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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 18,1994
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First Chicago Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-6052 36-2669970
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(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number Identification No.)
One First National Plaza, Chicago, IL 60670
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code 312-732-4000
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Item 5. Other Events
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The Registrant hereby incorporates by reference the information contained in
Attachment A hereto in response to this Item 5.
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.
First Chicago Corporation
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(Registrant)
Dated: October 18, 1994 By: /s/ Maurice E. Moore
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Title: Senior Vice President
and Treasurer
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Attachment A
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CHICAGO, October 17, 1994 -- First Chicago Corporation today reported third
quarter net income of $154 million, or $1.51 per share on a fully diluted basis.
Return on common stockholders' equity was 15 percent.
In the year-ago third quarter, earnings were a record $284 million, or $2.97
per share, substantially enhanced by near-record trading profits and $1.40 per
share from venture capital activities and other securities gains. Earnings for
the 1994 second quarter of $169 million, or $1.67 per share, were augmented by
$0.22 per share related to the Brazilian debt restructuring.
THIRD QUARTER HIGHLIGHTS
. The credit card business continued to be a substantial contributor to
earnings. Total managed credit card receivables grew to $11.4 billion at
September 30, up 18 percent from a year ago
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and 4 percent from June 30, when receivables were $11 billion. During the
third quarter, $1 billion of receivables were sold in a securitization
transaction, bringing the total securitized portfolio to $6.4 billion at
quarter-end.
. The provision for credit losses was $55 million, principally for credit card
receivables, compared to $65 million a year earlier.
. Credit quality remains excellent. Nonperforming assets were $177 million at
September 30, resulting in a nonperforming asset ratio of 0.7 percent, one of
the lowest among major U.S. banks. The allowance as a percentage of
nonperforming loans was 444 percent at quarter-end.
. Capital ratios continued to exceed the regulatory guidelines for "well-
capitalized" status by a wide margin. At September 30, the estimated Tier 1
risk-adjusted capital ratio was 9.2 percent, and the total risk-adjusted ratio
was approximately 14.0 percent.
. For the first nine months of 1994, net income was $516 million, or $5.17 per
share, compared to net income of $632 million, or $6.63 per share a year
earlier.
. Third quarter results reflect the acquisition of Lake Shore Bancorp, Inc.,
completed on July 8. This transaction was accounted for as a pooling-of-
interests; however, prior-period results were not restated. Approximately 6.2
million shares of First Chicago common stock were issued for the acquisition.
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. The Corporation repurchased 1.2 million shares of common stock during the
third quarter. The stock buyback program authorizes the repurchase of up to 7
million shares, and as of September 30, one-quarter of the program (1.7
million shares) had been completed.
NET INTEREST INCOME
Net interest income on a tax-equivalent basis was $341 million. Net
interest margin was 2.49 percent for the quarter, and average earning assets
were $54.2 billion.
Adjusted for the effects of credit card securitization and the activities
of First Chicago Capital Markets, Inc., net interest margin was 3.85 percent.
This compares to 3.62 percent in the year-ago quarter (excluding the impact of
$42 million of gains on Brazilian bonds and special tax items) and 3.81 percent
in the second quarter of 1994 (excluding $14 million of interest income from the
Brazilian debt restructuring).
NONINTEREST INCOME
Total noninterest income was $455 million for the third quarter.
Credit card fee revenues were $221 million for the quarter. When adjusted
for the impact of securitization, these revenues climbed 15 percent from a year
ago.
Combined trading activities generated profits of $42 million, compared to
$37 million in the second quarter and a near-record $77 million a year ago.
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Equity securities gains were $20 million, including $17 million in the
venture capital portfolio, down substantially from total gains of $228 million a
year ago. Net income attributable to the venture capital business -- revenues
less the portfolio's cost-to-carry and other expenses -- was $3 million, or
$0.02 per share, compared with net income of $1.26 per share in the year-ago
quarter and a loss of $0.06 per share in the second quarter of 1994.
NONINTEREST EXPENSE
Noninterest expense was $491 million for the quarter, including the
previously announced charge of $7 million to cover the elimination of 600
positions in the Community Banking Group. Excluding this charge as well as
venture capital activities, the ratio of expenses to total revenues was 61
percent.
CREDIT QUALITY
The provision for credit losses was $55 million in the third quarter. This
included $50 million for the consumer portfolios and $5 million for commercial
credits. The provision was $43 million in the second quarter of 1994, reflecting
a negative $14 million commercial provision, principally due to the Brazilian
debt restructuring.
The allowance for credit losses was $683 million at September 30,
representing 444 percent of nonperforming loans at quarter-end. Of the total
allowance, $520 million was related to commercial exposure and $163 million to
the consumer portfolios.
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Net charge-offs in the third quarter were $38 million. Net charge-offs in the
commercial portfolio were $3 million. Consumer net charge-offs, mainly in the
credit card portfolio, were $35 million. The net charge-off rate for credit card
receivables, including the securitized portfolio, was 3.5 percent, compared to
3.5 percent a year earlier and 3.8 percent in the second quarter.
OTHER DEVELOPMENTS
. First Chicago was recently designated as a financial agent by the U.S.
Treasury Department for the development and operation of the Electronic
Federal Tax Payment System (EFTPS). This nationwide system, to be operational
before year-end 1995, will allow the payment of various corporate and
individual federal taxes by electronic means -- including personal computers,
telephones, mainframe computers and point-of-sale terminals. This new business
will generate over $400 million of revenues over the seven-year life of the
award, based upon volume estimates by the Treasury Department, and will be
operated through an alliance with Mercantile Bank of St. Louis.
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FIRST CHICAGO CORPORATION AND SUBSIDIARIES
COMPARATIVE SUMMARY
(Dollars in millions, except per share data)
Three Months Ended September 30
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1994 1993 Change
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Net interest income--tax-equivalent basis...... $ 340.8 $ 340.6 -%
Provision for credit losses.................... 55.0 65.0 - 15
Noninterest income............................. 455.1 685.4 - 34
Noninterest expense............................ 491.4 475.5 + 3
Net income..................................... 153.8 284.1 - 46
Earnings per share
Primary
Net income................................. $1.54 $3.14 - 51
Average common and common-equivalent
shares (in millions)..................... 93.4 86.1 + 8
Fully diluted
Net income................................. $1.51 $2.97 - 49
Average shares, assuming full dilution
(in millions)............................ 97.1 91.9 + 6
Average balances
Loans........................................ $ 23,484 $ 21,772 + 8%
Earning assets............................... 54,226 48,403 + 12
Total assets................................. 66,050 56,932 + 16
Common stockholders' equity.................. 3,815 3,177 + 20
Stockholders' equity......................... 4,426 4,004 + 11
Net interest margin............................ 2.49% 2.79% - 11
Return on assets............................... 0.92 1.98 - 54
Return on common stockholders' equity.......... 15.0 33.8 - 56
Nine Months Ended September 30
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1994 1993 Change
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Net interest income--tax-equivalent basis...... $1,015.0 $ 957.1 + 6%
Provision for credit losses.................... 148.0 200.0 - 26
Noninterest income............................. 1,385.8 1,679.4 - 17
Noninterest expense............................ 1,436.5 1,376.2 + 4
Net income..................................... 516.3 631.7 - 18
Earnings per share
Primary
Net income................................. $5.29 $6.94 - 24
Average common and common-equivalent
shares (in millions)..................... 89.7 84.8 + 6
Fully diluted
Net income................................. $5.17 $6.63 - 22
Average shares, assuming full dilution
(in millions)............................ 93.5 90.3 + 4
Average balances
Loans........................................ $22,971 $22,247 + 3%
Earning assets............................... 51,393 48,364 + 6
Total assets................................. 62,672 56,570 + 11
Common stockholders' equity.................. 3,699 2,972 + 24
Stockholders' equity......................... 4,410 3,777 + 17
Net interest margin............................ 2.64% 2.64% -%
Return on assets............................... 1.10 1.49 - 26
Return on common stockholders' equity.......... 17.1 26.5 - 35
At September 30
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1994 1993 Change
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Assets......................................... $ 65,747 $ 53,173 + 24%
Deposits....................................... 29,670 29,379 + 1
Loans.......................................... 23,817 21,969 + 8
Common stockholders' equity.................... 3,930 3,378 + 16
Stockholders' equity........................... 4,541 4,139 + 10
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<TABLE>
<CAPTION>
FIRST CHICAGO CORPORATION
CAPITAL DATA
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9/30/94 6/30/94 3/31/94 12/31/93 9/30/93
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<S> <C> <C> <C> <C> <C>
Common Equity/Assets (1)............ 6.6% 6.5% 6.6% 7.2% 7.0%
Risk-Based Capital Ratios: (1)(2)(3)
Tier 1............................ 9.2% 8.9% 9.1% 8.8% 8.7%
Total............................. 14.0% 13.8% 14.2% 13.6% 13.5%
Leverage Ratio (1)(2)(3)............ 7.8% 8.0% 7.8% 8.0% 8.0%
Book Value of Common Equity......... $42.79 $43.40 $42.19 $40.55 $39.03
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(1) Net of investment in First Chicago Capital Markets, Inc.
(2) 6/30/94 ratios exclude $150 million of Preferred Stock Series D redeemed
on July 1, 1994.
(3) 9/30/94 ratios are estimated.
