-----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, KkSmeHFY87AkDip6W4J5DEIG+DhwbK7rOOZKIFa1zVDrWnYyu7RTrmtEHyUG+SPT qLBwi/BSlyuosvVucoIsiw== 0000950109-96-006848.txt : 19961023 0000950109-96-006848.hdr.sgml : 19961023 ACCESSION NUMBER: 0000950109-96-006848 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961017 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961022 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: 96646357 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 CURRENT REPORT ________________________________________________________________________________ ________________________________________________________________________________ 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 17, 1996 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 October 17, 1996, Bank of Boston Corporation (the Corporation) issued a press release announcing its earnings for the quarter ended September 30, 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 October 17, 1996. -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: October 22, 1996 /s/ Robert T. Jefferson ----------------------------------------- Robert T. Jefferson Comptroller EX-99.A 2 PRESS RELEASE DATED OCTOBER 17, 1996 EXHIBIT 99(a) ------------- BANKBOSTON REPORTS THIRD QUARTER NET INCOME OF $197 MILLION BEFORE SPECIAL ITEMS OR $1.21 PER SHARE 15% GROWTH IN EPS FROM PRIOR YEAR RAISES COST SAVINGS TARGET FROM BAYBANKS INTEGRATION TO $230 MILLION BOSTON, October 17, 1996 -- Bank of Boston Corporation ("BankBoston"; NYSE: "BKB") reported today third quarter net income of $197 million, or $1.21 per common share on a fully diluted basis, before special items. This compares with $188 million, or $1.15 per share, in the second quarter of 1996 and $175 million, or $1.05 per share, in the third quarter of 1995. These operating results reflect the acquisition of BayBanks, which was consummated on July 29, 1996. The acquisition has been accounted for using the pooling of interests method of accounting and, accordingly, all prior period results have been restated to include the historical results of BayBanks. Actual net income was $80 million, or $.45 per share, on a fully diluted basis, in the third quarter of 1996, compared with $214 million, or $1.32 per share, in the second quarter of 1996 and $175 million, or $1.05 per share, in the third quarter of 1995. The third quarter of 1996 included a charge for restructuring and merger-related costs of $180 million ($117 million after- tax) related to the BayBanks acquisition. The Corporation also raised its estimate of the cost savings it expects to achieve in connection with the BayBanks integration to $230 million. The major systems and branch conversions are expected to be completed by the middle of next year with full realization of these savings to occur by the latter half of 1997. The cost savings and the charge for restructuring and merger-related costs each represent increases of $40 million from the original estimates that were announced in December, 1995. The second quarter of 1996 included a $46 million gain ($28 million after-tax) related to the sale of the Corporation's mortgage banking subsidiary, and a $4 million charge ($2 million after-tax) associated with the accelerated vesting of restricted stock for certain BayBanks employees. Net income for the first nine months of 1996 was $571 million, or $3.48 per share, before special items compared with net income of $498 million, or $3.00 per share, for the first nine months of 1995. Actual net income for the first nine months of 1996 was $449 million, or $2.69 per share, compared with $498 million, or $3.00 per share, for the first nine months of 1995. Third quarter operating highlights were as follows (amounts shown are before special items): * Total revenues increased to $933 million on a fully taxable equivalent basis, compared with $913 million in the prior quarter and $880 million in the third quarter of 1995; * On a fully taxable equivalent basis, operating income (before credit costs) increased to $405 million in the third quarter, compared with $386 million in the prior quarter and $364 million in the third quarter of 1995; * Return on average common equity improved to 17.56% in third quarter, compared with 17.19% in the prior quarter and 16.75% in the third quarter of 1995. Return on average assets was 1.31% in the third quarter, 1.29% in the prior quarter and 1.22% in the third quarter of 1995; * Net credit losses were $55 million in the third quarter, compared with $49 million in the prior quarter and $45 million in the third quarter of 1995. The provision for credit losses was $57 million in the third and second quarters of 1996 compared with $51 million in the third quarter of 1995. Nonaccrual loans and OREO totaled $496 million at September 30, 1996, compared with $460 million at June 30, 1996 and $494 million at September 30, 1995; * Operating ratio was 56.6% in the third quarter of 1996 compared with 57.7% in the prior quarter and 58.7% in the third quarter of 1995. NONINTEREST INCOME The components of noninterest income are as follows:
Second Quarter Third - ------- Quarter Nine Months ------------ -------------- 1996 (in millions) 1996 1995 Change 1996 1995 Change - ------- ----- ----- ------- ------- ----- ------- $ 135 Financial service fees $ 140 $ 162 $(22) $ 438 $ 465 ($27) 77 Net equity and mezzanine profits 51 25 26 165 65 100 23 Mutual fund fees 24 18 6 69 48 21 33 Personal trust fees 32 29 3 97 84 13 6 Other trust and agency fees 6 18 (12) 15 54 (39) 25 Trading profits and commissions 21 7 14 59 16 43 12 Foreign exchange trading profits 13 16 (3) 37 45 (8) 3 Securities portfolio gains, net 7 1 6 24 7 17 0 Gain on sale of mortgage servicing 13 6 7 13 10 3 23 Other income 30 24 6 93 73 20 ----- ----- ----- ---- ------ ----- ----- $ 337 Subtotal $ 337 $ 306 $ 31 $1,010 867 $ 143 46 Special items, net 0 0 0 (5) 75 (80) ----- ----- ----- ---- ------ ----- ----- $ 383 Total $ 337 $ 306 $ 31 $1,005 $ 942 $ 63 ===== ===== ===== ==== ====== ===== =====
* 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. * Equity and mezzanine profits continued strong, although down from the unusually high level attained in the second quarter. The higher level of realized profits compared with prior year periods is primarily due to a seasoning of the portfolio and favorable market conditions. The portfolio has been steadily growing and new investment activity in 1996 is expected to be about 50% above last year. * 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 $3.5 billion at September 30, 1996 compared with $2.1 billion at September 30, 1995. * The comparisons with prior year periods for other trust and agency fees are 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 second quarter due to a lower level of profits from Latin America. Compared with prior year periods, trading account profits and commissions improved significantly, mainly due to increases from the Corporation's capital markets areas and Latin American units. * Foreign exchange profits declined from prior year periods reflecting 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 $7 million increase in other income from the prior quarter reflects the absence of a second quarter loss on the sale of approximately $300 million of residential mortgages in connection with the Corporation's program to remove low return assets from the balance sheet and a change in Chile's hedging strategy that yielded higher levels of noninterest income and lower levels of net interest revenue in the third quarter. Compared with the prior year, other income increased due, in part, to higher profits from various joint ventures, including those related to HomeSide Lending, Boston EquiServe (stock transfer business), and the Argentine pension management business. The components of financial service fees are as follows:
Second - ------- Third Quarter Quarter Nine Months - ------- ------------ ------------ 1996 (in millions) 1996 1995 Change 1996 1995 Change - ------- ----- ----- ------- ----- ----- ------- $ 59 Deposit and ATM-related fees $ 61 $ 58 $ 3 $ 180 $ 173 $ 7 16 Letters of credit and acceptance fees 18 18 0 51 55 (4) 13 Syndication and agent fees 14 12 2 36 26 10 8 Other loan-related fees 9 8 1 28 25 3 4 Net mortgage servicing fees (before special items) 3 25 (22) 29 76 (47) 35 Other 35 41 (6) 114 110 4 ----- ----- ----- ---- ----- ----- ---- $ 135 Total $ 140 $ 162 $(22) $ 438 $ 465 $(27) ===== ===== ===== ==== ===== ===== ====
* Letter of credit and acceptance fees increased $2 million from the second quarter mainly due to higher fees earned by domestic commercial banking businesses. * 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. Fees in the second and third quarters of 1996 relate to the BayBanks' portfolio, which was sold to HomeSide Lending during the third quarter. Special items included in noninterest income are composed of the following:
Second - --------- Third Quarter Quarter Nine Months - --------- ------------ ------------- 1996 (in millions) 1996 1995 Change 1996 1995 Change - --------- ----- ----- ------ ------ ----- ------- Mortgage banking-related gains/losses: $ 46 Sale of mortgage subsidiary $ 0 $ 0 $0 $ 106 $ 0 $ 106 0 Contracts used to manage prepayment risk, net 0 0 0 (111) 0 (111) ----- ----- ----- -- ----- ----- ----- 46 Total 0 0 0 (5) 0 (5) 0 Gain on sale of banking subsidiaries 0 0 0 0 75 (75) ----- ----- ----- -- ----- ----- ----- $ 46 Total $ 0 $ 0 $0 $ (5) $ 75 $ (80) ===== ===== ===== == ===== ===== =====
* During the first quarter of 1996 the Corporation recorded a net pre- tax loss of $51 million from mortgage banking-related special items. As a result of the first quarter's rising rate environment, a loss of $111 million, or $70 million after-tax, (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. In addition, the Corporation recognized a gain of $60 million, or $39 million after-tax, from the sale of its mortgage banking subsidiary to two equity investment firms. The second phase of this transaction was completed in the second quarter and resulted in an additional gain of $46 million, or $28 million after-tax. The Corporation now owns a 33% interest in HomeSide Lending, which ranks among the country's largest mortgage banking companies with a servicing portfolio of $86 billion. * The Corporation recognized a $75 million gain in the first quarter of 1995 from the sale of its Maine and Vermont banking subsidiaries. NET INTEREST REVENUE Net interest revenue, on a fully taxable equivalent basis, was $596 million for the third quarter of 1996, compared with $576 million in the prior quarter and $574 million in the third quarter of 1995. Net interest margin was 4.40% for the third and second quarters of 1996 compared with 4.53% in the third quarter of last year. For the first nine months of 1996, net interest revenue, on a fully taxable equivalent basis, was $1,744 million, compared with $1,689 million in the first nine months of 1995. Net interest margin was 4.40% for the first nine months of 1996, compared with 4.61% for the first nine months of 1995. The $20 million increase in net interest revenue from the prior quarter reflected a $1.1 billion growth in average loan volume and a higher domestic margin. The latter was mainly due to wider spreads from the credit card business, as the "promotional rate" period expired on a portion of the portfolio; the addition of $1.3 billion of retail deposits from the June 28 acquisition of Boston Bancorp; and a higher level of interest recoveries on loans. Partially offsetting these increases was a lower international margin which primarily resulted from narrower spreads in Latin America, including a change in Chile's hedging strategy that yielded lower levels of net interest revenue and higher levels of noninterest income in the third quarter. 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, a decline in the international margin and narrower domestic spreads. The latter was caused, in part, by the aggressive marketing of a new higher-rate savings deposit product during 1995, competitive pricing pressures and the introduction of a "promotional rate" credit card product in late 1995. NONINTEREST EXPENSE The components of noninterest expense are as follows:
Second - ------- Third Quarter Quarter Nine Months - ------- ------------ -------------- 1996 (in millions) 1996 1995 Change 1996 1995 Change - ------- ----- ----- ------- ------ ------ ------- $ 289 Employee costs $ 293 $ 298 $ (5) $ 875 $ 857 $ 18 84 Occupancy & equipment 85 82 3 254 242 12 14 Professional fees 15 17 (2) 42 50 (8) 31 Advertising and public relations 26 19 7 84 60 24 25 Communications 24 24 0 74 66 8 5 Goodwill amortization 7 5 2 17 13 4 1 FDIC insurance premiums 0 3 (3) 1 36 (35) 78 Other 78 68 10 234 199 35 ----- ----- ----- ---- ------ ------ ---- 527 Subtotal before BayBanks and OREO costs 528 516 12 1,581 1,523 58 BayBanks-related costs: Restructuring and merger-related costs 180 0 180 180 0 180 4 Accelerated vesting of restricted stock 0 0 0 4 0 4 1 OREO costs 5 2 3 7 8 (1) ----- ----- ----- ---- ------ ------ ---- $ 532 Total $ 713 $ 518 $195 $1,772 $1,531 $241 ===== ===== ===== ==== ====== ====== ====
Noninterest expense before BayBanks-related and OREO costs, was $528 million in the third quarter of 1996, compared with $527 million in the prior quarter and $516 million for the same quarter in 1995. Noninterest expense was fairly flat with the second quarter of 1996 as declines associated with cost savings from the integration of BayBanks into the Corporation and lower advertising expense were offset by an increase from the June 28 acquisition of Boston Bancorp, as well as higher levels of expenses in the capital markets and Latin American businesses. The latter included expenses related to the opening of a new branch in Peru and a pension company in Uruguay. 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 retail banking, as well as an increase in consumer finance. 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 in retail banking. The increase in consumer finance was due, in part, to marketing campaigns related to credit card, home equity and other products. 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, the absence of expenses from the corporate trust and stock transfer businesses, and the elimination of FDIC insurance premiums. Total staff levels declined by about 7%, or 1,600, from September 1995 principally due to the mortgage banking transaction, the joint venture of the stock transfer business, and the BayBanks integration. In connection with the acquisition of BayBanks, the Corporation estimates that it will achieve $230 million of annualized cost savings from the integration. The integration process is proceeding within the regional and corporate banking businesses, as well as in various systems and support areas. The major systems and branch conversions are expected to be completed by the middle of next year with full realization of the cost savings to occur by the latter half of 1997. During the third quarter of 1996, the Corporation recorded a $180 million ($117 million after-tax) charge for restructuring and merger- related costs associated with the acquisition of BayBanks. Included in this charge were employee-related severance and property-related costs; professional fees and other costs of effecting the merger; and systems and other conversion costs which occurred during the third quarter. OREO expense increased $4 million from the second quarter mainly due to a writedown on one property. CREDIT PROFILE Loan and Lease Portfolio The segments of the lending portfolio are as follows:
(in millions) 9-30-96 6-30-96 3-31-96 12-31-95 9-30-95 -------- -------- -------- --------- -------- United States Operations: Commercial, industrial and financial $ 13,828 $ 12,915 $ 12,677 $ 12,809 $ 13,162 Commercial real estate Construction 323 410 383 386 460 Other commercial real estate 3,228 3,326 3,242 3,393 3,340 Consumer-related loans: Residential mortgages 4,156 4,133 4,218 4,141 5,244 Home equity loans 2,842 2,775 2,644 2,556 2,455 Credit card 1,320 1,223 810 495 369 Other 5,349 5,218 5,200 5,059 4,820 Lease financing 1,778 1,627 1,565 1,564 1,510 Unearned income (272) (245) (240) (240) (238) -------- -------- -------- --------- -------- 32,552 31,382 30,499 30,163 31,122 -------- -------- -------- --------- -------- International Operations: Loans and lease financing, net of unearned income 9,501 9,271 8,769 8,707 8,066 -------- -------- -------- --------- -------- Total loans and lease financing $ 42,053 $ 40,653 $ 39,268 $ 38,870 $ 39,188 ======== ======== ======== ========= ========
Loans and leases grew $1.4 billion from June 30, 1996 driven mainly by a $913 million increase in the domestic commercial and industrial loan portfolio due to increases in several portfolios including specialized industries, New England corporate banking and asset based lending. In addition, domestic consumer loans grew $318 million reflecting increases in the credit card, home equity and Ganis Credit Corp. portfolios, while the $230 million increase in the international portfolio reflected ongoing growth from Latin America, primarily in Brazil and Argentina. Nonaccrual Loans and OREO Nonaccrual loans and OREO amounted to $496 million at September 30, 1996, compared with $460 million at June 30, 1996, and $494 million at September 30, 1995. Nonaccrual loans and OREO represented 1.2% of related assets at September 30, 1996, compared with 1.1% at June 30, 1996 and 1.3% at September 30, 1995. The growth in nonaccrual loans and OREO from June 30 includes the placement of one large international loan on nonaccrual status and an increase resulting from conforming BayBanks consumer loan nonaccrual policies to those of the Corporation. The components of consolidated nonaccrual loans and OREO are as follows:
(in millions) 9-30-96 6-30-96 3-31-96 12-31-95 9-30-95 -------- -------- -------- --------- -------- Domestic nonaccrual loans: Commercial, industrial and financial $ 114 $ 140 $ 93 $ 88 $ 120 Commercial real estate Construction 9 10 22 25 23 Other commercial real estate 84 86 102 103 110 Consumer-related loans Residential mortgages 60 45 46 42 43 Home equity loans 22 20 16 14 17 Credit card 5 2 0 0 0 Other 44 38 42 35 31 -------- -------- -------- --------- -------- 338 341 321 307 344 -------- -------- -------- --------- -------- International nonaccrual loans 106 57 63 66 69 -------- -------- -------- --------- -------- Total nonaccrual loans 444 398 384 373 413 OREO 52 62 65 69 81 -------- -------- -------- --------- -------- Total $ 496 $ 460 $ 449 $ 442 $ 494 ======== ======== ======== ========= ========
Provision and Reserve for Credit Losses The reserve for credit losses at September 30, 1996 was $897 million, or 2.13% of outstanding loans and leases, compared with $894 million, or 2.20% at June 30, 1996, and $858 million, or 2.19% at September 30, 1995. The reserve for credit losses was 202% of nonaccrual loans at September 30, 1996, 225% at June 30, 1996, and 208% at September 30, 1995. The provision for credit losses was $57 million for the third and second quarters of 1996, compared with $51 million for the third quarter of last year. For the first nine months of 1996, the provision for credit losses was $171 million, compared with $194 million in the previous year, which included a special provision of $50 million. Net credit losses were $55 million for the third quarter of 1996, compared with $49 million for the prior quarter and $45 million for the comparable period last year. The increase from the second quarter was due, in part, to conforming BayBanks consumer loan chargeoff policies to those of the corporation. Net credit losses as a percent of average loans and leases on an annualized basis were .53% in 1996's third quarter, compared with .49% for the second quarter of 1996 and .46% for the third quarter of 1995.
Net credit losses were as follows: Second - ------- Third Quarter Quarter Nine Months - ------- ------------ ------------ 1996 (in millions) 1996 1995 1996 1995 - ------- ----- ----- ----- ----- Domestic $ 3 Commercial, industrial and financial $ 0 $ 6 $ 5 $ 24 2 Commercial real estate 1 4 15 27 Consumer-related loans: 2 Residential mortgages 2 5 9 14 4 Credit card 7 3 14 8 1 Home equity loans 0 3 4 4 27 Other 35 12 83 33 ----- ----- ----- ----- ----- 39 45 33 130 110 10 International 10 12 25 35 ----- ----- ----- ----- ----- $ 49 Total $ 55 $ 45 $ 155 $ 145 ===== ===== ===== ===== =====
THE CORPORATION BankBoston, with assets of $62.0 billion, is a focused financial institution engaged primarily in commercial and consumer banking in southern New England, providing financing to selected corporations and individuals nationally and internationally, and full-service banking in Latin America. New England's only global bank, 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) June 30 September 30 - ---------- ----------------------- 1996 1996 1995 - ---------- ---------- ----------- Assets Securities: $ 686 Held to maturity $ 685 $ 3,944 8,459 Available for sale 7,413 3,619 40,653 Loans and lease financing 42,053 39,188 (894) Reserve for credit losses (897) (858) ------- ------- ------- 39,759 Net loans and lease financing 41,156 38,330 5,462 Other earning assets 4,513 4,040 8,021 Cash and other nonearning assets 8,196 7,626 ------- ------- ------- $62,387 Total Assets $61,963 $57,559 ======= ======= ======= Liabilities and Stockholders' Equity $43,494 Deposits $43,328 $39,624 9,215 Funds borrowed 9,250 9,473 2,632 Notes payable 2,846 2,109 2,084 Other liabilities 1,785 1,854 ------- ------- ------- 57,425 Total Liabilities 57,209 53,060 ------- ------- ------- Stockholders' Equity 508 Preferred equity 508 508 4,454 Common equity 4,246 3,991 ------- ------- ------- 4,962 Total Stockholders' Equity 4,754 4,499 ------- ------- ------- $62,387 Total Liabilities and Stockholders' Equity $61,963 $57,559 ======= ======= =======
SELECTED AVERAGE BALANCES
Quarter Ended Quarters Ended Nine Months Ended - ------------- -------------- ----------------- June 30 September 30 September 30 - ------------- -------------- ----------------- 1996 1996 1995 1996 1995 - ------------- ------- -------------- ------- ----------------- Assets $40,114 Loans and lease financing $41,223 $39,033 $40,176 $37,920 8,065 Securities 8,249 7,468 8,153 7,342 52,717 Total earning assets 53,924 50,265 52,941 48,985 58,381 Total assets 60,049 56,712 59,010 55,053 Liabilities and Stockholders' Equity 34,233 Interest bearing deposits 35,432 31,980 34,408 31,305 6,885 Noninterest bearing deposits 7,185 6,786 7,052 6,597 ------- ------- ------- ------- ------- 41,118 Total deposits 42,617 38,766 41,460 37,902 2,584 Notes payable 2,674 2,115 2,560 2,137 45,099 Total interest bearing liabilities 46,407 43,715 45,515 42,498 4,180 Common stockholders' equity 4,251 3,913 4,210 3,708 4,688 Total stockholders' equity 4,759 4,421 4,718 4,216
NUMBER OF EMPLOYEES
Sept 30 June 30 Sept 30 1996 1996 1995 --------- --------- ------- Full time equivalent employees 22,600 22,700 24,200
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 Nine Months Ended June 30 September 30 September 30 - -------------- ------------------ ------------------ 1996 1996 1995 1996 1995 - -------------- -------- -------- -------- -------- $1,202.5 Interest income $1,199.5 $1,320.0 $3,642.3 $3,840.2 631.0 Interest expense 608.1 750.4 1,913.9 2,164.4 -------- -------- -------- -------- -------- 571.5 Net interest revenue 591.4 569.6 1,728.4 1,675.8 57.1 Provision for credit losses 57.0 51.0 171.0 194.0 -------- -------- -------- -------- -------- Net interest revenue after provision 514.4 for credit losses 534.4 518.6 1,557.4 1,481.8 -------- -------- -------- -------- -------- Noninterest income: 135.3 Financial service fees 140.4 162.2 327.2 464.9 61.9 Trust and agency fees 61.6 64.4 181.0 185.7 25.0 Trading profits and commissions 20.7 7.2 58.6 15.7 3.4 Securities portfolio gains, net 7.1 .8 24.0 7.2 157.3 Other income 106.7 71.2 413.8 268.6 -------- -------- -------- -------- -------- 382.9 Total noninterest income 336.5 305.8 1,004.6 942.1 -------- -------- -------- -------- -------- Noninterest expense: 243.9 Salaries 244.2 245.9 728.9 703.6 49.0 Employee benefits 49.1 52.2 150.4 153.1 49.7 Occupancy expense 51.1 48.3 151.9 142.4 33.9 Equipment expense 34.2 33.5 102.4 99.3 154.6 Other expense 149.0 136.3 450.6 424.3 -------- -------- -------- -------- -------- 531.1 Subtotal 527.6 516.2 1,584.2 1,522.7 0 Acquisition-related expense 180.0 0 180.0 0 1.1 OREO costs 4.8 1.7 7.4 7.7 -------- -------- -------- -------- -------- 532.2 Total noninterest expense 712.4 517.9 1,771.6 1,530.4 -------- -------- -------- -------- -------- 365.1 Income before income taxes 158.5 306.5 790.4 893.5 151.3 Provision for income taxes 78.5 132.0 341.8 395.4 -------- -------- -------- -------- -------- $ 213.8 NET INCOME $ 80.0 $ 174.5 $ 448.6 $ 498.1 ======== ======== ======== ======== ======== NET INCOME PER COMMON SHARE: $ 1.33 Primary $ .46 $ 1.06 $ 2.74 $ 3.07 $ 1.32 Fully diluted $ .45 $ 1.05 $ 2.69 $ 3.00 $ .44 DIVIDENDS PAID PER COMMON SHARE $ .44 $ .37 $ 1.25 $ .91 Average number of common shares, in thousands: 153,650 Primary 153,103 155,660 153,715 153,086 155,183 Fully diluted 155,183 157,599 156,300 156,407 $ 9.3 Preferred dividends $ 9.4 $ 9.4 $ 28.0 $ 28.1
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)
Quarter Ended Quarters Ended Nine Months Ended - --------------- --------------- ------------------ June 30 September 30 September 30 - --------------- --------------- ------------------ 1996 1996 1995 1996 1995 - --------------- ---- ---- ---- ---- EARNINGS PER SHARE BEFORE SPECIAL ITEMS*: $ 1.16 Primary $ 1.23 $ 1.06 $ 3.53 $ 3.07 $ 1.15 Fully diluted $ 1.21 $ 1.05 $ 3.48 $ 3.00 RETURN ON AVERAGE TOTAL ASSETS (ANNUALIZED): 1.47% Net income .53% 1.22% 1.02% 1.21% 1.29% Net income before special items* 1.31% 1.22% 1.29% 1.21% RETURN ON AVERAGE COMMON EQUITY (ANNUALIZED): 19.68% Net income 6.61% 16.75% 13.35% 16.95% 17.19% Net income before special items* 17.56% 16.75% 17.24% 16.95% * Based on net income of $197.0 million in the third quarter of 1996, $187.9 million in the second quarter of 1996 and $174.5 million in the third quarter of 1995 CONSOLIDATED NET INTEREST REVENUE AND MARGIN: Net interest revenue, fully taxable $576.2 equivalent basis $596.4 $574.0 $1,743.5 $1,689.3 4.40% Net interest margin 4.40% 4.53 4.40% 4.61% 4.47% DOMESTIC NET INTEREST MARGIN (ESTIMATED) 4.51% 4.60% 4.50% 4.74% 4.18% INTERNATIONAL NET INTEREST MARGIN (ESTIMATED) 4.07% 4.27% 4.08% 4.15% June 30 Sept 30 ------- -------------------- 1996 1996 1995 ------- ------ ----- COMMON STOCKHOLDERS' EQUITY: $ 4,454 Common stockholders' equity $ 4,246 $ 3,991 156,681 Common shares outstanding, in thousands 152,634 155,329 Per common share: $ 28.42 Book value $ 27.81 $ 25.69 49.50 Market value 57.88 47.63 CAPITAL RATIOS/REGULATORY CAPITAL: 6.52% Tangible Common Equity ratio 6.27% 5.59% Risk-based capital ratios: Estimate 8.6% Tier 1 capital ratio (minimum required 4.00%) 8.2% 8.4% 12.7% Total capital ratio (minimum required 8.00%) 12.6% 12.8% 7.8% Leverage ratio 7.2% 7.4% $ 4,505 Tier 1 capital $ 4,319 $ 4,156 6,649 Total capital 6,651 6,322 52,417 Total risk-adjusted assets 52,852 49,421
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 Nine Months Ended June 30 September 30 September 30 -------------------- ------------------ ------------------- 1996 1996 1995 1996 1995 --------------------- -------- -------- -------- --------- $ 884.1 Beginning balance $ 894.5 $ 838.2 $ 889.2 $ 827.0 57.1 Provision for credit losses 57.0 51.0 171.0 194.0 2.1 Reserve of acquired bank 14.5 2.1 14.5 Sale of mortgage banking subsidiary (10.9) Sale of Maine and Vermont banking subsidiaries (32.7) (66.6) Credit losses (73.4) (67.2) (212.0) (206.7) 17.8 Recoveries 18.6 21.7 57.3 62.1 ------- ------- ------- ------- -------- (48.8) Net credit losses (54.8) (45.5) (154.7) (144.6) ------- ------- ------- ------- -------- $ 894.5 Ending balance $ 896.7 $ 858.2 $ 896.7 $ 858.2 ======= ======= ======= ======= ======== 2.20% Reserve as a % of loans and leases 2.13% 2.19% 2.13% 2.19% ======= ======= ======= ======= ======== 225% Reserve as a % of nonaccrual loans 202% 208% 202% 208 ======= ======= ======= ======= ========
RENEGOTIATED LOANS
(in millions) 1995 1996 Third Fourth First Second Third Qtr Qtr Qtr Qtr Qtr ------- ------- ------- ------- ------- Renegotiated loans $ 31 $ 33 $ 28 $ 13 $ 11 ======= ======= ======= ======= =======
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-----