<PAGE>
- --------------------------------------------------------------------------------
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 18, 1996
BANK OF BOSTON CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Massachusetts 1-6522 04-2471221
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
100 Federal Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 434-2200
- --------------------------------------------------------------------------------
<PAGE>
Item 5. Other Events.
- ----------------------
On July 18, 1996, Bank of Boston Corporation (the Corporation) issued
a press release announcing its earnings for the quarter ended June 30, 1996.
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.
Item 7. Financial Statements and Exhibits.
- -------------------------------------------
(c) Exhibits.
99(a) Financial information included in the Corporation's Press Release
dated July 18, 1996.
2
<PAGE>
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: July 18, 1996 /s/ William J. Shea
--------------------------
William J. Shea
Vice Chairman,
Chief Financial Officer and Treasurer
3
<PAGE>
EXHIBIT 99 (A)
BANK OF BOSTON REPORTS SECOND QUARTER NET INCOME
OF $150 MILLION BEFORE SPECIAL ITEMS OR $1.26 PER SHARE
13% ABOVE PRIOR YEAR
BOSTON, July 18, 1996 -- Bank of Boston Corporation (NYSE: BKB)
reported today second quarter net income of $150 million, or $1.26 per common
share on a fully diluted basis, before special items. This compares with $148
million, or $1.23 per share, in the first quarter of 1996 and $133 million, or
$1.10 per share, in the second quarter of 1995. Actual net income was $178
million, or $1.52 per share, on a fully diluted basis, in the second quarter of
1996 compared with $117 million, or $.95 per share, in the first quarter of 1996
and $133 million, or $1.10 per share, in the second quarter of 1995. Included
in the actual net income totals for the first and second quarters of 1996 were
the previously announced mortgage banking-related special items that were
approximately offsetting for the first six months and are discussed below. On
this same basis, actual net income for the first half of 1996 was $295 million,
or $2.46 per share, compared with net income of $259 million, or $2.14 per
share, in the first half of 1995.
During the second quarter, the second phase of the sale of the
Corporation's mortgage banking subsidiary was completed. This sale had the
effect of reducing noninterest revenue by approximately $25 million and
operating income by approximately $10 million from the first quarter levels.
Second quarter highlights were (amounts shown are before the special items
discussed below):
* Total revenues increased to $717 million on a fully taxable equivalent
basis, compared with $713 million in the prior quarter and $672
million in the second quarter of 1995;
* On a fully taxable equivalent basis, operating income (before credit
costs) increased to $312 million in the second quarter, compared with
$310 million in the prior quarter and $283 million in the second
quarter of 1995;
* Return on average common equity improved to 17.68% in second quarter,
compared with 17.24% in the prior quarter and 17.22% in the second
quarter of 1995. Return on average assets was 1.28% in the second
quarter, 1.27% in the prior quarter and 1.21% in the second quarter of
1995;
* Net credit losses declined to $40 million in the second quarter,
compared with $42 million in the prior quarter and $44 million in the
second quarter of 1995. The provision for credit losses was $50
million in the second and first quarters of 1996 compared with $40
million in the second quarter of 1995. Nonaccrual loans and OREO
totaled $387 million at June 30, 1996, compared with $371 million at
March 31, 1996 and $417 million at June 30, 1995;
* Operating ratio was 56.5% in the second and first quarters of 1996
compared with 57.9% in the second quarter of 1995.
As a result of its sale of the mortgage banking subsidiary, the Corporation
recorded after-tax gains of $28 million in the second quarter and $39 million in
the first quarter of 1996. These gains were offset by $70 million of after-tax
losses (net of decreased servicing amortization) recognized in the first quarter
from contracts used to manage prepayment risk in the mortgage servicing
portfolio. The Corporation now owns a 33% interest in a new company, HomeSide,
Inc., which ranks among the country's largest mortgage banking companies with a
servicing portfolio of approximately $80 billion.
<PAGE>
NONINTEREST INCOME
The components of noninterest income are as follows:
<TABLE>
<CAPTION>
First
Quarter Second
- ------- Quarter Six Months
------------ -----------
1996 (in millions) 1996 1995 Change 1996 1995 Change
- ------- ----- ----- ------- ------ ----- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
$ 118 Financial service fees $ 89 $ 113 $(24) $ 207 $ 219 ($12)
-----
37 Net equity and mezzanine profits 77 23 54 114 39 75
51 Trust and agency fees 55 57 (2) 106 110 (4)
-----
12 Trading profits and commissions 24 6 18 37 7 30
12 Foreign exchange trading profits 11 16 (5) 23 28 (5)
13 Securities portfolio gains, net 4 0 4 17 6 11
-----
34 Other income 18 21 (3) 51 45 6
----- ----- ----- ---- ----- ----- -----
$ 277 Subtotal $ 278 $ 236 $ 42 $ 555 $ 454 $ 101
(51) Special items, net 46 0 46 (5) 75 (80)
----- ----- ----- ---- ----- ----- -----
$ 226 Total $ 324 $ 236 $ 88 $ 550 $ 529 $ 21
===== ===== ===== ==== ===== ===== =====
</TABLE>
* The reduction in financial service fees was greatly influenced by the
sale of the mortgage banking subsidiary. Changes are detailed below.
* The Private Equity Investing business had another excellent quarter as
reflected by the significant increases in net equity and mezzanine
profits compared with all prior periods. The higher level of realized
profits is primarily due to a seasoning of the portfolio and favorable
market conditions. The portfolio has been steadily growing and is
diversified as to industry, geography and type of investment. New
investment activity in 1996 is expected to be about 50% above last
year.
* Trust and agency fees increased $4 million from the first quarter
mainly due to higher fees from the Brazilian mutual fund and domestic
private banking businesses. Both of these areas are generating higher
volumes with mutual funds in Brazil growing to over $3 billion and
domestic personal assets under management now totaling about $17
billion. The declines from the prior year periods reflected the sale
of the Corporation's corporate trust business and the movement of its
stock transfer business into a joint venture. Excluding the effect of
these transactions, trust and agency fees increased by $10 million
from the second quarter of 1995 and $19 million from the first half of
1995.
* Compared with all prior periods, trading account profits and
commissions improved mainly due to increases from the Corporation's
Global Capital Markets and Latin American units.
* Foreign exchange profits declined $1 million from the prior quarter
and $5 million from both the second quarter and first half of 1995.
The declines from prior year periods reflected lower profits from
Latin America and Asia.
* Net securities gains declined $9 million from the prior quarter
reflecting a lower level of sales activity.
* The decline in other income of $16 million from the prior quarter
included a loss on the sale of approximately $300 million of
residential mortgages in connection with the Corporation's program to
remove low return assets from the balance sheet, lower revenues caused
by the sale of the mortgage banking business, and translation losses
related to a hedging strategy in Chile that yielded higher levels of
net interest revenue. Compared with the first six months of 1995,
other income increased $6 million due, in part, to higher profits from
various joint ventures, including those related to HomeSide, Inc.,
Boston EquiServe (stock transfer business), and the Argentine pension
management business, which has a 10% share of the local market with
funds under management of over $350 million.
<PAGE>
The components of financial service fees are as follows:
<TABLE>
<CAPTION>
First
- ------- Second Six Months
Quarter Quarter ------------
- ------- ------------
1996 (in millions) 1996 1995 Change 1996 1995 Change
- ------- ----- ----- ------- ----- ----- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
$ 20 Net mortgage servicing fees (before special items) $ 0 $ 27 $(27) $ 20 $ 48 $(28)
31 Deposit fees 29 29 0 60 59 1
20 Loan-related fees 20 17 3 40 30 10
16 Letters of credit and acceptance fees 15 16 (1) 31 35 (4)
31 Other 25 24 1 56 47 9
----- ----- ----- ---- ----- ----- ----
$ 118 Total $ 89 $ 113 $(24) $ 207 $ 219 $(12)
===== ===== ===== ==== ===== ===== ====
</TABLE>
* The declines in net mortgage servicing fees from all prior periods
reflect the sale of the Corporation's mortgage banking subsidiary.
* Loan-related fees grew $3 million from the second quarter of 1995 and
$10 million from the first six months of 1995 reflecting higher levels
of syndication fees generated by the Corporation's Global Capital
Markets business.
* Letter of credit and acceptance fees declined $4 million from the
first half of 1995 due to lower fees from Brazil, Asia and Europe.
* The $6 million decline in other financial service fees from the prior
quarter is attributable to lower levels of advisory fees, Latin
American credit card fees, and credit insurance revenues. Compared
with the first half of 1995, however, higher advisory and Latin
American credit card fees generated a $9 million increase in other
financial service fees.
Special items included in noninterest income are composed of the following:
<TABLE>
<CAPTION>
First
- --------- Second Six Months
Quarter Quarter -------------
- --------- ------------
1996 (in millions) 1996 1995 Change 1996 1995 Change
- --------- ----- ----- ------ ------ ----- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
Mortgage banking-related gains/losses:
$ 60 Sale of mortgage subsidiary $ 46 $ 0 $46 $ 106 $ 0 $ 106
(111) Contracts used to manage prepayment risk, net 0 0 0 (111) 0 (111)
------ ----- ----- --- ----- ----- -----
(51) Total 46 0 46 (5) 0 (5)
0 Gain on sale of banking subsidiaries 0 0 0 0 75 (75)
------ ----- ----- --- ----- ----- -----
$ (51) Total $ 46 $ 0 $46 $ (5) $ 75 $ (80)
====== ===== ===== === ===== ===== =====
</TABLE>
* During the first quarter of 1996 the Corporation recorded a net pre-
tax loss of $51 million from mortgage banking-related special items.
As a result of the first quarter's rising rate environment, a loss of
$111 million, or $70 million after-tax, (net of decreased servicing
amortization) was recorded from the change in market value of
contracts used to manage prepayment risk in the mortgage servicing
portfolio. In addition, the Corporation recognized a gain of $60
million, or $39 million after-tax, from the sale of its mortgage
banking subsidiary to two equity investment firms. The second phase
of this transaction was completed in the second quarter and resulted
in an additional gain of $46 million, or $28 million after-tax. The
Corporation now owns a 33% interest in HomeSide, Inc., which ranks
among the largest mortgage banking companies with a servicing
portfolio of approximately $80 billion.
* The Corporation recognized a $75 million gain in the first quarter of
1995 from the sale of its Maine and Vermont banking subsidiaries.
<PAGE>
NET INTEREST REVENUE
Net interest revenue, on a fully taxable equivalent basis, was $439 million
for the second quarter of 1996, compared with $436 million in both the prior
quarter and the second quarter of 1995. Net interest margin was 4.17% for the
second quarter of 1996, compared with 4.21% in the first quarter of 1996 and
4.49% in the second quarter of last year. For the first half of 1996, net
interest revenue, on a fully taxable equivalent basis, was $875 million,
compared with $863 million in the first half of 1995. Net interest margin was
4.19% for the first half of 1996, compared with 4.52% for the first half of
1995.
The $3 million increase in net interest revenue from the prior quarter
reflected a higher volume of average loans and a higher international margin,
partially offset by lower spreads from domestic operations. The latter, which
included a lower level of loan fees, was mainly responsible for the modest
decline in consolidated margin from the first quarter.
Compared with the prior year periods, net interest revenue improved while
net interest margin declined. These changes reflected a higher volume of
average earning assets coupled with narrower domestic spreads caused, in part,
by the aggressive marketing of a new higher-rate savings deposit product during
1995, the introduction of a "teaser rate" credit card product in late 1995, and
lower loan fees.
NONINTEREST EXPENSE
The components of noninterest expense are as follows:
<TABLE>
<CAPTION>
First
- ------- Second
Quarter Quarter Six Months
- ------- ------------ ----------
1996 (in millions) 1996 1995 Change 1996 1995 Change
- ------- ----- ----- ------- ----- ----- -------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
$ 229 Employee costs $ 227 $ 220 $ 7 $ 456 $ 437 $ 19
63 Occupancy & equipment 62 60 2 125 119 6
9 Professional fees 11 11 0 21 24 (3)
0 FDIC insurance premiums 0 11 (11) 0 23 (23)
102 Other 105 87 18 206 167 39
----- ----- ----- ---- ----- ----- ----
403 Noninterest expense before OREO costs 405 389 16 808 770 38
2 OREO costs 1 3 (2) 3 5 (2)
----- ----- ----- ---- ----- ----- ----
$ 405 Total $ 406 $ 392 $ 14 $ 811 $ 775 $ 36
===== ===== ===== ==== ===== ===== ====
</TABLE>
Noninterest expense before OREO costs, was $405 million in the second
quarter of 1996, compared with $403 million in the prior quarter and $389
million for the same quarter in 1995.
Compared with all prior periods, the increases in noninterest expense came
from ongoing expansion and investment spending in several of the Corporation's
growth businesses, mainly Latin America, Global Capital Markets, and Consumer
Finance. Initiatives in these units included: branch expansion and growth in
fee-based businesses in Latin America; start up of a high yield debt unit and
the hiring of sales and trading professionals in all the Global Capital Markets
businesses; and marketing campaigns related to credit card, home equity and
other products in Consumer Finance. Second quarter expense levels also included
higher incentive compensation costs related to improved business unit
performance along with higher litigation expenses.
The comparison of noninterest expense with all prior periods is affected by
the absence of operating expenses associated with the mortgage banking business,
which was sold in March, 1996. In addition, comparisons with prior year periods
reflects the absence of expenses from the corporate trust and stock transfer
businesses, as well as the elimination of FDIC insurance premiums in 1996.
Total staff levels declined by about 5%, or 900, from June 1995 principally due
to the mortgage banking transaction and the joint venture of the stock transfer
business.
<PAGE>
CREDIT PROFILE
Loan and Lease Portfolio
The segments of the lending portfolio are as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
(in millions) 6-30-96 3-31-96 12-31-95 9-30-95 6-30-95
-------- -------- --------- -------- --------
United States Operations:
Commercial, industrial and financial $ 11,682 $ 11,361 $ 11,439 $ 11,789 $ 11,907
Commercial real estate
Construction 352 323 336 412 327
Other commercial real estate 2,192 2,096 2,272 2,303 2,489
Consumer-related loans:
Residential mortgages 1,978 2,109 2,105 3,333 3,243
Home equity loans 1,998 1,867 1,756 1,645 1,509
Other 4,299 3,843 3,397 3,131 2,834
Lease financing 1,461 1,414 1,409 1,373 1,356
Unearned income (219) (217) (216) (216) (211)
-------- -------- --------- -------- --------
23,743 22,796 22,498 23,770 23,454
-------- -------- --------- -------- --------
International Operations:
Loans and lease financing, net of
unearned 9,142 8,606 8,569 7,921 7,934
income -------- -------- --------- -------- --------
Total loans and lease financing $ 32,885 $ 31,402 $ 31,067 $ 31,691 $ 31,388
======== ======== ========= ======== ========
</TABLE>
The $1 billion increase in domestic loans and leases from March 31, 1996
was driven by growth in both the consumer and commercial portfolios. The rise
in consumer loan levels was led by the credit card business, Ganis Credit Corp.,
and the home equity product areas. Partially offsetting these increases was a
decline in residential mortgages reflecting the sale of loans in connection with
the Corporation's program to remove low return assets from the balance sheet.
The growth in commercial loans occurred in various regional and national
portfolios; loan levels are also affected by the timing of syndication activity,
which has been steadily increasing.
The $500 million increase in the international portfolio reflected ongoing
growth from Latin America.
Nonaccrual Loans and OREO
Nonaccrual loans and OREO amounted to $387 million at June 30, 1996,
compared with $371 million at March 31, 1996, and $417 million at June 30, 1995.
Nonaccrual loans and OREO represented 1.2% of related assets at June 30, 1996
and March 31, 1996, compared with 1.3% at June 30, 1995.
The components of consolidated nonaccrual loans and OREO are as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
(in millions) 6-30-96 3-31-96 12-31-95 9-30-95 6-30-95
-------- -------- --------- -------- --------
Domestic nonaccrual loans:
Commercial, industrial and financial $ 128 $ 79 $ 66 $ 105 $ 106
Commercial real estate
Construction 9 21 24 23 16
Other commercial real estate 61 74 78 82 85
Consumer-related loans
Residential mortgages 32 32 29 30 31
Home equity loans 19 15 14 16 14
Other 37 39 32 30 21
-------- -------- --------- -------- --------
286 260 243 286 273
-------- -------- --------- -------- --------
International nonaccrual loans 57 63 66 69 66
-------- -------- --------- -------- --------
Total nonaccrual loans 343 323 309 355 339
OREO 44 48 50 62 78
-------- -------- --------- -------- --------
Total $ 387 $ 371 $ 359 $ 417 $ 417
======== ======== ========= ======== ========
</TABLE>
<PAGE>
Provision and Reserve for Credit Losses
The reserve for credit losses at June 30, 1996 was $744 million, or 2.26%
of outstanding loans and leases, compared with $732 million, or 2.33% at March
31, 1996, and $692 million, or 2.20% at June 30, 1995. The reserve for credit
losses was 217% of nonaccrual loans at June 30, 1996, 227% at March 31, 1996,
and 204% at June 30, 1995.
The provision for credit losses was $50 million in the second and first
quarters of 1996, compared with $40 million in the second quarter of 1995.
Net credit losses were $40 million for the second quarter of 1996, compared
with $42 million for the prior quarter and $44 million for the comparable period
last year. Net credit losses as a percent of average loans and leases on an
annualized basis were .50% in 1996's second quarter, compared with .54% for the
first quarter of 1996 and .57% for the second quarter of 1995.
<TABLE>
<CAPTION>
Net credit losses were as follows:
First
- ------- Second
Quarter Quarter Six Months
- ------- ------------ -----------
1996 (in millions) 1996 1995 1996 1995
- ------- ----- ----- ----- -----
<C> <S> <C> <C> <C> <C> <C>
Domestic
$ 0 Commercial, industrial and financial $ 4 $ 9 $ 4 $ 18
12 Commercial real estate 1 14 13 20
Consumer-related loans:
4 Residential mortgages 1 2 5 6
2 Home equity loans 1 1 3 2
19 Other 23 10 42 17
----- ----- ----- ----- -----
37 30 36 67 63
5 International 10 8 15 23
----- ----- ----- ----- -----
$ 42 Total $ 40 $ 44 $ 82 $ 86
===== ===== ===== ===== =====
</TABLE>
BALANCE SHEET AND ACQUISITION UPDATE
Total consolidated assets were $50.8 billion at June 30, 1996 compared with
$46.5 billion at March 31, 1996. The $4 billion increase was due to a higher
level of earning assets, mainly loans and securities. Contributing to the
increase was the Corporation's acquisition of Boston Bancorp, which added $1.3
billion of deposit liabilities and a comparable level of liquid assets to the
June 30 balance sheet. This transaction, which was accounted for as a purchase,
closed on June 28 and had no effect on second quarter earnings. As a result of
this acquisition, the Corporation issued 4.6 million shares of common stock,
which it is currently in the process of repurchasing.
On July 10, the Corporation received approval from the Board of Governors
of the Federal Reserve System to acquire BayBanks. Pending receipt of approval
from the Massachusetts Board of Bank Incorporation, the acquisition is expected
to close by the end of this month. Upon completion of the BayBanks acquisition,
which will be accounted for as a pooling of interests, Bank of Boston
Corporation and BayBanks, Inc. will operate under the BANKBOSTON name and will
have assets of approximately $60 billion.
THE CORPORATION
Bank of Boston Corporation, with assets of $50.8 billion, is a focused
financial institution engaged primarily in commercial and consumer banking in
southern New England, financing to selected corporations and individuals
nationally and internationally, and indigenous banking in Latin America. New
England's only global bank, the Corporation and its subsidiaries operate through
a network of 500 offices across the U.S. and through more than 100 offices in
over 20 countries in Latin America, Europe and Asia, the third largest overseas
network of any U.S. bank. 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
- ----------- --------------------
1996 1996 1995
- ----------- ---------- --------
<C> <S> <C> <C> <C>
Assets
Securities:
$ 647 Held to maturity $ 633 $ 1,821
5,064 Available for sale 6,430 3,011
31,402 Loans and lease financing 32,885 31,388
(732) Reserve for credit losses (744) (692)
------- ------- -------
30,670 Net loans and lease financing 32,141 30,696
4,249 Other earning assets 5,006 3,532
5,827 Cash and other nonearning assets 6,620 6,194
------- ------- -------
$46,457 Total Assets $50,830 $45,254
======= ======= =======
Liabilities and Stockholders' Equity
$31,235 Deposits $33,305 $29,121
7,201 Funds borrowed 8,856 9,045
2,499 Notes payable 2,632 2,110
1,811 Other liabilities 2,077 1,513
------- ------- -------
42,746 Total Liabilities 46,870 41,789
------- ------- -------
Stockholders' Equi
508 Preferred equity 508 508
3,203 Common equity 3,452 2,957
------- ------- -------
3,711 Total Stockholders' Equity 3,960 3,465
------- ------- -------
$46,457 Total Liabilities and Stockholders' Equity $50,830 $45,254
======= ======= =======
</TABLE>
SELECTED AVERAGE BALANCES
<TABLE>
<CAPTION>
Quarter Ended Quarters Ended Six Months Ended
- ------------- -------------- ----------------
March 31 June 30 June 30
- ------------- ------- -------
1996 1996 1995 1996 1995
- ------------- ------- ----- ------ ----
<C> <S> <C> <C> <C> <C> <C>
Assets
$31,357 Loans and lease financing $32,272 $30,928 $31,815 $30,528
5,653 Securities 5,915 4,526 5,784 4,408
41,605 Total earning assets 42,440 38,970 42,022 38,483
47,014 Total assets 47,087 44,101 47,055 43,473
Liabilities and Stockholders' Equity
25,805 Interest bearing deposits 26,386 24,195 26,095 24,170
5,018 Noninterest bearing deposits 4,743 4,612 4,880 4,611
------- ------- ------- ------- -------
30,823 Total deposits 31,129 28,807 30,975 28,781
2,374 Notes payable 2,584 2,062 2,479 2,098
36,606 Total interest bearing liabilities 36,949 34,431 36,778 34,001
3,235 Common stockholders' equity 3,195 2,889 3,216 2,790
3,743 Total stockholders' equity 3,703 3,397 3,724 3,298
</TABLE>
NUMBER OF EMPLOYEES
<TABLE>
<CAPTION>
June 30 Mar 31 June 30
1996 1996 1995
------- ------ -------
<S> <C> <C> <C>
Full time equivalent employees 17,200 16,900 18,100
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
(dollars in millions, except per share amounts)
Quarters Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
- -------------- ------- -------
1996 1996 1995 1996 1995
------ -------- -------- -------- --------
<C> <S> <C> <C> <C> <C> <C>
$1,034.9 Interest income $1,001.3 $1,103.4 $2,036.2 $2,136.7
601.3 Interest expense 563.3 669.3 1,164.6 1,276.7
-------- -------- -------- -------- --------
433.6 Net interest revenue 438.0 434.1 871.6 860.0
50.0 Provision for credit losses 50.0 40.0 100.0 130.0
-------- -------- -------- -------- --------
Net interest revenue after provision
383.6 for credit losses 388.0 394.1 771.6 730.0
-------- -------- -------- -------- --------
Noninterest income:
6.8 Financial service fees 89.1 113.3 95.9 218.9
51.0 Trust and agency fees 55.2 57.2 106.2 109.9
12.3 Trading profits and commissions 24.3 6.1 36.6 7.2
13.4 Securities portfolio gains, net 3.5 .2 16.9 6.4
142.7 Other income 151.7 59.3 294.4 187.0
-------- -------- -------- -------- --------
226.2 Total noninterest income 323.8 236.1 550.0 529.4
-------- -------- -------- -------- --------
Noninterest expense:
186.5 Salaries 185.3 179.6 371.8 356.0
42.6 Employee benefits 41.9 40.9 84.5 81.3
37.0 Occupancy expense 36.8 34.4 73.8 69.4
26.2 Equipment expense 25.4 25.7 51.6 49.8
110.6 Other expense 115.9 108.8 226.5 214.1
-------- -------- -------- -------- --------
402.9 Subtotal 405.3 389.4 808.2 770.6
1.6 OREO costs 1.1 2.7 2.7 4.7
-------- -------- -------- -------- --------
404.5 Total noninterest expense 406.4 392.1 810.9 775.3
-------- -------- -------- -------- --------
205.3 Income before income taxes 305.4 238.1 510.7 484.1
88.8 Provision for income taxes 127.3 104.8 216.1 225.4
-------- -------- -------- -------- --------
$ 116.5 NET INCOME $ 178.1 $ 133.3 $ 294.6 $ 258.7
======== ======== ======== ======== ========
NET INCOME PER COMMON SHARE:
$ .97 Primary $ 1.54 $ 1.11 $ 2.50 $ 2.19
$ .95 Fully diluted $ 1.52 $ 1.10 $ 2.46 $ 2.14
$ .37 DIVIDENDS PAID PER COMMON SHARE $ .44 $ .27 $ .81 $ .54
Average number of common shares, in thousands:
111,034 Primary 109,725 111,369 110,380 109,335
112,864 Fully diluted 111,253 112,933 112,064 112,718
$ 9.3 Preferred dividends $ 9.3 $ 9.3 $ 18.6 $ 18.7
</TABLE>
<PAGE>
OTHER DATA
(dollars in millions, except per share amounts
<TABLE>
<CAPTION>
Quarter Ended Quarters Ended Six Months Ended
- -------------- --------------- -----------------
March 31 June 30 June 30
- -------------- ------- -------
1996 1996 1995 1996 1995
- -------------- ------- ----- --------- ----
<S> <C> <C> <C> <C> <C>
EARNINGS PER SHARE BEFORE SPECIAL ITEMS*:
$ 1.25 Primary $ 1.28 $ 1.11 $ 2.53 $ 2.19
$ 1.23 Fully diluted $ 1.26 $ 1.10 $ 2.49 $ 2.14
RETURN ON AVERAGE TOTAL ASSETS (ANNUALIZED):
1.00% Net income 1.52% 1.21% 1.26% 1.20%
1.27% Net income before special items* 1.28% 1.21% 1.27% 1.20%
RETURN ON AVERAGE COMMON EQUITY (ANNUALIZED):
13.33% Net income 21.24% 17.22% 17.25% 17.35%
17.24% Net income before special items* 17.68% 17.22% 17.45% 17.35%
* Based on net income of $149.8 million in the
second quarter of 1996, $148.0 million in the first
quarter of 1996 and $133.3 million in the second
quarter of 1995
CONSOLIDATED NET INTEREST REVENUE AND MARGIN:
Net interest revenue, fully taxable equivalent
$435.8 basis $439.5 $436.0 $ 875.3 $863.4
4.21% Net interest margin 4.17% .49% 4.19% 4.52%
4.31% DOMESTIC NET INTEREST MARGIN (ESTIMATED) 4.16% 4.54% 4.23% 4.69%
3.99% INTERNATIONAL NET INTEREST MARGIN (ESTIMATED) 4.18% 4.35% 4.09% 4.08%
March 31 June 30
- -------- -------
1996 1996 1995
- -------- ------ -------
COMMON STOCKHOLDERS' EQUITY:
$3,203 Common stockholders' equity $3,452 $2,957
110,530 Common shares outstanding, in thousands 113,183 111,612
Per common share:
$ 28.98 Book value $30.50 $26.49
49.63 Market value 49.50 37.50
CAPITAL RATIOS/REGULATORY CAPITAL:
6.29% Tangible Common Equity ratio 6.12% 5.05%
Risk-based capital ratios: Estimate
8.1% Tier 1 capital ratio (minimum required 4.00%) 7.9% 7.7%
12.9% Total capital ratio (minimum required 8.00%) 12.5% 13.0%
7.2% Leverage ratio 7.6% 7.3%
$ 3,377 Tier 1 capital $3,557 $ 3,209
5,388 Total capital 5,606 5,423
41,807 Total risk-adjusted assets 44,920 41,578
</TABLE>
<PAGE>
RESERVE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
(dollars in millions)
Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
- -------------------- ------------------ ------------------
1996 1996 1995 1996 1995
--------- -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
$ 735.5 Beginning balance $ 732.4 $695.5 $ 735.5 $ 680.2
50.0 Provision for credit losses 50.0 40.0 100.0 130.0
0 Reserve of acquired bank 2.1 0 2.1 0
(10.9) Sale of mortgage banking subsidiary 0 0 (10.9) 0
0 Sale of Maine and Vermont banking subsidiaries 0 0 0 (32.7)
(57.6) Credit losses (53.5) (58.4) (111.2) (111.9)
15.4 Recoveries 13.3 14.8 28.8 26.3
------ ------- ------ ------- -------
(42.2) Net credit losses (40.2) (43.6) (82.4) (85.6)
------ ------- ------ ------- -------
$ 732.4 Ending balance $ 744.3 $691.9 $ 744.3 $ 691.9
====== ======= ====== ======= =======
2.33% Reserve as a % of loans and leases 2.26% 2.20% 2.26% 2.20%
====== ======= ====== ======= =======
227% Reserve as a % of nonaccrual loans 217% 204% 217% 204
====== ======= ====== ======= =======
</TABLE>
