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 17, 1996
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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.)
One Federal Street, Boston, MA 02211
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-292-2000
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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 and Other Exhibits.
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Exhibit No. Description
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Exhibit 99 Fleet Financial Group,
Inc. Press Release
Dated January 17, 1996
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/ Douglas L. Jacobs
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Douglas L. Jacobs
Treasurer
Dated: January 17, 1996
Exhibit 99
Contacts: Media: James Mahoney Investor: Thomas R. Rice
(617) 346-5472 (617) 346-0148
FLEET FINANCIAL GROUP REPORTS
EARNINGS IN EXCESS OF $1 BILLION FOR 1995,
EXCLUDING SPECIAL CHARGES
Boston, Mass., January 17, 1996: Fleet Financial Group, Inc. (FLT-NYSE)
today reported a 9% increase in 1995 earnings to $1.04 billion, or $3.77 per
share, excluding special charges, from $952 million, or $3.48 per share,
excluding special charges, in 1994. Including the impact of these special
charges noted below, net income and earnings per fully diluted share were $610
million and $1.57 respectively, in 1995. The Corporation also reported earnings
of $260 million, or $.94 per share, for the fourth quarter of 1995, excluding
special charges, compared with $258 million, or $.97 per share, for the fourth
quarter of 1994. Including the impact of these special charges, the Corporation
incurred a net loss of $138 million, or ($1.17) per fully diluted share, for the
fourth quarter of 1995.
Special charges for 1995 included $317 million (after-tax) of merger costs
related to the Shawmut merger ($286 million for the fourth quarter) and a charge
of $112 million (after-tax) related to the Corporation's decision to sell Fleet
Finance, its Atlanta based consumer finance subsidiary, and certain
nonperforming assets from its banking franchise that have been identified for
accelerated disposition. Earnings per share were also reduced by $.59 related
to the exchange of ownership interest with Kohlberg, Kravis and Roberts (KKR).
Terrence Murray, Fleet's president and chief executive officer, commented
on the watershed nature of the year saying, "A number of on-going strategic
efforts came to fruition in 1995 which have significantly enhanced the Fleet
franchise, including the acquisitions of Shawmut and NatWest. In addition, we
have strengthened Fleet's capital structure through the repurchase of the Fleet
Mortgage Group minority interest and the exchange of the ownership interest with
KKR."
Mr. Murray further commented on Fleet's earnings performance saying, "It is
gratifying to see that a combination of our strategic initiatives, an improving
New England economy, and the hard work of so many dedicated employees has
achieved record operating earnings in excess of $1 billion."
Mr. Murray also remarked that "the integration of the Shawmut acquisition
is proceeding smoothly, and we are confident that the same will be true of the
integration of NatWest following regulatory approval."
Eugene M. McQuade, executive vice president and chief financial officer,
said, "Our reasoning, in part, to sell both Fleet Finance and the accelerated
asset pool at this time is to allow management to focus its full attention on
the execution of our integration plans as well as to concentrate on businesses
that will achieve strong returns for our shareholders going forward." Mr.
McQuade also commented on the year's earnings saying, "Excluding the impact
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of special charges in 1995, return on assets and return on realized common
equity were 1.26% and 16.17% compared to 1.07% and 15.35%, respectively, for
1994."
Income Statement
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Net interest income totaled $3.1 billion for 1995 and 1994 as strong growth
in earning assets was offset by narrowing margins on those assets. Average
loans for the year increased by $7 billion, or 16%, due to both acquisitions and
new loan origination volume. The net interest margin for 1995 was 4.12%,
compared to 4.30% in 1994. The 18 basis point decrease is attributable to an
increase in the cost of interest-bearing liabilities outpacing the increase in
yields on interest-earning assets, which is reflective of an increasingly
competitive market for customer deposits. Net interest income for the fourth
quarter of 1995 totaled $747 million, while the net interest margin was 4.00%,
compared to $758 million and 4.29% in the prior year's fourth quarter and was
the result of the year's trends in deposit pricing discussed earlier.
Credit loss provisions for 1995 were $101 million, compared to $65 million
in 1994, and were $26 million in the fourth quarter of 1995 compared to $17
million for the fourth quarter of 1994. Net charge-offs increased $63 million
in 1995 and $37 million from last year's fourth quarter as a result of decreases
in recoveries on loans previously charged off, as well as an increase in
consumer charge-offs relating to an increase in the size of the Corporation's
credit card portfolio as well as at Fleet Finance.
Noninterest income totaled $1.8 billion for 1995, up 20% when compared to
$1.5 billion for 1994 with increases of 10% or more noted in several lines of
business most notably mortgage banking where revenues of $511 million in 1995
represented a 31% increase as a result of the Corporation's mortgage servicing
portfolio increasing 30% to $116 billion. Investment services revenue improved
10% to $322 million, reflecting the improvement in the stock and bond markets
during 1995, and student loan servicing fees have increased 33% to $72 million
due to increased loan volume associated with the National Direct Student Loan
Program at the Corporation's AFSA subsidiary. Noninterest income for the fourth
quarter totaled $526 million compared to $410 million for the same period of
1994, an increase of 28%, as the trends mentioned above continued into the
fourth quarter.
Noninterest expenses totaled $3.1 billion during 1995 compared to $3.0
billion for 1994, excluding special charges. (Merger charges of $490 million
were recorded in connection with the merger with Shawmut National Corporation
and a charge of $175 million was recognized in connection with the Corporation's
decision to sell Fleet Finance, Inc. and certain nonperforming assets from its
banking franchise that have been identified for accelerated disposition.) The
Corporation realized decreases in FDIC assessment fees of $46 million as the
FDIC reduced its assessment on deposits during 1995, and OREO expense declined
by $36 million due to reduced write-downs on OREO property. Offsetting these
decreases were increases in amortization of mortgage servicing rights (MSRs),
intangible asset amortization, and employee compensation. Amortization of MSRs
increased by $99 million due both to the acceleration of MSRs amortization
necessitated by the declining interest rate environment and 30% growth in the
size of the Corporation's servicing portfolio. This increase in MSRs
amortization was offset in large part by $77 million of gains on treasury
options, which are used as hedges and offset changes in the valuation of MSRs.
Increases in amortization of
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intangibles, employee compensation and various other expense categories are
attributable to numerous acquisitions completed during 1995.
Noninterest expense totaled $814 million in the fourth quarter of 1995,
excluding the aforementioned special charges, compared to $717 million in the
fourth quarter of 1994. The $97 million increase in noninterest expense during
the fourth quarter of 1995 is primarily attributable to a $70 million increase
in mortgage servicing rights amortization offset economically by treasury option
hedge gains.
Balance Sheet
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Total assets at December 31, 1995 and 1994 were $84.4 billion and $81.0
billion, respectively. Total loans and leases have increased from $46.0 billion
at December 31, 1994 to $51.5 billion at December 31, 1995, principally
commercial and residential real estate loans. Commercial loans have increased
18% to $23.3 billion at December 31, 1995, while residential real estate has
increased 35% during the same period to $11.5 billion. Growth in the
Corporation's loan portfolio is attributable to both acquisitions and new loan
origination activity. The reserve for loan losses at over $1.3 billion remains
strong at 2.6% of loans. The investment securities portfolio has decreased $1.8
billion to $19.3 billion at December 31, 1995, as part of an effort to improve
the overall mix of the Corporation's interest-earning assets. The investment
securities portfolio's market value has benefited significantly from falling
interest rates during the last twelve months and has appreciated by $1.1 billion
during the year. Also, during the fourth quarter, the Corporation reclassified
$6.4 billion of its security portfolio into the assets held for sale category,
which now represents substantially all of its security portfolio. Stockholders'
equity amounted to $6.4 billion at December 31, 1995 compared to $5.5 billion at
December 31, 1994 and reflects the exchange of the KKR dual convertible
preferred stock into 19.9 million common shares at year end 1995.
Fleet Financial Group is an $84-billion diversified financial services
company listed on the New York Stock Exchange. Fleet's lines of business
include commercial and consumer banking, mortgage banking, asset-based lending,
equipment leasing, investment management services and student loan processing.
(see comparative results attached)
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FLEET FINANCIAL GROUP
FINANCIAL HIGHLIGHTS
<TABLE><CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1995 1994 1995 1994
<C> <C> <S> <C> <C>
For the Period (S in millions)
$260 $258 Earnings before special charges $1,039 $952
(138) 258 Net income (loss) 610 849
747 758 Net interest income (a) 3,065 3,099
26 17 Provision for credit losses 101 65
Per Common Share
$0.94 $0.97 Fully diluted earnings before special charges $3.77 $3.48
(1.17) 0.97 Fully diluted earlings (loss) 1.57 3.09
40.75 32.38 Market value (period-end) 40.75 32.38
0.43 0.40 Cash dividends declared 1.63 1.40
22.71 20.68 Book value (period-end) 22.71 20.68
At Quarter End ($ in millions)
$84,432 $81,026 Assets $84,432 $81,026
51,525 46,035 Loans and leases 51,525 46,035
57,122 55,528 Deposits 57,122 55,528
6,366 5,471 Total stockholders' equity 6,366 5,471
Operating Ratios
1.24% (b) 1.31% Return on average assets 1.26% (b) 1.07%
15.45 (b) 19.41 Return on common equity 16.29 (b) 15.66
15.52 (b) 18.26 Return on realized common equity 16.17 (b) 15.35
4.00 4.29 Net interest margin 4.12 4.30
7.54 6.75 Total equity/assets (period-end) 7.54 6.75
7.8 9.1 Tier 1 risk-based capital ratio (Estimated) 7.8 9.1
11.5 12.9 Total risk-based capital ratio (Estimated) 11.5 12.9
Asset Quality ($ in millions)
$499 (c) $761 Nonperforming assets $499 (c) $761
Nonperforming assets as a % of loans, leases,
0.97% 1.65% and OREO 0.97% 1.65%
0.59 0.94 Nonperforming assets as a % of total assets 0.59 0.94
0.85 1.45 Nonperforming loans to period-end loans 0.85 1.45
Reserve for credit losses to period-end loans
2.56 3.25 and leases 2.56 3.25
Reserve for Credit Losses (millions)
$1,448 $1,537 Beginning reserve for credit losses $1,496 $1,669
26 17 Provision for credit losses 101 65
(125) (91) Gross charge-offs (418) (377)
30 33 Recoveries 116 138
(58) 0 Acquisitions/Other 26 1
1,321 1,496 Ending reserve for credit losses 1,321 1,496
</TABLE>
(a) Fully taxable equivalent
(b) Does not include the effect of the loss on assets hold for sale or
accelerated disposition or merger related charges. Including these special
charges, return on average assets, return on common equity and return on
realized common equity ratios are (.66%), (9.10%) and (9.14%),
respectively for the quarter and .74%, 9.32% and 9.25%, respectively for
the year.
(c) Excludes assets reclassified as held for sale or accelerated disposition
at December 31, 1995 of $317 million.
