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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 1-7901
BARNETT BANKS,INC.
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(Exact name of Registrant as specified in its charter)
FLORIDA 59-0560515
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
50 N. LAURA STREET, JACKSONVILLE, FL 32202-3638
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (904) 791-7720
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock The New York Stock Exchange
Par Value $2.00 per share
Series A $4.50 Cumulative The New York Stock Exchange
Convertible Preferred Stock
Series C $4.00 Cumulative The New York Stock Exchange
Convertible Preferred Stock
8 1/2% Subordinated Capital The New York Stock Exchange
Notes, due 1999
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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The aggregate market value of the voting stock held by non-affiliates of the
Registrant at December 31, 1994 is approximately $3,724,211,029.
Common Stock outstanding at December 31, 1994:
96,732,754 Shares
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference in this report: (1)
portions of Registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 1994, in Parts I, II, III and IV, and (2) Registrant's 1995
Annual Meeting Proxy Statement in Part Three, which is incorporated by
reference pursuant to Instruction G of Form 10-K. The Company will file its
definitive Proxy Statement with the Commission prior to March 31, 1995.
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INDEX TO FORM 10-K
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
NOTE: Certain information required by Form 10-K is incorporated by reference
from the 1994 Annual Report as indicated below. Only that information expressly
incorporated by reference is deemed filed with the Commission.
PART I
Item 1 Business
Item 2 Properties
Item 3 Legal Proceedings
Item 4 Submission of Matters to a Vote of Security Holders - None
PART II ANNUAL REPORT REFERENCE(1)
Item 5 Market for the Registrant's Equity and Related
Stockholder Matters
Item 6 Selected Financial Data
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 17 - 33, 36 - 39
Item 8 Financial Statements and Supplementary Data 34, 35, 42 - 59
Item 9(2) Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
PART III(3)
Item 10 Directors and Executive Officers of the Registrant:
Executive Officers 60
Directors 61
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and
Management
Item 13 Certain Relationships and Related Transactions.
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
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ITEMS OF PART IV - FORM 10-K
(a)1. The financial statements of Barnett are listed in response to
Item 8 of this report and are incorporated by reference.
(a)2. Financial Statement Schedules:
All schedules to the consolidated financial statements required by
Article 9 of Regulation S-X and all other schedules to the financial
statements of the Registrant have been omitted because the information
is either not required, not applicable, or is included in the
financial statements or notes thereto.
(b). Reports on Form 8-K: None
(c). Exhibits:
3. Articles of Incorporation and by-laws
4. Instruments defining the rights of security holders,
including indentures:
(a) Indenture dated as of May 15, 1972, relating to 7-3/4%
Sinking Fund Debentures due 1997.
(b) Indenture dated as of August 15, 1984 relating to the 8.5%
Subordinated Capital Notes due 1999.
(c) Indenture dated as of October 19, 1990, and supplemental
indentures dated April 21, 1991 and May 14, 1993 relating
to Debt Securities of the Company.
(d) Indenture dated as of October 19, 1990 and supplemental
indenture as of April 22, 1991 related to Debt Securities
of the Company.
10. Material contracts:
(a) Long Term Incentive Plan of Barnett Banks, Inc., as amended
(b) Employment agreements
11. Statement re Computation of Per Share Earnings.
12. Ratios of Earnings to Combined Fixed Charges and Preferred Dividends.
13. Annual Report to Security Holders for the fiscal year ended
December 31, 1994.
21. Subsidiaries of the Registrant.
23. Consents of experts and counsel
(a) Consent of Arthur Andersen LLP
(b) Consent of Price Waterhouse LLP
24. Powers of Attorney
27. Financial Data Schedule
(1)These items are incorporated from the 1994 Annual Report.
(2)Included on Form 8-K dated March 30, 1993, which is hereby incorporated by
reference.
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(3)Except for the information relating to executive officers, the material
required by Items 10 through 13 is hereby incorporated by reference from the
Company's definitive proxy statement pursuant to Instruction G of Form 10-K.
The Company will file its definitive Proxy Statement with the Commission prior
to March 31, 1995.
BUSINESS
Barnett Banks, Inc. is a bank holding company that was organized in
1930. Between 1930 and 1965, Barnett controlled several small banks on the East
Coast of Florida and was affiliated with Barnett Bank of Jacksonville, N.A.
through common ownership. In 1966, the company acquired the Jacksonville
bank,chartered in 1877, and began a program of expansion through the acquisition
and organization of banks in Florida's major population centers. In 1986,
Barnett completed its first acquisition in Georgia. In 1992, the company
consummated its largest merger to date with the acquisition of First Florida
Banks, Inc., owner of First Florida Banks, N.A., headquartered in Tampa,
Florida. First Florida, with $5.5 billion in assets and 144 offices, was
Florida's fifth largest banking organization.
On December 2, 1993, the company completed a transaction to exchange
its Atlanta franchise for Bank South Corporation's Pensacola banking affiliate,
common stock and cash, with an aggregate value of $125 million. Bank South's
Pensacola affiliate had assets of $417 million. The company's Atlanta franchise
had assets of $820 million.
On October 1, 1994, the company completed the acquisition of Loan
America Financial Corporation, a Miami-based wholesale mortgage banking company
with a $4 billion servicing portfolio, for $59 million. On December 15, 1994,
the company assumed $3.4 billion in deposits of the Florida franchise of
Glendale Federal Bank, FSB for $244 million.
Now one of the Southeast's largest banking institutions, Barnett had
assets of $41.3 billion and deposits of $35.1 billion on December 31, 1994. On
that date, Barnett owned 31 commercial banks with a total of 628 offices. The
company had 610 offices in 45 Florida counties and 18 offices in 8 Georgia
counties.
Barnett is a decentralized financial services organization, with its
affiliates acting autonomously in most day-to-day decisions. The principal role
of the holding company is to provide management leadership and support services
to its affiliates that are focused on the sale and delivery of company products.
Most accounting, financial management, human resource management, audit and loan
review functions are provided to affiliates through regional or central support
groups. Dividends and management fees from affiliates are the holding company's
major sources of income. Dividend payments from the banking affiliates may be
limited by statutes. (See Supervision and Regulation of this Form 10-K as well
as Note S of Notes to Financial Statements in the 1994 Annual Report.) Barnett
and its affiliates had 18,929 full-time employees at December 31, 1994.
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BANKING OPERATIONS
The average deposits of a Barnett affiliate bank at the end of 1994
were approximately $1.1 billion. Barnett Bank of South Florida, N.A., had total
deposits of $4.2 billion, or approximately 12% of the combined total deposits of
the company's banking affiliates. Barnett Bank of Broward County, N.A. had total
deposits of $4.1 billion, or 12% of the combined total deposits of the company's
banking affiliates. Barnett Bank of Tampa had total deposits of $2.4 billion, or
approximately 7% of the combined total deposits of the company's banking
affiliates. Fifteen of the company's other banking affiliates had total deposits
in excess of $500 million, including 7 with total deposits in excess of $1.0
billion. All of Barnett's banking affiliates provide a full range of commercial
banking and related financial services to the retail, wholesale, manufacturing,
real estate and financial sectors in its markets. State banking laws have been a
major factor in the development of the company's corporate structure in Florida.
Prior to 1977, Florida was a unit banking state, prohibiting the state's banks
from operating branches. At the end of 1976, Barnett operated 60 separate banks
in 24 counties. Since then, the Florida Banking Code has been liberalized to
permit cross-county mergers and, in 1988, to permit cross-county branching.
Since 1977, Barnett has consolidated more than 100 Florida banking organizations
into 29 banks, 15 of which serve multi-county markets.
NONBANKING ACTIVITIES
BARNETT BANKS TRUST COMPANY, N.A. provides a full range of trust and
investment management services, including personal trust and estate
administration, institutional asset management, and employee benefit plan
management and administration. It operates 35 sales offices and has total trust
assets of $13 billion, including $9 billion under management.
BARNETT MORTGAGE COMPANY including its wholly-owned subsidiary Loan
America Financial Corporation, is among the 25 largest mortgage servicers
nationally, servicing a portfolio of more than $18.4 billion and 240,000
mortgage loans.
BARNETT SECURITIES, INC. is a full-service brokerage company, with 40
offices and 125 investment officers. Its Capital Markets division is authorized
to engage in financial advisory services and limited underwriting of certain
securities, subject to volume restrictions.
BARNETT CARD SERVICES CORPORATION offers a variety of credit card
services to Barnett's affiliate banks and other credit card issuers.
BARNETT MERCHANT SERVICES CORPORATION provides a wide array of credit
card processing services for businesses that accept credit cards as a form of
payment.
BARNETT BANKS INSURANCE, INC. reinsures credit life and accident and
health insurance written in connection with loans made by Barnett's affiliates.
BARNETT RECOVERY CORPORATION provides loan collection services for the
banking affiliates.
BARNETT TECHNOLOGIES, INC. provides data processing services for the
banking and non-banking subsidiaries of Barnett.
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COMPETITION
In addition to competition from other banks, Barnett continues to face
increased competition from other financial services organizations. Savings and
loan associations continue to compete for loans and deposits, while finance
companies and credit unions compete in the important areas of consumer lending
and deposit gathering. Additionally, non-traditional financial service providers
such as brokerages, mutual funds, insurance companies and finance subsidiaries
of industrial companies have intensified competition in recent years.
SUPERVISION AND REGULATION
The banking industry is highly regulated, with numerous federal and
state laws and regulations governing its activities. As a bank holding company,
Barnett is subject to regulation under the Bank Holding Company Act of 1956, as
amended, and its examination and reporting requirements. This legislation
requires the Board of Governors of the Federal Reserve System to approve bank
acquisitions, limits the acquisition of out-of-state banking organizations
unless permitted by state law and limits non-banking activities. In addition,
the Georgia Department of Banking and Finance regulates the Georgia operations
of bank holding companies. Various federal and state laws and regulations also
govern the operations of the company's banking affiliates.
Barnett's affiliate banks are subject to regulation and supervision by
the Office of the Comptroller of the Currency (the "OCC"), (in the case of
nationally chartered banks) the state banking authorities of the states in which
they are organized (in the case of state chartered banks), the Federal Reserve
Board and the FDIC.
Barnett and its affiliates are also affected by various state and
federal laws, including those relating to consumer protection and similar
matters, as well as by the fiscal and monetary policies of the federal
government and its agencies, including the Federal Reserve Board. An important
purpose of these policies is to curb inflation and control recessions through
control of the supply of money and credit. The Federal Reserve Board uses its
powers to establish reserve requirements of insured depository institutions and
to conduct open market operations in the United States government securities so
as to influence the supply of money and credit. These policies have a direct
effect on the amount of bank loans and deposits and on interest rates charged on
loans and paid on deposits, with the result that federal policies have a
material effect on the earnings of Barnett and its affiliates. Future policies
of the Federal Reserve Board and other government authorities and future changes
in state and federal laws and regulations cannot be predicted nor can their
effect on the future earnings of Barnett and its affiliates be predicted.
On August 10, 1993 the Federal Deposit Insurance Act was amended to
provide that in the event of the liquidation or other resolution of an insured
depository institution occurring on or after such date, the claims of depositors
of such institution (including claims by the FDIC as subrogee of insured
depositors) are entitled to
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priority in payment over the claims of any other senior or general creditors of
the institution, including shareholders.
Effective December 31, 1992, the federal bank regulatory authorities
each adopted risk-based capital guidelines to which Barnett and its banking
affiliates are subject. These guidelines establish a systematic analytical
framework that makes regulatory capital requirements more sensitive to
differences in risk profile among banking organizations, takes off-balance sheet
exposures into explicit account in assessing capital adequacy and minimizes
disincentives to holding liquid, low-risk assets. Failure to meet applicable
capital guidelines could subject a bank to a variety of enforcement remedies
available to the federal regulatory authorities, including limitation on the
ability to pay dividends, the issuance of a directive to increase capital, the
termination of deposit insurance by the FDIC, and appointment of a conservator
or receiver. On December 31, 1994, Barnett and each of its affiliate banks'
capital levels exceeded the capital guidelines established by the federal
banking authorities.
The Federal Deposit Insurance Corporation Act of 1991 ("FDICIA")
provides for expanded regulation of depository institutions and their affiliates
and assigns to the federal banking agencies broad powers to take prompt
corrective action to resolve problems of insured depository institutions. The
extent of these powers depends upon whether the institution in question are
"well capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," or "critically undercapitalized." A depository institution
is considered "well capitalized" if it has (i) a total risk-based capital ratio
of 10% or greater, (ii) a Tier 1 risk-based capital ratio of 6% or greater,
(iii) a leverage ratio of 5% or greater and (iv) is not subject to any order or
written directive to meet and maintain a specific capital level. On December
31,1994, Barnett and each of its affiliate banks were considered by federal
regulatory authorities to be "well capitalized."
Barnett's nonbanking activities are supervised by the Federal Reserve
Board. In addition, Barnett Banks Insurance, Inc. is subject to insurance laws
and regulations of the Insurance Commissioner of the State of Florida. The
activities of Barnett Securities, Inc. are governed by the Securities and
Exchange Commission, the National Association of Securities Dealers and state
securities laws.
The Federal Deposit Insurance Corporation Improvement Act (FDICIA) of
1991 recapitalized the deposit insurance funds and gave regulators the authority
to restrict the operations, management and capital distributions of a bank,
depending upon its risk. On December 31, 1994 all of Barnett's affiliate banks
fell into the lowest risk category. FDICIA also directs regulators to establish
underwriting and operations standards, encompassing such areas as real estate
lending, consumer disclosure rules, internal controls and new reporting
requirements.
PROPERTIES
On December 31, 1994 the company and its affiliates had consolidated
premises and equipment with a net book value of $1.0 billion. The company and
its
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affiliates generally own their offices and related facilities. Most of the
company's non-banking affiliates and many of the company's consolidated
operations functions are housed in a multi-use office park in Jacksonville.
LEGAL PROCEEDINGS
The company and its subsidiaries are subject to various pending legal
proceedings arising in the normal course of business. After consultation with
legal counsel, management does not anticipate that the ultimate liability, if
any, arising out of these matters will have a material effect on the company's
financial condition.
SHAREHOLDER DATA
There were 33,268 shareholders of record of Barnett common stock as of
December 31, 1994. In addition, approximately 12,800 Barnett employees own
stock through company-sponsored plans.
STOCK PRICE AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
1993
----
4th 3rd 2nd 1st
<S> <C> <C> <C> <C>
High................. $45.13 $48.88 $49.00 $50.38
Low.................. 37.38 43.00 40.00 40.25
Close................ 41.50 45.00 47.75 45.00
Dividends............ .36 .36 .36 .33
Price/earnings ratio. 10.3x 15.3x 18.5x 20.5x
</TABLE>
STOCK PRICE AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
1994
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4th 3rd 2nd 1st
<S> <C> <C> <C> <C>
High................. $43.50 $47.63 48.13 $45.88
Low.................. 37.63 43.25 43.25 39.75
Close................ 38.50 44.25 43.75 44.13
Dividends............ .36 .41 .41 .41
Price/earnings ratio. 8.3x 9.8x 9.9x 10.4x
</TABLE>
EXECUTIVE OFFICERS
CHARLES E. RICE, 59, Chairman of the Board and Chief Executive Officer since
November 1988 and Chairman of the Board, President and Chief Executive Officer
from April 1984 to November 1988. Mr. Rice, who has been Chief Executive Officer
since 1979, joined the company in 1966 and was first elected an executive
officer in 1971.
ALLEN L. LASTINGER, JR., 52, President and Chief Operating Officer since January
1991; Vice Chairman and Chief Banking Officer from November 1988 to December
1990; and Vice Chairman/Retail Banking from April 1984 to November 1988.
Mr. Lastinger joined the company in 1971 and was first elected an executive
officer in 1980.
JUDY BEAUBOUEF, 48, Chief Legal Executive since 1991; Associate General Counsel
from 1988 to 1991.
SUSAN S. BLASER, 45, Chief Marketing Executive since December 1994; Senior Vice
President for Retail Banking for First Bank System from February 1991 to October
1994; Senior Vice President for CVN Companies from 1988 to 1990.
RICHARD C. BREWER, 53, Chief Credit Policy Executive since July 1994; Regional
Banking Executive/Central Region from January 1989 to July 1994; and Chairman
and Chief Executive Officer of Barnett Bank of Southwest Florida from January
1986 to
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January 1989. Mr. Brewer joined the company in 1970 and was first elected an
executive officer in 1989.
LEE H. CHAPLIN, JR., 55, Regional Banking Executive/North Region since February
1991; Regional Banking Executive/South Region from January 1990 to February
1991; Regional Banking Executive/South Region and President and Chief Executive
Officer of Barnett Bank of South Florida, N.A. from January 1989 to January
1990; and President of Barnett Bank of South Florida, N.A. from May 1985 to
January 1989. Mr. Chaplin joined the company in 1983 and was first elected an
executive officer in 1990.
DOUGLAS K. FREEMAN, 44, Chief Corporate Banking Executive since August 1991;
Executive Vice President for Business Banking of Wells Fargo Bank from January
1989 to August 1991; and an officer of C&S Corporation from June 1972 to January
1989. Mr. Freeman joined the company as an executive officer in 1991.
PAUL T. KERINS, 51, Chief Human Resources Executive since February 1985, when he
joined the company as an executive officer.
PATRICK J. MCCANN, 38, Controller since September 1992; Director of
Finance/Central Region from January 1989 to September 1992; Chief Financial
Officer of Barnett Bank of Southwest Florida from January 1988 to June 1989; and
Controller from September 1987 to January 1988. Mr. McCann joined the company in
1987 and was first elected an executive officer in 1992.
JAMES F. MONDELLO, 51, Regional Banking Executive/South Region since February
1991; Regional Banking Executive/East Region from January 1989 to February
1991; and Executive Vice President and Chief Operating Officer of Barnett Bank
of Polk County from January 1988 to January 1989. Mr. Mondello joined the
company in 1983 and was first elected an executive officer in 1989.
CHARLES W. NEWMAN, 45, Chief Financial Officer since January 1992 and Executive
Vice President and Controller from January 1988 to January 1992. Mr. Newman
joined the company in 1983 and was first elected an executive officer in 1985.
HINTON F. NOBLES, Jr., 49, Executive Vice President since April 1985. Mr. Nobles
joined the company in 1974 and was first elected an executive officer in 1983.
JONATHAN J. PALMER, 51, Chief Retail Banking and Technology Executive since
October 1994; Chief Technology Executive from July 1990 to October 1994; and
Chairman and Chief Executive Officer of Barnett Technologies, Inc. since
November 1990 to October 1994; Executive Vice President, Shearson Lehman Hutton,
from December 1989 to July 1990; Executive Vice President, Furash & Co., from
July 1989
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to December 1989; and Vice Chairman, Fidelity Bank, from 1980 to July 1989.
Mr. Palmer joined the company as an executive officer in 1990.
RICHARD J. REDICK, 44, Director of Finance since February 1993, when he joined
the company as an executive officer; Executive Vice President, BayBank Boston,
N.A. from 1983 to February 1993.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf, thereunto duly authorized.
Date: February 3, 1995
BARNETT BANKS, INC.
BY: *
--------------------------
Charles E. Rice, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
NAME TITLE DATE
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* Director February 3, 1995
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Walter H. Alford
* Director February 3, 1995
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Rita Bornstein
* Director February 3, 1995
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James L. Broadhead
* Director February 3, 1995
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Alvin R. Carpenter
Director February 3, 1995
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Armando M. Codina
* Director February 3, 1995
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Marshall M. Criser
* Director February 3, 1995
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Jack B. Critchfield
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NAME TITLE DATE
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* Director February 3, 1995
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Carter H. Golembe
* President, Chief February 3, 1995
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Allen L. Lastinger, Jr. Operating Officer
and Director
* Director February 3, 1995
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Clarence V. McKee
PATRICK J. MCCANN Controller February 3, 1995
- ---------------------
Patrick J. McCann (Principal Accounting
Officer)
CHARLES W. NEWMAN Chief Financial February 3, 1995
- ---------------------
Charles W. Newman Officer (Principal
Financial Officer)
* Director February 3, 1995
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Tom L. Rankin
* Chairman and Chief February 3, 1995
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Charles E. Rice Executive Officer
and Director (Principal
Executive Officer)
* Director February 3, 1995
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Frederick H. Schultz
* Director February 3, 1995
- ---------------------
Stewart Turley
* Director February 3, 1995
- ---------------------
John A. Williams
PARTICK J. MCCANN February 3, 1995
- ---------------------
*Patrick J. McCann
* by signing his name hereto, does sign this document on behalf of each of the
persons indicated by an asterisk above, pursuant to Powers of Attorney duly
executed by such persons and filed with the Securities and Exchange
Commission.
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EXHIBIT INDEX
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3. Articles of Incorporation and Bylaws.
*(a) Amended and Restated Articles of
Incorporation.
(b) Bylaws.
4. Instruments defining the rights of security
holders, including indentures:
**(a) Indenture dated as of May 15, 1972,
relating to 7 3/4% Sinking Fund Debentures
due 1997.
+(b) Indenture dated as of August 15, 1984,
relating to Floating Rate Subordinated
Capital Notes due 1996 and to 8 1/2%
Subordinated Capital Notes due 1999.
++(c) Indentures as of October 19, 1990,
and supplemental indentures dated April
21, 1991 and May 14, 1993 relating
to Debt Securities of the Company.
++(d) Indenture dated as of October 19, 1990 and supplemental indenture
as of April 22, 1991 related to Debt Securities of the Company.
10. Material Contracts
-(a) Long Term Incentive Plan of Barnett Banks, Inc., as amended.
--(b) Employment Agreement Messrs. Nobles, Newman,
Rice, Lastinger & Brewer
11. Statement re Computation of Per Share Earnings.
12. Ratios of Earnings to Combined Fixed Charges
and Preferred Dividends.
13. Annual Report to Security Holders for the fiscal
year ended December 31, 1994.
21. Subsidiaries of the Registrant in addition to pages 62 and 63
of the Annual Report to Shareholders.
23. Consents of Experts and Counsel.
(a) Consent of Arthur Andersen & Co.
(b) Consent of Price Waterhouse
24. Powers of Attorney.
27. Financial Data Schedule
99. Additional Exhibits
Opinion of Price Waterhouse LLP covering 1992 consolidated
Financial Statements
__________________________
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*Previously filed as Exhibits to Registrant's Registration
Statement of Form S-3, Registration No. 33-44344 and incorporated
herein by reference.
**Previously filed as Exhibits to Registrant's Form 10-K for the
fiscal year ended December 31, 1981, and incorporated herein by
reference.
+Previously filed as Exhibit to Registrant's Registration State-
ment on Form S-3, Registration No. 2-92815, and incorporated
herein by reference.
++Previously filed as Exhibit to Registrant's Form 10-K for the
fiscal year ended December 31, 1990, and incorporated herein by
reference.
-Previously filed as Exhibit to Registrant's Form 10-K for the
fiscal year ended December 31, 1984, and incorporated herein by
reference.
- --Previously filed as Exhibit to Registrant's Form 10-K for the
fiscal year ended December 31, 1993, and incorporated herein by
reference.
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APPENDIX DESCRIBING PICTURES AND CHARTS IN ANNUAL REPORT TO SHAREHOLDERS
On page 2 of the printed version, a bar chart appears reflecting the Return
on Common Shareholders' Equity for the five years ended 1994. These are shown
as follows: 1990 2.7%; 1991 3.5%; 1992 8.3%; 1993 16.0%; 1994 16.7%.
On page 2 of the printed version, a bar chart appears reflecting the Return on
Average Assets for the five years ended 1994. These are shown as follows: 1990
.15%; 1991 .21%; 1992 55%; 1993 1.13%; 1994 1.28%.
On page 3 of the printed version is a picture of Allen L. Lastinger Jr.,
President and Chief Operating Officer, and Charles E. Rice, Chairman and Chief
Executive Officer.
On page 4 of the printed version, a bar chart appears reflecting the Net Charge-
Offs for the five years ended 1994. These are shown as follows: 1990 $265
million; 1991 $432 million; 1992 $262 million; 1993 $142 million; 1994 $92
million.
On page 4 of the printed version, a bar chart appears reflecting the Reserve
Coverage of Non-Performing Loans at the end of each year for the five years
ended 1994. These are shown as follows: 1990 75%; 1991 85%; 1992 114%;
1993 171%; 1994 250%.
On page 6 of the printed version are three pictures under the headings RETAIL
BANKING, CORPORATE BANKING and OTHER ACTIVITIES as follows: RETAIL BANKING
has a picture of a man's hands writing a check; CORPORATE BANKING has a picture
of a woman walking out of a flower shop; OTHER ACTIVITIES has a picture of a
computer terminal.
On page 8 of the printed version, a photograph of three people in a bank lobby
appears.
On page 10 of the printed version, a photograph of a man in a hammock on the
beach appears. He is working on a lap top computer.
On page 12 of the printed version, a photograph of two men in front of a vacant
lot appear.
On page 14 of the printed version, a photograph of an Aspen Mountain home scene
appears.
On page 17 of the printed version, a bar chart appears reflecting Earnings Per
Common Share Fully Diluted for the five years ended 1994. These are shown as
follows: 1990 $.65; 1991 $.80; 1992 $1.97; 1993 $4.01; 1994 $4.66.
On page 18 of the printed version, two pie charts appear reflecting the Average
Loans in 1990 and 1994. These are shown as follows: 1994 Commercial 16%,
Commercial Real Estate 12%, Consumer 72%; 1990 Commercial 19%, Commercial Real
Estate 25%, Consumer 56%.
On page 20 of the printed version, two pie charts appear reflecting the Average
Deposits in 1994 and 1990. These are shown as follows: 1994 Consumer CD 24%,
Savings & Money Mkt. 36%, Demand & NOW 35%, Other 5%; 1990 Consumer CD 36%,
Savings & Money Mkt. 23%, Demand & NOW 27%, Other 14%.
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On page 22 of the printed version, a bar chart appears reflecting the Taxable
Equivalent Net Interest Income for the five years ended 1994. These are shown
as follows: 1990 $1.49 billion; 1991 $1.57 billion; 1992 $1.74 billion;
1993 $1.70 billion; 1994 $1.68 billion.
On page 22 of the printed version, a line graph appears reflecting Net Yield as
a percentage of Average Earning Assets for the five years ended 1994. These are
shown as follows: 1990 4.60%; 1991 4.60%; 1992 5.11%; 1993 5.07%; 1994 4.87%.
On page 25 of the printed version, a bar graph appears reflecting Non-Interest
Income, Excluding Securities Transactions, for the five years ended 1994.
These are shown as follows: 1990 $476 million; 1991 $529 million; 1992 $587
million; 1993 $601 million; 1994 $556 million.
On page 26 of the printed version, a line graph appears reflecting the Overhead
Ratio for the five years ended 1994. This is shown as follows: 1990 67%; 1991
71%; 1992 71%; 1993 65%; 1994 61%.
On page 30 of the printed version, a line graph appears reflecting Consumer
Credit Delinquency 30 Days or More Past Due for Bank Card and Installment at
December 31 for the five years ended 1994. Bank Card is as follows:
1990 3.71%; 1991 3.76%; 1992 2.42%; 1993 2.77%; 1994 2.77%. Installment is
shown as follows: 1990 1.13%; 1991 .79%; 1992 .47%; 1993 .68%; 1994 .94%.
On page 31 of the printed version, a bar graph appears reflecting Average
Shareholders' Equity for the five years ended 1994. This is shown as follows:
1990 $2.0 billion; 1991 $2.1 billion; 1992 $2.5 billion; 1993 $2.7 billion;
1994 $3.0 billion.
On page 31 of the printed version, a bar graph appears reflecting Book Value
Per Share for the five years ended 1994. This is shown as follows: 1990
$24.16; 1991 $24.19; 1992 $25.40; 1993 $28.34; 1994 $31.09.
On page 60 of the printed version, a picture of the Board of Directors appears.
On page 61 of the printed version, a picture of the Management Executive
Committee appears.
On page 63 of the printed version, a map of Florida and South Georgia appears.
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EXHIBIT 3(b)
AMENDED AND RESTATED
BYLAWS
OF
BARNETT BANKS, INC.
ARTICLE I
STOCK
SECTION 1.1 ISSUANCE OF CERTIFICATES.
(a) Certificates of stock of each of the classes provided for in the
Articles of Incorporation shall be issued in numerical order, and each
shareholder shall be entitled to a certificate, signed by the Chairman or the
President and the Secretary or an Assistant Secretary, certifying to the number
and class of shares owned by him. Where, however, such certificate is signed by
a transfer agent acting on behalf of this Corporation, the signature of any of
the above-named officers may be facsimile.
(b) In case any officer who has signed a certificate, or whose facsimile
signature has been used on a certificate, has ceased to be an officer before the
certificate has been delivered, such certificate may, nevertheless, be adopted
and issued and delivered by this Corporation as though the officer who signed
such certificate, or whose facsimile signature shall have been used thereon, had
not ceased to be such officer in this Corporation.
(c) Each certificate representing shares shall state upon the face
thereof: (i) the name of this Corporation; (ii) that this Corporation is
organized under the laws of Florida; (iii) the name of the person or persons to
whom issued; (iv) the number and class of shares, and the designation of the
series, if any, which such certificate represents; and (v) the par value of each
share represented by such certificate, or a statement that the shares are
without par value.
(d) Each certificate representing shares shall set forth or fairly
summarize upon the face or back of the certificate, or shall state that the
Corporation will furnish to any shareholder
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upon request and without charge a full statement of: (i) the designations,
preferences, limitations, and relative rights of the shares of each class of
series authorized to be issued; (ii) the variations in the relative rights and
preferences between the shares of each series, insofar as the same have been
fixed and determined; and (iii) the authority of the Board of Directors to fix
and determine the relative rights and preferences of subsequent series.
(e) Each certificate shall otherwise comply, in all respects, with the
requirements of law.
SECTION 1.2. REGISTERED HOLDERS.
Except as expressly provided by law, only registered shareholders shall be
entitled to be treated by this Corporation as the holders in fact of the shares
standing in their respective names, and this Corporation shall not be bound to
recognize any equitable or other claim to or interest in any share on the part
of any other person, whether or not it shall have express or other notice
thereof.
SECTION 1.3. TRANSFER.
This Corporation or its transfer agent shall register a stock certificate
presented to it for transfer if: (i) the certificate is properly endorsed by
the holder of record or his duly authorized attorney and accompanied by
reasonable assurance that such endorsement is genuine and effective; (ii) this
Corporation is not under, or has discharged, any duty to inquire into adverse
claims to the shares represented by such certificate; and (iii) applicable laws
relating to the collection of taxes have been complied with. Transfer of a
stock certificate shall be made only upon the transfer books of this
Corporation, kept at the offices of either this Corporation or the transfer
agent designated to transfer the class represented by such certificate. Before
a new certificate is issued, the old certificate shall be surrendered for
cancellation.
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SECTION 1.4. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE.
(a) For the purpose of determining shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or entitled
to receive payment of any dividend, or in order to make a determination of
shareholders for any other purpose, the Board of Directors may provide that the
stock transfer books shall be closed for a stated period not to exceed, in any
case, sixty days. If the stock transfer books shall be closed for the purpose
of determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten days immediately
preceding such meeting.
(b) In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any determination of
shareholders, such date to be, in any case, no more than seventy days and, in
case of a meeting of shareholders, not less than ten days prior to the date on
which the particular action requiring such determination of shareholders is to
be taken.
(c) If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
(d) When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting.
SECTION 1.5. RECORD OF SHAREHOLDERS HAVING VOTING RIGHTS.
The officer or agent having charge of the stock transfer books shall make,
at least ten days before each meeting of
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shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, with the address of, and the number and
class and series, if any, of shares held by, each. For a period of ten days
prior to such meeting, the list shall be kept on file at the registered office
or principal place of business of this Corporation or at the office of the
transfer agent or registrar of this Corporation, and any shareholder shall be
entitled to inspect the list during usual business hours. The list shall also
be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder at any time during the meeting. If
the requirements of this section have not been substantially complied with, the
meeting, on demand of any shareholder in person or by proxy, shall be adjourned
until the requirements are complied with. If no such demand is made, failure to
comply with the requirements of this section shall not affect the validity of
any action taken at such meeting.
SECTION 1.6. LOST, STOLEN, OR DESTROYED CERTIFICATES.
This Corporation shall issue a new stock certificate in the place of any
certificate previously issued if the holder of record of the certificate: (i)
makes proof in affidavit form that it has been lost, destroyed, or wrongfully
taken; (ii) requests the issue of a new certificate before this Corporation has
notice that the certificate has been acquired by a purchaser for value in good
faith and without notice of any adverse claim; (iii) gives bond in such form as
this Corporation may direct, to indemnify this Corporation, the transfer agent,
and registrar against any claim that may be made on account of the alleged loss,
destruction, or theft of the certificate; and (iv) satisfies any other
reasonable requirements imposed by this Corporation.
ARTICLE II
SHAREHOLDERS MEETINGS
SECTION 2.1. PLACE.
The place of any meeting of the shareholders shall be the principal office
of this Corporation in the City of Jacksonville,
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Florida, or such other place within or without the State of Florida as shall be
determined by the Board of Directors.
SECTION 2.2. ANNUAL MEETING.
The annual meeting of the shareholders of this Corporation, for the purpose
of electing directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting.
SECTION 2.3. NOTICE.
(a) Written notice stating the place, day, and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered, either personally or by United States mail, by or at
the direction of the Chairman or the Secretary, to each shareholder of record
entitled to vote at the meeting. Such notice shall be given not less than ten
nor more than sixty days before the annual meeting or any special meeting called
by the Chairman, President or the Board of Directors, and not less than twenty
nor more than ninety days after the receipt of a request from any other persons
entitled to call a special meeting of shareholders. If mailed, any notice
required by this section shall be deemed to be delivered when deposited in the
United States mail addressed to shareholder at his address as it appears on the
stock transfer books of this Corporation, with postage thereon prepaid.
(b) Whenever notice is required to be given to any shareholder, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be the equivalent to the
giving of such notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of business because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the shareholders need be specified in the written waiver of
notice.
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SECTION 2.4. PROXIES.
(a) Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting, or his duly authorized attorney-
in-fact, may authorize another person or persons to act for him by proxy.
(b) Every proxy must be signed by the shareholder or his attorney-in-fact.
No proxy shall be valid after the expiration of eleven months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the shareholder executing it, except as otherwise provided by
law.
SECTION 2.5. PRESIDING OFFICER AND CONDUCT OF MEETINGS.
The Chairman, or in his absence the President, a Vice Chairman or a
director, shall call meetings of the shareholders to order and shall act as
presiding officer of the meetings. If none of those persons is present at the
meeting, the presiding officer of the meeting shall be chosen by the vote of a
majority of the shares represented and entitled to vote at the meeting. The
Secretary or an assistant secretary of this Corporation, shall act as secretary
at all meetings of the shareholders, but if neither the Secretary nor an
assistant secretary of this Corporation shall be present at the meeting, the
presiding officer may appoint any other person to act as secretary of the
meeting.
The presiding officer of a meeting shall have broad discretion in
determining the order of business. The presiding officer's authority to conduct
the meeting shall include, but in no way shall be limited to, recognizing
shareholders entitled to speak, calling for necessary reports, stating questions
and putting them to a vote, calling for nominations, and announcing the results
of voting. The presiding officer shall also take such actions as are necessary
and appropriate to preserve order at the meeting. The rules of parliamentary
procedure need not be observed in the conduct of a shareholder's meeting.
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SECTION 2.6. INSPECTORS OF ELECTION.
Inspectors of elections shall be appointed by the Board of Directors to act
at any meeting of shareholders at which any election is held. If inspectors of
election are not so appointed, the presiding officer of the meeting may, and on
the request of a shareholder or his proxy shall, make such appointment. The
inspectors of elections shall: (i) determine the number of shares outstanding,
the voting rights with respect to each, the shares represented at the meeting,
the existence of a quorum and the authenticity, validity, and effect of proxies;
(ii) receive notes, ballots, consents, waivers, or releases; (iii) hear and
determine all challenges and questions arising in connection with the vote; (iv)
count and tabulate all votes, consents, waivers, and releases; (v) determine and
announce the results; and (vi) do such acts as are proper to conduct the
election or vote, with fairness to all shareholders. No inspector, whether
appointed by the Board of Directors or by the presiding officer of the meeting,
need be a shareholder.
SECTION 2.7. SHAREHOLDER QUORUM AND VOTING.
A majority of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders. Matters other
than the election of directors are approved if affirmative votes cast by shares
represented at a meeting at which a quorum is present and entitled to vote on
the subject matter exceed votes opposing the action, unless the vote of a
greater number or voting by class is required by law, the Articles of
Incorporation, or these Bylaws. After a quorum has been established at a
meeting of shareholders, the subsequent withdrawal of shareholders, so as to
reduce the number of shares entitled to vote at the meeting below the number
required for a quorum, shall not affect the validity of any action taken at the
meeting or any adjournment thereof (unless a new record date is or must be set
for the adjourned meeting). Directors are elected by a plurality of the votes
cast by shares entitled to vote on their election at a meeting of the
shareholders at which a quorum is present.
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SECTION 2.8. ADJOURNMENT.
A majority of the shares represented and entitled to vote at any meeting of
shareholders may adjourn the meeting to another time and place whether or not a
quorum exists. When a meeting is adjourned to another time and place, it shall
not be necessary to give any notice of the adjourned meeting if the time and
place to which the meeting is adjourned are announced at the meeting at which
the adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If,
however, after the adjournment, the Board of Directors fixes a new record date
for the adjourned meeting, a notice of the adjourned meeting shall be given, as
provided above in Section 2.4 of these Bylaws, to each shareholder of record on
the new record date entitled to vote at such meeting.
SECTION 2.9. VOTING OF SHARES.
(a) Voting at all meetings of shareholders may be viva voce, but any
qualified voter may demand a stock vote, whereupon such stock vote may be taken
by ballot, each of which shall state the name of the shareholder voting and the
number of shares voted by him, and if such ballot be cast by proxy, it shall
also state the name of such proxy.
(b) Each outstanding share represented in person or by proxy, regardless
of class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders, except as may otherwise be provided by the Articles of
Incorporation or by resolution of the Board of Directors pursuant thereto.
(c) At each election of directors, every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected at
the time for whose election he has a right to vote. No cumulative voting shall
be permitted.
(d) If a proxy for the same shares confers authority upon two or more
persons and does not otherwise provide, a majority of them present at the
meeting, or if only one is present then that one, may exercise all the powers
conferred by the proxy; but if
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the proxy holders present at the meeting are equally divided as to the right and
manner of voting in any particular case, the voting of such shares shall be pro-
rated.
SECTION 2.10 NATURE OF BUSINESS.
At any meeting of shareholders, only such business shall be conducted as
shall have been brought before the meeting by or at the direction of the Board
of Directors or by any shareholder who complies with the procedures set forth in
this Section 2.10.
No business may be transacted at any meeting of shareholders, other than
business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors (or
any duly authorized committee thereof), (b) otherwise properly brought before
such meeting of shareholders by or at the direction of the Board of Directors
(or any duly authorized committee thereof) or (c) in the case of an Annual
Meeting of Shareholders, otherwise properly brought before such meeting by any
shareholder (i) who is a shareholder of record on the date of the giving of the
notice provided for in this Section 2.10 and on the record date for the
determination of shareholders entitled to vote at such Annual Meeting of
Shareholders and (ii) who complies with the notice procedures set forth in this
Section 2.10.
In addition to any other applicable requirements, for business to be
properly brought before an Annual Meeting of Shareholders by a shareholder, such
shareholder must have given timely notice thereof in proper written form to the
Secretary.
To be timely, a shareholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding Annual Meeting of Shareholders;
PROVIDED, HOWEVER, that in the event that the Annual Meeting of Shareholders is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the shareholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which notice of the date of the Annual Meeting of Shareholders was
mailed or public disclosure of the date of the Annual Meeting of Shareholders
was made, whichever first occurs.
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To be in proper written form, a shareholder's notice to the Secretary must
set forth as to each matter such shareholder proposes to bring before the Annual
Meeting of Shareholders (i) a brief description of the business desired to be
brought before the Annual Meeting of Shareholders and the reasons for conducting
such business at the Annual Meeting of Shareholders, (ii) the name and record
address of such shareholder, (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or of record by
such shareholder as of the record date for the meeting (if such date shall then
have been made publicly available and shall have occurred) and as of the date of
such notice, (iv) a description of all arrangements or understandings between
such shareholder and any other person or persons (including their names) in
connection with the proposal of such business by such shareholder and any
material interest of such shareholder in such business, (v) any other
information which would be required to be disclosed in a proxy statement or
other filings required to be made in connection with the solicitations of
proxies for the proposal pursuant to Section 14 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the rules and regulations
promulgated thereunder if such shareholder were engaged in such a solicitation,
and (vi) a representation that such shareholder intends to appear in person or
by proxy at the Annual Meeting of Shareholders to bring such business before the
meeting.
No business shall be conducted at the Annual Meeting of Shareholders except
business brought before the Annual Meeting of Shareholders in accordance with
the procedures set forth in this Section 2.10, PROVIDED, HOWEVER, that, once
business has been properly brought before the Annual Meeting of Shareholders in
accordance with such procedures, nothing in this Section 2.10 shall be deemed to
preclude discussion by any shareholder of any such business. If the Chairman of
an Annual Meeting of Shareholders determines that business was not properly
brought before the Annual Meeting of Shareholders in accordance with the
foregoing procedures, the Chairman shall declare to the meeting that the
business was not properly brought before the meeting and such business shall not
be transacted.
When a meeting is adjourned to another time or place, notice of the
adjourned meeting need not be given if the time and place thereof are announced
at the meeting at which the adjournment is taken, unless the adjournment is for
more than 30 days, or unless
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after the adjournment a new record date is fixed for the adjourned meeting, in
which case notice of the adjourned meeting shall be given to each shareholder of
record entitled to vote at the meeting. At the adjourned meeting, any business
may be transacted that might have been transacted at the original meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. AUTHORITY.
All corporate powers shall be exercised by or under the authority of, and
the business and affairs of this Corporation shall be managed under the
direction of, the Board of Directors. In addition to the powers and authorities
expressly conferred upon it by these Bylaws and the Articles of Incorporation,
the Board of Directors may exercise all such powers of this Corporation and do
all such lawful acts and things as are not by statute, the Articles of
Incorporation, or these Bylaws directed or required to be exercised or done by
the shareholders.
SECTION 3.2. NUMBER AND ELIGIBILITY.
The Board of Directors of this Corporation shall consist of sixteen
members, unless otherwise determined from time to time by resolution adopted by
the vote of at least 80% of the entire Board of Directors. Directors shall be
eligible to serve in that capacity only through the Annual Meeting of
Shareholders next following their 70th birthday, or in the case of a director
who is employed by the Corporation, only through the Annual Meeting of
Shareholders next following the date on which the director's employment with the
Corporation ceases. Notwithstanding the foregoing, the chief executive officer
of the Corporation shall be eligible to serve as an outside Director following
the cessation of his employment with the Corporation for the remainder of the
term to which he was elected and, if nominated by the Board of Directors, shall
be eligible to serve as a director through the Annual Meeting of Shareholders
next following his 70th birthday.
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SECTION 3.3. VACANCIES.
Any vacancy occurring on the Board of Directors, including any vacancy
created by reason of an increase in the number of directors, may be filled only
by the affirmative vote of 80% of the directors then in office. A director
elected to fill a vacancy shall hold office until the next shareholders' meeting
at which directors are elected.
SECTION 3.4. PLACE, TIME AND CALL OF MEETINGS.
The annual meeting of the Board of Directors shall be held at the same
place as the annual shareholders' meeting immediately following the annual
meeting of the shareholders. In addition, there shall be seven regular meetings
of the Board of Directors to be held at such time and at such place within or
without the State of Florida as the Board of Directors may from time to time
designate. Upon the request of any two directors or the President or upon his
own initiative, the Chairman may call a special meeting of the Board of
Directors to be held at such time and place, within or without the State of
Florida, and for such purpose as the notice of the meeting may designate.
SECTION 3.5. NOTICE OF MEETINGS.
(a) Written notice of the time and place of any regular or special meeting
of the Board of Directors shall be given to each director by personal delivery,
mail, telegram, or cablegram at least two days before the meeting.
(b) Notice of any meeting of the Board of Directors need not be given to
any director who signs a written waiver of notice either before or after the
meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting and waiver of any and all objections to the place of the
meeting, the time of the meeting, or the manner in which it has been called or
convened, except when a director states, at the beginning of the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened.
(c) Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of
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Directors need be specified in the notice or waiver of notice of such meeting.
SECTION 3.6. USE OF COMMUNICATION EQUIPMENT.
Members of the Board of Directors may participate in a meeting of the Board
by conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
SECTION 3.7. DIRECTOR QUORUM.
A majority of the number of directors holding office pursuant to these
Bylaws shall constitute a quorum for the transaction of business. The act of
the majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 3.8. ADJOURNMENT OF MEETINGS.
A majority of the directors present, whether or not a quorum exists, may
adjourn any meeting of the Board of Directors to another time and place. Notice
of any such adjourned meeting shall be given, as provided in Section 3.8 of
these Bylaws, to the directors who are not present at the time of the
adjournment and, unless the time and place of the adjourned meeting are
announced at the time of the adjournment, to the other directors.
SECTION 3.9. ACTION WITHOUT A MEETING.
Any action required to be taken at a meeting of the Board of Directors, or
any action which may be taken at a meeting of the directors or a committee
thereof, may be taken without a meeting if a consent in writing, setting forth
the action so to be taken signed by all of the directors or all the members of
the committee, as the case may be, is filed in the minutes of the proceedings of
the board or of the committee. Such consent shall have the same effect as a
unanimous vote.
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SECTION 3.10. COMPENSATION.
Directors are entitled to receive such fees and expenses for attendance at
meetings of the Board of Directors as may be fixed from time to time by the
Board. Directors shall also be entitled to receive compensation for services
rendered to the Corporation as officers or as members of any committee appointed
by the Board, or for service in any other capacity as may be provided from time
to time by the Board.
SECTION 3.11. CONFLICTS OF INTEREST.
(a) No contract or other transaction between this Corporation and one or
more of its directors, or any other Corporation, firm, association, or entity in
which one or more of the directors are directors or officers or are financially
interested, shall be either void or voidable because of such relationship or
interest, because such director or directors are present at the meeting of the
Board of Directors, or committee thereof, which authorizes, approves, or
ratifies such contract or transaction, or because his or their votes are counted
for such purpose, if: (i) the fact of such relationship or interest is
disclosed or known to the Board of Directors or committee which authorizes,
approves, or ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the votes or consents of such
interested directors; (ii) the fact of such relationship or interest is
disclosed or known to the shareholders entitled to vote and they authorize,
approve, or ratify such contract or transaction by vote or written consent; or
(iii) the contract or transaction is fair and reasonable as to the Corporation
at the time it is authorized by the board, a committee, or the shareholders.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves, or ratifies such contract or transaction.
SECTION 3.12 NOMINATION OF DIRECTORS.
Only persons who are nominated in accordance with the following procedures
shall be eligible for election as directors of the Corporation, except as may be
otherwise provided in the
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Certificate of Incorporation with respect to the right of holders of preferred
stock of the Corporation to nominate and elect a specified number of directors
in certain circumstances. Nominations of persons for election to the Board of
Directors may be made at any Annual Meeting of Shareholders, or at any Special
Meeting of Shareholders called for the purpose of electing directors, (a) by or
at the direction of the Board of Directors (or any duly authorized committee
thereof) or (b) by any shareholder of the Corporation (i) who is a shareholder
of record on the date of the giving of the notice provided for in this Section
3.12 and on the record date for the determination of shareholders entitled to
vote at such meeting and (ii) who complies with the notice procedures set forth
in this Section 3.12.
In addition to any other applicable requirements, for a nomination to be
made by a shareholder, such shareholder must have given timely notice thereof in
proper written form to the Secretary.
To be timely, a shareholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation (a)
in the case of an Annual Meeting of Shareholders, not less than sixty (60) days
nor more than ninety (90) days prior to the anniversary date of the immediately
preceding Annual Meeting of Shareholders; PROVIDED, HOWEVER, that in the event
that the Annual Meeting of Shareholders is called for a date that is not within
thirty (30) days before or after such anniversary date, notice by the
shareholder in order to be timely must be so received not later than the close
of business on the tenth (10th) day following the day on which notice of the
date of the Annual Meeting of Shareholders was mailed or public disclosure of
the date of the Annual Meeting was made, whichever first occurs; and (b) in the
case of a Special Meeting of Shareholders called for the purpose of electing
directors, not later than the close of business on the tenth (10th) day
following the day on which notice of the date of the Special Meeting of
Shareholders was mailed or public disclosure of the date of the Special Meeting
of Shareholders was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the Secretary must
set forth (a) as to each person whom the shareholder proposes to nominate for
election as a director (i)
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the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class or series and
number of shares of capital stock of the Corporation which are owned
beneficially or of record by the person as of the record date for the meeting
(if such date shall have been made publicly available and shall have occurred)
and as of the date of such notice and (iv) any other information relating to the
person that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange Act, and the rules
and regulations promulgated thereunder; and (b) as to the shareholder giving the
notice (i) the name and record address of such shareholder, (ii) the class or
series and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such shareholder as of the record date for the
meeting (if such date shall have been made publicly available and shall have
occurred) and as of the date of such notice, (iii) a description of all
arrangements or understandings between such shareholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such shareholder, (iv) a
representation that such shareholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such shareholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth in this Section
3.12. If the Chairman of the meeting determines that a nomination was not made
in accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.
16
<PAGE>
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
SECTION 4.1. EXECUTIVE COMMITTEE.
The Board of Directors may elect annually an Executive Committee,
consisting of the Chief Executive Officer who shall serve as Chairman of the
Executive Committee, as well as the Chairperson of each of the Board's standing
committees. When the Board of Directors is not in session, the Executive
Committee, if elected, shall have and may exercise all of the powers of the
Board of Directors, except as limited by the laws of the State of Florida.
SECTION 4.2. AUDIT COMMITTEE.
The Board of Directors shall elect annually at least three of its members
to constitute an Audit Committee, which committee shall have such
responsibilities as may be assigned to it by resolutions of the Board, including
responsibility for recommending to the Board the selection of independent
auditors and meeting from time to time with such independent auditors to review
the scope of the annual audit and the accounting practices of this Corporation.
SECTION 4.3. EXECUTIVE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE.
The Board of Directors shall elect annually at least three of its members
to constitute an Executive Compensation and Management Development Committee,
which committee shall have such responsibilities as may be assigned to it by the
Board, including responsibility for recommending to the Board the compensation
arrangements for directors and officers elected or appointed by the Board.
SECTION 4.4. CORPORATE RESPONSIBILITY COMMITTEE
The Board of Directors shall appoint annually at least three of its members
to constitute a Corporate Responsibility
17
<PAGE>
Committee, which committee shall have such responsibilities as may be assigned
to it by the Board, including the responsibility for reviewing all phases of the
Corporation's activities that relate to matters of public policy and corporate
responsibility. In addition, the Corporate Responsibility Committee shall
identify and recommend prospective directors for nomination to the Board and,
from time to time, shall assess the composition of the Board and the
qualifications of its members.
SECTION 4.5. OTHER COMMITTEES.
Other standing or temporary committees may be appointed from its own number
by the Board of Directors from time to time, and the Board of Directors may from
time to time invest such committees with such powers as it may see fit, except
as limited by law, subject to such conditions as may be prescribed by the Board.
SECTION 4.6. ALTERNATE MEMBERS.
The Board of Directors may designate one or more directors as alternate
members of any committee of the Board, who may act in the place and stead of any
absent member or members at any meeting of such committee.
SECTION 4.7. CALL, NOTICE, PLACE, AND TIME OF MEETINGS.
Regular meetings of any committee of the Board may be held without call or
notice at such places and times as such committee from time to time may fix.
Special meetings of any committee of the Board may be called by the Chief
Executive Officer or any two members of the committee, upon notice as provided
for special meetings of the Board of Directors, at the place and time set forth
in such notice. Notice of such special meetings may be waived.
SECTION 4.8. COMMITTEE QUORUM.
A quorum at any meeting of a committee of the Board shall consist of a
majority of its members. A majority vote of the
18
<PAGE>
members in attendance at any meeting shall, in the presence of a quorum, decide
its action.
SECTION 4.9. MINUTES OF COMMITTEE MEETINGS.
All committees of the Board shall keep regular minutes of the transactions
of their meetings, shall cause them to be recorded in the books kept for that
purpose in the office of this Corporation, and shall report the same to the
Board of Directors at its next meeting.
ARTICLE V
OFFICERS
SECTION 5.1. OFFICERS.
The officers of this Corporation shall be a Chairman, a President, one or
more Executive Vice Presidents, a Secretary, and a Controller, each of whom
shall be appointed by and serve at the pleasure of the Board of Directors. The
Chief Executive Officer is authorized to appoint such officers on an interim
basis, subject to ratification by the Board at its next meeting. Such other
officers and assistant officers and agents as may be deemed necessary or
appropriate may be appointed by the Board of Directors or such person or persons
as the Board may designate from time to time. The Board shall designate either
the Chairman or the President as Chief Executive Officer of this Corporation
who, subject to the control of the Board, shall have general supervision and
control of the business and affairs of this Corporation. The Chairman and
President each shall be a director, but no other officer need be a member of the
Board of Directors. Any two or more offices may be held by the same person. An
outside Director shall not serve as an officer. Any person who serves both as an
officer and a director of the Corporation shall be a salaried employee of the
Corporation, devoting substantially all of his time to Corporation business.
19
<PAGE>
SECTION 5.2. DUTIES.
(a) CHAIRMAN. The Chairman shall be the Chief Executive Officer. The
Chairman shall preside at all meetings of the Board of Directors, shall have
general executive powers, and shall have such other duties as may be assigned to
him by the Board of Directors or provided by these Bylaws. In the Chairman's
absence, the President shall preside at meetings of the Board and assume the
other duties assigned to the Chairman. Except where, by law, the signature of
the President is required, the Chairman shall possess the same power as the
President to sign all certificates, contracts and other instruments of the
Corporation which may be authorized by the Board of Directors.
(b) THE PRESIDENT shall have general executive powers, and shall have such
other duties as may be assigned to him by the Board of Directors or provided by
these Bylaws. He may sign or countersign all certificates, contracts, and
other instruments of this Corporation as authorized by the Board of Directors.
He shall make reports to the Board of Directors and shareholders, and shall
perform all such other duties as are incident to his office or are properly
required of him by the Board of Directors.
(c) EACH EXECUTIVE VICE PRESIDENT shall perform the duties delegated to him
from time to time by the Board of Directors or by the Chief Executive Officer.
(d) THE SECRETARY shall issue notice for all meetings, shall keep minutes
of all meetings, shall have charge of the seal and the corporate books, and
shall make such reports and perform such other duties as are incident to his
office or are properly required of him by the Board of Directors or the Chief
Executive Officer.
(e) THE CONTROLLER shall have custody of all monies and securities of this
Corporation and shall keep or cause to be kept regular books of account. He
shall disburse the funds of this Corporation in payment of the just demands
against this Corporation, or as may be ordered by the Chief Executive Officer or
the Board of Directors, taking proper vouchers for such disbursements. He shall
report the financial condition of this Corporation to the stockholders at the
annual meeting and shall render to the Chief Executive Officer and the Board of
Directors from time to time, as may be required of him, an account of all
20
<PAGE>
of his transactions as Controller and of the financial condition of this
Corporation. He shall perform such other duties as are incident to his office
or are properly required of him by the Board of Directors or the Chief Executive
Officer.
SECTION 5.3. ABSENCE OR INABILITY.
In the case of absence or inability to act of any officer of this
Corporation and of any person herein authorized to act in his place, the Board
of Directors may from time to time delegate the powers or duties of such officer
to any other person whom it may select.
SECTION 5.4. VACANCIES.
Vacancies in any office arising from any cause may be filled by the Board
of Directors.
SECTION 5.5. COMPENSATION.
The salaries and other compensation of all officers of this Corporation
elected or appointed by the Board of Directors shall be fixed by the Board of
Directors or by a committee of Board members designated for that purpose by
the Board. Compensation of other employees and agents shall be fixed by or
under the authority of the Chief Executive Officer. No member of the Board of
Directors shall be disqualified from voting on compensation of officers by
reason of the fact that he is an officer as well as a director, except that his
vote shall not be counted in fixing his own compensation.
SECTION 5.6. REMOVAL.
Any officer elected or appointed by the Board of Directors may be removed
at any time, with or without cause, by the affirmative vote of a majority of the
Board of Directors.
21
<PAGE>
SECTION 5.7. PERFORMANCE BONDS.
The Board of Directors, may, by resolution, require any and all of the
officers to give bonds to this Corporation, with sufficient surety or sureties,
conditioned for the faithful performance of the duties of their respective
offices, and to comply with such other duties as may from time to time be
required by the Board of Directors.
ARTICLE VI
DIVIDENDS AND FINANCES
SECTION 6.1. DIVIDENDS.
The Board of Directors of this Corporation may, from time to time, declare,
and this Corporation may pay, dividends as permitted by law on its shares in
cash, property, or its own shares, except when this Corporation is insolvent or
when the payment thereof would render this Corporation insolvent.
SECTION 6.2. RESERVES.
Before making any distribution of profits there may be set aside out of the
net profits of this Corporation such sum or sums as the directors may from time
to time, in their absolute discretion, deem expedient, as a reserve fund to meet
contingencies, or for equalizing dividends, or for maintaining any property of
this Corporation, or for any other purpose, and any profits of any year not
distributed as dividends shall be deemed to have been thus set apart until
otherwise disposed of by the Board of Directors.
SECTION 6.3. DEPOSIT OF MONIES.
Monies of this Corporation shall be deposited in the name of this
Corporation in such banks or trust companies as the Board of Directors shall
designate, and shall be drawn out only by checks signed by persons designated by
resolution by the Board of Directors.
22
<PAGE>
SECTION 6.4. FISCAL YEAR.
The fiscal year of this Corporation shall begin on the first day of January
in each year, unless otherwise provided by the Board of Directors.
ARTICLE VII
BOOKS AND RECORDS
SECTION 7.1. BOOKS AND RECORDS.
(a) This Corporation shall keep correct and complete books and records of
accounts and shall keep minutes of the proceedings of its shareholders, Board of
Directors, and committees of directors.
(b) This Corporation shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar, a record
of its shareholders, giving the names and addresses of all shareholders, and the
number, class, and series, if any, of the shares held by each.
(c) Any books, records, and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
SECTION 7.2. SHAREHOLDERS' INSPECTION RIGHTS.
Any person who shall have been a holder of record of one quarter of one
percent of the shares or of voting trust certificates therefor for at least six
months immediately preceding his demand or shall be the holder of record of, or
the holder of record of voting trust certificates for, at least five percent of
the outstanding shares of any class or series of this Corporation, upon written
demand stating the purpose thereof, shall have the right to examine, in person
or by agent or attorney, at any reasonable time or times and for any proper
purpose, its relevant books and records of accounts, minutes, and records of
shareholders and to make extracts therefrom.
23
<PAGE>
SECTION 7.3. FINANCIAL STATEMENTS.
(a) Unless modified by resolution of the shareholders not later than four
months after the close of each fiscal year, this Corporation shall prepare a
balance sheet showing in reasonable detail the financial condition of the
Corporation as of the close of its fiscal year, and a profit and loss statement
showing the results of the operations of the Corporation during its fiscal year.
(b) Upon the written request of any shareholder or holder of voting trust
certificates for shares of the Corporation, the Corporation shall mail to such
shareholder or holder of voting trust certificates a copy of its most recent
balance sheet and profit and loss statement.
(c) The balance sheets and profit and loss statement shall be filed in the
registered office of the Corporation in this state, shall be kept for at least
five years, and shall be subject to inspection during business hours by any
shareholder or holder of voting trust certificates, in person or by agent.
ARTICLE VIII
SEAL
The corporate seal of this Corporation shall consist of an impression
showing two concentric circles, between which circles shall be the words
"Barnett Banks, Inc." and in the center there shall be inscribed the words
"Incorporated, 1930, Seal". Such seal as impressed upon the margin of these
Bylaws is hereby adopted as the corporate seal of this Corporation.
ARTICLE IX
VOTING OF SHARES OWNED BY CORPORATION
SECTION 9.1. BY THE CORPORATION.
Unless otherwise directed by the Board of Directors, the Chairman and Chief
Executive Officer, and in his absence the President, shall have full power and
authority on behalf of this
24
<PAGE>
Corporation to attend and to act and to vote at any meeting of the shareholders
of any Corporation of which this Corporation may hold stock, and at any such
meeting shall possess and may exercise all of the rights and powers incident to
the ownership of such stock, and which, as the owner thereof, this Corporation
might have possessed and exercised if present.
SECTION 9.2. BY PROXY OR CONSENT.
Whenever, in the judgment of the Chief Executive Officer, it is desirable
for this Corporation to execute a proxy or give a shareholder's consent with
respect to any shares of stock issued by any other Corporation and owned by this
Corporation, such proxy or consent shall be executed in the name of this
Corporation by the Chief Executive Officer, Chief Financial Officer or Secretary
without necessity of any authorization by the Board of Directors. Any person or
persons designated in the manner above as the proxy or proxies of this
Corporation shall have full right, power, and authority to vote the shares of
stock issued by such other Corporation and owned by this Corporation in the same
manner and to the same extent as such shares might be voted by this Corporation.
SECTION 9.3. BY OTHER PERSONS.
The Board of Directors may confer similar powers upon any other person or
persons, in its discretion, from time to time.
ARTICLE X
AMENDMENT OF BYLAWS
Alteration, amendment, or repeal of these Bylaws may be made by a majority
vote of the Board of Directors at any regular or special meeting.
25
<PAGE>
EXHIBIT 11
BARNETT BANKS, INC. - CONSOLIDATED
COMPUTATION OF EQUIVALENT SHARES AND PER SHARE EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE TWELVE MONTHS ENDED DECEMBER 31
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
1994 1993 1992
----------------------------------------------------------------------------------------
FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
---------- ---------- ---------- ---------- ---------- ----------
Equivalent shares:
<S> <C> <C> <C> <C> <C> <C>
Average shares outstanding: 97,262,496 97,262,496 97,182,222 97,182,222 95,205,415 95,205,415
Additional shares due to:
Stock options 784,227 784,227 960,690 960,690 575,923 899,370
Series A preferred stock 0 3,773,600 0 3,773,600 0 3,773,600
Series B preferred stock 34,468 34,468 40,205 40,205 60,426 60,426
Series C preferred stock 0 2,911,340 0 2,911,340 0 2,911,340
----------------------------------------------------------------------------------------
Total equivalent shares 98,081,191 104,766,131 98,183,117 104,868,057 95,841,764 102,850,151
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Earnings per share:
Net income $487,971 $487,971 $420,994 $420,994 $207,656 $207,656
Less: Preferred stock dividends (18,200) 0 (18,200) 0 (18,200) 0
----------------------------------------------------------------------------------------
Adjusted net income $469,771 $487,971 $402,794 $420,994 $189,456 $207,656
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Total equivalent shares 98,081,191 104,766,131 98,183,117 104,868,057 95,841,764 102,850,151
Earnings per share on net income $4.79 $4.66 $4.10 $4.01 $1.97 $1.97
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 12
BARNETT BANKS, INC. - CONSOLIDATED
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
EXCLUDING INTEREST ON DEPOSITS
Year Ended December 31
-----------------------------------------------------------
1994 1993 1992 1991 1990
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $487,971 $420,994 $207,656 $81,442 $55,548
Provision (benefit) for income taxes 249,834 207,482 95,310 8,446 (8,922)
----------------------------------------------------------
Earnings before provision (benefit)
for income taxes 737,805 628,476 302,966 89,888 46,626
----------------------------------------------------------
Fixed charges:
Interest expense (excluding interest on
deposits) 159,897 91,005 100,953 133,014 173,477
Capitalized interest 665 1,364 1,498 0 3,138
Interest portion of rentals (33%) 27,450 32,256 31,115 28,244 25,044
----------------------------------------------------------
Total fixed charges 188,012 124,625 133,566 161,258 201,659
----------------------------------------------------------
Earnings before provision (benefit)
for income taxes and fixed charges $925,817 $753,101 $436,532 $251,146 $248,285
----------------------------------------------------------
----------------------------------------------------------
Ratio of earnings to fixed charges 4.92 6.04 3.27 1.56 1.23
----------------------------------------------------------
----------------------------------------------------------
<CAPTION>
INCLUDING INTEREST ON DEPOSITS
Year Ended December 31
----------------------------------------------------------
1994 1993 1992 1991 1990
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $487,971 $420,994 $207,656 $81,442 $55,548
Provision (benefit) for income taxes 249,834 207,482 95,310 8,446 (8,922)
----------------------------------------------------------
Earnings before provision (benefit)
for income taxes 737,805 628,476 302,966 89,888 46,626
----------------------------------------------------------
Fixed charges:
Interest expense (including interest on
deposits) 921,408 880,105 1,143,680 1,764,424 1,976,517
Capitalized interest 665 1,364 1,498 0 3,138
Interest portion of rentals (33%) 27,450 32,256 31,115 28,244 25,044
----------------------------------------------------------
Total fixed charges 949,523 913,725 1,176,293 1,792,668 2,004,699
----------------------------------------------------------
Earnings before provision (benefit)
for income taxes and fixed charges $1,687,328 $1,542,201 $1,479,259 $1,882,556 $2,051,325
-----------------------------------------------------------
-----------------------------------------------------------
Ratio of earnings to fixed charges 1.78 1.69 1.26 1.05 1.02
-----------------------------------------------------------
-----------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 12 - (continued)
BARNETT BANKS, INC. - CONSOLIDATED
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
(Dollars in thousands)
<TABLE>
<CAPTION>
EXCLUDING INTEREST ON DEPOSITS
Year Ended December 31
-------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $487,971 $420,994 $207,656 $81,442 $55,548
Provision (benefit) for income taxes 249,834 207,482 95,310 8,446 (8,922)
-------------------------------------------------
Earnings before provision (benefit)
for income taxes 737,805 628,476 302,966 89,888 46,626
-------------------------------------------------
Fixed charges:
Interest expense (excluding interest on
deposits) 159,897 91,005 100,953 133,014 173,477
Capitalized interest 665 1,364 1,498 0 3,138
Interest portion of rentals (33%) 27,450 32,756 31,115 28,244 25,044
------------------------------------------------
Total fixed charges 188,012 125,125 133,566 161,258 201,659
------------------------------------------------
Earnings before provision (benefit)
for income taxes and fixed charges $925,817 $753,601 $436,532 $251,146 $248,285
------------------------------------------------
------------------------------------------------
Preferred dividend requirements 18,234 18,238 18,254 10,284 85
Ratio of pre-tax income to net income 1.51 1.49 1.46 1.10 0.84
------------------------------------------------
Preferred dividend factor 27,570 27,226 26,632 11,351 71
Total Fixed Charges 188,012 125,125 133,566 161,258 201,659
------------------------------------------------
Combined fixed charges and preferred
dividend requirements $215,582 $152,351 $160,198 $172,609 $201,730
-----------------------------------------------
-----------------------------------------------
Ratio of earnings to combined fixed
charges and preferred dividend
requirements 4.29 4.95 2.72 1.46 1.23
-----------------------------------------------
-----------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 12 - (continued)
BARNETT BANKS, INC. - CONSOLIDATED
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
(Dollars in thousands)
<TABLE>
<CAPTION>
INCLUDING INTEREST ON DEPOSITS
Year Ended December 31
---------------------------------------------------------
1994 1993 1992 1991 1990
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $487,971 $420,994 $207,656 $81,442 $55,548
Provision (benefit) for income taxes 249,834 207,482 95,310 8,446 (8,922)
---------------------------------------------------------
Earnings before provision (benefit)
for income taxes 737,805 628,476 302,966 89,888 46,626
---------------------------------------------------------
Fixed charges:
Interest expense (including
interest on deposits) 921,408 880,105 1,143,680 1,764,424 1,976,517
Capitalized interest 665 1,364 1,498 0 3,138
Interest portion of rentals (33%) 27,450 32,256 31,115 28,244 25,044
---------------------------------------------------------
Total fixed charges 949,523 913,725 1,176,293 1,792,668 2,004,699
---------------------------------------------------------
Earnings before provision for
income taxes and fixed charges $1,687,328 $1,542,201 $1,479,259 $1,882,556 $2,051,325
---------------------------------------------------------
---------------------------------------------------------
Preferred dividend requirements 18,234 18,238 18,254 10,284 85
Ratio of pre-tax income to net income 1.51 1.49 1.46 1.10 0.84
---------------------------------------------------------
Preferred dividend factor 27,570 27,226 26,632 11,351 71
Total Fixed Charges 949,523 913,725 1,176,293 1,792,668 2,004,699
---------------------------------------------------------
Combined fixed charges and preferred
dividend requirements $977,093 $940,951 $1,202,925 $1,804,019 $2,004,770
---------------------------------------------------------
---------------------------------------------------------
Ratio of earnings to combined fixed
charges and preferred dividend
requirements 1.73 1.64 1.23 1.04 1.02
---------------------------------------------------------
---------------------------------------------------------
</TABLE>
<PAGE>
[Photo]
BARNETT BANKS, INC.
1994 ANNUAL REPORT [BARNETT BANK LOGO]
<PAGE>
- --------------------------------------------------------------------------------
CORPORATE PROFILE
Barnett Banks, Inc. is the leading financial institution in Florida and is
ranked in the top 25 in the United States. Barnett's stock is listed on the New
York Stock Exchange.
Barnett's 31 banks in Florida and Georgia are complemented by non-banking
affiliates providing support services and specialized financial services,
including trust, full-service brokerage, credit card, mortgage banking and
consumer finance. Barnett-REGISTRATION MARK- commands the leading market share
in Florida in virtually every major banking line of business, including ranking
first, second or third in deposit share in all 45 Florida counties in which it
operates.
- --------------------------------------------------------------------------------
MISSION STATEMENT
The mission of Barnett is to create value for its owners, customers and
employees as a major financial services provider in the United States.
We will strengthen our position in existing markets by providing a full
range of financial services, by acquiring other financial institutions, and by
capitalizing on our market knowledge and our commitment to entrepreneurial
market ownership.
Our focus will be on satisfying our customers' total financial needs by
offering differentiated benefits driven by a sales and service process that
solidifies and expands the total customer relationship.
Barnett will aggressively pursue diversified income opportunities which
include internal initiatives, acquisitions and alliances in attractive markets
throughout the country which complement, leverage and expand our core
capabilities.
By the year 2000, Barnett will be a fully diversified financial services
organization with the acknowledged leadership position in the evolving banking
business in its markets and with a diversified group of other financial
businesses throughout the nation.
- --------------------------------------------------------------------------------
CONTENTS
Consolidated Financial Highlights. . . . . . . . . . 1
A Letter to Our Shareholders . . . . . . . . . . . . 2
Lines of Business. . . . . . . . . . . . . . . . . . 6
Building the Bank, Diversifying the Business . . . . 8
Management Discussion. . . . . . . . . . . . . . . . 17
Six-Year Statements. . . . . . . . . . . . . . . . . 34
Fourth Quarter Management Discussion . . . . . . . . 36
Annual Financial Statements. . . . . . . . . . . . . 42
Notes to Financial Statements. . . . . . . . . . . . 47
Directors. . . . . . . . . . . . . . . . . . . . . . 60
Officers . . . . . . . . . . . . . . . . . . . . . . 61
Directory of Affiliates. . . . . . . . . . . . . . . 62
Shareholder Information. . . . . . . . . . . . . . . 64
<PAGE>
- --------------------------------------------------------------------------------
BARNETT BANKS, INC.
- --------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DOLLARS IN MILLIONS EXCEPT PER SHARE DATA 1994 1993 CHANGE 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEAR
Net interest income (taxable-equivalent)....... $1,677.5 $1,700.3 (1)% $1,736.1 $1,568.0 $1,490.8
Provision for loan losses...................... 74.0 120.4 (39) 257.3 453.9 491.6
Non-interest income............................ 542.6 599.0 (9) 620.7 546.8 452.7
Non-interest expense (excluding
restructuring charge)....................... 1,364.2 1,501.0 (9) 1,645.5 1,497.1 1,320.0
Restructuring charge........................... -- -- -- 92.6 -- --
Net income..................................... 488.0 421.0 16 207.7 81.4 55.5
- --------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE
Net income:
Primary...................................... $ 4.79 $ 4.10 17% $ 1.97 $ .80 $ .65
Fully diluted................................ 4.66 4.01 16 1.97 .80 .65
Cash dividends declared........................ 1.59 1.41 13 1.32 1.32 1.29
Book value(1).................................. 31.09 28.34 10 25.40 24.19 24.16
Stock price:
High........................................ 48.13 50.38 (4) 43.63 36.38 37.75
Low......................................... 37.63 37.38 1 31.00 15.50 14.13
Close....................................... 38.50 41.50 (7) 41.25 33.50 18.88
- --------------------------------------------------------------------------------------------------------------------
KEY PERFORMANCE RATIOS
Return on assets............................... 1.28% 1.13% 13% .55% .21% .15%
Return on common equity........................ 16.70 16.02 4 8.26 3.54 2.74
Return on total equity......................... 16.11 15.42 4 8.27 3.83 2.73
Net yield on average earning assets............ 4.87 5.07 (4) 5.11 4.60 4.60
Overhead ratio(2).............................. 61.09 65.22 (6) 70.85 71.41 67.11
Shareholders' equity to total assets(1)........ 7.81 7.76 1 6.77 6.34 5.45
Leverage ratio................................. 6.97 7.29 (4) 6.18 5.54 4.59
Total risk-based capital ratio................. 12.42 13.33 (7) 12.11 10.53 8.11
- --------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES
Assets......................................... $38,169 $37,356 2% $37,923 $37,900 $36,122
Deposits....................................... 31,710 32,485 (2) 33,221 33,338 31,458
Loans, net of unearned income.................. 26,810 25,840 4 26,236 27,201 27,285
Earning assets................................. 34,441 33,513 3 33,940 34,118 32,381
Common equity.................................. 2,814 2,515 12 2,295 2,009 2,031
Shareholders' equity........................... 3,029 2,730 11 2,511 2,128 2,032
Primary shares (thousands)..................... 98,081 98,183 -- 95,842 88,855 85,485
Fully diluted shares (thousands)............... 104,766 104,868 -- 102,850 93,054 85,485
- --------------------------------------------------------------------------------------------------------------------
AT YEAR END
Assets......................................... $41,278 $38,331 8% $39,465 $38,491 $37,978
Deposits....................................... 35,109 32,634 8 34,689 33,850 33,663
Loans, net of unearned income.................. 28,521 25,930 10 26,051 26,422 28,070
Long-term debt................................. 777 682 14 701 710 495
Preferred stock................................ 215 215 -- 215 216 1
Shareholders' equity........................... 3,134 2,874 9 2,556 2,314 1,938
Common shares (thousands)...................... 96,733 97,404 (1) 96,643 91,992 85,680
- --------------------------------------------------------------------------------------------------------------------
<FN>
(1)COMPUTED BASED ON EQUITY BEFORE DEDUCTION OF THE EMPLOYEE STOCK OWNERSHIP PLAN OBLIGATION.
(2)EXCLUDING RESTRUCTURING CHARGE.
</TABLE>
1
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A LETTER TO OUR SHAREHOLDERS
By many measures, 1994 was a significant year for Barnett. The company
achieved record earnings and profitability while further strengthening its
balance sheet and improving efficiency. We continued to build our core banking
business through the acquisition of the Florida franchise of Glendale Federal
Bank, FSB, and internal initiatives designed to differentiate us in the
marketplace. Our strategy to diversify was advanced through the acquisitions of
Loan America Financial Corporation and EquiCredit Corporation, companies with
national lending franchises.
Earnings rose 16% in 1994 to $488 million, or $4.66 per fully diluted share,
both records. This year's earnings represented a strong 1.28% return on average
assets and a 16.70% return on common shareholders' equity.
Among the financial highlights:
/ / We cut expenses 9% below 1993 levels, reducing our overhead ratio to
61%. That ratio--representing expenses as a percentage of revenues--is down from
71% just two years ago.
/ / We reduced non-performing assets by 37% to the lowest level in five
years.
/ / We experienced a 35% reduction in net charge-offs to .34% of loans, the
best ratio reported by Barnett since 1985.
/ / We enjoyed our best growth in loans since 1990. Lending to consumers
was particularly strong, increasing by 13%, and loans to businesses grew by 9%.
In line with our strategic focus on consumers and small businesses, loans to
those two groups represented 77% of our total portfolio on December 31.
Loan growth was offset by a reduction in our net yield on earning assets,
producing a 1% decline in net interest income. However, our large core deposit
base and the short maturity of our securities portfolio has minimized the
volatility of our net yield, contributing to a more predictable revenue stream.
Non-interest income was affected by lower mortgage origination volumes and
slower sales of investment products and services. Both businesses were impacted
by rising interest rates.
Long term, a more diversified revenue stream is one of our strategic
objectives, a goal we discussed in our 1993 annual report. Other objectives
include maintaining sound credit quality and strong reserves, being in the right
businesses and having a powerful franchise. By these measures, Barnett today is
operating from a strong position.
Our mission for the remainder of the decade is to leverage that strength,
building both our traditional banking business and a diverse family of consumer
financial service companies with regional or national franchises. This year, we
made acquisitions designed to build our bank and diversify our business.
On October 1, we completed the purchase of Loan America, Barnett's entry
into national wholesale mortgage banking in which loans are acquired from
mortgage brokers. This
[CHART]
[CHART]
BARNETT TODAY IS OPERATING FROM A STRONG POSITION...
OUR MISSION FOR THE REMAINDER OF THE DECADE IS TO LEVERAGE THAT STRENGTH,
BUILDING BOTH OUR TRADITIONAL BANKING BUSINESS AND A FAMILY OF DIVERSIFIED
FINANCIAL SERVICE COMPANIES WITH REGIONAL OR NATIONAL FRANCHISES.
2
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A LETTER TO OUR SHAREHOLDERS
acquisition is part of an ongoing plan to expand our mortgage banking business.
Barnett's traditional mortgage lending through banking offices combined with
Loan America's production totaled $4.3 billion in loan originations during 1994.
Through the addition of adjustable-rate mortgages to its product line, Loan
America is contributing to growth in Barnett's earning assets. Loan America's
originations are also contributing to our servicing business, which totaled
$18.4 billion on December 31 and is a stable source of fee income.
On December 15, Barnett completed the purchase of the Florida franchise of
Glendale Federal, with approximately $3.4 billion in deposits in 10 Florida
counties. This purchase substantially increases our market share in Broward,
Palm Beach and Pinellas counties and takes us from second to first in
Hillsborough County.
In January 1995, Barnett completed the purchase of EquiCredit, a company
that originates, sells and services fixed-rate consumer loans secured by first
or second mortgages from 94 offices in 29 states. EquiCredit originated $656
million in loans during 1994, and the company's servicing portfolio was $1.7
billion on December 31. This transaction will also increase fee income.
On January 19, 1995, Barnett announced a definitive agreement to acquire
BancPLUS Financial Corporation for $162 million in cash. BancPLUS, based in San
Antonio, Texas, is a full-service mortgage banking company with 54 retail and 9
wholesale offices in 23 states, giving Barnett an entry into national retail
mortgage banking. BancPLUS originated $1.5 billion in loans during 1994 and had
a servicing portfolio of approximately $14 billion at year end.
[PHOTO]
- ---------------
ALLEN L. LASTINGER, JR., PRESIDENT
AND CHIEF OPERATING OFFICER;
CHARLES E. RICE, CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The transaction is expected to close in the first half of 1995.
These acquisitions will add to earnings in 1995. Our expansion strategy is
based on our conviction that banks must evolve if they are to prosper. Barnett
is seeking to differentiate itself through sophisticated marketing, effective
and efficient product delivery, a consistently high level of performance,
3
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A LETTER TO OUR SHAREHOLDERS
superior management information systems and the ability to adapt to an ever
changing environment.
Markets and businesses are constantly changing, making flexibility
essential. Barnett's decentralized, autonomous structure is more accommodating
to changing conditions than a centralized organization. Importantly, our
management team embraces an organizational attitude that is skeptical of the
status quo and realizes the benefits of change.
We view information technology as a key differentiator for banks that seek
to capitalize on market positions, provide superior customer service and
maintain competitive cost structures. Barnett will employ our vast customer
information base to help us precisely target our marketing efforts to meet our
customers' evolving needs, to provide unparalleled customer service and to
continue our drive toward superior operating efficiency.
In recognition of our information-based strategies, we recently realigned
our management structure. Recognizing the importance technology will play in
the delivery of retail financial services, we combined the chief retail banking
and chief technology executive positions and named Jonathan Palmer to fill that
role. We also appointed Susan Blaser to the newly created chief marketing
executive position and appointed her to the Management Operating Committee (MOC)
to ensure we give appropriate emphasis to the customer and market perspectives.
We also created an MOC position solely to head asset management activities,
including deposit products, trust, brokerage and other non-credit products,
recognizing that these areas represent a major strategic opportunity.
With Congress having successfully dealt with the interstate banking issue
in 1994, we believe it is time for legislators to explicitly grant banking
companies new powers. Our business is no longer unique. Non-banks provide
checking accounts, automobile financing, credit cards, corporate finance and
mortgages, products traditionally offered by banks. If the banking industry is
to prosper, it must be allowed to compete fairly and fully. For example, all
banking companies should be allowed to sell annuities directly. Under current
law, banks must adopt cumbersome structures to sell mutual funds and other
investments that our customers seek. It would be more customer responsive and
efficient if banks were explicitly granted these powers by federal law, putting
banks and their non-bank competitors on a level playing field.
We are also hopeful that legislators and regulators will begin to reverse
the hidden costs they are imposing on the U.S. banking system through excessive
regulation. While we believe that adequate regulation is essential, a number of
disclosure and documentation requirements mandated in recent years impose great
costs for little or no benefit.
One area in which regulators are moving to require less paperwork is the
Community Reinvestment Act (CRA). Instead of abundant detailed documentation,
results are what should count.
We are proud of Barnett's record of serving our communities. Fourteen
banking affiliates were examined by regulators in 1994 under the
[CHART]
[CHART]
OUR EXPANSION STRATEGY IS BASED ON OUR CONVICTION THAT BANKS MUST EVOLVE IF THEY
ARE TO PROSPER.
4
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A LETTER TO OUR SHAREHOLDERS
Community Reinvestment Act (CRA). Ten of those affiliates were rated out-
standing, with the others receiving satisfactory results. Nationwide, only 16%
of banks earned outstanding ratings last year. At year end, all Barnett banks
that had been examined for CRA had outstanding or satisfactory ratings. These
ratings are the result of the determined efforts of our people to serve all
market segments of our communities.
As Florida's largest financial institution, Barnett is taking an active
role in making our communities better places to live. The company was honored
as the leading contributor to United Way agencies in Florida. We have been a
major participant in the development of Enterprise Florida, a partnership
between the private sector and the State of Florida to bring more quality jobs
to our communities. And we are the leading source of support for low-income
housing initiatives in the state.
Barnett people are proud of their company and its impact on their com-
munities. They bring the same entrepreneurial spirit to helping others they
have employed in making Barnett so successful. For example, in Jacksonville,
more than 1,200 Barnett employees participated in the Walk-America event to
support the March of Dimes. According to that charity, this was the largest
contingent from one organization ever to participate in this event in the United
States.
Market leadership and community involvement will continue to be a critical
element in building our bank. Our office network and our growing use of
alternative delivery channels--the telephone, ATMs and PC-based home banking
services--provide our customers an unparalleled level of convenience. As we
move into 1995, we plan to improve our leadership position by continuing to
invest in alternative delivery systems, by expanding our product line, by lever-
aging our vast customer information base to improve our effectiveness in needs-
based selling and by continuing our emphasis on operating efficiency. At the
same time, we will continue to seek acquisitions that diversify our business and
create shareholder value.
Our significant progress has been the direct result of our committed and
hardworking team of employees and their pride in their work. We appreciate the
support of our shareholders and look forward to another successful year.
Sincerely,
/s/ Charles E. Rice
Charles E. Rice
Chairman and Chief Executive Officer
/s/ Allen L. Lastinger, Jr.
Allen L. Lastinger, Jr.
President and Chief Operating Officer
BARNETT PEOPLE ARE CARING AND PROUD OF THEIR COMPANY AND ITS IMPACT ON THEIR
COMMUNITIES.
5
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LINES OF BUSINESS
- ------------------------------------------------------------------------------
RETAIL BANKING
- ------------------------------------------------------------------------------
BUSINESS PROFILE AND ACTIVITIES
/ / Barnett has the broadest, most effective distribution system of any Florida
financial institution, with 628 offices, 772 ATMs, three telephone banking
centers, and PC-based home banking in Florida and southern Georgia.
/ / Barnett has relationships with almost 40% of Florida's households and enjoys
a 20% share of its deposit market and a 33% share of its consumer loan market.
/ / Barnett provides loans through more than 1,000, or 59%, of Florida's
automobile dealers; 32% consider Barnett to be their primary financing source.
/ / Barnett serves more than one million cardholders with outstanding credit
card balances exceeding $1.3 billion. Barnett is among the top 50 issuers of
credit cards in the nation.
- ------------------------------------------------------------------------------
KEY ACCOMPLISHMENTS--1994
/ / Acquired Glendale Federal's Florida franchise, adding $3.4 billion in
deposits and increasing Barnett's deposit share in Florida from 18% to 20%.
/ / Continued to improve sales performance in banking offices as
information-based tools were introduced that help identify cross-sell
opportunities and that pre-screen and pre-approve customers for credit cards.
/ / Piloted a new sales management system that, in conjunction with Barnett's
sales incentive program, helps office managers raise office team sales
performance.
/ / Added four new EMERALD FUNDS, the BARNETT SUPERCARD CHECK CARD, and the
GATOR ONE CARD (a debit card/student ID card for the University of Florida) to
the expanding family of Barnett products.
/ / Increased credit card outstandings during the year by 13% through expanded
direct mail programs, competitive pricing, expanded programs for college
students and a pre-approved card program at point of sale. Target marketing
reduced the cost per new account, and new fraud prevention procedures were
implemented.
/ / Originated $2.6 billion of residential real estate loans, ranking the
company as the market share leader with 8% of the Florida market.
- ------------------------------------------------------------------------------
LOOKING AHEAD--1995
/ / Further enhancement of sales effectiveness, including the addition of
licensed investment representatives in banking offices to assist in meeting
customer needs for investment products.
/ / Implementation of an on-line customer support system that will significantly
improve servicing capabiliities.
/ / Continued emphasis on re-engineering of important business processes, making
it easier for customers to do business with Barnett.
/ / Continued growth in consumer lending based on market expansions begun and
new products introduced in 1994.
- ------------------------------------------------------------------------------
CORPORATE BANKING
- ------------------------------------------------------------------------------
BUSINESS PROFILE AND ACTIVITIES
/ / Barnett has achieved a leading 14% share of the small business market
segment.
/ / Barnett serves 43% of the large business market and 37% of the middle
commercial market in Florida.
/ / Barnett is a leader in merchant card services, international foreign
correspondent banking, international foreign exchange and cash management
services in Florida.
- ------------------------------------------------------------------------------
KEY ACCOMPLISHMENTS--1994
/ / Introduced relationship management technology tools to better manage and
measure business customer relationships.
/ / Implemented computerized small business underwriting and credit scoring to
improve credit decisions and lower costs.
/ / Formed an alliance with AT&T to offer long distance discounts for small
business customers.
/ / Added Business Pro platform system to assist offices in better sales efforts
toward small businesses.
- ------------------------------------------------------------------------------
LOOKING AHEAD--1995
/ / Will continue to increase small business market share via product delivery
and service leadership.
/ / Will capitalize on small business fee income opportunities and relationship
stability and utilize technological service delivery systems for profitability.
/ / Will focus corporate middle market sales to increase non-credit products.
/ / Will continue relationship strategies for the commercial real estate market
to replace transaction orientation.
- ------------------------------------------------------------------------------
LINES OF BUSINESS
OTHER ACTIVITIES
- ------------------------------------------------------------------------------
BUSINESS PROFILE AND ACTIVITIES
/ / Barnett Securities provides a full line of retail brokerage services
throughout the retail banking network. Offices are located in 40 branches with
125 investment officers.
/ / Barnett Mortgage Company is among the 25 largest mortgage servicers
nationally, with a servicing portfolio of $18 billion and 240,000 loans. Barnett
is one of the nation's largest portfolio lenders with $9.8 billion in
residential real estate outstandings and offers customers a wide array of fixed-
and adjustable-rate product options.
/ /Barnett Trust Company is the largest trust organization headquartered in
Florida with 32 offices and more than $9 billion in total managed assets.
- ------------------------------------------------------------------------------
KEY ACCOMPLISHMENTS--1994
/ / Barnett Securities increased investment assets under management from $3.2
billion in 1993 to $3.6 billion in 1994, while expanding its sales force and
offering new products and services.
/ / Barnett's acquisition of Loan America Financial Corporation added $4 billion
and 38,000 loans to Barnett Mortgage Company's servicing portfolio, giving
Barnett a nationwide wholesale source for producing residential mortgages.
Through other sources, the mortgage company increased its servicing portfolio by
an additional $1.3 billion.
/ / Barnett Trust Company expanded its sales force into new markets, repackaged
its 401(k) product to offer more investment choices and added a daily valuation
option. The company divested its corporate bond administration businesses to
focus on core trust and investment management businesses.
/ / Barnett agreed to acquire EquiCredit Corporation, entering the consumer
finance business nationwide.
- ------------------------------------
LOOKING AHEAD--1995
/ / Barnett Securities will add a cash management account, a 401(k) product, a
wrap account and international brokerage accounts.
/ / Barnett Mortgage Company will integrate Loan America, BancPLUS and its own
direct lending and servicing into an effective national banking operation,
featuring advantageous economies of scale.
/ / Barnett Trust Company will broaden its market by providing different service
levels available through a centralized account administration unit. An expanded
sales force will target new markets.
6 7
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FPO
Page 8
[PHOTO]
<PAGE>
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BUILDING THE BANK, DIVERSIFYING THE BUSINESS
Banks today face a rapidly changing environment, ranging from the aging of
the population to intensifying competition. In response, Barnett has redefined
its mission: While continuing to build its strong core banking business, the
company is diversifying into complementary financial services that leverage its
core capabilities.
Barnett's strengths include the most powerful distribution system for
financial products in Florida, the highest name recognition, relationships with
more than a third of the state's households and market leading positions in
virtually every significant banking line of business. The company's focus will
be on serving consumers and small businesses.
Customers today are signaling that they want more than banks' traditional
products and services. They want alternative investments. They want convenient
access to their accounts outside of the banking office. And they want help in
organizing their finances. Barnett's mission is to meet those needs in ways that
create value for shareholders.
- --------------------------------------------------------------------------------
BUILDING THE BANK
Florida in many respects is banking heaven. With 14 million residents, the
state is already the fourth largest in the United States and is growing by more
than 700 people every day. Florida is the number one destination in the United
States for people of all ages. Job seekers, attracted by a low cost of living
and robust employment market, are moving into the state. And Florida continues
to be one of the top choices for retirement.
Floridians own well over $500 billion in investable assets, and the average
household net worth is about 10% above the national average.
As the only major banking company based in Florida, Barnett holds an
enviable position. The company has 20% of the bank and thrift deposits. It
originates about 25% of the automobile loans, and Barnett has a leading 8% share
of a fragmented residential mortgage market.
Barnett's key advantage has been its extensive and efficient office system
that makes it more convenient to do business with Barnett than any other
financial institution in Florida. Barnett's average of $56 million in deposits
per office is 40% larger than the average bank in the state. When Floridians are
asked to name a bank, they name Barnett three times as often as the second most
well known institution.
Barnett's banking mission is to increase its share of the financial
services its more than 2 million household customers use. This strategy
recognizes that Barnett's greatest strength and opportunity lie in the consumer
middle market, which comprises almost 75% of Florida's 5.5 million households.
Research has shown these consumers would like to consolidate their financial
service business with a single provider and that they prefer Barnett. The
company is enhancing its marketing, sales, distribution and products to take
full advantage.
Success in consumer banking requires excellence in marketing, which Barnett
defines as understanding a customer's particular wants and needs and shaping
solutions that are responsive. In recent years, Barnett has invested heavily in
systems that give the company a better understanding of the true business
CUSTOMERS TODAY WANT A BANK THAT OFFERS MORE THAN JUST TRADITIONAL PRODUCTS AND
SERVICES. THROUGH NEEDS-BASED SELLING FEATURING A FULL RANGE OF FINANCIAL
SERVICES, BARNETT IS BUILDING LONG-TERM RELATIONSHIPS.
"THE MISSION OF BARNETT IS TO CREATE VALUE FOR ITS OWNERS, CUSTOMERS AND
EMPLOYEES AS A MAJOR FINANCIAL SERVICES PROVIDER IN THE UNITED STATES."
9
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Page 10
[PHOTO]
<PAGE>
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BUILDING THE BANK, DIVERSIFYING THE BUSINESS
potential that exists in each of its local markets as well as information about
the nature of its relationship with each of its customers. This enables Barnett
to look beyond traditional factors such as age and income when marketing
products and to consider major life events such as marriage, employment change,
college and retirement, which shape financial needs for individuals and their
families. This "needs-based" approach to segmenting the market enables Barnett
to increasingly tailor its products and promotions to specific opportunities
within its customer base.
Barnett's sales efforts are also driven by this "needs-based" philosophy.
Office managers and sales and service associates, armed with an ever-growing
array of products, are trained in "needs-based" selling techniques. Their goal
is to find the right solution to the customer's needs, putting a premium on
building value through a long-term, growing relationship rather than emphasizing
a single transaction. Further supporting this emphasis on relationship building,
Barnett introduced TRIO in 1994. This incentive program gives sales and service
associates points for sales of appropriate products and for customer retention.
Barnett has also enhanced its relationship building effectiveness with a
new customer service system which keeps track of every contact Barnett makes
with its customers, no matter where it occurs in the company. This system
provides sales associates in any office or telebanking center a complete picture
of a customer's banking relationship, giving Barnett a significant edge in
customer service.
In 1995, Barnett is adjusting its sales organization and process to be even
more responsive to customers. This new organization will feature employees
qualified and dedicated to helping customers meet their financial objectives.
Incentives will be structured to maintain and expand customer relationships, not
to sell customers particular products.
Barnett intends to continue as the leader in delivering banking services.
In addition to unparalleled convenience offered through its banking offices,
Barnett has the largest ATM network in the state, with 25% more ATMs than the
nearest competitor. The company offers customers the most sophisticated
automated telephone banking service in Florida, which provides detailed account
information 24 hours a day. Barnett is the only Florida bank offering home
banking by computer. The company is working on new ways to deliver banking
products, including the use of interactive television and a new, more
sophisticated ATM that will cash checks and allow bill payments.
Through these channels, Barnett intends to deliver an ever-widening product
line. In addition to traditional bank products such as checking accounts,
savings deposits, loans, and credit cards, Barnett is offering tax-advantaged
investments, mutual funds and other brokerage services. As the government
permits, the company intends to offer other financial products that customers
need.
While Barnett believes the consumer middle market offers the greatest
opportunity for growth, strategies have also been developed to serve the
affluent and low- and moderate-income markets.
Barnett has considerable opportunities to serve the affluent market, where
it has by far the largest market share in meeting deposit and loan needs. The
company can leverage that position by providing products that take advantage of
its position as the most convenient bank in its markets.
WITH BARNETT'S DESKTOP BANKING, CUSTOMERS CAN MONITOR THEIR BANKING
RELATIONSHIPS, TRANSFER MONEY OR PAY BILLS ELECTRONICALLY WHENEVER AND WHEREVER
THEY WANT. IN THE FORESEEABLE FUTURE, BANKING SERVICES WILL BE ACCESSED IN EVEN
THE MOST REMOTE LOCATIONS.
"WE WILL STRENGTHEN OUR POSITION IN EXISTING MARKETS BY PROVIDING A FULL RANGE
OF FINANCIAL SERVICES."
11
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Page 12
[PHOTO]
<PAGE>
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BUILDING THE BANK, DIVERSIFYING THE BUSINESS
Barnett is also the leader in serving low- and moderate-income families.
Barnett provides a number of products targeted to this market, including the
low-cost Economy Checking Account, small consumer loans and the Home Ownership
Made Easy (HOME) residential mortgage program featuring low interest rates and
more liberal underwriting and down payment rules. In 1993, the company launched
a five-year, $2 billion lending program to low- and moderate-income borrowers
and businesses owned by women and minorities. In just under two years, Barnett
has already achieved 75% of its goal, originating $1.5 billion in total loans.
This includes $223 million in loans to businesses owned by women and minorities
and $741 million in mortgage loans to low- and moderate-income applicants.
Barnett is actively seeking qualified borrowers through relationships with
real estate agents specializing in low- and moderate-income areas, frequent
seminars on how to apply for a mortgage, partnerships with community
organizations and advertising in media outlets specifically aimed at this market
segment. The company also invests and lends money to low-income housing
partnerships and other worthwhile community projects.
Lending to consumers is one of Barnett's most important business lines,
representing 72% of total loans. Residential mortgage loans represent 36% of
total loans. Residential lending facilitates Barnett's establishment of banking
relationships with newcomers, provides attractive returns and features
significantly lower levels of loan losses than other types of credit. Barnett's
broad product line, featuring fixed and adjustable-rate loans, helps to maintain
a strong origination stream even when, as in 1994, interest rates rise.
The heart of Barnett's installment lending operation is originating credit
through automobile dealers. The company works with more than 1,000 automobile
dealers in Florida, underwriting and financing loans to their customers.
One-third of Florida's automobile dealers consider Barnett their primary
financing source and the company's share of such "indirect" loans exceeds that
of all of its major bank competitors combined. It also exceeds the Florida
market share of all automobile manufacturer finance organizations.
Technology plays an important part in this business. This year, the company
introduced an automated information system through which dealers can obtain
pay-off information on Barnett loans seven days a week. Another new system has
cut turnaround time in half on loan requests. And technology
has allowed Barnett to reduce the cost of booking a loan to $87 from $125 during
the last two years.
To expand its leadership, Barnett has a number of strategies. Leasing,
which Barnett will offer beginning in 1995, represents a significant
opportunity. A national industry study shows that in the next five years,
leasing will increase from 25% to 40% of consumers' acquisition of new
automobiles.
Strategies implemented in 1993 began to pay dividends this year in
Barnett's credit card business. Outstandings grew by 13% during the year through
sophisticated direct mail programs, better targeting of customer segments and
greater use of information to anticipate customer financial behavior. The latter
allows the company to identify its profitable customers and take steps to retain
them in this highly competitive business. These
A LEADER IN SERVING LOW- AND MODERATE-INCOME FAMILIES, BARNETT OFFERS A NUMBER
OF PRODUCTS TARGETED TO THIS MARKET. BARNETT PLANS TO BUILD AN OFFICE IN THE
BROWNSVILLE SECTION OF MIAMI, THE FIRST TO OPEN IN THAT LOW-INCOME NEIGHBORHOOD
IN MORE THAN A DECADE. OFFICE MANAGER DEVON WOOLCOCK (LEFT) IS WORKING CLOSELY
WITH COMMUNITY LEADERS SUCH AS EVERETT STEWART, SR. TO MEET THE NEEDS OF THE
SURROUNDING COMMUNITY.
"OUR FOCUS WILL BE ON SATISFYING OUR CUSTOMERS' TOTAL FINANCIAL NEEDS."
13
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ASPEN MOUNTAIN HOME SCENE
Page 14
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BUILDING THE BANK, DIVERSIFYING THE BUSINESS
efforts have reduced voluntary attrition rates by almost 50% over three years.
In addition, Barnett's cost to acquire a new card account is under $20 compared
to an industry average of $60.
In late 1994, the company introduced the Barnett SuperCard Check Card, a
debit card that can be used anywhere Visa is accepted. This card, which can also
be used to withdraw cash from an ATM or make a purchase at selected
point-of-sale terminals in grocery and other stores, acts like a check. Results
during the December holiday season indicated strong consumer acceptance of this
product.
Barnett's corporate banking efforts continue to focus on small business
banking, international and merchant services and on maintaining its leading
position in middle market banking, cash management and commercial real estate.
Small businesses, defined as having $5 million or less in sales, are the
backbone of Florida's economy. The combination of Florida's most convenient bank
office network and most extensive product line aimed exclusively at small
businesses gives Barnett a competitive advantage. The company has increased its
market share from approximately 11% in 1992 to 14% in 1994.
Barnett also wants to extend its leading market share in middle market
business, defined as from $5 million to $50 million in sales, through aggressive
sale of non-credit products and superior customer service. Having reduced
commercial real estate loans from 28% of total loans in 1988 to 12% in 1994, the
company is now seeking to increase that portfolio in line with total loan
growth. Lending will concentrate on market niches with less risk and focus on
relationship profitability.
Barnett is also Florida's leader in providing international banking
services to the state's businesses. The company focuses on providing trade
finance, correspondent banking services and foreign exchange. Florida is the
gateway to Latin America, and international business is a rapidly growing sector
of the state's economy. Barnett's strategy is to grow with this sector by
providing value-added services as part of a wider banking relationship to its
customers engaged in international business.
There are further opportunities to build Barnett's banking franchise
through in-market acquisitions of banks or thrifts. This year, Barnett acquired
the Florida franchise of Glendale Federal Bank, FSB, adding $3.4 billion in
deposits in 10 Florida counties. Barnett is reducing Glendale's expenses by
eliminating redundancies. In addition, Barnett should increase revenues by
offering a broader array of products to these new customers.
- -------------------------------------------------------------------------------
DIVERSIFYING THE BUSINESS
As the population ages, more people are entering their prime years for
saving and are investing to finance college educations for their children or
looking ahead to retirement. At the same time, banks face unprecedented
competition for their customers' investment dollars. Twenty-five years ago,
Americans had 50% of their financial assets in banks. Today that percentage has
been cut in half.
As these trends continue, traditional banking is expected to grow by about
3% a year through the decade. In contrast, mutual funds, annuities and pension
funds are expected to grow at approximately four times that rate.
Barnett has responded to this environment by diversifying its business
lines to meet customer needs. The company already sells the investment products
such as mutual funds and provides annuities through a third party. It has also
identified opportunities to expand current businesses geographically and to
build on some businesses to capture more fee income.
WITH THE ACQUISITION OF LOAN AMERICA FINANCIAL CORPORATION, BARNETT DIVERSIFIED
ITS MORTGAGE ACTIVITIES GEOGRAPHICALLY AND ADVANCED TOWARD ITS GOAL OF BECOMING
A NATIONAL MORTGAGE BANKING COMPANY.
"BARNETT WILL AGGRESSIVELY PURSUE DIVERSIFIED INCOME OPPORTUNITIES."
15
<PAGE>
- -------------------------------------------------------------------------------
BUILDING THE BANK, DIVERSIFYING THE BUSINESS
Mortgage banking is a high priority. Barnett is a strong originator of
mortgages through its retail banking network. And the company has a sizable
mortgage servicing portfolio. Barnett spends less than $67 a year to service a
loan compared to an average of more than $74 for its peers.
In October, the company purchased Loan America's Financial Corporation, one
of the nation's largest wholesale mortgage originators, advancing Barnett toward
its goal of becoming a national player in mortgage banking with balanced sources
of originations. Loan America, which buys loans originated by brokers,
contributed a servicing portfolio of about $4 billion in loans. When added to
Barnett's $14 billion, it created a total servicing portfolio of $18 billion,
the 24th largest in the United States. This transaction improved Barnett's
servicing economies of scale, representing savings of more than $1 million.
Loan America, with 8 offices across the country, will provide a steady
source of new servicing, will diversify Barnett's mortgage activities
geographically and will create new opportunities to cross-sell the company's
other products. For example, Loan America has already begun offering
adjustable-rate mortgages which Barnett can keep in its portfolio. The
acquisition of BancPLUS Financial Corporation announced in January 1995
will further enhance Barnett's mortgage banking business by contributing
significantly to servicing and adding national retail loan origination
capability.
In September, Barnett announced an agreement to acquire EquiCredit
Corporation, a consumer finance company that originates, sells and services
first and second mortgages secured by equity in customers' homes throughout the
country. In the Barnett tradition, it is a leader in its business niche with a
record of strong growth, stable returns and excellent management. In 1994,
EquiCredit originated $656 million in loans.
This acquisition gives Barnett access to a new group of customers through a
company that has excellent returns. These customers generally have moderate
incomes and significant equity in their homes. The main purpose for EquiCredit
loans are debt consolidation and home improvement. Strategically, this
acquisition adds to fee income, promotes geographic diversification and
leverages Barnett's strength in consumer lending.
Asset management is another top diversification priority. Mutual fund asset
growth has exploded, and the assets in mutual funds now exceed the deposits in
commercial banks. This business is expected to grow by 12% annually during the
rest of the decade, making it appealing for expansion.
More customers are seeking assistance in asset management as families plan
for retirement or invest inherited funds. As a relationship bank, Barnett wants
to meet these needs as completely as possible. The company is conducting an
in-depth study to determine the best ways it can participate in this industry.
What will these efforts mean to the company? Barnett's vision is to be
nationally recognized as the top provider of financial services to individuals
and small businesses. The core of Barnett's business will continue to be
providing banking services in Florida. By the year 2000, this activity will be
complemented by a family of financial service companies with franchises that
extend well beyond the state.
[BARNETT LOGO]
"BY THE YEAR 2000, BARNETT WILL BE A FULLY DIVERSIFIED FINANCIAL SERVICES
ORGANIZATION."
16
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- -------------------------------------------------------------------------------
SUMMARY/OVERVIEW
Barnett's 1994 net income rose 16% to $488.0 million from $421.0 million in
1993. This increase reflects improved credit quality, strengthening loan growth
and reduced non-interest expense. Earnings per fully diluted share for 1994 were
$4.66, up from $4.01 in 1993.
Profitability measures also continued to improve, with return on assets
rising to 1.28% from 1.13% in 1993 and return on average common equity
increasing to 16.70% from 16.02% in 1993.
Net interest income fell 1% during 1994, resulting from a lower net yield
on earning assets partially offset by a higher earning asset base. The net yield
on earning assets fell 20 basis points in 1994 to 4.87%, primarily reflecting
loan pricing pressure. Earning assets grew 3% as consumers stepped up borrowing
to buy homes and autos.
Lending accelerated during 1994 as average loans grew 4% over 1993. In line
with the company's strategy to focus on providing financial services to
consumers and small businesses, loans to consumers rose $1.4 billion, or 8%,
from 1993. Commercial and commercial real estate loans decreased 5% from 1993.
Average deposits of $31.7 billion were down 2% from the previous year as
modest deposit growth in transaction and money market accounts was offset by an
11% drop in time deposits.
Excluding securities transactions, non-interest income fell 8%. This
decline resulted from the sale of several fee producing business units during
1993, lower mortgage banking income as the refinancing boom ended and decreased
revenue from sales of investment products and services. A six-year summary of
income is provided in Table 1.
Non-interest expense was reduced by $136.8 million in 1994, due to lower
credit-related expenses and the impact of internal productivity initiatives.
In the fourth quarter of 1994, Barnett completed two acquisitions,
advancing its strategy to build the company's banking franchise and diversify
into complementary lines of business. Loan America Financial Corporation was
purchased on October 1 for $59 million. Loan America, a national wholesale
mortgage company, acquires mortgages originated through brokers. Loan America
provides a source of earning assets and mortgage servicing revenue for Barnett
and significantly expands Barnett's geographic reach.
The second transaction was the purchase on December 15 of the Florida
franchise of Glendale Federal Bank, FSB, for $244 million. This deposit
[CHART]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
TABLE 1 SIX-YEAR STATEMENTS OF INCOME
DOLLARS IN MILLIONS EXCEPT PER SHARE
DATA--TAXABLE-EQUIVALENT 1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income............................ $1,677.5 $1,700.3 $1,736.1 $1,568.0 $1,490.8 $1,361.1
Provision for loan losses...................... 74.0 120.4 257.3 453.9 491.6 173.6
- --------------------------------------------------------------------------------------------------------------
Net interest income after loan loss provision.. 1,603.5 1,579.9 1,478.8 1,114.1 999.2 1,187.5
Non-interest income............................ 542.6 599.0 620.7 546.8 452.7 444.6
Non-interest expense (excluding restructuring
charge)........................................ 1,364.2 1,501.0 1,645.5 1,497.1 1,320.0 1,170.9
Restructuring charge........................... -- -- 92.6 -- -- --
- --------------------------------------------------------------------------------------------------------------
Income before income taxes..................... 781.9 677.9 361.4 163.8 131.9 461.2
Income tax provision (benefit)................. 249.8 207.5 95.3 8.4 (8.9) 89.1
Taxable-equivalent adjustment.................. 44.1 49.4 57.8 74.0 85.3 76.0
- --------------------------------------------------------------------------------------------------------------
Net income before accounting changes........... 488.0 421.0 208.3 81.4 55.5 296.1
Cumulative effect of changing to different
accounting methods, net of taxes............. -- -- (0.6) -- -- --
- --------------------------------------------------------------------------------------------------------------
Net income................................... $ 488.0 $ 421.0 $ 207.7 $ 81.4 $ 55.5 $ 296.1
- --------------------------------------------------------------------------------------------------------------
Primary net income per common share............ $4.79 $4.10 $1.97 $.80 $.65 $3.46
Fully diluted net income per common share...... 4.66 4.01 1.97 .80 .65 3.45
- --------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
franchise, located in 10 southern and central Florida counties, consisted of
$3.4 billion in deposits, enhancing the market position in three of Florida's
largest counties, Dade, Broward and Palm Beach. Barnett's deposit share among
banks and thrifts in Florida rose from 18% to 20% following this acquisition,
strengthening Barnett's leadership in the state.
In January 1995, Barnett completed the acquisition of EquiCredit
Corporation for $332 million. EquiCredit originates fixed-rate consumer loans
secured by first or second mortgages from 94 offices in 29 states. The company
originated $656 million in mortgages in 1994 and had a servicing portfolio of
$1.7 billion on December 31. The acquisition will add to fee income, increase
geographic diversification and give Barnett access to a new group of customers.
Also in January, Barnett signed a definitive agreement to purchase BancPLUS
Financial Corporation for $162 million. Based in San Antonio, Texas, BancPLUS is
a full-service mortgage banking company that originates first mortgage loans in
all 50 states through a network of 54 retail and 9 wholesale offices. The
company originated $1.5 billion in loans during 1994, and its servicing
portfolio was in excess of $14 billion on December 31.
- -------------------------------------------------------------------------------
EARNING ASSETS
Average earning assets rose 3% to $34.4 billion in 1994, reflecting strong
loan growth in the second half of 1994.
Barnett gathers local market deposits and invests these funds into high
quality earning assets. Barnett prefers to deploy investable funds in quality
loans because they carry a higher risk-adjusted yield. The company also
maintains a portfolio of investment-grade securities and short-term investments
to manage liquidity and interest rate risk. At the end of 1994, loans
represented 79% of earning assets compared to 76% a year earlier.
LOANS. Loans grew 4% in 1994 to $26.8 billion, paced by lending to the
consumer. Florida's expanding economy and continued population growth were major
factors in increased consumer borrowing for homes, autos and durable goods.
Due to Barnett's strong emphasis on retail banking, loans to consumers
represented 72% of average loans, up from 69% in 1993. This is one of the
highest proportions of consumer loans of any major bank.
Though interest rates climbed throughout the year, residential mortgage
loans grew 6% to $9.8 billion. This increase reflects consumer preference for
adjustable-rate mortgages, which Barnett retains in its portfolio. At the end of
1994, 70% of the residential portfolio consisted of adjustable-rate mortgages,
indexed to the one-year U.S. Treasury security yield, which generally reprice
annually.
Management carefully controls the mix of the residential portfolio by
emphasizing adjustable-rate mortgages. The variable-rate concentration of this
portfolio and the ability to securitize fixed-rate mortgages give the company
flexibility in managing its interest rate sensitivity. During 1994,
substantially all fixed-rate mortgage originations were sold into the secondary
market. Barnett retains the servicing rights on the loans it sells, providing an
ongoing source of fee income.
Strong automobile sales fueled an increase in installment loans to $7.6
billion in 1994 from $6.9 billion in the previous year. Approximately two-thirds
of Barnett's installment loan portfolio is for the purchase of motor vehicles.
Barnett has a leading 25% share of this market in Florida, more than the next
three bank lenders combined.
The other one-third of the portfolio is comprised primarily of home equity
and student loans with the remainder consisting of loans for consumer goods and
mobile homes. At the end of 1994, home equity loans had increased $153 million,
or 13%, while student loans increased $252 million, or 37%, from the end of
1993.
[CHART]
18
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
TABLE 2 COMMERCIAL REAL ESTATE
1994 1993
------------------- ---------------------
DECEMBER 31--DOLLARS IN MILLIONS BALANCE NPA RATIO(1) BALANCE NPA RATIO(1)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Residential properties.......................... $ 627 3% $ 617 5%
Office buildings................................ 598 5 666 8
Shopping centers................................ 477 7 440 7
Rental apartments............................... 423 2 391 5
Warehouses/service centers...................... 268 3 266 6
Hotels/motels................................... 220 4 229 8
Retail business properties...................... 183 2 205 7
Condominiums.................................... 138 2 71 13
Commercial land acquisition and development..... 98 21 151 33
Recreational properties......................... 77 11 63 9
Health care facilities.......................... 52 1 69 1
Manufacturing/industrial plants................. 29 5 25 2
Churches, educational and non-profit............ 27 -- 39 15
Multi-family land acquisition and development... 7 -- 6 25
Other........................................... 85 22 240 13
- -------------------------------------------------------------------------------------------------
Total................................. $3,309 5% $3,478 9%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<FN>
(1)NON-PERFORMING ASSETS TO PERIOD-END LOANS PLUS REAL ESTATE HELD FOR SALE FOR
EACH PROPERTY TYPE.
</TABLE>
Barnett's targeted direct mail programs and competitive pricing have
allowed the company to grow bank card outstandings. Balances grew 13% to $1.2
billion during 1994, and the number of cards outstanding increased by 5%.
Commercial loans rose 7% during 1994 to $4.2 billion, as the company
continued to develop relationships with small and middle market companies.
Barnett's average business loan of $203,000 is indicative of the make-up of the
Florida market.
Barnett's average small business loan is approximately $80,000. These
companies tend to be relationship oriented, and Barnett's goal is to supply
technology and services which add value to and deepen these relationships.
Commercial real estate loans decreased 17% from 1993, reflecting fewer
quality lending opportunities. Construction loans fell 20% in 1994 to $851
million. Commercial mortgage loans declined 16% from last year to $2.5 billion.
The decrease in commercial mortgage loans also reflects the continued slow rate
of commercial building activity and competition from non-bank sources of
permanent financing. Total commercial real estate loans of $3.3 billion on
December 31, 1994, represented 12% of loans, down from a peak of 28% in 1988.
TABLE 2 details the types of properties securing the commercial real estate loan
portfolio and the non-performing asset ratio for each on December 31.
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.
Borrower experience and financial capacity are critical factors in underwriting
and approving loan requests. Few loans exceed $15 million, with the average loan
being $478,000. Virtually all of these projects are located in Florida and
southern Georgia. Business loans, including commercial real estate,
represented 28% of loans compared to 31% last year.
The distribution of loan maturities is shown in TABLE 3 on page 20. For an
analysis of loans that can be repriced in less than one year and their impact on
Barnett's interest rate sensitivity, see TABLE 8 on page 24.
INVESTMENT SECURITIES. Investments in taxable securities increased 15% to
$6.8 billion. Meanwhile, tax-free securities dropped 20% to $715 million,
reflecting a surge of redemptions as municipalities
19
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
took advantage of low rates to refinance their bonds. The purchase of
tax-free securities no longer represents an attractive investment alternative
because tax law changes enacted in 1986 eliminated substantially all of the tax
benefits of ownership of these securities by banks.
Securities are generally purchased for investment purposes and are selected
primarily for their risk-adjusted, taxable-equivalent yields. Consideration is
also given to the company's liquidity and asset-liability management needs. For
an analysis of the impact of investment securities on Barnett's interest rate
sensitivity, see TABLE 8 on page 24.
Investment securities available for sale totaled $2.7 billion at December
31. These securities are carried at fair value with an unrealized loss, net of
tax, of $27.0 million at the end of 1994, recorded as an adjustment to
shareholders' equity. Management considers this unrealized loss to be temporary.
The available for sale portfolio has a weighted average maturity of 1.9 years.
Investment securities of $4.9 billion at December 31, with a weighted
average life of 1.3 years, are classified as held to maturity. For further
details, see TABLE 4.
Short-term instruments, such as federal funds sold, represent other
alternatives for the deployment of excess liquidity. In 1994, average federal
funds sold fell to $43 million from $288 million in 1993, as excess liquidity
was absorbed by loan growth. As discussed in Other Funding Sources, the company
was in a net funds purchased position for much of 1994.
- ------------------------------------------------------------------------------
DEPOSITS AND OTHER
FUNDING SOURCES
DEPOSITS. Average deposits fell 2% to $31.7 billion in 1994 as a result of
a reduction in certificates of deposit, offset in part by increased transaction
account balances. Certificates of deposit and other time deposits fell $1.1
billion to $9.1 billion, as some customers allowed the proceeds from maturing
CDs to remain in transaction accounts and others sought non-deposit investment
alternatives. CD balances declined throughout 1993 and the first half of 1994 as
the cost to the consumer of remaining liquid was low. In reaction to rising
interest rates and volatility in the securities markets, bank CDs became
attractive to consumers, and CD balances rose during the second half of 1994.
TABLE 5 on page 22 shows the changes in deposit mix, and TABLE 6 on the same
page indicates the maturity of CDs over $100,000.
[CHART]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
TABLE 3 LOAN MATURITY
WITHIN 1 TO 5 AFTER
DECEMBER 31, 1994--DOLLARS IN MILLIONS(1) 1 YEAR YEARS 5 YEARS TOTAL
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial, financial and agricultural......... $1,794 $ 2,028 $ 627 $ 4,449
Real estate construction....................... 506 405 19 930
Commercial mortgages........................... 638 1,311 430 2,379
Residential mortgages.......................... 783 1,516 8,250 10,549
Installment.................................... 2,763 4,456 975 8,194
Bank card...................................... 647 728 -- 1,375
Credit lines................................... 719 -- -- 719
- ------------------------------------------------------------------------------------------
Total................................ $7,850 $10,444 $10,301 $28,595
- ------------------------------------------------------------------------------------------
Loans maturing after one year with:
Fixed interest rates....................... $ 6,923 $ 2,453
Floating or adjustable interest rates...... 3,521 7,848
- ------------------------------------------------------------------------------------------
Total............................... $10,444 $10,301
- ------------------------------------------------------------------------------------------
<FN>
(1)TOTAL LOANS GROSS OF UNEARNED INCOME.
</TABLE>
20
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
TABLE 4 MATURITY OF INVESTMENT SECURITIES
HELD TO MATURITY AVAILABLE FOR SALE
----------------------------------- ------------------------------------
AMORTIZED FAIR YEAR-END AMORTIZED FAIR YEAR-END
DECEMBER 31, 1994--DOLLARS IN THOUSANDS COST VALUE YIELD(1) COST VALUE YIELD(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury:
Within 1 year................................ $ 314,281 $ 311,064 4.31% $ 687,715 $ 670,205 4.29%
1 to 5 years................................. 952,256 931,824 5.81 1,217,488 1,199,802 6.55
5 to 10 years................................ 2,003 1,963 7.54 -- -- --
More than 10 years........................... 570 564 7.85 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total.................................. 1,269,110 1,245,415 5.44 1,905,203 1,870,007 5.73
- ----------------------------------------------------------------------------------------------------------------------------------
States and political subdivisions:
Within 1 year................................ 421,914 431,824 13.05 10 9 6.23
1 to 5 years................................. 160,670 170,482 12.11 2,494 2,469 8.38
5 to 10 years................................ 46,705 49,928 11.77 3,474 3,221 8.60
More than 10 years........................... 9,976 10,309 9.63 5,511 5,257 10.28
- ----------------------------------------------------------------------------------------------------------------------------------
Total................................. 639,265 662,543 12.67 11,489 10,956 9.36
- ----------------------------------------------------------------------------------------------------------------------------------
Other U.S. Government agencies
and corporations:
Within 1 year................................ 75,275 75,176 6.17 75,971 75,866 5.78
1 to 5 years................................. 178,249 175,736 6.55 99,900 92,750 6.37
5 to 10 years................................ 999 965 7.47 -- -- --
More than 10 years........................... 114 121 10.26 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total................................. 254,637 251,998 6.44 175,871 168,616 6.12
- ----------------------------------------------------------------------------------------------------------------------------------
Mortgage-backed securities:
Within 1 year................................ 955,338 933,342 4.92 153,250 149,755 4.88
1 to 5 years................................. 1,191,243 1,149,988 5.40 83,439 82,115 6.04
5 to 10 years................................ 17,711 17,006 7.75 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total................................. 2,164,292 2,100,336 5.21 236,689 231,870 5.29
- ----------------------------------------------------------------------------------------------------------------------------------
Other securities:
Within 1 year................................ 200,460 196,971 5.32 307,362 306,836 4.96
1 to 5 years................................. 415,622 405,996 5.94 18,602 18,517 6.00
5 to 10 years................................ 1,310 1,308 7.11 5,607 1,118 5.56
More than 10 years(2)........................ 112 99 7.05 122,485 130,680 4.60
- ----------------------------------------------------------------------------------------------------------------------------------
Total................................. 617,504 604,374 5.74 454,056 457,151 4.91
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities...................... $4,944,808 $4,864,666 6.36% $2,783,308 $2,738,600 5.60%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEARS
---------------------------------------------------
DECEMBER 31, 1994 HELD TO MATURITY AVAILABLE FOR SALE TOTAL
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Average life of debt securities:(3)
Taxable..................................................................... 1.2 1.9 1.5
Tax-free.................................................................... 2.0 15.2 2.3
- ----------------------------------------------------------------------------------------------------------------------------------
Total................................................................ 1.3 1.9 1.5
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)COMPUTED ON A TAXABLE-EQUIVALENT BASIS AND INCLUDES ACCRETION OF DISCOUNT AND AMORTIZATION OF PREMIUM IN THE DETERMINATION
OF SECURITIES INCOME. BALANCE UTILIZED IN CALCULATING YIELDS IS AMORTIZED COST.
(2)INCLUDES FEDERAL RESERVE BANK STOCK.
(3)FLOATING-RATE SECURITIES ARE INCLUDED AS OF THEIR REPRICING DATE.
</TABLE>
21
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
The acquisition of Glendale Federal's Florida deposits added significantly
to CDs in December, though it had only a modest impact on the fourth quarter and
year-to-date average balances.
In 1994, transaction, savings and money market accounts increased $367
million and comprised 71% of average deposits, up from 68% in 1993.
OTHER FUNDING SOURCES. Average federal funds purchased, securities sold
under agreements to repurchase and other short-term borrowings of $2.3 billion
were $1.3 billion higher than the previous year. This increase reflects the
funding of balance sheet growth throughout 1994 with short-term borrowings in
anticipation of completing the Glendale Federal deposit acquisition. During
December, $2.3 billion in short-term borrowings were replaced with the Glendale
Federal deposits.
Average long-term debt decreased 1%, or $6 million, from 1993. Of the $777
million in long-term debt outstanding at year end, $415 million qualified as
Tier II capital under risk-based capital guidelines.
- -------------------------------------------------------------------------------
NET INTEREST INCOME
In 1994, Barnett's taxable-equivalent net interest income was $1.7 billion,
down 1% from 1993. The decline from last year resulted from a lower net yield on
earning assets partially offset by a 3% increase in earning assets. TABLE 7
shows the changes in net interest income by category during 1994 due to shifts
in volume and rate.
The net yield on earning assets declined to 4.87% from 5.07% in 1993. The
20 basis-point contraction in the net interest margin was caused primarily by
pricing pressure on Barnett's residential and installment loan originations.
This same pricing pressure led to a 15 basis-point decrease in the average
yield on earning assets to 7.55%. The cost of interest-bearing liabilities, the
company's primary funding source, rose 11 basis points to 3.16%. This increase
is the result of the company's short-term strategy to utilize non-deposit
sources, primarily federal funds purchased and securities sold under agreements
to
[Chart]
[Chart]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
TABLE 5 CHANGES IN DEPOSIT MIX
CHANGE
-----------------
AVERAGE BALANCES--DOLLARS IN MILLIONS 1994 1993 AMOUNT PERCENT
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Demand deposits............................... $ 5,531 $ 5,400 $ 131 2%
NOW accounts.................................. 5,725 5,710 15 --
Money market accounts......................... 7,848 7,743 105 1
Savings deposits.............................. 3,469 3,353 116 3
Certificates of deposit under $100,000........ 7,498 8,343 (845) (10)
Other time deposits........................... 1,639 1,936 (297) (15)
- ------------------------------------------------------------------------------------------
Total deposits $31,710 $32,485 $(775) (2)%
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
TABLE 6 MATURITY OF CDs OVER $100,000
DECEMBER 31, 1994--DOLLARS IN MILLIONS BALANCE PERCENT
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Less than 3 months.................................................. $ 583 33%
3 to 6 months....................................................... 369 21
6 to 12 months...................................................... 350 19
More than 12 months................................................. 485 27
- ------------------------------------------------------------------------------------------
Total..................................................... $1,787 100%
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TABLE 7 CHANGE IN NET INTEREST INCOME
1994 1993
--------------------------- --------------------------
CHANGE FROM CHANGE FROM
PREVIOUS PREVIOUS
YEAR DUE TO: YEAR DUE TO:
------------------ ---------------
TOTAL TOTAL
DOLLARS IN MILLIONS--TAXABLE-EQUIVALENT VOLUME RATE(1) CHANGE VOLUME RATE(1) CHANGE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans...................................... $ 93.3 $ (59.1) $ 34.2 $ (20.4) $(202.0) $(222.4)
Taxable securities......................... 44.6 (19.6) 25.0 14.2 (67.9) (53.7)
Tax-free securities........................ (22.5) 4.5 (18.0) (17.4) 3.6 (13.8)
Federal funds sold......................... (7.7) .3 (7.4) (9.1) (1.2) (10.3)
Securities purchased under agreements
to resell................................ (7.6) .4 (7.2) -- (1.6) (1.6)
Other earning assets....................... (8.1) -- (8.1) 7.0 (4.6) 2.4
- --------------------------------------------------------------------------------------------------------------
Total interest income................ 92.0 (73.5) 18.5 (25.7) (273.7) (299.4)
- --------------------------------------------------------------------------------------------------------------
Interest expense:
NOW accounts............................... .3 (5.2) (4.9) 9.2 (6.8) 2.4
Money market accounts...................... 2.5 16.7 19.2 16.0 (46.4) (30.4)
Savings deposits........................... 2.3 3.1 5.4 10.8 (20.1) (9.3)
Certificates of deposit under $100,000..... (36.0) 1.7 (34.3) (99.6) (65.4) (165.0)
Other time deposits........................ (12.7) (.3) (13.0) (37.0) (14.3) (51.3)
- --------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits..... (43.6) 16.0 (27.6) (100.6) (153.0) (253.6)
Federal funds purchased.................... 16.2 12.2 28.4 (1.3) (1.1) (2.4)
Securities sold under agreements to repurchase 18.0 22.3 40.3 (1.0) (3.3) (4.3)
Other short-term borrowings................ .6 .9 1.5 .5 .4 .9
Long-term debt............................. (.5) (.8) (1.3) (4.1) (.1) (4.2)
- --------------------------------------------------------------------------------------------------------------
Total interest expense.............. (9.3) 50.6 41.3 (106.5) (157.1) (263.6)
- --------------------------------------------------------------------------------------------------------------
Net interest income................. $101.3 $(124.1) $(22.8) $ 80.8 $(116.6) $ (35.8)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
<FN>
(1)INCLUDES CHANGES IN INTEREST INCOME AND EXPENSE NOT DUE SOLELY TO VOLUME OR
RATE CHANGES.
</TABLE>
repurchase, to fund earning asset growth in anticipation of the acquisition of
the Glendale Federal deposits. These funding sources experienced a 162
basis-point increase in 1994.
Partially offsetting this decrease in the company's net interest spread was
the 5% increase in interest-free funds (non-interest bearing liabilities and
equity) to $9.0 billion. Information on average balances, yields and rates for
the past six years can be found on pages 34 and 35.
- -------------------------------------------------------------------------------
ASSET-LIABILITY MANAGEMENT
Net interest income, Barnett's primary source of revenue, is affected by
changes in interest rates as well as fluctuations in levels 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 risk.
Interest rate sensitivity is primarily a function of the repricing
structure of the company's balance sheet. TABLE 8 on page 24 shows this
structure as of December 31, with each maturity interval referring to the
earliest repricing opportunity (i.e., the earlier of scheduled contractual
maturities or next rate reset date) for each asset and liability. The resulting
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 esti-
23
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
TABLE 8 INTEREST RATE SENSITIVITY ANALYSIS
NON-RATE
SENSITIVE
0-30 31-90 91-180 181-365 AND OVER
DECEMBER 31, 1994--DOLLARS IN MILLIONS DAYS DAYS DAYS DAYS ONE YEAR TOTAL
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Variable-rate commercial and real estate loans.. $4,929 $ 32 $ 55 $ 105 $ 1 $ 5,122
Fixed-rate commercial and real estate loans,
including ARMs.................................. 816 1,187 2,153 4,037 4,995 13,188
Consumer loans.................................. 2,743 464 665 1,284 5,055 10,211
- -------------------------------------------------------------------------------------------------------------------
Total loans........................... 8,488 1,683 2,873 5,426 10,051 28,521
Securities...................................... 388 258 241 2,328 4,469 7,684
Federal funds sold and other earning assets..... 35 35
- -------------------------------------------------------------------------------------------------------------------
Total earning assets.................. $8,911 $1,941 $3,114 $7,754 $14,520 $36,240
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
NOW accounts................................... $ 6,186 $ 6,186
Money market accounts.......................... 7,747 7,747
Savings deposits............................... 3,684 3,684
Certificates of deposit under $100,000......... 1,354 $1,370 $1,958 $1,872 $3,032 9,586
Other time deposits............................ 317 333 389 368 541 1,948
- -------------------------------------------------------------------------------------------------------------------
Total deposits....................... 19,288 1,703 2,347 2,240 3,573 29,151
Federal funds purchased and other short-term
borrowings.................................. 1,654 1,654
Long-term debt................................. 73 150 26 528 777
- -------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities... $21,015 $1,853 $2,347 $2,266 $4,101 $31,582
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Gap before interest rate swaps and
management adjustments...................... $(12,104) $ 88 $ 767 $5,488 $10,419
Management adjustments:(1)
Assets...................................... 466 719 845 (644) (1,386)
Deposits.................................... 8,053 -- -- -- (8,053)
Interest rate swaps............................ (955) (928) -- -- 1,883
- -------------------------------------------------------------------------------------------------------------------
Interest rate sensitivity gap adjusted for
interest rate swaps and management adjustments (4,540) (121) 1,612 4,844 2,863
Cumulative adjusted interest rate
sensitivity gap.............................. (4,540) (4,661) (3,049) 1,795
Cumulative adjusted gap as a percentage of
earning assets:
December 31, 1994........................... (12.53)% (12.86)% (8.41)% 4.95%
December 31, 1993........................... (10.97) (7.79) (2.89) 9.70
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
<FN>
(1)MANAGEMENT ADJUSTMENTS REFLECT THE COMPANY'S ESTIMATE 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.
MANAGEMENT HAS ESTIMATED THAT NOW AND SAVINGS DEPOSITS ARE APPROXIMATELY ONE-THIRD SENSITIVE AND MONEY MARKET
ACCOUNTS ARE APPROXIMATELY 80% SENSITIVE. IN ORDER TO PROVIDE A MORE ACCURATE ONE-YEAR GAP POSITION, TWO-THIRDS
AND 20%, RESPECTIVELY, OF THESE DEPOSITS ARE REDISTRIBUTED TO THE NON-RATE SENSITIVE CATEGORY.
</TABLE>
mate of the expected prepayments of amortizing loans and investment securities
is included in the adjustment. Changes in the economic and interest rate
environments may impact these expected prepayments.
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 interest rate sensitivity analysis indicates that the company was liability
sensitive on December 31, with a cumulative six-month negative gap of 8.41%.
Management augments the rate sensitivity analysis shown in TABLE 8 with two
additional measures of rate sensitivity: rate-shock simulation and duration of
equity. These analyses, which analyze longer term impacts of rate changes,
indicate Barnett is relatively rate neutral.
24
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
Rate-shock simulation is a modeling technique used to estimate the impact of
changes in rates over a two-year horizon on the company's net interest margin.
Duration of equity measures the change in the market value of the company's
equity resulting from a change in interest rates. It is designed to evaluate the
economic impact of rate changes for periods that extend beyond the time horizons
targeted by static gap and rate shock simulation analysis. Based upon these
analyses, management believes the company's asset-liability mix is sufficiently
balanced within a broad range of interest rate scenarios to minimize the impact
of significant rate movements.
The primary objective of Barnett's asset-liability management function is
to maximize net interest income while maintaining acceptable levels of
interest-rate sensitivity. The Asset-Liability Management Committee sets
specific rate-sensitivity limits for the company. The committee monitors and
adjusts the company's exposure to changes in interest rates to achieve
predetermined risk targets that it believes are consistent with current and
expected market conditions. Barnett strives to maintain a relatively neutral
interest rate position, making its net interest income less vulnerable to
changing interest rates.
Barnett controls its interest rate risk by managing the level and duration
of certain balance sheet assets and liabilities and with the selective use of
off-balance-sheet instruments. Barnett applies a high risk test to both its
balance sheet and off-balance-sheet instruments in order to ensure compliance
with its policy risk limits.
The company's current interest rate swap portfolio has a notional amount of
$2.3 billion. Most of the company's swaps involve receipt of fixed interest rate
payments for variable (primarily LIBOR-based) interest payments.
Approximately $1 billion of the interest rate swap portfolio is generic
fixed-term interest rate swaps which mature in 1996 and on which the company
receives fixed payment. An additional $1 billion of the swap portfolio is
index-principal instruments with expected maturities of approximately two and
one-half years. The company does not use leveraged swaps. The swaps used by the
company have similar characteristics to cash instruments typically used for
asset-liability management purposes.
The interest rate swap portfolio performed as expected during the year.
Because rates have risen, the replacement value related to this swap portfolio
was a negative $107 million on December 31. A summary of Barnett's risk
management derivatives portfolio is reflected in NOTE P in the NOTES TO
FINANCIAL STATEMENTS.
Interest rate swaps entered into in 1994 related to assets reduced gross
interest income for the year by $588,000. Interest rate swaps entered into in
1992 related to long-term debt increased interest expense by $3.4 million, $4.6
million and $3.0 million in 1994, 1993 and 1992, respectively. Interest rate
swaps reduced the net yield on earning assets by 1 basis point in 1994 and 1992
and 2 basis points in 1993.
- -------------------------------------------------------------------------------
NON-INTEREST INCOME
Non-interest income, excluding securities transactions, fell 8% to $556
million in 1994, due to the sale of several fee-generating business units in
1993, lower mortgage banking revenue and reduced sales of investment products
and services.
Trust revenues fell 6% from last year to $77.4 million, as a result of a
decline in assets under management. Brokerage income fell 27% to $30.0 million
as the volume of customer transactions executed fell 10% and the mix of those
transactions shifted from mutual fund sales to bond trades which generate a
lower return to the company. In 1994, mutual funds represented 55% of the
brokerage revenues compared to 72% last year and 64% in 1992.
Mortgage banking income fell $7.8 million, or 19%, from last year.
Residential
[CHART]
25
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
mortgage production slowed as the rising interest rate environment halted the
refinance boom. Consumer preference also changed in 1994 from fixed-rate
mortgages, which the company sells into the secondary market, to adjustable-rate
mortgages, which the company holds in portfolio. This resulted in $556 million,
or 22% of residential production, being sold into the secondary market in 1994
compared to $904 million, or 28% of originations, in 1993.
Other service charges and fees fell $26.7 million to $104.8 million.
Revenues from the business units sold, which were included in other service
charges and fees, totaled $24.6 million in 1993. These businesses were sold
because they did not meet the company's strategic objectives. No material gains
or losses were recorded from these sales.
Net securities losses of $12.9 million in the fourth quarter of 1994
resulted from the sale of $575 million of securities available for sale.
During 1994, Barnett began to diversify its revenue stream through a
strategy to acquire financial services companies with regional or national
franchises in complementary lines of business. The company purchased Loan
America on October 1, 1994 and in January 1995 acquired EquiCredit. In addition,
the company signed a definitive agreement to purchase BancPLUS Financial. These
acquisitions will benefit fee income in 1995. During 1994, fee-based revenues,
excluding securities transactions, comprised 25% of Barnett's total revenues.
- --------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Non-interest expense was reduced 9%, or $136.7 million, in 1994 to $1.4
billion. The decline from last year was primarily due to lower credit-related
expense and facilities and personnel costs as a result of savings from the 1992
acquisition of First Florida Banks, Inc. as well as internal productivity
initiatives.
Salaries and benefits declined 2% from last year to $648.7 million. The
number of full-time-equivalent employees increased by only 280 to 18,929,
despite the addition of 524 employees through acquisitions.
Net occupancy expense dropped 13% to $118.3 million, and furniture and
equipment expense decreased 4% from last year to $138.5 million. These
reductions relate to the sale of certain businesses in 1993, cost savings
generated from the First Florida merger and internal productivity initiatives.
Other expenses fell 18% in 1994 to $458.8 million. While reductions
occurred in a number of categories, credit-related expenses registered the
largest single source of savings. Reflecting the improvement in asset quality,
expenses and provision on real estate held for sale fell 83% to $16.1 million.
Details of other expenses over the past three years are shown in NOTE M of
NOTES TO FINANCIAL STATEMENTS.
Barnett continued to make progress toward its long-term goal of a 60%
overhead ratio. In 1994, the overhead ratio declined to 61% from 65% in 1993 and
71% in 1992.
- --------------------------------------------------------------------------------
ASSET QUALITY
RISK ELEMENTS. Commercial and commercial real estate loans are generally
placed on non-accrual status when the collectibility of interest or principal is
uncertain. Residential mortgages four payments in arrears are classified as
non-accruing in conformance with predominant mortgage industry practice. Income
recognized on installment loans and credit card advances is discontinued, and
the loans are charged-off generally after a delinquency period of 120 and 180
days, respectively. When a loan is placed on non-accrual status, interest
accruals cease and uncollected interest is reversed and charged against current
income.
Non-performing loans consist of all non-accruing and reduced-rate loans.
Non-performing assets are composed of non-performing loans plus real estate held
for sale. TABLE 9 presents detailed information on these assets for the past
five years.
[CHART]
26
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
TABLE 9 FIVE-YEAR HISTORY OF RISK ELEMENTS
TOTAL REAL TOTAL
NON-ACCRUING NON- ESTATE NON- 90 DAYS
-------------------------
90 DAYS LESS THAN REDUCED- PERFORMING HELD FOR PERFORMING PAST-DUE
DECEMBER 31--DOLLARS IN MILLIONS PAST DUE 90 DAYS TOTAL RATE LOANS LOANS SALE ASSETS ACCRUALS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994
Commercial, financial and agricultural $ 23.2 $26.2 $ 49.4 -- $ 49.4 $ 2.0
Real estate construction.............. 9.0 .6 9.6 -- 9.6 1.0
Commercial mortgages.................. 44.1 43.5 87.6 $2.3 89.9 --
Residential mortgages................. 51.6 -- 51.6 -- 51.6 12.9
Installment........................... -- -- -- -- -- 9.2
Bank card and credit lines............ -- -- -- -- -- 13.8
- ----------------------------------------------------------------------------------------------------------------------------------
Total(1).................... $127.9 $70.3 $198.2 $2.3 $200.5 $90.4 $290.9 $38.9
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding....... .45% .24% .69% .01% .70% .31% 1.01% .14%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
1993
Commercial, financial and agricultural $ 55.5 $ 29.6 $ 85.1 -- $ 85.1 $ .3
Real estate construction.............. 27.6 2.9 30.5 -- 30.5 .3
Commercial mortgages.................. 57.9 69.8 127.7 $1.8 129.5 .6
Residential mortgages................. 60.6 -- 60.6 -- 60.6 11.5
Installment........................... -- -- -- -- -- 6.0
Bank card and credit lines............ -- -- -- -- -- 9.4
- ----------------------------------------------------------------------------------------------------------------------------------
Total(1).................... $201.6 $102.3 $303.9 $1.8 $305.7 $152.6 $458.3 $28.1
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding....... .76% .39% 1.15% .01% 1.16% .58% 1.74% .11%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
1992
Commercial, financial and agricultural $ 67.4 $ 50.1 $117.5 -- $117.5 $ 2.5
Real estate construction.............. 69.7 50.2 119.9 -- 119.9 --
Commercial mortgages.................. 99.1 76.0 175.1 $5.0 180.1 .3
Residential mortgages................. 59.2 3.4 62.6 -- 62.6 21.7
Installment........................... -- -- -- -- -- 1.3
Bank card and credit lines............ -- -- -- -- -- 8.1
- ----------------------------------------------------------------------------------------------------------------------------------
Total(1).................... $295.4 $179.7 $475.1 $5.0 $480.1 $363.2 $843.3 $33.9
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding....... 1.10% .67% 1.77% .02% 1.79% 1.35% 3.14% 13%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
1991
Commercial, financial and agricultural $119.3 $ 58.7 $178.0 $.1 $178.1 $ 1.0
Real estate construction.............. 127.9 61.6 189.5 -- 189.5 --
Commercial mortgages.................. 139.3 68.2 207.5 -- 207.5 4.1
Residential mortgages................. 67.5 6.2 73.7 -- 73.7 20.8
Installment........................... 1.0 -- 1.0 -- 1.0 3.1
Bank card and credit lines............ -- -- -- -- -- 13.0
- ----------------------------------------------------------------------------------------------------------------------------------
Total(1).................... $455.0 $194.7 $649.7 $.1 $649.8 $448.7 $1,098.5 $42.0
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding....... 1.65% .70% 2.35% -- 2.35% 1.62% 3.97% .15%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
1990
Commercial, financial and agricultural $114.3 $ 90.0 $204.3 $ .8 $205.1 $ 2.6
Real estate construction.............. 86.0 149.8 235.8 -- 235.8 --
Commercial mortgages.................. 107.4 94.5 201.9 .6 202.5 --
Residential mortgages................. 48.0 4.1 52.1 -- 52.1 1.0
Installment........................... 4.0 -- 4.0 -- 4.0 6.5
Bank card and credit lines............ -- -- -- -- -- 15.0
- ----------------------------------------------------------------------------------------------------------------------------------
Total(1) $359.7 $338.4 $698.1 $1.4 $699.5 $287.5 $987.0 $25.1
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding....... 1.23% 1.15% 2.38% .01% 2.39% .98% 3.37% .09%
- --------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)BEFORE DEDUCTION FOR UNEARNED INCOME.
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
Non-performing assets totaled $291 million on December 31, down
significantly from $458 million at the end of 1993 and $843 million at the end
of 1992. The decline to the current level is attributable to the success of
Barnett's centralized workout unit in resolving and selling problem assets, the
improved economy and market for commercial real estate and a slowdown in the
inflow of new problem loans. In addition, the portfolio is now more heavily
weighted toward consumer loans, which tend to be on non-accrual status for
shorter periods than commercial loans.
Barnett's non-performing assets as a percentage of gross loans plus real
estate held for sale fell to 1.01% on December 31, compared to 1.74% at the end
of last year and 3.14% at the end of 1992.
Non-performing loans totaled $200 million on December 31, 1994, down 34%
from a year ago. This decline reflects the continued resolution of problem
loans, either through workout of satisfactory credit arrangements with the
borrower, foreclosure or charge-off.
Of total non-performing loans, 35%, or $70 million, were contractually
current or less than 90 days past due, reflecting management's conservative
approach to evaluating the loan portfolio. Loans 90 days or more past due and
still accruing interest were $38.9 million, or .14% of total outstandings. The
coverage ratio of the allowance for loan losses to non-performing loans also
improved during the year to 250% from 171% a year ago.
By the end of 1994, the company had reduced its real estate held for sale
to $90 million from $153 million the previous year.
Barnett's policies generally require annual appraisals for properties
securing loans graded substandard or doubtful. In addition, real estate held for
sale is appraised annually and carried at appraised value less estimated cost to
dispose. If, in the judgment of management, a property's value may have declined
significantly, the appraisal may be updated more frequently.
Management monitors loan quality through loan grading processes, on-site
loan reviews, on-line reporting systems and quarterly reporting of adversely
graded or past-due loans. In addition, management continually reviews asset
quality trends, loan policy issues, market conditions and the economic
environment and adjusts underwriting guidelines as needed.
NET CHARGE-OFFS. In 1994, net charge-offs were $92 million, down
substantially from $142 million in 1993 and $262 million in 1992. While net
charge-offs were lower in all loan categories except bank card, the improvement
was most significant in commercial and commercial real estate.
Net charge-offs in 1994 represented .34% of average outstandings, compared
to .55% in 1993 and 1.00% in 1992. The 1994 net charge-offs were below
historical levels and were better than the company's strategic target range of
50 to 60 basis points of average loans. An analysis of loan charge-offs is in
TABLE 10.
Commercial recoveries exceeded charge-offs by $3.0 million in 1994 compared
to net charge-offs of $1.6 million in 1993. Gross charge-offs fell $10.8
million. Net losses from construction loans fell $14.9 million, or 89%, from
last year to $1.8 million. The net charge-off ratio for this category declined
to .21% from 1.56% last year. Net charge-offs on commercial mortgages totaled
$7.9 million, a 68% decline from $24.9 million in 1993. This decline in
construction and commercial mortgage losses results from the improved operating
environment for commercial real estate as well as a continued high level of
recoveries. This level of recoveries may not be indicative of future results.
These improvements are attributable to strengthened underwriting standards
adopted in 1990 and the stronger economy. The corporate loan portfolio is not
concentrated in any single industry,
28
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
TABLE 10 LOAN CHARGE-OFF ANALYSIS
<TABLE>
<CAPTION>
DOLLARS IN MILLIONS 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning allowance for loan losses . . . . . . . . . . . . . . . . . . . $521.8 $547.7 $552.1 $527.6 $298.6
- -----------------------------------------------------------------------------------------------------------------------------
Charge-offs:
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . 14.7 25.5 64.7 131.1 73.5
Real estate construction . . . . . . . . . . . . . . . . . . . . . . . . 3.1 18.5 31.8 86.1 61.0
Commercial mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1 33.1 64.5 69.3 22.6
Residential mortgages. . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.4 5.6 6.2 2.6
Installment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57.6 73.2 95.8 127.3 100.9
Bank card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.5 43.0 53.8 59.0 33.4
Credit lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 5.7 9.3 13.1 7.7
- -----------------------------------------------------------------------------------------------------------------------------
Total charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . 148.4 202.4 325.5 492.1 301.7
- -----------------------------------------------------------------------------------------------------------------------------
Recoveries:
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . 17.7 23.9 20.9 18.5 8.1
Real estate construction . . . . . . . . . . . . . . . . . . . . . . . . 1.3 1.8 2.4 1.7 2.1
Commercial mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2 8.2 7.0 3.5 1.4
Residential mortgages. . . . . . . . . . . . . . . . . . . . . . . . . . .2 .4 .1 .5 .2
Installment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 18.5 26.5 30.5 21.0
Bank card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 6.8 5.4 3.6 3.2
Credit lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 1.0 1.0 1.5 .4
- -----------------------------------------------------------------------------------------------------------------------------
Total recoveries. . . . . . . . . . . . . . . . . . . . . . . . . . . 56.1 60.6 63.3 59.8 36.4
- -----------------------------------------------------------------------------------------------------------------------------
Net charge-offs:
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . (3.0) 1.6 43.8 112.6 65.4
Real estate construction . . . . . . . . . . . . . . . . . . . . . . . . 1.8 16.7 29.4 84.4 58.9
Commercial mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 24.9 57.5 65.8 21.2
Residential mortgages. . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 3.0 5.5 5.7 2.4
Installment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.5 54.7 69.3 96.8 79.9
Bank card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.8 36.2 48.4 55.4 30.2
Credit lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 4.7 8.3 11.6 7.3
- -----------------------------------------------------------------------------------------------------------------------------
Total net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . 92.3 141.8 262.2 432.3 265.3
- -----------------------------------------------------------------------------------------------------------------------------
Provision for loan losses. . . . . . . . . . . . . . . . . . . . . . . . . 74.0 120.4 257.3 453.9 491.6
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.1) (4.5) .5 2.9 2.7
- -----------------------------------------------------------------------------------------------------------------------------
Ending allowance for loan losses. . . . . . . . . . . . . . . . . . . $501.4 $521.8 $547.7 $552.1 $527.6
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Ending allowance for loan losses as a percentage of loans. . . . . . . . . 1.76% 2.01% 2.10% 2.09% 1.88%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net charge-offs to average loans by category:
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . (.07)% .04% 1.01% 2.34% 1.28%
Real estate construction . . . . . . . . . . . . . . . . . . . . . . . . .21 1.56 1.86 3.59 2.01
Commercial mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . .32 .84 1.67 1.72 .55
Residential mortgages. . . . . . . . . . . . . . . . . . . . . . . . . . .02 .03 .06 .07 .03
Installment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 .79 1.06 1.45 1.21
Bank card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.23 3.50 4.60 5.13 3.05
Credit lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 .65 1.17 1.65 1.08
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 .55 1.00 1.59 .97
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Allocation of allowance for loan losses by category:
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . $ 84.8 $ 85.8 $ 89.3 $162.0 $158.6
Real estate construction . . . . . . . . . . . . . . . . . . . . . . . . 16.1 36.7 60.0 96.6 124.2
Commercial mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . 102.6 117.4 108.4 118.9 111.6
Residential mortgages. . . . . . . . . . . . . . . . . . . . . . . . . . 23.5 27.0 7.0 5.3 8.9
Installment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.4 107.7 99.9 73.8 74.0
Bank card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.2 59.1 62.4 55.2 35.6
Credit lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4 10.1 15.1 10.1 7.6
Unallocated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.4 78.0 105.6 30.2 7.1
- -----------------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $501.4 $521.8 $547.7 $552.1 $527.6
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
but reflects the broad-based service sectors in Florida and Georgia.
Barnett increased its loans to consumers from 69% of average loans last
year to 72% at the end of 1994. These portfolios produce fewer non-performing
assets and have more predictable loss experience throughout the various economic
and credit cycles.
Consumer delinquencies for loans 30 days or more past due are shown in the
accompanying chart. The percentage of delinquent installment loans increased to
.94% on December 31, 1994 from .68% a year earlier. The bank card delinquency
ratio remained flat at 2.77% in 1994. While installment delinquency levels
increased, they remain well below national averages for the financial services
industry.
The net charge-off ratio of installment loans decreased to .56%, from .79%
last year. Credit line losses also fell to .51% from .65%, and bank card losses
dropped to 3.23% of loans from 3.50%.
PROVISION/ALLOWANCE FOR LOAN LOSSES. The provision for loan losses is a
charge to earnings in the current period to maintain the allowance for loan
losses at an adequate level. In 1994, Barnett's provision expense was $74.0
million, down substantially from $120.4 million in the prior year and $257.3
million in 1992.
The allowance for loan losses represents a reserve for potential losses
existing in the loan portfolio. Barnett's methodology for evaluating the
adequacy of the allowance is based on the operating and economic environment,
the level and quality of adversely graded loans, the level of charge-offs and
analyses of individual loans within the portfolio. This methodology requires
minimum reserves for all adversely graded loans. These adverse grades equate to
four regulatory classifications of assets: other loans especially mentioned,
substandard, doubtful and loss.
Since 1992, adversely graded loans have declined steadily as the commercial
real estate market has stabilized. In 1993, the economic recovery combined with
the company's strengthened credit policy and aggressive workout of problem
credits resulted in the allowance for loan losses declining $26 million to $522
million, or 2.01% of outstandings.
In 1994, the allowance for loan losses declined another $20 million to $501
million and represented 1.76% of outstandings on December 31. The decline in the
allowance from last year reflects the charge-off of several large corporate
credits which had been fully reserved in prior periods as well as the changing
composition of the loan portfolio.
During the late 1980s, Barnett's loan portfolio was more heavily weighted
toward commercial and commercial real estate loans. During the recession
beginning in 1990, these portfolios produced a high level of non-performing
loans, charge-offs and foreclosures. Since that time, management has reduced the
investment in commercial real estate loans from a high of 28% of the loan
portfolio in 1988 to 12% at the end of 1994 and significantly reduced its
investment in loans to large corporate customers, as evidenced by the $203,000
average commercial loan size.
The company has focused its lending efforts on the retail and small
business segments. These market segments generate higher volumes of smaller
loans with more predictable loss experience throughout the economic and credit
cycles.
Since the allowance is established to cover potential losses inherent in
the portfolio as a whole, due to the weighting of the portfolio toward consumer
loans, the allowance will not necessarily decline at the same rate as
non-performing loans. The company allocates its allowance to the various loan
categories to assist in measuring functional performance. Management considers
the
CONSUMER CREDIT DELINQUENCY
30 DAYS OR MORE PAST DUE -- DECEMBER 31
[Line Graph]
'90 '91 '92 '93 '94
Bank Card: 3.71% 3.76% 2.42% 2.77% 2.77%
Installment: 1.13% .79% .47% .68% .94%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
30
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
allowance appropriate and adequate to cover potential losses inherent in the
loan portfolio based on the current economic environment.
TABLE 10 on page 29 provides a reconciliation of the allowance for loan
losses for the years 1990 through 1994, as well as gross charge-offs, recoveries
and net charge-offs.
- --------------------------------------------------------------------------------
IMPACT OF ACCOUNTING STANDARDS
Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by
Creditors for Impairment of a Loan," which will be implemented in the first
quarter of 1995, prescribes how the allowance for loan losses related to
impaired loans should be determined. Impaired loans are loans for which it is
probable that the creditor will be unable to collect all amounts due according
to contractual terms of the loan agreement. Impaired loans must be valued based
on the present value of the loan's expected future cash flows at the loan's
effective interest rate. In certain cases, the loans may be valued at their
observable market price or the fair value of the underlying collateral. In
management's opinion, the adoption of this standard will not have a significant
impact on the financial condition or results of operations of the company.
- --------------------------------------------------------------------------------
TAXES
Barnett's provision for income taxes rose to $249.8 million in 1994 from
$207.5 million in 1993, primarily as a result of growth in pre-tax earnings. The
effective tax rate increased to 33.9% from 33.0%, reflecting reduced tax-exempt
income and higher state income taxes. Tax-exempt interest and dividend income
declined 14% and state income taxes rose 19% during 1994.
A reconciliation of the effective tax rate to the 1994 federal statutory
rate can be found in NOTE N of NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
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, 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 and other non-relationship
funding sources such as senior or subordinated debt, bank notes and asset
securitization. The high concentration of residential and installment loans in
Barnett's balance sheet provide it with an exceptional amount of contingent
liquidity through the conventional securitization programs that exist today.
Management believes that the company's level of liquidity is sufficient to meet
current and future funding requirements.
- --------------------------------------------------------------------------------
AVERAGE SHAREHOLDERS' EQUITY
DOLLARS IN BILLIONS
[Bar Chart]
'90 '91 '92 '93 '94
$2.0 $2.1 $2.5 $2.7 $3.0
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOOK VALUE PER SHARE
[Bar Chart]
'90 '91 '92 '93 '94
$24.16 $24.19 $25.40 $28.34 $31.09
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
31
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
TABLE 11 RATE OF INTERNAL CAPITAL GENERATION
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Return on assets . . . . . . . . . . . . . . . . . . . . . . . . 1.28% 1.13% .55% .21% .15% .91%
Average equity to assets . . . . . . . . . . . . . . . . . . . . 7.94 7.31 6.62 5.61 5.63 6.16
- -----------------------------------------------------------------------------------------------------------------------------
Return on total equity . . . . . . . . . . . . . . . . . . . . . 16.11 15.42 8.27 3.83 2.73 14.75
Total dividend payout ratio. . . . . . . . . . . . . . . . . . . 35.98 36.26 58.58 120.59 173.22 29.41
Earnings retention rate. . . . . . . . . . . . . . . . . . . . . 64.02 63.74 41.42 (20.59) (73.22) 70.59
- -----------------------------------------------------------------------------------------------------------------------------
Internal capital generation rate . . . . . . . . . . . . . . . . 10.31% 9.83% 3.43% (.79)% (2.00)% 10.41%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
TABLE 12 CAPITAL RATIOS
DECEMBER 31--DOLLARS IN MILLIONS 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Tier I capital . . . . . . . . . . . . . . . $ 2,708 $ 2,686
Total risk-based capital . . . . . . . . . . 3,474 3,468
Total risk-adjusted assets . . . . . . . . . 27,962 26,020
- ---------------------------------------------------------------------------
Tier I capital ratio . . . . . . . . . . . . 9.68% 10.32%
Total risk-based capital ratio . . . . . . . 12.42 13.33
Tier I leverage ratio. . . . . . . . . . . . 6.97 7.29
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CAPITAL
On December 31, 1994, Barnett's shareholders' equity totaled $3.1 billion,
up 9% from a year earlier. Shareholders' equity, before deducting the Employee
Stock Ownership Plan obligation, rose to 7.81% of assets at the end of 1994,
compared to 7.76% a year earlier.
Reflecting strong capital levels and the improved rate of internal capital
generation, the company continued to acquire its stock in the open market to
fund its stock purchase and employee benefit plans. During 1994, the company
purchased 1.9 million shares for a total value of $83 million and issued 1.2
million shares through the stock purchase and employee benefit plans.
Barnett has traditionally met most of its capital requirements through
retained earnings, and in 1994 this source added more than $312 million to
equity. TABLE 11 shows a six-year history of Barnett's rate of internal capital
generation and the factors which determine it.
The company declared dividends of $1.59 per common share in 1994,
representing a 34% dividend payout ratio which is defined as dividends per
common share divided by earnings per fully diluted common share. Reflecting the
increase in the company's earnings, Barnett increased the quarterly dividend
payout 14% on May 18, 1994 to $.41 per share. Barnett's goal is to maintain a
common dividend payout ratio in the range of 30% to 40%. Barnett's 1993 payout
ratio was 35%.
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 8.00%,
with at least half of total capital in the form of Tier I capital.
As TABLE 12 shows, Barnett significantly exceeded these capital guidelines
on December 31, with a Tier I capital
32
<PAGE>
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
ratio of 9.7% and a total risk-based capital ratio of 12.4%.
The minimum leverage ratio, defined as Tier I capital divided by quarterly
average assets, 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 December 31, Barnett's leverage ratio was 7.0% compared to
7.3% a year earlier. This decline reflects additional intangible assets as a
result of 1994 acquisitions. The ratio is expected to decline further upon
completion of the EquiCredit acquisition, but will remain well in excess of
regulatory minimums.
- --------------------------------------------------------------------------------
COMPARISON OF 1993 WITH 1992
Barnett's 1993 earnings improved significantly from 1992, as a result of
the successful merger with First Florida and continued emphasis on programs to
increase productivity and improve credit quality. Consolidated net income of
$421.0 million, or $4.01 per fully diluted share, was more than double the
$207.7 million, or $1.97 per share, earned in 1992, which included a $92.6
million pre-tax restructuring charge related to the merger with First Florida.
Excluding this charge, 1993 earnings increased 53% from the $275 million, or
$2.68 per share, earned in 1992.
Profitability measures also improved sharply due to substantial expense
reductions and continued credit quality improvement. Return on assets rose to
1.13% from .55% in 1992. Return on common shareholders' equity increased to
16.02% from 8.26%.
During 1993, the overhead ratio declined to 65% from 71% in 1992,
non-performing assets were reduced by $385 million and charge-offs and provision
expense dropped significantly.
The economy experienced a moderate recovery during 1993 as increased retail
sales and Gross Domestic Product growth provided tangible evidence of higher
consumer confidence. Reflecting this higher level of confidence, the residential
and consumer loan portfolios registered strong growth. This growth, however, was
offset by declines in the commercial and commercial real estate portfolios,
resulting in a 2% decrease in Barnett's average loans during 1993.
Average deposits of $32.5 billion were down 2% from the previous year. The
decline was accompanied by a change in deposit mix which created a lower-cost
funding source. The low interest rate environment in 1993 led some customers to
seek higher returns on their investments.
A lower net yield combined with a decline in earning assets to produce a
drop in net interest income. The net yield contraction from 1992 was primarily
attributable to the repricing of certain earning assets.
Excluding securities gains and losses, non-interest income increased by 2%
due to higher levels of brokerage, trust and mortgage banking income.
Non-interest expense, excluding the restructuring charge, was reduced by
$144.6 million in 1993. The primary factors contributing to this improvement
were lower credit-related expenses, savings from the merger with First Florida
and the impact of internal productivity initiatives.
33
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SIX-YEAR AVERAGE BALANCES, YIELDS AND RATES
CONSOLIDATED-BARNETT BANKS, INC. AND AFFILIATES
1994 1993
------------------------------ ------------------------------
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:(1)
Commercial, financial and agricultural . . . . . $ 4,220 $ 324.4 7.69% $ 3,927 $ 281.6 7.17%
Real estate construction . . . . . . . . . . . . 851 76.2 8.95 1,068 83.0 7.77
Commercial mortgages . . . . . . . . . . . . . . 2,492 206.6 8.29 2,970 236.5 7.96
Residential mortgages. . . . . . . . . . . . . . 9,759 698.0 7.15 9,179 705.7 7.69
Installment. . . . . . . . . . . . . . . . . . . 7,633 634.8 8.32 6,941 632.7 9.11
Bank card. . . . . . . . . . . . . . . . . . . . 1,168 187.0 16.01 1,034 170.9 16.53
Credit lines . . . . . . . . . . . . . . . . . . 687 55.0 8.01 721 53.9 7.48
- ----------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income. . . . . 26,810 2,174.9 8.11 25,840 2,140.7 8.28
- ----------------------------------------------------------------------------------------------------------------------
Securities:(2)
Taxable. . . . . . . . . . . . . . . . . . . . . 6,839 327.9 4.79 5,961 302.9 5.08
Tax-free . . . . . . . . . . . . . . . . . . . . 715 93.0 13.01 897 111.0 12.37
- ----------------------------------------------------------------------------------------------------------------------
Total securities. . . . . . . . . . . . . . . 7,554 420.9 5.57 6,858 413.9 6.04
- ----------------------------------------------------------------------------------------------------------------------
Federal funds sold . . . . . . . . . . . . . . . . 43 1.7 3.91 288 9.1 3.14
Securities purchased under agreements to resell. . 34 1.4 4.26 271 8.6 3.20
Other earning assets . . . . . . . . . . . . . . . -- -- -- 256 8.1 3.18
- ----------------------------------------------------------------------------------------------------------------------
Total earning assets. . . . . . . . . . . . . 34,441 $2,598.9 7.55% 33,513 $2,580.4 7.70%
Cash . . . . . . . . . . . . . . . . . . . . . . . 2,092 2,164
Other assets . . . . . . . . . . . . . . . . . . . 2,156 2,218
Allowance for loan losses. . . . . . . . . . . . . (520) (539)
- ----------------------------------------------------------------------------------------------------------------------
Total assets. . . . . . . . . . . . . . . . . $38,169 $37,356
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
NOW accounts . . . . . . . . . . . . . . . . . . . $ 5,725 $ 97.5 1.70% $ 5,710 $102.4 1.79%
Money market accounts. . . . . . . . . . . . . . . 7,848 200.4 2.55 7,743 181.2 2.34
Savings deposits . . . . . . . . . . . . . . . . . 3,469 72.8 2.10 3,353 67.4 2.01
Certificates of deposit under $100,000 . . . . . . 7,498 320.8 4.28 8,343 355.1 4.26
Other time deposits. . . . . . . . . . . . . . . . 1,639 70.0 4.27 1,936 83.0 4.29
- ----------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits . . . . . . . 26,179 761.5 2.91 27,085 789.1 2.91
Federal funds purchased. . . . . . . . . . . . . . 783 35.5 4.53 238 7.1 2.98
Securities sold under agreements to repurchase . . 1,409 58.2 4.13 704 17.9 2.55
Other short-term borrowings. . . . . . . . . . . . 125 5.7 4.59 108 4.2 3.88
Long-term debt . . . . . . . . . . . . . . . . . . 683 60.5 8.85 689 61.8 8.97
- ----------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities. . . . . . 29,179 $921.4 3.16% 28,824 $880.1 3.05%
Demand deposits. . . . . . . . . . . . . . . . . . 5,531 5,400
Other liabilities. . . . . . . . . . . . . . . . . 430 402
Preferred equity . . . . . . . . . . . . . . . . . 215 215
Common equity. . . . . . . . . . . . . . . . . . . 2,814 2,515
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities and equity. . . . . . . . . $38,169 $37,356
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
SPREAD AND NET YIELD
Interest rate spread . . . . . . . . . . . . . . . 4.39% 4.65%
Cost of funds supporting earning assets. . . . . . 2.68 2.63
Net yield on earning assets. . . . . . . . . . . . $1,677.5 4.87 $1,700.3 5.07
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<FN>
(1)INCOME ON NON-ACCRUING LOANS IS RECOGNIZED ON A CASH BASIS. INTEREST INCOME
ON INDIVIDUAL LOAN CATEGORIES IS AT CONTRACTUAL RATES, WHILE TOTAL LOAN INTEREST
INCOME IS NET OF REVERSALS OF INTEREST ON NON-ACCRUING LOANS.
(2)AVERAGE YIELDS ON INVESTMENT SECURITIES AVAILABLE FOR SALE HAVE BEEN
CALCULATED BASED ON AMORTIZED COST.
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
SIX-YEAR AVERAGE BALANCES, YIELDS AND RATES
<TABLE>
<CAPTION>
1992 1991 1990 1989 GROWTH RATE
- --------------------------- --------------------------- --------------------------- --------------------------- ------------
AVERAGE AVERAGE AVERAGE AVERAGE 5-YEAR
AVERAGE YIELD AVERAGE YIELD AVERAGE YIELD AVERAGE YIELD COM- 1994/
BALANCE INTEREST OR RATE BALANCE INTEREST OR RATE BALANCE INTEREST OR RATE BALANCE INTEREST OR RATE POUND 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 4,341 $ 322.2 7.42% $ 4,811 $ 436.3 9.07% $ 5,129 $ 527.0 10.28% $ 4,590 $ 497.1 10.83% (2)% 7%
1,577 125.8 7.98 2,353 236.5 10.05 2,934 336.8 11.48 2,819 346.1 12.28 (21) (20)
3,442 299.3 8.70 3,823 385.3 10.08 3,862 420.1 10.88 3,771 423.5 11.23 (8) (16)
8,564 752.2 8.78 7,780 780.5 10.03 7,103 737.4 10.38 6,137 630.2 10.27 10 6
6,549 670.4 10.24 6,655 739.2 11.11 6,593 778.5 11.81 5,712 675.9 11.83 6 10
1,052 172.6 16.40 1,080 178.7 16.55 989 149.6 15.12 867 133.0 15.34 6 13
711 55.4 7.79 699 70.8 10.12 675 74.9 11.09 584 69.7 11.93 3 (5)
- ------------------------------------------------------------------------------------------------------------------------------------
26,236 2,363.1 9.00 27,201 2,769.8 10.18 27,285 2,977.6 10.91 24,480 2,752.0 11.24 2 4
- ------------------------------------------------------------------------------------------------------------------------------------
5,734 356.6 6.23 4,561 352.6 7.73 3,235 288.3 8.91 2,641 231.0 8.75 21 15
1,042 124.8 11.97 1,251 148.3 11.86 1,466 169.3 11.55 1,539 173.3 11.26 (14) (20)
- ------------------------------------------------------------------------------------------------------------------------------------
6,776 481.4 7.11 5,812 500.9 8.62 4,701 457.6 9.74 4,180 404.3 9.67 13 10
- ------------------------------------------------------------------------------------------------------------------------------------
543 19.4 3.56 882 49.5 5.62 288 23.6 8.20 207 19.7 9.54 (27) (85)
270 10.2 3.76 223 12.2 5.48 107 8.5 7.93 180 16.3 9.06 (28) (87)
115 5.7 4.96 - - - - - - 1 .1 11.32 - -
- ------------------------------------------------------------------------------------------------------------------------------------
33,940 $2,879.8 8.48% 34,118 $3,332.4 9.77% 32,381 $3,467.3 10.71% 29,048 $3,192.4 10.99% 3 3
2,131 1,889 1,895 1,786 3 (3)
2,403 2,450 2,223 2,010 1 (3)
(551) (557) (377) (272) 14 (4)
- ------------------------------------------------------------------------------------------------------------------------------------
$37,923 $37,900 $36,122 $32,572 3% 2%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
$ 5,227 $ 100.0 1.91% $ 4,473 $ 150.9 3.37% $ 4,046 $ 176.3 4.36% $ 3,652 $ 165.9 4.54% 9% -
7,199 211.6 2.94 6,185 299.9 4.85 5,040 282.4 5.60 4,958 297.1 5.99 10 1%
2,941 76.7 2.61 2,432 99.2 4.08 2,284 109.5 4.79 2,206 108.2 4.91 9 3
10,318 520.1 5.04 12,022 814.6 6.78 11,456 891.6 7.78 9,498 774.2 8.15 (5) (10)
2,672 134.3 5.03 3,915 266.8 6.81 4,335 343.2 7.92 3,521 298.0 8.47 (14) (15)
- ------------------------------------------------------------------------------------------------------------------------------------
28,357 1,042.7 3.68 29,027 1,631.4 5.62 27,161 1,803.0 6.64 23,835 1,643.4 6.90 2 (3)
276 9.5 3.42 272 15.5 5.70 364 29.8 8.19 418 38.6 9.22 13 -
737 22.2 3.01 1,023 52.6 5.15 1,109 83.1 7.49 1,181 102.0 8.64 4 -
95 3.3 3.49 140 8.1 5.73 315 25.3 8.04 181 16.6 9.18 (7) 16
734 66.0 9.00 653 56.8 8.70 397 35.3 8.88 395 30.7 7.75 12 (1)
- ------------------------------------------------------------------------------------------------------------------------------------
30,199 $1,143.7 3.79% 31,115 $1,764.4 5.67% 29,346 $1,976.5 6.74% 26,010 $1,831.3 7.04% 2 1
4,864 4,311 4,297 4,095 6 2
349 346 447 459 (1) 7
216 119 1 1 - -
2,295 2,009 2,031 2,007 7 12
- ------------------------------------------------------------------------------------------------------------------------------------
$37,923 $37,900 $36,122 $32,572 3% 2%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
4.69% 4.10% 3.97% 3.95%
3.37 5.17 6.11 6.30
$1,736.1 5.11 $1,568.0 4.60 $1,490.8 4.60 $1,361.1 4.69
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
- --------------------------------------------------------------------------------
FOURTH QUARTER MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
SUMMARY
Barnett reported consolidated net income of $125.4 million in the fourth
quarter of 1994, up from $123.4 million in the third quarter and $113.3 million
in the fourth quarter of 1993.
Earnings per fully diluted share were a record $1.21 in the fourth quarter
of 1994, up from $1.18 in the third quarter and $1.08 in the fourth quarter of
1993.
The improvement in earnings from last year resulted from higher net
interest income, as earning assets grew, and lower non-interest expense, as the
company improved efficiency and reduced credit-related costs. These improvements
helped offset a decrease in non-interest income and higher provision expense.
Selected quarterly data can be found in TABLE 13.
EARNING ASSETS
Average earning assets rose to $35.4 billion, 7% higher than last year and
3% greater than the third quarter. This earning asset growth reflects continued
strong loan demand. Average loans grew 8% from the fourth quarter of 1993 and
were up $921 million from last quarter.
Lending to consumers continued to be the foundation of loan growth, growing
at an annualized rate of 17% during the fourth quarter. Installment loans were
up 11% from last year and $226 million from last quarter. Bank card balances
increased 18% from last year and $121 million from the third quarter.
The residential mortgage portfolio rose 10% from a year ago and $460
million from the third quarter. The acquisi-
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TABLE 13 SELECTED QUARTERLY DATA
1994 1993
------------------------------------ ------------------------------------
DOLLARS IN MILLIONS EXCEPT PER SHARE DATA FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
- -TAXABLE-EQUIVALENT
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net interest income. . . . . . . . . . . . . . . $426.2 $419.8 $416.2 $415.3 $413.9 $421.7 $427.9 $436.8
Provision for loan losses. . . . . . . . . . . . 25.6 15.4 13.7 19.3 18.9 23.8 34.5 43.2
- ------------------------------------------------------------------------------------------------------------------------------
Net interest income after loan loss provision. . 400.6 404.4 402.5 396.0 395.0 397.9 393.4 393.6
Non-interest income. . . . . . . . . . . . . . . 129.8 138.1 137.4 137.3 147.0 152.1 151.7 148.2
Non-interest expense . . . . . . . . . . . . . . 341.5 340.3 341.8 340.6 359.2 368.4 378.5 394.9
- ------------------------------------------------------------------------------------------------------------------------------
Income before income taxes . . . . . . . . . . . 188.9 202.2 198.1 192.7 182.8 181.6 166.6 146.9
Income tax provision . . . . . . . . . . . . . . 52.6 67.6 65.9 63.7 57.9 57.2 50.3 42.0
Taxable-equivalent adjustment. . . . . . . . . . 10.9 11.2 11.0 11.0 11.6 13.3 12.0 12.6
- ------------------------------------------------------------------------------------------------------------------------------
Net income . . . . . . . . . . . . . . . $125.4 $123.4 $121.2 $118.0 $113.3 $111.1 $104.3 $ 92.3
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Primary net income per common share. . . . . . . $1.24 $1.21 $1.19 $1.15 $1.11 $1.08 $1.01 $.90
Fully diluted net income per common share. . . . 1.21 1.18 1.15 1.12 1.08 1.06 .99 .88
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
FOURTH QUARTER MANAGEMENT DISCUSSION
tion of Loan America Financial Corporation accounted for $115 million of this
increase. Although higher interest rates have slowed residential mortgage
origination volumes, the change in consumer preference from fixed to
adjustable-rate mortgages has produced a higher level of balance sheet growth
for the company.
Commercial loans rose $65 million from the third quarter, or at an
annualized rate of 6%. Commercial real estate loans grew $35 million from the
third quarter, the first increase since 1990, as construction loans added $63
million but commercial mortgages fell by $28 million.
Average investment securities rose 9% from the fourth quarter of 1993, but
were down slightly from the third quarter.
- --------------------------------------------------------------------------------
FUNDING SOURCES
Barnett's average deposits fell less than 1% from a year ago to $31.8
billion but increased 2% from the third quarter. The acquisition of $3.4 billion
of deposits from Glendale Federal Bank, FSB, on December 15 increased average
deposits for the fourth quarter by $591 million.
Demand deposits fell less than 1% from last year to an average balance of
$5.6 billion. Money market and NOW
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TABLE 14 LOAN QUALITY INFORMATION
1994 1993
------------------------------------ ------------------------------------
DOLLARS IN THOUSANDS FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net charge-offs:
Commercial, financial, agricultural. . . . $ 2,365 $ 844 $ (5,243) $ (991) $ (610) $ 134 $ 3,029 $ (965)
Real estate construction . . . . . . . . . 115 18 1,014 640 4,228 1,380 204 10,852
Commercial mortgages . . . . . . . . . . . 16,239 (4,368) (1,621) (2,318) 1,346 (776) 7,966 16,388
Residential mortgages. . . . . . . . . . . 423 369 576 435 387 907 994 729
Installment. . . . . . . . . . . . . . . . 12,994 8,196 9,184 12,159 13,456 15,591 11,822 13,862
Bank card. . . . . . . . . . . . . . . . . 10,609 9,564 8,695 8,887 9,360 9,141 9,337 8,395
Credit lines . . . . . . . . . . . . . . . 1,123 793 1,013 601 1,232 1,005 1,193 1,217
- ------------------------------------------------------------------------------------------------------------------------------
Total net charge-offs . . . . . . . $43,868 $15,416 $13,618 $19,413 $29,399 $27,382 $34,545 $50,478
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Gross charge-offs. . . . . . . . . . . . . . $ 57,578 $ 30,775 $ 28,222 $ 31,875 $ 45,731 $ 41,115 $ 50,285 $ 65,264
Allowance for loan losses. . . . . . . . . . 501,447 521,871 521,843 521,763 521,827 536,709 540,086 540,137
Non-performing loans . . . . . . . . . . . . 200,455 218,582 225,064 268,992 305,704 382,906 404,376 453,603
Non-performing assets. . . . . . . . . . . . 290,862 303,776 335,638 395,792 458,276 597,194 683,829 784,552
Non-performing asset ratio . . . . . . . . . 1.01% 1.10% 1.25% 1.50% 1.74% 2.26% 2.58% 2.96%
Net charge-offs to average loans . . . . . . .63 .23 .21 .30 .45 .42 .54 .78
Allowance to non-performing loans. . . . . . 250 239 232 194 171 140 134 119
Allowance to period-end loans. . . . . . . . 1.76 1.91 1.95 1.99 2.01 2.07 2.09 2.09
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
FOURTH QUARTER MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TABLE 15 OTHER NON-INTEREST EXPENSE
1994 1993
------------------------------------ ------------------------------------
DOLLARS IN THOUSANDS FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advertising and marketing. . . . . . . . . . $ 8,600 $ 7,427 $ 6,594 $ 6,680 $ 8,583 $ 6,160 $ 6,583 $ 6,447
Amortization of intangibles. . . . . . . . . 6,592 6,557 7,508 7,870 8,903 9,253 9,278 9,553
Communications . . . . . . . . . . . . . . . 8,663 8,928 9,130 7,024 7,962 8,666 9,079 9,168
Expenses and provision
on real estate held for sale . . . . . . . 2,087 3,083 4,483 6,419 16,823 18,979 25,329 31,316
FDIC assessments . . . . . . . . . . . . . . 17,467 17,760 18,042 18,140 19,122 18,802 20,302 20,333
Franchise and credit card fees . . . . . . . 4,271 4,150 3,887 4,139 4,486 4,441 4,441 4,587
Outside computer services. . . . . . . . . . 9,205 9,754 8,499 9,250 8,190 6,268 5,978 5,630
Postage . . . . . . . . . . . . . . . . . . 6,170 5,420 5,831 5,756 5,681 6,246 7,046 7,075
Stationery and supplies. . . . . . . . . . . 4,694 3,428 3,939 3,706 6,334 4,871 5,618 5,879
Insurance, taxes and other . . . . . . . . . 47,901 48,546 45,797 45,379 45,686 52,288 46,877 48,186
- ------------------------------------------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . $115,650 $115,053 $113,710 $114,363 $131,770 $135,974 $140,531 $148,174
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
accounts were down 2%, while balances held in savings accounts rose 2%.
In contrast, certificates of deposit under $100,000 rose $108 million, or
1%, from last year and 5% from the third quarter, primarily as a result of the
Glendale Federal acquisition.
- --------------------------------------------------------------------------------
NET INTEREST INCOME
Barnett's taxable-equivalent net interest income of $426.2 million in the
fourth quarter was 3% higher than the corresponding period last year and 2%
higher than the third quarter. The increase was due to earning asset growth,
partially offset by a decline in the net yield.
The net yield on earning assets declined to 4.80% for the fourth quarter
from 4.98% a year earlier and 4.85% last quarter. Yields on residential and
installment loans continued to experience pricing pressure. Funding costs
increased over the third quarter and last year, due to the general rise in
interest rates.
- --------------------------------------------------------------------------------
LOAN QUALITY
The provision for loan losses was $25.6 million in the fourth quarter, up
from $18.9 million in the fourth quarter of 1993 and $15.4 million in the third
quarter.
Net charge-offs were $43.9 million, up from $29.4 million in the fourth
quarter of 1993 and $15.4 million in the third quarter. The increase in the
fourth quarter reflects the charge-off of three large corporate credits which
had been fully reserved. As a result, the allowance for loan losses declined $20
million during the quarter. As a percentage of average loans, net charge-offs
rose to .63% from .45% in the fourth quarter of 1993.
Non-performing assets fell $167 million, or 37%, from last year to $291
million. This decline was the result of resolution of problem assets through
principal paydowns, OREO sales and an increase in loans returned to accrual.
38
<PAGE>
- --------------------------------------------------------------------------------
FOURTH QUARTER MANAGEMENT DISCUSSION
Non-performing assets at 1.01% are now within management's targeted operating
level of less than 1.25% of outstandings.
For further details on loan quality, see TABLE 14 on page 37 and pages 26
through 31 of the MANAGEMENT DISCUSSION.
- --------------------------------------------------------------------------------
NON-INTEREST INCOME
Non-interest income, excluding securities transactions, decreased 3% from the
fourth quarter of 1993, but increased 4% from last quarter to $142.7 million.
The decline from 1993 was due primarily to lower brokerage and trust income as a
result of sharply rising interest rates. The increase from last quarter is
largely attributable to mortgage banking revenue added by Loan America and
seasonally high credit card discounts and fees.
Net securities losses of $12.9 million in the fourth quarter resulted from
the sale of $575 million of securities. Proceeds from these securities sales
were utilized to fund fourth quarter loan growth and purchase securities at
improved yields.
- --------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Non-interest expense fell 5%, or $17.7 million, from the fourth quarter of
1993 and increased $1.2 million from last quarter to $341.5 million. The savings
from last year are primarily due to lower credit-related expenses and improved
productivity.
Salaries rose 2% with the addition of 524 full-time-equivalent employees
from Loan America and Glendale Federal. Despite the addition of these employees
through acquisitions, the number of full-time-equivalent employees on December
31 was only 280 higher than last year at 18,929.
Details on other non-interest expense can be found in TABLE 15. Expenses
and provision on real estate held for sale fell $14.7 million from last year as
non-performing assets were reduced 37%.
- --------------------------------------------------------------------------------
TAXES
Barnett's effective tax rate for the fourth quarter was 29.6%, compared to
33.8% for the fourth quarter of 1993. The reduced level of expense was
attributable to the realization of tax benefits in the fourth quarter upon the
completion and filing of the 1993 federal tax return.
39
<PAGE>
QUARTERLY AVERAGE BALANCES, YIELDS AND RATES
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------------------------------------
FOURTH THIRD SECOND
--------------------------- --------------------------- -----------------------------
AVERAGE AVERAGE AVERAGE
YIELD YIELD YIELD
DOLLARS IN MILLIONS-- AVERAGE OR AVERAGE OR AVERAGE OR
TAXABLE-EQUIVALENT BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:
Commercial, financial and
agricultural. . . . . . . . . . $ 4,350 $ 87.8 8.01% $ 4,285 $ 84.1 7.79% $ 4,165 $ 80.0 7.71%
Real estate construction . . . . 896 22.5 9.94 833 19.5 9.31 820 17.7 8.66
Commercial mortgages . . . . . . 2,428 51.5 8.42 2,456 51.9 8.38 2,517 52.0 8.29
Residential mortgages. . . . . . 10,229 185.7 7.26 9,769 175.2 7.17 9,577 168.9 7.06
Installment. . . . . . . . . . . 7,996 168.8 8.38 7,770 162.7 8.31 7,537 154.4 8.22
Bank card. . . . . . . . . . . . 1,286 48.6 15.01 1,165 47.6 16.21 1,118 46.6 16.70
Credit lines . . . . . . . . . . 704 15.4 8.69 690 14.7 8.45 679 12.7 7.51
- -----------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned
income . . . . . . . . . . . 27,889 578.1 8.25 26,968 553.0 8.16 26,413 530.8 8.05
- -----------------------------------------------------------------------------------------------------------------------------
Securities:(1)
Taxable. . . . . . . . . . . . . 6,815 86.7 5.07 6,785 82.4 4.84 6,804 79.3 4.67
Tax-free . . . . . . . . . . . . 660 23.3 14.10 691 23.3 13.49 742 22.9 12.32
- -----------------------------------------------------------------------------------------------------------------------------
Total securities. . . . . . . 7,475 110.0 5.87 7,476 105.7 5.64 7,546 102.2 5.42
- -----------------------------------------------------------------------------------------------------------------------------
Federal funds sold . . . . . . . . 34 .4 5.20 30 .4 4.64 27 .3 3.82
Securities purchased under
agreements to resell. . . . . . . 33 .4 5.33 20 .2 4.57 39 .4 4.26
Other earning assets . . . . . . . -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total earning assets. . . . . 35,431 $688.9 7.74% 34,494 $659.3 7.61% 34,025 $633.7 7.46%
- -----------------------------------------------------------------------------------------------------------------------------
Cash . . . . . . . . . . . . . . . 2,061 1,985 2,094
Other assets . . . . . . . . . . . 2,302 2,159 2,105
Allowance for loan losses. . . . . (524) (519) (519)
- -----------------------------------------------------------------------------------------------------------------------------
Total assets. . . . . . . . . $39,270 $38,119 $37,705
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
NOW accounts . . . . . . . . . . . $ 5,639 $ 25.7 1.81% $ 5,572 $ 24.6 1.75% $ 5,809 $ 23.8 1.65%
Money market accounts. . . . . . . 7,714 54.5 2.80 7,904 53.4 2.68 7,909 49.5 2.51
Savings deposits . . . . . . . . . 3,477 20.1 2.29 3,450 19.4 2.23 3,473 17.6 2.03
Certificates of deposit under
$100,000. . . . . . . . . . . . . 7,801 88.8 4.52 7,409 80.4 4.30 7,379 76.7 4.17
Other time deposits. . . . . . . . 1,655 19.0 4.55 1,608 17.5 4.32 1,647 16.9 4.12
- -----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
deposits . . . . . . . . . . 26,286 208.1 3.14 25,943 195.3 2.99 26,217 184.5 2.82
Federal funds purchased. . . . . . 1,002 13.5 5.32 897 10.5 4.63 785 8.0 4.09
Securities sold under agreements
to repurchase . . . . . . . . . . 1,836 23.2 5.01 1,591 17.6 4.39 963 8.7 3.64
Other short-term borrowings. . . . 194 2.7 5.60 96 1.0 4.31 99 1.1 4.30
Long-term debt . . . . . . . . . . 690 15.2 8.84 681 15.1 8.87 681 15.1 8.88
- -----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities. . . . . . . . . 30,008 $262.7 3.47% 29,208 $239.5 3.26% 28,745 $217.4 3.03%
Demand deposits. . . . . . . . . . 5,562 5,391 5,573
Other liabilities. . . . . . . . . 584 470 370
Preferred equity . . . . . . . . . 215 215 215
Common equity. . . . . . . . . . . 2,901 2,835 2,802
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity. $39,270 $38,119 $37,705
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SPREAD AND NET YIELD
Interest rate spread . . . . . . . 4.27% 4.35% 4.43%
Cost of funds supporting earning
assets. . . . . . . . . . . . . . 2.94 2.76 2.56
Net yield on earning assets. . . . $426.2 4.80 $419.8 4.85 $416.3 4.90
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
40
<PAGE>
<CAPTION>
1994 1993
--------------------------- -----------------------------------------------------------
FIRST FOURTH THIRD
--------------------------- --------------------------- -----------------------------
AVERAGE AVERAGE AVERAGE
YIELD YIELD YIELD
DOLLARS IN MILLIONS-- AVERAGE OR AVERAGE OR AVERAGE OR
TAXABLE-EQUIVALENT BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:
Commercial, financial and
agricultural. . . . . . . . . . $ 4,075 $ 72.4 7.20% $ 3,931 $ 69.9 7.05% $ 3,814 $ 69.5 7.23%
Real estate construction . . . . 856 16.5 7.83 902 18.0 7.89 1,011 19.7 7.72
Commercial mortgages . . . . . . 2,568 51.2 8.08 2,732 53.6 7.78 2,910 57.5 7.84
Residential mortgages. . . . . . 9,453 168.3 7.12 9,328 172.3 7.39 9,254 173.6 7.50
Installment. . . . . . . . . . . 7,220 148.8 8.25 7,202 156.1 8.67 7,046 159.2 9.04
Bank card. . . . . . . . . . . . 1,101 44.3 16.30 1,090 42.9 15.63 1,045 43.9 16.66
Credit lines . . . . . . . . . . 675 12.2 7.31 700 12.9 7.32 715 13.6 7.56
- -----------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned
income . . . . . . . . . . . 25,948 513.0 7.95 25,885 522.1 8.04 25,795 530.6 8.20
- -----------------------------------------------------------------------------------------------------------------------------
Securities:(1)
Taxable. . . . . . . . . . . . . 6,955 79.5 4.60 6,033 71.8 4.74 5,852 73.7 5.02
Tax-free . . . . . . . . . . . . 769 23.6 12.28 818 25.8 12.65 889 28.1 12.66
- -----------------------------------------------------------------------------------------------------------------------------
Total securities. . . . . . . 7,724 103.1 5.36 6,851 97.6 5.69 6,741 101.8 6.03
- -----------------------------------------------------------------------------------------------------------------------------
Federal funds sold . . . . . . . . 81 .6 3.12 282 2.2 3.05 169 1.3 3.08
Securities purchased under
agreements to resell. . . . . . . 42 .3 3.25 177 1.4 3.11 61 .5 2.92
Other earning assets . . . . . . . -- -- -- 22 .1 3.05 328 2.5 3.07
- -----------------------------------------------------------------------------------------------------------------------------
Total earning assets. . . . . 33,795 $617.0 7.34% 33,217 $623.4 7.49% 33,094 $636.7 7.67%
- -----------------------------------------------------------------------------------------------------------------------------
Cash . . . . . . . . . . . . . . . 2,233 2,248 2,058
Other assets . . . . . . . . . . . 2,055 2,101 2,171
Allowance for loan losses. . . . . (518) (529) (538)
- -----------------------------------------------------------------------------------------------------------------------------
Total assets. . . . . . . . . $37,565 $37,037 $36,785
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
NOW accounts . . . . . . . . . . . $ 5,885 $ 23.3 1.61% $ 5,752 $ 26.1 1.80% $ 5,611 $ 25.6 1.81%
Money market accounts. . . . . . . 7,866 43.0 2.22 7,807 45.0 2.29 7,788 45.0 2.29
Savings deposits . . . . . . . . . 3,478 15.7 1.83 3,398 17.2 2.01 3,357 17.0 2.01
Certificates of deposit under
$100,000. . . . . . . . . . . . . 7,397 75.0 4.11 7,693 80.1 4.13 8,097 85.7 4.20
Other time deposits. . . . . . . . 1,648 16.6 4.08 1,758 18.1 4.10 1,875 20.1 4.25
- -----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
deposits . . . . . . . . . . 26,274 173.6 2.68 26,408 186.5 2.80 26,728 193.4 2.87
Federal funds purchased. . . . . . 438 3.5 3.29 248 1.9 3.02 236 1.8 3.08
Securities sold under agreements
to repurchase . . . . . . . . . . 1,237 8.7 2.84 822 5.3 2.57 599 3.8 2.56
Other short-term borrowings. . . . 109 .9 3.25 86 .7 3.03 89 .9 3.88
Long-term debt . . . . . . . . . . 682 15.0 8.82 684 15.1 8.85 685 15.1 8.82
- -----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities. . . . . . . . . 28,740 $201.7 2.84% 28,248 $209.5 2.94% 28,337 $215.0 3.01%
Demand deposits. . . . . . . . . . 5,599 5,588 5,317
Other liabilities. . . . . . . . . 296 351 368
Preferred equity . . . . . . . . . 215 215 215
Common equity. . . . . . . . . . . 2,715 2,635 2,548
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity. $37,565 $37,037 $36,785
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SPREAD AND NET YIELD
Interest rate spread . . . . . . . 4.50% 4.55% 4.66%
Cost of funds supporting earning
assets. . . . . . . . . . . . . . 2.42 2.51 2.58
Net yield on earning assets. . . . $415.3 4.92 $413.9 4.98 $421.7 5.09
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1993
---------------------------------------------------------
SECOND FIRST
--------------------------- ---------------------------
AVERAGE AVERAGE
YIELD YIELD
DOLLARS IN MILLIONS-- AVERAGE OR AVERAGE OR
TAXABLE-EQUIVALENT BALANCE INTEREST RATE BALANCE INTEREST RATE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:
Commercial, financial and
agricultural. . . . . . . . . . $ 3,968 $ 71.0 7.17% $ 3,998 $ 71.2 7.22%
Real estate construction . . . . 1,091 21.2 7.78 1,271 24.2 7.71
Commercial mortgages . . . . . . 3,057 61.1 8.02 3,187 64.3 8.18
Residential mortgages. . . . . . 9,123 177.4 7.78 9,007 182.4 8.10
Installment. . . . . . . . . . . 6,844 158.8 9.28 6,664 158.5 9.51
Bank card. . . . . . . . . . . . 1,008 42.0 16.70 993 42.2 17.21
Credit lines . . . . . . . . . . 725 13.7 7.61 743 13.6 7.43
- -----------------------------------------------------------------------------------------------
Total loans, net of unearned
income . . . . . . . . . . . 25,816 538.9 8.36 25,863 549.0 8.54
- -----------------------------------------------------------------------------------------------
Securities:(1)
Taxable. . . . . . . . . . . . . 5,983 77.5 5.18 5,977 80.0 5.38
Tax-free . . . . . . . . . . . . 934 27.9 11.98 949 29.0 12.21
- -----------------------------------------------------------------------------------------------
Total securities. . . . . . . 6,917 105.4 6.10 6,926 109.0 6.32
- -----------------------------------------------------------------------------------------------
Federal funds sold . . . . . . . . 225 1.7 3.04 481 3.9 3.26
Securities purchased under
agreements to resell. . . . . . . 204 1.6 3.20 647 5.2 3.24
Other earning assets . . . . . . . 414 3.2 3.11 263 2.2 3.44
- -----------------------------------------------------------------------------------------------
Total earning assets. . . . . 33,576 $650.8 7.76% 34,180 $669.3 7.87%
- -----------------------------------------------------------------------------------------------
Cash . . . . . . . . . . . . . . . 2,172 2,178
Other assets . . . . . . . . . . . 2,259 2,341
Allowance for loan losses. . . . . (538) (550)
- -----------------------------------------------------------------------------------------------
Total assets. . . . . . . . . $37,469 $38,149
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
NOW accounts . . . . . . . . . . . $ 5,732 $ 25.5 1.79% $ 5,746 $ 25.3 1.78%
Money market accounts. . . . . . . 7,661 45.6 2.39 7,713 45.6 2.40
Savings deposits . . . . . . . . . 3,332 16.7 2.01 3,325 16.4 2.01
Certificates of deposit under
$100,000. . . . . . . . . . . . . 8,513 90.9 4.28 9,087 98.5 4.40
Other time deposits. . . . . . . . 1,995 21.3 4.29 2,120 23.4 4.47
- -----------------------------------------------------------------------------------------------
Total interest-bearing
deposits . . . . . . . . . . 27,233 200.0 2.95 27,991 209.2 3.03
Federal funds purchased. . . . . . 265 2.0 3.01 205 1.4 2.78
Securities sold under agreements
to repurchase . . . . . . . . . . 662 4.1 2.50 732 4.6 2.55
Other short-term borrowings. . . . 82 .9 4.45 176 1.8 4.03
Long-term debt . . . . . . . . . . 690 15.9 9.23 696 15.6 8.98
- -----------------------------------------------------------------------------------------------
Total interest-bearing
liabilities. . . . . . . . . 28,932 $222.9 3.09% 29,800 $232.6 3.16%
Demand deposits. . . . . . . . . . 5,455 5,236
Other liabilities. . . . . . . . . 395 498
Preferred equity . . . . . . . . . 215 215
Common equity. . . . . . . . . . . 2,472 2,400
- -----------------------------------------------------------------------------------------------
Total liabilities and equity. $37,469 $38,149
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
SPREAD AND NET YIELD
Interest rate spread . . . . . . . 4.67% 4.71%
Cost of funds supporting earning
assets. . . . . . . . . . . . . . 2.66 2.75
Net yield on earning assets. . . . $427.9 5.10 $436.7 5.12
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<FN>
(1) AVERAGE YIELDS ON INVESTMENT SECURITIES AVAILABLE FOR SALE HAVE BEEN
CALCULATED ON AMORTIZED COST.
</TABLE>
41
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Barnett Banks, Inc.:
We have audited the accompanying consolidated statements of financial
condition of Barnett Banks, Inc. (a Florida corporation) and affiliates as of
December 31, 1994 and 1993, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements of Barnett Banks, Inc. and affiliates as of
December 31, 1992, were audited by other auditors whose report dated January 14,
1993, on those statements included an explanatory paragraph that described the
change in the Company's method of accounting for income taxes and
post-retirement benefits in 1992, as discussed in Note C to the financial
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Barnett Banks, Inc. and
affiliates as of December 31, 1994 and 1993, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Jacksonville, Florida
January 11, 1995
- --------------------------------------------------------------------------------
MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING
The management of Barnett Banks, Inc. has prepared and is responsible for
the accompanying financial statements, together with the other information
presented in this annual report. Management believes that the financial
statements have been prepared in conformity with generally accepted accounting
principles appropriate in the circumstances to reflect the substance of events
and transactions that should be included. The financial statements include
amounts that are based on management's best estimates and judgments.
Management maintains and depends upon an internal accounting control system
designed to provide reasonable assurance that transactions are executed in
accordance with management's authorization, that financial records are reliable
as the basis for the preparation of all financial statements, and that the
company's assets are safeguarded. The design and implementation of all systems
of internal control are based on judgments required to evaluate the costs of
controls in relation to the expected benefits and to determine the appropriate
balance between these costs and benefits. The company maintains a strong
internal audit program to monitor compliance with the system of internal
accounting control. Operational and special audits are conducted and internal
audit reports are submitted to appropriate management.
The Audit Committee of the Board of Directors, comprised solely of outside
directors, meets periodically with the independent certified public accountants,
management and internal auditors to review accounting, auditing and financial
reporting matters. The independent certified public accountants and internal
auditors have free access to the committee, without management present, to
discuss the results of their audit work and their evaluations of the adequacy of
internal controls and the quality of financial reporting.
The financial statements in this annual report have been audited by the
company's independent certified public accountants, Arthur Andersen LLP, for the
purpose of determining that the financial statements are presented fairly. Their
independent professional opinion on the company's financial statements is
presented above.
/s/ Charles E. Rice /s/ Allen L. Lastinger, Jr. /s/ Charles W. Newman
Charles E. Rice Allen L. Lastinger, Jr. Charles W. Newman
Chairman and President and Chief Financial Officer
Chief Executive Officer Chief Operating Officer
42
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF FINANCIAL CONDITION
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
DECEMBER 31-DOLLARS IN THOUSANDS 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,872,855 $ 2,765,725
Federal funds sold and securities purchased under agreements to resell . . . . . . . 35,040 272,200
Investment securities held to maturity (fair value $4,864,666 in 1994
and $5,881,439 in 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,944,808 5,788,913
Investment securities available for sale . . . . . . . . . . . . . . . . . . . . . . 2,738,600 2,050,902
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,594,523 26,137,816
Less: Allowance for loan losses. . . . . . . . . . . . . . . . . . . . . . . . . . . (501,447) (521,827)
Unearned income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (73,370) (208,030)
- ------------------------------------------------------------------------------------------------------------------------
Net loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,019,706 25,407,959
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,015,187 1,037,183
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498,264 237,228
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,153,859 770,999
- ------------------------------------------------------------------------------------------------------------------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41,278,319 $38,331,109
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Demand deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,957,700 $ 6,016,751
NOW accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,186,427 6,175,813
Money market accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,747,453 7,837,769
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,683,880 3,433,668
Certificates of deposit under $100,000 . . . . . . . . . . . . . . . . . . . . . . . 9,585,472 7,470,972
Other time deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,947,699 1,698,793
- ------------------------------------------------------------------------------------------------------------------------
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,108,631 32,633,766
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase . . . . 1,250,506 1,721,833
Other short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 403,398 110,178
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604,925 309,117
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 776,676 682,124
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,144,136 35,457,018
- ------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $.10 par value: 20,000,000 shares authorized:
Series A, outstanding 2,000,000 shares. . . . . . . . . . . . . . . . . . . . . . 100,000 100,000
Series B, outstanding 12,289 and 14,040 shares. . . . . . . . . . . . . . . . . . 307 351
Series C, outstanding 2,300,000 shares. . . . . . . . . . . . . . . . . . . . . . 115,000 115,000
Common stock, $2 par value: 200,000,000 shares authorized;
issued, 96,732,754 and 97,404,425 . . . . . . . . . . . . . . . . . . . . . . . . 193,466 194,809
Contributed capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741,654 775,719
Net unrealized gain (loss) on investment securities available for sale . . . . . . . (26,998) 3,772
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,098,977 1,786,561
Less: Employee stock ownership plan obligation,
collateralized by 2,732,372 and 3,162,813 shares. . . . . . . . . . . . . . . . . (88,223) (102,121)
- ------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . 3,134,183 2,874,091
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity. . . . . . . . . . . . . . . . . $41,278,319 $38,331,109
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
43
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF INCOME
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
FOR THE YEARS ENDED DECEMBER 31--DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,164,320 $2,130,029 $2,349,688
Investment securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 387,465 375,067 436,951
Federal funds sold and securities purchased under agreements to resell . . . 3,108 17,697 29,526
Other earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8,146 5,725
- ------------------------------------------------------------------------------------------------------------------------
Total interest income. . . . . . . . . . . . . . . . . . . . . . . . 2,554,893 2,530,939 2,821,890
- ------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 761,511 789,100 1,042,727
Federal funds purchased and securities sold under agreements to repurchase . 93,714 25,046 31,639
Other short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . 5,719 4,181 3,317
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,464 61,778 65,997
- ------------------------------------------------------------------------------------------------------------------------
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . 921,408 880,105 1,143,680
- ------------------------------------------------------------------------------------------------------------------------
Net interest income. . . . . . . . . . . . . . . . . . . . . . . . . 1,633,485 1,650,834 1,678,210
Provision for loan losses. . . . . . . . . . . . . . . . . . . . . . . . . . 74,049 120,410 257,277
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses. . . . . . . . . 1,559,436 1,530,424 1,420,933
- ------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on deposit accounts. . . . . . . . . . . . . . . . . . . . . 227,573 222,650 215,779
Trust income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,357 82,256 72,751
Credit card discounts and fees . . . . . . . . . . . . . . . . . . . . . . . 54,377 55,235 58,684
Mortgage banking income. . . . . . . . . . . . . . . . . . . . . . . . . . . 33,112 40,911 32,753
Brokerage income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,010 41,109 32,700
Other service charges and fees . . . . . . . . . . . . . . . . . . . . . . . 104,845 131,560 140,527
Securities transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . (13,086) (2,098) 34,169
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,412 27,386 33,352
- ------------------------------------------------------------------------------------------------------------------------
Total non-interest income. . . . . . . . . . . . . . . . . . . . . . 542,600 599,009 620,715
- ------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . . 648,658 664,293 715,683
Net occupancy expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,251 136,574 148,798
Furniture and equipment expense. . . . . . . . . . . . . . . . . . . . . . . 138,546 143,641 130,885
Other expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458,776 556,449 650,145
Restructuring charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 92,575
- ------------------------------------------------------------------------------------------------------------------------
Total non-interest expense . . . . . . . . . . . . . . . . . . . . . 1,364,231 1,500,957 1,738,086
- ------------------------------------------------------------------------------------------------------------------------
Net non-interest expense . . . . . . . . . . . . . . . . . . . . . . 821,631 901,948 1,117,371
- ------------------------------------------------------------------------------------------------------------------------
EARNINGS
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 737,805 628,476 303,562
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249,834 207,482 95,310
- ------------------------------------------------------------------------------------------------------------------------
Income before accounting changes. . . . . . . . . . . . . . . . . . . 487,971 420,994 208,252
Cumulative effect of changing to different accounting methods, net of taxes. - - (596)
- ------------------------------------------------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 487,971 $ 420,994 $ 207,656
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE
Primary: Earnings per share before accounting changes. . . . . . . . $4.79 $4.10 $1.98
Earnings per share. . . . . . . . . . . . . . . . . . . . . 4.79 4.10 1.97
Average number of shares. . . . . . . . . . . . . . . . . . 98,081,191 98,183,117 95,841,764
Dividends on preferred stock. . . . . . . . . . . . . . . . $18,200 $18,200 $18,200
Fully diluted: Earnings per share before accounting changes. . . . . . . . $4.66 $4.01 $1.98
Earnings per share. . . . . . . . . . . . . . . . . . . . . 4.66 4.01 1.97
Average number of shares . . . . . . . . . . . . . . . . . 104,766,131 104,868,057 102,850,151
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
44
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
CONSOLIDATED-BARNETT BANKS, INC. AND AFFILIATES
Contri- Net
FOR THE YEARS ENDED DECEMBER 31- PREFERRED COMMON BUTED UNREALIZED RETAINED ESOP
DOLLARS IN THOUSANDS STOCK STOCK CAPITAL GAIN (LOSS) EARNINGS OBLIGATION TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992
Balance at January 1 . . . . . . . . $215,737 $183,983 $608,951 - $1,432,203 $(127,208) $2,313,666
Net income . . . . . . . . . . . . . 207,656 207,656
Cash dividends declared:
Common ($1.32 per share) . . . . . (103,384) (103,384)
Preferred:
Series A . . . . . . . . . . . . (9,000) (9,000)
Series B . . . . . . . . . . . . (54) (54)
Series C . . . . . . . . . . . . (9,200) (9,200)
Net issuances of common stock:
Sale of common stock . . . . . . . 6,600 96,646 103,246
Stock purchase, option and
employee benefit plans. . . . . . 2,648 37,563 12,912 53,123
Preferred stock conversions. . . . (267) 56 211 -
- -----------------------------------------------------------------------------------------------------------------------------------
1993
Balance at January 1 . . . . . . . . 215,470 193,287 743,371 - 1,518,221 (114,296) 2,556,053
Net income . . . . . . . . . . . . . 420,994 420,994
Net unrealized gain on investment
securities held for sale . . . . . $ 3,772 3,772
Cash dividends declared:
Common ($1.41 per share) . . . . . (134,416) (134,416)
Preferred:
Series A . . . . . . . . . . . (9,000) (9,000)
Series B . . . . . . . . . . . (38) (38)
Series C . . . . . . . . . . . (9,200) (9,200)
Net issuances of common stock:
Stock purchase, option and
employee benefit plans. . . . . . 1,497 32,254 12,175 45,926
Preferred stock conversions. . . . (119) 25 94 -
- -----------------------------------------------------------------------------------------------------------------------------------
1994
Balance at January 1 . . . . . . . . 215,351 194,809 775,719 3,772 1,786,561 (102,121) 2,874,091
Net income . . . . . . . . . . . . . 487,971 487,971
Change in net unrealized gain (loss)
on investment securities
available for sale . . . . . . . . (30,770) (30,770)
Cash dividends declared:
Common ($1.59 per share) . . . . . (157,321) (157,321)
Preferred:
Series A . . . . . . . . . . . (9,000) (9,000)
Series B . . . . . . . . . . . (34) (34)
Series C . . . . . . . . . . . (9,200) (9,200)
Net issuances (repurchases) of
common stock:
Stock purchase, option and
employee benefit plans . . . . . (1,352) (34,100) 13,898 (21,554)
Preferred stock conversions. . . . (44) 9 35 -
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 . . . . $215,307 $193,466 $741,654 $(26,998) $2,098,977 $(88,223) $3,134,183
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
45
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
CONSOLIDATED-BARNETT BANKS, INC. AND AFFILIATES
FOR THE YEARS ENDED DECEMBER 31-DOLLARS IN THOUSANDS 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 487,971 $ 420,994 $ 207,656
Reconcilement of net income to net cash provided by operating activities:
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . 74,049 120,410 257,277
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . 92,756 100,464 100,432
Amortization of intangibles . . . . . . . . . . . . . . . . . . . . . . . 28,527 36,987 39,280
Employee benefits funded by equity. . . . . . . . . . . . . . . . . . . . 28,682 20,938 23,392
Deferred income tax provision (benefit) . . . . . . . . . . . . . . . . . 44,930 (1,925) (30,962)
Decrease (increase) in interest receivable. . . . . . . . . . . . . . . . (66,633) 18,249 (5,303)
Increase (decrease) in interest payable . . . . . . . . . . . . . . . . . 37,245 (24,288) (39,183)
Decrease (increase) in other assets . . . . . . . . . . . . . . . . . . . (115,049) 728,571 (454,098)
Increase (decrease) in other liabilities. . . . . . . . . . . . . . . . . 45,243 (78,849) 131,346
Originations of mortgages held for sale . . . . . . . . . . . . . . . . . (862,817) (974,342) (701,458)
Proceeds from sales of mortgages held for sale. . . . . . . . . . . . . . 555,905 904,439 747,655
Non-cash portion of restructuring charge. . . . . . . . . . . . . . . . . - - 84,244
Cumulative effect of changing to different accounting
methods, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . - - 596
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,216) (30,152) (27,724)
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities. . . . . . . . . . . . . . 339,593 1,241,496 333,150
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale. . . . . . . . . . . . (2,532,901) - (240,306)
Proceeds from sales of investment securities available for sale. . . . . . . 475,102 - 83,873
Proceeds from maturities of investment securities available for sale . . . . 1,308,423 - 944,390
Purchases of investment securities held to maturity. . . . . . . . . . . . . (3,569,914) (6,621,525) (6,615,827)
Proceeds from sales of investment securities held to maturity. . . . . . . . - - 762,777
Proceeds from maturities of investment securities held to maturity . . . . . 4,419,600 5,672,666 4,945,967
Net increase in loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,230,534) (426,727) (141,030)
Proceeds from sales of loans . . . . . . . . . . . . . . . . . . . . . . . . - 128,897 205,564
Proceeds from sales of premises and equipment. . . . . . . . . . . . . . . . 42,422 51,978 146,227
Purchases of premises and equipment. . . . . . . . . . . . . . . . . . . . . (77,909) (145,660) (260,416)
Net decrease (increase) in other earning assets. . . . . . . . . . . . . . . - 45,756 (45,756)
Net cash received (paid) related to acquisitions and dispositions. . . . . . 2,939,875 20,562 (2,802)
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities . . . . . . . . . . 774,164 (1,274,053) (217,339)
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in demand, NOW, savings and money market accounts. . (731,521) 507,247 3,988,390
Net decrease in other time deposits. . . . . . . . . . . . . . . . . . . . . (97,642) (2,219,862) (3,149,714)
Net decrease in federal funds purchased. . . . . . . . . . . . . . . . . . . (50,707) (75,208) (63,081)
Net increase (decrease) in other short-term borrowings . . . . . . . . . . . 187,942 (50,980) 62,009
Net (decrease) increase in securities sold under agreements to repurchase. . (420,620) 834,295 (210,618)
Principal repayments of long-term debt . . . . . . . . . . . . . . . . . . . (2,375) (169,014) (108,845)
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . 96,927 150,000 100,570
Net issuance (repurchase) of common and preferred stock. . . . . . . . . . . (50,236) 24,988 132,977
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (175,555) (152,654) (121,638)
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities . . . . . . . . . . (1,243,787) (1,151,188) 630,050
- --------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . (130,030) (1,183,745) 745,861
Cash and cash equivalents, January 1 . . . . . . . . . . . . . . . . . . . . 3,037,925 4,221,670 3,475,809
- --------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, December 31 . . . . . . . . . . . . . . . . . . . $ 2,907,895 $ 3,037,925 $ 4,221,670
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
<FN>
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992, INCOME TAXES OF $193
MILLION, $188 MILLION AND $78 MILLION WERE PAID, RESPECTIVELY. INTEREST OF $880
MILLION, $880 MILLION AND $1.1 BILLION WAS PAID IN THE YEARS ENDED DECEMBER 31,
1994, 1993 AND 1992, RESPECTIVELY.
DURING 1994, THE COMPANY ACQUIRED $513 MILLION OF NON-CASH ASSETS AND $3,453
MILLION OF LIABILITIES. DURING 1993, THE COMPANY DISPOSED OF $749 MILLION OF
NON-CASH ASSETS AND $704 MILLION OF LIABILITIES. THE COMPANY ALSO ACQUIRED $364
MILLION IN NON-CASH ASSETS AND $380 MILLION OF LIABILITIES IN 1993. DURING 1992,
THE COMPANY ACQUIRED $280 MILLION OF NON-CASH ASSETS AND $306 MILLION OF
LIABILITIES.
DURING 1994, 1993 AND 1992, $64 MILLION, $149 MILLION AND $308 MILLION OF LOANS
WERE TRANSFERRED TO REAL ESTATE HELD FOR SALE, RESPECTIVELY.
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
46
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Barnett conform to generally
accepted accounting principles and prevailing practices within the banking
industry. Certain previously reported amounts have been reclassified to conform
to current presentation.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the company and its affiliates. Material intercompany accounts
and transactions have been eliminated.
CASH AND CASH EQUIVALENTS. 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. Generally, federal funds are
purchased and sold for one-day periods.
SECURITIES. Securities are classified as either held to maturity or
available for sale. Investment securities held to maturity are those that the
company has the positive intent and ability to hold to maturity and are carried
at cost, adjusted for premiums and discounts that are recognized as interest
income over the life of the security.
Investment securities available for sale are carried at fair value.
Unrealized holding gains and losses are reported net of taxes as a separate
component of shareholders' equity.
Gains and losses are recognized using the specific identification method
upon realization or when impairment of value is deemed to be other than
temporary.
LOANS. Non-refundable loan fees and certain direct loan origination costs
are capitalized and recognized as a yield adjustment over the lives of the
loans.
Commercial and commercial real estate loans are generally placed on
non-accrual status when the collectibility of interest or principal is
uncertain. Residential mortgages four payments in arrears are classified as
non-accruing in conformance with predominant mortgage industry practice. Income
recognized on installment loans and credit card advances is discontinued and the
loans are charged-off generally after a delinquency period of 120 and 180 days,
respectively. When a loan is placed on non-accrual status, interest accruals
cease and uncollected interest is reversed and charged against current income.
ALLOWANCE FOR LOAN LOSSES. The financial statements include an allowance
for estimated losses on loans based on past loss experience and an evaluation of
potential losses in the current loan portfolio.
PREMISES AND EQUIPMENT. Premises and equipment, including leases meeting
criteria for capitalization, are stated at cost less accumulated depreciation
and amortization. Depreciation and amortization are computed primarily on a
straight-line basis over the estimated useful life of each type of asset.
PURCHASED MORTGAGE SERVICING RIGHTS. The cost of mortgage servicing rights
purchased is included in other assets and is amortized in proportion to and over
the period of estimated net servicing revenues. The company evaluates the
carrying value of the servicing portfolio on a disaggregated, undiscounted
basis.
INTANGIBLE ASSETS. Intangible assets consist primarily of goodwill and core
deposit intangibles. Goodwill arising before November 1, 1970, totaling $4.1
million, is not being amortized, since in the opinion of management this
intangible asset has continuing value. Goodwill and other intangible assets
acquired after that date are being amortized on a straight-line basis, primarily
over 10 to 25 years.
Periodically, the company reviews its intangible assets for events or
changes in circumstances that may indicate that the carrying amounts of the
assets are not recoverable.
REAL ESTATE HELD FOR SALE. Real estate held for sale includes properties
acquired through, or in lieu of, loan foreclosure and operating premises no
longer intended for business operations. Acquired premises designated for sale
are included in other assets. Valuations are performed periodically and the real
estate is carried at the lower of cost or appraised value minus estimated costs
to sell. Credit losses arising at the time of foreclosure are charged against
the allowance for loan losses. Any additional declines are charged to other
expense and recorded in a valuation reserve on an asset by asset basis. No
depreciation is recorded on real estate held for sale.
INCOME TAXES. The company and its eligible affiliates file consolidated
federal and state income tax returns. Under a tax-sharing arrangement, income
tax charges or credits are generally allocated to the company and each affiliate
on the basis of their respective taxable income or loss included in the
consolidated income tax returns.
Deferred tax assets and liabilities are reflected at currently enacted
income tax rates applicable to the period in which the deferred tax assets or
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.
RISK MANAGEMENT INSTRUMENTS. Derivative financial instruments used by the
company in the management of its interest rate risk are accounted for primarily
on an accrual basis. Revenues and expenses arising from these instruments are
classified in the category appropriate to the related asset or liability.
Amounts to be paid or received under interest rate swap agreements are
recognized as interest income or expense in the periods in which they accrue.
Gains and losses on early terminations of derivative instruments are deferred
and amortized as an adjustment to the
47
<PAGE>
- --------------------------------------------------------------------------------
yield of the hedged assets or liabilities over the maturity of the instrument.
See note P. for further discussion of risk management instruments.
The company reviews the performance of its derivative financial instruments
to ensure that they are effective. If the company determines that an instrument
is not effective, it is marked to market and the resulting gain or loss is
included in income.
EARNINGS PER COMMON SHARE. Primary earnings per common share is computed
from net income after preferred stock dividends and is based on the
weighted-average number of shares of common stock outstanding and common stock
equivalents assumed outstanding during the year.
Fully diluted shares outstanding includes the maximum dilutive effect of
stock issuable upon conversion of convertible preferred stock and exercise of
common stock options.
- --------------------------------------------------------------------------------
B. ACQUISITIONS
In January 1995, the company will acquire 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.
On December 15, 1994, the company assumed $3.4 billion in deposits of the
Florida franchise of Glendale Federal Bank, FSB for $244 million. Amounts
assigned to intangible assets may vary as final valuation and other information
becomes available.
On October 1, 1994, the company completed the acquisition of Loan America
Financial Corporation, a Miami-based wholesale mortgage banking company with a
$4 billion servicing portfolio, for $59 million.
On December 2, 1993, the company completed a transaction to exchange its
Atlanta franchise for Bank South Corporation's Pensacola banking affiliate,
common stock and cash, with an aggregate value of $125 million. Bank South's
Pensacola affiliate had assets of $417 million. The company's Atlanta franchise
had assets of $820 million.
All of the above acquisitions were accounted for as purchases. Accordingly,
results are included from the date acquired.
The company divested certain processing and servicing units in 1993.
Results for 1993 included aggregate gross revenues of approximately $25.9
million and aggregate expenses of $29.3 million prior to the date of these
divestitures. There was no significant gain or loss resulting from these
transactions.
On December 7, 1992, First Florida Banks, Inc., was merged into a
wholly-owned subsidiary of the company. Approximately 22.5 million shares of the
company's common stock were issued as a result of the merger. This transaction
was accounted for as a pooling of interests and, accordingly, all amounts
represent the combined results of First Florida and the company.
- --------------------------------------------------------------------------------
C. CHANGES IN ACCOUNTING PRINCIPLES
In 1992, the company adopted two new accounting standards. Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
changed the accounting for income taxes to the asset and liability method from
the deferral method. SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," requires that the projected future cost of
providing post-retirement health care and other benefits be recognized during
the periods employees provide services to earn those benefits. As permitted
under SFAS No. 106, the company chose to immediately recognize the transition
obligation for post-retirement benefits other than pensions in net income in
1992.
The company adopted both of these changes on a prospective basis effective
January 1, 1992. The effect of these changes on operating results for the year
ended December 31, 1992, excluding the cumulative effect of the changes, was not
material.
48
<PAGE>
- --------------------------------------------------------------------------------
D. INVESTMENT SECURITIES
<TABLE>
<CAPTION>
HELD TO MATURITY
-------------------------------------------------------------------------------------------
1994 1993
-------------------------------------------- ---------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR AMORTIZED UNREALIZED UNREALIZED FAIR
DECEMBER 31--DOLLARS IN THOUSANDS COST GROSS GAIN GROSS LOSS VALUE COST GROSS GAIN GROSS LOSS VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities . . . . . $1,269,110 $ 382 $ 24,077 $1,245,415 $1,595,948 $16,782 $ 41 $1,612,689
Obligations of states and
political subdivisions . . . . . 639,265 23,891 613 662,543 784,931 69,700 208 854,423
Other U.S. Government
agencies and corporations. . . . 254,637 23 2,662 251,998 381,454 553 177 381,830
Mortgage-backed securities(1). . . 2,164,292 72 64,028 2,100,336 2,403,026 5,935 3,904 2,405,057
Other securities . . . . . . . . . 617,504 19 13,149 604,374 623,554 4,972 1,086 627,440
- --------------------------------------------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . $4,944,808 $24,387 $104,529 $4,864,666 $5,788,913 $97,942 $5,416 $5,881,439
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
AVAILABLE FOR SALE
-------------------------------------------------------------------------------------------
1994 1993
-------------------------------------------- ---------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR AMORTIZED UNREALIZED UNREALIZED FAIR
DECEMBER 31--DOLLARS IN THOUSANDS COST GROSS GAIN GROSS LOSS VALUE COST GROSS GAIN GROSS LOSS VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities . . . . . $1,905,203 $ 76 $35,272 $1,870,007 $ 924,218 $ 702 $ 7 $ 924,913
Obligations of states and
political subdivisions . . . . . 11,489 185 718 10,956 7,940 708 -- 8,648
Other U.S. Government
agencies and corporations. . . . 175,871 -- 7,255 168,616 16,381 1 7 16,375
Mortgage-backed securities(1). . . 236,689 1 4,820 231,870 385,426 1,059 204 386,281
Other securities . . . . . . . . . 454,056 8,406 5,311 457,151 710,942 3,915 172 714,685
- --------------------------------------------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . $2,783,308 $8,668 $53,376 $2,738,600 $2,044,907 $6,385 $390 $2,050,902
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)BALANCE IS COMPRISED SUBSTANTIALLY OF GOVERNMENT-GUARANTEED MORTGAGE
SECURITIES.
</TABLE>
TABLE 4. "Maturity Of Investment Securities," on page 21 of the MANAGEMENT
DISCUSSION shows the amortized cost and fair value of investment securities by
contractual maturity, except for mortgage-backed securities which are presented
at their expected maturities. Unrealized losses on securities relate primarily
to high quality short-term debt securities and are considered by the company to
be temporary. Gross gains and losses on sales of investment securities available
for sale in 1994 were $.7 million and $12.8 million, respectively. Gross gains
on sales of investment securities in 1993 and 1992 were $2.5 million and $41.9
million, respectively, and gross losses were $4.6 million and $7.7 million,
respectively.
Taxable interest income was $326.0 million, $301.8 million and $353.0
million in 1994, 1993 and 1992, respectively. Non-taxable interest income was
$61.5 million, $73.3 million and $84.0 million in 1994, 1993 and 1992,
respectively.
Securities with an amortized cost of approximately $2.2 billion on
December 31, 1994 were pledged to secure public deposits and for other purposes.
49
<PAGE>
- -------------------------------------------------------------------------------
E. LOANS
<TABLE>
<CAPTION>
DECEMBER 31--DOLLARS IN THOUSANDS
NET OF UNEARNED INCOME 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial, financial and
agricultural . . . . . . . . $ 4,445,841 $ 4,086,754 $ 4,230,765
Real estate construction . . . 929,229 853,602 1,265,999
Commercial mortgages . . . . . 2,379,309 2,624,555 3,201,363
Residential mortgages. . . . . 10,555,563 9,449,457 8,946,836
Installment. . . . . . . . . . 8,116,982 7,107,845 6,636,917
Bank card. . . . . . . . . . . 1,375,292 1,127,784 1,057,599
Credit lines . . . . . . . . . 718,937 679,789 711,362
- -------------------------------------------------------------------------------
Total. . . . . . . . . . $28,521,153 $25,929,786 $26,050,841
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The company grants loans principally in the state of Florida. A significant
portion of its loans are secured by real estate.
Residential mortgages of $1.8 billion have been pledged as collateral to
secure debt of banking subsidiaries.
- -------------------------------------------------------------------------------
F. ALLOWANCES FOR LOSSES
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
ALLOWANCE FOR LOAN
LOSSES
Beginning balance. . . . . . . $ 521,827 $ 547,716 $ 552,057
Recoveries . . . . . . . . . . 56,135 60,591 63,267
Provision expense. . . . . . . 74,049 120,410 257,277
Loans charged off. . . . . . . (148,450) (202,395) (325,512)
Other, net . . . . . . . . . . (2,114) (4,495) 627
- -------------------------------------------------------------------------------
Ending balance . . . . . $ 501,447 $ 521,827 $ 547,716
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," which
prescribes how the allowance for loan losses related to impaired loans should be
determined, will be adopted by the company effective January 1, 1995. The
adoption of this standard will not have a significant impact on the financial
condition or results of operations of the company.
The company recognizes any estimated potential decline in the value of real
estate held for sale between appraisal dates on an asset-by-asset basis through
periodic additions to the allowance for losses on real estate held for sale.
Writedowns charged against this reserve are taken when the related real estate
is sold at a loss.
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
ALLOWANCE FOR LOSSES ON
REAL ESTATE HELD FOR SALE
Beginning balance. . . . . . . . . . . . . . . . $ 65,165 $ 23,250
Provision expense. . . . . . . . . . . . . . . . 5,149 68,081
Dispositions, net. . . . . . . . . . . . . . . . (29,536) (26,166)
- -------------------------------------------------------------------------------
Ending balance . . . . . . . . . . . . . . $ 40,778 $ 65,165
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
G. NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
REAL
NON- REDUCED- ESTATE
ACCRUAL RATE HELD
DECEMBER 31--DOLLARS IN THOUSANDS LOANS LOANS FOR SALE TOTAL
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Recorded investment. . . . . . . . . $198,212 $2,243 $90,407 $290,862
Interest at contracted rates(1). . . 18,200 208 -- 18,408
Interest recorded as income. . . . . 6,703 193 -- 6,896
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
1993
Recorded investment. . . . . . . . . $303,875 $1,829 $152,572 $458,276
Interest at contracted rates(1). . . 31,401 211 -- 31,612
Interest recorded as income. . . . . 9,915 153 -- 10,068
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<FN>
(1)INTEREST INCOME THAT WOULD HAVE BEEN RECORDED IF THE LOANS HAD BEEN CURRENT
AND IN ACCORDANCE WITH THEIR ORIGINAL TERMS.
</TABLE>
- --------------------------------------------------------------------------------
H. PREMISES AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31--DOLLARS IN THOUSANDS 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . $ 207,244 $ 193,742
Buildings and leasehold improvements . . . . . . 921,089 890,043
Furniture and equipment. . . . . . . . . . . . . 456,345 455,106
Capitalized leases . . . . . . . . . . . . . . . 27,040 27,219
Construction in progress and real estate
for future expansion . . . . . . . . . . . . . 57,291 86,758
- -------------------------------------------------------------------------------
Total cost . . . . . . . . . . . . . . . . 1,669,009 1,652,868
Less: Accumulated depreciation and
amortization . . . . . . . . . . . . . . . . . (653,822) (615,685)
- -------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . . . $1,015,187 $1,037,183
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The company enters into operating leases for equipment and facilities in
the normal course of business. The following is a schedule of future minimum
rental payments required under operating leases having initial or remaining
non-cancelable lease terms in excess of one year at December 31, 1994:
DOLLARS IN THOUSANDS AMOUNT
- -------------------------------------------------------------------------------
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,543
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,838
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,027
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,594
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,864
Later years. . . . . . . . . . . . . . . . . . . . . . . . . . . 63,486
- -------------------------------------------------------------------------------
Total minimum payments required. . . . . . . . . . . . . . $269,352
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
50
<PAGE>
- --------------------------------------------------------------------------------
I. SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
SECURITIES
FEDERAL SOLD UNDER OTHER
FUNDS AGREEMENTS COMMERCIAL SHORT-TERM
DECEMBER 31--DOLLARS IN THOUSANDS PURCHASED TO REPURCHASE PAPER BORROWINGS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Balance. . . . . . . . . . . . . . . . . . . . . . $ 119,854 $1,130,652 $ 6,199 $397,199
Maximum indebtedness at any month end. . . . . . . 1,469,131 2,191,536 18,551 397,199
Daily average indebtedness outstanding . . . . . . 782,577 1,409,128 8,295 116,395
Average rate paid for the year . . . . . . . . . . 4.53% 4.13% 3.81% 4.64%
Average rate on period-end borrowings. . . . . . . 5.82 5.41 5.80 5.62
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
1993
Balance. . . . . . . . . . . . . . . . . . . . . . $170,561 $1,551,272 $ 5,457 $104,721
Maximum indebtedness at any month end. . . . . . . 350,937 1,551,272 18,016 193,362
Daily average indebtedness outstanding . . . . . . 238,413 704,017 10,618 97,227
Average rate paid for the year . . . . . . . . . . 2.98% 2.55% 2.88% 3.99%
Average rate on period-end borrowings. . . . . . . 3.00 2.06 3.01 2.76
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
1992
Balance. . . . . . . . . . . . . . . . . . . . . . $270,769 $676,289 $ 6,153 $155,005
Maximum indebtedness at any month end. . . . . . . 308,124 924,723 14,105 155,005
Daily average indebtedness outstanding . . . . . . 276,307 737,137 10,427 84,527
Average rate paid for the year . . . . . . . . . . 3.42% 3.01% 3.14% 3.54%
Average rate on period-end borrowings. . . . . . . 3.00 2.35 2.77 3.12
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
J. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31--DOLLARS IN THOUSANDS 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
7.75% Sinking Fund Debentures, due 1997,
with annual sinking fund payments of
$700,000 through 1996. . . . . . . . . . . . . . $ 10,900 $ 11,600
Less: Face value of debentures repurchased and
held for future retirements. . . . . . . . . . . (1,472) (2,172)
- -------------------------------------------------------------------------------
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%. . . . . . . . 226,900 202,300
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 Collateralized Bonds, due 1996, with
interest from a floating 6.348%. . . . . . . . . 71,927 --
Mortgages payable. . . . . . . . . . . . . . . . . -- 179
Capitalized lease obligations. . . . . . . . . . . 13,421 15,217
- -------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . . . . $776,676 $682,124
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The maturities and sinking fund requirements of long-term debt for the next
five years, not met by repurchases of debentures and exclusive of mortgages
payable and capitalized lease obligations, are $25.8 million for 1995, $271.6
million for 1996, $9.4 million for 1997, $1.0 million for 1998 and $200 million
for 1999.
- --------------------------------------------------------------------------------
K. SHAREHOLDERS' EQUITY
The company currently has outstanding 2 million shares of Series A $4.50
Cumulative Convertible Preferred Stock, each convertible into 1.8868 shares of
common stock. The stock is redeemable at the option of the company on or after
April 15, 1996 at $52.25 per share and at decreasing prices thereafter to $50
per share on or after March 31, 2001.
The company also has outstanding 2.3 million shares of Series C $4.00
Cumulative Convertible Preferred Stock, each convertible into 1.2658 shares of
common stock. The stock is redeemable at the option of the company on or after
October 15, 1995 at $52.40 per share or at decreasing prices thereafter to $50
per share on or after September 30, 2001. All of the Series A and C shares
remain outstanding at December 31, 1994.
On December 31, 1994, the company also had 12,289 shares of Series B $2.50
Cumulative Convertible Preferred Stock outstanding, each convertible into 2.5988
shares of common stock. The stock's earliest redemption date was December 7,
1991 and can be redeemed at the holder's option after 1996.
On December 31, 1994, a total of 15,659,398 shares of common stock were
reserved for future issuance in connection with the dividend and interest
reinvestment, employee benefit, long-term incentive and customer stock purchase
plans and conversions of preferred stock.
The company has a long-term incentive plan for certain officers of the
company and its affiliates, which provides for a maximum grant of 7,500,000
shares of Barnett stock. At December 31, 1994, there were 4,053,937 shares
available for future option grants.
Stock options granted are for a term of 10 years and, subject to limited
exceptions, are not exercisable before the third anniversary of the date of
grant.
51
<PAGE>
Options outstanding and the activity for 1994 and 1993 are presented below:
<TABLE>
<CAPTION>
NUMBER OPTION
1994 OF SHARES PRICE
- -------------------------------------------------------------------------------
<S> <C> <C>
Beginning balance. . . . . . . . . . . . 3,846,634 $ 9.13 - $45.38
Granted. . . . . . . . . . . . . . . . . 775,340 40.88 - 46.13
Exercised. . . . . . . . . . . . . . . . (302,774) 9.13 - 42.63
Cancelled. . . . . . . . . . . . . . . . (116,928) 16.50 - 45.38
- -------------------------------------------------------------------------------
Ending balance . . . . . . . . . . 4,202,272 $13.30 - $46.13
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Options which became exercisable
during the year. . . . . . . . . . . . 656,000 $18.38 - $45.38
Options exercisable at December 31 . . . 1,887,171 13.30 - 45.38
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<CAPTION>
NUMBER OPTION
1993 OF SHARES PRICE
- -------------------------------------------------------------------------------
<S> <C> <C>
Beginning balance. . . . . . . . . . . . 3,556,427 $ 9.13 - $38.38
Granted. . . . . . . . . . . . . . . . . 753,100 42.13 - 45.38
Exercised. . . . . . . . . . . . . . . . (320,574) 15.17 - 42.63
Cancelled. . . . . . . . . . . . . . . . (142,319) 18.38 - 45.38
- -------------------------------------------------------------------------------
Ending balance . . . . . . . . . . 3,846,634 $ 9.13 - $45.38
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Options which became exercisable
during the year. . . . . . . . . . . . 600,499 $ 9.17 - $42.63
Options exercisable at December 31 . . . 1,534,020 9.13 - 42.63
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
In November 1989, the company incorporated employee stock ownership plan
(ESOP) provisions into its existing 401(k) employee benefit plan. The ESOP
acquired $141 million of the company's common stock using the proceeds of a loan
from the company. The terms of the loan include equal monthly payments of
principal and interest from September 1990 through September 2015. Interest is
at 9.75% and prepayments of principal are allowed. The loan is generally being
repaid from contributions to the plan by the company and dividends on company
stock held by the ESOP. The loan to the ESOP is classified as a reduction in
shareholders' equity.
Shares held by the ESOP are allocated to plan participants as the loan is
repaid. The company recognizes expense based on the number of shares allocated
to participants (the shares allocated method).
The ESOP shares as of December 31 were as follows:
<TABLE>
<CAPTION>
1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Allocated shares . . . . . . . . . . . . . . . . . 1,646,228 1,215,787
Unallocated shares . . . . . . . . . . . . . . . . 2,732,372 3,162,813
- -------------------------------------------------------------------------------
Total ESOP shares. . . . . . . . . . . . . . 4,378,600 4,378,600
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The company has a restricted stock grant plan under which key employees are
awarded shares of the company's common stock subject to certain restrictions.
Certain time-based awards provide that restrictions lapse on the third
anniversary of the date of the agreement awarding such restricted stock. Certain
performance-based awards provide that specific performance criteria must be met
in order for restrictions to lapse. As of December 31, 1994, 182,500 grants (50%
of which were time-based and 50% of which were performance-based) were
outstanding with an average grant price of $41.84.
- --------------------------------------------------------------------------------
L. RETIREMENT AND BENEFIT PLANS
The company and its affiliates participate in a non-contributory pension
plan covering substantially all employees who qualify as to age and length of
service. Benefits under the plan are based on an employee's years of service and
compensation. It is the company's policy to fund amounts between the minimum
required under the Employee Retirement Income Security Act of 1974 and the
maximum amount deductible for federal income tax purposes.
The components of 1994, 1993 and 1992 net periodic pension cost for the
plan are shown below:
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost for benefits earned
during the year. . . . . . . . . . . . $ 13,398 $ 11,596 $ 10,015
Interest cost on projected benefit
obligations. . . . . . . . . . . . . . 20,539 19,363 17,871
Actual return on plan assets . . . . . . 8,971 (25,881) (12,454)
Net amortization and deferral. . . . . . (38,181) (778) (11,917)
- -------------------------------------------------------------------------------
Net periodic pension cost
and pension expense. . . . . . . $ 4,727 $ 4,300 $ 3,515
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status of the pension plan and
amounts recognized in the STATEMENTS OF FINANCIAL CONDITION:
<TABLE>
<CAPTION>
DECEMBER 31--DOLLARS IN THOUSANDS 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value:
Accumulated
benefit obligation(1). . . . . . . . $(226,145) $(220,099) $(176,112)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Projected benefit obligation . . . . . $(272,309) $(266,271) $(231,746)
Plan assets at fair value. . . . . . . . 276,003 280,238 267,833
- -------------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation . . . . . . . . . . 3,694 13,967 36,087
Unrecognized net loss. . . . . . . . . . 41,168 29,147 1,041
Unrecognized prior service cost. . . . . 2,297 (5,095) 3,770
Unrecognized net asset at adoption
of SFAS No. 87, net of
amortization . . . . . . . . . . . . (26,458) (30,271) (34,104)
- -------------------------------------------------------------------------------
Prepaid pension cost . . . . . . . $ 20,701 $ 7,748 $ 6,794
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<FN>
(1)INCLUDES VESTED AMOUNTS OF $213,237, $208,819 AND $176,058 IN 1994, 1993 AND
1992, RESPECTIVELY.
</TABLE>
Assumptions used to determine the actuarial present value of benefit
obligations were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted-average discount rate . . . . . . . 8.9% 7.5% 8.5%
Increase in compensation levels. . . . . . . 4.5 4.0 5.1
Expected long-term return on assets. . . . . 9.0 9.0 9.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
At December 31, 1994, the plan's assets consisted primarily of investments
in pooled-equity and fixed-income funds. Dividend income related to shares of
the company's stock was $71,000 in 1994.
The company also maintains a non-qualified supplemental retirement plan for
certain officers of the company. The plan, which is unfunded, provides benefits
in excess of that permitted to be paid by the company's pension plan under the
provisions of the tax law. Supplemental retirement bene-
52
<PAGE>
fits are based on the participant's compensation during the last two years of
employment. Plan cost was $3.8 million for 1994, $2.2 million for 1993 and $2.4
million for 1992. At December 31, 1994, 1993 and 1992, the projected benefit
obligation was $25.7 million, $24.5 million and $13.1 million, respectively. The
accrued liability for the plan at December 31, 1994, 1993 and 1992 was $16.2
million, $13.2 million and $11.8 million, respectively.
The company also has 401(k) defined contribution plans in which
substantially all employees are eligible to participate. The company makes
matching contributions to these plans, up to a maximum of 6% of employees'
compensation. The company's contributions were $16.3 million in 1994 and 1993
and $14 million in 1992.
The company also provides health care and life insurance benefits to
employees who retire from the company at age 55 or later and meet certain
minimum service requirements. The post-retirement health care plan is
contributory, with retirees' contributions adjusted annually to reflect certain
cost-sharing provisions of the plan. The post-retirement life insurance plan is
non-contributory.
The components of net periodic post-retirement benefits cost are shown
below:
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost . . . . . . . . . . . . . . . . $1,026 $ 909 $1,161
Interest cost. . . . . . . . . . . . . . . . 2,782 2,712 3,001
Actual return on plan assets . . . . . . . . 52 (291) (111)
Net amortization and deferral. . . . . . . . (253) (22) 37
- -------------------------------------------------------------------------------
Net periodic post-retirement
benefit cost . . . . . . . . . . . . $3,607 $3,308 $4,088
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status of the post-retirement
plans and amounts recognized in the STATEMENTS OF FINANCIAL CONDITION:
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Accumulated post-retirement
benefit obligation:
Retirees . . . . . . . . . . . . . . . . $(22,372) $(26,735) $(22,922)
Fully eligible active
plan participants. . . . . . . . . . . (306) (968) (1,908)
Other active plan participants . . . . . (7,608) (9,859) (11,350)
- -------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . (30,286) (37,562) (36,180)
Plan assets at fair value. . . . . . . . . . 5,206 3,162 2,911
- -------------------------------------------------------------------------------
Accumulated post-retirement benefit
obligation in excess of plan assets. . . . (25,080) (34,400) (33,269)
Unrecognized prior service cost. . . . . . . 359 369 --
Unrecognized net (gain) loss . . . . . . . . (1,797) 5,891 (37)
- -------------------------------------------------------------------------------
Accrued post-retirement benefit cost . . . . $(26,518) $(28,140) $(33,306)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
An 11% health-care-cost-trend rate was assumed for 1994, gradually
decreasing to 7.0% by the year 1999 and remaining constant thereafter.
Increasing the assumed health-care-cost-trend rate by one percentage point would
increase the accumulated post-retirement benefit obligation at December 31, 1994
by $1.2 million and increase the aggregate of the service and interest cost
components of net periodic post-retirement benefit cost for 1994 by $100,000. A
discount rate of 8.9% was used to determine the accumulated post-retirement
benefit obligation. The plan's assets at December 31, 1994 consisted primarily
of investments in pooled-equity and fixed-income funds.
- -------------------------------------------------------------------------------
M. OTHER EXPENSE
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Advertising and marketing. . . . . . . . . . $ 29,301 $ 27,773 $ 26,832
Amortization of intangibles. . . . . . . . . 28,527 36,987 39,280
Communications . . . . . . . . . . . . . . . 33,745 34,875 36,195
Expenses and provision
on real estate held for sale . . . . . . . 16,072 92,447 154,397
FDIC assessments . . . . . . . . . . . . . . 71,409 78,559 76,276
Franchise and credit card. . . . . . . . . . 16,447 17,955 13,364
Outside computer services. . . . . . . . . . 36,708 26,066 23,302
Postage . . . . . . . . . . . . . . . . . . 23,177 26,048 27,661
Stationery, printing, supplies . . . . . . . 15,767 22,702 27,005
Insurance, taxes and other . . . . . . . . . 187,623 193,037 225,833
- -------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . $458,776 $556,449 $650,145
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
N. FEDERAL AND STATE INCOME TAXES
The provisions for income taxes reflected in the STATEMENTS OF INCOME are
detailed below:
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993(1) 1992(2)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense:
Federal. . . . . . . . . . . . . $184,684 $191,239 $118,598
State . . . . . . . . . . . . . 20,220 19,327 7,674
- ----------------------------------------------------------------------------
Total current. . . . . . . . 204,904 210,566 126,272
- ----------------------------------------------------------------------------
Deferred tax expense (benefit):
Federal. . . . . . . . . . . . . 41,821 (3,388) (29,269)
State . . . . . . . . . . . . . 3,109 304 (1,693)
- ----------------------------------------------------------------------------
Total deferred . . . . . . . 44,930 (3,084) (30,962)
- ----------------------------------------------------------------------------
Total income tax expense . . $249,834 $207,482 $ 95,310
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<FN>
(1)RECLASSIFIED TO REFLECT ACTUAL TAX RETURN AS FILED.
(2)EXCLUDING EFFECT OF ACCOUNTING CHANGES.
</TABLE>
The difference between federal income tax computed at the statutory rate
and the actual tax provision is shown below:
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993 1992(1)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Income before taxes. . . . . . . . $737,805 $628,476 $303,562
- ----------------------------------------------------------------------------
Tax at the statutory rate(2) . . . 258,232 219,967 103,211
- ----------------------------------------------------------------------------
Increase (decrease) in taxes:
Tax-exempt interest
and dividends. . . . . . . . . (28,778) (33,653) (40,457)
State income tax, net of
federal benefit. . . . . . . . 15,163 12,760 3,948
Disallowed interest expense. . . . 2,610 2,592 3,153
Non-deductible expenses. . . . . . 6,636 9,029 14,902
Other . . . . . . . . . . . . . (4,029) (3,213) 10,553
- ----------------------------------------------------------------------------
Total decrease in taxes. . . (8,398) (12,485) (7,901)
- ----------------------------------------------------------------------------
Total income tax expense . . $249,834 $207,482 $ 95,310
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Effective tax rate . . . . . 33.9% 33.0% 31.4%
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<FN>
(1)EXCLUDING EFFECT OF ACCOUNTING CHANGES.
(2)35% FOR 1994 AND 1993, 34% FOR 1992.
</TABLE>
53
<PAGE>
Deferred income taxes reflect the impact of differences between the
financial statement and tax bases of assets and liabilities and available tax
carryforwards. The tax effect of temporary differences and tax carryforwards
which create deferred tax assets and liabilities at December 31, 1994, 1993 and
1992, are detailed below:
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993(1) 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Loan loss reserve. . . . . . . . $173,366 $183,076 $187,271
Writedown of real estate
held for sale. . . . . . . . . 26,240 29,538 28,427
Employee benefits. . . . . . . . 14,976 18,354 19,194
Loan fees and expenses . . . . . 7,433 11,220 13,698
Capital loss carryforward. . . . 3,756 5,160 6,313
SFAS No. 115 equity adjustment . 17,710 -- --
Other . . . . . . . . . . . . . 25,649 22,478 20,834
- -------------------------------------------------------------------------------
Gross deferred tax assets. . 269,130 269,826 275,737
Valuation allowance. . . . . . . (4,087) (5,820) (7,207)
- -------------------------------------------------------------------------------
Gross deferred tax assets net
of valuation allowance . . 265,043 264,006 268,530
- -------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation . . . . . . . . . . 41,442 31,077 25,415
Leasing. . . . . . . . . . . . . 6,312 7,265 12,385
Intangibles. . . . . . . . . . . 29,959 19,244 23,471
Interest income. . . . . . . . . 11,970 18,740 21,390
Other . . . . . . . . . . . . . 37,678 17,178 16,229
- -------------------------------------------------------------------------------
Gross deferred tax liabilities 127,361 93,504 98,890
- -------------------------------------------------------------------------------
Net deferred tax asset . . . $137,682 $170,502 $169,640
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<FN>
(1)RECLASSIFIED TO REFLECT ACTUAL TAX RETURNS AS FILED.
</TABLE>
The company's valuation allowance at December 31, 1994, 1993 and 1992,
respectively, represents capital loss carryforwards of $3.8 million, $5.2
million and $6.3 million expiring in 1996 and other carryforward benefits of
$300,000, $600,000 and $900,000.
During 1994, the net deferred tax asset also increased $19.9 million due to
fair value adjustments recorded in equity under SFAS No. 115 and decreased by
$7.8 million as a result of the Loan America acquisition.
The Internal Revenue Code permits qualifying savings and loan institutions
to deduct an annual addition to the reserve for bad debts in determining taxable
income, which differs from the addition reported for financial reporting
purposes. In accordance with SFAS No. 109, a deferred tax liability is not
recognized for the difference that arose in tax years beginning before December
31, 1987. Retained earnings contain approximately $53 million representing such
bad debt reserves for which no deferred income taxes have been recorded at
qualifying affiliates.
- --------------------------------------------------------------------------------
O. EARNINGS PER COMMON SHARE
The weighted-average number of shares used in the computation of earnings
per common share is as follows:
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
PRIMARY SHARES
Average common shares
outstanding. . . . . . . . . . . . . . 97,262,496 97,182,222 95,205,415
Common shares assumed
outstanding to reflect
dilutive effect of:
Convertible preferred stock. . . . . . 34,468 40,205 60,426
Common stock options . . . . . . . . . 784,227 960,690 575,923
- -------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . 98,081,191 98,183,117 95,841,764
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Adjustments for preferred
stock dividends. . . . . . . . . . . . $18,200 $18,200 $18,200
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<CAPTION>
1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
FULLY DILUTED SHARES
Average common shares
outstanding. . . . . . . . . . . 97,262,496 97,182,222 95,205,415
Common shares assumed
outstanding to reflect
dilutive effect of:
Convertible preferred stock. . . 6,719,408 6,725,145 6,745,366
Common stock options . . . . . . 784,227 960,690 899,370
- -------------------------------------------------------------------------------
Total. . . . . . . . . . . . 104,766,131 104,868,057 102,850,151
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
54
<PAGE>
- --------------------------------------------------------------------------------
P. RISK MANAGEMENT INSTRUMENTS
The company 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, primarily interest rate swaps and
floors, to manage its interest rate sensitivity position. Please refer to the
ASSET-LIABILITY MANAGEMENT section of the MANAGEMENT DISCUSSION for a discussion
of the company's asset-liability management.
Interest rate swap transactions generally involve the exchange of fixed-
and floating-rate interest payment obligations and do not entail the exchange of
the underlying principal (notional) amounts.
The company's current interest rate swap portfolio has a notional amount of
$2.3 billion. Most of the company's swaps involve receipt of fixed cash flows in
exchange for variable (primarily LIBOR-based) cash flows. These swaps hedge
prime rate loans and create a net fixed-rate cash flow. These swaps were
executed to reduce the company's risk to flat or falling interest rates.
Approximately $1.0 billion of the interest rate swap portfolio is generic
fixed-term interest rate swaps which mature in early 1996 and on which the
company receives fixed payments. Another $1.0 billion of the swap portfolio is
index-principal instruments with expected maturities of approximately two and
one-half years. None of the company's swaps are leveraged.
In December 1994, the company purchased $2.0 billion of interest rate
floors to protect itself against potentially falling rates on adjustable-rate
mortgages during 1996 and 1997.
Barnett manages its credit exposure relative to its swap counterparties in
a manner consistent with the granting of credit. Any counterparty exposure is
generally measured by the market replacement value at any point in time. Barnett
utilizes bilateral collateral exchange agreements with swap counterparties in
order to minimize this credit exposure. Under these agreements, swap
counterparties are required to deliver collateral as the replacement value at
risk increases with changes in interest rates.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE INTEREST RATE
------------------------------------------------ AVERAGE
NOTIONAL REPLACEMENT RECEIVE PAY MATURITY
DECEMBER 31, 1994--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 $ 1.46 6.00% LIBOR 6.85% CMT 3.08
Generic swaps:
Receive fixed. . . . . . . . . . . 1,040 (34.36) 4.38 Fixed 5.56 LIBOR 1.14
Pay fixed. . . . . . . . . . . . . 167 4.30 6.07 LIBOR 6.71 Fixed 2.91
Index-principal swaps. . . . . . . . 1,010 (78.33) 4.64 Fixed 5.72 LIBOR 2.48(2)
Interest rate floors . . . . . . . . . . 2,000 2.76 6.00(3) LIBOR -- -- 3.00
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)Based upon spot rates at December 31, 1994.
(2)The maturity of index-principal swaps can extend to a maximum average of 2.59
years.
(3)The company receives interest equal to the amount by which LIBOR is less than
6.00%.
</TABLE>
- --------------------------------------------------------------------------------
Q. OFF-BALANCE-SHEET RISK AND CONTINGENT
LIABILITIES
The company originates financial instruments with off-balance-sheet risk in
the normal course of business, primarily to reduce the company's exposure to
interest rate changes as described in NOTE P and to meet the financing needs of
its customers. These financial instruments include commitments to extend credit,
letters of credit and assets sold with recourse and involve varying degrees of
credit risk in excess of the amounts reflected in the STATEMENTS OF FINANCIAL
CONDITION.
Commitments to extend credit are contractual obligations to lend to a
customer as long as all established contractual conditions are satisfied.
Commitments generally have fixed expiration dates or other termination clauses
and usually require payment of a fee.
Standby letters of credit and financial guarantees are conditional
commitments issued by the company to guarantee the performance of a customer to
a third party. Standby letters of credit and financial guarantees are generally
terminated through the performance of a specified condition or through the lapse
of time.
Commercial letters of credit are conditional commitments issued by the
company to guarantee payment by a customer to a third party upon proof of
shipment or delivery of goods as agreed. Commercial letters of credit are used
primarily for importing or exporting goods and are terminated when proper
payment is made by the customer.
The company originates and services residential mortgage loans to be sold
in the secondary market. Some of these residential mortgages are sold with
provisions for recourse. Residential mortgages sold with recourse are
conventional mortgages underwritten by the company in accordance with its usual
credit and collateral policies.
The company's exposure to credit loss in the event of non-performance by
the other party to commitments to extend credit, standby letters of credit,
commercial letters of credit and loans sold with recourse is represented by the
contractual or notional amount of these instruments. As these off-balance-sheet
financial instruments have essentially the same credit risk involved in
extending loans, the company generally uses the same credit and collateral
policies in making these commitments and conditional obligations as it does for
on-balance-sheet instruments. Since many of the commitments to extend credit,
standby letters
55
<PAGE>
of credit, commercial letters of credit and loans sold with recourse are
expected to expire without being drawn upon, the contractual or notional amounts
do not necessarily represent future cash requirements.
At December 31, 1994 and 1993, financial instruments having potential
credit risk in excess of that reported in the STATEMENTS OF FINANCIAL CONDITION
are as follows:
<TABLE>
<CAPTION>
CONTRACTUAL OR NOTIONAL AMOUNTS
DOLLARS IN THOUSANDS 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit . . . . . . . . . . . $13,414,879 $9,338,684
Standby letters of credit and
financial guarantees . . . . . . . . . . . . . . 486,210 550,597
Commercial letters of credit . . . . . . . . . . . 80,646 80,631
Loans sold with recourse . . . . . . . . . . . . . 109,836 149,703
Commitments to sell mortgage loans . . . . . . . . 22,415 --
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The company and its affiliates are parties to various legal and
administrative proceedings and claims. While any litigation contains an element
of uncertainty, management believes that the outcome of such proceedings or
claims pending or known to be threatened will not have a material adverse effect
on the company's consolidated financial position.
- --------------------------------------------------------------------------------
R. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair values are based upon quoted market prices, when available. In cases
where quoted market prices are not available, fair values are based on estimates
using present value or other techniques, all of which may be significantly
affected by the assumptions used. Therefore, these values may not be
substantiated by comparison to independent markets and are not intended to
reflect the proceeds that may be realizable from offering for sale at one time
the company's entire holdings of a particular financial instrument. Furthermore,
the company does not intend to dispose of a significant portion of its financial
instruments, and, thus, any aggregate unrealized gains or losses should not be
interpreted as a forecast of future earnings and cash flows.
In the company's opinion, the value of certain non-financial items, which
include trust and credit card relationships, core deposit intangibles and
mortgage servicing rights, is significantly in excess of their carrying amounts.
However, the company also believes their value is often only reliably
determinable in arms-length transactions and may vary significantly depending on
specific circumstances. For these reasons, no fair value estimates of these
non-financial instruments are disclosed. As a result, the following fair values
are not comprehensive and therefore do not reflect the underlying value of the
company.
The following methods and assumptions were used to estimate the fair value
of each material class of financial instruments:
CASH AND CASH EQUIVALENTS. The carrying amounts of cash and cash
equivalents reasonably approximate their fair value.
SECURITIES. Fair values are based on quoted market prices, if available. If
a quoted market price is not available, fair value is estimated using quoted
market prices for similar securities.
LOANS. For residential mortgage loans, fair value is estimated using quoted
market prices for sales of whole loans with similar characteristics, such as
repricing dates, product type, and size. For other homogeneous categories of
loans, fair value is estimated using quoted market prices for securities backed
by similar loans, adjusted for differences in loan characteristics.
The fair value of other types of loans, such as commercial, commercial real
estate, construction, and consumer loans for which quoted market prices are not
available, is estimated by discounting expected future cash flows using current
rates at which similar loans would be made to borrowers with similar credit
ratings and for the same remaining maturities. For non-accruing loans, fair
value is estimated by discounting expected future principal cash flows only.
TRADING DERIVATIVES. The company acts as an intermediary in arranging
interest rate swap transactions for customers. Net trading revenue is included
in other income and is not significant to the company's results of operations.
The notional amounts of those contracts totaled $211 million and $217 million at
December 31, 1994 and 1993, respectively. The nature of those instruments is the
same as described for risk management instruments.
RISK MANAGEMENT DERIVATIVES. The fair value of interest rate swaps is the
estimated amount that the company would pay to terminate the swap agreement at
the reporting date, taking into account current interest rates and the present
creditworthiness of the swap counterparties.
DEPOSIT LIABILITIES. The fair value of demand deposits and certain money
market deposits is the amount payable on demand at the reporting date. The fair
value of fixed-maturity certificates of deposit is estimated using rates
currently offered for deposits of similar remaining maturities.
SHORT-TERM BORROWINGS. The carrying amount of short-term borrowings, which
include federal funds purchased, securities sold under agreements to repurchase
and other short-term borrowings, reasonably approximate their fair value.
LONG-TERM DEBT. Rates currently available to the company for debt with
similar terms and remaining maturities are used to estimate the fair value of
existing debt.
COMMITMENTS TO EXTEND CREDIT AND OTHER OFF-BALANCE-SHEET FINANCIAL
INSTRUMENTS. The fair value of commitments to extend credit and letters of
credit is estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the
present creditworthiness of the counterparties. The fair value of other
off-balance-sheet financial instruments is based on the estimated cost to
terminate or otherwise settle obligations with the counterparties at the
reporting date.
56
<PAGE>
The estimated fair values of the company's financial instruments are as
follows:
<TABLE>
<CAPTION>
1994 1993
----------------------- -----------------------
CARRYING FAIR Carrying Fair
DECEMBER 31--DOLLARS IN THOUSANDS AMOUNT(1) VALUE(1) Amount(1) Value(1)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets
Cash and cash equivalents. . . . . . . . . . . . . . . $ 2,907,895 $ 2,907,895 $ 3,037,925 $ 3,037,925
Investment securities held to maturity . . . . . . . . 4,944,808 4,864,666 5,788,913 5,881,439
Investment securities available for sale . . . . . . . 2,738,600 2,738,600 2,050,902 2,050,902
Loans. . . . . . . . . . . . . . . . . . . . . . . . . 28,521,153 25,929,786
Less: Allowance for loan losses. . . . . . . . . . . . (501,447) (521,827)
Net loans. . . . . . . . . . . . . . . . . . . . 28,019,706 27,649,396 25,407,959 26,292,780
Trading derivatives(2) . . . . . . . . . . . . . . . . (253) 7,551 (331) 2,188
Risk management derivatives(2) . . . . . . . . . . . . 2,067 8,523 (1,725) 9,664
- ------------------------------------------------------------------------------------------------------------------------
Financial liabilities
Deposits:
Without stated maturities. . . . . . . . . . . . . . 23,575,460 23,575,460 23,464,001 23,464,001
With stated maturities . . . . . . . . . . . . . . . 11,533,171 11,434,800 9,169,765 9,291,369
Short-term borrowings. . . . . . . . . . . . . . . . . 1,653,904 1,653,904 1,832,011 1,832,011
Long-term debt (excluding capitalized leases). . . . . 763,255 769,433 666,907 727,144
Trading derivatives(2) . . . . . . . . . . . . . . . . -- 7,551 -- 2,188
Risk management derivatives(2) . . . . . . . . . . . . (1,587) 112,693 175 1,230
Commitments to extend credit(2). . . . . . . . . . . . 1,755 6,137 3,423 6,336
Other off-balance-sheet financial instruments(2) . . . 136 2,297 194 2,164
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<FN>
(1)THESE FAIR VALUE ESTIMATES AND THEIR RELATED CARRYING AMOUNTS DO NOT INCLUDE
THE VALUE OF NON-FINANCIAL INSTRUMENTS, SUCH AS FIXED ASSETS, THE VALUE OF
CUSTOMER RELATIONSHIPS AND THE VALUE OF RIGHTS TO RECEIVE FUTURE FEE INCOME.
AS A RESULT, THESE FAIR VALUES ARE NOT COMPREHENSIVE AND THEREFORE DO NOT
REFLECT THE UNDERLYING VALUE OF THE COMPANY.
(2)THE AMOUNTS SHOWN UNDER "CARRYING AMOUNT" REPRESENT ACCRUED OR DEFERRED
INCOME ARISING FROM THESE UNRECOGNIZED FINANCIAL INSTRUMENTS.
</TABLE>
- --------------------------------------------------------------------------------
S. REGULATORY RESTRICTIONS
The payment of dividends by affiliate banks is subject to certain
regulatory restrictions. The most common restriction requires regulatory
approval of any dividends paid which would cause total dividends for the most
recent three fiscal years to exceed net income for the same period.
Under this restriction, $361 million was available for payment of dividends
on December 31, 1994. Banking regulators have the authority to limit further the
dividends paid by the company's banking subsidiaries.
Banking affiliates are required by law to maintain non-interest bearing
deposits to meet reserve requirements. At December 31, 1994, these deposits
totaled $354 million.
57
<PAGE>
- --------------------------------------------------------------------------------
T. PARENT COMPANY FINANCIAL INFORMATION
CONDENSED FINANCIAL INFORMATION FOR BARNETT BANKS, INC. (PARENT COMPANY 0NLY)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31--DOLLARS IN THOUSANDS 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,931 $ 3,068
Investment securities available for sale (amortized cost of $19,248 in 1994 and
$203,592 in 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,246 205,922
Investments in and amounts due from affiliates:
Banks, at equity in net assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,940,812 2,753,153
Non-banking affiliates, at equity in net assets . . . . . . . . . . . . . . . . . . . . . . . . 215,248 124,404
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . 198,000 50,000
Amounts due from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164,441 147,288
Cost in excess of fair value of net assets acquired . . . . . . . . . . . . . . . . . . . . . . 102,105 108,948
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159,666 164,564
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206,761 206,367
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,010,210 $3,763,714
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,199 $ 5,457
Amounts due to non-banking affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 50,000
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,500 167,438
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691,328 666,728
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 876,027 889,623
- ----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,134,183 2,874,091
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . $4,010,210 $3,763,714
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31--DOLLARS IN THOUSANDS 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Income from affiliates:
Dividends ($462,406 in 1994, $299,835 in 1993 and $0 in 1992 from banks). . . . . . $462,465 $299,835 $ 8,745
Management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182,346 128,634 109,289
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,168 31,400 30,236
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,682 4,373 6,927
- ----------------------------------------------------------------------------------------------------------------------------------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673,661 464,242 155,197
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,050 90,827 71,034
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,071 60,185 63,700
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,864 82,490 87,380
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277,985 233,502 222,114
- ----------------------------------------------------------------------------------------------------------------------------------
EARNINGS
Income (loss) before income taxes and equity in undistributed income of affiliates . . 395,676 230,740 (66,917)
Reduction of consolidated income taxes resulting from parent company operating loss. . 22,429 23,317 20,090
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before equity in undistributed income of affiliates. . . . . . . . . . . 418,105 254,057 (46,827)
Equity in undistributed income of affiliates . . . . . . . . . . . . . . . . . . . . . 69,866 166,937 253,228
- ----------------------------------------------------------------------------------------------------------------------------------
Income before accounting changes . . . . . . . . . . . . . . . . . . . . . . . . 487,971 420,994 206,401
Cumulative effect of changing to different accounting methods, net of taxes. . . . . . -- -- 1,255
- ----------------------------------------------------------------------------------------------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $487,971 $420,994 $207,656
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31--DOLLARS IN THOUSANDS 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 487,971 $ 420,994 $ 207,656
Adjustments to reconcile net income to net cash provided by operating
activities:
Increase in undistributed income of affiliates. . . . . . . . . . . . . . . . . . . (69,866) (166,937) (253,228)
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,152 10,689 6,713
Amortization of intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,621 20,558 22,205
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . (22,429) 20,122 (3,402)
Employee benefits funded by equity (parent company and affiliates). . . . . . . . . 28,682 20,938 23,392
Decrease (increase) in other assets . . . . . . . . . . . . . . . . . . . . . . . . 17,760 (79,007) (41,606)
Increase in other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,062 58,742 31,965
Cumulative effect of changing to different accounting methods . . . . . . . . . . . -- -- (1,255)
Loss on sale of investment securities available for sale. . . . . . . . . . . . . . 4,559 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities . . . . . . . . . . . . . . . . 481,512 306,099 (7,560)
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . (151,466) (217,352) (227,577)
Proceeds from sales of investment securities . . . . . . . . . . . . . . . . . . . . . 95,320 -- 49,950
Proceeds from maturities of investment securities. . . . . . . . . . . . . . . . . . . 212,657 37,080 272,250
Net increase in advances to affiliates . . . . . . . . . . . . . . . . . . . . . . . . (17,153) (36,210) (9,750)
Net capital returns from (contributions to) affiliates . . . . . . . . . . . . . . . . (212,195) 144,267 (92,655)
Purchases of premises and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . (13,240) (89,071) (90,378)
Proceeds from sales of premises and equipment. . . . . . . . . . . . . . . . . . . . . 2,877 1,040 13,439
Net business dispositions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 24,240 --
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities. . . . . . . . . . . . . . . . . . . . . . (83,200) (136,006) (84,721)
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings . . . . . . . . . . . . . . . . . . . 742 (35,696) 30,121
(Repayments) proceeds of advances from non-banking affiliate . . . . . . . . . . . . . (50,000) 50,000 --
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . 25,000 150,000 100,000
Principal repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . (400) (165,700) (106,400)
Net (repurchase) issuance of common and preferred stock. . . . . . . . . . . . . . . . (50,236) 24,988 132,977
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (175,555) (152,654) (121,638)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities . . . . . . . . . . . . . . . . (250,449) (129,062) 35,060
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . 147,863 41,031 (57,221)
Cash and cash equivalents, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . 53,068 12,037 69,258
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, December 31 . . . . . . . . . . . . . . . . . . . . . . . . $ 200,931 $ 53,068 $ 12,037
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992, INTEREST OF $59 MILLION,
$60 MILLION AND $64 MILLION WAS PAID, RESPECTIVELY.
</TABLE>
59
<PAGE>
[Photo]
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
SEATED LEFT TO RIGHT:
JOHN A. WILLIAMS
Chairman of Post Properties, Inc., Atlanta, Georgia.
CARTER H. GOLEMBE
President of CHG Consulting, Inc., Delray Beach, Florida;
Chairman Emeritus of The Secura Group, Washington, D.C.
JACK B. CRITCHFIELD
Chairman and Chief Executive Officer of Florida Progress Corporation,
St. Petersburg, Florida; President Emeritus of Rollins College.
FREDERICK H. SCHULTZ
Owner of Schultz Investments, Jacksonville, Florida;
former Vice Chairman of the Board of Governors of the
Federal Reserve System.
JEAN MCARTHUR DAVIS
Chairman of McArthur Farms, Inc. and McArthur Management
Company, Miami, Florida.
STANDING LEFT TO RIGHT:
JAMES L. BROADHEAD
Chairman and Chief Executive Officer of FPL Group, Inc.,
Juno Beach, Florida.
ARMANDO M. CODINA
Chairman and Chief Executive Officer of the
Codina Group, Inc., Coral Gables, Florida.
RITA BORNSTEIN
President of Rollins College, Winter Park, Florida.
ALLEN L. LASTINGER, JR.
President and Chief Operating Officer of Barnett Banks, Inc.,
Jacksonville, Florida.
CHARLES E. RICE
Chairman and Chief Executive Officer of Barnett Banks, Inc.,
Jacksonville, Florida.
TOM L. RANKIN
Chairman, President and Chief Executive Officer of
Lykes Bros. Inc., Tampa, Florida.
WALTER H. ALFORD
Executive Vice President and General Counsel of
BellSouth Corporation, Atlanta, Georgia.
ALVIN R. CARPENTER
President and Chief Executive Officer of CSX Transportation, Inc.,
Jacksonville, Florida.
MARSHALL M. CRISER
Chairman of Mahoney Adams & Criser, P.A., Jacksonville, Florida;
President Emeritus of the University of Florida.
STEWART TURLEY
Chairman and Chief Executive Officer of Eckerd Corporation,
Largo, Florida.
CLARENCE V. MCKEE
Chairman, President and Chief Executive Officer of McKee
Communications, Inc., Tampa, Florida.
WE DEEPLY REGRET THE PASSING ON JANUARY 13, 1995 OF
JEAN MCARTHUR DAVIS, A BARNETT DIRECTOR SINCE 1984.
60
<PAGE>
- --------------------------------------------------------------------------------
OFFICERS
[Photo]
MANAGEMENT EXECUTIVE COMMITTEE
SEATED LEFT TO RIGHT:
CHARLES E. RICE
Chairman and Chief Executive Officer
RICHARD C. BREWER, JR.
Chief Credit Policy Executive
CHARLES W. NEWMAN
Chief Financial Officer
JUDY S. BEAUBOUEF
Chief Legal Executive
STANDING LEFT TO RIGHT:
HINTON F. NOBLES, JR.
Executive Vice President
ALLEN L. LASTINGER, JR.
President and Chief Operating Officer
- --------------------------------------------------------------------------------
MANAGEMENT OPERATING COMMITTEE
ALLEN L. LASTINGER, JR.*
RICHARD A. ANDERSON
Regional Banking Executive/Central Region
SUSAN S. BLASER
Chief Marketing Executive
LEE H. CHAPLIN, JR.
Regional Banking Executive/North Region
DOUGLAS K. FREEMAN
Chief Corporate Banking Executive
PAUL T. KERINS
Chief Human Resources Executive
JAMES F. MONDELLO
Regional Banking Executive/South Region
JONATHAN J. PALMER
Chief Retail Banking and Technology Executive
RICHARD J. REDICK
Director of Finance
*CHAIRMAN, MANAGEMENT OPERATING COMMITTEE
- --------------------------------------------------------------------------------
PATRICK J. MCCANN
Chief Accounting Officer and Controller
- --------------------------------------------------------------------------------
61
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORY OF AFFILIATES
- --------------------------------------------------------------------------------
FLORIDA
BARNETT BANK OF ALACHUA COUNTY, N.A.
2627 N.W. 43rd Street
Gainesville, FL 32606
CHIEF EXECUTIVE: Mark D. Walker
OFFICES: 8 ASSETS: $475 million
BARNETT BANK OF BROWARD COUNTY, N.A.
1 E. Broward Boulevard
Ft. Lauderdale, FL 33301
CHIEF EXECUTIVE: M. Alex Crotzer
OFFICES: 49 ASSETS: $4.8 billion
BARNETT BANK OF CENTRAL FLORIDA, N.A.
390 N. Orange Avenue
Orlando, FL 32802-3200
CHIEF EXECUTIVE: Thomas H. Yochum
OFFICES: 59 ASSETS: $3.4 billion
BARNETT BANK OF HIGHLANDS COUNTY
231 S. Ridgewood Drive
Sebring, FL 33870
CHIEF EXECUTIVE: James L. Ridley
OFFICES: 6 ASSETS: $421 million
BARNETT BANK OF JACKSONVILLE, N.A.
50 N. Laura Street
Jacksonville, FL 32202
CHIEF EXECUTIVE: Andrew B. Cheney
OFFICES: 34 ASSETS: $3.0 billion
BARNETT BANK OF THE KEYS
1010 Kennedy Drive
Key West, FL 33040
CHIEF EXECUTIVE: Harry L. Woolley
OFFICES: 8 ASSETS: $331 million
BARNETT BANK OF LAKE
COUNTY, N.A.
100 N. Bay Street
Eustis, FL 32727
CHIEF EXECUTIVE: Don D. Roberts
OFFICES: 10 ASSETS: $417 million
BARNETT BANK OF LAKE OKEECHOBEE
205 N. Parrott Avenue
Okeechobee, FL 34972
CHIEF EXECUTIVE: Richard D. Coleman
OFFICES: 5 ASSETS: $191 million
BARNETT BANK OF LEE COUNTY, N.A.
2000 Main Street
Fort Myers, FL 33901
CHIEF EXECUTIVE: Allan L. McLeod, Jr.
OFFICES: 20 ASSETS: $935 million
BARNETT BANK OF MANATEE COUNTY, N.A.
1001 Third Avenue W.
Bradenton, FL 34205
CHIEF EXECUTIVE: Kenneth W. Oden
OFFICES: 16 ASSETS: $969 million
BARNETT BANK OF MARION COUNTY, N.A.
35 S.E. First Avenue
Ocala, FL 34470
CHIEF EXECUTIVE: Richard L. Andrews
OFFICES: 13 ASSETS: $601 million
BARNETT BANK OF MARTIN COUNTY, N.A.
900 S. Federal Highway
Stuart, FL 34994
CHIEF EXECUTIVE: Leo Hill
OFFICES: 8 ASSETS: $372 million
BARNETT BANK OF NAPLES
796 Fifth Avenue S.
Naples, FL 33940
CHIEF EXECUTIVE: James E. Loskill
OFFICES: 14 ASSETS: $853 million
BARNETT BANK OF NASSAU COUNTY
520 Centre Street
Fernandina Beach, FL 32034
CHIEF EXECUTIVE: Dian S. Williams
OFFICES: 3 ASSETS: $101 million
BARNETT BANK OF NORTH CENTRAL FLORIDA
150 W. Madison Street
Lake City, FL 32055
CHIEF EXECUTIVE: Joe R. Williams
OFFICES: 6 ASSETS: $260 million
BARNETT BANK OF NORTHWEST FLORIDA
189 Eglin Parkway, N.E.
Ft. Walton Beach, FL 32548
CHIEF EXECUTIVE: Freddy G. Carr
OFFICES: 7 ASSETS: $252 million
BARNETT BANK OF PALM BEACH COUNTY
625 N. Flagler Drive
West Palm Beach, FL 33401
CHIEF EXECUTIVE: R. Michael Strickland
OFFICES: 45 ASSETS: $3.3 billion
BARNETT BANK OF PASCO COUNTY
10220 U.S. 19
Port Richey, FL 34668
CHIEF EXECUTIVE: Kendall L. Spencer
OFFICES: 20 ASSETS: $1.2 billion
BARNETT BANK OF PINELLAS COUNTY
200 Central Avenue
St. Petersburg, FL 33701
CHIEF EXECUTIVE: Sam A. Davis, II
OFFICES: 54 ASSETS: $3.6 billion
BARNETT BANK OF POLK COUNTY
331 S. Florida Avenue
Lakeland, FL 33801
CHIEF EXECUTIVE: Bob Barbree
OFFICES: 21 ASSETS: $946 million
BARNETT BANK OF SOUTH FLORIDA, N.A.
701 Brickell Avenue
Miami, FL 33131
CHIEF EXECUTIVE: William R. Myers
OFFICES: 46 ASSETS: $5.1 billion
BARNETT BANK OF SOUTHWEST FLORIDA
240 S. Pineapple Avenue
Sarasota, FL 34236
CHIEF EXECUTIVE: Rebecca S. Allen
OFFICES: 26 ASSETS: $1.9 billion
BARNETT BANK OF THE ST. JOHNS
2155 Old Moultrie Road
St. Augustine, FL 32086
CHIEF EXECUTIVE: William F. Young
OFFICES: 10 ASSETS: $457 million
BARNETT BANK OF THE SUNCOAST, N.A.
9223 Cortez Boulevard
Brooksville, FL 34613
CHIEF EXECUTIVE: H.M. Shirley, Jr.
OFFICES: 14 ASSETS: $768 million
BARNETT BANK OF TALLAHASSEE
315 S. Calhoun Street
Tallahassee, FL 32301
CHIEF EXECUTIVE: Ken Stafford
OFFICES: 10 ASSETS: $563 million
BARNETT BANK OF TAMPA
101 E. Kennedy Boulevard
Tampa, FL 33602
CHIEF EXECUTIVE: James W. Ivey
OFFICES: 40 ASSETS: $2.8 billion
62
<PAGE>
- --------------------------------------------------------------------------------
BARNETT BANK OF THE TREASURE COAST
900 E. Prima Vista Boulevard
Port St. Lucie, FL 34952
CHIEF EXECUTIVE: Jeff Atwater
OFFICES: 13 ASSETS: $639 million
BARNETT BANK OF VOLUSIA COUNTY
230 N. Woodland Boulevard
DeLand, FL 32720
CHIEF EXECUTIVE: Lowell E. Renfroe
OFFICES: 29 ASSETS: $1.5 billion
BARNETT BANK OF WEST FLORIDA
100 W. Garden Street
Pensacola, FL 32501
CHIEF EXECUTIVE: Eric Nickelsen
OFFICES: 16 ASSETS: $748 million
- --------------------------------------------------------------------------------
GEORGIA
BARNETT BANK OF SOUTHEAST GEORGIA, N.A.
700 Glouscester Street
Brunswick, GA 31520
CHIEF EXECUTIVE: James H. Hunt
OFFICES: 8 ASSETS: $204 million
BARNETT BANK OF SOUTHWEST GEORGIA
1234 First Avenue
Columbus, GA 31901
CHIEF EXECUTIVE: C. Michael Collins
OFFICES: 10 ASSETS: $353 million
[Map]
FPO
- --------------------------------------------------------------------------------
BARNETT BANK LOCATIONS
DECEMBER 31, 1994
234 Cities
53 Counties
628 Offices (610 Florida, 18 Georgia)
- --------------------------------------------------------------------------------
COUNTY DEPOSIT MARKET SHARE
/ / 48 counties where Barnett is first, second or third
/ / 5 counties where Barnett is emerging
- --------------------------------------------------------------------------------
FLORIDA BANK MARKET SHARE
INDIVIDUAL, PARTNERSHIP AND CORPORATE DEPOSITS
September 30, 1994 . . . . . . 26.6%
December 31, 1993. . . . . . . 26.2
December 31, 1992. . . . . . . 27.0
December 31, 1991. . . . . . . 23.4
December 31, 1990. . . . . . . 24.1
December 31, 1989. . . . . . . 22.1
- --------------------------------------------------------------------------------
NON-BANKING
BARNETT BANKS INSURANCE, INC.
9000 Southside Boulevard
Jacksonville, FL 32256
CHIEF EXECUTIVE: James K. Slater
BARNETT BANKS TRUST COMPANY, N.A.
9000 Southside Boulevard
Jacksonville, FL 32256
CHIEF EXECUTIVE: Michael C. Baker
OFFICES: 35
BARNETT CARD SERVICES CORPORATION
9000 Southside Boulevard
Jacksonville, FL 32256
CHIEF EXECUTIVE: Cynthia A. Graham
BARNETT MERCHANT SERVICES CORPORATION
9000 Southside Boulevard
Jacksonville, FL 32256
CHIEF EXECUTIVE: Lyn Miles
BARNETT MORTGAGE COMPANY
9000 Southside Boulevard
Jacksonville, FL 32256
CHIEF EXECUTIVE: Francis G. Seabrook
LOAN AMERICA FINANCIAL CORPORATION
8100 Oak Lane
Miami Lakes, FL 33016
CHIEF EXECUTIVE: John Kuczwanski
OFFICES: 8
BARNETT RECOVERY CORPORATION
9000 Southside Boulevard
Jacksonville, FL 32256
CHIEF EXECUTIVE: Robert K. Bieri
BARNETT SECURITIES, INC.
9000 Southside Boulevard
Jacksonville, FL 32256
CHIEF EXECUTIVE: David M. Strickland
OFFICES: 40
BARNETT TECHNOLOGIES, INC.
9000 Southside Boulevard
Jacksonville, FL 32256
CHIEF EXECUTIVE: Jonathan J. Palmer
EQUICREDIT CORPORATION
(ACQUIRED JANUARY 1995)
1801 Art Museum Drive
Jacksonville, FL 32207
CHIEF EXECUTIVE: John T. Hayt
OFFICES: 94
63
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
CORPORATE OFFICES
The corporate offices of Barnett Banks, Inc. are at:
50 North Laura Street
Jacksonville, FL 32202-3638
Mailing address:
P.O. Box 40789
Jacksonville, FL 32203-0789
Telephone: 904/791-7720
- --------------------------------------------------------------------------------
SECURITIES MARKETS
Shares of Barnett Banks, Inc. are listed on the New York Stock Exchange
(ticker symbols: BBI, BBIprA, BBIprC). The listing found in most newspapers is
"Barnett."
Certain debt securities are also listed on the New York Stock Exchange.
Barnett's debt ratings are:
SENIOR SUBORDINATED
DEBT DEBT
- --------------------------------------------------------------------------------
Moody's............. A2 A3
Standard & Poor's... A- BBB+
Duff & Phelps....... A A-
- --------------------------------------------------------------------------------
SHAREHOLDER ASSISTANCE
Shareholders requiring a change of address, records or information about lost
certificates, dividend checks or dividend reinvestment should contact:
First Chicago Trust, Agent
P.O. Box 2500
Jersey City, NJ 07303-2500
Telephone: 1-800-328-5822
- --------------------------------------------------------------------------------
SHAREHOLDER DATA
There were 33,268 shareholders of record of Barnett common stock as of
December 31, 1994. In addition, approximately 12,800 Barnett employees own stock
through company-sponsored plans.
- --------------------------------------------------------------------------------
INFORMATION
Analysts, investors and others seeking financial data should contact GREGORY
M. DELANEY, Director of Investor Relations: 904/791-7254
Media representatives and others seeking general information should contact
ROBERT L. STICKLER, Manager of External Communications: 904/791-7668
- --------------------------------------------------------------------------------
PUBLICATIONS
For printed material (annual and quarterly reports, proxy statements, 10-K
and 10-Q reports), contact Corporate Communications: 904/791-7668
- --------------------------------------------------------------------------------
DIRECT PURCHASE PLAN
Barnett's SHAREHOLDER INVESTMENT PLAN is a convenient and cost-effective way
to acquire Barnett common stock.
/ / The initial minimum investment is $250.
/ / No brokerage commissions are charged on purchases.
/ / Automatic monthly purchases can be made by deduction from a checking or
savings account.
/ / Optional cash purchases of additional common stock can be made.
/ / Participation is voluntary, and you may withdraw at any time.
/ / Dividends can be automatically reinvested.
If you would like more information on this plan, please contact First
Chicago Trust, Agent.
- --------------------------------------------------------------------------------
ANNUAL MEETING
Barnett's annual meeting of shareholders will be on Wednesday,
April 19, 1995, at 10 a.m. in Building 500 of the Barnett Office Park,
9000 Southside Blvd., Jacksonville, FL.
- --------------------------------------------------------------------------------
FIVE-YEAR DIVIDEND HISTORY
[Chart]
'90 '91 '92 '93 '94
$1.29 $1.32 $1.32 $1.41 $1.59
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1994 QUARTERLY STOCK PRICES
[Chart]
1Q 2Q 3Q 4Q
High $45.88 $48.13 $47.63 $43.50
Low $39.75 $43.25 $43.25 $37.63
Close $44.13 $43.75 $44.25 $38.50
- --------------------------------------------------------------------------------
64
<PAGE>
SHAREHOLDER SERVICES
Please mail me information about how to:
/ / Subscribe to the DIRECT PURCHASE Plan
/ / Consolidate duplicate stock accounts
/ / Eliminate duplicate mailings of annuals and quarterlies
/ / Please change my mailing address as follows:
Name
- --------------------------------------------------------------------------------
Street
- --------------------------------------------------------------------------------
City State Zip
- --------------------------------------------------------------------------------
Taxpayer ID No.
- --------------------------------------------------------------------------------
Daytime Phone No. ( )
- --------------------------------------------------------------------------------
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 500 EDISON, NJ
POSTAGE WILL BE PAID BY ADDRESSEE
BARNETT BANKS, INC.
C/O FIRST CHICAGO TRUST CO.
P.O. BOX 8075
EDISON, NJ 08818-9045
<PAGE>
- --------------------------------------------------------------------------------
FORM 10-K
To obtain a copy of Barnett's Form 10-K, call Corporate Communications at
904-791-7668 or write Corporate Communications, P.O. Box 40789, Jacksonville,
Florida 32203-0789.
- --------------------------------------------------------------------------------
CREDITS
Annual reports for Barnett Banks, Inc. are produced by the company's
Financial Reporting Committee:
JENNIFER A. BAILEY
External Communications Officer
STEPHEN J. BOYLE
Manager/Financial Reporting
CATHERINE C. COSBY
Senior Counsel/Corporate Secretary
TERESA I. CURRY
Manager/Corporate Accounting
GREGORY M. DELANEY
Director/Investor Relations
NANCY J. KESLER
Director/Regulatory Relations
PATRICK J. MCCANN
Controller
DAVID R. PALOMBI
Director/Corporate Communications
ROBERT L. STICKLER
Manager/External Communications
- --------------------------------------------------------------------------------
Design and Photography:
MCELWEE & MCELWEE, INC.
Map Illustration:
KURTIS LOFTUS
Printing:
CENTRAL FLORIDA PRESS
Barnett is a registered trademark of Barnett Banks, Inc. Visa is a registered
trademark.
63
<PAGE>
EXHIBIT 21
BARNETT BANKS, INC.
SUBSIDIARIES OF THE REGISTRANT
IN ADDITION TO PAGES 62 AND 63 OF THE
1994 ANNUAL REPORT TO SHAREHOLDERS
DECEMBER 31, 1994
Name State of Incorporation
---- ----------------------
Barnett Merger Corporation Florida
<PAGE>
EXHIBIT 23(A)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into the Registrant's
previously filed Registration Statement Nos. 2-83506, 33-5434, 33-32459,
33-39535, 33-39536, 33-41184, 33-44344, 33-51365, and 33-59246.
ARTHUR ANDERSEN
Jacksonville, Florida
February 3, 1995
<PAGE>
EXHIBIT 23(B)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-3 and S-8 of Barnett Banks, Inc., of our report dated
January 14, 1993 appearing in this Form 10-K.
PRICE WATERHOUSE LLP
Orlando, Florida
February 3, 1995
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Walter H. Alford
--------------------------------
Walter H. Alford
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, her true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for her and in her name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or their substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Rita Bornstein
--------------------------------
Rita Bornstein
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ James L. Broadhead
--------------------------------
James L. Broadhead
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Alvin R. Carpenter
--------------------------------
Alvin R. Carpenter
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Marshall M. Criser
--------------------------------
Marshall M. Criser
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Jack B. Critchfield
--------------------------------
Jack B. Critchfield
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Carter H. Golembe
--------------------------------
Carter H. Golembe
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Clarence V. McKee
--------------------------------
Clarence V. McKee
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Tom L. Rankin
--------------------------------
Tom L. Rankin
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Frederick H. Schultz
--------------------------------
Frederick H. Schultz
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Stewart Turley
--------------------------------
Stewart Turley
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ John A. Williams
--------------------------------
John A. Williams
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Charles W. Newman
--------------------------------
Charles W. Newman
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Charles E. Rice
--------------------------------
Charles E. Rice
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 18th day of January, 1995.
/s/ Allen L. Lastinger, Jr.
--------------------------------
Allen L. Lastinger, Jr.
(SEAL)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 2,873
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 35
<TRADING-ASSETS> 1
<INVESTMENTS-HELD-FOR-SALE> 2,739
<INVESTMENTS-CARRYING> 4,945
<INVESTMENTS-MARKET> 4,865
<LOANS> 28,521
<ALLOWANCE> 501
<TOTAL-ASSETS> 41,278
<DEPOSITS> 35,109
<SHORT-TERM> 1,654
<LIABILITIES-OTHER> 605
<LONG-TERM> 777
<COMMON> 193
0
215
<OTHER-SE> 2,725
<TOTAL-LIABILITIES-AND-EQUITY> 41,278
<INTEREST-LOAN> 2,164
<INTEREST-INVEST> 387
<INTEREST-OTHER> 3
<INTEREST-TOTAL> 2,555
<INTEREST-DEPOSIT> 762
<INTEREST-EXPENSE> 921
<INTEREST-INCOME-NET> 1,633
<LOAN-LOSSES> 74
<SECURITIES-GAINS> (13)
<EXPENSE-OTHER> 1,364
<INCOME-PRETAX> 738
<INCOME-PRE-EXTRAORDINARY> 488
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 488
<EPS-PRIMARY> 4.79
<EPS-DILUTED> 4.66
<YIELD-ACTUAL> 4.87
<LOANS-NON> 198
<LOANS-PAST> 39
<LOANS-TROUBLED> 2
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 522
<CHARGE-OFFS> 148
<RECOVERIES> 56
<ALLOWANCE-CLOSE> 501
<ALLOWANCE-DOMESTIC> 501
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 102
</TABLE>
<PAGE>
EXHIBIT 99
REPORT OF INDEPENDENT CERTIFIED ACCOUNTANTS
TO THE SHAREHOLDERS AND
BOARD OF DIRECTORS OF
BARNETT BANKS, INC.
In our opinion, the consolidated statements of income, of cash flows and of
changes in stockholders' equity as of and for the year ended December 31, 1992
(appearing on pages 43 through 59 of the Barnett Banks, Inc., 1994 Annual
Report to Shareholders which has been incorporated by reference in this
Form 10-K Annual Report) present fairly, in all material respects, the results
of operations and cash flows of Barnett Banks, Inc. and its subsidiaries as of
and for the year ended December 31, 1992 in conformity with generally accepted
accounting principals. These financial statements are the responsibility of
Barnett's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above. We have not audited the
consolidated financial statements of Barnett Banks, Inc. for any period
subsequent to December 31, 1992.
As discussed in Note C to the financial statement, Barnett Banks, Inc. changed
its method of accounting for income taxes and post-retirement benefits in 1992.
PRICE WATERHOUSE
Orlando, Florida
January 14, 1993
