<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): JANUARY 16, 1997
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
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
-2-
ITEM 5. OTHER EVENTS.
- ----------------------
On January 16, 1997, Bank of Boston Corporation (the Corporation) issued a
press release announcing its earnings for the quarter ended December 31, 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
January 16, 1997.
<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: January 21, 1997 /s/ Robert T. Jefferson
---------------------------
Robert T. Jefferson
Comptroller
<PAGE>
EXHIBIT 99(a)
-------------
BANKBOSTON REPORTS FOURTH QUARTER NET INCOME
OF $202 MILLION OR $1.24 PER SHARE
15% GROWTH IN EPS FROM PRIOR YEAR
BOSTON, January 16, 1997 -- Bank of Boston Corporation ("BankBoston"; NYSE:
"BKB") reported today fourth quarter net income of $202 million, or $1.24 per
common share on a fully diluted basis compared with $180 million, or $1.08 per
share, in the fourth quarter of 1995. Net income for the third quarter of 1996
was $197 million, or $1.21 per share, before restructuring and merger-related
costs associated with the acquisition of BayBanks ($80 million, or $.45 per
share, including these charges).
Net income for the full year 1996 was $773 million, or $4.71 per share
before charges associated with the acquisition of BayBanks and items related to
the sale of the mortgage banking subsidiary, compared with net income of $678
million, or $4.09 per share, for the full year 1995. Actual net income for the
full year 1996 was $650 million, or $3.93 per share, compared with net income of
$678 million, or $4.09 per share, for the full year 1995.
These results reflect the acquisition of BayBanks, which was consummated on
July 29, 1996. The acquisition was accounted for under the pooling of interests
method and, accordingly, all prior period results have been restated to include
the historical results of BayBanks.
Operating highlights were as follows (1996 amounts are before charges
associated with the acquisition of BayBanks and items related to the sale of the
mortgage banking subsidiary):
. On a fully taxable equivalent basis, operating income was $410 million
in the fourth quarter, compared with $405 million in the prior quarter
and $380 million in the fourth quarter of 1995. For the full year
1996, operating income was $1,582 million, compared with $1,414
million for the full year 1995. Amounts for 1995 periods exclude
income and charges related to the sale or reorganization of businesses
and the valuation or disposition of certain assets;
. Return on average common equity ("ROE") improved to 17.71% in the
fourth quarter, compared with 17.56% in the prior quarter and 16.66%
in the fourth quarter of 1995. For the full year 1996, ROE was
17.36%, compared with 16.86% for 1995;
. Return on average assets ("ROA") was 1.31% in the fourth and third
quarters of 1996, compared with 1.24% in the fourth quarter of 1995.
For the full year 1996, ROA was 1.30%, compared with 1.22% for 1995;
. Nonaccrual loans and OREO totaled $452 million at December 31, 1996,
compared with $496 million at September 30, 1996 and $442 million at
December 31, 1995. Net credit losses, excluding those related to the
transfer of commercial real estate loans into a held for sale account
as discussed below, were $60 million in the fourth quarter, compared
with $55 million in the prior quarter and $51 million in the fourth
quarter of 1995. The provision for credit losses was $60 million in
the fourth quarter, compared with $57 million in the third quarter and
$81 million in the fourth quarter of 1995 (including a special
provision of $25 million).
Included in the fourth quarter of 1996 results discussed above were the
following items:
. A gain of $47 million from the previously announced sale of twenty
branches to US Trust Corp. ("US Trust"), which involved the transfer
of approximately $700 million of deposits and $500 million of loans;
. A charge of $25 million from the transfer of approximately $400
million of commercial real estate loans into a held for sale account
as part of the Corporation's balance sheet management program. In
addition, credit losses of $15 million were also taken as part of this
transfer;
. A valuation-related charge of $11 million associated with certain
investments;
. A charge of $6 million related to the vesting of stock price
performance-related restricted stock to certain employees.
<PAGE>
NONINTEREST INCOME
The components of noninterest income are as follows:
<TABLE>
<CAPTION>
Third
Quarter Fourth Quarter Twelve Months
- ------- -------------- --------------
1996 (in millions) 1996 1995 Change 1996 1995 Change
- ------- ----- ----- ------ ------ ------ -------
<C> <S> <C> <C> <C> <C> <C> <C>
$ 140 Financial service fees $ 147 $ 164 $ (17) $ 585 $ 628 $ (43)
51 Net equity and mezzanine profits 45 45 0 209 110 99
24 Mutual fund fees 25 20 5 94 67 27
32 Personal trust fees 34 28 6 131 112 19
6 Other trust and agency fees 6 7 (1) 21 61 (40)
21 Trading profits and commissions 17 9 8 76 25 51
13 Foreign exchange trading profits 17 15 2 54 60 (6)
Securities portfolio gains, net (before
7 valuation charges) 7 2 5 31 9 22
13 Gain on sale of mortgage servicing 0 0 0 13 10 3
30 Other income 31 24 7 124 99 25
----- ----- ----- ------ ------ ------ ------
$ 337 Subtotal $ 329 $ 314 $ 15 $1,338 $1,181 $ 157
0 Other items, net (details on following page) 11 53 (42) 6 128 (122)
----- ----- ----- ------ ------ ------ ------
$ 337 Total $ 340 $ 367 $ (27) $1,344 $1,309 $ 35
===== ===== ===== ====== ====== ====== ======
</TABLE>
. Changes in financial service fees are detailed below. The reduction
from prior year periods was greatly influenced by the sale of the
Corporation's mortgage banking subsidiary. Excluding the decline in
net mortgage servicing fees, total financial service fees grew $33
million, or 6%, from full year 1995.
. Equity and mezzanine profits continued strong in the fourth quarter.
The higher level of realized profits compared with full year 1995 is
primarily due to a seasoning of the portfolio and favorable market
conditions. In addition, the portfolio grew over $200 million during
1996 as new investment activity was double the 1995 level.
. The increase in mutual fund fees compared with all prior periods was
mainly due to higher levels of funds under management in Brazil.
These funds stood at $3.7 billion at December 31, 1996 compared with
$2.5 billion at December 31, 1995.
. Personal trust fees improved from all prior periods mainly due to a
higher level of assets under management.
. The comparison with full year 1995 for other trust and agency fees is
mainly affected by the sale of the Corporation's corporate trust
business and the movement of its stock transfer business into a joint
venture.
. Trading account profits and commissions declined from the third
quarter due, in part, to a lower level of profits from Brazil.
Compared with prior year periods, trading account profits and
commissions improved significantly, mainly due to increases from the
Corporation's capital markets areas and Brazil.
. The improvement in foreign exchange profits from the prior quarter
included increases from domestic and Asian operations. The decline in
the full year comparison mainly reflects lower profits from Asia.
. The $13 million gain on the sale of mortgage servicing in the third
quarter of 1996 resulted from the sale of BayBanks' $4 billion
servicing portfolio to HomeSide Lending.
. The increases in other income compared with prior year periods were
due, in part, to higher profits from various joint ventures, including
those related to HomeSide Lending (mortgage banking business), Boston
EquiServe (stock transfer business), and the Argentine pension
management business.
<PAGE>
The components of financial service fees are as follows:
<TABLE>
<CAPTION>
Third
-----
Quarter Fourth Quarter Twelve Months
- ------- -------------- -------------
1996 (in millions) 1996 1995 Change 1996 1995 Change
---- ------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 61 Deposit and ATM-related fees $ 59 $ 58 $ 1 $ 238 $ 231 $ 7
18 Letters of credit and acceptance fees 17 17 0 68 72 (4)
14 Syndication and agent fees 21 12 9 58 38 20
9 Other loan-related fees 10 9 1 38 34 4
Net mortgage servicing fees
3 (before items detailed below) 0 29 (29) 29 105 (76)
35 Other 40 39 1 154 148 6
----- ----- ----- ---- ----- ----- -----
$ 140 Total $ 147 $ 164 $(17) $ 585 $ 628 $ (43)
===== ===== ===== ==== ===== ===== =====
</TABLE>
. The increases in syndication and agent fees from all prior periods
reflect a higher volume of transactions generated by the
Corporation's corporate finance business.
. The declines in net mortgage servicing fees from prior year periods
reflect the sale of the Corporation's mortgage banking subsidiary.
. The increase in other financial service fees from the third quarter
is mainly due to higher levels of advisory fees from the
Corporation's capital markets business.
Other items included in noninterest income are composed of the following:
<TABLE>
<CAPTION>
Third
-----
Quarter Fourth Quarter Twelve Months
- ------- ------------- -------------
1996 (in millions) 1996 1995 Change 1996 1995 Change
----- ----- ----- ------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 Gain on sale of branches/banking subsidiaries $ 47 $ 0 $ 47 $ 47 $ 75 $ (28)
0 Transfer of loans into held for sale (25) (17) (8) (25) (17) (8)
0 Valuation charges associated with investments (11) (17) 6 (11) (17) 6
Mortgage banking-related gains/losses:
0 Sale of mortgage subsidiary 0 0 0 106 0 106
0 Contracts used to manage prepayment risk, net 0 67 (67) (111) 67 (178)
----- ----- ----- ----- ----- ----- ------
0 Total 0 67 (67) (5) 67 (72)
0 Gain on sale of corporate trust business 0 20 (20) 0 20 (20)
----- ----- ----- ----- ----- ----- ------
$ 0 Total $ 11 $ 53 $ (42) $ 6 $ 128 $ (122)
===== ===== ===== ===== ===== ===== ======
</TABLE>
. During the fourth quarter of 1996 the Corporation recorded: (1) a gain
of $47 million from the previously announced sale of twenty branches
to US Trust, which involved the transfer of approximately $700 million
of deposits and $500 million of loans, (2) a charge of $25 million
from the transfer of approximately $400 million of commercial real
estate loans into a held for sale account as part of the Corporation's
balance sheet management program, and (3) valuation-related charges of
$11 million associated with certain investments.
. During the first half of 1996 the Corporation recorded a net pre-tax
loss of $5 million from mortgage banking-related items. As a result
of the first quarter's rising rate environment, a loss of $111 million
(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 which, in turn, protected the economic
value of the Corporation's mortgage banking subsidiary pending the
completion of its sale to Homeside Lending. The completion of this
transaction resulted in the recognition of gains totaling $106
million. The Corporation now owns a 33% interest in HomeSide Lending,
which ranks among the country's largest mortgage banking companies.
. During the fourth quarter of 1995, the Corporation recorded: (1)$67
million of gains (net of increased servicing amortization) from
contracts used to manage prepayment risk in the mortgage servicing
portfolio, (2) a net gain of $20 million from the previously announced
sale of its corporate trust business, (3) a loss of $17 million from
the transfer of $1.3 billion of low yielding residential mortgage
loans into a held for sale account, and (4)$17 million of valuation-
related charges associated with certain investments and other assets,
including assets being retained by the Corporation as a result of the
mortgage banking sale. During the first quarter of 1995, the
Corporation recognized a $75 million gain from the sale of its Maine
and Vermont banking subsidiaries.
<PAGE>
NET INTEREST REVENUE
Net interest revenue, on a fully taxable equivalent basis, was $616 million
for the fourth quarter of 1996, compared with $596 million in the prior quarter
and $581 million in the fourth quarter of 1995. Net interest margin was 4.47%
for the fourth quarter, compared with 4.40% in the prior quarter and 4.50% in
the fourth quarter of last year. For the full year 1996, net interest revenue,
on a fully taxable equivalent basis, was $2,360 million, compared with $2,271
million for the full year 1995. On the same basis, net interest margin was
4.42% in 1996 and 4.58% in 1995.
The $20 million increase in net interest revenue from the prior quarter
reflected a growth in average earning assets of approximately $900 million
coupled with the 7 basis point improvement in net interest margin. The growth
in average earning assets was mainly due to an overall increase of $600 million
in average loans including growth in the domestic commercial and consumer
portfolios and higher levels of Latin American loans, partially offset by a
decline in average residential mortgages. The latter resulted from the sale of
loans during the fourth quarter including those associated with the sale of
branches to US Trust. The 7 basis point improvement in net interest margin
included wider spreads from the credit card business, as the "promotional rate"
period expired on additional loans in the portfolio, and higher loan fees.
Partially offsetting these increases was a decline in margin from the
aforementioned sale of branches to US Trust which included approximately $700
million of retail deposits.
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 and a decline in the international margin. The full year
comparison also reflected narrower domestic spreads which were caused, in part,
by the aggressive marketing of a new higher-rate savings deposit product during
1995 and competitive pricing pressures.
<PAGE>
NONINTEREST EXPENSE
The components of noninterest expense are as follows:
<TABLE>
<CAPTION>
Third
- -------
Quarter Fourth Quarter Twelve Months
- ------- -------------- -------------
1996 (in millions) 1996 1995 Change 1996 1995 Change
---- ----- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 293 Employee costs $ 293 $ 289 $ 4 $1,168 $1,146 $ 22
85 Occupancy & equipment 87 82 5 341 324 17
15 Professional fees 14 16 (2) 56 65 (9)
26 Advertising and public relations 24 27 (3) 108 87 21
24 Communications 27 24 3 101 90 11
7 Goodwill amortization 7 5 2 24 18 6
78 Other 88 72 16 323 309 14
----- ----- ----- ---- ------ ------ ----
528 Subtotal before other items & OREO costs 540 515 25 2,121 2,039 82
Other items:
0 Stock price performance-related restricted stock 6 0 6 6 0 6
BayBanks-related costs:
180 Restructuring and merger-related costs 0 0 0 180 0 180
0 Accelerated vesting of restricted stock 0 0 0 4 0 4
0 Reorganization and other costs 0 28 (28) 0 28 (28)
----- ----- ----- ---- ------ ------ ----
708 Subtotal before OREO costs 546 543 3 2,311 2,067 244
5 OREO costs 2 2 0 9 9 0
----- ----- ----- ---- ------ ------ ----
$ 713 Total $ 548 $ 545 $ 3 $2,320 $2,076 $244
===== ===== ===== ==== ====== ====== ====
</TABLE>
Noninterest expense before "other items" and OREO costs, was $540 million
in the fourth quarter of 1996, compared with $528 million in the prior quarter
and $515 million for the same quarter in 1995.
The $12 million increase from the third quarter was mainly due to growth in
certain businesses including New England consumer, corporate banking and Latin
America, as well as increased levels of incentive compensation. These increases
were partially offset by a decline associated with cost savings from the
integration of BayBanks into the Corporation. The number of employees declined
to 22,000 at December 31, 1996 from 22,600 at September 30, 1996 and 23,700 at
December 31, 1995. The decline from the prior year also reflected the mortgage
banking transaction .
Compared with prior year periods, the growth in noninterest expense
reflected ongoing expansion and investment spending in several of the
Corporation's growth businesses, mainly Latin America, capital markets, and
consumer banking. Initiatives in the growth businesses 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 capital markets businesses and the acquisition of Boston Bancorp, as well as
marketing campaigns related to credit card, home equity and other products in
consumer banking. Current year expense levels also included higher incentive
compensation costs related to improved business unit performance. The comparison
of noninterest expense with prior year periods is also affected by the absence
of operating expenses associated with the mortgage banking business, which was
sold in March, 1996, and the elimination of FDIC insurance premiums. The full
year comparison is also affected by the absence of expenses from the corporate
trust and stock transfer businesses .
During the fourth quarter of 1996 the Corporation recorded a $6 million
charge associated with a performance restricted stock plan for certain
employees. Under the terms of the plan, 75% of the stock award vested with
these employees during the fourth quarter when the Corporation's common stock
price closed at $60 or above for two consecutive days. The remaining 25% of the
award vested in January, 1997 when the stock price closed at $70 or above for
two consecutive days.
<PAGE>
CREDIT PROFILE
Loan and Lease Portfolio
The segments of the lending portfolio are as follows:
<TABLE>
<CAPTION>
12-31-96 9-30-96 6-30-96 3-31-96 12-31-95
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
(in millions)
United States Operations:
Commercial, industrial and financial $ 13,162 $ 13,828 $ 12,915 $ 12,677 $ 12,809
Commercial real estate
Construction 284 323 410 383 386
Other commercial real estate 3,240 3,228 3,326 3,242 3,393
Consumer-related loans:
Residential mortgages 3,184 4,156 4,133 4,218 4,141
Home equity loans 2,878 2,842 2,775 2,644 2,556
Credit card 1,395 1,320 1,223 810 495
Other 5,503 5,349 5,218 5,200 5,059
Lease financing 1,816 1,778 1,627 1,565 1,564
Unearned income (287) (272) (245) (240) (240)
--------- -------- -------- -------- ---------
31,175 32,552 31,382 30,499 30,163
--------- -------- -------- -------- ---------
International Operations:
Loans and lease financing, net of
unearned income 9,886 9,501 9,271 8,769 8,707
--------- -------- -------- -------- ---------
Total loans and lease financing $ 41,061 $ 42,053 $ 40,653 $ 39,268 $ 38,870
========= ======== ======== ======== =========
</TABLE>
Loans and leases declined approximately $1 billion from September 30, 1996
driven mainly by a $972 million decline in residential mortgages due to the sale
of loans, including those associated with the sale of branches to US Trust. In
addition, domestic commercial and industrial loans declined $666 million due, in
part, to the outflow of loans carried at September 30 which were earmarked for
syndication. These declines were partially offset by a $385 million increase in
international loans reflecting ongoing growth from Latin America.
Nonaccrual Loans and OREO
Nonaccrual loans and OREO amounted to $452 million at December 31, 1996,
compared with $496 million at September 30, 1996, and $442 million at December
31, 1995. Nonaccrual loans and OREO represented 1.1% of related assets at
December 31, 1996, compared with 1.2% at September 30, 1996 and 1.1% at December
31, 1995.
The components of consolidated nonaccrual loans and OREO are as follows:
<TABLE>
12-31-96 9-30-96 6-30-96 3-31-96 12-31-95
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
(in millions)
Domestic nonaccrual loans:
Commercial, industrial and financial $ 82 $ 114 $ 140 $ 93 $ 88
Commercial real estate
Construction 6 9 10 22 25
Other commercial real estate 67 84 86 102 103
Consumer-related loans
Residential mortgages 57 60 45 46 42
Home equity loans 23 22 20 16 14
Credit card 17 5 2 0 0
Other 44 44 38 42 35
--------- -------- -------- -------- ---------
296 338 341 321 307
--------- -------- -------- -------- ---------
International nonaccrual loans 106 106 57 63 66
--------- -------- -------- -------- ---------
Total nonaccrual loans 402 444 398 384 373
OREO 50 52 62 65 69
--------- -------- -------- -------- ---------
Total $ 452 $ 496 $ 460 $ 449 $ 442
========= ======== ======== ======== =========
</TABLE>
<PAGE>
Provision and Reserve for Credit Losses
The reserve for credit losses at December 31, 1996 was $883 million, or
2.15% of outstanding loans and leases, compared with $897 million, or 2.13% at
September 30, 1996, and $890 million, or 2.29% at December 31, 1995. The
reserve for credit losses was 220% of nonaccrual loans at December 31, 1996,
202% at September 30, 1996, and 239% at December 31, 1995.
The provision for credit losses was $60 million in the fourth quarter of
1996, compared with $57 million in the third quarter of 1996 and $81 million in
the fourth quarter of 1995, which included a special provision of $25 million.
For the full year 1996, the provision for credit losses was $231 million,
compared with $275 million for the full year 1995. Full year 1995 included
special provisions of $75 million ($50 million recorded in the first quarter and
$25 million recorded in the fourth quarter).
Net credit losses, excluding $15 million related to the transfer of
commercial real estate loans into a held for sale account, were $60 million for
the fourth quarter of 1996, compared with $55 million for the prior quarter and
$51 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 1996's fourth
quarter (excluding the aforementioned loans transferred into a held for sale
account), compared with .53% for the third quarter of 1996 and .51% for the
fourth quarter of 1995.
Net credit losses were as follows:
<TABLE>
<CAPTION>
Third
- -------
Quarter Fourth Quarter Twelve Months
- ------- -------------- -------------
1996 1996 1995 1996 1995
- ------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
(in millions)
Domestic
$ 0 Commercial, industrial and financial $ 3 $ 6 $ 8 $ 30
1 Commercial real estate 1 8 16 35
Consumer-related loans:
2 Residential mortgages 2 5 11 19
7 Credit card 13 3 27 11
0 Home equity loans 3 2 7 6
35 Other 26 18 109 51
----- ----- ----- ----- -----
45 48 42 178 152
10 International 12 9 37 44
----- ----- ----- ----- -----
$ 55 Subtotal $ 60 $ 51 $ 215 $ 196
Commercial real estate loans transferred
0 into a held for sale category 15 0 15 0
----- ----- ----- ----- -----
$ 55 Total $ 75 $ 51 $ 230 $ 196
===== ===== ===== ===== =====
</TABLE>
THE CORPORATION
BankBoston, with assets of $62.3 billion, was founded in 1784. BankBoston
is engaged primarily in commercial and consumer banking in southern New England,
providing financing and capital markets services to selected corporations
nationally and internationally, and full-service banking in key Latin American
markets. The Corporation and its subsidiaries operate through a network of 650
offices in the U.S. and through more than 100 offices in 24 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 stock exchanges.
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(dollars in millions)
September 30 December 31
------------ -----------------
1996 1996 1995
---- ------- -------
<S> <C> <C> <C>
Assets
Securities:
$ 685 Held to maturity $ 692 $ 660
7,413 Available for sale 7,792 7,582
42,053 Loans and lease financing 41,061 38,870
(897) Reserve for credit losses (883) (890)
------- ------- -------
41,156 Net loans and lease financing 40,178 37,980
4,513 Other earning assets 4,729 4,973
8,196 Cash and other nonearning assets 8,915 8,228
------- ------- -------
$61,963 Total Assets $62,306 $59,423
======= ======= =======
Liabilities and Stockholders' Equity
$43,328 Deposits $42,831 $41,064
9,250 Funds borrowed 9,136 9,503
2,846 Notes payable 2,843 2,189
1,785 Other liabilities 2,062 1,965
Guaranteed preferred beneficial
interest in Corporation's junior
subordinated debt 500
------- ------- -------
57,209 Total Liabilities 57,372 54,721
------- ------- -------
Stockholders' Equity
508 Preferred equity 508 508
4,246 Common equity 4,426 4,194
------- ------- -------
4,754 Total Stockholders' Equity 4,934 4,702
------- ------- -------
Total Liabilities and
$61,963 Stockholders' Equity $62,306 $59,423
======= ======= =======
</TABLE>
SELECTED AVERAGE BALANCES
<TABLE>
<CAPTION>
Quarter Ended Quarters Ended Twelve Months Ended
- ------------- -------------- -------------------
September 30 December 31 December 31
- ------------- ----------- -----------
1996 1996 1995 1996 1995
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Assets
$41,223 Loans and lease financing $41,835 $39,357 $40,589 $38,283
8,249 Securities 8,029 7,823 8,122 7,463
53,924 Total earning assets 54,819 51,295 53,410 49,567
60,049 Total assets 61,056 57,801 59,523 55,744
Liabilities and Stockholders' Equity
35,432 Interest bearing deposits 34,739 32,902 34,491 31,708
7,185 Noninterest bearing deposits 7,292 7,001 7,112 6,698
------- ------- ------- ------- -------
42,617 Total deposits 42,031 39,903 41,603 38,406
2,674 Notes payable 2,983 2,159 2,666 2,142
46,407 Total interest bearing liabilities 47,079 44,416 45,908 42,982
4,251 Common stockholders' equity 4,317 4,070 4,236 3,796
4,759 Total stockholders' equity 4,825 4,578 4,744 4,304
</TABLE>
NUMBER OF EMPLOYEES
<TABLE>
<CAPTION>
Dec 31 Sept 30 Dec 31
1996 1996 1995
--------- ---------- -------
<S> <C> <C> <C>
Full time equivalent employees 22,000 22,600 23,700
</TABLE>
Prior period results have been restated to give effect to the Corporation's
acquisition of BayBanks, Inc., completed on July 29, 1996 and accounted for as a
pooling of interests.
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
(dollars in millions, except per share amounts)
Quarters Ended Quarters Ended Twelve Months Ended
September 30 December 31 December 31
- -------------- ------------ -----------
1996 1996 1995 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$1,199.5 Interest income $1,250.1 $1,278.7 $4,892.4 $5,118.9
608.1 Interest expense 638.9 705.8 2,552.8 2,870.2
-------- -------- -------- -------- --------
591.4 Net interest revenue 611.2 572.9 2,339.6 2,248.7
57.0 Provision for credit losses 60.0 81.0 231.0 275.0
-------- -------- -------- -------- --------
Net interest revenue after provision
534.4 for credit losses 551.2 491.9 2,108.6 1,973.7
-------- -------- -------- -------- --------
Noninterest income:
140.4 Financial service fees 146.6 230.6 473.8 695.5
61.6 Trust and agency fees 65.0 54.8 246.0 240.4
20.7 Trading profits and commissions 17.2 9.1 75.8 24.9
7.1 Securities portfolio gains, net (.8) 1.9 23.2 9.1
106.7 Other income 111.5 71.3 525.4 339.9
-------- -------- -------- -------- --------
336.5 Total noninterest income 339.5 367.7 1,344.2 1,309.8
-------- -------- -------- -------- --------
Noninterest expense:
244.2 Salaries 254.5 243.2 983.4 946.8
49.1 Employee benefits 44.4 45.8 194.7 198.9
51.1 Occupancy expense 50.6 48.6 202.6 191.1
34.2 Equipment expense 36.2 33.8 138.6 133.1
149.0 Other expense 160.4 144.4 611.0 568.6
-------- -------- -------- -------- --------
527.6 Subtotal 546.1 515.8 2,130.3 2,038.5
180.0 Acquisition and reorganization-related expenses 28.2 180.0 28.2
4.8 OREO costs 1.8 1.7 9.2 9.5
-------- -------- -------- -------- --------
712.4 Total noninterest expense 547.9 545.7 2,319.5 2,076.2
-------- -------- -------- -------- --------
158.5 Income before income taxes 342.8 313.9 1,133.3 1,207.3
78.5 Provision for income taxes 141.3 133.6 483.1 529.0
-------- -------- -------- -------- --------
$ 80.0 NET INCOME $ 201.5 $ 180.3 $ 650.2 $ 678.3
======== ======== ======== ======== ========
NET INCOME PER COMMON SHARE:
$ .46 Primary $ 1.26 $ 1.09 $ 3.99 $ 4.17
$ .45 Fully diluted $ 1.24 $ 1.08 $ 3.93 $ 4.09
$ .44 DIVIDENDS PAID PER COMMON SHARE $ .44 $ .37 $ 1.69 $ 1.28
Average number of common shares, in thousands:
153,103 Primary 152,975 156,140 153,529 153,856
155,183 Fully diluted 155,157 157,959 156,112 156,768
$ 9.4 Preferred dividends $ 9.4 $ 9.4 $ 37.4 $ 37.5
</TABLE>
Prior period results have been restated to give effect to the Corporation's
acquisition of BayBanks, Inc., completed on July 29, 1996 and accounted for as a
pooling of interests.
<PAGE>
OTHER DATA
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Twelve Months
-------------
Quarter Ended Quarters Ended Ended
- ------------- -------------- -----
September 30 December 31 December 31
- ------------- ------------ ------------
1996 1996 1995 1996 1995
---- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C>
EARNINGS PER SHARE BEFORE CERTAIN ITEMS*:
$1.23 Primary $ 1.26 $ 1.09 $ 4.79 $ 4.17
$1.21 Fully diluted $ 1.24 $ 1.08 $ 4.71 $ 4.09
RETURN ON AVERAGE TOTAL ASSETS (ANNUALIZED):
.53% Net income 1.31% 1.24% 1.09% 1.22%
1.31% Net income before certain items* 1.31% 1.24% 1.30% 1.22%
RETURN ON AVERAGE COMMON EQUITY (ANNUALIZED):
6.61% Net income 17.71% 16.66% 14.47% 16.86%
17.56% Net income before certain items* 17.71% 16.66% 17.36% 16.86%
* Where applicable, 1996 amounts exclude charges
associated with the BayBanks acquisition and items
related to the sale of the mortgage banking
subsidiary.
CONSOLIDATED NET INTEREST REVENUE AND MARGIN:
Net interest revenue, fully taxable
$596.4 equivalent basis $616.5 $581.2 $2,360.0 $2,270.5
4.40% Net interest margin 4.47% 4.50% 4.42% 4.58%
4.51% DOMESTIC NET INTEREST MARGIN (ESTIMATED) 4.65% 4.65% 4.54% 4.72%
4.07% INTERNATIONAL NET INTEREST MARGIN (ESTIMATED) 3.97% 3.98% 4.05% 4.10%
</TABLE>
<TABLE>
<CAPTION>
Sept 30 Dec. 31
------- ----------------------
1996 1996 1995
---- ---- ----
<S> <C> <C> <C>
COMMON STOCKHOLDERS' EQUITY:
$4,246 Common stockholders' equity $ 4,426 $ 4,194
152,634 Common shares outstanding, in thousands 153,173 155,296
Per common share:
$27.81 Book value $28.89 $ 27.01
57.88 Market value 64.25 46.25
CAPITAL RATIOS/REGULATORY CAPITAL:
6.27% Tangible Common Equity ratio 6.49% 5.62%
Risk-based capital ratios: Estimate
8.3% Tier 1 capital ratio (minimum required 4.00%) 9.3% 8.5%
12.7% Total capital ratio (minimum required 8.00%) 13.7% 12.8%
7.2% Leverage ratio 8.2% 7.4%
$4,319 Tier 1 capital $ 4,954 $ 4,275
6,642 Total capital 7,288 6,440
52,223 Total risk-adjusted assets 53,398 50,382
</TABLE>
Prior period results have been restated to give effect to the Corporation's
acquisition of BayBanks, Inc., completed on July 29, 1996 and accounted for as a
pooling of interests.
<PAGE>
RESERVE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
(dollars in millions)
Quarter Ended Quarters Ended Twelve Months Ended
September 30 December 31 December 31
------------- ------------------ ------------------
1996 1996 1995 1996 1995
----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$894.5 Beginning balance $ 896.7 $ 858.2 $ 889.2 $ 827.0
57.0 Provision for credit losses 60.0 81.0 231.0 275.0
Reserve of acquired banks 1.5 2.1 3.7 16.6
Reserves of companies sold (10.9) (32.7)
(73.4) Credit losses (98.1) (75.3) (310.2) (281.9)
18.6 Recoveries 23.2 23.2 80.5 85.2
----- ------- ------- ------- -------
(54.8) Net credit losses (74.9) (52.1) (229.7) (196.7)
----- ------- ------- ------- -------
$896.7 Ending balance $ 883.3 $ 889.2 $ 883.3 $ 889.2
======== ======= ======= ======= =======
Reserve as a % of loans
2.13% and leases 2.15% 2.29% 2.15% 2.29%
======== ======= ======= ======= =======
Reserve as a % of nonaccrual
202% loans 220% 239% 220% 239%
======= ======= ======= ======= =======
</TABLE>
RENEGOTIATED LOANS
<TABLE>
<CAPTION>
(in millions)
1995 1996
Fourth First Second Third Fourth
Qtr Qtr Qtr Qtr Qtr
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Renegotiated loans $33 $28 $13 $11 $ 8
=== === === === ===
</TABLE>
Prior period results have been restated to give effect to the Corporation's
acquisition of BayBanks, Inc., completed on July 29, 1996 and accounted for as a
pooling of interests.
