-----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, SSzWmCxF0QDxxGs1IAGSa7APdUG5DJyDLIKqAj5KjBelOYoVfyrp+NW3kXlrHnZo w0HXRMUwhuzDB+Ab3CifRA== 0000927016-99-000154.txt : 19990125 0000927016-99-000154.hdr.sgml : 19990125 ACCESSION NUMBER: 0000927016-99-000154 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990121 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990122 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: 99509977 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): January 21, 1999 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 January 21, 1999, BankBoston Corporation (the Corporation) issued a press release announcing its earnings for the quarter ended December 31, 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 January 21, 1999. -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: January 22, 1999 /s/ Robert T. Jefferson ---------------------------------------- Robert T. Jefferson Comptroller EX-99.A 2 EXA EXHIBIT 99 (A) BANKBOSTON REPORTS FOURTH QUARTER NET INCOME OF $207 MILLION OR $.70 PER SHARE COMMON DIVIDEND RAISED 10% TO 32 CENTS BRAZILIAN OPERATIONS REPORT RECORD EARNINGS IN 1998 BOSTON, January 21, 1999 -- BankBoston Corporation (NYSE: BKB) reported today fourth quarter net income of $207 million, or $.70 per common share on a diluted basis. This compares with $195 million, or $.66 per share, in the third quarter of 1998 (excluding acquisition-related and business realignment costs) and $235 million, or $.78 per share, in the fourth quarter of 1997. Net income for the full year of 1998, excluding the third quarter acquisition-related and business realignment costs referred to above, was $882 million, or $2.94 per share, compared with net income for the full year of 1997 of $879 million, or $2.82 per share. Actual net income for the full year of 1998 was $792 million, or $2.64 per share. Highlights were as follows (where applicable, amounts shown for the third and fourth quarters of 1998 are before business sale gains, asset writedowns, and acquisition-related/business realignment costs): . Revenues, on a fully taxable equivalent basis, were $1,202 million in the current quarter, compared with $1,035 million in the prior quarter and $1,039 million in the fourth quarter of 1997; . The Corporation acquired Robertson Stephens on August 31, 1998. Excluding bonus payments due to employees under the acquisition agreement, Robertson Stephens' pre-tax income for the fourth quarter was approximately $10 million compared with an essentially break-even result for the third quarter. This improvement was achieved on the strength of improved revenue, which rose from approximately $20 million in September to nearly $100 million in the fourth quarter. The revenue growth came from higher levels of brokerage, advisory and underwriting fees, as well as trading account profits; . During 1998, the Corporation's Brazilian operations reported record earnings which resulted in an over 30% increase in net income from 1997 to approximately $100 million. The Argentine operations likewise achieved record earnings of approximately $70 million, a growth of nearly 15%. These improvements were achieved on the strength of increased fee-based income and wider spreads which more than offset the higher costs related to significant de novo expansion of approximately 35 branches in Brazil and approximately 65 branches in Argentina; . Expenses (excluding acquisition-related and business realignment costs) were $807 million in the current quarter, compared with $661 million in the prior quarter and $600 million in the fourth quarter of 1997. The increase was driven by a full quarter's inclusion of Robertson Stephens, higher levels of revenue, and investment spending in key businesses, such as Latin American de novo branch expansion; . Return on average common equity was 17.21% in the fourth quarter, compared with 16.29% in the prior quarter and 21.74% in the fourth quarter of 1997. Return on average assets was 1.09% in the fourth quarter, compared with 1.07% in the prior quarter and 1.37% in the fourth quarter of 1997; . During the quarter, the Corporation recognized $89 million of gains from completing the previously announced sales of its domestic institutional custody business and Berkshire branch network; . Provision for credit losses grew $60 million from the third quarter, bringing the fourth quarter provision to $120 million, compared with $40 million in the fourth quarter of 1997. Net credit losses were $113 million in the current quarter, $59 million in the third quarter and $60 million in the fourth quarter of 1997. The reserve for credit losses was 1.76% of outstanding loans and leases at December 31, 1998, compared with 1.62% at September 30, 1998 and December 31, 1997. Nonaccrual loans and OREO totaled $402 million at December 31, 1998, $395 million at September 30, 1998 and $356 million at December 31, 1997; . During the quarter, the Corporation recorded $31 million of charges related to the writedown of securities held in the available for sale portfolio, the write-off of software in connection with converting to a new trust system, and branch closings. Noninterest income The components of noninterest income are as follows:
Third Fourth Quarter Twelve Months Quarter ---------------- ------------------ 1998 (in millions) 1998 1997 Change 1998 1997 Change - --------- ------ ------ ------- ------ ------ ------ $ 223 Financial service fees $ 295 $ 196 $ 99 $ 877 $ 663 $ 214 54 Net equity and mezzanine profits 42 68 (26) 233 221 12 33 Mutual fund fees 37 30 7 132 111 21 40 Personal trust fees 40 38 2 162 145 17 9 Other trust and agency fees 5 7 (2) 32 27 5 (52) Trading profits and commissions 19 (9) 28 (3) 58 (61) 35 Net foreign exchange trading profits 32 31 1 127 88 39 17 Securities gains, net (12) 27 (39) 41 80 (39) 46 Other income 54 20 34 197 102 95 0 Gains on sales of businesses 89 0 89 254 68 186 (20) Writedown of Korean equity investment 0 0 0 (20) 0 (20) ----- ----- ----- ------ ------ ------ ------ $ 385 Total $ 601 $ 408 $ 193 $2,032 $1,563 $ 469 ===== ===== ===== ====== ====== ====== ======
. Changes in financial service fees are detailed below. . Equity and mezzanine profits declined in the quarterly comparisons due to a lower level of sales activity, while revenue for full year 1998 exceeded 1997 by 5%. At December 31, 1998, the Private Equity portfolio had a carrying value of $1.3 billion compared with approximately $965 million at December 31, 1997. . Mutual fund fees improved in all comparisons, primarily driven by higher fees from Argentina and Brazil. The Corporation is among the top mutual fund providers in each of these countries with a combined level of assets under management of $7.6 billion at December 31, 1998, compared with $6.1 billion at December 31, 1997. . Personal trust fees grew from prior year periods mainly due to an increase in assets under management. . The decline in other trust and agency fees from the third quarter reflects the fourth quarter sale of the Corporation's domestic institutional custody business. . The improvement in trading account profits and commissions from the third quarter mainly reflects a $56 million decline in losses from the Boston-based emerging markets and high yield trading units, coupled with $11 million of trading profits recorded by Robertson Stephens in the fourth quarter (compared with a slight loss in the third quarter). The profits from Robertson Stephens also had a favorable impact on both prior year comparisons. The improvement from the fourth quarter of 1997 was also due to lower losses from the Boston-based emerging markets trading unit and higher profits from Argentina and the Boston-based derivatives trading unit, partially offset by higher losses from the high yield trading unit. The decline in the full year comparison was mainly due to losses from the Boston-based emerging markets and high yield trading units stemming from the severe volatility that was present in the world financial markets during much of 1998, partially offset by higher profits from Argentina, Brazil and the derivatives trading unit. . Foreign exchange profits were up sharply in the full year comparison as the Corporation benefited from higher customer demand for products arising out of volatile market conditions. . Included in securities gains for the fourth quarter of 1998 is the recognition of $22 million of impairment related to certain available for sale securities held in the Corporation's Boston-based emerging markets portfolio. In addition, the drop in securities gains in all comparisons also relates to Argentina, partially offset by higher gains from domestic securities. Lower gains from sales of emerging markets securities also affected both prior year comparisons. . The increase in other income from the third quarter is due, in part, to higher earnings from equity subsidiaries. The comparisons of other income 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 a higher level of loan sale gains in 1998. The full year comparison was also affected by an $11 million charge in 1997 related to interest rate futures contracts that had been used to hedge the funding of Fidelity Acceptance Corporation. . During the fourth quarter, the Corporation recorded a $51 million gain in connection with the sale of its Berkshire branch network in western Massachusetts and recorded a $38 million gain in connection with the completion of the sale of its domestic institutional custody business. The Corporation's Latin American custody business was not affected by this sale. The components of financial service fees are as follows:
Third Fourth Quarter Twelve Months Quarter -------------- ------------- 1998 (in millions) 1998 1997 Change 1998 1997 Change - --------- ------ ------ ------- ------ ------ ------ $ 78 Deposit and ATM-related fees $ 87 $ 70 $ 17 $ 312 $ 259 $ 53 21 Letters of credit and acceptance fees 19 20 (1) 77 73 4 11 Other loan-related fees 12 10 2 45 39 6 18 Credit card fees 24 11 13 64 36 28 17 Syndication and agent fees 17 35 (18) 68 95 (27) 16 Advisory fees 38 12 26 70 28 42 13 Brokerage fees 43 2 41 62 11 51 15 Underwriting fees 16 8 8 47 18 29 34 Other 39 28 11 132 104 28 ----- ------ ------ ------ ------ ------ ------ $ 223 Total $ 295 $ 196 $ 99 $ 877 $ 663 $ 214 ===== ====== ====== ====== ====== ====== ======
. The level of financial service fees has been affected by the August 31, 1998 acquisition of Robertson Stephens. Total financial service fees from Robertson Stephens were in excess of $80 million in the fourth quarter compared with approximately $20 million in the third quarter. . Deposit and ATM-related fees increased in all comparisons due, in part, to higher fees from Argentine operations and an increase in domestic electronic banking fees. The increases from Argentina in the prior year comparisons included growth from the acquisition of Deutsche Bank Argentina. . The improvement in credit card fees in all comparisons is attributable to increased fee income from Argentina, Brazil and Uruguay. The latter was affected by the acquisition of OCA (a Uruguayan consumer finance company) during 1998. . Syndication and agent fees declined in the prior year comparisons due to a lower level of activity. . The growth in advisory fees, as well as brokerage fees, in all comparisons is mainly due to the acquisition of Robertson Stephens on August 31, 1998. . Compared with the third quarter, underwriting fees increased slightly as fees from Robertson Stephens were mostly offset by a decline from the domestic high yield unit. The acquisition of Robertson Stephens was the major factor behind the growth in the fourth quarter comparison, while the full year increase was due to a combination of Robertson Stephens and a higher level of fees from the domestic high yield unit. . Other financial service fees improved in all prior period comparisons mainly due to a higher level of fees from Argentina and Brazil. Net interest revenue Net interest revenue, on a fully taxable equivalent basis, was $668 million for the fourth quarter of 1998, compared with $630 million in the prior quarter and $631 million in the fourth quarter of 1997. Net interest margin was 4.13% for the fourth quarter of 1998, compared with 3.97% in the third quarter of 1998 and 4.20% in the fourth quarter of last year. For the full year of 1998, net interest revenue on a fully taxable equivalent basis was $2,550 million, compared with $2,453 million for the full year of 1997. Net interest margin was 4.09% in 1998 and 4.25% in 1997. The growth in net interest revenue and net interest margin from the prior quarter was mainly due to a $19 million increase in dividends from private equity investments and wider spreads from Argentina and Brazil. In addition, a $1 billion increase in average domestic loans and leases contributed to the improvement in net interest revenue. Compared with prior year periods, in 1998 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 $5.8 billion in the quarterly and $6.6 billion in the full year comparison. Nearly two-thirds of the growth in average earning assets came from loans, 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 in Brazil, while wider spreads in Argentina had a favorable impact in the comparison with the fourth quarter of 1997. 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:
Third Fourth Quarter Twelve Months Quarter -------------- ------------- 1998 (in millions) 1998 1997 Change 1998 1997 Change - --------- ------ ------ ------- ------ ------ ------ $ 449 Employee costs $ 459 $ 339 $ 120 $1,630 $1,279 $ 351 99 Occupancy & equipment 109 90 19 398 350 48 29 Professional fees 36 23 13 111 61 50 30 Advertising and public relations 25 34 (9) 109 107 2 33 Communications 38 29 9 132 112 20 10 Goodwill amortization 13 6 7 39 27 12 136 Other 136 79 57 491 388 103 ----- ------ ------ ------- ------ ------ ------ $ 786 Total $ 816 $ 600 $ 216 $2,910 $2,324 $ 586 ===== ====== ====== ======= ====== ====== ======
Below is an analysis of the changes in noninterest expense from the third quarter: Noninterest expense: third quarter 1998 $ 786 . Absence of third quarter costs for the Robertson Stephens acquisition ($80 million) and nonrecurring charges for the regional banking operations in New England ($15 million), as well as the realignment of Asia and the emerging markets investment banking business units ($30 million) (125) . Robertson Stephens: Increase in core expenses (three months in Q4 vs. one month in Q3) 67 Quarterly charge for bonus payments under the acquisition agreement plus increase in goodwill amortization 21 . Increase from Latin America including growth related to branch expansion programs and the acquisition of OCA 16 . Higher levels of incentive compensation (excluding Robertson Stephens and Latin America) which were due, in part, to the impact of a decline in revenues in the third quarter and higher levels of revenues in the fourth quarter 14 . Increase from Risk Management and Technology, including costs associated with the Euro and Year 2000 projects as well as consulting fees 12 . Increase from regional consumer and domestic commercial businesses, including lending and Private Equity businesses 11 . Q4 charges associated with the write-off of software in connection with converting to a new trust system and branch closings 9 . Other factors, net 5 ----- Noninterest expense: fourth quarter 1998 $ 816 Noninterest expense increased $216 million from the fourth quarter of 1997 and $586 million in the full year comparison. These increases were mainly related to 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 third quarter of 1998 for acquisition-related and business realignment costs referred to above and in the first quarter of 1998 related to the European, private banking, and regional consumer businesses contributed to the increase in the full year comparison. Partially offsetting these increases was the absence of expenses from the national consumer businesses and, in the case of the full year comparison, 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) 12-31-98 9-30-98 6-30-98 3-31-98 12-31-97 --------- -------- -------- -------- --------- United States Operations: Commercial, industrial and financial $ 16,294 $ 18,218 $ 16,275 $ 15,887 $ 15,268 Commercial real estate: Construction 215 209 219 260 271 Other commercial real estate 3,871 4,089 3,876 3,736 4,211 Consumer-related loans: Residential mortgages 2,035 2,111 2,229 2,551 2,570 Home equity 2,294 2,672 2,871 2,802 2,823 Credit card 404 393 412 503 1,756 Other 2,532 2,693 2,753 2,801 2,956 Lease financing 1,801 1,607 1,609 2,017 1,938 Unearned income (275) (231) (232) (303) (302) --------- -------- -------- -------- --------- 29,171 31,761 30,012 30,254 31,491 --------- -------- -------- -------- --------- International Operations: Commercial 10,356 10,636 10,218 10,682 10,159 Consumer-related loans: Residential mortgages 1,251 1,383 1,318 1,302 947 Credit card 362 339 248 226 182 Other 1,192 1,164 1,087 987 828 Lease financing 725 652 519 517 452 Unearned Income (251) (188) (148) (146) (79) --------- -------- -------- -------- --------- 13,635 13,986 13,242 13,568 12,489 --------- -------- -------- -------- --------- Total loans and lease financing $ 42,806 $ 45,747 $ 43,254 $ 43,822 $ 43,980 ========= ======== ======== ======== =========
Loans and leases were $42.8 billion at December 31, 1998, compared with $45.7 billion at September 30, 1998. The domestic portfolio declined $2.6 billion due mainly to securitizations of commercial and industrial ($2.2 billion) and home equity ($0.5 billion) loans during the fourth quarter. In addition, continued runoff in the indirect auto portfolio also contributed to the decline. International loans declined by approximately $350 million mainly reflecting lower levels of Latin American loans. Nonaccrual Loans and OREO Nonaccrual loans and OREO amounted to $402 million at December 31, 1998, compared with $395 million at September 30, 1998, and $356 million at December 31, 1997. Nonaccrual loans and OREO represented .9% of related assets at December 31, 1998 and September 30, 1998, compared with .8% at December 31, 1997. The components of consolidated nonaccrual loans and OREO are as follows:
(in millions) 12-31-98 9-30-98 6-30-98 3-31-98 12-31-97 --------- -------- -------- -------- --------- Domestic nonaccrual loans: Commercial, industrial and financial $ 86 $ 71 $ 63 $ 43 $ 59 Commercial real estate: Construction 2 2 2 3 3 Other commercial real estate 19 30 33 41 40 Consumer-related loans: Residential mortgages 36 36 42 46 50 Home equity 17 18 15 15 14 Credit card 6 6 6 6 26 Other 20 21 18 20 20 --------- -------- -------- -------- --------- 186 184 179 174 212 --------- -------- -------- -------- --------- International nonaccrual loans: Commercial 86 103 107 97 64 Consumer-related loans: Residential mortgages 50 39 36 34 28 Credit card 6 7 6 4 4 Other 47 33 26 18 12 --------- -------- -------- -------- --------- 189 182 175 153 108 --------- -------- -------- -------- --------- Total nonaccrual loans 375 366 354 327 320 OREO 27 29 28 42 36 --------- -------- -------- -------- --------- Total $ 402 $ 395 $ 382 $ 369 $ 356 ========= ======== ======== ======== =========
Provision and Reserve for Credit Losses The reserve for credit losses at December 31, 1998 was $754 million, or 1.76% of outstanding loans and leases, compared with $740 million, or 1.62% at September 30, 1998, and $712 million, or 1.62% at December 31, 1997. The reserve for credit losses was 201% of nonaccrual loans at December 31, 1998, compared with 202% at September 30, 1998 and 222% at December 31, 1997. The provision for credit losses was $120 million in the fourth quarter of 1998, compared with $60 million in the third quarter and $40 million in the fourth quarter of 1997. For the full year of 1998, the provision for credit losses was $380 million, compared with $200 million for the full year of 1997. Net credit losses were $113 million in the fourth quarter of 1998, compared with $59 million in the third quarter of 1998 and $60 million in the fourth quarter of 1997. Net credit losses as a percent of average loans and leases on an annualized basis were .98% in the fourth quarter of 1998, compared with .52% for the third quarter of 1998 and .55% for the fourth quarter of 1997. The increase in domestic commercial and industrial net credit losses from the third quarter is substantially due to the chargeoff of one large credit. In addition, the increase in international commercial net credit losses from the third quarter is mainly due to chargeoffs related to the Asian and Multinational business units. Total Asian nonaccrual loans at December 31, 1998 were $14 million. Net credit losses were as follows:
Third Fourth Quarter Twelve Months Quarter (in millions) -------------- ---------------- 1998 1998 1997 1998 1997 - ----------- ----- ----- ------ ------ Domestic $ 9 Commercial, industrial and financial $ 38 $ 8 $ 65 $ 33 (1) Commercial real estate 0 0 (2) (5) Consumer-related loans: 1 Residential mortgages 2 2 6 4 6 Credit card 5 25 36 92 1 Home equity 2 2 6 8 13 Other 13 15 56 96 ----- ----- ----- ----- ----- 29 60 52 167 228 International 7 Commercial 34 1 130 26 Consumer-related loans: 6 Credit card 5 2 15 8 17 Other 14 5 52 17 ----- ----- ----- ----- ----- 30 53 8 197 51 ----- ----- ----- ----- ----- $ 59 Total $ 113 $ 60 $ 364 $ 279 ===== ===== ===== ===== =====
Common Dividend The Corporation's Board of Directors approved today an increase in the quarterly dividend on common stock to 32 cents from 29 cents per share, payable on February 26, 1999 to stockholders of record on February 8, 1999. The Corporation BankBoston, with assets of $73.5 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 recent events in Brazil and 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 and the Year 2000 issue. (more) Consolidated Balance Sheet (dollars in millions)
September 30 December 31 ------------ ---------------------- 1998 1998 1997 ---- ------- ------- Assets Securities: $11,988 Available for sale $12,075 $ 9,946 516 Held to maturity 459 537 45,747 Loans and lease financing 42,806 43,980 (740) Reserve for credit losses (754) (712) ------- ------- ------- 45,007 Net loans and lease financing 42,052 43,268 4,401 Other earning assets 5,733 5,442 11,922 Cash and other nonearning assets 13,194 10,075 ------- ------- ------- $73,834 Total Assets $73,513 $69,268 ======= ======= ======= Liabilities and Stockholders' Equity $46,420 Deposits $48,500 $45,761 14,873 Funds borrowed 12,016 12,865 4,436 Notes payable 4,593 2,941 2,395 Other liabilities 2,592 2,344 Guaranteed preferred beneficial interests in corporation's junior subordinated 995 debentures 995 747 ------- ------- ------- 69,119 Total Liabilities 68,696 64,658 ------- ------- ------- Stockholders' Equity 0 Preferred equity 0 278 4,715 Common equity 4,817 4,332 ------- ------- ------- 4,715 Total Stockholders' Equity 4,817 4,610 ------- ------- ------- Total Liabilities and Stockholders' $73,834 Equity $73,513 $69,268 ======= ======= =======
Selected Average Balances
Quarter Ended Quarters Ended Twelve Months Ended ------------- -------------- ------------------- September 30 December 31 December 31 ------------ -------------- -------------- 1998 1998 1997 1998 1997 ---- ------- ------- ------- ------- Assets $45,069 Loans and lease financing $45,731 $43,242 $44,683 $42,383 11,692 Securities 12,171 10,538 11,419 9,741 62,869 Total earning assets 64,204 59,554 62,392 57,708 72,501 Total assets 75,331 68,092 72,200 65,263 Liabilities and Stockholders' Equity 37,334 Interest bearing deposits 40,535 35,834 38,063 34,922 7,205 Noninterest bearing deposits 6,854 8,418 7,715 7,931 ------- ------- ------- ------- ------- 44,539 Total deposits 47,389 44,252 45,778 42,853 5,149 Notes payable (1) 5,477 3,524 4,698 3,382 56,906 Total interest bearing liabilities 59,291 52,088 56,032 50,168 4,734 Common stockholders' equity 4,769 4,202 4,629 4,227 4,772 Total stockholders' equity 4,769 4,480 4,777 4,667
(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 Twelve Months Ended September 30 December 31 December 31 - ----------------- ---------------------- --------------------- 1998 1998 1997 1998 1997 - ----------------- --------- --------- --------- -------- $1,409.6 Interest income $1,439.6 $1,341.5 $5,576.9 $5,164.1 784.7 Interest expense 780.7 720.0 3,050.3 2,735.5 -------- -------- -------- -------- -------- 624.9 Net interest revenue 658.9 621.5 2,526.6 2,428.6 60.0 Provision for credit losses 120.0 40.0 380.0 200.0 -------- -------- -------- -------- -------- Net interest revenue after provision 564.9 for credit losses 538.9 581.5 2,146.6 2,228.6 -------- -------- -------- -------- -------- Noninterest income: 222.8 Financial service fees 294.5 195.7 877.0 663.0 82.3 Trust and agency fees 82.4 74.8 326.1 283.0 (52.1) Trading profits and commissions 19.0 (8.6) (2.6) 58.3 16.6 Securities portfolio gains, net (12.2) 27.4 40.6 79.5 115.5 Other income 216.8 119.1 791.0 479.3 -------- -------- -------- -------- -------- 385.1 Total noninterest income 600.5 408.4 2,032.1 1,563.1 -------- -------- -------- -------- -------- Noninterest expense: 384.4 Salaries 390.9 283.0 1,373.1 1,064.7 64.1 Employee benefits 68.2 56.3 256.5 214.2 58.3 Occupancy expense 62.9 51.3 231.4 203.8 40.8 Equipment expense 45.9 38.4 166.5 146.0 238.0 Other expense 248.0 171.5 882.6 695.2 -------- -------- -------- -------- -------- 785.6 Total noninterest expense 815.9 600.5 2,910.1 2,323.9 -------- -------- -------- -------- -------- 164.4 Income before income taxes 323.5 389.4 1,268.6 1,467.8 59.4 Provision for income taxes 116.6 154.7 476.6 588.6 -------- -------- -------- -------- -------- $ 105.0 NET INCOME $ 206.9 $ 234.7 $ 792.0 $ 879.2 ======== ======== ======== ======== ======== Net Income Per Common Share: $ .35 Basic $ .70 $ .79 $ 2.66 $ 2.86 $ .35 Diluted $ .70 $ .78 $ 2.64 $ 2.82 $ .29 Dividends Paid Per Common Share $ .29 $ .26 $ 1.16 $ .99 Average number of common shares, in thousands: 294,379 Basic 294,774 290,482 293,873 295,918 296,361 Diluted 296,755 294,618 296,663 300,080 $ .7 Preferred dividends $ 0 $ 4.4 $ 9.4 $ 31.7
Number of Employees Dec. 31 Sept. 30 Dec. 31 1998 1998 1997 ------- -------- ------- Full time equivalent employees 24,500 24,800 21,500 Other Data (dollars in millions, except per share amounts)
Quarter Ended Quarters Ended Twelve Months Ended ------------- -------------- ------------------- September 30 December 31 December 31 ------------ ----------- ----------- 1998 1998 1997 1998 1997 ---- ------- ------- ------- ------- Return on average total assets (annualized): .57% Based on actual net income 1.09% 1.37% 1.10% 1.35% 1.07% Based on core net income 1.09% 1.37% 1.22% 1.35% Return on average common equity (annualized): 8.75% Based on actual net income 17.21% 21.74% 16.91% 20.05% 16.29% Based on core net income 17.21% 21.74% 18.85% 20.05% $ 629.6 Net interest revenue, fully taxable equivalent basis $668.2 $631.1 $2,549.6 $2,453.0 3.97% Consolidated net interest margin 4.13% 4.20% 4.09% 4.25% 3.75% Domestic net interest margin (estimated) 3.64% 4.30% 3.90% 4.36% 4.47% International net interest margin (estimated) 5.34% 3.97% 4.50% 3.98%
September 30 December 31 ------------ ----------- 1998 1998 1997 ---- -------- -------- Common stockholders' equity: $ 4,715 Common stockholders' equity $ 4,817 $ 4,332 294,596 Common shares outstanding, in thousands 294,972 145,707 Per common share: $ 16.01 Book value $ 16.33 $ 14.87 33.00 Market value 38.94 46.97 Capital ratios/regulatory capital: 5.38% Tangible common equity ratio 5.54% 5.81% Risk-based capital ratios: Estimate 7.0% Tier 1 capital ratio (minimum required 4.00%) 7.2% 8.0% 11.3% Total capital ratio (minimum required 8.00%) 11.8% 12.1% 6.8% Leverage ratio 6.7% 7.4% $ 4,906 Tier 1 capital $ 5,020 $ 4,971 7,902 Total capital 8,238 7,519 69,733 Total risk-adjusted assets 69,842 62,216
Reserve for Credit Losses (dollars in millions)
Quarter Ended Quarters Ended Twelve Months Ended ------------- -------------- ------------------- September 30 December 31 December 31 ------------ ----------- ----------- 1998 1998 1997 1998 1997 ---- ------- ------- ------- ------- $ 733.9 Beginning balance $ 740.0 $ 729.1 $ 711.6 $ 883.3 60.0 Provision for credit losses 120.0 40.0 380.0 200.0 5.0 Reserve of acquired companies 6.6 2.7 25.7 2.7 0.0 Reserves of companies sold 0.0 0.0 0.0 (94.7) (78.8) Credit losses (132.9) (83.2) (441.4) (366.4) 19.9 Recoveries 19.8 23.0 77.6 86.7 ------- ------- ------- ------- ------- (58.9) Net credit losses (113.1) (60.2) (363.8) (279.7) ------- ------- ------- ------- ------- $ 740.0 Ending balance $ 753.5 $ 711.6 $ 753.5 $ 711.6 ======= ======= ======= ======= ======= 1.62% Reserve as a % of loans and leases 1.76% 1.62% 1.76% 1.62% ======= ======= ======= ======= ======= 202% Reserve as a % of nonaccrual loans 201% 222% 201% 222% ======= ======= ======= ======= =======
-----END PRIVACY-ENHANCED MESSAGE-----