-----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, MA8tTpyAA485AhXUBgfInrhlR7jPOijs8MQ5xDTtJgIgWNsieYeCamCbDqt3QQEi MYIojnHHPSmRXUjhhQy32Q== 0000908662-99-000116.txt : 19990421 0000908662-99-000116.hdr.sgml : 19990421 ACCESSION NUMBER: 0000908662-99-000116 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990414 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990420 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: 99597465 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 14, 1999 ---------------------------------------------------------------- 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, Massachusetts 02110 ------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 346-4000 ---------------------------------------------- (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(a) Earnings Press Release dated April 14, 1999 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Fleet has duly caused this report to be signed in its behalf by the undersigned hereunto duly authorized. FLEET FINANCIAL GROUP, INC. By: /s/ Robert C. Lamb, Jr. ------------------------------ Robert C. Lamb, Jr. Controller Chief Accounting Officer Date: April 14,1999 EX-99 2 PRESS RELEASE & VARIOUS FINANCIAL EXHIBITS Exhibit 99 Contacts: Media: James Mahoney Investor: Thomas R. Rice (617) 346-5472 (617) 346-0148 FLEET FINANCIAL GROUP EARNINGS RISE 36% TO $438 MILLION OR $.72 PER SHARE Boston, Massachusetts, April 14, 1999: Fleet Financial Group, Inc. (FLT-NYSE) today reported record net income of $438 million, or $.72 per diluted share, for the first quarter of 1999, a 36% increase compared with net income of $323 million, or $.53 per diluted share, earned in the first quarter of 1998. Return on assets and return on common equity for the first quarter of 1999 were 1.63% and 19.28%, respectively. Included in the first quarter of 1998 was a $44 million merger charge ($.07 per share) pertaining to the acquisitions of Quick & Reilly and the credit card operations of Advanta. "It was a spectacular quarter," said Terrence Murray, Fleet's chairman and chief executive officer. "The business momentum we felt in 1998 has accelerated in the early part of 1999. Earnings were driven by 23% revenue growth over last year. We saw strength across the entire franchise as the success of Fleet's product and marketing strategies, as well as the success of our recent acquisitions, were further enhanced by a favorable business environment. This momentum provides a solid foundation for the recently announced merger with BankBoston." Robert J. Higgins, president and chief operating officer, said "The quality of the quarter was evident in the strong level of earnings achieved throughout our business lines, particularly credit cards, brokerage and investment services, commercial banking and mortgage banking. Our results also benefited from the acquisition of Sanwa Business Credit which closed on February 1, adding both product and geographic diversity to our business profile." Mr. Higgins provided further insights into the strength of the first quarter's results saying "Earnings from credit cards rose sixfold to $30 million, while Quick & Reilly's earnings almost doubled to $47 million from the first quarter of 1998. These outstanding results demonstrate the power of adding new product lines to service Fleet's customer base of 15 million." During the quarter, the corporation completed the acquisition of Sanwa Business Credit (Sanwa), a leasing and asset-based lending company, which makes Fleet Capital Corporation the third largest bank-owned leasing business in the United States. The acquisition closed on February 1, 1999 and was accounted for by the purchase method of accounting and as such, financial results for Sanwa are included subsequent to the date of close ($6 million this quarter). In addition, the corporation entered into an agreement on March 14, 1999 to merge with BankBoston Corporation (BankBoston). The merger is expected to close in the latter half of 1999, pending approval from regulatory authorities, and will make the corporation the eighth largest financial institution in the country. Financial Highlights - -------------------- Net interest income totaled $1.042 billion during the first quarter of 1999, up 11%, or $104 million from the first quarter of 1998. The increase is principally attributable to the inclusion of Sanwa for two months and the acquisition of $1.3 billion of credit card receivables from Household at the end of the fourth quarter of 1998 as well as stronger fee revenue as a result of higher credit card and commercial loan fees. The corporation's net interest margin was 4.59%. Noninterest income in the first quarter totaled $959 million, up 38%, or $264 million from the same period in 1998, due primarily to strong gains in virtually all revenue categories. Fee revenue now represents 48% of total revenue. Investment services revenue increased 23% to $248 million driven by a strong equity market, which benefited the corporation's brokerage and clearing units of Quick & Reilly, and increased sales of mutual fund and annuity products. Processing-related revenues increased $94 million, or 159%, to $153 million due primarily to increased mortgage revenue bolstered by record mortgage production of $13 billion. Capital markets revenue, excluding $51 million of securities gains taken in last year's first quarter, increased 71% to $149 million as a result of robust gains in market-making revenue from our equity specialists business, as well as strong venture capital revenue and investment banking fees. Credit card revenue increased $85 million over the prior year's first quarter which is attributable to the acquisition of various credit card portfolios during 1998, including the consumer credit card operations of Advanta in February, 1998. Noninterest expense in the first quarter of 1999 totaled $1.12 billion, up $194 million from the first quarter of 1998. The increase was due primarily to the impact of various acquisitions, including Advanta, Sanwa and the Merrill Lynch Specialist business, in addition to incentive and volume-related increases in compensation at many of our businesses that delivered strong revenue growth. Nonperforming assets continue their decline and have decreased 25% in the past year to $280 million at the end of the first quarter. Net charge-offs and the provision for credit losses were both $149 million in the first quarter, higher than the first quarter of 1998 due to the inclusion of the acquired credit card portfolios as well as Sanwa. The reserve for credit losses increased $172 million from year-end to $1.724 billion, as a result of the Sanwa acquisition and now represents 2.34% of total loans and 646% of nonperforming loans. Fleet's focus on balance sheet and capital management were again obvious this quarter as total assets at March 31, 1999 grew less than $2 billion since December 31, 1998 to $106.2 billion, despite the acquisition of $6 billion of assets from Sanwa. Loans grew by $4.3 billion to $73.7 billion and stockholders' equity amounted to $9.6 billion at March 31, 1999, $1 billion greater than a year ago. FLEET FINANCIAL GROUP FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED ---------------------------------------------- March 31, December 31, March 31, 1999 1998 1998 ---- ---- ---- For the Period ($ in millions) Net Income $ 438 $ 416 $ 323 Total Revenue 2,001 1,897 1,633 Total Expense 1,125 1,073 997 Provision for Credit Losses 149 140 92 Per Common Share (a) Diluted earnings per share $ .72 $ .69 $ .53 Basic earnings per share .74 .71 .55 Cash dividends declared .27 .27 .245 Book value (period-end) 15.69 15.31 13.96 At Period-End ($ in billions) Assets $ 106.2 $ 104.4 $ 97.7 Loans 73.7 69.4 65.0 Deposits 67.6 69.7 68.2 Total stockholders' equity 9.6 9.4 8.6 Operating Ratios Return on average assets 1.63% 1.62% 1.43% Return on common equity 19.28 18.62 16.00 Net interest margin 4.59 4.61 4.75 Efficiency ratio 55.9 (b) 56.6 56.6 (b) Total equity/assets (period-end) 9.1 9.0 8.8 Tier 1 risk-based capital ratio 6.7 7.0 6.4 Total risk-based capital ratio 11.0 11.1 10.4 Asset Quality ($ in millions) Nonperforming assets $ 280 $ 282 $ 373 Reserve for credit losses 1,724 1,552 1,553 Nonperforming assets as a % of loans .38% .41% .57% Nonperforming assets as a % of total assets .26 .27 .38 Reserve for credit losses to period-end loans 2.34 2.24 2.39 Reserve for credit losses to nonperforming loans 646 586 441 Net charge-offs/average loans .83 .81 .60
(a) All common share data for all periods presented reflects the two-for-one common stock split which was effective October 7, 1998. (b) The efficiency ratio excludes merger-related charges of $7 million and $73 million recorded in the first quarters of 1999 and 1998, respectively. FLEET FINANCIAL GROUP CONSOLIDATED INCOME STATEMENTS ($ in millions)
THREE MONTHS ENDED ------------------------------------------ March 31, December 31, March 31, 1999 1998 1998 ---- ---- ---- Net interest income (FTE) $ 1,042 $ 1,007 $ 938 Noninterest income: Investment services revenue 248 220 201 Banking fees and commissions 193 192 176 Processing-related revenue 153 142 59 Capital markets revenue 149 161 138 Credit card revenue 141 120 56 Other 75 55 65 - -------------------------------------------------------------------------------------------------------- Total noninterest income 959 890 695 - -------------------------------------------------------------------------------------------------------- Total Revenue 2,001 1,897 1,633 ======================================================================================================== Provision for credit losses 149 140 92 Noninterest expense: Employee compensation and benefits 542 512 445 Equipment 86 76 80 Occupancy 76 74 74 Intangible asset amortization 71 60 51 Other 343 351 274 - ------------------------------------------------------------------------------------------------------- Total noninterest expense 1,118 1,073 924 - ------------------------------------------------------------------------------------------------------- Earnings before income taxes and merger-related charges 734 684 617 Income taxes and tax-equivalent adjustment 292 268 250 - ------------------------------------------------------------------------------------------------------- Operating earnings before merger-related charges 442 416 367 Merger-related charges, net of tax 4 - 44 - ------------------------------------------------------------------------------------------------------- Net income $ 438 $ 416 $ 323 ======================================================================================================= Diluted earnings per share $ .72 $ .69 $ .53 Basic earnings per share .74 .71 .55 Diluted earnings per share, excluding merger charges .72 .69 .60 Basic earnings per share, excluding merger charges .74 .71 .63
FLEET FINANCIAL GROUP CONSOLIDATED BALANCE SHEETS ($ in millions)
March 31, December 31, March 31, 1999 1998 1998 ---- ---- ---- ASSETS: Cash and equivalents $ 4,862 $ 5,738 $ 5,493 Securities 10,968 10,792 11,279 Loans 73,683 69,396 64,986 Reserve for credit losses (1,724) (1,552) (1,553) Due from brokers/dealers 2,726 3,600 3,567 Mortgages held for resale 2,155 3,960 2,416 Other assets 13,496 12,448 11,499 - -------------------------------------------------------------------------------- Total assets $ 106,166 $104,382 $97,687 ================================================================================ LIABILITIES: Deposits $ 67,633 $ 69,678 $ 68,165 Short-term borrowings 5,871 9,312 8,238 Due to brokers/dealers 3,823 3,975 4,433 Long-term debt 15,586 8,820 5,095 Other liabilities 3,641 3,188 3,136 - -------------------------------------------------------------------------------- Total liabilities 96,554 94,973 89,067 ================================================================================ STOCKHOLDERS' EQUITY: Preferred stock 691 691 691 Common stock 8,921 8,718 7,929 - ------------------------------------------------------------------------------- Total stockholders' equity 9,612 9,409 8,620 - -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 106,166 $104,382 $97,687 ================================================================================
FLEET FINANCIAL GROUP CONSOLIDATED AVERAGE BALANCE SHEETS ($ in millions)
THREE MONTHS ENDED ----------------------------------------------------------------------- March 31, 1999 December 31, 1998 March 31, 1998 -------------- ----------------- -------------- Average Average Average Balance Rate Balance Rate Balance Rate ------- ---- ------- ---- ------- ---- ASSETS: Securities $ 10,565 6.53% $ 10,212 6.58% $ 10,051 6.56% Loans 72,649 8.32 68,753 8.42 62,603 8.66 Mortgages held for resale 3,819 6.86 3,256 6.81 1,637 7.25 Due from brokers/dealers 3,404 4.41 3,455 4.72 3,749 5.13 Other earning assets 1,377 5.21 1,488 4.51 1,025 4.99 - ------------------------------------------------------------------------------------------------------------------------ Total interest-earning assets 91,814 7.86% 87,164 7.93% 79,065 8.15% - ------------------------------------------------------------------------------------------------------------------------- Reserve for credit losses (1,689) --- (1,518) --- (1,466) --- Other assets 16,788 --- 15,945 --- 14,235 --- - ------------------------------------------------------------------------------------------------------------------------- Total assets $ 106,913 --- $ 101,591 --- $ 91,834 --- - ------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Savings $ 29,345 2.10% $ 29,289 2.25% $ 27,429 2.37% Time 22,151 4.98 22,078 5.13 21,167 5.31 - ------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 51,496 3.34 51,367 3.49 48,596 3.65 - ------------------------------------------------------------------------------------------------------------------------- Short-term borrowings 9,009 3.61 8,603 4.34 6,914 4.90 Due to brokers/dealers 3,865 4.12 3,932 4.55 4,564 4.83 Long-term debt 13,198 6.08 8,006 6.83 4,853 7.31 - -------------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities $ 77,568 3.87% $ 71,908 4.02% $ 64,927 4.14% - -------------------------------------------------------------------------------------------------------------------------- Net interest spread --- 3.99% --- 3.91% --- 4.01% ========================================================================================================================== Demand deposits and other noninterest- bearing time deposits $ 16,874 --- $ 17,010 --- $ 15,844 --- Other liabilities 2,978 --- 3,398 --- 2,501 --- - ------------------------------------------------------------------------------------------------------------------------- Total liabilities 97,420 --- 92,316 --- 83,272 --- - ------------------------------------------------------------------------------------------------------------------------- Stockholders' equity 9,493 --- 9,275 --- 8,562 --- - ------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $106,913 --- $ 101,591 --- $ 91,834 --- - ------------------------------------------------------------------------------------------------------------------------- Net interest margin 4.59% 4.61% 4.75% =========================================================================================================================
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