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) October 19, 1994
FLEET FINANCIAL GROUP,INC.
(Exact name of registrant as specified in its charter)
RHODE ISLAND
(State or other jurisdiction of incorporation)
1-6366 05-0341324
(Commission File Number) (IRS Employer Identification No.)
50 Kennedy Plaza, Providence, Rhode Island 02903
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 401-278-5800
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Pursuant to Form 8-K, General Instructions F,
Registrant hereby incorporates by reference the press
release attached hereto as Exhibit 28.
Item 7. Financial Statements and Other Exhibits.
Exhibit No. Description
Exhibit 28 Fleet Financial Group,
Inc. Press Release
Dated October 19, 1994
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this report
to be signed in its behalf by the undersigned hereunto duly
authorized.
FLEET FINANCIAL GROUP, INC.
Registrant
By /s/ William C. Mutterperl
William C. Mutterperl
Senior Vice President and
General Counsel
Dated: October 19, 1994
EXHIBIT 28
Robert W. Lougee, Jr. Thomas L. Lavelle
Vice President and Director, Manager, Media Relations
Financial Communications (401) 278-3003
(401) 278-5879
Fleet Financial Group Reports
Record Third Quarter Earnings of $164 Million
Providence, R. I., October 19, 1994: Fleet Financial Group
today reported record net income of $164 million, or $1.01 per
fully diluted share, for the quarter ended September 30, 1994,
up 29% from the $127 million, or $.78 per fully diluted share,
earned in the third quarter of 1993.
For the first nine months of 1994, net income was $448
million, or $2.70 per fully diluted share, up 27% from the $352
million, or $2.16 per fully diluted share, for the first nine
months of 1993.
"We are delighted to report another quarter of strong
operating results which reflect favorable loan growth trends in
the Northeast, ongoing expense control efforts, continued
improvement in credit quality, and significant expansion of our
banking and financial services franchises," said Terrence
Murray, chairman and chief executive officer.
"We are especially pleased that our return on assets and
return on equity continue to show improvement over the already
high levels reported in previous quarters." Eugene M. McQuade,
executive vice president and chief financial officer, noted:
"Return on assets for the quarter was 1.30% and return on
equity was 20.08%, compared to 1.09% and 16.37%, respectively,
for the third quarter of 1993 and 1.22% and 18.31% for the
second quarter of 1994."
"Growth in both commercial and consumer loans continues to
be encouraging," Murray noted, "as average loans and leases
increased 10% on an annualized basis compared to the previous
quarter. In addition, during the quarter we strengthened our
banking and financial services franchises through acquisitions
and mortgage servicing purchases. We completed the acquisition
of Sterling Bancshares, signed a definitive agreement to
acquire Plaza Home Mortgage Corp., and Fleet Mortgage Group,
our mortgage banking subsidiary, purchased nearly $10 billion
in mortgage servicing."
Income Statement
Net interest income of $505 million decreased slightly from
the $512 million recorded in the previous quarter as a result
of the impact of rising short-term interest rates on the
Corporation's investment portfolio. Net interest margin for
the third quarter was 4.45% compared to 4.66% in the second
quarter. The effect of the narrower margin on net interest
income, also the result of rising interest rates, was
substantially offset by growth in earning assets.
The third quarter provision for credit losses was $11
million. As a further sign that the economy is strengthening in
the Northeast, net charge-offs for the quarter amounted to only
$19 million, compared to $71 million in 1993. These positive
items reflect a 29% decrease in nonperforming assets (NPAs)
over the past year to $526 million at September 30.
Noninterest income for the third quarter was $288 million
compared to $318 million, excluding $127 million of securities
gains, in the prior year. The decrease is due primarily to a
reduction in mortgage banking income as a result of a
continuing decline in mortgage production revenue caused by the
refinancing wave in mortgage lending during 1993.
Noninterest expense totaled $501 million in the third
quarter compared to $562 million for the third quarter of 1993,
prior to a $125 million restructuring charge in 1993. This $61
million decrease is primarily attributable to reductions
resulting from the Corporation's efficiency improvement program
and a reduction in mortgage servicing amortization resulting
from a significant decline in mortgage refinancings. Included
in noninterest expense is the previously announced $7 million
restructuring charge recorded at Fleet Mortgage Group.
Earnings by Group
The Banking Group generated $162 million (excluding $1
million of after-tax securities losses) in third quarter
earnings, compared to $109 million (excluding $58 million of
after-tax securities gains) in 1993's third quarter. These
improved results were due to reduced credit costs, as asset
quality continues to improve, and expense reductions from our
efficiency improvement programs.
The Financial Services Group recorded income of $18 million
in the third quarter, compared to $37 million in 1993's third
quarter. Fleet Mortgage contributed $17 million, excluding the
restructuring charge, to Fleet's earnings for the quarter
compared to $20 million in the third quarter of 1993. This
decrease is primarily due to reduced mortgage production
revenue, as mortgage loan origination is significantly below
the levels of a year ago.
During the third quarter, in further recognition of the
changing mortgage lending environment, the Corporation made
several strategic moves at its mortgage banking subsidiary,
including: the signing of an agreement to acquire Plaza Home
Mortgage Corp. and its $9 billion servicing portfolio; the
purchase of an additional $10 billion in mortgage servicing;
and the completion of the previously announced reengineering
program that identified $40 million in annual pre-tax profit
improvements when compared to that subsidiary's second quarter
revenue and expense.
Fleet Finance recorded a loss of $8 million in the quarter
compared to a breakeven position for the same period in 1993.
The loss is attributable to lower net interest income as a
result of lower outstandings and increased provision for credit
losses due to asset quality concerns at that subsidiary.
Balance Sheet
Total assets at September 30, 1994 were $47.0 billion,
while total loans and leases were $27.0 billion at the same
date, compared with $46.9 billion of total assets and $26.3
billion of total loans and leases at September 30, 1993.
Average loans and leases increased more than $600 million from
the second quarter primarily in commercial and consumer loans,
as average loan growth was noted in all Fleet banking markets,
especially the Massachusetts, New York, and Rhode Island
franchises.
The reserve for credit losses was $969 million at September
30, 1994, representing 3.58% of loans, compared to $977
million, or 3.65% of loans, at June 30, 1994.
Stockholders' equity amounted to $3.4 billion at September
30, 1994 compared to $3.6 billion at June 30, 1994. The
decrease reflects the previously announced repurchase of common
shares in anticipation of the purchase of New Bedford Bancorp.
All 1994 financial information has been restated to include
the acquisition of Sterling Bancshares as if it had occurred on
January 1, 1994.
Fleet Financial Group is a diversified financial services
company listed on the New York Stock Exchange (NYSE-FLT) with
approximately 1,200 offices nationwide. Its lines of business
include commercial and consumer banking, mortgage banking,
investment management, and student loan processing.
(see comparative results attached)
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FLEET FINANCIAL GROUP
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, September 30, September 30, September 30,
1994 1993 1994 1993
For the Period
($ in millions):
Net income $164 $127 $448 $352
Net interest income (a) 505 531 1,529 1,562
Provision for credit
losses 11 61 45 215
Per Common Share:
Fully diluted earnings $1.01 $0.78 $2.70 $2.16
Market value
(period-end) 37.63 34.88 37.63 34.88
Cash dividends declared 0.35 0.25 1.00 0.725
Book value (period-end) 22.50 22.17 22.50 22.17
Operating Ratios:
Return on average assets 1.30% 1.09% 1.22% 1.03%
Return on average
common equity 20.08 16.37 17.87 15.76
Return on average
realized common
equity (b) 19.05 16.37 17.61 15.76
Net interest margin 4.45 5.08 4.62 5.06
Total equity/assets
(period-end) 7.33 7.54 7.33 7.54
Tier 1 risk-based capital
ratio (Estimated) 11.5 11.6 11.5 11.6
Total risk-based capital
ratio (Estimated) 16.2 16.5 16.2 16.5
At Quarter End
($ in millions):
Assets $46,988 $46,920 $46,988 $46,920
Loans and leases 27,048 26,275 27,048 26,275
Deposits 33,612 31,082 33,612 31,082
Total stockholders'
equity 3,446 3,537 3,446 3,537
Asset Quality
($ in millions):
Nonperforming assets $526 $736 $526 $736
Nonperforming assets as
a % of loans, leases,
ISF and OREO 1.94% 2.78% 1.94% 2.78%
Nonperforming assets as
a % of total assets 1.12 1.57 1.12 1.57
Nonperforming loans to
period-end loans 1.58 2.15 1.58 2.15
Reserve for credit losses
to period-end loans
and leases 3.58 3.86 3.58 3.86
Reserve for Credit Losses
($ in millions):
Beginning reserve for
credit losses $977 $1,028 $1,000 $1,029
Provision for credit
losses 11 61 45 215
Gross charge-offs (38) (88) (138) (284)
Recoveries 19 17 67 61
Sales, puts to FDIC, other 0 (3) (5) (6)
Ending reserve for credit
losses 969 1,015 969 1,015
(a) Fully taxable equivalent
(b) Excludes average unrealized losses on securities available for sale.
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FLEET FINANCIAL GROUP
CONSOLIDATED INCOME STATEMENT
($ in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, September 30, September 30, September 30,
1994 1993 1994 1993
Interest income (FTE) $860,454 $809,591 $2,477,219 $2,442,414
Interest expense 355,777 278,906 948,024 880,501
------- ------- --------- --------
Net interest income (FTE) 504,677 530,685 1,529,195 1,561,913
Provision for credit ------- ------- --------- ---------
losses 10,599 60,510 45,016 215,381
Net interest income after ------ ------ ------ -------
provision for credit
losses 494,078 470,175 1,484,179 1,346,532
Noninterest income: ------- ------- --------- ---------
Mortgage banking 93,150 106,939 278,000 303,352
Service charges, fees,
and commissions 63,012 60,431 185,289 179,147
Investment services
revenue 43,806 44,504 131,097 129,671
Securities available
for sale gains 1,385 126,535 20,564 259,233
Other 86,212 106,743 248,391 274,755
------- ------- ------- -------
Total noninterest income 287,565 445,152 863,341 1,146,158
------- ------- ------- ---------
Noninterest expense:
Employee compensation
and benefits 228,751 257,127 727,007 768,054
Occupancy 42,524 43,965 128,930 130,873
Legal and other
professional fees 37,856 30,445 101,534 93,027
Equipment 32,037 32,588 99,528 96,740
FDIC assessment 17,215 16,990 52,763 58,197
Other 94,855 102,589 291,091 311,688
------- ------- ------- -------
Subtotal noninterest
expense 453,238 483,704 1,400,853 1,458,579
Acquired servicing ------- ------- --------- ---------
rights amortization 17,115 51,971 68,947 198,320
Core deposit and
goodwill amortization 14,010 13,750 42,217 40,593
Restructuring charge 7,000 125,000 32,000 125,000
OREO expense 10,132 12,806 22,217 49,340
------ ------- ------ -------
Subtotal 48,257 203,527 165,381 413,253
Total noninterest ------ ------- ------- -------
expense 501,495 687,231 1,566,234 1,871,832
Income before income ------- ------- --------- ---------
taxes 280,148 228,096 781,286 620,858
Tax-equivalent adjustment 10,909 8,435 29,452 25,198
Applicable income taxes 102,241 87,775 296,328 240,510
Net income before ------- ------- ------- -------
minority interest 166,998 131,886 455,506 355,150
Minority interest (3,105) (4,792) (7,765) (3,134)
------- ------- -------- ---------
Net income $163,893 $127,094 $447,741 $352,016
-------- ------- -------- --------
-------- ------- -------- --------
<PAGE>
FLEET FINANCIAL GROUP
CONSOLIDATED BALANCE SHEETS
($ in millions)
September 30, June 30, September 30,
1994 1994 1993
ASSETS:
Cash and cash equivalents $ 2,349 $ 2,202 $2,257
Securities available for sale:
1994 at market; 1993 at cost 12,779 15,496 11,816
Securities held to maturity 940 748 1,673
Loans and lease financing (net of
unearned income) 27,048 26,759 26,275
Reserve for credit losses (969) (977) (1,015)
Mortgages held for resale 581 895 2,050
Premises and equipment 793 774 719
Acquired servicing rights 793 632 532
Accrued interest receivable 364 305 408
Other intangibles 349 362 358
Foreclosed property and repossessed
equipment 99 117 172
Other assets 1,862 1,888 1,675
------ ------ ------
Total assets $46,988 $49,201 $46,920
------- ------- -------
------- ------- -------
LIABILITIES:
Deposits:
Demand $ 6,272 $ 6,497 $ 6,069
Regular savings, NOW, money market 15,576 16,087 16,083
Time 11,764 9,785 8,930
------- ------- -------
Total deposits 33,612 32,369 31,082
------- ------- -------
Federal funds purchased and
repurchase agreements 2,576 4,119 1,911
Other short-term borrowings 2,540 4,416 5,331
Accrued expenses and other liabilities 1,418 1,368 1,284
Long-term debt 3,396 3,341 3,775
------ ------ ------
Total liabilities 43,542 45,613 43,383
------- ------- -------
STOCKHOLDERS' EQUITY:
Preferred stock 379 379 501
Common stock 3,067 3,209 3,036
------ ------ ------
Total stockholders' equity 3,446 3,588 3,537
------ ------ ------
Total liabilities and
stockholders' equity $46,988 $49,201 $46,920
------- ------- -------
------- ------- -------
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FLEET FINANCIAL GROUP
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, September 30, September 30, September 30
1994 1994 1994 1994
Avg. Avg. Avg. Avg.
Bal. Rate Bal. Rate Bal. Rate Bal. Rate
ASSETS:
Money market
instruments $ 116 4.73% 100 3.29% $ 52 4.45% $ 243 3.00%
Trading account
securities 72 4.89 76 4.21 71 4.64 79 4.17
Securities 17,353 5.81 13,096 6.57 16,273 5.95 12,668 7.07
Loans and leases 26,785 8.76 26,075 8.43 26,450 8.49 26,109 8.52
Mortgages held
for resale 775 7.43 2,102 6.99 1,283 6.99 1,889 7.20
Foreclosed property 113 -- 202 -- 128 -- 228
--- ----- ----- ---- ----- ----- ----- -----
Total interest-
earning assets 45,214 7.57% 41,651 7.71% 44,257 7.48% 41,216 7.92%
------ ----- ------ ----- ------ ----- ------ -----
Accrued interest
receivable 332 -- 363 -- 344 -- 336 --
Reserve for
credit losses (981) -- (1,034) -- (993) -- (1,038) --
Other assets 5,498 -- 5,221 -- 5,526 -- 5,028 --
----- ----- ------ -----
Total assets $50,063 -- $46,201 -- $49,134 -- $45,542 --
------- ------- ------- -------
------- ------- ------- -------
LIABILITIES AND
STOCKHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Savings $15,826 2.15% $16,142 2.01% $16,180 2.00% $15,925 2.24%
Time 10,734 4.50 9,057 4.25 9,388 4.30 9,415 4.41
Total interest-
bearing deposits 26,560 3.10 25,199 2.82 25,568 2.84 25,340 3.05
Short-term
borrowings 8,530 4.13 6,289 2.65 8,401 3.73 5,552 3.05
Long-term debt 3,359 7.03 3,597 6.41 3,362 6.76 3,723 6.34
----- ---- ----- ---- ----- ---- ----- ----
Total interest-
bearing
liabilities 38,449 3.67% 35,085 3.15% 37,331 3.40% 34,615 3.40%
------ ----- ------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ ----- ------ -----
Net interest
spread -- 3.90% -- 4.56% -- 4.08% -- 4.52%
------ ----- ------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ ----- ------ -----
Demand deposits
and other
noninterest-bearing
time deposits 6,698 -- 6,452 -- 6,715 -- 6,319 --
Other liabilities 1,347 -- 1,185 -- 1,427 -- 1,198 --
----- ----- ----- ----- ----- ----- ----- -----
Total liabilities 46,494 -- 42,722 -- 45,473 -- 42,132 --
------ ----- ------ ----- ------ ----- ------ -----
Stockholders' equity 3,569 -- 3,479 -- 3,661 -- 3,410 --
----- ----- ----- ----- ----- ----- ----- -----
Total liabilities
and stockholders'
equity $50,063 -- $46,201 -- $49,134 -- $45,542 --
------- -- ------- -- ------- -- ------- --
------- -- ------- -- ------- -- ------- --
Net interest
margin 4.45% 5.08% 4.62% 5.06%
----- ----- ----- -----
<PAGE>
FLEET FINANCIAL GROUP
NET INCOME BY QUARTER
A graph was presented in the press release showing the
growth of Fleet's net income from $77 million in the third
quarter of 1992 to $164 million in the third quarter of 1994.
<PAGE>
FLEET FINANCIAL GROUP
RETURN ON AVERAGE ASSETS
A graph was presented in the press release showing the
growth of Fleet's return on average assets ratio from .67% in
the third quarter of 1992 to 1.30% in the third quarter of 1994.
<PAGE>
FLEET FINANCIAL GROUP
RETURN ON AVERAGE COMMON EQUITY
A graph was presented in the press release showing the
growth of Fleet's return on average common equity ratio from
11.96% in the third quarter of 1992 to 20.08% in the third
quarter of 1994.
