<PAGE>
- --------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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 20, 1995
BANK OF BOSTON CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 1-6522 04-2471221
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 Federal Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 434-2200
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<PAGE>
-2-
Item 5. Other Events.
- ----------------------
On July 20, 1995, Bank of Boston Corporation (the Corporation) issued a
press release announcing its earnings for the quarter ended June 30, 1995. The
financial information that is included herewith as Exhibit 99(a) was included in
the Corporation's press release and is incorporated herein by reference.
On July 27, 1995, the Corporation issued a press release announcing that it
had increased its common dividend and declared preferred dividends. Included
herewith as Exhibit 99(b) is the Corporation's press release related to
dividends and such information is incorporated herein by reference.
On July 27, 1995, the Corporation issued a press release announcing the
retirement of Ira Stepanian as Chairman and Chief Executive Officer and the
election of Charles K. Gifford as the Corporation's new Chairman and Chief
Executive Officer. Included herewith as Exhibit 99(c) is the Corporation's press
release related to these changes in management and such information is
incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
- -------------------------------------------
(c) Exhibits.
99(a) Financial information included in the Corporation's Press Release dated
July 20, 1995.
99(b) The Corporation's Press Release dated July 27, 1995 related to dividends.
99(c) The Corporation's Press Release dated July 27, 1995 related to
management changes.
<PAGE>
-3-
SIGNATURES
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 OF BOSTON CORPORATION
Dated: August 2, 1995 /s/ William J. Shea
---------------------------------------------------
William J. Shea
Vice Chairman,
Chief Financial Officer and Treasurer
<PAGE>
BOSTON, July 20, 1995 -- Bank of Boston Corporation (NYSE: BKB) reported
today second quarter net income of $133 million, or $1.10 per common share on a
fully diluted basis. This compares with $125 million, or $1.04 per share, in
the first quarter of 1995 and $95 million, or $.77 per share ($104 million, or
$.86 per share, before acquisition-related charges) in the second quarter of
1994.
Net income for the first half of 1995 was $259 million, or $2.14 per
share, compared with net income of $191 million, or $1.56 per share ($207
million, or $1.71 per share, before acquisition-related charges and
extraordinary items), for the first half of 1994.
Second quarter highlights were:
. Total revenues grew to $672 million on a fully taxable equivalent
basis, compared with $646 million in the prior quarter (excluding
gains from the sales of businesses) and $568 million in the second
quarter of 1994;
. On a fully taxable equivalent basis, operating income (before credit
costs and special items) improved to $283 million in the second
quarter, compared with $265 million in the prior quarter and $219
million in the second quarter of 1994;
. Operating ratio improved further to 57.9% in the second quarter. This
compares with 59.0% in the prior quarter and 61.4% in the second
quarter of 1994;
. Nonaccrual loans and OREO totaled $417 million at June 30, 1995,
compared with $422 million at March 31, 1995 and $518 million at June
30, 1994. The ratio of nonaccrual loans and OREO to related assets
declined to 1.3% from 1.4% in the prior quarter and 1.7% in the second
quarter of 1994;
. Return on average common equity was 17.22% in the second quarter of
1995, compared with 17.43% in the prior quarter and 13.87% (15.36%
before acquisition-related charges) in the second quarter of 1994.
Return on average assets was 1.21% in the second quarter of 1995,
compared with 1.19% in the prior quarter and .89% (.97% before
acquisition-related charges) in the second quarter of 1994.
<PAGE>
Net interest revenue
Net interest revenue, on a fully taxable equivalent basis, was $436 million
for the second quarter of 1995, compared with $427 million in the prior quarter
and $376 million for the same period in 1994. Net interest margin was 4.49% for
the second quarter of 1995, compared with 4.56% in the first quarter of 1995 and
3.98% in the second quarter of last year. For the first half of 1995, net
interest revenue, on a fully taxable equivalent basis, was $863 million,
compared with $718 million for the first half of 1994. Net interest margin was
4.52% for the first half of 1995, compared with 3.89% for the first half of
1994.
The $9 million increase in net interest revenue from the prior quarter was
mainly due to wider Latin American spreads and higher loan volume principally in
Latin America and in domestic consumer lending portfolios. These items were
partially offset by higher domestic deposit costs. The decline in margin from
the first quarter principally reflected narrower domestic spreads and lower
interest recoveries from problem loans.
The increases in net interest revenue and margin of $60 million and 51
basis points, respectively, from the second quarter of 1994 and $145 million and
63 basis points, respectively, from the first six months of 1994 mainly
reflected wider spreads from both domestic and international operations.
Domestically, the Corporation benefited from loan yields growing at a faster
pace than retail deposit rates, while the international margin improvement was
primarily driven by Argentina and Brazil. Net interest revenue also benefited
from higher domestic consumer and Latin American loan levels.
Noninterest income
Noninterest income is composed of the following:
<TABLE>
<CAPTION>
First
Quarter Second Quarter Six Months
- ------- -------------- ------------
1995 (in millions) 1995 1994 Change 1995 1994 Change
- ------- ----- ----- ------ ----- ----- ------
<C> <S> <C> <C> <C> <C> <C> <C>
$ 106 Financial service fees $ 113 $ 94 $19 $ 219 $ 186 $ 33
53 Trust and agency fees 57 50 7 110 98 12
1 Trading profits and commissions 6 1 5 7 5 2
6 Securities portfolio gains, net 0 6 (6) 6 10 (4)
16 Mezzanine/venture capital profits, net 23 5 18 39 19 20
12 Foreign exchange trading profits, net 16 11 5 28 20 8
24 Other income 21 25 (4) 45 62 (17)
----- ----- ----- --- ----- ----- ----
218 Subtotal 236 192 44 454 400 54
Gains from sales of businesses:
75 Maine/Vermont bank subsidiaries 0 0 0 75 0 75
0 Domestic factoring business 0 0 0 0 27 (27)
----- ----- ----- --- ----- ----- ----
$ 293 Total $ 236 $ 192 $44 $ 529 $ 427 $102
===== ===== ===== === ===== ===== ====
</TABLE>
<PAGE>
Noninterest income increased $18 million from the first quarter of 1995,
before gains from sales of bank subsidiaries. Financial service fees, detailed
below, increased $7 million from the prior quarter. The improvement in trust
and agency fees from prior periods mainly reflected seasonal tax preparation
fees and higher fees from the Latin American mutual fund business, principally
Brazil. Trading account profits improved from the prior quarter due to higher
profits from both Latin American securities trading and the domestic treasury
business. The former was mainly responsible for the increases in trading
account profits from prior year periods. Mezzanine/venture capital profits
continued strong in the second quarter and showed improvement in all prior
period comparisons as a result of a higher level of sales activity. Foreign
exchange profits were higher compared with all prior periods as increases were
posted by Latin America and domestic treasury. The decline in other income from
the prior quarter and the second quarter of 1994 reflected lower gains from the
sale of mortgage servicing rights, while the decline from the first half of 1994
was mainly due to the absence of net gains recorded during the first quarter of
1994 from the sale of securities originally acquired in connection with loan
restructurings.
Financial service fees
The components of financial service fees are as follows:
<TABLE>
<CAPTION>
First
- -------
Quarter Second Quarter Six Months
- ------- -------------- ------------
1995 (in millions) 1995 1994 Change 1995 1994 Change
- ------- ----- ----- ------- ----- ----- -------
<C> <S> <C> <C> <C> <C> <C> <C>
$ 30 Deposit fees $ 29 $ 31 $(2) $ 59 $ 61 $(2)
19 Letters of credit and acceptance fees 16 14 2 35 27 8
21 Net mortgage servicing fees 27 13 14 48 23 25
13 Loan-related fees 17 15 2 30 29 1
23 Other 24 21 3 47 46 1
----- ----- ----- --- ----- ----- ---
$ 106 Total $ 113 $ 94 $19 $ 219 $ 186 $33
===== ===== ===== === ===== ===== ===
</TABLE>
The increase in net mortgage servicing fee income from the prior
quarter included a higher level of profits from contracts used to manage
prepayment risk in the servicing portfolio partially offset by higher
amortization of the servicing asset. The positive comparisons with prior year
periods also reflect the growth in the servicing portfolio to $38 billion from
$33 billion a year ago. Letter of credit and acceptance fees declined from the
first quarter of 1995 due to lower import-related fees in Latin America. The
growth in loan-related fees from the first quarter was due to higher syndication
revenues reflecting the Corporation's increased emphasis on capital markets
activities.
<PAGE>
Noninterest expense
The components of noninterest expense are as follows:
<TABLE>
<CAPTION>
First
- -------
Quarter Second Quarter Six Months
- ------- -------------- ------------
1995 (in millions) 1995 1994 Change 1995 1994 Change
- ------- ----- ----- ------- ----- ----- -------
<C> <S> <C> <C> <C> <C> <C> <C>
$ 217 Employee costs $ 220 $ 199 $ 21 $ 437 $ 394 $ 43
59 Occupancy & equipment 60 56 4 119 111 8
13 Professional fees 11 14 (3) 24 26 (2)
12 FDIC insurance premiums 11 13 (2) 23 24 (1)
80 Other 87 67 20 167 135 32
----- ----- ----- ---- ----- ----- ----
Noninterest expense, before acquisition-
381 related charges and OREO costs 389 349 40 770 690 80
0 Acquisition-related charges 0 16 (16) 0 16 (16)
2 OREO costs 3 7 (4) 5 13 (8)
----- ----- ----- ---- ----- ----- ----
$ 383 Total $ 392 $ 372 $ 20 $ 775 $ 719 $ 56
===== ===== ===== ==== ===== ===== ====
</TABLE>
Noninterest expense, before acquisition-related charges and OREO costs, was
$389 million in the second quarter of 1995, compared with $381 million in the
prior quarter and $349 million for the same quarter in 1994. Using this expense
base, the Corporation's operating ratio of expenses to revenue improved to 57.9%
in the second quarter of 1995, compared with 59.0% in the first quarter and
61.4% in the second quarter of last year.
Compared with all prior periods, the increase in noninterest expense
reflects increases from the Corporation's Latin American and personal banking
growth businesses. The increase in employee costs includes merit increases and
higher levels of incentive compensation. The increase in nonemployee costs
reflects, in part, higher levels of advertising and travel expenses, including
spending for key business initiatives, such as the Corporation's Global
Initiative, and the promotion of new products. In addition, the 1995 periods
reflect higher levels of goodwill amortization over the comparative 1994
periods.
<PAGE>
Credit Profile
Loan and Lease Portfolio
The segments of the lending portfolio are as follows:
<TABLE>
<CAPTION>
(in millions) 6-30-95 3-31-95 12-31-94 9-30-94 6-30-94
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
United States Operations:
Commercial, industrial and financial $11,907 $11,684 $11,805 $11,987 $11,871
Commercial real estate
Construction 327 355 354 464 499
Other commercial real estate 2,489 2,645 3,141 3,110 3,084
Consumer-related loans
Secured by 1-4 family residential
properties 4,752 4,635 5,004 4,878 4,215
Other 2,834 2,603 2,462 2,373 2,283
Lease financing 1,356 1,350 1,366 1,312 1,263
Unearned income (211) (216) (216) (199) (198)
------- ------- ------- ------- -------
23,454 23,056 23,916 23,925 23,017
------- ------- ------- ------- -------
International Operations:
Loans and lease financing, net of
unearned income 7,934 7,383 7,089 6,956 6,949
------- ------- ------- ------- -------
Total loans and lease financing $31,388 $30,439 $31,005 $30,881 $29,966
======= ======= ======= ======= =======
</TABLE>
Loans and leases grew over $900 million from March 31 due to increases in
consumer-related and Latin American loans. The growth in the consumer-related
category included increases from the Corporation's national consumer finance
companies, Fidelity Acceptance Corp. and Ganis Credit Corp. Loans purchased
from Century Acceptance Corp. are not included in the June 30 total since this
transaction did not close until July. Total commercial loans were essentially
flat this quarter as an increase in the commercial and industrial portfolio,
principally in New England, was offset by the continued decline in the real
estate portfolio. The international portfolio increased by over $500 million
mainly due to ongoing growth in the Latin American portfolio.
Nonaccrual Loans and OREO
Nonaccrual loans and OREO amounted to $417 million at June 30, 1995,
compared with $422 million at March 31, 1995, and $518 million at June 30, 1994.
Nonaccrual loans and OREO represented 1.3% of related assets at June 30, 1995,
compared with 1.4% at March 31, 1995 and 1.7% at June 30, 1994.
The components of consolidated nonaccrual loans and OREO are as follows:
<TABLE>
<CAPTION>
(in millions) 6-30-95 3-31-95 12-31-94 9-30-94 6-30-94
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Domestic nonaccrual loans:
Commercial, industrial and
financial $106 $111 $113 $119 $131
Commercial real estate
Construction 16 20 13 18 30
Other commercial real estate 85 97 106 119 160
Consumer-related loans
Secured by 1-4 family
residential properties 45 45 44 35 30
Other 21 21 24 15 9
---- ---- ---- ---- ----
273 294 300 306 360
---- ---- ---- ---- ----
International nonaccrual loans 66 57 65 71 87
---- ---- ---- ---- ----
Total nonaccrual loans 339 351 365 377 447
OREO 78 71 76 93 71
---- ---- ---- ---- ----
Total $417 $422 $441 $470 $518
==== ==== ==== ==== ====
</TABLE>
<PAGE>
Provision and Reserve for Credit Losses
The reserve for credit losses at June 30, 1995 was $692 million, or 2.20%
of outstanding loans and leases, compared with $696 million, or 2.29% at March
31, 1995, and $676 million, or 2.26% at June 30, 1994. The reserve for credit
losses was 204% of nonaccrual loans at June 30, 1995, 198% at March 31, 1995,
and 151% at June 30, 1994.
The provision for credit losses was $40 million for the second quarter of
1995 and $90 million for the first quarter of 1995, including a special
provision of $50 million reflecting management's intent to further strengthen
the Corporation's loan loss reserve. The provision for the second quarter of
1994 was $25 million.
Net credit losses were $44 million for the second quarter of 1995, compared
with $42 million for the prior quarter and $30 million for the comparable period
last year. Net credit losses as a percent of average loans and leases on an
annualized basis were .57% in 1995's second quarter, compared with .56% for the
first quarter of 1995 and .41% for the second quarter of 1994.
Net credit losses were as follows:
<TABLE>
<CAPTION>
First
-----
Quarter Second Quarter Six Months
- ------- ---------------- -----------------
1995 (in millions) 1995 1994 1995 1994*
---- ---- ---- ---- -----
<C> <S> <C> <C> <C> <C>
Domestic
$ 9 Commercial, industrial and financial $ 9 $ 6 $ 18 $ 4
6 Commercial real estate 14 10 20 17
Consumer-related loans
4 Secured by 1-4 family residential properties 3 2 7 5
8 Other 10 9 18 20
----- ----- ----- ----- -----
27 Subtotal 36 27 63 46
15 International 8 3 23 16
----- ----- ----- ----- -----
$ 42 Total $ 44 $ 30 $ 86 $ 62
===== ===== ===== ===== =====
</TABLE>
* Excludes credit losses related to the transfer of assets to the accelerated
disposition portfolio.
The Corporation
Bank of Boston Corporation, New England's only global bank, with assets of
$45.3 billion, is a superregional bank holding company that operates in three
principal businesses: Personal Banking, Corporate Banking and Global Banking.
Its major banking subsidiaries are The First National Bank of Boston, in
Massachusetts, Bank of Boston Connecticut and Rhode Island Hospital Trust
National Bank. The Corporation and its subsidiaries provide a broad range of
financial services to individual, corporate, institutional and governmental
customers, as well as to other banks in New England and in selected markets
across the nation and around the world. The Corporation's common and preferred
stocks are listed on the New York and Boston exchanges.
<PAGE>
Consolidated Balance Sheet
<TABLE>
<CAPTION>
(dollars in millions)
March 31 June 30
-------- ------------------
1995 1995 1994
------ ------- -------
<C> <S> <C> <C>
Assets
Securities:
$1,857 Held to maturity $ 1,821 $ 1,666
2,388 Available for sale 3,011 1,936
30,439 Loans and lease financing 31,388 29,966
(696) Reserve for credit losses (692) (676)
------- ------- -------
29,743 Net loans and lease financing 30,696 29,290
3,285 Other earning assets 3,532 3,689
6,189 Cash and other nonearning assets 6,194 6,856
------- ------- -------
$43,462 Total Assets $45,254 $43,437
======= ======= =======
Liabilities and Stockholders' Equity
$28,275 Deposits $29,121 $29,395
7,752 Funds borrowed 9,045 7,175
2,093 Notes payable 2,110 2,050
2,014 Other liabilities 1,513 1,812
------- ------- -------
40,134 Total Liabilities 41,789 40,432
------- ------- -------
Stockholders' Equity
508 Preferred equity 508 508
2,820 Common equity 2,957 2,497
------- ------- -------
3,328 Total Stockholders' Equity 3,465 3,005
------- ------- -------
$43,462 Total Liabilities and Stockholders' Equity $45,254 $43,437
======= ======= =======
</TABLE>
Selected Average Balances
<TABLE>
<CAPTION>
Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
---------- ---------------- ----------------
1995 1995 1994 1995 1994
------ ------- ------- ------- -------
<C> <S> <C> <C> <C> <C>
Assets
$30,123 Loans and lease financing $30,928 $29,105 $30,528 $28,860
4,288 Securities 4,526 3,164 4,408 3,054
37,987 Total earning assets 38,970 37,882 38,483 37,193
42,845 Total assets 44,101 42,702 43,473 41,958
Liabilities and Stockholders' Equity
24,145 Interest bearing deposits 24,195 23,436 24,170 23,459
4,609 Noninterest bearing deposits 4,612 4,796 4,611 4,963
------- ------- ------- ------- -------
28,754 Total deposits 28,807 28,232 28,781 28,422
2,133 Notes payable 2,062 1,957 2,098 2,075
33,562 Total interest bearing liabilities 34,431 33,531 34,001 32,619
2,699 Common stockholders' equity 2,889 2,463 2,790 2,450
3,207 Total stockholders' equity 3,397 2,971 3,298 2,958
</TABLE>
Number of Employees
<TABLE>
<CAPTION>
June 30 Mar 31 June 30
1995 1995 1994
--------- -------- --------
<S> <C> <C> <C>
Full time equivalent employees 18,113 17,926 18,600
</TABLE>
<PAGE>
Consolidated Statement of Income
<TABLE>
<CAPTION>
(dollars in millions, except per share amounts)
Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
---------- ------------------ ----------------------
1995 1995 1994 1995 1994
---------- -------- -------- -------- ----------
<C> <S> <C> <C> <C> <C>
$1,033.3 Interest income $1,103.4 $ 840.0 $2,136.7 $1,563.7
607.4 Interest expense 669.3 465.5 1,276.7 848.5
-------- -------- -------- -------- --------
425.9 Net interest revenue 434.1 374.5 860.0 715.2
90.0 Provision for credit losses 40.0 25.0 130.0 70.0
-------- -------- -------- -------- --------
Net interest revenue after provision
335.9 for credit losses 394.1 349.5 730.0 645.2
-------- -------- -------- -------- --------
Noninterest income:
105.6 Financial service fees 113.3 93.9 218.9 186.3
52.7 Trust and agency fees 57.2 50.3 109.9 98.0
1.1 Trading profits and commissions 6.1 1.2 7.2 5.1
6.1 Securities portfolio gains, net .2 5.9 6.4 9.8
127.7 Other income 59.3 41.0 187.0 128.2
-------- -------- -------- -------- --------
293.2 Total noninterest income 236.1 192.3 529.4 427.4
-------- -------- -------- -------- --------
Noninterest expense:
176.4 Salaries 179.6 161.5 356.0 319.3
40.4 Employee benefits 40.9 37.0 81.3 74.0
34.9 Occupancy expense 34.4 33.1 69.4 65.0
24.1 Equipment expense 25.7 23.4 49.8 47.0
105.3 Other expense 108.8 94.2 214.1 185.3
-------- -------- -------- -------- --------
381.1 Subtotal 389.4 349.2 770.6 690.6
0 Acquisition-related charge 0 16.4 0 16.4
2.1 OREO costs 2.7 6.8 4.7 12.1
-------- -------- -------- -------- --------
383.2 Total noninterest expense 392.1 372.4 775.3 719.1
-------- -------- -------- -------- --------
245.9 Income before income taxes and extraordinary item 238.1 169.4 484.1 353.5
120.6 Provision for income taxes 104.8 74.9 225.4 156.3
-------- -------- -------- -------- --------
125.3 Income before extraordinary item 133.3 94.5 258.7 197.2
Extraordinary loss from early extinguishment of debt,
0 net of tax 0 0 0 (6.6)
-------- -------- -------- -------- --------
$ 125.3 NET INCOME $ 133.3 $ 94.5 $ 258.7 $ 190.6
======== ======== ======== ======== ========
Per Common Share:
Income before extraordinary item:
$ 1.08 Primary $ 1.11 $ .80 $ 2.19 $ 1.68
$ 1.04 Fully diluted $ 1.10 $ .77 $ 2.14 $ 1.62
Net income:
$ 1.08 Primary $ 1.11 $ .80 $ 2.19 $ 1.62
$ 1.04 Fully diluted $ 1.10 $ .77 $ 2.14 $ 1.56
$ .27 Dividends declared $ .27 $ .22 $ .54 $ .44
Average number of common shares, in thousands:
107,278 Primary 111,369 106,619 109,335 106,410
111,820 Fully diluted 112,933 111,286 112,718 111,055
$ 9.4 Preferred dividends $ 9.3 $ 9.4 $ 18.7 $ 18.7
</TABLE>
<PAGE>
Other Data
<TABLE>
<CAPTION>
(dollars in millions, except per share amounts)
Quarter Quarters Ended Six Months Ended
Ended June 30 June 30
March 31 ------- -------
--------
1995 1995 1994 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net income before acquisition-related
charges and extraordinary item:
$125.3 Net income $133.3 $ 94.5 $258.7 $190.6
Merger and restructuring charges,
0 net of tax 0 9.2 0 9.2
0 Extraordinary item, net of tax 0 0 0 6.6
------ ------ ------ ------ ------
$125.3 Net income before merger and restructuring charges $133.3 $103.7 $258.7 $206.4
====== and extraordinary item ====== ====== ====== ======
Earnings per share before acquisition-related charges and
extraordinary item:
$1.08 Primary $ 1.11 $ .89 $ 2.19 $ 1.77
$1.04 Fully diluted $ 1.10 $ .86 $ 2.14 $ 1.71
Return on average total assets (annualized):
1.19% Net income 1.21% .89% 1.20% .92%
Net income before acquisition-related charges and
1.19% extraordinary item 1.21% .97% 1.20% .99%
Return on average common equity (annualized):
17.43% Net income 17.22% 13.87% 17.35% 14.15%
Net income before acquisition-related charges and
17.43% extraordinary item 17.22% 15.36% 17.35% 15.45%
Consolidated net interest revenue and margin:
$427.4 Net interest revenue, fully taxable equivalent basis $436.0 $376.0 $863.4 $718.2
4.56% Net interest margin 4.49% 3.98% 4.52% 3.89%
4.85% Domestic net interest margin (estimated) 4.54% 4.27% 4.69% 4.17%
3.81% International net interest margin (estimated) 4.35% 3.14% 4.08% 3.09%
<CAPTION>
March 31 June 30
-------- --------------------------
1995 1995 1994
------- ------ ------
<C> <S> <C> <C>
Common stockholders' equity:
$2,820 Common stockholders' equity $ 2,957 $ 2,497
111,167 Common shares outstanding, in thousands 111,612 106,851
Per common share:
$25.36 Book value $ 26.49 $ 23.36
29.88 Market value 37.50 24.63
Regulatory capital:
Risk-based capital ratios: Estimate
7.8% Tier 1 capital ratio (minimum required 4.00%) 7.7% 7.1%
13.3% Total capital ratio (minimum required 8.00%) 13.0% 12.3%
7.3% Leverage ratio 7.3% 6.6%
$ 3,090 Tier 1 capital $ 3,209 $ 2,780
5,282 Total capital 5,424 4,813
39,827 Total risk-adjusted assets 41,653 39,140
</TABLE>
<PAGE>
Reserve for Credit Losses
<TABLE>
<CAPTION>
(dollars in millions)
Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
------------- ----------------- ------------------
1995 1995 1994 1995 1994
------- ------- -------- -------- --------
<C> <S> <C> <C> <C> <C>
$680.2 Beginning balance $695.5 $664.2 $ 680.2 $ 770.3
0 Reserve of acquired company 0 16.6 0 16.6
(32.7) Reserve of bank subsidiaries sold 0 0 (32.7) 0
90.0 Provision for credit losses 40.0 25.0 130.0 70.0
(53.5) Credit losses (58.4) (46.3) (111.9) (92.0)
11.5 Recoveries 14.8 16.3 26.3 29.9
------- ------ ------ ------- -------
(42.0) Net credit losses (43.6) (30.0) (85.6) (62.1)
Credit losses on exposure transferred
0 to accelerated disposition portfolio 0 0 0 (119.0)
------- ------ ------ ------- -------
$ 695.5 Ending balance $691.9 $675.8 $ 691.9 $ 675.8
======= ====== ====== ======= =======
2.29% Reserve as a % of loans and leases 2.20% 2.26% 2.20% 2.26%
======= ====== ====== ======= =======
198% Reserve as a % of nonaccrual loans 204% 151% 204% 151%
======= ====== ====== ======= =======
</TABLE>
Renegotiated Loans
<TABLE>
<CAPTION>
1994 1995
Second Third Fourth First Second
Qtr Qtr Qtr Qtr Qtr
------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C>
Renegotiated loans $81 $72 $68 $43 $29
====== ===== ====== ===== ======
</TABLE>
<PAGE>
BANK OF BOSTON INCREASES COMMON DIVIDEND BY 37 PERCENT TO
---------------------------------------------------------
37 CENTS PER SHARE AND DECLARES PREFERRED DIVIDENDS
---------------------------------------------------
BOSTON, MA, July 27, 1995 - Bank of Boston Corporation (NYSE:BKB) reported
that its Board of Directors today approved an increase in its quarterly dividend
on the Corporation's common stock to 37 cents from 27 cents per share. The
dividend is payable August 25, 1995 to stockholders of record on August 7, 1995.
Bank of Boston Chairman and Chief Executive Officer Ira Stepanian said,
"Our financial performance continues to be quite strong with second quarter
earnings exceeding the prior year's levels by over 40 percent. The significant
increase in our common dividend demonstrates our ongoing commitment to improve
shareholder returns. This step also brings our payout ratio more in line with
our peer group average."
Separately, the Board declared quarterly dividends on its five outstanding
series of preferred stock as follows: $.76 per share for Series A, $.76 per
share for Series B, $1.39 per share for Series C, $.5375 per depositary share
representing Series E, and $.49219 per depositary share representing Series F.
These dividends are payable on September 15, 1995 to stockholders of record on
August 15, 1995. The dividend rates on the adjustable rate preferred stocks are
6.00% for Series A, 6.00% for Series B and 5.50% for Series C.
Bank of Boston Corporation, with assets of $45.3 billion as of June 30,
1995, is New England's only global bank. The Corporation and its subsidiaries
provide a broad range of financial services to individual, corporate,
institutional and governmental customers, as well as to other banks. The
Corporation's common and preferred stocks are listed on the New York and Boston
stock exchanges.
###
<PAGE>
BANK OF BOSTON CHAIRMAN IRA STEPANIAN RETIRES:
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CHARLES K. GIFFORD ASSUMES LEADERSHIP
-------------------------------------
OF 211-YEAR-OLD INSTITUTION
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BOSTON, MA, JULY 27, 1995 -- Bank of Boston Corporation tonight announced that
Ira Stepanian has decided to retire as Chairman and Chief Executive Officer and
that Charles K. Gifford has been elected by the Board as the Corporation's new
Chairman and Chief Executive Officer, effective immediately, retaining his
current position as President.
The Board released the following statement:
"We are very grateful to Ira Stepanian for his steadfast leadership of this
company. Ira consistently demonstrated integrity, strength and conviction and
led the company in achieving remarkable and historic results for our
shareholders, customers, employees and the communities it serves. He has done
an extraordinary job and leaves behind an impressive legacy that reflects
proudly on this institution and this City. We wish him all the best."
"In selecting Chad Gifford as the Corporation's new Chairman and CEO, we have
ensured continuity of leadership and direction. Chad is energetic,
knowledgeable and a proven leader in both the industry and the community. We
have confidence that his business savvy, management competence and personal
values will promote the interests of all the Corporation's key constituencies
and that he will take Bank of Boston to a new plateau of performance and
distinction."
Chad Gifford made the following statement:
"Ira Stepanian has guided Bank of Boston through what is arguably our most
difficult period and has provided steady leadership that has resulted in record
earnings, revenue growth and substantially enhanced shareholder value. We have
been of one mind during this period, and I am thankful to him for his friendship
and wise stewardship."
"We retain our commitment to improving shareholder value while maintaining our
position as an important New England-based institution. Ira and I have agreed
on the direction of this 211-year-old institution and I intend to continue to
pursue the policies we together have put in place during his tenure as
Chairman."
Mr. Stepanian issued the following statement:
"After 32 years at Bank of Boston, I feel that it is time to move on and let
others help direct this fine institution."
"Perhaps the greatest source of satisfaction during my tenure has been
the fierce determination and enduring commitment of our 18,000 employees,
who have helped transform this proud institution into a customer-focused,
high-performance bank for the future. Through difficult times for the industry
and the region, Bank of Boston's people continued to believe in our strategy, in
our importance to New England, in our commitments to the community, and in our
obligations to our two million customers and thousands of shareholders."
(more)
<PAGE>
"Our people continue to face their responsibilities with integrity and with
faith in one another, and helping this company to not only survive but to
thrive. Together, we have transformed Bank of Boston into a unique banking
institution--one that is local as well as global, one that has achieved great
financial success while at the same time making a major difference in the
communities that we serve.
"I am proud of many things, most especially the responsible leadership role this
great bank and its talented employees play in our industry, in this great city,
in our region and in the lives and businesses of so many communities and
customers we serve throughout the nation and around the world."
Mr. Gifford commented further: "I am looking forward to these new
responsibilities with enthusiasm and with the knowledge that, with Bill Shea and
Ed O'Neal as Vice Chairmen, and with a terrifically talented Corporate Working
Committee, we have a winning team for the future."
Chad Gifford has been President and Chief Operating Officer of Bank of Boston
since 1989. Joining the bank some 29 years ago as a loan officer, Mr. Gifford
moved up through the ranks of the bank, assuming the position of Group Executive
of the Corporate Banking Group in 1984 and in March 1987, was elected Vice
Chairman of both Bank of Boston Corporation and its principal subsidiary, the
First National Bank of Boston. Mr. Gifford was elected President in March 1989.
Mr. Gifford serves as a director of Massachusetts Mutual Life Insurance Company
and of Boston Edison Company, and he also serves as a trustee of the Boston Plan
for Excellence in the Public Schools, the Boston Private Industry Council, and
the Dana Farber Cancer Institute, where he is also a member of the executive
committee. Mr. Gifford is chairman of the Massachusetts Minority Enterprise
Investment Corporation (MEIC) and chairman of the United Way "Success By 6"
Leadership Council, and is on the executive committees of both the Boston
Chamber of Commerce and the United Way. He is also involved with WGBH Public
Broadcasting, Northeastern University, the New England Aquarium and Junior
Achievement.
Mr. Gifford was awarded a B.A. degree from Princeton University in 1964. He and
his wife Anne have four children.
Bank of Boston Corporation (NYSE: BKB), New England's only global bank, has
assets of $45.3 billion as of June 30, 1995. The Corporation and its
subsidiaries provide a broad range of financial services to individual,
corporate, institutional and governmental customers, as well as to other banks.
The Corporation's common and preferred stocks are listed on the New York and
Boston stock exchanges.
Earlier in the day, the Board approved a 37% increase in the Corporation's
common stock dividend, from $.27 per share to $.37 per share.
###
