-----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, KZ6QNGLpVvQ6mRjG63AOF5rom2REQhy2EZ6QymUhYHZ5FkD9O42onM9HpSoa8Bvl bkgVCWZltzwhULUIszXdyQ== 0000927016-97-000096.txt : 19970122 0000927016-97-000096.hdr.sgml : 19970122 ACCESSION NUMBER: 0000927016-97-000096 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970116 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970121 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANK OF BOSTON 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: 1934 Act SEC FILE NUMBER: 001-06522 FILM NUMBER: 97508141 BUSINESS ADDRESS: STREET 1: 100 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174342200 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): JANUARY 16, 1997 BANK OF BOSTON 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 January 16, 1997, Bank of Boston Corporation (the Corporation) issued a press release announcing its earnings for the quarter ended December 31, 1996. 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 January 16, 1997. -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. BANK OF BOSTON CORPORATION Dated: January 21, 1997 /s/ Robert T. Jefferson --------------------------- Robert T. Jefferson Comptroller EX-99.A 2 PRESS RELEASE DATED JANUARY 16,1997 EXHIBIT 99(a) ------------- BANKBOSTON REPORTS FOURTH QUARTER NET INCOME OF $202 MILLION OR $1.24 PER SHARE 15% GROWTH IN EPS FROM PRIOR YEAR BOSTON, January 16, 1997 -- Bank of Boston Corporation ("BankBoston"; NYSE: "BKB") reported today fourth quarter net income of $202 million, or $1.24 per common share on a fully diluted basis compared with $180 million, or $1.08 per share, in the fourth quarter of 1995. Net income for the third quarter of 1996 was $197 million, or $1.21 per share, before restructuring and merger-related costs associated with the acquisition of BayBanks ($80 million, or $.45 per share, including these charges). Net income for the full year 1996 was $773 million, or $4.71 per share before charges associated with the acquisition of BayBanks and items related to the sale of the mortgage banking subsidiary, compared with net income of $678 million, or $4.09 per share, for the full year 1995. Actual net income for the full year 1996 was $650 million, or $3.93 per share, compared with net income of $678 million, or $4.09 per share, for the full year 1995. These results reflect the acquisition of BayBanks, which was consummated on July 29, 1996. The acquisition was accounted for under the pooling of interests method and, accordingly, all prior period results have been restated to include the historical results of BayBanks. Operating highlights were as follows (1996 amounts are before charges associated with the acquisition of BayBanks and items related to the sale of the mortgage banking subsidiary): . On a fully taxable equivalent basis, operating income was $410 million in the fourth quarter, compared with $405 million in the prior quarter and $380 million in the fourth quarter of 1995. For the full year 1996, operating income was $1,582 million, compared with $1,414 million for the full year 1995. Amounts for 1995 periods exclude income and charges related to the sale or reorganization of businesses and the valuation or disposition of certain assets; . Return on average common equity ("ROE") improved to 17.71% in the fourth quarter, compared with 17.56% in the prior quarter and 16.66% in the fourth quarter of 1995. For the full year 1996, ROE was 17.36%, compared with 16.86% for 1995; . Return on average assets ("ROA") was 1.31% in the fourth and third quarters of 1996, compared with 1.24% in the fourth quarter of 1995. For the full year 1996, ROA was 1.30%, compared with 1.22% for 1995; . Nonaccrual loans and OREO totaled $452 million at December 31, 1996, compared with $496 million at September 30, 1996 and $442 million at December 31, 1995. Net credit losses, excluding those related to the transfer of commercial real estate loans into a held for sale account as discussed below, were $60 million in the fourth quarter, compared with $55 million in the prior quarter and $51 million in the fourth quarter of 1995. The provision for credit losses was $60 million in the fourth quarter, compared with $57 million in the third quarter and $81 million in the fourth quarter of 1995 (including a special provision of $25 million). Included in the fourth quarter of 1996 results discussed above were the following items: . A gain of $47 million from the previously announced sale of twenty branches to US Trust Corp. ("US Trust"), which involved the transfer of approximately $700 million of deposits and $500 million of loans; . A charge of $25 million from the transfer of approximately $400 million of commercial real estate loans into a held for sale account as part of the Corporation's balance sheet management program. In addition, credit losses of $15 million were also taken as part of this transfer; . A valuation-related charge of $11 million associated with certain investments; . A charge of $6 million related to the vesting of stock price performance-related restricted stock to certain employees. NONINTEREST INCOME The components of noninterest income are as follows:
Third Quarter Fourth Quarter Twelve Months - ------- -------------- -------------- 1996 (in millions) 1996 1995 Change 1996 1995 Change - ------- ----- ----- ------ ------ ------ ------- $ 140 Financial service fees $ 147 $ 164 $ (17) $ 585 $ 628 $ (43) 51 Net equity and mezzanine profits 45 45 0 209 110 99 24 Mutual fund fees 25 20 5 94 67 27 32 Personal trust fees 34 28 6 131 112 19 6 Other trust and agency fees 6 7 (1) 21 61 (40) 21 Trading profits and commissions 17 9 8 76 25 51 13 Foreign exchange trading profits 17 15 2 54 60 (6) Securities portfolio gains, net (before 7 valuation charges) 7 2 5 31 9 22 13 Gain on sale of mortgage servicing 0 0 0 13 10 3 30 Other income 31 24 7 124 99 25 ----- ----- ----- ------ ------ ------ ------ $ 337 Subtotal $ 329 $ 314 $ 15 $1,338 $1,181 $ 157 0 Other items, net (details on following page) 11 53 (42) 6 128 (122) ----- ----- ----- ------ ------ ------ ------ $ 337 Total $ 340 $ 367 $ (27) $1,344 $1,309 $ 35 ===== ===== ===== ====== ====== ====== ======
. Changes in financial service fees are detailed below. The reduction from prior year periods was greatly influenced by the sale of the Corporation's mortgage banking subsidiary. Excluding the decline in net mortgage servicing fees, total financial service fees grew $33 million, or 6%, from full year 1995. . Equity and mezzanine profits continued strong in the fourth quarter. The higher level of realized profits compared with full year 1995 is primarily due to a seasoning of the portfolio and favorable market conditions. In addition, the portfolio grew over $200 million during 1996 as new investment activity was double the 1995 level. . The increase in mutual fund fees compared with all prior periods was mainly due to higher levels of funds under management in Brazil. These funds stood at $3.7 billion at December 31, 1996 compared with $2.5 billion at December 31, 1995. . Personal trust fees improved from all prior periods mainly due to a higher level of assets under management. . The comparison with full year 1995 for other trust and agency fees is mainly affected by the sale of the Corporation's corporate trust business and the movement of its stock transfer business into a joint venture. . Trading account profits and commissions declined from the third quarter due, in part, to a lower level of profits from Brazil. Compared with prior year periods, trading account profits and commissions improved significantly, mainly due to increases from the Corporation's capital markets areas and Brazil. . The improvement in foreign exchange profits from the prior quarter included increases from domestic and Asian operations. The decline in the full year comparison mainly reflects lower profits from Asia. . The $13 million gain on the sale of mortgage servicing in the third quarter of 1996 resulted from the sale of BayBanks' $4 billion servicing portfolio to HomeSide Lending. . The increases in other income compared with prior year periods were due, in part, to higher profits from various joint ventures, including those related to HomeSide Lending (mortgage banking business), Boston EquiServe (stock transfer business), and the Argentine pension management business. The components of financial service fees are as follows:
Third ----- Quarter Fourth Quarter Twelve Months - ------- -------------- ------------- 1996 (in millions) 1996 1995 Change 1996 1995 Change ---- ------- ------- -------- ------- ------- -------- $ 61 Deposit and ATM-related fees $ 59 $ 58 $ 1 $ 238 $ 231 $ 7 18 Letters of credit and acceptance fees 17 17 0 68 72 (4) 14 Syndication and agent fees 21 12 9 58 38 20 9 Other loan-related fees 10 9 1 38 34 4 Net mortgage servicing fees 3 (before items detailed below) 0 29 (29) 29 105 (76) 35 Other 40 39 1 154 148 6 ----- ----- ----- ---- ----- ----- ----- $ 140 Total $ 147 $ 164 $(17) $ 585 $ 628 $ (43) ===== ===== ===== ==== ===== ===== =====
. The increases in syndication and agent fees from all prior periods reflect a higher volume of transactions generated by the Corporation's corporate finance business. . The declines in net mortgage servicing fees from prior year periods reflect the sale of the Corporation's mortgage banking subsidiary. . The increase in other financial service fees from the third quarter is mainly due to higher levels of advisory fees from the Corporation's capital markets business. Other items included in noninterest income are composed of the following:
Third ----- Quarter Fourth Quarter Twelve Months - ------- ------------- ------------- 1996 (in millions) 1996 1995 Change 1996 1995 Change ----- ----- ----- ------ ----- ----- ------ $ 0 Gain on sale of branches/banking subsidiaries $ 47 $ 0 $ 47 $ 47 $ 75 $ (28) 0 Transfer of loans into held for sale (25) (17) (8) (25) (17) (8) 0 Valuation charges associated with investments (11) (17) 6 (11) (17) 6 Mortgage banking-related gains/losses: 0 Sale of mortgage subsidiary 0 0 0 106 0 106 0 Contracts used to manage prepayment risk, net 0 67 (67) (111) 67 (178) ----- ----- ----- ----- ----- ----- ------ 0 Total 0 67 (67) (5) 67 (72) 0 Gain on sale of corporate trust business 0 20 (20) 0 20 (20) ----- ----- ----- ----- ----- ----- ------ $ 0 Total $ 11 $ 53 $ (42) $ 6 $ 128 $ (122) ===== ===== ===== ===== ===== ===== ======
. During the fourth quarter of 1996 the Corporation recorded: (1) a gain of $47 million from the previously announced sale of twenty branches to US Trust, which involved the transfer of approximately $700 million of deposits and $500 million of loans, (2) a charge of $25 million from the transfer of approximately $400 million of commercial real estate loans into a held for sale account as part of the Corporation's balance sheet management program, and (3) valuation-related charges of $11 million associated with certain investments. . During the first half of 1996 the Corporation recorded a net pre-tax loss of $5 million from mortgage banking-related items. As a result of the first quarter's rising rate environment, a loss of $111 million (net of decreased servicing amortization) was recorded from the change in market value of contracts used to manage prepayment risk in the mortgage servicing portfolio which, in turn, protected the economic value of the Corporation's mortgage banking subsidiary pending the completion of its sale to Homeside Lending. The completion of this transaction resulted in the recognition of gains totaling $106 million. The Corporation now owns a 33% interest in HomeSide Lending, which ranks among the country's largest mortgage banking companies. . During the fourth quarter of 1995, the Corporation recorded: (1)$67 million of gains (net of increased servicing amortization) from contracts used to manage prepayment risk in the mortgage servicing portfolio, (2) a net gain of $20 million from the previously announced sale of its corporate trust business, (3) a loss of $17 million from the transfer of $1.3 billion of low yielding residential mortgage loans into a held for sale account, and (4)$17 million of valuation- related charges associated with certain investments and other assets, including assets being retained by the Corporation as a result of the mortgage banking sale. During the first quarter of 1995, the Corporation recognized a $75 million gain from the sale of its Maine and Vermont banking subsidiaries. NET INTEREST REVENUE Net interest revenue, on a fully taxable equivalent basis, was $616 million for the fourth quarter of 1996, compared with $596 million in the prior quarter and $581 million in the fourth quarter of 1995. Net interest margin was 4.47% for the fourth quarter, compared with 4.40% in the prior quarter and 4.50% in the fourth quarter of last year. For the full year 1996, net interest revenue, on a fully taxable equivalent basis, was $2,360 million, compared with $2,271 million for the full year 1995. On the same basis, net interest margin was 4.42% in 1996 and 4.58% in 1995. The $20 million increase in net interest revenue from the prior quarter reflected a growth in average earning assets of approximately $900 million coupled with the 7 basis point improvement in net interest margin. The growth in average earning assets was mainly due to an overall increase of $600 million in average loans including growth in the domestic commercial and consumer portfolios and higher levels of Latin American loans, partially offset by a decline in average residential mortgages. The latter resulted from the sale of loans during the fourth quarter including those associated with the sale of branches to US Trust. The 7 basis point improvement in net interest margin included wider spreads from the credit card business, as the "promotional rate" period expired on additional loans in the portfolio, and higher loan fees. Partially offsetting these increases was a decline in margin from the aforementioned sale of branches to US Trust which included approximately $700 million of retail deposits. Compared with the prior year periods, net interest revenue improved while net interest margin declined. These changes reflected a higher volume of average earning assets and a decline in the international margin. The full year comparison also reflected narrower domestic spreads which were caused, in part, by the aggressive marketing of a new higher-rate savings deposit product during 1995 and competitive pricing pressures. NONINTEREST EXPENSE The components of noninterest expense are as follows:
Third - ------- Quarter Fourth Quarter Twelve Months - ------- -------------- ------------- 1996 (in millions) 1996 1995 Change 1996 1995 Change ---- ----- ----- ------ ------ ------ ------ $ 293 Employee costs $ 293 $ 289 $ 4 $1,168 $1,146 $ 22 85 Occupancy & equipment 87 82 5 341 324 17 15 Professional fees 14 16 (2) 56 65 (9) 26 Advertising and public relations 24 27 (3) 108 87 21 24 Communications 27 24 3 101 90 11 7 Goodwill amortization 7 5 2 24 18 6 78 Other 88 72 16 323 309 14 ----- ----- ----- ---- ------ ------ ---- 528 Subtotal before other items & OREO costs 540 515 25 2,121 2,039 82 Other items: 0 Stock price performance-related restricted stock 6 0 6 6 0 6 BayBanks-related costs: 180 Restructuring and merger-related costs 0 0 0 180 0 180 0 Accelerated vesting of restricted stock 0 0 0 4 0 4 0 Reorganization and other costs 0 28 (28) 0 28 (28) ----- ----- ----- ---- ------ ------ ---- 708 Subtotal before OREO costs 546 543 3 2,311 2,067 244 5 OREO costs 2 2 0 9 9 0 ----- ----- ----- ---- ------ ------ ---- $ 713 Total $ 548 $ 545 $ 3 $2,320 $2,076 $244 ===== ===== ===== ==== ====== ====== ====
Noninterest expense before "other items" and OREO costs, was $540 million in the fourth quarter of 1996, compared with $528 million in the prior quarter and $515 million for the same quarter in 1995. The $12 million increase from the third quarter was mainly due to growth in certain businesses including New England consumer, corporate banking and Latin America, as well as increased levels of incentive compensation. These increases were partially offset by a decline associated with cost savings from the integration of BayBanks into the Corporation. The number of employees declined to 22,000 at December 31, 1996 from 22,600 at September 30, 1996 and 23,700 at December 31, 1995. The decline from the prior year also reflected the mortgage banking transaction . Compared with prior year periods, the growth in noninterest expense reflected ongoing expansion and investment spending in several of the Corporation's growth businesses, mainly Latin America, capital markets, and consumer banking. Initiatives in the growth businesses included: branch expansion and growth in fee-based businesses in Latin America; start up of a high yield debt unit and the hiring of sales and trading professionals in all the capital markets businesses and the acquisition of Boston Bancorp, as well as marketing campaigns related to credit card, home equity and other products in consumer banking. Current year expense levels also included higher incentive compensation costs related to improved business unit performance. The comparison of noninterest expense with prior year periods is also affected by the absence of operating expenses associated with the mortgage banking business, which was sold in March, 1996, and the elimination of FDIC insurance premiums. The full year comparison is also affected by the absence of expenses from the corporate trust and stock transfer businesses . During the fourth quarter of 1996 the Corporation recorded a $6 million charge associated with a performance restricted stock plan for certain employees. Under the terms of the plan, 75% of the stock award vested with these employees during the fourth quarter when the Corporation's common stock price closed at $60 or above for two consecutive days. The remaining 25% of the award vested in January, 1997 when the stock price closed at $70 or above for two consecutive days. CREDIT PROFILE Loan and Lease Portfolio The segments of the lending portfolio are as follows:
12-31-96 9-30-96 6-30-96 3-31-96 12-31-95 --------- -------- -------- -------- --------- (in millions) United States Operations: Commercial, industrial and financial $ 13,162 $ 13,828 $ 12,915 $ 12,677 $ 12,809 Commercial real estate Construction 284 323 410 383 386 Other commercial real estate 3,240 3,228 3,326 3,242 3,393 Consumer-related loans: Residential mortgages 3,184 4,156 4,133 4,218 4,141 Home equity loans 2,878 2,842 2,775 2,644 2,556 Credit card 1,395 1,320 1,223 810 495 Other 5,503 5,349 5,218 5,200 5,059 Lease financing 1,816 1,778 1,627 1,565 1,564 Unearned income (287) (272) (245) (240) (240) --------- -------- -------- -------- --------- 31,175 32,552 31,382 30,499 30,163 --------- -------- -------- -------- --------- International Operations: Loans and lease financing, net of unearned income 9,886 9,501 9,271 8,769 8,707 --------- -------- -------- -------- --------- Total loans and lease financing $ 41,061 $ 42,053 $ 40,653 $ 39,268 $ 38,870 ========= ======== ======== ======== =========
Loans and leases declined approximately $1 billion from September 30, 1996 driven mainly by a $972 million decline in residential mortgages due to the sale of loans, including those associated with the sale of branches to US Trust. In addition, domestic commercial and industrial loans declined $666 million due, in part, to the outflow of loans carried at September 30 which were earmarked for syndication. These declines were partially offset by a $385 million increase in international loans reflecting ongoing growth from Latin America. Nonaccrual Loans and OREO Nonaccrual loans and OREO amounted to $452 million at December 31, 1996, compared with $496 million at September 30, 1996, and $442 million at December 31, 1995. Nonaccrual loans and OREO represented 1.1% of related assets at December 31, 1996, compared with 1.2% at September 30, 1996 and 1.1% at December 31, 1995. The components of consolidated nonaccrual loans and OREO are as follows: 12-31-96 9-30-96 6-30-96 3-31-96 12-31-95 --------- -------- -------- -------- --------- (in millions) Domestic nonaccrual loans: Commercial, industrial and financial $ 82 $ 114 $ 140 $ 93 $ 88 Commercial real estate Construction 6 9 10 22 25 Other commercial real estate 67 84 86 102 103 Consumer-related loans Residential mortgages 57 60 45 46 42 Home equity loans 23 22 20 16 14 Credit card 17 5 2 0 0 Other 44 44 38 42 35 --------- -------- -------- -------- --------- 296 338 341 321 307 --------- -------- -------- -------- --------- International nonaccrual loans 106 106 57 63 66 --------- -------- -------- -------- --------- Total nonaccrual loans 402 444 398 384 373 OREO 50 52 62 65 69 --------- -------- -------- -------- --------- Total $ 452 $ 496 $ 460 $ 449 $ 442 ========= ======== ======== ======== =========
Provision and Reserve for Credit Losses The reserve for credit losses at December 31, 1996 was $883 million, or 2.15% of outstanding loans and leases, compared with $897 million, or 2.13% at September 30, 1996, and $890 million, or 2.29% at December 31, 1995. The reserve for credit losses was 220% of nonaccrual loans at December 31, 1996, 202% at September 30, 1996, and 239% at December 31, 1995. The provision for credit losses was $60 million in the fourth quarter of 1996, compared with $57 million in the third quarter of 1996 and $81 million in the fourth quarter of 1995, which included a special provision of $25 million. For the full year 1996, the provision for credit losses was $231 million, compared with $275 million for the full year 1995. Full year 1995 included special provisions of $75 million ($50 million recorded in the first quarter and $25 million recorded in the fourth quarter). Net credit losses, excluding $15 million related to the transfer of commercial real estate loans into a held for sale account, were $60 million for the fourth quarter of 1996, compared with $55 million for the prior quarter and $51 million for the comparable period last year. Net credit losses as a percent of average loans and leases on an annualized basis were .57% in 1996's fourth quarter (excluding the aforementioned loans transferred into a held for sale account), compared with .53% for the third quarter of 1996 and .51% for the fourth quarter of 1995. Net credit losses were as follows:
Third - ------- Quarter Fourth Quarter Twelve Months - ------- -------------- ------------- 1996 1996 1995 1996 1995 - ------- ----- ----- ----- ----- (in millions) Domestic $ 0 Commercial, industrial and financial $ 3 $ 6 $ 8 $ 30 1 Commercial real estate 1 8 16 35 Consumer-related loans: 2 Residential mortgages 2 5 11 19 7 Credit card 13 3 27 11 0 Home equity loans 3 2 7 6 35 Other 26 18 109 51 ----- ----- ----- ----- ----- 45 48 42 178 152 10 International 12 9 37 44 ----- ----- ----- ----- ----- $ 55 Subtotal $ 60 $ 51 $ 215 $ 196 Commercial real estate loans transferred 0 into a held for sale category 15 0 15 0 ----- ----- ----- ----- ----- $ 55 Total $ 75 $ 51 $ 230 $ 196 ===== ===== ===== ===== =====
THE CORPORATION BankBoston, with assets of $62.3 billion, was founded in 1784. BankBoston is engaged primarily in commercial and consumer banking in southern New England, providing financing and capital markets services to selected corporations nationally and internationally, and full-service banking in key Latin American markets. The Corporation and its subsidiaries operate through a network of 650 offices in the U.S. and through more than 100 offices in 24 countries in Latin America, Europe and Asia, the third largest overseas network of any U.S. bank. The Corporation's common and preferred stocks are listed on the New York and Boston stock exchanges. CONSOLIDATED BALANCE SHEET
(dollars in millions) September 30 December 31 ------------ ----------------- 1996 1996 1995 ---- ------- ------- Assets Securities: $ 685 Held to maturity $ 692 $ 660 7,413 Available for sale 7,792 7,582 42,053 Loans and lease financing 41,061 38,870 (897) Reserve for credit losses (883) (890) ------- ------- ------- 41,156 Net loans and lease financing 40,178 37,980 4,513 Other earning assets 4,729 4,973 8,196 Cash and other nonearning assets 8,915 8,228 ------- ------- ------- $61,963 Total Assets $62,306 $59,423 ======= ======= ======= Liabilities and Stockholders' Equity $43,328 Deposits $42,831 $41,064 9,250 Funds borrowed 9,136 9,503 2,846 Notes payable 2,843 2,189 1,785 Other liabilities 2,062 1,965 Guaranteed preferred beneficial interest in Corporation's junior subordinated debt 500 ------- ------- ------- 57,209 Total Liabilities 57,372 54,721 ------- ------- ------- Stockholders' Equity 508 Preferred equity 508 508 4,246 Common equity 4,426 4,194 ------- ------- ------- 4,754 Total Stockholders' Equity 4,934 4,702 ------- ------- ------- Total Liabilities and $61,963 Stockholders' Equity $62,306 $59,423 ======= ======= =======
SELECTED AVERAGE BALANCES
Quarter Ended Quarters Ended Twelve Months Ended - ------------- -------------- ------------------- September 30 December 31 December 31 - ------------- ----------- ----------- 1996 1996 1995 1996 1995 ---- ---- ---- ---- ----- Assets $41,223 Loans and lease financing $41,835 $39,357 $40,589 $38,283 8,249 Securities 8,029 7,823 8,122 7,463 53,924 Total earning assets 54,819 51,295 53,410 49,567 60,049 Total assets 61,056 57,801 59,523 55,744 Liabilities and Stockholders' Equity 35,432 Interest bearing deposits 34,739 32,902 34,491 31,708 7,185 Noninterest bearing deposits 7,292 7,001 7,112 6,698 ------- ------- ------- ------- ------- 42,617 Total deposits 42,031 39,903 41,603 38,406 2,674 Notes payable 2,983 2,159 2,666 2,142 46,407 Total interest bearing liabilities 47,079 44,416 45,908 42,982 4,251 Common stockholders' equity 4,317 4,070 4,236 3,796 4,759 Total stockholders' equity 4,825 4,578 4,744 4,304
NUMBER OF EMPLOYEES
Dec 31 Sept 30 Dec 31 1996 1996 1995 --------- ---------- ------- Full time equivalent employees 22,000 22,600 23,700
Prior period results have been restated to give effect to the Corporation's acquisition of BayBanks, Inc., completed on July 29, 1996 and accounted for as a pooling of interests. CONSOLIDATED STATEMENT OF INCOME
(dollars in millions, except per share amounts) Quarters Ended Quarters Ended Twelve Months Ended September 30 December 31 December 31 - -------------- ------------ ----------- 1996 1996 1995 1996 1995 ---- ---- ---- ---- ---- $1,199.5 Interest income $1,250.1 $1,278.7 $4,892.4 $5,118.9 608.1 Interest expense 638.9 705.8 2,552.8 2,870.2 -------- -------- -------- -------- -------- 591.4 Net interest revenue 611.2 572.9 2,339.6 2,248.7 57.0 Provision for credit losses 60.0 81.0 231.0 275.0 -------- -------- -------- -------- -------- Net interest revenue after provision 534.4 for credit losses 551.2 491.9 2,108.6 1,973.7 -------- -------- -------- -------- -------- Noninterest income: 140.4 Financial service fees 146.6 230.6 473.8 695.5 61.6 Trust and agency fees 65.0 54.8 246.0 240.4 20.7 Trading profits and commissions 17.2 9.1 75.8 24.9 7.1 Securities portfolio gains, net (.8) 1.9 23.2 9.1 106.7 Other income 111.5 71.3 525.4 339.9 -------- -------- -------- -------- -------- 336.5 Total noninterest income 339.5 367.7 1,344.2 1,309.8 -------- -------- -------- -------- -------- Noninterest expense: 244.2 Salaries 254.5 243.2 983.4 946.8 49.1 Employee benefits 44.4 45.8 194.7 198.9 51.1 Occupancy expense 50.6 48.6 202.6 191.1 34.2 Equipment expense 36.2 33.8 138.6 133.1 149.0 Other expense 160.4 144.4 611.0 568.6 -------- -------- -------- -------- -------- 527.6 Subtotal 546.1 515.8 2,130.3 2,038.5 180.0 Acquisition and reorganization-related expenses 28.2 180.0 28.2 4.8 OREO costs 1.8 1.7 9.2 9.5 -------- -------- -------- -------- -------- 712.4 Total noninterest expense 547.9 545.7 2,319.5 2,076.2 -------- -------- -------- -------- -------- 158.5 Income before income taxes 342.8 313.9 1,133.3 1,207.3 78.5 Provision for income taxes 141.3 133.6 483.1 529.0 -------- -------- -------- -------- -------- $ 80.0 NET INCOME $ 201.5 $ 180.3 $ 650.2 $ 678.3 ======== ======== ======== ======== ======== NET INCOME PER COMMON SHARE: $ .46 Primary $ 1.26 $ 1.09 $ 3.99 $ 4.17 $ .45 Fully diluted $ 1.24 $ 1.08 $ 3.93 $ 4.09 $ .44 DIVIDENDS PAID PER COMMON SHARE $ .44 $ .37 $ 1.69 $ 1.28 Average number of common shares, in thousands: 153,103 Primary 152,975 156,140 153,529 153,856 155,183 Fully diluted 155,157 157,959 156,112 156,768 $ 9.4 Preferred dividends $ 9.4 $ 9.4 $ 37.4 $ 37.5
Prior period results have been restated to give effect to the Corporation's acquisition of BayBanks, Inc., completed on July 29, 1996 and accounted for as a pooling of interests. OTHER DATA (dollars in millions, except per share amounts)
Twelve Months ------------- Quarter Ended Quarters Ended Ended - ------------- -------------- ----- September 30 December 31 December 31 - ------------- ------------ ------------ 1996 1996 1995 1996 1995 ---- ----- ----- ---- ---- EARNINGS PER SHARE BEFORE CERTAIN ITEMS*: $1.23 Primary $ 1.26 $ 1.09 $ 4.79 $ 4.17 $1.21 Fully diluted $ 1.24 $ 1.08 $ 4.71 $ 4.09 RETURN ON AVERAGE TOTAL ASSETS (ANNUALIZED): .53% Net income 1.31% 1.24% 1.09% 1.22% 1.31% Net income before certain items* 1.31% 1.24% 1.30% 1.22% RETURN ON AVERAGE COMMON EQUITY (ANNUALIZED): 6.61% Net income 17.71% 16.66% 14.47% 16.86% 17.56% Net income before certain items* 17.71% 16.66% 17.36% 16.86% * Where applicable, 1996 amounts exclude charges associated with the BayBanks acquisition and items related to the sale of the mortgage banking subsidiary. CONSOLIDATED NET INTEREST REVENUE AND MARGIN: Net interest revenue, fully taxable $596.4 equivalent basis $616.5 $581.2 $2,360.0 $2,270.5 4.40% Net interest margin 4.47% 4.50% 4.42% 4.58% 4.51% DOMESTIC NET INTEREST MARGIN (ESTIMATED) 4.65% 4.65% 4.54% 4.72% 4.07% INTERNATIONAL NET INTEREST MARGIN (ESTIMATED) 3.97% 3.98% 4.05% 4.10%
Sept 30 Dec. 31 ------- ---------------------- 1996 1996 1995 ---- ---- ---- COMMON STOCKHOLDERS' EQUITY: $4,246 Common stockholders' equity $ 4,426 $ 4,194 152,634 Common shares outstanding, in thousands 153,173 155,296 Per common share: $27.81 Book value $28.89 $ 27.01 57.88 Market value 64.25 46.25 CAPITAL RATIOS/REGULATORY CAPITAL: 6.27% Tangible Common Equity ratio 6.49% 5.62% Risk-based capital ratios: Estimate 8.3% Tier 1 capital ratio (minimum required 4.00%) 9.3% 8.5% 12.7% Total capital ratio (minimum required 8.00%) 13.7% 12.8% 7.2% Leverage ratio 8.2% 7.4% $4,319 Tier 1 capital $ 4,954 $ 4,275 6,642 Total capital 7,288 6,440 52,223 Total risk-adjusted assets 53,398 50,382
Prior period results have been restated to give effect to the Corporation's acquisition of BayBanks, Inc., completed on July 29, 1996 and accounted for as a pooling of interests. RESERVE FOR CREDIT LOSSES
(dollars in millions) Quarter Ended Quarters Ended Twelve Months Ended September 30 December 31 December 31 ------------- ------------------ ------------------ 1996 1996 1995 1996 1995 ----- -------- -------- -------- -------- $894.5 Beginning balance $ 896.7 $ 858.2 $ 889.2 $ 827.0 57.0 Provision for credit losses 60.0 81.0 231.0 275.0 Reserve of acquired banks 1.5 2.1 3.7 16.6 Reserves of companies sold (10.9) (32.7) (73.4) Credit losses (98.1) (75.3) (310.2) (281.9) 18.6 Recoveries 23.2 23.2 80.5 85.2 ----- ------- ------- ------- ------- (54.8) Net credit losses (74.9) (52.1) (229.7) (196.7) ----- ------- ------- ------- ------- $896.7 Ending balance $ 883.3 $ 889.2 $ 883.3 $ 889.2 ======== ======= ======= ======= ======= Reserve as a % of loans 2.13% and leases 2.15% 2.29% 2.15% 2.29% ======== ======= ======= ======= ======= Reserve as a % of nonaccrual 202% loans 220% 239% 220% 239% ======= ======= ======= ======= =======
RENEGOTIATED LOANS
(in millions) 1995 1996 Fourth First Second Third Fourth Qtr Qtr Qtr Qtr Qtr ------ ------ ------ ------ ------- Renegotiated loans $33 $28 $13 $11 $ 8 === === === === ===
Prior period results have been restated to give effect to the Corporation's acquisition of BayBanks, Inc., completed on July 29, 1996 and accounted for as a pooling of interests. -----END PRIVACY-ENHANCED MESSAGE-----