<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period Commission file number 1-7901.
ended March 31, 1997
BARNETT BANKS, INC.
------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-0580515
- ------------------------------- ------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
50 North Laura Street
Jacksonville, Florida 32202
---------------------------------------
(Address of principal executive offices)
(904) 791-7720
--------------------------------------------------
(Registrants telephone number, Including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Barnett Burke, Inc. Common Stock - March 31, 1997:
177,314,033 shares outstanding
<PAGE>
BARNETT
{IDEAS)
FIRST QUARTER
1997
Form 10-Q
Barnett Banks, Inc.
<PAGE>
Barnett Banks, Inc.
Financial Review and Form 10-Q
TABLE OF CONTENTS
<TABLE>
Part I--Financial Information
- ----------------------------------------------------------------------------------
<S> <C>
Consolidated Financial Highlights...................................... 3
Management Discussion (Item 2)......................................... 4
Quarterly Average Balances, Yields and Rates.......................... 12
Financial Statements (Item 1):
Statements of Financial Condition..................................... 14
Statements of Income.................................................. 15
Statements of Changes in Shareholders' Equity......................... 16
Statements of Cash Flows.............................................. 17
Notes to Financial Statements......................................... 18
</TABLE>
Part II--Other Information
- -------------------------------------------------------------------------------
Exhibits and Reports on Form 8-K (Item 6)
Exhibit 11, "Statement re: computation of per share earnings," is included
in the Notes to Financial Statements on page 19 of this report.
A report on Form 8-K, dated January 14, 1997, filed a press release
announcing the company's agreement to acquire Oxford Resources Corp.
A report on Form 8-K, dated January 24, 1997, filed a press release
announcing 1996 earnings for the company.
Barnett Banks, Inc. and Subsidiaries
FORM 10-Q, March 31, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BARNETT BANKS, INC.
DATED: MAY 14, 1997 /S/ CHARLES W. NEWMAN
-----------------------------------
CHARLES W. NEWMAN
CHIEF FINANCIAL OFFICER
DATED: MAY 14, 1997 /S/ GREGORY M. DELANEY
-----------------------------------
GREGORY M. DELANEY
CONTROLLER
<PAGE>
Consolidated Financial Highlights
Restated for 2-for-1 stock split in September 1996
<TABLE>
<CAPTION>
Three Months
FOR THE PERIODS ENDED MARCH 31-- ----------------------------------
DOLLARS IN MILLIONS EXCEPT PER SHARE DATA 1997 1996 CHANGE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For the Period
Net interest income (taxable-equivalent)........................................ $ 474.0 $ 475.2 --
Provision for loan losses....................................................... 31.8 41.6 (24)%
Non-interest income (excluding securities transactions)......................... 215.7 196.6 10
Securities transactions(1)...................................................... -- 19.0 --
Non-interest expense............................................................ 415.9 407.6 2
Net income...................................................................... 145.7 148.2 (2)
=======================================================================================================================
Per Share Data
Net income:
Primary....................................................................... $ .79 $ .76 4%
Fully diluted................................................................. .78 .74 5
Dividends declared.............................................................. .27 .24 13
Book value(2)................................................................... 16.49 17.35 (5)
Stock price:
High.......................................................................... 50.88 31.88 60
Low........................................................................... 40.00 27.75 44
Close......................................................................... 46.50 31.13 49
=======================================================================================================================
Key Ratios
Return on assets................................................................ 1.41% 1.44% (2)%
Return on equity................................................................ 19.34 17.89 8
Net yield on earning assets..................................................... 5.28 5.27 --
Overhead ratio.................................................................. 60.29 60.67 (1)
Shareholders' equity to total assets(2)......................................... 6.99 8.09 (14)
Leverage ratio.................................................................. 7.50 6.31 19
Total risk-based capital ratio.................................................. 12.97 11.62 12
=======================================================================================================================
Average Balances
Assets.......................................................................... $ 41,337 $ 41,136 --
Deposits........................................................................ 33,138 33,845 (2)%
Loans, net of unearned income................................................... 30,526 30,347 1
Earning assets.................................................................. 36,200 36,161 --
Shareholders' equity............................................................ 3,012 3,313 (9)
Fully diluted shares (thousands)................................................ 185,597 198,997 (7)
=======================================================================================================================
Period End
Assets.......................................................................... $ 41,848 $ 41,519 1%
Deposits........................................................................ 33,839 33,930 --
Loans, net of unearned income................................................... 30,701 30,378 1
Long-term debt.................................................................. 1,221 1,388 (12)
Preferred stock................................................................. -- 91 --
Shareholders' equity............................................................ 2,865 3,287 (13)
Common shares (thousands)....................................................... 177,314 188,329 (6)
=======================================================================================================================
</TABLE>
(1) Includes the sale of Bank South stock in the first quarter of 1996.
(2) Computed on equity before deduction of the employee stock ownership plan
obligation.
<PAGE>
MANAGEMENT DISCUSSION
TABLE 1 Selected Quarterly Data
<TABLE>
<CAPTION>
1996
1997 ------------------------------------------
DOLLARS IN MILLIONS EXCEPT PER SHARE DATA FIRST FOURTH THIRD SECOND FIRST
- ----------------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net interest income (taxable-equivalent)......................... $ 474.0 $ 461.9 $ 469.0 $ 480.3 $ 475.3
Provision for loan losses........................................ 31.8 28.6 44.9 39.5 41.6
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses.............. 442.2 433.3 424.1 440.8 433.7
Non-interest income (excluding securities transactions).......... 215.7 206.0 194.8 193.9 196.6
Securities transactions.......................................... -- (.1) -- .3 19.0
Non-interest expense (excluding SAIF assessment)................. 415.9 399.7 384.4 400.8 407.6
SAIF assessment.................................................. -- -- 24.5 -- --
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes and minority interest................. 242.0 239.5 210.0 234.2 241.7
Income tax provision............................................. 84.5 83.4 78.8 90.3 88.6
Taxable-equivalent adjustment.................................... 3.5 3.9 4.2 4.4 4.9
Minority interest expense, net of income taxes................... 8.3 2.4 -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Net income..................................................... $ 145.7 $ 149.8 $ 127.0 $ 139.5 $ 148.2
========================================================================================================================
Primary earnings per common share................................ $ .79 $ .77 $ .65 $ .71 $ .76
Fully diluted earnings per common share.......................... .78 .76 .65 .71 .74
========================================================================================================================
</TABLE>
SUMMARY
All historical data used in this report has been restated to reflect a
2-for-1 stock split in September 1996.
Barnett reported first quarter 1997 earnings of $145.7 million, or $.78
per fully diluted share, compared to $148.2 million, or $.74 per share, in
last year's first quarter and $149.8 million, or $.76 per share, in the
fourth quarter of 1996. First quarter 1996 results included a $19.0 million
pre-tax gain on the company's equity holding in Bank South Corporation which
was acquired by another institution. Excluding the impact of this gain,
earnings per share increased 13%.
First quarter results represent a return on assets of 1.41% compared to
1.44% last year. Return on shareholders' equity was 19.34% for the first
quarter compared to 17.89% last year.
Revenue, excluding securities transactions, rose 3% over both the first
quarter of 1996 and the fourth quarter to $689.7 million. Taxable-equivalent
net interest income fell slightly to $474.0 million from the same period last
year, reflecting the impact of the company's mortgage servicing venture with
HomeSide, Inc. ("HomeSide") and the sale of $776 million of non-core credit
card receivables to Household Credit Services, Inc. ("Household"). First
quarter net interest income was up $12.1 million from the fourth quarter, as
average earning assets increased $649 million and the net yield on earning
assets rose 10 basis points.
Non-interest income, excluding securities transactions, rose 10% from a
year earlier and 5% from the fourth quarter of 1996 to $215.7 million. The
increase from last year largely reflects growth in consumer finance income
and other fees, partially offset by lower mortgage banking income and lower
credit card discounts and fees stemming from the HomeSide and Household
transactions, respectively. The increase from the fourth quarter reflects
growth in virtually every reported category.
Non-interest expense increased 2% from last year and 4% over the fourth
quarter to $415.9 million. Barnett's first quarter overhead ratio was 60.3%,
down from 60.7% a year earlier, but up slightly from 59.9% in the fourth
quarter, as the company continued making significant investments designed to
enhance its future business.
The provision for loan losses fell 24% from last year, but increased 11%
from the fourth quarter, to $31.8 million. At March 31, the reserve for loan
losses stood at $477 million and represented 1.55% of period-end loans and
259% of non-performing loans.
Net charge-offs of $31.8 million dropped 23% from a year earlier, but
rose $3.3 million from the fourth quarter. First quarter net charge-offs
represented an annualized .42% of average loans compared to .55% a year
earlier and .38% in the fourth quarter. Non-performing assets of $233
million on March 31 represented .76% of gross loans plus real estate held for
sale.
Selected quarterly data is provided in Table 1.
In January, the company announced that it had reached a definitive
agreement to acquire Oxford Resources Corp., the nation's largest independent
automobile leasing company. Oxford does business with more than 2,000
automobile dealers in 21 states and originated more than $1 billion in loans
and leases during 1996. Concurrent with the announcement, Barnett's Board of
Directors authorized management to repurchase up to an additional 15 million
shares of Barnett's common stock. Accordingly, the company's fully diluted
weighted average shares fell to 185.6 million in the first quarter from 194.3
million in the fourth quarter. The company closed the purchase of Oxford on
April 1 by issuing 13.6 million shares of common stock in exchange for all of
the outstanding stock of Oxford. The results of Oxford's operations will be
included in Barnett's results beginning in the second quarter.
EARNING ASSETS
LOANS. Average loans rose $179 million from a year earlier and $320
million from the fourth quarter to $30.5 billion. The increases in loans from
the
<PAGE>
Table 2 Interest Rate Sensitivity Analysis
<TABLE>
<CAPTION>
NON-RATE
SENSITIVE
0-30 31-90 91-180 181-365 1-5 AND OVER
MARCH 31, 1997--DOLLARS IN MILLIONS DAYS DAYS DAYS DAYS YEARS FIVE YEARS TOTAL
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and agricultural.............. $ 3,929 $ 148 $ 164 $ 172 $ 800 $ 226 $ 5,439
Real estate construction............................ 786 14 5 5 12 3 825
Commercial mortgages................................ 836 102 104 190 490 53 1,775
Residential mortgages............................... 1,096 1,368 1,749 2,689 2,014 745 9,661
Installment......................................... 2,752 783 1,049 1,759 4,558 94 10,995
Other loans......................................... 1,523 483 2,006
- ---------------------------------------------------------------------------------------------------------------------------------
Total loans(1)................................. 10,922 2,415 3,071 4,815 8,357 1,121 30,701
Securities(1)....................................... 109 323 468 1,282 1,687 1,016 4,885
Federal funds sold, securities purchased under
agreements to resell and other earning assets..... 780 780
- ---------------------------------------------------------------------------------------------------------------------------------
Total earning assets........................... $ 11,811 $ 2,738 $ 3,539 $ 6,097 $ 10,044 $ 2,137 $ 36,366
=================================================================================================================================
NOW and money market accounts(1).................... $ 4,389 $ 88 $ 549 $ 7,238 $ 12,264
Savings deposits(1)................................. 599 56 354 1,942 2,951
Time deposits....................................... 1,932 $ 2,091 $ 2,478 2,687 2,836 83 12,107
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits................ 6,920 2,091 2,478 2,831 3,739 9,263 27,322
Short-term borrowings............................... 2,206 2,206
Long-term debt...................................... 51 462 201 506 1,220
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities............. $ 9,177 $ 2,553 $ 2,478 $ 2,831 $ 3,940 $ 9,769 $ 30,748
=================================================================================================================================
Gap before interest rate swaps...................... $ 2,634 $ 185 $ 1,061 $ 3,266 $ 6,104 $ (7,632)
Interest rate swaps................................. (1,560) (2,195) 420 1,850 1,075 410
- ---------------------------------------------------------------------------------------------------------------------------------
Interest rate sensitivity gap adjusted for interest
rate swaps........................................ 1,074 (2,010) 1,481 5,116 7,179 (7,222)
Cumulative adjusted interest rate sensitivity gap... 1,074 (936) 545 5,661 12,840
Cumulative adjusted gap as a percentage of earning
assets:
March 31, 1997.................................... 2.95% (2.57)% 1.50% 15.57% 35.31%
March 31, 1996(2)................................. 5.14 5.20 8.36 16.87 28.36
=================================================================================================================================
</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.
Approximately 63% of the NOW and money market account balances and 78% of
the savings account balances are classified as over one year.
(2) In 1997, management changed certain assumptions used to estimate the
anticipated repricing sensitivity of non-maturity deposit products
considered to be non-rate sensitive. Prior year amounts have been restated
to give effect to the change.
first and fourth quarters of 1996 reflect growth in commercial and
installment loan balances, offsetting reductions in real estate loan
balances. The increase in loans from the first quarter of 1996 was also
partially offset by the Household transaction.
Installment loans rose $1.6 billion, or 18%, from the same period last
year and $340 million, or an annualized growth rate of 13%, from the fourth
quarter to $10.9 billion. The expansion of indirect automobile lending to new
markets and increased home equity loans originated through the EquiCredit
franchise were the principal factors in the growth of the installment loan
portfolio. The volume of automobile loans, the largest component of
installment loans, is dependent upon new and used automobile sales, which can
vary depending on economic conditions and other factors.
Residential mortgage loans fell 9%, or $1.0 billion, from last year and
$139 million from the fourth quarter to $9.7 billion. These reductions
reflect management's decision to utilize the liquidity from amortizing
residential mortgages to fund growth in loan categories with higher
risk-adjusted rates of return. Also contributing to the decline from last
year was the sale of the company's pipeline of mortgage loans held for sale
to HomeSide.
At the end of the first quarter, 76% of the residential loan portfolio
consisted of adjustable-rate mortgages. Most of these mortgages reprice
annually based on a spread over the one-year Constant Maturity Treasury
index. This repricing is limited by annual and lifetime caps.
Commercial loans grew 11% from last year and at an annualized rate of 15%
from the fourth quarter to $5.3 billion. Commercial real estate loans
decreased 12% from a year earlier and $127 million from the fourth quarter to
$2.6 billion.
Credit line and bank card outstandings fell 25%, or $631 million, from
last year, but grew at an annualized rate of 12% from the fourth quarter to
$1.9 billion. The reduction from last year reflects the sale of $776 million
in non-core credit card outstandings during the fourth quarter of 1996. The
growth from last quarter primarily reflects increased usage of previously
authorized credit.
INVESTMENT SECURITIES AND OTHER EARNING ASSETS. The company's $5.1
billion securities portfolio, with an average life of 2.24 years, consists
primarily of AAA or equivalently rated securities. U.S. Treasury securities
comprised 40% of the
<PAGE>
Table 3 Derivative Financial Instruments
<TABLE>
<CAPTION>
WEIGHTED AVERAGE INTEREST RATE
----------------------------------------------
AVERAGE
NOTIONAL REPLACEMENT RECEIVE PAY MATURITY
MARCH 31--DOLLARS IN MILLIONS AMOUNT VALUE RATE(1) INDEX RATE(1) INDEX IN YEARS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest rate swaps:
Basis swap............................. $ 50 $ .39 5.69% LIBOR 5.76% CMT .83
Generic swaps:
Receive fixed........................ 4,020 (26.66) 5.85 Fixed 5.56 LIBOR 1.84
Pay fixed............................ 116 .98 5.84 LIBOR 5.84 Fixed 1.74
Interest rate floors..................... 250 .66 6.00(2) LIBOR -- -- .76
- -------------------------------------------------------------------------------------------------------------------------------
Total.................................... $ 4,436 $ (24.63) 5.86% 5.57% 1.76
===============================================================================================================================
1996
Interest rate swaps:
Basis swap............................. $ 50 $ .78 5.41% LIBOR 5.39% CMT 1.83
Generic swaps:
Receive fixed........................ 3,550 (21.77) 5.42 Fixed 5.40 LIBOR 1.67
Pay fixed............................ 266 (.22) 5.39 LIBOR 6.38 Fixed 1.47
Interest rate floors..................... 250 2.19 6.00(2) LIBOR -- -- 1.75
- -------------------------------------------------------------------------------------------------------------------------------
Total.................................... $ 4,116 $ (19.02) 5.45% 5.47% 1.66
===============================================================================================================================
</TABLE>
- ------------------------
(1) Based upon contractual rates at March 31.
(2) The company receives interest equal to the amount by which LIBOR is less
than 6.00%.
portfolio at March 31. Average securities fell $108
million, or 2%, and federal funds sold and securities purchased under
agreements to resell fell $32 million from the same period last year. Average
securities grew $70 million and federal funds sold and securities purchased
under agreements to resell rose $259 million from the fourth quarter.
At March 31, the available-for-sale securities portfolio had a $21
million pre-tax unrealized loss compared to a $16 million pre-tax unrealized
gain at March 31, 1996 and a $13 million pre-tax unrealized gain at December
31, 1996. These unrealized gains and losses do not impact net income or
regulatory capital but are recorded as adjustments to shareholders' equity on
a net of tax basis. The adjustments to shareholders' equity also include a
$13 million market value adjustment on certain servicing assets associated
with the company's consumer finance franchise which resulted from the
company's adoption of Statements of Financial Accounting Standards (SFAS) No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" on January 1, 1997.
DEPOSITS AND OTHER FUNDING SOURCES
DEPOSITS. Average deposits declined 2%, or $707 million, from a year ago
but rose at an annualized growth rate of 5% from the fourth quarter to $33.1
billion. Transaction, money market and savings account balances dropped $582
million from a year ago but rose $586 million from the fourth quarter. The
decrease from last year was primarily due to the transfer of mortgage escrow
deposits to HomeSide during the second quarter of 1996. CD and other time
deposit balances fell $125 million from a year ago and $170 million during
the quarter.
OTHER FUNDING SOURCES. Average federal funds purchased, securities sold
under agreements to repurchase and other short-term borrowings increased $161
million, or 8%, from the same period last year, but decreased $12 million
during the quarter to $2.2 billion.
The company issues commercial paper to fund certain consumer lending
activities. As of March 31, Barnett's commercial paper outstandings totaled
$50 million compared to $42 million as of December 31, 1996 and $907 million
as of March 31, 1996.
ASSET-LIABILITY MANAGEMENT
Net interest income, the company's primary source of revenue, is affected
by changes in interest rates as well as fluctuations in the level and
duration of assets and liabilities contained on the company's balance sheet.
The impact of changes in interest rates on the company's net interest income
represents Barnett's level of interest rate risk.
Interest rate sensitivity is primarily a function of the repricing
structure of the company's balance sheet. Table 2 on page 5 shows this
structure as of March 31, with each maturity interval referring to the
earliest repricing opportunity (i.e., the earlier of scheduled contractual
maturity or repricing date) for each asset and liability category. The
resulting gap is one measure of the sensitivity of earnings to changes in
interest rates.
In order to reflect more appropriately the repricing structure of the
company's balance sheet, management has made certain adjustments to the
balances shown in the table. Based on historical and industry data, an
estimate of the expected prepayments of amortizing loans and investment
securities is reflected in the balances in the table. Changes in the economic
and interest rate environments may impact these expected prepayments.
Similarly, an adjustment to deposits is
<PAGE>
Table 4 Change In Net Interest Income
<TABLE>
<CAPTION>
CHANGE FROM
PREVIOUS
YEAR DUE TO:
FOR THE PERIOD ENDED MARCH 31, 1997-- ---------------------- TOTAL
Dollars in Millions--Taxable-Equivalent VOLUME RATE(1) CHANGE
- --------------------------------------------------------------------------------------- ----------------------------------
<S> <C> <C> <C>
Interest income:
Loans................................................................................ $ (5.5) $ (6.1) $ (11.6)
Taxable securities................................................................... (.8) 2.9 2.1
Tax-free securities.................................................................. (1.5) -- (1.5)
Federal funds sold and securities purchased under agreements to resell............... (.4) (.2) (.6)
- --------------------------------------------------------------------------------------- ----------------------------------
Total interest income.............................................................. (8.2) (3.4) (11.6)
Interest expense:
NOW and money market accounts........................................................ (2.7) 2.5 (.2)
Savings deposits..................................................................... (1.6) (.2) (1.8)
Certificates of deposit under $100,000............................................... (2.9) (4.2) (7.1)
Other time deposits.................................................................. 1.4 (1.4) --
- --------------------------------------------------------------------------------------- ----------------------------------
Total interest-bearing deposits.................................................... (5.8) (3.3) (9.1)
Federal funds purchased and securities sold under agreements to repurchase........... 10.6 (.9) 9.7
Other short-term borrowings.......................................................... (9.8) (.1) (9.9)
Long-term debt....................................................................... (.4) (.6) (1.0)
- --------------------------------------------------------------------------------------- ----------------------------------
Total interest expense............................................................. (5.4) (4.9) (10.3)
- --------------------------------------------------------------------------------------- ----------------------------------
Net interest income................................................................ $ (2.8) $ 1.5 $ (1.3)
======================================================================================= ==================================
</TABLE>
(1) Includes changes in interest income and expense not due solely to volume or
rate changes.
made to reflect the behavioral characteristics of certain core deposits that
do not have specified maturities (i.e., interest-bearing checking, savings
and money market deposit accounts). The footnote accompanying the table more
fully explains the specific adjustments made to the analysis. This interest
rate sensitivity analysis indicates that the company was asset sensitive on
March 31, with a cumulative six-month positive gap of 1.50%.
In addition to gap analysis, management uses rate-shock simulation and
duration of equity to measure the rate sensitivity of its balance sheet.
Rate-shock simulation is a modeling technique used to estimate the impact of
changes in rates on the company's net interest margin. Duration of equity
measures the change in the market value of the company's equity resulting
from a change in interest rates. It is designed to evaluate the economic
impact of rate changes for periods that extend beyond the time horizons
targeted by gap and rate shock simulation analysis. These analyses, which
consider longer term impacts of rate changes, indicate that Barnett is
relatively rate neutral. The company's rate shock simulation indicates that
an instantaneous 1% change in interest rates would have less than a 2% impact
on net interest income over a twelve-month period. This simulation is based
on the company's business mix, as well as interest rate exposures at a point
in time, and includes a parallel shift of the yield curve. It also requires
certain assumptions about the future pricing of loans and deposits in
response to changes in interest rates. While this simulation is a useful
measure of the company's sensitivity to changing rates, it is not a forecast
of future results and is based on many assumptions, which if changed, could
cause a different outcome.
The primary objective of Barnett's asset-liability management is to
maximize net interest income while maintaining acceptable levels of
interest-rate sensitivity. The Asset-Liability Management Committee sets
specific rate-sensitivity limits for the company. The committee monitors and
adjusts the company's exposure to changes in interest rates to achieve
predetermined risk targets that it believes are consistent with current and
expected market conditions. Management strives to minimize the negative
impact on net interest income caused by changes in interest rates. At this
time, management believes the company's asset-liability mix is sufficiently
balanced within a broad range of interest rate scenarios to minimize the
impact of significant rate movements.
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 derivatives portfolio used for asset-liability management
purposes, summarized in Table 3, had a notional amount of $4.4 billion at
March 31. This portfolio consisted of $4.2 billion of interest rate swaps and
$250 million of interest rate floors. The swap portfolio consists of
fixed-term, non-amortizing interest rate swaps, which mature through October
1999. Most of the company's swaps involve receipt of fixed cash flows in
exchange for variable (primarily LIBOR-based) cash flows. The purpose of
these swaps is to convert cash flows from floating-rate loans to fixed cash
flows to reduce the sensitivity of the net interest margin to flat or falling
interest rates.
<PAGE>
Table 5 Other Non-Interest Expense
<TABLE>
<CAPTION>
1997 1996
---------- ----------------------------------------------
DOLLARS IN THOUSANDS FIRST FOURTH THIRD SECOND FIRST
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advertising and marketing............................ $ 18,175 $ 10,256 $ 11,098 $ 12,693 $ 13,905
Amortization of intangibles.......................... 11,638 11,731 11,970 13,043 13,440
Communications....................................... 13,663 12,388 11,554 11,416 10,970
Expenses and provision on real estate held for
sale............................................... 2,034 3,233 3,696 3,384 2,409
FDIC assessments..................................... 1,628 -- 2,545 2,514 2,720
Outside computer services............................ 13,316 10,737 8,637 8,973 9,739
Postage.............................................. 5,866 6,345 6,147 7,390 6,920
Stationery and supplies.............................. 7,787 7,545 5,936 5,634 5,762
Insurance, taxes and other........................... 51,413 53,895 48,060 56,482 59,729
- -----------------------------------------------------------------------------------------------------------------
Total.............................................. $ 125,520 $ 116,130 $ 109,643 $ 121,529 $ 125,594
==========================================================
</TABLE>
The derivatives portfolio performed as expected during the quarter, as
the value of instruments entered into to protect the company in a declining
rate environment fell in value due to a modest rise in interest rates during
the period. The replacement value related to the company's derivatives
portfolio was a negative $24.6 million on March 31, 1997 compared to a
negative $19.0 million on the same date last year and a negative $4.7 million
on December 31, 1996.
The derivatives portfolio, including the amortization of deferred gains
on interest rate floors, increased net interest income in the first quarter
of 1997 by $5.6 million, representing a 6 basis point increase in the net
yield on earning assets. The swap portfolio reduced first quarter 1996 net
interest income by $1.6 million, representing a 2 basis point reduction in
the net yield on earning assets.
Barnett manages the counterparty exposure of its derivatives in a manner
consistent with the granting of credit. Any exposure is generally measured by
the market replacement value at any point in time. Barnett utilizes
collateral exchange agreements with derivatives counterparties in order to
control the level of credit exposure to these entities.
NET INTEREST INCOME
Barnett's taxable-equivalent net interest income, which represented 69%
of first quarter revenues, was $474.0 million, slightly below last year but
up $12.1 million, or 3%, from the fourth quarter. The decrease from last year
reflects the impact of the HomeSide and Household transactions, partially
offset by an increase in non-interest bearing funding, which reduced the cost
of funds supporting earning assets. The increase from the fourth quarter
primarily reflects a higher net yield on earning assets and increased earning
assets. Table 4 on page 7 shows the changes in net interest income by
category due to shifts in volume and rate.
The net yield on earning assets rose to 5.28% from 5.27% a year earlier
and 5.18% in the fourth quarter. The increase in the net yield on earning
assets from last year was driven by a change in loan mix from residential
mortgages to higher yielding commercial and installment loans and an increase
in non-interest bearing funding. This increase in the net yield was offset by
the impact of the sale of $776 million of high-yielding non-core credit card
outstandings to Household in the fourth quarter of 1996 and the change in
financial presentation of mortgage servicing costs resulting from the
HomeSide venture. Prior reporting had reflected internal mortgage servicing
costs in non-interest expense. As a result of the mortgage servicing
venture, these expenses became third party costs and are now netted against
interest on residential loans, resulting in lower net interest income. The
impact of the change in financial presentation of mortgage servicing costs on
the residential mortgage loan yield was 8 basis points and the impact on the
net interest margin was 2 basis points.
The 10 basis point expansion of the net interest margin from the fourth
quarter was primarily due to the increase in higher yielding commercial and
installment loans and the impact of capital securities issued during the
fourth quarter of 1996 and the first quarter of 1997.
NON-INTEREST INCOME
Non-interest income, excluding securities transactions, rose 10% from a
year ago to $215.7 million due to growth in consumer finance income and other
fees, partially offset by the impact of the HomeSide and Household
transactions. Non-interest income was up 5% from the fourth quarter,
reflecting growth in nearly every reported category.
Consumer finance income of $41.6 million represents revenue generated
through the company's consumer loan securitization program and related loan
servicing. Consumer finance income rose 32%, or $10.2 million, from the same
period a year ago, reflecting increased loan securitization volume. Consumer
finance income rose 5%, or $1.9 million, from the fourth quarter. On January
1, 1997, the company adopted SFAS No. 125 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," which
among other provisions, prescribes the accounting to be followed with respect
to loan securitizations occurring after December 31, 1996. These new
provisions affect the amount of gain recorded upon the sale of securitized
loans; however, the impact of SFAS No. 125 on the loan securitization gain
recorded during the first quarter was immaterial.
Mortgage banking income fell $5.1 million from the same period last year
but rose $3.8 million from the fourth quarter to $16.3 million. The decrease
from the first quarter of 1996 primarily reflects the impact of the HomeSide
venture. During the first quarter of 1997, HomeSide completed an initial
public offering of common stock which had a $2.1 million
<PAGE>
Table 6 Non-Performing Assets
<TABLE>
<CAPTION>
1997 1996
---------------------------------- ----------------------------
<S> <C> <C> <C> <C>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
MARCH 31--DOLLARS IN THOUSANDS AMOUNT OUTSTANDING(1) AMOUNT OUTSTANDING(1)
- ---------------------------------------------------------------------------------------------------------------------
Non-accruing loans:
Less than 90 days past due........................ $ 19,123 .06% $ 25,375 .08%
90 days past due.................................. 160,089 .52 151,204 .50
- --------------------------------------------------------------------------------------------------------------------
Total non-accruing loans....................... 179,212 .58 176,579 .58
Reduced-rate loans................................. 4,859 .02 4,803 .01
- --------------------------------------------------------------------------------------------------------------------
Total non-performing loans..................... 184,071 .60 181,382 .59
Real estate held for sale.......................... 49,329 .16 63,256 .21
- --------------------------------------------------------------------------------------------------------------------
Total non-performing assets.................... $233,400 .76% $ 244,638 .80%
====================================================================================================================
Non-performing loans by category:
Commercial, financial and agricultural............ $ 32,199 .11% $ 38,713 .13%
Real estate construction.......................... 3,814 .01 12,663 .04
Commercial mortgages.............................. 25,477 .08 40,895 .13
Residential mortgages............................. 122,581 .40 89,111 .29
====================================================================================================================
Total.......................................... $184,071 .60% $ 181,382 .59%
====================================================================================================================
90 days past due accruals.......................... $ 54,610 .18% $ 60,981 .20%
====================================================================================================================
</TABLE>
- ------------------------
(1) Before deduction for unearned income.
benefit on Barnett's results for the quarter.
Other service charges and fees rose 26%, or $7.8 million, from last year
to $37.6 million, reflecting higher retail fees that include new ATM
surcharges and special promotional programs.
Credit card discounts and fees fell $3.0 million, or 26%, from last
year's first quarter, reflecting the sale of non-core credit card
outstandings to Household. Credit card fees rose $1.9 million, or 28%, from
the fourth quarter.
Brokerage income grew 4% from a year ago and 9% from the fourth quarter
to $11.7 million, primarily reflecting growth in annuity and mutual fund
sales.
In the first quarter of 1996, the company recognized a $19 million gain
on its equity ownership in Bank South Corporation, which was acquired by
another institution.
NON-INTEREST EXPENSE
Non-interest expense rose 2%, or $8.3 million, from a year ago and 4%, or
$16.2 million, from the fourth quarter. The increase from last year reflects
the company's investment in strategic initiatives to diversify sources of
revenue, improve marketing and expand the use of technology for competitive
advantage. This increase was somewhat offset by the impact of the HomeSide
venture. The rise from the fourth quarter reflects continued investment in
strategic initiatives. The overhead ratio was 60.3% in the first quarter,
below last year's 60.7% but an increase from 59.9% in the fourth quarter of
1996.
Salaries and benefits increased $6.4 million from the same period last
year and $7.6 million from the fourth quarter. The growth from last year was
primarily due to staffing expenses related to strategic initiatives. The
increase from the fourth quarter of 1996 was largely due to a rise in certain
payroll taxes. The company had an average of 20,539 full-time equivalent
employees in the first quarter, compared to 20,430 a year ago.
Other expense decreased slightly from last year, reflecting the impact of
HomeSide, partially offset by increased marketing and technology expenses for
strategic initiatives. Other expense increased 8%, or $9.4 million, from the
fourth quarter, reflecting increased marketing and technology expenses
related to strategic initiatives. Other expense for the past five quarters is
shown in Table 5.
ASSET QUALITY
RISK ELEMENTS. As shown in Table 6, non-performing assets were $233
million on March 31, representing .76% of gross loans plus real estate held
for sale. By comparison, non-performing assets stood at $245 million, or .80%
of outstandings, on the same date last year, and $234 million, or .77% of
outstandings, on December 31, 1996.
Borrower experience and financial capacity are critical factors in
underwriting and approving all loan requests. Barnett's commercial real
estate loan policies generally require a maximum loan-to-value ratio of 75%.
Barnett has reduced its exposure to commercial real estate from a high of
28% of loans in 1988 to 9% and anticipates maintaining this portfolio at or
below 15% of loans. The commercial loan portfolio, representing 18% of total
loans, is not concentrated in any single industry but reflects the
broad-based economies in Florida and southern Georgia.
Barnett's residential loans generally are secured by 1-4 family homes,
conform to federal agency underwriting standards and have a maximum
loan-to-value ratio of 80% unless they are protected by mortgage insurance.
At March 31, 4.43% of residential loans were 30 days or more past due
compared to 4.06% a year earlier and 4.59% at December 31, 1996. At the end
of the first quarter, 1.27% of residential loans were non-performing compared
to .85% a year earlier and 1.19% on December 31, 1996. Losses in this
portfolio were 3 basis points in the first quarter and have historically been
in the 2-to-7 basis point range, as Florida's residential real estate values
have remained relatively stable.
At March 31, the percentage of installment loans 30 days or more past due
was 1.25% compared to .96% a year earlier and 1.47% at December 31. Barnett's
installment loan portfolio consists primarily of loans secured by new and
used automobiles (60%), home equity loans (21%), government-guaranteed
student loans (14%) and other secured loans (2%). The remaining 3% of
installment loans are unsecured.
At March 31, the percentage of bank card outstandings 30 days or more
past due was 3.05%, down from 3.58% a year earlier but up from 2.14% in the
fourth quarter.
NET CHARGE-OFFS. As shown in Table 7, net charge-offs dropped 23% from a
year earlier to $31.8 million due to reduced losses on credit card loans but
rose $3.3 million from the fourth quarter due to reduced commercial
recoveries. Bank card net charge-offs were $20.0 million lower than the same
period last year, as a result of the sale of $776 million of non-core credit
card receivables. Total net charge-offs in the first quarter represented an
annualized .42% of average outstandings, compared to .38% in the fourth
quarter and .55% for the same period last year.
PROVISION/ALLOWANCE FOR LOAN LOSSES. Barnett's provision expense in the
first quarter was $31.8 million, compared to $41.6 million in last year's
first quarter and $28.6 million in the fourth quarter of 1996.
At March 31, the allowance for loan losses stood at $477 million, or
1.55% of period-end loans, down 6% from a year ago and up slightly from
December 31, 1996. The allowance for loan losses is based on such factors as
the company's mix of loans, historical and expected loss experience and the
overall economic environment. Management considers the allowance appropriate
and adequate to cover potential losses inherent in the loan portfolio based
in part, on the current composition of the loan portfolio, credit quality
trends and economic environment.
The ratio of the allowance for loan losses to non-performing loans
remained a strong 259% at March 31, compared to 279% a year earlier and 250%
in the fourth quarter.
TAXES
Barnett's income tax expense in interim reporting periods is determined
by estimating the combined federal and state effective tax rate for the year
and applying this rate to taxable income. The company's effective tax rate
for the first quarter of 1997 was 35% compared to 37% last year, primarily
reflecting increased income exempt from tax.
LIQUIDITY
For banks, liquidity represents the ability to meet both loan commitments
and deposit withdrawals. Funds to meet these needs can be obtained by
converting liquid assets to cash or by attracting new deposits or other
sources of funding. Many factors affect a bank's ability to meet liquidity
needs, including variations in the markets served, its asset-liability mix,
its reputation and credit standing in the market and general economic
conditions.
In addition to its traditional in-market deposit sources, Barnett has
many other sources of liquidity, including proceeds from maturing securities
and loans, the sale of securities, asset securitization and other
non-relationship funding sources, such as senior or subordinated debt, bank
notes, commercial paper and wholesale purchased funds.
The high proportion of residential and installment loans on Barnett's
balance sheet provides it with an exceptional
Table 7 Loan Quality Information
<TABLE>
<CAPTION>
1997 1996
--------- -----------------------------------------
DOLLARS IN THOUSANDS FIRST FOURTH THIRD SECOND FIRST
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net charge-offs (recoveries):
Commercial, financial and agricultural.................... $ 3,300 $ 667 $ 3,271 $ (740) $ (334)
Real estate construction.................................. (20) 28 (13) -- (175)
Commercial mortgages...................................... 162 (572) (2,931) (2,184) (1,850)
Residential mortgages..................................... 793 1,129 781 608 508
Installment............................................... 19,769 19,672 11,666 12,795 15,428
Bank card................................................. 6,756 6,260 31,186 28,254 26,797
Credit lines.............................................. 1,015 1,252 1,133 711 1,031
- ------------------------------------------------------------------------------------------------------------------
Total net charge-offs.................................. $ 31,775 $ 28,436 $ 45,093 $ 39,444 $ 41,405
==================================================================================================================
Gross charge-offs.......................................... $ 39,850 $ 43,278 $ 61,037 $ 53,284 $ 51,500
Allowance for loan losses.................................. 477,188 476,709 507,109 506,892 506,315
Non-performing loans....................................... 184,071 190,425 192,216 192,711 181,382
Non-performing assets...................................... 233,400 233,980 251,137 251,969 244,638
Non-performing asset ratio................................. .76% .77% .82% .82% .80%
Net charge-offs to average loans (annualized).............. .42 .38 .59 .52 .55
Allowance to non-performing loans.......................... 259 250 264 263 279
Allowance to period-end loans.............................. 1.55 1.58 1.66 1.66 1.67
==================================================================================================================
</TABLE>
<PAGE>
Table 8 Capital Ratios
<TABLE>
<CAPTION>
MARCH 31--DOLLARS IN MILLIONS 1997 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Tier I capital............................................................. $ 3,057 $ 2,551
Total risk-based capital................................................... 4,031 3,538
Total risk-adjusted assets................................................. 31,091 30,444
- -------------------------------------------------------------------------------------------------
Tier I capital ratio....................................................... 9.83% 8.38%
Total risk-based capital ratio............................................. 12.97 11.62
Tier I leverage ratio...................................................... 7.50 6.31
=================================================================================================
</TABLE>
amount of contingent liquidity through the conventional securitization
programs that exist today.
The company has a commercial paper program to provide funding for certain
consumer lending operations. This facility is supported by $760 million in
back-up lines of credit. There were no borrowings under these lines at March
31.
As of March 31, the company had $1.4 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
At March 31, shareholders' equity totaled $2.9 billion. Fully diluted
shares outstanding fell to 185.6 million from 199.0 million a year ago and
194.3 million last quarter, as the company repurchased shares in anticipation
of issuing common stock for the Oxford Resources acquisition. Barnett
declared a $.27 dividend for the first quarter, representing a dividend
payout ratio of 35%.
In the fourth quarter of 1996, the company established two statutory
business trusts for the sole purpose of issuing capital securities and
investing the proceeds in the company's junior subordinated debentures. The
parent company issued two fixed-rate junior subordinated debentures totaling
$500 million to the trusts. During the first quarter of 1997, the company
established an additional statutory business trust and the parent company
issued a floating rate junior subordinated debenture totaling $250 million to
the trust. The trust preferred securities are reflected in the consolidated
financial statements as minority interest and included in Tier I capital for
the risk-based capital ratio and leverage ratio calculations.
The company is subject to risk-based capital guidelines that measure
capital relative to risk-weighted assets and off-balance-sheet financial
instruments. Capital guidelines issued by the Federal Reserve Board require
bank holding companies to have a minimum total risk-based capital ratio of
8%, with at least half of total capital in the form of Tier I capital.
As Table 8 shows, Barnett exceeded these capital guidelines on March 31,
with a Tier I capital ratio of 9.84% and a total risk-based capital ratio of
12.97%. The leverage ratio is used in connection with the risk-based capital
standards and is defined as Tier I capital divided by average assets for the
most recent quarter. The minimum leverage ratio under this standard is 3% for
the highest-rated bank holding companies which are not undertaking
significant expansion programs. An additional 1% to 2% may be required for
other companies, depending upon their regulatory ratings and expansion plans.
On March 31, 1997, Barnett's leverage ratio was 7.50%, up 119 basis points
from a year earlier due primarily to lower intangible assets as a result of
the HomeSide venture.
IMPACT OF ACCOUNTING STANDARDS
Effective January 1, 1997, Barnett adopted SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." This Statement establishes new ground rules for determining
whether a transfer of financial assets constitutes a sale and, if so, the
determination of any resulting gain or loss. This Statement requires that an
enterprise recognize only assets it controls and liabilities it has incurred,
to remove assets only when control has been surrendered, and to remove
liabilities only when they have been extinguished. See the Non-Interest
Income section on page 8 for further discussion.
In February 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 128, "Earnings per Share" which, when adopted, will replace the
current methodology for calculating and presenting earnings per share. The
Statement will be effective for the company's December 31, 1997 financial
statements. See Note E of the Notes to Financial Statements for further
discussion.
In February 1997, the FASB issued SFAS No. 129, "Disclosure of
Information about Capital Structure." This Statement establishes standards
for the disclosure of descriptive information about securities, the
liquidation preference of preferred stock and redeemable stock. This
Statement is effective for Barnett's fiscal year ending December 31, 1997.
The adoption of this Statement is not expected to have a material effect on
Barnett's financial position or results of operations.
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This report contains "forward-looking statements" within the meaning of
the federal securities laws. The forward-looking statements in this report
are subject to risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the statements.
<PAGE>
QUARTERLY AVERAGE BALANCES, YIELDS AND RATES
Consolidated--Barnett Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
1997 1996
------------------------------- -----------------------------------------------------
FIRST FOURTH THIRD
------------------------------- ------------------------------- --------------------
AVERAGE AVERAGE
AVERAGE YIELD OR AVERAGE YIELD AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST OR RATE BALANCE INTEREST
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dollars in Millions--Taxable-Equivalent
- --------------------------------------------------------------------------------------------------------------------------------
Assets
Loans:(1)
Commercial, financial and
agricultural........................ $ 5,347 $ 110.8 8.41% $ 5,158 $ 107.6 8.29% $ 4,963 $ 103.3
Real estate construction.............. 817 19.4 9.63 817 19.9 9.69 805 19.9
Commercial mortgages.................. 1,816 40.2 8.97 1,943 43.2 8.83 2,028 44.8
Residential mortgages................. 9,726 189.0 7.77 9,865 190.0 7.70 10,006 191.4
Installment........................... 10,936 242.7 9.00 10,596 240.3 9.02 10,188 226.3
Bank card............................. 1,081 41.0 15.38 1,046 39.0 14.85 1,793 69.4
Credit lines.......................... 803 19.3 9.72 781 18.8 9.62 764 18.8
- --------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income. 30,526 659.6 8.73 30,206 656.3 8.66 30,547 671.9
- --------------------------------------------------------------------------------------------------------------------------------
Securities:(2)
Taxable............................... 4,937 78.0 6.36 4,863 78.4 6.44 4,986 77.9
Tax-free.............................. 156 4.3 11.17 160 4.7 11.53 175 5.0
- --------------------------------------------------------------------------------------------------------------------------------
Total securities.................... 5,093 82.3 6.50 5,023 83.1 6.60 5,161 82.9
- --------------------------------------------------------------------------------------------------------------------------------
Federal funds sold and securities
purchased under agreements to
resell................................ 581 7.7 5.38 322 4.4 5.48 135 1.8
- --------------------------------------------------------------------------------------------------------------------------------
Total earning assets................ 36,200 $ 749.6 8.36% 35,551 $ 743.8 8.34% 35,843 $ 756.6
- --------------------------------------------------------------------------------------------------------------------------------
Cash.................................... 2,132 2,172 1,979
Other assets............................ 3,482 3,411 3,336
Allowance for loan losses............... (477) (480) (507)
- --------------------------------------------------------------------------------------------------------------------------------
Total assets........................ $ 41,337 $ 40,654 $ 40,651
================================================================================================================================
Liabilities, Minority Interest and Equity
NOW and money market accounts........... $ 12,040 $ 61.7 2.08% $ 11,806 $ 60.8 2.05% $ 11,683 $ 59.4
Savings deposits........................ 2,947 12.6 1.73 2,970 12.9 1.73 3,075 13.4
Certificates of deposit under
$100,000.............................. 9,639 118.6 4.99 9,812 123.3 5.00 9,799 122.5
Other time deposits..................... 2,511 33.0 5.34 2,508 33.7 5.34 2,643 35.7
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits..... 27,137 225.9 3.38 27,096 230.7 3.39 27,200 231.0
Federal funds purchased and securities
sold under agreements to repurchase... 1,860 23.0 5.01 1,690 21.8 5.12 2,075 27.0
Other short-term borrowings............. 289 4.2 5.94 471 6.7 5.69 443 6.6
Long-term debt.......................... 1,221 22.5 7.35 1,227 22.7 7.40 1,228 23.0
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities.. 30,507 $ 275.6 3.66% 30,484 $ 281.9 3.68% 30,946 $ 287.6
Demand deposits......................... 6,001 5,626 5,473
Other liabilities....................... 1,120 993 921
Minority interest....................... 697 179 --
Preferred equity........................ -- -- --
Common equity........................... 3,012 3,372 3,311
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities, minority interest
and equity........................ $ 41,337 $ 40,654 $ 40,651
================================================================================================================================
Spread and Net Yield
Interest rate spread.................... 4.70% 4.66%
Cost of funds supporting earning
assets................................ 3.08 3.16
Net yield on earning assets............. $ 474.0 5.28 $ 461.9 5.18 $ 469.0
================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1996
-----------------------------------------------------------------------------
THIRD SECOND FIRST
--------- --------------------------------- -------------------------------
AVERAGE AVERAGE AVERAGE
YIELD AVERAGE YIELD AVERAGE YIELD
OR RATE BALANCE INTEREST OR RATE BALANCE INTEREST OR RATE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dollars in Millions--Taxable-Equivalent
Assets
Loans:(1)
Commercial, financial and
agricultural........................ 8.28% $ 4,873 $ 100.8 8.32% $ 4,821 $ 99.5 8.30%
Real estate construction.............. 9.84 795 19.8 10.02 826 20.9 10.15
Commercial mortgages.................. 8.79 2,078 46.1 8.92 2,155 47.8 8.92
Residential mortgages................. 7.65 10,303 200.5 7.79 10,729 211.4 7.88
Installment........................... 8.84 9,813 216.3 8.86 9,301 206.0 8.91
Bank card............................. 15.40 1,746 68.0 15.67 1,756 68.0 15.56
Credit lines.......................... 9.78 756 18.6 9.87 759 19.0 10.08
- -----------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income. 8.76 30,364 667.3 8.83 30,347 671.2 8.88
- -----------------------------------------------------------------------------------------------------------------------
Securities:(2)
Taxable............................... 6.23 5,084 79.6 6.28 4,992 75.9 6.09
Tax-free.............................. 11.60 196 5.6 11.36 209 5.8 11.18
- -----------------------------------------------------------------------------------------------------------------------
Total securities.................... 6.41 5,280 85.2 6.47 5,201 81.7 6.29
- -----------------------------------------------------------------------------------------------------------------------
Federal funds sold and securities
purchased under agreements to
resell................................ 5.33 689 9.2 5.35 613 8.3 5.44
- -----------------------------------------------------------------------------------------------------------------------
Total earning assets................ 8.41% 36,333 $ 761.7 8.42% 36,161 $ 761.2 8.45%
- -----------------------------------------------------------------------------------------------------------------------
Cash.................................... 1,926 1,980
Other assets............................ 3,365 3,501
Allowance for loan losses............... (507) (506)
- -----------------------------------------------------------------------------------------------------------------------
Total assets........................ $ 41,117 $ 41,136
=======================================================================================================================
Liabilities, Minority Interest and Equity
NOW and money market accounts........... 2.02% $ 12,268 $ 58.7 1.93% $ 12,599 $ 61.9 1.97%
Savings deposits........................ 1.73 3,213 13.8 1.73 3,310 14.4 1.75
Certificates of deposit under
$100,000.............................. 4.98 9,747 120.8 4.98 9,867 125.7 5.12
Other time deposits..................... 5.38 2,570 34.3 5.36 2,408 33.0 5.52
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits..... 3.38 27,798 227.6 3.29 28,184 235.0 3.35
Federal funds purchased and securities
sold under agreements to repurchase... 5.17 1,215 15.0 4.96 1,046 13.3 5.14
Other short-term borrowings............. 5.90 1,045 14.1 5.42 942 14.1 6.00
Long-term debt.......................... 7.51 1,337 24.7 7.40 1,242 23.5 7.56
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities.. 3.70% 31,395 $ 281.4 3.60% 31,414 $ 285.9 3.66%
Demand deposits......................... 5,688 5,661
Other liabilities....................... 735 748
Minority interest....................... -- --
Preferred equity........................ 1 97
Common equity........................... 3,298 3,216
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities, minority interest
and equity........................ $ 41,117 $ 41,136
=======================================================================================================================
Spread and Net Yield
Interest rate spread.................... 4.71% 4.82% 4.79%
Cost of funds supporting earning
assets................................ 3.19 3.12 3.18
Net yield on earning assets............. 5.22 $ 480.3 5.30 $ 475.3 5.27
=======================================================================================================================
</TABLE>
- ------------------------
(1) Income on non-accruing loans is recognized on a cash basis. Interest income
on individual loan categories is at contractual rates, while total loan
interest income is net of reversals of interest on non-accruing loans.
(2) Average yields on investment securities available for sale have been
calculated on amortized cost.
<PAGE>
STATEMENTS OF FINANCIAL CONDITION
Consolidated--Barnett Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
(UNAUDITED) (AUDITED)
---------------------------- -----------
DOLLARS IN THOUSANDS 1997 1996 1996
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks............................................. $ 2,393,652 $ 2,197,380 $ 2,781,146
Federal funds sold and securities purchased under agreements to
resell............................................................ 653,000 588,318 2,500
Investment securities available for sale............................ 4,759,310 5,017,973 5,031,123
Investment securities held to maturity (fair value $135,126,
$205,847 and $139,999)............................................ 125,899 192,498 129,595
Loans............................................................... 30,764,796 30,405,326 30,297,954
Less: Allowance for loan losses..................................... (477,188) (506,315) (476,709)
Unearned income............................................... (63,960) (27,355) (45,430)
- -----------------------------------------------------------------------------------------------------------------
Net loans....................................................... 30,223,648 29,871,656 29,775,815
Premises and equipment.............................................. 1,166,938 1,084,667 1,135,644
Intangible assets................................................... 601,117 753,416 592,142
Other assets........................................................ 1,924,225 1,813,133 1,783,410
- -----------------------------------------------------------------------------------------------------------------
Total assets.................................................... $ 41,847,789 $ 41,519,041 $ 41,231,375
=================================================================================================================
Liabilities
Demand deposits..................................................... $ 6,517,453 $ 5,794,210 $ 6,528,006
NOW and money market accounts....................................... 12,263,886 12,588,266 12,163,289
Savings deposits.................................................... 2,950,688 3,291,344 2,938,243
Certificates of deposit under $100,000.............................. 9,563,061 9,796,571 9,708,311
Other time deposits................................................. 2,543,579 2,459,986 2,482,409
- -----------------------------------------------------------------------------------------------------------------
Total deposits.................................................. 33,838,667 33,930,377 33,820,258
Short-term borrowings:
Federal funds purchased and securities sold under agreements to
repurchase...................................................... 2,155,503 974,757 1,265,837
Commercial paper.................................................. 49,673 907,306 42,297
Other short-term borrowings....................................... 1,226 163,848 1,233
Other liabilities................................................... 966,893 867,391 1,004,890
Long-term debt...................................................... 1,220,541 1,387,988 1,226,529
- -----------------------------------------------------------------------------------------------------------------
Total liabilities............................................... 38,232,503 38,231,667 37,361,044
- -----------------------------------------------------------------------------------------------------------------
Minority Interest
Company obligated mandatorily redeemable securities of trusts
holding solely parent debentures.................................. 750,000 -- 500,000
Shareholders' Equity
Preferred stock, $.10 par value: 20,000,000 shares authorized;
issued 8,489, 1,817,530 and 8,489 shares.......................... 212 90,622 212
Common stock, $2 par value: 400,000,000 shares authorized; issued
177,314,033, 188,329,074 and 189,668,922 shares................... 370,628 376,658 395,338
Contributed capital................................................. -- 333,636 220,041
Net unrealized gain (loss) on investment securities available for
sale and certain other financial assets........................... (25,971) 10,493 8,187
Retained earnings................................................... 2,580,043 2,547,350 2,808,749
Less: Employee stock ownership plan obligation, collateralized by
3,693,353, 4,421,750 and 3,852,556 shares......................... (59,626) (71,385) (62,196)
- ------------------------------------------------------------------------------------------------------------------
Total shareholders' equity...................................... 2,865,286 3,287,374 3,370,331
- ------------------------------------------------------------------------------------------------------------------
Total liabilities, minority interest and shareholders' equity... $ 41,847,789 $ 41,519,041 $ 41,231,375
==================================================================================================================
</TABLE>
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
<PAGE>
STATEMENTS OF INCOME
Consolidated--Barnett Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
THREE MONTHS
----------------------------
<S> <C> <C>
FOR THE PERIODS ENDED MARCH 31--DOLLARS IN THOUSANDS
(UNAUDITED) 1997 1996
- ----------------------------------------------------------------------------------------------
Interest Income
Loans.......................................................... $ 657,487 $ 668,557
Investment securities.......................................... 80,835 79,431
Federal funds sold and securities purchased under agreements to
resell....................................................... 7,699 8,290
- ----------------------------------------------------------------------------------------------
Total interest income........................................ 746,021 756,278
- ----------------------------------------------------------------------------------------------
Interest Expense
Deposits....................................................... 225,896 234,950
Federal funds purchased and securities sold under agreements to
repurchase................................................... 22,960 13,357
Other short-term borrowings.................................... 4,225 14,076
Long-term debt................................................. 22,437 23,471
- ----------------------------------------------------------------------------------------------
Total interest expense....................................... 275,518 285,854
- ----------------------------------------------------------------------------------------------
Net interest income.......................................... 470,503 470,424
Provision for loan losses...................................... 31,775 41,598
- ----------------------------------------------------------------------------------------------
Net interest income after provision for loan losses.......... 438,728 428,826
- ----------------------------------------------------------------------------------------------
Non-Interest Income
Service charges on deposit accounts............................ 62,369 57,910
Consumer finance income........................................ 41,643 31,447
Trust income................................................... 21,025 21,190
Credit card discounts and fees................................. 8,583 11,535
Mortgage banking income........................................ 16,252 21,363
Brokerage income............................................... 11,671 11,219
Other service charges and fees................................. 37,621 29,773
Securities transactions........................................ -- 18,962
Other income................................................... 16,514 12,160
- ----------------------------------------------------------------------------------------------
Total non-interest income.................................... 215,678 215,559
- ----------------------------------------------------------------------------------------------
Non-Interest Expense
Salaries and employee benefits................................. 217,626 211,250
Net occupancy expense.......................................... 33,046 33,420
Furniture and equipment expense................................ 39,661 37,329
Other expense.................................................. 125,520 125,594
- ----------------------------------------------------------------------------------------------
Total non-interest expense................................... 415,853 407,593
- ----------------------------------------------------------------------------------------------
Net non-interest expense..................................... 200,175 192,034
- ----------------------------------------------------------------------------------------------
Earnings
Income before income taxes and minority interest............... 238,553 236,792
Income tax provision........................................... 84,592 88,593
Minority interest expense, net of income taxes................. 8,311 --
- ----------------------------------------------------------------------------------------------
Net income................................................... $ 145,650 $ 148,199
==============================================================================================
Earnings Per Common Share
Restated for 2-for-1 stock split in September 1996
Primary: Earnings per share.................................... $ .79 $ .76
Average number of shares....................................... 185,496,891 191,621,602
Dividends on preferred stock................................... -- $ 2,167
Fully Diluted: Earnings per share.............................. $ .78 $ .74
Average number of shares....................................... 185,597,041 198,996,702
==============================================================================================
</TABLE>
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
<PAGE>
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Consolidated--Barnett Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
CONTRI- NET
DOLLARS IN THOUSANDS PREFERRED COMMON BUTED UNREALIZED RETAINED ESOP
(UNAUDITED) STOCK STOCK CAPITAL GAIN (LOSS) EARNINGS OBLIGATION TOTAL
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
For the Period
Balance at January 1,
1996................... $ 97,753 $ 379,461 $ 385,734 $ 38,242 $ 2,445,810 $ (74,814) $ 3,272,186
Net income............... 148,199 148,199
Change in net unrealized
gain (loss) on
investment securities
available for sale..... (27,749) (27,749)
Cash dividends declared:
Common ($.24 per
share)................. (44,482) (44,482)
Preferred................ (2,177) (2,177)
Issuances of common
stock:
Stock purchase, option
and employee benefit
plans.................. 1,808 22,874 3,429 28,111
Preferred stock
conversions............ (7,131) 1,069 5,994 (68)
Repurchases of common
stock.................. (5,680) (80,966) (86,646)
- ---------------------------------------------------------------------------------------------------------------------
Balance at March 31,
1996................... $ 90,622 $ 376,658 $ 333,636 $ 10,493 $ 2,547,350 $ (71,385) $ 3,287,374
=====================================================================================================================
For the Period
Balance at January 1,
1997................... $ 212 $ 395,338 $ 220,041 $ 8,187 $ 2,808,749 $ (62,196) $ 3,370,331
Net income............... 145,650 145,650
Change in net unrealized
gain (loss) on
investment securities
available for sale and
certain other financial
assets................. (34,158) (34,158)
Cash dividends declared:
Common ($.27 per
share)................. (47,896) (47,896)
Preferred................ (5) (5)
Issuances of common
stock: Stock purchase,
option and employee
benefit plans.......... 2,055 17,271 2,570 21,896
Repurchases of common
stock.................. (26,765) (237,312) (326,455) (590,532)
- ---------------------------------------------------------------------------------------------------------------------
Balance at March 31,
1997................... $ 212 $ 370,628 -- $ (25,971) $ 2,580,043 $ (59,626) $ 2,865,286
=====================================================================================================================
</TABLE>
- ------------------------
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS
Consolidated--Barnett Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
FOR THE PERIODS ENDED MARCH 31--DOLLARS IN THOUSANDS (UNAUDITED) 1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net income......................................................... $ 145,650 $ 148,199
Reconcilement of net income to net cash provided by operating
activities:
Provision for loan losses.......................................... 31,755 41,598
Gains from securities transactions................................. -- (18,962)
Gain on securitization and sale of loans........................... (36,685) (26,247)
Depreciation and amortization...................................... 61,806 64,364
Employee benefits funded by equity................................. 7,689 6,086
Deferred income tax benefit........................................ (1,793) (17,287)
Decrease in interest receivable.................................... 7,154 20,268
Decrease in interest payable....................................... (8,887) (23,048)
Increase in other assets........................................... (148,268) (194,287)
Increase (decrease) in other liabilities........................... (28,631) 111,718
Originations of loans held for sale................................ (1,169,714) (1,620,624)
Proceeds from sales of loans held for sale......................... 1,224,625 1,602,891
Other.............................................................. (40,029) (50,785)
- ---------------------------------------------------------------------------------------------
Net cash provided by operating activities....................... 44,672 43,884
- ---------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Purchases of investment securities available for sale.............. (424,291) (1,348,629)
Proceeds from sales of investment securities available for sale.... 922 178,198
Proceeds from maturities of investment securities available for
sale............................................................. 663,726 1,308,181
Purchases of investment securities held to maturity................ -- (2,932)
Proceeds from maturities of investment securities held to
maturity......................................................... 3,805 11,520
Net decrease (increase) in loans................................... (499,515) 234,748
Proceeds from sales of premises and equipment...................... 8,899 9,056
Purchases of premises and equipment................................ (70,442) (40,375)
Payments related to dispositions and acquisitions, net of cash
acquired......................................................... -- (9,326)
- ---------------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities.......... (316,896) 340,441
- ---------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net increase (decrease) in demand, NOW, savings and money market
accounts......................................................... 102,489 (397,972)
Net decrease in certificates of deposit and other time deposits.... (84,080) (22,588)
Net increase in federal funds purchased and securities sold under
agreements to repurchase......................................... 889,666 75,090
Net increase (decrease) in other short-term borrowings............. 7,369 (108,128)
Principal repayments of long-term debt............................. (5,988) (52,826)
Proceeds from issuance of medium-term notes........................ -- 50,000
Proceeds from issuance of long-term debt........................... -- 200,000
Proceeds from issuance of company-obligated mandatorily redeemable
securities of trusts holding solely parent debentures............ 250,000 --
Issuances of common stock.......................................... 14,207 21,957
Repurchases of common stock........................................ (590,532) (86,646)
Cash dividends..................................................... (47,901) (46,659)
- ---------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities.......... 535,230 (367,772)
- ---------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents.......................... 263,006 16,553
Cash and cash equivalents, January 1............................... 2,783,646 2,769,145
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents, March 31................................ $ 3,046,652 $ 2,785,698
=============================================================================================
</TABLE>
For the periods ended March 31, 1997 and 1996, income tax payments of $19
million and $.2 million were paid and interest of $284 million and $309 million
was paid, respectively. Cash and cash equivalents includes cash and due from
banks, interest-bearing deposits in other banks, securities purchased under
agreements to resell and federal funds sold.
For the period ended March 31, 1997 and 1996, $15 million and $13 million of
loans were transferred to real estate held for sale, respectively.
During the period ended March 31, 1996, the company acquired $120 million of
non-cash assets and $118 million of liabilities.
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
IN SEPTEMBER 1996, BARNETT COMPLETED A 2-FOR-1 STOCK SPLIT. ALL HISTORICAL
DATA IN THIS REPORT HAS BEEN RESTATED TO REFLECT THE SPLIT.
A. GENERAL
The accounting and reporting policies of Barnett Banks, Inc. and its
subsidiaries conform to generally accepted accounting principles and to
predominant practices within the banking industry. Except as noted below, the
company has not changed its accounting and reporting policies from those
disclosed in its 1996 Annual Report on Form 10-K.
On January 1, 1997, the company adopted Statements of Financial Accounting
Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." This Statement establishes new
ground rules for determining whether a transfer of financial assets constitutes
a sale and, if so, the determination of any resulting gain or loss. This
Statement requires that an enterprise recognize only assets it controls and
liabilities it has incurred, to remove assets only when control has been
surrendered and to remove liabilities only when they have been extinguished. The
adoption of SFAS No. 125 did not have a material impact on the financial
position or results of operations of the company.
The results of operations for the three-month period ended March 31, 1997
may not be indicative of operating results for the year ending December 31,
1997. Certain prior year and prior quarter amounts have been reclassified to
conform to current classifications.
In January 1997, the company announced that it had signed a definitive
agreement to acquire the outstanding common stock of Oxford Resources Corp., the
nation's largest independent automobile leasing company, for approximately 14
million shares of company common stock. The company closed the purchase of
Oxford on April 1, and the results of its operations will be included in
Barnett's results beginning in the second quarter of 1997.
In the opinion of the company's management, all adjustments necessary to
fairly present the financial position as of March 31, 1997 and 1996, and the
results of operations and cash flows for the periods then ended, all of which
are of a normal and recurring nature, have been included.
B. LOANS
<TABLE>
<CAPTION>
MARCH 31--DOLLARS IN THOUSANDS
NET OF UNEARNED INCOME 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial, financial and agricultural......................... $ 5,438,956 $ 4,820,260
Real estate construction....................................... 825,033 788,076
Commercial mortgages........................................... 1,774,708 2,138,545
Residential mortgages.......................................... 9,660,732 10,536,548
Installment.................................................... 10,995,331 9,600,777
Bank card...................................................... 1,198,248 1,740,745
Credit lines................................................... 807,828 753,020
- ----------------------------------------------------------------------------------------------
Total.......................................................... $ 30,700,836 $ 30,377,971
==============================================================================================
</TABLE>
C. ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31--
DOLLARS IN THOUSANDS 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Beginning balance..................................................... $ 476,709 $ 505,148
Recoveries............................................................ 8,075 10,095
Provision expense..................................................... 31,775 41,598
Loans charged off..................................................... (39,850) (51,500)
Other, net............................................................ 479 974
- -----------------------------------------------------------------------------------------------
Ending balance........................................................ $ 477,188 $ 506,315
===============================================================================================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
D. LONG-TERM DEBT
<TABLE>
<CAPTION>
MARCH 31 -- DOLLARS IN THOUSANDS 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Parent Company:
7.75% Sinking Fund Debentures, due 1997........................... $ 9,500 $ 10,200
Less: Face value of debentures repurchased and held for future
retirements................................................. (72) (772)
- -----------------------------------------------------------------------------------------------
Total outstanding............................................ 9,428 9,428
Medium-term notes, due in varying
maturities through 2003, with interest
from a floating 5.53% to a fixed 9.83%....................... 401,500 561,500
8.50% Subordinated Capital Notes, due 1999........................ 200,000 200,000
9.875% Subordinated Capital Notes, due 2001....................... 100,000 100,000
10.875% Subordinated Capital Notes, due 2003...................... 55,000 55,000
6.90% Subordinated Capital Notes, due 2005........................ 150,000 150,000
8.50% Subordinated Capital Notes, due 2007........................ 100,000 100,000
5.52% Senior Notes, due 1998...................................... 200,000 200,000
Subsidiaries:
Capitalized lease obligations..................................... 4,613 12,060
- -----------------------------------------------------------------------------------------------
Total....................................................... $ 1,220,541 $ 1,387,988
===============================================================================================
</TABLE>
E. EARNINGS PER COMMON SHARE
The weighted-average number of shares used in the computation of earnings
per share is as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31 --
DOLLARS IN THOUSANDS 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Primary Shares
Average common shares outstanding.............................. 180,989,736 189,073,952
Common shares assumed outstanding
to reflect dilutive effect of:
Convertible preferred stock............................... 44,122 56,896
Common stock options...................................... 4,463,033 2,490,754
- -----------------------------------------------------------------------------------------------
Total..................................................... 185,496,891 191,621,602
===============================================================================================
Adjustments for preferred dividends............................ -- $ 2,167
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31-- 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Fully Diluted Shares
Average common shares outstanding.............................. 180,989,736 189,073,952
Common shares assumed outstanding
to reflect dilutive effect of:
Convertible preferred stock............................... 44,122 7,217,304
Common stock options...................................... 4,563,183 2,705,446
- -----------------------------------------------------------------------------------------------
Total.......................................................... 185,597,041 198,996,702
===============================================================================================
</TABLE>
Concurrent with the company's announcement to acquire Oxford Resources
Corp., Barnett's Board of Directors authorized management to repurchase up to
an additional 15 million shares of Barnett's common stock. Accordingly,
primary and fully diluted weighted average shares fell to 185.5 million and
185.6 million, respectively. The company issued 13.6 million shares upon
closing of the Oxford acquisition on April 1, 1997.
In February 1997, the Financial Accounting Standards Board issued SFAS
No.128, "Earnings per Share" which, when adopted, will replace the current
methodology for calculating and presenting earnings per share. Under SFAS No.
128, primary earnings per share will be replaced with a presentation of basic
earnings per share and fully diluted earnings per share will be replaced with
diluted earnings per share. Basic earnings per share excludes dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share is computed similarly to fully diluted earnings per share. The Statement
will be effective for the company's December 31, 1997 financial statements.
<PAGE>
Barnett Banks, Inc.
Post Office Box 40789
Jacksonville, Florida 32203-0789
Telephone: 904/791-7720
Shareholder assistance
Shareholders requiring a change of address, records
or information about lost certificates, dividend checks or dividend
reinvestment should contact:
First Chicago Trust, Agent
P. O. Box 2500
Jersey City, NJ 07303-2500
Telephone: 1-800-328-5822
Information
Analysts, investors and others seeking financial data should
contact John Glover, Director of Investor Relations, at 904/791-7254.
Others seeking general information should contact Robert L. Stickler,
Manager of External Communications, or Jerri R. Franz, Manager of Media
Relations, at 904/791-7668.
Publications
For printed material (annual and quarterly reports, proxy statements,
10-K and 10-Q reports), contact Corporate Communications at 904/791-5516.
How to reach us
The corporate offices of Barnett Banks, Inc. are located at:
50 North Laura Street
Jacksonville, FL
32202-3638
Mailing address
P. O. Box 40789
Jacksonville, FL
32203-0789
Telephone
904/791-7720
Internet address
http://www.barnett.com
Email address
[email protected]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2394
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 653
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4759
<INVESTMENTS-CARRYING> 126
<INVESTMENTS-MARKET> 135
<LOANS> 30,701
<ALLOWANCE> 477
<TOTAL-ASSETS> 41,848
<DEPOSITS> 33,839
<SHORT-TERM> 2,206
<LIABILITIES-OTHER> 967
<LONG-TERM> 1221
750
0
<COMMON> 371
<OTHER-SE> 2,494
<TOTAL-LIABILITIES-AND-EQUITY> 41,848
<INTEREST-LOAN> 657
<INTEREST-INVEST> 81
<INTEREST-OTHER> 8
<INTEREST-TOTAL> 746
<INTEREST-DEPOSIT> 226
<INTEREST-EXPENSE> 276
<INTEREST-INCOME-NET> 471
<LOAN-LOSSES> 32
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 416
<INCOME-PRETAX> 239
<INCOME-PRE-EXTRAORDINARY> 146
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 146
<EPS-PRIMARY> .79
<EPS-DILUTED> .78
<YIELD-ACTUAL> 5.28
<LOANS-NON> 184
<LOANS-PAST> 55
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 477
<CHARGE-OFFS> 40
<RECOVERIES> 8
<ALLOWANCE-CLOSE> 477
<ALLOWANCE-DOMESTIC> 477
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
