<PAGE>
[LOGO]
THIRD QUARTER
1996
FORM 10-Q
BARNETT BANKS, INC.
[PHOTO]
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period Commission file number 1-7901.
ended September 30, 1996
BARNETT BANKS, INC.
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(Exact name of registrant as specified in its charter)
Florida 59-0560515
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(State of incorporation) (I.R.S. Employer
Identification No.)
50 North Laura Street
Jacksonville, Florida 32202
--------------------------------------
(Address of Principal Executive Offices)
(904) 791-7720
-------------------------------------------------
(Registrants telephone number, Including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
----- -----
Barnett Banks, Inc. Common Stock - September 30, 1996:
191,124,776 shares outstanding
<PAGE>
BARNETT BANKS, INC.
FINANCIAL REVIEW AND FORM 10-Q
TABLE OF CONTENTS
PART I-FINANCIAL INFORMATION
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Consolidated Financial Highlights ......................................... 3
Management Discussion (Item 2) ............................................ 4
Quarterly Average Balances, Yields and Rates ............................ 12
Financial Statements (Item 1):
Statements of Financial Condition ....................................... 14
Statements of Income .................................................... 15
Statements of Changes in Shareholders' Equity ........................... 16
Statements of Cash Flows ................................................ 17
Notes to Financial Statements ........................................... 18
PART II-OTHER INFORMATION
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EXHIBITS AND REPORTS ON FORM 8-K (ITEM 6)
Exhibit 11, "Statement Re: computation of per share earnings," is included
in the Notes to Financial Statements on page 19 of this report.
BARNETT BANKS, INC. AND SUBSIDIARIES
FORM 10-Q, SEPTEMBER 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BARNETT BANKS, INC.
Dated: November 8, 1996 /s/ Charles W. Newman
------------------------------------
Charles W. Newman
Chief Financial Officer
Dated: November 8, 1996
/s/ Patrick J. McCann
------------------------------------
Patrick J. McCann
Controller
2
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BARNETT BANKS, INC.
<PAGE>
CONSOLIDATED FINANCIAL HIGHLIGHTS
Restated for 2-for-1 stock split in September 1996
<TABLE>
<CAPTION>
Three Months Nine Months
--------------------------- --------------------------
For the Periods Ended September 30--
Dollars in Millions Except Per Share Data 1996 1995 Change 1996 1995 Change
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<S> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD
Net interest income (taxable-equivalent)..................... $469.0 $446.9 5% $1,424.6 $1,312.9 9%
Provision for loan losses.................................... 44.9 34.2 31 126.0 85.3 48
Non-interest income (excluding securities transactions)...... 194.8 182.6 7 585.3 528.5 11
Securities transactions...................................... -- .1 -- 19.3 .1 --
Non-interest expense (excluding SAIF assessment)............. 384.4 379.3 1 1,192.7 1,124.7 6
SAIF assessment.............................................. 24.5 -- -- 24.5 -- --
Net income (excluding SAIF assessment)....................... 142.3 134.1 6 430.0 395.0 9
Net income................................................... 127.0 134.1 (5) 414.7 395.0 5
==============================================================================================================================
PER COMMON SHARE
Fully diluted net income (excluding SAIF assessment)......... $ .73 $ .65 12% $ 2.18 $ 1.89 15%
Fully diluted net income..................................... .65 .65 -- 2.10 1.89 11
Dividends declared........................................... .27 .24 13 .78 .68 15
Book value(1)................................................ 17.72 16.87 5 17.72 16.87 5
Stock price:
High...................................................... 34.06 29.44 16 34.06 29.44 16
Low....................................................... 29.25 25.63 14 27.75 19.38 43
Close..................................................... 33.75 28.31 19 33.75 28.31 19
==============================================================================================================================
KEY RATIOS
Return on assets(2).......................................... 1.40% 1.30% 8% 1.40% 1.28% 9%
Return on equity(2).......................................... 17.19 16.02 7 17.33 15.94 9
Net yield on earning assets.................................. 5.22 4.90 7 5.27 4.83 9
Overhead ratio(2)............................................ 57.91 60.25 (4) 59.34 61.08 (3)
Shareholders' equity to total assets(1)...................... 8.21 8.27 (1) 8.21 8.27 (1)
Leverage ratio............................................... 6.84 6.35 8 6.84 6.35 8
Total risk-based capital ratio............................... 11.98 12.02 -- 11.98 12.02 --
==============================================================================================================================
AVERAGE BALANCES
Assets....................................................... $40,651 $41,136 (1)% $40,967 $41,076 --
Deposits..................................................... 32,673 33,477 (2) 33,332 33,704 (1)%
Loans, net of unearned income................................ 30,547 30,191 1 30,419 29,555 3
Earning assets............................................... 35,843 36,364 (1) 36,111 36,323 (1)
Shareholders' equity......................................... 3,311 3,347 (1) 3,308 3,304 --
Fully diluted shares (thousands)............................. 194,892 206,937 (6) 197,355 209,222 (6)
==============================================================================================================================
PERIOD-END
Assets........................................................................................... $41,271 $41,175 --
Deposits......................................................................................... 33,238 33,248 --
Loans, net of unearned income.................................................................... 30,638 30,469 1%
Long-term debt................................................................................... 1,227 1,151 7
Preferred stock.................................................................................. -- 213 --
Shareholders' equity............................................................................. 3,323 3,328 --
Common shares (thousands)........................................................................ 191,125 189,193 1
==============================================================================================================================
</TABLE>
(1) COMPUTED ON EQUITY BEFORE DEDUCTION OF THE EMPLOYEE STOCK OWNERSHIP PLAN
OBLIGATION.
(2) EXCLUDING $24.5 MILLION PRE-TAX SAIF ASSESSMENT DURING THE THIRD QUARTER
OF 1996.
3
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
TABLE 1 SELECTED QUARTERLY DATA
1996 1995
----------------------- ---------------------------------
Dollars in Millions Except Per Share Data--Taxable-Equivalent THIRD Second First Fourth Third Second First
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<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income ........................................... $469.0 $480.3 $475.3 $459.2 $446.9 $435.6 $430.5
Provision for loan losses ..................................... 44.9 39.4 41.6 37.2 34.2 26.8 24.3
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Net interest income after loan loss provision ................. 424.1 440.9 433.7 422.0 412.7 408.8 406.2
Non-interest income (excluding
securities transactions) ................................. 194.8 193.9 196.6 185.5 182.6 183.1 162.8
Securities transactions ....................................... -- .3 19.0 4.9 .1 -- --
Non-interest expense (excluding SAIF assessment) .............. 384.4 400.7 407.6 393.9 379.3 381.9 363.5
SAIF assessment ............................................... 24.5 -- -- -- -- -- --
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Income before income taxes .................................... 210.0 234.4 241.7 218.5 216.1 210.0 205.5
Income tax provision .......................................... 78.8 90.4 88.6 75.0 75.4 69.4 66.5
Taxable-equivalent adjustment ................................. 4.2 4.5 4.9 5.2 6.6 8.4 10.3
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Net income .......................................... $127.0 $139.5 $148.2 $138.3 $134.1 $132.2 $128.7
================================================================================================================================
Primary net income per common share ........................... $.65 $.71 $.76 $.69 $.67 $.65 $.64
Fully diluted net income per common share .65 .71 .74 .67 .65 .63 .61
================================================================================================================================
</TABLE>
SUMMARY
ON SEPTEMBER 6, BARNETT COMPLETED A 2-FOR-1 STOCK SPLIT. ALL HISTORICAL
DATA USED IN THIS REPORT HAS BEEN RESTATED TO REFLECT THE SPLIT.
Barnett reported third quarter earnings of $127.0 million, or $.65 per
share, which included a special charge for a potential assessment to
recapitalize the Savings Association Insurance Fund (SAIF). Excluding this
$24.5 million, or $.08 per share, charge, third quarter earnings per share
rose 12% to $.73 from $.65 per share a year earlier.
For the first nine months of 1996, Barnett's earnings per share,
excluding the SAIF assessment, rose 15% from a year ago to $2.18 per share.
Third quarter results, excluding the SAIF assessment, demonstrated
continued improved profitability. Return on assets in the third quarter
increased to 1.40% from 1.30% a year earlier and return on shareholders'
equity increased to 17.19% from 16.02%.
The third quarter results reflect the first full quarter impact of the
formation of HomeSide Lending Inc., a mortgage banking venture to which
Barnett sold its mortgage servicing business. The company holds a one-third
ownership interest and the remainder is owned by Bank Boston Corporation and
two equity investors.
Third quarter revenue rose $34.3 million, or 5%, over the third quarter
of 1995 to $663.9 million, but was $10.7 million below the second quarter.
Third quarter taxable-equivalent net interest income rose $22.1 million, or
5%, from the same period last year to $469.0 million, due to an increase of
32 basis points in the net yield on earning assets partially offset by a 1%
decline in earning assets. The increase in the net yield from last year was
largely the result of lower funding costs and strategic decisions by the
company that favorably changed the mix of earning assets. Net interest income
fell $11.3 million from the second quarter as the net yield on earning assets
decreased 8 basis points and average earning assets fell $490 million,
reflecting lower escrow deposit balances as a result of the HomeSide venture.
Non-interest income rose 7% from a year earlier to $194.9 million. The
increase from last year was largely the result of growth in consumer finance
income, investment services revenue and other retail fees. The modest
increase from the second quarter reflects strong growth in consumer finance
income partially offset by lower mortgage banking income as a result of the
sale of the company's mortgage servicing business to the HomeSide venture.
Non-interest expense, excluding the SAIF assessment, increased $5.2
million from last year, but fell $16.3 million from the second quarter to
$384.4 million. Barnett's overhead ratio, which excludes the SAIF assessment,
fell to 57.91% from 60.25% a year earlier and 59.43% in the second quarter.
The provision for loan losses was $44.9 million in the third quarter
compared to $34.2 million last year and $39.4 million in the second quarter.
Net charge-offs of $45.1 million in the third quarter were $11.0 million
higher than the same period last year and $5.6 million higher than the second
quarter, primarily due to increased bank card charge-offs. Third quarter net
charge-offs represented an annualized .59% of average loans. Non-performing
assets of $251.1 million on September 30 represented .82% of gross loans plus
real estate held for sale.
In October, the company entered into a strategic alliance with Household
Credit Services, Inc. to jointly build and manage Barnett's credit card
business. As part of that transaction, Barnett sold $776 million of non-core
credit card outstandings to Household. The transaction closed in October and
the company anticipates it will be
4
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
accretive to earnings within the first 12 months.
Selected quarterly data is provided in TABLE 1.
EARNING ASSETS
LOANS. Average loans rose $356 million from a year earlier and $183
million from the second quarter to $30.5 billion, despite a reduction in
residential mortgages as the company continued to utilize liquidity from
amortizing residential mortgages to fund higher yielding loans.
Installment loans rose $1.5 billion, or 18%, from the same period last
year and $375 million, or an annualized growth rate of 15%, from the second
quarter to $10.2 billion. Expansion of indirect automobile lending to new
markets and increased home equity loans originated through the EquiCredit
franchise were the principal factors in the growth of the installment loan
portfolio. The volume of automobile loans, the largest component of
installment loans, is dependent upon new and used automobile sales, which can
vary depending on economic conditions and other factors.
Residential mortgage loans fell 12%, or $1.4 billion, from last year and
$297 million from the second quarter to $10.0 billion. These reductions
reflect management's decision to utilize the liquidity from amortizing
residential mortgages to fund growth in loan categories with higher
risk-adjusted rates of return. Also contributing to the decline was the sale
to HomeSide of the company's pipeline of loans held for sale. At the end of
the third quarter, 75% of the residential loan portfolio consisted of
adjustable-rate mortgages. Most of these mortgages reprice annually based on
a spread over the one-year constant maturity Treasury index. This repricing
is limited by annual and lifetime caps.
Commercial loans grew 9% from last year and at an annualized rate of 7%
from the second quarter to $5.0 billion. Commercial real estate loans
decreased 13% from a year earlier and $40 million from the second quarter to
$2.8 billion.
<TABLE>
<CAPTION>
TABLE 2 INTEREST RATE SENSITIVITY ANALYSIS
Non-Rate
Sensitive
0-30 31-90 91-180 181-365 and Over
September 30, 1996--Dollars in Millions Days Days Days Days One Year Total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and agricultural............................ $ 3,659 $ 162 $ 111 $ 198 $ 961 $ 5,091
Real estate construction.......................................... 763 13 9 8 17 810
Commercial mortgages.............................................. 990 135 143 213 523 2,004
Residential mortgages............................................. 1,023 1,328 1,675 3,186 2,675 9,887
Installment....................................................... 2,167 1,088 1,037 1,711 4,270 10,273
Other loans....................................................... 2,043 530 2,573
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Total loans(1).............................................. 10,645 2,726 2,975 5,316 8,976 30,638
Securities(1)..................................................... 333 549 540 689 3,003 5,114
Federal funds sold and securities purchased under agreements
to resell...................................................... 5 5
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Total earning assets........................................ $10,983 $ 3,275 $3,515 $6,005 $11,979 $35,757
===============================================================================================================================
NOW and money market accounts(1).................................. $ 6,940 $ 4,694 $11,634
Savings deposits(1)............................................... 1,001 2,004 3,005
Time deposits..................................................... 2,183 $ 2,086 $3,108 $2,678 2,756 12,811
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Total interest-bearing deposits............................. 10,124 2,086 3,108 2,678 9,454 27,450
Short-term borrowings............................................. 2,456 2,456
Long-term debt.................................................... 3 458 50 9 707 1,227
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Total interest-bearing liabilities.......................... $12,583 $ 2,544 $3,158 $2,687 $10,161 $31,133
===============================================================================================================================
Gap before interest rate swaps.................................... $(1,600) $ 731 $ 357 $3,318 $ 1,818
Interest rate swaps............................................... (2,130) (1,779) 30 820 3,059
- -------------------------------------------------------------------------------------------------------------------------------
Interest rate sensitivity gap adjusted for interest rate swaps.... (3,730) (1,048) 387 4,138 4,877
Cumulative adjusted interest rate sensitivity gap................. (3,730) (4,778) (4,391) (253)
Cumulative adjusted gap as a percentage of earning assets:
September 30, 1996............................................. (10.43)% (13.36)% (12.28)% (.71)%
September 30, 1995............................................. (8.61) (9.25) (3.41) 7.59
===============================================================================================================================
</TABLE>
(1) REFLECTS MANAGEMENT'S ADJUSTMENTS FOR THE COMPANY'S ESTIMATES OF THE
EFFECTS OF EARLY PRINCIPAL REPAYMENTS ON RESIDENTIAL AND OTHER AMORTIZING
LOANS AND SECURITIES AND THE ANTICIPATED REPRICING SENSITIVITY OF
NON-MATURITY DEPOSIT PRODUCTS. HISTORICALLY, BALANCES ON NON-MATURITY
DEPOSIT ACCOUNTS HAVE REMAINED RELATIVELY STABLE DESPITE CHANGES IN MARKET
INTEREST RATES. MANAGEMENT HAS CLASSIFIED CERTAIN OF THESE ACCOUNTS AS
NON-RATE SENSITIVE BASED ON MANAGEMENT'S HISTORICAL PRICING PRACTICES AND
RUNOFF EXPERIENCE. TWO-THIRDS OF THE NOW AND SAVINGS ACCOUNT BALANCES, AND
APPROXIMATELY 20% OF THE MONEY MARKET ACCOUNT BALANCES, ARE CLASSIFIED AS
NON-RATE SENSITIVE.
5
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
TABLE 3 DERIVATIVE FINANCIAL INSTRUMENTS
Weighted Average Interest Rate
------------------------------------------ Average
Notional Replacement Receive Pay Maturity
September 30--Dollars in Millions Amount Value Rate(1) Index Rate(1) Index In Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996
Interest rate swaps:
Basis swap............................... $ 50 $ .61 5.44% LIBOR 5.85% CMT 1.33
Generic swaps:
Receive fixed....................... 4,025 (23.12) 5.53 FIXED 5.59 LIBOR 1.32
Pay fixed........................... 116 .93 5.73 LIBOR 5.84 FIXED 2.28
Interest rate floors.......................... 250 1.03 6.00(2) LIBOR -- -- 1.25
- -------------------------------------------------------------------------------------------------------------------------------
Total......................................... $4,441 $(20.55) 5.56% 5.60% 1.34
===============================================================================================================================
1995
Interest rate swaps:
Basis swap............................... $ 50 $ .54 5.87% LIBOR 5.20% CMT 2.33
Generic swaps:
Receive fixed....................... 2,340 (7.12) 5.16 Fixed 5.85 LIBOR 1.25
Pay fixed........................... 267 (.42) 5.91 LIBOR 6.38 Fixed 1.99
Index-principal swaps.................... 250 (1.48) 4.47 Fixed 5.88 LIBOR .32(3)
Interest rate floors.......................... 250 2.64 6.00(2) LIBOR -- -- 2.26
- -------------------------------------------------------------------------------------------------------------------------------
Total......................................... $3,157 $ (5.84) 5.25% 5.89% 1.34
===============================================================================================================================
</TABLE>
(1) BASED UPON CONTRACTUAL RATES AT SEPTEMBER 30.
(2) THE COMPANY RECEIVES INTEREST EQUAL TO THE AMOUNT BY WHICH LIBOR IS LESS
THAN 6.00%.
(3) THE MATURITY OF INDEX-PRINCIPAL SWAPS CAN EXTEND TO A MAXIMUM AVERAGE OF
1.8 YEARS.
Credit line and bank card outstandings grew 11%, or $256 million, from
last year and at an annualized rate of 9% from the second quarter to $2.6
billion. The growth from last year reflects expanded marketing through the
first quarter of 1996 of the credit card both within Florida and in
neighboring markets. The growth from last quarter primarily reflects
increased usage of previously authorized lines.
As part of the agreement with Household, the company sold $776 million
of non-core credit card outstandings in October, which will result in lower
credit card balances beginning in the fourth quarter.
INVESTMENT SECURITIES AND OTHER EARNING ASSETS. The company's $5.2
billion securities portfolio, with an average life of 1.40 years, consists
primarily of AAA or equivalent-rated securities. U.S. Treasury securities
comprised 47% of the portfolio at September 30. Average securities fell $966
million, or 16%, from the same period last year reflecting the deployment of
liquidity from maturing securities into higher yielding loans. Federal funds
sold and securities purchased under agreements to resell rose $89 million.
Average securities fell $119 million and federal funds sold and securities
purchased under agreements to resell fell $554 million from the second
quarter, primarily due to reduced funding needs related to the HomeSide
venture.
At September 30, the available-for-sale securities portfolio had a $1.8
million unrealized gain compared to a $39.6 million unrealized gain at
September 30, 1995 and a $3.7 million unrealized loss at June 30, 1996.
DEPOSITS AND OTHER FUNDING SOURCES
DEPOSITS. Average deposits declined $804 million from a year ago and
$813 million from the second quarter to $32.7 billion. Transaction, money
market and savings account balances dropped $1.0 billion from a year ago and
$938 million during the quarter, largely due to the transfer of mortgage
escrow deposits to HomeSide. The reduction from the second quarter also
reflected seasonal outflows. CD balances rose $243 million from a year ago
and $125 million during the quarter.
OTHER FUNDING SOURCES. Average federal funds purchased, securities sold
under agreements to repurchase and other short-term borrowings decreased $132
million, or 5%, from the same period last year but increased $258 million
during the quarter to $2.5 billion.
The company issues commercial paper to fund consumer lending activities.
As of September 30, Barnett's commercial paper outstandings totaled $416
million compared to $871 million as of June 30 and $709 million as of
September 30, 1995.
ASSET-LIABILITY MANAGEMENT
Net interest income, the company's primary source of revenue, is
affected by changes in interest rates as well as fluctuations in the level
and duration of assets and liabilities contained on the company's balance
sheet. 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 2 on page 5 shows this
structure as of September 30, with each maturity interval referring to the
earliest repricing opportunity (i.e., the earlier
6
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
TABLE 4 CHANGE IN NET INTEREST INCOME
Three Months Nine Months
----------------------------------- -----------------------------------
Change from Previous Year Due to: Change from Previous Year Due to:
For the Periods Ended September 30, 1996-- ----------------------------------- -----------------------------------
Taxable-Equivalent Dollars in Millions Volume Rate(1) Total Change Volume Rate(1) Total Change
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans........................................ $ 15.8 $ (9.7) $ 6.1 $ 77.9 $ 15.0 $ 92.9
Taxable securities........................... (11.0) 7.9 (3.1) (50.0) 23.9 (26.1)
Tax-free securities.......................... (5.4) (.1) (5.5) (28.5) (2.3) (30.8)
Federal funds sold and securities purchased
under agreements to resell................ 1.3 (.2) 1.1 18.4 (1.9) 16.5
- --------------------------------------------------------------------------------------------------------------------------------
Total interest income..................... 0.7 (2.1) (1.4) 17.8 34.7 52.5
- --------------------------------------------------------------------------------------------------------------------------------
Interest expense:
NOW and money market accounts................ (4.9) (5.3) (10.2) (11.0) (33.2) (44.2)
Savings deposits............................. (1.4) (2.1) (3.5) (4.3) (8.4) (12.7)
Certificates of deposit under $100,000....... (2.6) (8.0) (10.6) (4.5) (7.4) (11.9)
Other time deposits.......................... 6.1 (1.6) 4.5 17.4 .4 17.8
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits........... (2.8) (17.0) (19.8) (2.4) (48.6) (51.0)
Federal funds purchased and securities
sold under agreements to repurchase....... 8.1 (2.4) 5.7 (12.1) (6.2) (18.3)
Other short-term borrowings.................. (11.2) (.4) (11.6) (2.4) (3.0) (5.4)
Long-term debt............................... 4.0 (1.8) 2.2 23.2 (7.7) 15.5
- --------------------------------------------------------------------------------------------------------------------------------
Total interest expense.................... (1.9) (21.6) (23.5) 6.3 (65.5) (59.2)
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income....................... $ 2.6 $ 19.5 $ 22.1 $ 11.5 $100.2 $111.7
================================================================================================================================
</TABLE>
(1) INCLUDES CHANGES IN INTEREST INCOME AND EXPENSE NOT DUE SOLELY TO VOLUME
OR RATE CHANGES.
of scheduled contractual maturity or repricing date) for each asset and
liability category. The resulting gap is one 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
balances shown in the table. Based on historical and industry data, an
estimate of the expected prepayments of amortizing loans and investment
securities is reflected in the balances in the table. Changes in the economic
and interest rate environments may impact these expected prepayments.
Similarly, an adjustment to deposits is made to reflect the behavioral
characteristics of certain core deposits that do not have specified
maturities (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 September 30,
with a cumulative six-month negative gap of 12.28%.
In addition to gap analysis, management uses rate-shock simulation and
duration of equity to measure the rate sensitivity of its balance sheet.
Rate-shock simulation is a modeling technique used to estimate the impact of
changes in rates 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 gap and rate shock simulation analysis. These analyses, which
analyze longer term impacts of rate changes, indicate that Barnett is
relatively rate neutral. The company's rate shock simulation indicates that
an instantaneous 1% change in interest rates would have less than a 2% impact
on net interest income over a twelve-month period. This simulation is based
on the company's business mix, as well as interest rate exposures at a point
in time and includes a parallel shift of the yield curve. It also requires
certain assumptions about the future pricing of loans and deposits in
response to changes in interest rates. This simulation is a useful measure of
the company's sensitivity to changing rates; it is not a forecast of future
results and is based on many assumptions, which if changed, could cause a
different outcome from the simulation.
The primary objective of Barnett's asset-liability management 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. Management strives to minimize the negative
impact on net interest income caused by changes in interest rates. At this
time, 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.
7
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
TABLE 5 OTHER NON-INTEREST EXPENSE
1996 1995
------------------------- ------------------------------------
Dollars in Thousands THIRD Second First Fourth Third Second First
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Advertising and marketing................................ $ 11,098 $ 12,693 $ 13,905 $ 11,959 $ 8,407 $ 7,737 $ 5,416
Amortization of intangibles.............................. 11,970 13,043 13,440 13,031 13,415 14,022 12,326
Communications........................................... 11,554 11,416 10,970 10,349 10,852 10,464 9,321
Expenses and provision on real estate held for sale...... 3,696 3,384 2,409 2,280 2,901 3,418 3,513
FDIC assessments......................................... 2,545 2,514 2,720 5,517 612 18,565 18,533
Franchise and credit card fees........................... 3,800 3,733 4,531 5,235 5,184 5,613 4,398
Outside computer services................................ 8,637 8,973 9,739 8,474 8,220 7,494 7,790
Postage.................................................. 6,147 7,390 6,920 6,553 6,878 6,584 6,311
Stationery and supplies.................................. 5,936 5,634 5,762 6,169 4,750 4,770 4,708
Insurance, taxes and other............................... 44,260 52,749 55,198 54,887 57,713 46,054 48,338
- ------------------------------------------------------------------------------------------------------------------------------
Total............................................... $109,643 $121,529 $125,594 $124,454 $118,932 $124,721 $120,654
==============================================================================================================================
</TABLE>
Barnett controls its interest rate risk by managing the level and
duration of certain balance sheet assets and liabilities. The company also
uses off-balance-sheet instruments (derivatives) to manage its interest rate
sensitivity position. Barnett ensures that both balance sheet and
off-balance-sheet instruments used for asset-liability management purposes
are consistent with safe and sound banking practices.
The company's derivative portfolio used for asset-liability management
purposes, summarized in TABLE 3 on page 6, had a notional amount of $4.4
billion at September 30. This portfolio consisted of $4.2 billion of interest
rate swaps, of which $425 million was added in the third quarter, and $250
million of interest rate floors. The swap portfolio consists of fixed-term,
non-amortizing interest rate swaps, which primarily mature beginning January
1997 through September 1999. Most of the company's swaps involve receipt of
fixed cash flows in exchange for variable (primarily LIBOR-based) cash flows.
The purpose of the swaps is to convert variable cash flows from floating-rate
loans to fixed cash flows. The derivatives reduce the sensitivity of the net
interest margin to flat or falling interest rates.
The swap portfolio performed as expected during the quarter, as the
value of derivatives instruments entered into to protect the company in a
declining rate environment fell in value due to a modest rise in interest
rates during the period. Since the company is relatively rate neutral, the
overall impact of rising rates was neutral. The replacement value related to
the company's derivatives portfolio was a negative $20.6 million on September
30, 1996 compared to a negative $5.8 million on the same date last year and a
negative $28.6 million on June 30.
The derivatives portfolio, including the amortization of deferred gains
on interest rate floors, increased net interest income in the third quarter
of 1996 by $1.0 million, representing a 1 basis point increase in the net
yield on earning assets. The swap portfolio reduced third quarter 1995 net
interest income by $6.6 million, representing a 7 basis point reduction in
the net yield on earning assets.
Barnett manages the counterparty exposure of its derivatives in a manner
consistent with the granting of credit. Any exposure is generally measured by
the market replacement value at any point in time. Barnett utilizes
collateral exchange agreements with derivatives counterparties in order to
control the level of credit exposure to these entities.
NET INTEREST INCOME
Barnett's taxable-equivalent net interest income, which represented 71%
of revenues, was $469.0 million in the third quarter, up $22.1 million from a
year earlier, but $11.3 million below the second quarter. The increase from
last year primarily reflects a higher net yield on earning assets while the
decrease from last quarter reflects a lower net yield and reduced earning
assets. TABLE 4 on page 7 shows the changes in net interest income by
category due to shifts in volume and rate.
The net yield on earning assets rose to 5.22% from 4.90% a year earlier,
but was down 8 basis points from 5.30% in the second quarter. The expansion
of the net interest margin from last year was primarily due to the increase
in higher yielding loans as a percentage of earning assets and a decrease in
funding costs. Loans grew from 83% of earning assets in the third quarter of
1995 to 85% in the third quarter of 1996. The rate paid on interest-bearing
liabilities fell 18 basis points from last year. Lower rates paid on NOW,
money market and savings accounts more than offset the higher cost as a
result of the migration of balances from transaction accounts to time
deposits.
The decrease in the net yield on earning assets from the second quarter
was driven by the change in financial presentation of mortgage servicing
costs resulting from the HomeSide venture, partially offset by the shift from
residential mortgages to higher yielding commercial and consumer loans.
Third quarter operating results reflect the first full quarter impact of
the HomeSide venture. The impact of this transaction is evident in the
decrease in net interest margin, mortgage banking income and non-interest
expense. Prior reporting had reflected internal mortgage servicing costs in
non-interest expense. As a result of the venture, these expenses became third
party costs and are now netted
8
- -------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
against interest on residential loans, resulting in lower net interest income.
NON-INTEREST INCOME
Non-interest income rose 7% from a year ago to $194.9 million. Consumer
finance income, brokerage commissions and other retail fees showed healthy
gains. Non-interest income was up slightly from the second quarter, due to
the growth in consumer finance income partially offset by the lower mortgage
banking income as a result of the full quarter impact of the HomeSide venture.
Consumer finance income rose 30%, or $7.1 million, from the same period
a year ago and 25%, or $6.0 million, from the second quarter. The increases
reflect increased securitization volumes and the adoption of Statement of
Financial Accounting Standards (SFAS) No. 122, Accounting for Mortgage
Servicing Rights. Consumer finance income of $30.4 million represents revenue
generated through the company's quarterly securitization program of consumer
finance loan production and related loan servicing.
Brokerage income grew 31% from a year ago to $10.3 million, primarily
reflecting a significant increase in annuity and mutual fund sales.
Mortgage banking income fell $1.5 million from the same period last year
and $4.3 million from the second quarter to $14.5 million. The decrease from
the second quarter reflects the full quarter impact of the HomeSide venture.
Other service charges and fees rose 17%, or $5.1 million, from last year
to $35.4 million, reflecting higher retail fees which includes the new ATM
surcharge.
Credit card fees fell $2.4 million, or 16%, from last year's third
quarter as the company entered into a joint venture in January to perform
bank card merchant processing. As a result of this new structure, the company
now records its share of the net income from the venture under the equity
method of accounting rather than gross revenues and expenses.
NON-INTEREST EXPENSE
Non-interest expense, excluding the $24.5 million SAIF assessment, rose
1%, or $5.2 million, from a year ago but fell 4%, or $16.3 million, from the
second quarter. The increase from last year reflects the company's spending
on strategic initiatives to diversify sources of revenue, improve marketing
and expand the use of technology for competitive advantage, offset by the
impact of the HomeSide venture. The decrease from last quarter reflects the
full quarter impact of transferring costs associated with the residential
loan servicing operation to HomeSide, partially offset by continued spending
on strategic initiatives.
The overhead ratio, which excludes the SAIF assessment, was 57.91% in
the third quarter, below last year's 60.25% and the prior quarter's 59.43%.
The lower overhead ratio was achieved as Barnett continued to focus on
operating businesses where it has the greatest market opportunity as well as
processing scale and product expertise. The company has recently outsourced
or formed alliances to run businesses where it does not have those advantages.
Salaries and benefits increased $8.9 million from the same period last
year, primarily due to staffing related to strategic initiatives and higher
performance-based compensation. The $6.2 million decrease from the second
quarter primarily represents the full quarter impact of the HomeSide venture
and lower pension expense. The company had 19,045 full-time equivalent
employees in the third quarter, compared to 19,475 during the second quarter
and 19,091 a year ago.
Other expense, excluding the SAIF assessment, decreased 8%, or $9.3
million, from last year, reflecting the impact of HomeSide partially offset
by increased marketing and technology expenses related to strategic
initiatives. Other expense decreased 10%, or $11.9 million, from the second
quarter reflecting the full quarter impact of HomeSide. Other expense for the
past seven quarters is shown in TABLE 5.
The FDIC has advised that it will levy a special assessment to
recapitalize the Savings Association Insurance Fund (SAIF) as a result of
legislation signed into law on September 30, 1996. The company recognized
$24.5 million in expense in the third quarter related to this assessment.
ASSET QUALITY
RISK ELEMENTS. As shown in TABLE 6, non-performing assets were $251
million on September 30, representing .82% of gross loans plus real estate
held for sale. By comparison, non-performing assets stood at $282
<TABLE>
<CAPTION>
TABLE 6 NON-PERFORMING ASSETS
1996 1995
--------------------------- ------------------------
PERCENTAGE Percentage
OF TOTAL of Total
September 30--Dollars in Thousands AMOUNT OUTSTANDING(1) Amount Outstanding(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Non-accruing loans:
Less than 90 days past due.................. $ 21,111 .07% $ 58,065 .19%
90 days past due............................ 163,559 .53 147,379 .48
- ----------------------------------------------------------------------------------------------------------
Total non-accruing loans................. 184,670 .60 205,444 .67
Reduced-rate loans............................. 7,546 .03 2,458 .01
- ----------------------------------------------------------------------------------------------------------
Total non-performing loans............... 192,216 .63 207,902 .68
Real estate held for sale...................... 58,921 .19 74,292 .24
- ----------------------------------------------------------------------------------------------------------
Total non-performing assets.............. $251,137 .82% $282,194 .92%
==========================================================================================================
Non-performing loans by category:
Commercial, financial and
agricultural............................. $ 35,662 .12% $ 37,600 .12%
Real estate construction.................... 8,024 .03 17,228 .06
Commercial mortgages........................ 36,548 .12 75,373 .25
Residential mortgages....................... 111,982 .36 77,701 .25
- ----------------------------------------------------------------------------------------------------------
Total.................................... $192,216 .63% $207,902 .68%
==========================================================================================================
90 days past due accruals...................... $ 60,819 .20% $ 45,886 .15%
==========================================================================================================
</TABLE>
(1) BEFORE DEDUCTION FOR UNEARNED INCOME.
9
-------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
TABLE 7 LOAN QUALITY INFORMATION
1996 1995
---------------------------- ------------------------------------------
Dollars in Thousands THIRD Second First Fourth Third Second First
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net charge-offs (recoveries):
Commercial, financial and agricultural....... $ 3,271 $ (740) $ (334) $ (1,484) $ 2,049 $ (1,863) $ (2,781)
Real estate construction..................... (13) -- (175) (1) 428 147 190
Commercial mortgages......................... (2,931) (2,184) (1,850) (2,828) 515 2,392 499
Residential mortgages........................ 781 608 508 1,140 543 261 739
Installment.................................. 11,666 12,795 15,428 17,212 12,318 12,229 12,381
Bank card.................................... 31,186 28,254 26,797 21,443 17,384 13,510 12,683
Credit lines................................. 1,133 711 1,031 718 810 629 727
- ---------------------------------------------------------------------------------------------------------------------------------
Total net charge-offs..................... $ 45,093 $ 39,444 $ 41,405 $ 36,200 $ 34,047 $ 27,305 $ 24,438
=================================================================================================================================
Gross charge-offs............................... $ 61,037 $ 53,284 $ 51,500 $ 50,163 $ 44,062 $ 42,529 $ 36,125
Allowance for loan losses....................... 507,109 506,892 506,315 505,148 503,032 502,521 502,800
Non-performing loans............................ 192,216 192,711 181,382 170,268 207,902 208,142 221,943
Non-performing assets........................... 251,137 251,969 244,638 237,898 282,194 280,869 297,223
Non-performing asset ratio...................... .82% .82% .80% .78% .92% .93% 1.01%
Net charge-offs to average loans (annualized)... .59 .52 .55 .48 .45 .37 .34
Allowance to non-performing loans............... 264 263 279 297 242 241 227
Allowance to period-end loans................... 1.66 1.66 1.67 1.66 1.65 1.68 1.72
=================================================================================================================================
</TABLE>
million, or .92% of outstandings, on the same date last year, and $252
million, or .82% of outstandings, on June 30. The increasing percentage of
consumer loans in the loan portfolio has contributed to the reduction of
non-performing assets because consumer loans, except for residential real
estate, are generally charged off rather than placed on non-accrual status.
Consumer loans represent 74% of total loans.
Borrower experience and financial capacity are critical factors in
underwriting and approving all loan requests. Barnett's commercial real
estate loan policies generally require a maximum loan-to-value ratio of 75%.
Barnett has reduced its exposure to commercial real estate from a high
of 28% of loans in 1988 to 9% currently and anticipates maintaining this
portfolio at or below 15% of loans. The commercial loan portfolio,
representing 16% of total loans, is not concentrated in any single industry,
but reflects the broad-based economies in Florida and southern Georgia.
Barnett's residential loans generally are secured by 1-4 family homes,
conform to federal agency underwriting standards and have a maximum
loan-to-value ratio of 80% unless they are protected by mortgage insurance.
At September 30, 4.57% of residential loans were 30 days or more past
due compared to 4.07% a year earlier and 4.36% at June 30. At the end of the
third quarter, 1.15% of residential loans were non-performing compared to
.74% a year earlier and 1.04% on June 30. Non-performing residential loans
and delinquencies have risen for Barnett and the industry as adjustable-rate
mortgages have repriced upward. Losses in this portfolio were 3 basis points
in the third quarter and have historically been in the 2-to-5 basis point
range as Florida's residential real estate values have remained relatively
stable.
At September 30, 1.35% of installment loans were 30 days or more past
due compared to 1.08% a year earlier and at June 30. Barnett's installment
loan portfolio consists primarily of loans secured by new and used
automobiles (59%), home equity loans (23%), government-guaranteed student
loans (13%) and other secured loans (2%). The remaining 3% of installment
loans are unsecured.
At September 30, 4.04% of bank card outstandings were 30 days or more
past due, up from 3.48% in the second quarter and 2.88% a year earlier.
NET CHARGE-OFFS. As shown in TABLE 7, net charge-offs were $45.1
million, up from $34.0 million a year earlier and $39.4 million in the second
quarter. The increases were primarily a result of increased bank card and
commercial loan net charge-offs. Bank card net charge-offs were $13.8 million
higher than the same period last year and $2.9 million higher than the second
quarter. Bank card losses are expected to decline in the fourth quarter as a
result of the strategic alliance with Household. As part of this agreement,
the company sold $776 million of non-core credit card receivables, made up
primarily of the non-relationship, out of market and lower credit score
cards, in October. These balances have been the primary source of the
increased level of losses in the credit card portfolio.
Total net charge-offs in the third quarter represented an annualized
.59% of average outstandings, compared to .52% in the second quarter and .45%
for the same period last year.
PROVISION/ALLOWANCE FOR LOAN LOSSES. Barnett's provision expense in the
third quarter was $44.9 million, compared to $34.2 million in last year's
third quarter and $39.4 million in the second quarter.
At September 30, the allowance for loan losses stood at $507.1 million,
or 1.66% of outstandings, up slightly from a year ago and slightly below June
30. Management considers the allowance appropriate and adequate to cover
potential losses inherent in the loan portfolio based on the current economic
environment.
10
- -------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
<TABLE>
<CAPTION>
TABLE 8 CAPITAL RATIOS
September 30--Dollars in Millions 1996 1995
- --------------------------------------------------------------------
<S> <C> <C>
Tier I capital.................................. $ 2,740 $ 2,563
Total risk-based capital........................ 3,713 3,539
Total risk-adjusted assets...................... 30,995 29,420
- --------------------------------------------------------------------
Tier I capital ratio............................ 8.84% 8.71%
Total risk-based capital ratio.................. 11.98 12.02
Tier I leverage ratio........................... 6.84 6.35
====================================================================
</TABLE>
The ratio of the allowance for loan losses to non-performing loans
remained a strong 264% at September 30, compared to 242% a year earlier and
263% in the second quarter.
TAXES
Barnett's income tax expense in interim reporting periods is determined
by estimating the combined federal and state effective tax rate for the year
and applying this rate to taxable income. The company's effective
taxable-equivalent tax rate for the first nine months of 1996 was 40%
compared to 37% last year, primarily reflecting higher state taxes this year
and the utilization of loss carryforwards in 1995.
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 proceeds from maturing securities
and loans, the sale of securities, asset securitization and other
non-relationship funding sources, such as senior or subordinated debt, bank
notes, commercial paper and wholesale purchased funds.
The high proportion of residential and installment loans on Barnett's
balance sheet provides it with an exceptional amount of contingent liquidity
through the conventional securitization programs that exist today. Management
believes that the level of liquidity is sufficient to meet current and future
funding requirements.
During the quarter, the company utilized a commercial paper facility to
fund certain consumer lending activities. Borrowings under this facility were
$416 million at September 30.
As of September 30, the company had $1.4 billion in debt available under
existing shelf registrations with the Securities and Exchange Commission.
CAPITAL
At September 30, shareholders' equity totaled $3.3 billion. On September
6, Barnett's common shares outstanding were increased through a 2-for-1 stock
split. All historical data used in this report has been restated to reflect
the split.
The company continued to use internally generated capital to fund its
common stock repurchase program. The company repurchased 2.5 million shares
during the quarter to fund benefit plan needs. Fully diluted shares
outstanding fell to 194.9 million from 206.9 million a year ago and 196.4
million last quarter.
Barnett declared a $.27 dividend for the third quarter, representing a
dividend payout ratio, excluding the SAIF assessment, of 37%.
The company is subject to risk-based capital guidelines that measure
capital relative to risk-weighted assets and off-balance-sheet financial
instruments. Capital guidelines issued by the Federal Reserve Board require
bank holding companies to have a minimum total risk-based capital ratio of
8%, with at least half of total capital in the form of Tier I capital.
As TABLE 8 shows, Barnett exceeded these capital guidelines on September
30, with a Tier I capital ratio of 8.84% and a total risk-based capital ratio
of 11.98%.
In addition, a leverage ratio is used in connection with the risk-based
capital standards and is defined as Tier I capital divided by average assets
for the most recent quarter. The minimum leverage ratio under this standard
is 3% for the highest-rated bank holding companies which are not undertaking
significant expansion programs. An additional 1% to 2% may be required for
other companies, depending upon their regulatory ratings and expansion plans.
On September 30, 1996, Barnett's leverage ratio was 6.84%, up 49 basis points
from a year earlier due primarily to lower intangible assets as a result of
the HomeSide venture.
11
-------------------
BARNETT BANKS, INC.
<PAGE>
QUARTERLY AVERAGE BALANCES, YIELDS AND RATES
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
1996
---------------------------------------------------------------------------------------
THIRD Second First
--------------------------- --------------------------- ---------------------------
AVERAGE Average Average
AVERAGE YIELD Average Yield Average Yield
Dollars in Millions--Taxable-Equivalent BALANCE INTEREST OR RATE Balance Interest or Rate Balance Interest or Rate
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans(1):
Commercial, financial and agricultural.. $ 4,963 $103.3 8.28% $ 4,873 $100.8 8.32% $ 4,821 $ 99.5 8.30%
Real estate construction................ 805 19.9 9.84 795 19.8 10.02 826 20.9 10.15
Commercial mortgages.................... 2,028 44.8 8.79 2,078 46.1 8.92 2,155 47.8 8.92
Residential mortgages................... 10,006 191.4 7.65 10,303 200.5 7.79 10,729 211.4 7.88
Installment............................. 10,188 226.3 8.84 9,813 216.3 8.86 9,301 206.0 8.91
Bank card............................... 1,793 69.4 15.40 1,746 68.0 15.67 1,756 68.0 15.56
Credit lines............................ 764 18.8 9.78 756 18.6 9.87 759 19.0 10.08
- ---------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income... 30,547 671.9 8.76 30,364 667.3 8.83 30,347 671.2 8.88
- ---------------------------------------------------------------------------------------------------------------------------------
Securities(2):
Taxable................................. 4,986 77.9 6.23 5,084 79.6 6.28 4,992 75.9 6.09
Tax-free................................ 175 5.0 11.60 196 5.6 11.36 209 5.8 11.18
- ---------------------------------------------------------------------------------------------------------------------------------
Total securities...................... 5,161 82.9 6.41 5,280 85.2 6.47 5,201 81.7 6.29
- ---------------------------------------------------------------------------------------------------------------------------------
Federal funds sold and securities purchased
under agreements to resell.............. 135 1.8 5.33 689 9.2 5.35 613 8.3 5.44
- ---------------------------------------------------------------------------------------------------------------------------------
Total earning assets.................. 35,843 $756.6 8.41% 36,333 $761.7 8.42% 36,161 $761.2 8.45%
- ---------------------------------------------------------------------------------------------------------------------------------
Cash..................................... 1,979 1,926 1,980
Other assets............................. 3,336 3,365 3,501
Allowance for loan losses................ (507) (507) (506)
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets.......................... $40,651 $41,117 $41,136
=================================================================================================================================
LIABILITIES AND EQUITY
NOW and money market accounts............ $11,683 $ 59.4 2.02% $12,268 $ 58.7 1.93% $12,599 $ 61.9 1.97%
Savings deposits......................... 3,075 13.4 1.73 3,213 13.8 1.73 3,310 14.4 1.75
Certificates of deposit under $100,000... 9,799 122.5 4.98 9,747 120.8 4.98 9,867 125.7 5.12
Other time deposits...................... 2,643 35.7 5.38 2,570 34.3 5.36 2,408 33.0 5.52
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits....... 27,200 231.0 3.38 27,798 227.6 3.29 28,184 235.0 3.35
Federal funds purchased and securities
sold under agreements to repurchase..... 2,075 27.0 5.17 1,215 15.0 4.96 1,046 13.3 5.14
Other short-term borrowings.............. 443 6.6 5.90 1,045 14.1 5.42 942 14.1 6.00
Long-term debt........................... 1,228 23.0 7.51 1,337 24.7 7.40 1,242 23.5 7.56
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities.... 30,946 $287.6 3.70% 31,395 $281.4 3.60% 31,414 $285.9 3.66%
Demand deposits.......................... 5,473 5,688 5,661
Other liabilities........................ 921 735 748
Preferred equity......................... -- 1 97
Common equity............................ 3,311 3,298 3,216
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity.......... $40,651 $41,117 $41,136
=================================================================================================================================
SPREAD AND NET YIELD
Interest rate spread..................... 4.71% 4.82% 4.79%
Cost of funds supporting earning assets.. 3.19 3.12 3.18
Net yield on earning assets.............. $469.0 5.22 $480.3 5.30 $475.3 5.27
=================================================================================================================================
</TABLE>
(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 ON AMORTIZED COST.
12
- -------------------
BARNETT BANKS, INC.
<PAGE>
<TABLE>
<CAPTION>
1995
- ---------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First
----------------------------- ---------------------------- ---------------------------- ----------------------------
Average Average Average Average
Average Yield Average Yield Average Yield Average Yield
Balance Interest or Rate Balance Interest or Rate Balance Interest or Rate Balance Interest or Rate
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 4,661 $ 99.3 8.46% $ 4,556 $ 97.2 8.47% $ 4,555 $ 95.8 8.43% $ 4,442 $ 91.9 8.39%
904 23.9 10.51 946 25.0 10.48 948 25.3 10.69 925 24.2 10.62
2,246 50.0 8.81 2,304 50.7 8.73 2,345 51.0 8.72 2,383 50.5 8.60
11,180 217.7 7.79 11,417 219.4 7.69 11,110 210.2 7.57 10,755 198.9 7.40
9,000 202.4 8.92 8,667 195.5 8.95 8,435 185.9 8.84 8,301 176.6 8.63
1,677 63.6 15.05 1,566 62.0 15.69 1,439 59.1 16.47 1,375 53.0 15.64
746 18.9 10.06 735 19.5 10.50 730 19.2 10.55 718 16.9 9.53
- ---------------------------------------------------------------------------------------------------------------------------------
30,414 674.5 8.82 30,191 665.8 8.77 29,562 643.7 8.73 28,899 608.0 8.49
- ---------------------------------------------------------------------------------------------------------------------------------
5,471 81.4 5.93 5,771 81.0 5.59 6,194 86.3 5.58 6,702 92.2 5.57
232 6.4 11.10 356 10.5 11.82 514 15.5 12.02 593 21.3 14.34
- ---------------------------------------------------------------------------------------------------------------------------------
5,703 87.8 6.14 6,127 91.5 5.95 6,708 101.8 6.07 7,295 113.5 6.29
- ---------------------------------------------------------------------------------------------------------------------------------
148 2.1 5.78 46 .7 5.84 47 .7 6.14 92 1.3 5.92
- ---------------------------------------------------------------------------------------------------------------------------------
36,265 $764.4 8.39% 36,364 $758.0 8.29% 36,317 $746.2 8.23% 36,286 $722.8 8.04%
- ---------------------------------------------------------------------------------------------------------------------------------
2,033 1,943 2,012 2,064
3,396 3,332 3,401 3,007
(504) (503) (498) (499)
- ---------------------------------------------------------------------------------------------------------------------------------
$41,190 $41,136 $41,232 $40,858
=================================================================================================================================
$12,598 $ 69.0 2.17% $12,576 $ 69.6 2.19% $12,665 $ 73.5 2.33% $13,198 $ 81.0 2.49%
3,314 16.7 1.99 3,362 16.9 2.00 3,451 17.2 2.00 3,619 20.3 2.27
9,863 130.5 5.25 9,990 133.1 5.29 10,071 131.5 5.24 9,698 116.3 4.86
2,281 32.3 5.61 2,209 31.2 5.61 2,133 29.4 5.52 1,983 24.6 5.02
- ---------------------------------------------------------------------------------------------------------------------------------
28,056 248.5 3.51 28,137 250.8 3.54 28,320 251.6 3.56 28,498 242.2 3.45
1,228 17.2 5.55 1,491 21.2 5.65 1,892 27.9 5.91 1,734 24.4 5.71
1,107 17.0 6.11 1,159 18.2 6.24 838 13.3 6.37 579 8.6 6.02
1,131 22.5 7.98 1,028 20.9 8.11 842 17.8 8.48 815 17.1 8.40
- ---------------------------------------------------------------------------------------------------------------------------------
31,522 $305.2 3.84% 31,815 $311.1 3.88% 31,892 $310.6 3.91% 31,626 $292.3 3.75%
5,598 5,340 5,382 5,441
717 634 618 568
104 214 215 215
3,249 3,133 3,125 3,008
- ---------------------------------------------------------------------------------------------------------------------------------
$41,190 $41,136 $41,232 $40,858
=================================================================================================================================
4.55% 4.41% 4.32% 4.29%
3.34 3.39 3.43 3.27
$459.2 5.05 $446.9 4.90 $435.6 4.80 $430.5 4.77
=================================================================================================================================
</TABLE>
13
-------------------
BARNETT BANKS, INC.
<PAGE>
STATEMENTS OF FINANCIAL CONDITION
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
September 30 December 31
(Unaudited) (Audited)
------------------- -----------
Dollars in Thousands 1996 1995 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks............................................................. $2,506,182 $ 1,903,021 $ 2,658,661
Federal funds sold and securities purchased under agreements to resell.............. 5,400 4,707 110,484
Investment securities available for sale............................................ 4,965,286 2,550,273 5,133,041
Investment securities held to maturity (fair value $159,251;
$3,409,517 and $216,066).......................................................... 148,840 3,395,001 200,960
Loans............................................................................... 30,674,212 30,497,071 30,514,418
Less: Allowance for loan losses.................................................... (507,109) (503,032) (505,148)
Unearned income.............................................................. (36,252) (28,320) (28,419)
- -------------------------------------------------------------------------------------------------------------------------------
Net loans.................................................................... 30,130,851 29,965,719 29,980,851
Premises and equipment.............................................................. 1,109,089 1,035,726 1,078,057
Intangible assets................................................................... 603,996 765,568 758,297
Other assets........................................................................ 1,801,227 1,555,063 1,633,194
- -------------------------------------------------------------------------------------------------------------------------------
Total assets................................................................. $41,270,871 $41,175,078 $41,553,545
===============================================================================================================================
LIABILITIES
Demand deposits..................................................................... $ 5,788,432 $ 5,282,560 $ 5,938,694
NOW and money market accounts....................................................... 11,633,848 12,473,006 12,816,304
Savings deposits.................................................................... 3,005,363 3,326,864 3,292,157
Certificates of deposit under $100,000.............................................. 10,296,245 9,931,682 9,853,010
Other time deposits................................................................. 2,514,234 2,233,427 2,333,403
- -------------------------------------------------------------------------------------------------------------------------------
Total deposits............................................................... 33,238,122 33,247,539 34,233,568
Short-term borrowings:
Federal funds purchased and securities sold under agreements
to repurchase................................................................ 2,037,646 1,490,293 899,667
Commercial paper................................................................. 416,440 708,772 669,766
Other short-term borrowings...................................................... 1,541 518,975 509,516
Other liabilities................................................................... 1,026,855 730,116 778,028
Long-term debt...................................................................... 1,227,499 1,151,211 1,190,814
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities............................................................ 37,948,103 37,846,906 38,281,359
- -------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $.10 par value, 20,000,000 shares authorized;
issued 10,587; 4,265,959 and 1,960,371........................................... 265 212,999 97,753
Common stock, $2 par value, 400,000,000 shares authorized;
issued 191,124,776; 189,192,950 and 189,730,736.................................. 382,250 378,386 379,461
Contributed capital................................................................. 293,423 438,377 385,734
Net unrealized gain on investment securities available for sale..................... 1,149 25,329 38,242
Retained earnings................................................................... 2,710,187 2,350,361 2,445,810
Less: Employee stock ownership plan obligation,
collateralized by 3,995,654; 4,786,866 and 4,634,134 shares...................... (64,506) (77,280) (74,814)
- -------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity................................................... 3,322,768 3,328,172 3,272,186
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity................................... $41,270,871 $41,175,078 $41,553,545
===============================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
14
- -------------------
BARNETT BANKS, INC.
<PAGE>
STATEMENTS OF INCOME
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
Three Months Nine Months
------------------ --------------------
For the Periods Ended September 30--Dollars in Thousands (Unaudited) 1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans................................................................. $669,455 $662,859 $2,002,884 $1,908,795
Investment securities................................................. 81,078 87,811 243,689 290,151
Federal funds sold and securities purchased under agreements
to resell............................................................ 1,803 675 19,268 2,740
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest income.............................................. 752,336 751,345 2,265,841 2,201,686
- ---------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits.............................................................. 231,007 250,800 693,566 744,592
Federal funds purchased and securities sold under agreements
to repurchase........................................................ 26,951 21,230 55,298 73,549
Other short-term borrowings........................................... 6,569 18,227 34,726 40,116
Long-term debt........................................................ 23,052 20,832 71,241 55,763
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest expense............................................. 287,579 311,089 854,831 914,020
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income................................................ 464,757 440,256 1,411,010 1,287,666
Provision for loan losses............................................. 44,913 34,198 125,955 85,324
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses................ 419,844 406,058 1,285,055 1,202,342
- ---------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on deposit accounts................................... 59,559 55,699 175,492 167,214
Consumer finance income............................................... 30,355 23,293 86,144 59,461
Trust income.......................................................... 19,665 19,189 61,441 58,253
Credit card discounts and fees........................................ 12,616 14,988 37,288 43,971
Mortgage banking income............................................... 14,485 15,964 54,620 49,938
Brokerage income...................................................... 10,316 7,868 33,331 21,832
Other service charges and fees........................................ 35,387 30,277 101,101 86,526
Securities transactions............................................... 35 58 19,337 84
Other income.......................................................... 12,454 15,366 35,873 41,355
- ---------------------------------------------------------------------------------------------------------------------------------
Total non-interest income.......................................... 194,872 182,702 604,627 528,634
- ---------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits........................................ 201,274 192,327 619,961 559,224
Net occupancy expense................................................. 34,583 32,142 101,936 94,410
Furniture and equipment expense....................................... 38,946 35,850 114,080 106,769
SAIF assessment....................................................... 24,524 -- 24,524 --
Other expense......................................................... 109,643 118,932 356,766 364,307
- ---------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense......................................... 408,970 379,251 1,217,267 1,124,710
- ---------------------------------------------------------------------------------------------------------------------------------
Net non-interest expense........................................... 214,098 196,549 612,640 596,076
- ---------------------------------------------------------------------------------------------------------------------------------
EARNINGS
Income before income taxes............................................ 205,746 209,509 672,415 606,266
Income tax provision.................................................. 78,796 75,421 257,735 211,302
- ---------------------------------------------------------------------------------------------------------------------------------
Net income......................................................... $126,950 $134,088 $ 414,680 $ 394,964
=================================================================================================================================
EARNINGS PER SHARE (Restated for 2-for-1 stock split in September 1996)
Primary: Earnings per share..................................... $.65 $.67 $2.12 $1.96
Average number of shares............................... 194,509,218 193,504,330 194,292,373 194,871,768
Dividends on preferred stock........................... -- $4,525 $2,168 $13,625
Fully Diluted: Earnings per share..................................... $.65 $.65 $2.10 $1.89
Average number of shares............................... 194,892,213 206,937,256 197,355,406 209,222,476
=================================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
15
-------------------
BARNETT BANKS, INC.
<PAGE>
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
Contri- Net
Preferred Common buted Unrealized Retained ESOP
Dollars in Thousands (Unaudited) Stock Stock Capital Gain (Loss) Earnings Obligation Total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD
Balance at January 1, 1995................... $215,307 $193,466 $ 741,654 $(26,998) $2,098,977 $(88,223) $3,134,183
Adjustment for the effect of a
2-for-1 stock split....................... 193,465 (193,465)
- -------------------------------------------------------------------------------------------------------------------------------
Balance at January 1, 1995 restated......... 215,307 386,931 548,189 (26,998) 2,098,977 (88,223) 3,134,183
Net income.................................. 394,964 394,964
Change in net unrealized gain (loss) on
investment securities available for sale.. 52,327 52,327
Cash dividends declared:
Common ($.68 per share)................... (129,933) (129,933)
Preferred................................. (13,647) (13,647)
Issuances of common stock:
Stock purchase, option and
employee benefit plans.................. 4,659 52,442 10,943 68,044
Preferred stock conversions............... (2,308) 294 2,014 --
Repurchases of common stock................. (13,498) (164,268) (177,766)
- -------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1995............... $212,999 $378,386 $ 438,377 $ 25,329 $2,350,361 $(77,280) $3,328,172
===============================================================================================================================
FOR THE PERIOD
Balance at January 1, 1996.................. $ 97,753 $379,461 $ 385,734 $38,242 $2,445,810 $(74,814) $3,272,186
Net income.................................. 414,680 414,680
Change in net unrealized gain (loss) on
investment securities available for sale.. (37,093) (37,093)
Cash dividends declared:
Common ($.78 per share)................... (148,116) (148,116)
Preferred................................. (2,187) (2,187)
Issuances of common stock:
Stock purchase, option and
employee benefit plans.................. 11,844 52,380 10,308 74,532
Preferred stock conversions............... (97,488) 7,319 89,606 (563)
Repurchases of common stock................. (16,374) (234,297) (250,671)
- -------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1996............... $ 265 $382,250 $ 293,423 $ 1,149 $2,710,187 $(64,506) $3,322,768
===============================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
16
- -------------------
BARNETT BANKS, INC.
<PAGE>
STATEMENTS OF CASH FLOWS
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
For the Periods Ended September 30--Dollars in Thousands (Unaudited) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.......................................................................................... $ 414,680 $ 394,964
Reconcilement of net income to net cash provided by operating activities:
Provision for loan losses......................................................................... 125,955 85,324
Gains from securities transactions................................................................ (19,337) (84)
Gain on securitization and sale of loans.......................................................... (76,672) (45,427)
Depreciation and amortization..................................................................... 187,349 170,821
Employee benefits funded by equity................................................................ 20,814 19,379
Deferred income tax provision..................................................................... 6,033 22,078
Decrease in interest receivable................................................................... 18,447 5,366
Increase (decrease) in interest payable........................................................... (20,609) 17,421
Increase in other assets.......................................................................... (453,369) (120,479)
Increase (decrease) in other liabilities.......................................................... 444,285 (58,151)
Originations of loans held for sale............................................................... (4,232,917) (3,411,164)
Proceeds from sales of loans held for sale........................................................ 4,119,417 1,843,965
Other............................................................................................. (18,286) (31,230)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities................................................ 515,790 (1,107,217)
- ---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale............................................... (2,900,385) (650,883)
Proceeds from sales of investment securities available for sale..................................... 397,076 179,993
Proceeds from maturities of investment securities available for sale................................ 2,683,864 758,308
Purchases of investment securities held to maturity................................................. (2,932) (290,187)
Proceeds from maturities of investment securities held to
maturity............................................................................................ 55,498 1,842,952
Net increase in loans............................................................................... (219,617) (147,122)
Purchases of premises and equipment................................................................. (140,248) (110,112)
Proceeds from sales of premises and equipment....................................................... 22,413 31,001
Receipts (payments) related to dispositions and acquisitions, net of cash disposed and acquired..... 378,249 (465,563)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities....................................................... 273,918 1,148,387
- ---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in demand, NOW, savings and money market
accounts............................................................................................ (1,644,149) (2,493,030)
Net increase in time deposits....................................................................... 531,334 631,938
Net increase in federal funds purchased and
securities sold under agreements to repurchase.................................................... 1,137,979 239,787
Net increase (decrease) in other short-term borrowings.............................................. (761,301) 154,841
Principal repayments of long-term debt.............................................................. (213,315) (127,192)
Proceeds from issuance of medium-term notes......................................................... 50,000 675,000
Proceeds from issuance of long-term debt............................................................ 200,000 150,000
Issuance of common stock............................................................................ 53,155 48,665
Repurchases of common stock......................................................................... (250,671) (177,766)
Cash dividends...................................................................................... (150,303) (143,580)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities........................................................... (1,047,271) (1,041,337)
- ---------------------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents........................................................... (257,563) (1,000,167)
Cash and cash equivalents, January 1................................................................ 2,769,145 2,907,895
- ---------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, September 30............................................................. $ 2,511,582 $ 1,907,728
=================================================================================================================================
</TABLE>
FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND 1995, INCOME TAX PAYMENTS OF
$256 MILLION AND $203 MILLION WERE PAID AND INTEREST OF $876 MILLION AND $898
MILLION WAS PAID, RESPECTIVELY. CASH AND CASH EQUIVALENTS INCLUDES CASH AND
DUE FROM BANKS, INTEREST-BEARING DEPOSITS IN OTHER BANKS, SECURITIES
PURCHASED UNDER AGREEMENTS TO RESELL AND FEDERAL FUNDS SOLD.
FOR EACH OF THE PERIODS ENDED SEPTEMBER 30, 1996 AND 1995, $36 MILLION AND
$57 MILLION OF LOANS, RESPECTIVELY, WERE TRANSFERRED TO REAL ESTATE HELD FOR
SALE.
DURING THE PERIOD ENDED SEPTEMBER 30, 1996, THE COMPANY DISPOSED OF $559
MILLION OF NON-CASH ASSETS AND $55 MILLION OF LIABILITIES. DURING THE PERIOD
ENDED SEPTEMBER 30, 1995, THE COMPANY ACQUIRED $990 MILLION OF NON-CASH
ASSETS AND $525 MILLION OF LIABILITIES.
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
17
-------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
A. GENERAL
The accounting and reporting policies of Barnett Banks, Inc. and its
affiliates conform to generally accepted accounting principles and to
predominant practices within the banking industry. The company has not
changed its accounting and reporting policies from those disclosed in its
1995 Annual Report on Form 10-K.
In the opinion of the company's management, all adjustments necessary to
fairly present the financial position as of September 30, 1996 and 1995, and
the results of operations and cash flows for the periods then ended, all of
which are of a normal and recurring nature, have been included.
The results of operations for the three and nine-month periods ended
September 30, 1996 may not be indicative of operating results for the year
ending December 31, 1996. Certain prior year and prior quarter amounts have
been reclassified to conform to current classifications.
In October 1996, the company entered into an agreement with Household
Credit Services, Inc. to form a strategic alliance to manage and build its
credit card business. The company sold $776 million of non-core credit card
outstandings to Household.
B. LOANS
<TABLE>
<CAPTION>
September 30--Dollars in Thousands
Net of Unearned Income 1996 1995
- ----------------------------------------------------------------
<S> <C> <C>
Commercial, financial and
agricultural.................. $ 5,091,116 $ 4,605,319
Real estate construction......... 810,128 908,211
Commercial mortgages............. 2,004,097 2,262,588
Residential mortgages............ 9,886,999 11,497,295
Installment...................... 10,273,193 8,828,175
Bank card........................ 1,797,456 1,623,934
Credit lines..................... 774,971 743,229
- ----------------------------------------------------------------
Total......................... $30,637,960 $30,468,751
================================================================
</TABLE>
C. ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
For the Nine Months Ended September 30--
Dollars in Thousands 1996 1995
- ----------------------------------------------------------------
<S> <C> <C>
Beginning balance.................. $ 505,148 $ 501,447
Recoveries......................... 39,879 36,926
Provision expense.................. 125,955 85,324
Loans charged off.................. (165,821) (122,716)
Other, net......................... 1,948 2,051
- ----------------------------------------------------------------
Ending balance..................... $ 507,109 $ 503,032
================================================================
</TABLE>
18
- -------------------
BARNETT BANKS, INC.
<PAGE>
D. LONG-TERM DEBT
<TABLE>
<CAPTION>
September 30--Dollars in Thousands 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
7.75% Sinking Fund Debentures,
due 1997....................................... $ 9,500 $ 10,200
Less: Face value of debentures
repurchased and held for
future retirements............................. (72) (772)
- -----------------------------------------------------------------------------
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 5.55% to
a fixed 9.83%.................................. 401,500 476,150
9.875% Subordinated Capital Notes,
due 2001....................................... 100,000 100,000
10.875% Subordinated Capital Notes,
due 2003....................................... 55,000 55,000
6.90% Subordinated Capital Notes,
due 2005....................................... 150,000 150,000
8.50% Subordinated Capital Notes,
due 2007....................................... 100,000 100,000
Senior Notes with interest from a
floating 5.53%, due 1998....................... 200,000 --
Mortgage collaterized Bonds, due
1996 with interest from a floating
6.348%......................................... -- 47,700
Capitalized lease obligations.................... 11,571 12,933
- -----------------------------------------------------------------------------
Total........................................ $1,227,499 $1,151,211
=============================================================================
</TABLE>
E. EARNINGS PER SHARE
The weighted-average number of shares used in the computation of
earnings per share have been restated to reflect the 2-for-1 stock split in
September 1996 and are as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
For the Periods Ended September 30-- ------------------ ------------------
Dollars in Thousands 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY SHARES
Average common shares outstanding................. 191,613,326 190,878,710 191,299,103 192,990,120
Common shares assumed outstanding
to reflect dilutive effect of:
Convertible preferred stock..................... 55,252 62,956 55,898 63,564
Common stock options............................ 2,840,640 2,562,664 2,937,372 1,818,084
- --------------------------------------------------------------------------------------------------------
Total........................................... 194,509,218 193,504,330 194,292,373 194,871,768
========================================================================================================
Adjustments for preferred dividends............... -- $4,525 $2,168 $13,625
========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Three Months Nine Months
------------------ ------------------
For the Periods Ended September 30 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FULLY DILUTED SHARES
Average common shares outstanding................. 191,613,326 190,878,710 191,299,103 192,990,120
Common shares assumed outstanding
to reflect dilutive effect of:
Convertible preferred stock..................... 55,252 13,369,868 2,600,572 13,412,224
Common stock options............................ 3,223,635 2,688,678 3,455,731 2,820,132
- --------------------------------------------------------------------------------------------------------
Total........................................... 194,892,213 206,937,256 197,355,406 209,222,476
========================================================================================================
</TABLE>
19
-------------------
BARNETT BANKS, INC.
<PAGE>
[LOGO]
BARNETT BANKS, INC.
Post Office Box 40789
Jacksonville, Florida 32203-0789
Telephone: 904/791-7720
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
INFORMATION
Analysts, investors and others seeking financial data should contact
Gregory M. Delaney, Director of Investor Relations, at 904/791-7254.
Others seeking general information should contact Robert L. Stickler,
Manager of External Communications, or Jerri R. Franz, Manager of Media
Relations, at 904/791-7668.
PUBLICATIONS
For printed material (annual and quarterly reports, proxy statements,
10-K and 10-Q reports), contact Corporate Communications at 904/791-5516.
HOW TO REACH US
The corporate offices of Barnett Banks, Inc. are located at:
50 North Laura Street
Jacksonville, FL
32202-3638
MAILING ADDRESS
P. O. Box 40789
Jacksonville, FL
32203-0789
TELEPHONE
904/791-7720
INTERNET ADDRESS
http://www.barnett.com
EMAIL ADDRESS
[email protected]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,506
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,965
<INVESTMENTS-CARRYING> 149
<INVESTMENTS-MARKET> 159
<LOANS> 30,638
<ALLOWANCE> 507
<TOTAL-ASSETS> 41,271
<DEPOSITS> 33,238
<SHORT-TERM> 2,456
<LIABILITIES-OTHER> 1,027
<LONG-TERM> 1,227
0
0
<COMMON> 382
<OTHER-SE> 2,941
<TOTAL-LIABILITIES-AND-EQUITY> 41,271
<INTEREST-LOAN> 2,003
<INTEREST-INVEST> 244
<INTEREST-OTHER> 19
<INTEREST-TOTAL> 2,266
<INTEREST-DEPOSIT> 694
<INTEREST-EXPENSE> 855
<INTEREST-INCOME-NET> 1,411
<LOAN-LOSSES> 126
<SECURITIES-GAINS> 19
<EXPENSE-OTHER> 1,217
<INCOME-PRETAX> 672
<INCOME-PRE-EXTRAORDINARY> 672
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 415
<EPS-PRIMARY> 2.12
<EPS-DILUTED> 2.10
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
