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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 17, 1995
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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)
Date: April 17, 1995 By: Maurice E. Moore
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Title: Senior Vice President and
Treasurer
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Attachment A
CHICAGO, April 17, 1995 -- First Chicago Corporation today reported first
quarter net income of $195 million, slightly higher than $194 million in the
first quarter of 1994, and up strongly from $173 million in the fourth quarter.
Earnings per share were $1.98 on a fully diluted basis. This compares with
$2.00 in the year-ago quarter, of which $0.73 represented gains from venture
capital activities primarily associated with the Corporation's NEXTEL
transaction. Earnings per share were $1.72 in the fourth quarter of 1994.
Return on common stockholders' equity was 19% in the quarter.
FIRST QUARTER HIGHLIGHTS
. Total managed credit card receivables rose to $12.3 billion at March 31, an
18% increase from a year earlier. The securitized portfolio was $5.9 billion
at quarter-end.
. The Corporation renewed its agreement with United Airlines during the quarter,
extending their partnership into the next century in First Card's successful
Mileage Plus credit card program. Because of a new revenue-sharing
arrangement, starting in 1995, mileage payments previously recorded as
noninterest expenses are netted against associated revenues.
. Combined trading activities generated profits of $50 million -- the best
quarterly performance since fourth-quarter 1993. Increased customer demand for
foreign exchange transactions was a key factor in the quarter's results.
. Equity securities gains from the venture capital portfolio totaled $43
million.
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. Credit quality at March 31 remained excellent. Nonperforming assets were
$130 million, resulting in a nonperforming asset ratio of 0.5%, which
continues to be one of the lowest among major U.S. banks. The allowance as
a percentage of nonperforming loans was 618%. The provision for credit
losses was $65 million in the quarter, compared with $50 million a year
earlier.
. The Corporation made further progress in its common stock buyback program,
repurchasing approximately 400,000 shares during the quarter.
. First Chicago's book value increased to $45.16 per common share at
March 31, from $42.19 a year earlier.
NET INTEREST INCOME
Net interest income on a tax-equivalent basis was $380 million. Net
interest margin was 2.60%, and average earning assets were $59.2 billion.
Adjusted for the effects of credit card securitization and the activities
of First Chicago Capital Markets, Inc., net interest margin was 3.87%. The
adjusted margin was 3.93% in the year-ago quarter and 3.74% in the fourth
quarter of 1994. This relative stability in the margin reflects the
Corporation's longstanding policy of maintaining a neutral interest rate risk
position.
NONINTEREST INCOME
Total noninterest income was $470 million for the first quarter.
Credit card fee revenues were $191 million. When adjusted for the impact of
securitization and the change in the recognition of Mileage Plus payments, these
revenues climbed 25% from the year-ago quarter.
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Market-driven revenues, which include securities gains and trading profits,
totaled $105 million in the quarter, compared with $110 million a year earlier
and $85 million in the fourth quarter.
Combined trading activities generated profits of $50 million, reflecting
increased customer-driven foreign exchange activity due to more volatile
currency markets as well as higher fixed income trading revenues. This reflects
a significant improvement from $12 million in the fourth quarter of 1994, and a
$25 million loss in the year-ago quarter resulting from weakness in the emerging
markets sector.
Equity securities gains were $55 million, including $43 million in the
venture capital portfolio and $12 million related to corporate financing
activities. Total equity gains were $134 million in the year-ago quarter,
primarily associated with the Corporation's investment in NEXTEL Communications,
Inc., and $71 million in the fourth quarter.
Earnings attributable to the venture capital portfolio--revenues less the
portfolio's cost-to-carry and other expenses--were $0.23 per share, compared
with $0.73 in the year-ago quarter and $0.26 in the fourth quarter.
In the first quarter of 1994, a $35 million gain was recorded from the sale
of the Corporation's remaining interest in Brinson Holdings, Inc.
NONINTEREST EXPENSE
Noninterest expense was $478 million in the quarter. The ratio of expenses
to total revenues (net interest income and noninterest income) was 56%.
In the first quarter of 1994, expenses were $485 million, which included
$42 million of nonrecurring charges, related mainly to a change in accounting
treatment for personal computers and other special items.
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CREDIT QUALITY
The provision for credit losses was $65 million, including $58 million for
the consumer portfolios and $7 million for commercial credits. This compares
with $76 million in the fourth quarter of 1994 and $50 million in the year-ago
quarter. The Corporation's allowance for credit losses was $754 million at March
31, representing 618% of nonperforming loans. Of the total allowance, $529
million was related to commercial exposure and $225 million to the consumer
portfolios.
Net charge-offs in the quarter were $44 million, reflecting $50 million of
consumer net charge-offs, mainly in the credit card portfolio, and net
recoveries of $6 million in the commercial portfolio. The net charge-off rate
for credit card receivables, including the securitized portfolio, was 3.9%,
compared with 3.6% a year earlier and 3.7% in the fourth quarter.
CAPITAL MANAGEMENT
The estimated Tier 1 risk-adjusted capital ratio was 8.6% at March 31, and
the total risk-adjusted ratio was approximately 13.0%. Both ratios remain
significantly above the regulatory guidelines for "well-capitalized" status.
As of March 31, the Corporation had completed 75% of its 7 million share
common stock buyback program. Since the program's inception, 5.2 million shares
have been repurchased, including approximately 400,000 shares during the first
quarter.
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First Chicago Corporation and Subsidiaries
Comparative Summary
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Three Months
Ended March 31
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1995 1994 Change
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<S> <C> <C> <C>
Net interest income--tax equivalent basis..................................... $379.7 $335.5 + 13%
Provision for credit losses................................................... 65.0 50.0 + 30
Noninterest income............................................................ 470.1 501.9 - 6
Noninterest expense........................................................... 478.1 484.5 - 1
Net income.................................................................... 195.1 193.8 + 1
Earnings per share
Primary
Net income................................................................ $2.03 $2.05 - 1
Average common and common-equivalent shares (in millions)................. 91.0 87.7 + 4
Fully diluted
Net income................................................................ $1.98 $2.00 - 1
Average shares, assuming full dilution (in millions)...................... 94.8 91.6 + 3
Average balances
Loans....................................................................... $26,034 $22,488 + 16%
Earning assets.............................................................. 59,220 49,488 + 20
Total assets................................................................ 69,852 61,475 + 14
Common stockholders' equity................................................. 3,978 3,620 + 10
Stockholders' equity........................................................ 4,589 4,381 + 5
Net interest margin........................................................... 2.60% 2.75% - 5
Return on assets.............................................................. 1.13 1.28 - 12
Return on common stockholders' equity......................................... 18.9 20.2 - 6
</TABLE>
<TABLE>
<CAPTION>
At March 31
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1995 1994 Change
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<S> <C> <C> <C>
Assets........................................................................ $72,378 $59,843 + 21%
Loans......................................................................... 27,018 23,782 + 14
Deposits...................................................................... 32,191 28,833 + 12
Common stockholders' equity................................................... 4,057 3,647 + 11
Stockholders' equity.......................................................... 4,668 4,408 + 6
</TABLE>
<TABLE>
<CAPTION>
FIRST CHICAGO CORPORATION
CAPITAL DATA
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3/31/95 12/31/94 9/30/94 6/30/94 3/31/94
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<S> <C> <C> <C> <C> <C>
Common Equity/Assets (1)....................................... 6.2% 6.6% 6.6% 6.5% 6.6%
Risk-Based Capital Ratios: (1)(2)(3)
Tier 1....................................................... 8.6% 8.8% 9.2% 8.9% 9.1%
Total........................................................ 13.0% 13.4% 13.9% 13.8% 14.2%
Leverage Ratio (1)(2)(3)....................................... 7.7% 7.5% 7.8% 8.0% 7.8%
Book Value of Common Equity.................................... $45.16 $43.65 $42.79 $43.40 $42.19
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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) 3/31/95 ratios are estimated.
