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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 1-7901
BARNETT BANKS,INC.
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(Exact name of Registrant as specified in its charter)
FLORIDA 59-0560515
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
50 N. LAURA STREET, JACKSONVILLE, FL 32202-3638
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (904) 791-7720
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock The New York Stock Exchange
Par Value $2.00 per share
Series A $4.50 Cumulative The New York Stock Exchange
Convertible Preferred Stock
Series C $4.00 Cumulative The New York Stock Exchange
Convertible Preferred Stock
8 1/2% Subordinated Capital The New York Stock Exchange
Notes, due 1999
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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The aggregate market value of the voting stock held by non-affiliates of the
Registrant at December 31, 1995 is approximately $5,597,056,712.
Common Stock outstanding at December 31, 1995:
94,865,368 Shares
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference in this report: (1)
portions of Registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 1995, in Parts II and III and (2) Registrant's 1996
Annual Meeting Proxy Statement in Part Three, which is incorporated by
reference pursuant to Instruction G of Form 10-K. The Company will file its
definitive Proxy Statement with the Commission prior to March 31, 1996.
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INDEX TO FORM 10-K
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
NOTE: Certain information required by Form 10-K is incorporated by reference
from the 1995 Annual Report as indicated below. Only that information
expressly incorporated by reference is deemed filed with the Commission.
PART I
Item 1 Business
Item 2 Properties
Item 3 Legal Proceedings
Item 4 Submission of Matters to a Vote of Security Holders - None
PART II ANNUAL REPORT REFERENCE(1)
Item 5 Market for the Registrant's Common Stock and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . .64
Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . 2
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . .17 - 33, 36- 39
Item 8 Financial Statements and Supplementary Data . . .34, 35, 42 - 59
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . .None
PART III(2)
Item 10 Directors and Executive Officers of the Registrant:
Executive Officers. . . . . . . . . . . . . . . . . . . . . . .61
Directors . . . . . . . . . . . . . . . . . . . . . . . . .60, 61
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management
Item 13 Certain Relationships and Related Transactions
PART IV(3)
Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K
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ITEMS OF PART IV - FORM 10-K
(a)1. The financial statements of Barnett are listed in response to
Item 8 of this report and are incorporated by reference.
(a)2. Financial Statement Schedules:
All schedules to the consolidated financial statements required by
Article 9 of Regulation S-X and all other schedules to the financial
statements of the Registrant have been omitted because the information
is either not required, not applicable, or is included in the
financial statements or notes thereto.
(b). Reports on Form 8-K: None.
(c). Exhibits:
3. Articles of Incorporation are incorporated by reference to exhibit
4(a) of the Corporation's Registration Statement No. 33-59246
4. Instruments defining the rights of security holders,
including indentures:
(a) Indenture dated as of May 15, 1972, relating to 7-3/4%
Sinking Fund Debentures due 1997.
(b) Indenture dated as of August 15, 1984 relating to the 8.5%
Subordinated Capital Notes due 1999.
(c) Indenture dated as of October 19, 1990, and supplemental
indentures dated April 21, 1991 and May 14, 1993 relating
to Debt Securities of the Company.
(d) Indenture dated as of October 19, 1990 and supplemental
indenture as of April 22, 1991 related to Debt Securities
of the Company.
(e) Indenture dated March 16, 1995 relating to Subordinated
Debt Securities of the Company
(f) Indenture dated March 16, 1995 relating to Senior Debt
Securities of the Company
10. Material contracts:
(a) Long Term Incentive Plan of Barnett Banks, Inc., as amended
(b) Employment agreements
11. Statement re Computation of Per Share Earnings.
12. Ratios of Earnings to Combined Fixed Charges and Preferred Dividends.
13. Annual Report to Security Holders for the fiscal year ended
December 31, 1995.
21. Subsidiaries of the Registrant.
23. Consents of experts and counsel
(a) Consent of Arthur Andersen LLP
24. Powers of Attorney
27. Financial Data Schedule
(1)These items are incorporated from the 1995 Annual Report.
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(2)Except for the information relating to executive officers, the material
required by Items 10 through 13 is hereby incorporated by reference from the
Company's definitive proxy statement pursuant to Instruction G of Form 10-K.
The Company will file its definitive Proxy Statement with the Commission prior
to March 31, 1996.
BUSINESS
GENERAL
Barnett Banks, Inc. is a bank holding company that was organized in
1930. Between 1930 and 1965, Barnett controlled several small banks on the
East Coast of Florida and was affiliated with Barnett Bank of Jacksonville,
N.A. through common ownership. In 1966, the company acquired the Jacksonville
bank, chartered in 1877, and began a program of expansion through the
acquisition and organization of banks in Florida's major population centers.
In 1986, Barnett completed its first acquisition in Georgia.
Now one of the top 25 financial institutions in the United States,
Barnett had assets of $41.6 billion and deposits of $34.2 billion on December
31, 1995. On that date, Barnett owned 32 commercial banks with a total of 613
offices in 45 Florida counties and 8 Georgia counties.
Barnett is a decentralized financial services organization, with its
affiliates acting autonomously in most day-to-day decisions. The principal
role of the holding company is to provide management leadership and support
services to its affiliates that are focused on the sale and delivery of
company products. Most accounting, financial management, human resource
management, audit and loan review functions are provided to affiliates
through regional or central support groups. Dividends and management fees
from affiliates are the holding company's major sources of income. Dividend
payments from the banking affiliates may be limited by statutes. (See
Supervision and Regulation of this Form 10-K as well as NOTE R of NOTES TO
FINANCIAL STATEMENTS in the 1995 Annual Report.) Barnett and its affiliates
had 20,175 full-time employees at December 31, 1995.
CHANGES IN ORGANIZATIONAL STRUCTURE
On February 5, 1996, the company announced that it plans to simplify
its legal structure to enhance internal operations, reduce reporting
redundancies and focus more resources on serving customer needs.
Under the new structure, all but four of the company's 32 banks and
several of its non-bank affiliates will be consolidated into a national bank
to be called Barnett Bank, N.A. Barnett's affiliate banks in Southeast
Georgia, Southwest Georgia, Marion County and the Community Bank of the
Islands on Sanibel Island will retain their individual bank charters.
Barnett expects that its simplified organizational structure will
receive regulatory approval later this year.
BANKING OPERATIONS
The average deposits of a Barnett affiliate bank at the end of 1995
were approximately $1.1 billion. Barnett Bank of South Florida, N.A., had
total deposits of $4.1 billion, or approximately 12% of the combined total
deposits of the company's banking affiliates. Barnett Bank of Broward County,
N.A. had total deposits of $3.8 billion, or 11% of the combined total
deposits of the company's banking affiliates. Barnett Bank of Central Florida
had total deposits of $3.2 billion, or approximately 9% of the combined total
deposits of the company's banking affiliates. Fifteen of the company's other
banking affiliates had total deposits in excess of $500 million, including 6
with total deposits in excess of $1.0 billion. Barnett's banking affiliates
generally provide a full range of commercial banking and related financial
services to the retail, wholesale, manufacturing, real estate and financial
sectors in its markets. State banking laws have been a major factor in the
development of the company's corporate structure in Florida. Prior to 1977,
Florida was a unit banking state, prohibiting the state's banks from
operating branches. At the end of 1976, Barnett operated 60 separate banks in
24 counties. Since then, the Florida Banking Code has been liberalized to
permit cross-county mergers and, in 1988, to permit cross-county branching.
Since 1977, Barnett has consolidated more than 100 Florida banking
organizations into 32 banks, 15 of which serve multi-county markets.
NONBANKING ACTIVITIES
EQUICREDIT CORPORATION is a consumer finance company that specializes
in originating, securitizing and servicing fixed-rate consumer loans secured
by first or second mortgages. It operates in 37 states and originated more
than $1 billion of home equity loans in 1995.
BARNETT BANKS TRUST COMPANY, N.A. provides a full range of trust and
investment management services, including personal trust and estate
administration, institutional asset management, and employee benefit plan
management and administration. It operates 28 sales offices and has total
trust assets of $14 billion, including $10 billion under management.
BARNETT MORTGAGE COMPANY, including its wholly-owned subsidiaries
BancPLUS Financial Corporation and Loan America Financial Corporation, is
among the 25 largest mortgage servicers nationally, servicing a portfolio of
more than $33 billion and 445,000 mortgage loans.
BARNETT SECURITIES, INC. is a full-service brokerage company with 36
offices and 192 financial consultants. Its Capital Markets division is
authorized to engage in financial advisory services and limited underwriting
of certain securities, subject to volume restrictions.
BARNETT CARD SERVICES CORPORATION offers a variety of credit card
services to Barnett's affiliate banks and other credit card issuers.
BARNETT MERCHANT SERVICES CORPORATION, through its joint venture with
First Data Corporation, provides a wide array of credit card processing
services for businesses that accept credit cards as a form of payment.
BARNETT BANKS INSURANCE, INC. reinsures credit life and accident and
health insurance written in connection with loans made by Barnett's
affiliates.
BARNETT TECHNOLOGIES, INC. provides data, item processing and other
operational services for Barnett's affiliates.
COMPETITION
Pursuant to the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994, substantially all state law barriers to the
acquisition of banks by out-of-state bank holding companies were eliminated
as of September 29, 1995. The law will also permit interstate branching by
banks effective June 1, 1997 subject to the ability of states to not adopt
interstate branching completely or to set an earlier effective date. The
company anticipates that the effect of the new law will be to increase
competition within the markets in which it now operates, although the company
cannot predict the extent nor the timing.
In addition to competition from other banks, Barnett continues to
face increased competition from other financial services organizations.
Savings and loan associations continue to compete for loans and deposits,
while finance companies and credit unions compete in the important areas of
consumer lending and deposit gathering. Non-traditional financial service
providers such as brokerages, mutual funds, insurance companies and finance
subsidiaries of industrial companies have intensified competition in recent
years. Additionally, Barnett's national mortgage banking and consumer finance
subsidiaries face significant competition from numerous bank and non-bank
companies.
SUPERVISION AND REGULATION
The banking industry is highly regulated, with numerous federal and
state laws and regulations governing its activities. As a bank holding
company, Barnett is subject to regulation under the Bank Holding Company Act
of 1956, as amended, and its examination and reporting requirements. This
legislation requires the Board of Governors of the Federal Reserve System to
approve bank acquisitions, limits the acquisition of out-of-state banking
organizations unless permitted by state law and limits non-banking
activities. In addition, the Georgia Department of Banking and Finance
regulates the Georgia operations of bank holding companies. Various federal
and state laws and regulations also govern the operations of the company's
banking affiliates.
Barnett's affiliate banks are subject to regulation and supervision by
the Office of the Comptroller of the Currency (OCC) (in the case of
nationally chartered banks), the state banking authorities of the states in
which they are organized (in the case of state chartered banks), the Federal
Reserve Board (in the case of state chartered banks) and the FDIC.
Barnett and its affiliates are also affected by various state and
federal laws, including those relating to consumer protection and similar
matters, as well as by the fiscal and monetary policies of the federal
government and its agencies, including the Federal Reserve Board. An
important purpose of these policies is to curb inflation and control
recessions through control of the supply of money and credit. The Federal
Reserve Board uses its powers to establish reserve requirements of insured
depository institutions and to conduct open market operations in the United
States government securities so as to influence the supply of money and
credit. These policies have a direct effect on the amount of bank loans and
deposits and on interest rates charged on loans and paid on deposits, with
the result that federal policies have a material effect on the earnings of
Barnett and its affiliates. Future policies of the Federal Reserve Board and
other government authorities and future changes in state and federal laws and
regulations cannot be predicted nor can their effect on the future earnings
of Barnett and its affiliates be predicted.
On August 10, 1993, the Federal Deposit Insurance Act was amended to
provide that in the event of the liquidation or other resolution of an
insured depository institution occurring on or after such date, the claims of
depositors of such institution (including claims by the FDIC as subrogee of
insured depositors) are entitled to priority in payment over the claims of
any other senior or general creditors of the institution, including
shareholders.
Effective December 31, 1992, the federal bank regulatory authorities
each adopted risk-based capital guidelines to which Barnett and its banking
affiliates are subject. These guidelines establish a systematic analytical
framework that makes regulatory capital requirements more sensitive to
differences in risk profile among banking organizations, takes off-balance
sheet exposures into explicit account in assessing capital adequacy and
minimizes disincentives to holding liquid, low-risk assets. Failure to meet
applicable capital guidelines could subject a bank to a variety of
enforcement remedies available to the federal regulatory authorities,
including limitation on the ability to pay dividends, the issuance of a
directive to increase capital, the termination of deposit insurance by the
FDIC, and appointment of a conservator or receiver. On December 31, 1995,
Barnett and each of its affiliate banks' capital levels exceeded the capital
guidelines established by the federal banking authorities.
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) provides for expanded regulation of depository institutions and
their affiliates and assigns to the federal banking agencies broad powers to
take prompt corrective action to resolve problems of insured depository
institutions. The extent of these powers depends upon whether the
institutions in question are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," or "critically
undercapitalized." A depository institution is considered "well capitalized"
if it has (i) a total risk-based capital ratio of 10% or greater, (ii) a Tier
1 risk-based capital ratio of 6% or greater, (iii) a leverage ratio of 5% or
greater and (iv) is not subject to any order or written directive to meet and
maintain a specific capital level. On December 31,1995, Barnett and each of
its affiliate banks were considered by federal regulatory authorities to be
"well capitalized."
Barnett's nonbanking activities are supervised by the Federal Reserve
Board. In addition, Barnett Banks Insurance, Inc. and Barnett Annuities
Corporation are subject to insurance laws and regulations of the Insurance
Commissioner of the State of Florida. The activities of Barnett Securities,
Inc. are governed by the Securities and Exchange Commission, the National
Association of Securities Dealers and state securities laws.
The FDICIA recapitalized the deposit insurance funds and gave
regulators the authority to restrict the operations, management and capital
distributions of a bank, depending upon its risk. On December 31, 1995, all
of Barnett's affiliate banks fell into the lowest risk category. FDICIA also
directs regulators to establish underwriting and operations standards,
encompassing such areas as real estate lending, consumer disclosure rules,
internal controls and new reporting requirements.
As discussed under the Competition section, the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 eliminated substantially all
state law barriers to the acquisition of banks by out-of-state bank holding
companies.
PROPERTIES
On December 31, 1995, the company and its affiliates had consolidated
premises and equipment with a net book value of $1.1 billion. The company and
its affiliates generally own their offices and related facilities. Most of
the company's non-banking affiliates and many of the company's consolidated
operations functions are housed in a multi-use office park in Jacksonville.
LEGAL PROCEEDINGS
The company and its subsidiaries are subject to various pending legal
proceedings arising in the normal course of business. After consultation with
legal counsel, management does not anticipate that the ultimate liability, if
any, arising out of these matters will have a material effect on the
company's financial condition.
EXECUTIVE OFFICERS
CHARLES E. RICE, 60, Chairman of the Board and Chief Executive Officer
since November 1988 and Chairman of the Board, President and Chief Executive
Officer from April 1984 to November 1988. Mr. Rice, who has been Chief
Executive Officer since 1979, joined the company in 1966 and was first
elected an executive officer in 1971.
ALLEN L. LASTINGER, JR., 53, President and Chief Operating Officer
since January 1991; Vice Chairman and Chief Banking Officer from November
1988 to December 1990; and Vice Chairman/Retail Banking from April 1984 to
November 1988. Mr. Lastinger joined the company in 1971 and was first elected
an executive officer in 1980.
RICHARD A. ANDERSON, 51, Regional Banking Executive/ Central Region
since April 1994; President and Chief Executive Officer of Barnett Bank of
Broward County, N.A. from January 1990 to April 1994; and President and Chief
Executive Officer of Barnett Bank of Naples from June 1987 to January 1990.
Mr. Anderson joined the company in 1979 and was first elected an executive
officer in 1994.
JUDY BEAUBOUEF, 49, Chief Legal Executive since 1991; Associate
General Counsel from 1988 to 1991. Ms. Beaubouef joined the company in 1988
and was first elected an executive officer in 1991.
SUSAN S. BLASER, 46, Chief Marketing Executive since December 1994;
Senior Vice President for Retail Banking for First Bank System from February
1991 to October 1994; Senior Vice President of CVN Companies from 1988 to
1990. Ms. Blaser joined the company as an executive officer in 1994.
RICHARD C. BREWER, 54, Chief Credit Policy Executive since July 1994;
Regional Banking Executive/Central Region from January 1989 to July 1994; and
Chairman and Chief Executive Officer of Barnett Bank of Southwest Florida
from January 1986 to January 1989. Mr. Brewer joined the company in 1970 and
was first elected an executive officer in 1989.
LEE H. CHAPLIN, JR., 56, Regional Banking Executive/North Region since
February 1991; Regional Banking Executive/South Region from January 1990 to
February 1991; Regional Banking Executive/South Region and President and
Chief Executive Officer of Barnett Bank of South Florida, N.A. from January
1989 to January 1990; and President of Barnett Bank of South Florida, N.A.
from May 1985 to January 1989. Mr. Chaplin joined the company in 1983 and was
first elected an executive officer in 1990.
DOUGLAS K. FREEMAN, 45, Chief Corporate Banking Executive since August
1991; Executive Vice President for Business Banking of Wells Fargo Bank from
January 1989 to August 1991. Mr. Freeman joined the company as an executive
officer in 1991.
RICHARD J. JONES, 45, Chief Asset Management Executive for Barnett
Banks, Inc. since July 1995; President and Chief Executive Officer of Fleet
Investment Services and Corporate Vice President of Fleet Financial Group
from 1991 to 1995.
PAUL T. KERINS, 52, Chief Human Resources Executive since February
1985, when he joined the company as an executive officer.
PATRICK J. MCCANN, 39, Controller since September 1992; Director of
Finance/Central Region from January 1989 to September 1992; Chief Financial
Officer of Barnett Bank of Southwest Florida from January 1988 to June 1989;
and Controller from September 1987 to January 1988. Mr. McCann joined the
company in 1987 and was first elected an executive officer in 1992.
JAMES F. MONDELLO, 52, Regional Banking Executive/ South Region since
February 1991; Regional Banking Executive/East Region from January 1989 to
February 1991; and Executive Vice President and Chief Operating Officer of
Barnett Bank of Polk County from January 1988 to January 1989. Mr. Mondello
joined the company in 1983 and was first elected an executive officer in 1989.
CHARLES W. NEWMAN, 46, Chief Financial Officer since January 1992 and
Executive Vice President and Controller from January 1988 to January 1992.
Mr. Newman joined the company in 1983 and was first elected an executive
officer in 1985.
HINTON F. NOBLES, JR., 50, Executive Vice President since April 1985.
Mr. Nobles joined the company in 1974 and was first elected an executive
officer in 1983.
JONATHAN J. PALMER, 52, Chief Retail Banking and Technology Executive
since October 1994; Chief Technology Executive from July 1990 to October 1994
and Chairman and Chief Executive Officer of Barnett Technologies, Inc. from
November 1990 to October 1994. Mr. Palmer joined the company as an executive
officer in 1990.
RICHARD J. REDICK, 45, Director of Finance since February 1993, when
he joined the company as an executive officer; Executive Vice President of
BayBank Boston, N.A. from 1983 to February 1993.
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BANKING OPERATIONS
The average deposits of a Barnett affiliate bank at the end of 1994
were approximately $1.1 billion. Barnett Bank of South Florida, N.A., had total
deposits of $4.2 billion, or approximately 12% of the combined total deposits of
the company's banking affiliates. Barnett Bank of Broward County, N.A. had total
deposits of $4.1 billion, or 12% of the combined total deposits of the company's
banking affiliates. Barnett Bank of Tampa had total deposits of $2.4 billion, or
approximately 7% of the combined total deposits of the company's banking
affiliates. Fifteen of the company's other banking affiliates had total deposits
in excess of $500 million, including 7 with total deposits in excess of $1.0
billion. All of Barnett's banking affiliates provide a full range of commercial
banking and related financial services to the retail, wholesale, manufacturing,
real estate and financial sectors in its markets. State banking laws have been a
major factor in the development of the company's corporate structure in Florida.
Prior to 1977, Florida was a unit banking state, prohibiting the state's banks
from operating branches. At the end of 1976, Barnett operated 60 separate banks
in 24 counties. Since then, the Florida Banking Code has been liberalized to
permit cross-county mergers and, in 1988, to permit cross-county branching.
Since 1977, Barnett has consolidated more than 100 Florida banking organizations
into 29 banks, 15 of which serve multi-county markets.
NONBANKING ACTIVITIES
BARNETT BANKS TRUST COMPANY, N.A. provides a full range of trust and
investment management services, including personal trust and estate
administration, institutional asset management, and employee benefit plan
management and administration. It operates 35 sales offices and has total trust
assets of $13 billion, including $9 billion under management.
BARNETT MORTGAGE COMPANY including its wholly-owned subsidiary Loan
America Financial Corporation, is among the 25 largest mortgage servicers
nationally, servicing a portfolio of more than $18.4 billion and 240,000
mortgage loans.
BARNETT SECURITIES, INC. is a full-service brokerage company, with 40
offices and 125 investment officers. Its Capital Markets division is authorized
to engage in financial advisory services and limited underwriting of certain
securities, subject to volume restrictions.
BARNETT CARD SERVICES CORPORATION offers a variety of credit card
services to Barnett's affiliate banks and other credit card issuers.
BARNETT MERCHANT SERVICES CORPORATION provides a wide array of credit
card processing services for businesses that accept credit cards as a form of
payment.
BARNETT BANKS INSURANCE, INC. reinsures credit life and accident and
health insurance written in connection with loans made by Barnett's affiliates.
BARNETT RECOVERY CORPORATION provides loan collection services for the
banking affiliates.
BARNETT TECHNOLOGIES, INC. provides data processing services for the
banking and non-banking subsidiaries of Barnett.
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COMPETITION
In addition to competition from other banks, Barnett continues to face
increased competition from other financial services organizations. Savings and
loan associations continue to compete for loans and deposits, while finance
companies and credit unions compete in the important areas of consumer lending
and deposit gathering. Additionally, non-traditional financial service providers
such as brokerages, mutual funds, insurance companies and finance subsidiaries
of industrial companies have intensified competition in recent years.
SUPERVISION AND REGULATION
The banking industry is highly regulated, with numerous federal and
state laws and regulations governing its activities. As a bank holding company,
Barnett is subject to regulation under the Bank Holding Company Act of 1956, as
amended, and its examination and reporting requirements. This legislation
requires the Board of Governors of the Federal Reserve System to approve bank
acquisitions, limits the acquisition of out-of-state banking organizations
unless permitted by state law and limits non-banking activities. In addition,
the Georgia Department of Banking and Finance regulates the Georgia operations
of bank holding companies. Various federal and state laws and regulations also
govern the operations of the company's banking affiliates.
Barnett's affiliate banks are subject to regulation and supervision by
the Office of the Comptroller of the Currency (the "OCC"), (in the case of
nationally chartered banks) the state banking authorities of the states in which
they are organized (in the case of state chartered banks), the Federal Reserve
Board and the FDIC.
Barnett and its affiliates are also affected by various state and
federal laws, including those relating to consumer protection and similar
matters, as well as by the fiscal and monetary policies of the federal
government and its agencies, including the Federal Reserve Board. An important
purpose of these policies is to curb inflation and control recessions through
control of the supply of money and credit. The Federal Reserve Board uses its
powers to establish reserve requirements of insured depository institutions and
to conduct open market operations in the United States government securities so
as to influence the supply of money and credit. These policies have a direct
effect on the amount of bank loans and deposits and on interest rates charged on
loans and paid on deposits, with the result that federal policies have a
material effect on the earnings of Barnett and its affiliates. Future policies
of the Federal Reserve Board and other government authorities and future changes
in state and federal laws and regulations cannot be predicted nor can their
effect on the future earnings of Barnett and its affiliates be predicted.
On August 10, 1993 the Federal Deposit Insurance Act was amended to
provide that in the event of the liquidation or other resolution of an insured
depository institution occurring on or after such date, the claims of depositors
of such institution (including claims by the FDIC as subrogee of insured
depositors) are entitled to
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priority in payment over the claims of any other senior or general creditors of
the institution, including shareholders.
Effective December 31, 1992, the federal bank regulatory authorities
each adopted risk-based capital guidelines to which Barnett and its banking
affiliates are subject. These guidelines establish a systematic analytical
framework that makes regulatory capital requirements more sensitive to
differences in risk profile among banking organizations, takes off-balance sheet
exposures into explicit account in assessing capital adequacy and minimizes
disincentives to holding liquid, low-risk assets. Failure to meet applicable
capital guidelines could subject a bank to a variety of enforcement remedies
available to the federal regulatory authorities, including limitation on the
ability to pay dividends, the issuance of a directive to increase capital, the
termination of deposit insurance by the FDIC, and appointment of a conservator
or receiver. On December 31, 1994, Barnett and each of its affiliate banks'
capital levels exceeded the capital guidelines established by the federal
banking authorities.
The Federal Deposit Insurance Corporation Act of 1991 ("FDICIA")
provides for expanded regulation of depository institutions and their affiliates
and assigns to the federal banking agencies broad powers to take prompt
corrective action to resolve problems of insured depository institutions. The
extent of these powers depends upon whether the institution in question are
"well capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," or "critically undercapitalized." A depository institution
is considered "well capitalized" if it has (i) a total risk-based capital ratio
of 10% or greater, (ii) a Tier 1 risk-based capital ratio of 6% or greater,
(iii) a leverage ratio of 5% or greater and (iv) is not subject to any order or
written directive to meet and maintain a specific capital level. On December
31,1994, Barnett and each of its affiliate banks were considered by federal
regulatory authorities to be "well capitalized."
Barnett's nonbanking activities are supervised by the Federal Reserve
Board. In addition, Barnett Banks Insurance, Inc. is subject to insurance laws
and regulations of the Insurance Commissioner of the State of Florida. The
activities of Barnett Securities, Inc. are governed by the Securities and
Exchange Commission, the National Association of Securities Dealers and state
securities laws.
The Federal Deposit Insurance Corporation Improvement Act (FDICIA) of
1991 recapitalized the deposit insurance funds and gave regulators the authority
to restrict the operations, management and capital distributions of a bank,
depending upon its risk. On December 31, 1994 all of Barnett's affiliate banks
fell into the lowest risk category. FDICIA also directs regulators to establish
underwriting and operations standards, encompassing such areas as real estate
lending, consumer disclosure rules, internal controls and new reporting
requirements.
PROPERTIES
On December 31, 1994 the company and its affiliates had consolidated
premises and equipment with a net book value of $1.0 billion. The company and
its
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affiliates generally own their offices and related facilities. Most of the
company's non-banking affiliates and many of the company's consolidated
operations functions are housed in a multi-use office park in Jacksonville.
LEGAL PROCEEDINGS
The company and its subsidiaries are subject to various pending legal
proceedings arising in the normal course of business. After consultation with
legal counsel, management does not anticipate that the ultimate liability, if
any, arising out of these matters will have a material effect on the company's
financial condition.
SHAREHOLDER DATA
There were 33,268 shareholders of record of Barnett common stock as of
December 31, 1994. In addition, approximately 12,800 Barnett employees own
stock through company-sponsored plans.
STOCK PRICE AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
1993
----
4th 3rd 2nd 1st
<S> <C> <C> <C> <C>
High................. $45.13 $48.88 $49.00 $50.38
Low.................. 37.38 43.00 40.00 40.25
Close................ 41.50 45.00 47.75 45.00
Dividends............ .36 .36 .36 .33
Price/earnings ratio. 10.3x 15.3x 18.5x 20.5x
</TABLE>
STOCK PRICE AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
1994
----
4th 3rd 2nd 1st
<S> <C> <C> <C> <C>
High................. $43.50 $47.63 48.13 $45.88
Low.................. 37.63 43.25 43.25 39.75
Close................ 38.50 44.25 43.75 44.13
Dividends............ .36 .41 .41 .41
Price/earnings ratio. 8.3x 9.8x 9.9x 10.4x
</TABLE>
EXECUTIVE OFFICERS
CHARLES E. RICE, 59, Chairman of the Board and Chief Executive Officer since
November 1988 and Chairman of the Board, President and Chief Executive Officer
from April 1984 to November 1988. Mr. Rice, who has been Chief Executive Officer
since 1979, joined the company in 1966 and was first elected an executive
officer in 1971.
ALLEN L. LASTINGER, JR., 52, President and Chief Operating Officer since January
1991; Vice Chairman and Chief Banking Officer from November 1988 to December
1990; and Vice Chairman/Retail Banking from April 1984 to November 1988.
Mr. Lastinger joined the company in 1971 and was first elected an executive
officer in 1980.
JUDY BEAUBOUEF, 48, Chief Legal Executive since 1991; Associate General Counsel
from 1988 to 1991.
SUSAN S. BLASER, 45, Chief Marketing Executive since December 1994; Senior Vice
President for Retail Banking for First Bank System from February 1991 to October
1994; Senior Vice President for CVN Companies from 1988 to 1990.
RICHARD C. BREWER, 53, Chief Credit Policy Executive since July 1994; Regional
Banking Executive/Central Region from January 1989 to July 1994; and Chairman
and Chief Executive Officer of Barnett Bank of Southwest Florida from January
1986 to
9
<PAGE>
January 1989. Mr. Brewer joined the company in 1970 and was first elected an
executive officer in 1989.
LEE H. CHAPLIN, JR., 55, Regional Banking Executive/North Region since February
1991; Regional Banking Executive/South Region from January 1990 to February
1991; Regional Banking Executive/South Region and President and Chief Executive
Officer of Barnett Bank of South Florida, N.A. from January 1989 to January
1990; and President of Barnett Bank of South Florida, N.A. from May 1985 to
January 1989. Mr. Chaplin joined the company in 1983 and was first elected an
executive officer in 1990.
DOUGLAS K. FREEMAN, 44, Chief Corporate Banking Executive since August 1991;
Executive Vice President for Business Banking of Wells Fargo Bank from January
1989 to August 1991; and an officer of C&S Corporation from June 1972 to January
1989. Mr. Freeman joined the company as an executive officer in 1991.
PAUL T. KERINS, 51, Chief Human Resources Executive since February 1985, when he
joined the company as an executive officer.
PATRICK J. MCCANN, 38, Controller since September 1992; Director of
Finance/Central Region from January 1989 to September 1992; Chief Financial
Officer of Barnett Bank of Southwest Florida from January 1988 to June 1989; and
Controller from September 1987 to January 1988. Mr. McCann joined the company in
1987 and was first elected an executive officer in 1992.
JAMES F. MONDELLO, 51, Regional Banking Executive/South Region since February
1991; Regional Banking Executive/East Region from January 1989 to February
1991; and Executive Vice President and Chief Operating Officer of Barnett Bank
of Polk County from January 1988 to January 1989. Mr. Mondello joined the
company in 1983 and was first elected an executive officer in 1989.
CHARLES W. NEWMAN, 45, Chief Financial Officer since January 1992 and Executive
Vice President and Controller from January 1988 to January 1992. Mr. Newman
joined the company in 1983 and was first elected an executive officer in 1985.
HINTON F. NOBLES, Jr., 49, Executive Vice President since April 1985. Mr. Nobles
joined the company in 1974 and was first elected an executive officer in 1983.
JONATHAN J. PALMER, 51, Chief Retail Banking and Technology Executive since
October 1994; Chief Technology Executive from July 1990 to October 1994; and
Chairman and Chief Executive Officer of Barnett Technologies, Inc. since
November 1990 to October 1994; Executive Vice President, Shearson Lehman Hutton,
from December 1989 to July 1990; Executive Vice President, Furash & Co., from
July 1989
10
<PAGE>
to December 1989; and Vice Chairman, Fidelity Bank, from 1980 to July 1989.
Mr. Palmer joined the company as an executive officer in 1990.
RICHARD J. REDICK, 44, Director of Finance since February 1993, when he joined
the company as an executive officer; Executive Vice President, BayBank Boston,
N.A. from 1983 to February 1993.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf, thereunto duly authorized.
Date: February 7, 1996
BARNETT BANKS, INC.
BY: *
--------------------------
Charles E. Rice, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
NAME TITLE DATE
---- ----- ----
* Director February 7, 1996
- ---------------------
Walter H. Alford
* Director February 7, 1996
- ---------------------
Rita Bornstein
* Director February 7, 1996
- ---------------------
James L. Broadhead
* Director February 7, 1996
- ---------------------
Alvin R. Carpenter
* Director February 7, 1996
- ---------------------
Marshall M. Criser
* Director February 7, 1996
- ---------------------
Jack B. Critchfield
Director February 7, 1996
- ---------------------
Remedios Diaz Oliver
12
<PAGE>
NAME TITLE DATE
---- ----- ----
* President, Chief February 7, 1996
- ---------------------
Allen L. Lastinger, Jr. Operating Officer
and Director
* Director February 7, 1996
- ---------------------
Clarence V. McKee
PATRICK J. MCCANN Controller February 7, 1996
- ---------------------
Patrick J. McCann (Principal Accounting
Officer)
CHARLES W. NEWMAN Chief Financial February 7, 1996
- ---------------------
Charles W. Newman Officer (Principal
Financial Officer)
* Executive Vice February 7, 1996
- --------------------- President
Hinton F. Nobles, Jr.
* Director February 7, 1996
- ---------------------
Thompson L. Rankin
* Chairman and Chief February 7, 1996
- ---------------------
Charles E. Rice Executive Officer
and Director (Principal
Executive Officer)
* Director February 7, 1996
- ---------------------
Frederick H. Schultz
* Director February 7, 1996
- ---------------------
John A. Williams
PARTICK J. MCCANN February 7, 1996
- ---------------------
*Patrick J. McCann
* by signing his name hereto, does sign this document on behalf of each of the
persons indicated by an asterisk above, pursuant to Powers of Attorney duly
executed by such persons and filed with the Securities and Exchange
Commission.
13
<PAGE>
EXHIBIT INDEX
-------------
3. Articles of Incorporation and Bylaws.
*(a) Amended and Restated Articles of
Incorporation.
***(b) Bylaws.
4. Instruments defining the rights of security
holders, including indentures:
**(a) Indenture dated as of May 15, 1972,
relating to 7 3/4% Sinking Fund Debentures
due 1997.
+(b) Indenture dated as of August 15, 1984,
relating to Floating Rate Subordinated
Capital Notes due 1996 and to 8 1/2%
Subordinated Capital Notes due 1999.
++(c) Indentures as of October 19, 1990,
and supplemental indentures dated April
21, 1991 and May 14, 1993 relating
to Debt Securities of the Company.
++(d) Indenture dated as of October 19, 1990 and supplemental indenture
as of April 22, 1991 related to Debt Securities of the Company.
+++(e) Indenture dated March 16, 1995 relating to Subordinated Debt
Securities of the Company.
+++(f) Indenture dated March 16, 1995 relating to Senior Debt Securities
of the Company.
10. Material Contracts
-(a) Long Term Incentive Plan of Barnett Banks, Inc., as amended.
--(b) Employment Agreement Messrs. Nobles, Newman,
Rice, Lastinger & Brewer
11. Statement re Computation of Per Share Earnings.
12. Ratios of Earnings to Combined Fixed Charges
and Preferred Dividends.
13. Annual Report to Security Holders for the fiscal
year ended December 31, 1995.
21. Subsidiaries of the Registrant in addition to page 62
of the Annual Report to Shareholders.
23. Consent of Experts and Counsel.
(a) Consent of Arthur Andersen LLP
24. Powers of Attorney.
27. Financial Data Schedule
__________________________
14
<PAGE>
*Previously filed as Exhibits to Registrant's Registration
Statement of Form S-3, Registration No. 33-59246 and incorporated
herein by reference.
**Previously filed as Exhibits to Registrant's Form 10-K for the
fiscal year ended December 31, 1981, and incorporated herein by
reference.
***Previously filed as Exhibits to Registrant's Registration Statement
on Form S-3. Registration Statement No. 33-57597 and incorporated
herein by reference.
+Previously filed as Exhibit to Registrant's Registration State-
ment on Form S-3, Registration No. 2-92815, and incorporated
herein by reference.
++Previously filed as Exhibit to Registrant's Form 10-K for the
fiscal year ended December 31, 1990, and incorporated herein by
reference.
+++Previously filed as Exhibit to Registrant's Report on Form 8-K
dated March 22, 1995.
-Previously filed as Exhibit to Registrant's Form 10-K for the
fiscal year ended December 31, 1984, and incorporated herein by
reference.
- --Previously filed as Exhibit to Registrant's Form 10-K for the
fiscal year ended December 31, 1993, and incorporated herein by
reference.
15
<PAGE>
APPENDIX DESCRIBING PICTURES AND CHARTS IN ANNUAL REPORT TO SHAREHOLDERS
On page 3 of the printed version, a photo of executive officers appears.
On pages 8, 10, 12, 14 and 16 of the printed version, photos of people
(customers) appear.
On page 17 of the printed version, graphs show fully diluted earnings per
share and return on common shareholders' equity from 1991 to 1995. This
information is included in CONSOLIDATED FINANCIAL HIGHLIGHTS on page 2.
On page 18 of the printed version, a graph shows return on average assets
from 1991 to 1995. This information is included in CONSOLIDATED FINANCIAL
HIGHLIGHTS on page 2.
On page 19 of the printed version, a graph AVERAGE LOANS shows: 1995;
Commercial 15%,Commercial Real Estate 11%, Consumer 74%, 1990; Commercial
19%, Commercial Real Estate 25%, Consumer 56%. A graph AVERAGE DEPOSITS
shows: 1995; Consumer CD 30%, Savings 10%, NOW & Money Market 38%, Demand
16%, Other 6%, 1990; Consumer CD 36%, Savings 7%, NOW & Money Market 29%,
Demand 14%, Other 14%.
On page 23 of the printed version, a graph NET INTEREST INCOME appears which
shows net interest income from 1991 to 1995. This information is included in
CONSOLIDATED FINANCIAL HIGHLIGHTS on page 2. A graph NET YIELD also appears
which shows the net yield as a percentage of average earning assets from 1991
to 1995. This information is also included in CONSOLIDATED FINANCIAL
HIGHLIGHTS on page 2.
On page 25 of the printed version, a graph shows non-interest income,
excluding securities transactions from 1991 to 1995. Another graph shows the
overhead ratio (expenses as a percentage of revenues) for 1991 to 1995. All
of this information is included in CONSOLIDATED FINANCIAL HIGHLIGHTS on page 2.
On page 29 of the printed version, a graph RESERVE COVERAGE OF NON-PERFORMING
LOANS shows: 1991 85%; 1992 114%; 1993 171%; 1994 250%; 1995 297%. Another
graph NET CHARGE-OFFS shows net charge-offs from 1991 to 1995. This
information is included in Table 11 LOAN CHARGE-OFF ANALYSIS on page 30.
On page 32 of the printed version, a graph AVERAGE SHAREHOLDERS' EQUITY shows
average shareholders' equity from 1991 to 1995. This information is included
in CONSOLIDATED FINANCIAL HIGHLIGHTS on page 2.
On page 33 of the printed version, a graph shows book value per share from
1991 to 1995. This information is included in CONSOLIDATED FINANCIAL
HIGHLIGHTS on page 2.
On pages 60 and 61 of the printed version, photographs of the Board of
Directors appear.
16
<PAGE>
On page 63 of the printed version, maps of the United States and
Florida/Southeast Georgia appear showing locations of Barnett's nationwide
companies and bank markets.
On page 64 of the printed version, graphs show 5 year dividend history from
1991 to 1995 and 5 year stock prices (high, low and close) form 1991 to 1995.
This information is included in CONSOLIDATED FINANCIAL HIGHLIGHTS on page 2.
A graph also shows 1995 quarterly stock prices as follows: Q1 High $45.75,
Low $38.75, Close $45.50; Q2 High $52.25, Low $45.50, Close $51.38; Q3 High
$58.88, Low $51.25, Close $56.63; Q4 High $61.50, Low $54.50, Close $59.00.
17
<PAGE>
EXHIBIT 11
BARNETT BANKS, INC. - CONSOLIDATED
COMPUTATION OF EQUIVALENT SHARES AND PER SHARE EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE TWELVE MONTHS ENDED DECEMBER 31
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
1995 1994 1993
----------------------------------------------------------------------------------------
FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
---------- ---------- ---------- ---------- ---------- -----------
Equivalent shares:
<S> <C> <C> <C> <C> <C> <C>
Average shares outstanding: 96,535,240 96,535,240 97,262,496 97,262,496 97,182,222 97,182,222
Additional shares due to:
Stock options 980,902 1,449,796 784,227 784,227 960,690 960,690
Series A preferred stock 0 3,750,612 0 3,773,600 0 3,773,600
Series B preferred stock 31,266 31,266 34,468 34,468 40,205 40,205
Series C preferred stock 0 2,212,823 0 2,911,340 0 2,911,340
----------------------------------------------------------------------------------------
Total equivalent shares 97,547,408 103,979,737 98,081,191 104,766,131 98,183,117 104,868,057
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Earnings per share:
Net income $533,301 533,301 $487,971 $487,971 $420,994 $420,994
Less: Preferred stock dividends (15,861) 0 (18,200) 0 (18,200) 0
----------------------------------------------------------------------------------------
Adjusted net income $517,440 $533,301 $469,771 $487,971 $402,794 $420,994
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Total equivalent shares 97,547,408 103,979,737 98,081,191 104,766,131 98,183,117 104,868,057
Earnings per share on net income $5.30 $5.13 $4.79 $4.66 $4.10 $4.01
-------------------------- -------------------------------------------------------------
-------------------------- -------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 12
BARNETT BANKS, INC. - CONSOLIDATED
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
EXCLUDING INTEREST ON DEPOSITS
Year Ended December 31
-----------------------------------------------------------
1995 1994 1993 1992 1991
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $533,301 $487,971 $420,994 $207,656 $81,442
Provision (benefit) for income taxes 286,293 249,834 207,482 95,310 8,446
-----------------------------------------------------------
Earnings before provision (benefit)
for income taxes 819,594 737,805 628,476 302,966 89,888
-----------------------------------------------------------
Fixed charges:
Interest expense (excluding interest on
deposits) 226,207 159,897 91,005 100,953 133,014
Capitalized interest 1,386 665 1,364 1,498 0
Interest portion of rentals (33%) 29,993 27,450 32,256 31,115 28,244
-----------------------------------------------------------
Total fixed charges 257,586 188,012 124,625 133,566 161,258
-----------------------------------------------------------
Earnings before provision (benefit)
for income taxes and fixed charges $1,077,180 $925,817 $753,101 $436,532 $251,146
-----------------------------------------------------------
-----------------------------------------------------------
Ratio of earnings to fixed charges 4.18 4.92 6.04 3.27 1.56
-----------------------------------------------------------
-----------------------------------------------------------
<CAPTION>
INCLUDING INTEREST ON DEPOSITS
Year Ended December 31
-----------------------------------------------------------
1995 1994 1993 1992 1991
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $533,301 $487,971 $420,994 $207,656 $81,442
Provision (benefit) for income taxes 286,293 249,834 207,482 95,310 8,446
-----------------------------------------------------------
Earnings before provision (benefit)
for income taxes 819,594 737,805 628,476 302,966 89,888
-----------------------------------------------------------
Fixed charges:
Interest expense (including interest on
deposits) 1,219,253 921,408 880,105 1,143,680 1,764,424
Capitalized interest 1,386 665 1,364 1,498 0
Interest portion of rentals (33%) 29,993 27,450 32,256 31,115 28,244
-----------------------------------------------------------
Total fixed charges 1,250,632 949,523 913,725 1,176,293 1,792,668
-----------------------------------------------------------
Earnings before provision (benefit)
for income taxes and fixed charges $2,070,226 $1,687,328 $1,542,201 $1,479,259 $1,882,556
-----------------------------------------------------------
-----------------------------------------------------------
Ratio of earnings to fixed charges 1.66 1.78 1.69 1.26 1.05
-----------------------------------------------------------
-----------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 12 - (continued)
BARNETT BANKS, INC. - CONSOLIDATED
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
(Dollars in thousands)
<TABLE>
<CAPTION>
EXCLUDING INTEREST ON DEPOSITS
Year Ended December 31
---------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $533,301 $487,971 $420,994 $207,656 $81,442
Provision (benefit) for income taxes 286,293 249,834 207,482 95,310 8,446
---------------------------------------------------
Earnings before provision (benefit)
for income taxes 819,594 737,805 628,476 302,966 89,888
---------------------------------------------------
Fixed charges:
Interest expense (excluding interest on
deposits) 226,207 159,897 91,005 100,953 133,014
Capitalized interest 1,386 665 1,364 1,498 0
Interest portion of rentals (33%) 29,993 27,450 32,756 31,115 28,244
---------------------------------------------------
Total fixed charges 257,586 188,012 125,125 133,566 161,258
---------------------------------------------------
Earnings before provision (benefit)
for income taxes and fixed charges $1,077,180 $925,817 $753,601 $436,532 $251,146
---------------------------------------------------
---------------------------------------------------
Preferred dividend requirements 15,861 18,234 18,238 18,254 10,284
Ratio of pre-tax income to net income 1.54 1.51 1.49 1.46 1.10
---------------------------------------------------
Preferred dividend factor 24,376 27,570 27,226 26,632 11,351
Total Fixed Charges 257,586 188,012 125,125 133,566 161,258
---------------------------------------------------
Combined fixed charges and preferred
dividend requirements $281,962 $215,582 $152,351 $160,198 $172,609
---------------------------------------------------
---------------------------------------------------
Ratio of earnings to combined fixed
charges and preferred dividend
requirements 3.82 4.29 4.95 2.72 1.46
---------------------------------------------------
---------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 12 - (continued)
BARNETT BANKS, INC. - CONSOLIDATED
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
(Dollars in thousands)
<TABLE>
<CAPTION>
INCLUDING INTEREST ON DEPOSITS
Year Ended December 31
-----------------------------------------------------------
1995 1994 1993 1992 1991
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $533,301 $487,971 $420,994 $207,656 $81,442
Provision (benefit) for income taxes 286,293 249,834 207,482 95,310 8,446
-----------------------------------------------------------
Earnings before provision (benefit)
for income taxes 819,594 737,805 628,476 302,966 89,888
-----------------------------------------------------------
Fixed charges:
Interest expense (including
interest on deposits) 1,219,253 921,408 880,105 1,143,680 1,764,424
Capitalized interest 1,386 665 1,364 1,498 0
Interest portion of rentals (33%) 29,993 27,450 32,256 31,115 28,244
-----------------------------------------------------------
Total fixed charges 1,250,632 949,523 913,725 1,176,293 1,792,668
-----------------------------------------------------------
Earnings before provision for
income taxes and fixed charges $2,070,226 1,687,328 $1,542,201 $1,479,259 $1,882,556
-----------------------------------------------------------
-----------------------------------------------------------
Preferred dividend requirements 15,861 18,234 18,238 18,254 10,284
Ratio of pre-tax income to net income 1.54 1.51 1.49 1.46 1.10
-----------------------------------------------------------
Preferred dividend factor 24,376 27,570 27,226 26,632 11,351
Total Fixed Charges 1,250,632 949,523 913,725 1,176,293 1,792,668
-----------------------------------------------------------
Combined fixed charges and preferred
dividend requirements $1,275,008 $977,093 $940,951 $1,202,925 $1,804,019
-----------------------------------------------------------
-----------------------------------------------------------
Ratio of earnings to combined fixed
charges and preferred dividend
requirements 1.62 1.73 1.64 1.23 1.04
-----------------------------------------------------------
-----------------------------------------------------------
</TABLE>
<PAGE>
[BARNETT BANK LOGO] BARNETT BANKS, INC. 1995 ANNUAL REPORT
what is
VALUE?
[PHOTO]
<PAGE>
CONTENTS Consolidated Financial Highlights. . . . . . 2
A Letter to Our Shareholders . . . . . . . . 3
What is Value? . . . . . . . . . . . . . . . 7
Lines of Business . . . . . . . . . . . . . 14
Creating Value in Our Communities . . . . . 16
Management Discussion. . . . . . . . . . . . 17
Six-Year Statements . . . . . . . . . . . . 34
Fourth Quarter Management Discussion . . . . 36
Annual Financial Statements. . . . . . . . . 42
Notes to Financial Statements . . . . . . . 47
Directors and Officers . . . . . . . . . . . 60
Directory of Affiliates. . . . . . . . . . . 62
Shareholder Information . . . . . . . . . . 64
BARNETT TODAY
Barnett Banks, Inc. is the leading financial institution in Florida and is
ranked in the top 25 in the United States. Barnett's stock is listed on the New
York Stock Exchange.
Barnett-Registered Trademark- commands the leading market share in Florida in
virtually every major banking line of business and ranks first, second or third
in deposit share in all Florida markets in which it operates. Barnett's banks in
Florida and Georgia are complemented by nonbank affiliates providing support
services and specialized financial services, including trust, full-service
brokerage, credit card, mortgage banking and consumer finance. Barnett's
mortgage banking and consumer finance affiliates offer loans nationwide.
OUR MISSION
The mission of Barnett is to create value for its owners, customers and
employees as a major financial services provider in the United States.
We will strengthen our position in existing markets by providing a full range
of financial services, by acquiring other financial institutions, and by
capitalizing on our market knowledge and our commitment to entrepreneurial
market ownership.
Our focus will be on satisfying our customers' total financial needs by
offering differentiated benefits driven by a sales and service process that
solidifies and expands the total customer relationship.
Barnett will aggressively pursue diversified income opportunities which
include internal initiatives, acquisitions and alliances in attractive markets
throughout the country which complement, leverage and expand our core
capabilities.
By the year 2000, Barnett will be a fully diversified financial services
organization with the acknowledged leadership position in the evolving banking
business in its markets and with a diversified group of other financial
businesses throughout the nation.
<PAGE>
[GRAPHICS]
VALUE is that [PHOTO]
combination of PRODUCT,
[PHOTO] SERVICE and PRICE that
customers find attractive and our company
finds PROFITABLE.
[PHOTO]
[GRAPHICS]
<PAGE>
CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Dollars in Millions Except Per Share Data 1995 1994 Change 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEAR
Net interest income (taxable-equivalent) . . . . . . . . . . . . $1,772.2 $1,677.5 6% $1,700.3 $1,736.1 $1,568.0
Provision for loan losses. . . . . . . . . . . . . . . . . . . . 122.5 74.0 66 120.4 257.3 453.9
Non-interest income (excluding securities transactions). . . . . 714.0 555.7 28 601.1 586.5 528.6
Securities transactions. . . . . . . . . . . . . . . . . . . . . 5.0 (13.1) -- (2.1) 34.2 18.2
Non-interest expense (excluding restructuring charge). . . . . . 1,518.6 1,364.2 11 1,501.0 1,645.5 1,497.1
Restructuring charge . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- 92.6 --
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . 533.3 488.0 9 421.0 207.7 81.4
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE
Net income:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.30 $ 4.79 11% $ 4.10 $ 1.97 $ .80
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . 5.13 4.66 10 4.01 1.97 .80
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . 1.82 1.59 14 1.41 1.32 1.32
Book value(1). . . . . . . . . . . . . . . . . . . . . . . . . . 34.25 31.09 10 28.34 25.40 24.19
Stock price:
High. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.50 48.13 28 50.38 43.63 36.38
Low . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.75 37.63 3 37.38 31.00 15.50
Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.00 38.50 53 41.50 41.25 33.50
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
KEY PERFORMANCE RATIOS
Return on assets . . . . . . . . . . . . . . . . . . . . . . . . 1.30% 1.28% 2% 1.13% .55% .21%
Return on common equity. . . . . . . . . . . . . . . . . . . . . 16.54 16.70 (1) 16.02 8.26 3.54
Return on total equity . . . . . . . . . . . . . . . . . . . . . 16.08 16.11 -- 15.42 8.27 3.83
Net yield on earning assets. . . . . . . . . . . . . . . . . . . 4.88 4.87 -- 5.07 5.11 4.60
Overhead ratio(2). . . . . . . . . . . . . . . . . . . . . . . . 61.08 61.09 -- 65.22 70.85 71.41
Shareholders' equity to total assets(1). . . . . . . . . . . . . 8.05 7.81 3 7.76 6.77 6.34
Leverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . 6.16 6.97 (12) 7.29 6.18 5.54
Total risk-based capital ratio . . . . . . . . . . . . . . . . . 11.51 12.42 (7) 13.33 12.11 10.53
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41,105 $38,169 8% $37,356 $37,923 $37,900
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,691 31,710 6 32,485 33,221 33,338
Loans, net of unearned income. . . . . . . . . . . . . . . . . . 29,772 26,810 11 25,840 26,236 27,201
Earning assets . . . . . . . . . . . . . . . . . . . . . . . . . 36,308 34,441 5 33,513 33,940 34,118
Common equity. . . . . . . . . . . . . . . . . . . . . . . . . . 3,129 2,814 11 2,515 2,295 2,009
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . 3,316 3,029 9 2,730 2,511 2,128
Fully diluted shares (thousands) . . . . . . . . . . . . . . . . 103,980 104,766 (1) 104,868 102,850 93,054
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AT YEAR END
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41,554 $41,278 1% $38,331 $39,465 $38,491
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,234 35,109 (2) 32,634 34,689 33,850
Loans, net of unearned income. . . . . . . . . . . . . . . . . . 30,486 28,521 7 25,930 26,051 26,422
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . 1,191 777 53 682 701 710
Preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . 98 215 (54) 215 215 216
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . 3,272 3,134 4 2,874 2,556 2,314
Common shares (thousands). . . . . . . . . . . . . . . . . . . . 94,865 96,733 (2) 97,404 96,643 91,992
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 COMPUTED BASED ON EQUITY BEFORE DEDUCTION OF THE EMPLOYEE STOCK OWNERSHIP PLAN
OBLIGATION.
2 EXCLUDING RESTRUCTURING CHARGE.
2
- -------------------
BARNETT BANKS, INC.
<PAGE>
[PHOTO]
CHARLES E. RICE,
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ALLEN L. LASTINGER, JR.,
PRESIDENT AND CHIEF OPERATING OFFICER
A LETTER TO OUR SHAREHOLDERS
Barnett had an outstanding 1995, achieving record operating results for
the third consecutive year while making significant investments toward
building a profitable future as a diversified financial services provider.
Solid revenue growth combined with effective expense control produced record
net income and earnings per share. Through internal initiatives and
acquisitions, we continued to invest selectively in our traditional banking
business. And we expanded nationally in business lines such as consumer
finance and mortgage banking that leverage our core capabilities.
Barnett earned $533.3 million, or $5.13 per fully diluted share, in 1995,
a 10% increase in per-share earnings. The company earned $488.0 million, or
$4.66 per fully diluted share, in 1994.
Among the 1995 highlights:
Revenues, excluding securities transactions, rose 11% from 1994, paced by
additional non-interest income from recently acquired companies, loan growth
and prudent management of our net interest margin. Net interest income was up
6%, as earning assets rose $1.9 billion and the net yield on earning assets
remained stable at 4.88%. Non-interest income, excluding securities
transactions, increased 28%, primarily due to contributions from EquiCredit
Corporation, a nationwide consumer finance company acquired in January, and
increased mortgage revenue, largely as a result of the acquisitions of Loan
America Financial Corporation and BancPLUS Financial Corporation.
Despite an 11% increase in non-interest expense, also mostly due to
acquisitions, our overhead ratio remained at 61%.
Non-performing assets of $238 million on December 31 represented just
.78% of outstandings, the lowest non-performing asset ratio Barnett has
reported in more than 10 years.
Net charge-offs rose 32% during the year to $122.0 million, representing
.41% of loans. That level, which continued to reflect significant recoveries,
remained below our anticipated long-term operating range of .50-.60%.
- -------------------------------------------------------------------------------
WE EXPANDED NATIONALLY IN BUSINESS LINES SUCH AS CONSUMER FINANCE AND
MORTGAGE BANKING THAT LEVERAGE OUR CORE CAPABILITIES.
3
-------------------
BARNETT BANKS, INC.
<PAGE>
LETTER TO SHAREHOLDERS
Among our core businesses, consumer lending continued to be a strong
contributor. Our portfolio of loans to consumers, which primarily consists of
mortgage and installment loans, grew 14% during the year and now represents
74% of total loans.
Our success in building the bank while diversifying the business is
evident in our financial results. Expansion of our mortgage banking business
and the acquisition of EquiCredit helped increase non-interest income to 29%
of revenues in 1995 from 24% in 1994. In addition, we are geographically
diversifying our revenue as EquiCredit and Barnett Mortgage now offer loan
products through nationwide networks.
Mortgage originations, which contribute to non-interest income through
servicing fees, more than doubled to $5.8 billion, primarily due to
acquisitions. EquiCredit, which securitizes its loans for sale, originated
more than $1 billion of consumer loans, up from $656 million in 1994.
In our letter last year, we listed five areas in which Barnett must excel
in order to prosper: distribution and sales, risk management, management
systems, marketing and adaptability. In 1995, we made progress in all of
those areas.
The company rigorously reviewed its sales and distribution processes and
continued to make significant enhancements. We are improving sales training,
refining our incentives, using telebanking as a sales vehicle as well as
providing customer service and making it more attractive for customers to use
our more efficient delivery channels. To be further responsive to the
customer, we have begun to reorganize sales forces around customer segments.
We continue to practice disciplined risk management to maintain credit
quality. Non-performing assets as a percentage of total loans have declined
in each of the past four years to their lowest levels in more than a decade.
Future credit quality is heavily dependent on the economy, and we believe that
this is the most important time to ensure that high credit standards are
maintained.
Our advanced management systems are providing timely information to
Barnett employees in the marketplace to enable them to accurately assess
market potential, understand their best opportunities and develop strategies
to reach their goals. These systems are also providing management with
insights into our markers that we are using to identify and institutionalize
best practices from market to market.
Our new marketing team conducted an extensive study of consumers'
awareness and impressions of Barnett throughout our markets. During 1996,
this information will guide a reinvigorated advertising and promotional
program that will begin to clearly differentiate Barnett from its bank and
non-bank competitors.
Marketing is also spearheading our drive to understand our customers
better. The use of information about customer needs, behavior and
profitability is the critical factor in our strategy to grow revenues
profitably.
- --------------------------------------------------------------------------------
OUR SUCCESS IN BUILDING THE BANK WHILE DIVERSIFYING THE BUSINESS IS EVIDENT IN
OUR FINANCIAL RESULTS. EXPANSION OF OUR MORTGAGE BANKING BUSINESS AND THE
ACQUISITION OF EQUICREDIT HELPED INCREASE NON-INTEREST INCOME TO 29% OF
REVENUES IN 1995 FROM 24% IN 1994.
4
- -------------------
BARNETT BANKS, INC.
<PAGE>
We can now determine the profit contribution of each of our retail and small
business customers. That information is the foundation for us to offer
customers unique combinations of price, product and service that they
consider attractive and, importantly, that creates benefits for shareholders.
We call these VALUE PROPOSITIONS.
Our annual report this year describes how we are using this information to
create these value propositions that benefit customers and shareholders by
building our product line, reinventing delivery and creating innovative
pricing. Taking our cue from customers, we are providing more and better
delivery channels, from supermarket banking to computer access. And we are
creating value for those who want more electronic delivery.
We are creating value propositions for those who are willing to give us
more of their business in order to get a better price and for those who want
a high degree of personal service. We are implementing a strategy to help
consumers manage their assets that fully integrates delivery of deposit and
investment products and that moves toward helping customers plan for their
futures.
By creating value for customers in these ways, we will increase our share
of financial services in the markets in which we operate, retaining our best
customers and expanding our relationship with others in profitable ways.
Barnett's entire organization is focused on how to adapt to a future that
will be very different from our past. Retail finance used to be local; people
deposited their savings in financial institutions which lent that money
within the community. Today, financial markets are global and there are many
providers -- banks and non banks -- that cater to the retail financial
services market.
Twenty-five years ago, families had a majority of their financial assets
in bank deposits. Today, they invest a significant portion of their savings
in mutual funds and many buy annuities for retirement. Credit is easily
available from national nonbank providers.
We understand that to thrive in this world, we must adapt. And we are
doing it. Barnett today has a diversified product line that responds to these
trends. From traditional deposits, loans, mutual funds, annuities and other
investment products for individuals to payroll services, cash management and
access to the capital markets for businesses, we are offering more and better
solutions to customers' increasingly complex financial needs.
The banking industry is consolidating rapidly, as many banks are pursuing
earnings growth through acquisitions and cost-cutting strategies. Because of
the dynamic markets in which we operate, we have opted instead for a revenue
growth strategy, designed to earn more of customers' financial services
business by meeting a myriad of needs attractively and effectively. This is a
winning strategy because it is customer-focused, it expands our product
lines in faster growing businesses and it maximizes value for shareholders.
- --------------------------------------------------------------------------------
WE HAVE OPTED FOR A REVENUE GROWTH STRATEGY, DESIGNED TO EARN MORE OF
CUSTOMERS' FINANCIAL SERVICES BUSINESS BY MEETING A MYRIAD OF FINANCIAL NEEDS
ATTRACTIVELY AND EFFECTIVELY. THIS IS A WINNING STRATEGY BECAUSE IT IS
CUSTOMER-FOCUSED, IT EXPANDS OUR PRODUCT LINES IN FASTER GROWING BUSINESSES
AND IT MAXIMIZES VALUE FOR SHAREHOLDERS.
5
-------------------
BARNETT BANKS, INC.
<PAGE>
LETTER TO SHAREHOLDERS
In making this transition, Barnett is operating from a strong position. We
are focused on Florida, the nation's fourth-largest state and the fastest
growing of the nation's largest states. Florida's residents have a per capita
income and investable assets well above the national average.
Our company has a relationship with almost four out of ten Florida
households and one in six businesses. Surveys show ours is the best known
financial service company in Florida. When asked to name a bank, one person in
three names Barnett first. With more than 600 offices, almost 800 ATMs and
the most complete telephone banking service, we have the most powerful
financial services distribution network in our markets.
We can leverage this position by increasing our share of the financial
services market in Florida while expanding outside of the state in high
growth businesses, such as consumer finance, that enhance our traditional
strengths and give us access to new groups of customers. In 1995, our Dealer
Financial Services subsidiary, which makes vehicle loans through dealers,
piloted an office in Charlotte, N.C. and will consider, based on that
success, expanding into other southern states in 1996. EquiCredit opened 20
new offices around the country.
Barnett's 20,000 employees are focused on one goal: to create shareholder
value by becoming the premier financial services provider in our markets. To
be recognized as one of the leaders in the industry is a journey with no end.
Barnett employees have proven in the past that they have the ingenuity,
enthusiasm and perseverance it takes to travel that road.
We are excited about this challenge and appreciate the support of
shareholders as we write a new and prosperous chapter in Barnett's 118-year
history.
/s/ CHARLES E. RICE
Charles E. Rice
Chairman and Chief Executive Officer
/s/ ALLEN L. LASTINGER, JR.
Allen L. Lastinger, Jr.
President and Chief Operating Officer
6
- -------------------
BARNETT BANKS, INC.
<PAGE>
IT IS BARNETT'S GOAL TO CREATE VALUE PROPOSITIONS: CUSTOMER-DRIVEN
COMBINATIONS OF PRODUCT, SERVICE AND PRICE THAT WILL PROFITABLY CREATE VALUE,
CUSTOMER BY CUSTOMER.
THE CUSTOMER Traditionally, value has been thought of as PRICE, some measure
of QUALITY and CONVENIENCE, and SERVICE. But understanding customers' true
perceptions of value requires a deeper understanding of how they really use
our products and services.
Quality is about more than simply providing basic service. It is also
about willingness to promptly solve problems and to constantly strive for new
answers to customer needs.
Convenience is no longer simply about having an office on every corner.
It is about minimizing customers' time and stress in understanding,
purchasing and using a product or service.
But for financial products and services there is another key component:
SITUATION. Our products and services are means to an end. A loan buys a
car, a house, an education. Understanding the timing of customers' needs and
how they want to use the product or service, therefore, becomes a critical
component of the value equation.
Value, then, is different for each customer. It is Barnett's goal to
create value propositions: customer-driven combinations of product, service
and price that will profitably create value, customer by customer.
DELIVERY To do that, the company has embarked on a number of important
initiatives summarized here and discussed in more detail in the following
pages. We are trying to learn everything we can about our customers' needs
and what aspects of service are most important to them. We are analyzing how
they like to transact with us, what products and services they use most and
generally how satisfied they are with the company. We also are profiling
customers within our banking offices to learn about their financial goals.
And we are studying factors that create profitable customer relationships.
We are using this information to do a better job of building value into
customer relationships. In response to customer preferences for greater
convenience, we are expanding our delivery capability to provide 24-hour
access through new electronic channels while maintaining the ability to bank
face-to-face in our offices for those who prefer it. To meet customers'
changing financial needs, we are creating new products and enhancing our
existing product packages. At the same time, we are building pricing
strategies to retain our more profitable customers and to encourage our
customers to use more efficient delivery.
This strategy is designed to differentiate Barnett in the marketplace. We
are focused on the customer, assuring that Barnett is adding value not just
in the products, services and delivery options we offer, but in how customers
can combine them to increase the value of doing more of their business with us.
Other companies may offer similar products or services, but none will feature
the combination of convenience, service and product that Barnett can offer to
key market segments.
PRODUCTS Barnett is uniquely positioned as the premier provider of financial
services in our markets. Think about what most people or businesses need in
financial services, and you start with a checking account and credit. These
have been Barnett's principal business lines. About one in four Floridians
have checking accounts at Barnett. Approximately one in three who borrow do
so with our company. And one in six small businesses in our markets have a
relationship with us.
Our opportunity now is to broaden our Florida base profitably, leveraging
the infrastructure already in place to meet the more diverse financial
service needs of individuals and businesses. Our strategy is aimed at
increasing the amount of business we do with each customer by making Barnett
the preferred one-stop destination for financial services in our selected
markets.
We will be the most convenient place to do business.
We will have the most complete product line with innovative pricing that
makes it attractive to do business with us as the customer desires.
We will have the best sales force with technologically advanced tools to
help the customer make the right choices and to get the most benefit from a
relationship with Barnett.
But uniquely, Barnett will create value for shareholders by using our
understanding of customers' preferences and use of financial services. We
will create the combination of products, services and price that will produce
value for customers, giving them a compelling reason to profitably expand
their Barnett relationship.
7
-------------------
BARNETT BANKS, INC.
<PAGE>
UNDERSTANDING CUSTOMER NEEDS
A HOME
AN EDUCATION
RETIREMENT
[PHOTO]
8
- -------------------
BARNETT BANKS, INC.
<PAGE>
TO UNDERSTAND CUSTOMERS BETTER, BARNETT IS ANALYZING INFORMATION ABOUT A
CUSTOMER'S FULL RELATIONSHIP WITH US, INCLUDING PRODUCTS AND DISTRIBUTION POINTS
USED, REVENUES AND COSTS. THEN WE CAN USE THAT KNOWLEDGE TO DESIGN TARGETED
MARKETING AND MAKE AVAILABLE ATTRACTIVE, PROFITABLE PACKAGES OF FINANCIAL
SERVICES TO CUSTOMERS.
LIFE EVENTS The process of understanding customers starts with recognizing that
life events often drive customer needs. From buying a home to paying for a
child's college education to investing for retirement, each customer has
different financial targets. Barnett's information analysis and sales process
are designed to discern those needs.
To understand customers better, Barnett is analyzing information about a
customer's full relationship with us, including products and distribution points
used, revenues and costs. Then we can use that knowledge to design targeted
marketing and make available attractive, profitable packages of financial
services to customers.
For example, we know that many customers make deposits at tellers when
they could be using ATMs more conveniently and less expensively. In late
1995, Barnett piloted a program to encourage targeted customers to make
deposits through an ATM. These customers were selected because of the way
they had used technology to access Barnett in the past. The incentives were
positive; there was no penalty if they continued to use tellers. It is
Barnett's goal to make it attractive for customers to use self-service for
routine transactions, something that would be more convenient for them and
more efficient for the company.
Barnett Card Services Corporation has been using customer information to
execute a successful retention strategy. Through information engineering, the
company is directing its solicitation efforts toward the appropriate
customers. And by immediately analyzing a customer's profitability, card
services representatives can take quick, effective action to retain customer
accounts.
TARGETED MARKETS These examples illustrate our mission to take the vast
amounts of data we have and turn it into useful information about our
customers, our markets and our delivery system in order to profitably
maintain and expand customer relationships.
This use of information is dramatically changing the way we do business.
Previously, we defined target market segments principally in terms of
demographics. We generally tried to market to each with standardized
products. For example, we have the Premier Account for the affluent segment,
Senior Partners for those 55 and over, the Edge Account for the middle market
and Economy Checking for the low-to-moderate income checking account customer.
[BULLSEYE LOGO]
Today, we are developing more combinations to fit different customers'
needs. The number of primary segments has almost doubled from six to 11. We
are developing the capability to give customers incentives to use our more
efficient delivery channels and to structure product offerings that provide
greater value for both the customer and Barnett.
By analyzing customer information, we understand that 10% of our customers
provide 50% of the profits. The key is to have strategies to retain those
customers while building the profitability of others. There is profit
potential across the demographic spectrum. Age and income are not definitive
predictors.
STRATEGIES Our understanding of customer profitability is helping us to
become more effective in a number of ways. We know who our profitable
customers are, and we have strategies to retain them. For example, users of
Desktop Banking, who access us through personal computers, are twice as
profitable as the average customer.
We're developing predictive modeling capabilities to identify customers at
risk of attrition and then will build proactive strategies that retain them
as Barnett customers. We are incenting unprofitable customers to become
profitable by increasing their relationship with us or by accessing us
differently.
To help local Barnett representatives identify their most profitable
customers and manage their relationships accordingly, Barnett will roll out a
new Retail Market Management System in 1996. Using this system, employees
will better understand the profit dynamics of expanding individual
relationships and develop winning strategies to retain and expand business.
Ultimately, understanding the customer is the first step toward creating
value propositions that customers find attractive and create value for
shareholders.
9
-------------------
BARNETT BANKS, INC.
<PAGE>
MORE DELIVERY CHOICES
AVAILABLE 24 HOURS
CONVENIENT
EASY & HELPFUL
[PHOTO]
10
- -------------------
BARNETT BANKS, INC.
<PAGE>
CONVENIENT, COST-EFFECTIVE DELIVERY IS A KEY ELEMENT OF THE VALUE
PROPOSITION. BARNETT WILL CONTINUE TO USE TECHNOLOGY AND CUSTOMER INFORMATION
TO IMPROVE ACCESS TO ITS PRODUCTS AND SERVICES AND TO FOCUS THE COMPANY'S
SALES PROCESS AND ORGANIZATION ON CUSTOMER NEEDS.
REINVENTING DELIVERY Customers are redefining how, when and where they expect
financial services to be delivered. In response, Barnett is reinventing
delivery with an emphasis on convenience.
By developing a deep understanding of customers' changing preferences for
more convenient and less expensive access as well as what constitutes
profitable delivery, we can tailor our strategy to include the appropriate
mix of office-based and on-line, self-service channels.
Historically, financial institutions have offered one size fits all
delivery systems composed of full-service offices. Today, nearly 50% of
Barnett's retail transactions take place outside of the office, and that
percentage is growing as customers become more comfortable with
technology-based self-service. The growth rate of transactions through
alternative channels such as ATMs, telebanking and personal computers is
almost 10 times the growth rate of office-based transactions.
The traditional role of the banking office as a transaction center is
receding, and its importance as a sales center is growing. Barnett's answer
is to reshape its office network to look and act more like retail stores than
traditional bank branches. We'll have full-service superstores with well-trained
sales forces where the customer can choose from a wider array of products and
services, such as investment and retirement counseling.
CONVENIENCE Barnett will also have many "convenience" stores, efficient
offices which will cater to customers who prefer to transact in the local
bank office. Because these stores will be less expensive to operate than
traditional banking offices, we can offer more locations for the same cost.
The company will also locate Barnett offices in supermarkets and other
shared facilities to respond to the growing customer need for any time, any
place banking. In the first half of 1996, Barnett expects to open pilot
offices in selected Publix Super Markets locations in Florida. Then, based on
the success of the pilot locations, we plan to expand our presence in shared
retail environments.
ATMs remain in integral part of our strategy to deliver convenience.
Barnett has the largest ATM network in its markets and we're aggressively
adding ATMs and putting them in more convenient locations such as malls,
airports and drive-up kiosks. While today's ATMs easily and conveniently
handle routine transactions, new machines will offer much more in the near
future.
Calls to Barnett's automated telephone service or telebanking, which
didn't exist 10 years ago, reached 50 million in 1995. The telephone adds
convenience for the customer who can access account information 24 hours a
day from anywhere in the world. And it substantially reduces the cost to
Barnett of handling these inquiries or transactions. Increasingly,
telebanking is being used as a sales channel.
TECHNOLOGY More and more customers use personal computers at work and at
home, and they are taking advantage of this technology to enhance their
lives. Barnett has offered Desktop Banking since 1993. In 1996, the company
will introduce an enhanced Desktop Banking service that will be available
separately from any on-line service and that will enable customers to connect
directly and securely to Barnett. The company maintains an active site on the
Internet's World Wide Web and is also experimenting with delivery via
interactive television.
To be successful, delivery must not only be convenient, it must be
seamless. Barnett's automated customer inquiry handling system allows any
Barnett representative, whether in the office or in telebanking, to access
information on a customer's complete banking relationship. The representative
can note what actions were taken so that if the customer subsequently
contacts Barnett, the next customer service representative can see what was
done.
Barnett's Customer Access System gives us the ability to deliver all of
the information about a customer's relationship without asking the customer
for account numbers. And our new relationship account will allow customers to
open an account with Barnett once, then add products without ever having to
come into a Barnett office.
Convenient, cost-effective delivery is a key element of the value
proposition. Barnett will continue to use technology and customer information
to improve access to its products and services and to focus the company's
sales process on customer needs.
[PICTURE]
11
-------------------
BARNETT BANKS, INC.
<PAGE>
PRODUCTS FOR TODAY'S LIFESTYLES
TRANSACTION SERVICES
INVESTMENTS
AUTO LOANS AND LEASES
[PHOTO]
12
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BARNETT BANKS, INC.
<PAGE>
WHAT IS VALUE?
IN 1996, OUR PRODUCT DEVELOPMENT STRATEGY WILL UTILIZE NEW TECHNOLOGY TO
IDENTIFY CUSTOMER NEEDS AND DEVELOP COMPETITIVE PACKAGES TO BETTER SERVE OUR
CUSTOMERS AND PROMOTE DEEPER, BROADER AND LONGER-LASTING RELATIONSHIPS.
NEW PRODUCTS Barnett's traditional strength is our banking relationship with
nearly 40% of Florida's households. Now we see baby boomers beginning to
migrate from loan and credit-related products toward retirement planning and
wealth accumulation. As a result, these customers need more sophisticated
services and investment guidance from a financial services expert.
To meet this need, the company in 1995 embarked on a number of important
initiatives. We focused investment sales forces around customer segments
rather than product or company affiliation to facilitate seamless product
delivery. We assigned specially trained and licensed financial consultants to
many of our offices to assist customers with an interest in purchasing
investment products such as mutual funds, stocks, bonds and annuities. And we
realigned our management structure by hiring a new chief asset management
executive to oversee how we sell both traditional bank and non-insured
investment products.
We will take additional actions in 1996 to satisfy customers' emerging
needs. The financial consultants in our offices will employ new technology
designed to rapidly profile customers and provide them with the products that
best meet their financial needs.
INVESTING Our new Investor's Access Account, which incorporates a sweep
feature to transfer funds into a variety of interest-bearing money market
accounts, will include an enhanced statement in 1996. The new reporting
integrates both FDIC deposit and non-insured investment products in one
statement to simplify financial planning and monitoring of financial assets
for Barnett customers.
The potential to sell insurance also presents an attractive growth
opportunity for Barnett. Currently, banks owned by holding companies in
Florida are prohibited by state law from selling most types of insurance,
although such sales are permitted in almost 30 other states. The U.S. Supreme
Court has agreed to review Barnett's assertion that we are permitted to sell
insurance in Florida, and the court is expected to rule on this issue in 1996.
Product opportunities are not limited to meeting the investment needs of
affluent customers. By providing customers with the right packages, their
income level has little bearing on profitability. Economy Checking, for
example, is a very successful product due to its low servicing cost. It
features a no-fee account limited to seven checks per month, but with
unlimited ATM and telephone access. We will further differentiate our
products by providing customers pricing options based upon their delivery
preferences.
CREDIT We identified multiple opportunities in 1995 to expand credit product
offerings. Barnett Card Services Corporation began marketing a secured
MasterCard in the fourth quarter to consumers establishing or rebuilding
positive credit histories.
[PHOTO]
The Barnett SuperCard Check Card, a debit purchase card accepted
everywhere Visa is honored, continues to gain popularity with consumers. More
convenient for the customer at point of sale and less expensive to process
than paper checks, this product is at the forefront of payment alternatives.
To complement Barnett's leading share in automobile loans and the growing
trend toward leasing, the company introduced the Barnett TotalLease. This new
product offers the flexibility, simplicity and low price customers desire.
SMALL BUSINESS Just as consumer banking is customer-driven, business banking
must also be shaped by the growing needs of today's businesses.
SCAN, or Shared Check Authorization Network, protects businesses from bad
or fraudulent checks. Checks are read automatically at point of sale and
matched against a database of thousands of other retailers to track bad check
writers. Barnett is exclusively licensed to provide this product to Florida's
small businesses.
EasyLine, an unsecured line of credit for small businesses, will be
launched early in 1996. Customers will have convenient access to the line
through checks, a credit card or the Business SuperPhone. Purchasing EasyLine
will be as simple as applying for a credit card and will not require a bank
office visit.
At Barnett, value is providing customers with the high quality products
they want at competitive prices. In 1996, our product development strategy
will utilize new technology to identify customer needs and develop
competitive packages to better serve our customers and promote deeper, broader
and longer-lasting relationships.
13
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BARNETT BANKS, INC.
<PAGE>
LINES OF BUSINESS
CONSUMER
FINANCIAL SERVICES
ASSET MANAGEMENT
BUSINESS PROFILE AND ACTIVITIES
- Barnett has a relationship with almost 40% of Florida's households and
enjoys a leading 20% share of bank and thrift deposits. Approximately one in
four Florida households has a Barnett checking account.
- Barnett's array of products and services now includes insured deposits plus
a growing selection of investment products, including mutual funds, stocks,
bonds and annuities.
- Barnett's retail distribution network is the most convenient and
comprehensive in Florida, with 613 offices, 789 ATMs, 24-hour telephone
banking, PC-based home banking and a presence on the Internet's World Wide Web.
KEY ACCOMPLISHMENTS IN 1995
- Increasing our emphasis on building customer relationships, Barnett re-
oriented our investment sales force by customer segment rather than by product
line.
- Barnett made significant progress in developing a customer-knowledge,
market-knowledge data base to help us develop customer-specific marketing and
delivery strategies.
- Customers continued to increase their use of alternative channels, as
transactions outside traditional banking offices increased by 30%, while those
inside the office grew only 3%.
CONSUMER LENDING
BUSINESS PROFILE AND ACTIVITIES
- Barnett is Florida's leader with a 21% share of its consumer loan market
and 11% of the mortgage market.
- EquiCredit Corporation, Barnett's consumer finance company operating in 37
states, originated $1.1 billion of home-equity secured loans in 1995.
- Barnett Mortgage Company is among the top 20 mortgage servicers and
originators nationally, with a servicing portfolio of $33 billion and 445,000
loans. With offices in 25 states, Barnett's loan production in 1995 totaled $5.8
billion.
- Barnett provides loans through more than 1,000, or almost 60%, of Florida's
automobile dealers, as well as in other southeastern states.
- Barnett serves almost one million active cardholders,
with outstanding credit card balances exceeding $1.7 billion.
KEY ACCOMPLISHMENTS IN 1995
- Barnett purchased EquiCredit, entering the consumer finance business
nationwide. EquiCredit experienced strong growth for the year, increasing loan
originations by more than 70% and adding 20 branch loan origination offices.
BUSINESS
FINANCIAL SERVICES
BUSINESS PROFILE AND ACTIVITIES
- Barnett has a relationship with 43% of large businesses, 37% of middle
market companies and 15% of small businesses in Florida.
- Barnett is a leading lender to Florida's small businesses.
- Barnett is a leader in merchant card services, international foreign
correspondent banking and cash management services in Florida.
- Barnett has an 8% market share in commercial real estate loans, the largest
in Florida.
KEY ACCOMPLISHMENTS IN 1995
- Barnett introduced four new products for small businesses: the Shared Check
Authorization Network, which helps reduce bad check losses; Easy L/C, a letter
of credit with 24-hour turnaround; Easy F/X, an inexpensive way to hedge foreign
exchange exposure, and the Salary Reduction Simplified Employee Pension Plan
which makes retirement planning easier.
- The company formed a strategic alliance with Stephens Inc. to offer
customers a full line of investment banking services.
14
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BARNETT BANKS, INC.
<PAGE>
LINES OF BUSINESS
- The Investor's Access Account, a relationship-driven cash management
account, was introduced to meet the increasingly complex financial services
needs of today's customers.
LOOKING AHEAD TO 1996
- Barnett will offer the convenience of supermarket banking through a pilot
program in selected Publix Super Markets in Florida.
- Barnett will expand its telephone, ATM and home banking services,
positioning these delivery channels at the forefront of the industry.
- Barnett will continue to modify its existing office network in response to
customers' growing use of alternative delivery.
- Barnett's financial consultants will employ new technology to develop
individualized financial plans for customers.
- Barnett's Emerald Family of Mutual Funds will be enhanced to attract more
retail customers.
- A series of flexible tax-advantaged products and programs will be
introduced.
- Barnett's acquisition of BancPLUS Financial Corporation added $14 billion
and more than 198,000 loans in servicing.
- Barnett enhanced the automation of our credit application process,
improving response time to a customer's need for credit.
- The company introduced the Barnett TotalLease, a new vehicle leasing
program to complement our leading share in automobile loans.
- Dealer Financial Services expanded operations outside of our traditional
markets by opening an office in Charlotte, N. C.
LOOKING AHEAD TO 1996
- EquiCredit will establish a telemarketing unit to further enhance branch
loan originations.
- Barnett Mortgage will complete the functional consolidation of its mortgage
affiliates to allow for maximum efficiencies in mortgage operations.
- Barnett's Dealer Financial Services subsidiary will explore market
expansion into other southeastern states.
- Barnett will introduce mortgages and credit products that feature more
flexible repayment options, terms and rates.
- The company implemented state-of-the-art computer technology to enhance
relationship managers' ability to easily access corporate customer information.
LOOKING AHEAD TO 1996
- Continuing its strong focus on the small business market, Barnett will
introduce its new EasyLine product, an application-based unsecured line of
credit.
- Barnett will provide a service to its commercial real estate customers by
placing long-term, permanent debt on commercial properties with a variety of
institutional investors.
- The company will continue to focus on efforts to leverage its leading share
of middle market companies by meeting a greater variety of business needs.
15
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BARNETT BANKS, INC.
<PAGE>
WHAT IS VALUE?
BELOW, STUDENTS IN THE TAKE STOCK IN CHILDREN PROGRAM BENEFIT FROM THE
ATTENTION OF VOLUNTEER MENTORS AND TUTORS. SCHOLARSHIPS AWAIT THOSE CHILDREN
WHO COMPLETE THE PROGRAM AND GRADUATE FROM HIGH SCHOOL.
RESPONSIBILITY As our company becomes a national provider of financial
services, Barnett has maintained its traditional view of corporate
responsibility and its dedication to helping our neighbors.
Progress in meeting the credit needs of all our communities is
continuously measured against a five-year $2 billion commitment that began in
1993. In only three years, Barnett exceeded the plan's lending goals by $200
million. Categories of the plan include: residential mortgages to low- and
moderate-income applicants; certain consumer loans, including home
improvement loans to low- and moderate-income applicants; and loans to
businesses owned by women and minorities. A total of $2.2 billion was loaned
under this five-year plan through September 30, 1995.
Reflecting this level of commitment, it is not surprising that 19 Barnett
banks have been rated Outstanding by federal banking regulators under the
Community Reinvestment Act and the remaining 13 banks have been rated
Satisfactory. As recently as 1994, only 16% of banks across the nation were
rated Outstanding compared to almost 60% for Barnett.
DIVERSE NEEDS The involvement of the company and its employees is
demonstrated in hundreds of local programs aimed not only at community and
economic development, but health, welfare and community service, cultural and
educational programs.
In 1995, Barnett Bank of Jacksonville introduced "Reach Out Barnett" to
marshal the volunteer resources of more than 6,000 northeast Florida
employees at the company's headquarters and banking and non-banking
affiliates. The program responds equitably to a growing number of requests
from non-profit groups in need of large-scale volunteer resources.
Barnett Bank of Central Florida has conducted more than 100 workshops to
provide a clearinghouse of homebuying information throughout the bank's
four-county market area. Dubbed P.O.W.E.R. House (Providing Opportunities
With Education and Resources), the workshop is a strategic initiative of the
Barnett Bank of Central Florida Community Group, which evolved to include
local and county governments, non-profit organizations, private companies and
community leaders.
Barnett Bank of South Florida is one of several of our affiliates
instrumental in bringing INROADS, Inc. to their market areas. This 25-year-old
national program places talented minority youth in intern positions in
business to prepare them for corporate and community leadership. In Miami,
Barnett's funding and leadership has helped this program provide an
increasing number of opportunities for on-the-job experience and a source of
income for students pursuing higher education.
The partnership between Barnett Bank of Pasco County and East Pasco
Habitat for Humanity illustrates the efforts of our banks and employees to
meet the need for affordable housing in our communities. Four Pasco bank
officers and a member of the board of directors have served on the Habitat
board. The completion and sale of several homes in the East Pasco area was
made possible by Barnett volunteers and others who provided services in every
aspect of home building.
[PHOTO]
A NEW FOCUS We have instituted changes and provided a new focus for
Barnett's charitable giving program. Barnett Community Foundation, Inc. is
the new name for Barnett Charities, reflecting the company's focus on
communities. Barnett will be supporting established programs and will be
creating new initiatives that make a measurable difference in two priority
areas: kindergarten through 12th-grade education and at-risk youth.
In 1996, Barnett will lead one of the most significant public/private
campaigns in Florida's history--Take Stock In Children. Led by local
Barnett banks and county school districts, it will involve other companies
and individual volunteers in a comprehensive effort to assure that all
children have the opportunity to develop into productive adults.
The value proposition that Barnett brings to customers, shareholders and
employees applies also to the communities where we do business. Barnett
continues to focus its financial services, human resources, and community
involvement on the diverse needs of the businesses and individuals that make
up our communities.
<PAGE>
MANAGEMENT DISCUSSION
SUMMARY/OVERVIEW
Barnett earned $533.3 million, or $5.13 per fully diluted share, in 1995, a
10% increase in per-share earnings. This increase reflects solid revenue growth
and continued non-interest expense control.
Profitability continued to be strong. Return on assets rose to 1.30%, and
return on average common shareholders' equity was 16.54%.
Revenues, excluding securities transactions, rose 11% over 1994, as both net
interest income and non-interest income scored healthy gains. Net interest
income rose 6%, as the company expanded its earning assets 5% while maintaining
its net yield. The provision for loan losses rose 66% to $122.5 million during
1995, approaching more normal loss levels following the post-recession lows.
Non-interest income, excluding securities transactions, rose 28%, primarily due
to revenue from companies acquired during the year. Non-interest expense
increased 11% in 1995, primarily reflecting the expense added from companies
acquired during the year. A six-year summary of income is provided in TABLE 1.
Average total assets rose 8%, reflecting 11% growth in loans funded through
increased deposits and proceeds from maturing securities. Loan growth in 1995
was paced by increased loans to consumers. Average deposits grew 6% from the
previous year, reflecting the purchase of $3.4 billion of Florida deposits from
Glendale Federal Bank, FSB in December 1994. Average securities fell 15% during
the year, as the proceeds from maturing securities were redeployed into higher
yielding loans.
In January 1995, Barnett completed the acquisition of EquiCredit Corporation
for $332 million in cash. EquiCredit originates, sells and services fixed-rate
consumer loans secured by first or second mortgages from 107 offices in 37
states. In February 1995, Barnett purchased BancPLUS Financial Corporation for
$162 million in cash. BancPLUS is a full-service mortgage banking company that
originates first mortgage loans in all 50 states through a network of retail and
wholesale offices.
EARNING ASSETS
Average earning assets grew 5% to $36.3 billion in 1995, reflecting strong
loan growth in the first three quarters of the year, partially offset by
reductions in the securities portfolio. Barnett prefers to deploy investable
funds in quality loans because they carry a higher risk-adjusted yield. Average
loans represented 82% of earning assets in 1995 compared to 78% a year earlier.
At the end of the year, Barnett's loan-to-deposit ratio reached 89%, up from 81%
the prior year. The company also maintains a portfolio of investment-grade
- ----------------------------------------
EARNINGS PER COMMMON SHARE
FULLY DILUTED
[GRAPH]
- ----------------------------------------
RETURN ON COMMON SHAREHOLDERS' EQUITY
[GRAPH]
TABLE 1 SIX-YEAR STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Dollars in Millions Except Per Share Data--Taxable-Equivalent 1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income. . . . . . . . . . . . . . . . . . . . . . . $1,772.2 $1,677.5 $1,700.3 $1,736.1 $1,568.0 $1,490.8
Provision for loan losses . . . . . . . . . . . . . . . . . . . 122.5 74.0 120.4 257.3 453.9 491.6
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after loan loss provision. . . . . . . . . . 1,649.7 1,603.5 1,579.9 1,478.8 1,114.1 999.2
Non-interest income (excluding securities transactions). . . . . 714.0 555.7 601.1 586.5 528.6 476.1
Securities transactions. . . . . . . . . . . . . . . . . . . . . 5.0 (13.1) (2.1) 34.2 18.2 (23.4)
Non-interest expense (excluding restructuring charge). . . . . . 1,518.6 1,364.2 1,501.0 1,645.5 1,497.1 1,320.0
Restructuring charge . . . . . . . . . . . . . . . . . . . . . . -- -- -- 92.6 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes . . . . . . . . . . . . . . . . . . . 850.1 781.9 677.9 361.4 163.8 131.9
Income tax provision (benefit) . . . . . . . . . . . . . . . . . 286.3 249.8 207.5 95.3 8.4 (8.9)
Taxable-equivalent adjustment. . . . . . . . . . . . . . . . . . 30.5 44.1 49.4 57.8 74.0 85.3
- -----------------------------------------------------------------------------------------------------------------------------------
Net income before accounting changes . . . . . . . . . . . . . . 533.3 488.0 421.0 208.3 81.4 55.5
Cumulative effect of changing to different
accounting methods, net of taxes. . . . . . . . . . . . . . . -- -- -- (0.6) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 533.3 $ 488.0 $ 421.0 $ 207.7 $ 81.4 $ 55.5
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Primary net income per common share. . . . . . . . . . . . . . . $ 5.30 $ 4.79 $ 4.10 $ 1.97 $ .80 $ .65
Fully diluted net income per common share. . . . . . . . . . . . 5.13 4.66 4.01 1.97 .80 .65
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
securities and short-term investments to manage liquidity and interest rate
risk.
LOANS Loan portfolio growth of 11% was driven by lending to consumers. Due
to Barnett's strong emphasis on retail banking, loans to consumers represented
74% of average loans, up from 72% in 1994. This is one of the highest
proportions of loans to consumers of any major bank in the United States.
Florida's continued growth and the favorable rate environment were major
factors in increased consumer borrowing.
Residential mortgage loans grew 14% to $11.1 billion, reflecting the
company's increased origination capacity and consumer preference for adjustable-
rate mortgages early in the year. Barnett retained in its portfolio
substantially all adjustable-rate residential mortgages originated during the
first three quarters of 1995.
Management carefully controls the mix of the residential portfolio. At the
end of 1995, 74% of the residential portfolio consisted of adjustable-rate
mortgages. The variable-rate concentration of this portfolio and the ability to
securitize virtually all of its mortgages give the company flexibility in
managing its interest rate sensitivity and liquidity.
During 1995, substantially all fixed-rate mortgage originations were sold
into the secondary market. Barnett generally retains the servicing rights on the
loans it sells, providing a source of fee income.
Installment loans grew 13% during the year to $8.6 billion from $7.6 billion
in the previous year. Approximately two-thirds of Barnett's installment loan
portfolio is composed of motor vehicle loans, which grew 6% during the year to
$5.4 billion. Barnett, which has a relationship with more than 1,000 auto
dealers in Florida and Georgia, provided over 25% of all auto loans in Florida,
more than the next three bank lenders combined. To grow this profitable
business, Barnett began piloting a program in the fourth quarter to purchase
auto loans from dealers in other selected southeastern markets. Barnett also
introduced an automobile lease product during 1995 to capitalize on its strength
in auto financing and the growing trend toward leasing.
The other one-third of the installment loan portfolio is comprised primarily
of home equity and student loans. During 1995, home equity secured installment
loans increased 28% to $1.6 billion, while student loans increased 34% to $1
billion.
- ----------------------------------------
RETURN ON AVERAGE ASSETS
[GRAPH]
TABLE 2 LOAN MATURITY
<TABLE>
<CAPTION>
Within 1 to 5 After
December 31, 1995--Dollars in Millions(1) 1 Year Years 5 Years Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial, financial and agricultural . . . . . . $1,972 $ 2,051 $ 672 $ 4,695
Real estate construction . . . . . . . . . . . . . 511 386 15 912
Commercial mortgages . . . . . . . . . . . . . . . 599 1,215 367 2,181
Residential mortgages. . . . . . . . . . . . . . . 695 1,426 8,106 10,227
Installment. . . . . . . . . . . . . . . . . . . . 2,998 4,824 1,185 9,007
Bank card. . . . . . . . . . . . . . . . . . . . . -- 1,783 -- 1,783
Credit lines . . . . . . . . . . . . . . . . . . . 760 -- -- 760
- ---------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . $7,535 $11,685 $10,345 $29,565
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Loans maturing after one year with:
Fixed interest rates. . . . . . . . . . . . . . $ 7,617 $ 776
Floating or adjustable interest rates . . . . . 4,068 9,569
- ---------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . $11,685 $10,345
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1)TOTAL LOANS GROSS OF UNEARNED INCOME. EXCLUDES $655 MILLION OF RESIDENTIAL
MORTGAGES HELD FOR SALE AND $294 MILLION OF INSTALLMENT LOANS HELD FOR SALE.
18
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
Barnett used targeted direct mail programs and competitive pricing to grow
bank card outstandings by 30% to $1.5 billion. Though Barnett has been
conducting successful solicitation programs in several southeastern markets
outside Florida, 80% of the outstandings are from consumers in Florida. Of the
over 750,000 cardholders in Barnett's primary market, 63% have other
relationships with the company.
Commercial loans rose 8% during 1995 to $4.6 billion, as the company
continued to develop relationships with small and middle market companies.
Barnett's average small business loan is approximately $60,000. These companies
tend to buy multiple products from their financial services provider, and
Barnett's goal is to supply products and services which add value to these
relationships.
Commercial real estate loans decreased 3% from 1994. Construction loans rose
9% in 1995 to $931 million, reflecting the resurgence of quality residential
real estate development lending opportunities in Florida. Commercial mortgage
loans declined 7% from last year to $2.3 billion, reflecting increased
competition from banks and nonbanks to provide long-term financing for
commercial real estate projects.
The distribution of loan maturities is shown in TABLE 2. For an analysis of
loans that can be repriced in less than one year and their impact on Barnett's
interest rate sensitivity, see TABLE 6 on page 22.
INVESTMENT SECURITIES Investments in taxable securities decreased 12% to
$6.0 billion in 1995, as the proceeds from maturing securities were utilized to
fund loan growth. Tax-free securities dropped 41% to $423 million, reflecting a
surge of redemptions as municipalities took advantage of lower rates to
refinance their bonds. The purchase of tax-free securities no longer represents
an attractive investment alternative because tax law changes enacted in 1986
eliminated substantially all of the tax benefits of ownership of these
securities by banks.
Securities are generally purchased for investment purposes and are selected
primarily for their risk-adjusted, taxable-equivalent yields. Consideration is
also given to the company's liquidity and asset-liability management needs. For
an analysis of the impact of investment securities on Barnett's interest rate
sensitivity, see TABLE 6.
As a result of a Financial Accounting Standards Board (FASB) interpretation
allowing the one-time transfer of securities from the held-to-maturity category,
the company classified all of its taxable securities as available for sale
during the fourth quarter. The company does not expect that this will
significantly affect its investment strategy. The securities available for sale
are carried at fair value and had an unrealized gain, net of tax, of $38 million
at December 31, 1995. At December 31, 1994, securities available for sale had an
unrealized loss, net of tax, of $27 million. These unrealized gains or losses,
net of tax, do not impact net income or regulatory capital but are recorded as
adjustments to shareholders' equity. At December 31, 1995, the available for
sale portfolio had an average yield of 5.92% and a weighted average maturity of
1.0 years. For further details, see TABLE 3 on page 20.
DEPOSITS AND OTHER FUNDING SOURCES
DEPOSITS Average deposits rose 6% to $33.7 billion in 1995, reflecting a full
year's impact of the Florida deposits acquired from Glendale Federal.
Certificates of deposit and other time deposits rose $2.9 billion to $12.1
billion, reflecting the mix of deposits acquired from Glendale Federal and the
movement of consumer balances from transaction and saving accounts into CDs. As
interest rates rose in late 1994 and early 1995, CDs became more attractive to
depositors.
In 1995, transaction, savings and money market accounts decreased $941
million and equaled 64% of average deposits, down from 71% in 1994. On page 21,
TABLE 4 shows the changes in deposit mix, and TABLE 5 indicates the maturity of
CDs and other time deposits over $100,000.
- ----------------------------------------
AVERAGE LOANS
1995
[PIE CHART]
- ----------------------------------------
1990
[PIE CHART]
- ----------------------------------------
AVERAGE DEPOSITS
1995
[PIE CHART]
- ----------------------------------------
1990
[PIE CHART]
19
-------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
TABLE 3 MATURITY OF INVESTMENT SECURITIES
<TABLE>
<CAPTION>
Available for Sale
----------------------------------------------
Amortized Fair Year-End
December 31, 1995--Dollars in Thousands Cost Value Yield(1)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury:
Within 1 year . . . . . . . . . . . . $1,298,533 $1,302,801 5.42%
1 to 5 years. . . . . . . . . . . . . 917,690 947,275 7.40
5 to 10 years . . . . . . . . . . . . 2,002 2,263 7.54
More than 10 years. . . . . . . . . . 1,565 1,727 7.76
- -------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . 2,219,790 2,254,066 6.24
- -------------------------------------------------------------------------------------------------
States and political subdivisions:
Within 1 year . . . . . . . . . . . . -- -- --
1 to 5 years. . . . . . . . . . . . . 2,532 2,656 8.27
5 to 10 years . . . . . . . . . . . . 2,484 2,566 9.10
More than 10 years. . . . . . . . . . 6,982 7,386 9.16
- -------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . 11,998 12,608 8.96
- -------------------------------------------------------------------------------------------------
Other U.S. Government agencies
and corporations:
Within 1 year . . . . . . . . . . . . 244,827 246,053 6.24
1 to 5 years. . . . . . . . . . . . . 152,437 150,427 6.02
5 to 10 years . . . . . . . . . . . . 999 1,038 7.47
More than 10 years. . . . . . . . . . 88 101 10.26
- -------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . 398,351 397,619 6.16
- -------------------------------------------------------------------------------------------------
Mortgage-backed securities:
Within 1 year . . . . . . . . . . . . 1,154,719 1,152,806 5.18
1 to 5 years. . . . . . . . . . . . . 370,084 375,027 6.05
5 to 10 years . . . . . . . . . . . . 15,338 15,758 7.46
More than 10 years. . . . . . . . . . 22,605 22,654 5.62
- -------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . 1,562,746 1,566,245 5.42
- -------------------------------------------------------------------------------------------------
Other securities:
Within 1 year . . . . . . . . . . . . 270,346 289,316 5.36
1 to 5 years. . . . . . . . . . . . . 508,962 511,404 6.06
5 to 10 years . . . . . . . . . . . . 53,151 53,240 6.11
More than 10 years(2) . . . . . . . . 47,835 48,543 5.57
- -------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . 880,294 902,503 5.82
- -------------------------------------------------------------------------------------------------
Total securities . . . . . . . . . . . . $5,073,179 $5,133,041 5.92%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<CAPTION>
Held to Maturity
----------------------------------------------
Amortized Fair Year-End
December 31, 1995--Dollars in Thousands Cost Value Yield(1)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
States and political subdivisions:
Within 1 year . . . . . . . . . . . . $ 67,173 $ 68,366 10.93%
1 to 5 years. . . . . . . . . . . . . 76,822 83,015 12.40
5 to 10 years . . . . . . . . . . . . 34,924 41,400 12.10
More than 10 years. . . . . . . . . . 22,041 23,285 9.26
- -------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . $200,960 $216,066 11.51%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<CAPTION>
Years
-----------------------------------------------------
December 31, 1995 Held to Maturity Available for Sale Total
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Average life of debt securities:(3)
Taxable . . . . . . . . . . . . . . . -- 1.00 1.00
Tax-free. . . . . . . . . . . . . . . 4.31 15.01 4.92
- -------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . 4.31 1.03 1.16
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1)COMPUTED ON A TAXABLE-EQUIVALENT BASIS AND INCLUDES ACCRETION OF DISCOUNT AND
AMORTIZATION OF PREMIUM IN THE DETERMINATION OF SECURITIES INCOME. BALANCE
UTILIZED IN CALCULATING YIELDS IS AMORTIZED COST.
(2)INCLUDES FEDERAL RESERVE BANK STOCK.
(3)FLOATING RATES ARE INCLUDED AS OF THEIR REPRICING DATE.
20
- -------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
TABLE 4 CHANGES IN DEPOSIT MIX
<TABLE>
<CAPTION>
Change
-----------------
Average Balances--Dollars in Millions 1995 1994 Amount Percent
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Demand deposits. . . . . . . . . . . . . . . . . . $ 5,440 $ 5,531 $ (91) (2)%
NOW and money market accounts. . . . . . . . . . . 12,757 13,573 (816) (6)
Savings deposits . . . . . . . . . . . . . . . . . 3,435 3,469 (34) (1)
Certificates of deposit under $100,000 . . . . . . 9,906 7,498 2,408 32
Other time deposits. . . . . . . . . . . . . . . . 2,153 1,639 514 31
- ---------------------------------------------------------------------------------------------------------
Total deposits. . . . . . . . . . . . . . . . $33,691 $31,710 $1,981 6%
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
TABLE 5 MATURITY OF CDS AND OTHER TIME DEPOSITS $100,000 OR MORE
<TABLE>
<CAPTION>
December 31, 1995--Dollars in Millions BALANCE Percent
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 747 32%
Over 3 to 6 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594 25
Over 6 to 12 months. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 19
More than 12 months. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 24
- ---------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,333 100%
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
OTHER FUNDING SOURCES Federal funds purchased, securities sold under
agreements to repurchase and other short-term borrowings of $2.5 billion were
$191 million higher than the previous year. This increase primarily reflects the
short-term funding of the mortgage banking and consumer finance operations
through a commercial paper program. At December 31, 1995, borrowing under this
facility was $670 million.
Long-term debt increased 40%, or $272 million, from 1994. Of the $1.2 billion
in long-term debt outstanding at year end, $605 million qualified as Tier II
capital under risk-based capital guidelines. For more information on Barnett's
long-term debt, refer to NOTE I in the NOTES TO FINANCIAL STATEMENTS.
ASSET LIABILITY MANAGEMENT
Net interest income, which was 71% of Barnett's 1995 revenue, is affected by
changes in interest rates as well as fluctuations in levels and duration of
earning assets and interest-bearing liabilities. The impact of changes in
interest rates on the company's net interest income represents Barnett's
interest rate risk.
Interest rate sensitivity is primarily a function of the repricing structure
of the company's balance sheet. TABLE 6 on page 22 shows this structure as of
December 31, with each maturity interval referring to the earliest repricing
opportunity (i.e., the earlier of scheduled contractual maturities or next rate
reset date) for each asset and liability category. The resulting gaps are a
measure of the sensitivity of earnings to changes in interest rates.
In order to more appropriately reflect the repricing structure of the
company's balance sheet, management has made certain adjustments to the table.
Based on historical and industry data, an estimate of the expected prepayments
of amortizing loans and investment securities is included in the adjustment.
Changes in the economic and interest rate environments may impact these expected
prepayments.
Similarly, an adjustment is made to reflect the behavioral characteristics of
certain core deposits without contractual maturity (i.e., interest-bearing
checking, savings and money market deposit accounts). The footnote accompanying
the table more fully explains the specific adjust-
21
-------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
TABLE 6 INTEREST RATE SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>
Non-Rate
Sensitive
0-30 31-90 91-180 181-365 and Over
December 31, 1995--Dollars in Millions Days Days Days Days One Year Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and agricultural . . . . . . . . . . . . . . $ 3,302 $ 93 $ 160 $ 188 $ 950 $ 4,693
Real estate construction . . . . . . . . . . . . . . . . . . . . . 866 3 6 9 28 912
Commercial mortgages . . . . . . . . . . . . . . . . . . . . . . . 964 78 132 233 774 2,181
Residential mortgages. . . . . . . . . . . . . . . . . . . . . . . 904 1,044 1,888 3,343 3,713 10,892
Installment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,139 484 703 1,335 4,603 9,264
Other loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,954 590 2,544
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . 10,129 1,702 2,889 5,108 10,658 30,486
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566 495 588 1,436 2,249 5,334
Federal funds sold and other earning assets. . . . . . . . . . . . 110 110
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets. . . . . . . . . . . . . . . . . . . . . $10,805 $2,197 $3,477 $6,544 $12,907 $35,930
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
NOW and money market accounts. . . . . . . . . . . . . . . . . . . $12,816 $12,816
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . 3,292 3,292
Time deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,943 $2,516 $2,750 $2,286 $ 2,692 12,187
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits . . . . . . . . . . . . . . . 18,051 2,516 2,750 2,286 2,692 28,295
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . 1,854 125 100 2,079
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 52 351 10 778 1,191
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities. . . . . . . . . . . . . . $19,957 $2,992 $2,760 $2,386 $ 3,470 $31,565
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Gap before interest rate swaps and management adjustments. . . . . $(9,152) $ (795) $ 717 $4,158 $ 9,437
Management adjustments(1). . . . . . . . . . . . . . . . . . . . . 7,907 608 438 334 (9,287)
Interest rate swaps. . . . . . . . . . . . . . . . . . . . . . . . (314) (870) (100) (150) 1,434
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate sensitivity gap adjusted for interest rate swaps
and management adjustments. . . . . . . . . . . . . . . . . . . (1,559) (1,057) 1,055 4,342 1,584
Cumulative adjusted interest rate sensitivity gap. . . . . . . . . (1,559) (2,616) (1,561) 2,781
Cumulative adjusted gap as a percentage of earning assets:
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . (4.34)% (7.28)% (4.34)% 7.74%
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . (12.53) (12.86) (8.41) 4.95
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)MANAGEMENT ADJUSTMENTS REFLECT THE COMPANY'S ESTIMATE OF THE EFFECTS OF EARLY
PRINCIPAL REPAYMENTS ON RESIDENTIAL AND OTHER AMORTIZING LOANS AND SECURITIES
AND THE ANTICIPATED REPRICING SENSITIVITY OF NON-MATURITY DEPOSIT PRODUCTS.
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.
ments made to the analysis. This interest rate sensitivity analysis indicates
that the company was liability sensitive on December 31, with a cumulative six-
month negative gap of 4.34%.
In addition to gap analysis, management uses rate-shock simulation and
duration of equity to measure the interest sensitivity of the 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 static gap
and rate shock simulation analysis. These analyses, which analyze longer term
impacts of rate changes, indicate Barnett is relatively rate neutral. Based upon
these analyses, management believes the company's asset-liability mix is
sufficiently balanced within a broad range of interest rate scenarios to
minimize the impact of significant rate movements.
22
- -------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
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.
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.
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 current derivatives portfolio includes $3.1 billion of interest
rate swaps and $500 million of interest rate options. Most of the company's
swaps involve receipt of fixed interest rate payments for variable (primarily
LIBOR-based) interest payments. The swaps are linked to prime-rate loans and
create a net fixed-rate cash flow. They were executed to reduce the company's
exposure to flat or falling interest rates.
Approximately $2.8 billion of the interest rate swap portfolio is fixed-term
non-amortizing interest rate swaps, $1.0 billion of which mature in early 1996
and $1.8 billion of which mature beginning September 1996 through January 1998.
During the year, $760 million of index amortized interest rate swaps matured and
the company entered into $1.6 billion of non-amortizing fixed-term interest rate
swaps. These instruments have similar characteristics to balance sheet
instruments typically used by the company for asset-liability management
purposes.
The interest rate swap portfolio performed as expected during the year.
Because rates have fallen, the replacement value related to the swaps portfolio
was a positive $10 million on December 31, 1995 compared to a negative $107
million on December 31, 1994.
During 1995, the company terminated prior to maturity $1.75 billion of
interest rate floors, resulting in a net gain of $24 million. This gain was
deferred and will be amortized in 1996 and 1997, the period over which the
floors were intended to provide protection from falling rates.
In December 1995, the company purchased options to buy $500 million of U.S.
Treasury securities in order to reduce its exposure to the impact of falling
interest rates on the value of its capitalized mortgage servicing asset. A
summary of Barnett's risk management derivatives portfolio is shown in NOTE O in
the NOTES TO FINANCIAL STATEMENTS, and Barnett's accounting policies related to
derivatives are described in NOTE A.
NET INTEREST INCOME
In 1995, Barnett's taxable-equivalent net interest income was $1.8 billion,
up 6% from 1994. This increase resulted from 5% growth in earning assets and a
slightly higher net yield. TABLE 7 on page 24 shows the changes in net interest
income by category during 1995 due to shifts in volume and rate.
The net yield on earning assets rose slightly to 4.88% from 4.87% in 1994.
Interest income growth was generated by increases in balances and changes in
earning asset mix, discussed previously in the Earning Assets section, as well
as higher yields across asset categories. The average yield on earning assets
increased 69 basis points to 8.24%, as loans increased as a percent of earning
assets, the yield on the loan portfolio rose 60 basis points and the yield on
the securities portfolio rose 54 basis points.
The commercial loan yield rose 75 basis points, as a result of an increase in
- ----------------------------------------
NET INTEREST INCOME
[GRAPH]
- ----------------------------------------
NET YIELD
[GRAPH]
23
-------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
TABLE 7 CHANGE IN NET INTEREST INCOME
<TABLE>
<CAPTION>
1995 1994
------------------------------ -------------------------------
CHANGE FROM Change from
PREVIOUS Previous
YEAR DUE TO: Year Due to:
------------------------------ -------------------------------
TOTAL Total
Dollars in Millions--Taxable-Equivalent VOLUME RATE(1) CHANGE Volume Rate(1) Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . $255.5 $161.6 $417.1 $ 93.3 $ (59.1) $ 34.2
Taxable securities . . . . . . . . . . . . . . . . . . . (38.8) 51.7 12.9 44.6 (19.6) 25.0
Tax-free securities . . . . . . . . . . . . . . . . . . . (38.0) (1.3) (39.3) (22.5) 4.5 (18.0)
Federal funds sold and securities purchased under
agreements to resell . . . . . . . . . . . . . . . . . .3 1.5 1.8 (15.3) .7 (14.6)
Other earning assets. . . . . . . . . . . . . . . . . . . -- -- -- (8.1) -- (8.1)
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income . . . . . . . . . . . . . . . . . 179.0 213.5 392.5 92.0 (73.5) 18.5
- -----------------------------------------------------------------------------------------------------------------------------------
Interest expense:
NOW and money market accounts . . . . . . . . . . . . . . (17.9) 13.2 (4.7) 2.8 11.5 14.3
Savings deposits. . . . . . . . . . . . . . . . . . . . . (.7) (1.1) (1.8) 2.3 3.1 5.4
Certificates of deposit under $100,000. . . . . . . . . . 103.1 87.5 190.6 (36.0) 1.7 (34.3)
Other time deposits . . . . . . . . . . . . . . . . . . . 21.9 25.5 47.4 (12.7) (.3) (13.0)
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits . . . . . . . . . . . . 106.4 125.1 231.5 (43.6) 16.0 (27.6)
Federal funds purchased and securities sold under
agreements to repurchase. . . . . . . . . . . . . . . . (25.2) 22.2 (3.0) 34.2 34.5 68.7
Other short-term borrowings . . . . . . . . . . . . . . . 36.6 14.9 51.5 .6 .9 1.5
Long-term debt. . . . . . . . . . . . . . . . . . . . . . 24.0 (6.2) 17.8 (.5) (.8) (1.3)
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense. . . . . . . . . . . . . . . . . 141.8 156.0 297.8 (9.3) 50.6 41.3
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income . . . . . . . . . . . . . . . . . . $ 37.2 $ 57.5 $ 94.7 $101.3 $(124.1) $(22.8)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)INCLUDES CHANGES IN INTEREST INCOME AND EXPENSE NOT DUE SOLELY TO VOLUME OR
RATE CHANGES.
the average prime rate, somewhat offset by the impact of interest rate swaps.
Residential mortgage yields rose 46 basis points, reflecting the repricing of
the $7.7 billion adjustable-rate mortgage portfolio. These repricings, limited
by annual and lifetime caps, are generally tied to a 275 basis point spread over
the one-year Constant Maturity Treasury (CMT) index.
Installment loans experienced a 52 basis point increase in yield, reflecting
the increase in market rates during the last two years.
The rate paid on interest-bearing liabilities rose 68 basis points to 3.84%.
This increase reflects the level of CDs in the Florida deposit base acquired
from Glendale Federal, consumers' preference for time deposits and the increased
utilization of non-deposit funding. Non-deposit funding rose $463 million in
1995, and the rising rate environment increased the rate paid on this funding
source by 120 basis points.
Information on average balances, yields and rates for the past six years can
be found on pages 34 and 35.
Interest rate swaps reduced net interest income in 1995 by $35.3 million
compared to $4.0 million in 1994 and $4.6 million in 1993. Interest rate swaps
reduced the net yield on earning assets by 10 basis points in 1995 compared to 1
basis point in 1994 and 2 basis points in 1993. As discussed previously,
Barnett's swaps were entered into primarily to reduce the company's exposure to
falling interest rates. These net interest income reductions were more than
offset by increased loan yields.
24
- -------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
NON-INTEREST INCOME
Non-interest income, excluding securities transactions, rose 28% to $714.0
million in 1995, due primarily to income contributed by companies acquired
during the year. Reflecting the company's strategic objective to diversify
revenue, non-interest income increased to 29% of total revenue in 1995 from 24%
in 1994.
EquiCredit, acquired in January 1995, contributed $83.5 million of non-
interest income. EquiCredit originated $1.1 billion in loans in 1995, a 72%
increase over the $656 million in 1994. This acquisition increased the
geographic diversification of Barnett's revenues and provided access to a new
group of customers.
The February acquisition of BancPLUS and full year impact of Loan America,
acquired in October 1994, contributed to an increase in mortgage banking revenue
of $29.5 million.
Other service charges and fees increased 13%, or $13.8 million, to $118.6
million, as the company realized increased revenue from the Barnett SuperCard
Check Card, a debit card product introduced in late 1994, and increased sales of
credit insurance.
Net securities gains of $5.0 million in 1995 resulted from the sale of a
portion of the company's holdings in Bank South Corporation and compare to $13.1
million of securities losses in 1994. Consummation of the merger of Bank South
with another institution will result in an additional $19 million pre-tax gain
in the first quarter of 1996.
Other income increased $24.2 million over 1994. This is partially due to the
increase in cash surrender value of corporate-owned life insurance policies
purchased in 1995. Also during 1995, Barnett outsourced its official check
business and the net revenue generated from this arrangement is included in
other income.
NON-INTEREST EXPENSE
Non-interest expense rose 11%, or $154.4 million, in 1995 to $1.5 billion,
primarily due to the impact of companies acquired during the year.
Salaries and benefits grew 17% from last year to $758.9 million, due
primarily to the addition of employees from acquisitions, annual salary
increases and higher production and stock price related incentives. The number
of full-time-equivalent employees increased by 1,246 to 20,175, including the
addition of 1,469 employees through acquisitions.
Net occupancy expense rose 7% to $126.5 million, and furniture and equipment
expense increased 4% from last year to $144.5 million, primarily related to
acquisitions.
Other expenses rose 7% in 1995 to $488.8 million due to the impact of
acquisitions and increased spending on marketing, technology and strategic
initiatives aimed at enhancing future revenue growth, partially offset by a
reduction in FDIC premiums. Effective June 1, 1995, premiums on the Bank
Insurance Fund were reduced from $.23 per $100 of deposits to $.04. This reduced
third and fourth quarter assessments by $18.0 million and $13.0 million,
respectively.
Despite increased expense levels as a result of acquisitions, the overhead
ratio remained at 61%. Details of other expenses over the past three years are
shown in NOTE L of NOTES TO FINANCIAL STATEMENTS.
At December 31, 1995, approximately $4.4 billion of deposits resulting from
thrift acquisitions were insured through the Savings Association Insurance Fund
(SAIF). These deposits maintained their $.23 per $100 assessment, though
legislation has been proposed which would reduce the SAIF assessment to $.04 for
well capitalized institutions. The current legislation, if enacted, would result
in a one-time assessment of approximately 80 basis points to be charged on 80%
of SAIF deposits. Any assessment will depend on enactment of final legislation.
LINE OF BUSINESS PERFORMANCE
The company's primary business is to provide banking and related financial
services to consumers and businesses. The
[NON-INTEREST INCOME GRAPH]
[OVERHEAD RATIO GRAPH]
25
-------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
TABLE 8 LINES OF BUSINESS
<TABLE>
<CAPTION>
Consumer Business
Financial Financial
December 31, 1995--Dollars in Millions Services Services
- ---------------------------------------------------------------------------
<S> <C> <C>
Net interest income--taxable-equivalent. . . $ 1,256.7 $ 515.5
Provision for loan loss. . . . . . . . . . . 125.3 (2.8)
Non-interest income. . . . . . . . . . . . . 591.3 127.7
Non-interest expense . . . . . . . . . . . . 1,202.7 315.9
- ---------------------------------------------------------------------------
Earnings before tax. . . . . . . . . . . . . 520.0 330.1
Taxes and taxable equivalent adjustment. . . 197.9 118.9
- ---------------------------------------------------------------------------
Net income . . . . . . . . . . . . . . . . . $ 322.1 $ 211.2
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Average loans. . . . . . . . . . . . . . . . $21,968.0 $7,804.0
Average deposits . . . . . . . . . . . . . . 27,509.1 6,181.9
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
financial performance of the company's business lines is monitored by an
internal profitability measurement system. The system utilizes funds transfer
pricing to allocate a standard cost for funds used or credit for funds provided
to all business group assets and liabilities using a matched funding concept.
Expenses that directly support business group operations are charged to the
groups based on a standard unit cost and actual volume measurements. Capital is
allocated based upon credit, operational and business risks.
Management reporting concepts are periodically refined and results may be
restated to reflect methodological enhancements and/or management organization
changes. Although valuable in managing the enterprise, no authoritative guidance
exists for management accounting. Therefore, reported results are not
necessarily comparable with other companies.
CONSUMER The Consumer Financial Services group includes all deposit,
investment, lending and asset management activities related to Barnett's retail
customers, including the company's consumer finance and mortgage banking
subsidiaries. Certain unallocated functions have also been included in this
group. The consumer group contributed $1.8 billion, or 74%, of the company's
revenues and $322.1 million, or 60%, of the company's net income.
BUSINESS The Business Financial Services group includes lending to large
corporate, middle market, small business and commercial real estate customers,
as well as providing a full range of deposit, cash management, trade-related and
other services to these customers. The business group contributed $643 million,
or 26%, of the company's revenues and $211.2 million, or 40%, of the company's
net income. The group's 1995 results include a negative $2.8 million provision
for loan losses, resulting from net loan recoveries during the year and other
favorable asset quality developments. Future provision levels will likely be
higher.
For a profile of both business groups, highlights of 1995 achievements and
plans for 1996, please refer to pages 14 and 15. Lines of business performance
is summarized in TABLE 8.
ASSET QUALITY
RISK ELEMENTS Commercial and commercial real estate loans are generally
placed on non-accrual status when the collectibility of interest or principal is
uncertain. Residential mortgages four payments in arrears are classified as non-
accruing in conformance with predominant mortgage industry practice. Income
recognized on installment loans and credit card advances is discontinued and the
loans are charged-off generally after a
26
- -------------------
BARNETT BANKS, INC.
<PAGE>
TABLE 9 COMMERCIAL REAL ESTATE
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
December 31--Dollars in Millions BALANCE NPA RATIO(1) Balance NPA Ratio(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Residential properties . . . . . . . . . . . . . . . . $ 609 2% $ 627 3%
Office buildings . . . . . . . . . . . . . . . . . . . 507 3 598 5
Shopping centers . . . . . . . . . . . . . . . . . . . 445 4 477 7
Rental apartments. . . . . . . . . . . . . . . . . . . 441 2 423 2
Warehouses/service centers . . . . . . . . . . . . . . 252 1 268 3
Hotels/motels. . . . . . . . . . . . . . . . . . . . . 185 1 220 4
Retail business properties . . . . . . . . . . . . . . 180 13 183 2
Condominiums . . . . . . . . . . . . . . . . . . . . . 136 -- 138 2
Commercial land acquisition and development. . . . . . 84 16 98 21
Recreational properties. . . . . . . . . . . . . . . . 55 5 77 11
Health care facilities . . . . . . . . . . . . . . . . 63 -- 52 1
Manufacturing/industrial plants. . . . . . . . . . . . 23 15 29 5
Churches, educational and non-profit . . . . . . . . . 16 -- 27 --
Multi-family land acquisition and development. . . . . 3 -- 7 --
Other. . . . . . . . . . . . . . . . . . . . . . . . . 95 18 85 22
- --------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . $3,094 4% $3,309 5%
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1)NON-PERFORMING ASSETS TO PERIOD-END LOANS PLUS REAL ESTATE HELD FOR SALE FOR
EACH PROPERTY TYPE.
delinquency period of 120 and 180 days, respectively. When a loan is placed on
non-accrual status, interest accruals cease and uncollected interest is reversed
and charged against current income.
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 11% in 1995 and anticipates maintaining this portfolio at or
below 15% of loans. TABLE 9 includes a break-down of commercial real estate non-
performing assets by category. The commercial loan portfolio, representing 15%
of total loans, is not concentrated in any single industry, but reflects the
broad-based economies in Florida and southern Georgia.
Loans to consumers represent 74% of total loans. 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.
Non-performing assets are composed of non-performing loans plus real estate
held for sale. TABLE 10 on page 28 presents detailed information on these assets
for the past five years.
Non-performing assets totaled $238 million on December 31, 1995, down from
$291 million at the end of 1994 and $458 million at the end of 1993. The decline
to the current level is attributable to the success of Barnett's centralized
workout unit in resolving and selling problem assets, the improved economy, the
improved market for commercial real estate and a slowdown in the inflow of new
problem loans. In addition, the loan portfolio is now more heavily weighted
toward consumer loans, which, except for residential real estate, tend to be
charged off rather than placed on non-accrual status.
Barnett's non-performing assets as a percentage of gross loans plus real
estate held for sale fell to .78% on December 31, 1995, compared to 1.01% at the
end of last year and 1.74% at the end of 1993.
Non-performing loans totaled $170 million on December 31, 1995, down 15% from
a year ago. This decline reflects the continued resolution of problem loans,
either
27
-------------------
BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
TABLE 10 FIVE-YEAR HISTORY OF RISK ELEMENTS
<TABLE>
<CAPTION>
Non-Accruing Total Real Total
----------------------------- Non- Estate Non- 90 Days
90 Days Less Than Reduced- Performing Held for Performing Past-Due
December 31--Dollars in Millions Past Due 90 Days Total Rate Loans Loans Sale Assets Accruals
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995
Commercial, financial and agricultural . . $ 20.5 $ 11.0 $ 31.5 $ .1 $ 31.6 $ .2
Real estate construction . . . . . . . . . 13.3 1.5 14.8 -- 14.8 .2
Commercial mortgages . . . . . . . . . . . 24.1 18.2 42.3 2.4 44.7 .3
Residential mortgages. . . . . . . . . . . 78.8 .4 79.2 -- 79.2 22.5
Installment. . . . . . . . . . . . . . . . -- -- -- -- -- 11.3
Bank card and credit lines . . . . . . . . -- -- -- -- -- 20.9
- -----------------------------------------------------------------------------------------------------------------------------------
Total(1). . . . . . . . . . . . . . . $136.7 $ 31.1 $167.8 $2.5 $170.3 $ 67.6 $ 237.9 $55.4
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding. . . . . . .45% .10% .55% .01% .56% .22% .78% .18%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1994
Commercial, financial and agricultural . . $ 23.2 $ 26.2 $ 49.4 -- $ 49.4 $ 2.0
Real estate construction . . . . . . . . . 9.0 .6 9.6 -- 9.6 1.0
Commercial mortgages . . . . . . . . . . . 44.1 43.5 87.6 $2.3 89.9 --
Residential mortgages. . . . . . . . . . . 51.6 -- 51.6 -- 51.6 12.9
Installment. . . . . . . . . . . . . . . . -- -- -- -- -- 9.2
Bank card and credit lines . . . . . . . . -- -- -- -- -- 13.8
- -----------------------------------------------------------------------------------------------------------------------------------
Total(1). . . . . . . . . . . . . . . $127.9 $ 70.3 $198.2 $2.3 $200.5 $ 90.4 $ 290.9 $38.9
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding. . . . . . .45% .24% .69% .01% .70% .31% 1.01% .14%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1993
Commercial, financial and agricultural . . $ 55.5 $ 29.6 $ 85.1 -- $ 85.1 $ .3
Real estate construction . . . . . . . . . 27.6 2.9 30.5 -- 30.5 .3
Commercial mortgages . . . . . . . . . . . 57.9 69.8 127.7 $1.8 129.5 .6
Residential mortgages. . . . . . . . . . . 60.6 -- 60.6 -- 60.6 11.5
Installment. . . . . . . . . . . . . . . . -- -- -- -- -- 6.0
Bank card and credit lines . . . . . . . . -- -- -- -- -- 9.4
- -----------------------------------------------------------------------------------------------------------------------------------
Total(1). . . . . . . . . . . . . . . $201.6 $102.3 $303.9 $1.8 $305.7 $152.6 $ 458.3 $28.1
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding. . . . . . .76% .39% 1.15% .01% 1.16% .58% 1.74% .11%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1992
Commercial, financial and agricultural . . $ 67.4 $ 50.1 $117.5 -- $117.5 $ 2.5
Real estate construction . . . . . . . . . 69.7 50.2 119.9 -- 119.9 --
Commercial mortgages . . . . . . . . . . . 99.1 76.0 175.1 $5.0 180.1 .3
Residential mortgages. . . . . . . . . . . 59.2 3.4 62.6 -- 62.6 21.7
Installment. . . . . . . . . . . . . . . . -- -- -- -- -- 1.3
Bank card and credit lines . . . . . . . . -- -- -- -- -- 8.1
- -----------------------------------------------------------------------------------------------------------------------------------
Total(1). . . . . . . . . . . . . . . $295.4 $179.7 $475.1 $5.0 $480.1 $363.2 $ 843.3 $33.9
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding. . . . . . 1.10% .67% 1.77% .02% 1.79% 1.35% 3.14% .13%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1991
Commercial, financial and agricultural . . $119.3 $ 58.7 $178.0 $ .1 $178.1 $ 1.0
Real estate construction . . . . . . . . . 127.9 61.6 189.5 -- 189.5 --
Commercial mortgages . . . . . . . . . . . 139.3 68.2 207.5 -- 207.5 4.1
Residential mortgages. . . . . . . . . . . 67.5 6.2 73.7 -- 73.7 20.8
Installment. . . . . . . . . . . . . . . . 1.0 -- 1.0 -- 1.0 3.1
Bank card and credit lines . . . . . . . . -- -- -- -- -- 13.0
- -----------------------------------------------------------------------------------------------------------------------------------
Total(1). . . . . . . . . . . . . . . $455.0 $194.7 $649.7 $ .1 $649.8 $448.7 $1,098.5 $42.0
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of total outstanding. . . . . . 1.65% .70% 2.35% -- 2.35% 1.62% 3.97% .15%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)BEFORE DEDUCTION FOR UNEARNED INCOME.
28
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
through workout of satisfactory credit arrangements with the borrower,
foreclosure or charge-off.
Of total non-performing loans, 18%, or $31 million, were contractually
current or less than 90 days past due. Loans 90 days or more past due and still
accruing interest were $55 million, or .18% of total outstandings. The coverage
ratio of the allowance for loan losses to non-performing loans also improved
during the year to 297% from 250% a year ago.
By the end of 1995, the company had reduced its real estate held for sale to
$68 million from $90 million the previous year.
Barnett's policies generally require annual appraisals for properties
securing loans graded substandard or doubtful. In addition, real estate held for
sale is appraised annually and carried at appraised value less estimated cost to
dispose. If, in the judgment of management, a property's value may have declined
significantly, the appraisal may be updated more frequently.
Management monitors loan quality through loan grading processes, on-site loan
reviews, on-line reporting systems and quarterly reporting of adversely graded
or past-due loans. In addition, management continually reviews asset quality
trends, loan policy issues, market conditions and the economic environment and
adjusts underwriting guidelines as needed.
NET CHARGE-OFFS Net charge-offs were $122.0 million, up from $92.3 million
in 1994 but lower than the $141.8 million reported in 1993. While net charge-
offs were higher in all consumer loan categories, recoveries continued to reduce
net losses from commercial and commercial real estate loans.
Net charge-offs in 1995 represented .41% of average outstandings, compared to
.34% in 1994 and .55% in 1993. The 1995 net charge-offs were below historical
levels and were better than the company's anticipated long-term range of 50 to
60 basis points of average loans. An analysis of loan charge-offs is presented
in TABLE 11 on page 30.
Recoveries exceeded charge-offs of commercial loans by $4.1 million in 1995
compared to net recoveries of $3.0 million in 1994. Net losses from construction
loans fell $1.0 million from last year to $.8 million. Net charge-offs on
commercial mortgages declined to $.6 million from $7.9 million in 1994. This
decline in construction and commercial mortgage losses results from the improved
operating environment for commercial real estate as well as a continued high
level of recoveries. This level of recoveries may not be indicative of future
results.
Loans to consumers, which represent 74% of average loans, produce fewer non-
performing assets and their smaller average loan size reduces credit exposure to
individual borrowers.
Installment loan net charge-offs rose $11.6 million in 1995 to a net loss
rate of .63%, up from .56% in 1994, as loss rates increased throughout 1995.
This loss rate remains below management's long-term expectations for this
portfolio.
Bank card net charge-offs rose 72% to $65.0 million in 1995, reflecting the
30% growth in this portfolio and increased consumer default rates as
indebtedness and personal bankruptcies rose. The net charge-off ratio on this
portfolio increased from 3.23% in 1994 to 4.29% in 1995 as the loss rate rose in
the second half of the year.
Credit line losses fell from .51% to .40% in 1995 while residential losses of
.02% remained unchanged from last year.
The percentage of installment loans 30 days or more past due increased to
1.20% on December 31, 1995 from .94% a year earlier. The bank card delinquency
ratio increased to 3.31% in 1995 from 2.77% in 1994. As a result of higher bank
card delinquencies and losses, management has taken action to review future
solicitation levels and has increased collection efforts.
PROVISION/ALLOWANCE FOR LOAN LOSSES The provision for loan losses is a
charge to earnings in the current period to maintain the allowance for loan
losses at an adequate level. In 1995, Barnett's provision
[NET CHARGE-OFFS CHART]
[RESERVE COVERAGE OF NON-PERFORMING LOANS CHART]
29
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
TABLE 11 LOAN CHARGE-OFF ANALYSIS
<TABLE>
<CAPTION>
Dollars in Millions 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning allowance for loan losses . . . . . . . . . . . . $501.4 $521.8 $547.7 $552.1 $527.6
- ----------------------------------------------------------------------------------------------------------------------------------
Charge-offs:
Commercial, financial and agricultural. . . . . . . . . . 10.7 14.7 25.5 64.7 131.1
Real estate construction. . . . . . . . . . . . . . . . . .8 3.1 18.5 31.8 86.1
Commercial mortgages. . . . . . . . . . . . . . . . . . . 12.9 21.1 33.1 64.5 69.3
Residential mortgages . . . . . . . . . . . . . . . . . . 2.9 2.0 3.4 5.6 6.2
Installment . . . . . . . . . . . . . . . . . . . . . . . 68.6 57.6 73.2 95.8 127.3
Bank card . . . . . . . . . . . . . . . . . . . . . . . . 73.5 45.5 43.0 53.8 59.0
Credit lines. . . . . . . . . . . . . . . . . . . . . . . 3.5 4.4 5.7 9.3 13.1
- ----------------------------------------------------------------------------------------------------------------------------------
Total charge-offs . . . . . . . . . . . . . . . . . . . 172.9 148.4 202.4 325.5 492.1
- ----------------------------------------------------------------------------------------------------------------------------------
Recoveries:
Commercial, financial and agricultural. . . . . . . . . . 14.8 17.7 23.9 20.9 18.5
Real estate construction. . . . . . . . . . . . . . . . . -- 1.3 1.8 2.4 1.7
Commercial mortgages. . . . . . . . . . . . . . . . . . . 12.3 13.2 8.2 7.0 3.5
Residential mortgages . . . . . . . . . . . . . . . . . . .2 .2 .4 .1 .5
Installment . . . . . . . . . . . . . . . . . . . . . . . 14.5 15.1 18.5 26.5 30.5
Bank card . . . . . . . . . . . . . . . . . . . . . . . . 8.5 7.7 6.8 5.4 3.6
Credit lines. . . . . . . . . . . . . . . . . . . . . . . .6 .9 1.0 1.0 1.5
- ----------------------------------------------------------------------------------------------------------------------------------
Total recoveries. . . . . . . . . . . . . . . . . . . . 50.9 56.1 60.6 63.3 59.8
- ----------------------------------------------------------------------------------------------------------------------------------
Net charge-offs:
Commercial, financial and agricultural. . . . . . . . . . (4.1) (3.0) 1.6 43.8 112.6
Real estate construction. . . . . . . . . . . . . . . . . .8 1.8 16.7 29.4 84.4
Commercial mortgages. . . . . . . . . . . . . . . . . . . .6 7.9 24.9 57.5 65.8
Residential mortgages . . . . . . . . . . . . . . . . . . 2.7 1.8 3.0 5.5 5.7
Installment . . . . . . . . . . . . . . . . . . . . . . . 54.1 42.5 54.7 69.3 96.8
Bank card . . . . . . . . . . . . . . . . . . . . . . . . 65.0 37.8 36.2 48.4 55.4
Credit lines. . . . . . . . . . . . . . . . . . . . . . . 2.9 3.5 4.7 8.3 11.6
- ----------------------------------------------------------------------------------------------------------------------------------
Total net charge-offs . . . . . . . . . . . . . . . . . 122.0 92.3 141.8 262.2 432.3
- ----------------------------------------------------------------------------------------------------------------------------------
Provision for loan losses. . . . . . . . . . . . . . . . . . 122.5 74.0 120.4 257.3 453.9
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 (2.1) (4.5) .5 2.9
- ----------------------------------------------------------------------------------------------------------------------------------
Ending allowance for loan losses. . . . . . . . . . . . $505.1 $501.4 $521.8 $547.7 $552.1
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Ending allowance for loan losses as a percentage of loans. . 1.66% 1.76% 2.01% 2.10% 2.09%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net charge-offs to average loans by category:
Commercial, financial and agricultural. . . . . . . . . . (.09)% (.07)% .04% 1.01% 2.34%
Real estate construction. . . . . . . . . . . . . . . . . .09 .21 1.56 1.86 3.59
Commercial mortgages. . . . . . . . . . . . . . . . . . . .03 .32 .84 1.67 1.72
Residential mortgages . . . . . . . . . . . . . . . . . . .02 .02 .03 .06 .07
Installment . . . . . . . . . . . . . . . . . . . . . . . .63 .56 .79 1.06 1.45
Bank card . . . . . . . . . . . . . . . . . . . . . . . . 4.29 3.23 3.50 4.60 5.13
Credit lines. . . . . . . . . . . . . . . . . . . . . . . .40 .51 .65 1.17 1.65
Total . . . . . . . . . . . . . . . . . . . . . . . . . .41 .34 .55 1.00 1.59
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Allocation of allowance for loan losses by category:
Commercial, financial and agricultural. . . . . . . . . . $ 73.4 $ 84.8 $ 85.8 $ 89.3 $162.0
Real estate construction. . . . . . . . . . . . . . . . . 14.7 16.1 36.7 60.0 96.6
Commercial mortgages. . . . . . . . . . . . . . . . . . . 87.0 102.6 117.4 108.4 118.9
Residential mortgages . . . . . . . . . . . . . . . . . . 23.2 23.5 27.0 7.0 5.3
Installment . . . . . . . . . . . . . . . . . . . . . . . 100.7 90.4 107.7 99.9 73.8
Bank card . . . . . . . . . . . . . . . . . . . . . . . . 105.6 72.2 59.1 62.4 55.2
Credit lines. . . . . . . . . . . . . . . . . . . . . . . 8.8 9.4 10.1 15.1 10.1
Unallocated . . . . . . . . . . . . . . . . . . . . . . . 91.7 102.4 78.0 105.6 30.2
- ----------------------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $505.1 $501.4 $521.8 $547.7 $552.1
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
expense was $122.5 million, up from $74.0 million in the prior year but similar
to the $120.4 million reported in 1993.
The allowance for loan losses represents a reserve for potential losses
existing in the loan portfolio. Barnett's methodology for evaluating the
adequacy of the allowance is based on the operating and economic environment,
the level and quality of impaired and adversely graded loans, the level of
charge-offs and analyses of individual loans within the portfolio. This
methodology requires detailed review of impaired loans and minimum reserves for
other adversely graded loans. These adverse grades equate to four regulatory
classifications of assets: other loans especially mentioned, substandard,
doubtful and loss.
The allowance for loan losses rose slightly to $505.1 million and represented
1.66% of loans on December 31, 1995.
Since the allowance is established to cover potential losses inherent in the
portfolio as a whole, due to the weighting of the portfolio toward consumer
loans, the allowance will not necessarily decline at the same rate as non-
performing loans. Management considers the allowance appropriate and adequate to
cover potential losses inherent in the loan portfolio based on the current
economic environment.
TABLE 11 provides a reconciliation of the allowance for loan losses for the
years 1991 through 1995, as well as gross charge-offs, recoveries and net
charge-offs.
IMPACT OF ACCOUNTING STANDARDS
Effective January 1, 1995, Barnett adopted Statement of Accounting Standards
(SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan," which
prescribes how the allowance for loan losses related to impaired loans should be
determined. The adoption of this standard had no significant impact on the
financial condition or results of operations of the company. For more
information, see NOTE E of NOTES TO FINANCIAL STATEMENTS.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The statement
was adopted by the company on January 1, 1996. Adoption of this standard will
not have a significant impact on the financial condition or results of
operations of the company.
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing
Rights." The statement requires that an enterprise recognize as separate assets
the rights to service mortgage loans for others, however those servicing rights
are acquired. Additionally, the enterprise must periodically assess its
capitalized mortgage servicing rights for impairment based on the fair value of
those rights. The company adopted the statement prospectively on January 1,
1996.
TAXES
Barnett's provision for income taxes rose to $286.3 million in 1995 from
$249.8 million in 1994, primarily as a result of growth in pre-tax earnings. The
effective tax rate increased to 34.9% from 33.9%, reflecting reduced tax-exempt
income and higher state income taxes and non-deductible expenses. A
reconciliation of the effective tax rate to the 1995 federal statutory rate can
be found in NOTE M of NOTES TO FINANCIAL STATEMENTS.
LIQUIDITY
For banks, liquidity represents the ability to meet loan commitments, deposit
withdrawals and other operating needs. 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 or the sales of securities, asset securitization and other non-
relationship funding sources
31
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
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.
During 1995, the company commenced a commercial paper program to provide the
primary funding for its mortgage banking and consumer finance operations. On
December 31, 1995, the company had $670 million of commercial paper outstanding.
This facility is supported by $760 million in backup lines of credit.
At the end of the year, the company had $1.6 billion in debt and preferred
stock available under existing shelf registrations with the Securities and
Exchange Commission.
Management believes that the level of liquidity is sufficient to meet current
and future funding requirements.
CAPITAL
On December 31, 1995, Barnett's shareholders' equity totaled $3.3 billion, up
4% from a year earlier, due to retention of earnings partially offset by
repurchases of common stock. Shareholders' equity, before deducting the Employee
Stock Ownership Plan obligation, rose to 8.05% of assets from 7.81% a year
earlier.
Reflecting the strong capital levels and rate of internal capital generation,
the Board of Directors in May approved the repurchase of up to 10 million shares
of the company's common stock and the redemption of the Series A $4.50
Cumulative Convertible Preferred Stock and Series C $4.00 Cumulative Convertible
Preferred Stock on or following their earliest redemption dates. In October, the
company called for redemption of the Series C preferred stock and substantially
all of the shares converted into 2.9 million common shares. The company had
previously repurchased an equivalent amount of common shares related to this
conversion.
Barnett meets most of its capital requirements through retained earnings, and
in 1995 this source added more than $347 million to equity. TABLE 12 shows a
six-year history of Barnett's rate of internal capital generation and the
component factors which determine it.
The company declared dividends of $1.82 per common share in 1995,
TABLE 12 RATE OF INTERNAL CAPITAL GENERATION
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Return on assets . . . . . . . . . . . . 1.30% 1.28% 1.13% .55% .21% .15%
Average equity to assets . . . . . . . . 8.07 7.94 7.31 6.62 5.61 5.63
- --------------------------------------------------------------------------------------------------------------
Return on total equity . . . . . . . . . 16.08 16.11 15.42 8.27 3.83 2.73
Total dividend payout ratio. . . . . . . 35.83 35.98 36.26 58.58 120.59 173.22
Earnings retention rate. . . . . . . . . 64.17 64.02 63.74 41.42 (20.59) (73.22)
- --------------------------------------------------------------------------------------------------------------
Internal capital generation rate . . . . 10.32% 10.31% 9.83% 3.43% (.79)% (2.00)%
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
TABLE 13 CAPITAL RATIOS
<TABLE>
<CAPTION>
December 31--Dollars in Millions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tier I capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,491 $ 2,708
Total risk-based capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,475 3,474
Total risk-adjusted assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,188 27,962
- --------------------------------------------------------------------------------------------------------------
Tier I capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.25% 9.68%
Total risk-based capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.51 12.42
Tier I leverage ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.16 6.97
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------------------
AVERAGE SHAREHOLDERS' EQUITY
[GRAPH]
32
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BARNETT BANKS, INC.
<PAGE>
MANAGEMENT DISCUSSION
representing a 35% dividend payout ratio which is defined as dividends per
common share divided by earnings per fully diluted common share. Reflecting the
increase in the company's earnings, Barnett increased the quarterly dividend 15%
on May 17, 1995 from $.41 per share to $.47. Barnett's goal is to maintain a
common dividend payout ratio in the range of 30% to 40%.
The company is subject to risk-based capital guidelines that measure capital
relative to risk-weighted assets and off-balance-sheet financial instruments.
Capital guidelines issued by the Federal Reserve Board require bank holding
companies to have a minimum total risk-based capital ratio of 8.00%, with at
least half of total capital in the form of Tier I capital.
As TABLE 13 shows, Barnett significantly exceeded these capital guidelines on
December 31, with a Tier I capital ratio of 8.25% and a total risk-based capital
ratio of 11.51%.
The minimum leverage ratio, defined as Tier I capital divided by quarterly
average assets, is 3% for the highest-rated bank holding companies which are not
undertaking significant expansion programs. An additional 1% to 2% may be
required for other companies, depending upon their regulatory ratings and
expansion plans. On December 31, 1995, Barnett's leverage ratio was 6.16%
compared to 6.97% a year earlier. This decline reflects additional intangible
assets as a result of acquisitions completed in 1995 and the capital returned to
shareholders through the ongoing stock repurchase program.
COMPARISON OF 1994 WITH 1993
Barnett's 1994 net income rose 16% to $488.0 million from $421.0 million in
1993. This increase reflected improved credit quality, strengthening loan growth
and reduced non-interest expense. Earnings per fully diluted share for 1994 were
$4.66, up from $4.01 in 1993.
Profitability measures also improved, with return on assets rising to 1.28%
from 1.13% in 1993 and return on average common equity increasing to 16.70% from
16.02% in 1993.
Net interest income fell 1% during 1994, resulting from a lower net yield on
earning assets partially offset by higher earning assets. The net yield on
earning assets fell 20 basis points in 1994 to 4.87%, primarily reflecting loan
pricing pressure. Earning assets grew 3% as consumers stepped up borrowing to
buy homes and autos.
Lending accelerated during 1994 as average loans grew 4% over 1993. In line
with the company's strategy to focus on providing financial services to
consumers and small businesses, loans to consumers rose $1.4 billion, or 8%,
from 1993. Commercial and commercial real estate loans decreased 5% from 1993.
Average deposits of $31.7 billion were down 2% from the previous year as
modest deposit growth in transaction and money market accounts was offset by an
11% drop in time deposits.
Excluding securities transactions, non-interest income fell 8%. This decline
resulted from the sale of several fee producing business units during 1993,
lower mortgage banking income as the refinancing boom ended and decreased
revenue from sales of investment products and services.
Non-interest expense was reduced by $136.8 million in 1994, due to lower
credit-related expenses and the impact of internal productivity initiatives.
BOOK VALUE PER SHARE
[GRAPH]
33
-------------------
BARNETT BANKS, INC.
<PAGE>
SIX-YEAR AVERAGE BALANCES, YIELDS AND RATES
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
1995 1994
----------------------------------- ----------------------------------
Average Average
Average Yield Average Yield
Dollars in Millions--Taxable-Equivalent Balance Interest or Rate Balance Interest or Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:(1)
Commercial, financial and agricultural. . . . $ 4,554 $ 384.2 8.44% $ 4,220 $ 324.4 7.69%
Real estate construction. . . . . . . . . . . 931 98.4 10.57 851 76.2 8.95
Commercial mortgages. . . . . . . . . . . . . 2,319 202.1 8.71 2,492 206.6 8.29
Residential mortgages . . . . . . . . . . . . 11,118 846.3 7.61 9,759 698.0 7.15
Installment . . . . . . . . . . . . . . . . . 8,603 760.3 8.84 7,633 634.8 8.32
Bank card . . . . . . . . . . . . . . . . . . 1,515 237.7 15.69 1,168 187.0 16.01
Credit lines. . . . . . . . . . . . . . . . . 732 74.4 10.16 687 55.0 8.01
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income. . . . 29,772 2,592.0 8.71 26,810 2,174.9 8.11
- -----------------------------------------------------------------------------------------------------------------------------------
Securities:(2)
Taxable . . . . . . . . . . . . . . . . . . . 6,030 340.8 5.65 6,839 327.9 4.79
Tax-free. . . . . . . . . . . . . . . . . . . 423 53.7 12.70 715 93.0 13.01
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities. . . . . . . . . . . . . . 6,453 394.5 6.11 7,554 420.9 5.57
- -----------------------------------------------------------------------------------------------------------------------------------
Federal funds sold and securities purchased
under agreements to resell. . . . . . . . . . 83 4.9 5.88 77 3.1 4.03
Other earning assets . . . . . . . . . . . . . -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets. . . . . . . . . . . . 36,308 $2,991.4 8.24% 34,441 $2,598.9 7.55%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash . . . . . . . . . . . . . . . . . . . . . 2,013 2,092
Other assets . . . . . . . . . . . . . . . . . 3,287 2,156
Allowance for loan losses. . . . . . . . . . . (503) (520)
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets . . . . . . . . . . . . . . . . $41,105 $38,169
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
NOW and money market accounts. . . . . . . . . $12,757 $ 293.2 2.30% $13,573 $297.9 2.19%
Savings deposits . . . . . . . . . . . . . . . 3,435 71.0 2.07 3,469 72.8 2.10
Certificates of deposit under $100,000 . . . . 9,906 511.4 5.16 7,498 320.8 4.28
Other time deposits. . . . . . . . . . . . . . 2,153 117.4 5.45 1,639 70.0 4.27
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits . . . . . 28,251 993.0 3.52 26,179 761.5 2.91
Federal funds purchased and securities sold
under agreements to repurchase. . . . . . . 1,585 90.7 5.73 2,192 93.7 4.27
Other short-term borrowings. . . . . . . . . . 923 57.2 6.19 125 5.7 4.59
Long-term debt . . . . . . . . . . . . . . . . 955 78.3 8.20 683 60.5 8.85
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities. . . . 31,714 $1,219.2 3.84% 29,179 $921.4 3.16%
Demand deposits. . . . . . . . . . . . . . . . 5,440 5,531
Other liabilities. . . . . . . . . . . . . . . 635 430
Preferred equity . . . . . . . . . . . . . . . 187 215
Common equity. . . . . . . . . . . . . . . . . 3,129 2,814
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity. . . . . . . $41,105 $38,169
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
SPREAD AND NET YIELD
Interest rate spread . . . . . . . . . . . . . 4.40% 4.39%
Cost of funds supporting earning assets. . . . 3.36 2.68
Net yield on earning assets. . . . . . . . . . $1,772.2 4.88 $1,677.5 4.87
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</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 based on amortized cost.
34
- -------------------
BARNETT BANKS, INC.
<PAGE>
SIX-YEAR AVERAGE BALANCES, YIELDS AND RATES
<TABLE>
<CAPTION>
1993 1992 1991
- ---------------------------------- --------------------------------- ----------------------------------
Average Average Average
Average Yield Average Yield Average Yield
Balance Interest or Rate Balance Interest or Rate Balance Interest or Rate
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 3,927 $ 281.6 7.17% $ 4,341 $ 322.2 7.42% $ 4,811 $ 436.3 9.07%
1,068 83.0 7.77 1,577 125.8 7.98 2,353 236.5 10.05
2,970 236.5 7.96 3,442 299.3 8.70 3,823 385.3 10.08
9,179 705.7 7.69 8,564 752.2 8.78 7,780 780.5 10.03
6,941 632.7 9.11 6,549 670.4 10.24 6,655 739.2 11.11
1,034 170.9 16.53 1,052 172.6 16.40 1,080 178.7 16.55
721 53.9 7.48 711 55.4 7.79 699 70.8 10.12
- ------------------------------------------------------------------------------------------------------------------------
25,840 2,140.7 8.28 26,236 2,363.1 9.00 27,201 2,769.8 10.18
- ------------------------------------------------------------------------------------------------------------------------
5,961 302.9 5.08 5,734 356.6 6.23 4,561 352.6 7.73
897 111.0 12.37 1,042 124.8 11.97 1,251 148.3 11.86
- ------------------------------------------------------------------------------------------------------------------------
6,858 413.9 6.04 6,776 481.4 7.11 5,812 500.9 8.62
- ------------------------------------------------------------------------------------------------------------------------
559 17.7 3.17 813 29.6 3.64 1,105 61.7 5.58
256 8.1 3.18 115 5.7 4.96 -- -- -
- ------------------------------------------------------------------------------------------------------------------------
33,513 $2,580.4 7.70% 33,940 $2,879.8 8.48% 34,118 $3,332.4 9.77
2,164 2,131 1,889
2,218 2,403 2,450
(539) (551) (557)
- ------------------------------------------------------------------------------------------------------------------------
$ 37,356 $37,923 $37,900
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
$ 13,453 $283.6 2.11% $12,426 $ 311.6 2.51% $10,658 $ 450.8 4.23%
3,353 67.4 2.01 2,941 76.7 2.61 2,432 99.2 4.08
8,343 355.1 4.26 10,318 520.1 5.04 12,022 814.6 6.78
1,936 83.0 4.29 2,672 134.3 5.03 3,915 266.8 6.81
- ------------------------------------------------------------------------------------------------------------------------
27,085 789.1 2.91 28,357 1,042.7 3.68 29,027 1,631.4 5.62
942 25.0 2.65 1,013 31.7 3.13 1,295 68.1 5.26
108 4.2 3.88 95 3.3 3.49 140 8.1 5.73
689 61.8 8.97 734 66.0 9.00 653 56.8 8.70
- -----------------------------------------------------------------------------------------------------------------------
28,824 $880.1 3.05% 30,199 $1,143.7 3.79% 31,115 $1,764.4 5.67%
5,400 4,864 4,311
402 349 346
215 216 119
2,515 2,295 2,009
- -----------------------------------------------------------------------------------------------------------------------
$ 37,356 $37,923 $37,900
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
4.65% 4.69% 4.10
2.63 3.37 5.17
$1,700.3 5.07 $1,736.1 5.11 $1,568.0 4.60
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
1990 Growth Rate
- ---------------------------------- -----------------------------
Average 5-Year
Average Yield Com- 1995/
Balance Interest or Rate pound 1994
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,129 $ 527.0 10.28% (2)% 8%
2,934 336.8 11.48 (21) 9
3,862 420.1 10.88 (10) (7)
7,103 737.4 10.38 9 14
6,593 778.5 11.81 5 13
989 149.6 15.12 9 30
675 74.9 11.09 2 7
- --------------------------------------------------------------------
27,285 2,977.6 10.91 2 11
- --------------------------------------------------------------------
3,235 288.3 8.91 13 (12)
1,466 169.3 11.55 (22) (41)
- --------------------------------------------------------------------
4,701 457.6 9.74 7 (15)
- --------------------------------------------------------------------
395 32.1 8.13 (27) 8
-- -- -- -- --
- --------------------------------------------------------------------
32,381 $3,467.3 10.71% 2 5
1,895 1 (4)
2,223 8 52
(377) 6 (3)
- --------------------------------------------------------------------
$ 36,122 3% 8%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
$ 9,086 $ 458.7 5.05% 7% (6)%
2,284 109.5 4.79 9 (1)
11,456 891.6 7.78 (3) 32
4,335 343.2 7.92 (13) 31
- --------------------------------------------------------------------
27,161 1,803.0 6.64 1 8
1,473 112.9 7.66 1 (28)
315 25.3 8.04 24 --
397 35.3 8.88 19 40
- --------------------------------------------------------------------
29,346 $1,976.5 6.74% 2 9
4,297 5 (2)
447 7 48
1 -- (13)
2,031 9 11
- --------------------------------------------------------------------
$36,122 3% 8%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
3.97%
6.11
$1,490.8 4.60
- --------------------------------------------------------------------
- --------------------------------------------------------------------
</TABLE>
35
- -------------------
BARNETT BANKS, INC.
<PAGE>
FOURTH QUARTER MANAGEMENT DISCUSSION
SUMMARY
Barnett reported net income of $138.3 million, or $1.35 per fully diluted
share, in the fourth quarter of 1995, up from $134.1 million, or $1.29 per
share, in the third quarter and $125.4 million, or $1.21 per share, in the
fourth quarter of 1994. Fourth quarter results represent a return on assets of
1.34% and return on common equity of 16.76%
Revenue grew for the seventh consecutive quarter, increasing $20.0 million
over the third quarter and $93.6 million from the fourth quarter of 1994. These
increases are primarily due to higher net interest income, largely as a result
of a higher net yield on earnings assets, and improved non-interest income.
Non-interest expense increased $14.6 million over the third quarter and $52.4
million from last year's fourth quarter. Non-interest expense rose from the
third quarter due to higher salaries and other expense. The increase from the
fourth quarter of 1994 reflected the impact of acquisitions, somewhat offset by
the decrease in FDIC insurance premiums. The provision for loan losses was
$37.2 million in the fourth quarter of 1995, $3.0 million over the third quarter
of 1995, $3.0 million over the third quarter of 11.6 million higher than last
year. The reserve for loan losses was $505 million on December 31, 1995,
covering 297% of non-performing loans.
Net charge-offs rose $2.2 million form the third quarter to $36.2 million,
or 48 basis points of average loans. Net charge-offs were $7.7 million lower
than the fourth quarter of 1994, due to three large commercial real estate
charge-offs in 1994, somewhat offset by increased consumer charge-offs in 1995.
Non-performing assets fell $44 million from the third quarter and a total of
$53 million during the year to $238 million, representing
78 basis points of outstanding on December 31, 1995.
Selected quarterly data can be found in TABLE 14.
FOURTH QUARTER MANAGEMENT DISCUSSION
Fourth Quarter Management Discussion
TABLE 14 SELECTED QUARTERLY DATA
<TABLE>
<CAPTION>
1995 1994
DOLLARS IN MILLIONS EXCEPT PER -------------------------------------- -------------------------------------
SHARE DATA--TAXABLE-EQUIVALENT FOURTH Third Second First Fourth Third Second First
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net interest income. . . . . . . . . . . . . . $459.2 $446.9 435.6 $430.5 $426.2 $419.8 $416.2 $415.3
Provision for loan losses. . . . . . . . . . . 37.2 34.2 26.8 24.3 25.6 15.4 13.7 19.3
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income after loan
loss provision . . . . . . . . . . . . . . . 422.0 412.7 408.8 406.2 400.6 404.4 402.5 396.0
Non-interest income (excluding
securities transactions) . . . . . . . . . . 185.5 182.6 183.1 162.8 142.7 137.7 137.6 137.7
Securities transactions. . . . . . . . . . . . 4.9 .1 -- -- (12.9) .4 (.2) (.4)
Non-interest expense . . . . . . . . . . . . . 393.9 379.3 381.9 363.5 341.5 340.3 341.8 340.6
- ----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes . . . . . . . . . . 218.5 216.1 210.0 205.5 188.9 202.2 198.1 192.7
Income tax provision . . . . . . . . . . . . . 75.0 75.4 69.4 66.5 52.6 67.6 65.9 63.7
Taxable-equivalent adjustment. . . . . . . . . 5.2 6.6 8.4 10.3 10.9 11.2 11.0 11.0
- ----------------------------------------------------------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . $138.3 $134.1 $132.2 $128.7 $125.4 $123.4 $121.2 $118.0
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Primary net income per common share. . . . . . $1.39 $1.34 $1.30 $1.27 $1.24 $1.21 $1.19 $1.15
Fully diluted net income per common share. . . 1.35 1.29 1.26 1.23 1.21 1.18 1.15 1.12
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
- --------------------
BARRNETT BANKS, INC.
<PAGE>
FOURTH QUARTER MANAGEMENT DISCUSSION
EARNING ASSETS
Average earning assets were up 2% from last year to $36.3 billion, but
slightly below the third quarter's level. The earning asset increase from
last year's fourth quarter reflects strong loan growth during the first three
quarters of 1995. Earning asset growth slowed due to management's decision to
redeploy the proceeds from maturing securities and amortizing residential
mortgage loans into consumer and commercial loans.
Average loans grew $2.5 billion, or 9%, from the fourth quarter of 1994.
Lending to consumers continued to be the foundation of loan growth in 1995,
as residential mortgage loans rose 9% to $11.2 billion, installment loans
increased 13% to $9.0 billion and bank card outstandings climbed 30% to $1.7
billion.
During the fourth quarter, loans grew $223 million, or at a 3% annualized
growth rate, reflecting management's decision to begin selling substantially
all residential mortgage production for asset-liability management purposes.
The resulting reduction of $237 million in residential mortgages was offset
by continued growth in installment, bank card and commercial loans.
Average investment securities fell throughout 1995. The fourth quarter
average balance of $5.7 billion was 24% lower than the fourth quarter of
1994, as proceeds from maturing securities were utilized to fund loan growth.
FUNDING SOURCES
Barnett's average deposits grew 6% from a year ago to $33.7 billion,
reflecting the acquisition of $3.4 billion of Florida deposits from Glendale
Federal Bank, FSB on December 15, 1994, and rose slightly over the third
quarter as seasonal residents returned to Florida.
Demand deposits rose 1% from last year to an average balance of $5.6
billion. Money market and NOW accounts were down 6%, while savings account
balances fell 5%.
In contrast, certificates of deposit under $100,000 rose 26% and other
time deposits rose 38% from last year, primarily as a result of the mix of
deposits acquired from Glendale Federal.
NET INTEREST INCOME
Barnett's taxable-equivalent net interest income of $459.2 million in the
fourth quarter was 8% higher than the corresponding period last year and 3%
over the third quarter level. These increases are primarily due to an
increased net yield on earning assets.
The net yield rose 25 basis points from last year, primarily because of
increased investment in loans as a percent of earning assets and upward
repricing of the adjustable-rate mortgage portfolio, partially offset by
increased funding costs. Loans rose to 84% of earning asset from 79% last
year and the yield on loans rose 57 basis points. The rate paid on interest
bearing liabilities rose 37 basis points from the same period last year, due
to consumer preference for higher yielding time deposits and increases in
market rates.
NON-INTEREST INCOME
Non-interest income, excluding securities transactions, increased 30% from
the fourth quarter of 1994, primarily due to revenue added by companies
acquired during 1995 and higher fees from the retail banking, asset
management and credit card operations. Other services charges and fees
37
-------------------
BARNETT BANKS, INC.
<PAGE>
FOURTH QUARTER MANAGEMENT DISCUSSION
rose $6.2 million from last year's fourth quarter, primarily due to increase
revenue from the sale of credit insurance, the Barnett SuperCard Check Card and
other retail banking fees. Brokerage revenue rose $3.3 million, or 51% ,
reflecting increased volume generated by new sales personnel deployed in 1995.
Non-interest income, excluding securities transactions, rose 2% over the
third quarter, primarily reflecting seasonal influences.
Net securities gains of $4.9 million in the fourth quarter resulted from
the sale of a portion of the company's investment in Bank South Corporation
compared to net securities losses of $12.9 million in the fourth quarter of
1994.
NON-INTEREST EXPENSE
Non-interest expense rose 15% from the fourth quarter of 1994 and 4% from
last quarter to $393.9 million, primarily due to companies acquired during 1995
and increased investment in marketing, technology and strategic initiatives,
somewhat offset by reduced FDIC assessments. The overhead ratio of 61% in the
fourth quarter was slightly above last year's 60%, primarily reflecting this
increased level of investment.
Salaries and benefits rose 23% from the same period last year to $199.7
million, maily due to the addition of 1,469 fulltime equivalent employees
through acquisiions. The number of FTEs was 20,175 on December 31, 1995,
compared to 18,929 last year.
Other expense rose 8% from last year, primarily due to aquistions,
increased marketing, technology and other expense, partially offset by a
reduction in FDIC premiums.
Non-interest expense rose from the third quarter, primarily due to higher
stock price and production-related incentives and higher other expense. Details
on other non-interest expense can be found in TABLE 15.
TABLE 15 OTHER NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
1995 1994
-------------------------------------- ----------------------------------------
DOLLARS IN THOUSANDS FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advertising and marketing. . . . . . . . $ 11,959 $ 8,407 $ 7,737 $ 5,416 $ 8,600 $ 7,427 $ 6,594 $ 6,680
Amortization of intangibles. . . . . . . 13,031 13,415 14,022 12,326 9,235 8,729 9,138 9,474
Communications . . . . . . . . . . . . . 10,349 10,852 10,464 9,321 8,663 8,928 9,130 7,024
Expenses and provision on
real estate held for sale . . . . . . 2,280 2,901 3,418 3,513 2,087 3,083 4,483 6,419
FDIC assessments . . . . . . . . . . . . 5,517 612 18,565 18,533 17,467 17,760 18,042 18,140
Franchise and credit card fees . . . . . 5,235 5,184 5,613 4,398 4,271 4,150 3,887 4,139
Outside computer services. . . . . . . . 11,490 11,081 10,214 10,404 9,205 9,754 8,499 9,250
Postage. . . . . . . . . . . . . . . . . 6,553 6,878 6,584 6,311 6,170 5,420 5,831 5,756
Stationery and supplies. . . . . . . . . 6,169 4,750 4,770 4,708 4,694 3,428 3,939 3,706
Insurance, taxes and other . . . . . . . 51,871 54,852 43,334 45,724 45,258 46,374 44,167 43,775
- ------------------------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . $124,454 $118,932 $124,721 $120,654 $115,650 $115,053 $113,710 $114,363
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
- --------------------
BARRNETT BANKS, INC.
<PAGE>
FOURTH QUARTER MANAGEMENT DISCUSSION
ASSET QUALITY
The provision for loan losses was $37.2 million in the fourth quarter, more
than covering net charge-offs of $36.2 million. The fourth quarter 1994
provision of $25.6 million was below net charge-offs of $43.9 million, which
included three large coporate losses that had been fully reserved.
As a percentage of average loans, net charge-offs were .48% compared to
.63% in the fourth quarter of 1994. The allowance for loan losses was $505
million at December 31 compared to $501 million last year.
Non-performing assets fell $53 million, or 18%, from last year
to $238 million. This decline was the result of the resolution of problem
assets through principal paydowns, OREO sales and an increse loans returned to
accrual. Non-performing assets on December 31 represented .78% of outstandings
compared to 1.01% last year.
For further details on loan quality, see TABLE 16.
TAXES
Barnett's effective tax rate for the fourth quarter was 35.2%, compared
to 29.6% for the fourth quarter of 1994. The lower effective tax rate in 1994
was primarily attributable to the realization of tax benefits in the fourth
quarter upon the completion and filing of the 1993 federal tax return.
TABLE 16 LOAN QUALITY INFORMATION
<TABLE>
<CAPTION>
1995 1994
-------------------------------------- -----------------------------------------
DOLLARS IN THOUSANDS FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net charge-offs (recoveries):
Commercial, financial, agricultural . $ (1,484) $ 2,049 $ (1,863) $ (2,781) $ 2,365 $ 844 $ (5,243) $ (991)
Real estate construction. . . . . . . (1) 428 147 190 115 18 1,014 640
Commercial mortgages. . . . . . . . . (2,828) 515 2,392 499 16,239 (4,368) (1,621) (2,318)
Residential mortgages . . . . . . . . 1,140 543 261 739 423 369 576 435
Installment . . . . . . . . . . . . . 17,212 12,318 12,229 12,381 12,994 8,196 9,184 12,159
Bank card . . . . . . . . . . . . . . 21,443 17,384 13,510 12,683 10,609 9,564 8,695 8,887
Credit lines. . . . . . . . . . . . . 718 810 629 727 1,123 793 1,013 601
- ------------------------------------------------------------------------------------------------------------------------------------
Total net charge-offs . . . . . . . $ 36,200 $ 34,047 $ 27,305 $ 24,438 $ 43,868 $ 15,416 $ 13,618 $ 19,413
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Gross charge-offs. . . . . . . . . . . . $ 50,163 $ 44,062 $ 42,529 $ 36,125 $ 57,578 $ 30,775 $ 28,222 $ 31,875
Allowance for loan losses. . . . . . . . 505,148 503,032 502,521 502,800 501,447 521,871 521,843 521,763
Non-performing loans . . . . . . . . . . 170,268 207,902 208,142 221,943 200,455 218,582 225,064 268,992
Non-performing assets. . . . . . . . . . 237,898 282,194 280,869 297,223 290,862 303,776 335,638 395,792
Non-performing asset ratio . . . . . . . .78% .92% .93% 1.01% 1.01% 1.10% 1.25% 1.50%
Net charge-offs to average
loans (annualized) . . . . . . . . . .48 .45 .37 .34 .63 .23 .21 .30
Allowance to non-performing loans. . . . 297 242 241 227 250 239 232 194
Allowance to period-end loans. . . . . . 1.66 1.65 1.68 1.72 1.76 1.91 1.95 1.99
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
--------------------
BARRETT BANKS, INC.
<PAGE>
QUARTERLY AVERAGE BALANCES, YIELDS AND RATES
Consolidated--Barnett Banks, Inc. and Affiliates
<TABLE>
<CAPTION>
1995
-------------------------------------------------------------------------------------
FOURTH Third Second
--------------------------- --------------------------- ---------------------------
AVERAGE Average Average
AVERAGE YIELD OR Average Yield or Average Yield or
Dollars in Millions--Taxable-Equivalent BALANCE INTEREST RATE Balance Interest Rate Balance Interest Rate
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans:(1)
Commercial, financial and agricultural $ 4,661 $ 99.3 8.46% $ 4,556 $ 97.2 8.47% $ 4,555 $ 95.8 8.43%
Real estate construction. . . . . . . 904 23.9 10.51 946 25.0 10.48 948 25.3 10.69
Commercial mortgages. . . . . . . . . 2,246 50.0 8.81 2,304 50.7 8.73 2,345 51.0 8.72
Residential mortgages . . . . . . . . 11,180 217.7 7.79 11,417 219.4 7.69 11,110 210.2 7.57
Installment . . . . . . . . . . . . . 9,000 202.4 8.92 8,667 195.5 8.95 8,435 185.9 8.84
Bank card . . . . . . . . . . . . . . 1,677 63.6 15.05 1,566 62.0 15.69 1,439 59.1 16.47
Credit lines. . . . . . . . . . . . . 746 18.9 10.06 735 19.5 10.50 730 19.2 10.55
- --------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income 30,414 674.5 8.82 30,191 665.8 8.77 29,562 643.7 8.73
- --------------------------------------------------------------------------------------------------------------------------------
Securities:(2)
Taxable . . . . . . . . . . . . . . . 5,471 81.4 5.93 5,771 81.0 5.59 6,194 86.3 5.58
Tax-free. . . . . . . . . . . . . . . 232 6.4 11.10 356 10.5 11.82 514 15.5 12.02
- --------------------------------------------------------------------------------------------------------------------------------
Total securities . . . . . . . . . 5,703 87.8 6.14 6,127 91.5 5.95 6,708 101.8 6.07
- --------------------------------------------------------------------------------------------------------------------------------
Federal funds sold and securities purchased
under agreements to resell. . . . . . 148 2.1 5.78 46 .7 5.84 47 .7 6.14
- --------------------------------------------------------------------------------------------------------------------------------
Total earning assets . . . . . . . 36,265 $764.4 8.39% 36,364 $758.0 8.29% 36,317 $746.2 8.23%
- --------------------------------------------------------------------------------------------------------------------------------
Cash . . . . . . . . . . . . . . . . . . 2,033 1,943 2,012
Other assets . . . . . . . . . . . . . . 3,396 3,332 3,401
Allowance for loan losses. . . . . . . . (504) (503) (498)
- --------------------------------------------------------------------------------------------------------------------------------
Total assets . . . . . . . . . . . $41,190 $41,136 $41,232
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
NOW and money market accounts. . . . . . $12,598 $ 69.0 2.17% $12,576 $ 69.6 2.19% $12,665 $ 73.5 2.33%
Savings deposits . . . . . . . . . . . . 3,314 16.7 1.99 3,362 16.9 2.00 3,451 17.2 2.00
Certificates of deposit under $100,000 . 9,863 130.5 5.25 9,990 133.1 5.29 10,071 131.5 5.24
Other time deposits. . . . . . . . . . . 2,281 32.3 5.61 2,209 31.2 5.61 2,133 29.4 5.52
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits. . 28,056 248.5 3.51 28,137 250.8 3.54 28,320 251.6 3.56
Federal funds purchased and securities sold
under agreements to repurchase. . . . 1,228 17.2 5.55 1,491 21.2 5.65 1,892 27.9 5.91
Other short-term borrowings. . . . . . . 1,107 17.0 6.11 1,159 18.2 6.24 838 13.3 6.37
Long-term debt . . . . . . . . . . . . . 1,131 22.5 7.98 1,028 20.9 8.11 842 17.8 8.48
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 31,522 $305.2 3.84% 31,815 $311.1 3.88% 31,892 $310.6 3.91%
Demand deposits. . . . . . . . . . . . . 5,598 5,340 5,382
Other liabilities. . . . . . . . . . . . 717 634 618
Preferred equity . . . . . . . . . . . . 104 214 215
Common equity. . . . . . . . . . . . . . 3,249 3,133 3,125
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity . . . $41,190 $41,136 $41,232
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
SPREAD AND NET YIELD
Interest rate spread . . . . . . . . . . 4.55% 4.41% 4.32%
Cost of funds supporting earning assets. 3.34 3.39 3.43
Net yield on earning assets. . . . . $459.2 5.05 $446.9 4.90 $435.6 4.80
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</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.
<PAGE>
QUARTERLY AVERAGE BALANCES, YIELDS AND RATES
<TABLE>
<CAPTION>
1995
- -----------------------------------
First Fourth Third
- ----------------------------------- -------------------------------------- -----------------------
Average Average
Average Yield or Average Yield or Average
Balance Interest Rate Balance Interest Rate Balance Interest
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 4,442 $ 91.9 8.39% $ 4,350 $ 87.8 8.01% $ 4,285 $ 84.1
925 24.2 10.62 896 22.5 9.94 833 19.5
2,383 50.5 8.60 2,428 51.5 8.42 2,456 51.9
10,755 198.9 7.40 10,229 185.7 7.26 9,769 175.2
8,301 176.6 8.63 7,996 168.8 8.38 7,770 162.7
1,375 53.0 15.64 1,286 48.6 15.01 1,165 47.6
718 16.9 9.53 704 15.4 8.69 690 14.7
- ------------------------------------------------------------------------------------------------------------------
28,899 608.0 8.49 27,889 578.1 8.25 26,968 553.0
- ------------------------------------------------------------------------------------------------------------------
6,702 92.2 5.57 6,815 86.7 5.07 6,785 82.4
593 21.3 14.34 660 23.3 14.10 691 23.3
- ----------------------------------------------------------------------------------------------------------------
7,295 113.5 6.29 7,475 110.0 5.87 7,476 105.7
- ----------------------------------------------------------------------------------------------------------------
92 1.3 5.92 67 .8 5.26 50 .6
- ----------------------------------------------------------------------------------------------------------------
36,286 $722.8 8.04% 35,431 $688.9 7.74% 34,494 $659.3
- ----------------------------------------------------------------------------------------------------------------
2,064 2,061 1,985
3,007 2,302 2,159
(499) (524) (519)
- ----------------------------------------------------------------------------------------------------------------
$40,858 $39,270 $38,119
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
$13,198 $ 81.0 2.49% $13,353 $ 80.2 2.38% $13,476 $ 78.0
3,619 20.3 2.27 3,477 20.1 2.29 3,450 19.4
9,698 116.3 4.86 7,801 88.8 4.52 7,409 80.4
1,983 24.6 5.02 1,655 19.0 4.55 1,608 17.5
- ----------------------------------------------------------------------------------------------------------------
28,498 242.2 3.45 26,286 208.1 3.14 25,943 195.3
1,734 24.4 5.71 2,838 36.7 5.12 2,488 28.1
579 8.6 6.02 194 2.7 5.60 96 1.0
815 17.1 8.40 690 15.2 8.84 681 15.1
- ----------------------------------------------------------------------------------------------------------------
31,626 $292.3 3.75% 30,008 $262.7 3.47% 29,208 $239.5
5,441 5,562 5,391
568 584 470
215 215 215
3,008 2,901 2,835
- ----------------------------------------------------------------------------------------------------------------
$40,858 $39,270 $38,119
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
4.29% 4.27%
3.27 2.94
$430.5 4.77 $426.2 4.80 $419.8
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
1994
- -------------------------------------------------------------------------------------------------
Third Second First
- --------- ----------------------------------- --------------------------------------
Average Average Average
Yield or Average Yield or Average Yield or
Rate Balance Interest Rate Balance Interest Rate
- -------------------------------------------------------------------------------------------------
7.79% $ 4,165 $ 80.0 7.71% $ 4,075 $ 72.4 7.20%
9.31 820 17.7 8.66 856 16.5 7.83
8.38 2,517 52.0 8.29 2,568 51.2 8.08
7.17 9,577 168.9 7.06 9,453 168.3 7.12
8.31 7,537 154.3 8.22 7,220 148.8 8.25
16.21 1,118 46.6 16.70 1,101 44.3 16.30
8.45 679 12.7 7.51 675 12.2 7.31
- -------------------------------------------------------------------------------------------------
8.16 26,413 530.7 8.05 25,948 513.0 7.95
- -------------------------------------------------------------------------------------------------
4.84 6,804 79.3 4.67 6,955 79.5 4.60
13.49 742 22.9 12.32 769 23.6 12.28
- -------------------------------------------------------------------------------------------------
5.64 7,546 102.2 5.42 7,724 103.1 5.36
- -------------------------------------------------------------------------------------------------
4.61 66 .7 4.08 123 .9 3.17
- -------------------------------------------------------------------------------------------------
7.61% 34,025 $633.6 7.46% 33,795 $617.0 7.34%
- -------------------------------------------------------------------------------------------------
2,094 2,233
2,105 2,055
(519) (518)
- -------------------------------------------------------------------------------------------------
$37,705 $37,565
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
2.30% $13,718 $ 73.3 2.14% $13,751 $ 66.3 1.96%
2.23 3,473 17.6 2.03 3,478 15.7 1.83
4.30 7,379 76.7 4.17 7,397 75.0 4.11
4.32 1,647 16.9 4.12 1,648 16.6 4.08
- -------------------------------------------------------------------------------------------------
2.99 26,217 184.5 2.82 26,274 173.6 2.68
4.48 1,748 16.7 3.84 1,675 12.2 2.96
4.31 99 1.1 4.30 109 .9 3.25
8.87 681 15.1 8.88 682 15.0 8.82
- -------------------------------------------------------------------------------------------------
3.26% 28,745 $217.4 3.03% 28,740 $201.7 2.84%
5,573 5,599
370 296
215 215
2,802 2,715
- -------------------------------------------------------------------------------------------------
$37,705 $37,565
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
4.35% 4.43% 4.50%
2.76 2.56 2.42
4.85 $416.2 4.90 $415.3 4.92
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Barnett Banks, Inc.:
We have audited the accompanying consolidated statements of financial
condition of Barnett Banks, Inc. (a Florida corporation) and affiliates as of
December 31, 1995 and 1994, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for each of the three years in
the period ending December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Barnett Banks, Inc. and
affiliates as of December 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ending December
31, 1995 in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Jacksonville, Florida
January 10, 1996
MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING
The management of Barnett Banks, Inc. has prepared and is responsible for the
accompanying financial statements, together with the other information presented
in this annual report. Management believes that the financial statements have
been prepared in conformity with generally accepted accounting principles
appropriate in the circumstances to reflect the substance of events and
transactions that should be included. The financial statements include amounts
that are based on management's best estimates and judgments.
Management maintains and depends upon an internal accounting control system
designed to provide reasonable assurance that transactions are executed in
accordance with management's authorization, that financial records are reliable
as the basis for the preparation of all financial statements, and that the
company's assets are safeguarded. The design and implementation of all systems
of internal control are based on judgments required to evaluate the costs of
controls in relation to the expected benefits and to determine the appropriate
balance between these costs and benefits. The company maintains a strong
internal audit program to monitor compliance with the system of internal
accounting control. Operational and special audits are conducted and internal
audit reports are submitted to appropriate management.
The Audit Committee of the Board of Directors, comprised solely of outside
directors, meets periodically with the independent certified public accountants,
management and internal auditors to review accounting, auditing and financial
reporting matters. The independent certified public accountants and internal
auditors have free access to the committee, without management present, to
discuss the results of their audit work and their evaluations of the adequacy of
internal controls and the quality of financial reporting.
The financial statements in this annual report have been audited by the
company's independent certified public accountants, Arthur Andersen LLP, for the
purpose of determining that the financial statements are presented fairly. Their
independent professional opinion on the company's financial statements is
presented above.
/s/ Charles E. Rice /s/ Allen L. Lastinger, Jr. /s/ Charles W. Newman
Charles E. Rice Allen L. Lastinger, Jr. Charles W. Newman
Chairman and President and Chief Financial Officer
Chief Executive Officer Chief Operating Officer
42
- -------------------
BARNETT BANKS, INC.
<PAGE>
STATEMENTS OF FINANCIAL CONDITION
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
December 31--Dollars in Thousands 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,658,661 $ 2,872,855
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . 110,484 35,040
Investment securities held to maturity (fair value $216,066 in 1995 and $4,864,666 in 1994). 200,960 4,944,808
Investment securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . 5,133,041 2,738,600
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,514,418 28,594,523
Less: Allowance for loan losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (505,148) (501,447)
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,419) (73,370)
- -------------------------------------------------------------------------------------------------------------------------------
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,980,851 28,019,706
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,078,057 1,015,187
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 758,297 498,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,633,194 1,153,859
- -------------------------------------------------------------------------------------------------------------------------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41,553,545 $41,278,319
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Demand deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,938,694 $ 5,957,700
NOW and money market accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,816,304 13,933,880
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,292,157 3,683,880
Certificates of deposit under $100,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,853,010 9,585,472
Other time deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,333,403 1,947,699
- -------------------------------------------------------------------------------------------------------------------------------
Total deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,233,568 35,108,631
Short-term borrowings:
Federal funds purchased and securities sold under agreements to
repurchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899,667 1,250,506
Commercial paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 669,766 6,199
Other short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509,516 397,199
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 778,028 604,925
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,190,814 776,676
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,281,359 38,144,136
- -------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $.10 par value: 20,000,000 shares authorized; issued,
1,960,371 and 4,312,289. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,753 215,307
Common stock, $2 par value: 200,000,000 shares authorized; issued,
94,865,368 and 96,732,754. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,731 193,466
Contributed capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575,464 741,654
Net unrealized gain (loss) on investment securities available for sale . . . . . . . . . . . 38,242 (26,998)
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,445,810 2,098,977
Less: Employee stock ownership plan obligation, collateralized
by 2,317,067 and 2,732,372 shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (74,814) (88,223)
- -------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,272,186 3,134,183
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . $41,553,545 $41,278,319
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
43
-------------------
BARNETT BANKS, INC.
<PAGE>
STATEMENTS OF INCOME
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
For the Years Ended December 31--Dollars in Thousands Except Share Data 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,580,408 $2,164,320 $2,130,029
Investment securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375,692 387,465 375,067
Federal funds sold and securities purchased under agreements to resell . . . . . . . 4,887 3,108 17,697
Other earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 8,146
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,960,987 2,554,893 2,530,939
- ----------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 993,046 761,511 789,100
Federal funds purchased and securities sold under agreements to repurchase . . . . . 90,730 93,714 25,046
Other short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,154 5,719 4,181
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,323 60,464 61,778
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,219,253 921,408 880,105
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,741,734 1,633,485 1,650,834
Provision for loan losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,531 74,049 120,410
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses . . . . . . . . . . . . . . 1,619,203 1,559,436 1,530,424
- ----------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on deposit accounts. . . . . . . . . . . . . . . . . . . . . . . . . 225,966 227,573 222,650
Consumer finance income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,477 -- --
Trust income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,036 77,357 82,256
Credit card discounts and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,999 54,377 55,235
Mortgage banking income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,640 33,112 40,911
Brokerage income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,694 30,010 41,109
Other service charges and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,616 104,845 131,560
Securities transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,994 (13,086) (2,098)
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,601 28,412 27,386
- ----------------------------------------------------------------------------------------------------------------------------------
Total non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 719,023 542,600 599,009
- ----------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 758,930 648,658 664,293
Net occupancy expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,480 118,251 136,574
Furniture and equipment expense. . . . . . . . . . . . . . . . . . . . . . . . . . . 144,461 138,546 143,641
Other expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488,761 458,776 556,449
- ----------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,518,632 1,364,231 1,500,957
- ----------------------------------------------------------------------------------------------------------------------------------
Net non-interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . 799,609 821,631 901,948
- ----------------------------------------------------------------------------------------------------------------------------------
EARNINGS
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 819,594 737,805 628,476
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286,293 249,834 207,482
- ----------------------------------------------------------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 533,301 $ 487,971 $ 420,994
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE
Primary: Earnings per share. . . . . . . . . . . . . . . . . . . . . . . $5.30 $4.79 $4.10
Average number of shares. . . . . . . . . . . . . . . . . . . . . . . . . . 97,547,408 98,081,191 98,183,117
Dividends on preferred stock. . . . . . . . . . . . . . . . . . . . . . . . $15,861 $18,200 $18,200
Fully diluted: Earnings per share . . . . . . . . . . . . . . . . . . . . . . . $5.13 $4.66 $4.01
Average number of shares . . . . . . . . . . . . . . . . . . . . . . . . . 103,979,737 104,766,131 104,868,057
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
44
- -------------------
BARNETT BANKS, INC.
<PAGE>
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
Contri- Net
For the Years Ended December 31-- Preferred Common buted Unrealized Retained ESOP
Dollars in Thousands Stock Stock Capital Gain (Loss) Earnings Obligation Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1993
Balance at January 1 . . . . . . . $215,470 $193,287 $ 743,371 -- $1,518,221 $(114,296) $2,556,053
Net income . . . . . . . . . . . . 420,994 420,994
Change in net unrealized gain
(loss) on investment securities
available for sale. . . . . . . $ 3,772 3,772
Cash dividends declared:
Common ($1.41 per share). . . . (134,416) (134,416)
Preferred:
Series A . . . . . . . . . . . (9,000) (9,000)
Series B . . . . . . . . . . . (38) (38)
Series C . . . . . . . . . . . (9,200) (9,200)
Issuances of common stock:
Stock purchase, option and
employee benefit plans . . . . 1,716 36,509 12,175 50,400
Preferred stock conversions . . (119) 25 94 --
Repurchases of common stock. . . . (219) (4,255) (4,474)
- ------------------------------------------------------------------------------------------------------------------------------------
1994
Balance at January 1 . . . . . . . 215,351 194,809 775,719 3,772 1,786,561 (102,121) 2,874,091
Net income . . . . . . . . . . . . 487,971 487,971
Change in net unrealized gain
(loss) on investment securities
available for sale . . . . . . (30,770) ( 30,770)
Cash dividends declared:
Common ($1.59 per share). . . . (157,321) (157,321)
Preferred:
Series A . . . . . . . . . . . (9,000) (9,000)
Series B . . . . . . . . . . . (34) (34)
Series C . . . . . . . . . . . (9,200) (9,200)
Issuances of common stock:
Stock purchase, option and
employee benefit plans . . . . 2,498 45,123 13,898 61,519
Preferred stock conversions . . (44) 9 35 --
Repurchases of common stock. . . . (3,850) (79,223) (83,073)
- ------------------------------------------------------------------------------------------------------------------------------------
1995
Balance at January 1 . . . . . . . 215,307 193,466 741,654 (26,998) 2,098,977 (88,223) 3,134,183
Net income . . . . . . . . . . . . 533,301 533,301
Change in net unrealized gain
(loss) on investment securities
available for sale. . . . . . . 65,240 65,240
Cash dividends declared:
Common ($1.82per share) . . . . (175,196) (175,196)
Preferred:
Series A . . . . . . . . . . . (8,935) (8,935)
Series B . . . . . . . . . . . (29) (29)
Series C . . . . . . . . . . . (6,926) (6,926)
Issuances of common stock:
Stock purchase, option and
employee benefit plans . . . . 2,768 71,814 13,409 87,991
Preferred stock conversions . . (117,554) 5,995 111,001 (558)
Acquisition . . . . . . . . . . 664 3,062 4,618 8,344
Repurchases of common stock. . . . (13,162) (352,067) (365,229)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 . . . $ 97,753 $189,731 $ 575,464 $ 38,242 $2,445,810 $ (74,814) $3,272,186
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
45
-------------------
BARNETT BANKS, INC.
<PAGE>
STATEMENTS OF CASH FLOWS
CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
<TABLE>
<CAPTION>
For the Years Ended December 31--Dollars in Thousands 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 533,301 $ 487,971 $ 420,994
Reconcilement of net income to net cash provided by operating activities:
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,531 74,049 120,410
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . 234,667 131,813 137,451
Employee benefits funded by equity. . . . . . . . . . . . . . . . . . . . . . . . . 24,237 28,682 20,938
Deferred income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . 6,571 50,975 (1,925)
Decrease (increase) in interest receivable. . . . . . . . . . . . . . . . . . . . . (11,060) (66,633) 18,249
Increase (decrease) in interest payable . . . . . . . . . . . . . . . . . . . . . . 45,953 37,245 (24,288)
Decrease (increase) in other assets . . . . . . . . . . . . . . . . . . . . . . . . (189,870) (131,624) 728,571
Increase (decrease) in other liabilities. . . . . . . . . . . . . . . . . . . . . . (43,179) 45,243 (78,849)
Originations of loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . (5,187,852) (862,817) (974,342)
Proceeds from sales of loans held for sale. . . . . . . . . . . . . . . . . . . . . 4,593,009 555,905 904,439
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (82,646) (11,216) (30,152)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . 45,662 339,593 1,241,496
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale. . . . . . . . . . . . . . . . . (1,866,067) (2,532,901) --
Proceeds from sales of investment securities available for sale. . . . . . . . . . . . 339,694 475,102 --
Proceeds from maturities of investment securities available for sale . . . . . . . . . 2,042,733 1,308,423 --
Purchases of investment securities held to maturity. . . . . . . . . . . . . . . . . . (298,423) (3,569,914) (6,621,525)
Proceeds from maturities of investment securities held to maturity . . . . . . . . . . 2,267,517 4,419,600 5,672,666
Net increase in loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,119,035) (2,230,534) (426,727)
Proceeds from sales of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 128,897
Proceeds from sales of premises and equipment. . . . . . . . . . . . . . . . . . . . . 39,831 42,422 51,978
Purchases of premises and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . (186,825) (77,909) (145,660)
Net decrease in other earning assets . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 45,756
Receipts (payments) related to dispositions and acquisitions, net of cash acquired . . (452,200) 2,939,875 20,562
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities. . . . . . . . . . . . . . . . . 767,225 774,164 (1,274,053)
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in demand, NOW, savings and money market accounts. . . . . . . (1,574,792) (731,521) 507,247
Net increase (decrease) in other time deposits . . . . . . . . . . . . . . . . . . . . 623,326 (97,642) (2,219,862)
Net (decrease) increase in federal funds purchased and securities sold
under agreements to repurchase. . . . . . . . . . . . . . . . . . . . . . . . . . . (350,839) (471,327) 759,087
Proceeds from issuance of short-term notes . . . . . . . . . . . . . . . . . . . . . . 425,000 -- --
Net increase (decrease) in other short-term borrowings . . . . . . . . . . . . . . . . 106,376 187,942 (50,980)
Principal repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . (187,589) (2,375) (169,014)
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . 500,000 96,927 150,000
Issuances of common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,196 32,837 29,462
Repurchases of common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (365,229) (83,073) (4,474)
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (191,086) (175,555) (152,654)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities . . . . . . . . . . . . . . . . . . . . . . (951,637) (1,243,787) (1,151,188)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . (138,750) (130,030) (1,183,745)
Cash and cash equivalents, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . 2,907,895 3,037,925 4,221,670
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, December 31 . . . . . . . . . . . . . . . . . . . . . . . . $ 2,769,145 $ 2,907,895 $ 3,037,925
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993, INCOME TAXES OF $286
MILLION, $193 MILLION AND $188 MILLION WERE PAID, RESPECTIVELY. INTEREST OF
$1.2 BILLION, $880 MILLION AND $880 MILLION WAS PAID IN THE YEARS ENDED
DECEMBER 31, 1995, 1994 AND 1993, RESPECTIVELY.
DURING 1995, THE COMPANY ACQUIRED $1.1 BILLION OF NON-CASH ASSETS AND $602
MILLION OF LIABILITIES. DURING 1994, THE COMPANY ACQUIRED $513 MILLION OF
NON-CASH ASSETS AND $3.5 BILLION OF LIABILITIES. DURING 1993, THE COMPANY
DISPOSED OF $749 MILLION OF NON-CASH ASSETS AND $704 MILLION OF LIABILITIES.
THE COMPANY ALSO ACQUIRED $364 MILLION IN NON-CASH ASSETS AND $380 MILLION
OF LIABILITIES IN 1993.
DURING 1995, 1994 AND 1993, $83 MILLION, $64 MILLION AND $149 MILLION OF LOANS
WERE TRANSFERRED TO REAL ESTATE HELD FOR SALE, RESPECTIVELY.
DURING 1995, $2.8 BILLION OF INVESTMENT SECURITIES HELD TO MATURITY WERE
TRANSFERRED TO INVESTMENT SECURITIES AVAILABLE FOR SALE (SEE NOTE C OF NOTES
TO FINANCIAL STATEMENTS).
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
46
- -------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
A. SIGNIFICANT ACCOUNTING POLICIES
Barnett provides financial services to consumers and businesses. Banking
services are provided through 32 banks in Florida and South Georgia.
Barnett's banks are complemented by non-bank affiliates providing support
services and specialized financial services, including trust, brokerage,
credit card, mortgage banking and consumer finance. Barnett's mortgage
banking and consumer finance affiliates operate nationwide.
The accounting and reporting policies of Barnett conform to generally
accepted accounting principles and prevailing practices within the banking
industry. Certain previously reported amounts have been reclassified to
conform to current presentation.
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include
the accounts of the company and its affiliates. Material intercompany
accounts and transactions have been eliminated.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosed
amount of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS Cash and cash equivalents includes cash and due
from banks, securities purchased under agreements to resell and federal funds
sold. Generally, federal funds are purchased and sold for one-day periods.
SECURITIES Securities are classified as either held to maturity or
available for sale. Investment securities held to maturity are those that the
company has the positive intent and ability to hold to maturity and are
carried at cost, adjusted for premiums and discounts that are recognized as
interest income over the life of the security.
Investment securities available for sale are carried at fair value.
Unrealized holding gains and losses are reported net of taxes as a separate
component of shareholders' equity.
Gains and losses are recognized using the specific identification method
upon realization or when impairment of value is deemed to be other than
temporary.
LOANS Non-refundable loan fees and certain direct loan origination costs
are capitalized and recognized as a yield adjustment over the lives of the
loans.
Commercial and commercial real estate loans are generally placed on
non-accrual status when the collectibility of interest or principal is
uncertain. Residential mortgages four payments in arrears are classified as
non-accruing in conformance with predominant mortgage industry practice.
Income recognized on installment loans and credit card advances is
discontinued and the loans are charged-off generally after a delinquency
period of 120 and 180 days, respectively. When a loan is placed on
non-accrual status, interest accruals cease and uncollected interest is
reversed and charged against current income.
ALLOWANCE FOR LOAN LOSSES The financial statements include an allowance
for estimated losses on loans based on past loss experience and an evaluation
of potential losses in the current loan portfolio.
The allowance for loan losses is increased by charges to income and
decreased by charge-offs, net of recoveries. Management's periodic evaluation
of the adequacy of the allowance is based on the company's past loan loss
experience, known and inherent risks in the portfolio, adverse situations
that may affect the borrower's ability to repay, the estimated value of any
underlying collateral and current economic conditions.
The company defines impaired loans as all non-performing loans except
residential mortgages and small business loans. The allowance for loan losses
related to impaired loans is determined by measuring the amount of impairment
for these loans. Impairment is measured by comparing the recorded investment
in the loan to the present value of expected future cash flows from the loan
or to the fair value of the underlying collateral.
PREMISES AND EQUIPMENT Premises and equipment, including leases meeting
criteria for capitalization, are stated at cost less accumulated depreciation
and amortization. Depreciation and amortization are computed primarily on a
straight-line basis over the estimated useful life or lease term of each type
of asset.
PURCHASED MORTGAGE SERVICING RIGHTS The cost of mortgage servicing rights
purchased is included in other assets and is amortized in proportion to and
over the period of estimated net servicing revenues. The company evaluates
the carrying value of the servicing portfolio on a disaggregated,
undiscounted basis.
INTANGIBLE ASSETS Intangible assets consist primarily of goodwill and
core deposit intangibles. These intangible assets are generally being
amortized on a straight-line basis over 10 to 25 years. The company reviews
its intangible assets periodically for events or changes in circumstances
that may indicate that the carrying amounts of the assets are not recoverable
on an undiscounted cash flow basis.
REAL ESTATE HELD FOR SALE Real estate held for sale includes properties
acquired through, or in lieu of, loan foreclosure and operating premises no
longer intended for business operations. Acquired premises designated for
sale are included in other assets. Valuations are performed periodically and
the real estate is carried at the lower of cost or appraised value minus
estimated costs to sell. Credit losses arising at the time of foreclosure are
charged against the allowance for loan losses. Any additional declines are
charged to other expense and recorded in a valuation reserve on an asset by
asset basis. No depreciation is recorded on real estate held for sale.
INCOME TAXES The company and its eligible affiliates file consolidated
federal and state income tax returns. Under a
47
-------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
tax-sharing arrangement, income tax charges or credits are generally
allocated to the company and each affiliate on the basis of their respective
taxable income or loss included in the consolidated income tax returns.
Deferred tax assets and liabilities are reflected at currently enacted
income tax rates applicable to the period in which the deferred tax assets or
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes.
DERIVATIVE FINANCIAL INSTRUMENTS The company uses interest rate swaps and
floors to manage its interest rate sensitivity. The company accounts for
these instruments on an accrual basis if the instrument can be demonstrated
to effectively change the cash flows of a designated asset or liability and
the designated asset or liability exposes the company to interest rate risk.
Amounts to be paid or received under interest rate swaps and floors are
recognized as interest income or expense of the related asset or liability.
Gains and losses on early terminations of interest rate swaps and floors are
deferred and amortized as an adjustment to the yield of the related asset or
liability over the shorter of the remaining contract life or the maturity of
the related asset or liability. If the related asset or liability is sold,
the derivative financial instrument is marked to market and the resulting
gain or loss is recognized in income in the same period.
Interest rate swaps and floors that do not meet this criteria would be
carried at market value, and changes in market value would be recognized in
income.
The company uses purchased option contracts to reduce its exposure to a
decline in the value of its capitalized mortgage servicing asset as a result
of interest rate movements. Premiums paid for option contracts are included
in the carrying value of the related asset and amortized over the asset's
expected life. Changes in the market value of option contracts are recognized
in the same period as changes in the value of the related asset. Gains and
losses on sales of option contracts are included in the carrying value of the
related asset.
The company acts as an intermediary in arranging interest rate swap
transactions for customers. These are separate agreements that have
offsetting payment streams and the same maturity, repricing dates and
notional amounts. Net revenue related to these agreements is included in
other income.
REVENUE RECOGNITION Consumer finance income includes gains on the
securitization and sale of home equity installment loans and servicing
income on loans sold. The gains on sales of such loans represent the present
value of servicing revenues in excess of a normal servicing fee over the
expected average life of the loans, discounted at a market rate at the time
of sale, adjusted for projected prepayments and expected foreclosure
expenses. A corresponding asset, capitalized excess servicing income, is
recorded at the time of sale and is included in other assets.
Mortgage banking income includes servicing and other fees on residential
mortgages sold, gains and losses on securitizations of mortgages, and gains
on sales of servicing rights. Gains and losses on sales of mortgages are
recognized at settlement date and are determined by the difference between
sales proceeds and the carrying value of the mortgages.
EARNINGS PER COMMON SHARE Primary earnings per common share is computed
from net income after preferred stock dividends and is based on the
weighted-average number of shares of common stock outstanding and common
stock equivalents assumed outstanding during the year.
Fully diluted shares outstanding includes the maximum dilutive effect of
stock issuable upon conversion of convertible preferred stock and exercise of
common stock options.
B. ACQUISITIONS
In October 1995, the company acquired Community Bank of the Islands for
331,994 shares of Barnett common stock. This acquisition was accounted for as
a pooling of interests. However, prior periods have not been restated as the
acquisition was not material.
In February 1995, the company acquired BancPLUS Financial Corporation, a
national full service mortgage banking company, for $162 million. In addition
to mortgage loans held for sale, the primary asset of BancPLUS was purchased
mortgage servicing rights of $187 million. The purchase price in excess of
net assets acquired was $113 million.
In January 1995, the company acquired EquiCredit Corporation, a
Jacksonville-based national consumer finance company, for $332 million.
EquiCredit specializes in originating, securitizing and servicing fixed-rate
consumer loans secured by first or second mortgages. The purchase price in
excess of net assets acquired was $201 million.
In December 1994, the company assumed $3.4 billion in deposits of the
Florida franchise of Glendale Federal Bank, FSB for $244 million.
In October 1994, the company completed the acquisition of Loan America
Financial Corporation, a Miami-based national wholesale mortgage banking
company with a $4 billion servicing portfolio, for $59 million.
In December 1993, the company completed a transaction to exchange its
Atlanta franchise for Bank South Corporation's Pensacola banking affiliate,
common stock and cash, with an aggregate value of $125 million. Bank South's
Pensacola affiliate had assets of $417 million. The company's Atlanta
franchise had assets of $820 million.
Unless otherwise noted, all of the above acquisitions were accounted for
as purchases. Accordingly, results are included from the date acquired.
The company divested certain processing and servicing units in 1993.
Results for 1993 included aggregate gross revenues of approximately $25.9
million and aggregate expenses of $29.3 million prior to the date of these
divestitures. There was no significant gain or loss resulting from these
transactions.
48
- -------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
C. INVESTMENT SECURITIES
<TABLE>
<CAPTION>
HELD TO MATURITY
----------------------------------------------------
1995
----------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31--Dollars in Thousands COST GROSS GAIN GROSS LOSS VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities...... -- -- -- --
Obligations of states and
political subdivisions...... $200,960 $15,122 $16 $216,066
Other U.S. Government
agencies and corporations... -- -- -- --
Mortgage-backed securities(1). -- -- -- --
Other securities.............. -- -- -- --
- ------------------------------------------------------------------------------------------
Total................... $200,960 $15,122 $16 $216,066
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
<CAPTION>
HELD TO MATURITY
----------------------------------------------------------------------
1994 1993
------------------------------------------------------- ---------
Amoritized Unrealized Unrealized Fair Amortized
December 31--Dollars in Thousands Cost Gross Gain Gross Loss Value Cost
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Treasury securities...... $1,269,110 $382 $ 24,077 $1,245,415 $1,595,948
Obligations of states and
political subdivisions...... 639,265 23,891 613 662,543 784,931
Other U.S. Government
agencies and corporations... 254,637 23 2,662 251,998 381,454
Mortgage-backed securities(1). 2,164,292 72 64,028 2,100,336 2,403,026
Other securities.............. 617,504 19 13,149 604,374 623,554
- ---------------------------------------------------------------------------------------------------------------
Total................... $4,944,808 $24,387 $104,529 $4,864,666 $5,788,913
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
----------------------------------------------------
1995
----------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31--Dollars in Thousands COST GROSS GAIN GROSS LOSS VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities....... $2,219,790 $35,283 $ 1,007 $2,254,066
Obligations of states and
political subdivisions....... 11,998 634 24 12,608
Other U.S. Government
agencies and corporations.... 398,351 3,149 3,881 397,619
Mortgage-backed securities(1).. 1,562,746 9,916 6,417 1,566,245
Other securities............... 880,294 23,261 1,052 902,503
- ------------------------------------------------------------------------------------------
Total.................... $5,073,179 $72,243 $12,381 $5,133,041
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
<CAPTION>
AVAILABLE FOR SALE
----------------------------------------------------------------------
1994 1993
------------------------------------------------------- ---------
Amoritized Unrealized Unrealized Fair Fair
December 31--Dollars in Thousands Cost Gross Gain Gross Loss Value Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Treasury securities....... $1,905,203 $ 76 $35,272 $1,870,007 $ 924,913
Obligations of states and
political subdivisions....... 11,489 185 718 10,956 8,648
Other U.S. Government
agencies and corporations.... 175,871 -- 7,255 168,616 16,375
Mortgage-backed securities(1).. 236,689 1 4,820 231,870 386,281
Other securities............... 454,056 8,406 5,311 457,151 714,685
- ------------------------------------------------------------------------------------------------------------
Total.................... $2,783,308 $8,668 $53,376 $2,738,600 $2,050,902
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) BALANCE IS COMPRISED SUBSTANTIALLY OF GOVERNMENT-GUARANTEED MORTGAGE
SECURITIES.
As a result of a Financial Accounting Standards Board (FASB)
interpretation allowing a one-time transfer of securities from the
held-to-maturity category, investment securities held to maturity with an
amortized cost of $2.8 billion and net unrealized appreciation of $7.5
million were transferred to available for sale on December 7, 1995. TABLE 3,
"Maturity Of Investment Securities," on page 20 of the MANAGEMENT DISCUSSION
shows the amortized cost and fair value of investment securities by
contractual maturity, except for mortgage-backed and asset-backed securities
which are presented at their expected maturities. Gross gains on sales of
investment securities available for sale in 1995 and 1994 were $6.3 million
and $.7 million, respectively, and gross losses were $1.3 million and $12.8
million, respectively. Gross gains and losses on sales of investment
securities in 1993 were $2.5 million and $4.6 million, respectively.
Taxable interest income was $340.0 million, $326.0 million and $301.8
million in 1995, 1994 and 1993, respectively. Non-taxable interest income was
$35.7 million, $61.5 million and $73.3 million in 1995, 1994 and 1993,
respectively.
Securities with an amortized cost of approximately $2.9 billion on
December 31, 1995 were pledged to secure public deposits and for other
purposes.
D. LOANS
<TABLE>
<CAPTION>
December 31--Dollars in Thousands
Net of Unearned Income 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural................... $ 4,693,010 $ 4,445,841 $ 4,086,754 $ 4,230,765 $ 4,664,751
Real estate construction........ 912,359 929,229 853,602 1,265,999 1,909,687
Commercial mortgages............ 2,181,327 2,379,309 2,624,555 3,201,363 3,599,568
Residential mortgages(1)........ 10,891,412 10,555,563 9,449,457 8,946,836 7,804,764
Installment..................... 9,264,037 8,116,982 7,107,845 6,636,917 6,613,249
Bank card....................... 1,783,420 1,375,292 1,127,784 1,057,599 1,105,952
Credit lines.................... 760,434 718,937 679,789 711,362 724,101
- -------------------------------------------------------------------------------------------------------------------
Total...................... $30,485,999 $28,521,153 $25,929,786 $26,050,841 $26,422,072
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) AT DECEMBER 31, 1995, RESIDENTIAL MORTGAGES OF $1.5 BILLION WERE PLEDGED AS
COLLATERAL TO SECURE DEBT OF BANKING SUBSIDIARIES.
49
-------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
E. ALLOWANCES FOR LOSSES
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES
Beginning balance............... $ 501,447 $ 521,827 $ 547,716
Recoveries...................... 50,889 56,135 60,591
Provision expense............... 122,531 74,049 120,410
Loans charged off............... (172,879) (148,450) (202,395)
Other, net...................... 3,160 (2,114) (4,495)
- ------------------------------------------------------------------------------
Ending balance.............. $ 505,148 $ 501,447 $ 521,827
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
At December 31, 1995, impaired loans totaled $79 million. Of that amount,
approximately $50 million in impaired loans had related reserves of $10
million. An additional $29 million in impaired loans were determined to be
carried at or below fair value of the underlying collateral and, accordingly,
had no reserves. The allowance for loan losses is established to cover
potential losses inherent in the portfolio as a whole.
The company recognizes income on impaired loans primarily on the cash
basis. Any change in the present value of expected cash flows is recognized
through the allowance for loan losses. For the year ended December 31, 1995,
the average carrying amount of impaired loans was $117 million, on which the
company recognized income of $7.1 million.
The company recognizes any estimated potential decline in the value of
real estate held for sale between appraisal dates on an asset-by-asset basis
through periodic additions to the allowance for losses on real estate held
for sale. Writedowns charged against this reserve are taken when the related
real estate is sold at a loss.
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
ALLOWANCE FOR LOSSES ON
REAL ESTATE HELD FOR SALE
Beginning balance.............. $ 40,778 $ 65,165 $ 23,250
Provision expense.............. 2,145 5,149 68,081
Dispositions, net.............. (16,966) (29,536) (26,166)
- ------------------------------------------------------------------------------
Ending balance........... $ 25,957 $ 40,778 $ 65,165
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
F. NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
Real
Non- Reduced- Estate
Accrual Rate Held
December 31--Dollars in Thousands Loans Loans for Sale Total
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Recorded investment................. $167,821 $2,447 $67,630 $237,898
Interest at contracted rates(1)..... 16,612 200 -- 16,812
Interest recorded as income......... 5,817 220 -- 6,037
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
1994
Recorded investment................. $198,212 $2,243 $90,407 $290,862
Interest at contracted rates(1)..... 18,200 208 -- 18,408
Interest recorded as income......... 6,703 193 -- 6,896
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
(1) INTEREST INCOME THAT WOULD HAVE BEEN RECORDED IF THE LOANS HAD BEEN CURRENT
AND IN ACCORDANCE WITH THEIR ORIGINAL TERMS.
G. PREMISES AND EQUIPMENT
<TABLE>
<CAPTION>
December 31--Dollars in Thousands 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Land........................................ $ 205,597 $ 207,244
Buildings and leasehold improvements........ 1,003,044 921,089
Furniture and equipment..................... 494,152 456,345
Capitalized leases.......................... 28,274 27,040
Construction in progress and real estate
for future expansion....................... 67,563 57,291
- ----------------------------------------------------------------------------
Total cost............................ 1,798,630 1,669,009
Less: Accumulated depreciation and
amortization.............................. (720,573) (653,822)
- ----------------------------------------------------------------------------
Total............................... $1,078,057 $1,015,187
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
The company enters into operating leases for equipment and facilities in
the normal course of business. The following is a schedule of future minimum
rental payments required under operating leases having initial or remaining
non-cancelable lease terms in excess of one year at December 31, 1995:
<TABLE>
<CAPTION>
Dollars in Thousands Amount
- ----------------------------------------------------
<S> <C>
1996.................................... $70,011
1997.................................... 57,496
1998.................................... 44,325
1999.................................... 30,765
2000.................................... 16,261
Later years............................. 45,278
- ----------------------------------------------------
Total minimum payments required...... $264,136
- ----------------------------------------------------
- ----------------------------------------------------
</TABLE>
50
- -------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
H. SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
Securities
Federal Sold Under Other
Funds Agreements Commercial Short-term
December 31--Dollars in Thousands Purchased to Repurchase Paper Borrowings
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Balance..................................... $ 148,711 $ 750,956 $669,766 $509,516
Maximum indebtedness at any month end....... 1,422,988 1,118,335 775,591 882,567
Daily average indebtedness outstanding...... 759,580 824,984 418,455 504,327
Average rate paid for the year.............. 5.99% 5.49% 6.12% 6.26%
Average rate on period-end borrowings....... 5.79 5.20 5.87 5.82
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
1994
Balance..................................... $ 119,854 $1,130,652 $ 6,199 $397,199
Maximum indebtedness at any month end....... 1,469,131 2,191,536 18,551 397,199
Daily average indebtedness outstanding...... 782,577 1,409,128 8,295 116,395
Average rate paid for the year.............. 4.53% 4.13% 3.81% 4.64%
Average rate on period-end borrowings....... 5.82 5.41 5.80 5.62
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
1993
Balance..................................... $ 170,561 $1,551,272 $ 5,457 $104,721
Maximum indebtedness at any month end....... 350,937 1,551,272 18,016 193,362
Daily average indebtedness outstanding...... 238,413 704,017 10,618 97,227
Average rate paid for the year.............. 2.98% 2.55% 2.88% 3.99%
Average rate on period-end borrowings....... 3.00 2.06 3.01 2.76
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
On April 1, 1995, the company entered into a four-year revolving credit
agreement with several financial institutions in connection with its
commercial paper program. At December 31, 1995, $760 million was available
under these back-up lines of credit. No borrowings were made under this
agreement in 1995.
I. LONG-TERM DEBT
<TABLE>
<CAPTION>
December 31--Dollars in Thousands 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
7.75% Sinking Fund Debentures, due 1997,
with annual sinking fund payments of
$700,000 through 1996......................... $ 10,200 $ 10,900
Less: Face value of debentures repurchased and
held for future retirements................... (772) (1,472)
- -------------------------------------------------------------------------------
Total outstanding............................ 9,428 9,428
8.50% Subordinated Capital Notes, due 1999...... 200,000 200,000
Medium-term notes, due in varying maturities
through 2003, with interest from a
floating 5.805% to a fixed 10.00%............. 551,150 226,900
9.875% Subordinated Capital Notes, due 2001..... 100,000 100,000
6.90% Subordinated Capital Notes, due 2005...... 150,000 --
10.875% Subordinated Capital Notes, due 2003.... 55,000 55,000
8.50% Subordinated Capital Notes, due 2007...... 100,000 100,000
Mortgage Collateralized Bonds, due 1996, with
interest from a floating 6.348%............... 12,886 71,927
Capitalized lease obligations................... 12,350 13,421
- -------------------------------------------------------------------------------
Total...................................... $1,190,814 $776,676
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The maturities and sinking fund requirements of long-term debt for the
next five years, not met by repurchases of debentures and exclusive of
capitalized lease obligations, are $212.5 million for 1996, $159.4 million
for 1997, $201.0 million for 1998 and $200.0 million for 1999. There are no
payments due in 2000.
J. SHAREHOLDERS' EQUITY
The company currently has outstanding 1,947,057 shares of Series A $4.50
Cumulative Convertible Preferred Stock, each convertible into 1.8868 shares
of common stock. The stock is redeemable at the option of the company on or
after April 15, 1996 at $52.25 per share and at decreasing prices thereafter
to $50 per share on or after March 31, 2001.
On December 31, 1995, the company also had 11,164 shares of Series B $2.50
Cumulative Convertible Preferred Stock outstanding, each convertible into
2.5988 shares of common stock. The stock's earliest redemption date was
December 7, 1991 and can be redeemed at the holder's option after 1996.
In October 1995, the company called for redemption of its Series C $4.00
Cumulative Convertible Preferred Stock. As of December 31, 1995,
substantially all of those shares were converted into common shares.
On December 31, 1995, a total of 14,912,836 shares of common stock were
reserved for future issuance in connection with the shareholder investment,
employee benefit and long-term incentive plans and conversions of preferred
stock.
The company has awarded options to purchase common stock to certain
officers of the company and its affiliates under long-term incentive plans
that provide for a maximum
51
-------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
grant of 7,500,000 shares. All options granted are for a term of 10 years
and, subject to limited exceptions, are not exercisable before the third
anniversary of the date of grant. At December 31, 1995, there were 3,292,437
shares available for future option grants.
Options outstanding and the activity for 1995 and 1994 are presented below:
<TABLE>
<CAPTION>
NUMBER OPTION
1995 OF SHARES PRICE
- ---------------------------------------------------------------------------
<S> <C> <C>
Beginning balance..................... 4,202,272 $13.30 - $46.13
Granted............................... 861,986 43.81 - 58.25
Exercised............................. (635,874) 13.30 - 42.75
Cancelled............................. (85,262) 18.38 - 46.13
- ---------------------------------------------------------------------------
Ending balance................... 4,343,122 $18.38 - $58.25
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Options which became exercisable
during the year..................... 519,171 $34.00 - $42.63
Options exercisable at December 31.... 1,769,117 18.38 - 42.63
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<CAPTION>
Number Option
1994 of Shares Price
- ---------------------------------------------------------------------------
Beginning balance..................... 3,846,634 $ 9.13 - $45.38
Granted............................... 775,340 40.88 - 46.13
Exercised............................. (302,774) 9.13 - 42.63
Cancelled............................. (116,928) 16.50 - 45.38
- ---------------------------------------------------------------------------
Ending balance................... 4,202,272 $13.30 - $46.13
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Options which became exercisable
during the year...................... 656,000 $18.38 - $45.38
Options exercisable at December 31.... 1,887,171 13.30 - 45.38
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
In November 1989, the company incorporated employee stock ownership plan
(ESOP) provisions into its existing 401(k) employee benefit plan. The ESOP
acquired $141 million of the company's common stock using the proceeds of a
loan from the company. The terms of the loan include equal monthly payments
of principal and interest from September 1990 through September 2015.
Interest is at 9.75% and prepayments of principal are allowed. The loan is
generally being repaid from contributions to the plan by the company and
dividends on company stock held by the ESOP. The loan to the ESOP is
classified as a reduction in shareholders' equity.
Shares held by the ESOP are allocated to plan participants as the loan is
repaid. The company recognizes expense based on the number of shares
allocated to participants (the shares allocated method).
The ESOP shares as of December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------
<S> <C> <C>
Allocated........................... 2,061,533 1,646,228
Unallocated......................... 2,317,067 2,732,372
- -------------------------------------------------------------------
Total ESOP shares.............. 4,378,600 4,378,600
- -------------------------------------------------------------------
- -------------------------------------------------------------------
</TABLE>
The company has a restricted stock grant plan under which key employees
are awarded shares of the company's common stock subject to certain
restrictions. Certain time-based awards provide that restrictions lapse
beginning on the third anniversary of the date of the agreement awarding such
restricted stock. Certain performance-based awards provide that specific
performance criteria must be met in order for restrictions to lapse. As of
December 31, 1995, 172,500 grants (50% of which were time-based and 50% of
which were performance-based) were outstanding with an average grant price of
$42.
K. RETIREMENT AND BENEFIT PLANS
The company and its affiliates participate in a non-contributory pension
plan covering substantially all employees who qualify as to age and length of
service. Benefits under the plan are based on an employee's years of service
and compensation. It is the company's policy to fund amounts between the
minimum required under the Employee Retirement Income Security Act of 1974
and the maximum amount deductible for federal income tax purposes.
The components of 1995, 1994 and 1993 net periodic pension cost for the
plan are shown below:
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994 1993
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost for benefits earned
during the year........................ $ 11,740 $ 13,398 $ 11,596
Interest cost on projected benefit
obligations............................ 24,700 20,539 19,363
Actual return on plan assets............. (71,806) 8,971 (25,881)
Net amortization and deferral............ 39,527 (38,181) (778)
- -----------------------------------------------------------------------------------
Net periodic pension cost
and pension expense................ $ 4,161 $ 4,727 $ 4,300
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status of the pension plan and
amounts recognized in the STATEMENTS OF FINANCIAL CONDITION:
<TABLE>
<CAPTION>
December 31--Dollars in Thousands 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value:
Accumulated
benefit obligation(1)................... $(305,296) $(226,145) $(220,099)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Projected benefit obligation.............. $(369,419) $(272,309) $(266,271)
Plan assets at fair value.................... 362,143 276,003 280,238
- ------------------------------------------------------------------------------------
Plan assets (less than) in excess
of projected benefit obligation............ (7,276) 3,694 13,967
Unrecognized net loss........................ 74,850 41,168 29,147
Unrecognized prior service cost.............. 2,165 2,297 (5,095)
Unrecognized net asset at adoption
of SFAS No. 87, net of
amortization............................... (22,646) (26,458) (30,271)
- ------------------------------------------------------------------------------------
Prepaid pension cost.................... $ 47,093 $ 20,701 $ 7,748
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
(1) INCLUDES VESTED AMOUNTS OF $287,975, $213,237 AND $208,819 IN 1995, 1994
AND 1993, RESPECTIVELY.
Assumptions used to determine the actuarial present value of benefit
obligations were as follows:
<TABLE>
<CAPTION>
December 31 1995 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted-average discount rate............. 7.3% 8.9% 7.5%
Increase in compensation levels............ 4.0 4.5 4.0
Expected long-term return on assets........ 9.5 9.0 9.0
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
52
- -------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At December 31, 1995, the plan's assets consisted primarily of investments
in pooled-equity and fixed-income funds.
The company also maintains a non-qualified supplemental retirement plan
for certain officers of the company. The plan, which is unfunded, provides
benefits in excess of that permitted to be paid by the company's pension plan
under the provisions of the tax law. Supplemental retirement benefits are
based on the participant's compensation during the last two years of
employment. Plan cost was $4.2 million for 1995, $3.8 million for 1994 and
$2.2 million for 1993. At December 31, 1995, 1994 and 1993, the projected
benefit obligation was $31.2 million, $25.7 million and $24.5 million,
respectively. The accrued liability for the plan at December 31, 1995, 1994
and 1993 was $19.2 million, $16.2 million and $13.2 million, respectively.
The company also has 401(k) defined contribution plans in which
substantially all employees are eligible to participate. The company makes
matching contributions to these plans, up to a maximum of 6% of employees'
compensation. The company's contributions were $20.2 million in 1995 and
$16.3 million in both 1994 and 1993.
The company also provides health care and life insurance benefits to
employees who retire from the company at age 55 or later and meet certain
minimum service requirements. The post-retirement health care plan is
contributory, with retirees' contributions adjusted annually to reflect
certain cost-sharing provisions of the plan. The post-retirement life
insurance plan is non-contributory.
The components of net periodic post-retirement benefits cost are shown
below:
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost............................... $ 734 $1,026 $ 909
Interest cost.............................. 2,683 2,782 2,712
Actual return on plan assets............... (1,563) 52 (291)
Net amortization and deferral.............. 883 (253) (22)
- ----------------------------------------------------------------------------------
Net periodic post-retirement
benefit cost......................... $ 2,737 $3,607 $3,308
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status of the post-retirement
plans and amounts recognized in the STATEMENTS OF FINANCIAL CONDITION:
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994 1993
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Accumulated post-retirement
benefit obligation:
Retirees.................................. $(24,386) $(22,372) $(26,735)
Fully eligible active plan participants... (509) (306) (968)
Other active plan participants............ (11,553) (7,608) (9,859)
- -----------------------------------------------------------------------------------
Total.................................. (36,448) (30,286) (37,562)
Plan assets at fair value................... 11,051 5,206 3,162
- -----------------------------------------------------------------------------------
Accumulated post-retirement benefit
obligation in excess of plan assets....... (25,397) (25,080) (34,400)
Unrecognized prior service cost............. (609) 359 369
Unrecognized net (gain) loss................ 3,536 (1,797) 5,891
- -----------------------------------------------------------------------------------
Accrued post-retirement benefit cost........ $(22,470) $(26,518) $(28,140)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
A 10% health-care-cost-trend rate was assumed for 1995, gradually
decreasing to 5.0% by the year 2003 and remaining constant thereafter.
Increasing the assumed health-care-cost-trend rate by one percentage point
would increase the accumulated post-retirement benefit obligation at December
31, 1995 by $1.0 million and increase the aggregate of the service and
interest cost components of net periodic post-retirement benefit cost for
1995 by $100,000. A discount rate of 7.25% was used to determine the
accumulated post-retirement benefit obligation. The plan's assets at December
31, 1995 consisted primarily of investments in pooled-equity and fixed-income
funds.
L. OTHER EXPENSE
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advertising and marketing................... $ 33,519 $ 29,301 $ 27,773
Amortization of intangibles................. 52,794 36,576 43,596
Communications.............................. 40,986 33,745 34,875
Expenses and provision
on real estate held for sale.............. 12,112 16,072 92,447
FDIC assessments............................ 43,227 71,409 78,559
Franchise and credit card................... 20,430 16,447 17,955
Outside computer services................... 43,189 36,708 26,066
Postage..................................... 26,326 23,177 26,048
Stationery, printing, supplies.............. 20,397 15,767 22,702
Insurance, taxes and other.................. 195,781 179,574 186,428
- -----------------------------------------------------------------------------------------
Total.................................. $488,761 $458,776 $556,449
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
M. FEDERAL AND STATE INCOME TAXES
The provisions for income taxes reflected in the STATEMENTS OF INCOME are
detailed below:
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994(1) 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense:
Federal................................ $250,797 $178,562 $191,239
State.................................. 28,925 20,297 19,327
- -----------------------------------------------------------------------------------------
Total current....................... 279,722 198,859 210,566
- -----------------------------------------------------------------------------------------
Deferred tax expense (benefit):
Federal................................ 6,184 47,943 (3,388)
State.................................. 387 3,032 304
- -----------------------------------------------------------------------------------------
Total deferred...................... 6,571 50,975 (3,084)
- -----------------------------------------------------------------------------------------
Total income tax expense............ $286,293 $249,834 $207,482
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
(1) RECLASSIFIED TO REFLECT ACTUAL TAX RETURN AS FILED.
53
-------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The difference between federal income tax computed at the statutory rate
and the actual tax provision is shown below:
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before taxes....................... $819,594 $737,805 $628,476
- ----------------------------------------------------------------------------------------
Tax at the statutory rate................ 286,858 258,232 219,967
- ----------------------------------------------------------------------------------------
Increase (decrease) in taxes:
Tax-exempt interest
and dividends........................ (20,982) (28,778) (33,653)
State income tax, net of
federal benefit...................... 18,211 15,163 12,760
Disallowed interest expense............ 2,743 2,610 2,592
Non-deductible expenses................ 11,679 6,636 9,029
Other.................................. (12,216) (4,029) (3,213)
- ----------------------------------------------------------------------------------------
Total decrease in taxes............ (565) (8,398) (12,485)
- ----------------------------------------------------------------------------------------
Total income tax expense........... $286,293 $249,834 $207,482
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Effective tax rate................. 34.9% 33.9% 33.0%
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
Deferred income taxes reflect the impact of differences between the
financial statement and tax bases of assets and liabilities and available tax
carryforwards. The tax effect of temporary differences and tax carryforwards
which create deferred tax assets and liabilities are detailed below:
<TABLE>
<CAPTION>
December 31--Dollars in Thousands 1995 1994(1) 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Loan loss reserve........................... $177,345 $173,314 $183,076
Writedown of real estate
held for sale............................. 28,737 22,654 29,538
Employee benefits........................... 23,206 16,142 18,354
Loan fees and expenses...................... -- 7,433 11,220
Capital loss carryforward................... -- 3,756 5,160
SFAS No. 115 equity adjustment.............. -- 17,710 --
Other....................................... 38,259 28,358 22,478
- -----------------------------------------------------------------------------------------
Gross deferred tax assets............... 267,547 269,367 269,826
Valuation allowance......................... (3,591) (4,087) (5,820)
- -----------------------------------------------------------------------------------------
Gross deferred tax assets net
of valuation allowance................ 263,956 265,280 264,006
- -----------------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation................................ 43,793 41,841 31,077
Leasing..................................... 9,055 7,355 7,265
Intangibles................................. 6,919 17,205 19,244
Interest income............................. 7,559 12,535 18,740
Loan servicing.............................. 52,581 13,938 --
Securitization.............................. 40,918 5,563 --
SFAS No. 115 equity adjustment.............. 21,620 -- --
Other....................................... 22,464 35,206 17,178
- -----------------------------------------------------------------------------------------
Gross deferred tax liabilities.......... 204,909 133,643 93,504
- -----------------------------------------------------------------------------------------
Net deferred tax asset.................. $ 59,047 $131,637 $170,502
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
(1) RECLASSIFIED TO REFLECT ACTUAL TAX RETURNS AS FILED.
The company's $59 million net deferred tax asset includes a valuation
allowance of $3.1 million for pre-affiliation federal and state net operating
loss carryforwards and $.5 million for other carryforward benefits.
During 1995, the net deferred tax asset decreased $39.3 million due to
fair value adjustments recorded in equity under SFAS No. 115 and $26.7
million as a result of acquisitions.
The Internal Revenue Code permits qualifying savings and loan institutions
to deduct an annual addition to the reserve for bad debts in determining
taxable income, which differs from the addition reported for financial
reporting purposes. In accordance with SFAS No. 109, a deferred tax liability
is not recognized for the difference that arose in tax years beginning before
December 31, 1987. Retained earnings contain approximately $53 million
representing such bad debt reserves for which no deferred income taxes have
been recorded at qualifying affiliates.
N. EARNINGS PER COMMON SHARE
The weighted-average number of shares used in the computation of earnings
per common share is as follows:
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRIMARY SHARES
Average common shares
outstanding........................... 96,535,240 97,262,496 97,182,222
Common shares assumed
outstanding to reflect
dilutive effect of:
Convertible preferred stock........... 31,266 34,468 40,205
Common stock options.................. 980,902 784,227 960,690
- ----------------------------------------------------------------------------------------
Total............................. 97,547,408 98,081,191 98,183,117
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Adjustments for preferred
stock dividends....................... $ 15,861 $ 18,200 $ 18,200
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------
FULLY DILUTED SHARES
Average common shares
outstanding .......................... 96,535,240 97,262,496 97,182,222
Common shares assumed
outstanding to reflect
dilutive effect of:
Convertible preferred stock........... 5,994,701 6,719,408 6,725,145
Common stock options.................. 1,449,796 784,227 960,690
- ----------------------------------------------------------------------------------------
Total............................. 103,979,737 104,766,131 104,868,057
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
O. DERIVATIVE FINANCIAL INSTRUMENTS
The company controls its interest rate risk principally by managing the
level and duration of certain balance sheet assets and liabilities. The
company also uses off-balance-sheet instruments, primarily interest rate
swaps and floors, to manage its interest rate sensitivity position. Please
refer to the ASSET-LIABILITY MANAGEMENT section of the MANAGEMENT DISCUSSION
for a discussion of the company's asset-liability management.
Interest rate swap transactions generally involve the exchange of fixed-
and floating-rate interest payment obligations and do not entail the exchange
of the underlying principal (notional) amounts.
54
- -------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The company's current derivative portfolio has a notional amount of $3.9
billion. This portfolio consists of $3.1 billion of interest rate swaps, $250
million of interest rate floors and $500 million of options to purchase
securities. Most of the company's swaps involve receipt of fixed cash flows
in exchange for variable (primarily LIBOR-based) cash flows. These swaps are
linked to prime rate loans and create a net fixed-rate cash flow. The swaps
and floors were executed to reduce the company's risk to flat or falling
interest rates. The company purchased options to buy U.S. Treasury securities
in order to reduce its exposure to the impact of falling interest rates on
the value of its capitalized mortgage servicing asset.
Approximately $2.8 billion of the interest rate swap portfolio is
fixed-term non-amortizing interest rate swaps, $1.0 billion of which mature
in early 1996 and $1.8 billion of which mature beginning September 1996
through January 1998.
During 1995, the company terminated prior to maturity $1.75 billion of
interest rate floors, resulting in a net gain of $24 million. This gain was
deferred and will be amortized in 1996 and 1997, the period over which the
floors were intended to provide protection from falling rates.
Barnett manages its credit exposure relative to its swap counterparties in
a manner consistent with the granting of credit. Any counterparty exposure is
generally measured by the market replacement value at any point in time.
Barnett utilizes bilateral collateral exchange agreements with swap
counterparties in order to minimize this credit exposure. Under these
agreements, swap counterparties are required to deliver collateral as the
replacement value at risk increases with changes in interest rates.
<TABLE>
<CAPTION>
Weighted Average Interest Rate
------------------------------------------------ Average
Notional Replacement Receive Pay Maturity
December 31--Dollars in Millions Amount Value Rate(1) Index Rate(1) Index In Years
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995
Interest rate swaps:
Basis swap......................... $ 50 $ .49 5.75% LIBOR 4.81% CMT 2.08
Generic swaps:
Receive fixed.................... 2,540 12.19 5.21 FIXED 5.83 LIBOR 1.02
Pay fixed........................ 267 (1.97) 5.84 LIBOR 6.38 FIXED 1.73
Index-principal swaps.............. 250 (.29) 4.47 FIXED 5.94 LIBOR .08(2)
Interest rate floors.................. 250 4.51 6.00(3) LIBOR -- -- 2.00
Options to purchase securities........ 500 9.74 -- -- .20
- ---------------------------------------------------------------------------------------------------------------------------------
Total................................. $3,857 $24.67 5.27% 5.87% .98
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
1994
Interest rate swaps:
Basis swap......................... $ 50 $ 1.46 6.00% LIBOR 6.85% CMT 3.08
Generic swaps:
Receive fixed.................... 1,040 (34.36) 4.38 FIXED 5.56 LIBOR 1.14
Pay fixed........................ 167 4.30 6.07 LIBOR 6.71 FIXED 2.91
Index-principal swaps.............. 1,010 (78.33) 4.64 FIXED 5.72 LIBOR 2.48(2)
Interest rate floors.................. 2,000 2.76 6.00(3) LIBOR -- -- 3.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total................................. $4,267 $(104.17) 5.29% 5.75% 2.42
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) BASED UPON CONTRACTUAL RATES AT DECEMBER 31.
(2) THE MATURITY OF INDEX-PRINCIPAL SWAPS CAN EXTEND TO A MAXIMUM AVERAGE OF
1.57 YEARS AT DECEMBER 31, 1995 AND 2.59 YEARS AT DECEMBER 31, 1994.
(3) THE COMPANY RECEIVES INTEREST EQUAL TO THE AMOUNT BY WHICH LIBOR IS LESS
THAN 6.00%.
P. OFF-BALANCE-SHEET RISK AND CONTINGENT
LIABILITIES
The company originates financial instruments with off-balance-sheet risk
in the normal course of business, primarily to reduce the company's exposure
to interest rate changes as described in NOTE O and to meet the financing
needs of its customers. These financial instruments include commitments to
extend credit, letters of credit and assets sold with recourse and involve
varying degrees of credit risk in excess of the amounts reflected in the
STATEMENTS OF FINANCIAL CONDITION.
Commitments to extend credit are contractual obligations to lend to a
customer as long as all established contractual conditions are satisfied.
Commitments generally have fixed expiration dates or other termination
clauses and usually require payment of a fee.
Standby letters of credit and financial guarantees are conditional
commitments issued by the company to guarantee the performance of a customer
to a third party. Standby letters of credit and financial guarantees are
generally terminated through the performance of a specified condition or
through the lapse of time.
Commercial letters of credit are conditional commitments issued by the
company to guarantee payment by a customer to a third party upon proof of
shipment or delivery of goods as agreed. Commercial letters of credit are
used primarily for importing or exporting goods and are terminated when
proper payment is made by the customer.
55
-------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The company originates and services residential mortgage loans and home
equity loans to be sold in the secondary market. Some of these loans are sold
with provisions for recourse. Residential mortgages sold with recourse are
conventional mortgages underwritten by the company in accordance with its
usual credit and collateral policies.
The company's exposure to credit loss in the event of non-performance by
the other party to commitments to extend credit, standby letters of credit,
commercial letters of credit and loans sold with recourse is represented by
the contractual or notional amount of these instruments. As these
off-balance-sheet financial instruments have essentially the same credit risk
involved in extending loans, the company generally uses the same credit and
collateral policies in making these commitments and conditional obligations
as it does for balance sheet instruments. Since many of the commitments to
extend credit, standby letters of credit, commercial letters of credit and
loans sold with recourse are expected to expire without being drawn upon, the
contractual or notional amounts do not necessarily represent future cash
requirements.
At December 31, 1995 and 1994, financial instruments having potential
credit risk in excess of that reported in the STATEMENTS OF FINANCIAL
CONDITION are as follows:
<TABLE>
<CAPTION>
Contractual or Notional Amounts--
Dollars in Thousands 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit.............. $15,258,002 $13,414,879
Standby letters of credit and
financial guarantees.................... 608,138 486,210
Commercial letters of credit.............. 64,938 80,646
Loans sold with recourse.................. 2,183,056 109,836
Commitments to sell loans................. 1,063,812 22,415
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
Included in the above table are $1.9 billion of loans sold under
EquiCredit's securitization program on which the maximum contingent risk is
limited to $58 million as of December 31, 1995. At December 31, 1995,
EquiCredit had $28 million in other liabilities related to loans held with
recourse.
The company has $4.4 billion of deposits resulting from thrift
acquisitions that are insured through the Savings Association Insurance Fund
(SAIF). These deposits maintained their $.23 per $100 assessment, though
legislation has been proposed which would reduce the SAIF assessment from
$.23 to $.04 for well capitalized institutions. The current legislation, if
enacted, would result in a one-time assessment of approximately 80 basis
points to be charged on 80% of SAIF deposits. Any assessment will depend on
enactment of final legislation.
The company and its affiliates are parties to various legal and
administrative proceedings and claims. While any litigation contains an
element of uncertainty, management believes that the outcome of such
proceedings or claims pending or known to be threatened will not have a
material adverse effect on the company's consolidated financial position.
Q. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair values are based upon quoted market prices, when available. In cases
where quoted market prices are not available, fair values are based on
estimates using present value or other techniques, all of which may be
significantly affected by the assumptions used. Therefore, these values may
not be substantiated by comparison to independent markets and are not
intended to reflect the proceeds that may be realizable from offering for
sale at one time the company's entire holdings of a particular financial
instrument. Any unrealized gains or losses should not be interpreted as a
forecast of future earnings and cash flows.
The value of certain non-financial items, which include trust and credit
card relationships, core deposit intangibles, mortgage servicing on portfolio
loans and purchased mortgage servicing rights, is significantly in excess of
their aggregate carrying amounts. However, the company also believes their
value is often only reliably determinable in arms-length transactions and may
vary significantly depending on specific circumstances. For these reasons, no
fair value estimates of these non-financial instruments are disclosed. As a
result, the following fair values are not comprehensive and therefore do not
reflect the underlying value of the company.
The following methods and assumptions were used to estimate the fair value
of each material class of financial instruments:
CASH AND CASH EQUIVALENTS The carrying amounts of cash and cash
equivalents reasonably approximate their fair value.
SECURITIES Fair values are based on quoted market prices, if available.
If a quoted market price is not available, fair value is estimated using
quoted market prices for similar securities.
CAPITALIZED EXCESS SERVICING INCOME, NET For capitalized excess servicing
income, fair value is determined by calculating the present value of expected
cash flows which exceed normal servicing fees, using prepayment, default and
interest rate assumptions that current market participants would use for
similar instruments.
LOANS For residential mortgage loans, fair value is estimated using
quoted market prices for sales of whole loans with similar characteristics,
such as repricing dates, product type, and size. For other homogeneous
categories of loans, fair value is estimated using quoted market prices for
securities backed by similar loans, adjusted for differences in loan
characteristics.
The fair value of other types of loans, such as commercial, commercial
real estate, construction, and consumer loans for which quoted market prices
are not available, is estimated by discounting expected future cash flows
using current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities. For
non-accruing loans, fair value is estimated by discounting expected future
principal cash flows only.
TRADING DERIVATIVES The company acts as an intermediary in arranging
interest rate swap transactions for customers. Net trading revenue is
included in other income and is not significant to the company's results of
operations. The notional amounts of those contracts totaled $421 million and
$211 million at December 31, 1995 and 1994, respectively. The
56
- -------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
nature of those instruments is the same as described for derivative financial
instruments.
RISK MANAGEMENT DERIVATIVES The fair value of derivatives is the
estimated amount that the company would pay or receive to terminate the
agreements at the reporting date, taking into account current interest rates
and the present creditworthiness of the counterparties to the agreements.
DEPOSIT LIABILITIES The fair value of demand deposits and certain money
market deposits is the amount payable on demand at the reporting date. The
fair value of fixed-maturity certificates of deposit is estimated using rates
currently offered for deposits of similar remaining maturities.
SHORT-TERM BORROWINGS The carrying amount of short-term borrowings, which
include commercial paper, federal funds purchased, securities sold under
agreements to repurchase and other short-term borrowings, reasonably
approximate their fair value.
LONG-TERM DEBT Rates currently available to the company for debt with
similar terms and remaining maturities are used to estimate the fair value of
existing debt.
COMMITMENTS TO EXTEND CREDIT AND OTHER OFF-BALANCE-SHEET FINANCIAL
INSTRUMENTS The fair value of commitments to extend credit and letters of
credit is estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the
present creditworthiness of the counterparties. The fair value of other
off-balance-sheet financial instruments is based on the estimated cost to
terminate or otherwise settle obligations with the counterparties at the
reporting date.
The estimated fair values of the company's financial instruments are as
follows:
<TABLE>
<CAPTION>
1995 1994
---------------------------- -----------------------------
CARRYING FAIR Carrying Fair
December 31--Dollars in Thousands AMOUNT(1) VALUE(1) Amount(1) Value(1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets
Cash and cash equivalents..................... $ 2,769,145 $ 2,769,145 $ 2,907,895 $ 2,907,895
Investment securities held to maturity........ 200,960 216,066 4,944,808 4,864,666
Investment securities available for sale...... 5,133,041 5,133,041 2,738,600 2,738,600
Capitalized excess servicing income, net...... 149,662 169,581 -- --
Loans......................................... 30,485,999 28,521,153
Less: Allowance for loan losses............... (505,148) (501,447)
Net loans............................... 29,980,851 30,174,023 28,019,706 27,649,396
Trading derivatives(2)........................ (47) 6,479 (253) 7,551
Risk management derivatives(2)................ 11,611 29,938 2,067 8,523
Financial liabilities
Deposits:
Without stated maturities................... 22,047,155 22,047,155 23,575,460 23,575,460
With stated maturities...................... 12,186,413 12,219,144 11,533,171 11,434,800
Short-term borrowings......................... 2,078,949 2,078,949 1,653,904 1,653,904
Long-term debt (excluding capitalized leases). 1,178,464 1,251,001 763,255 769,433
Trading derivatives(2)........................ -- 6,479 -- 7,551
Risk management derivatives(2)................ 2,515 5,265 (1,587) 112,693
Commitments to extend credit(2)............... (980) 3,317 1,755 6,137
Other off-balance-sheet financial
instruments(2).............................. 27,949 32,955 136 2,297
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THESE FAIR VALUE ESTIMATES AND THEIR RELATED CARRYING AMOUNTS DO NOT
INCLUDE THE VALUE OF NON-FINANCIAL INSTRUMENTS, SUCH AS FIXED ASSETS, THE
VALUE OF CUSTOMER RELATIONSHIPS AND THE VALUE OF RIGHTS TO RECEIVE FUTURE
FEE INCOME. AS A RESULT, THESE FAIR VALUES ARE NOT COMPREHENSIVE AND
THEREFORE DO NOT REFLECT THE UNDERLYING VALUE OF THE COMPANY.
(2) THE AMOUNTS SHOWN UNDER "CARRYING AMOUNT" REPRESENT ACCRUED OR DEFERRED
INCOME OR EXPENSE ARISING FROM THESE UNRECOGNIZED FINANCIAL INSTRUMENTS.
R. REGULATORY RESTRICTIONS
The payment of dividends by affiliate banks is subject to certain
regulatory restrictions. The most common restriction requires regulatory
approval of any dividends paid which would cause total dividends for the most
recent three fiscal years to exceed net income for the same period. Under
this restriction, $171 million was available for payment of dividends on
December 31, 1995. Banking regulators have the authority to limit further the
dividends paid by the company's banking subsidiaries.
Banking affiliates are required by law to maintain non-interest bearing
deposits to meet reserve requirements. At December 31, 1995, these deposits
totaled $120 million.
57
-------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
S. PARENT COMPANY FINANCIAL INFORMATION
CONDENSED FINANCIAL INFORMATION FOR BARNETT BANKS, INC. (PARENT COMPANY ONLY)
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31--Dollars in Thousands 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash............................................................ $ 1,489 $ 2,931
Investment securities available for sale (amortized cost of
$18,644 in 1995 and $19,248 in 1994).......................... 37,426 20,246
Investments in and amounts due from affiliates:
Banks, at equity in net assets............................... 3,157,069 2,940,812
Non-banking affiliates, at equity in net assets.............. 715,806 215,248
Securities purchased under agreements to resell.............. 134,500 198,000
Amounts due from affiliates.................................. 1,184,225 164,441
Cost in excess of fair value of net assets acquired.......... 95,189 102,105
Premises and equipment.......................................... 188,221 159,666
Other assets.................................................... 257,996 206,761
- --------------------------------------------------------------------------------------------------
Total assets.............................................. $5,771,921 $4,010,210
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
LIABILITIES
Commercial paper................................................ $ 669,766 $ 6,199
Other short-term borrowings..................................... 425,000 --
Other liabilities............................................... 239,391 178,500
Long-term debt.................................................. 1,165,578 691,328
- --------------------------------------------------------------------------------------------------
Total liabilities......................................... 2,499,735 876,027
- --------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Total shareholders' equity................................ 3,272,186 3,134,183
- --------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity................ $5,771,921 $4,010,210
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Years Ended December 31--Dollars in Thousands 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Income from affiliates:
Dividends ($446,009 in 1995, $462,406 in 1994
and $299,835 in 1993 from banks).......................... $483,884 $462,465 $299,835
Management fees............................................. 229,052 182,346 128,634
Other....................................................... 60,681 21,168 31,400
Other income................................................... 8,591 7,682 4,373
- --------------------------------------------------------------------------------------------------------
Total income............................................. 782,208 673,661 464,242
- --------------------------------------------------------------------------------------------------------
EXPENSES
Salaries and employee benefits................................. 161,029 108,050 90,827
Interest....................................................... 118,354 59,071 60,185
Other.......................................................... 121,710 110,864 82,490
- --------------------------------------------------------------------------------------------------------
Total expenses........................................... 401,093 277,985 233,502
- --------------------------------------------------------------------------------------------------------
EARNINGS
Income before income taxes and equity in undistributed
income of affiliates......................................... 381,115 395,676 230,740
Reduction of consolidated income taxes resulting from
parent company operating loss................................ 37,776 22,429 23,317
- --------------------------------------------------------------------------------------------------------
Income before equity in undistributed income of affiliates..... 418,891 418,105 254,057
Equity in undistributed income of affiliates................... 114,410 69,866 166,937
- --------------------------------------------------------------------------------------------------------
Net income............................................... $533,301 $487,971 $420,994
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
58
- -------------------
BARNETT BANKS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31--Dollars in Thousands 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................... $ 533,301 $ 487,971 $ 420,994
Adjustments to reconcile net income to net cash provided
by operating activities:
Increase in undistributed income of affiliates............. (114,410) (69,866) (166,937)
Depreciation and amortization.............................. 13,440 12,152 10,689
Amortization of intangibles................................ 9,127 11,621 20,558
Deferred income tax expense (benefit)...................... (37,776) (22,429) 20,122
Employee benefits funded by equity (parent company and
affiliates).............................................. 24,237 28,682 20,938
Decrease (increase) in other assets........................ (47,659) 17,760 (79,007)
Increase in other liabilities.............................. 60,891 11,062 58,742
Other...................................................... (985) 4,559 --
- ---------------------------------------------------------------------------------------------------------
Net cash provided by operating activities............... 440,166 481,512 306,099
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities............................ (40,959) (151,466) (217,352)
Proceeds from sales of investment securities.................. -- 95,320 --
Proceeds from maturities of investment securities............. 58,698 212,657 37,080
Net increase in advances to affiliates........................ (999,042) (17,153) (36,210)
Net capital returns from (contributions to) affiliates........ (234,390) (212,195) 144,267
Purchases of premises and equipment........................... (46,159) (13,240) (89,071)
Proceeds from sales of premises and equipment................. 150 2,877 1,040
Net business dispositions (acquisitions), net of cash
acquired.................................................... (313,104) -- 24,240
- ---------------------------------------------------------------------------------------------------------
Net cash used by investing activities................... (1,574,806) (83,200) (136,006)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in commercial paper and other
short-term borrowings....................................... 1,088,567 742 (35,696)
Proceeds (repayments) of advances from non-banking
affiliates.................................................. -- (50,000) 50,000
Proceeds from issuance of long-term debt...................... 500,000 25,000 150,000
Principal repayments of long-term debt........................ (25,750) (400) (165,700)
Net issuance (repurchase) of common and preferred stock....... (302,033) (50,236) 24,988
Cash dividends................................................ (191,086) (175,555) (152,654)
- ---------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities........... 1,069,698 (250,449) (129,062)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents.......... (64,942) 147,863 41,031
Cash and cash equivalents, January 1.......................... 200,931 53,068 12,037
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents, December 31........................ $ 135,989 $ 200,931 $ 53,068
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
59
-------------------
BARNETT BANKS, INC.
<PAGE>
BOARD OF DIRECTORS
[PHOTO]
STANDING LEFT TO RIGHT:
CLARENCE V. MCKEE
Chairman, President and Chief Operating Officer of
McKee Communications, Inc., Tampa, Florida.
JOHN A. WILLIAMS
Chairman of Post Properties, Inc., Atlanta, Georgia.
JACK B. CRITCHFIELD
Chairman and Chief Executive Officer of
Florida Progress Corporation, St. Petersburg, Florida;
President Emeritus of Rollins College.
SEATED:
STEWART TURLEY
Chairman and Chief Executive Officer of
Eckerd Corporation, Largo, Florida.
[PHOTO]
STANDING LEFT TO RIGHT:
WALTER H. ALFORD
Executive Vice President and General Counsel of
BellSouth Corporation, Atlanta, Georgia.
RITA BORNSTEIN
President of Rollins College, Winter Park, Florida.
FREDERICK H. SCHULTZ
Owner of Schultz Investments, Jacksonville, Florida;
former Vice Chairman of the Board of Governors of
the Federal Reserve System.
SEATED LEFT TO RIGHT:
ALLEN L. LASTINGER, JR.
President and Chief Operating Officer of
Barnett Banks, Inc., Jacksonville, Florida.
JAMES L. BROADHEAD
Chairman and Chief Executive Officer of
FPL Group, Inc., Juno Beach, Florida.
60
<PAGE>
[PHOTO]
STANDING LEFT TO RIGHT:
TOM L. RANKIN
Chairman, President and
Chief Executive Officer of
Lykes Bros. Inc., Tampa, Florida.
MARSHALL M. CRISER
Chairman of Mahoney Adams & Criser, P.A.,
Jacksonville, Florida;
President Emeritus of
the University of Florida.
CHARLES E. RICE
Chairman and Chief Executive Officer of
Barnett Banks, Inc., Jacksonville, Florida.
ALVIN R. CARPENTER
President and Chief Executive Officer of
CSX Transportation, Inc., Jacksonville, Florida.
SEATED:
REMEDIOS DIAZ OLIVER
President and Chief Executive Officer of
All American Containers, Inc.,
Miami, Florida.
- -------------------------------------------------------------------------------
OFFICERS
MANAGEMENT EXECUTIVE COMMITTEE
CHARLES E. RICE
Chairman and Chief Executive Officer
ALLEN L. LASTINGER, JR.
President and Chief Operating Officer
JUDY S. BEAUBOUEF
Chief Legal Executive
RICHARD C. BREWER, JR.
Chief Credit Policy Executive
CHARLES W. NEWMAN
Chief Financial Officer
HINTON F. NOBLES, JR.
Executive Vice President
MANAGEMENT OPERATING COMMITTEE
ALLEN L. LASTINGER, JR.*
RICHARD A. ANDERSON
Regional Banking Executive/Central Region
SUSAN S. BLASER
Chief Marketing Executive
LEE H. CHAPLIN, JR.
Regional Banking Executive/North Region
DOUGLAS K. FREEMAN
Chief Corporate Banking Executive
RICHARD H. JONES
Chief Asset Management Executive
PAUL T. KERINS
Chief Human Resources Executive
JAMES F. MONDELLO
Regional Banking Executive/South Region
JONATHAN J. PALMER
Chief Retail Banking and Technology Executive
RICHARD J. REDICK
Director of Finance
*Chairman, Management Operating Committee
- -------------------------------------------------------------------------------
PATRICK J. MCCANN
Chief Accounting Officer and Controller
61
<PAGE>
DIRECTORY OF AFFILIATES
FLORIDA
BARNETT BANK OF ALACHUA COUNTY, N.A.
Gainesville, FL
Chief Executive: Mark D. Walker
BARNETT BANK OF BROWARD COUNTY, N.A.
Ft. Lauderdale, FL
Chief Executive: M. Alex Crotzer
BARNETT BANK OF CENTRAL FLORIDA, N.A.
Orlando, FL
Chief Executive: Thomas H. Yochum
BARNETT BANK OF HIGHLANDS COUNTY
Sebring, FL
Chief Executive: James L. Ridley
BARNETT BANK OF JACKSONVILLE, N.A.
Jacksonville, FL
Chief Executive: Andrew B. Cheney
BARNETT BANK OF THE KEYS
Key West, FL
Chief Executive: Harry L. Woolley
BARNETT BANK OF LAKE COUNTY, N.A.
Eustis, FL
Chief Executive: Don D. Roberts
BARNETT BANK OF LAKE OKEECHOBEE
Okeechobee, FL
Chief Executive: Richard D. Coleman
BARNETT BANK OF LEE COUNTY, N.A.
Fort Myers, FL
Chief Executive: Allan L. McLeod, Jr.
BARNETT BANK OF MANATEE COUNTY, N.A.
Bradenton, FL
Chief Executive: Kenneth W. Oden
BARNETT BANK OF MARION COUNTY, N.A.
Ocala, FL
Chief Executive: Richard L. Andrews
BARNETT BANK OF MARTIN COUNTY, N.A.
Stuart, FL
Chief Executive: Leo Hill
BARNETT BANK OF NAPLES
Naples, FL
Chief Executive: James E. Loskill
BARNETT BANK OF NASSAU COUNTY
Fernandina Beach, FL
Chief Executive: Dian S. Williams
BARNETT BANK OF NORTH CENTRAL FLORIDA
Lake City, FL
Chief Executive: Joe R. Williams
BARNETT BANK OF NORTHWEST FLORIDA
Ft. Walton Beach, FL
Chief Executive: Freddy G. Carr
BARNETT BANK OF PALM BEACH COUNTY
West Palm Beach, FL
Chief Executive: R. Michael Strickland
BARNETT BANK OF PASCO COUNTY
Port Richey, FL
Chief Executive: Kendall L. Spencer
BARNETT BANK OF PINELLAS COUNTY
St. Petersburg, FL
Chief Executive: Sam A. Davis, II
BARNETT BANK OF POLK COUNTY
Lakeland, FL
Chief Executive: Bob Barbree
BARNETT BANK OF SOUTH FLORIDA, N.A.
Miami, FL
Chief Executive: William R. Myers
BARNETT BANK OF SOUTHWEST FLORIDA
Sarasota, FL
Chief Executive: C. Michael Collins
BARNETT BANK OF THE ST. JOHNS
St. Augustine, FL
Chief Executive: William F. Young
BARNETT BANK OF THE SUNCOAST, N.A.
Brooksville, FL
Chief Executive: H.M. Shirley, Jr.
BARNETT BANK OF TALLAHASSEE
Tallahassee, FL
Chief Executive: Ken Stafford
BARNETT BANK OF TAMPA
Tampa, FL
Chief Executive: James W. Ivey
BARNETT BANK OF THE TREASURE COAST
Port St. Lucie, FL
Chief Executive: Jeff Atwater
BARNETT BANK OF VOLUSIA COUNTY
DeLand, FL
Chief Executive: David M. Strickland
BARNETT BANK OF WEST FLORIDA
Pensacola, FL
Chief Executive: Eric Nickelsen
COMMUNITY BANK OF THE ISLANDS
Sanibel Island, FL
Chief Executive: Lyman Frank
GEORGIA
BARNETT BANK OF SOUTHEAST GEORGIA, N.A.
Brunswick, GA
Chief Executive: James H. Hunt
BARNETT BANK OF SOUTHWEST GEORGIA
Columbus, GA
Chief Executive: Gary Peacock, Jr.
NONBANK
BARNETT BANKS INSURANCE, INC.
Jacksonville, FL
BARNETT BANKS TRUST COMPANY, N.A.
Jacksonville, FL
Chief Executive: Rebecca S. Allen
BARNETT CARD SERVICES CORPORATION
Jacksonville, FL
Chief Executive: Cynthia A. Graham
BARNETT MERCHANT SERVICES CORPORATION
Jacksonville, FL
Chief Executive: Lyn Miles
BARNETT MORTGAGE COMPANY
Jacksonville, FL
Chief Executive: Francis G. Seabrook
BANCPLUS FINANCIAL CORPORATION
LOAN AMERICA FINANCIAL CORPORATION
BARNETT RECOVERY CORPORATION
Jacksonville, FL
Chief Executive: Robert K. Bieri
BARNETT SECURITIES, INC.
Jacksonville, FL
BARNETT TECHNOLOGIES, INC.
Jacksonville, FL
Chief Executive: Jonathan J. Palmer
EQUICREDIT CORPORATION
Jacksonville, FL
Chief Executive: John T. Hayt
62
- -------------------
BARNETT BANKS, INC.
<PAGE>
DIRECTORY OF AFFILIATES
[MAP OF UNITED STATES]
OUR NATIONWIDE COMPANIES
- - Loan America Financial Corp.
Wholesale Mortgage Office
- - BancPLUS Financial Corp.
Retail Office
- - EquiCredit Financial Corp.
Consumer Finance Office
BARNETT BANK MARKETS
234 Cities
53 Counties
613 Offices (596 Florida, 17 Georgia)
63
-------------------
BARNETT BANKS, INC.
<PAGE>
SHAREHOLDER INFORMATION
CORPORATE OFFICES
The corporate offices of Barnett Banks, Inc. are at:
50 North Laura Street
Jacksonville, FL 32202-3638
Mailing address:
P.O. Box 40789
Jacksonville, FL 32203-0789
Telephone: 904/791-7720
INTERNET ADDRESS
Barnett can be accessed on the World Wide Web at http://www.barnett.com or
through electronic mail at corpcomm@ barnett.com. This site contains the
latest news from Barnett, including quarterly earnings reports.
SECURITIES MARKETS
Shares of Barnett Banks, Inc. are listed on the New York Stock Exchange
(ticker symbols: BBI and BBIprA). The listing found in most newspapers is
"Barnett."
Certain debt securities are also listed on the New York Stock Exchange.
Barnett's debt ratings are:
<TABLE>
<CAPTION>
SENIOR SUBORDINATED
DEBT DEBT
- ------------------------------------------
<S> <C> <C>
Moody's A2 A3
Standard & Poor's A- BBB+
Duff & Phelps A A-
</TABLE>
SHAREHOLDER ASSISTANCE
Shareholders requiring a change of address, records or information about lost
certificates, dividend checks or dividend reinvestment should contact:
First Chicago Trust, Agent
P.O. Box 2500
Jersey City, NJ 07303-2500
Telephone: 1-800-328-5822
SHAREHOLDER DATA
There were 38,880 shareholders of record of Barnett common stock as of
December 31, 1995. In addition, approximately 12,900 Barnett employees own stock
through company-sponsored plans.
ANNUAL MEETING
Barnett's annual meeting of shareholders will be on Wednesday, April 17, 1996,
at 10 a.m. in Building 500 of the Barnett Office Park, 9000 Southside Blvd.,
Jacksonville, FL.
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.
DIRECT PURCHASE PLANS
Barnett's Shareholder Investment Plan is a convenient and cost-effective way
to acquire Barnett common stock.
- The initial minimum investment
is $250.
- No brokerage commissions are charged on purchases.
- Automatic monthly purchases can be made by deduction from a checking or
savings account.
- An Individual Retirement Account which invests in Barnett stock can be
established.
- Optional cash purchases of additional common stock can be made.
- Participation is voluntary, and you may withdraw at any time.
- Gift certificates are available for giving shares for birthdays and
graduation.
- Dividends can be automatically reinvested.
If you would like more information on this plan, please contact First Chicago
Trust, Agent, at 1-800-328-5822.
STOCK PRICES--1994
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q
- ----------------------------------------------
<S> <C> <C> <C> <C>
High $45.88 $48.13 $47.63 $43.50
Low $39.75 $43.25 $43.25 $37.63
Close $44.13 $43.75 $44.25 $38.50
</TABLE>
[5 YEAR DIVIDEND HISTORY GRAPH]
[5 YEAR STOCK PRICES GRAPH]
[QUARTERLY STOCK PRICES GRAPH]
64
- ------------------
BARNETT BANKS, INC.
<PAGE>
HOW TO REACH US:
BARNETT AUTOMATED RESPONSE TELEPHONE:
UNITED STATES 1-800-562-5725
CANADA 1-800-441-2999
CUSTOMER SERVICE 1-800-242-2007
BUSINESS SUPERPHONE 1-800-628-5677
CARD SERVICES 1-800-323-6276
DESKTOP BANKING 1-800-457-6419
INSTALLMENT LOANS:
NORTH/CENTRAL FLORIDA REGION 1-800-562-6701
SOUTH FLORIDA REGION 1-800-962-3422
CANADA 1-800-457-7220
INVESTMENT SERVICE CENTER 1-800-380-8120
MERCHANT SERVICES 1-800-882-7521
MORTGAGE COMPANY 1-800-342-7581
NEWCOMERS DEPARTMENT 1-800-368-8580
STUDENT LOANS 1-800-633-7192
DID YOU KNOW?
IN 1995 . . .
- - BARNETT PROCESSED 4 MILLION CHECKS
PER DAY.
- - BARNETT'S ATMS HANDLED AN AVERAGE OF
135,000 TRANSACTIONS PER DAY.
- - BARNETT'S AUTOMATED TELEPHONE SYSTEM
RECEIVED 120,000 INQUIRIES PER DAY.
- - BARNETT'S BUSINESS SUPERPHONE HANDLED
12,300 CALLS PER DAY FROM SMALL BUSINESSES.
CREDITS
ANNUAL REPORTS FOR BARNETT BANKS, INC. ARE PRODUCED BY
THE COMPANY'S FINANCIAL REPORTING COMMITTEE:
STEPHEN J. BOYLE
Manager/Financial Reporting
CATHERINE C. COSBY
Senior Counsel/Corporate Secretary
TERESA I. CURRY
Manager/Corporate Accounting
GREGORY M. DELANEY
Director/Investor Relations
NANCY J. KESLER
Director/Regulatory Relations
PATRICK J. MCCANN
Chief Accounting Officer and Controller
DAVID R. PALOMBI
Director/Corporate Communications
ROBERT L. STICKLER
Manager/External Communications
JENNIFER A. WADE
External Communications Officer
CREATIVE SERVICES/PRODUCTION:
DIANE HUNT
Art Director/Corporate Communications
MCELWEE & MCELWEE
Photography
CHRISTOPHER STICKNEY
Photography, Page 16
SCOTT MACNEILL
Illustration
PAUL FIGURA
Digital Retouching & Composing
CRAFTSMAN PRINTING COMPANY
Printing
BARNETT, SENIOR PARTNERS, EDGE ACCOUNT, BARNETT SUPERCARD CHECK CARD,
BARNETT CONNECTION AND BUSINESS SUPERPHONE ARE REGISTERED TRADEMARKS
OF BARNETT BANKS, INC. PREMIER ACCOUNT IS A REGISTERED SERVICE MARK
OF BARNETT BANKS, INC. VISA IS A REGISTERED TRADEMARK.
<PAGE>
[BARNETT BANK LOGO]
BARNETT BANKS, INC.
Post Office Box 40789
Jacksonville, Florida 32203-0789
Telephone: 904-791-7720
<PAGE>
EXHIBIT 21
BARNETT BANKS, INC.
SUBSIDIARIES OF THE REGISTRANT
IN ADDITION TO PAGE 62 OF THE
1995 ANNUAL REPORT TO SHAREHOLDERS
DECEMBER 31, 1995
Name State of Incorporation
---- ----------------------
Barnett Merger Corporation Florida
<PAGE>
EXHIBIT 23(A)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into the Registrant's
previously filed Registration Statement File Nos. 2-83506, 33-5434, 33-32459,
33-39535, 33-39536, 33-41184, 33-44344, 33-51365, 33-59246, 33-57597,
33-59246, 33-83571, and 33-61229.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
February 7, 1996
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Walter H. Alford
--------------------------------
Walter H. Alford
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, her true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for her and in her name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or their substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Rita Bornstein
--------------------------------
Rita Bornstein
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ James L. Broadhead
--------------------------------
James L. Broadhead
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Alvin R. Carpenter
--------------------------------
Alvin R. Carpenter
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Marshall M. Criser
--------------------------------
Marshall M. Criser
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Jack B. Critchfield
--------------------------------
Jack B. Critchfield
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Remedios Diaz Oliver
--------------------------------
Remedios Diaz Oliver
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Clarence V. McKee
--------------------------------
Clarence V. McKee
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Thompson L. Rankin
--------------------------------
Thompson L. Rankin
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Frederick H. Schultz
--------------------------------
Frederick H. Schultz
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Patrick J. McCann
--------------------------------
Patrick J. McCann
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ John A. Williams
--------------------------------
John A. Williams
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Charles W. Newman
--------------------------------
Charles W. Newman
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Charles E. Rice
--------------------------------
Charles E. Rice
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Hinton
F. Nobles, Jr., Charles W. Newman and Patrick J. McCann, and each or any of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead to
sign the Corporation's Form 10-K Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or their substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have set my hand this 17th day of January, 1996.
/s/ Allen L. Lastinger, Jr.
--------------------------------
Allen L. Lastinger, Jr.
(SEAL)
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