<PAGE>
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 22, 1998
----------------------------
BANK ONE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-60313 31-1597175
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One First National Plaza, Chicago, IL 60670
- --------------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code 312-732-4000
------------
<PAGE>
Item 5. Other Events
- ------
On October 22, 1998, the Registrant issued a press release announcing the
third quarter 1998 earnings of its two predecessor companies, BANC ONE
CORPORATION and First Chicago NBD Corporation. A copy of such press release,
including unaudited financial information released as a part thereof, is
attached as Exhibit 99 to this Current Report on Form 8-K and incorporated by
reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ------
(c) Exhibits.
Exhibit Number Description of Exhibits
-------------- -----------------------
99 Registrant's October 22, 1998 Press Release
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.
BANK ONE CORPORATION
--------------------
(Registrant)
Date: October 22, 1998 By: /s/ M. Eileen Kennedy
------------------ ------------------------------
Title: Treasurer
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EXHIBIT INDEX
Exhibit Number Description of Exhibits
- -------------- -----------------------
99 Registrant's October 22, 1998 Press Release
3
<PAGE>
Exhibit 99
[BANK ONE CORPORATION News Release Letterhead]
Media Contact:
Thomas A. Kelly (312) 732-7007
Investor Contacts:
Jay S. Gould (312) 732-5771
Holly E. Hobson (614) 248-1280
Sandra M. Catanzaro (312) 732-8013
FOR IMMEDIATE RELEASE
BANK ONE CORPORATION ANNOUNCES THIRD QUARTER RESULTS
CHICAGO, OCTOBER 22, 1998 BANK ONE CORPORATION (NYSE: ONE) today announced the
third quarter earnings for its two predecessor companies, BANC ONE CORPORATION
and First Chicago NBD Corporation. BANK ONE was created on October 2, 1998, by
the combination of the two predecessor companies.
On a combined basis, BANK ONE CORPORATION results for the third quarter were net
income of $1.054 billion, or $0.89 per diluted share. Compared with results for
the year-ago quarter, net income and per diluted share were up 24 percent and 27
percent, respectively. On a combined basis, third quarter return on common
equity was 20.7 percent. Combined nine month net income was $2.882 billion, or
$2.42 per diluted share, with a 19.9 percent return on common equity.
"The financial results of these two great companies demonstrate our commitment
to disciplined risk management and a focus on improving operating efficiency,"
stated Verne G. Istock, Chairman of the Board. "The benefit of our diversified
earnings streams was evidenced in that the recent disruptions in the capital
markets did not have a major impact on overall results."
"This quarter's results reflected continued momentum in a number of our key
businesses," said John B. McCoy, President and Chief Executive Officer. "With
our excellent progress integrating these two companies, we remain very
encouraged about our prospects for producing the superior long-term returns
investors expect."
BANC ONE's net income for the third quarter was $648 million, or $0.91 per
diluted share, up 39 percent and 40 percent, respectively, from the 1997 third
quarter. Return on common equity was 21.8 percent, up from 17.5 percent in the
year-ago period. For the nine months, net income was $1.683 billion, or $2.36
per diluted share, up from $924 million and $1.30 per diluted share,
respectively.
First Chicago NBD's net income was $405 million for the third quarter, or $1.38
per diluted share, up 5 percent and 10 percent, respectively, from the year-ago
quarter. Return on common equity was 19.0 percent, essentially unchanged from
the 1997 third quarter. For the
1
<PAGE>
nine months, net income was $1.196 billion, or $4.06 per diluted share, up 5
percent and 12 percent, respectively, from the same year-ago period.
BANK ONE CORPORATION is headquartered in Chicago, Illinois, and is the nation's
fifth largest bank holding company with assets of more than $235 billion. BANK
ONE is a major commercial bank nationally and the leading business bank in the
Midwest and Arizona. Additional businesses include the nation's largest credit
card company, the leading retail bank in eight states, the third-largest bank
mutual fund company, and a presence in selected international markets.
The 1998 third quarter results that follow are for BANC ONE and First Chicago
NBD separately.
BANC ONE
1998 Third Quarter Highlights
. Earnings per share grew 31 percent from last year, excluding $69 million in
branch sale gains in the current quarter.
. Managed net interest income was up 8 percent and net interest margin expanded
to 6.59 percent.
. Credit quality continued to improve with the managed net charge-off ratio
declining from second quarter levels.
. Credit card spreads were wider and losses lower, offsetting the impact of
slower balance growth.
. The managed efficiency ratio improved to 51 percent from 53 percent during
the quarter.
The third quarter's results included a $69 million ($0.06 per share) pre-tax
gain on branch sales. Excluding this gain, earnings per diluted share were
$0.85 for the third quarter, up 31 percent from $0.65 in the 1997 third quarter.
Portions of the following discussion are on a managed basis in order to better
describe underlying operating trends. Managed information has been adjusted to
include credit card loans that have been securitized and removed from the
balance sheet. The net revenue on securitized credit card loans are
reclassified from noninterest income to net interest income and provision for
loan losses as if the securitization had not occurred.
Net Interest Income and Margin
Managed net interest income on a tax equivalent basis in the third quarter was
$2.284 billion, up $165 million, or 8 percent, from 1997's third quarter.
Improvements in the yield on credit card loans and the mix of earning assets
were the primary drivers of the net interest income growth. The third quarter's
managed net interest income rose $78 million, or 14 percent on
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an annualized basis, from the second quarter of this year, also related to the
higher yield on credit card loans and the improved earning asset mix.
The managed net interest margin was 6.59 percent in the 1998 third quarter, up
from 6.21 percent in the year-ago quarter and 6.34 percent in the second
quarter. The yield on earning assets increased to 10.87 percent in the third
quarter from 10.52 percent in 1997's third quarter and 10.60 percent in the
second quarter while the cost of interest bearing liabilities remained stable.
Excluding the continued planned run-off in selected residential and commercial
real estate portfolios, and adjusting for the impact of portfolio sales and
purchases, average managed targeted loans increased 10 percent from the year-ago
quarter. Consumer and credit card loans increased 14 percent and 10 percent,
respectively, and commercial loans increased 6 percent. Compared with the
second quarter, average managed targeted loans increased at an 8 percent
annualized rate, led by a 14 percent annualized rate in consumer loans and 10
percent annualized rate in credit cards. At the end of the third quarter a $4.9
billion credit card portfolio was acquired from Chevy Chase Bank FSB that will
significantly increase average managed credit card balances in the 1998 fourth
quarter. The third quarter also represented another significant new credit card
account generation period as some 2.2 million new accounts were opened, up from
2.0 million in the 1998 second quarter. While growth of credit card loans has
slowed in recent quarters, this has been more than offset by wider spreads and a
decline in the net charge-off ratio. At quarter-end, managed credit cards loans
totaled $48.0 billion with 47.5 million cardmembers.
Average deposits were $81.6 billion in the third quarter. Excluding the effect
of branch sales during the year that included deposits of $3.2 billion, deposits
were up 2 percent from the year-ago period.
Noninterest Income
Managed noninterest income was $931 million in the third quarter and included
pre-tax gains on branch sales of $69 million, primarily related to divestitures
required in the First Commerce acquisition. In 1997's third quarter, managed
noninterest income was $860 million. Other managed noninterest income increased
slightly, reflecting the impact of market conditions on market driven revenues,
specifically venture capital and brokerage activity.
Noninterest income was $1.330 billion, up 9 percent from the year-ago quarter on
a reported basis, excluding the current quarter's gains on branch sales. This
increase primarily reflected stronger credit card fee income including $61
million of gains on $3.4 billion of net new securitizations during the current
quarter.
Noninterest Expense
For the third quarter, noninterest expense was $1.634 billion, up 1 percent from
the year-ago quarter. Third quarter expenses increased at less than a 2 percent
annualized rate from the
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second quarter excluding $182 million of one-time costs related to the First
Commerce acquisition.
The managed efficiency ratio improved again to 50.9 percent for the third
quarter, from 52.6 percent in the prior quarter and 54.5 percent in the year-ago
quarter.
Provision for Credit Losses and Credit Quality
The managed provision for credit losses was $646 million in the third quarter,
compared with $633 million in 1997's third quarter and $664 million in the
second quarter. The year over year increase was primarily attributable to
growth in loans. The decrease in the provision from the second quarter was
driven by improvements in credit quality, particularly the credit card business.
Managed net charge-offs were $646 million, or 2.13 percent of average loans for
the third quarter, compared with $646 million, or 2.22 percent, in 1997's third
quarter and down from $706 million, or 2.36 percent, in this year's second
quarter. The managed credit card net charge-off ratio declined to 5.16 percent
for the third quarter from 5.75 percent a year ago and 5.84 percent in the
second quarter. The 90-day delinquency ratio for managed credit card
receivables was 2.07 percent at quarter-end, up slightly from 2.02 percent in
1997's third quarter, but down from 2.18 percent at the end of the second
quarter.
The September 30, 1998 allowance for credit losses was 1.60 percent of loans and
254 percent of nonperforming loans. Nonperforming assets at quarter end totaled
$633 million and represented 0.75 percent of loans and other real estate owned.
Capital
Capital ratios remained strong. At September 30, 1998, total common equity to
assets was 10.0 percent, up from 9.3 percent at June 30, 1998, with the tangible
common equity to net assets ratio increasing to 8.7 percent from 8.4 percent.
Tier 1 and total risk-based capital ratios were 9.2 percent and 13.6 percent,
respectively, at September 30, 1998.
FIRST CHICAGO NBD
1998 Third Quarter Highlights
. Growth in fee-based income for the quarter was 23 percent from the year-ago
quarter on a managed basis, reflecting strong results from credit card, cash
management and consumer banking activities.
. The managed net interest margin improved to 4.02 percent for the quarter from
3.95 percent for the second quarter with stabilized pricing in the large
corporate banking business a major factor.
. Operating expense for the third quarter was $906 million. Excluding the
impact of a full quarter's expenses for the regional brokerage firm, Roney
and Company, as well as a one-
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<PAGE>
time reserve for a specific legal matter, this represented a 5 percent
increase from the year-ago quarter. The managed efficiency ratio was 50.7
percent.
. Volatility in the financial markets held market-driven revenue to $3 million
for the quarter, compared with $68 million for the year-ago quarter.
. The provision for credit losses on a managed basis was $297 million, down
from $340 million in the year-ago quarter and $359 million in the second
quarter. The managed credit card charge-off ratio in the third quarter was
5.98 percent, down from both 6.80 percent in the year-ago quarter and 6.94
percent in the second quarter.
Net Interest Income and Margin
Managed net interest income on a tax-equivalent basis was $1.096 billion for the
third quarter, down only 1 percent from a year ago and up 13 percent on an
annualized basis from the second quarter. Average managed loans grew to $77.7
billion, up 4 percent from the year-ago quarter. Average managed credit card
receivables were $17.0 billion for the quarter, down slightly from both a year
ago and the prior quarter.
Net interest margin on a managed basis was 4.02 percent for the quarter,
compared with 4.29 percent for the year-ago period, and up from 3.95 percent in
the second quarter.
Noninterest Income
Noninterest income on a managed basis was $691 million for the third quarter, up
4 percent from a year ago.
Reflecting the volatility in recent months of financial market conditions,
market-driven revenue for the quarter was $3 million, compared with $68 million
in the year-ago quarter. Trading activities were essentially break even for the
quarter, compared with profits of $32 million a year ago. The current quarter
included an unfavorable valuation adjustment in equity securities of $18 million
reflecting the recent downward movement in the equity market. This compared
with equity securities gains of $28 million in the year-ago period. Investment
securities gains totaled $21 million, up from $8 million a year ago and $6
million in the second quarter.
Managed credit card fee revenue was $257 million, up 30 percent from $198
million in the year-ago period and up substantially from the second quarter,
partially reflecting repricing. Fiduciary and investment management fees were
$110 million for the third quarter, up 8 percent from the year-ago quarter.
Service charges and commissions were $290 million for the quarter, a 23 percent
increase from $235 million for the year-ago quarter.
Noninterest Expense
Total operating expense for the third quarter was $906 million, up 9 percent
from the year-ago quarter, but down from $911 million in the prior quarter.
Contributing to the increase from last year were technology-related investments
and credit card marketing expenses. Excluding Roney and the previously
mentioned legal matter, operating expenses increased 5 percent
5
<PAGE>
from the year-ago period. Second quarter expenses included higher variable costs
and incentive compensation related to fee-generating activities, primarily in
the market-driven area.
The managed operating efficiency ratio for the third quarter was 50.7 percent,
reflecting continued expense discipline. The reported operating efficiency
ratio was 54.6 percent.
Provision for Credit Losses and Credit Quality
The provision for credit losses on a managed basis was $297 million for the
third quarter, down from $340 million in the year-ago quarter and $359 million
in the second quarter, reflecting declines in managed net charge-offs. Tighter
credit management policies and improved collection efforts resulted in improved
credit card loss performance.
Total managed net charge-offs for the third quarter totaled $297 million, down
from $340 million a year ago and $359 million in the second quarter. Managed
credit card net charge-offs declined to $254 million in the quarter from $292
million in the second quarter. The managed net charge-off ratio for credit
cards was 5.98 percent in the third quarter, down from 6.80 percent in the year-
ago quarter and 6.94 percent in the second quarter. The 90-day delinquency
ratio for managed credit card receivables was 1.44 percent at quarter-end,
versus 1.80 percent one year ago and 1.46 percent at the end of the second
quarter.
The allowance for credit losses was $1.4 billion at September 30, 1998, and
represented 2.01 percent of period-end loans and 428 percent of nonperforming
loans. Nonperforming assets were $344 million at September 30, 1998,
representing 0.49 percent of loans and other real estate owned.
Capital
At September 30, 1998, total common equity to assets was 7.2 percent, up from
6.8 percent at June 30, 1998, with the tangible common equity to net assets
ratio increasing to 6.8 percent from 6.4 percent. Tier 1 and total risk-based
capital ratios were 8.0 percent and 11.3 percent, respectively, at September 30,
1998.
Information about BANK ONE's financial results can be accessed on the Internet
at www.bankone.com and www.investquest.com or through fax-on-demand at 614-844-
3860.
###
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<PAGE>
<TABLE>
<CAPTION>
BANC ONE CORPORATION and Subsidiaries
FINANCIAL HIGHLIGHTS Three Months Ended September 30 Three Months
-------------------------------- Ended
($ millions, except per share amounts) 1998 1997 % Change June 30, 1998
-------------------------------- -------------
<S> <C> <C> <C> <C>
PER SHARE DATA
- --------------
Earnings - Basic $ 0.92 $ 0.67 37% $ 0.69
- Diluted 0.91 0.65 40% 0.68
Dividends 0.38 0.345 10% 0.38
INCOME STATEMENT DATA
- ---------------------
Net income $ 648 $ 465 39% $ 487
Net interest income (FTE) 1,415 1,471 (4%) 1,436
Provision for credit losses 177 287 (38%) 194
Noninterest income 1,330 1,161 15% 1,290
Noninterest expense 1,634 1,624 1% 1,809
FINANCIAL PERFORMANCE RATIOS
- ----------------------------
Net interest margin - managed 6.59% 6.21% 6.34%
- reported 5.29% 5.28% 5.21%
Return on assets 2.14% 1.50% 1.57%
Return on common equity 21.8% 17.5% 17.3%
Operating efficiency - managed 50.9% 54.5% 52.6%
- reported 59.5% 61.7% 61.7%
BALANCE SHEET DATA
- ------------------
Average: Loans - managed $ 120,294 $ 115,628 4% $ 119,984
- reported 84,567 92,120 (8%) 88,460
Earning assets 106,132 110,591 (4%) 110,634
Total assets 120,051 123,142 (3%) 124,580
Deposits 81,612 82,839 (1%) 83,871
Common equity 12,043 10,445 13% 11,308
End of Period: Loans - managed $ 125,772 $ 117,306 7% $ 120,247
- reported 83,950 89,529 (6%) 87,459
Total assets 120,153 122,455 (2%) 124,549
Deposits 81,870 83,231 (2%) 84,979
Common equity 11,810 10,709 12% 11,574
Nine Months Ended September 30
--------------------------------
1998 1997 % Change
--------------------------------
PER SHARE DATA
- --------------
Earnings - Basic $ 2.39 $ 1.33 80%
- Diluted 2.36 1.30 82%
Dividends 1.14 1.04 10%
INCOME STATEMENT DATA
- ---------------------
Net income $ 1,683 $ 924 82%
Net interest income (FTE) 4,256 4,408 (3%)
Provision for credit losses 583 982 (41%)
Noninterest income 3,834 2,903 32%
Noninterest expense 5,028 4,836 4%
FINANCIAL PERFORMANCE RATIOS
- ----------------------------
Net interest margin - managed 6.44% 6.19%
- reported 5.22% 5.37%
Return on assets 1.83% 1.02%
Return on common equity 19.8% 11.7%
Operating efficiency - managed 51.7% 54.1%
- reported 60.6% 61.5%
BALANCE SHEET DATA
- ------------------
Average: Loans - managed $ 120,004 $ 111,634 7%
- reported 87,760 89,502 (2%)
Earning assets 108,908 109,845 (1%)
Total assets 123,276 121,634 1%
Deposits 83,194 81,644 2%
Common equity 11,349 10,378 9%
</TABLE>
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<PAGE>
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------
Consolidated Statement of Income Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions, except per share amounts) 1998 1998 1998 1997 1997
- ------------------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Interest Income $ 2,418 $ 2,477 $ 2,453 $ 2,473 $ 2,563
Interest Expense 1,019 1,057 1,062 1,075 1,106
-------- -------- -------- -------- --------
Net interest income 1,399 1,420 1,391 1,398 1,457
Provision for credit losses 177 194 212 281 287
-------- -------- -------- -------- --------
Net interest income after provision for credit losses 1,222 1,226 1,179 1,117 1,170
Noninterest income
Trading profits (losses) 18 13 14 13 11
Equity securities gains (losses) 15 34 14 (2) 65
Investment securities gains 20 43 23 14 35
-------- -------- -------- -------- --------
Market-driven revenue 53 90 51 25 111
Credit card fees 631 440 504 580 518
Fiduciary and investment management fees 96 95 92 89 89
Service charges and commissions 350 382 409 364 371
-------- -------- -------- -------- --------
Fee-based revenue 1,077 917 1,005 1,033 978
Other income 200 283 158 111 72
-------- -------- -------- -------- --------
Total noninterest income 1,330 1,290 1,214 1,169 1,161
Noninterest expense
Salaries and related costs 627 648 668 641 645
Net occupancy and equipment expense 138 136 131 122 118
Depreciation and amortization 111 110 112 124 116
Outside services and processing 215 251 194 235 213
Marketing and development 233 180 169 132 245
Communication and transportation 129 131 124 133 122
Other expense 181 226 187 190 165
-------- -------- -------- -------- --------
Operating expenses 1,634 1,682 1,585 1,577 1,624
Merger-related and restructuring costs - 127 - - -
-------- -------- -------- -------- --------
Total noninterest expense 1,634 1,809 1,585 1,577 1,624
-------- -------- -------- -------- --------
Income before income taxes 918 707 808 709 707
Provision for income taxes 270 220 260 202 242
-------- -------- -------- -------- --------
Net income $ 648 $ 487 $ 548 $ 507 $ 465
======== ======== ======== ======== ========
Net income attributable to common
stockholders' equity $ 648 $ 487 $ 546 $ 505 $ 462
======== ======== ======== ======== ========
Earnings per common share
- Basic $ 0.92 $ 0.69 $ 0.78 $ 0.73 $ 0.67
- Diluted 0.91 0.68 0.77 0.71 0.65
Average common shares outstanding (thousands)
- Basic 705,040 703,480 698,438 699,336 695,878
- Diluted 714,102 715,319 716,591 719,289 719,379
</TABLE>
8
<PAGE>
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended
-------------------
Consolidated Statement of Income Sep 30, Sep 30,
($ millions, except per share amounts) 1998 1997
- ------------------------------------------------------- -------- --------
<S> <C> <C>
Interest Income $ 7,348 $ 7,595
Interest Expense 3,138 3,234
-------- --------
Net interest income 4,210 4,361
Provision for credit losses 583 982
-------- --------
Net interest income after provision for credit losses 3,627 3,379
Noninterest income
Trading profits (losses) 45 22
Equity securities gains (losses) 63 154
Investment securities gains 86 44
-------- --------
Market-driven revenue 194 220
Credit card fees 1,575 1,155
Fiduciary and investment management fees 283 250
Service charges and commissions 1,141 1,091
-------- --------
Fee-based revenue 2,999 2,496
Other income 641 187
-------- --------
Total noninterest income 3,834 2,903
Noninterest expense
Salaries and related costs 1,943 1,841
Net occupancy and equipment expense 405 329
Depreciation and amortization 333 334
Outside services and processing 660 580
Marketing and development 582 573
Communication and transportation 384 343
Other expense 594 499
-------- --------
Operating expenses 4,901 4,499
Merger-related and restructuring costs 127 337
-------- --------
Total noninterest expense 5,028 4,836
-------- --------
Income before income taxes 2,433 1,446
Provision for income taxes 750 522
-------- --------
Net income $ 1,683 $ 924
======== ========
Net income attributable to common
stockholders' equity $ 1,681 $ 909
======== ========
Earnings per common share
- Basic $ 2.39 $ 1.33
- Diluted 2.36 1.30
Average common shares outstanding (thousands)
- Basic 702,301 682,858
- Diluted 715,428 714,687
</TABLE>
9
<PAGE>
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Balance Sheet Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions) 1998 1998 1998 1997 1997
- --------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Assets
Cash and due from banks $ 6,694 $ 8,168 $ 7,235 $ 8,157 $ 6,821
Interest bearing due from banks 6 2 3 7 2
Federal funds sold and securities under resale agreements 814 1,058 1,386 667 554
Trading assets 1,162 1,214 1,410 1,048 773
Derivative product assets 151 91 139 76 120
Investment securities 19,177 19,260 19,794 16,708 17,109
Loans and leases:
Commercial 37,464 37,667 37,221 37,004 36,190
Consumer 40,325 41,030 41,466 40,878 41,308
Credit Card 6,161 8,762 10,110 12,973 12,031
--------- --------- --------- --------- ---------
Total loans 83,950 87,459 88,797 90,855 89,529
Allowance for credit losses (1,343) (1,344) (1,385) (1,409) (1,428)
--------- --------- --------- --------- ---------
Loans, net 82,607 86,115 87,412 89,446 88,101
Other assets:
Bank premises and equipment, net 1,971 1,984 1,986 1,987 1,936
Customer acceptance liability 22 40 35 34 36
Other 7,549 6,617 6,493 7,289 6,993
--------- --------- --------- --------- ---------
Total other assets 9,542 8,641 8,514 9,310 8,975
--------- --------- --------- --------- ---------
Total assets $ 120,153 $ 124,549 $ 125,893 $ 125,419 $ 122,455
========= ========= ========= ========= =========
Liabilities
Deposits:
Demand $ 19,509 $ 21,512 $ 20,266 $ 19,885 $ 18,628
Savings 38,014 38,111 38,880 37,510 36,220
Time 21,510 22,631 24,365 24,966 26,521
Foreign offices 2,837 2,725 2,136 2,877 1,862
--------- --------- --------- --------- ---------
Total deposits 81,870 84,979 85,647 85,238 83,231
Federal funds purchased and repurchase agreements 8,443 9,219 9,643 11,075 8,759
Other short-term borrowings 2,363 3,096 3,621 3,096 4,440
Long-term borrowings 11,032 11,649 11,988 11,450 11,755
Guaranteed preferred beneficial interest in the
Corporation's junior subordinated debt 7 7 7 7 7
Acceptances outstanding 22 40 35 34 46
Derivative product liabilities 16 19 14 13 21
Other liabilities 4,357 3,966 3,602 3,303 3,313
--------- --------- --------- --------- ---------
Total liabilities 108,110 112,975 114,557 114,216 111,572
--------- --------- --------- --------- ---------
Stockholders' Equity
Preferred stock -- -- 100 135 174
Common stock 3,527 3,522 3,518 3,506 3,202
Surplus 6,781 6,771 6,797 6,804 4,126
Retained earnings 1,549 1,170 956 672 3,298
Accumulated other adjustments to stockholders' equity 188 111 160 155 122
Treasury stock (2) -- (195) (69) (39)
--------- --------- --------- --------- ---------
Total stockholders' equity 12,043 11,574 11,336 11,203 10,883
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 120,153 $ 124,549 $ 125,893 $ 125,419 $ 122,455
========= ========= ========= ========= =========
Common shares - period end/(1)/ (thousands)
Common shares issued 705,384 704,322 703,645 701,207 640,452
Treasury shares -- -- 3,742 1,421 707
Common shares outstanding 705,384 704,322 699,903 699,786 639,745
</TABLE>
(1) September 30, 1997 amounts have not been restated for the 10% stock
dividend.
10
<PAGE>
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Third Quarter 1998 Second Quarter 1998 Third Quarter 1997
Average Balance Sheet, --------------------------- --------------------------- ---------------------------
Yields, & Rates: /(1) (2)/ Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
($ millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate
- -------------------------------------- -------- ------- ------ -------- ------- ------ -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Short-term investments $ 2,013 $ 34 6.70% $ 2,493 $ 36 5.79% $ 1,705 $ 24 5.58%
Investment Securities: /(4)/
U.S. government and federal agency 9,366 308 13.05% 11,185 285 10.22% 12,317 208 6.70%
States and political subdivisions 1,411 28 7.87% 1,496 30 8.04% 1,732 35 8.02%
Other 8,775 43 1.94% 7,000 41 2.35% 2,717 36 5.26%
-------- ------- -------- ------- -------- -------
Total investment securities 19,552 379 7.69% 19,681 356 7.26% 16,766 279 6.60%
Loans: /(3)/
Commercial 37,725 737 7.75% 38,383 746 7.80% 37,105 752 8.04%
Consumer 40,469 1,003 9.83% 40,496 990 9.81% 40,044 992 9.83%
Credit card 6,373 281 17.49% 9,581 365 15.28% 14,971 531 14.07%
-------- ------- -------- ------- -------- -------
Total loans, net 84,567 2,021 9.48% 88,460 2,101 9.53% 92,120 2,275 9.80%
Total earning assets 106,132 2,434 9.10% 110,634 2,493 9.04% 110,591 2,578 9.25%
Allowance for credit losses (1,319) (1,351) (1,446)
Other assets 15,238 15,297 13,997
-------- -------- --------
Total assets $120,051 $124,580 $123,142
======== ======== ========
Deposits-interest bearing:
Savings $ 11,194 $ 70 2.48% $ 12,033 $ 75 2.50% $ 12,805 $ 76 2.35%
Money market 26,984 275 4.04% 26,808 268 4.01% 23,349 233 3.96%
Time 22,117 297 5.33% 23,580 315 5.36% 26,929 372 5.48%
Foreign offices 2,989 40 5.31% 2,606 35 5.39% 2,510 34 5.37%
-------- ------- -------- ------- -------- -------
Total deposits interest bearing 63,284 682 4.28% 65,027 693 4.27% 65,593 715 4.32%
Federal funds purchased and securities
under repurchase agreements 9,038 122 5.36% 10,165 128 5.05% 10,369 137 5.24%
Other short-term borrowings 2,551 39 6.07% 3,274 48 5.88% 5,637 83 5.84%
Long-term debt 11,040 176 6.32% 11,961 188 6.30% 10,567 172 6.46%
-------- ------- -------- ------- -------- -------
Total interest bearing liabilities 85,913 1,019 4.71% 90,427 1,057 4.69% 92,166 1,107 4.77%
Demand deposits 18,328 18,844 17,246
Other liabilities 4,000 3,997 3,109
Preferred stock - 4 176
Common stockholders' equity 11,810 11,308 10,445
-------- -------- --------
Total liabilities and equity $120,051 $124,580 $123,142
======== ======== ========
Interest income/earning assets $ 2,434 9.10% $ 2,493 9.04% $ 2,578 9.25%
Interest expense/earning assets 1,019 3.81% 1,057 3.83% 1,107 3.97%
------- ------- -------
Net interest margin $ 1,415 5.29% $ 1,436 5.21% $ 1,471 5.28%
======= ======= =======
</TABLE>
/(1)/ Fully taxable equivalent basis
/(2)/ Certain prior period amounts have been reclassified for comparison
purposes
/(3)/ Nonaccrual loans are included in loan balances
/(4)/ Average securities balances are based on amortized historical cost,
excluding SFAS 115 adjustments to fair value, which are included in
other assets.
11
<PAGE>
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------------------------------
September 30, 1998 September 30, 1997
Average Balance Sheet, --------------------------- ---------------------------
Yields, & Rates: /(1) (2)/ Average Income/ Yield/ Average Income/ Yield/
($ millions) Balance Expense Rate Balance Expense Rate
- -------------------------------------- -------- ------- ------ -------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Short-term investments $ 2,253 $ 101 5.99% $ 1,514 $ 67 5.92%
Investment Securities: /(4)/
U.S. government and federal agency 10,772 811 10.07% 14,322 724 6.76%
States and political subdivisions 1,494 89 7.96% 1,731 106 8.19%
Other 6,629 122 2.46% 2,776 105 5.06%
-------- ------- -------- -------
Total investment securities 18,895 1,022 7.23% 18,829 935 6.64%
Loans: /(3)/
Commercial 37,897 2,215 7.81% 36,095 2,180 8.07%
Consumer 40,713 3,018 9.91% 38,815 2,870 9.89%
Credit card 9,150 1,038 15.17% 14,592 1,590 14.57%
-------- ------- -------- -------
Total loans, net 87,760 6,271 9.55% 89,502 6,640 9.92%
Total earning assets 108,908 7,394 9.08% 109,845 7,642 9.30%
Allowance for credit losses (1,344) (1,344)
Other assets 15,712 13,133
-------- --------
Total assets $123,276 $121,634
======== ========
Deposits-interest bearing:
Savings $ 11,781 $ 221 2.51% $ 13,252 $ 237 2.39%
Money market 26,541 800 4.03% 22,251 648 3.89%
Time 23,473 943 5.37% 27,156 1,119 5.51%
Foreign offices 2,770 111 5.36% 2,378 98 5.51%
-------- ------- -------- -------
Total deposits interest bearing 64,565 2,075 4.30% 65,037 2,102 4.32%
Federal funds purchased and securities
under repurchase agreements 10,060 391 5.20% 11,701 456 5.21%
Other short-term borrowings 2,878 129 5.99% 5,751 242 5.63%
Long-term debt 11,534 543 6.29% 8,995 434 6.45%
-------- ------- -------- -------
Total interest bearing liabilities 89,037 3,138 4.71% 91,484 3,234 4.73%
Demand deposits 18,629 16,607
Other liabilities 4,218 2,976
Preferred stock 43 189
Common stockholders' equity 11,349 10,378
-------- --------
Total liabilities and equity $123,276 $121,634
======== ========
Interest income/earning assets $ 7,394 9.08% $ 7,642 9.30%
Interest expense/earning assets 3,138 3.86% 3,234 3.93%
------- -------
Net interest margin $ 4,256 5.22% $ 4,408 5.37%
======= =======
</TABLE>
/(1)/ Fully taxable equivalent basis
/(2)/ Certain prior period amounts have been reclassified for comparison
purposes
/(3)/ Nonaccrual loans are included in loan balances
/(4)/ Average securities balances are based on amortized historical cost,
excluding SFAS 115 adjustments to fair value, which are included in
other assets.
12
<PAGE>
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------
Credit Quality Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions) 1998 1998 1998 1997 1997
- ------------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Provision for credit losses $ 177 $ 194 $ 212 $ 281 $ 287
Gross charge-offs $ 236 $ 307 $ 332 $ 374 $ 377
Recoveries 59 71 96 74 77
------- ------- ------- ------- -------
Net charge-offs $ 177 $ 236 $ 236 $ 300 $ 300
Net charge-offs:
Commercial $ 16 $ 26 $ (5) $ 36 $ 6
Consumer 82 82 97 84 82
Credit card 79 128 144 180 212
------- ------- ------- ------- -------
Total $ 177 $ 236 $ 236 $ 300 $ 300
Total - managed $ 646 $ 706 $ 694 $ 661 $ 646
Net charge-off ratios:
Commercial 0.17% 0.27% -0.05% 0.39% 0.06%
Consumer 0.80% 0.81% 0.96% 0.83% 0.81%
Credit card 4.94% 5.38% 5.05% 5.73% 5.61%
Total 0.83% 1.07% 1.06% 1.32% 1.29%
Total - managed 2.13% 2.36% 2.35% 2.23% 2.22%
Allowance for credit losses - period end $ 1,343 $ 1,344 $ 1,385 $ 1,409 $ 1,428
Nonperforming assets - period end:
Nonperforming loans $ 530 $ 528 $ 522 $ 446 $ 465
Other real estate owned 103 87 77 70 60
------- ------- ------- ------- -------
Total nonperforming assets $ 633 $ 615 $ 629 $ 516 $ 525
Allowance to ending loans 1.60% 1.54% 1.56% 1.55% 1.60%
Allowance to nonperforming loans 254% 254% 251% 316% 307%
Nonperforming assets ratio 0.75% 0.70% 0.71% 0.57% 0.59%
Capital
($ millions, except per share amounts)
- -------------------------------------------
Common equity/assets ratio 10.0% 9.3% 8.9% 8.8% 8.7%
Tier 1 capital ratio 9.2% 9.0% 8.9% 8.6% 8.6%
Total risk adjusted capital ratio 13.6% 13.5% 13.6% 13.0% 13.1%
Regulatory leverage ratio 9.1% 8.5% 8.2% 7.9% 7.7%
Tangible common equity to net assets 8.7% 8.4% 7.9% 7.9% 7.9%
Book value of common equity per share $ 17.07 $ 16.43 $ 16.05 $ 15.82 $ 16.74
Intangibles - period end
Goodwill $ 701 $ 716 $ 738 $ 755 $ 765
Other intangibles 1,045 557 631 515 344
------- ------- ------- ------- -------
Total intangibles $ 1,746 $ 1,243 $ 1,369 $ 1,270 $ 1,109
</TABLE>
13
<PAGE>
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------------
Managed Income Statement Statistics /(1)/ Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions) 1998 1998 1998 1997 1997
- ----------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Reported:
- -----------------------------------------------
Net interest income -- FTE $ 1,415 $ 1,436 $ 1,405 $ 1,414 $ 1,141
Provision for credit losses 177 194 212 281 287
Noninterest income 1,330 1,290 1,214 1,169 1,161
Noninterest expense 1,634 1,809 1,585 1,577 1,624
Net income 648 487 548 507 465
Securitized:
- -----------------------------------------------
Net interest income -- FTE $ 869 $ 770 $ 795 $ 713 $ 648
Provision for credit losses 469 470 458 361 346
Noninterest income (399) (300) (337) (351) (301)
Noninterest expense 1 -- -- 1 1
Net income -- -- -- -- --
Managed:
- -----------------------------------------------
Net interest income -- FTE $ 2,284 $ 2,206 $ 2,200 $ 2,127 $ 2,119
Provision for credit losses 646 664 670 642 633
Noninterest income 931 990 877 818 860
Noninterest expense 1,635 1,809 1,585 1,578 1,625
Net income 648 487 548 507 465
Managed balance sheet and net interest margin:
- -----------------------------------------------
Total average loans $ 120,294 $ 119,984 $ 119,728 $ 117,712 $ 115,628
Total average earning assets 137,540 139,623 139,692 137,152 135,342
Net interest margin 6.59% 6.34% 6.39% 6.15% 6.21%
</TABLE>
(1) Managed data only adjusted for credit card securitization activity
14
<PAGE>
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------------------------
Managed Credit Card Detail Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions) 1998 1998 1998 1997 1997
- --------------------------------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Period end loans - managed $ 47,983 $ 41,550 $ 40,526 $ 41,748 $ 39,808
- securitized (41,822) (32,788) (30,416) (28,775) (27,777)
- reported 6,161 8,762 10,110 12,973 12,031
Average loans - managed $ 42,100 $ 41,105 $ 40,962 $ 40,093 $ 38,479
- securitized (35,727) (31,524) (29,410) (27,663) (23,508)
- reported 6,373 9,581 11,552 12,430 14,971
Net charge-offs - amount - managed $ 548 $ 598 $ 602 $ 541 $ 558
- securitized (469) (470) (458) (316) (346)
- reported 79 128 144 180 212
Net charge-offs - rate - managed 5.16% 5.84% 5.96% 5.35% 5.75%
- securitized 5.20% 5.98% 6.31% 5.18% 5.83%
- reported 4.94% 5.38% 5.05% 5.73% 5.61%
Delinquency rate - 30+ days - managed 4.70% 4.61% 5.12% 5.15% 4.85%
- securitized 4.56% 4.47% 5.09% 5.23% 4.62%
- reported 5.68% 5.11% 5.21% 4.98% 5.38%
Delinquency rate - 90+ days - managed 2.07% 2.18% 2.38% 2.28% 2.02%
- securitized 2.02% 2.14% 2.36% 2.34% 1.92%
- reported 2.42% 2.31% 2.43% 2.16% 2.24%
Credit card charge volume - managed $ 13,167 $ 12,542 $ 11,141 $ 13,269 $ 12,121
New accounts opened (thousands) - managed 2,185 2,006 2,033 2,447 2,338
Cardmembers (thousands) - managed 47,478 42,989 41,315 41,743 41,608
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
FIRST CHICAGO NBD CORPORATION and Subsidiaries
FINANCIAL HIGHLIGHTS Three Months Ended September 30 Three Months
--------------------------------- Ended
($ millions, except per share amounts) 1998 1997 % Change June 30, 1998
--------- --------- -------- -------------
<S> <C> <C> <C> <C>
PER SHARE DATA
- --------------
Earnings - Basic $ 1.39 $ 1.28 9% $ 1.41
- Diluted 1.38 1.26 10% 1.38
Dividends 0.44 0.40 10% 0.44
INCOME STATEMENT DATA
- ---------------------
Net income $ 405 $ 385 5% $ 408
Net interest income (FTE) 925 921 0% 898
Provision for credit losses 168 191 (12%) 206
Noninterest income 733 701 5% 842
Noninterest expense 906 835 9% 911
FINANCIAL PERFORMANCE RATIOS
- ----------------------------
Net interest margin - managed 4.02% 4.29% 3.95%
- reported 3.66% 3.88% 3.61%
Return on assets 1.38% 1.40% 1.40%
Return on common equity 19.0% 19.1% 20.1%
Operating efficiency - managed 50.7% 47.1% 48.1%
- reported 54.6% 51.5% 52.4%
BALANCE SHEET DATA
- ------------------
Average: Loans - managed $ 77,685 $ 74,874 4% $ 77,884
- reported 69,900 66,782 5% 69,748
Earning assets 100,318 94,104 7% 99,742
Total assets 116,667 108,950 7% 116,577
Deposits 66,781 64,859 3% 67,723
Common equity 8,405 7,893 6% 8,059
End of Period: Loans - managed $ 77,671 $ 75,669 3% $ 80,477
- reported 70,107 67,822 3% 72,563
Total assets 118,649 113,306 5% 119,781
Deposits 67,054 67,565 (1%) 69,528
Common equity 8,501 7,792 9% 8,124
Nine Months Ended September 30
---------------------------------
1998 1997 % Change
--------- --------- ---------
PER SHARE DATA
- --------------
Earnings - Basic $ 4.12 $ 3.69 12%
- Diluted 4.06 3.63 12%
Dividends 1.32 1.20 10%
INCOME STATEMENT DATA
- ---------------------
Net income $ 1,196 $ 1,143 5%
Net interest income (FTE) 2,701 2,779 (3%)
Provision for credit losses 553 558 (1%)
Noninterest income 2,314 2,024 14%
Noninterest expense 2,665 2,460 8%
FINANCIAL PERFORMANCE RATIOS
- ----------------------------
Net interest margin - managed 4.01% 4.45%
- reported 3.65% 4.04%
Return on assets 1.39% 1.42%
Return on common equity 19.6% 18.3%
Operating efficiency - managed 48.9% 46.5%
- reported 53.1% 51.2%
BALANCE SHEET DATA
- ------------------
Average: Loans - managed $ 77,286 $ 74,380 4%
- reported 69,149 66,093 5%
Earning assets 99,030 92,045 8%
Total assets 115,400 107,472 7%
Deposits 66,952 63,954 5%
Common equity 8,083 8,227 (2%)
</TABLE>
16
<PAGE>
FIRST CHICAGO NBD CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------
Consolidated Statement of Income Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions, except per share amounts) 1998 1998 1998 1997 1997
- ------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Interest Income $ 1,931 $ 1,911 $ 1,864 $ 1,872 $ 1,881
Interest Expense 1,021 1,027 1,003 1,000 982
--------- --------- --------- --------- ---------
Net interest income 910 884 861 872 899
Provision for credit losses 168 206 179 167 191
--------- --------- --------- --------- ---------
Net interest income after provision for credit losses 742 678 682 705 708
Noninterest income
Trading profits (losses) -- 52 46 (15) 32
Equity securities gains (losses) (18) 87 58 54 28
Investment securities gains 21 6 10 6 8
--------- --------- --------- --------- ---------
Market-driven revenue 3 145 114 45 68
Credit card fees 299 234 234 230 233
Fiduciary and investment management fees 110 108 106 101 102
Service charges and commissions 290 283 251 261 235
--------- --------- --------- --------- ---------
Fee-based revenue 699 625 591 592 570
Other income 31 72 34 90 63
--------- --------- --------- --------- ---------
Total noninterest income 733 842 739 727 701
Noninterest expense
Salaries and related costs 454 477 440 457 440
Net occupancy and equipment expense 78 73 72 66 74
Depreciation and amortization 57 55 55 57 55
Outside services and processing 103 97 79 99 86
Marketing and development 33 41 29 38 35
Communication and transportation 62 59 61 63 57
Other expense 119 109 112 92 88
--------- --------- --------- --------- ---------
Operating expenses 906 911 848 872 835
Merger-related and restructuring costs -- -- -- -- --
--------- --------- --------- --------- ---------
Total noninterest expense 906 911 848 872 835
--------- --------- --------- --------- ---------
Income before income taxes 569 609 573 560 574
Provision for income taxes 164 201 190 178 189
--------- --------- --------- --------- ---------
Net income $ 405 $ 408 $ 383 $ 382 $ 385
========= ========= ========= ========== =========
Net income attributable to common
stockholders' equity $ 402 $ 404 $ 381 $ 378 $ 380
========= ========= ========= ========== =========
Earnings per common share
- Basic $ 1.39 $ 1.41 $ 1.32 $ 1.30 $ 1.28
- Diluted 1.38 1.38 1.30 1.28 1.26
Average common shares outstanding (thousands)
- Basic 287,984 287,444 288,126 290,276 296,802
- Diluted 292,231 292,581 293,039 295,226 301,558
</TABLE>
17
<PAGE>
FIRST CHICAGO NBD CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended
---------------------
Consolidated Statement of Income Sep 30, Sep 30,
($ millions, except per share amounts) 1998 1997
- -------------------------------------------------------- --------- ---------
<S> <C> <C>
Interest Income $ 5,706 $ 5,475
Interest Expense 3,051 2,775
--------- ---------
Net interest income 2,655 2,700
Provision for credit losses 553 558
--------- ---------
Net interest income after provision for credit losses 2,102 2,142
Noninterest income
Trading profits (losses) 98 96
Equity securities gains (losses) 127 128
Investment securities gains 37 37
--------- ---------
Market-driven revenue 262 261
Credit card fees 767 674
Fiduciary and investment management fees 324 304
Service charges and commissions 824 675
--------- ---------
Fee-based revenue 1,915 1,655
Other income 137 108
--------- ---------
Total noninterest income 2,314 2,024
Noninterest expense
Salaries and related costs 1,371 1,291
Net occupancy and equipment expense 223 222
Depreciation and amortization 167 178
Outside services and processing 279 231
Marketing and development 103 94
Communication and transportation 182 172
Other expense 340 272
--------- ---------
Operating expenses 2,665 2,460
Merger-related and restructuring costs -- --
--------- ---------
Total noninterest expense 2,665 2,460
--------- ---------
Income before income taxes 1,751 1,706
Provision for income taxes 555 563
--------- ---------
Net income $ 1,196 $ 1,143
========= =========
Net income attributable to common stockholders' equity $ 1,187 $ 1,126
========= =========
Earnings per common share
- Basic $ 4.12 $ 3.69
- Diluted 4.06 3.63
Average common shares outstanding (thousands)
- Basic 287,851 305,177
- Diluted 292,635 310,840
</TABLE>
18
<PAGE>
FIRST CHICAGO NBD CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Balance Sheet Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions) 1998 1998 1998 1997 1997
- ---------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Assets
Cash and due from banks $ 7,415 $ 8,049 $ 7,907 $ 7,223 $ 7,929
Interest bearing due from banks 4,615 5,588 5,163 6,904 7,721
Federal funds sold and securities under resale
agreements 9,252 7,982 7,735 8,501 7,671
Trading assets 4,608 4,128 3,841 4,198 4,632
Derivative product assets 4,449 4,250 4,233 4,547 3,717
Investment securities 13,480 12,604 11,594 9,330 9,025
Loans and leases:
Commercial 44,431 45,608 43,931 42,302 40,417
Consumer 16,054 17,709 16,707 16,729 17,685
Credit Card 9,622 9,246 8,952 9,693 9,720
-------- -------- -------- -------- --------
Total loans 70,107 72,563 69,590 68,724 67,822
Allowance for credit losses (1,408) (1,408) (1,408) (1,408) (1,408)
-------- -------- -------- -------- --------
Loans, net 68,699 71,155 68,182 67,316 66,414
Other assets:
Bank premises and equipment, net 1,460 1,448 1,468 1,439 1,406
Customer acceptance liability 412 366 560 708 694
Other 4,259 4,211 4,121 3,930 4,097
-------- -------- -------- -------- --------
Total other assets 6,131 6,025 6,149 6,077 6,197
-------- -------- -------- -------- --------
Total assets $118,649 $119,781 $114,804 $114,096 $113,306
======== ======== ======== ======== ========
Liabilities
Deposits:
Demand $ 15,248 $ 17,038 $ 16,440 $ 16,069 $ 16,548
Savings 20,799 21,432 21,681 21,437 21,097
Time 15,184 15,256 15,350 15,178 15,127
Foreign offices 15,823 15,802 14,699 15,805 14,793
-------- -------- -------- -------- --------
Total deposits 67,054 69,528 68,170 68,489 67,565
Federal funds purchased and repurchase
agreements 12,176 9,869 10,176 9,271 9,650
Other short-term borrowings 10,860 12,672 10,458 9,710 10,733
Long-term borrowings 10,106 9,595 9,298 9,092 8,910
Guaranteed preferred beneficial interest in the
Corporation's junior subordinated debt 996 996 996 996 996
Acceptances outstanding 412 366 560 708 694
Derivative product liabilities 4,733 4,307 4,129 4,616 3,716
Other liabilities 3,621 4,134 3,011 3,254 2,960
-------- -------- -------- -------- --------
Total liabilities 109,958 111,467 106,798 106,136 105,224
-------- -------- -------- -------- --------
Stockholders' Equity
Preferred stock 190 190 190 190 290
Common stock 320 320 320 320 320
Surplus 1,873 1,948 1,960 1,966 1,986
Retained earnings 8,253 7,977 7,699 7,446 7,195
Deferred compensation (94) (112) (109) (79) (87)
Accumulated other adjustments to stockholders'
equity 56 66 48 55 48
Treasury stock (1,907) (2,075) (2,102) (1,938) (1,670)
-------- -------- -------- -------- --------
Total stockholders' equity 8,691 8,314 8,006 7,960 8,082
-------- -------- -------- -------- --------
Total liabilities and stockholders' equity $118,649 $119,781 $114,804 $114,096 $113,306
======== ======== ======== ======== ========
Common shares - period end (thousands)
Common shares issued 319,509 319,509 319,509 319,509 319,509
Treasury shares 29,147 31,766 32,321 30,372 26,862
Common shares outstanding 290,362 287,743 287,188 289,137 292,647
</TABLE>
19
<PAGE>
FIRST CHICAGO NBD CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Third Quarter 1998 Second Quarter 1998 Third Quarter 1997
Average Balance Sheet, --------------------------- --------------------------- ---------------------------
Yields, & Rates: Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
($ millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate
- -------------------------------------- -------- ------- ------ -------- ------- ------ -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Short-term investments $ 12,111 $ 167 5.47% $ 13,569 $ 184 5.44% $ 13,773 $ 199 5.73%
Trading assets /(2)/ 5,282 77 5.78% 4,741 68 5.75% 4,976 67 5.34%
Investment Securities: /(2)/
U.S. government and federal agency 6,590 108 6.50% 6,468 104 6.45% 5,589 92 6.53%
States and political subdivisions 724 14 7.67% 736 14 7.63% 835 18 8.55%
Other 5,711 59 4.10% 4,480 49 4.39% 2,149 31 5.72%
-------- ------- -------- ------- -------- -------
Total investment securities 13,025 181 5.51% 11,684 167 5.73% 8,573 141 6.53%
Loans: /(1)(2)/
Commercial 43,530 854 7.78% 44,045 856 7.80% 40,257 808 7.96%
Consumer 17,165 358 8.27% 16,711 349 8.38% 17,378 372 8.49%
Credit card 9,205 309 13.32% 8,992 301 13.43% 9,147 316 13.71%
-------- ------- -------- ------- -------- -------
Total loans, net 69,900 1,521 8.63% 69,748 1,506 8.66% 66,782 1,496 8.89%
Total earning assets 100,318 1,946 7.70% 99,742 1,925 7.74% 94,104 1,903 8.02%
Allowance for credit losses (1,395) (1,397) (1,401)
Other assets 17,744 18,232 16,247
-------- -------- --------
Total assets $116,667 $116,577 $108,950
======== ======== ========
Deposits-interest bearing:
Savings $ 9,329 $ 48 2.04% $ 9,534 $ 48 2.02% $ 9,158 $ 52 2.25%
Money market 11,873 95 3.17% 11,816 98 3.33% 11,715 101 3.42%
Time 15,168 190 4.97% 15,375 216 5.63% 15,154 215 5.63%
Foreign offices 15,395 205 5.28% 15,234 200 5.27% 14,616 192 5.21%
-------- ------- -------- ------- -------- -------
Total deposits interest bearing 51,765 538 4.12% 51,959 562 4.34% 50,643 560 4.39%
Federal funds purchased and securities
under repurchase agreements 11,754 156 5.27% 10,791 141 5.24% 9,877 134 5.38%
Other short-term borrowings 11,101 152 5.43% 11,694 154 5.28% 9,045 125 5.48%
Long-term debt 10,731 175 6.47% 10,443 170 6.53% 9,620 163 6.72%
-------- ------- -------- ------- -------- -------
Total interest bearing liabilities 85,351 1,021 4.75% 84,887 1,027 4.85% 79,185 982 4.92%
Demand deposits 15,016 15,764 14,216
Other liabilities 7,705 7,677 7,366
Preferred stock 190 190 290
Common stockholders' equity 8,405 8,059 7,893
-------- -------- --------
Total liabilities and equity $116,667 $116,577 $108,950
======== ======== ========
Interest income/earning assets $ 1,946 7.70% $ 1,925 7.74% $ 1,903 8.02%
Interest expense/earning assets 1,021 4.04% 1,027 4.13% 982 4.14%
------- ------- -------
Net interest margin $ 925 3.66% $ 898 3.61% $ 921 3.88%
======= ======= =======
</TABLE>
/(1)/ Nonperforming loans are included in average balances used to determine
the average rate
/(2)/ Includes tax-equivalent adjustments based on a 35% federal income tax
rate.
20
<PAGE>
FIRST CHICAGO NBD CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------------------------------
September 30, 1998 September 30, 1997
Average Balance Sheet, --------------------------- ---------------------------
Yields, & Rates: Average Income/ Yield/ Average Income/ Yield/
($ millions) Balance Expense Rate Balance Expense Rate
- -------------------------------------- -------- ------- ------ -------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Short-term investments $ 13,144 $ 541 5.50% $ 13,109 $ 551 5.62%
Trading assets /(2)/ 5,103 216 5.66% 4,930 203 5.51%
Investment Securities: /(2)/
U.S. government and federal agency 6,445 314 6.51% 5,061 245 6.47%
States and political subdivisions 730 45 8.24% 958 64 8.93%
Other 4,459 145 4.35% 1,894 99 6.99%
-------- ------- -------- -------
Total investment securities 11,634 504 5.79% 7,913 408 6.89%
Loans: /(1)(2)/
Commercial 43,242 2,534 7.83% 40,087 2,368 7.90%
Consumer 16,814 1,058 8.41% 17,195 1,096 8.52%
Credit card 9,093 899 13.22% 8,811 928 14.08%
-------- ------- -------- -------
Total loans, net 69,149 4,491 8.68% 66,093 4,392 8.88%
Total earning assets 99,030 5,752 7.77% 92,045 5,554 8.07%
Allowance for credit losses (1,398) (1,392)
Other assets 17,768 16,819
-------- --------
Total assets $115,400 $107,472
======== ========
Deposits-interest bearing:
Savings $ 9,418 $ 145 2.06% $ 9,519 $ 157 2.21%
Money market 11,916 296 3.32% 11,645 302 3.47%
Time 15,218 601 5.28% 15,085 625 5.54%
Foreign offices 15,259 600 5.26% 13,599 519 5.10%
-------- ------- -------- -------
Total deposits interest bearing 51,811 1,642 4.24% 49,848 1,603 4.30%
Federal funds purchased and securities
under repurchase agreements 11,124 439 5.28% 9,377 372 5.30%
Other short-term borrowings 10,893 453 5.56% 8,602 348 5.41%
Long-term debt 10,515 517 6.57% 9,003 452 6.71%
-------- ------- -------- -------
Total interest bearing liabilities 84,343 3,051 4.84% 76,830 2,775 4.83%
Demand deposits 15,141 14,106
Other liabilities 7,643 7,976
Preferred stock 190 333
Common stockholders' equity 8,083 8,227
-------- --------
Total liabilities and equity $115,400 $107,472
======== ========
Interest income/earning assets $ 5,752 7.77% $ 5,554 8.07%
Interest expense/earning assets 3,051 4.12% 2,775 4.03%
------- -------
Net interest margin $ 2,701 3.65% $ 2,779 4.04%
======= =======
</TABLE>
/(1)/ Nonperforming loans are included in average balances used to determine
the average rate
/(2)/ Includes tax-equivalent adjustments based on a 35% federal income tax
rate.
21
<PAGE>
FIRST CHICAGO NBD CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------
Credit Quality Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions) 1998 1998 1998 1997 1997
- --------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Provision for credit losses $ 168 $ 206 $ 179 $ 167 $ 191
Gross charge-offs $ 207 $ 253 $ 233 $ 226 $ 232
Recoveries 39 47 54 59 41
------- ------- ------- ------- -------
Net charge-offs $ 168 $ 206 $ 179 $ 167 $ 191
Net charge-offs:
Commercial $ 27 $ 54 $ 24 $ (3) $ 27
Consumer 16 13 20 23 20
Credit card 125 139 135 147 144
------- ------- ------- ------- -------
Total $ 168 $ 206 $ 179 $ 167 $ 191
Total - managed $ 297 $ 359 $ 327 $ 328 $ 340
Net charge-off ratios:
Commercial 0.25% 0.49% 0.23% -0.03% 0.27%
Consumer 0.37% 0.31% 0.48% 0.54% 0.46%
Credit card 5.43% 6.32% 6.25% 6.61% 6.30%
Total 0.96% 1.18% 1.06% 1.00% 1.14%
Total - managed 1.53% 1.84% 1.71% 1.74% 1.82%
Allowance for credit losses - period end $ 1,408 $ 1,408 $ 1,408 $ 1,408 $ 1,408
Nonperforming assets - period end:
Nonperforming loans $ 329 $ 293 $ 352 $ 311 $ 330
Other real estate owned 15 13 12 15 15
------- ------- ------- ------- -------
Total nonperforming assets $ 344 $ 306 $ 364 $ 326 $ 345
Allowance to ending loans 2.01% 1.94% 2.02% 2.05% 2.08%
Allowance to nonperforming loans 428% 481% 400% 453% 427%
Nonperforming assets ratio 0.49% 0.42% 0.52% 0.47% 0.51%
Capital
($ millions, except per share amounts)
- --------------------------------------
Common equity/assets ratio 7.2% 6.8% 6.8% 6.8% 6.9%
Tier 1 capital ratio 8.0% 7.7% 7.8% 7.9% 8.1%
Total risk adjusted capital ratio 11.3% 11.1% 11.4% 11.7% 11.9%
Regulatory leverage ratio 8.0% 7.6% 7.6% 7.8% 8.2%
Tangible common equity to net assets 6.8% 6.4% 6.5% 6.5% 6.5%
Book value of common equity per share $ 29.28 $ 28.23 $ 27.21 $ 26.87 $ 26.62
Intangibles - period end
Goodwill $ 393 $ 401 $ 357 $ 365 $ 373
Other intangibles 80 74 69 67 58
------- ------- ------- ------- -------
Total intangibles $ 473 $ 475 $ 426 $ 432 $ 431
</TABLE>
22
<PAGE>
FIRST CHICAGO NBD CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------------
Managed Income Statement Statistics /(1)/ Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions) 1998 1998 1998 1997 1997
- ---------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Reported:
- ----------------------------------------------
Net interest income -- FTE $ 925 $ 898 $ 878 $ 888 $ 921
Provision for credit losses 168 206 179 167 191
Noninterest income 733 842 739 727 701
Noninterest expense 906 911 848 872 835
Net income 405 408 383 382 385
Securitized:
- ----------------------------------------------
Net interest income -- FTE $ 171 $ 164 $ 178 $ 184 $ 184
Provision for credit losses 129 153 148 161 149
Noninterest income (42) (11) (30) (23) (35)
Noninterest expense -- -- -- -- --
Net income -- -- -- -- --
Managed:
- ----------------------------------------------
Net interest income -- FTE $ 1,096 $ 1,062 $ 1,056 $ 1,072 $ 1,105
Provision for credit losses 297 359 327 328 340
Noninterest income 691 831 709 704 666
Noninterest expense 906 911 848 872 835
Net income 405 408 383 382 385
Managed balance sheet and net interest margin:
- ----------------------------------------------
Total average loans $ 77,685 $ 77,884 $ 76,274 $ 75,364 $ 74,874
Total average earning assets 108,103 107,878 105,489 103,514 102,196
Net interest margin 4.02% 3.95% 4.06% 4.11% 4.29%
</TABLE>
/(1)/ Managed data only adjusted for credit card securitization activity
23
<PAGE>
FIRST CHICAGO NBD CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------
Managed Credit Card Detail Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ millions) 1998 1998 1998 1997 1997
- ---------------------------------------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Period end loans - managed $ 17,186 $ 17,160 $ 17,216 $ 18,332 $ 17,567
- securitized (7,564) (7,914) (8,264) (8,639) (7,847)
- reported 9,622 9,246 8,952 9,693 9,720
Average loans - managed $ 16,990 $ 17,128 $ 17,582 $ 17,399 $ 17,239
- securitized (7,785) (8,136) (8,501) (8,505) (8,092)
- reported 9,205 8,992 9,081 8,894 9,147
Net charge-offs - amount - managed $ 254 $ 292 $ 283 $ 308 $ 293
- securitized (129) (153) (148) (161) (149)
- reported 125 139 135 147 144
Net charge-offs - rate - managed 5.98% 6.94% 6.71% 7.08% 6.80%
- securitized 6.63% 7.62% 7.20% 7.57% 7.37%
- reported 5.43% 6.32% 6.25% 6.61% 6.30%
Delinquency rate - 30+ days - managed 3.94% 3.69% 4.12% 4.32% 4.50%
- securitized 4.10% 3.79% 4.24% 4.55% 4.61%
- reported 3.81% 3.61% 4.02% 4.12% 4.40%
Delinquency rate - 90+ days - managed 1.44% 1.46% 1.75% 1.73% 1.80%
- securitized 1.51% 1.50% 1.80% 1.83% 1.84%
- reported 1.39% 1.43% 1.71% 1.64% 1.77%
Credit card charge volume - managed $ 11,939 $ 11,549 $ 11,560 $ 11,897 $ 11,119
New accounts opened (thousands) - managed 353 265 297 393 377
Cardmembers (thousands) - managed 13,029 12,806 13,250 13,745 13,700
</TABLE>
24
