<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period Commission file number 1-7901.
ended June 30, 1995
BARNETT BANKS, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-0560515
----------------------------------- -----------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
50 North Laura Street
Jacksonville, Florida 32202
--------------------------------------
(Address of Principal Executive Offices)
(904) 791-7720
-------------------------------------------------
(Registrants 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
requirement for the past 90 days.
Yes X No
----- -----
Barnett Banks, Inc. Common Stock - June 30, 1995:
96,465,227 shares outstanding
<PAGE>
BARNETT BANKS, INC.
Financial Review and Form 10-Q
TABLE OF CONTENTS
PART I-FINANCIAL INFORMATION
-------------------------------------------------------------------------------
Consolidated Financial Highlights. . . . . . . . . . . . . . . . . . . . . 3
Management Discussion (Item 2) . . . . . . . . . . . . . . . . . . . . . . 4
Quarterly Average Balances, Yields and Rates. . . . . . . . . . . . . . 12
Financial Statements (Item 1):
Statements of Financial Condition . . . . . . . . . . . . . . . . . . . 14
Statements of Income. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Statements of Changes in Shareholders' Equity . . . . . . . . . . . . . 16
Statements of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . 17
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . 18
PART II-OTHER INFORMATION
-------------------------------------------------------------------------------
EXHIBITS AND REPORTS ON FORM 8-K (ITEM 6)
Exhibit 11, "Statement Re computation of per share earnings," is included in
the Notes to Financial Statements on page 19 of this report.
BARNETT BANKS, INC. AND SUBSIDIARIES
FORM 10-Q, JUNE 30, 1995
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.
BARNETT BANKS, INC.
Dated: August 11, 1995 /s/ Charles W. Newman
------------------------------
Charles W. Newman
Chief Financial Officer
Dated: August 11, 1995
/s/ Patrick J. McCann
------------------------------
Patrick J. McCann
Controller
2 BARNETT BANKS, INC.
<PAGE>
CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
------------------------------------ ------------------------------
FOR THE PERIODS ENDED JUNE 30-
DOLLARS IN MILLIONS EXCEPT PER SHARE DATA 1995 1994 CHANGE 1995 1994 CHANGE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD
Net interest income (taxable-equivalent)... $435.6 $416.3 5% $866.1 $831.5 4%
Provision for loan losses.................. 26.8 13.7 96 51.1 33.0 55
Non-interest income........................ 183.1 137.4 33 345.9 274.6 26
Non-interest expense....................... 381.9 341.8 12 745.5 682.4 9
Net income................................. 132.2 121.2 9 260.9 239.2 9
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE
Net income:
Primary.................................. $ 1.30 $ 1.19 9% $ 2.57 $ 2.34 10%
Fully diluted............................ 1.26 1.15 10 2.49 2.27 10
Dividends declared......................... .47 .41 15 .88 .77 14
Book value(1).............................. 33.22 29.60 12 33.22 29.60 12
Stock price:
High..................................... 52.25 48.13 9 52.25 48.13 9
Low...................................... 45.50 43.25 5 38.75 39.75 (3)
Close.................................... 51.38 43.75 17 51.38 43.75 17
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
KEY PERFORMANCE RATIOS
Return on assets........................... 1.28% 1.29% (1)% 1.27% 1.27% -
Return on common equity.................... 16.34 16.65 (2) 16.42 16.68 (2)%
Return on total equity..................... 15.83 16.07 (1) 15.90 16.08 (1)
Net yield on earning assets................ 4.80 4.90 (2) 4.79 4.92 (3)
Overhead ratio............................. 61.73 61.73 - 61.51 61.66 -
Shareholders' equity to total assets(1).... 8.18 8.15 - 8.18 8.15 -
Leverage ratio............................. 6.31 7.60 (17) 6.31 7.60 (17)
Total risk-based capital ratio............. 11.26 13.67 (18) 11.26 13.67 (18)
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES
Assets..................................... $41,232 $37,705 9% $41,046 $37,635 9%
Deposits................................... 33,702 31,790 6 33,820 31,831 6
Loans, net of unearned income.............. 29,562 26,413 12 29,232 26,182 12
Earning assets............................. 36,317 34,025 7 36,302 33,911 7
Common equity.............................. 3,125 2,802 12 3,067 2,759 11
Total equity............................... 3,340 3,017 11 3,282 2,974 10
Fully diluted shares (thousands)........... 104,998 105,383 - 104,955 105,132 -
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
AT PERIOD-END
Assets............................................................................... $41,787 $38,063 10%
Deposits............................................................................. 33,970 31,753 7
Loans, net of unearned income........................................................ 29,952 26,694 12
Long-term debt....................................................................... 925 681 36
Preferred stock...................................................................... 215 215 -
Total equity......................................................................... 3,339 3,007 11
Common shares (thousands)............................................................ 96,465 97,516 (1)
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) COMPUTED BASED ON EQUITY BEFORE DEDUCTION OF THE EMPLOYEE STOCK OWNERSHIP
PLAN OBLIGATION.
</TABLE>
BARNETT BANKS, INC. 3
<PAGE>
MANAGEMENT DISCUSSION
TABLE 1 SELECTED QUARTERLY DATA
<TABLE>
<CAPTION>
1995 1994
----------------- ------------------------------------
DOLLARS IN MILLIONS EXCEPT PER SHARE DATA-TAXABLE-EQUIVALENT SECOND FIRST FOURTH THIRD SECOND FIRST
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income. . . . . . . . . . . . . . . . . . . . . . .$435.6 $430.5 $426.2 $419.8 $416.2 $415.3
Provision for loan losses. . . . . . . . . . . . . . . . . . . . 26.8 24.3 25.6 15.4 13.7 19.3
--------------------------------------------------------------------------------------------------------------------------
Net interest income after loan loss provision. . . . . . . . . . 408.8 406.2 400.6 404.4 402.5 396.0
Non-interest income. . . . . . . . . . . . . . . . . . . . . . . 183.1 162.8 129.8 138.1 137.4 137.3
Non-interest expense . . . . . . . . . . . . . . . . . . . . . . 381.9 363.5 341.5 340.3 341.8 340.6
--------------------------------------------------------------------------------------------------------------------------
Income before income taxes . . . . . . . . . . . . . . . . . . . 210.0 205.5 188.9 202.2 198.1 192.7
Income tax provision . . . . . . . . . . . . . . . . . . . . . . 69.4 66.5 52.6 67.6 65.9 63.7
Taxable-equivalent adjustment. . . . . . . . . . . . . . . . . . 8.4 10.3 10.9 11.2 11.0 11.0
--------------------------------------------------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . .$132.2 $128.7 $125.4 $123.4 $121.2 $118.0
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Primary net income per common share. . . . . . . . . . . . . . . $1.30 $1.27 $1.24 $1.21 $1.19 $1.15
Fully diluted net income per common share. . . . . . . . . . . . 1.26 1.23 1.21 1.18 1.15 1.12
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
SUMMARY
Barnett earned $132.2 million, or $1.26 per fully diluted share, in the second
quarter compared to $121.2 million, or $1.15 per share, a year earlier, a
per-share increase of 10%. Second quarter net income was up from $128.7 million,
or $1.23 per share, in the first quarter of 1995.
Return on assets in the second quarter was 1.28%, consistent with the second
quarter of 1994 and slightly above the 1.26% in the first quarter of 1995.
Return on average common shareholders' equity decreased to 16.34% from 16.65% in
the same period last year and 16.51% in the first quarter.
Earnings for the first half of 1995 grew 9% to $260.9 million, or $2.49 per
share, from $239.2 million, or $2.27 per share, earned a year ago. The return on
assets of 1.27% equalled the first half of 1994, while return on average common
shareholders' equity of 16.42% was lower than the 1994 level of 16.68%.
Second quarter taxable-equivalent net interest income rose $19.4 million from
the same period last year to $435.6 million, as income generated from a $2.3
billion increase in earning assets more than offset a 10 basis-point decline in
the net yield on earning assets. Non-interest income rose 33% to $183.1 million
while non-interest expense grew 12% to $381.9 million. These increases reflect
the fee revenue and overhead added by acquired companies. TABLE 1 provides
summary income statements for the last six quarters.
Non-performing assets of $281 million on June 30 fell below 1% of outstandings
to .93%. Net charge-offs and provision expense remained below historic operating
levels. Net charge-offs in the second quarter of $27.3 million were $13.7
million higher than last year, $2.9 million higher than the first quarter and
represented an annualized .37% of average loans. Provision expense was $26.8
million compared to $13.7 million last year and $24.3 million reported in the
first quarter. See TABLES 1, 6 and 7 for further details.
EARNING ASSETS
LOANS. Average loans increased $3.1 billion, or 12%, from the same period last
year and grew at an annualized rate of 9% from the first quarter. The continued
growth in loans was paced by lending to consumers.
Residential loans totaled $11.1 billion, up 16% from $9.6 billion last year.
These loans grew at an annualized rate of 13% during the second quarter.
Mortgage loan originations during the second quarter increased 75% to $1.4
billion from $819 million in the first quarter, primarily reflecting the full
quarter impact of the BancPLUS acquisition.
At the end of the quarter, 75% of the residential loan portfolio consisted of
adjustable-rate mortgages. Most of the adjustable-rate mortgage portfolio
reprices annually based on a spread over the one-year constant maturity Treasury
index, which may be limited by annual and lifetime caps. Barnett has
historically retained adjustable-rate loans in its portfolio. However, as part
of the company's asset-liability management strategy, it may sell
adjustable-rate or fixed-rate mortgages into the secondary market.
Installment loans grew $134 million during the quarter to $8.4 billion,
primarily as a result of growth in home equity loans. Installment loans were
12%, or $898 million higher than the same period last year with increases in all
major product categories. The volume of automobile loans, a significant
component of installment loans, is
4 BARNETT BANKS, INC.
<PAGE>
dependent upon new and used automobile sales, which can vary depending on
economic conditions and other factors.
Bank card outstandings of $1.4 billion were 29% higher than a year earlier and
grew at an annualized rate of 19% during the quarter. This growth is primarily
due to increased marketing initiatives.
Commercial loans grew 9% from last year to $4.6 billion. Commercial real
estate loans decreased slightly from last quarter and the prior year and now
represent $3.3 billion, or 11%, of total loans.
INVESTMENT SECURITIES AND OTHER EARNING ASSETS. The company's securities
portfolio consists primarily of AAA or equivalent-rated securities, including
44% U.S. Treasury securities, with an average life of 1.24 years. Average
securities of $6.7 billion were $838 million, or 11%, lower than the same period
last year and 8% below the first quarter. During the quarter, proceeds from
maturing securities were used to fund loan growth. The available-for-sale
securities portfolio had a $29.6 million unrealized gain at June 30, due to
declines in market interest rates during the period, compared to a $1.1 million
unrealized gain at March 31.
DEPOSITS AND OTHER FUNDING SOURCES
DEPOSITS. Average deposits rose $1.9 billion, or 6%, from the second quarter
of last year to $33.7 billion, reflecting the acquisition of the Florida
franchise of Glendale Federal Bank, FSB on December 15, 1994, offset in part by
reductions in transaction, money market and savings account balances.
<TABLE>
<CAPTION>
TABLE 2 INTEREST RATE SENSITIVITY ANALYSIS
NON-RATE
SENSITIVE
0-30 31-90 91-180 181-365 AND OVER
JUNE 30, 1995-DOLLARS IN MILLIONS. . . . . . . DAYS DAYS DAYS DAYS ONE YEAR TOTAL
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and agricultural . . . . $3,211 $ 158 $ 154 $ 205 $ 884 $ 4,612
Real estate construction . . . . . . . . . . . 883 7 5 6 53 954
Commercial mortgages . . . . . . . . . . . . . 1,050 135 208 221 731 2,345
Residential mortgages. . . . . . . . . . . . . 759 1,246 1,875 3,771 3,606 11,257
Installment. . . . . . . . . . . . . . . . . . 1,746 459 669 1,290 4,396 8,560
Other loans. . . . . . . . . . . . . . . . . . 1,573 - 43 - 608 2,224
---------------------------------------------------------------------------------------------------------
Total loans . . . . . . . . . . . . . . . 9,222 2,005 2,954 5,493 10,278 29,952
Securities . . . . . . . . . . . . . . . . . . 350 90 1,351 1,957 2,757 6,505
Federal funds sold and other earning assets. . 10 10
---------------------------------------------------------------------------------------------------------
Total earning assets. . . . . . . . . . . $9,582 $2,095 $4,305 $7,450 $13,035 $36,467
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
NOW accounts . . . . . . . . . . . . . . . . . $ 5,652 $5,652
Money market accounts. . . . . . . . . . . . . 7,035 7,035
Savings deposits . . . . . . . . . . . . . . . 3,418 3,418
Time deposits. . . . . . . . . . . . . . . . . 1,781 $1,747 $2,309 $3,329 $3,085 12,251
---------------------------------------------------------------------------------------------------------
Total deposits. . . . . . . . . . . . . . 17,886 1,747 2,309 3,329 3,085 28,356
Short-term borrowings. . . . . . . . . . . . . 2,594 325 2,919
Long-term debt . . . . . . . . . . . . . . . . 72 275 50 528 925
---------------------------------------------------------------------------------------------------------
Total interest bearing liabilities. . . . $20,552 $2,347 $2,309 $3,379 $3,613 $32,200
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
Gap before interest rate swaps and management
adjustments . . . . . . . . . . . . . . . $(10,970) $ (252) $ 1,996 $4,071 $ 9,422
Management adjustments(1). . . . . . . . . . . 7,875 737 415 131 (9,158)
Interest rate swaps. . . . . . . . . . . . . . (955) (543) 1,465 33
---------------------------------------------------------------------------------------------------------
Interest rate sensitivity gap adjusted
for interest rate swaps and management
adjustments. . . . . . . . . . . . . . . . . (4,050) (58) 2,411 5,667 297
Cumulative adjusted interest rate
sensitivity gap. . . . . . . . . . . . . . . . (4,050) (4,108) (1,697) 3,970
Cumulative adjusted gap as a percentage of
earning assets:
June 30, 1995 . . . . . . . . . . . . . . (11.11)% (11.26)% (4.65)% 10.89%
June 30, 1994 . . . . . . . . . . . . . . (14.10) (13.11) (7.69) 4.53
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
<FN>
(1) MANAGEMENT ADJUSTMENTS REFLECT THE COMPANY'S ESTIMATES OF THE EFFECTS OF
EARLY PRINCIPAL REPAYMENTS ON RESIDENTIAL AND OTHER AMORTIZING LOANS AND
SECURITIES AND THE ANTICIPATED REPRICING SENSITIVITY OF NON-MATURITY DEPOSIT
PRODUCTS. HISTORICALLY, BALANCES ON NON-MATURITY DEPOSIT ACCOUNTS HAVE REMAINED
RELATIVELY STABLE DESPITE CHANGES IN MARKET INTEREST RATES. MANAGEMENT HAS
CLASSIFIED CERTAIN OF THESE ACCOUNTS AS NON-RATE SENSITIVE BASED ON MANAGEMENT'S
HISTORICAL PRICING PRACTICES AND RUNOFF EXPERIENCE. TWO-THIRDS OF THE NOW AND
SAVINGS ACCOUNT BALANCES, AND APPROXIMATELY 20% OF THE MONEY MARKET ACCOUNT
BALANCES, ARE CLASSIFIED AS NON-RATE SENSITIVE.
</TABLE>
BARNETT BANKS, INC. 5
<PAGE>
Certificates of deposit rose $3.2 billion from a year ago, but transaction,
money market and savings account balances dropped $1.3 billion. This shift in
the deposit base contributed to a 74 basis-point increase in the rate paid on
interest-bearing deposits.
Average deposits fell $237 million during the quarter, as transaction, money
market and savings account balances dropped $760 million and CDs rose $523
million. This shift in the deposit base was a factor in an 11 basis-point
increase in the rate paid on interest-bearing deposits. This trend is discussed
further in the NET-INTEREST INCOME section.
OTHER FUNDING SOURCES. Average federal funds purchased, securities sold under
agreements to repurchase and other short-term borrowings of $2.7 billion were
$883 million higher than the previous year and $417 million higher than the
first quarter. During the quarter, the company began to utilize a commercial
paper facility to fund its mortgage banking and consumer finance loan pipelines,
replacing higher cost funding sources at each entity. Borrowings under this
facility were $537 million at June 30.
ASSET-LIABILITY MANAGEMENT
Net interest income, Barnett's primary source of revenue, is affected by
changes in interest rates as well as the level and mix of earning assets and
interest-bearing liabilities. The impact of changes in interest rates on the
company's net interest income represents Barnett's level of interest rate
sensitivity. Barnett uses several asset-liability management techniques to
measure its interest rate sensitivity within specific rate-sensitivity limits.
Interest rate sensitivity is primarily a function of the repricing structure
of the company's balance sheet. TABLE 2 shows this structure as of June 30, with
each maturity interval referring to the earliest repricing opportunity (i.e.,
the earlier of scheduled contractual maturity or next rate reset date) for each
asset and liability. The resultant gaps are a measure of the sensitivity of
earnings to changes in interest rates.
In order to more appropriately reflect the repricing structure of the
company's balance sheet, management has made certain adjustments to the table.
Based on historical and industry data, an estimate of the expected prepayments
of amortizing loans and investment securities is included in the analysis.
Similarly, an adjustment is made to reflect the behavioral characteristics of
certain core deposits without contractual maturity (i.e., interest-bearing
checking, savings and money market deposit accounts). The footnote accompanying
the table more fully explains the specific adjustments made to the analysis.
This analysis indicates that the company was moderately liability sensitive on
June 30, with a six-month negative gap of 4.65%.
In addition to gap analysis, management uses rate-shock simulation and
duration of equity to measure the rate sensitivity of its balance sheet. These
measures of risk show that a 1.00% change in interest rates would not have a
material impact on the net interest margin over a twelve month period.
Barnett controls its interest rate risk principally by managing the level and
duration of certain balance sheet assets and liabilities. The company also uses
off-balance-sheet instruments (derivatives) to manage its interest rate
sensitivity position. Barnett ensures that both balance sheet and
off-balance-sheet instruments used for asset-liability management purposes are
consistent with safe and sound banking practices.
The company's current derivatives portfolio used for asset liability
management purposes, summarized in TABLE 3, has a notional amount of $2.6
billion. This portfolio consists of $2.35
<TABLE>
<CAPTION>
TABLE 3 DERIVATIVE FINANCIAL INSTRUMENTS
WEIGHTED AVERAGE INTEREST RATE
-------------------------------
AVERAGE
NOTIONAL REPLACEMENT RECEIVE PAY MATURITY
JUNE 30, 1995- DOLLARS IN MILLIONS AMOUNT VALUE RATE(1) INDEX RATE(1) INDEX IN YEARS
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest rate swaps:
Basis swap. . . . . . . . . . $ 50 $.47 6.06% LIBOR 5.13% CMT 2.58
Generic swaps:
Receive fixed . . . . . . . 1,040 (9.24) 4.38 Fixed 6.34 LIBOR .65
Pay fixed . . . . . . . . . 267 (.71) 6.09 LIBOR 6.38 Fixed 2.24
Index-principal swaps . . . . 997 (5.93) 4.63 Fixed 6.18 LIBOR .90(2)
Interest rate floors . . . . . . . 250 3.56 6.00(3) LIBOR - - 2.50
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) BASED UPON CONTRACTUAL RATES AT JUNE 30, 1995.
(2) THE MATURITY OF INDEX-PRINCIPAL SWAPS CAN EXTEND TO A MAXIMUM AVERAGE OF
2.10 YEARS.
(3) THE COMPANY RECEIVES INTEREST EQUAL TO THE AMOUNT BY WHICH LIBOR IS LESS
THAN 6.00%.
</TABLE>
6 BARNETT BANKS, INC.
<PAGE>
TABLE 4 CHANGE IN NET INTEREST INCOME
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
--------------------------------- ---------------------------------
FOR THE PERIODS ENDED JUNE 30, 1995-- CHANGE FROM PREVIOUS YEAR DUE TO: CHANGE FROM PREVIOUS YEAR DUE TO:
--------------------------------- ---------------------------------
TAXABLE-EQUIVALENT DOLLARS IN MILLIONS VOLUME RATE(1) TOTAL VOLUME RATE(1) TOTAL
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans . . . . . . . . . . . . . . . . . . $66.4 $46.6 $113.0 $127.8 $ 80.2 $208.0
Taxable securities. . . . . . . . . . . . (7.1) 14.1 7.0 (10.0) 29.7 19.7
Tax-free securities . . . . . . . . . . . (7.0) (.4) (7.4) (12.4) 2.7 (9.7)
Other earning assets. . . . . . . . . . . (.2) .2 - (.4) .8 .4
-------------------------------------------------------------------------------------------------------------------
Total interest income. . . . . . . . 52.1 60.5 112.6 105.0 113.4 218.4
-------------------------------------------------------------------------------------------------------------------
Interest expense:
NOW accounts. . . . . . . . . . . . . . . (.9) (.7) (1.6) (1.5) 2.6 1.1
Money market accounts . . . . . . . . . . (5.1) 6.9 1.8 (7.3) 21.1 13.8
Savings deposits. . . . . . . . . . . . . (.1) (.3) (.4) .6 3.6 4.2
Certificates of deposit under $100,000. . 28.0 26.8 54.8 51.3 44.8 96.1
Other time deposits . . . . . . . . . . . 5.0 7.5 12.5 8.3 12.2 20.5
-------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits. . . 26.9 40.2 67.1 51.4 84.3 135.7
Federal funds purchased and securities
sold under agreements to repurchase . . 1.6 9.6 11.2 2.6 20.8 23.4
Other short-term borrowings . . . . . . . 7.9 4.3 12.2 11.3 8.6 19.9
Long-term debt. . . . . . . . . . . . . . 3.6 (.9) 2.7 6.5 (1.7) 4.8
-------------------------------------------------------------------------------------------------------------------
Total interest expense . . . . . . . 40.0 53.2 93.2 71.8 112.0 183.8
-------------------------------------------------------------------------------------------------------------------
Net interest income. . . . . . . . . $12.1 $ 7.3 $ 19.4 $ 33.2 $ 1.4 $ 34.6
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
<FN>
(1) INCLUDES CHANGES IN INTEREST INCOME AND EXPENSE NOT DUE SOLELY TO VOLUME OR
RATE CHANGES.
</TABLE>
billion of interest rate swaps and $250 million of interest rate floors. Most of
the company's swaps involve receipt of fixed cash flows in exchange for variable
(primarily LIBOR-based) cash flows. The swaps are linked to prime rate loans and
create a net fixed-rate cash flow. The $250 million interest rate floor
contracts are indexed to the 3-month LIBOR and have terms which span 1996 and
1997. These swaps and floors were executed to reduce the company's exposure to
flat or falling interest rates.
Approximately half of the interest rate swap portfolio is fixed-term
non-amortizing interest rate swaps which mature in early 1996. The other half of
the swap portfolio is indexed amortizing instruments with expected maturities of
less than one year. These instruments have similar characteristics to
balance-sheet instruments typically used by the company for asset-liability
management purposes.
The derivatives portfolio has operated as intended, reducing the company's
exposure to falling or flat interest rates. The replacement value related to the
company's derivatives portfolio, including deferred gains, was a positive $12.3
million on June 30, 1995 compared to a negative $49 million at March 31, 1995.
This favorable change was due to declining interest rates during the period.
During the quarter, the company executed early termination of $1.75 billion of
interest rate floors resulting in a net gain of $24 million. This gain was
deferred and will be amortized in 1996 and 1997, the period over which the
floors were intended to provide protection from falling rates. The decision to
terminate the floors early was based on a significant decline in interest rates
during the quarter which caused the value of the floors to reach the protection
levels targeted at purchase.
The interest rate swap portfolio reduced interest income in the second quarter
of 1995 by $9.4 million and increased interest expense by $200 thousand,
representing an 11 basis-point reduction in the net yield on earning assets. The
portfolio increased second quarter 1994 net interest income by $1.7 million, or
a 2 basis point increase in the net yield. The 1994 increase consisted of a $2.7
million increase to interest income and a $1.0 million increase to interest
expense.
Barnett manages the credit exposure of its derivatives in a manner consistent
with the granting of credit. Any exposure is generally measured by the market
replacement value at any point in time. Barnett utilizes collateral exchange
agreements with derivatives counterparties in order to control the level of
credit exposure to these entities.
NET INTEREST INCOME
Barnett's taxable-equivalent net interest income in the first quarter was
$435.6 million, up $5.1 million from the first quarter and $19.4 million from
last year's level. These increases primarily reflect loan growth, as discussed
in the EARNING ASSETS section. TABLE 4 shows the changes in net interest
income by
BARNETT BANKS, INC. 7
<PAGE>
TABLE 5 OTHER NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
1995 1994
------------------ ------------------------------------------
DOLLARS IN THOUSANDS SECOND FIRST FOURTH THIRD SECOND FIRST
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Advertising and marketing. . . . . . . . . . . $ 7,737 $ 5,416 $ 8,600 $ 7,427 $ 6,594 $ 6,680
Amortization of intangibles. . . . . . . . . . 14,022 12,326 9,235 8,729 9,138 9,474
Communications . . . . . . . . . . . . . . . . 10,464 9,321 8,663 8,928 9,130 7,024
Expenses and provision on real estate held for
sale . . . . . . . . . . . . . . . . . . . . 3,418 3,513 2,087 3,083 4,483 6,419
FDIC assessments . . . . . . . . . . . . . . . 18,565 18,533 17,467 17,760 18,042 18,140
Franchise and credit card fees . . . . . . . . 5,613 4,398 4,271 4,150 3,887 4,139
Outside computer services. . . . . . . . . . . 10,214 10,404 9,205 9,754 8,499 9,250
Postage. . . . . . . . . . . . . . . . . . . . 6,584 6,311 6,170 5,420 5,831 5,756
Stationery and supplies. . . . . . . . . . . . 4,770 4,708 4,694 3,428 3,939 3,706
Insurance, taxes and other . . . . . . . . . . 43,334 45,724 45,258 46,374 44,167 43,775
-------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . $124,721 $120,654 $115,650 $115,053 $113,710 $114,363
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
</TABLE>
category due to shifts in volume and rate.
The net yield on earning assets declined to 4.80% from 4.90% a year earlier,
but increased from 4.77% last quarter. The contraction in the net interest
margin from last year was caused primarily by increased funding costs and
changes in deposit mix, partially offset by asset repricing. The increase in net
yield from the first quarter was primarily due to favorable changes in asset
mix, as $600 million in proceeds from maturing securities was redeployed into
higher yielding loans.
The rate on interest-bearing liabilities rose 88 basis points from the second
quarter of 1994. That increase reflects the Federal Reserve's actions to
increase short-term interest rates during the period, as well as increased use
of non-deposit funding and the change in deposit mix discussed above. The rate
paid on interest-bearing liabilities in the second quarter increased 16 basis
points over the first quarter level, primarily reflecting the changing deposit
mix and higher rates paid on CD balances.
The rate earned on interest-bearing assets rose 19 basis points from the first
quarter, due to the repricing of adjustable rate mortgages and the impact of
higher yielding loans replacing maturing securities. The yield on
interest-bearing assets increased 77 basis points from the second quarter of
1994, as a result of the impact of increases in market interest rates during the
period.
NON-INTEREST INCOME
Barnett's non-interest income of $183.1 million was 33% higher than the $137.4
million reported a year ago and 12% higher than the $162.8 million last quarter.
These increases were generated by the acquisitions of EquiCredit and BancPLUS
during the first quarter. Consumer finance income of $18.6 million represented
the revenue generated through EquiCredit's quarterly securitization program and
fees for consumer loan servicing.
Mortgage banking income rose $16.5 million over the same period last year and
$16.0 million compared to the first quarter, primarily due to increased net loan
servicing revenue as a result of the acquisition of BancPLUS on February 27,
1995, as well as a $6.7 million gain on the sale of mortgage servicing rights in
the second quarter.
Mortgage servicing rights provide an ongoing source of fee income to the
company. At June 30, the mortgage servicing portfolio stood at $33.1 billion.
This portfolio has grown from $13.4 billion a year ago, largely as a result of
acquisitions. The mortgage servicing portfolio increased $548 million during the
second quarter, net of the sale of servicing rights mentioned above.
Credit card discounts and fees grew 10% from the same quarter in 1994 and 5%
from the first quarter due to successful efforts of increased marketing
initiatives.
Trust income increased modestly from last year and the first quarter
reflecting higher retail trust fees as a result of an increase in assets under
management.
NON-INTEREST EXPENSE
Non-interest expense rose 12%, or $40.1 million, from a year ago and $18.4
million from last quarter. The overhead ratio of 61.7% in the second quarter was
consistent with last year's ratio and higher than the prior quarter's 61.3%,
primarily due to higher salaries and benefits and the full quarter impact of the
recent acquisitions.
Salaries and benefits increased 16%, or $26.6 million, from the same period
last year and $13.0 million from last quarter to $190.0 million. These increases
primarily reflect the full quarter impact of the addition of 1,431 full-time
equivalent employees through acquisitions in the first quarter. Full-time
equivalent employees were 19,890 at June 30, compared to
8 BARNETT BANKS, INC.
<PAGE>
20,183 at March 31, 1995 and 18,420 a year ago.
Occupancy and equipment expenses rose 4%, or $2.0 million, from the second
quarter of 1994 and $1.0 million from the first quarter of 1995, reflecting the
full quarter impact of the BancPLUS and EquiCredit acquisitions. The company
continued to rationalize its delivery system, closing 10 banking offices during
the quarter.
Other expense grew 10%, or $11.0 million, from last year's level and $4.1
million from the first quarter, reflecting increased advertising and marketing
expenses and higher amortization of intangible assets due to acquisitions.
Details of other expense for the past six quarters are shown in TABLE 5.
ASSET QUALITY
RISK ELEMENTS. As shown in TABLE 6, non-performing assets stood at $281
million on June 30, representing .93% of gross loans plus real estate held for
sale. In comparison, non-performing assets stood at $336 million, or 1.25% of
outstandings, on the same date last year, and $297 million, or 1.01% of
outstandings, at March 31, 1995. The decrease from last year and last quarter is
the result of the continued resolution of problem loans, either through
repayment, workout of satisfactory credit arrangements with the borrower,
foreclosure, or reductions due to charge-offs.
Borrower experience and financial capacity are critical factors in
underwriting and approving all loan requests. Barnett's commercial real estate
loan policies generally require a maximum loan-to-value ratio of 75% and a
minimum equity requirement of 20% of cost.
Barnett has reduced its exposure to commercial real estate from a high of 28%
of loans in 1988 to 11% this quarter. The corporate loan portfolio is not
concentrated in any single industry, but reflects the broad-based service
sectors in Florida and southern Georgia.
Barnett's consumer delinquencies remain below national peer averages.
Installment loans 30 days or more past due were .79% compared to .74% at the end
of the first quarter and .62% last year. The bank card delinquency ratio
declined to 2.52% from 2.74% at the end of the first quarter but increased
modestly from 2.49% in the same period in 1994.
Barnett's residential loans generally are secured by 1-4 family homes, conform
to federal agency underwriting standards and have a maximum loan-to-value ratio
of 80% unless they are protected by mortgage insurance.
Barnett's installment loan portfolio during the second quarter consisted
primarily of loans secured by new and used automobiles (63%), home equity loans
(19%) and government guaranteed student loans (12%).
NET CHARGE-OFFS. As shown in TABLE 7, net charge-offs were $27.3 million, up
from $13.6 million a year earlier and $24.4 million in the first quarter. The
ratio of net charge-offs to average loans remained below the company's expected
long-term operating range of 50 to 60 basis points. Net charge-offs in the
second quarter represented an annualized .37% of average outstandings, compared
to .34% in the first quarter and .21% for the same period last year.
PROVISION/ALLOWANCE FOR LOAN LOSSES. Barnett's provision expense in the second
quarter was $26.8 million, compared to $13.7 million in last year's second
quarter and $24.3 million reported in the first quarter.
The reserve for loan losses stood at $503 million on June 30, 4% lower than a
year ago and unchanged from the first quarter. The decline in the reserve from
last year, though modest in relation to the reduction in non-performing loans,
reflects the changing risk profile of the portfolio. The percentage of loans to
consumers and small businesses has increased. These loans are smaller, limiting
the company's exposure to potential loss from an individual borrower, and have
more predictable loss experience throughout economic cycles. Small business
loans with an
TABLE 6 NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
1995 1994
-------------------- ----------------------
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
JUNE 30-DOLLARS IN THOUSANDS AMOUNT OUTSTANDING(1) AMOUNT OUTSTANDING(1)
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Non-accruing loans:
Less than 90 days past due . . . $ 71,495 .24% $ 75,576 .28%
90 days past due . . . . . . . . 132,920 .44 144,685 .54
---------------------------------------------------------------------------------
Total non-accruing loans . . . . 204,415 .68 220,261 .82
Reduced-rate loans . . . . . . . . 3,727 .01 4,803 .02
---------------------------------------------------------------------------------
Total non-performing loans . . . 208,142 .69 225,064 .84
Real estate held for sale. . . . . 72,727 .24 110,574 .41
---------------------------------------------------------------------------------
Total non-performing assets. . . $280,869 .93% $335,638 1.25%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Non-performing loans by category:
Commercial, financial and
agricultural . . . . . . . . . $ 38,427 .13% $72,339 .27%
Real estate construction . . . . 22,979 .08 11,730 .05
Commercial mortgages . . . . . . 76,395 .25 89,464 .33
Residential mortgages. . . . . . 70,341 .23 51,531 .19
---------------------------------------------------------------------------------
Total . . . . . . . . . . . . . $208,142 .69% $225,064 .84%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
90 days past due accruals. . . . . $ 35,661 .12% $34,423 .13%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
<FN>
(1) BEFORE DEDUCTION FOR UNEARNED INCOME.
</TABLE>
BARNETT BANKS, INC. 9
<PAGE>
<TABLE>
<CAPTION>
TABLE 7 LOAN QUALITY INFORMATION
1995 1994
------------------ ------------------------------------
DOLLARS IN THOUSANDS SECOND FIRST FOURTH THIRD SECOND FIRST
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net charge-offs (recoveries):
Commercial, financial and agricultural . . . . . . . . . . . . . $(1,863) $(2,781) $2,365 $844 $(5,243) $(991)
Real estate construction . . . . . . . . . . . . . . . . . . . . 147 190 115 18 1,014 640
Commercial mortgages . . . . . . . . . . . . . . . . . . . . . . 2,392 499 16,239 (4,368) (1,621) (2,318)
Residential mortgages. . . . . . . . . . . . . . . . . . . . . . 261 739 423 369 576 435
Installment. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,229 12,381 12,994 8,196 9,184 12,159
Bank card. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,510 12,683 10,609 9,564 8,695 8,887
Credit lines . . . . . . . . . . . . . . . . . . . . . . . . . . 629 727 1,123 793 1,013 601
--------------------------------------------------------------------------------------------------------------------------------
Total net charge-offs . . . . . . . . . . . . . . . . . . . . $27,305 $24,438 $43,868 $15,416 $13,618 $ 19,413
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Gross charge-offs. . . . . . . . . . . . . . . . . . . . . . . . . $ 42,529 $ 36,125 $ 57,578 $ 30,775 $ 28,222 $ 31,875
Allowance for loan losses. . . . . . . . . . . . . . . . . . . . . 502,521 502,800 501,447 521,871 521,843 521,763
Non-performing loans . . . . . . . . . . . . . . . . . . . . . . . 208,142 221,943 200,455 218,582 225,064 268,992
Non-performing assets. . . . . . . . . . . . . . . . . . . . . . . 280,869 297,223 290,862 303,776 335,638 395,792
Non-performing asset ratio . . . . . . . . . . . . . . . . . . . . .93% 1.01% 1.01% 1.10% 1.25% 1.50%
Net charge-offs to average loans (annualized). . . . . . . . . . . .37 .34 .63 .23 .21 .30
Allowance to non-performing loans. . . . . . . . . . . . . . . . . 241 227 250 239 232 194
Allowance to period-end loans. . . . . . . . . . . . . . . . . . . 1.68 1.72 1.76 1.91 1.95 1.99
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
average loan size of $50,000 to $75,000 are often secured by real estate.
The ratio of the allowance for loan losses to non-performing loans remained
strong as of quarter-end at 241%, compared to 232% a year earlier.
Management believes it is prudent to maintain a strong allowance for loan
losses and considers the current level adequate to cover losses inherent in the
loan portfolio based on current economic conditions.
TAXES
Barnett's income tax expense in interim reporting periods is determined by
estimating the combined federal and state effective tax rate for the year and
applying this rate to taxable income. The company's estimated effective tax rate
for 1995 is 34%.
LIQUIDITY
For banks, liquidity represents the ability to meet both loan commitments and
deposit withdrawals. Funds to meet these needs can be obtained by converting
liquid assets to cash or by attracting new deposits or other sources of funding.
Many factors affect a bank's ability to meet liquidity needs, including
variations in the markets served by its office network, its asset-liability mix,
its reputation and credit standing in the market, and general economic
conditions.
In addition to its traditional in-market deposit sources, Barnett has many
other sources of liquidity, including securities available for sale, asset
securitization and other non-relationship funding sources such as bank notes,
commercial paper and wholesale purchased funds.
The high proportion of residential and installment loans on Barnett's balance
sheet provides it with an exceptional amount of contingent liquidity through the
conventional securitization programs that exist today. Management believes that
the level of liquidity is sufficient to meet current and future funding
requirements.
On April 1, the company commenced a commercial paper program to provide the
primary funding for its mortgage banking and consumer finance operations. At
June 30, the company had $650 million in back-up lines of credit for this
program.
During the quarter, the company issued $100 million in medium-term notes. As
of June 30, the company had approximately $1.0 billion in debt and preferred
stock remaining under existing shelf registrations with the Securities and
Exchange Commission.
CAPITAL
On June 30, shareholders' equity totaled $3.3 billion, up 11% from a year
earlier. Shareholders' equity, before deducting the Employee Stock Ownership
Plan obligation, was 8.18% of assets at the end of the second quarter, compared
to 8.15% a year earlier.
The growth of shareholders' equity was provided primarily through retained
earnings. During the last 12 months, this source added $327 million to capital.
Barnett declared a dividend of $.47 for the second quarter, up 15% from the
$.41 declared in the first quarter and representing a common dividend payout
ratio of 37%. The company also initiated a common stock buyback program during
the quarter. The Board of Directors
BARNETT BANKS, INC. 10
<PAGE>
<TABLE>
<CAPTION>
TABLE 8 CAPITAL RATIOS
JUNE 30-DOLLARS IN MILLIONS 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C>
Tier I capital . . . . . . . . . . . . . . . . . . . . . $2,554 $2,847
Total risk-based capital . . . . . . . . . . . . . . . . 3,297 3,637
Total risk-adjusted assets . . . . . . . . . . . . . . . 29,270 26,596
-----------------------------------------------------------------------------
Tier I capital ratio . . . . . . . . . . . . . . . . . . 8.72% 10.70%
Total risk-based capital ratio . . . . . . . . . . . . . 11.26 13.67
Tier I leverage ratio. . . . . . . . . . . . . . . . . . 6.31 7.60
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
approved the repurchase of up to 10 million shares of common stock. The board
also authorized management to call the Preferred Stock Series C and A on or
after their earliest redemption dates of October 1995 and April 1996,
respectively.
The company is subject to risk-based capital guidelines that measure capital
relative to risk-weighted assets and off-balance-sheet financial instruments.
Capital guidelines issued by the Federal Reserve Board require bank holding
companies to have a minimum total risk-based capital ratio of 8%, with at least
half of total capital in the form of Tier I capital.
As TABLE 8 shows, Barnett significantly exceeded these capital guidelines on
June 30, with a Tier I capital ratio of 8.72% and a total risk-based capital
ratio of 11.26%.
In addition, a leverage ratio is used in connection with the risk-based
capital standards and is defined as Tier I capital divided by average assets for
the most recent quarter. The minimum leverage ratio under this standard is 3%
for the highest-rated bank holding companies which are not undertaking
significant expansion programs. An additional 1% to 2% may be required for other
companies, depending upon their regulatory ratings and expansion plans. On June
30, Barnett's leverage ratio was 6.31%, 6 basis points higher than the first
quarter and well in excess of regulatory requirements, but 129 basis points
lower than last year. The decline in the leverage ratio from last year reflects
asset growth and the addition of intangible assets from acquisitions, which are
deductions from Tier I capital.
IMPACT OF ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The statement
must be adopted by the company on or before January 1, 1996. The company has not
yet adopted the standard, but in management's opinion adoption of this standard
will not have a significant impact on the financial condition or results of
operations of the company.
In May 1995, the Financial Accounting Standards Board issued SFAS No. 122,
"Accounting for Mortgage Servicing Rights." The statement eliminates the
distinction between rights to service mortgage loans for others that are
acquired through origination and those acquired through purchase transactions.
The company must adopt the statement prospectively by January 1, 1996, but may
adopt earlier. The company has not yet adopted the standard. Adoption of the
standard will result in recognition of additional servicing right assets and
related income. The company is currently evaluating the impact of adoption.
BARNETT BANKS, INC. 11
<PAGE>
QUARTERLY AVERAGE BALANCES, YIELDS AND RATES
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
1995
-----------------------------------------------------------
SECOND FIRST
---------------------------- ---------------------------
AVERAGE AVERAGE
AVERAGE YIELD AVERAGE YIELD
DOLLARS IN MILLIONS--TAXABLE-EQUIVALENT BALANCE INTEREST OR RATE BALANCE INTEREST OR RATE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:
Commercial, financial and agricultural . . . . . . . . . . . . . . . $ 4,555 $95.8 8.43% $4,442 $91.9 8.39%
Real estate construction . . . . . . . . . . . . . . . . . . . . . . 948 25.3 10.69 925 24.2 10.62
Commercial mortgages . . . . . . . . . . . . . . . . . . . . . . . . 2,345 51.0 8.72 2,383 50.5 8.60
Residential mortgages. . . . . . . . . . . . . . . . . . . . . . . . 11,110 210.2 7.57 10,755 198.9 7.40
Installment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,435 185.9 8.84 8,301 176.6 8.63
Bank card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,439 59.1 16.47 1,375 53.0 15.64
Credit lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . 730 19.2 10.55 718 16.9 9.53
----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income . . . . . . . . . . . . . . . 29,562 643.7 8.73 28,899 608.0 8.49
----------------------------------------------------------------------------------------------------------------------------------
Securities(1):
Taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,194 86.3 5.58 6,702 92.2 5.57
Tax-free . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514 15.5 12.02 593 21.3 14.34
----------------------------------------------------------------------------------------------------------------------------------
Total securities . . . . . . . . . . . . . . . . . . . . . . . . 6,708 101.8 6.07 7,295 113.5 6.29
----------------------------------------------------------------------------------------------------------------------------------
Other earning assets . . . . . . . . . . . . . . . . . . . . . . . . . 47 .7 6.14 92 1.3 5.92
----------------------------------------------------------------------------------------------------------------------------------
Total earning assets . . . . . . . . . . . . . . . . . . . . . . 36,317 $746.2 8.23% 36,286 $722.8 8.04%
----------------------------------------------------------------------------------------------------------------------------------
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,012 2,064
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,401 3,007
Allowance for loan losses. . . . . . . . . . . . . . . . . . . . . . . (498) (499)
----------------------------------------------------------------------------------------------------------------------------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $41,232 $40,858
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
NOW accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,576 $ 22.2 1.60% $ 5,750 $ 26.0 1.84%
Money market accounts. . . . . . . . . . . . . . . . . . . . . . . . . 7,089 51.3 2.90 7,448 55.0 3.00
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,451 17.2 2.00 3,619 20.3 2.27
Certificates of deposit under $100,000 . . . . . . . . . . . . . . . . 10,071 131.5 5.24 9,698 116.3 4.86
Other time deposits. . . . . . . . . . . . . . . . . . . . . . . . . . 2,133 29.4 5.52 1,983 24.6 5.02
----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits . . . . . . . . . . . . . . . . 28,320 251.6 3.56 28,498 242.2 3.45
Federal funds purchased and securities sold under agreements
to repurchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,892 27.9 5.91 1,734 24.4 5.71
Other short-term borrowings. . . . . . . . . . . . . . . . . . . . . . 838 13.3 6.37 579 8.6 6.02
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 842 17.8 8.48 815 17.1 8.40
----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities. . . . . . . . . . . . . . . 31,892 $310.6 3.91% 31,626 $292.3 3.75%
Demand deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,382 5,441
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 618 568
Preferred equity . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 215
Common equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,125 3,008
----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity. . . . . . . . . . . . . . . . . . $41,232 $40,858
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
SPREAD AND NET YIELD
Interest rate spread . . . . . . . . . . . . . . . . . . . . . . . . . 4.32% 4.29%
Cost of funds supporting earning assets. . . . . . . . . . . . . . . . 3.43 3.27
Net yield on earning assets. . . . . . . . . . . . . . . . . . . . . . $435.6 4.80 $430.5 4.77
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) AVERAGE YIELDS ON INVESTMENT SECURITIES AVAILABLE FOR SALE HAVE BEEN
CALCULATED BASED ON AMORTIZED COST.
</TABLE>
12 BARNETT BANKS, INC.
<PAGE>
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------------
FOURTH THIRD
-------------------------------- -----------------------------
AVERAGE AVERAGE
AVERAGE YIELD AVERAGE YIELD
DOLLARS IN MILLIONS--TAXABLE-EQUIVALENT BALANCE INTEREST OR RATE BALANCE INTEREST OR RATE
------------------------------------------------------------------------------------------------ -----------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:
Commercial, financial and agricultural . . . . . . . . . . . $ 4,350 $ 87.8 8.01% $ 4,285 $ 84.1 7.79%
Real estate construction . . . . . . . . . . . . . . . . . . 896 22.5 9.94 833 19.5 9.31
Commercial mortgages . . . . . . . . . . . . . . . . . . . . 2,428 51.5 8.42 2,456 51.9 8.38
Residential mortgages. . . . . . . . . . . . . . . . . . . . 10,229 185.7 7.26 9,769 175.2 7.17
Installment. . . . . . . . . . . . . . . . . . . . . . . . . 7,996 168.8 8.38 7,770 162.7 8.31
Bank card. . . . . . . . . . . . . . . . . . . . . . . . . . 1,286 48.6 15.01 1,165 47.6 16.21
Credit lines . . . . . . . . . . . . . . . . . . . . . . . . 704 15.4 8.69 690 14.7 8.45
---------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income . . . . . . . . . . 27,889 578.1 8.25 26,968 553.0 8.16
---------------------------------------------------------------------------------------------------------------------------------
Securities(1):
Taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,815 86.7 5.07 6,785 82.4 4.84
Tax-free . . . . . . . . . . . . . . . . . . . . . . . . . . 660 23.3 14.10 691 23.3 13.49
---------------------------------------------------------------------------------------------------------------------------------
Total securities . . . . . . . . . . . . . . . . . . . . 7,475 110.0 5.87 7,476 105.7 5.64
---------------------------------------------------------------------------------------------------------------------------------
Other earning assets . . . . . . . . . . . . . . . . . . . . . 67 .8 5.26 50 .6 4.61
---------------------------------------------------------------------------------------------------------------------------------
Total earning assets . . . . . . . . . . . . . . . . . . 35,431 $688.9 7.74% 34,494 $659.3 7.61%
---------------------------------------------------------------------------------------------------------------------------------
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,061 1,985
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 2,302 2,159
Allowance for loan losses. . . . . . . . . . . . . . . . . . . (524) (519)
---------------------------------------------------------------------------------------------------------------------------------
Total assets . . . . . . . . . . . . . . . . . . . . . . $39,270 $38,119
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
NOW accounts . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,639 $ 25.7 1.81% $ 5,572 $ 24.6 1.75%
Money market accounts. . . . . . . . . . . . . . . . . . . . . 7,714 54.5 2.80 7,904 53.4 2.68
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . 3,477 20.1 2.29 3,450 19.4 2.23
Certificates of deposit under $100,000 . . . . . . . . . . . . 7,801 88.8 4.52 7,409 80.4 4.30
Other time deposits. . . . . . . . . . . . . . . . . . . . . . 1,655 19.0 4.55 1,608 17.5 4.32
---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits . . . . . . . . . . . . 26,286 208.1 3.14 25,943 195.3 2.99
Federal funds purchased and securities sold under agreements
to repurchase . . . . . . . . . . . . . . . . . . . . . . . . 2,838 36.7 5.12 2,488 28.1 4.48
Other short-term borrowings. . . . . . . . . . . . . . . . . . 194 2.7 5.60 96 1.0 4.31
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 690 15.2 8.84 681 15.1 8.87
---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities. . . . . . . . . . . 30,008 $262.7 3.47% 29,208 $239.5 3.26%
Demand deposits. . . . . . . . . . . . . . . . . . . . . . . . 5,562 5,391
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . 584 470
Preferred equity . . . . . . . . . . . . . . . . . . . . . . . 215 215
Common equity. . . . . . . . . . . . . . . . . . . . . . . . . 2,901 2,835
---------------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity. . . . . . . . . . . . . . $39,270 $38,119
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
SPREAD AND NET YIELD
Interest rate spread . . . . . . . . . . . . . . . . . . . . . 4.27% 4.35%
Cost of funds supporting earning assets. . . . . . . . . . . . 2.94 2.76
Net yield on earning assets. . . . . . . . . . . . . . . . . . $426.2 4.80 $419.8 4.85
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994
-----------------------------------------------------------------
SECOND FIRST
-------------------------------- -----------------------------
AVERAGE AVERAGE
AVERAGE YIELD AVERAGE YIELD
DOLLARS IN MILLIONS--TAXABLE-EQUIVALENT BALANCE INTEREST OR RATE BALANCE INTEREST OR RATE
----------------------------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:
Commercial, financial and agricultural . . . . . . . . . . . $ 4,165 $ 80.0 7.71% $4,075 $ 72.4 7.20%
Real estate construction . . . . . . . . . . . . . . . . . . 820 17.7 8.66 856 16.5 7.83
Commercial mortgages . . . . . . . . . . . . . . . . . . . . 2,517 52.0 8.29 2,568 51.2 8.08
Residential mortgages. . . . . . . . . . . . . . . . . . . . 9,577 168.9 7.06 9,453 168.3 7.12
Installment. . . . . . . . . . . . . . . . . . . . . . . . . 7,537 154.3 8.22 7,220 148.8 8.25
Bank card. . . . . . . . . . . . . . . . . . . . . . . . . . 1,118 46.6 16.70 1,101 44.3 16.30
Credit lines . . . . . . . . . . . . . . . . . . . . . . . . 679 12.7 7.51 675 12.2 7.31
------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income . . . . . . . . . . 26,413 530.7 8.05 25,948 513.0 7.95
------------------------------------------------------------------------------------------------------------------------------
Securities(1):
Taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,804 79.3 4.67 6,955 79.5 4.60
Tax-free . . . . . . . . . . . . . . . . . . . . . . . . . . 742 22.9 12.32 769 23.6 12.28
------------------------------------------------------------------------------------------------------------------------------
Total securities . . . . . . . . . . . . . . . . . . . . 7,546 102.2 5.42 7,724 103.1 5.36
------------------------------------------------------------------------------------------------------------------------------
Other earning assets . . . . . . . . . . . . . . . . . . . . . 66 .7 4.08 123 .9 3.17
------------------------------------------------------------------------------------------------------------------------------
Total earning assets . . . . . . . . . . . . . . . . . . 34,025 $633.6 7.46% 33,795 $617.0 7.34%
------------------------------------------------------------------------------------------------------------------------------
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,094 2,233
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 2,105 2,055
Allowance for loan losses. . . . . . . . . . . . . . . . . . . (519) (518)
------------------------------------------------------------------------------------------------------------------------------
Total assets . . . . . . . . . . . . . . . . . . . . . . $37,705 $37,565
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
NOW accounts . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,809 $ 23.8 1.65% $ 5,885 $ 23.3 1.61%
Money market accounts. . . . . . . . . . . . . . . . . . . . . 7,909 49.5 2.51 7,866 43.0 2.22
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . 3,473 17.6 2.03 3,478 15.7 1.83
Certificates of deposit under $100,000 . . . . . . . . . . . . 7,379 76.7 4.17 7,397 75.0 4.11
Other time deposits. . . . . . . . . . . . . . . . . . . . . . 1,647 16.9 4.12 1,648 16.6 4.08
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits . . . . . . . . . . . . 26,217 184.5 2.82 26,274 173.6 2.68
Federal funds purchased and securities sold under agreements
to repurchase . . . . . . . . . . . . . . . . . . . . . . . . 1,748 16.7 3.84 1,675 12.2 2.96
Other short-term borrowings. . . . . . . . . . . . . . . . . . 99 1.1 4.30 109 .9 3.25
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 681 15.1 8.88 682 15.0 8.82
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities. . . . . . . . . . . 28,745 $217.4 3.03% 28,740 $201.7 2.84%
Demand deposits. . . . . . . . . . . . . . . . . . . . . . . . 5,573 5,599
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . 370 296
Preferred equity . . . . . . . . . . . . . . . . . . . . . . . 215 215
Common equity. . . . . . . . . . . . . . . . . . . . . . . . . 2,802 2,715
-----------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity. . . . . . . . . . . . . . $37,705 $37,565
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
SPREAD AND NET YIELD
Interest rate spread . . . . . . . . . . . . . . . . . . . . . 4.43% 4.50%
Cost of funds supporting earning assets. . . . . . . . . . . . 2.56 2.42
Net yield on earning assets. . . . . . . . . . . . . . . . . . $416.2 4.90 $415.3 4.92
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
BARNETT BANKS, INC. 13
<PAGE>
STATEMENTS OF FINANCIAL CONDITION
CONSOLIDATED-BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
------------------- -----------
DOLLARS IN THOUSANDS (UNAUDITED) 1995 1994 1994
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,508,889 $ 2,144,624 $ 2,872,855
Federal funds sold and securities purchased under agreements to
resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,207 31,996 35,040
Investment securities held to maturity (fair value $3,995,632
$5,263,660 and $4,864,666). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,982,497 5,277,316 4,944,808
Investment securities available for sale . . . . . . . . . . . . . . . . . . . . . . . 2,521,883 2,229,608 2,738,600
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,993,720 26,819,628 28,594,523
Less: Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . (502,521) (521,843) (501,447)
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41,380) (125,816) (73,370)
---------------------------------------------------------------------------------------------------------------------------------
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,449,819 26,171,969 28,019,706
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,025,469 1,016,923 1,015,187
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801,403 221,513 498,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,486,754 969,213 1,153,859
---------------------------------------------------------------------------------------------------------------------------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41,786,921 $38,063,162 $41,278,319
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Demand deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,614,372 $ 5,542,974 $ 5,957,700
NOW accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,652,199 5,837,727 6,186,427
Money market accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,034,851 7,856,206 7,747,453
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,417,652 3,460,376 3,683,880
Certificates of deposit under $100,000 . . . . . . . . . . . . . . . . . . . . . . . . 10,063,507 7,416,481 9,585,472
Other time deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,187,632 1,639,586 1,947,699
---------------------------------------------------------------------------------------------------------------------------------
Total deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,970,213 31,753,350 35,108,631
Short-term borrowings:
Federal funds purchased and securities sold under agreements
to repurchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,929,649 1,992,705 1,250,506
Commercial paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537,125 4,030 6,199
Other short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 452,272 110,746 397,199
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633,351 514,736 604,925
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925,176 680,733 776,676
---------------------------------------------------------------------------------------------------------------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,447,786 35,056,300 38,144,136
--------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $.10 par value, 20,000,000 shares authorized:
Series A, outstanding 2,000,000 shares. . . . . . . . . . . . . . . . . . . . . 100,000 100,000 100,000
Series B, outstanding 12,289; 13,216 and 12,289 shares. . . . . . . . . . . . . 307 331 307
Series C, outstanding 2,300,000 shares. . . . . . . . . . . . . . . . . . . . . 115,000 115,000 115,000
Common stock, $2 par value, 200,000,000 shares authorized;
issued 96,465,227; 97,516,421 and 96,732,754 shares. . . . . . . . . . . . . . . . . 192,930 195,033 193,466
Contributed capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 727,256 770,361 741,654
Net unrealized gain (loss) on investment securities available for
sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,887 (17,479) (26,998)
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,265,325 1,938,766 2,098,977
Less: Employee stock ownership plan obligation,
collateralized by 2,495,343; 2,946,911 and 2,732,372
shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (80,570) (95,150) (88,223)
--------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,339,135 3,006,862 3,134,183
---------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity. . . . . . . . . . . . . . . . . . . $41,786,921 $38,063,162 $41,278,319
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
BARNETT BANKS, INC. 14
<PAGE>
STATEMENTS OF INCOME
CONSOLIDATED-BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
--------------------- -------------------
FOR THE PERIODS ENDED JUNE 30-DOLLARS IN THOUSANDS(UNAUDITED) 1995 1994 1995 1994
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $640,770 $528,264 $1,245,936 $1,038,770
Investment securities. . . . . . . . . . . . . . . . . . . . . . . . 96,323 93,819 202,340 188,435
Other earnings assets. . . . . . . . . . . . . . . . . . . . . . . . 725 678 2,065 1,639
-----------------------------------------------------------------------------------------------------------------------------
Total interest income . . . . . . . . . . . . . . . . . . . . . 737,818 622,761 1,450,341 1,228,844
Interest Expense
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251,570 184,524 493,792 358,179
Federal funds purchased and securities sold under agreements
to repurchase. . . . . . . . . . . . . . . . . . . . . . . . . . . 27,897 16,751 52,319 28,969
Other short-term borrowings. . . . . . . . . . . . . . . . . . . . . 13,304 1,056 21,889 1,931
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,821 15,108 34,931 30,128
Total interest expense. . . . . . . . . . . . . . . . . . . . . 310,592 217,439 602,931 419,207
Net interest income. . . . . . . . . . . . . . . . . . . . . . . . . 427,226 405,322 847,410 809,637
Provision for loan losses. . . . . . . . . . . . . . . . . . . . . . 26,849 13,698 51,126 33,048
Net interest income after provision for loan losses . . . . . . 400,377 391,624 796,284 776,589
-----------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on deposit accounts. . . . . . . . . . . . . . . . . 56,079 55,033 111,515 109,527
Mortgage banking income. . . . . . . . . . . . . . . . . . . . . . . 24,980 8,432 33,974 16,988
Trust income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,707 18,656 39,064 39,370
Consumer finance income. . . . . . . . . . . . . . . . . . . . . . . 18,609 -- 36,168 --
Credit card discounts and fees . . . . . . . . . . . . . . . . . . . 14,828 13,423 28,983 26,312
Brokerage income . . . . . . . . . . . . . . . . . . . . . . . . . . 7,327 7,811 13,964 16,525
Other service charges and fees . . . . . . . . . . . . . . . . . . . 28,605 27,167 56,249 52,762
Securities transactions. . . . . . . . . . . . . . . . . . . . . . . 9 (138) 26 (571)
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,962 6,969 25,989 13,699
-----------------------------------------------------------------------------------------------------------------------------
Total non-interest income . . . . . . . . . . . . . . . . . . . 183,106 137,353 345,932 274,612
-----------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . 189,962 163,348 366,897 325,919
Net occupancy expense. . . . . . . . . . . . . . . . . . . . . . . . 31,642 29,603 62,268 59,018
Furniture and equipment expense. . . . . . . . . . . . . . . . . . . 35,600 35,170 70,919 69,353
Other expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . 124,721 113,710 245,375 228,073
-----------------------------------------------------------------------------------------------------------------------------
Total non-interest expense. . . . . . . . . . . . . . . . . . . 381,925 341,831 745,459 682,363
-----------------------------------------------------------------------------------------------------------------------------
Net non-interest expense. . . . . . . . . . . . . . . . . . . . 198,819 204,478 399,527 407,751
-----------------------------------------------------------------------------------------------------------------------------
EARNINGS
Income before income taxes . . . . . . . . . . . . . . . . . . . . . 201,558 187,146 396,757 368,838
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . 69,381 65,938 135,881 129,668
-----------------------------------------------------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . $132,177 $121,208 $ 260,876 $ 239,170
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
Primary: Earnings per share. . . . . . . . . . . . . . . . . . $1.30 $1.19 $2.57 $2.34
Average number of shares. . . . . . . . . . . . . . . 98,072,393 98,697,582 97,835,596 98,447,009
Dividends on preferred stock. . . . . . . . . . . . . $4,550 $4,550 $9,100 $9,100
Fully Diluted: Earnings per share. . . . . . . . . . . . . . . . . . $1.26 $1.15 $2.49 $2.27
Average number of shares. . . . . . . . . . . . . . . 104,997,655 105,382,522 104,954,574 105,131,949
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
BARNETT BANKS, INC. 15
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
CONSOLIDATED-BARNETT BANKS, INC. AND AFFILIATES
CONTRI- NET
PREFERRED COMMON BUTED UNREALIZED RETAINED ESOP
DOLLARS IN THOUSANDS (UNAUDITED) STOCK STOCK CAPITAL GAIN (LOSS) EARNINGS OBLIGATION TOTAL
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD
Balance at January 1, 1994 . . . . . . . . . $215,351 $194,809 $775,719 $3,772 $1,786,561 $(102,121) $2,874,091
Net income . . . . . . . . . . . . . . . . . 239,170 239,170
Change in unrealized gain (loss) on
investment securities available for sale (21,251) (21,251)
Cash dividends declared:
Common ($.77 per share) . . . . . . . . (77,847) (77,847)
Preferred:
Series A. . . . . . . . . . . . . . . . (4,500) (4,500)
Series B. . . . . . . . . . . . . . . . (18) (18)
Series C. . . . . . . . . . . . . . . . (4,600) (4,600)
Issuances of common stock:
Stock purchase, option and
employee benefit plans. . . . . . . . 1,378 18,933 6,971 27,282
Preferred stock conversions . . . . . . (20) 4 16 --
Repurchases of common stock. . . . . . . . . (1,158) (24,307) (25,465)
-------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1994 . . . . . . . . . . $215,331 $195,033 $770,361 $(17,479) $1,938,766 $ (95,150) $3,006,862
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
Balance at January 1,1995. . . . . . . . . . $215,307 $193,466 $741,654 $(26,998) $2,098,977 $(88,223) $3,134,183
Net income . . . . . . . . . . . . . . . . . 260,876 260,876
Change in unrealized gain (loss) on
investment securities available for sale 45,885 45,885
Cash dividends declared:
Common ($.88 per share) . . . . . . . . (85,413) (85,413)
Preferred:
Series A. . . . . . . . . . . . . . . (4,500) (4,500)
Series B. . . . . . . . . . . . . . . (15) (15)
Series C. . . . . . . . . . . . . . . (4,600) (4,600)
Issuances of common stock:
Stock purchase, option and
employee benefit plans. . . . . . . . 1,614 35,881 7,653 45,148
Repurchases of common stock. . . . . . . . . (2,150) (50,279) (52,429)
-------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1995 . . . . . . . . . . $215,307 $192,930 $727,256 $18,887 $2,265,325 $(80,570) $3,339,135
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
16 BARNETT BANKS, INC.
<PAGE>
STATEMENTS OF CASH FLOWS
CONSOLIDATED-BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
FOR THE PERIODS ENDED JUNE 30-DOLLARS IN THOUSANDS (UNAUDITED) 1995 1994
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 260,876 $ 239,170
Reconcilement of net income to net cash provided by operating activities:
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . 51,126 33,048
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . 108,144 65,240
Employee benefits funded by equity. . . . . . . . . . . . . . . . . . . . 13,288 19,791
Deferred income tax provision . . . . . . . . . . . . . . . . . . . . . . 26,494 897
Decrease (increase) in interest receivable. . . . . . . . . . . . . . . . 9,607 (9,919)
Increase in interest payable. . . . . . . . . . . . . . . . . . . . . . . 21,259 4,849
Increase in other assets. . . . . . . . . . . . . . . . . . . . . . . . . (42,707) (192,872)
(Decrease) increase in other liabilities. . . . . . . . . . . . . . . . . (173,182) 212,029
Originations of loans held for sale . . . . . . . . . . . . . . . . . . . (1,482,460) (324,000)
Proceeds from sales of loans held for sale. . . . . . . . . . . . . . . . 1,043,712 430,976
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,556) (11,285)
-------------------------------------------------------------------------------------------------------
Net cash (used) provided by operating activities . . . . . . . . . . (183,399) 467,924
-------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale. . . . . . . . . . . . . (332,258) (979,987)
Proceeds from sales of investment securities available for sale. . . . . . . . 173,525 -
Proceeds from maturities of investment securities available for sale . . . . . 460,707 768,044
Purchases of investment securities held to maturity. . . . . . . . . . . . . . (238,581) (2,321,354)
Proceeds from maturities of investment securities held to maturity . . . . . . 1,203,716 2,834,860
Net increase in loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (778,632) (897,382)
Purchases of premises and equipment. . . . . . . . . . . . . . . . . . . . . . (69,542) (51,000)
Proceeds from sales of premises and equipment. . . . . . . . . . . . . . . . . 26,552 28,866
Payments for purchases of acquired companies, net of cash acquired . . . . . . (465,563) -
--------------------------------------------------------------------------------------------------------
Net cash used by investing activities. . . . . . . . . . . . . . . . (20,076) (617,953)
-------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in demand, NOW, savings and money market accounts . . . . . . . . (1,856,386) (766,718)
Net increase (decrease) in other time deposits . . . . . . . . . . . . . . . . 717,968 (113,698)
Net increase in federal funds purchased and
securities sold under agreements to repurchase . . . . . . . . . . . . . . . . 679,143 270,872
Net increase in other short-term borrowings. . . . . . . . . . . . . . . . . . 16,491 4,598
Principal repayments of long-term debt . . . . . . . . . . . . . . . . . . . . (102,443) (1,391)
Proceeds from issuance of medium-term notes. . . . . . . . . . . . . . . . . . 475,000 -
Issuances of common and preferred stock. . . . . . . . . . . . . . . . . . . . 31,860 7,491
Repurchases of common stock. . . . . . . . . . . . . . . . . . . . . . . . . . (52,429) (25,465)
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (94,528) (86,965)
-------------------------------------------------------------------------------------------------------
Net cash used by financing activities. . . . . . . . . . . . . . . . (185,324) (711,276)
-------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . (388,799) (861,305)
Cash and cash equivalents, January 1 . . . . . . . . . . . . . . . . . . . . . 2,907,895 3,037,925
-------------------------------------------------------------------------------------------------------
Cash and cash equivalents, June 30 . . . . . . . . . . . . . . . . . . . . . . $ 2,519,096 $ 2,176,620
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
</TABLE>
FOR THE PERIODS ENDED JUNE 30, 1995 AND 1994, INCOME TAXES OF $152 MILLION AND
$117 MILLION WERE PAID AND INTEREST OF $583 MILLION AND $410 MILLION WAS PAID,
RESPECTIVELY. CASH AND CASH EQUIVALENTS INCLUDES CASH AND DUE FROM BANKS,
INTEREST-BEARING DEPOSITS IN OTHER BANKS, SECURITIES PURCHASED UNDER AGREEMENTS
TO RESELL AND FEDERAL FUNDS SOLD.
FOR THE PERIODS ENDED JUNE 30, 1995 AND 1994, $27 MILLION AND $38 MILLION OF
LOANS, RESPECTIVELY, WERE TRANSFERRED TO REAL ESTATE HELD FOR SALE.
DURING THE PERIOD ENDED JUNE 30, 1995, THE COMPANY ACQUIRED $990 MILLION OF
NON-CASH ASSETS AND $525 MILLION OF LIABILITIES.
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
BARNETT BANKS, INC. 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
A.GENERAL
The accounting and reporting policies of Barnett Banks, Inc. and its
affiliates conform to generally accepted accounting principles and to
predominant practices within the banking industry. The company has not changed
its accounting and reporting policies from those disclosed in its 1994 Annual
Report on Form 10-K, except for the adoption on January 1, 1995 of Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan", as described in the Form 10-Q for the period ended March 31, 1995.
In the opinion of the company's management, all adjustments necessary to
fairly present the financial position as of June 30, 1995 and 1994, and the
results of operations and cash flows for the periods then ended, all of which
are of a normal and recurring nature, have been included.
The results of operations for the three and six-month periods ended June
30,1995 may not be indicative of operating results for the year ending December
31, 1995. Certain prior year and prior quarter amounts have been reclassified to
conform to current classifications.
In January 1995, the company acquired EquiCredit Corporation, a
Jacksonville-based consumer finance company, for $332 million. EquiCredit
specializes in originating, selling and servicing fixed-rate consumer loans
secured by first or second mortgages. In February 1995, the company acquired
BancPLUS Financial Corporation, a Texas-based full-service mortgage banking
company, for $162 million. These acquisitions have been accounted for as
purchase transactions, in accordance with APB No. 16. Amounts assigned to
intangible assets may vary as final valuation and other information becomes
available.
B. LOANS
<TABLE>
<CAPTION>
JUNE 30-DOLLARS IN THOUSANDS
NET OF UNEARNED INCOME 1995 1994
------------------------------------------------------------
<S> <C> <C>
Commercial, financial and
agricultural . . . . . . . . . $ 4,611,842 $ 4,278,386
Real estate construction . . . . 954,073 808,196
Commercial mortgages . . . . . . 2,345,161 2,492,292
Residential mortgages. . . . . . 11,257,370 9,642,671
Installment. . . . . . . . . . . 8,560,266 7,661,902
Bank card. . . . . . . . . . . . 1,486,919 1,125,455
Credit lines . . . . . . . . . . 736,709 684,910
------------------------------------------------------------
Total. . . . . . . . . . . . . . $29,952,340 $26,693,812
------------------------------------------------------------
------------------------------------------------------------
</TABLE>
C. ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30
DOLLARS IN THOUSANDS 1995 1994
------------------------------------------------------------
<S> <C> <C>
Beginning balance. . . . . . . . $501,447 $521,827
Recoveries . . . . . . . . . . . 26,911 27,065
Provision expense. . . . . . . . 51,126 33,048
Loans charged off. . . . . . . . (78,654) (60,097)
Other, net . . . . . . . . . . . 1,691 --
------------------------------------------------------------
Ending balance . . . . . . . . . $502,521 $521,843
------------------------------------------------------------
------------------------------------------------------------
</TABLE>
The company defines impaired loans as all non-performing loans except
residential mortgages and small business loans. At June 30, 1995, impaired loans
totaled $117 million. Of that amount, approximately $70 million in impaired
loans have related reserves of $15 million. An additional $47 million in
impaired loans were determined to be carried at or below fair value and,
accordingly, have no reserves. The allowance for loan losses is established to
cover potential losses inherent in the portfolio as a whole.
The company recognizes income on impaired loans primarily on the cash basis.
Any change in the present value of expected cash flows is recognized through the
allowance for loan losses. For the three-month period ended June 30, 1995, the
average carrying amount of impaired loans was $121 million, on which the company
recognized income of $2.4 million.
18 BARNETT BANKS, INC.
<PAGE>
D. LONG-TERM DEBT
<TABLE>
<CAPTION>
JUNE 30-DOLLARS IN THOUSANDS 1995 1994
------------------------------------------------------------
<S> <C> <C>
7.75% Sinking Fund Debentures,
due 1997,with annual sinking
fund payments of $700,000
through 1996 . . . . . . . . . . . . $ 10,200 $ 10,900
Less: Face value of debentures
repurchased and held for
future retirements . . . . . . . . . (772) (1,472)
------------------------------------------------------------
Total outstanding. . . . . . . . . 9,428 9,428
8.50% Subordinated Capital Notes, due
1999 . . . . . . . . . . . . . . . . 200,000 200,000
Medium-term notes, due in varying
maturities through 2003, with
interest from a floating 4.275% to
a fixed 10.00% . . . . . . . . . . . 376,150 201,900
9.875% Subordinated Capital Notes,
due 2001 . . . . . . . . . . . . . . 100,000 100,000
10.875% Subordinated Capital Notes,
due 2003 . . . . . . . . . . . . . . 55,000 55,000
8.50% Subordinated Capital Notes,
due 2007 . . . . . . . . . . . . . . 100,000 100,000
Mortgage collaterized Bonds, due
1996 with interest from a floating
6.348% . . . . . . . . . . . . . . . . 71,927 --
Capitalized lease obligations. . . . 12,671 14,405
------------------------------------------------------------
Total. . . . . . . . . . . . . . . $925,176 $680,733
------------------------------------------------------------
------------------------------------------------------------
</TABLE>
E. EARNINGS PER SHARE
The weighted-average number of shares used in the computation of earnings per
share are as follows:
<TABLE>
<CAPTION>
FOR THE PERIODS ENDED JUNE 30-- THREE MONTHS SIX MONTHS
------------------------ -------------------
DOLLARS IN THOUSANDS 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------
<S> <S> <S> <S> <C>
Primary Shares
Average common shares outstanding. . . . . . . . . . . . . 97,082,195 97,649,394 97,031,661 97,536,993
Common shares assumed outstanding
to reflect dilutive effect of:
Convertible preferred stock. . . . . . . . . . . . . . 31,936 35,310 31,936 35,800
Common stock options . . . . . . . . . . . . . . . . . 958,262 1,012,878 771,999 874,216
------------------------------------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . 98,072,393 98,697,582 97,835,596 98,447,009
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Adjustments for preferred dividends. . . . . . . . . . . . $4,550 $4,550 $9,100 $9,100
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
------------------------ -------------------
FOR THE PERIODS ENDED JUNE 30 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fully Diluted Shares
Average common shares outstanding. . . . . . . . . . . . . 97,082,195 97,649,394 97,031,661 97,536,993
Common shares assumed outstanding
to reflect dilutive effect of:
Convertible preferred stock. . . . . . . . . . . . . . 6,716,876 6,720,250 6,716,876 6,720,740
Common stock options . . . . . . . . . . . . . . . . . 1,198,584 1,012,878 1,206,037 874,216
------------------------------------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . 104,997,655 105,382,522 104,954,574 105,131,949
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>
BARNETT BANKS, INC. 19
<PAGE>
Barnett Banks, Inc.
Post Office Box 40789
Jacksonville Florida 32203-0789
Telephone: 904/791-7720
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,509
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,522
<INVESTMENTS-CARRYING> 3,982
<INVESTMENTS-MARKET> 3,996
<LOANS> 29,952
<ALLOWANCE> 503
<TOTAL-ASSETS> 41,787
<DEPOSITS> 33,970
<SHORT-TERM> 2,919
<LIABILITIES-OTHER> 634
<LONG-TERM> 925
<COMMON> 193
0
215
<OTHER-SE> 2,931
<TOTAL-LIABILITIES-AND-EQUITY> 41,787
<INTEREST-LOAN> 1,246
<INTEREST-INVEST> 202
<INTEREST-OTHER> 2
<INTEREST-TOTAL> 1,450
<INTEREST-DEPOSIT> 494
<INTEREST-EXPENSE> 603
<INTEREST-INCOME-NET> 847
<LOAN-LOSSES> 51
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 745
<INCOME-PRETAX> 397
<INCOME-PRE-EXTRAORDINARY> 397
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 261
<EPS-PRIMARY> 2.57
<EPS-DILUTED> 2.49
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
