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 18, 1995
FLEET FINANCIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
RHODE ISLAND
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(State or other jurisdiction of incorporation)
1-6366 05-0341324
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(Commission File Number) (IRS Employer
Identification No.)
50 Kennedy Plaza, Providence, Rhode Island 02903
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 401-278-5800
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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Pursuant to Form 8-K, General Instructions F, Registrant hereby
incorporates by reference the press release attached hereto as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits
Exhibit No. Description
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Exhibit 99 Press Release of Fleet Financial
Group, Inc. Dated October 18, 1995
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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
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William C. Mutterperl
Senior Vice President and
General Counsel
Dated: October 18, 1995
News Release
Contacts: Press: Meg Pier Investor: Thomas Rice
617/346-3104 401/278-5879
Fleet Financial Group Reports
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Record Third Quarter Earnings of $177 Million
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Providence, R. I., October 18, 1995: Fleet Financial Group today
reported record net income of $177 million, or $1.08 per share, for the quarter
ended September 30, up 8% compared to $164 million, or $1.01 per share, earned
in the third quarter of 1994. Earnings for the first nine months of 1995 were
$514 million, or $3.14 per share, up 15% versus $448 million, or $2.70 per
share, earned in the first nine months of 1994.
Commenting on third quarter results, Terrence Murray, chairman and chief
executive officer, said, "It was a constructive quarter in which growth in core
revenues coupled with Fleet's improved efficiency produced a continued
advancement in earnings. We are pleased to report such strong earnings at a
time when we are readying the Corporation to leverage the growth opportunities
following the upcoming merger with Shawmut National Corporation. During the
third quarter we continued to invest in new business initiatives, while
enhancing our management team with respected industry talent, who should be the
basis for further product expansion, and accomplished critical tasks relative to
the regulatory approvals required for the merger with Shawmut." Fleet
anticipates final regulatory approvals shortly.
Murray also remarked that record third quarter earnings "included
important contributions from the corporation's mortgage banking business driven
by increased mortgage production and servicing revenue. Our banking franchise
continues to deliver solid performance. Continuing sizable investments in
pursuit of future revenue growth did not interfere with tight cost controls as
noninterest expenses declined during the quarter. Our successful approach to
cost control reinforces our confidence that consolidation of the combined Fleet-
Shawmut organization will significantly reduce expenses while offering customers
uninterrupted access to enhanced products and services."
(more)
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Eugene M. McQuade, executive vice president and chief financial
officer, said "return on assets (ROA) and return on realized common equity (ROE)
continued at strong levels as ROA was 1.41% at September 30, 1995, versus 1.30%
a year earlier, while ROE was 18.13%, compared to 19.05% at September 30, 1994.
The net interest margin was 4.63% in the third quarter of 1995 compared to 4.45%
in the third quarter of 1994. Good cost control and maintenance of revenue
levels produced a significant improvement in the efficiency ratio to 61.5% in
the quarter versus 63.1% in the second quarter."
Income Statement
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Net interest income totaled $510 million during the third quarter of
1995 compared to $507 million during the second quarter of 1995 and $505 million
during the third quarter of 1994. Increases in average earning assets from
$42.8 billion in the second quarter of 1995 to $43.9 billion in the third
quarter of 1995 were partially offset by a decrease of 10 basis points in the
net interest margin from the second quarter of 1995, reflecting an increasingly
competitive market for customer deposits. Growth in average earning assets was
paced by continued improvement in the mortgage banking line of business as
mortgages held for sale almost doubled to $1.9 billion reflecting increased loan
origination activity. In addition, average loans grew nearly $460 million, or
6.2% on an annualized basis to, $30 billion.
Third quarter provision for credit losses was $27 million, compared to
$11 million recorded in the prior year's third quarter. Net charge-offs for the
quarter amounted to $41 million, compared to $19 million in the third quarter of
1994. In comparison to the second quarter, nonperforming assets (NPAs) remained
flat at $579 million. The reserve for loan losses stood at $937 million at
September 30, 1995, or 3.04% of loans.
(more)
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Noninterest income in the third quarter totaled $341 million, up 22%
when compared to $280 million for the same period in 1994 with increases of 10%
or more noted in several lines of business. Mortgage banking revenue of $135
million in the third quarter of 1995 represented a 45% increase from the $93
million recorded in the third quarter of 1994. The increase is primarily
attributable to a $26 million increase in mortgage production revenue as loan
production has increased dramatically as a result of the favorable interest rate
environment for residential mortgages. In addition, mortgage servicing revenue
increased $17 million as the Corporation's mortgage servicing portfolio has
increased from $83 billion to $103 billion during this year. Service charges,
fees and commissions increased over 14% as a result of the implementation of
various fee producing programs. Investment services revenue improved almost
10% to $47 million, compared to the third quarter of 1994 reflecting the
improvement in the stock and bond markets during 1995 and student loan servicing
fees have increased 14% to $17 million compared to the third quarter of 1994 due
to increased loan volume associated with the National Direct Student Loan
Program at the Corporation's AFSA subsidiary.
Noninterest expense in the third quarter totaled $523 million, compared
to the $494 million reported for the third quarter of 1994. The increase is
primarily attributable to a $13 million increase in the amortization of mortgage
servicing rights (MSRs) as the mortgage servicing portfolio has increased to
$103 billion as of September 30, 1995, coupled with increases in several other
expense categories, including amortization of intangibles, as a result of the
completion of the acquisitions of NBB Bancorp and Plaza Home Mortgage Corp. in
the first quarter of 1995 and the buyback of the Fleet Mortgage Group minority
interest. Additionally, expenses included the costs of several new business
initiatives, such as direct student loan origination, co-branded credit card
marketing expenses, and our tax return processing business. On a consecutive
quarter basis expenses have been reduced by $25 million.
(more)
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Noninterest expense was positively impacted by a $12 million decrease in FDIC
premiums as FDIC premiums have been reduced to four cents per $100 of domestic
deposits.
Balance Sheet
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Total assets at September 30, 1995 were $50.9 billion, while total loans
and leases were $30.8 billion at the same date, compared with $51.3 billion of
total assets and $30.0 billion of loans and leases at June 30, 1995. Loan
growth in the quarter occurred primarily in the Corporation's residential loan
portfolio with increases in both the commercial and lease financing portfolios
noted as well. Loans have grown $3.8 billion, or 14%, since September 30,
1994. The investment securities portfolio remained stable for the quarter at
$11.6 billion. The investment portfolio's market value increased by $54 million
from June 30, 1995 to September 30, 1995, resulting in a positive market value
of $113 million as of September 30, 1995. Stockholder's equity increased nearly
$1.0 billion, or 27%, to $4.4 billion during the past year.
Fleet Financial Group is a diversified financial services company listed
on the New York Stock Exchange (NYSE-FLT) with approximately 1,200 offices
nationwide. Its lines of business include commercial and consumer banking,
mortgage banking, consumer finance, asset-based lending, equipment leasing,
investment management, and student loan processing.
(see comparative results attached)
(To receive a copy of this or previous Fleet news releases by fax-on-demand,
please call 1-800-758-5804 #316250)
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<TABLE><CAPTION>
FLEET FINANCIAL GROUP
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED NINE MONTHS ENDED
Sep 30, Sep 30, Sep 30, Sep 30,
1995 1994 1995 1994
<C> <C> <S> <C> <C>
For the Period ($ in millions)
$177 $164 Net income $514 $448
510 505 Net interest income (a) 1,514 1,529
27 11 Provision for credit losses 75 45
Per Common Share
$1.08 $1.01 Fully diluted earnings $3.14 $2.70
37.75 37.63 Market value (period-end) 37.75 37.63
0.40 0.35 Cash dividends declared 1.20 1.00
28.13 22.50 Book value (period-end) 28.13 22.50
At Quarter End ($ in millions)
$50,861 $46,988 Assets $50,861 $46,988
30,801 27,006 Loans and leases 30,801 27,006
32,436 33,612 Deposits 32,436 33,612
4,361 3,446 Total stockholders' equity 4,361 3,446
Operating Ratios
1.41 % 1.30 % Return on average assets 1.42 % 1.22 %
17.91 20.08 Return on common equity 18.69 17.87
18.13 19.05 Return on realized equity (b) 18.35 17.61
4.63 4.45 Net interest margin 4.72 4.62
8.57 7.33 Total equity/assets (period-end) 8.57 7.33
9.5 10.6 Tier 1 risk-based capital ratio (Estimated) 9.5 10.6
13.4 15.0 Total risk-based capital ratio (Estimated) 13.4 15.0
Asset Quality ($ in millions)
$579 $526 Nonperforming assets $579 $526
Nonperforming assets as a % of loans, leases,
1.87 % 1.95 % and OREO 1.87 % 1.95 %
1.14 1.12 Nonperforming assets as a % of total assets 1.14 1.12
1.63 1.58 Nonperforming loans to period-end loans 1.63 1.58
Reserve for credit losses to period-end loans
3.04 3.59 and leases 3.04 3.59
Reserve for Credit Losses (millions)
$951 $977 Beginning reserve for credit losses $953 $1,000
27 11 Provision for credit losses 75 45
(57) (38) Gross charge-offs (173) (138)
16 19 Recoveries 51 67
0 0 Acquisitions/Other 31 (5)
937 969 Ending reserve for credit losses 937 969
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(a) Fully taxable equivalent
(b) Excludes average unrealized gains/losses on securities
available for sale.
