-----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, IriEtTz8Y6btKOii9ko98rdKKOUGjJMbGKaWmHdt7zwY9cKJi5SXFV5eUrgDCe2E kqtxvzPJnlGWJyrJWlb0Mw== 0000908662-97-000040.txt : 19970721 0000908662-97-000040.hdr.sgml : 19970721 ACCESSION NUMBER: 0000908662-97-000040 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970716 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970718 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: 1934 Act SEC FILE NUMBER: 001-06366 FILM NUMBER: 97642648 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 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) July 16, 1997 -------------------------------------------------------------- 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(a). Item 7. Financial Statements and Other Exhibits. ---------------------------------------- Exhibit No. Description ----------- ----------- Exhibit 99(a) Press Release Reporting Second Quarter 1997 Earnings - dated July 16, 1997 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 and Chief Accounting Officer Dated: July , 1997 EX-99 2 EXHIBIT 99(A) Exhibit 99(a) Contacts: Media: James Mahoney Investor: Thomas R. Rice (617) 346-5472 (617) 346-0148 T. Kevin Beatty (617) 346-4963 FLEET FINANCIAL GROUP REPORTS SECOND QUARTER NET INCOME OF $328 MILLION EARNINGS PER SHARE UP 24% TO $1.19 ROA 1.61% ROE 20.2% BOSTON, Mass., July 16, 1997 - Fleet Financial Group, Inc. (FLT-NYSE) today reported net income of $328 million for the second quarter of 1997, an increase of $50 million from the second quarter of 1996. Earnings per share were $1.19 for the quarter or 24% higher than the $.96 per share reported in last year's second quarter. Return on assets and return on equity for the quarter were 1.61% and 20.24%, respectively, compared with 1.32% and 17.20%, respectively, for the second quarter of 1996. Cash basis results continue to outpace reported results as earnings per share were $1.29 in the second quarter, while return on assets and return on equity were 1.77% and 28.67%, respectively. Cash basis results exclude the impact of certain nonqualifying intangible assets and their amortization created as the result of acquisition activity. Net income for the six months of 1997 was $639 million, an increase of $97 million from the first half of 1996. Earnings per share were $2.28 for the first half of 1997, an increase of 21%, compared with $1.89 earned in the first half of 1996. Return on assets and return on equity for the six months of 1997 were 1.56% and 19.52%, respectively, compared with 1.36% and 17.09%, respectively, for the first half of 1996. Highlights "This was a watershed quarter for Fleet," said Terrence Murray, Fleet's chairman and chief executive officer, "Fleet made a number of bold promises to the market 18 months ago. We envisioned the creation of one of the country's finest financial services franchises with our employees stepping up to the challenges of integrating two of the largest acquisitions in U.S. banking, capturing $600 million in cost savings, and dramatically restructuring Fleet's balance sheet. Today that vision is a reality." "The effective execution of this ambitious strategy has created tangible value for Fleet's shareholders," Mr. Murray observed. "With a return on equity in excess of 20% and a return on assets in excess of 1.6%, Fleet's performance measurements are solidly positioned among the true leaders of the industry. With a current market capitalization of almost $17 billion, Fleet has delivered nearly $6 billion of increased shareholder value since closing on the acquisition of Shawmut in late 1995. Earnings per share growth of 24% over the past year is an additional source of pride as well as an objective measure of the magnitude of these accomplishments." "Toward the end of the second quarter we announced the completion of our integrations of Shawmut and NatWest and the achievement of our cost savings target of $600 million. These completed integrations have created a unique position for Fleet in the northeast. With Fleet's common technology platform fully installed, a Fleet customer can walk into any of our over 1,200 branches, in any of the seven states served by Fleet, and conduct business as if it were their branch around the corner. No other bank provides this caliber of service in this market. Fleet has certainly delivered on its promises," concluded Mr. Murray. Eugene M. McQuade, vice chairman and chief financial officer, provided additional detail on the strong results in Fleet's second quarter, "Fleet has made extraordinary progress over the last six quarters during which two major acquisitions were integrated into our operations and our balance sheet was restructured. Cost savings of $700 million have been captured, the efficiency ratio has improved to 55.8% and our net interest margin has risen over 30% to 5.25%." Second quarter results include one-time charges totaling $155 million. Included among these special charges was $125 million for investments to maintain Fleet's position at the forefront of banking technology and $30 million to reengineer selected back office operations to improve responsiveness, service quality, and efficiency through the use of new technology. In addition, the corporation reported net gains of $175 million from the sale of three businesses: Option One (the corporation's non-conforming mortgage banking subsidiary), Corporate Trust and Indirect Auto Lending. Also of note in the quarter was an $18 million increase from the first quarter in the provision for loan losses. Strong annualized loan growth of 9%, excluding the impact of the previously announced sale of three business units, contributed to the record performance in the quarter. New loan growth of more than $1.4 billion was primarily attributable to the commercial loan portfolio which increased by $1.2 billion. Reflected in the corporation's balance sheet at June 30, 1997 is a reduction of $2.2 billion of indirect auto and floorplan loans which were contracted to be sold at the end of the quarter. Second Quarter Results Net interest income totaled $916 million, an increase of $53 million, or 6%, from the second quarter of 1996. The increase is principally attributable to the acquisition of NatWest on May 1, 1996, and an increasing net interest margin. The Corporation reported a net interest margin of 5.25%, an increase of almost 50 basis points, reflecting the continuing impact of a comprehensive balance sheet restructuring program which lowered funding costs and enhanced the Corporation's earning asset mix. The provision for credit losses was $83 million, a $35 million increase from the prior year's second quarter. Net charge-offs amounted to $102 million, a $27 million increase from the second quarter of 1996, primarily the result of the inclusion of NatWest for the entire quarter. Nonperforming assets of $531 million in the second quarter decreased $173 million from March 31, 1997. The reserve for loan losses remained relatively stable at $1.4 billion. At this level, the loan loss reserve is 2.5% of total loans and almost 3 times nonperforming loans. Noninterest income on an operating basis totaled $514 million, (excluding gains of $175 million on the aforementioned sales of business units) an increase of $45 million, or nearly 10%, when compared to $469 million for the same period in 1996 (excluding $32 million of branch divestiture gains). The corporation experienced growth in all major core noninterest revenue categories. Noninterest expense declined $40 million from the first quarter of 1997 to $797 million (excluding $155 million of special charges). The expense reductions resulted from the effective integrations of NatWest and Shawmut, two significant consolidations undertaken and completed in a period of time notably quicker than industry standards. The company exceeded its $600 million of cost saves estimated at the time of these two acquisitions by $100 million. The effect of these reductions and the aforementioned revenue growth have combined to improve the company's efficiency ratio to 55.8%. Total assets at June 30, 1997 were $83.4 billion compared to $85.5 billion of total assets at December 31, 1996. Stockholders' equity amounted to $7.0 billion at June 30, 1997. During the quarter, the corporation repurchased 5 million common shares bringing the total number of shares repurchased this year to 11.9 million.
FLEET FINANCIAL GROUP FINANCIAL HIGHLIGHTS THREE MONTHS ENDED SIX MONTHS ENDED June 30, March 31, June 30, June 30, June 30, 1997 1997 1996 1997 1996 For the Period ($ in millions) Net income $ 328 $ 311 $ 278 $ 639 $ 542 Total Revenue 1,430 (c) 1,428 1,364 2,858 (c) 2,574 Total Expense 797 (c) 840 837 1,638 (c) 1,554 Provision for credit losses 83 65 48 148 84 Per Common Share Fully diluted earnings per share $ 1.19 $ 1.10 $ 0.96 $ 2.28 $ 1.89 Market value (period-end) 63.25 57.13 43.50 63.25 43.50 Cash dividends declared 0.45 0.45 0.43 0.90 0.86 Book value (period-end) 24.64 24.34 23.25 24.64 23.25 At Quarter End ($ in billions) Assets $ 83.4 $ 81.7 $ 87.7 $ 83.4 $ 87.7 Loans and leases 58.2 (b) 59.1 59.1 58.2 (b) 59.1 Deposits 63.2 64.1 68.1 63.2 68.1 Total stockholders' equity 7.0 7.1 7.1 7.0 7.1 Operating Ratios Return on average assets 1.61 % 1.52 % 1.32 % 1.56 1.36 % Return on common equity 20.24 18.82 17.20 19.52 17.09 Return on realized common equity (a) 20.23 18.87 17.08 19.55 17.08 Net interest margin 5.25 5.16 4.76 5.21 4.60 Efficiency ratio 55.8 (c) 58.8 61.4 57.3 (c) 60.4 Total equity/assets (period-end) 8.4 8.7 8.1 8.4 8.1 Tier 1 risk-based capital ratio (estimated) 7.2 7.6 7.0 7.2 7.0 Total risk-based capital ratio (estimated) 10.8 11.3 10.9 10.8 10.9 Asset Quality ($ in millions) Nonperforming assets $ 531 $ 704 $ 745 $ 531 $ 745 Reserve for credit losses 1,443 1,462 1,597 1,443 1,597 Nonperforming assets as a % of loans, leases, and OREO 0.91 % 1.19 % 1.26 % 0.91 % 1.26 % Nonperforming assets as a % of total assets 0.64 0.86 0.85 0.64 0.85 Nonperforming loans to period-end loans 0.86 1.14 1.17 0.86 1.17 Reserve for credit losses to period-end loans 2.48 2.48 2.70 2.48 2.70 Net charge-offs/average loans 0.69 0.61 0.54 0.65 0.51 (a) Excludes average unrealized gains/losses on securities available for sale (b) Excludes $2.2 billion of indirect auto loans which have been reclassified to other assets due to the pending sale of this business unit (c) Excludes net gains on sales of business units and special charges
FLEET FINANCIAL GROUP CONSOLIDATED INCOME STATEMENTS ($ in millions) THREE MONTHS ENDED SIX MONTHS ENDED June 30, March 31, June 30, June 30, June 30, 1997 1997 1996 1997 1996 Net interest income (FTE) $ 916 $ 902 $ 863 $ 1,818 $ 1,595 Provision for credit losses 83 65 48 148 84 Net interest income after provision 833 837 815 1,670 1,511 Noninterest income: Service charges, fees, and commissions 159 157 130 316 238 Investment services revenue 103 103 93 206 181 Mortgage banking, net of amortization 91 104 85 194 167 Student loan servicing fees 26 26 22 52 44 Other 135 136 171 272 349 Subtotal noninterest income 514 526 501 1,040 979 Gains on the sales of business units 175 - - 175 - Total noninterest income 689 526 501 1,215 979 Noninterest expense: Employee compensation and benefits 406 425 411 831 758 Occupancy 67 75 75 141 136 Equipment 67 70 68 137 125 Intangible asset amortization 39 39 30 79 56 Other 218 231 253 450 479 Subtotal noninterest expense 797 840 837 1,638 1,554 Special charges 155 - - 155 - Total noninterest expense 952 840 837 1,793 1,554 Earnings before income taxes 570 523 479 1,092 936 Income taxes and tax-equivalent adjustment 242 212 201 453 394 Net income $ 328 $ 311 $ 278 $ 639 $ 542
FLEET FINANCIAL GROUP CONSOLIDATED BALANCE SHEETS ($ in millions) June 30, March 31, June 30, 1997 1997 1996 ASSETS: Cash and cash equivalents $ 6,057 $ 5,309 $ 7,048 Securities 8,704 8,557 11,415 Loans and lease financing 58,186(a) 59,054 59,093 Reserve for credit losses (1,443) (1,462) (1,597) Mortgages held for resale 1,000 1,334 1,860 Other assets 10,897 8,900 9,909 Total assets 83,401 $ 81,692 $ 87,728 LIABILITIES: Deposits: Demand $ 16,471 $ 16,089 $ 17,527 Regular savings, NOW, money market 27,641 27,738 28,801 Time 19,117 20,312 21,817 Total deposits 63,229 64,139 68,145 Short-term borrowings 5,786 3,579 4,637 Long-term debt 4,550 4,617 5,303 Other liabilities 2,818 2,260 2,516 Total liabilities 76,383 74,595 80,601 STOCKHOLDERS' EQUITY: Preferred stock 835 869 1,003 Common stock 6,183 6,228 6,124 Total stockholders' equity 7,018 7,097 7,127 Total liabilities and stockholders' equity $ 83,401 $ 81,692 $ 87,728 (a) Excludes $2.2 billion of indirect auto loans which have been reclassified to other assets due to the pending sale of this business unit.
FLEET FINANCIAL GROUP CONSOLIDATED AVERAGE BALANCE SHEETS ($ in millions) THREE MONTHS ENDED June 30, 1997 March 31, 1997 June 30, 1996 Average Average Average Balance Rate Balance Rate Balance Rate ASSETS: Securities $ 8,327 6.72% $ 8,580 6.67% $ 11,481 6.32% Loans and leases 59,027 8.67 58,669 8.63 55,935 8.58 Mortgages held for resale 1,444 7.91 1,686 7.59 2,190 7.79 Other earning assets 1,182 4.81 1,575 4.91 3,242 8.20 Total interest-earning assets 69,980 8.37% 70,510 8.29% 72,848 8.18% Reserve for credit losses (1,457) (1,488) (1,510) Other assets 13,281 13,864 13,442 Total assets $ 81,804 $ 82,886 $ 84,780 LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Savings $ 27,611 2.22% $ 27,779 2.25% $ 26,494 2.25% Time 20,005 5.09 20,715 5.13 20,920 5.43 Total interest-bearing deposits 47,616 3.43 48,494 3.48 47,414 3.65 Short-term borrowings 4,357 4.84 3,608 4.35 6,941 5.10 Long-term debt 4,611 7.33 5,003 7.17 5,871 7.10 Total interest-bearing liabilities $ 56,584 3.86% $ 57,105 3.87% $ 60,226 4.15% Net interest spread 4.51% 4.42% 4.03% Demand deposits and other noninterest-bearing time deposits $ 16,161 $ 16,197 $ 15,218 Other liabilities 2,027 2,354 2,296 Total liabilities 74,772 75,656 77,740 Stockholders' equity 7,032 7,230 7,040 Total liabilities and stockholders' equity $ 81,804 $ 82,886 $ 84,780 Net interest margin 5.25% 5.16% 4.76%
FLEET FINANCIAL GROUP CONSOLIDATED AVERAGE BALANCE SHEETS ($ in millions) SIX MONTHS ENDED June 30, 1997 June 30, 1996 Average Average Balance Rate Balance Rate ASSETS: Securities $ 8,451 6.70% $ 11,697 6.31% Loans and leases 58,849 8.65 52,716 8.60 Mortgages held for resale 1,565 7.74 2,138 7.64 Other earning assets 1,377 4.86 3,004 8.21 Total interest-earning assets 70,242 8.33% 69,555 8.17% Reserve for credit losses (1,473) (1,414) Other assets 13,573 11,762 Total assets $ 82,342 $ 79,903 LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Savings $ 27,694 2.24% $ 24,295 2.34% Time 20,358 5.11 20,036 5.52 Total interest-bearing deposits 48,052 3.46 44,331 3.78 Short-term borrowings 3,985 4.62 7,500 5.21 Long-term debt 4,806 7.21 5,976 7.01 Total interest-bearing liabilities $ 56,843 3.86% $ 57,807 4.30% Net interest spread 4.47% 3.87% Demand deposits and other noninterest- bearing time deposits $ 16,179 $ 13,199 Other liabilities 2,189 2,106 Total liabilities 75,211 73,112 Stockholders' equity 7,131 6,791 Total liabilities and stockholders' equity $ 82,342 $ 79,903 Net interest margin 5.21% 4.60%
-----END PRIVACY-ENHANCED MESSAGE-----