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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) July 17, 1995
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)
Date: July 17, 1995 By: Maurice E. Moore
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Title: Senior Vice President
and Treasurer
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ATTACHMENT A
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CHICAGO, July 17, 1995 -- First Chicago Corporation today reported second
quarter net income of $187 million, versus $169 million in the second quarter of
1994 and $195 million in the 1995 first quarter.
Earnings per common share were $1.90 on a fully diluted basis, versus $1.67
in the year-ago quarter and $1.98 in the first quarter. Return on common
stockholders' equity was 17%.
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Net income for the first half of 1995 was a record $383 million, or $3.88
per share, for a return on common equity of 18%.
SECOND QUARTER HIGHLIGHTS
. Total managed credit card receivables rose to $13.5 billion at June 30,
a 23% increase from a year earlier. During the quarter, approximately
$2.0 billion of credit card receivables were securitized, bringing the
total securitized portfolio to $8.0 billion at quarter-end.
. Market-driven revenues, composed of securities gains and trading
profits, were $75 million. Equity securities gains totaled $59 million,
while trading results were $16 million due in part to lower customer
demand.
. Net gains from accelerated asset disposition portfolio activities were
$25 million.
. Credit quality ratios continued to be among the best of the major U.S.
banks. At June 30, nonperforming assets were $136 million, or 0.5% of
loans and other real estate, and the allowance for credit losses as a
percentage of nonperforming loans was 538%. The provision for credit
losses was $70 million, compared with $43 million in the year-ago
quarter that was favorably affected by an $18 million loan loss recovery
related to the Brazilian debt restructuring.
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. The Corporation repurchased approximately 650,000 shares during the
quarter under its common stock buyback program.
. First Chicago's book value increased to $46.37 per common share at June
30, up from $43.40 a year earlier.
NET INTEREST INCOME
Net interest income on a tax-equivalent basis was $365 million. The net
interest margin was 2.41%, and average earning assets were $60.8 billion.
Adjusted for the effects of credit card securitization and the activities of
First Chicago Capital Markets, Inc., net interest margin was 3.72%. Using the
same adjustments, year-over-year growth was 18% for average loans and 20% for
average earning assets. In the year-ago quarter the adjusted margin was 3.93%,
which included $14 million, or 12 basis points, from the Brazilian debt
restructuring. The adjusted margin for the first quarter of 1995 was 3.87%.
The relative stability of the adjusted margin despite swings in short-term
interest rates reflects the Corporation's long-standing policy of seeking to
maintain a neutral interest rate risk position.
NONINTEREST INCOME
Total noninterest income was $488 million for the second quarter.
Credit card fee revenues were $214 million. When adjusted for the impact of
securitization and the change in the classification of Mileage Plus payments,
these revenues increased 24% from the year-ago quarter.
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Market-driven revenues, which include securities gains and trading profits,
totaled $75 million versus $41 million in the year-ago quarter and $105 million
in the first quarter. Combined trading profits were $16 million, down from $37
million in the second quarter of 1994 and $50 million in the first quarter.
Equity securities gains were $59 million, including $34 million from the
venture capital portfolio and $25 million related to corporate finance
activities. Total equity gains were $4 million in the year-ago quarter and $55
million in the first quarter.
Earnings attributable to the venture capital portfolio -- revenues less the
portfolio's cost-to-carry and other expenses -- were $0.16 per share, compared
with $0.23 in the first quarter and a net loss of $0.06 in the year-ago quarter.
Net gains related to asset disposition activities totaled $25 million,
compared with $22 million in the year-ago quarter.
NONINTEREST EXPENSE
Noninterest expense was $488 million in the quarter. The ratio of expenses
to total revenues (net interest income and noninterest income) was 57% for the
second quarter and 57% for the first six months.
In the second quarter of 1994, noninterest expenses were $461 million, which
included Mileage Plus payments that are now netted against credit card fee
revenue.
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CREDIT QUALITY
The provision for credit losses was $70 million, including $62 million for
the consumer portfolios and $8 million for commercial credits. This compares
with $65 million in the first quarter of 1995 and $43 million in the second
quarter of last year, which included the Brazilian debt recovery.
The Corporation's allowance for credit losses was $689 million at June 30,
representing 538% of nonperforming loans. Of the total allowance, $537 million
was related to commercial exposure and $152 million was related to the consumer
portfolios. The allowance related to commercial exposure represented 420% of
commercial nonperforming loans.
Net charge-offs in the quarter were $45 million; all related to the consumer
segment, and mainly in the credit card portfolio. The net charge-off rate for
credit card receivables, including the securitized portfolio, was 4.0%,
compared with 3.8% a year earlier and 3.9% in the first quarter.
CAPITAL MANAGEMENT
The estimated Tier 1 risk-adjusted capital ratio was 8.7% at June 30, and
the total risk-adjusted ratio was approximately 13.0%. Both ratios remain
significantly above the regulatory guidelines for "well-capitalized" status.
As of June 30, the Corporation had completed 84% of its 7 million share
common stock buyback program. Since the program's inception, 5.9 million shares
have been repurchased.
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OTHER DEVELOPMENTS
On Wednesday, July 12, 1995, the Corporation and NBD Bancorp, Inc.
announced that they signed a definitive agreement providing for a merger of
equals, which will result in the combined company becoming the Midwest's leading
provider of banking services to consumers, middle market companies and large
corporate customers.
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First Chicago Corporation and Subsidiaries
Comparative Summary
<TABLE>
<CAPTION>
Three Months Ended June 30
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(Dollars in millions, except per share data) 1995 1994 Change
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<S> <C> <C> <C>
Net interest income--tax-equivalent basis......... $365.4 $338.7 + 8%
Provision for credit losses....................... 70.0 43.0 +63
Noninterest income................................ 487.7 428.8 +14
Noninterest expense............................... 487.7 460.6 + 6
Net income........................................ 187.4 168.7 +11
Earnings per share
Primary
Net income.................................... $1.95 $1.71 +14
Average common and common-equivalent shares
(in millions)................................ 91.2 88.0 + 4
Fully diluted
Net income.................................... $1.90 $1.67 +14
Average shares, assuming full dilution
(in millions)................................ 95.1 91.8 + 4
Average balances
Loans........................................... $26,145 $22,940 +14%
Earning assets.................................. 60,772 50,464 +20
Total assets.................................... 76,076 60,490 +26
Common stockholders' equity..................... 4,102 3,663 +12
Stockholders' equity............................ 4,713 4,424 + 7
Net interest margin............................... 2.41% 2.69% -10%
Return on assets.................................. 0.99 1.12 -12
Return on common stockholders' equity............. 17.4 16.5 + 5
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30
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(Dollars in millions, except per share data) 1995 1994 Change
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<S> <C> <C> <C>
Net interest income--tax-equivalent basis......... $745.1 $674.2 +11%
Provision for credit losses....................... 135.0 93.0 +45
Noninterest income................................ 957.8 930.7 + 3
Noninterest expense............................... 965.8 945.1 + 2
Net income........................................ 382.5 362.5 + 6
Earnings per share
Primary
Net income.................................... $3.98 $3.76 + 6
Average common and common-equivalent shares
(in millions)................................ 91.1 87.9 + 4
Fully diluted
Net income.................................... $3.88 $3.67 + 6
Average shares, assuming full dilution
(in millions)................................ 95.0 91.7 + 4
Average balances
Loans........................................... $26,090 $22,714 +15%
Earning assets.................................. 59,996 49,976 +20
Total assets.................................... 72,964 60,982 +20
Common stockholders' equity..................... 4,040 3,641 +11
Stockholders' equity............................ 4,651 4,402 + 6
Net interest margin............................... 2.50% 2.72% - 8%
Return on assets.................................. 1.06 1.20 -12
Return on common stockholders' equity............. 18.1 18.3 - 1
</TABLE>
<TABLE>
<CAPTION>
At June 30
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1995 1994 Change
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<S> <C> <C> <C>
Assets............................................ $75,328 $64,089 +18%
Loans............................................. 26,517 23,680 +12
Deposits.......................................... 33,764 28,577 +18
Common stockholders' equity....................... 4,160 3,763 +11
Stockholders' equity.............................. 4,771 4,524 + 5
</TABLE>
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<TABLE>
<CAPTION>
FIRST CHICAGO CORPORATION
CAPITAL DATA
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6/30/95 3/31/95 12/31/94 9/30/94 6/30/94
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<S> <C> <C> <C> <C> <C>
Common Equity/Assets (1).................. 6.1% 6.2% 6.6% 6.6% 6.5%
Risk-Based Capital Ratios: (1)(2)(3)......
Tier 1.................................. 8.7% 8.6% 8.8% 9.2% 8.9%
Total................................... 13.0% 13.0% 13.4% 13.9% 13.8%
Leverage Ratio (1)(2)(3).................. 7.0% 7.7% 7.5% 7.8% 8.0%
Book Value of Common Equity............... $46.37 $45.16 $43.65 $42.79 $43.40
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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) 6/30/95 ratios are estimated.
