-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, T2bQpBx4c8lf0u4niEZJNeTFMoNEtqb5U+SGdq0E0nXOB9crjDjTuTDFMs3PUfMP /lzS2A8jq6MLey2fNcbbjA== 0000070040-94-000003.txt : 19940520 0000070040-94-000003.hdr.sgml : 19940520 ACCESSION NUMBER: 0000070040-94-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NBD BANCORP INC /DE/ CENTRAL INDEX KEY: 0000070040 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 381984850 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07127 FILM NUMBER: 94528166 BUSINESS ADDRESS: STREET 1: 611 WOODWARD AVE CITY: DETROIT STATE: MI ZIP: 48226 BUSINESS PHONE: 3132251000 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL DETROIT CORP DATE OF NAME CHANGE: 19810522 10-Q 1 1ST QUARTER 1994 10-Q Cover - - ------------------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION FORM 10-Q Washington, D.C. 20549 (Mark One) /X/Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1994 / /Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 1-7127 - - ------------------------------------------------------------------------------ NBD BANCORP, INC. (Exact name of registrant as specified in its charter) Delaware 38-1984850 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 611 Woodward Avenue, Detroit, Michigan 48226 (Address of principal executive offices) (zip code) (313) 225-1000 (Registrant's telephone number, including area code) - - ---------------------------------------------------------------------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Class Outstanding at April 30, 1994 ----------------------------- ----------------------------- Common Stock, $1.00 Par Value 160,491,206 - - ----------------------------------------------------------------------------- Page 1 Part 1 - FINANCIAL INFORMATION Item 1. Financial Statements - - ------- ----------------------------------------- NBD Bancorp, Inc. Consolidated Balance Sheet (in thousands except share data)
Assets March 31 December 31 March 31 1994 1993 1993 ------------ ------------ ------------ Cash and Due From Banks..................................... $ 2,421,942 $ 2,405,694 $ 2,315,300 Interest-Bearing Deposits................................... 612,284 722,109 635,695 Federal Funds Sold and Resale Agreements.................... 316,544 282,481 122,208 Other Money Market Investments.............................. - - 31,624 Trading Account Securities.................................. 93,555 109,637 92,806 Investment Securities (Note B): Available-for-Sale (At Fair Value)....................... 4,285,088 3,784,384 - Held-to-Maturity (Fair Value of $7,848,646, $7,017,903 and $11,023,368, respectively)............. 7,667,607 6,607,409 10,474,611 ------------ ------------ ------------ 11,952,695 10,391,793 10,474,611 ------------ ------------ ------------ Loans and Leases (Net of Unearned Income of $136,526, $140,412 and $134,752, respectively): Commercial............................................... 14,088,500 13,794,714 13,718,318 Real Estate Construction................................. 765,715 789,248 842,144 Residential Mortgage..................................... 2,773,533 2,560,539 2,635,705 Mortgages Held For Sale.................................. 62,663 255,902 199,681 Consumer................................................. 6,823,794 6,758,171 6,300,921 Lease Financing.......................................... 283,451 284,805 248,640 Foreign.................................................. 1,080,032 1,107,413 1,092,312 ------------ ------------ ------------ 25,877,688 25,550,792 25,037,721 Allowance For Possible Credit Losses (Note C)............ (423,410) (423,030) (419,271) ------------ ------------ ------------ 25,454,278 25,127,762 24,618,450 ------------ ------------ ------------ Net Premises and Equipment.................................. 635,993 634,541 575,279 Customers' Liability on Acceptances......................... 187,516 172,171 191,254 Other Assets................................................ 1,257,862 929,717 996,021 ------------ ------------ ------------ Total Assets.................................... $42,932,669 $40,775,905 $40,053,248 ============ ============ ============
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Liabilities and Shareholders' Equity March 31 December 31 March 31 1994 1993 1993 ------------ ------------ ------------ Deposits: Demand (Non-Interest Bearing)...............................$ 6,602,773 $ 6,667,958 $ 5,936,577 Savings..................................................... 8,029,415 8,051,337 7,061,316 Money Market Accounts....................................... 5,431,509 5,561,573 6,074,967 Time........................................................ 7,332,600 7,474,234 8,748,879 Foreign Office.............................................. 2,779,319 2,066,005 2,378,269 ------------ ------------ ------------ 30,175,616 29,821,107 30,200,008 Short-Term Borrowings......................................... 6,917,420 5,354,839 5,006,424 Liability on Acceptances...................................... 187,516 172,171 191,254 Accrued Expenses and Sundry Liabilities....................... 803,810 744,242 665,110 Long-Term Debt................................................ 1,583,608 1,434,947 972,474 ------------ ------------ ------------ Total Liabilities......................................... 39,667,970 37,527,306 37,035,270 ------------ ------------ ------------ Shareholders' Equity: Series A Preferred Stock - Par Value $1, Stated Value $50... - - - No. of March 31 December 31 March 31 Shares 1994 1993 1993 ------ ------------ ------------ ------------ Auth..... 460,000 460,000 460,000 Issued... - - - Preferred Stock - No Par Value.............................. - - - No. of March 31 December 31 March 31 Shares 1994 1993 1993 ------- ------------ ------------ ------------ Auth..... 10,000,000 10,000,000 10,000,000 Issued... - - - Common Stock - Par Value $1................................. 160,872 160,715 160,507 No. of March 31 December 31 March 31 Shares 1994 1993 1993 ------ ------------ ------------ ------------ Auth..... 500,000,000 500,000,000 500,000,000 Issued... 160,872,446 160,715,173 160,506,869 Capital Surplus............................................. 546,969 541,232 540,664 Retained Earnings........................................... 2,624,608 2,565,627 2,329,017 Unrealized Loss on Available-for-Sale Securities ........... (53,753) (7,012) - Accumulated Translation Adjustment.......................... 5,122 4,384 6,544 Deferred Compensation....................................... (19,119) (16,347) (18,754) ------------ ------------ ------------ Total Shareholders' Equity................................ 3,264,699 3,248,599 3,017,978 ------------ ------------ ------------ Total Liabilities and Shareholders' Equity..........$42,932,669 $40,775,905 $40,053,248 ============ ============ ============
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NBD Bancorp, Inc. Consolidated Statement of Income (in thousands except per share data) Quarter Ended March 31 --------------------- 1994 1993 --------- --------- Interest Income: Loans and Leases (including fees).........................$462,061 $478,816 Investment Securities: Taxable................................................. 138,946 147,459 Non-Taxable............................................. 25,339 27,688 Trading Account Securities................................ 884 1,148 Federal Funds Sold and Resale Agreements................... 949 873 Other Money Market Investments............................ - 614 Interest-Bearing Deposits................................. 7,000 10,326 --------- --------- Total Interest Income................................... 635,179 666,924 --------- --------- Interest Expense: Deposits.................................................. 183,539 219,796 Short-Term Borrowings..................................... 45,373 41,690 Long-Term Debt............................................ 25,007 16,977 --------- --------- Total Interest Expense.................................. 253,919 278,463 --------- --------- Net Interest Income......................................... 381,260 388,461 Provision For Possible Credit Losses...................... 15,460 39,920 --------- --------- Net Interest Income After Provision For Possible Credit Losses................................ 365,800 348,541 --------- --------- Non-Interest Income: Trust Fees................................................ 38,110 35,348 Service Charges on Deposit Accounts....................... 40,979 41,983 Securities Gains.......................................... 390 1,114 Other..................................................... 59,271 66,549 --------- --------- Total Non-Interest Income............................... 138,750 144,994 --------- --------- Non-Interest Expenses: Compensation: Salaries................................................ 133,459 129,993 Benefits................................................ 43,289 39,853 --------- --------- Total Compensation................................... 176,748 169,846 Net Occupancy............................................. 30,081 29,526 Equipment Rentals, Depreciation and Maintenance........... 21,954 21,197 FDIC and Other Regulatory Assessments..................... 16,675 18,662 Amortization of Intangibles............................... 6,524 9,126 Other..................................................... 70,337 77,198 --------- --------- Total Non-Interest Expenses.......................... 322,319 325,555 --------- --------- Income before Income Taxes.................................. 182,231 167,980 Income Tax Expense (Including tax effect of $149 and $426, respectively, on securities sales)...................... 59,355 52,899 --------- --------- Income before Extraordinary Item and Cumulative Effect of Accounting Change............................... 122,876 115,081 Extraordinary Item (net of income tax effect) (Note E).... (7,730) - Cumulative Effect of Accounting Change (net of income tax effect) (Note A)............................. (7,885) 3,950 --------- --------- Net Income..................................................$107,261 $119,031 ========= ========= Net Income Per Share (on average shares outstanding): Income before Extraordinary Item and Cumulative Effect of Accounting Change.............................$ 0.77 $ 0.71 Extraordinary Item (net of income tax effect)............. (0.05) - Cumulative Effect of Accounting Change (net of income tax effect)...................................... (0.05) 0.03 --------- --------- Net Income Per Share........................................$ 0.67 $ 0.74 ========= =========
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NBD Bancorp, Inc. Consolidated Statement of Shareholders' Equity (in thousands except share data) Quarter Ended March 31 ------------------------ 1994 1993 ----------- ----------- Preferred Stock: Balance, Beginning and End of Period...............$ - $ - ----------- ----------- Common Stock: Balance, Beginning of Period....... 160,715 160,386 Conversion of Subordinated Debentures and Other (157,273 shares in 1994)................. 157 121 ----------- ----------- Balance, End of Period............................. 160,872 160,507 ----------- ----------- Capital Surplus: Balance, Beginning of Period....................... 541,232 536,900 Conversion of Subordinated Debentures and Other.. 5,737 3,764 ----------- ----------- Balance, End of Period............................. 546,969 540,664 ----------- ----------- Retained Earnings: Balance, Beginning of Period....................... 2,565,627 2,253,332 Net Income....................................... 107,261 119,031 Cash Dividends Declared on Common Stock ($.30 and $.27 per share, respectively)........ (48,280) (43,346) ----------- ----------- Balance, End of Period............................. 2,624,608 2,329,017 ----------- ----------- Unrealized Loss on Available-for-Sale Securities: Balance, Beginning of Period....................... (7,012) - Net Unrealized Loss.............................. (46,741) - ----------- ----------- Balance, End of Period............................. (53,753) - ----------- ----------- Accumulated Translation Adjustment: Balance, Beginning of Period....................... 4,384 5,610 Aggregate Translation Gain....................... 738 934 ----------- ----------- Balance, End of Period............................. 5,122 6,544 ----------- ----------- Deferred Compensation: Balance, Beginning of Period....................... (16,347) (15,335) Awards Granted................................... (6,378) (4,292) Amortization of Deferred Compensation............ 3,301 2,456 Other............................................ 305 (1,583) ----------- ----------- Balance, End of Period............................. (19,119) (18,754) ----------- ----------- Treasury Stock: Balance, Beginning of Period....................... - - Purchase of Common Stock (131,748 shares in 1994) (3,822) (3,798) Conversion of Subordinated Debentures and Other (131,748 shares in 1994)............. 3,822 3,798 ----------- ----------- Balance, End of Period............................. - - ----------- ----------- Total Shareholders' Equity, End of Period............$3,264,699 $3,017,978 =========== ===========
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NBD Bancorp, Inc. Consolidated Statement of Cash Flows (in thousands) Quarter Ended March 31 --------------------------- 1994 1993 ------------ ------------ Cash Flows from Operating Activities: Net Income....................................................... $ 107,261 $ 119,031 Adjustments to Reconcile Net Income to Net Cash Provided by Operations: Depreciation and Amortization................................. 25,512 25,357 Provision for Possible Credit Losses.......................... 15,460 39,920 Securities Gains.............................................. (390) (1,114) Increase in Interest Receivable............................... (21,869) (36,869) Increase in Current Income Taxes Payable...................... 27,706 15,184 Decrease in Accrued Expenses.................................. (64,651) (57,347) Decrease in Trading Account Investments....................... 16,172 75,684 Decrease in Mortgages Held for Sale........................... 193,239 90,005 Other, net.................................................... 7,046 (4,671) ------------ ------------ Net Cash Provided by Operating Activities................. 305,486 265,180 ------------ ------------ Cash Flows from Investing Activities: Decrease in Interest-Bearing Deposits............................ 112,098 51,255 (Increase) Decrease in Federal Funds Sold and Resale Agreements.. (34,063) 1,248 Decrease in Other Money Market Investments....................... - 11,531 Purchase of Investment Securities................................ (2,866,112) (653,528) Proceeds from Maturity or Call of Investment Securities.......... 1,180,980 1,080,727 Proceeds from Sale of Investment Securities...................... 44,889 8,970 Increase in Loans and Leases..................................... (523,066) (71,726) Purchase of Loan Portfolios...................................... - (19,617) Proceeds from Sale of Loan Portfolios............................ - 70,107 Purchase of Premises and Equipment and Other Assets.............. (222,627) (20,432) Proceeds from Sale of Premises and Equipment and Other Assets.... 19,294 13,735 ------------ ------------ Net Cash (Used) Provided by Investing Activities.......... (2,288,607) 472,270 ------------ ------------ Cash Flows from Financing Activities: Increase (Decrease) in Deposits.................................. 334,733 (809,734) Increase (Decrease) in Short-Term Borrowings..................... 1,560,986 (113,550) Proceeds from the Issuance of Debt............................... 350,000 - Principal Payments on Long-Term Debt............................. (199,225) (2,423) Proceeds from Stock Option Exercises............................. 132 1,025 Payments to Acquire Treasury Stock............................... (3,822) (3,798) Dividends Paid................................................... (43,411) (43,318) ------------ ------------ Net Cash Provided (Used) by Financing Activities.......... 1,999,393 (971,798) ------------ ------------ Effect of Exchange Rate Changes on Cash and Due From Banks......... (24) 377 ------------ ------------ Net Increase (Decrease) in Cash and Due From Banks................. 16,248 (233,971) Cash and Due From Banks - Beginning of Period...................... 2,405,694 2,549,271 ------------ ------------ Cash and Due From Banks - End of Period............................ $ 2,421,942 $ 2,315,300 ============ ============ Other Cash Flow Disclosures: Interest Paid................................................... $ 328,523 $ 336,838 State and Federal Taxes Paid.................................... 23,048 33,765
[TEXT] Page 6 Notes to Consolidated Financial Statements Note A - Accounting Policies - - ---------------------------- Accounting policies of NBD Bancorp, Inc. and its subsidiaries (the Corporation) are described below. Basis of Presentation: The unaudited consolidated financial statements as of and for the three months ended March 31, 1994 and 1993, are prepared in conformity with generally accepted accounting principles for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation have been included. These financial statements should be read in conjunction with the consolidated financial statements included in the Corporation's Form 10-K Annual Report for the year ended December 31, 1993. The Corporation has adopted Statement of Financial Accounting Standard (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits," effective January 1, 1994. This statement requires the accrual of benefits provided to former or inactive employees after employment but before retirement. The cumulative effect of adopting SFAS No.112 was a charge of $12,323,000 ($7,885,000 net of income taxes). The Corporation has adopted SFAS No. 109, "Accounting for Income Taxes," effective in the first quarter of 1993, and SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," effective December 31, 1993. Consolidation: The consolidated financial statements of the Corporation include the accounts of its subsidiaries, principally NBD Bank, N.A. (Michigan). All material inter-company accounts and transactions have been eliminated. Investments in unconsolidated affiliates in which ownership is at least 20 percent are accounted for by the equity method and are reported in Other Assets. Securities: In accordance with SFAS No. 115, Investment Securities are accounted for as follows: (a) Debt securities that the Corporation has the positive intent and ability to hold to maturity are classified as Held-to-Maturity and reported at amortized cost; (b) Debt and equity securities that are bought and held principally for the purpose of selling in the near term are classified as Trading and reported at fair value, with realized and unrealized gains and losses included in Other Non-Interest Income; and (c) Debt and equity securities not classified as Held-to-Maturity or Trading are classified as Available-for-Sale and reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders' equity, net of tax. Prior to December 31, 1993, the Corporation classified securities purchased with the intent and the ability to hold to maturity as Investment Securities and reported them at amortized cost. If it was subsequently determined that certain investment securities were to be sold, their reported Page 7 value was adjusted as necessary to the lower of cost or fair value with the adjustments included in Securities Gains(Losses). The Corporation's accounting for Trading Account Securities was not changed by the adoption of SFAS No. 115. Gains and losses realized on the sale of Investment Securities are determined on the specific identification method and included in Securities Gains(Losses). Loans: Loans are generally reported at the principal amount outstanding, net of unearned income. Non-refundable loan origination and commitment fees, and certain costs of origination, are deferred and either included in interest income over the term of the related loan or commitment or, if the loan is held for sale, included in Other Non-Interest Income when the loan is sold. Mortgages Held For Sale are valued at the lower of aggregate cost or fair value. Unrealized losses, as well as realized gains or losses, are included in Other Non-Interest Income. Interest income on loans is accrued as earned. Except for consumer loans, loans are placed on non-accrual status and previously accrued but unpaid interest is reversed against current period interest income when collectibility of principal or interest is considered doubtful, payment of principal or interest is 90 days or more past due, or the loan is completely or partially charged off. Interest income on loans considered doubtful or 90 days or more past due is recorded as collected. Collections of principal and interest on charged-off loans are applied in the following sequence: (1) as a reduction of remaining principal balance; (2) as recovery of principal charged off; and (3) as interest income. Consumer loans are not placed on a non-accrual status because they are charged off when 120 days to 150 days past due. Accrued but unpaid interest is generally reversed against current period interest income when the loan is charged off. Allowance for Possible Credit Losses: The Allowance is maintained at a level considered by management to be adequate to provide for probable loan and lease losses inherent in the portfolio. Management's evaluation is based on a continuing review of the loan and lease portfolio and includes consideration of the actual loan and lease loss experience, the present and prospective financial condition of borrowers, balance of the loan and lease portfolio, industry and country concentrations within the portfolio and general economic conditions. Income Taxes: SFAS No. 109 requires an asset and liability approach to accounting and reporting for income taxes. Under this approach, current and deferred income taxes payable and refundable are remeasured annually using provisions of then enacted tax laws and rates. SFAS No. 109 also specifies the criteria for recognition and measurement of deferred income tax benefits. Page 8
Income Per Share: Per share amounts are based on the weighted average number of shares outstanding throughout the period. Quarter Ended March 31 ---------------------------- 1994 1993 ----------- ----------- Average Shares Outstanding.................................... 161,099,451 161,322,452
[TEXT] Note B - Investment Securities - - ------------------------------ Following are the amortized cost and fair value of Investment Securities Available-for-Sale and Held-to-Maturity at March 31, 1994:
Investment Securities Available-for-Sale ---------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- ----------- (in thousands) U.S. Govt............................................$ 1,115,903 $ 3,868 $ 3,072 $ 1,116,699 U.S. Govt Agencies (principally mortgage-backed)..... 2,867,736 3,252 59,446 2,811,542 Other Securities..................................... 385,760 560 29,473 356,847 ----------- ---------- --------- ------------ Total...........................................$ 4,369,399 $ 7,680 $ 91,991 $ 4,285,088 =========== ========== ========= ============
Investment Securities Held-to-Maturity ----------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---------- ---------- ---------- ----------- (in thousands) U.S. Govt............................................$ 525,010 $ 9,531 $ 1,615 $ 532,926 U.S. Govt Agencies (principally mortgage-backed)..... 5,636,256 178,481 105,410 5,709,327 States and Political Subdivisions.................... 1,505,425 105,704 5,668 1,605,461 Other Securities..................................... 916 16 - 932 ---------- ---------- --------- ----------- Total...........................................$ 7,667,607 $ 293,732 $ 112,693 $ 7,848,646 ========== ========== ========= ===========
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Following are the amortized cost and fair value of Investment Securities Available-for - - -Sale and Held-to-Maturity at December 31, 1993: Investment Securities Available-for-Sale ----------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---------- ---------- ---------- ----------- (in thousands) U.S. Govt............................................$ 965,190 $ 9,405 $ 1 $ 974,594 U.S. Govt Agencies (principally mortgage-backed)..... 2,396,927 5,782 11,535 2,391,174 States and Political Subdivisions.................... 1,261 112 - 1,373 Other Securities..................................... 431,488 1,082 15,327 417,243 ---------- ---------- --------- ----------- Total...........................................$ 3,794,866 $ 16,381 $ 26,863 $ 3,794,866 =========== ========== ========= ===========
Investment Securities Held-to-Maturity ----------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---------- ---------- ---------- ----------- (in thousands) U.S. Govt............................................$ 525,698 $ 22,020 $ 36 $ 547,682 U.S. Govt Agencies (principally mortgage-backed)..... 4,573,861 252,846 2,356 4,824,351 States and Political Subdivisions.................... 1,505,270 139,527 1,585 1,643,212 Other Securities..................................... 2,580 78 - 2,658 ---------- ---------- --------- ------------ Total...........................................$ 6,607,409 $ 414,471 $ 3,977 $ 7,017,903 =========== ========= ========= ===========
[TEXT] Note C - Allowance For Possible Credit Losses - - ---------------------------------------------- The changes in the Allowance for Possible Credit Losses are summarized below:
Quarter Ended March 31 ----------------------- 1994 1993 -------- -------- (in thousands) Balance, Beginning of Period.........................$423,030 $417,764 Provision.......................................... 15,460 39,920 Charge-offs........................................ (31,044) (55,704) Recoveries......................................... 15,674 16,955 Translation Adjustments............................ 290 336 -------- -------- Balance, End of Period...............................$423,410 $419,271 ======== ========
[TEXT] Page 10 Note D - Assets Pledged - - ----------------------- Assets, principally Investment Securities, carried at approximately $6,315,916,000 were pledged at March 31, 1994 to secure public deposits (including deposits of $101,428,000 of the Treasurer, State of Michigan), repurchase agreements and for other purposes required by law. Note E - Extraordinary Item - - --------------------------- On March 15, 1994, an extraordinary item charge of $7,730,000 (net of income taxes) was incurred, representing the premium paid and unamortized issuance costs related to the Corporation's call and redemption of the $199,985,000 7.25% Convertible Subordinated Debentures Due 2006. Note F - Other Commitments and Contingent Liabilities - - ----------------------------------------------------- In the normal course of business the Corporation and its subsidiaries have various outstanding commitments and contingent liabilities, including guarantees, commitments to extend credit, foreign exchange futures contracts, etc., which are not reflected in the financial statements. Management does not anticipate any material loss as a result of these transactions. The Corporation is a defendant in various legal proceedings arising in the normal course of business. In the opinion of management, based on the advice of legal counsel, the ultimate resolution of these proceedings will not have a material effect on the Corporation's financial position. Outstanding standby letters of credit at March 31, 1994, totaled approximately $1,719,000,000. Page 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. - - ------- ------------------------------------------------------ The following discussion and analysis supplements information contained in the financial statements and related notes appearing in this report. NBD BANCORP, INC. FINANCIAL HIGHLIGHTS
Quarter Ended March 31 -------------------------- Pct. 1994 1993 Change -------- -------- ------ (dollars in thousands, except per share data) Income Before Extraordinary Item and Cumulative Effect of Accounting Change........... $122,876 $115,081 6.8 Extraordinary Item (Redemption of Debt)........... (7,730) - Cumulative Effect of Accounting Change (SFAS Nos. 112 and 109, respectively).................. (7,885) 3,950 -------- -------- Net Income....................... $107,261 $119,031 (9.9) ======== ======== Per Share: Income before Extraordinary Item and Accounting Change $ 0.77 $ 0.71 8.5 Net Income..................... $ 0.67 $ 0.74 (9.5) Cash Dividends Paid............ $ 0.27 $ 0.27 0.0 Book Value..................... $ 20.29 $ 18.80 7.9 Return on Average Shareholders' Equity: Before Extraordinary Item and Accounting Change....(pct.) 14.79 15.27 After Extraordinary Item and Accounting Change....(pct.) 12.92 15.77 Return on Average Assets: Before Extraordinary Item and Accounting Change....(pct.) 1.20 1.15 After Extraordinary Item and Accounting Change....(pct.) 1.05 1.19 Net Interest Margin........(pct.) 4.31 4.48 Balance Sheet Data: March 31 -------------------------------- Pct. 1994 1993 Change ----------- ----------- ------ (dollars in thousands) Total Assets............ $42,932,669 $40,053,248 7.2 Total Earning Assets.... $38,852,766 $36,394,665 6.8 Total Loans and Leases.. $25,877,688 $25,037,721 3.4 Total Deposits.......... $30,175,616 $30,200,008 (0.1) Total Common Shareholders' Equity................ $ 3,264,699 $ 3,017,978 8.2 Risk-Based Capital Ratios: Tier I Capital........ $ 3,040,316 $ 2,710,696 Ratio.............(pct) 9.14 8.78 Total Capital......... $ 4,307,040 $ 3,802,372 Ratio.............(pct) 12.94 12.31 Leverage Ratio........(pct) 7.12 6.82 NBD Bancorp Common Stock: Quarter Ended ------------------------------------------- 3-31-94 12-31-93 9-30-93 6-30-93 3-31-93 ------- -------- ------- ------- ------- Market Value: End of Period...$28 1/4 $29 3/4 $34 1/4 $32 3/8 $35 1/4 High............$30 3/4 $34 5/8 $34 3/8 $36 1/4 $36 3/8 Low.............$27 1/4 $28 5/8 $31 3/8 $29 5/8 $31 3/8 (a) Price/Earnings Ratio....... 9.6 9.9 11.5 13.3 15.8 (a) Based on most recent twelve-month Net Income per share and end-of-period stock prices.
[TEXT] Page 12 SUMMARY OF OPERATIONS - - --------------------- In the first quarter of 1994, Net Income amounted to $107,261,000, or $.67 per share. Income before the effects of an extraordinary item and an accounting change totaled $122,876,000, or $.77 per share. Net Income in the first quarter of 1993 totaled $119,031,000, or $.74 per share, while income before the effect of an accounting change amounted to $115,081,000, or $.71 per share. An extraordinary charge of $7,730,000 (net of income taxes), or five cents per share, was incurred, representing premium paid and unamortized issuance costs related to the redemption on March 15, 1994, of the $199,985,000 outstanding 7.25% Convertible Subordinated Debentures Due March 2006. Also, Financial Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits," was adopted as of January 1, 1994, which required a charge against earnings of $7,885,000 (net of income taxes), or five cents per share. In the first quarter of 1993, SFAS No. 109, "Accounting for Income Taxes," was adopted, which had the effect of increasing earnings by $3,950,000, or three cents per share.
Table 1 Summary of Operations (in thousands except per share data) Quarter Ended ---------------------------------------------------------- March December September June March 1994 1993 1993 1993 1993 ---------- ---------- ---------- ---------- ---------- Interest Income - Including Taxable Equivalent Adjustment.................... $ 651,998 $ 655,717 $ 676,236 $ 677,365 $ 685,865 Interest Expense.......................... (253,919) (256,106) (263,109) (267,035) (278,463) ---------- ---------- ---------- ---------- ---------- Net Interest Income - Taxable Equivalent.. 398,079 399,611 413,127 410,330 407,402 Taxable Equivalent Adjustment............. (16,819) (16,929) (17,936) (18,557) (18,941) ---------- ---------- ---------- ---------- ---------- Net Interest Income....................... 381,260 382,682 395,191 391,773 388,461 Provision For Possible Credit Losses...... (15,460) (19,841) (24,853) (35,060) (39,920) Securities Gains.......................... 390 6,470 55 1,689 1,114 Other Non-Interest Income................. 138,360 149,632 141,063 141,480 143,880 Compensation.............................. (176,748) (178,926) (181,942) (173,030) (169,846) Other Non-Interest Expenses............... (145,571) (166,089) (147,723) (148,575) (155,709) ---------- ---------- ---------- ---------- ---------- Income Before Taxes....................... 182,231 173,928 181,791 178,277 167,980 Applicable Taxes.......................... (59,355) (54,968) (56,639) (55,629) (52,899) ---------- ---------- ---------- ---------- ---------- Income before Extraordinary Item and Cumulative Effect of Accounting Change... 122,876 118,960 125,152 122,648 115,081 Extraordinary Item....................... (7,730) - - - - Cumulative Effect of Accounting Change... (7,885) - - - 3,950 ---------- ---------- ---------- ---------- ---------- Net Income................................ $ 107,261 $ 118,960 $ 125,152 $ 122,648 $ 119,031 ========== ========== ========== ========== ========== Income Per Share: Income before Extraordinary Item and Accounting Change...................... $ 0.77 $ 0.74 $ 0.77 $ 0.76 $ 0.71 Net Income............................... $ 0.67 $ 0.74 $ 0.77 $ 0.76 $ 0.74 Average Shares Outstanding................ 161,099 161,173 161,278 161,243 161,322 Average Earning Assets (in millions)...... $ 37,127 $ 36,398 $ 36,209 $ 36,302 $ 36,598 Net Interest Margin....................... 4.31 % 4.38 % 4.55 % 4.53 % 4.48 % (/TABLE> [TEXT] Page 13 Net Interest Income Taxable equivalent net interest income in the first quarter of 1994 was $398.1 million, a decrease of $9.3 million, or 2.3 percent, versus the same quarter last year. The decrease was attributable to lower interest margin, which decreased 17 basis points from 4.48 percent in the first quarter of 1993 to 4.31 percent in the first quarter of 1994. The unfavorable rate variance was partially offset by an increase of $529 million, or 1.4 percent, in average earning assets, which rose from $36.6 million in the first quarter of 1993 to $37.1 million in the same 1994 period. Further detail on average balances, yields and rates is shown in Table 7. Provision for Possible Credit Losses Reflecting continuing improvement in loan quality, the first quarter 1994 Provision for Possible Credit Losses was $15.5 million, $24.5 million lower than the first quarter of 1993 and lower than the $19.8 million in the fourth quarter of 1993. A comprehensive analysis of the related Allowance for Possible Credit Losses, charge-offs, nonperforming assets and ratios is presented in Table 5. Securities Transactions Other than the fourth quarter of 1993, securities gains over the last five quarters were nominal. Essentially all of the securities gains in the fourth quarter of 1993 were attributable to the sale of an equity holding in a nonbank financial services company. Other Non-Interest Income Other Non-Interest Income of $138.4 million was earned in the first quarter of 1994 compared with $143.9 million in the first three months of 1993, a decrease of $5.5 million, or 3.8 percent. Table 2 and its related discussion provide additional details of the composition of Other Non-Interest Income. Compensation Compensation expense in the first quarter of 1994 totaled $176.7 million, which was $6.9 million, or 4.1 percent, higher than the comparable period of last year. Salaries increased $3.5 million, or 2.7 percent, while benefits expense increased $3.4 million, or 8.6 percent. Other Non-Interest Expenses Other Non-Interest Expenses amounted to $145.6 million for the first quarter of 1994 compared with $155.7 million for the same quarter last year, or a decrease of 6.5 percent. Factors influencing period-to-period changes are discussed in connection with Table 3. Page 14 Taxes on Income Income tax expense of $59.4 million in the first quarter of 1994 was $6.5 million, or 12.2 percent, over the same quarter last year, reflecting both an 8.5 percent increase in pre-tax income and the use of a 34 percent tax rate for reporting first quarter 1993 net income versus a rate of 35 percent in the first three months of 1994. In the third quarter of 1993, the tax rate was increased to 35 percent from 34 percent retroactive to January 1, 1993. The Corporation's effective tax rate, when computed after adding the taxable equivalent adjustment to both pre-tax income and income tax expense, was 38 percent for the first quarters of both 1994 and 1993. OTHER NON-INTEREST INCOME - - ------------------------- Deposit Service Charges for the first quarter of 1994 amounted to $41.0 million versus $42.0 million in the comparable period of 1993, or a decrease of 2.4 percent. The reduction was attributable to a higher credit given for balances maintained on business accounts. Trust fees of $38.1 million in the first quarter of 1994 increased $2.8 million, or 7.8 percent, over the first three months of 1993. The increase in Insurance Premiums and Commissions in the first quarter of 1994 compared with the first three months of 1993 was attributable to the earnings related to $200 million of corporate owned life insurance purchased by the Corporation in January 1994. Profit on Mortgage Sales over the last five quarters has shown variability due to changes in interest rates and in the volume of refinancing activity. The "Other" classification contains income items which are generally small in amount or infrequent in occurrence. Other Income in the first quarter of 1994 was $5.2 million versus $14.5 million in the same period of last year. Included in the first quarter of 1993 amount was a gain of $9.6 million on the sale of credit card receivables. Table 2 Other Non-Interest Income
(in thousands) Quarter Ended ------------------------------------------------------ March Dec. Sept. June March 1994 1993 1993 1993 1993 ---------- ---------- ---------- ---------- ---------- Deposit Service Charges................ $ 40,979 $ 40,203 $ 41,373 $ 41,857 $ 41,983 Trust Income........................... 38,110 39,904 36,860 37,440 35,348 Charge Card Merchant Processing Fees... 7,689 9,167 10,118 5,679 5,972 Data Processing Fees................... 7,214 7,372 8,017 7,032 6,442 Insurance Premiums and Commissions..... 5,925 4,600 3,697 4,017 4,612 Other Domestic and International Fees.. 5,469 5,476 5,293 5,157 6,108 Letter of Credit Fees.................. 4,692 5,649 5,610 4,817 4,482 Mortgage Loan Servicing................ 4,544 5,156 4,079 5,164 4,998 Profit on Mortgage Sales............... 3,863 9,306 9,262 7,773 4,502 Retail Banking Fees.................... 3,299 3,082 3,688 3,294 3,325 Foreign Exchange and Translation....... 2,965 2,927 3,177 3,199 3,265 Rental Income.......................... 2,656 2,572 2,655 2,633 2,317 OREO Gains............................. 1,823 8,037 1,784 3,651 380 Mutual Fund and Annuity Product Fees... 1,742 2,311 2,354 2,543 1,660 Securities Trading and Underwriting.... 1,486 1,476 1,807 1,710 2,678 Charge Card Fees....................... 688 1,496 989 1,310 1,319 Other.................................. 5,216 898 300 4,204 14,489 ---------- ---------- ---------- ---------- ---------- Total Other Non-Interest Income..... $ 138,360 $ 149,632 $ 141,063 $ 141,480 $ 143,880 ========== ========== ========== ========== ==========
[TEXT] Page 15 OTHER NON-INTEREST EXPENSES - - --------------------------- Occupancy expense for the first three months of 1994 totaled $30.1 million, which represents an increase of 1.9 percent over the same period last year. Equipment expense amounted to $22.0 million in the first quarter of 1994, an increase of 3.6 percent. Amortization of Intangibles decreased $2.6 million to $6.5 million in the first quarter of 1994 compared with the first three months of 1993. Most of the decrease was attributable to a higher level of amortization of purchased mortgage servicing rights in the 1993 period prompted by the high activity in mortgage refinancing. OREO Expense for the first quarter of 1994 totaled $0.9 million, a decrease of $5.8 million below the first quarter of 1993. The decrease resulted primarily from write-downs recorded on properties in the 1993 period.
Table 3 Other Non-Interest Expenses (in thousands) Quarter Ended ------------------------------------------------------ March Dec. Sept. June March 1994 1993 1993 1993 1993 ---------- ---------- ---------- ---------- ---------- Occupancy........................ $ 30,081 $ 30,271 $ 28,837 $ 29,429 $ 29,526 Equipment........................ 21,954 21,858 20,309 20,916 21,197 FDIC & Other Regulatory Assessments................... 16,675 16,927 16,868 16,309 18,662 Purchased Services............... 7,138 7,559 6,824 6,389 6,856 Operating and Other Taxes........ 6,866 6,352 5,653 5,731 5,893 Telephone........................ 6,852 7,999 6,627 7,245 7,303 Amortization of Intangibles...... 6,524 9,328 9,291 7,997 9,126 Professional Services............ 6,433 9,034 7,580 6,880 6,358 Postage.......................... 5,274 5,396 4,635 4,977 5,650 Stationery and Supplies.......... 4,716 5,712 5,576 5,391 6,279 Marketing........................ 3,946 7,246 4,569 4,967 5,243 Travel and Entertainment......... 3,655 5,667 4,587 4,308 3,738 Public Relations................. 2,586 2,777 2,725 2,343 3,289 Loan and Credit Charges.......... 2,067 2,500 1,855 2,730 1,697 Federal Reserve Service Charges.. 1,958 1,845 2,124 2,134 2,308 Armored Carrier and Cartage...... 1,819 2,105 1,919 2,076 1,988 OREO Expense..................... 970 2,000 468 2,326 6,788 Other Insurance.................. 913 970 1,451 907 868 Other............................ 15,144 20,543 15,825 15,520 12,940 Total Other Non-Interest ---------- ---------- ---------- ---------- ---------- Expenses................... $ 145,571 $ 166,089 $ 147,723 $ 148,575 $ 155,709 ========== ========== ========== ========== ==========
[TEXT] Page 16 FINANCIAL CONDITION AND CAPITAL ACCOUNTS - - ---------------------------------------- The Corporation's consolidated balance sheet is presented on pages 1 and 2. NBD Bancorp, Inc. consolidated total assets at March 31, 1994, were $42.9 billion, an increase of $2.2 billion since December 31, 1993. Investment Securities increased $1.6 billion since year-end 1993, primarily attributable to the acquisition of mortgage-backed U.S. Agency Securities during the first quarter of 1994. Total Loans and Leases increased $326.9 million since December 31, 1993, primarily attributable to increases of $293.8 million and $213.0 million in commercial loans and residential mortgages, respectively, partially offset by a reduction of $193.2 million in Mortgages Held For Sale. Included in the commercial loan portfolio are highly leveraged transactions (HLTs) and investment property term loans. As of March 31, 1994, HLT commitments totaled $381.4 million, of which $210.5 million were outstanding. A total of $3.5 million of HLT outstandings were classified as nonperforming. About 79 percent of the outstanding amount was domiciled in the Midwest and 67 percent was related to manufacturing activities. Investment property term loan commitments amounted to $1,860.1 million, of which $1,553.7 million were outstanding at March 31, 1994, and $50.5 million were classified as nonperforming. As of March 31, 1994, real estate construction loan commitments totaled $1,233.0 million, of which $765.7 million were outstanding and $34.4 million were classified as nonperforming. Other Assets increased $328.1 million since December 31, 1993. Most of the increase related to a $200 million investment in corporate owned life insurance. The increase of $2.1 billion in total liabilities since December 31, 1993, primarily consisted of increases in Short-Term Borrowings, total deposits, and Long-Term Debt of $1.6 billion, $354.5 million, and $148.7 million, respectively. The increase in total deposits was attributable to an increase of $713.3 million in Foreign Office Deposits, partially offset by moderate decreases in each of the other deposit categories, which in total decreased 1.3 percent since year-end 1993. The change in Long-Term Debt was attributable to an increase of $350 million in bank notes since year-end 1993, partially offset by the redemption of approximately $200 million of convertible subordinated debentures noted earlier. Shareholders' Equity totaled $3.3 billion at March 31, 1994, an increase of $16.1 million since year-end 1993. Page 17 ANALYSIS OF CAPITAL - - ------------------- The table that follows presents the components of Tier I Capital and Total Capital. Both Tier I and Total capital ratios exceed the regulatory minimum requirements of 4.0 percent and 8.0 percent, respectively. The Tier I Leverage Ratio, also presented below, exceeds the regulatory minimum of 3.0 percent. In March of 1994, the Corporation declared a dividend of $0.30 per share, payable on May 10 to shareholders of record April 19. This represents an increase of 11.1 percent in the quarterly dividend rate and marks the 28th consecutive year of increased dividend payments to shareholders.
Table 4 Analysis of Capital (dollars in thousands) March 31 Dec. 31 Sept. 30 June 30 March 31 1994 1993 1993 1993 1993 ----------- ----------- ----------- ----------- ----------- Capital Components: Tier 1 Capital: Common Shareholders' Equity..................... $3,264,699 $3,248,599 $3,179,606 $3,093,459 $3,017,978 Intangible Assets and Other Adjustments.............. (224,383) (281,507) (290,557) (300,596) (307,282) ----------- ----------- ----------- ----------- ----------- Total Tier 1 Capital........ $3,040,316 $2,967,092 $2,889,049 $2,792,863 $2,710,696 =========== =========== =========== =========== =========== Total Capital: Common Shareholders' Equity..................... $3,264,699 $3,248,599 $3,179,606 $3,093,459 $3,017,978 Qualifying Allowance for Possible Credit Losses..... 416,050 406,618 398,047 393,241 386,440 Qualifying Long-Term Debt....................... 854,000 1,053,985 1,053,985 854,067 705,400 Intangible Assets and Other Adjustments.............. (227,709) (284,819) (290,691) (300,743) (307,446) ----------- ----------- ----------- ----------- ----------- Total Capital............... $4,307,040 $4,424,383 $4,340,947 $4,040,024 $3,802,372 =========== =========== =========== =========== =========== Ratios (End of Period): Risk-Based Capital Ratios: Tier 1 Capital Ratio.......... 9.14 % 9.13 % 9.08 % 8.89 % 8.78 % Total Capital Ratio........... 12.94 % 13.61 % 13.64 % 12.85 % 12.31 % Tier 1 Leverage Ratio.......... 7.12 % 7.33 % 7.21 % 6.97 % 6.82 %
[TEXT] Page 18 ALLOWANCE FOR POSSIBLE CREDIT LOSSES - - ------------------------------------ An analysis of the changes in the Allowance for Possible Credit Losses and related credit quality data is presented below. The Allowance for Possible Credit Losses at March 31, 1994, of $423.4 million was equal to 1.64 percent of total loan and leases, compared with 1.66 percent at December 31, 1993, and 1.67 percent at March 31, 1993. While the Allowance has stayed relatively constant over the last several quarters, the level of nonperforming loans has dropped, which generated an improvement in the Allowance as a percent of nonperforming loans and leases to 170.18 percent as of March 31, 1994, compared with 157.28 percent at year-end 1993 and 129.85 percent at March 31, 1993.
Table 5 (dollars in thousands) Allowance for Possible Credit Losses Quarter Ended -------------------------------------------------------------- March December September June March 1994 1993 1993 1993 1993 ---------- ---------- ---------- ---------- ---------- Summary of Transactions: Balance at Beginning of Period..... $ 423,030 $ 422,964 $ 421,505 $ 419,271 $ 417,764 Provision for Credit Losses........ 15,460 19,841 24,853 35,060 39,920 Translation Adjustment............. 290 (16) (153) (50) 336 Charge-Offs........................ (31,044) (53,243) (47,116) (50,038) (55,704) Recoveries......................... 15,674 33,484 23,875 17,262 16,955 ---------- ---------- ---------- ---------- ---------- Net Charge-Offs................. (15,370) (19,759) (23,241) (32,776) (38,749) ---------- ---------- ---------- ---------- ---------- Balance at End of Period........... $ 423,410 $ 423,030 $ 422,964 $ 421,505 $ 419,271 ========== ========== ========== ========== ========== Net Loan Charge-Offs by Category: Commercial and Foreign............. $ (9,217) $ (12,602) $ (8,077) $ (18,382) $ (26,718) Real Estate Construction........... 202 1,012 (7,641) (8,524) (4,201) Residential Mortgage............... (175) (47) (96) 4 63 Consumer........................... (5,680) (7,898) (6,971) (5,349) (7,736) Lease Financing.................... (500) (224) (456) (525) (157) ---------- ---------- ---------- ---------- ---------- Total Net Charge-Offs........... $ (15,370) $ (19,759) $ (23,241) $ (32,776) $ (38,749) ========== ========== ========== ========== ========== Net Charge-Off Ratio (Annualized) 0.24% 0.31% 0.37% 0.52% 0.62% Allowance for Possible Credit Losses as a Percent of: Total Loans and Leases.......... 1.64% 1.66% 1.67% 1.66% 1.67% Nonperforming Loans and Leases*.................... 170.18% 157.28% 137.74% 148.71% 129.85% Analysis of Nonperforming Assets March 31 Dec. 31 Sept. 30 June 30 March 31 1994 1993 1993 1993 1993 Loans: ---------- ---------- ---------- ---------- ---------- Non-Accrual..................... $ 248,690 $ 265,699 $ 306,916 $ 283,263 $ 322,296 Restructured*................... 107 3,268 155 178 591 ---------- ---------- ---------- ---------- ---------- Total Loans................... 248,797 268,967 307,071 283,441 322,887 Other Real Estate Owned............ 35,583 44,014 53,572 55,589 53,516 ---------- ---------- ---------- ---------- ---------- Total Nonperforming Assets.... $ 284,380 $ 312,981 $ 360,643 $ 339,030 $ 376,403 ========== ========== ========== ========== ========== Nonperforming Assets* as a Percent of: Total Loans and Leases.......... 1.10% 1.22% 1.43% 1.34% 1.50% Allowance for Possible Credit Losses................. 67.16% 73.99% 85.27% 80.43% 89.78% *Excludes $88,941 of Mexican restructured debt for the first three quarters of 1993. These obligations were reclassified to investment securities available-for-sale at year-end 1993, concurrent with the implementation of SFAS No. 115. Loans 90 Days or More Past Due and Still Accruing Interest..... $ 33,461 $ 36,905 $ 38,550 $ 35,188 $ 35,377
[TEXT] Page 19 ORGANIZATIONAL PERFORMANCE - - -------------------------- Table 6 presents performance data and other information organized by the three major geographical banking markets serviced by the Corporation. Various mergers and transfers of certain business activities made to establish operations in each state and position them for the future have minimized the usefulness of comparative data for prior periods. In the first quarter of 1994, an agreement was reached to acquire AmeriFed Financial Corporation (AFFC), a thrift holding company with $885 million in assets located in Joliet, Illinois. The Corporation will issue approximately 5.2 million of its shares for all of the outstanding shares of AFFC. The acquisition, which is subject to the approval of AFFC shareholders and regulatory authorities, will be accounted for as a purchase.
Table 6 Organizational Performance (dollars in thousands) For the Quarter Ended March 31, 1994 ------------------------------------ Michigan Indiana Illinois -------- -------- -------- Income before Accounting Changes................ $85,297 $22,967 $15,051 Net Income...................................... 79,855 22,128 14,547 Average Earning Assets.......................... 23,535 8,927 4,357 Return on Assets (Before Accounting Changes).... 1.32 % 0.92 % 1.28 % Full-Time Equivalent Employees.................. 8,583 5,310 1,955
Page 20 Average Balances, Yields and Rates The following table presents average asset and liability balances and related yields and rates for the latest five quarters. Table 7 Average Balances, Yields and Rates (Yields are on a fully taxable equivalent basis.) (dollars in millions)
First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter 1994 1993 1993 1993 1993 ------------------ ------------------ ------------------ ------------------ ------------------ Average Yield/ Average Yield/ Average Yield/ Average Yield/ Average Yield/ Balance Rate Balance Rate Balance Rate Balance Rate Balance Rate -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Assets: Interest-Bearing Deposits......$ 645 4.40 % $ 576 4.97 % $ 673 4.79 % $ 661 5.17 % $ 719 5.82 % Federal Funds Sold and Resale Agreements............ 114 3.37 176 3.11 203 3.23 110 3.35 114 3.09 Money Market Investments....... - - 34 3.99 35 4.27 82 3.96 57 4.39 Trading Account Securities..... 92 3.88 140 3.56 172 3.62 165 3.64 111 4.29 Investment Securities: U.S. Government............... 1,583 5.30 1,518 5.36 1,559 5.51 1,637 5.56 1,662 5.53 U.S. Government Agencies...... 7,565 6.44 6,802 6.60 6,472 6.90 6,504 7.23 6,793 7.39 States and Political Subdivisions................ 1,492 8.21 1,503 8.43 1,519 8.64 1,551 8.72 1,595 8.58 Other......................... 389 4.72 362 4.52 428 4.33 512 4.59 608 4.96 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Investment Securities.... 11,029 6.45 10,185 6.62 9,978 6.84 10,204 7.06 10,658 7.14 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Loans and Leases: Commercial.................... 13,673 6.97 13,699 6.83 13,685 7.26 13,775 7.01 13,626 6.96 Real Estate Construction...... 754 7.19 751 7.94 811 7.04 830 6.88 862 7.26 Residential Mortgage.......... 2,759 7.46 2,739 7.99 2,763 8.11 2,822 8.41 2,814 8.49 Consumer...................... 6,751 8.61 6,703 8.78 6,567 9.05 6,354 9.30 6,346 9.51 Lease Financing............... 284 10.25 273 10.49 260 11.42 249 11.57 251 11.88 Foreign....................... 1,026 5.70 1,122 5.73 1,062 6.01 1,050 6.43 1,040 6.60 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Loans and Leases......... 25,247 7.46 25,287 7.50 25,148 7.81 25,080 7.76 24,939 7.83 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Earning Assets........... 37,127 7.08 % 36,398 7.17 % 36,209 7.43 % 36,302 7.47 % 36,598 7.55 % ====== ====== ====== ====== ====== Cash and Due From Banks........ 2,285 2,766 2,204 2,271 2,190 Other Assets................... 1,931 1,573 1,772 1,703 1,720 Less Allowance for Possible Credit Losses................ (433) (435) (437) (433) (431) -------- -------- -------- -------- -------- Total Assets...................$40,910 $40,302 $39,748 $39,843 $40,077 ======== ======== ======== ======== ======== Liabilities and Shareholders' Equity: Interest-Bearing Deposits: Savings.....................$ 7,854 2.29 % $ 7,624 2.42 % $ 7,346 2.50 % $ 7,175 2.54 % $ 6,852 2.64 % Money Market Accounts....... 5,516 2.68 5,683 2.73 5,885 2.78 5,955 2.83 6,154 2.88 Time........................ 7,796 4.30 8,471 4.33 8,388 4.49 9,049 4.55 9,310 4.76 Foreign Office.............. 2,035 3.96 1,707 4.24 1,729 4.35 1,810 4.54 1,720 5.18 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Interest-Bearing Deposits..................... 23,201 3.21 23,485 3.31 23,348 3.42 23,989 3.52 24,036 3.71 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Short-Term Borrowings.......... 5,647 3.26 4,739 3.12 5,141 3.13 4,746 3.10 5,357 3.16 Long-Term Debt................. 1,615 6.20 1,402 6.47 1,320 6.45 1,216 6.46 974 6.98 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Interest-Bearing Liabilities.................. 30,463 3.37 % 29,626 3.43 % 29,809 3.50 % 29,951 3.57 % 30,367 3.71 % ====== ====== ====== ====== ====== Demand Deposits................ 6,217 6,565 5,966 6,011 5,853 Other Liabilities.............. 909 850 841 816 838 Shareholders' Equity........... 3,321 3,261 3,132 3,065 3,019 -------- -------- -------- -------- -------- Total Liabilities and Shareholders' Equity.........$40,910 $40,302 $39,748 $39,843 $40,077 ======== ======== ======== ======== ======== Interest Rate Spread........... 3.71 % 3.74 % 3.93 % 3.90 % 3.84 % ====== ====== ====== ====== ====== Net Interest Margin............ 4.31 % 4.38 % 4.55 % 4.53 % 4.48 % ====== ====== ====== ====== ====== The FTE adjustments are computed using a combined federal and state income tax rate of 36.4% in 1994 and 1993. The combined amounts for Investment Securities Available-for-Sale and Held-to-Maturity for 1994 are based on their respective carrying values.
Page 21 IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS - - ---------------------------------------------- In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan." This statement requires that impaired loans be measured based on the present value of the expected future cash flows discounted at the loan's effective interest rate. The statement is effective for fiscal years beginning after December 15, 1994. The Corporation has not determined the impact that adoption of the standard will have on the financial statements. INTERNATIONAL BANKING - - --------------------- At March 31, 1994, the Corporation had total foreign cross-border outstandings of $1.0 billion. Foreign outstandings consist primarily of interest-bearing deposits, bankers acceptances, federal funds sold, and loans denominated in dollars or other non-local currency. Assets denominated in the local currency are included to the extent they are not hedged or are not funded by local borrowings. An item is classified as either foreign or domestic based on the domicile of the party ultimately responsible for payment. At March 31, 1994, the Corporation had no foreign outstandings to any individual country which exceeded 0.75 percent of total assets. However, foreign cross-border outstandings at March 31, 1994, were $21.0 million (excluding $98.9 million of obligations collateralized by U. S. Treasury securities) for all countries that the Corporation considers to be experiencing severe economic and liquidity problems. Of such outstandings, none were nonperforming. No special reserve was required to be established under the International Lending Supervision Act of 1983. Page 22 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - - ------- --------------------------------- (a) Exhibits (11) The Earnings Per Share Computation is attached hereto. (b) Reports on Form 8-K None. Page 23 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 thereunto duly authorized. NBD Bancorp, Inc. --------------------------------- (Registrant) By: /s/ Louis Betanzos ------------------------------ Louis Betanzos Executive Vice President and Chief Financial Officer By: /s/ Gerald K. Hanson ------------------------------- Gerald K. Hanson Senior Vice President and Comptroller May 10, 1994 Page 24
Exhibit (11) NBD Bancorp, Inc. Consolidated Earnings Per Share Computation (in thousands except per share data) Quarter Ended March 31 ----------------------- 1994 1993 ---------- ---------- Primary: Net Income..................................... $ 107,261 $ 119,031 ========== ========== Average Shares Outstanding..................... 160,762 160,438 Adjustment: Shares Applicable to Common Stock Options.... 337 884 ---------- ---------- Shares Applicable to Primary Earnings.......... 161,099 161,322 ========== ========== Fully Diluted: Net Income..................................... $ 107,261 $ 119,031 Adjustment: Interest on 7.25% Convertible Debentures..... 3,052 3,663 Tax Effect on Above.......................... (1,068) (1,246) ---------- ---------- Net Adjustment............................... 1,984 2,417 Adjusted Net Income Applicable ---------- ---------- to Common Stock.............................. $ 109,245 $ 121,448 ========== ========== Average Shares Outstanding..................... 160,762 160,438 Adjustment: Shares Applicable to Convertible Debentures.. 5,336 6,579 Shares Applicable to Common Stock Options.... 337 934 ---------- ---------- Shares Applicable to Fully Diluted Earnings.... 166,435 167,951 ========== ========== Per Share Data: Primary-Net Income per Share of Common Stock..... $ 0.67 $ 0.74 Fully Diluted-Net Income per ========== ========== Share of Common Stock.......................... $ 0.66 $ 0.72 ========== ==========
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