-----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, Qzw3nEWIVM42FmuxdW4olaDs16Wn6sO4pHxevMfCn3fChxnxXcQaoqDkB7Olz1Zu HTzhIQQ1bHk0Y8iRglz28A== 0000908662-98-000021.txt : 19980121 0000908662-98-000021.hdr.sgml : 19980121 ACCESSION NUMBER: 0000908662-98-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980115 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980120 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEET FINANCIAL GROUP INC CENTRAL INDEX KEY: 0000050341 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 050341324 STATE OF INCORPORATION: RI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06366 FILM NUMBER: 98509189 BUSINESS ADDRESS: STREET 1: ONE FEDERAL STREET CITY: BOSTON STATE: MA ZIP: 02211 BUSINESS PHONE: 6172922000 MAIL ADDRESS: STREET 1: ONE FEDERAL STREET CITY: BOSTON STATE: MA ZIP: 02211 FORMER COMPANY: FORMER CONFORMED NAME: FLEET FINANCIAL GROUP INC DATE OF NAME CHANGE: 19880110 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL NATIONAL CORP DATE OF NAME CHANGE: 19820512 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 15, 1998 FLEET FINANCIAL GROUP, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) RHODE ISLAND ----------------------------------------------------- (State or other jurisdiction of incorporation) 1-6366 05-0341324 ------------------------------------------------------ (Commission File Number) (IRS Employer Identification No.) ONE FEDERAL STREET, BOSTON, MA 02211 ------------------------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 617-292-2000 ----------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. OTHER EVENTS. Pursuant to Form 8-K, General Instructions F, Registrant hereby incorporates by reference the press release attached hereto as Exhibit 99. Item 7. FINANCIAL STATEMENTS AND OTHER EXHIBITS. EXHIBIT NO. DESCRIPTION Exhibit 99 Fleet Financial Group, Inc. Press Release Dated January 15, 1998 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed in its behalf by the undersigned hereunto duly authorized. FLEET FINANCIAL GROUP, INC. Registrant By /S/ Robert C. Lamb, Jr. ----------------------------------------- Robert C. Lamb, Jr. Controller Chief Accounting Officer Dated: January 15, 1998 EX-99 2 EXHBIT 99 PRESS RELEASE EXHIBIT 99 Contacts: Media: James Mahoney Investor: Thomas Rice (617) 346-5472 (617) 346-0148 T. Kevin Beatty (617) 346-4963 FLEET FINANCIAL GROUP REPORTS 1997 NET INCOME OF $1.3 BILLION EARNINGS PER SHARE UP 19% TO $4.74 BOSTON, MASSACHUSETTS, JANUARY 15, 1998: Fleet Financial Group, Inc. (FLT-NYSE) today reported net income of $1.303 billion for 1997, an increase of $164 million compared to 1996 net income of $1.139 billion. Earnings per share increased 19% to $4.74 from $3.98 in 1996. Return on assets and return on equity for the year were 1.59% and 19.53%, respectively, compared to 1.37% and 17.43% in 1996. In the fourth quarter of 1997, Fleet's net income was $335 million, or $1.23 per share, compared to $302 million, or $1.05 per share in 1996, representing an 11% increase in net income and a 17% increase in earnings per share. Return on assets and return on equity for the quarter were 1.62% and 19.23%, respectively, compared with 1.40% and 17.67% for the fourth quarter of 1996. HIGHLIGHTS "1997 was an outstanding year for Fleet and our employees. Earnings grew to more than $1.3 billion while the company also made great progress towards its strategic objectives," said Terrence Murray, Fleet's chairman and chief executive officer. "We completed the integrations of the Shawmut and NatWest acquisitions which solidified Fleet's position as the preeminent financial services organization serving the northeast. We refined our business profile by exiting businesses which were not meeting our criteria for risk or profitability and were not critical to our vision for the company. At the same time, we invested in businesses more central to our growth strategy which broadened our product array and enhanced our distribution capabilities. The acquisitions of Columbia Management Company, the Quick & Reilly Group, and the credit card operations of Advanta Corporation will double Fleet's customer base to over 13 million customers, improve our revenue mix to nearly 50% fee income, further diversify the geographic sources of Fleet's revenue streams, and boost earnings momentum as we head into 1998." Eugene M. McQuade, vice chairman and chief financial officer, provided additional comments on the company's strong 1997 results. "Fleet saw healthy loan growth throughout the year. This growth, against a backdrop of meaningful declines in operating expenses, dramatically improved the operating leverage and profitability of the company." Mr. McQuade continued, "With a return on equity nearing 20% and a return on assets of 1.6%, Fleet's performance measures rank among the leaders of the industry and continue Fleet's record of building value for our shareholders. In 1997, we more than delivered on the integration efficiencies of our acquisitions, expanded both our product line and customer base, and continued to invest in technological advances for the future." FINANCIAL HIGHLIGHTS Net interest income totaled $3.7 billion for 1997, an increase of $228 million from 1996. Net interest margin improved 40 basis points to 5.21% in 1997, as the Corporation's balance sheet restructuring program lowered funding costs and markedly enhanced the mix of earning assets. Net interest income for the fourth quarter of 1997 totaled $923 million compared to $910 million in the fourth quarter of 1996, reflecting the continued positive impact of the actions noted above. Fourth quarter net interest margin was 5.19%, up 19 basis points from last year's 5.00%. The provision for credit losses was $322 million in 1997, an increase of $109 million from 1996. Net charge-offs in 1997 were virtually flat at $376 million, increasing only $6 million. The provision for credit losses was $90 million in the fourth quarter of 1997 and net charge-offs of $90 million were down $34 million from the fourth quarter of 1996. The strong improvement in net charge-offs in the fourth quarter of 1997 was driven by continued improvement in the Corporation's commercial loan portfolio. Nonperforming assets were reduced by over $300 million (42%) during the year to $416 million. Continuing this trend in the fourth quarter, nonperforming assets were reduced by $63 million from September 30, 1997. The reserve for loan losses of $1.4 billion remained unchanged from September 30, 1997, maintaining the Corporation's loss coverages of 2.3% of total loans and 365% of nonperforming loans. Noninterest income was $2.1 billion for 1997, compared to $2.0 billion in 1996. Service charges, fees and commissions increased 18% due to increases in cash management and electronic banking volume. Investment services revenue also increased 12%, as the corporation benefited from strong financial markets in 1997, as well as increasing levels of assets under management. Additionally, corporate finance fees, a line of business started in the latter part of 1996, grew over $40 million in 1997. Mortgage banking revenues decreased 12% in 1997 primarily due to the second quarter sale of Option One, one of the Corporation's mortgage banking subsidiaries. Noninterest income was $517 million for the quarter. This represents an increase in noninterest income from continuing operations of $17 million after excluding the impact of divested businesses. Growth was experienced in nearly all core noninterest revenue categories including service charges, fees and commissions, investment services revenue and corporate finance fees. Noninterest expense totaled $3.2 billion in 1997, compared to $3.3 billion during 1996. Noninterest expense totaled $796 million in the fourth quarter of 1997. Noninterest expense from continuing operations declined by $36 million from $832 million in the fourth quarter of 1996 after excluding $25 million for noninterest expense from divested businesses. Cost reductions included savings from the successful completion of the integration of the Shawmut and NatWest acquisitions. Aggregate cost savings from these two acquisitions totaled $750 million. This total exceeded the original cost savings projections by $150 million, or 25%. Total assets at December 31, 1997, were $85.5 billion. However, the composition of earning assets and funding sources has become significantly more productive due to balance sheet restructuring actions over the past two years as loans increased almost $4.5 billion, excluding the impact of divested businesses, during the past year. Stockholders' equity amounted to $8.0 billion at December 31, 1997, an increase of approximately $600 million from December 31, 1996.
FLEET FINANCIAL GROUP FINANCIAL HIGHLIGHTS THREE MONTHS ENDED TWELVE MONTHS ENDED December 31, September 30, December 31, December 31, December 31, 1997 1997 1996 1997 1996 For the Period ($ in millions) $ 335 $ 329 $ 302 Net Income $ 1,303 $ 1,139 1,440 1,440 1,439 Total Revenue 5,739 5,452 796 791 857 Total Expense 3,226 3,272 90 85 65 Provision for credit losses 322 213 Per Common Share $ 1.28 $ 1.25 $ 1.08 Basic earnings per share $ 4.89 $ 4.06 1.23 1.21 1.05 Diluted earnings per share 4.74 3.98 75.13 65.56 49.88 Market value (period-end) 75.13 49.88 0.49 0.45 0.45 Cash dividends declared 1.84 1.74 28.10 25.42 24.66 Book value (period-end) 28.10 24.66 At Quarter End ($ in billions) $ 85.5 $ 83.6 $ 85.5 Assets $ 85.5 $ 85.5 61.2 59.3 58.8 Loans and leases 61.2 58.8 63.7 62.9 67.1 Deposits 63.7 67.1 8.0 7.2 7.4 Total stockholders' equity 8.0 7.4 Operating Ratios 1.62% 1.60% 1.40% Return on average assets 1.59% 1.37% 19.23 19.89 17.67 Return on common equity 19.53 17.43 19.47 20.07 17.77 Return on realized common equity (a) 19.66 17.42 5.19 5.23 5.00 Net interest margin 5.21 4.81 55.3 54.9 59.5 Efficiency ratio 56.2(b) 60.0 9.4 8.6 8.7 Total equity/assets (period-end) 9.4 8.7 7.3 7.1 7.7 Tier 1 risk-based capital ratio (estimated) 7.3 7.7 10.9 10.8 11.4 Total risk-based capital ratio (estimated) 10.9 11.4 Asset Quality ($ in millions) $ 416 $ 479 $ 723 Nonperforming assets $ 416 $ 723 1,432 1,432 1,488 Reserve for credit losses 1,432 1,488 Nonperforming assets as a % of loans, 0.68% 0.81% 1.23% leases, and OREO 0.68% 1.23% 0.49 0.57 0.85 Nonperforming assets as a % of total assets 0.49 0.85 0.64 0.77 1.18 Nonperforming loans to period-end loans 0.64 1.18 2.34 2.42 2.53 Reserve for credit losses to period-end loans 2.34 2.53 0.60 0.64 0.83 Net charge-offs/average loans 0.65 0.66 (a) Excludes average unrealized gains/losses on securities available for sale (b) Excludes gains on sales of business units, net of charges
FLEET FINANCIAL GROUP CONSOLIDATED BALANCE SHEETS ($ in millions) December 31, September 30, December 31, 1997 1997 1996 ASSETS: Cash and cash equivalents $ 5,481 $ 6,563 $ 9,015 Securities 9,362 8,770 8,680 Loans and lease financing 61,179 59,264 58,844 Reserve for credit losses (1,432) (1,432) (1,488) Mortgages held for resale 1,526 1,396 1,560 Other assets 9,419 9,014 8,907 Total assets $ 85,535 $ 83,575 $ 85,518 LIABILITIES: Deposits $ 63,735 $ 62,907 $ 67,071 Short-term borrowings 6,903 6,524 3,627 Long-term debt 4,500 4,459 5,114 Other liabilities 2,363 2,498 2,291 Total liabilities 77,501 76,388 78,103 STOCKHOLDERS' EQUITY: Preferred stock 691 835 953 Common stock 7,343 6,352 6,462 Total stockholders' equity 8,034 7,187 7,415 Total liabilities and stockholders' equity $ 85,535 $ 83,575 $ 85,518
FLEET FINANCIAL GROUP CONSOLIDATED INCOME STATEMENTS ($ in millions) THREE MONTHS ENDED TWELVE MONTHS ENDED December 31, September 30, December 31, December 31, December 31, 1997 1997 1996 1997 1996 $ 923 $ 926 $ 910 Net interest income (FTE) $ 3,667 $3,439 90 85 65 Provision for credit losses 322 213 833 841 845 Net interest income after provision 3,345 3,226 Noninterest income: 157 159 146 Service charges, fees, and commissions 633 537 108 104 98 Investment services revenue 418 372 67 66 109 Mortgage banking, net of amortization 327 373 24 24 31 Student loan servicing fees 101 98 161 161 145 Other 593 633 517 514 529 Total noninterest income 2,072 2,013 Noninterest expense: 376 384 423 Employee compensation and benefits 1,591 1,607 70 70 74 Occupancy 282 284 67 70 71 Equipment 274 266 43 41 40 Intangible asset amortization 163 135 240 226 249 Other 916 980 796 791 857 Total noninterest expense 3,226 3,272 554 564 517 Earnings before income taxes and net gains 2,191 1,967 -- -- -- Gains on sales of business units, net of charges 20 -- 219 235 215 Income taxes and tax-equivalent adjustment 908 828 $ 335 $ 329 $ 302 Net income $ 1,303 $1,139 $ 1.28 $ 1.25 $ 1.08 Basic earnings per share $ 4.89 $ 4.06 1.23 1.21 1.05 Diluted earnings per share 4.74 3.98
FLEET FINANCIAL GROUP CONSOLIDATED AVERAGE BALANCE SHEETS ($ in millions) THREE MONTHS ENDED December 31, 1997 September 30, 1997 December 31, 1996 Average Average Average Balance Rate Balance Rate Balance Rate ASSETS: Securities $ 9,095 6.74% $ 8,690 6.78% $ 10,261 6.71% Loans and leases 59,889 8.71 58,087 8.72 59,256 8.58 Mortgages held for resale 1,305 7.56 1,222 7.47 1,569 8.20 Other earning assets 455 3.31 2,434 6.58 1,462 4.87 Total interest-earning assets 70,744 8.40% 70,433 8.38% 72,548 8.23% Reserve for credit losses (1,430) - (1,441) - (1,546) - Other assets 12,690 - 12,609 - 14,827 - Total assets $ 82,004 - $ 81,601 - $ 85,829 - LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Savings $ 27,206 2.31% $ 27,325 2.23% $ 28,225 2.30% Time 19,746 5.27 19,695 5.17 21,622 5.36 Total interest-bearing deposits 46,952 3.55 47,020 3.46 49,847 3.63 Short-term borrowings 5,420 5.12 5,315 5.03 3,903 4.47 Long-term debt 4,341 7.43 4,487 7.42 4,940 7.27 Total interest-bearing liabilities $ 56,713 4.00% $ 56,822 3.91% $ 58,690 3.99% Net interest spread - 4.40% - 4.47% 4.24% Demand deposits and other noninterest- bearing time deposits $ 15,700 - $ 15,475 - $16,808 - Other liabilities 2,227 - 2,219 - 2,961 - Total liabilities 74,640 - 74,516 - 78,459 - Stockholders' equity 7,364 - 7,085 - 7,370 - Total liabilities and stockholders' equity $ 82,004 - $ 81,601 - $ 85,829 - Net interest margin 5.19% 5.23% 5.00%
FLEET FINANCIAL GROUP CONSOLIDATED AVERAGE BALANCE SHEETS ($ in millions) TWELVE MONTHS ENDED December 31, 1997 December 31, 1996 Average Average Balance Rate Balance Rate ASSETS: Securities $ 8,674 6.73% $ 11,425 6.45% Loans and leases 58,920 8.68 56,074 8.61 Mortgages held for resale 1,413 7.65 1,878 7.87 Other earning assets 1,411 5.68 2,120 7.75 Total interest-earning assets 70,418 8.36% 71,497 8.22% Reserve for credit losses (1,454) - (1,493) - Other assets 13,106 - 13,120 - Total assets $ 82,070 - $ 83,124 - LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Savings $ 27,478 2.25% $ 26,363 2.33% Time 20,036 5.16 20,971 5.44 Total interest-bearing deposits 47,514 3.48 47,334 3.70 Short-term borrowings 4,682 4.88 5,844 5.05 Long-term debt 4,608 7.34 5,486 7.10 Total interest-bearing liabilities $ 56,804 3.91% $ 58,664 4.16% Net interest spread - 4.45% - 4.06% Demand deposits and other noninterest- bearing time deposits $ 15,882 - $ 15,042 - Other liabilities 2,206 - 2,397 - Total liabilities 74,892 - 76,103 - Stockholders' equity 7,178 - 7,021 - Total liabilities and stockholders' equity $ 82,070 - $ 83,124 - Net interest margin 5.21% 4.81%
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