual status, bear market rates of interest and are performing under the restructured terms. Of the $9.0 million, $4.5 million previously had been reported as nonaccrual and $2.9 million previously had been reported as pre-SFAS 114 restructured, accruing loans. (2) Restructured, accruing loans entered into prior to the adoption of SFAS No. 114 are not reported as nonperforming loans. ### 7 CONSOLIDATED BALANCE SHEET BAYBANKS, INC. - ------------------------------------------------------------------------------ (In thousands, except share amounts)
March 31 December 31 March 31 1996 1995 1995 ------------ ----------- ----------- ASSETS Cash and due from banks $ 872,677 $ 922,031 $ 658,022 Trading account securities 36,340 50,755 18,368 Securities portfolios (1) Interest-bearing deposits and other short-term investments 210,875 361,164 196,831 Securities available for sale - amortized cost $2,187,804 at March 31, 1996, $2,518,199 at December 31, 1995, and $221,299 at March 31, 1995 2,202,876 2,549,127 222,015 Investment securities - market value $52,612 at March 31, 1996, $54,398 at December 31, 1995, and $2,644,529 at March 31, 1995 52,612 54,398 2,675,403 ----------- ----------- ----------- 2,466,363 2,964,689 3,094,249 Loans, net of unearned income and fees Commercial 1,570,836 1,604,031 1,580,403 Commercial real estate 1,202,729 1,167,043 977,986 Residential mortgage 2,163,366 2,053,635 1,376,372 Instalment 2,932,918 2,946,384 2,839,733 ----------- ----------- ----------- 7,869,849 7,771,093 6,774,494 Less allowance for loan losses 151,680 153,688 146,348 ----------- ----------- ----------- 7,718,169 7,617,405 6,628,146 Premises and equipment, net 213,151 215,714 193,785 Goodwill and other intangibles 54,624 54,869 4,282 Other assets 231,855 238,038 246,906 ----------- ----------- ----------- Total assets $11,593,179 $12,063,501 $10,843,758 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Demand $ 2,209,027 $ 2,383,823 $ 2,100,424 NOW accounts 1,599,149 1,657,825 1,407,048 Savings 1,539,254 1,498,596 1,460,247 Money market deposit accounts 2,663,653 2,599,295 2,493,856 Consumer time 1,899,501 1,862,611 1,299,848 Time - $100,000 or more 190,812 215,257 182,532 ----------- ----------- ----------- 10,101,396 10,217,407 8,943,955 Federal funds purchased and other short-term borrowings 415,628 718,941 961,883 Accrued expenses and other accounts payable 82,591 104,831 66,815 Long-term debt 14,871 64,849 51,146 Guarantee of ESOP indebtedness 2,941 6,289 6,289 Stockholders' equity: Common stock, par value $2.00 per share Shares authorized - 50,000,000 Shares issued - 19,729,361 at March 31, 1996, 19,642,774 at December 31, 1995, and 19,006,032 at March 31, 1995 39,459 39,286 38,012 Surplus 364,464 360,969 315,660 Retained earnings 566,268 539,711 465,867 Net unrealized gain on securities available for sale, net of tax 8,663 17,678 420 Treasury stock at cost - 1,525 shares at March 31, 1996, and 1,841 shares at December 31, 1995 (161) (171) - Guarantee of ESOP indebtedness (2,941) (6,289) (6,289) ----------- ----------- ----------- Total stockholders' equity 975,752 951,184 813,670 ----------- ----------- ----------- Total liabilities and stockholders' equity $11,593,179 $12,063,501 $10,843,758 =========== =========== ===========
(1) During the fourth quarter of 1995, the Financial Accounting Standards Board allowed a one-time reassessment of the classification of securities, and the Company reclassified $2.0 billion from investment securities to securities available for sale. 8 CONSOLIDATED STATEMENT OF INCOME BAYBANKS, INC. - ------------------------------------------------------------------------- (In thousands, except per share amounts)
First Quarter Ended March 31 --------------------- 1996 1995 -------- -------- Income on interest-bearing deposits and other short-term investments $ 3,560 $ 2,863 Interest on securities available for sale and investment securities 34,094 37,932 Interest and fees on loans 167,778 148,589 -------- -------- Total income on earning assets 205,432 189,384 Interest expense on deposits and borrowings Deposits 64,532 49,327 Short-term borrowings 8,081 16,272 Long-term debt 922 831 -------- -------- Total interest expense 73,535 66,430 -------- -------- Net interest income 131,897 122,954 Provision for loan losses 6,900 6,500 -------- -------- Net interest income after provision for loan losses 124,997 116,454 Noninterest income Service charges and fees on deposit accounts 27,692 26,643 Other noninterest income 31,478 24,798 -------- -------- Total noninterest income 59,170 51,441 Net securities gains (losses) 5 1 Operating expenses Salaries and benefits 63,587 60,318 Occupancy and equipment 24,729 22,598 Other operating expenses 34,701 33,636 -------- -------- Total operating expenses 123,017 116,552 Provision for OREO reserve, net (398) 1,000 -------- -------- Total operating expenses after OREO provision 122,619 117,552 -------- -------- Income before taxes 61,553 50,344 Provision for income taxes 23,174 19,869 -------- -------- NET INCOME $ 38,379 $ 30,475 ======== ======== EARNINGS PER SHARE $ 1.92 $ 1.58
9 AVERAGE BALANCES AND CAPITAL RATIOS(1) BAYBANKS, INC. - ------------------------------------------------------------------------------ (Dollars in millions)
1996 1995 ------- ------------------------------------ First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter ------- ------- ------- ------- ------ ASSETS Interest-bearing deposits and other short-term investments $ 271 $ 432 $ 366 $ 215 $ 205 Securities available for sale (2) 2,432 1,147 337 225 231 Investment securities (2) 53 1,418 2,303 2,574 2,687 Loans (3) Commercial 1,546 1,587 1,609 1,615 1,533 Commercial real estate 1,191 1,085 1,090 981 980 Residential mortgage 2,097 1,991 1,831 1,415 1,357 Instalment 2,941 2,895 2,846 2,820 2,840 ------- ------- ------- ------- ------- 7,775 7,558 7,376 6,831 6,710 Less allowance for loan losses 155 155 157 146 151 ------- ------- ------- ------- ------- 7,620 7,403 7,219 6,685 6,559 ------- ------- ------- ------- ------- Total earning assets 10,531 10,555 10,382 9,845 9,833 Cash and due from banks 705 711 690 667 632 Other assets 501 482 495 442 440 ------- ------- ------- ------- ------- Total assets $11,582 $11,593 $11,410 $10,808 $10,754 ======= ======= ======= ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Demand $ 2,122 $ 2,134 $ 2,090 $ 2,013 $ 1,998 NOW accounts 1,538 1,472 1,439 1,377 1,383 Savings 1,504 1,484 1,479 1,431 1,451 Money market deposit accounts 2,611 2,545 2,539 2,468 2,512 Consumer time 1,887 1,838 1,789 1,401 1,189 Time - $100,000 or more 209 217 216 210 175 ------- ------- ------- ------- ------- 9,871 9,690 9,552 8,900 8,708 Federal funds purchased and other short-term borrowings 598 807 799 947 1,114 Long-term debt 62 65 65 51 51 ------- ------- ------- ------- ------- Total deposits and borrowings 10,531 10,562 10,416 9,898 9,873 Other liabilities (4) 104 115 103 86 81 Stockholders' equity 947 916 891 824 800 ------- ------- ------- ------- ------- Total liabilities and stockholders' equity $11,582 $11,593 $11,410 $10,808 $10,754 ======= ======= ======= ======= ======= CAPITAL RATIOS Risk-Based Core (Min regulatory standard - 4.00%) 12.04% 11.41% 11.57% 11.99% 11.81% Total (Min regulatory standard - 8.00%) 13.30 12.80 13.10 13.53 13.36 Leverage 7.96 7.66 7.59 7.75 7.55
(1) Average balances exclude the impact of average unrealized gains on securities available for sale, net of tax. (2) During the fourth quarter of 1995, the Financial Accounting Standards Board allowed a one-time reassessment of the classification of securities, and the Company reclassified $2.0 billion from investment securities to securities available for sale. (3) Nonperforming loans are included in the average balances. (4) Includes guarantee of ESOP indebtedness. 10 SUMMARY OF OPERATIONS BAYBANKS, INC - -------------------------------------------------------------------------------- (Dollars in thousands on a tax equivalent basis, except per share amounts)
1996 1995 -------- ----------------------------------------------- First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter -------- -------- -------- -------- -------- INCOME ON EARNING ASSETS $208,686 $212,404 $209,826 $197,045 $192,179 Interest expense on deposits and borrowings 73,535 77,945 76,738 70,885 66,430 -------- -------- -------- -------- -------- Net interest income 135,151 134,459 133,088 126,160 125,749 Noninterest income 59,170 54,714 57,344 55,752 51,441 -------- -------- -------- -------- -------- Total income from operations 194,321 189,173 190,432 181,912 177,190 Operating expenses 123,017 117,288 125,109 119,926 116,552 -------- -------- -------- -------- -------- OPERATING INCOME BEFORE NET SECURITIES GAINS (LOSSES) AND PROVISIONS FOR LOAN LOSSES AND OREO RESERVE 71,304 71,885 65,323 61,986 60,638 -------- -------- -------- -------- -------- Net securities gains (losses) 5 (3) 42 - 1 -------- -------- -------- -------- -------- Provision for loan losses 6,900 6,000 6,000 6,500 6,500 Provision for OREO reserve, net (398) (592) (229) - 1,000 -------- -------- -------- -------- -------- Credit provisions 6,502 5,408 5,771 6,500 7,500 -------- -------- -------- -------- -------- Pre-tax income 64,807 66,474 59,594 55,486 53,139 Less tax equivalent adjustment included above 3,254 3,395 2,891 2,943 2,795 -------- -------- -------- -------- -------- Income before taxes 61,553 63,079 56,703 52,543 50,344 Provision for income taxes 23,174 25,257 21,984 18,185 19,869 -------- -------- -------- -------- -------- NET INCOME $ 38,379 $ 37,822 $ 34,719 $ 34,358 $ 30,475 ======== ======== ======== ======== ======== EARNINGS PER SHARE $ 1.92 $ 1.90 $ 1.74 $ 1.78 $ 1.58 DIVIDENDS PAID PER SHARE $ 0.60 $ 0.60 $ 0.60 $ 0.50 $ 0.50 FINANCIAL RATIOS Return on average equity 16.0% 16.3% 15.5% 16.7% 15.5% Return on average assets 1.33 1.29 1.21 1.28 1.15 COMMON STOCK DATA Period-end book value per share $ 49.46 $ 48.43 $ 46.18 $ 44.09 $ 42.81 Tangible book value per share 46.69 45.64 43.74 43.84 42.59 Dividend payout ratio 31.3% 31.6% 34.5% 28.1% 31.6% Range of BayBanks, Inc. last sale price High $ 108.00 $ 98.25 $ 83.75 $ 79.50 $ 64.50 Low 88.75 75.88 74.75 60.50 52.00 Close 107.50 98.25 75.88 79.25 64.50
11 AVERAGE YIELDS, RATES PAID, AND NET INTEREST MARGIN(1) BAYBANKS, INC. - -------------------------------------------------------------------------------
1996 1995 ------- ---------------------------------------- First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter ------- ------ ------ ------ ------- Interest-bearing deposits and other short-term investments 5.40% 5.74% 5.78% 6.04% 5.84% Securities available for sale(2) 5.90 5.89 6.24 6.64 6.80 Investment securities 9.38 5.94 5.81 5.72 5.51 Loans 8.67 8.83 8.92 8.99 8.94 Commercial 8.36 8.59 8.68 8.85 8.92 Commercial real estate 8.92 9.26 9.26 9.31 8.98 Residential mortgage 7.64 7.62 7.70 7.69 7.62 Instalment 9.44 9.62 9.70 9.61 9.57 Total earning assets 7.94% 7.99% 8.03% 8.01% 7.89% Interest-bearing funds 3.51% 3.66% 3.65% 3.60% 3.41% NOW accounts 1.21 1.32 1.37 1.36 1.37 Savings 2.26 2.33 2.30 2.29 2.25 Money market deposit accounts 3.44 3.47 3.44 3.37 3.22 Consumer time 5.63 5.67 5.61 5.46 4.83 Time - $100,000 or more 5.29 5.58 5.65 5.84 5.78 Short-term borrowings 5.35 5.68 5.77 5.99 5.84 Long-term debt 5.93 6.01 6.22 6.35 6.50 Interest expense as a percentage of average earning assets 2.80% 2.92% 2.93% 2.88% 2.73% Net interest margin 5.14% 5.07% 5.10% 5.13% 5.16%
(1) Tax equivalent basis. (2) Yields based on average amortized cost. 12 CREDIT QUALITY INFORMATION BAYBANKS, INC. - -------------------------------------------------------------------------------
SUMMARY OF LOAN LOSS EXPERIENCE (Dollars in thousands) 1996 1995 ------- ------------------------------------------------ First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter(3) ------- ------- ------- ------- ----------- Allowance for loan losses: Balance at beginning of period $153,688 $153,808 $146,345 $146,348 $146,835 Allowance acquired through acquisitions - 2,065 8,240 - - Loans charged off Commercial 4,029 1,448 2,102 2,193 961 Commercial real estate 209 1,601 1,213 5,294 1,713 Residential mortgage 1,472 1,619 2,173 2,442 1,387 Instalment 8,616 7,398 6,976 6,312 7,187 -------- -------- -------- -------- -------- Total loans charged off 14,326 12,066 12,464 16,241 11,248 -------- -------- -------- -------- -------- Recoveries Commercial 1,422 1,037 1,608 3,566 1,013 Commercial real estate 1,309 680 1,551 3,081 1,296 Residential mortgage 807 622 678 951 440 Instalment 1,880 1,542 1,850 2,140 1,512 -------- -------- -------- -------- -------- Total recoveries 5,418 3,881 5,687 9,738 4,261 -------- -------- -------- -------- -------- Net loans charged off 8,908 8,185 6,777 6,503 6,987 Provision for loan losses 6,900 6,000 6,000 6,500 6,500 -------- -------- -------- -------- -------- Balance at end of period $151,680 $153,688 $153,808 $146,345 $146,348 ======== ======== ======== ======== ======== Annualized quarterly net charge-offs as a percentage of average loans for the quarter 0.5% 0.4% 0.4% 0.4% 0.4% Allowance for loan losses as a percentage of period-end loans 1.9 2.0 2.1 2.1 2.2 Allowance for loan losses as a percentage of nonperforming loans 215 241 264 201 194 Allowance for loan losses as a percentage of nonperforming loans; restructured, accruing loans; and accruing loans 90 days or more past due 137 139 159 133 130
NONPERFORMING ASSETS; RESTRUCTURED, ACCRUING LOANS; AND ACCRUING LOANS 90 DAYS OR MORE PAST DUE AT PERIOD-END (Dollars in thousands) 1996 1995 -------- ------------------------------------------------ March 31 December 31 September 30 June 30 March 31 -------- ----------- ------------ ------- -------- Nonperforming loans Nonaccrual loans $61,529 $63,830 $58,174 $72,968 $ 75,512 Restructured, accruing loans (1) 9,009 - - - - ------- ------- ------- ------- -------- 70,538 63,830 58,174 72,968 75,512 Other real estate owned In-substance foreclosures 4,864 5,272 5,272 6,561 11,617 Foreclosed property 21,219 23,688 24,883 33,142 41,418 ------- ------- ------- ------- -------- 26,083 28,960 30,155 39,703 53,035 Less OREO reserve 9,280 10,164 11,452 15,857 16,542 ------- ------- ------- ------- -------- OREO, net of reserve 16,803 18,796 18,703 23,846 36,493 ------- ------- ------- ------- -------- Total nonperforming assets $87,341 $82,626 $76,877 $96,814 $112,005 ======= ======= ======= ======= ======== Restructured, accruing loans(2) $ 2,332 $ 5,949 $ 3,609 $ 3,619 $ 6,765 ======= ======= ======= ======= ======== Accruing loans 90 days or more past due $38,009 $40,472 $34,849 $33,651 $ 30,427 ======= ======= ======= ======= ======== Nonperforming assets as a percentage of loans and OREO 1.1% 1.1% 1.0% 1.4% 1.6% Nonperforming assets as a percentage of total assets 0.8 0.7 0.7 0.9 1.0
(1) In accordance with SFAS No. 114, included in nonperforming loans at March 31, 1996 are loans totaling $9.0 million which were restructured during the first quarter of 1996. These loans, which are on accrual status, bear market rates of interest and are performing under the restructured terms. Of the $9.0 million, $4.5 million previously had been reported as nonaccrual and $2.9 million previously had been reported as pre-SFAS 114 restructured, accruing loans. (2) Restructured, accruing loans entered into prior to the adoption of SFAS No. 114 are not reported as nonperforming loans. (3) As a result of the adoption of SFAS No. 114 on January 1, 1995, $33.2 million of in-substance foreclosures (ISF) and related reserves of $8.7 million were reclassified to loans and the allowance for loan losses, respectively. Charge-offs of $8.7 million were subsequently recorded during the first quarter of 1995. The reclassification of ISF reserves and subsequent charge-offs had no effect on the allowance for loan losses and are not reflected in the Summary of Loan Loss Experience table above. -----END PRIVACY-ENHANCED MESSAGE-----