-----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, JPf6E44KsOvqz0f2fB7y2436QpL7FcgHTu8dvq7ohxXMBXeFyzJVeST8OgRsGeGC WyTW0NHp3QoEMQFX+wF1GA== 0000908662-98-000074.txt : 19980420 0000908662-98-000074.hdr.sgml : 19980420 ACCESSION NUMBER: 0000908662-98-000074 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980415 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980417 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: 98596400 BUSINESS ADDRESS: STREET 1: ONE FEDERAL STREET CITY: BOSTON STATE: MA ZIP: 02211 BUSINESS PHONE: 6173464000 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) April 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 99 Fleet Financial Group, Inc. Press Release Dated April 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: April 15, 1998 EX-99 2 EXHIBIT 99 PRESS RELEASE Contacts: Media: James Mahoney Investor: Thomas R. Rice (617) 346-5472 (617) 346-0148 T. Kevin Beatty (617) 346-4963 FLEET FINANCIAL GROUP OPERATING EARNINGS RISE 10 PERCENT TO $367 MILLION Boston, Massachusetts, April 15, 1998: Fleet Financial Group, Inc. (FLT-NYSE) today reported operating earnings of $367 million, or $1.21 per diluted share, for the first quarter of 1998, a 10% increase compared with $334 million, or $1.10 per diluted share, earned in the first quarter of 1997. Return on assets and return on common equity for the first quarter of 1998 were 1.62% and 18.27%, respectively. During the quarter, the Corporation completed the acquisitions of The Quick & Reilly Group, Inc. and the consumer credit card operations of Advanta Corporation. Financial data for all prior periods has been restated to reflect the pooling of Fleet and Quick & Reilly. The financial results of Advanta, accounted for as a purchase, are included subsequent to February 20, 1998, the date of close. Net income for the first quarter of 1998, including the impact of merger-related charges relating to these acquisitions, was $323 million, or $1.06 per diluted share. Terrence Murray, Fleet's chairman and chief executive officer, commented on Fleet's accomplishments during the quarter, "With the acquisition of Quick & Reilly and Advanta's consumer credit card operations, Fleet materially advanced its capabilities in serving the increasingly sophisticated financial needs of our customers and communities. From a shareholder point of view, these businesses make an immediate contribution to Fleet's revenue growth and will accelerate earnings performance for the year." Eugene M. McQuade, vice chairman and chief financial officer, commented, "Noninterest income grew in excess of $80 million in the past twelve months, moving us toward our goal of bringing a better balance to the corporation's overall revenue mix. This growth reflects strong performances at both Quick & Reilly and Advanta, as well as our investment services business which had a 68% increase in assets under management over the past year." Asset quality continued to improve in all aspects of the Corporation's loan portfolio as nonperforming assets decreased nearly 50% in the past year to $373 million at the end of the first quarter. Net charge-offs and the provision for credit losses were both $92 million in the first quarter. The reserve for loan losses is $1.55 billion at March 31, 1998 and represents 2.39% of total loans and 441% of nonperforming loans. Financial Highlights Net interest income totaled $938 million during the first quarter of 1998, an increase of $20 million from the first quarter of 1997. The increase is principally attributable to strong growth in Fleet's earning assets and increased loan fees. The Corporation reported a net interest margin of 4.75% which reflected the impact of lower-yielding assets acquired with both Advanta and Quick & Reilly. Noninterest income in the first quarter totaled $695 million, an increase of $82 million, or 13%, from the same period in 1997. Investment services revenue has increased 14% to $201 million in the first quarter driven by a strong equity market, a $33 billion growth in assets under management, partially attributable to the acquisition of Columbia Management late in 1997, and increased sales of mutual fund and annuity products. Capital markets revenue, excluding securities gains, climbed 50% to $87 million in comparison to the first quarter of 1997 as market-making revenue derived from the company's discount brokerage firm has nearly doubled, while venture capital revenue increased 67% to $30 million. Credit card revenue increased $42 million over the prior year's first quarter which is attributable to the Advanta acquisition. As a result of the sharply decreasing interest-rate environment, the Corporation's mortgage banking business experienced a strong acceleration in mortgage prepayments this quarter. To recognize this, the Corporation established a $75 million charge against the value of the investment in this business. Because of the anticipated volatility of this asset, the Corporation protects itself against a decrease to net income through various hedging strategies. As a result of these strategies, the Corporation was able to fully offset the impact of this charge through the recognition of $50 million in gains from the securities portfolio, which had a substantial increase in value in this interest rate environment, and $25 million of gains from the sales of mortgage servicing. Noninterest expense in the first quarter of 1998, excluding merger-related charges, totaled $924 million, an increase of only $20 million, or 2.2%, from the first quarter of 1997, despite the additions of Advanta and Columbia Management. Notable declines were realized in several categories, including employee compensation and occupancy expenses as the Corporation continues to tightly manage its expense levels. Total assets at March 31, 1998 were $97.7 billion, including total loans of $65.0 billion, compared with $91.0 billion of total assets and $62.6 billion of loans at December 31, 1997. Stockholders' equity amounted to $8.6 billion at March 31, 1998.
FLEET FINANCIAL GROUP FINANCIAL HIGHLIGHTS THREE MONTHS ENDED (a) March 31, March 31, 1998 1997 For the Period ($ in millions) Net income - operating basis $ 367 $ 334 Total Revenue 1,633 1,531 Total Expense 924 904 Provision for credit losses 92 65 Per Common Share Basic earnings per share $ 1.25 $ 1.13 Diluted earnings per share 1.21 1.10 Market value (period-end) 85.06 57.13 Cash dividends declared 0.49 0.45 Book value (period-end) 27.91 23.74 At Quarter End ($ in billions) Assets $ 97.7 $ 85.8 Loans 65.0 60.1 Deposits 68.2 64.1 Total stockholders' equity 8.6 7.5 Operating Ratios Return on average assets 1.62% 1.56% Return on common equity 18.27 19.17 Net interest margin 4.75 4.99 Efficiency ratio 56.6 59.1 Total equity/assets (period-end) 8.8 8.7 Tier 1 risk-based capital ratio 6.4 7.6 Total risk-based capital ratio 10.4 11.2 Asset Quality ($ in millions) Nonperforming assets $ 373 $ 704 Reserve for credit losses 1,553 1,462 Nonperforming assets as a % of loans + OREO 0.57% 1.17% Nonperforming assets as a % of total assets 0.38 0.82 Nonperforming loans to period-end loans 0.54 1.12 Reserve for credit losses to period-end loans 2.39 2.43 Reserve for credit losses to nonperforming loans 441 217 Net charge-offs/average loans 0.60 0.61 (a) Excludes merger-related charges of $44 million for the first quarter of 1998. Including merger-related charges, financial data and ratios were as follows: Net Income $ 323 Total Expenses 997 Basic earnings per share 1.09 Diluted earnings per share 1.06 Return on average assets 1.43% Return on common equity 16.00
FLEET FINANCIAL GROUP CONSOLIDATED INCOME STATEMENTS ($ IN MILLIONS) THREE MONTHS ENDED March 31, December 31, March 31, 1998 1997 1997 Net interest income (FTE) $ 938 $ 944 $ 918 Provision for credit losses 92 90 65 - ---------------------------------------------------------------------------------------- Net interest income after provision 846 854 853 - ---------------------------------------------------------------------------------------- Noninterest income: Investment services revenue 201 188 176 Banking fees and commissions 178 176 175 Capital markets revenue 138 88 71 Processing-related revenue 59 101 142 Credit card revenue 56 17 14 Other 63 54 35 - ---------------------------------------------------------------------------------------- Total noninterest income 695 624 613 - ---------------------------------------------------------------------------------------- Noninterest expense: Employee compensation and benefits 445 422 459 Equipment 80 81 79 Occupancy 74 74 77 Intangible asset amortization 51 44 41 Other 274 266 248 - ---------------------------------------------------------------------------------------- Total noninterest expense 924 887 904 - ---------------------------------------------------------------------------------------- Earnings before income taxes and merger-related charges 617 591 562 Income taxes and tax-equivalent adjustment 250 235 228 - ---------------------------------------------------------------------------------------- Net income before merger-related charges 367 356 334 Merger-related charges, net of tax 44 22 - - ---------------------------------------------------------------------------------------- Net income $ 323 $ 334 $ 334 - ---------------------------------------------------------------------------------------- Basic earnings per share, excluding merger-related charges $ 1.25 $ 1.25 $ 1.13 Diluted earnings per share, excluding merger-related charges 1.21 1.21 1.10 Basic earnings per share 1.09 1.17 1.13 Diluted earnings per share 1.06 1.13 1.10
FLEET FINANCIAL GROUP CONSOLIDATED BALANCE SHEETS ($ IN MILLIONS) March 31, December 31, March 31, 1998 1997 1997 ASSETS: Cash and equivalents $ 5,493 $ 5,574 $ 5,399 Securities 11,279 9,362 8,557 Loans 64,986 62,565 60,071 Reserve for credit losses (1,553) (1,432) (1,462) Due from brokers/dealers 3,567 3,510 2,618 Mortgages held for resale 2,416 1,526 1,334 Other assets 11,499 9,942 9,307 - --------------------------------------------------------------------------------------------------------- Total assets $ 97,687 $ 91,047 $ 85,824 - --------------------------------------------------------------------------------------------------------- LIABILITIES: Deposits $ 68,165 $ 63,735 $ 64,139 Short-term borrowings 8,238 7,505 4,145 Due to brokers/dealers 4,433 4,316 3,080 Long-term debt 5,095 4,500 4,617 Other liabilities 3,136 2,539 2,371 - --------------------------------------------------------------------------------------------------------- Total liabilities 89,067 82,595 78,352 - --------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY: Preferred stock 691 691 869 Common stock 7,929 7,761 6,603 - --------------------------------------------------------------------------------------------------------- Total stockholders' equity 8,620 8,452 7,472 - --------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 97,687 $ 91,047 $ 85,824 - ---------------------------------------------------------------------------------------------------------
FLEET FINANCIAL GROUP CONSOLIDATED AVERAGE BALANCE SHEETS ($ in millions) THREE MONTHS ENDED March 31, 1998 December 31, 1997 March 31, 1997 Average Average Average Balance Rate Balance Rate Balance Rate ASSETS: Securities $ 10,051 6.56% $ 9,095 6.74% $ 8,580 6.67% Loans 62,603 8.66 61,274 8.70 59,687 8.63 Mortgages held for resale 1,637 7.25 1,305 7.56 1,686 7.59 Due from brokers/dealers 3,749 5.13 3,510 4.25 2,618 4.36 Other earning assets 1,025 4.99 685 4.24 1,735 5.28 - ----------------------------------------------------------------------------------------------------------------------- Total interest-earning assets 79,065 8.15% 75,869 8.20% 74,306 8.16% Reserve for credit losses (1,466) - (1,430) - (1,488) - Other assets 14,235 - 13,077 - 14,200 - - ----------------------------------------------------------------------------------------------------------------------- Total Assets $ 91,834 - $ 87,516 - $ 87,018 - - ----------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Savings $ 27,429 2.37% $ 27,206 2.31% $ 27,779 2.25% Time 21,167 5.31 19,746 5.27 20,716 5.13 - ----------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 48,596 3.65 46,952 3.55 48,495 3.48 Short-term borrowings 6,914 4.90 6,023 4.98 4,175 4.18 Due to brokers/dealers 4,564 4.83 4,316 4.07 3,080 4.19 Long-term debt 4,853 7.31 4,341 7.43 5,003 7.18 - ----------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities $ 64,927 4.14% $ 61,632 4.00% $ 60,753 3.87% Net interest spread - 4.01% - 4.20% - 4.29% Demand deposits and other noninterest- bearing time deposits $ 15,844 - $ 15,700 - $ 16,196 - Other liabilities 2,501 - 2,385 - 2,464 - - ----------------------------------------------------------------------------------------------------------------------- Total liabilities 83,272 - 79,717 - 79,413 - Stockholders' equity 8,562 - 7,799 - 7,605 - - ----------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 91,834 - $ 87,516 - $ 87,018 - - ----------------------------------------------------------------------------------------------------------------------- Net interest margin 4.75% 4.95% 4.99%
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