<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
APRIL 18, 1996
BAYBANKS, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 0-959 04-2008039
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
175 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(617) 482-1040
Page 1 of 16
Exhibit Index appears on Page 4
<PAGE> 2
ITEM 5. OTHER EVENTS.
On April 18, 1996, the Registrant issued a press release containing
its operating results for the first quarter of 1996. A complete copy of the
full text of this press release, together with certain supplemental financial
information, is attached as Exhibit 99 hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits:
Exhibit
No. Description
- -------- -----------
99 BayBanks, Inc. press release dated April 18, 1996, together
with certain supplemental financial information.
- 2 -
<PAGE> 3
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 hereunto duly authorized.
Date: April 18, 1996 BAYBANKS, INC.
By: /s/ Michael W. Vasily
---------------------------
Michael W. Vasily
Executive Vice President
- 3 -
<PAGE> 4
EXHIBIT INDEX
EXHIBIT
NO.
--------
99 BayBanks, Inc. press release dated April 18, 1996, together
with certain supplemental financial information.
- 4 -
<PAGE> 1
Exhibit 99
<TABLE>
<S> <C> <C>
Media: or Investor:
Bruce Spitzer Michael W. Vasily
Vice President Executive Vice President
Public Relations and Chief Financial Officer
(617) 788-7812 (617) 482-1040
</TABLE>
FOR IMMEDIATE RELEASE
BAYBANKS ANNOUNCES FIRST QUARTER EARNINGS
BOSTON, Apr. 18, 1996 -- BayBanks, Inc. (Nasdaq: BBNK) today reported
net income for the first quarter of 1996 of $38.4 million, or $1.92 per share,
compared with $30.5 million, or $1.58 per share, in the first quarter of 1995,
an increase of 22 percent on a per share basis. Reflected in the Company's
earnings for the first quarter of 1996 are the results of operations of BayBank
FSB and BayBank NH, the two New Hampshire banks that became subsidiaries of the
Company during the second half of 1995. Earnings for the first quarter of 1996
included the effect of a favorable court decision on a Company tax refund
claim, resulting in an after-tax benefit of $2.5 million, or $.13 per share.
Operating income for the quarter, before net securities gains and the
provisions for loan losses and OREO reserves and on a fully taxable basis, was
$71.3 million, up 18 percent from the $60.6 million reported in 1995. Included
in operating income was $2.6 million of interest related to the tax claim noted
above. Residential real estate lending was the primary source of new loan
volume during the first quarter of 1996. Commercial real estate,
international, indirect auto, and student loans also grew during the quarter
while general commercial lending, home equity credit, and credit card loans
experienced declines.
-more-
<PAGE> 2
BayBanks, Inc. Earnings Announcement
Page Two
The Company's net interest margin for the first quarter was 5.14
percent,up from the previous quarter's 5.07 percent. This improvement was
aided by the maturity of lower-yielding securities which were not reinvested,
but used instead to reduce the level of borrowed funds.
Operating expenses increased 6% from the first quarter of 1995
reflecting the addition of the two New Hampshire banks mentioned above and
higher marketing costs related to the promotion of new products and services.
These costs were partially offset by a reduction in Federal Deposit Insurance
premiums and lower provisions for certain compensation programs.
Credit costs were $6.5 million in the first quarter of 1996 compared
with $5.4 million in the fourth quarter of 1995 and $7.5 million in the first
quarter of 1995.
At Mar. 31, 1996, nonperforming assets were $87 million, compared with
$83 million at Dec. 31, 1995 and $112 million at Mar. 31, 1995. Reserves for
loan losses at $152 million were 215 percent of nonperforming loans.
BayBanks' preliminary consolidated risk-based capital ratios were
12.04 percent for core capital and 13.30 percent for total capital at Mar. 31,
1996. The Company's preliminary leverage ratio was 7.96 percent as of the same
date. All capital ratios have increased since year- end 1995.
As previously announced, on Dec. 12, 1995, BayBanks, Inc. and Bank of
Boston Corporation entered into an agreement and plan of merger. The merger is
subject to approval by the shareholders of both companies at meetings scheduled
for April 25, 1996 and by bank regulators and is expected to be completed
around mid-year.
-more-
<PAGE> 3
BayBanks, Inc. Earnings Announcement
Page Three
BayBanks, Inc., headquartered in Boston, is one of New England's
largest bank holding companies with total assets of $11.6 billion at Mar. 31,
1996. BayBanks provides a full range of commercial products and lending
services, as well as an extensive consumer banking network that includes 238
full service offices and 456 remote banking facilities serving 174 cities and
towns in Massachusetts, 14 in New Hampshire, and two in Connecticut.
-more-
<PAGE> 4
BayBanks, Inc. Earnings Announcement
Page Four
BAYBANKS, INC.
FINANCIAL INFORMATION
(Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------
March 31 December 31 March 31
1996 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
PER SHARE INFORMATION
Net income per share $ 1.92 $ 1.90 $ 1.58
Dividends paid per share $ 0.60 $ 0.60 $ 0.50
Average shares outstanding 19,978,541 19,933,899 19,261,941
CONDENSED SUMMARY OF OPERATIONS
(Tax equivalent basis)
Net interest income $ 135,151 $ 134,459 $ 125,749
Noninterest income 59,170 54,714 51,441
----------- ----------- -----------
Total income from operations 194,321 189,173 177,190
Operating expenses 123,017 117,288 116,552
----------- ----------- -----------
Operating income before provisions for loan losses
and other real estate owned reserve, and net
securities gains (losses) 71,304 71,885 60,638
----------- ----------- -----------
Provision for loan losses 6,900 6,000 6,500
Provision for other real estate owned reserve, net (398) (592) 1,000
----------- ----------- -----------
Credit provisions 6,502 5,408 7,500
Net securities gains (losses) 5 (3) 1
----------- ----------- -----------
Pre-tax income 64,807 66,474 53,139
Income taxes and tax equivalent adjustment 26,428 28,652 22,664
----------- ----------- -----------
Net income $ 38,379 $ 37,822 $ 30,475
=========== =========== ===========
FINANCIAL RATIOS
Return on average stockholders' equity(1) 16.0% 16.3% 15.5%
Return on average assets(1) 1.33 1.29 1.15
Net interest margin 5.14 5.07 5.16
</TABLE>
(1) Includes average unrealized gains on securities available for sale, net of
tax.
<TABLE>
<CAPTION>
CAPITAL RATIOS
<S> <C> <C> <C>
Risk-based capital ratios (March 31, 1996 preliminary)
Core 12.04% 11.41% 11.81%
Total 13.30 12.80 13.36
Leverage capital ratio 7.96 7.66 7.55
</TABLE>
- more -
<PAGE> 5
BayBanks, Inc. Earnings Announcement
Page Five
BAYBANKS, INC.
FINANCIAL INFORMATION
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31 December 31 March 31
BALANCE SHEET INFORMATION 1996 1995 1995
----------- ----------- ------------
Condensed Period-End Balance Sheet
- ----------------------------------
<S> <C> <C> <C>
Securities portfolios $ 2,502,703 $ 3,015,444 $ 3,112,617
Loans
Commercial 1,570,836 1,604,031 1,580,403
Commercial real estate 1,202,729 1,167,043 977,986
Residential mortgage 2,163,366 2,053,635 1,376,372
Instalment 2,932,918 2,946,384 2,839,733
----------- ----------- -----------
Total loans, gross 7,869,849 7,771,093 6,774,494
Less allowance for loan losses 151,680 153,688 146,348
----------- ----------- -----------
Net loans 7,718,169 7,617,405 6,628,146
Total earning assets 10,372,552 10,786,537 9,887,111
All other assets 1,372,307 1,430,652 1,102,995
----------- ----------- -----------
Total assets $11,593,179 $12,063,501 $10,843,758
=========== =========== ===========
Deposits
Noninterest-bearing $ 2,209,027 $ 2,383,823 $ 2,100,424
Interest-bearing 7,892,369 7,833,584 6,843,531
----------- ----------- -----------
Total deposits 10,101,396 10,217,407 8,943,955
Borrowings 430,499 783,790 1,013,029
Other liabilities 85,532 111,120 73,104
Total stockholders' equity 975,752 951,184 813,670
----------- ----------- -----------
Total liabilities and stockholders' equity $11,593,179 $12,063,501 $10,843,758
=========== =========== ===========
Book value per share $ 49.46 $ 48.43 $ 42.81
Tangible book value per share 46.69 45.64 42.59
First Quarter Fourth Quarter First Quarter
1996 1995 1995
Condensed Average Balance Sheet ------------- ------------ -----------
- ------------------------------
<S> <C> <C> <C>
Securities portfolios(1) $ 2,756,300 $ 2,997,150 $ 3,123,247
Loans
Commercial 1,546,064 1,587,409 1,533,471
Commercial real estate 1,191,466 1,084,655 979,525
Residential mortgage 2,096,957 1,990,957 1,356,933
Instalment 2,940,667 2,895,323 2,840,258
----------- ----------- -----------
Total loans, gross 7,775,154 7,558,344 6,710,187
Total earning assets 10,531,454 10,555,494 9,833,434
All other assets, net 1,050,223 1,037,719 920,803
----------- ----------- -----------
Total assets $11,581,677 $11,593,213 $10,754,237
=========== =========== ===========
Deposits
Noninterest-bearing $ 2,122,303 $ 2,133,765 $ 1,997,837
Interest-bearing 7,748,904 7,556,622 6,709,968
----------- ----------- -----------
Total deposits 9,871,207 9,690,387 8,707,805
Borrowings 659,665 871,535 1,165,384
Other liabilities 103,447 115,222 81,427
Total stockholders' equity(1) 947,358 916,069 799,621
----------- ----------- -----------
Total liabilities and stockholders' equity $11,581,677 $11,593,213 $10,754,237
=========== =========== ===========
</TABLE>
(1) Average balances exclude the impact of average unrealized gains on
securities available for sale, net of tax.
- more -
<PAGE> 6
BayBanks, Inc. Earnings Announcement
Page Six
BAYBANKS, INC.
FINANCIAL INFORMATION
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31 December 31 March 31
CREDIT QUALITY INFORMATION 1996 1995 1995
-------- ----------- --------
<S> <C> <C> <C>
Allowance for loan losses $151,680 $153,688 $146,348
======== ======== ========
Net charge-offs for the quarter $ 8,908 $ 8,185 $ 6,987
======== ======== ========
Nonperforming loans
Nonaccrual loans $ 61,529 $ 63,830 $ 75,512
Restructured, accruing loans(1) 9,009 - -
-------- -------- --------
70,538 63,830 75,512
Other real estate owned (OREO)
In-substance foreclosures 4,864 5,272 11,617
Foreclosed property 21,219 23,688 41,418
-------- -------- --------
26,083 28,960 53,035
Less OREO reserve 9,280 10,164 16,542
-------- -------- --------
OREO, net of reserve 16,803 18,796 36,493
-------- -------- --------
Total nonperforming assets $ 87,341 $ 82,626 $112,005
======== ======== ========
Restructured, accruing loans(2) $ 2,332 $ 5,949 $ 6,765
======== ======== ========
Accruing loans 90 days or more past due $ 38,009 $ 40,472 $ 30,427
======== ======== ========
Total nonperforming loans; restructured,
accruing loans; and accruing loans 90
days or more past due $110,879 $110,251 $112,704
======== ======== ========
Allowance for loan losses as a percentage
of nonperforming loans 215% 241% 194%
Allowance for loan losses as a percentage
of nonperforming loans; restructured,
accruing loans; and accruing loans
90 days or more past due 137 139 130
Nonperforming assets as a percentage of
total assets 0.8 0.7 1.0
</TABLE>
(1) In accordance with Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," included in
nonperforming loans at March 31, 1996 are loans totaling $9.0 million
which were restructured during the first quarter of 1996. These loans,
which are on accrual status, bear market rates of interest and are
performing under the restructured terms. Of the $9.0 million, $4.5 million
previously had been reported as nonaccrual and $2.9 million previously had
been reported as pre-SFAS 114 restructured, accruing loans.
(2) Restructured, accruing loans entered into prior to the adoption of SFAS No.
114 are not reported as nonperforming loans.
###
<PAGE> 7
CONSOLIDATED BALANCE SHEET BAYBANKS, INC.
- ------------------------------------------------------------------------------
(In thousands, except share amounts)
<TABLE>
<CAPTION>
March 31 December 31 March 31
1996 1995 1995
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 872,677 $ 922,031 $ 658,022
Trading account securities 36,340 50,755 18,368
Securities portfolios (1)
Interest-bearing deposits and other short-term investments 210,875 361,164 196,831
Securities available for sale - amortized cost $2,187,804 at March 31, 1996,
$2,518,199 at December 31, 1995, and $221,299 at March 31, 1995 2,202,876 2,549,127 222,015
Investment securities - market value $52,612 at March 31, 1996, $54,398 at
December 31, 1995, and $2,644,529 at March 31, 1995 52,612 54,398 2,675,403
----------- ----------- -----------
2,466,363 2,964,689 3,094,249
Loans, net of unearned income and fees
Commercial 1,570,836 1,604,031 1,580,403
Commercial real estate 1,202,729 1,167,043 977,986
Residential mortgage 2,163,366 2,053,635 1,376,372
Instalment 2,932,918 2,946,384 2,839,733
----------- ----------- -----------
7,869,849 7,771,093 6,774,494
Less allowance for loan losses 151,680 153,688 146,348
----------- ----------- -----------
7,718,169 7,617,405 6,628,146
Premises and equipment, net 213,151 215,714 193,785
Goodwill and other intangibles 54,624 54,869 4,282
Other assets 231,855 238,038 246,906
----------- ----------- -----------
Total assets $11,593,179 $12,063,501 $10,843,758
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand $ 2,209,027 $ 2,383,823 $ 2,100,424
NOW accounts 1,599,149 1,657,825 1,407,048
Savings 1,539,254 1,498,596 1,460,247
Money market deposit accounts 2,663,653 2,599,295 2,493,856
Consumer time 1,899,501 1,862,611 1,299,848
Time - $100,000 or more 190,812 215,257 182,532
----------- ----------- -----------
10,101,396 10,217,407 8,943,955
Federal funds purchased and other short-term borrowings 415,628 718,941 961,883
Accrued expenses and other accounts payable 82,591 104,831 66,815
Long-term debt 14,871 64,849 51,146
Guarantee of ESOP indebtedness 2,941 6,289 6,289
Stockholders' equity:
Common stock, par value $2.00 per share
Shares authorized - 50,000,000
Shares issued - 19,729,361 at March 31, 1996, 19,642,774 at
December 31, 1995, and 19,006,032 at March 31, 1995 39,459 39,286 38,012
Surplus 364,464 360,969 315,660
Retained earnings 566,268 539,711 465,867
Net unrealized gain on securities available for sale, net of tax 8,663 17,678 420
Treasury stock at cost - 1,525 shares at March 31, 1996, and
1,841 shares at December 31, 1995 (161) (171) -
Guarantee of ESOP indebtedness (2,941) (6,289) (6,289)
----------- ----------- -----------
Total stockholders' equity 975,752 951,184 813,670
----------- ----------- -----------
Total liabilities and stockholders' equity $11,593,179 $12,063,501 $10,843,758
=========== =========== ===========
</TABLE>
(1) During the fourth quarter of 1995, the Financial Accounting Standards Board
allowed a one-time reassessment of the classification of securities, and
the Company reclassified $2.0 billion from investment securities to
securities available for sale.
<PAGE> 8
CONSOLIDATED STATEMENT OF INCOME BAYBANKS, INC.
- -------------------------------------------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
First Quarter
Ended March 31
---------------------
1996 1995
-------- --------
<S> <C> <C>
Income on interest-bearing deposits and other
short-term investments $ 3,560 $ 2,863
Interest on securities available for sale
and investment securities 34,094 37,932
Interest and fees on loans 167,778 148,589
-------- --------
Total income on earning assets 205,432 189,384
Interest expense on deposits and borrowings
Deposits 64,532 49,327
Short-term borrowings 8,081 16,272
Long-term debt 922 831
-------- --------
Total interest expense 73,535 66,430
-------- --------
Net interest income 131,897 122,954
Provision for loan losses 6,900 6,500
-------- --------
Net interest income after provision for loan losses 124,997 116,454
Noninterest income
Service charges and fees on deposit accounts 27,692 26,643
Other noninterest income 31,478 24,798
-------- --------
Total noninterest income 59,170 51,441
Net securities gains (losses) 5 1
Operating expenses
Salaries and benefits 63,587 60,318
Occupancy and equipment 24,729 22,598
Other operating expenses 34,701 33,636
-------- --------
Total operating expenses 123,017 116,552
Provision for OREO reserve, net (398) 1,000
-------- --------
Total operating expenses after OREO provision 122,619 117,552
-------- --------
Income before taxes 61,553 50,344
Provision for income taxes 23,174 19,869
-------- --------
NET INCOME $ 38,379 $ 30,475
======== ========
EARNINGS PER SHARE $ 1.92 $ 1.58
</TABLE>
<PAGE> 9
AVERAGE BALANCES AND CAPITAL RATIOS(1) BAYBANKS, INC.
- ------------------------------------------------------------------------------
(Dollars in millions)
<TABLE>
<CAPTION>
1996 1995
------- ------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits and
other short-term investments $ 271 $ 432 $ 366 $ 215 $ 205
Securities available for sale (2) 2,432 1,147 337 225 231
Investment securities (2) 53 1,418 2,303 2,574 2,687
Loans (3)
Commercial 1,546 1,587 1,609 1,615 1,533
Commercial real estate 1,191 1,085 1,090 981 980
Residential mortgage 2,097 1,991 1,831 1,415 1,357
Instalment 2,941 2,895 2,846 2,820 2,840
------- ------- ------- ------- -------
7,775 7,558 7,376 6,831 6,710
Less allowance for loan losses 155 155 157 146 151
------- ------- ------- ------- -------
7,620 7,403 7,219 6,685 6,559
------- ------- ------- ------- -------
Total earning assets 10,531 10,555 10,382 9,845 9,833
Cash and due from banks 705 711 690 667 632
Other assets 501 482 495 442 440
------- ------- ------- ------- -------
Total assets $11,582 $11,593 $11,410 $10,808 $10,754
======= ======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand $ 2,122 $ 2,134 $ 2,090 $ 2,013 $ 1,998
NOW accounts 1,538 1,472 1,439 1,377 1,383
Savings 1,504 1,484 1,479 1,431 1,451
Money market deposit accounts 2,611 2,545 2,539 2,468 2,512
Consumer time 1,887 1,838 1,789 1,401 1,189
Time - $100,000 or more 209 217 216 210 175
------- ------- ------- ------- -------
9,871 9,690 9,552 8,900 8,708
Federal funds purchased and
other short-term borrowings 598 807 799 947 1,114
Long-term debt 62 65 65 51 51
------- ------- ------- ------- -------
Total deposits and borrowings 10,531 10,562 10,416 9,898 9,873
Other liabilities (4) 104 115 103 86 81
Stockholders' equity 947 916 891 824 800
------- ------- ------- ------- -------
Total liabilities and
stockholders' equity $11,582 $11,593 $11,410 $10,808 $10,754
======= ======= ======= ======= =======
CAPITAL RATIOS
Risk-Based
Core (Min regulatory standard - 4.00%) 12.04% 11.41% 11.57% 11.99% 11.81%
Total (Min regulatory standard - 8.00%) 13.30 12.80 13.10 13.53 13.36
Leverage 7.96 7.66 7.59 7.75 7.55
</TABLE>
(1) Average balances exclude the impact of average unrealized gains on
securities available for sale, net of tax.
(2) During the fourth quarter of 1995, the Financial Accounting Standards Board
allowed a one-time reassessment of the classification of securities, and
the Company reclassified $2.0 billion from investment securities to
securities available for sale.
(3) Nonperforming loans are included in the average balances.
(4) Includes guarantee of ESOP indebtedness.
<PAGE> 10
SUMMARY OF OPERATIONS BAYBANKS, INC
- --------------------------------------------------------------------------------
(Dollars in thousands on a tax equivalent basis, except per share amounts)
<TABLE>
<CAPTION>
1996 1995
-------- -----------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME ON EARNING ASSETS $208,686 $212,404 $209,826 $197,045 $192,179
Interest expense on deposits and borrowings 73,535 77,945 76,738 70,885 66,430
-------- -------- -------- -------- --------
Net interest income 135,151 134,459 133,088 126,160 125,749
Noninterest income 59,170 54,714 57,344 55,752 51,441
-------- -------- -------- -------- --------
Total income from operations 194,321 189,173 190,432 181,912 177,190
Operating expenses 123,017 117,288 125,109 119,926 116,552
-------- -------- -------- -------- --------
OPERATING INCOME BEFORE NET SECURITIES
GAINS (LOSSES) AND PROVISIONS FOR LOAN LOSSES
AND OREO RESERVE 71,304 71,885 65,323 61,986 60,638
-------- -------- -------- -------- --------
Net securities gains (losses) 5 (3) 42 - 1
-------- -------- -------- -------- --------
Provision for loan losses 6,900 6,000 6,000 6,500 6,500
Provision for OREO reserve, net (398) (592) (229) - 1,000
-------- -------- -------- -------- --------
Credit provisions 6,502 5,408 5,771 6,500 7,500
-------- -------- -------- -------- --------
Pre-tax income 64,807 66,474 59,594 55,486 53,139
Less tax equivalent
adjustment included above 3,254 3,395 2,891 2,943 2,795
-------- -------- -------- -------- --------
Income before taxes 61,553 63,079 56,703 52,543 50,344
Provision for income taxes 23,174 25,257 21,984 18,185 19,869
-------- -------- -------- -------- --------
NET INCOME $ 38,379 $ 37,822 $ 34,719 $ 34,358 $ 30,475
======== ======== ======== ======== ========
EARNINGS PER SHARE $ 1.92 $ 1.90 $ 1.74 $ 1.78 $ 1.58
DIVIDENDS PAID PER SHARE $ 0.60 $ 0.60 $ 0.60 $ 0.50 $ 0.50
FINANCIAL RATIOS
Return on average equity 16.0% 16.3% 15.5% 16.7% 15.5%
Return on average assets 1.33 1.29 1.21 1.28 1.15
COMMON STOCK DATA
Period-end book value per share $ 49.46 $ 48.43 $ 46.18 $ 44.09 $ 42.81
Tangible book value per share 46.69 45.64 43.74 43.84 42.59
Dividend payout ratio 31.3% 31.6% 34.5% 28.1% 31.6%
Range of BayBanks, Inc. last sale price
High $ 108.00 $ 98.25 $ 83.75 $ 79.50 $ 64.50
Low 88.75 75.88 74.75 60.50 52.00
Close 107.50 98.25 75.88 79.25 64.50
</TABLE>
<PAGE> 11
AVERAGE YIELDS, RATES PAID, AND NET INTEREST MARGIN(1) BAYBANKS, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
------- ----------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Interest-bearing deposits and
other short-term investments 5.40% 5.74% 5.78% 6.04% 5.84%
Securities available for sale(2) 5.90 5.89 6.24 6.64 6.80
Investment securities 9.38 5.94 5.81 5.72 5.51
Loans 8.67 8.83 8.92 8.99 8.94
Commercial 8.36 8.59 8.68 8.85 8.92
Commercial real estate 8.92 9.26 9.26 9.31 8.98
Residential mortgage 7.64 7.62 7.70 7.69 7.62
Instalment 9.44 9.62 9.70 9.61 9.57
Total earning assets 7.94% 7.99% 8.03% 8.01% 7.89%
Interest-bearing funds 3.51% 3.66% 3.65% 3.60% 3.41%
NOW accounts 1.21 1.32 1.37 1.36 1.37
Savings 2.26 2.33 2.30 2.29 2.25
Money market deposit accounts 3.44 3.47 3.44 3.37 3.22
Consumer time 5.63 5.67 5.61 5.46 4.83
Time - $100,000 or more 5.29 5.58 5.65 5.84 5.78
Short-term borrowings 5.35 5.68 5.77 5.99 5.84
Long-term debt 5.93 6.01 6.22 6.35 6.50
Interest expense as a percentage of
average earning assets 2.80% 2.92% 2.93% 2.88% 2.73%
Net interest margin 5.14% 5.07% 5.10% 5.13% 5.16%
</TABLE>
(1) Tax equivalent basis.
(2) Yields based on average amortized cost.
<PAGE> 12
CREDIT QUALITY INFORMATION BAYBANKS, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands) 1996 1995
------- ------------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter(3)
------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for loan losses:
Balance at beginning of period $153,688 $153,808 $146,345 $146,348 $146,835
Allowance acquired through acquisitions - 2,065 8,240 - -
Loans charged off
Commercial 4,029 1,448 2,102 2,193 961
Commercial real estate 209 1,601 1,213 5,294 1,713
Residential mortgage 1,472 1,619 2,173 2,442 1,387
Instalment 8,616 7,398 6,976 6,312 7,187
-------- -------- -------- -------- --------
Total loans charged off 14,326 12,066 12,464 16,241 11,248
-------- -------- -------- -------- --------
Recoveries
Commercial 1,422 1,037 1,608 3,566 1,013
Commercial real estate 1,309 680 1,551 3,081 1,296
Residential mortgage 807 622 678 951 440
Instalment 1,880 1,542 1,850 2,140 1,512
-------- -------- -------- -------- --------
Total recoveries 5,418 3,881 5,687 9,738 4,261
-------- -------- -------- -------- --------
Net loans charged off 8,908 8,185 6,777 6,503 6,987
Provision for loan losses 6,900 6,000 6,000 6,500 6,500
-------- -------- -------- -------- --------
Balance at end of period $151,680 $153,688 $153,808 $146,345 $146,348
======== ======== ======== ======== ========
Annualized quarterly net charge-offs as a
percentage of average loans for the quarter 0.5% 0.4% 0.4% 0.4% 0.4%
Allowance for loan losses as a percentage of
period-end loans 1.9 2.0 2.1 2.1 2.2
Allowance for loan losses as a percentage of
nonperforming loans 215 241 264 201 194
Allowance for loan losses as a percentage of
nonperforming loans; restructured,
accruing loans; and accruing loans 90 days
or more past due 137 139 159 133 130
</TABLE>
<TABLE>
<CAPTION>
NONPERFORMING ASSETS; RESTRUCTURED,
ACCRUING LOANS; AND ACCRUING LOANS
90 DAYS OR MORE PAST DUE
AT PERIOD-END
(Dollars in thousands)
1996 1995
-------- ------------------------------------------------
March 31 December 31 September 30 June 30 March 31
-------- ----------- ------------ ------- --------
<S> <C> <C> <C> <C> <C>
Nonperforming loans
Nonaccrual loans $61,529 $63,830 $58,174 $72,968 $ 75,512
Restructured, accruing loans (1) 9,009 - - - -
------- ------- ------- ------- --------
70,538 63,830 58,174 72,968 75,512
Other real estate owned
In-substance foreclosures 4,864 5,272 5,272 6,561 11,617
Foreclosed property 21,219 23,688 24,883 33,142 41,418
------- ------- ------- ------- --------
26,083 28,960 30,155 39,703 53,035
Less OREO reserve 9,280 10,164 11,452 15,857 16,542
------- ------- ------- ------- --------
OREO, net of reserve 16,803 18,796 18,703 23,846 36,493
------- ------- ------- ------- --------
Total nonperforming assets $87,341 $82,626 $76,877 $96,814 $112,005
======= ======= ======= ======= ========
Restructured, accruing loans(2) $ 2,332 $ 5,949 $ 3,609 $ 3,619 $ 6,765
======= ======= ======= ======= ========
Accruing loans 90 days or more past due $38,009 $40,472 $34,849 $33,651 $ 30,427
======= ======= ======= ======= ========
Nonperforming assets as a percentage of
loans and OREO 1.1% 1.1% 1.0% 1.4% 1.6%
Nonperforming assets as a percentage of
total assets 0.8 0.7 0.7 0.9 1.0
</TABLE>
(1) In accordance with SFAS No. 114, included in nonperforming loans at March
31, 1996 are loans totaling $9.0 million which were restructured during the
first quarter of 1996. These loans, which are on accrual status, bear
market rates of interest and are performing under the restructured terms.
Of the $9.0 million, $4.5 million previously had been reported as
nonaccrual and $2.9 million previously had been reported as pre-SFAS 114
restructured, accruing loans.
(2) Restructured, accruing loans entered into prior to the adoption of SFAS No.
114 are not reported as nonperforming loans.
(3) As a result of the adoption of SFAS No. 114 on January 1, 1995, $33.2
million of in-substance foreclosures (ISF) and related reserves of $8.7
million were reclassified to loans and the allowance for loan losses,
respectively. Charge-offs of $8.7 million were subsequently recorded during
the first quarter of 1995. The reclassification of ISF reserves and
subsequent charge-offs had no effect on the allowance for loan losses and
are not reflected in the Summary of Loan Loss Experience table above.
