-----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, IOHZ8Qk4YoHWxXBTjeFKEE19pOhOf6JhtAaVn7Qg6aqKqDpVX2eebrZc7xGGNoEQ eSZJUi8161zF2lXKhuVdYw== 0000950118-94-000068.txt : 19940404 0000950118-94-000068.hdr.sgml : 19940404 ACCESSION NUMBER: 0000950118-94-000068 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940328 ITEM INFORMATION: 5 FILED AS OF DATE: 19940401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIGNET BANKING CORP CENTRAL INDEX KEY: 0000009659 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 546037910 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 34 SEC FILE NUMBER: 001-06505 FILM NUMBER: 94520013 BUSINESS ADDRESS: STREET 1: 7 N EIGHTH ST STREET 2: PO BOX 25970 CITY: RICHMOND STATE: VA ZIP: 23260 BUSINESS PHONE: 8047472000 FORMER COMPANY: FORMER CONFORMED NAME: BANK OF VIRGINIA CO DATE OF NAME CHANGE: 19860717 FORMER COMPANY: FORMER CONFORMED NAME: VIRGINIA COMMONWEALTH BANKSHARES INC DATE OF NAME CHANGE: 19721020 FORMER COMPANY: FORMER CONFORMED NAME: VIRGINIA COMMONWEALTH CORP DATE OF NAME CHANGE: 19701113 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): March 28, 1994 SIGNET BANKING CORPORATION (Exact name of registrant as specified in its charter) Virginia 1-6505 54-6037910 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 7 North Eighth Street, Richmond, Virginia 23219 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 804 747-2000 Not Applicable Former name, former address and former fiscal year, if changed since last report Page 1 of 5 ITEM 5. Other Events. Signet Banking Corporation has announced that it plans to apply for regulatory approval to establish a separately chartered credit card bank. Signet hopes to establish the Bank Card Division as a separate wholly-owned subsidiary in the second half of 1994. See Exhibit 1 for the News Release dated March 28, 1994. ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. 1. News release dated March 28, 1994. SIGNATURE 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 there unto duly authorized. SIGNET BANKING CORPORATION (Registrant) Date: April 1, 1994 /s/ Wallace B. Millner, III Wallace B. Millner, III Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) Page 2 of 5 Exhibit 1 March 28, 1994 Teri A. Temples 7:30 a.m. E.S.T. Public Relations Director (804) 771-7210 Signet Banking Corporation Releases Line of Business Results for Bank Card Division RICHMOND, Va. Signet Banking Corporation's 1993 Annual Report, which was mailed to shareholders today, disclosed for the first time the financial results of Signet's Bank Card Division (BCD). Robert M. Freeman, chairman and chief executive officer of Signet Banking Corporation, said "BCD achieved extraordinary success during 1993 with net income rising to $113 million from $17 million in 1992, and with the managed loan portfolio growing from $2.3 billion at year-end 1992 to $5.2 billion at year-end 1993." BCD's strong performance reflects the accelerating success of the information-based strategy initiated in 1988 and aggressively developed since that time. Extensive testing of product and customer market segments, continuing credit policy refinement and the application of proprietary statistical modeling techniques have all focused on improving the asset quality of new solicitations. These efforts have yielded systematically lower delinquency and charge-off rates for each successive vintage of accounts originated over the last several years. Loss experience on older portfolio segments continues to improve as a result of the maturation of accounts, account management policies and the improved economy. During 1993, Signet was among industry leaders in percentage growth and dollar growth of managed loans. Signet remains among industry leaders in product and market development, participating in such innovations as introductory rate pricing, balance transfer programs and secured credit cards for those with little or poor credit histories. Signet Banking Corporation also announced that it plans to apply for regulatory approval to establish a separately chartered credit card bank. Establishing a separate credit card bank will provide Signet with greater funding flexibility and will enable BCD to compete more effectively on a national basis with other credit card companies. Signet stated that it hopes to establish BCD as a separate wholly-owned subsidiary in the second half of 1994. Attachment: Bank Card Division's Financial Performance Page 3 of 5 Signet's Bank Card Financial Performance Methodologies The accompanying financial information is based on certain internal allocation and funding methodologies. The equity allocation to managed assets is determined by using both external benchmarks and an amount estimated to cover unexpected losses. The equity assignment differs from the equity held for risk-based regulatory guidelines. The loan loss provision is based on actual losses, plus an amount required to maintain an adequate loss allowance. Bank Card's assets are funded under a transfer pricing system that removes most of the interest rate risk from the line of business. Directly attributable non-interest expenses from support and corporate units are allocated to Bank Card. Remaining overhead is allocated based on the line's proportion of non-interest expenses to Signet's total non-interest expenses. Periodically, these numbers are revised when improvements to the assignments, allocations and transfer pricing methodologies are made. When we compare our Bank Card results with those of publicly traded credit card companies, we consider several factors: o Our transfer pricing system produces a funding cost that might differ significantly from that of an independent company funding through external sources. o We do not allocate any investment portfolio to Bank Card; independent companies require liquidity portfolios of significant size. o Bank Card makes use of various Signet financial and administrative services that are paid for through overhead allocations; these costs can differ significantly for companies that generate such services in their own infrastructures. Financial Results Bank Card's net interest income rose from $68 million in 1992 to $172 million in 1993, an increase of 154%. This reflected the impact of the significant credit card receivables growth and lower funding costs. Net interest income also was impacted by the $2.3 billion of securitizations during the latter part of 1993, which transformed net interest income into non-interest income. During 1992, Bank Card increased the allowance for loan losses as a result of the rapid growth in outstandings and an anticipated increase in losses as the new receivables seasoned. However, the charge-off rate for on-balance sheet credit card receivables declined sharply from 4.13% in 1992 to 1.28% in 1993. The improved credit quality of the portfolio and the 1993 securitizations resulted in a 39% decrease in provision for loan losses year over year. Non-interest income, which included servicing income and various credit card service charges, totaled $224 million, an increase of 75% over 1992. The $2.3 billion of credit card securitizations in 1993 caused a dramatic surge in servicing income. Also, the overall increase in accounts and outstandings contributed to the increase in non-interest income. For securitized receivables, any benefit or penalty resulting from mismatches between the receivables' maturity and repricing characteristics, and those of the related investor coupons, is excluded from Bank Card's servicing income. Non-interest expense for 1993 totaled $188 million, an increase of $75 million, or 66% from 1992. This increase reflected the expenses incurred to originate, service and support the significant growth in outstandings during 1993. Expenses from the card solicitation program totaled $56 million in 1993 compared to $23 million in the prior year, an increase of $33 million. The increase in other expenses, primarily salaries and benefits, was principally due to servicing the expanded credit card base (accounts and out-standings). Page 4 of 5 Signet Bank's Bank Card Line of Business Financial Results (dollars in thousands - except per account) Year Ended December 31 1993 1992 Net interest income $172,185 $67,686 Provision for loan losses 33,693 55,288 Non-interest income 223,748 127,581 Non-interest expense 188,471 113,570 Income before income taxes 173,769 26,409 Applicable income taxes 60,819 8,979 Net Income $112,950 $17,430 Average allocated equity $218,038 $109,711 Return on average allocated equity 51.80% 15.89% Average on-balance sheet earning assets $2,211,108 $772,414 Average managed portfolio $3,582,795 $1,772,414 Year-end managed portfolio $5,152,470 $2,306,540 Managed portfolio 60-day delinquency rate at year-end 1.53% 3.30% Managed portfolio net charge-off ratio 2.34% 5.31% Purchase charge volume $3,113,871 $1,742,117 Number of accounts outstanding at year-end 3,406,691 1,961,751 Outstandings per account at year-end $1,512 $1,176 The Bank Card line of business loan portfolio includes approximately $60,000 of other consumer-type loans. 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