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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) April 13, 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
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)
Date: April 13, 1994 By: /s/ Robert A. Rosholt
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Title: Executive Vice President
and Chief Financial
Officer
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Attachment A
CHICAGO, April 13, 1994--First Chicago Corporation today reported first
quarter net income of $193.8 million, or $2.00 per common share on a fully
diluted basis. Return on common stockholders' equity was 20 percent.
Net income for the 1993 first quarter was $179.1 million, or $1.91 per common
share, fully diluted.
FIRST QUARTER HIGHLIGHTS
. The credit card business continued to exceed expectations in both revenue
and volume levels. At quarter-end, total receivables were $10.4 billion,
an increase of 22 percent from the year-ago quarter.
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. Credit quality improved further in the quarter. The provision for credit
losses of $50 million -- including commercial provisions of $7 million -- was
the lowest level in five years. Nonperforming assets were $280 million, or
1.2 percent of related assets, essentially unchanged from year-end and down
26 percent from a year earlier.
. Combined trading activities resulted in a loss of $25 million for the
quarter. The recent turbulence in global markets caused sharp price declines
and reduced liquidity, particularly in emerging markets securities. These
factors produced significant valuation losses. The total loss in emerging
markets securities trading was $54 million.
. Equity gains from the venture capital portfolio totaled $119 million. Net
income from the venture capital business was $69 million, or 73 cents per
share. During the quarter, the Corporation issued 7.5 million notes -- Debt
Exchangeable for Common Stock ("DECS") -- related to its venture capital
investment in NEXTEL Communications, Inc. This transaction, along with
subsequent appreciation and sales of NEXTEL common stock, accounted for about
80 percent of the venture capital gains in the quarter.
. Other revenue included a $35 million gain, recorded in January, on the sale
of the Corporation's remaining investment in Brinson Holdings, Inc. to its
management. Brinson Holdings is the institutional investment management
company sold in 1989.
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. In the first quarter, the Corporation had nonrecurring charges of $42
million, $24 million of which related to a change in the accounting
treatment for personal computer equipment. Previously, purchases of PC's
were capitalized and depreciated; in the future, most of these purchases
will be expensed. Other special charges included $18 million of litigation
and other corporate expenses.
. At March 31, 1994, the Corporation's estimated Tier 1 risk-adjusted capital
ratio was 9.0 percent, and the total risk-adjusted ratio was approximately
14.0 percent. Both ratios are significantly above the regulatory guidelines
for "well capitalized" status. First Chicago's book value at quarter-end
was $42.19 per common share.
NET INTEREST INCOME
Net interest income on a tax-equivalent basis was $336 million for the first
quarter. Net interest margin increased to 2.75 percent, and average earning
assets were $49.5 billion.
Adjusted for the effects of credit card securitization and the activities of
the Corporation's capital markets subsidiary, net interest margin was a strong
3.93 percent. This was up from 3.61 percent in the first quarter of 1993 and
3.62 percent in the fourth quarter of 1993.
Strong growth in total credit card receivables, a more favorable earning asset
mix and conservative interest spread management were major factors in the margin
improvement. Loans outstanding to middle market customers, consumers and small
businesses also increased during the quarter.
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NONINTEREST INCOME
Total noninterest income was $502 million for the first quarter. Combined
trading activities generated a loss of $25 million.
Equity securities gains were $134 million, including $119 million from the
venture capital portfolio. The remaining $15 million of gains were realized from
equity securities held in conjunction with corporate financing activities.
The $35 million gain related to the sale of the Corporation's interest in
Brinson Holdings, Inc. was recorded in other revenue.
NONINTEREST EXPENSE
Noninterest expense was $485 million for the quarter, including the $42
million of special charges. Salaries and benefits reflected lower incentive
compensation costs versus recent periods. Other expense included increased
spending in the credit card business.
Excluding special items, noninterest expense was up 3 percent from a year-ago.
CREDIT QUALITY
The provision for credit losses was $50 million for the first quarter. This
included $43 million for the consumer portfolios and $7 million principally for
middle market commercial credits.
The Corporation's allowance for credit losses was $710 million at March 31,
1994. Of this total, $507 million was related to the commercial exposure segment
and $203 million to the consumer portfolios.
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Net charge-offs were $33 million for the first quarter. Commercial net
recoveries were $12 million. Consumer net charge-offs, mainly in the credit
card portfolio, were $45 million. The net charge-off rate for total credit card
receivables was 3.6 percent.
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First Chicago Corporation and Subsidiaries
Comparative Summary
<TABLE>
<CAPTION>
Three Months
Ended March 31
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(Dollars in millions, <S> <S> <S>
except per share data) 1994 1993 Change
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Net interest income--tax-equivalent
basis................................ $335.5 $305.0 + 10%
Combined credit provisions............ 50.2 65.5 - 23
Noninterest income.................... 501.9 490.5 + 2
Noninterest expense (excluding
provision for other real estate)..... 484.3 433.6 + 12
Net income............................ 193.8 179.1 + 8
Earnings per share
Primary
Net income.......................... 2.05 1.97 + 4
Average common and common-equivalent
shares (in millions)............... 87.7 84.1 + 4
Fully diluted
Net income.......................... 2.00 1.91 + 5
Average shares, assuming full
dilution (in millions)............. 91.6 88.0 + 4
Average balances
Loans................................ $22,460 $22,162 + 1%
Earning assets....................... 49,488 47,939 + 3
Total assets......................... 61,475 55,826 + 10
Common stockholders' equity.......... 3,620 2,803 + 29
Stockholders' equity................. 4,381 3,521 + 24
Net interest margin................... 2.75% 2.58% + 7%
Return on assets...................... 1.28 1.30 - 2
Return on common stockholders' equity. 20.2 23.9 - 15
At March 31
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1994 1993 Change
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Assets................................ $59,843 $48,482 + 23%
Deposits.............................. 28,833 27,687 + 4
Loans................................. 23,782 21,666 + 10
Common stockholders' equity........... 3,647 2,888 + 26
Stockholders' equity.................. 4,408 3,757 + 17
</TABLE>
NOTE: In 1994, the Corporation has prospectively changed its balance sheet
presentation to a separate disclosure of derivative product assets and
liabilities which include currency options purchased and currency options
written. This change is consistent with the prospective adoption of FASB
Interpretation No. 39 that requires the reporting of unrealized gains on
derivative financial instruments as assets and unrealized losses on
derivative financial instruments as liabilities. Carrying value amounts
recognized for derivative financial instruments executed with the same
counterparty under a legally enforceable master netting arrangement are
offset. Previously, the Corporation reported unrealized gains and losses
related to certain derivative financial instruments on a net basis.
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<TABLE>
<CAPTION>
FIRST CHICAGO CORPORATION
CAPITAL DATA
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3/31/94 12/31/93 9/30/93 6/30/93 3/31/93
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<S> <C> <C> <C> <C> <C>
Common Equity/Assets (1)........... 6.6% 7.2% 7.0% 6.5% 6.4%
Risk-Based Capital Ratios:(1)(2)
Tier 1........................... 9.0% 8.8% 8.7% 8.0% 7.8%
Total............................ 14.0% 13.6% 13.5% 13.0% 12.4%
Leverage Ratio (1)(2).............. 7.8% 8.0% 8.0% 7.4% 7.3%
Book Value of Common Equity........ $42.19 $40.55 $39.03 $36.27 $34.78
</TABLE>
(1) Net of investment in First Chicago Capital Markets, Inc.
(2) 3/31/94 ratios are estimated.
