-----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, JEBSCMZSyyYj6uLqbHSL5018yA0DoDkwCRtmow4KyQb9X1BrR3M6rTFb4jOIjr6F oz5Bcnc4V8vss6cHX6mdrA== 0000927016-98-003652.txt : 19981019 0000927016-98-003652.hdr.sgml : 19981019 ACCESSION NUMBER: 0000927016-98-003652 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981015 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981016 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKBOSTON CORP CENTRAL INDEX KEY: 0000036672 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 042471221 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06522 FILM NUMBER: 98727053 BUSINESS ADDRESS: STREET 1: 100 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174342200 FORMER COMPANY: FORMER CONFORMED NAME: BANK OF BOSTON CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FIRST NATIONAL BOSTON CORP DATE OF NAME CHANGE: 19830414 8-K 1 FORM 8-K _____________________________________________________________________ _____________________________________________________________________ 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): OCTOBER 15, 1998 BANKBOSTON CORPORATION (Exact name of registrant as specified in its charter) MASSACHUSETTS 1-6522 04-2471221 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 100 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 434-2200 _____________________________________________________________________ _____________________________________________________________________ -2- ITEM 5. OTHER EVENTS. - ---------------------- On October 15, 1998, BankBoston Corporation (the Corporation) issued a press release announcing its earnings for the quarter ended September 30, 1998. The financial information that is included herewith as Exhibit 99(a) was included in the Corporation's press release and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. - ------------------------------------------- (c) Exhibits. 99(a) Financial information included in the Corporation's Press Release dated October 15, 1998. -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. BANKBOSTON CORPORATION Dated: October 16, 1998 /s/ Robert T. Jefferson ------------------------------- Robert T. Jefferson Comptroller EX-99.A 2 BANKBOSTON REPORTS THIRD QUARTER CORE NET INCOME EXHIBIT 99 (A) Investor Relations contact: Media contact: John Kahwaty (617) 434-3650 Jeff Graham (617) 434-8756 BANKBOSTON REPORTS THIRD QUARTER CORE NET INCOME OF $195 MILLION OR $.66 PER SHARE EXCLUDES ACQUISITION-RELATED AND BUSINESS REALIGNMENT COSTS BOSTON, October 15, 1998 -- BankBoston Corporation (NYSE: BKB) reported today third quarter core net income of $195 million, or $.66 per common share on a diluted basis. This compares with $242 million, or $.80 per share, in the second quarter of 1998 and $226 million, or $.73 per share, in the third quarter of 1997. Actual net income for the third quarter was $105 million, or $.35 per share and included $80 million ($50 million after-tax) of costs associated with the August 31 acquisition of Robertson Stephens and $65 million of charges ($40 million after-tax) related to the realignment of other businesses. Core net income for the first nine months of 1998 was $675 million, or $2.25 per share, compared with net income for the first nine months of 1997 of $645 million, or $2.04 per share. Actual net income for the first nine months of 1998, which includes the items referred to above, was $585 million, or $1.94 per share. Operating highlights were as follows (amounts shown for the third quarter of 1998 are before acquisition-related and business realignment costs): . On a fully taxable equivalent basis, revenues were $1,035 million in the current quarter compared with core revenues of $968 million in the third quarter of 1997. Revenues for the third quarter of 1998 included $52 million of trading account losses compared with $20 million of profits in the third quarter of last year. This $72 million decline in trading account profits resulted in a $.15 decline in earnings per share and was the principal factor in the reduction of operating income (pre-tax income before provision for credit losses) to $374 million from $423 million a year ago; . Compared with the third quarter of 1997, operating income from the Corporation's businesses in Argentina and Brazil improved by more than 50%; . Provision for credit losses was $60 million in the third quarter compared with net credit losses in the quarter of $59 million. The provision in the third quarter of 1997 was $40 million compared with net credit losses of $61 million. Nonaccrual loans and OREO totaled $395 million at September 30, 1998, compared with $387 million at September 30, 1997; . Return on average common equity was 16.29% in the third quarter compared with 21.11% in the third quarter of 1997. Return on average assets was 1.07% in the third quarter compared with 1.36% in the third quarter of 1997. The declines in returns were mainly driven by trading account losses incurred during the third quarter of 1998 as discussed above. Acquisition-related and business realignment costs . The Corporation incurred approximately $80 million ($50 million after-tax) of previously announced costs associated with the August 31 acquisition of Robertson Stephens which were principally related to bonus payments due to employees under the acquisition agreement. September operating results for Robertson Stephens were essentially break-even. . Nonrecurring charges totaling $65 million ($40 million after-tax) were incurred in connection with the realignment and downsizing of certain businesses. This included $50 million related to the closing of branches in Asia, the downsizing of the Boston-based emerging markets investment banking unit, and the writedown of the Corporation's equity investment in a Korean merchant banking company. As announced yesterday, the Corporation will be closing offices in India, Japan, the Philippines, and Taiwan and will be reducing its staff by approximately 25% in the emerging markets unit. The charges also included $15 million primarily associated with regional banking operations in New England and its related redesign project. These costs include such items as completing the full merger of all New England bank subsidiaries and related systems into one entity, costs related to branch closings, and redesign consulting fees. The principal factors causing the change in core earnings from the second quarter are: Diluted earnings per share: second quarter 1998 $ .80 Decline in trading account results from the Boston-based high yield and emerging markets desks ($54 million) (.11) Decline in revenue from the Private Equity business ($39 million) (.08) Increase in revenue from Argentina and Brazil ($19 million) .04 Decline in consolidated core noninterest expense, excluding acquisitions of Robertson Stephens and OCA ($12 million) .03 Other factors, net (.02) ----- Diluted core earnings per share: third quarter 1998 $ .66
. Trading account results: During the third quarter and as a result of ----------------------- turmoil in global financial markets and illiquidity in the domestic high yield bond market, the Boston-based emerging markets and high yield desks incurred trading account losses totaling $78 million on a pre-tax basis, $54 million worse than the prior quarter (total consolidated pre-tax trading account losses in the third quarter were $52 million as the losses from these two units were partially offset by profits from other areas, including Argentina and Brazil). . Private Equity: The decline in revenue was due to a lower level of -------------- gains from sales of investments coupled with a lower level of dividend income. While influenced by current economic conditions, the level of revenue from the Private Equity business in the third quarter remained within the range of quarterly revenue performance exhibited over the past two years due to portfolio diversification efforts. Gains are recognized through the income statement only upon exit from an investment. Historically, about one-quarter of investment exits are due to IPOs. Argentina and Brazil: Revenue continued its upward trend in the third -------------------- quarter mainly as a result of higher net interest revenue, stemming from wider spreads coupled with growth in the Argentine loan portfolio, and an increase in fee income. Noninterest Expense: The decline in consolidated core noninterest ------------------- expense, excluding the acquisitions of Robertson Stephens and OCA (Uruguayan consumer finance company), was due mainly to a drop in incentive compensation caused by lower levels of market sensitive revenue. This was partially offset by higher levels of expenses from Argentina and Brazil primarily due to increased branch expansion costs. NONINTEREST INCOME The components of noninterest income are as follows:
Second Third Quarter Nine Months Quarter --------------- ----------------- 1998 (in millions) 1998 1997 Change 1998 1997 Change ----- ----- ----- ------- ------- ------ ------- $ 192 Financial service fees $ 221 $ 168 $ 53 $ 575 $ 462 $113 84 Net equity and mezzanine profits 54 61 (7) 190 153 37 32 Mutual fund fees 33 29 4 95 81 14 41 Personal trust fees 40 37 3 122 107 15 9 Other trust and agency fees 9 7 2 27 20 7 (4) Trading profits and commissions (52) 20 (72) (22) 67 (89) 32 Net foreign exchange trading profits 35 18 17 96 57 39 11 Securities portfolio gains, net 17 11 6 53 52 1 60 Other income 48 29 19 150 88 62 0 Writedown of Korean equity investment (20) 0 (20) (20) 0 (20) 0 Gain on sale of Fidelity Acceptance Corp. 0 68 (68) 0 68 (68) 0 Gain on sale of HomeSide 0 0 0 165 0 165 ----- ----- ----- ---- ------ ------ ---- $ 457 Total $ 385 $ 448 $(63) $1,431 $1,155 $276 ===== ===== ===== ==== ====== ====== ====
. Changes in financial service fees are detailed below. . Equity and mezzanine profits declined in the third quarter from the record performance registered in the prior quarter. In the nine month comparison, profits are running 24% ahead of 1997 reflecting the continued strong performance from the Corporation's Private Equity business. At September 30, 1998, the Private Equity portfolio had a carrying value of $1.3 billion compared with approximately $875 million at September 30, 1997. . Mutual fund fees improved in all comparisons, mainly driven by higher fees from Latin America and Private Banking. The combined level of assets under management in Argentina and Brazil was $7.1 billion at September 30, 1998 compared with $6.0 billion at September 30, 1997. . The increase in personal trust fees from prior year periods mainly relates to an increase in domestic assets under management. . The third quarter loss in trading account profits and commissions relates to trading losses incurred by the Boston-based emerging markets and high yield trading units, partially offset by profits registered from other areas, including Argentina and Brazil. The losses from the emerging markets and high yield trading portfolios mainly reflect the severe volatility that is present in the world financial markets. These losses were the major factor behind the declines in trading account profits and commissions in all prior period comparisons. . Foreign exchange profits improved in all comparisons as the Corporation continued to benefit from higher customer demand for products arising out of volatile market conditions. . The increase in securities gains from the second quarter was due, in part, to higher gains from international operations. . The decline in other income from the second quarter mainly reflected the absence of a prior quarter gain from the sale of the Corporation's minority interest in a Mexican pension company. The comparisons with prior year periods were affected by earnings in 1998 from an investment in bank owned life insurance policies, which was largely offset by the funding cost for the investment that is included in net interest revenue, and the absence of an $11 million charge related to interest rate futures contracts that had been used to hedge the funding of Fidelity Acceptance Corporation. The components of financial service fees are as follows:
Second Third Quarter Nine Months Quarter -------------- -------------- 1998 (in millions) 1998 1997 Change 1998 1997 Change ----- ----- ----- ------- ----- ----- ------- $ 76 Deposit and ATM-related fees $ 78 $ 69 $ 9 $ 224 $ 189 $ 35 19 Letters of credit and acceptance fees 21 19 2 59 53 6 20 Syndication and agent fees 17 22 (5) 51 60 (9) 12 Other loan-related fees 11 11 0 33 29 4 65 Other 94 47 47 208 131 77 ----- ----- ----- --- ----- ----- ---- $ 192 Total $ 221 $ 168 $53 $ 575 $ 462 $113 ===== ===== ===== === ===== ===== ====
. Deposit and ATM-related fees increased in all comparisons due, in part, to higher fees from Argentine operations, including an increase from the acquisition of Deutsche Bank Argentina, and an increase in domestic electronic banking fees. . The totals of other financial service fees for the current quarter and the first nine months of 1998 are affected by two acquisitions which closed during the third quarter. Specifically, the acquisition of Robertson Stephens contributed $20 million, mainly brokerage and advisory fees, while the acquisition of OCA, a consumer finance company in Uruguay, contributed $4 million of credit card fees. Beyond these acquisitions, the increases in all prior period comparisons were affected by higher levels of underwriting fees and Latin American credit card fees. In addition, the prior year comparisons were boosted by an increase in advisory fees. NET INTEREST REVENUE Net interest revenue, on a fully taxable equivalent basis, was $630 million for the third quarter of 1998, compared with $645 million in the prior quarter and $577 million in the third quarter of 1997. Net interest margin was 3.97% for the third quarter of 1998, compared with 4.17% in the second quarter of 1998 and 3.96% in the third quarter of last year. For the first nine months of 1998, net interest revenue on a fully taxable equivalent basis was $1,881 million, compared with $1,822 million in the first nine months of 1997. Net interest margin was 4.07% for the first nine months of 1998, compared with 4.27% for the first nine months of 1997. The declines in net interest revenue and net interest margin from the prior quarter were affected by several items related to domestic operations including lower levels of dividends from private equity investments, loan fees, and lease residual gains, as well as the redemption of the Corporation's remaining preferred stock, which was replaced by an issuance of floating rate capital securities. Net interest margin was also adversely affected by an increase in low-yielding assets in the Corporation's Section 20 subsidiary related to the acquisition of Robertson Stephens. Partially offsetting these factors were wider spreads in Brazil and Argentina as the Corporation's interest rate positions benefited from volatility in the local markets, and the July 31 acquisition of OCA, a Uruguayan consumer finance company. In addition, net interest revenue benefited from a higher level of average earning loans and one more day in the accrual period. Compared with prior year periods, net interest revenue increased while net interest margin declined. Net interest revenue was favorably affected by increases in average earning assets, which, excluding the effect of national consumer loans, were up approximately $7 billion in both the quarterly and nine month comparisons. Approximately $4.5 billion of these increases related to average loans and leases mainly reflecting growth in the domestic commercial portfolio and in Argentina. The prior year comparisons of net interest revenue and margin were favorably affected by wider spreads and a higher volume of average earning assets in Brazil. Partially offsetting the improvements in net interest revenue and contributing to the decline in net interest margin were the Corporation's exit from its national consumer businesses and the impact of funding costs associated with an investment in bank owned life insurance policies. The latter was largely offset by the revenue from this investment that is included in noninterest income as discussed previously. Noninterest expense The components of noninterest expense are as follows:
Second Third Quarter Nine Months Quarter -------------- ---------------- 1998 (in millions) 1998 1997 Change 1998 1997 Change ----- ----- ----- ------ ------ ------ ------ $ 368 Employee costs $ 449 $ 318 $131 $1,170 $ 939 $231 96 Occupancy & equipment 99 86 13 289 260 29 22 Professional fees 29 14 15 75 38 37 32 Advertising and public relations 30 25 5 84 73 11 31 Communications 33 29 4 94 83 11 8 Goodwill amortization 10 6 4 26 21 5 90 Other 136 123 13 356 309 47 ----- ----- ----- ---- ------ ------ ---- $ 647 Total $ 786 $ 601 $185 $2,094 $1,723 $371 ===== ===== ===== ==== ====== ====== ====
The principal factors causing the change in noninterest expense from the second quarter are: Noninterest expense: second quarter 1998 $647 Increase related to charges for acquisition-related and business realignment costs 125 Increase in core expenses from acquired companies (Robertson Stephens and OCA) 26 Expense reductions, net (12) ---- Noninterest expense: third quarter 1998 $786
Excluding acquisition-related and business realignment costs and the impact of the Robertson Stephens and OCA acquisitions, noninterest expense declined $12 million from the second quarter. This was mainly due to a decline in incentive compensation related to the lower levels of revenue and a decline in expenses from the regional consumer business. These declines were partially offset by an increase in expenses from Argentina and Brazil due to the ongoing branch expansion programs. Noninterest expense increased $185 million from the third quarter of 1997 and $371 million in the nine month comparison. These increases were mainly related to the third quarter 1998 charges for acquisition-related and business realignment costs referred to above, the increase in core expenses from acquired companies (Robertson Stephens and OCA), investment spending in Latin America, including de novo expansion costs and the Deutsche Bank Argentina acquisition, and the ongoing buildup of the Corporation's Corporate Banking businesses. In addition, charges incurred in the first quarter of 1998 related to the European, private banking, and regional consumer businesses contributed to the increase in the nine month comparison. Partially offsetting these increases was the absence of expenses from the national consumer businesses and the absence of third quarter 1997 charges related to the regional consumer business for additional conversion costs for BayBanks, the closing of branches and changes to the Connecticut operations. CREDIT PROFILE Loan and Lease Portfolio
The segments of the lending portfolio are as follows: (in millions) 9-30-98 6-30-98 3-31-98 12-31-97 9-30-97 -------- -------- -------- --------- -------- United States Operations: Commercial, industrial and financial $ 18,218 $ 16,275 $ 15,887 $ 15,268 $ 15,062 Commercial real estate: Construction 209 219 260 271 317 Other commercial real estate 4,089 3,876 3,736 4,211 3,845 Consumer-related loans: Residential mortgages 2,111 2,229 2,551 2,570 2,720 Home equity 2,672 2,871 2,802 2,823 2,952 Credit card 393 412 503 1,756 1,596 Other 2,693 2,753 2,801 2,956 3,118 Lease financing 1,607 1,609 2,017 1,938 1,880 Unearned income (231) (232) (303) (302) (293) -------- -------- -------- --------- -------- 31,761 30,012 30,254 31,491 31,197 -------- -------- -------- --------- -------- International Operations: Commercial 10,636 10,218 10,682 10,159 9,261 Consumer-related loans: Residential mortgages 1,383 1,318 1,302 947 893 Credit card 339 248 226 182 155 Other 1,164 1,087 987 828 678 Lease financing 652 519 517 452 345 Unearned Income (188) (148) (146) (79) (68) -------- -------- -------- --------- -------- 13,986 13,242 13,568 12,489 11,264 -------- -------- -------- --------- -------- Total loans and lease financing $ 45,747 $ 43,254 $ 43,822 $ 43,980 $ 42,461 ======== ======== ======== ========= ========
Loans and leases were $45.7 billion at September 30, 1998, compared with $43.3 billion at June 30, 1998. The domestic portfolio grew $1.7 billion due mainly to a higher level of commercial loans as increases were registered by several of the Corporation's lending divisions including Energy & Utilities, Media & Communications, Asset Based Finance, and Environmental Services. In addition, international loans grew $700 million mainly reflecting growth in the Argentine portfolio and the July 31 acquisition of OCA, a consumer finance company in Uruguay. Included in the September 30 portfolio are direct loan outstandings to hedge funds of $30 million. Subsequent to September 30, this portfolio has been paid down to $5 million. Nonaccrual Loans and OREO Nonaccrual loans and OREO amounted to $395 million at September 30, 1998, compared with $382 million at June 30, 1998, and $387 million at September 30, 1997. Nonaccrual loans and OREO represented .9% of related assets at September 30, 1998, June 30, 1998 and September 30, 1997. The components of consolidated nonaccrual loans and OREO are as follows: (in millions) 9-30-98 6-30-98 3-31-98 12-31-97 9-30-97 -------- -------- -------- --------- -------- Domestic nonaccrual loans: Commercial, industrial and financial $ 71 $ 63 $ 43 $ 59 $ 68 Commercial real estate: Construction 2 2 3 3 4 Other commercial real estate 30 33 41 40 44 Consumer-related loans: Residential mortgages 36 42 46 50 51 Home equity 18 15 15 14 26 Credit card 6 6 6 26 22 Other 21 18 20 20 23 ----- ----- ----- ----- ----- 184 179 174 212 238 ----- ----- ----- ----- ----- International nonaccrual loans: Commercial 103 107 97 64 58 Consumer-related loans: Residential mortgages 39 36 34 28 31 Credit card 7 6 4 4 3 Other 33 26 18 12 7 ----- ----- ----- ----- ----- 182 175 153 108 99 ----- ----- ----- ----- ----- Total nonaccrual loans 366 354 327 320 337 OREO 29 28 42 36 50 ----- ----- ----- ----- ----- Total $ 395 $ 382 $ 369 $ 356 $ 387 ===== ===== ===== ===== =====
Provision and Reserve for Credit Losses The reserve for credit losses at September 30, 1998 was $740 million, or 1.62% of outstanding loans and leases, compared with $734 million, or 1.70% at June 30, 1998, and $729 million, or 1.72% at September 30, 1997. The reserve for credit losses was 202% of nonaccrual loans at September 30, 1998, compared with 207% at June 30, 1998 and 216% at September 30, 1997. The provision for credit losses was $60 million in the third and second quarters of 1998, compared with $40 million in the third quarter of 1997. Net credit losses were $59 million in the third quarter of 1998, compared with $51 million in the second quarter of 1998 and $61 million in the third quarter of 1997. Net credit losses as a percent of average loans and leases on an annualized basis were .52% in the third quarter of 1998, compared with .46% for the second quarter of 1998 and .57% for the third quarter of 1997. Net credit losses were as follows:
Second Third Quarter Nine Months Quarter ---------------- ---------------- 1998 (in millions) 1998 1997 1998 1997 - ----------- ------ ------ ------ ------ Domestic $ 5 Commercial, industrial and financial $ 9 $ 2 $ 28 $ 25 (1) Commercial real estate (1) (2) (3) (5) Consumer-related loans: 1 Residential mortgages 1 1 4 2 6 Credit card 6 24 31 67 1 Home equity 1 2 4 6 11 Other 13 12 43 81 ----- ----- ----- ----- ----- 23 29 39 107 176 International 13 Commercial 7 15 96 25 Consumer-related loans: 2 Credit card 6 3 10 6 13 Other 17 4 38 12 ----- ----- ----- ----- ----- 28 30 22 144 43 ----- ----- ----- ----- ----- $ 51 Total $ 59 $ 61 $ 251 $ 219 ===== ===== ===== ===== =====
THE CORPORATION BankBoston, with assets of $73.8 billion and some 25,000 employees, is the nation's oldest commercial bank and New England's only global bank. BankBoston is engaged in consumer, small business, and corporate banking in New England; delivering sophisticated financial solutions to corporations and governments nationally and internationally; and full service banking in leading Latin American markets. The Corporation's common stock is listed on the New York and Boston stock exchanges. ************ This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from estimates. These risks and uncertainties include, among other things, (1) significant changes in general economic conditions, both domestic and international, including the impact of the Asian economic crisis on the economies of the United States, Latin American countries and other countries in which the Corporation does business; (2) the impact of market and economic conditions on debt, equity and emerging markets and trade-related revenues; (3) sharp changes in credit quality, interest rates and foreign exchange rates; and (4) the Corporation's ability and resources, in both its domestic and international operations, to execute its articulated business strategies and manage risks associated with integration of acquisitions, expansion plans, the Year 2000 issue, the business redesign initiative and the introduction of the euro. Consolidated Balance Sheet (dollars in millions)
June 30 September 30 ------- ---------------------- 1998 1998 1997 ---- --------- --------- Assets Securities: $11,142 Available for sale $11,910 $ 9,442 604 Held to maturity 594 637 43,254 Loans and lease financing 45,747 42,461 (734) Reserve for credit losses (740) (729) ------- ------- ------- 42,520 Net loans and lease financing 45,007 41,732 5,704 Other earning assets 4,401 6,901 10,529 Cash and other nonearning assets 11,922 9,518 ------- ------- ------- $70,499 Total Assets $73,834 $68,230 ======= ======= ======= Liabilities and Stockholders' Equity $45,196 Deposits $46,420 $44,655 12,507 Funds borrowed 13,214 12,585 3,682 Notes payable 4,436 2,781 3,139 Other liabilities 4,054 3,080 Guaranteed preferred beneficial interests in 995 corporation's junior subordinated debentures 995 747 ------- ------- ------- 65,519 Total Liabilities 69,119 63,848 ------- ------- ------- Stockholders' Equity 278 Preferred equity 0 278 4,702 Common equity 4,715 4,104 ------- ------- ------- 4,980 Total Stockholders' Equity 4,715 4,382 ------- ------- ------- $70,499 Total Liabilities and Stockholders' Equity $73,834 $68,230 ======= ======= =======
Selected Average Balances
Quarter Ended Quarters Ended Nine Months Ended - ------------- -------------- ----------------- June 30 September 30 September 30 ------- -------------- ----------------- 1998 1998 1997 1998 1997 ---- ---- ---- ---- ---- Assets $44,196 Loans and lease financing $45,069 $42,429 $44,328 $42,093 11,188 Securities 11,692 9,661 11,166 9,471 61,961 Total earning assets 62,869 57,769 61,781 57,085 71,236 Total assets 72,501 65,704 71,139 64,292 Liabilities and Stockholders' Equity 37,195 Interest bearing deposits 37,334 35,098 37,230 34,616 8,209 Noninterest bearing deposits 7,205 7,891 8,005 7,766 ------- ------- ------- ------- ------- 45,404 Total deposits 44,539 42,989 45,235 42,382 4,392 Notes payable (1) 5,149 3,336 4,435 3,334 54,641 Total interest bearing liabilities 56,906 50,801 54,934 49,522 4,600 Common stockholders' equity 4,734 4,080 4,576 4,218 4,878 Total stockholders' equity 4,772 4,548 4,773 4,713
(1) Amounts include guaranteed beneficial interests in Corporation's junior subordinated debentures. CONSOLIDATED STATEMENT OF INCOME (dollars in millions, except per share amounts)
Quarter Ended Quarters Ended Nine Months Ended - ------------- -------------- ----------------- June 30 September 30 September 30 ------- -------------- ----------------- 1998 1998 1997 1998 1997 ---- ---- ---- ---- ---- $1,390.2 Interest income $1,409.6 $1,266.8 $4,137.2 $3,822.5 750.7 Interest expense 784.7 695.7 2,269.5 2,015.5 -------- -------- -------- -------- -------- 639.5 Net interest revenue 624.9 571.1 1,867.7 1,807.0 60.0 Provision for credit losses 60.0 40.0 260.0 160.0 -------- -------- -------- -------- -------- Net interest revenue after provision 579.5 for credit losses 564.9 531.1 1,607.7 1,647.0 -------- -------- -------- -------- -------- Noninterest income: 191.7 Financial service fees 220.6 168.4 575.0 461.7 82.1 Trust and agency fees 82.3 72.8 243.7 208.2 (3.7) Trading profits and commissions (52.1) 19.9 (21.6) 67.0 11.4 Securities portfolio gains, net 16.6 11.3 52.8 52.0 175.9 Other income 117.7 175.8 581.7 365.8 -------- -------- -------- -------- -------- 457.4 Total noninterest income 385.1 448.2 1,431.6 1,154.7 -------- -------- -------- -------- -------- Noninterest expense: 305.1 Salaries 384.4 263.8 982.2 781.6 63.3 Employee benefits 64.1 54.0 188.3 158.0 55.8 Occupancy expense 58.3 49.6 168.5 152.5 39.6 Equipment expense 40.8 36.1 120.6 107.6 183.6 Other expense 238.0 197.8 634.5 523.7 -------- -------- -------- -------- -------- 647.4 Total noninterest expense 785.6 601.3 2,094.1 1,723.4 -------- -------- -------- -------- -------- 389.5 Income before income taxes 164.4 378.0 945.2 1,078.3 147.6 Provision for income taxes 59.4 152.3 360.0 433.8 -------- -------- -------- -------- -------- $ 241.9 NET INCOME $ 105.0 $ 225.7 $ 585.2 $ 644.5 ======== ======== ======== ======== ======== NET INCOME PER COMMON SHARE: $ .81 Basic $ .35 $ .75 $ 1.96 $ 2.07 $ .80 Diluted $ .35 $ .73 $ 1.94 $ 2.04 $ .29 DIVIDENDS PAID PER COMMON SHARE $ .29 $ .26 $ .87 $ .73 Average number of common shares, in thousands: 293,769 Basic 294,379 290,766 293,570 297,750 298,275 Diluted 296,361 295,684 296,050 303,148 $ 4.4 Preferred dividends $ .7 $ 8.6 $ 9.4 $ 27.2
NUMBER OF EMPLOYEES
Sept. 30 June 30 Sept. 30 1998 1998 1997 --------------- ----------- --------------- Full time equivalent employees 24,800 22,900 21,200
OTHER DATA (dollars in millions, except per share amounts)
Quarter Ended Quarters Ended Nine Months Ended ------------- -------------- ----------------- June 30 September 30 September 30 ------- -------------- ----------------- 1998 1998 1997 1998 1997 ---- ---- ---- ---- ---- Return on average total assets (annualized): 1.36% Based on actual net income .57% 1.36% 1.10% 1.34% 1.36% Based on core net income 1.07% 1.36% 1.27% 1.34% Return on average common equity (annualized): 20.70% Based on actual net income 8.75% 21.11% 16.82% 19.56% 20.70% Based on core net income 16.29% 21.11% 19.45% 19.56% $644.9 Net interest revenue, fully taxable equivalent basis $629.6 $576.5 $1,881.4 $1,822.0 4.17% Consolidated net interest margin 3.97% 3.96% 4.07% 4.27% 4.12% Domestic net interest margin (estimated) 3.75% 4.01% 4.00% 4.37% 4.29% International net interest margin (estimated) 4.47% 3.83% 4.23% 3.98%
June 30 September 30 ------- ---------------------- 1998 1998 1997 ---- --------- --------- COMMON STOCKHOLDERS' EQUITY: $ 4,702 Common stockholders' equity $ 4,715 $ 4,104 294,126 Common shares outstanding, in thousands 294,596 144,535 Per common share: $ 15.99 Book value $ 16.01 $ 14.20 55.63 Market value 33.00 44.22 CAPITAL RATIOS/REGULATORY CAPITAL: 6.09% Tangible common equity ratio 5.38% 5.56% Risk-based capital ratios: Estimate 8.4% Tier 1 capital ratio (minimum required 4.00%) 7.0% 7.8% 13.0% Total capital ratio (minimum required 8.00%) 11.3% 11.7% 7.8% Leverage ratio 6.8% 7.2% $ 5,491 Tier 1 capital $ 4,906 $ 4,626 8,524 Total capital 7,902 6,930 65,351 Total risk-adjusted assets 69,916 59,079
Reserve for Credit Losses (dollars in millions)
Quarter Ended Quarters Ended Nine Months Ended - ------------- ------------------- -------------------- June 30 September 30 September 30 ------- ------------------- -------------------- 1998 1998 1997 1998 1997 ---- ---- ---- ---- ---- $ 725.1 Beginning balance $733.9 $844.7 $ 711.6 $ 883.3 60.0 Provision for credit losses 60.0 40.0 260.0 160.0 0.0 Reserve of acquired companies 5.0 0.0 19.1 0.0 0.0 Reserves of companies sold 0.0 (94.7) 0.0 (94.7) (73.4) Credit losses (78.8) (80.0) (308.5) (283.2) 22.2 Recoveries 19.9 19.1 57.8 63.7 ------- ------ ------ ------- ------- (51.2) Net credit losses (58.9) (60.9) (250.7) (219.5) ------- ------ ------ ------- ------- $ 733.9 Ending balance $740.0 $729.1 $ 740.0 $ 729.1 ======= ====== ====== ======= ======= 1.70% Reserve as a % of loans and leases 1.62% 1.72% 1.62% 1.72% ======= ====== ====== ======= ======= 207% Reserve as a % of nonaccrual loans 202% 216% 202% 216% ======= ====== ====== ======= =======
-----END PRIVACY-ENHANCED MESSAGE-----