Rule 424(b)(5)
Registration No. 33-63631
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 29, 1995)
[LOGO]
3,000,000 DEPOSITARY SHARES
FLEET FINANCIAL GROUP, INC.
EACH REPRESENTING A ONE-FIFTH INTEREST IN A SHARE OF
SERIES VI 6.75% PERPETUAL PREFERRED STOCK
----------------
Each of the 3,000,000 Depositary Shares offered hereby (the "Depositary
Shares") represents a one-fifth interest in a share of Series VI 6.75% Perpetual
Preferred Stock, $250 liquidation preference per share (the "Perpetual Preferred
Stock"), of Fleet Financial Group, Inc. ("Fleet") deposited with the Depositary
(as defined herein) and, through the Depositary, entitles the holder to all
proportionate rights and preferences of the Perpetual Preferred Stock (including
dividend, voting, redemption and liquidation rights). The proportionate
liquidation preference of each Depositary Share is $50. See "Certain Terms of
the Depositary Shares".
Dividends on the Perpetual Preferred Stock will be cumulative from the date
of original issue and will be payable quarterly on January 15, April 15, July 15
and October 15 of each year, commencing April 15, 1996 at a rate of 6.75% per
annum. The amount of dividends payable in respect of the Perpetual Preferred
Stock will be adjusted in the event of certain amendments to the Internal
Revenue Code of 1986, as amended (the "Code"), in respect of the dividends
received deduction. See "Certain Terms of the Perpetual Preferred
Stock--Dividends".
The Perpetual Preferred Stock is not redeemable prior to April 15, 2006. The
Perpetual Preferred Stock is redeemable at the option of Fleet in whole or in
part, on and after April 15, 2006, at $250 per share (equivalent to $50 per
Depositary Share), plus, in each case, an amount equal to the sum of all accrued
and unpaid dividends thereon. The Perpetual Preferred Stock may also be redeemed
prior to April 15, 2006, in whole, at the option of Fleet, in the event of
certain amendments to the Code in respect of the dividends received deduction.
The Perpetual Preferred Stock will not be entitled to the benefit of any sinking
fund. See "Certain Terms of the Perpetual Preferred Stock--Redemption".
Application will be made to list the Depositary Shares on the New York Stock
Exchange (the "NYSE"). Trading of the Depositary Shares on the NYSE is expected
to commence within a 30-day period after the initial delivery of the Depositary
Shares.
Concurrently with this offering, Fleet is offering 11,000,000 Depositary
Shares, each representing a one-tenth interest in a share of Fleet's Series V
7.25% Perpetual Preferred Stock, at a purchase price of $25 per Depositary
Share.
-------------------
THE DEPOSITARY SHARES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK OR NONBANK SUBSIDIARY OF FLEET AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR RELATED PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[CAPTION]<TABLE>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) FLEET(1)(3)
<S> <C> <C> <C>
Per Depositary Share............................. $50.00 $1.00 $49.00
Total(4)......................................... $150,000,000 $3,000,000 $147,000,000
</TABLE>
(1) Plus accrued dividends, if any, from February 21, 1996.
(2) Fleet has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting".
(3) Before deducting expenses payable by Fleet estimated at $175,000.
(4) Fleet has granted the Underwriters an option, exercisable within 30 days
after the date hereof, to purchase up to an additional 450,000 Depositary
Shares at the Price to Public, less the Underwriting Discount, to cover
over-allotments, if any. If the Underwriters exercise such option in full,
the total Price to Public, Underwriting Discount and Proceeds to Fleet will
be $172,500,000, $3,450,000 and $169,050,000, respectively. See
"Underwriting". -------------------
<PAGE>
The Depositary Shares are offered by the several Underwriters, subject to
prior sale, when, as and if issued to and accepted by them, and subject to the
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Depositary Receipts evidencing the Depositary Shares will be
made in New York, New York on or about February 21, 1996.
-------------------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
-------------------
The date of this Prospectus Supplement is February 13, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEPOSITARY
SHARES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE,
IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This section supplements the section entitled "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus.
Fleet hereby incorporates by reference its Current Reports on Form 8-K dated
November 30, 1995, December 19, 1995, January 17, 1996, January 19, 1996 and
February 8, 1996, each of which was filed by Fleet with the Securities and
Exchange Commission (the "Commission") since the date of the accompanying
Prospectus.
All documents filed with the Commission by Fleet pursuant to Sections 13, 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities offered hereby are
incorporated herein by reference and such documents shall be deemed to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
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FLEET FINANCIAL GROUP, INC.
This section replaces the section entitled "Fleet Financial Group,
Inc.--General" in the accompanying Prospectus.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At December 31, 1995, Fleet had total assets of
$84.4 billion, total deposits of $57.1 billion and stockholders' equity of $6.4
billion.
Fleet is engaged in a general commercial banking and trust business
throughout the states of New York, Rhode Island, Connecticut, Massachusetts,
Maine, New Hampshire and Florida through its banking subsidiaries, Fleet Bank
("Fleet-NY"); Fleet Bank of New York, National Association ("FBNY"); Fleet
National Bank ("Fleet-RI"); Fleet Bank, National Association ("Fleet-CT"); Fleet
National Bank of Connecticut ("FNB-CT"); Fleet Bank of Massachusetts, National
Association ("Fleet-MA"); Fleet National Bank of Massachusetts ("FNB-MA"); Fleet
Bank of Maine; Fleet Bank-NH and Fleet Bank, F.S.B.
Fleet provides, through its nonbanking subsidiaries, a variety of financial
services, including mortgage banking, asset-based lending, equipment leasing,
consumer finance, real estate financing, securities brokerage services,
investment banking, investment advice and management, data processing and
student loan servicing.
On February 20, 1995, Fleet and Shawmut National Corporation ("Shawmut")
entered into an Agreement and Plan of Merger (the "Merger Agreement") providing
for the merger of Shawmut with and into Fleet (the "Shawmut Merger"). The
Shawmut Merger was consummated on November 30, 1995. For additional information
regarding the Shawmut Merger and Fleet's supplemental consolidated financial
statements giving effect thereto, see Fleet's Current Reports on Form 8-K dated
February 20, 1995, February 21, 1995, April 13, 1995, May 17, 1995, June 21,
1995, August 11, 1995, August 23, 1995, November 15, 1995, November 30, 1995 and
January 19, 1996, which are incorporated by reference herein. Unless otherwise
noted, all of Fleet's historical financial information set forth in this
Prospectus Supplement has been restated to give effect to the Shawmut Merger for
all periods presented.
On December 19, 1995, Fleet entered into an Agreement and Plan of Merger
(the "NatWest Merger Agreement") with National Westminster Bank Plc ("NatWest
Plc") providing for the merger (the "NatWest Merger") of FBNY with and into
NatWest Bank, N.A. ("NatWest Bank"), a national bank operating in New York and
New Jersey. NatWest Bank will continue its existence following the closing under
the name "Fleet Bank of New York, National Association" (the "Surviving Bank").
See "Recent Developments--NatWest Merger", "Unaudited Pro Forma Combined
Financial Statements" and "Notes to Unaudited Pro Forma Combined Financial
Statements". For additional information regarding the NatWest Merger, including
a copy of the NatWest Merger Agreement and certain additional financial
information related thereto, see Fleet's Current Reports on Form 8-K dated
December 19, 1995 and February 8, 1996, which are incorporated by reference
herein.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02211, telephone number (617) 292-2000.
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND DIVIDENDS
ON PREFERRED STOCK
This section replaces the section entitled "Consolidated Ratios of Earnings
to Fixed Charges and Dividends on Preferred Stock" in the accompanying
Prospectus.
Fleet's consolidated ratios of earnings to fixed charges and dividends on
preferred stock were as follows for the years and periods indicated:
<TABLE><CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges and Dividends on Preferred
Stock:
Excluding interest on deposits............................. 1.74x 2.25x 2.25x 1.78x *
Including interest on deposits............................. 1.33 1.61 1.54 1.25 *
</TABLE>
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* The sum of fixed charges and dividends on preferred stock exceeded earnings by
$16 million (excluding interest on deposits) and by $16 million (including
interest on deposits) for the year ended December 31, 1991.
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest)
and, where indicated, the pretax equivalents of dividends on preferred stock.
Fixed charges consist of interest on short-term debt and long-term debt
(including interest related to capitalized leases and capitalized interest) and
one-third of rent expense, which approximates the interest component of such
expense. In addition, where indicated, fixed charges include interest on
deposits.
USE OF PROCEEDS
This section replaces the section entitled "Use of Proceeds" in the
accompanying Prospectus.
Fleet intends to use the net proceeds from the sale of the Depositary Shares
to fund a portion of the purchase price for the NatWest Merger. See "Recent
Developments--NatWest Merger", "Unaudited Pro Forma Combined Financial
Statements" and "Notes to Unaudited Pro Forma Combined Financial Statements".
Fleet intends to use any net proceeds from the sale of the Depositary Shares not
used for such purpose for general corporate purposes, principally to extend
credit to, or fund investments in, its subsidiaries. The precise amounts and
timing of extensions of credit to, and investments in, such subsidiaries will
depend upon the subsidiaries' funding requirements and the availability of other
funds. Pending such applications, the net proceeds may be temporarily invested
in marketable securities or applied to the reduction of Fleet's short-term
indebtedness. Based upon the historic and anticipated future growth of Fleet and
the financial needs of its subsidiaries, Fleet may engage in additional
financings of a character and amount to be determined as the need arises.
RECENT DEVELOPMENTS
NATWEST MERGER
On December 19, 1995, Fleet entered into the NatWest Merger Agreement.
Following completion of the transaction, which has a purchase price of $3.26
billion, Fleet will have a strengthened market position in metropolitan New York
to complement its leading position in New England. The NatWest Merger Agreement
provides for a payment of $2.7 billion, subject to adjustment based on the
tangible net worth of NatWest Bank on the closing date of the NatWest Merger
(the "Closing Date"). In addition, the NatWest Merger Agreement provides for an
earnout payment (the "Earnout") of up to $560 million over an eight year period
following the Closing Date which will be based on the level of
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earnings of the Surviving Bank during such period. The Earnout may be prepaid by
Fleet at any time at a price to be negotiated, and is subject to accelerated
prepayment under certain circumstances.
Fleet expects to finance the NatWest Merger primarily through internal
funding sources. Fleet currently plans to issue $600 million of preferred stock
(of which NatWest Plc or an affiliate has agreed to take up to $300 million as
part of the purchase price if such amount of preferred stock is not issued by
Fleet prior to the Closing Date) and $400 million of debt securities prior to
the Closing Date. Fleet also has the option to issue up to $175 million of the
purchase price in shares of its Common Stock.
Following the NatWest Merger, Fleet will have approximately $90 billion in
assets reflecting an expected reduction of Fleet's and NatWest's assets. As a
result of the NatWest Merger, Fleet expects to liquidate low-return assets,
primarily securities and residential mortgage loans, and replace them with
higher-yielding loans of NatWest Bank almost entirely funded with core deposits.
In addition, Fleet expects to achieve cost savings of approximately $200
million (pre-tax) within eighteen months following the Closing Date, primarily
through reductions in staff, elimination and consolidation of certain branches,
and the consolidation of certain offices, data processing and other redundant
back-office operations. The extent to which cost savings will be achieved is
dependent upon various factors beyond the control of Fleet, including the
regulatory environment, economic conditions, unanticipated changes in business
conditions and inflation. Therefore, no assurances can be given with respect to
the ultimate level of cost savings to be realized, or that such savings will be
realized in the time-frame currently anticipated.
The NatWest Merger, which is subject to regulatory approval and other
conditions to closing, is expected to close in the second quarter of 1996. There
can be no assurance that such regulatory approvals will be obtained, and, if
obtained, there can be no assurance as to the date of any such approvals or the
absence of any litigation challenging such approvals. Upon completion, based on
information available to Fleet as of the date of this Prospectus Supplement,
Fleet expects to rank as the third largest banking institution in New York, the
fourth largest banking institution in New Jersey (the position currently
occupied by NatWest Bank) and to continue to rank as the largest banking
institution in New England. In total, Fleet expects to operate 1,225 branches
and 2,000 automated teller machines in eight states, and will maintain NatWest
Bank's recently opened customer service and sales operations in Scranton,
Pennsylvania.
For additional information regarding the NatWest Merger, see "Unaudited Pro
Forma Combined Financial Statements" and "Notes to Unaudited Pro Forma Combined
Financial Statements", as well as Fleet's Current Reports on Form 8-K dated
December 19, 1995 and February 8, 1996, which are incorporated by reference
herein.
KKR EXCHANGE
On December 31, 1995, Fleet and certain partnerships (the "Partnerships")
represented by Kohlberg, Kravis & Roberts signed an agreement to exchange the
Partnership's ownership interest represented by their holdings of Fleet's Dual
Convertible Preferred Stock (the "DCP Stock") into direct ownership of
approximately 19.9 million shares of Common Stock (the "KKR Exchange"). As a
result of the exchange, the Partnerships currently hold an approximate 7.5%
ownership interest in Fleet. The Partnerships continue to hold rights to
purchase 6.5 million shares of Common Stock (the "Rights").
The DCP Stock and the Rights were originally issued to the Partnerships in
1991 to provide capital for Fleet's purchase of the Bank of New England
franchise. As part of the 1991 agreement, the Partnerships had the option of
exchanging the DCP Stock into either 16.0 million shares of Fleet Common Stock
or a 50% ownership interest in Fleet-MA and Fleet-CT.
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For additional information on this transaction, see Fleet's Current Report
on Form 8-K dated December 19, 1995, which is incorporated by reference herein.
1995 AND FOURTH QUARTER RESULTS
Fleet's net income for the year ended December 31, 1995, was $610 million or
$1.57 per share compared to $849 million or $3.09 per share in 1994. Excluding
the impact of the special charges described below, Fleet's earnings were $1.04
billion or $3.77 per share for 1995, compared to $952 million or $3.48 per
share, excluding special charges for 1994. Fleet also reported a net loss of
$138 million or $1.17 per share for the fourth quarter of 1995, compared to net
income of $258 million or $0.97 per share for the fourth quarter of 1994.
Excluding the impact of special charges, earnings were $260 million or $0.94 per
share in 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 Fleet's decision to sell Fleet Finance,
Inc. ("Fleet Finance"), its consumer finance subsidiary, and to sell certain
nonperforming assets from its banking subsidiaries that have been identified for
accelerated disposition. Earnings per share were also reduced by $0.59 related
to the KKR Exchange described above.
Net interest income totaled $3.1 billion for both 1995 and 1994 as 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 was 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 noted above.
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 Fleet's credit card portfolio
as well as an increase in charge-offs at Fleet Finance. At December 31, 1995,
nonperforming assets were $499 million, which excludes $317 million of
nonperforming assets which were reclassified to assets held for sale or
accelerated disposition at December 31, 1995.
Noninterest income totaled $1.8 billion for 1995, up 20%, compared to $1.5
billion for 1994. Increases of 10% or more were noted in several lines of
business, including mortgage banking where revenues of $511 million in 1995
represented a 31% increase as a result of Fleet'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 increased 33% to $72 million due to increased
loan volume associated with the National Direct Student Loan Program at Fleet's
student loan servicing subsidiary. Noninterest income for the fourth quarter
totaled $524 million compared to $414 million for the same period in 1994, an
increase of 27%, as the trends mentioned above continued into the fourth
quarter.
Noninterest expense totaled $3.1 billion during 1995 compared to $3.0
billion for 1994, excluding the special charges described above. Fleet's FDIC
assessment fees decreased $46 million during 1995 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
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necessitated by the declining interest rate environment and a 30% growth in the
size of Fleet'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 to offset changes in the valuation of MSRs. Increases in amortization
of intangibles, employee compensation and various other expense categories are
primarily attributable to numerous acquisitions completed during 1995.
Noninterest expense totaled $814 million in the fourth quarter of 1995,
excluding the special charges noted above, 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.
Total assets at December 31, 1995 and 1994 were $84.4 billion and $81.0
billion, respectively. Total loans and leases increased from $46.0 billion at
December 31, 1994 to $51.5 billion at December 31, 1995, principally reflecting
increased commercial and residential real estate loans. Commercial loans
increased 18% to $23.3 billion at December 31, 1995, while residential real
estate loans increased 35% during the same period to $11.5 billion. Growth in
Fleet's loan portfolio is attributable both to acquisitions and new loan
origination activity. Fleet's reserve for loan losses at December 31, 1995 was
$1.3 billion, or 2.6% of loans. The investment securities portfolio decreased
$1.8 billion to $19.3 billion at December 31, 1995, as part of an effort to
improve the overall mix of Fleet's interest-earning assets. The market value of
Fleet's investment securities portfolio benefited significantly from falling
interest rates during 1995 and appreciated by $1.1 billion during the year.
Also, during the fourth quarter, Fleet reclassified $6.4 billion of its
securities portfolio into the asset held for sale category, which now contains
substantially all of its securities portfolio. Stockholders' equity amounted to
$6.4 billion at December 31, 1995 compared to $5.5 billion at December 31, 1994.
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SELECTED CONSOLIDATED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
The following unaudited consolidated summary sets forth selected financial
data for Fleet and its subsidiaries for each of the years in the five-year
period ending December 31, 1995. The following summary should be read in
conjunction with the financial information incorporated herein by reference to
other documents. See "Incorporation of Certain Documents by Reference". All
information included herein has been restated to give effect to the Shawmut
Merger for all periods presented.
<TABLE><CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Consolidated Summary of
Operations:
Interest income (fully
taxable equivalent)........ $ 6,069 $ 5,260 $ 5,086 $ 5,318 $ 5,425
Interest expense............. 3,005 2,161 1,917 2,337 3,142
Net interest income.......... 3,064 3,099 3,169 2,981 2,283
Provision for credit
losses..................... 101 65 327 728 995
Net interest income after
provision for credit losses 2,963 3,034 2,842 2,253 1,288
Noninterest income........... 1,850 1,555 1,883 1,897 1,627
Noninterest expense.......... 3,735 3,145 3,579 3,479 2,864
Net income (loss)............ 610(a) 849 817(b) 366(b) (76)
Earnings (loss) per common
share:
Fully diluted................ $1.57(a) $3.09 $3.03(b) $1.40(b) $(0.44)
Weighted average fully
diluted shares
outstanding.............. 265,886,363 264,828,469 257,373,073 237,116,784 204,024,214
Book value per common share.. $22.71 $20.68 $21.76 $17.65 $16.81
Cash dividends declared per
common share............. 1.63 1.40 1.025 0.825 0.80
Common dividends declared as
a percentage of earnings
per share................ 103.8% 45.3% 33.8% 58.9% --(h)
Ratio of Earnings to Fixed
Charges:
Excluding interest on
deposits................... 1.78x 2.33x 2.36x 1.90x --(f)
Including interest on
deposits................... 1.34 1.62 1.56 1.26 --(f)
Ratio of Earnings to Fixed
Charges and Dividends on
Preferred Stock:
Excluding interest on
deposits................... 1.74 2.25 2.25 1.78 --(g)
Including interest on
deposits................... 1.33 1.61 1.54 1.25 --(g)
Consolidated Balance Sheet--
Average Balances:
Total assets............... $82,726 $79,561 $75,286 $71,633 $65,099
Securities held to
maturity(c)................ 7,736 8,787 7,735 4,300 12,358
Securities available for
sale(c).................... 12,779 16,923 14,140 14,061 1,597
Loans and leases, net of
unearned income............ 51,044 44,102 43,283 43,029 40,986
Interest-bearing deposits.... 43,120 40,113 39,766 42,031 40,867
Short-term borrowings........ 14,045 15,355 12,807 8,848 6,520
Long-term debt/subordinated
notes and debentures....... 6,581 5,383 5,039 4,116 3,947
Dual Convertible Preferred
Stock(d)................... -- -- -- 283 134
Stockholders' Equity......... 6,545 5,782 5,311 4,118 3,596
</TABLE>
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<TABLE><CAPTION>
YEAR ENDED DECEMBER 31,
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1995 1994 1993 1992 1991
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(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Consolidated Ratios:
Net interest margin (fully taxable
equivalent).............................. 4.12% 4.30% 4.63% 4.57% 3.85%
Return (loss) on average assets............ 0.74(a) 1.07 1.09(b) 0.51(b) (0.12)
Return (loss) on average common
stockholders' equity..................... 9.32(a)(e) 15.66(e) 17.11(b) 9.12(b) (2.73)
Average stockholders' equity to average
assets................................... 7.91 7.27 7.05 6.14 5.52
Tier 1 risk-based capital ratio............ 7.80 9.14 10.44 9.89 7.38
Total risk-based capital ratio............. 11.54 12.92 14.89 14.61 11.27
Period-end reserve for credit losses to
period-end loans and leases, net of
unearned income........................ 2.56 3.25 3.82 4.43 4.73
Net charge-offs to average loans and
leases, net of unearned income........... 0.59 0.54 1.35 2.15 2.02
Period-end nonperforming assets to
period-end loans and leases, net of
unearned income, and other real estate
owned.................................. 0.97(i) 1.65 2.35 4.53 7.05
</TABLE>
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(a) Includes impact of the loss on assets held for sale or accelerated
disposition ($175 million pretax) and merger related charges ($490 million
pretax) recorded in 1995. Excluding these special charges, return on average
common stockholders' equity and return on average assets would have been
16.29% and 1.26%, respectively, while net income and earnings per share
would have been $1,039 million and $3.77, respectively.
(b) Includes impact of cumulative effect of change in accounting method of $53
million in 1993 and extraordinary credit of $18 million in 1992.
(c) For a discussion of Fleet's reclassification in 1992 of its "securities held
to maturity" to "securities held for sale", see Fleet's Current Report on
Form 8-K dated October 21, 1992. Effective January 1, 1994, Fleet adopted
FASB Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." The standard requires that securities available for sale
be reported at fair value, with unrealized gains or losses reflected as a
separate component of stockholders' equity. In connection with the adoption
of FASB Statement No. 115, Fleet transferred securities netting to $345
million from the held to maturity portfolio to the available for sale
portfolio. During the fourth quarter of 1995, Fleet reclassified $6.4
billion of its securities from the held to maturity portfolio to the
securities available for sale portfolio.
(d) Fleet's DCP Stock was issued in 1991, reclassified to stockholders' equity
as of December 31, 1992 and converted into common equity on December 31,
1995.
(e) Fleet's return on average common stockholders' equity includes the average
unrealized gains and losses on securities available for sale. Excluding the
impact of FASB Statement No. 115, Fleet's return on average common
stockholders' equity would have been 9.25% and 15.35%, respectively, for the
years ended December 31, 1995 and 1994.
(f) Fixed charges exceeded earnings by $16 million for both the ratio excluding
and including interest on deposits.
(g) The sum of fixed charges and dividends exceeded earnings by $16 million for
both the ratio excluding and including interest on deposits.
(h) For the year ended December 31, 1991, Fleet reported a $76 million net loss
and therefore the ratio is not applicable.
(i) Excludes $317 million of nonperforming assets reclassified to held for sale
or accelerated disposition at December 31, 1995.
S-9
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Balance Sheet as of September 30,
1995, and the Unaudited Pro Forma Combined Statements of Income for the nine
months ended September 30, 1995, and the year ended December 31, 1994, of Fleet
give effect to the NatWest Merger accounted for by the purchase method of
accounting as if such transaction had occurred on January 1, 1994.
The pro forma information is based on the historical consolidated financial
statements of Fleet and National Westminster Bancorp, Inc., a Delaware
corporation ("Bancorp") and their subsidiaries under the assumptions and
adjustments set forth in the accompanying Notes to the Unaudited Pro Forma
Combined Financial Statements. NatWest Bank is a wholly-owned direct subsidiary
of National Westminster Bancorp NJ, a New Jersey corporation, which is a
wholly-owned direct subsidiary of Bancorp. Bancorp is a wholly-owned indirect
subsidiary of NatWest Plc. Pursuant to the terms of the NatWest Merger
Agreement, certain operating subsidiaries of Bancorp, including its leasing
subsidiary, and certain assets and liabilities of NatWest Bank will be retained
by Bancorp or transferred to other affiliates of NatWest Plc. Such assets and
liabilities are included as pro forma adjustments in the Unaudited Pro Forma
Combined Financial Statements. The Unaudited Pro Forma Combined Financial
Statements should be read in conjunction with the supplemental consolidated
financial statements of Fleet, filed on Form 8-K dated January 19, 1996,
incorporated by reference herein, and the consolidated historical financial
statements of Bancorp, including the respective notes thereto, filed on Fleet's
Form 8-K dated February 8, 1996, incorporated by reference herein. The pro forma
information is presented for comparative purposes only and is not necessarily
indicative of the combined financial position or results of operations in the
future or of the combined financial position or results of operations which
would have been realized had the acquisition been consummated during the period
or as of the dates for which the pro forma information is presented.
S-10
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1995 (A)
<TABLE><CAPTION>
FLEET/
BALANCE SHEET NATWEST
FLEET NATWEST PRO FORMA RESTRUCTURING PRO FORMA
HISTORICAL PRO FORMA ADJUSTMENTS ADJUSTMENTS (D) COMBINED
---------- --------- ----------- --------------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents........... $ 3,517 $ 2,089 $ -- $ -- $ 5,606
Federal funds sold and securities
purchased under agreements to
resell............................ 548 1,818 -- (2,366) --
Securities.......................... 19,500 5,645 (1,700)(b) (16,134) 7,311
Loans and leases.................... 52,435 18,754 -- (3,500) 67,689
Reserve for credit losses........... (1,448) (263) -- -- (1,711)
Mortgages held for resale........... 2,252 5 -- -- 2,257
Premises and equipment.............. 1,010 415 (88)(c) -- 1,337
Mortgage servicing rights........... 1,263 13 5(c) -- 1,281
Excess cost over net assets of
subsidiaries acquired............. 947 999 (522)(c) -- 1,424
Other intangibles................... 194 26 242(c) -- 462
Other assets........................ 3,533 2,098 84(c) -- 5,715
---------- --------- ----------- --------------- ---------
Total assets........................ $ 83,751 $31,599 $ (1,979) $ (22,000) $91,371
---------- --------- ----------- --------------- ---------
---------- --------- ----------- --------------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand............................ $ 10,658 $ 4,094 $ -- $ -- $14,752
Regular savings, NOW, money
market.......................... 22,817 8,752 -- -- 31,569
Time.............................. 20,347 8,090 -- (3,600) 24,837
---------- --------- ----------- --------------- ---------
53,822 20,936 -- (3,600) 71,158
---------- --------- ----------- --------------- ---------
Federal funds purchased and
securities sold under agreements
to repurchase................... 8,817 4,241 -- (13,058) --
Other short-term borrowings......... 6,182 2,462 -- (5,342) 3,302
Accrued expenses and other
liabilities....................... 1,498 706 251(c) -- 2,455
Long-term debt...................... 6,734 24 400(b) -- 7,158
---------- --------- ----------- --------------- ---------
Total liabilities................... 77,053 28,369 651 (22,000) 84,073
---------- --------- ----------- --------------- ---------
Stockholders' equity:
Preferred equity.................. 682 -- 600(b) -- 1,282
Common equity..................... 6,016 3,230 (3,230)(c) -- 6,016
---------- --------- ----------- --------------- ---------
Total stockholders' equity.......... 6,698 3,230 (2,630) -- 7,298
---------- --------- ----------- --------------- ---------
Total liabilities and stockholders'
equity............................ $ 83,751 $31,599 $ (1,979) $ (22,000) $91,371
---------- --------- ----------- --------------- ---------
---------- --------- ----------- --------------- ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-11
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1995 (A)
<TABLE><CAPTION>
NATWEST
BANCORP PRO FORMA NATWEST
HISTORICAL ADJUSTMENTS (E) PRO FORMA
---------- --------------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents................................. $ 2,090 $ (1) $ 2,089
Federal funds sold and securities purchased under
agreements to resell.................................... 1,818 -- 1,818
Securities................................................ 5,648 (3) 5,645
Loans and leases.......................................... 19,264 (510) 18,754
Reserve for credit losses................................. (266) 3 (263)
Mortgages held for resale................................. 5 -- 5
Premises and equipment.................................... 546 (131) 415
Mortgage servicing rights................................. 13 -- 13
Excess cost over net assets of subsidiaries acquired...... 1,000 (1) 999
Other intangibles......................................... 27 (1) 26
Other assets.............................................. 2,164 (66) 2,098
---------- ------ ---------
Total assets.............................................. $ 32,309 $(710) $31,599
---------- ------ ---------
---------- ------ ---------
LIABILITIES AND STOCKHOLDER'S EQUITY:
Deposits:
Demand.................................................. $ 4,094 $ -- $ 4,094
Regular savings, NOW, money market...................... 8,752 -- 8,752
Time.................................................... 8,090 -- 8,090
---------- ------ ---------
20,936 -- 20,936
---------- ------ ---------
Federal funds purchased and securities sold under
agreements to repurchase................................ 4,241 -- 4,241
Other short-term borrowings............................... 2,614 (152) 2,462
Accrued expenses and other liabilities.................... 787 (81) 706
Long-term debt............................................ 622 (598) 24
---------- ------ ---------
Total liabilities......................................... 29,200 (831) 28,369
---------- ------ ---------
Stockholder's equity:
Common equity........................................... 3,109 121 3,230
---------- ------ ---------
Total stockholder's equity................................ 3,109 121 3,230
---------- ------ ---------
Total liabilities and stockholder's equity................ $ 32,309 $(710) $31,599
---------- ------ ---------
---------- ------ ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-12
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (A)
<TABLE><CAPTION>
FLEET/
BALANCE SHEET NATWEST
FLEET NATWEST PRO FORMA RESTRUCTURING PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENTS ADJUSTMENTS (D) COMBINED
----------- --------- -------------- -------------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C> <C> <C>
Interest and fees on loans and
leases........................... $ 3,589 $ 1,104 $ -- $ (210) $ 4,483
Interest on securities............. 1,062 487 (79)(b) (864) 606
----------- --------- ----- ------- -----------
Total interest income............ 4,651 1,591 (79) (1,074) 5,089
Interest expense:
Deposits......................... 1,328 444 -- (161) 1,611
Short-term borrowings............ 648 341 -- (799) 190
Long-term debt................... 359 -- 23(b) -- 382
----------- --------- ----- ------- -----------
Total interest expense........... 2,335 785 23 (960) 2,183
----------- --------- ----- ------- -----------
Net interest income................ 2,316 806 (102) (114) 2,906
----------- --------- ----- ------- -----------
Provision for credit losses........ 76 60 -- -- 136
----------- --------- ----- ------- -----------
Net interest income after provision
for credit losses................ 2,240 746 (102) (114) 2,770
----------- --------- ----- ------- -----------
Mortgage banking................... 381 18 -- -- 399
Investment services revenue........ 238 11 -- -- 249
Service charges, fees and
commissions...................... 400 174 -- -- 574
Securities available for sale
gains............................ 18 40 -- -- 58
Other noninterest income........... 303 82 -- -- 385
----------- --------- ----- ------- -----------
Total noninterest income......... 1,340 325 -- -- 1,665
----------- --------- ----- ------- -----------
Employee compensation and
benefits......................... 1,112 278 (2)(c) -- 1,388
Occupancy and equipment............ 349 97 (3)(c) -- 443
Mortgage servicing rights
amortization..................... 107 1 1(c) -- 109
FDIC assessment.................... 63 19 -- -- 82
Marketing.......................... 71 33 -- -- 104
Core deposit and goodwill
amortization..................... 84 59 (18)(c) -- 125
OREO expense....................... 14 4 -- -- 18
Merger-related charges............. 50 -- -- -- 50
Other noninterest expense.......... 519 227 -- -- 746
----------- --------- ----- ------- -----------
Total noninterest expense........ 2,369 718 (22) -- 3,065
----------- --------- ----- ------- -----------
Income before income taxes......... 1,211 353 (80) (114) 1,370
Applicable income taxes............ 474 165 (50) (46) 543
----------- --------- ----- ------- -----------
Net income......................... $ 737 $ 188 $ (30) $ (68) $ 827
----------- --------- ----- ------- -----------
----------- --------- ----- ------- -----------
Net income applicable to common
shares:(f)....................... $ 709 $ 188 $ (64)(b) $ (68) $ 765
----------- --------- ----- ------- -----------
----------- --------- ----- ------- -----------
Weighted average common shares
outstanding:(g)
Primary.......................... 266,681,634 266,681,634
Fully diluted.................... 267,200,272 267,200,272
Earnings per share:
Primary.......................... $2.66 $2.87
Fully diluted.................... $2.65 $2.86
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-13
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (A)
<TABLE><CAPTION>
FLEET PRO FORMA FLEET
HISTORICAL ADJUSTMENTS (H) PRO FORMA
----------- -------------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest and fees on loans and leases............ $ 3,525 $ 64 $ 3,589
Interest on securities........................... 1,001 61 1,062
----------- ----- -----------
Total interest income.......................... 4,526 125 4,651
Interest expense:
Deposits....................................... 1,272 56 1,328
Short-term borrowings.......................... 613 35 648
Long-term debt................................. 359 -- 359
----------- ----- -----------
Total interest expense......................... 2,244 91 2,335
----------- ----- -----------
Net interest income.............................. 2,282 34 2,316
Provision for credit losses...................... 75 1 76
----------- ----- -----------
Net interest income after provision for credit
losses......................................... 2,207 33 2,240
----------- ----- -----------
Mortgage banking................................. 380 1 381
Investment services revenue...................... 238 -- 238
Service charges, fees and commissions............ 396 4 400
Securities available for sale gains.............. 12 6 18
Other noninterest income......................... 300 3 303
----------- ----- -----------
Total noninterest income....................... 1,326 14 1,340
----------- ----- -----------
Employee compensation and benefits............... 1,086 26 1,112
Occupancy and equipment.......................... 340 9 349
Mortgage servicing rights amortization........... 101 6 107
FDIC assessment.................................. 60 3 63
Marketing........................................ 70 1 71
Core deposit and goodwill amortization........... 76 8 84
OREO expense..................................... 13 1 14
Merger-related charges........................... 50 -- 50
Other noninterest expense........................ 511 8 519
----------- ----- -----------
Total noninterest expense...................... 2,307 62 2,369
----------- ----- -----------
Income before income taxes....................... 1,226 (15) 1,211
Applicable income taxes.......................... 478 (4) 474
----------- ----- -----------
Net income....................................... $ 748 $ (11) $ 737
----------- ----- -----------
----------- ----- -----------
Net income applicable to common shares:(f)....... $ 721 $ (12) $ 709
----------- ----- -----------
----------- ----- -----------
Weighted average common shares outstanding:(g)
Primary........................................ 267,125,484 266,681,634
Fully diluted.................................. 267,644,122 267,200,272
Earnings per share:
Primary.......................................... $2.70 $2.66
Fully diluted.................................... $2.69 $2.65
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-14
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (A)
<TABLE><CAPTION>
NATWEST
BANCORP PRO FORMA NATWEST
HISTORICAL ADJUSTMENTS (E) PRO FORMA
----------- -------------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Interest and fees on loans and leases........... $ 1,111 $ (7) $ 1,104
Interest on securities.......................... 487 -- 487
----------- ------ -----------
Total interest income......................... 1,598 (7) 1,591
Interest expense:
Deposits...................................... 444 -- 444
Short-term borrowings......................... 321 20 341
Long-term debt................................ 46 (46) --
----------- ------ -----------
Total interest expense........................ 811 (26) 785
----------- ------ -----------
Net interest income............................. 787 19 806
Provision for credit losses..................... 60 -- 60
----------- ------ -----------
Net interest income after provision for
credit losses................................. 727 19 746
----------- ------ -----------
Mortgage banking................................ 18 -- 18
Investment services revenue..................... 11 -- 11
Service charges, fees and commissions........... 174 -- 174
Securities available for sale gains............. 40 -- 40
Other noninterest income........................ 83 (1) 82
----------- ------ -----------
Total noninterest income...................... 326 (1) 325
----------- ------ -----------
Employee compensation and benefits.............. 340 (62) 278
Occupancy and equipment......................... 100 (3) 97
Mortgage servicing rights amortization.......... 1 -- 1
FDIC assessment................................. 19 -- 19
Marketing....................................... 45 (12) 33
Core deposit and goodwill amortization.......... 59 -- 59
OREO expense.................................... 4 -- 4
Merger-related charges.......................... -- -- --
Other noninterest expense....................... 148 79 227
----------- ------ -----------
Total noninterest expense..................... 716 2 718
----------- ------ -----------
Income before income taxes...................... 337 16 353
Applicable income taxes......................... 152 13 165
----------- ------ -----------
Net income...................................... $ 185 $ 3 $ 188
----------- ------ -----------
----------- ------ -----------
Net income applicable to common shares:(f)...... $ 185 $ 3 $ 188
----------- ------ -----------
----------- ------ -----------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-15
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994 (A)
<TABLE><CAPTION>
FLEET/
BALANCE SHEET NATWEST
FLEET NATWEST PRO FORMA RESTRUCTURING PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENTS ADJUSTMENTS (D) COMBINED
--------- --------- ----------- --------------- ---------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Interest and fees on loans and
leases............................. $ 4,084 $ 1,174 $ -- $ (263) $ 4,995
Interest on securities............... 1,624 422 (101)(b) (1,073) 872
--------- --------- ----- ------- ---------
Total interest income.......... 5,708 1,596 (101) (1,336) 5,867
Interest expense:
Deposits......................... 1,355 375 -- (168) 1,562
Short-term borrowings............ 726 259 -- (749) 236
Long-term debt................... 385 -- 26(b) -- 411
--------- --------- ----- ------- ---------
Total interest expense......... 2,466 634 26 (917) 2,209
--------- --------- ----- ------- ---------
Net interest income.................. 3,242 962 (127) (419) 3,658
Provision for credit losses.......... 80 81 -- -- 161
--------- --------- ----- ------- ---------
Net interest income after provision
for credit losses.................. 3,162 881 (127) (419) 3,497
--------- --------- ----- ------- ---------
Mortgage banking..................... 438 8 -- -- 446
Investment services revenue.......... 294 14 -- -- 308
Service charges, fees and
commissions........................ 450 211 -- -- 661
Securities available for sale
gains.............................. 4 -- -- -- 4
Other noninterest income............. 472 100 -- -- 572
--------- --------- ----- ------- ---------
Total noninterest income....... 1,658 333 -- -- 1,991
--------- --------- ----- ------- ---------
Employee compensation and benefits... 1,544 361 (2)(c) -- 1,903
Occupancy and equipment.............. 499 115 (4)(c) -- 610
Mortgage servicing rights
amortization....................... 128 2 1(c) -- 131
FDIC assessment...................... 128 34 -- -- 162
Marketing............................ 86 34 -- -- 120
Core deposit and goodwill
amortization....................... 110 49 2(c) -- 161
OREO expense......................... 67 5 -- -- 72
Merger-related charges............... 101 -- -- -- 101
Other noninterest expense............ 808 274 -- -- 1,082
--------- --------- ----- ------- ---------
Total noninterest expense...... 3,471 874 (3) -- 4,342
--------- --------- ----- ------- ---------
Income before income taxes........... 1,349 340 (124) (419) 1,146
Applicable income taxes.............. 520 71 (63) (168) 360
--------- --------- ----- ------- ---------
Net income........................... $ 829 $ 269 $ (61) $ (251) $ 786
--------- --------- ----- ------- ---------
--------- --------- ----- ------- ---------
Net income applicable to common
shares:(f)........................... $ 786 $ 269 $(106)(b) $ (251) $ 698
--------- --------- ----- ------- ---------
--------- --------- ----- ------- ---------
Weighted average common shares
outstanding:(g)
Primary............................
266,614,990 266,614,990
Fully diluted......................
266,614,990 266,614,990
Earnings per share:
Primary............................ $2.95 $2.62
Fully diluted...................... $2.95 $2.62
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-16
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994 (A)
<TABLE><CAPTION>
FLEET PRO FORMA FLEET
HISTORICAL ADJUSTMENTS (H) PRO FORMA
--------- --------------- ---------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Interest and fees on loans and leases.................... $ 3,694 $ 390 $ 4,084
Interest on securities................................... 1,514 110 1,624
--------- ----- ---------
Total interest income.............................. 5,208 500 5,708
Interest expense:
Deposits............................................... 1,171 184 1,355
Short-term borrowings.................................. 628 98 726
Long-term debt......................................... 362 23 385
--------- ----- ---------
Total interest expense............................. 2,161 305 2,466
--------- ----- ---------
Net interest income...................................... 3,047 195 3,242
Provision for credit losses.............................. 65 15 80
--------- ----- ---------
Net interest income after provision for credit losses.... 2,982 180 3,162
--------- ----- ---------
Mortgage banking......................................... 391 47 438
Investment services revenue.............................. 294 -- 294
Service charges, fees and commissions.................... 438 12 450
Securities available for sale gains (losses)............. (1) 5 4
Other noninterest income................................. 421 51 472
--------- ----- ---------
Total noninterest income........................... 1,543 115 1,658
--------- ----- ---------
Employee compensation and benefits....................... 1,428 116 1,544
Occupancy and equipment.................................. 453 46 499
Mortgage servicing rights amortization................... 90 38 128
FDIC assessment.......................................... 114 14 128
Marketing................................................ 84 2 86
Core deposit and goodwill amortization................... 65 45 110
OREO expense............................................. 51 16 67
Merger-related charges................................... 101 -- 101
Other noninterest expense................................ 759 49 808
--------- ----- ---------
Total noninterest expense.......................... 3,145 326 3,471
--------- ----- ---------
Income before income taxes............................... 1,380 (31) 1,349
Applicable income taxes.................................. 531 (11) 520
--------- ----- ---------
Net income............................................... $ 849 $ (20) $ 829
--------- ----- ---------
--------- ----- ---------
Net income applicable to common shares:(f)............... $ 818 $ (32) $ 786
--------- ----- ---------
--------- ----- ---------
Weighted average common shares outstanding:(g)
Primary................................................
264,828,469 266,614,990
Fully diluted..........................................
264,828,469 266,614,990
Earnings per share:
Primary................................................ $3.09 $2.95
Fully diluted.......................................... $3.09 $2.95
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-17
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994 (A)
<TABLE><CAPTION>
NATWEST
BANCORP PRO FORMA NATWEST
HISTORICAL ADJUSTMENTS (E) PRO FORMA
--------- --------------- ---------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
Interest and fees on loans and leases.................... $ 1,182 $ (8) $ 1,174
Interest on securities................................... 422 -- 422
--------- ----- ---------
Total interest income.............................. 1,604 (8) 1,596
Interest expense:
Deposits............................................... 375 -- 375
Short-term borrowings.................................. 226 33 259
Long-term debt......................................... 60 (60) --
--------- ----- ---------
Total interest expense............................. 661 (27) 634
--------- ----- ---------
Net interest income...................................... 943 19 962
Provision for credit losses.............................. 81 -- 81
--------- ----- ---------
Net interest income after provision for credit losses.... 862 19 881
--------- ----- ---------
Mortgage banking......................................... 8 -- 8
Investment services revenue.............................. 14 -- 14
Service charges, fees and commissions.................... 211 -- 211
Securities available for sale gains (losses)............. 6 (6) --
Other noninterest income................................. 104 (4) 100
--------- ----- ---------
Total noninterest income........................... 343 (10) 333
--------- ----- ---------
Employee compensation and benefits....................... 448 (87) 361
Occupancy and equipment.................................. 117 (2) 115
Mortgage servicing rights amortization................... 2 -- 2
FDIC assessment.......................................... 34 -- 34
Marketing................................................ 49 (15) 34
Core deposit and goodwill amortization................... 49 -- 49
OREO expense............................................. 5 -- 5
Merger-related charges................................... -- -- --
Other noninterest expense................................ 174 100 274
--------- ----- ---------
Total noninterest expense.......................... 878 (4) 874
--------- ----- ---------
Income before income taxes............................... 327 13 340
Applicable income taxes.................................. 28 43 71
--------- ----- ---------
Net income............................................... $ 299 $ (30) $ 269
--------- ----- ---------
--------- ----- ---------
Net income applicable to common shares:(f)............... $ 299 $ (30) $ 269
--------- ----- ---------
--------- ----- ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-18
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
(a) The pro forma information presented is not necessarily indicative of the
results of operations or the combined financial position that would have
resulted had the NatWest Merger been consummated at the beginning of the periods
indicated, nor is it necessarily indicative of the results of operations in
future periods or the future financial position of the combined entities. Under
generally accepted accounting principles ("GAAP"), the assets and liabilities of
NatWest Bank will be combined at market value with those of Fleet with the
excess of the purchase price over the net assets acquired allocated to goodwill.
On November 30, 1995, Fleet completed the Shawmut Merger with such merger
accounted for as a pooling of interests. Fleet's historical financial
information has been restated to give effect to the Shawmut Merger for all
periods presented.
The pro forma combined financial statements do not give effect to the
anticipated cost savings in connection with the NatWest Merger or the Shawmut
Merger. While no assurance can be given, Fleet expects to achieve cost savings
of approximately $200 million (pre-tax) within eighteen months following the
NatWest Merger. Cost savings of $400 million are also expected to be achieved in
connection with the Shawmut Merger. Such cost savings are expected to be
achieved within the first fifteen months after the consummation of the Shawmut
Merger. Cost savings from both the NatWest Merger and the Shawmut Merger are
expected to be realized primarily through reductions in staff, elimination and
consolidation of certain branches, and the consolidation of certain offices,
data processing and other redundant back-office operations. The extent to which
cost savings will be achieved in connection with the NatWest Merger and the
Shawmut Merger is dependent upon various factors beyond the control of Fleet,
including the regulatory environment, economic conditions, unanticipated changes
in business conditions and inflation. Therefore, no assurances can be given with
respect to the ultimate level of cost savings to be realized, or that such
savings will be realized in the time-frame currently anticipated.
The pro forma information gives effect to the NatWest Merger as if such
NatWest Merger had occurred on January 1, 1994. In connection with the NatWest
Merger, Fleet intends to substantially restructure its balance sheet to replace
lower yielding assets, primarily securities and residential loans, with higher
earning assets acquired from NatWest Bank and to replace higher cost funding
with lower cost deposits acquired from NatWest Bank (see note d). The pro forma
information gives effect to the balance sheet restructuring. However, due to
differences in market conditions and the balance sheet mix and size during 1994
and 1995 compared to the current market conditions and the current balance sheet
mix and size, pro forma results of operations may not be indicative of the
results of operations in the future or which would have resulted had the
acquisition been consummated during the periods for which the pro forma
information is presented.
In connection with the Shawmut Merger, Fleet signed definitive agreements to
divest 64 branches to comply with anti-trust concerns. The sales will consist of
approximately $2.6 billion in deposits and $1.9 billion in loans. The negative
impact of the divestitures is not expected to be material to the business
operations or financial condition of Fleet and such impact has not been included
in the accompanying Unaudited Pro Forma Combined Financial Statements. No
divestitures are anticipated from the NatWest Merger.
During the fourth quarter of 1995, Fleet recorded pre-tax charges of $440
million relating to the Shawmut Merger and $175 million related to Fleet's
decision to sell Fleet Finance and certain nonperforming assets that have been
identified for accelerated disposition. In connection with this charge,
approximately $1.7 billion of assets (primarily loans) were classified to held
for sale or accelerated disposition. The after-tax effect of these charges was
$398 million. During the fourth quarter of 1995, Fleet exchanged all of Fleet's
DCP Stock for 19.9 million shares of Fleet Common Stock in the KKR Exchange. As
part of the KKR Exchange, $283 million of preferred equity was reclassified to
common equity and earnings available to common shareholders was reduced by $0.59
per share. These transactions are not reflected in the accompanying Unaudited
Pro Forma Combined Financial Statements.
All dollar amounts included in these Notes to Unaudited Pro Forma Combined
Financial Statements are in thousands unless otherwise indicated.
(b) The NatWest Merger Agreement provides for the payment of $2.7 billion in
cash at the closing; provided that Fleet may elect to pay (i) up to $175 million
of the purchase price in shares of its Common Stock and (ii) up to $300 million
of the purchase price in shares of a new series of Fleet preferred stock with a
stated value of $250 per share. The Unaudited Pro Forma Combined Financial
Statements assume that no Common Stock is issued as part of the purchase price
and the entire $300 million of preferred stock is issued either as part of the
purchase price or otherwise by Fleet to fund the payment of the cash purchase
price. The following funding assumptions have been made in conjunction with the
NatWest Merger and are reflected in the accompanying Unaudited Pro Forma
Combined Financial Statements. The $2.7 billion purchase price will be funded
through the issuance of $600 million of preferred stock with a dividend rate of
7.50 %, the issuance of $400 million of long-term debt with an average borrowing
rate of 6.50%, and the sale of approximately $1.7 billion of securities with an
average yield of 6.22% for 1995 and 5.92% for 1994. These funding assumptions
are based on the best information available as of the date of the filing of this
Prospectus Supplement and may be different from the actual adjustments to
reflect the funding transactions actually consummated. All funding transactions
are assumed to have occurred as of January 1, 1994.
(c) Purchase accounting adjustments include adjustments to reflect the fair
value of the assets acquired and liabilities assumed, the elimination of NatWest
Bank's stockholders' equity, and the recording of goodwill and core deposit
intangible in accordance with the purchase method of accounting. These
adjustments are based on the best information available as of the date of this
Prospectus Supplement and may be different from the actual adjustments to
reflect the fair value of the net assets purchased as of the date of
consummation of the NatWest Merger. Adjustments have been made to the Unaudited
Pro Forma Combined Balance Sheet to reflect the recording of goodwill as well as
to eliminate any goodwill balances previously recorded at NatWest Bank, in
accordance with the purchase method of accounting.
<TABLE>
<S> <C> <C>
Purchase price.................................................... $2,700
Historical net tangible assets acquired.......................... $3,230
Elimination of NatWest Bank goodwill and identifiable
intangibles.................................................... (1,007) 2,223
Estimated fair value adjustments................................. 62
------
Estimated fair value of net assets acquired....................... 2,285
------
Excess cost over net assets acquired (Goodwill)................... $ 415
------
------
</TABLE>
Goodwill of $415 million has been estimated assuming a purchase price of $2.7
billion which excludes any payments to be made under the Earnout. The NatWest
Merger Agreement provides for payment of the Earnout to be made annually based
upon the level of earnings from the NatWest Bank franchise, not to exceed $560
million during an eight year "Earnout Period", which will commence (a) on July
1, 1996 and end on
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<PAGE>
June 30, 2004 if the Closing Date occurs on or before June 30, 1996, or (b) if
the Closing Date occurs after June 30, 1996, on the first day of the fiscal
quarter immediately following such Closing Date and end on the eighth
anniversary of such first day of such fiscal quarter. Assuming full payout of
the Earnout, the total purchase price would be $3.26 billion resulting in an
increase to goodwill of $560 million. Such increase, if any, will be recorded
when earned during the Earnout Period and will be amortized over the remaining
life of the goodwill. Included in the pro forma adjustments is an increase to
goodwill of $62 million reflecting the estimated payment required under the
Earnout assuming consummation of the NatWest Merger as of January 1, 1994. This
estimate is based upon the level of NatWest Bank's pro forma earnings in 1994
and is not necessarily indicative of payments that may be made, if any, upon
consummation of the NatWest Merger. Estimated fair value adjustments include
merger related charges and other adjustments to reflect the estimated fair value
of assets being acquired and liabilities being assumed. Significant adjustments
include core deposit intangible of $150 million, net of tax, and a liability of
$106 million, net of tax, to reflect Fleet's best estimate of merger related
charges. Goodwill due to the NatWest Merger will be amortized on a straight line
basis over 25 years. Other identifiable intangible assets due to the NatWest
Merger will be amortized over the estimated period of benefit (primarily core
deposit intangible not exceeding 10 years).
(d) In conjunction with or prior to the NatWest Merger, Fleet and Bancorp
will take certain actions to restructure the Combined Balance Sheet through the
liquidation of low-return assets and the reduction of borrowed funds. These
restructuring adjustments are reflected in the accompanying Unaudited Pro Forma
Combined Financial Statements. The accompanying Unaudited Pro Forma Combined
Financial Statements assume the reduction of approximately $22 billion of assets
and reduces an equal amount of borrowed funds. The assets assumed to be reduced
include approximately $16.1 billion of securities with an average yield of 6.22%
for 1995 and 5.92% for 1994, approximately $3.5 billion of loans, primarily
residential real estate, with an average yield of 8.00% for 1995 and 7.51% for
1994, and approximately $2.4 billion in federal funds sold with an average yield
of 6.26% for 1995 and 4.99% for 1994. The $22 billion of borrowed funds assumed
to be reduced includes approximately $18.4 billion of short-term borrowings with
an average borrowing rate of 5.79% for 1995 and 4.07% for 1994, and $3.6 billion
of time deposits with an average borrowing rate of 5.95% for 1995 and 4.67% for
1994. Asset yields and funding costs have been estimated based upon historical
weighted average yields and funding costs of similar assets and liabilities in
the aggregate and may not be indicative of the results of operations in the
future or which would have been realized had such transactions been consummated
during the periods for which the pro forma information is presented. In
addition, because the assumed asset yields and funding costs have been based
upon historical weighted average asset yields and funding costs in the
aggregate, wider spreads between assets and liabilities assumed to have been
liquidated during 1994 compared to 1995 have created a more negative impact on
1994 pro forma results of operations compared to 1995. The balance sheet
restructuring adjustments have been calculated assuming a certain balance sheet
size as well as a certain mix of balance sheet assets (primarily securities and
residential loans) to total assets as of September 30, 1995. As a result,
restructuring assumptions may not be indicative of the results of operations in
the future or that would have been achieved had the NatWest Merger been
consummated at the beginning of the periods indicated. Also, due to changing
market conditions, balance sheet mix and balance sheet size restructuring
assumptions may differ as compared to the ultimate balance sheet restructuring
upon consummation of the NatWest Merger.
(e) Pursuant to the NatWest Merger Agreement, certain operating subsidiaries
of Bancorp, including its leasing business, and certain assets and liabilities
of NatWest Bank will be retained by Bancorp. Pro forma adjustments reflect the
approximate impact of those assets not being purchased and liabilities not being
assumed.
(f) The Fleet/NatWest Pro Forma net income applicable to common shares
reflects the sum of the Fleet Pro Forma net income applicable per common share
and the NatWest Pro Forma net income applicable per common share adjusted for
the purchase accounting, funding, and restructuring adjustments.
(g) The Fleet Pro Forma weighted average shares outstanding for the nine
months ended September 30, 1995, and for the year ended December 31, 1994,
reflect Fleet's historical weighted average shares outstanding, restated to give
effect to the Shawmut Merger, plus the effect of issuing treasury stock in
connection with the NBB Bancorp, Inc. ("NBB") and Northeast Federal Corp.
("Northeast") transactions as if such repurchase of common stock and reissuance
of the treasury stock occurred on January 1, 1994.
(h) During 1995 Fleet also completed the merger (the "NBB Merger") of NBB
with and into Fleet, the merger (the "Plaza Merger") of Plaza Home Mortgage
Corp. ("Plaza") with and into Fleet, the merger (the "Northeast Merger") of
Northeast with and into Fleet, the acquisition (the "Barclays Acquisition") of
substantially all of the assets of Barclays Business Finance Division of
Barclays Business Credit, Inc. ("Barclays") by Fleet and Fleet's repurchase (the
"FMG Repurchase") of the publicly-held shares of Fleet's majority-owned
subsidiary, Fleet Mortgage Group, Inc. ("FMG"), each of which was accounted for
by the purchase method of accounting and each of which is included in the
Unaudited Pro Forma Combined Balance Sheet. Pro forma adjustments to the
Unaudited Pro Forma Combined Statements of Income reflect the impact of the NBB
Merger, the Barclays Acquisition, the FMG Repurchase, the Plaza Merger and the
Northeast Merger which were consummated on January 27, 1995, January 31, 1995,
February 28, 1995, March 3, 1995 and June 9, 1995, respectively, as if such
transactions had been consummated on January 1, 1994. Certain acquisitions
completed by NatWest during 1994 and 1995 have not been reflected in the
Unaudited Pro Forma Combined Financial Statements due to immateriality.
S-20
<PAGE>
CERTAIN TERMS OF THE PERPETUAL PREFERRED STOCK
The following description of certain terms of the Perpetual Preferred Stock
supplements, and to the extent inconsistent therewith, replaces, the description
of the general terms and provisions of the Preferred Stock of Fleet set forth
under the heading "Description of Preferred Stock" in the accompanying
Prospectus, to which description reference is hereby made. Certain terms not
defined in this description are defined in the Prospectus.
The Perpetual Preferred Stock is a series of the Fleet $1 Par Preferred
Stock which may be issued from time to time in one or more series with such
rights, preferences and limitations as are determined by the Board of Directors
of Fleet. The description of certain provisions of the Perpetual Preferred Stock
set forth below does not purport to be complete and is subject to and qualified
in its entirety by reference to the Certificate of Designations relating to the
Perpetual Preferred Stock, which Certificate will be filed as an exhibit to the
Form 8-K Current Report to be filed with respect to this offering.
GENERAL
Under Fleet's Restated Articles of Incorporation (the "Articles"), the Board
of Directors of Fleet is authorized, without further shareholder action, to
provide for the issuance of up to 16,000,000 shares of preferred stock, $1 par
value ("Fleet $1 Par Preferred Stock"), in one or more series, with such voting
powers, dividends, designations, preferences, rights, qualifications,
limitations and restrictions as shall be set forth in the resolutions providing
for the issuance thereof adopted by the Board of Directors. As of December 31,
1995, Fleet had outstanding five series of Fleet $1 Par Preferred Stock as
follows: (i) 519,758 shares of Series III 10.12% Perpetual Preferred Stock (the
"Series III Preferred"), having a liquidation value of $100 per share, plus
accrued and unpaid dividends, were designated, issued and outstanding, (ii)
478,838 shares of Series IV 9.375% Perpetual Preferred Stock (the "Series IV
Preferred"), having a liquidation value of $100 per share, plus accrued and
unpaid dividends, were designated, issued and outstanding, (iii) 688,700 shares
of Preferred Stock with Cumulative and Adjustable Dividends (the "Adjustable
Preferred"), having a liquidation value of $50.00 per share, plus accrued and
unpaid dividends, were designated, issued and outstanding, (iv) 575,000 shares
of 9.30% Cumulative Preferred Stock (the "9.30% Preferred"), having a
liquidation value of $250 per share, plus accrued and unpaid dividends, were
designated, issued and outstanding and (v) 500,000 shares of 9.35% Cumulative
Preferred Stock (the "9.35% Preferred"), having a liquidation value of $250 per
share, plus accrued and unpaid dividends, were designated, issued and
outstanding. In addition, as of December 31, 1995, the Board of Directors of
Fleet had established a series of 3,000,000 shares of Cumulative Participating
Junior Preferred Stock, par value $1 per share (the "Junior Preferred Stock")
issuable upon exercise of the preferred share purchase rights described in the
accompanying Prospectus, of which no shares were issued and outstanding as of
such date. Each such outstanding series and class is described below and in the
accompanying Prospectus under "Description of Existing Preferred Stock".
The Perpetual Preferred Stock offered hereby is a single series consisting
of 690,000 shares. The Perpetual Preferred Stock will, on the date of original
issue, rank on a parity in all respects with each other outstanding series of
the Fleet $1 Par Preferred Stock (other than the Junior Preferred Stock) and
will rank senior in all respects to the Common Stock and the Junior Preferred
Stock. See "Description of Existing Preferred Stock" in the accompanying
Prospectus.
DIVIDENDS
Cash dividends will be payable on each share of Perpetual Preferred Stock at
the rate of 6.75% of the liquidation preference per annum (equivalent to $3.375
per annum per Depositary Share) when, as and if declared by the Board of
Directors of Fleet or a duly authorized committee thereof out of the assets of
Fleet legally available therefor. Dividends will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Dividends on the Perpetual
Preferred Stock will be cumulative from
S-21
<PAGE>
the date of original issue and will be payable to the holders of record at the
close of business on such record date, not exceeding 30 days (whether or not a
business day) preceding the dividend payment date, as shall be fixed by the
Board of Directors of Fleet. The initial dividend will be $2.53125 per share
(equivalent to $.50625 per Depositary Share) and will be payable on April 15,
1996. Thereafter dividends will be payable quarterly on January 15, April 15,
July 15 and October 15 of each year (a "Dividend Payment Date"). See
"Description of Preferred Stock--Dividends" in the accompanying Prospectus.
Changes in the Dividends Received Percentage
If one or more amendments to the Internal Revenue Code of 1986, as amended
(the "Code"), are enacted that change the percentage of the dividends received
deduction (currently 70%) as specified in Section 243(a)(1) of the Code or any
successor provision (the "Dividends Received Percentage"), the amount of each
dividend payable per share of the Perpetual Preferred Stock for dividend
payments made on or after the date of enactment of such change shall be adjusted
by multiplying the amount of the dividend payable determined as described above
(before adjustment) by a factor which shall be the number determined in
accordance with the following formula (the "DRD Formula"), and rounding the
result to the nearest cent:
1-.35 (1-.70)
----------------
1-.35 (1-DRP)
For the purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage applicable to the dividend in question. No amendment to the Code,
other than a change in the percentage of the dividends received deduction set
forth in Section 243(a)(1) of the Code or any successor provision, will give
rise to an adjustment. Notwithstanding the foregoing provisions, in the event
that, with respect to any such amendment, Fleet shall receive either an
unqualified opinion of independent recognized tax counsel or a private letter
ruling or similar form of authorization from the Internal Revenue Service to the
effect that such an amendment would not apply to dividends payable on the
Perpetual Preferred Stock, then any such amendment shall not result in the
adjustment provided for pursuant to the DRD Formula. Unless the context
otherwise requires, references to dividends in this Prospectus Supplement shall
mean dividends as adjusted by the DRD Formula. Fleet's calculation of the
dividends payable as so adjusted and as certified accurate as to calculation and
reasonable as to method by the independent certified public accountants then
regularly engaged by Fleet shall be final and not subject to review.
If any amendment to the Code which reduces the Dividends Received Percentage
is enacted after a dividend payable on a Dividend Payment Date has been
declared, the amount of dividend payable on such Dividend Payment Date will not
be increased; but instead, an amount, equal to the excess of (x) the product of
the dividends paid by Fleet on such Dividend Payment Date and the DRD Formula
(where the DRP used in the DRD Formula would be equal to the reduced Dividends
Received Percentage) and (y) the dividends paid by Fleet on such Dividend
Payment Date, will be payable to holders of record on the next succeeding
Dividend Payment Date in addition to any other amounts payable on such date.
In addition, if prior to May 16, 1996, an amendment to the Code is enacted
that reduces the Dividends Received Percentage and such reduction retroactively
applies to a Dividend Payment Date as to which Fleet previously paid dividends
on the Perpetual Preferred Stock (each an "Affected Dividend Payment Date"),
Fleet will pay (if declared) additional dividends (the "Additional Dividends")
on the next succeeding Dividend Payment Date (or if such amendment is enacted
after the dividend payable on such Dividend Payment Date has been declared, on
the second succeeding Dividend Payment Date following the date of enactment) to
holders of record on such succeeding Dividend Payment Date in an amount equal to
the excess of (x) the product of the dividends paid by Fleet on each Affected
Dividend Payment Date and the DRD Formula (where the DRP used in the DRD Formula
would be equal to the
S-22
<PAGE>
Dividends Received Percentage applied to each Affected Dividend Payment Date)
and (y) the dividends paid by Fleet on each Affected Dividend Payment Date.
Additional Dividends will not be paid in respect of the enactment of any
amendment to the Code on or after May 16, 1996 which retroactively reduces the
Dividends Received Percentage, or if prior to May 16, 1996, such amendment would
not result in an adjustment due to Fleet having received either an opinion of
counsel or tax ruling referred to in the third preceding paragraph. Fleet will
only make one payment of Additional Dividends.
In the event that the amount of dividend payable per share of the Perpetual
Preferred Stock shall be adjusted pursuant to the DRD Formula and/or Additional
Dividends are to be paid, Fleet will cause notice of each such adjustment and,
if applicable, any Additional Dividends, to be sent to the holders of the
Perpetual Preferred Stock.
In the event that the Dividends Received Percentage is reduced to 40% or
less, Fleet may, at its option, redeem the Perpetual Preferred Stock as a whole
but not in part as described below. See "Redemption".
See also "Federal Income Tax Consequences" for a discussion of certain
Proposals (as defined below) to reduce the Dividends Received Percentage.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Fleet, the holders of shares of Perpetual Preferred Stock will be
entitled to receive out of the assets of Fleet available for distribution to
stockholders, before any distribution of assets is made on the Common Stock or
any other class or series of stock of Fleet ranking junior to the Perpetual
Preferred Stock upon liquidation, liquidating distributions in the amount of
$250 per share (equivalent to $50 per Depositary Share), plus an amount equal to
the sum of all accrued and unpaid dividends (whether or not earned or declared)
for the then-current dividend period and all dividend periods prior thereto. See
"Description of Preferred Stock--Liquidation Rights" in the accompanying
Prospectus.
REDEMPTION
The Perpetual Preferred Stock is not redeemable prior to April 15, 2006. On
and after such date, the Perpetual Preferred Stock (and the Depositary Shares)
is redeemable in cash at the option of Fleet in whole or in part, from time to
time upon not less than 30 nor more than 60 days' notice, at $250 per share
(equivalent to $50 per Depositary Share), plus accrued dividends to the
redemption date, including any dividends payable due to changes in the Dividends
Received Percentage and Additional Dividends, if any. The Perpetual Preferred
Stock will not be entitled to the benefits of any sinking fund. See "Description
of Preferred Stock--Redemption" in the accompanying Prospectus.
Notwithstanding the preceding paragraph, if the Dividends Received
Percentage is equal to or less than 40% and, as a result, the amount of
dividends on the Perpetual Preferred Stock payable on any Dividend Payment Date
will be or is adjusted upwards as described above under "Changes in the
Dividends Received Percentage", Fleet, at its option, may redeem all, but not
less than all, of the outstanding shares of the Perpetual Preferred Stock (and
the Depositary Shares), provided, that within sixty days of the date on which an
amendment to the Code is enacted which reduces the Dividends Received Percentage
to 40% or less, Fleet sends notice to holders of the Perpetual Preferred Stock
of such redemption. Any redemption of the Perpetual Preferred Stock pursuant to
this paragraph will take place on the date specified in the notice, which shall
not be less than thirty nor more than sixty days' from the date such notice is
sent to holders of the Perpetual Preferred Stock. Any redemption of the
Perpetual Preferred Stock in accordance with this paragraph shall be on notice
as aforesaid at the applicable redemption price set forth in the following
table, in each case plus accrued and unpaid
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<PAGE>
dividends (whether or not declared) thereon to the date fixed for redemption,
including any changes in dividends payable due to changes in the Dividends
Received Percentage and Additional Dividends, if any.
<TABLE><CAPTION>
REDEMPTION PRICE
---------------------------------
<S> <C> <C>
REDEMPTION PERIOD PER SHARE PER DEPOSITARY SHARE
- ----------------- --------- --------------------
February 21, 1996 to April 14, 1997............................. $262.50 $52.50
April 15, 1997 to April 14, 1998................................ 261.25 52.25
April 15, 1998 to April 14, 1999................................ 260.00 52.00
April 15, 1999 to April 14, 2000................................ 258.75 51.75
April 15, 2000 to April 14, 2001................................ 257.50 51.50
April 15, 2001 to April 14, 2002................................ 256.25 51.25
April 15, 2002 to April 14, 2003 255.00 51.00
April 15, 2003 to April 14, 2004................................ 253.75 50.75
April 15, 2004 to April 14, 2005................................ 252.50 50.50
April 15, 2005 to April 14, 2006................................ 251.25 50.25
On or after April 15, 2006...................................... 250.00 50.00
</TABLE>
Under certain circumstances, Fleet may need the approval of the Federal
Reserve Board prior to exercising its right to redeem shares of Perpetual
Preferred Stock.
VOTING RIGHTS
Except as indicated below or except as expressly required by applicable law,
the holders of the Perpetual Preferred Stock will not be entitled to vote.
If the equivalent of six quarterly dividends payable on the Perpetual
Preferred Stock or any other class or series of preferred stock are in default,
the number of directors of Fleet will be increased by two (without duplication
of any increase made pursuant to the terms of any other series of preferred
stock of Fleet), and the holders of the Perpetual Preferred Stock, voting as a
single class with the holders of shares of any one or more other series of Fleet
$l Par Preferred Stock and any other class of Fleet preferred stock ranking on a
parity with the Perpetual Preferred Stock either as to dividends or distribution
of assets and upon which like voting rights have been conferred and are
exercisable, will be entitled to elect such two directors to fill such
newly-created directorships. Such right shall continue until full cumulative
dividends for all past dividend periods on all preferred shares of Fleet,
including any shares of the Perpetual Preferred Stock, have been paid or
declared and set apart for payment. Any such elected directors shall serve until
Fleet's next annual meeting of stockholders (notwithstanding that prior to the
end of such term the dividend default shall cease to exist) or until their
respective successors shall be elected and qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Perpetual Preferred Stock will be required for any
amendment of the Articles (or any certificate supplemental thereto) which will
adversely affect the powers, preferences, privileges or rights of the Perpetual
Preferred Stock. The affirmative vote or consent of the holders of at least 66
2/3% of the outstanding shares of the Perpetual Preferred Stock and any other
series of Fleet $1 Par Preferred Stock ranking on a parity with the Perpetual
Preferred Stock either as to dividends or upon liquidation, voting as a single
class without regard to series, will be required to issue, authorize or increase
the authorized amount of, or issue or authorize any obligation or security
convertible into or evidencing a right to purchase, any additional class or
series of stock ranking prior to the Perpetual Preferred Stock as to dividends
or upon liquidation, or to reclassify any authorized stock of Fleet into such
prior shares, but such vote will not be required for Fleet to take any such
actions with respect to any stock ranking on a parity with or junior to the
Perpetual Preferred Stock.
S-24
<PAGE>
CONVERSION RIGHTS
The Perpetual Preferred Stock is not convertible into shares of any other
class or series of the capital stock of Fleet.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Depositary Shares and the Perpetual
Preferred Stock is Fleet-RI, Providence.
CERTAIN TERMS OF THE DEPOSITARY SHARES
The following summary description of the Depositary Shares offered hereby
supplements, and to the extent inconsistent therewith, replaces, the description
of the terms of the Depositary Shares set forth under the heading "Description
of Depositary Shares" in the accompanying Prospectus, to which description
reference is hereby made. The summary description of the Depositary Shares set
forth below does not purport to be complete and is subject to and qualified in
its entirety by reference to the Deposit Agreement referred to below which will
be filed as an exhibit to the Form 8-K Current Report to be filed with respect
to this offering.
Each Depositary Share represents a one-fifth interest in a share of
Perpetual Preferred Stock. The shares of Perpetual Preferred Stock underlying
the Depositary Shares will be deposited with Fleet-RI, as Depositary (the
"Depositary"), under a Deposit Agreement (the "Deposit Agreement") among Fleet,
the Depositary and the holders from time to time of the depositary receipts
issued by the Depositary thereunder (the "Depositary Receipts"). The Depositary
Receipts so issued will evidence the Depositary Shares. Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled through
the Depositary, in proportion to the one-fifth interest in a share of Perpetual
Preferred Stock underlying such Depositary Share, to all rights and preferences
of a share of Perpetual Preferred Stock (including dividend, voting, redemption
and liquidation rights). Since each share of Perpetual Preferred Stock entitles
the holder thereof to one vote on matters on which the Perpetual Preferred Stock
is entitled to vote, each Depositary Share will, in effect, entitle the holder
thereof to one-fifth of a vote thereon, rather than one full vote. See "Certain
Terms of the Perpetual Preferred Stock--Voting Rights" above and "Description of
Depositary Shares" in the accompanying Prospectus. Fleet-RI is a wholly-owned
subsidiary of Fleet, with the depositary operations located at 111 Westminster
Street, Providence, Rhode Island 02903.
DESCRIPTION OF EXISTING PREFERRED STOCK
This section supplements the section entitled "Description of Existing
Preferred Stock" in the accompanying Prospectus.
Fleet issued three new series of Fleet $1 Par Preferred Stock on November
30, 1995 to replace the Shawmut preferred stock outstanding at the effective
time of the Shawmut Merger. The following summary of the terms of such series
does not purport to be complete and is subject in all respects to the applicable
provisions of the Rhode Island Business Corporation Act (the "RIBCA") and the
Articles and By-laws of Fleet.
Adjustable Preferred. Dividends on the outstanding Adjustable Preferred are
cumulative. The dividend rate on the Adjustable Preferred is established
quarterly at the rate of 2.25% below the highest of (a) the three-month U.S.
Treasury bill rate, (b) the U.S. Treasury ten-year constant maturity rate and
(c) the U.S. Treasury twenty-year constant maturity rate, in each case as
defined in the terms of the Adjustable Preferred, but may not be less than 6%
per annum or greater than 12% per annum. So long
S-25
<PAGE>
as any shares of the Adjustable Preferred are outstanding, Fleet may not redeem,
repurchase or otherwise acquire any shares of the Common Stock or any other
class of Fleet stock ranking junior to or on a parity with the Adjustable
Preferred either as to dividends or upon liquidation unless full cumulative
dividends on all outstanding shares of Adjustable Preferred are paid for all
past dividend payment periods. Further, if any dividends on the Adjustable
Preferred are in arrears, Fleet may not redeem, purchase or otherwise acquire
any shares of the Adjustable Preferred unless all outstanding shares of such
class are simultaneously redeemed, purchased or otherwise acquired, except
pursuant to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of the Adjustable Preferred.
Except as indicated below or except as expressly required by applicable law,
the holders of the Adjustable Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Adjustable Preferred are in
default, the number of directors of Fleet will be increased by two and the
holders of all outstanding classes and series of Fleet preferred stock, voting
as a single class without regard to series, will be entitled to elect two
additional directors until all accrued dividends have been paid. In addition,
the vote of the holders of two-thirds of the Adjustable Preferred voting as a
separate class, is required in order to amend or alter the Articles in a manner
which would adversely affect the preferences, rights, powers or privileges of
the Adjustable Preferred; and the vote of two-thirds of the Adjustable
Preferred, and all of the classes and series of Fleet preferred stock ranking on
a parity, either as to dividends or upon liquidation, with the Adjustable
Preferred, voting together as a single class, is required in order to reclassify
stock of Fleet into stock ranking prior, either as to dividends or upon
liquidation, to the Adjustable Preferred, or to authorize the creation or
issuance of stock, or of a security convertible into or evidencing a right to
purchase stock, ranking prior, either as to dividends or upon liquidation, to
the Adjustable Preferred.
In the event of any liquidation, dissolution or winding up of Fleet, the
holders of the Adjustable Preferred are entitled to receive $50 per share plus
accrued and unpaid dividends.
Shares of Adjustable Preferred may be redeemed at the option of Fleet at a
redemption price per share of $50 per share, plus accrued and unpaid dividends.
9.30% Preferred. Dividends on the outstanding 9.30% Preferred are cumulative
and are payable quarterly at the rate of 9.30% per annum. So long as any shares
of the 9.30% Preferred are outstanding, Fleet may not redeem, repurchase or
otherwise acquire any shares of the Common Stock or any other class of Fleet
stock ranking junior to or on a parity with the 9.30% Preferred either as to
dividends or upon liquidation unless full cumulative dividends on all
outstanding shares of 9.30% Preferred are paid for all past dividend payment
periods. Further, if any dividends on the 9.30% Preferred are in arrears, Fleet
may not redeem, purchase or otherwise acquire any shares of the 9.30% Preferred
unless all outstanding shares of such class are simultaneously redeemed,
purchased or otherwise acquired, except pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of the 9.30%
Preferred.
Except as indicated below or except as expressly required by applicable law,
the holders of the 9.30% Preferred are not entitled to vote. If the equivalent
of six quarterly dividends payable on any of the 9.30% Preferred are in default,
the number of directors of Fleet will be increased by two and the holders of all
outstanding classes and series of Fleet preferred stock, voting as a single
class without regard to series, will be entitled to elect two additional
directors until all accrued dividends have been paid. In addition, the vote of
the holders of two-thirds of the 9.30% Preferred, voting as a separate class, is
required in order to amend or alter the Articles in a manner which would
adversely affect the preferences, rights, powers or privileges of the 9.30%
Preferred; and the vote of two-thirds of the 9.30% Preferred, and all of the
classes and series of Fleet preferred stock ranking on a parity, either as to
dividends or upon liquidation, with the 9.30% Preferred, voting together as a
single class, is required in order to reclassify stock of Fleet into stock
ranking prior, either as to dividends or upon liquidation, to
S-26
<PAGE>
the 9.30% Preferred, or to authorize the creation or issuance of stock, or of a
security convertible into or evidencing a right to purchase stock, ranking
prior, either as to dividends or upon liquidation, to the 9.30% Preferred.
In the event of any liquidation, dissolution or winding up of Fleet, the
holders of the 9.30% Preferred are entitled to receive $250 per share plus
accrued and unpaid dividends.
The 9.30% Preferred is redeemable on at least 30 but not more than 60 days
notice, at the option of Fleet, as a whole or in part, at any time on and after
October 15, 1997 at a redemption price equal to $250 per share plus accrued and
unpaid dividends.
9.35% Preferred. Dividends on the outstanding 9.35% Preferred are cumulative
and are payable quarterly at the rate of 9.35% per annum. So long as any shares
of the 9.35% Preferred are outstanding, Fleet may not redeem, repurchase or
otherwise acquire any shares of the Common Stock or any other class of Fleet
stock ranking junior to or on a parity with the Fleet 9.35% Preferred either as
to dividends or upon liquidation unless full cumulative dividends on all
outstanding shares of 9.35% Preferred are paid for all past dividend payment
periods. Further, if any dividends on the 9.35% Preferred are in arrears, Fleet
may not redeem, purchase or otherwise acquire any shares of the 9.35% Preferred
unless all outstanding shares of such class are simultaneously redeemed,
purchased or otherwise acquired, except pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of the 9.35%
Preferred.
Except as indicated below or except as expressly required by applicable law,
the holders of the 9.35% Preferred are not entitled to vote. If the equivalent
of six quarterly dividends payable on any of the 9.35% Preferred are in default,
the number of directors of Fleet will be increased by two and the holders of all
outstanding classes and series of Fleet preferred stock, voting as a single
class without regard to series, will be entitled to elect two additional
directors until all accrued dividends have been paid. In addition, the vote of
the holders of two-thirds of the 9.35% Preferred, voting as a separate class, is
required in order to amend or alter the Articles in a manner which would
adversely affect the preferences, rights, powers or privileges of the 9.35%
Preferred; and the vote of two-thirds of the 9.35% Preferred, and all of the
classes and series of Fleet preferred stock ranking on a parity, either as to
dividends or upon liquidation, with the 9.35% Preferred, voting together as a
single class, is required in order to reclassify stock of Fleet into stock
ranking prior, either as to dividends or upon liquidation, to the 9.35%
Preferred, or to authorize the creation or issuance of stock, or of a security
convertible into or evidencing a right to purchase stock, ranking prior, either
as to dividends or upon liquidation, to the 9.35% Preferred.
In the event of any liquidation, dissolution or winding up of Fleet, the
holders of the 9.35% Preferred are entitled to receive $250 per share plus
accrued and unpaid dividends.
The 9.35% Preferred is redeemable on at least 30 but not more than 60 days
notice, at the option of Fleet, as a whole or in part, at any time on and after
January 15, 2000 at a redemption price equal to $250 per share plus accrued and
unpaid dividends.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the Depositary Shares will be treated for Federal income tax
purposes as if they were owners of the Perpetual Preferred Stock represented by
such Depositary Shares.
On December 7, 1995, the Clinton Administration released a budget plan that
includes certain tax proposals (the "Proposals") that may affect holders of the
Perpetual Preferred Stock and Depositary Shares. The Proposals have not yet been
introduced as legislation and there can be no certainty that they will be
enacted into law.
S-27
<PAGE>
Under the Proposals, the Dividends Received Percentage that is currently
available to U.S. corporate shareholders for certain dividends received from
another corporation in which the shareholder owns less than 20% (by vote and
value) would be reduced from 70% to 50% for dividends paid after January 31,
1996. Additionally, under current law, the Dividends Received Percentage is
allowed to a U.S. corporate shareholder only if the shareholder satisfies a
46-day holding period for the dividend-paying stock (or a 91-day period for
certain dividends on preferred stock); for this purpose, days on which the
market risk of owning said stock is reduced through certain hedging transactions
may not be counted. The Proposals provide that a taxpayer is not entitled to a
Dividends Received Percentage if the taxpayer's holding period for the
dividend-paying stock is not satisfied over a period immediately before or
immediately after the taxpayer becomes entitled to receive the dividend. This
provision would be effective for dividends paid after January 31, 1996.
REGULATORY MATTERS
The following sections replace the sections entitled "Fleet Financial Group,
Inc.--Regulatory Matters--General", "--Regulatory Matters--Interstate Banking
and Branching Legislation" and "--Regulatory Matters--Deposit Insurance
Assessments" in the accompanying Prospectus.
General
Fleet is a legal entity separate and distinct from its subsidiaries. The
ability of holders of debt and equity securities of Fleet, including the holders
of the Perpetual Preferred Stock offered hereby, to benefit from the
distribution of assets of any subsidiary upon the liquidation or reorganization
of such subsidiary is subordinate to prior claims of creditors of the subsidiary
(including depositors in the case of banking subsidiaries) except to the extent
that a claim of Fleet as a creditor may be recognized.
There are various statutory and regulatory limitations on the extent to
which banking subsidiaries of Fleet can finance or otherwise transfer funds to
Fleet or its nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary bank
to Fleet or any nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions consistent with
safe and sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Fleet from its banking subsidiaries. Under applicable
banking statutes, at December 31, 1995, Fleet's banking subsidiaries could have
declared additional dividends of approximately $559 million. Federal and state
regulatory agencies also have the authority to limit further Fleet's banking
subsidiaries' payment of dividends based on other factors, such as the
maintenance of adequate capital for such subsidiary bank.
Under the policy of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), Fleet is expected to act as a source of financial
strength to each subsidiary bank and to commit resources to support such
subsidiary bank in circumstances where it might not do so absent such policy. In
addition, any subordinated loans by Fleet to any of the subsidiary banks would
also be subordinate in right of payment to deposits and obligations to general
creditors of such subsidiary bank. Further, the Crime Control Act of 1990
amended the federal bankruptcy laws to provide that in the event of the
bankruptcy of Fleet, any commitment by Fleet to its regulators to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
S-28
<PAGE>
Interstate Banking and Branching Legislation
On September 29, 1994, President Clinton signed the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (the "Interstate Act") into law.
The Interstate Act facilitates the interstate expansion and consolidation of
banking organizations by permitting (i) beginning one year after enactment of
the legislation, bank holding companies that are adequately capitalized and
managed to acquire banks located in states outside their home states regardless
of whether such acquisitions are authorized under the law of the host state,
(ii) the interstate merger of banks after June 1, 1997, subject to the right of
individual states to "opt in" or "opt out" of this authority prior to such date,
(iii) banks to establish new branches on an interstate basis provided that such
action is specifically authorized by the law of the host state, (iv) foreign
banks to establish, with approval of the appropriate regulators in the United
States, branches outside their home states to the same extent that national or
state banks located in such state would be authorized to do so and (v) beginning
September 29, 1995, banks to receive deposits, renew time deposits, close loans,
service loans and receive payments on loans and other obligations as agent for
any bank or thrift affiliate, whether the affiliate is located in the same or
different state. Connecticut and Rhode Island, which are two states in which
Fleet subsidiaries conduct banking operations, have adopted legislation opting
into the interstate provisions of the Interstate Act. Fleet has recently filed
applications for approval by the Office of the Comptroller of the Currency to
merge its banking subsidiaries in Connecticut, Massachusetts and Rhode Island in
order to achieve cost savings and to increase convenience to its customers in
those states.
Deposit Insurance Assessments
The deposits of each of Fleet's subsidiary banks are insured up to
regulatory limits by the FDIC and, accordingly, are subject to deposit insurance
assessments to maintain the Bank Insurance Fund ("BIF") administered by the
FDIC. The FDIC has adopted regulations establishing a permanent risk-related
deposit insurance assessment system. Under this system, the FDIC places each
insured bank in one of nine risk categories based on (a) the bank's
capitalization and (b) supervisory evaluations provided to the FDIC by the
institution's primary federal regulator. Each insured bank's insurance
assessment rate is then determined by the risk category in which it is
classified by the FDIC. There is currently a 27 basis point spread between the
highest and lowest assessment rates, so that banks classified in the highest
capital and supervisory evaluation categories by the FDIC are currently subject
to a rate of $0.04 per $100 of deposits and banks classified in the lowest
capital and supervisory evaluation categories by the FDIC are currently subject
to a rate of $0.31 per $100 of deposits.
On November 14, 1995, the FDIC voted to decrease premiums effective January
1, 1996. The decrease will lower the rate of deposit insurance premiums by $.04
per $100 of deposits for banks in each risk assessment category. As a result,
banks in the highest capital and supervisory evaluation categories will have an
assessment rate of $0.00, and will pay only the minimum assessment of $2,000 per
year for deposit insurance. Banks in the lowest capital and supervisory
evaluation categories will be subject to a rate of $0.27 per $100 of deposits.
There is no guarantee that the rate of deposit insurance premiums will not
increase in the future.
These assessment rates also reflect the amount the FDIC has determined is
necessary to maintain the reserve ratio of BIF of 1.25% of total insured bank
deposits. The FDIC has announced that this reserve ratio was achieved during
1995. However, due primarily to the fact that the reserve ratio of the FDIC's
Savings Association Insurance Fund ("SAIF") is not projected to reach the
required level of 1.25% for several years, the FDIC has made a proposal to
Congress to (1) capitalize the SAIF through a special up-front cash assessment
on SAIF deposits; (2) spread the responsibility for payment to the Financing
Corporation created under Title III of the Competitive Equality Banking Act of
1987 proportionally over all FDIC-insured institutions; and (3) as soon as
practicable, merge the BIF and the SAIF. On November 14, 1995, the Board of
Directors of the FDIC voted to retain the existing assessment rate schedule
applicable to members of the SAIF for the first half of 1996.
Fleet's subsidiary banks do not hold significant amounts of deposits insured
by the SAIF.
S-29
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), Fleet has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Bear, Stearns & Co. Inc., Goldman, Sachs &
Co. and Lehman Brothers Inc., are acting as representatives (the
"Representatives"), has severally agreed to purchase the number of Depositary
Shares, each representing a one-fifth interest in a share of Perpetual Preferred
Stock, set forth opposite its name below. In the Underwriting Agreement, the
several Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all of the Depositary Shares offered hereby (other than
those covered by the over-allotment option) if any of the Depositary Shares are
purchased. In the event of default by an Underwriter, the Underwriting Agreement
provides that, in certain circumstances, purchase commitments of the
nondefaulting Underwriters may be increased or the Underwriting Agreement may be
terminated.
<TABLE><CAPTION>
NUMBER OF
UNDERWRITER DEPOSITARY SHARES
----------- -----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 750,000
Bear, Stearns & Co. Inc. .................................. 750,000
Goldman, Sachs & Co. ...................................... 750,000
Lehman Brothers Inc. ...................................... 750,000
-----------------
Total...................................................... 3,000,000
=================
</TABLE>
The Representatives of the Underwriters have advised Fleet that they propose
initially to offer the Depositary Shares to the public at the public offering
price set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $.60 per Depositary
Share. The Underwriters may allow, and such dealers may reallow, a discount not
in excess of $.40 per Depositary Share to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
Fleet has granted the Underwriters an option, exercisable within 30 days
from the date hereof, to purchase up to an aggregate of 450,000 additional
Depositary Shares at the public offering price set forth on the cover page
hereof, less the underwriting discount. The Underwriters may exercise such
options to purchase additional Depositary Shares solely for the purpose of
covering over-allotments, if any, incurred in the sale of the Depositary Shares
offered hereby. To the extent such option to purchase is exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional Depositary Shares as the
number set forth next to such Underwriter's name in the preceding table bears to
3,000,000.
Application will be made to list the Depositary Shares on the New York Stock
Exchange. Trading of the Depositary Shares on the New York Stock Exchange is
expected to commence within a 30-day period after the initial delivery of the
Depositary Shares. The Representatives have advised Fleet that they intend to
make a market in the Depositary Shares prior to the commencement of trading on
the New York Stock Exchange. The Representatives will have no obligation to make
a market in the Depositary Shares, however, and may cease market making
activities, if commenced, at any time.
Fleet has agreed to indemnify the Underwriters against, or contribute to
payments that the Underwriters may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Any Underwriter may engage in transactions with and perform services for
Fleet in the ordinary course of business.
S-30
<PAGE>
EXPERTS
This section replaces the section entitled "Experts" in the accompanying
Prospectus.
The consolidated financial statements of Fleet appearing in Fleet's 1994
Annual Report to Stockholders and incorporated by reference in Fleet's 1994
Annual Report on Form 10-K for the year ended December 31, 1994 (as amended by a
Form 10-K/A dated April 28, 1995), incorporated by reference herein (and
elsewhere in the Registration Statement) have been incorporated by reference
herein (and elsewhere in the Registration Statement) in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing. The report of KPMG
Peat Marwick LLP refers to a change in the method of accounting for investments
in debt and equity securities.
The supplemental consolidated financial statements of Fleet appearing in
Fleet's Current Report on Form 8-K dated January 19, 1996, incorporated by
reference herein, have been incorporated by reference herein in reliance upon
the report of KPMG Peat Marwick LLP, independent certified public accountants,
and upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP refers to changes in the methods of accounting
for investments in debt and equity securities and accounting for income taxes.
The consolidated financial statements of Bancorp appearing in Fleet's
Current Report on Form 8-K dated February 8, 1996, incorporated by reference
herein, have been incorporated by reference herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing. The report of KPMG
Peat Marwick LLP refers to changes in the methods of accounting for investments
and accounting for postretirement benefits other than pensions.
The consolidated financial statements of Shawmut incorporated in this
Prospectus by reference to Fleet's Current Report on Form 8-K dated April 13,
1995, have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
S-31
<PAGE>
PROSPECTUS
COMMON STOCK, COMMON STOCK WARRANTS, PREFERRED STOCK, DEPOSITARY SHARES, AND
PREFERRED STOCK WARRANTS
FLEET FINANCIAL GROUP, INC.
Fleet Financial Group, Inc., a Rhode Island corporation ("Fleet"), may offer
from time to time (a) shares of Common Stock, par value $1.00 per share,
including the associated Preferred Share Purchase Rights (the "Common Stock"),
(b) shares of preferred stock, par value $1.00 per share (the "Preferred
Stock"), including, at its option, depositary shares (the "Depositary Shares")
evidenced by depositary receipts (the "Depositary Receipts") each representing a
fractional interest in such Preferred Stock and (c) warrants to purchase Common
Stock (the "Common Stock Warrants") or Preferred Stock (the "Preferred Stock
Warrants", together with the Common Stock Warrants, the "Warrants"), having a
public offering price of up to an aggregate of $913,400,000 (or the equivalent
thereof if any of the Securities are denominated in a foreign currency or a
foreign currency unit, such as European Currency Units ("ECU")). The Common
Stock, Preferred Stock, Depositary Shares and Warrants (collectively, the
"Securities") may be offered separately or as units with other securities, in
separate series, in amounts and at prices and terms to be set forth in an
accompanying Prospectus Supplement (a "Prospectus Supplement"). Pursuant to the
terms of the Registration Statement of which this Prospectus constitutes a part,
Fleet may also offer and sell its unsecured debt securities, which may be either
senior or subordinated, or warrants to purchase debt securities (the "Debt
Securities"). Any such Debt Securities will be offered and issued pursuant to
the terms of a separate Prospectus contained in such Registration Statement. The
aggregate amount of Securities that may be offered and sold pursuant hereto is
subject to reduction as the result of the sale of any Debt Securities pursuant
to such separate Prospectus.
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the accompanying Prospectus Supplement,
together with the terms of the offering of the Securities and the initial price
and net proceeds to Fleet from the sale thereof. The Prospectus Supplement will
include, with regard to the particular Securities, the following information:
(i) in the case of Preferred Stock, the specific number of shares, title, stated
value and liquidation preference of each share, issuance price, dividend rate
(or method of calculation), dividend payment dates, any redemption or sinking
fund provisions, any conversion or exchange provisions and whether fractional
interests in shares of Preferred Stock will be represented by Depositary Shares;
(ii) in the case of Common Stock, the specific number of shares and issuance
price for such shares; (iii) in the case of Warrants, the duration, offering
price, exercise price and detachability of any such warrants; and (iv) in the
case of all Securities, whether such Securities will be offered separately or as
a unit with other securities. The Prospectus Supplement will also contain
information, where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Securities covered by the Prospectus Supplement.
Fleet may sell Securities to or through underwriters or dealers, and also
may sell Securities directly to other purchasers or through agents. See "Plan of
Distribution". If any agents or underwriters are involved in the sale of any of
the Securities, their names, any applicable fee, commission, purchase price or
discount arrangements with them will be set forth, or will be calculable from
the information set forth, in the Prospectus Supplement. Fleet may sell
Securities in an offering within the United States ("United States Offering") or
outside the United States ("International Offering").
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALE OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK OR NONBANK SUBSIDIARY OF FLEET AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is November 29, 1995.
<PAGE>
AVAILABLE INFORMATION
Fleet is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Proxy statements, reports
and other information concerning Fleet can be inspected and copied at the
Commission's office at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and the Commission's Regional Offices in New York (Suite
1300, Seven World Trade Center, New York, New York 10048) and Chicago
(Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661), and copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Common Stock is listed on the New York Stock
Exchange. Reports, proxy material and other information concerning Fleet also
may be inspected at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005. This Prospectus does not contain all the information
set forth in the Registration Statement and Exhibits thereto which Fleet has
filed with the Commission under the Securities Act of 1933, as amended (the
"Act"), which may be obtained from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the prescribed fees, and to which reference is hereby
made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Fleet are incorporated
in this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1994, as
amended by a Form 10-K/A dated April 28, 1995.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995,
June 30, 1995, and September 30, 1995.
3. Current Reports on Form 8-K dated January 18, 1995, January 27, 1995,
February 20, 1995, February 21, 1995, April 13, 1995, May 11, 1995,
May 17, 1995, June 21, 1995, August 11, 1995, August 23, 1995, October
18, 1995, October 26, 1995 and November 15, 1995.
4. The description of the Common Stock contained in a Registration
Statement filed by Industrial National Corporation (predecessor to
Fleet) on Form 8-B dated May 29, 1970, and any amendment or report
filed for the purpose of updating such description.
5. The description of the Preferred Share Purchase Rights contained in
Fleet's Registration Statement on Form 8-A dated November 29, 1990,
and any amendment or report filed for the purpose of updating such
description.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
All documents filed with the Commission by Fleet pursuant to Sections 13, 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities offered hereby are
incorporated herein by reference and such documents shall be deemed to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN (OTHER THAN THE EXHIBITS TO SUCH DOCUMENTS). WRITTEN REQUESTS
SHOULD BE MAILED TO INVESTOR RELATIONS DEPARTMENT, FLEET FINANCIAL GROUP, INC.,
50 KENNEDY PLAZA, PROVIDENCE, RHODE ISLAND 02903. TELEPHONE REQUESTS MAY BE
DIRECTED TO (401) 278-5800.
2
<PAGE>
FLEET FINANCIAL GROUP, INC.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At September 30, 1995, Fleet was the 16th largest
banking institution in the United States in terms of total assets, with total
assets of $50.9 billion, total deposits of $32.4 billion and stockholders'
equity of $4.4 billion.
Fleet is engaged in a general commercial banking and trust business
throughout the states of New York, Rhode Island, Connecticut, Massachusetts,
Maine and New Hampshire through its banking subsidiaries, Fleet Bank
("Fleet-NY"); Fleet National Bank ("Fleet-RI"); Fleet Bank, National Association
("Fleet-CT"); Fleet Bank of Massachusetts, National Association ("Fleet-MA");
Fleet Bank of Maine and Fleet Bank-NH.
Fleet provides, through its nonbanking subsidiaries, a variety of financial
services, including mortgage banking, asset-based lending, equipment leasing,
consumer finance, real estate financing, securities brokerage services,
investment banking, investment advice and management, data processing and
student loan servicing.
On February 20, 1995, Fleet and Shawmut National Corporation ("Shawmut")
entered into an Agreement and Plan of Merger (the "Merger Agreement") providing
for the merger of Shawmut with and into Fleet (the "Merger"). For additional
information regarding the Merger and certain pro forma financial information
relating thereto, see Fleet's Current Reports on Form 8-K dated February 20,
1995, February 21, 1995, April 13, 1995, May 17, 1995, June 21, 1995, August 11,
1995, August 23, 1995 and November 15, 1995.
The principal office of Fleet is located at 50 Kennedy Plaza, Providence,
Rhode Island 02903, telephone number (401) 278-5800.
REGULATORY MATTERS
General. Fleet is a legal entity separate and distinct from its
subsidiaries. The ability of holders of debt and equity securities of Fleet,
including the holders of the Securities offered hereby, to benefit from the
distribution of assets of any subsidiary upon the liquidation or reorganization
of such subsidiary is subordinate to prior claims of creditors of the subsidiary
(including depositors in the case of banking subsidiaries) except to the extent
that a claim of Fleet as a creditor may be recognized.
There are various statutory and regulatory limitations on the extent to
which banking subsidiaries of Fleet can finance or otherwise transfer funds to
Fleet or its nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary bank
to Fleet or any nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions consistent with
safe and sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Fleet from its banking subsidiaries. Under applicable
banking statutes, at September 30, 1995, Fleet's banking subsidiaries could have
declared additional dividends of approximately $446 million, of which $121
million could have been declared by Fleet-MA and Fleet-CT. Holders of Fleet's
dual convertible preferred stock are entitled to dividends equal to one-half of
the total common dividends declared (after the first $15 million in common
dividends) to Fleet, if any, by Fleet Banking Group, Inc. ("Fleet Banking
Group"), a wholly-owned subsidiary of Fleet and the holder of all of the
outstanding common stock of each of Fleet-MA and Fleet-CT. As of the date of the
Prospectus Supplement, Fleet Banking Group has not paid any dividends on its
common stock to Fleet. Federal and state regulatory agencies also have the
authority to limit further Fleet's banking subsidiaries' payment of dividends
based on other factors, such as the maintenance of adequate capital for such
subsidiary bank.
3
<PAGE>
Under the policy of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), Fleet is expected to act as a source of financial
strength to each subsidiary bank and to commit resources to support such
subsidiary bank in circumstances where it might not do so absent such policy. In
addition, any subordinated loans by Fleet to any of the subsidiary banks would
also be subordinate in right of payment to deposits and obligations to general
creditors of such subsidiary bank. Further, the Crime Control Act of 1990
amended the federal bankruptcy laws to provide that in the event of the
bankruptcy of Fleet, any commitment by Fleet to its regulators to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
FIRREA.
As a result of the enactment of the Financial Institutions Reform, Recovery
and Enforcement Act ("FIRREA") on August 9, 1989, any or all of Fleet's
subsidiary banks can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(a) the default of any other of Fleet's subsidiary banks or (b) any assistance
provided by the FDIC to any other of Fleet's subsidiary banks in danger of
default. "Default" is defined generally as the appointment of a conservator or
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a "default" is likely to occur without
regulatory assistance.
FDICIA.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDICIA"), which was enacted on December 19, 1991, provides for, among other
things, increased funding for the Bank Insurance Fund (the "BIF") of the FDIC
and expanded regulation of depository institutions and their affiliates,
including parent holding companies. A summary of certain provisions of FDICIA
and its implementing regulations is provided below.
Prompt Corrective Action. The FDICIA provides the federal banking agencies
with broad powers to take prompt corrective action to resolve problems of
insured depository institutions, depending upon a particular institution's level
of capital. The FDICIA establishes five tiers of capital measurement for
regulatory purposes ranging from "well-capitalized" to "critically
undercapitalized." A depository institution may be deemed to be in a
capitalization category that is lower than is indicated by its actual capital
position under certain circumstances. At September 30, 1995, each of Fleet's
subsidiary depository institutions was classified as "well-capitalized" under
the prompt corrective action regulations described above.
Brokered Deposits. Under the FDICIA, a depository institution that is
well-capitalized may accept brokered deposits. A depository institution that is
adequately capitalized may accept brokered deposits only if it obtains a waiver
from the FDIC, and may not offer interest rates on deposits "significantly
higher" than the prevailing rate in its market. An undercapitalized depository
institution may not accept brokered deposits. In Fleet's opinion, these
limitations do not have a material effect on Fleet.
Safety and Soundness Standards. The FDICIA, as amended, directs each federal
banking agency to prescribe safety and soundness standards for depository
institutions relating to internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation, asset-quality, earnings and stock valuation. Final
interagency regulations to implement these new safety and soundness standards
have recently been adopted by the federal banking agencies. In July 1995, the
federal banking agencies published proposed guidelines establishing safety and
soundness standards concerning asset quality and earnings. If adopted in final
form, these proposed guidelines will be incorporated into the Interagency
Guidelines Establishing Standards for Safety and Soundness. The ultimate
cumulative effect of these standards cannot currently be forecast.
The FDICIA also contains a variety of other provisions that may affect
Fleet's operations, including new reporting requirements, regulatory standards
for real estate lending, "truth in savings" provisions, and the requirement that
a depository institution give 90 days' prior notice to customers and regulatory
authorities before closing any branch.
4
<PAGE>
Capital Guidelines
Under the Federal Reserve Board's capital guidelines, the minimum ratio of
total capital to risk-adjusted assets (including certain off-balance sheet
items, such as standby letters of credit) is 8%. At least half of the total
capital is to be comprised of common equity, retained earnings, minority
interests in the equity accounts of consolidated subsidiaries and a limited
amount of noncumulative perpetual preferred stock, less deductible intangibles
("Tier 1 capital"). The remainder may consist of perpetual debt, mandatory
convertible debt securities, a limited amount of subordinated debt, other
preferred stock and a limited amount of loan loss reserves ("Tier 2 capital").
In addition, the Federal Reserve Board requires a leverage ratio (Tier 1 capital
to average quarterly assets, net of goodwill) of 3% for bank holding companies
that meet certain specified criteria, including that they have the highest
regulatory rating. The rule indicates that the minimum leverage ratio should be
1% to 2% higher for holding companies undertaking major expansion programs or
that do not have the highest regulatory rating. Fleet's national banking
subsidiaries are subject to similar capital requirements adopted by the
Comptroller of the Currency.
The federal banking agencies continue to consider capital requirements
applicable to banking organizations. Effective September 1, 1995, the federal
banking agencies adopted amendments to their risk-based capital regulations to
provide for the consideration of interest rate risk in the determination of a
bank's minimum capital requirements. The amendments require that banks
effectively measure and monitor their interest rate risk and that they maintain
capital adequate for that risk. Under the amendments, banks with excess interest
rate risk would be required to maintain additional capital beyond that generally
required. In addition, effective January 17, 1995, the federal banking agencies
adopted amendments to their risk-based capital standards to provide for the
concentration of credit risk and certain risks arising from nontraditional
activities, as well as a bank's ability to manage these risks, as important
factors in assessing a bank's overall capital adequacy.
As of September 30, 1995, Fleet's capital ratios on a historical basis
exceeded all minimum regulatory capital requirements.
Under federal banking laws, failure to meet the minimum regulatory capital
requirements could subject a banking institution to a variety of enforcement
remedies available to federal regulatory authorities, including the termination
of deposit insurance by the FDIC and seizure of the institution.
Interstate Banking and Branching Legislation
On September 29, 1994, President Clinton signed the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (the "Interstate Act") into law.
The Interstate Act facilitates the interstate expansion and consolidation of
banking organizations by permitting (i) beginning one year after enactment of
the legislation, bank holding companies that are adequately capitalized and
managed to acquire banks located in states outside their home states regardless
of whether such acquisitions are authorized under the law of the host state,
(ii) the interstate merger of banks after June 1, 1997, subject to the right of
individual states to "opt in" or "opt out" of this authority prior to such date,
(iii) banks to establish new branches on an interstate basis provided that such
action is specifically authorized by the law of the host state, (iv) foreign
banks to establish, with approval of the appropriate regulators in the United
States, branches outside their home states to the same extent that national or
state banks located in such state would be authorized to do so and (v) beginning
September 29, 1995, banks to receive deposits, renew time deposits, close loans,
service loans and receive payments on loans and other obligations as agent for
any bank or thrift affiliate, whether the affiliate is located in the same or
different state. Connecticut and Rhode Island, which are two states in which
Fleet subsidiaries conduct banking operations, have adopted legislation opting
into the interstate provisions of the Interstate Act. Fleet is currently
considering the potential benefits in cost savings and convenience to its
customers that might be achieved through combinations of two or more of its
banking subsidiaries.
5
<PAGE>
DEPOSIT INSURANCE ASSESSMENTS
The deposits of each of Fleet's subsidiary banks are insured up to
regulatory limits by the FDIC and, accordingly, are subject to deposit insurance
assessments to maintain the Bank Insurance Fund ("BIF") administered by the
FDIC. The FDIC has adopted regulations establishing a permanent risk-related
deposit insurance assessment system. Under this system, the FDIC places each
insured bank in one of nine risk categories based on (a) the bank's
capitalization and (b) supervisory evaluations provided to the FDIC by the
institution's primary federal regulator. Each insured bank's insurance
assessment rate is then determined by the risk category in which it is
classified by the FDIC. There is currently a 27 basic point spread between the
highest and lowest assessment rates, so that banks classified in the highest
capital and supervisory evaluation categories by the FDIC are currently subject
to a rate of $0.04 per $100 of deposits and banks classified in the lowest
capital and supervisory evaluation categories by the FDIC are currently subject
to a rate of $0.31 per $100 of deposits.
On November 14, 1995, the FDIC voted to decrease premiums effective January
1, 1996. The decrease will lower the rate of deposit insurance premiums by $.04
per $100 of deposits for banks in each risk assessment category. As a result,
banks in the highest capital and supervisory evaluation categories will have an
assessment rate of $0.00, and will pay only the minimum assessment of $2,000 per
year for deposit insurance. Banks in the lowest capital and supervisory
evaluation categories will be subject to a rate of $0.27 per $100 of deposits.
There is no guarantee that the rate of deposit insurance premiums will not
increase in the future.
These assessment rates also reflect the amount the FDIC has determined is
necessary to maintain the reserve ratio of BIF of 1.25% of total insured bank
deposits. The FDIC has announced that this reserve ratio was achieved during
1995. However, due primarily to the fact that the reserve ratio of the FDIC's
Savings Association Insurance Fund ("SAIF") is not projected to reach the
required level of 1.25% for several years, the FDIC has made a proposal to
Congress to (1) capitalize the SAIF through a special up-front cash assessment
on SAIF deposits; (2) spread the responsibility for payments to the Financing
Corporation created under Title III of the Competitive Equality Banking Act of
1987 proportionally over all FDIC-insured institutions; and (3) as soon as
practicable, merge the BIF and the SAIF.
Some Fleet subsidiary banks hold deposits that were acquired from savings
institutions and that, accordingly, are insured by SAIF. At September 30, 1995,
Fleet's banks held approximately $457 million of such deposits.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND DIVIDENDS
ON PREFERRED STOCK
Fleet's consolidated ratios of earnings to fixed charges and dividends on
preferred stock were as follows for the years and periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
1995 1994 1993 1992 1991 1990
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges and Dividends
on Preferred Stock:
Excluding interest on deposits................ 2.67x 2.73x 2.67x 2.09x 1.31x *
Including interest on deposits................ 1.66 1.75 1.66 1.33 1.08 *
</TABLE>
- ------------
* The sum of fixed charges and dividends on preferred stock exceeded earnings by
$163 million (excluding interest on deposits) and by $163 million (including
interest on deposits) for the year ended December 31, 1990.
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest)
and, where indicated, the pretax equivalents of dividends on preferred stock.
Fixed charges consist of interest on short-term debt and long-term debt
(including interest related to capitalized leases and capitalized interest) and
one-third of rent expense, which approximates the interest component of such
expense. In addition, where indicated, fixed charges include interest on
deposits.
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<PAGE>
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, Fleet
intends to use the net proceeds from the sale of the Securities for general
corporate purposes, principally to extend credit to, or fund investments in, its
subsidiaries. The precise amounts and timing of extensions of credit to, and
investments in, such subsidiaries will depend upon the subsidiaries' funding
requirements and the availability of other funds. Pending such applications, the
net proceeds may be temporarily invested in marketable securities or applied to
the reduction of Fleet's short-term indebtedness. Based upon the historic and
anticipated future growth of Fleet and the financial needs of its subsidiaries,
Fleet may engage in additional financings of a character and amount to be
determined as the need arises.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in the
Prospectus Supplement relating to such series of the Preferred Stock. If so
indicated in the applicable Prospectus Supplement, the terms of any such series
may differ from the terms set forth below. The description of the provisions of
the Preferred Stock set forth below and in any Prospectus Supplement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Certificate of Designation relating to the applicable series of
the Preferred Stock.
GENERAL
Under Fleet's Restated Articles of Incorporation (the "Articles"), the Board
of Directors of Fleet is authorized, without further shareholder action, to
provide for the issuance of up to 16,000,000 shares of preferred stock, $1 par
value ("Fleet $1 Par Preferred Stock"), in one or more series, with such voting
powers, dividends, designations, preferences, rights, qualifications,
limitations and restrictions as shall be set forth in the resolutions providing
for the issuance thereof adopted by the Board of Directors. As of September
30, 1995, Fleet had outstanding three series of Fleet $1 Par Preferred Stock as
follows: (i) 1,100,000 shares of Series III 10.12% Perpetual Preferred Stock
(the "Series III Preferred"), having a liquidation value of $100 per share, plus
accrued and unpaid dividends, were designated and 519,758 shares were issued and
outstanding, (ii) 1,000,000 shares of Series IV 9.375% Perpetual Preferred Stock
(the "Series IV Preferred"), having a liquidation value of $100 per share, plus
accrued and unpaid dividends, were designated and 478,838 shares were issued and
outstanding and (iii) 1,415,000 shares of Dual Convertible Preferred Stock (the
"Dual Convertible Preferred Stock"), having a liquidation value of $200 per
share, plus accrued and unpaid dividends, were designated and 1,415,000 shares
were issued and outstanding. In addition, as of September 30, 1995, the Board of
Directors of Fleet had established a series of 1,500,000 shares of Cumulative
Participating Junior Preferred Stock, par value $1 per share (the "Junior
Preferred Stock") issuable upon exercise of the preferred share purchase rights
described below, of which no shares were issued and outstanding as of such date.
Each such outstanding series and class is described below under "Description of
Existing Preferred Stock".
Under regulations adopted by the Federal Reserve Board, if the holders of
any series of the Preferred Stock are or become entitled to vote for the
election of directors because dividends on such series are in arrears, such
series may then be deemed a "class of voting securities" and a holder of 25% or
more of such series (or a holder of 5% or more if it otherwise exercises a
"controlling influence" over Fleet) may then be subject to regulation as a bank
holding company in accordance with the Bank Holding Company Act of 1956, as
amended. In addition, at such time as such series is deemed a class of voting
securities, (i) any other bank holding company may be required to obtain the
approval of the Federal Reserve Board to acquire or retain 5% or more of such
series and (ii) any person other than a bank holding company may be required to
obtain the approval of the Federal Reserve Board to acquire or retain 10% or
more of such series.
The Preferred Stock shall have the dividend, liquidation, redemption, voting
and conversion rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of
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<PAGE>
the Preferred Stock. Reference is made to the Prospectus Supplement relating to
the particular series of the Preferred Stock offered thereby for specific terms,
including: (i) the title, stated value and liquidation preference of such
Preferred Stock and the number of shares offered; (ii) the initial public
offering price at which such Preferred Stock will be issued; (iii) the dividend
rate or rates (or method of calculation), the dividend periods, the dates on
which dividends shall be payable and whether such dividends shall be cumulative
or noncumulative and, if cumulative, the dates from which dividends shall
commence to accumulate; (iv) any redemption or sinking fund provisions; (v) any
conversion provisions; (vi) whether Fleet has elected to offer Depositary Shares
as described under "Description of Depositary Shares"; and (vii) any other
rights, preferences, privileges, limitations and restrictions on such Preferred
Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock will rank on a
parity in all respects with the outstanding preferred stock of Fleet and each
other series of the Preferred Stock (except for the Junior Preferred Stock) and
will rank senior in all respects to any outstanding shares of Junior Preferred
Stock and the Common Stock. See "Description of Existing Preferred Stock". The
Preferred Stock will have no preemptive rights to subscribe for any additional
securities which may be issued by Fleet.
Unless otherwise specified in the applicable Prospectus Supplement, the
depositary, transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of the Preferred Stock will be Fleet-RI.
As described under "Description of Depositary Shares", Fleet may, at its
option, with respect to any series of the Preferred Stock, elect to offer
fractional interests in shares of Preferred Stock, and provide for the issuance
by a Depositary (as defined below) of depositary receipts ("Depositary
Receipts") representing depositary shares ("Depositary Shares"), each of which
will represent a fractional interest (to be specified in the applicable
Prospectus Supplement relating to a particular series of the Preferred Stock) in
a share of such series of the Preferred Stock.
DIVIDENDS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of Fleet, out of any funds
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. Such rates may be fixed or adjustable or both. If adjustable,
the formula or other method used for determining the applicable dividend rate
for each dividend period will be set forth in the applicable Prospectus
Supplement. Dividends will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Dividends on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement. If the Board
of Directors of Fleet fails to declare a dividend payable on a dividend payment
date on any series of the Preferred Stock for which dividends are noncumulative
("Noncumulative Preferred Stock"), then the holders of such series of the
Preferred Stock will have no right to receive a dividend in respect of the
dividend period ending on such dividend payment date, and Fleet will have no
obligation to pay the dividend accrued for such period, whether or not dividends
on such series are declared payable on any future dividend payment dates.
When dividends are not paid in full upon any series of the Preferred Stock
and any other series of Fleet's preferred stock ranking on a parity as to
dividends with such series of Preferred Stock, all dividends declared upon
shares of such series of Preferred Stock and any other series of Fleet's
preferred stock ranking on a parity as to dividends shall be declared pro rata
so that the amount of dividends declared per share on such series of Preferred
Stock and such other preferred stock shall in all cases bear to each other the
same ratio that accrued dividends per share on the shares of such series of
Preferred Stock (which shall not, if such Preferred Stock is Noncumulative
Preferred Stock, include any accumulation in respect of unpaid dividends for
prior dividend periods) and such other preferred stock bear to each other.
Except as provided in the preceding sentence, unless (i) with respect to any
8
<PAGE>
series of Preferred Stock for which dividends are cumulative ("Cumulative
Preferred Stock"), full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on such Preferred Stock for all dividend periods
terminating on or prior to the date of payment of any such dividends on such
other series of preferred shares of Fleet or (ii) with respect to any series of
Noncumulative Preferred Stock, full dividends for the then-current dividend
period on such Preferred Stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for such
payment, no dividends (other than in Common Stock or another stock ranking
junior to such series of Preferred Stock as to dividends and upon liquidation)
shall be declared or paid or set aside for payment, nor shall any other
distribution be made on the Common Stock or on any other stock of Fleet ranking
junior to or on a parity with such series of Preferred Stock as to dividends or
upon liquidation. Unless full dividends on the Cumulative Preferred Stock of any
series have been paid for the then-current and all past dividend periods and
full dividends for the then-current dividend period on the Noncumulative
Preferred Stock of any series have been declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment, no Common Stock
or any other stock of Fleet ranking junior to or on a parity with such series of
Preferred Stock as to dividends or upon liquidation may be redeemed, purchased
or otherwise acquired for any consideration (or any moneys paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by Fleet (except by conversion into or exchange for stock of Fleet ranking
junior to such series of Preferred Stock as to dividends and upon liquidation).
See "Fleet Financial Group, Inc." with respect to certain limitations on the
ability of Fleet and its banking subsidiaries to pay dividends.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary dissolution, liquidation or
winding up of Fleet, the holders of each series of the Preferred Stock will be
entitled to receive and to be paid out of assets of Fleet available for
distribution to its stockholders, before any payment or distribution is made to
holders of Common Stock or any other class of stock ranking junior to such
series of the Preferred Stock upon liquidation, liquidating distributions in an
amount per share as set forth in the Prospectus Supplement relating to such
series of the Preferred Stock, plus accrued and unpaid dividends (whether or not
earned or declared) for the then-current dividend period and, if such series of
the Preferred Stock is Cumulative Preferred Stock, for all dividend periods
prior thereto. If, upon any voluntary or involuntary dissolution, liquidation or
winding up of Fleet, the amounts payable with respect to the Preferred Stock of
any series and any other shares of stock of Fleet ranking as to any such
distribution on a parity with the Preferred Stock of such series are not paid in
full, the holders of the Preferred Stock of such series and of such other shares
will share ratably in any such distribution of assets of Fleet in proportion to
the full respective distributable amounts to which they are entitled. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of shares of such series of the Preferred Stock will not
be entitled to any further participation in any distribution of assets by Fleet.
Neither the sale of all or substantially all the property or business of Fleet,
nor the merger or consolidation of Fleet into or with any other corporation
shall be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, of Fleet.
REDEMPTION
Any series of the Preferred Stock may be redeemable, in whole or in part, at
the option of Fleet, and may be subject to mandatory redemption pursuant to a
sinking fund or otherwise, in each case upon the terms, at the times and at the
redemption prices set forth in the Prospectus Supplement relating to such series
and subject to the rights of holders of other securities of Fleet. Preferred
Stock redeemed by Fleet will be restored to the status of authorized but
unissued preferred shares.
The Prospectus Supplement relating to a series of the Preferred Stock which
is subject to mandatory redemption will specify the number of shares of such
series of the Preferred Stock which shall be redeemed by Fleet in each year
commencing after a date to be specified, at a redemption price
9
<PAGE>
per share and on one or more dates to be specified, together with an amount
equal to all accrued and unpaid dividends thereon (which shall not, if such
Preferred Stock is Noncumulative Preferred Stock, include any accumulation in
respect of unpaid dividends for prior dividend periods) to the date of
redemption. The redemption price may be payable in cash or other property, as
specified in the Prospectus Supplement relating to such series of Preferred
Stock.
If fewer than all of the outstanding shares of any series of the Preferred
Stock are to be redeemed, the number of shares to be redeemed will be determined
by the Board of Directors of Fleet and such shares shall be redeemed pro rata
from the holders of record of such shares in proportion to the number of such
shares held by such holders (with adjustments to avoid redemption of fractional
shares) or by lot in a manner determined by the Board of Directors of Fleet.
Notwithstanding the foregoing, if any dividends, including any accumulation
on shares of Cumulative Preferred Stock, of any series are in arrears, no shares
of Preferred Stock of such series shall be redeemed unless all outstanding
shares of Preferred Stock of such series are simultaneously redeemed, and Fleet
shall not purchase or otherwise acquire any shares of Preferred Stock of such
series; provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Preferred Stock of such series pursuant to a purchase
or exchange offer made on the same terms to all holders of such series of the
Preferred Stock.
Notice of redemption shall be given by mailing the same to each record
holder of the shares to be redeemed, not less than 30 nor more than 60 days
prior to the date fixed for redemption thereof, to the respective addresses of
such holders as the same shall appear on the stock books of Fleet. Each such
notice shall state: (i) the redemption date; (ii) the number of shares and
series of the Preferred Stock to be redeemed; (iii) the redemption price; (iv)
the place or places where certificates for such shares of Preferred Stock are to
be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue or accumulate on such redemption
date; and (vi) the date upon which the holders' conversion rights, if any, as to
such shares, shall terminate. If fewer than all shares of any series of the
Preferred Stock held by any holder are to be redeemed, the notice mailed to such
holder shall also specify the number of shares to be redeemed from such holder.
If notice of redemption has been given, dividends on the shares of Preferred
Stock so called for redemption shall cease to accrue or accumulate from and
after the redemption date for the shares of the series of the Preferred Stock
called for redemption (unless default shall be made by Fleet in providing money
for the payment of the redemption price of the shares so called for redemption),
and such shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of Fleet (except the right to receive the
redemption price) shall cease. Upon surrender in accordance with such notice of
the certificates representing any shares of the Preferred Stock so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of Fleet
shall so require and the notice shall so state), the redemption price set forth
above shall be paid out of funds provided by Fleet. If fewer than all of the
shares of the Preferred Stock represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as expressly required by
applicable law, the holders of the Preferred Stock will not be entitled to vote.
In the event Fleet issues shares of a series of the Preferred Stock, each share
will be entitled to one vote on matters on which holders of such series of the
Preferred Stock are entitled to vote. However, as more fully described below
under "Description of Depositary Shares", if Fleet elects to provide for the
issuance of Depositary Shares representing interests in a fraction of a share of
a series of the Preferred Stock, the holders of each such Depositary Share will,
in effect, be entitled through the Depositary to such fraction of a vote, rather
than a full vote. Since each full share of any series of the Preferred Stock
shall be entitled to one vote, the voting power of such series, on matters on
which holders of such series and holders of any other series of the Preferred
Stock or another series of preferred stock of Fleet are entitled to vote as a
single class, will depend on the number of shares in such
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<PAGE>
series, not the aggregate stated value, liquidation preference or initial
offering price of the shares of such series of the Preferred Stock.
If the equivalent of six quarterly dividends payable on any series of the
Preferred Stock or any other class or series of preferred stock are in default,
the number of directors of Fleet will be increased by two (without duplication
of any increase made pursuant to the terms of any other series of preferred
stock of Fleet), and the holders of all outstanding series of preferred stock,
including holders of any series of the Preferred Stock, voting as a single class
without regard to series, will be entitled at Fleet's next annual meeting of
stockholders (and at each subsequent annual meeting of stockholders) to elect
such additional two directors until full cumulative dividends for all
then-current and past dividend periods on all preferred shares of Fleet so
entitled to vote, including any shares of the Preferred Stock, have been paid or
declared and set apart for payment. Any such elected directors shall serve until
Fleet's next annual meeting of stockholders or until their respective successors
shall be elected and qualified. If a vacancy in the office of such director
shall occur during the continuance of a default in dividends on preferred shares
of Fleet so entitled to vote prior to the end of the term of such director, such
vacancy shall be filled for the unexpired term of such director by the remaining
director elected by the preferred shares so entitled to vote.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Preferred Stock of any series at the time outstanding,
voting as a class, will be required for any amendment of the Articles (or any
certificate supplemental thereto) which will adversely affect the powers,
preferences, privileges or rights of such series of Preferred Stock. The
affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of any series of Preferred Stock and any other series of
preferred stock of Fleet ranking on a parity with any series of Preferred Stock
as to dividends or upon liquidation, voting as a single class without regard to
series, will be required to issue, authorize or increase the authorized amount
of, or issue or authorize any obligation or security convertible into or
evidencing a right to purchase, any additional class or series of stock ranking
prior to any series of Preferred Stock as to dividends or upon liquidation, but
such vote will not be required to take any such actions with respect to any
stock ranking on a parity with or junior to the Preferred Stock of such series.
Subject to such affirmative vote or consent of the holders of the
outstanding shares of the Preferred Stock of any series, Fleet may, by
resolution of its Board of Directors or as otherwise permitted by law, from time
to time alter or change the preferences, rights or powers of the Preferred Stock
of such series. The holders of the Preferred Stock of such series shall not be
entitled to participate in any such vote if, at or prior to the time when any
such alteration or change is to take effect, provision is made for the
redemption of all the Preferred Stock of such series at the time outstanding.
Nothing in this section shall be taken to require a class vote or consent in
connection with the authorization, designation, increase or issuance of any
shares of any class or series (including additional Preferred Stock of any
series) ranking junior to or on a parity with the Preferred Stock of such series
as to dividends and liquidation rights or in connection with the authorization,
designation, increase or issuance of any bonds, mortgages, debentures or other
obligations of Fleet.
CONVERSION RIGHTS
The Prospectus Supplement relating to any series of the Preferred Stock that
is convertible will state the terms on which shares of such series are
convertible into Common Stock of Fleet or another series of Preferred Stock.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject to
and qualified in its entirety by reference to the Deposit Agreement and
Depositary Receipts relating to the applicable series of the Preferred Stock,
forms of which will be filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
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GENERAL
Fleet may, at its option, elect to offer fractional interests in shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, Fleet will provide for the issuance by a Depositary of
Depositary Receipts evidencing Depositary Shares, each of which will represent a
fractional interest (to be set forth in the Prospectus Supplement relating to a
particular series of the Preferred Stock) in a share of a particular series of
the Preferred Stock as described below.
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between Fleet and a bank or trust company selected by Fleet (which
may be affiliated with Fleet) having its principal office in the United States
and having a combined capital and surplus of at least $50,000,000 (the
"Depositary"). The Prospectus Supplement relating to a series of Depositary
Shares will set forth the name and address of the Depositary. Unless otherwise
specified in the applicable Prospectus Supplement, the Depositary for shares of
the Preferred Stock will be Fleet-RI. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fractional interest in a share of Preferred Stock underlying such
Depositary Share, to all the rights and preferences of the Preferred Stock
underlying such Depositary Share (including dividend, voting, redemption,
conversion and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Pending the preparation of definitive
engraved Depositary Receipts, the Depositary may, upon the written order of
Fleet, issue temporary Depositary Receipts substantially identical to, and
entitling the holders thereof to all the rights pertaining to, the definitive
Depositary Receipts but not in definitive form. Definitive Depositary Receipts
will be prepared thereafter without unreasonable delay, and temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts at Fleet's
expense.
Upon surrender of Depositary Receipts at the principal office of the
Depositary (unless the related Depositary Shares have previously been called for
redemption) and upon payment of the charges provided in the Deposit Agreement
and subject to the terms thereof, a holder of Depositary Shares is entitled to
have the Depositary deliver to, or upon the order of, such holder the whole
shares of Preferred Stock underlying, and any money or other property
represented by, the Depositary Shares evidenced by the surrendered Depositary
Receipts.
Partial shares of Preferred Stock will not be issued. If the Depositary
Receipts delivered by the holder evidence a number of Depositary Shares in
excess of the number of Depositary Shares representing the number of whole
shares of Preferred Stock to be withdrawn, the Depositary will deliver to such
holder at the same time a new Depositary Receipt evidencing such excess number
of Depositary Shares. Holders of shares of Preferred Stock thus withdrawn will
not thereafter be entitled to deposit such shares under the Deposit Agreement or
to receive Depositary Shares therefor. Fleet does not expect that there will be
any public trading market for the Preferred Stock except as represented by the
Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a fraction of
one cent, and any balance not so distributed shall be added to and treated as
part of the next sum received by the Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash (including, without
limitation, distributions resulting from stock dividends, splits or plans of
reorganization), the Depositary will distribute property received by it to the
record holders of Depositary Shares entitled thereto, unless the Depositary
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determines that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of Fleet, sell such property and distribute
the net proceeds from such sale to such holders.
The Deposit Agreement will also contain provisions relating to the manner in
which any subscription or similar rights offered by Fleet to holders of the
Preferred Stock shall be made available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If any Preferred Stock deposited under a Deposit Agreement is subject to
redemption, the related Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The Depositary
shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary Shares
to be so redeemed at their respective addresses appearing in the Depositary's
books. The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Stock. Whenever Fleet redeems shares of Preferred Stock held by
the Depositary, the Depositary will redeem as of the same redemption date the
number of Depositary Shares relating to shares of Preferred Stock so redeemed.
If less than all the Depositary Shares are to be redeemed, the Depositary Shares
to be redeemed will be selected pro rata or by lot as may be determined by the
Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the number of shares of Preferred Stock
underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
underlying such Depositary Shares in accordance with such instructions, and
Fleet will agree to take all action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of Preferred Stock to the extent it does not receive
specific instructions from the holders of Depositary Shares relating to such
Preferred Stock.
TAXATION
Owners of Depositary Shares will be treated for Federal income tax purposes
as if they were owners of the Preferred Stock represented by such Depositary
Shares and, accordingly, will be entitled to take into account for Federal
income tax purposes income and deductions to which they would be entitled if
they were holders of such Preferred Stock. In addition, (i) no gain or loss will
be recognized for Federal income tax purposes upon the withdrawal of Preferred
Stock in exchange for Depositary Shares as provided in the Deposit Agreement,
(ii) the tax basis of each share of Preferred Stock to an exchanging owner of
Depositary Shares will, upon such exchange, be the same as the aggregate tax
basis of the Depositary Shares exchanged therefor and (iii) the holding period
for shares of the Preferred Stock in the hands of an exchanging owner of
Depositary Shares who held such Depositary Shares as a capital asset at the time
of the exchange thereof for Preferred Stock will include the period during which
such person owned such Depositary Shares.
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AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between Fleet and the Depositary. However, any amendment which materially and
adversely alters the rights of the existing holders of Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the Depositary Shares then outstanding. A Deposit
Agreement may be terminated by Fleet or the Depositary only if (i) all
outstanding Depositary Shares relating thereto have been redeemed or (ii) there
has been a final distribution in respect of the Preferred Stock of the relevant
series in connection with any liquidation, dissolution or winding up of Fleet
and such distribution has been distributed to the holders of the related
Depositary Shares.
CHARGES OF DEPOSITARY
Fleet will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. Fleet will pay charges
of the Depositary in connection with the initial deposit of the Preferred Stock
and any redemption of the Preferred Stock. Holders of Depositary Shares will pay
other transfer and other taxes and governmental charges and such other charges
as are expressly provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all notices,
reports and other communications (including proxy solicitation materials) from
Fleet which are delivered to the Depositary and which Fleet is required to
furnish to the holders of the Preferred Stock.
Neither the Depositary nor Fleet will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Fleet and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, on information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Shares or other persons
believed to be competent and on documents believed to be genuine.
Any record holder of Depositary Shares who has been a holder for at least
six months or who holds at least five percent of the outstanding shares of
capital stock of Fleet will be entitled to inspect the transfer books relating
to the Depositary Shares and the list of record holders of Depositary Shares
upon certification to the Depositary that such holder is acting in good faith
and that such inspection is for a proper purpose.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Fleet notice of the
Depositary's election to do so, and Fleet may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
DESCRIPTION OF EXISTING PREFERRED STOCK
GENERAL
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Rhode Island Business Corporation
Act (the "RIBCA") and the Articles and By-laws of Fleet.
FLEET $1 PAR PREFERRED STOCK
Fleet $1 Par Preferred Stock (which includes the Preferred Stock), is
issuable in series, with such relative rights, preferences and limitations of
each series (including dividend rights, dividend rate,
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liquidation preference, voting rights, conversion rights and terms of redemption
(including sinking fund provisions), redemption price or prices and the number
of shares constituting any series) as may be fixed by the Board of Directors.
Series III Preferred. In the event of the dissolution, liquidation or
winding up of Fleet, holders of shares of the outstanding Series III Preferred
are entitled to receive a distribution of $100 per share, plus accrued and
unpaid dividends, if any.
The holders of Series III Preferred are entitled to receive dividends at the
rate of 10.12% per annum computed on the basis of the issue price thereof of
$100 per share, payable quarterly, before any dividend shall be declared or paid
upon the Common Stock or the Junior Preferred Stock. The dividends on Series III
Preferred are cumulative. The Series III Preferred is redeemable, in whole or in
part, at Fleet's option, on and after June 1, 1996, commencing at $105.06 per
share and declining ratably on June 1 of each year to $100 per share on or after
June 1, 2001, plus, in each case, accrued and unpaid dividends, if any.
Except as indicated below or except as expressly required by applicable law,
the holders of the Series III Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series III Preferred or any
other class or series of preferred stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) are in default, the number of directors of Fleet will be
increased by two (without duplication of any increase made pursuant to the terms
of any other series of preferred stock of Fleet), and the holders of the Series
III Preferred, voting as a single class with the holders of shares of any one or
more other series of Fleet $1 Par Preferred Stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) and any other class of Fleet preferred stock ranking on a
parity with the Series III Preferred either as to dividends or distribution of
assets and upon which like voting rights have been conferred and are
exercisable, will be entitled to elect two directors to fill each of the two
newly-created directorships. Such right shall continue until full cumulative
dividends for all past dividend periods on all preferred shares of Fleet (other
than any other class of preferred stock expressly entitled to elect additional
directors by a separate and distinct vote), including any shares of the Series
III Preferred, have been paid or declared and set apart for payment. Any such
elected directors shall serve until Fleet's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the dividend default shall
cease to exist) or until their respective successors shall be elected and
qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series III Preferred is required for any amendment of
the Articles (or any certificate supplemental thereto) which will adversely
affect the powers, preferences, privileges or rights of the Series III
Preferred. The affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of the Series III Preferred and any other series of Fleet
$1 Par Preferred Stock ranking on a parity with the Series III Preferred either
as to dividends or upon liquidation, voting as a single class without regard to
series, is required to issue, authorize or increase the authorized amount of, or
issue or authorize any obligation or security convertible into or evidencing a
right to purchase, any additional class or series of stock ranking prior to the
Series III Preferred as to dividends or upon liquidation, or to reclassify any
authorized stock of Fleet into such prior shares.
Series IV Preferred. In the event of the dissolution, liquidation or winding
up of Fleet, holders of shares of the outstanding Series IV Preferred are
entitled to receive a distribution of $100 per share, plus accrued and unpaid
dividends, if any.
The holders of Series IV Preferred are entitled to receive dividends at the
rate of 9.375% per annum computed on the basis of the issue price thereof of
$100 per share, payable quarterly, before any dividend shall be declared or paid
upon the Common Stock or the Junior Preferred Stock. The dividends on Series IV
Preferred are cumulative. The Series IV Preferred is redeemable, in whole or in
part, at Fleet's option, on and after December 1, 1996, at $100 per share, plus
accrued and unpaid dividends, if any.
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Except as indicated below or except as expressly required by applicable law,
the holders of the Series IV Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series IV Preferred or any
other class or series of preferred stock are in default (other than any other
class of preferred stock expressly entitled to elect additional directors by a
separate and distinct vote), the number of directors of Fleet will be increased
by two (without duplication of any increase made pursuant to the terms of any
other series of preferred stock of Fleet), and the holders of the Series IV
Preferred, voting as a single class with the holders of shares of any one or
more other series of Fleet $1 Par Preferred Stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) and any other class of Fleet preferred stock ranking on a
parity with the Series IV Preferred either as to dividends or distribution of
assets and upon which like voting rights have been conferred and are
exercisable, will be entitled to elect such directors to fill each of the two
newly-created directorships. Such right shall continue until full cumulative
dividends for all past dividend periods on all preferred shares of Fleet (other
than any other class of preferred stock expressly entitled to elect additional
directors by a separate and distinct vote), including any shares of the Series
IV Preferred, have been paid or declared and set apart for payment. Any such
elected directors shall serve until Fleet's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the dividend default shall
cease to exist) or until their respective successors shall be elected and
qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series IV Preferred is required for any amendment of
the Articles (or any certificate supplemental thereto) which will adversely
affect the powers, preferences, privileges or rights of the Series IV Preferred.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series IV Preferred and any other series of Fleet $1
Par Preferred Stock ranking on a parity with the Series IV Preferred either as
to dividends or upon liquidation, voting as a single class without regard to
series, is required to issue, authorize or increase the authorized amount of, or
issue or authorize any obligation or security convertible into or evidencing a
right to purchase, any additional class or series of stock ranking prior to the
Series IV Preferred as to dividends or upon liquidation, or to reclassify any
authorized stock of Fleet into such prior shares.
Dual Convertible Preferred Stock. The Dual Convertible Preferred Stock has
no voting rights except as provided by Rhode Island law or as indicated below.
The Dual Convertible Preferred Stock is not entitled to vote for the election of
directors in any circumstances, including dividend arrearages, and the holders
thereof have agreed to vote the Dual Convertible Preferred Stock as directed by
Fleet's board of directors on any matters upon which the shares are entitled to
vote under Rhode Island law, except on those matters adversely affecting the
rights of holders of Dual Convertible Preferred Stock. The affirmative vote or
consent of the holders of at least 66 2/3% of the outstanding shares of Dual
Convertible Preferred Stock, voting as a class, given in person or by proxy,
either in writing or by resolution adopted at a special meeting called for the
purpose, is required to authorize any new class of equity securities of Fleet to
which the Dual Convertible Preferred Stock ranks junior, whether with respect to
dividends or upon liquidation, dissolution, winding up or otherwise. In
addition, the affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of Dual Convertible Preferred Stock, voting as a class,
given in person or by proxy, either in writing or by resolution adopted at a
special meeting called for the purpose, shall be required for any amendment of
Fleet's Articles (or the certificate of designation of the Dual Convertible
Preferred Stock), which would affect materially and adversely the specified
rights, preferences, privileges or voting rights of shares of Dual Convertible
Preferred Stock.
The holders of Dual Convertible Preferred Stock are entitled to dividends
equal to one-half of the total dividends declared (after the first $15 million
in dividends), if any, by Fleet Banking Group on its common stock. Such
dividends, if accrued and unpaid, will be cumulative. In the event of the
liquidation, dissolution or winding up of Fleet, the holders of the outstanding
Dual Convertible Preferred Stock are entitled to receive a distribution of $200
per share, plus accrued and unpaid dividends, if any.
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On July 31, 1991, the date of issuance of the Dual Convertible Preferred
Stock, Fleet granted to the partnerships which purchased the Dual Convertible
Preferred Stock (the "Partnerships") rights (the "DCP Rights") to purchase
6,500,000 shares of Common Stock at $17.65 per share.
The Dual Convertible Preferred Stock is convertible into Common Stock at a
conversion price of $17.65 per share at any time. The total number of shares
issuable upon such conversion is 16,033,994 shares, subject to customary
anti-dilution adjustments. If any of such stock is converted prior to July 12,
2001, all of such stock must be converted. After July 12, 2001, any holder of
Dual Convertible Preferred Stock may convert its stock into Common Stock
independently of any other holder.
The Dual Convertible Preferred Stock is also convertible into 50% of the
common stock of Fleet Banking Group at any time after the later of (i) July 12,
1995 and (ii) the date on which the Partnerships distribute all the shares of
Dual Convertible Preferred Stock then held by them to the partners therein
(which distribution date will be July 12, 1997 unless the Federal Reserve Board
consents to an alternative distribution date, but in no event earlier than July
12, 1995). The Dual Convertible Preferred Stock is also convertible into Fleet
Banking Group common stock on an earlier date in the event that the quotient of
(i) Fleet's Tier 1 capital as of the date of determination (adjusted to include
goodwill of Fleet as of July 12, 1991) divided by (ii) total assets, falls below
3%. The Dual Convertible Preferred Stock is not convertible into Fleet Banking
Group common stock after July 12, 2001 or at any time while it is held by the
Partnerships. After the Dual Convertible Preferred Stock becomes convertible
into Fleet Banking Group common stock, the holders of the Dual Convertible
Preferred Stock will have the right to obtain an appraisal of the fair value of
the common stock of Fleet Banking Group (the "Appraisal") as if all such shares
were to be sold to a third party in a transaction reflecting a control premium.
If such Appraisal is acceptable to the holders of the Dual Convertible Preferred
Stock, the Dual Convertible Preferred Stock may be converted into 50% of the
common stock of Fleet Banking Group on or after the date that is six months
after such acceptance or, in the case of the earlier date due to the capital
deficiency described above, on or after the date that is 60 days after the
notice of such deficiency. During the period after acceptance but prior to the
date on which such shares become convertible, Fleet will have the option to
redeem the Dual Convertible Preferred Stock at a redemption price equal to 50%
of the Appraisal price less the sum of (i) the market value of the shares of
Common Stock into which the Dual Convertible Preferred Stock is then convertible
(and such shares of Common Stock shall be distributed to the holders of Dual
Convertible Preferred Stock) and (ii) the value of the DCP Rights. Fleet has the
option to pay such redemption price in cash or in any combination of Fleet
securities having a realizable market value equal to such redemption price. If
Fleet does not exercise this option, the holders of the Dual Convertible
Preferred Stock may convert their shares into 50% of the common stock of Fleet
Banking Group. Any such conversion must be for all of the Dual Convertible
Preferred Stock.
Junior Preferred Stock. The Junior Preferred Stock will be issued upon the
exercise of a Right (as hereinafter defined) issued to holders of the Common
Stock. As of the date of this Prospectus, there were 1,500,000 shares of Fleet
$1 Par Preferred Stock reserved for issuance upon the exercise of the Rights.
See "--Description of Common Stock--Preferred Share Purchase Rights". Shares of
Junior Preferred Stock purchasable upon exercise of the Rights will rank junior
to the Fleet $1 Par Preferred Stock and the Fleet $20 Par Adjustable Rate
Preferred Stock and will not be redeemable. Each share of Junior Preferred Stock
will, subject to the rights of such senior securities of Fleet, be entitled to a
preferential cumulative quarterly dividend payment equal to the greater of $1.00
per share or, subject to certain adjustments, 100 times the dividend declared
per share of Common Stock. Upon the liquidation, dissolution or winding up of
Fleet, the holders of the Junior Preferred Stock will, subject to the rights of
such senior securities, be entitled to a preferential liquidation payment equal
to the greater of $1.00 per share plus all accrued and unpaid dividends or 100
times the payment made per share of Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Junior Preferred Stock will, subject to the rights of
such senior securities, be entitled to receive 100 times the amount received per
share of Common Stock. Each share of Junior Preferred Stock will have 100 votes,
voting together with the Common Stock. The rights of the Junior Preferred Stock
are protected by customary antidilution provisions.
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DESCRIPTION OF COMMON STOCK
GENERAL
Holders of the Common Stock are entitled to receive dividends when, as and
if declared by the Board of Directors out of any funds legally available
therefor, and are entitled upon liquidation, after claims of creditors and
preferences of the Preferred Stock, and any other class or series of preferred
stock at the time outstanding, to receive pro rata the net assets of Fleet.
Dividends are paid on the Common Stock only if all dividends on the outstanding
series of Preferred Stock, and any other class or series of preferred stock at
the time outstanding, for the then-current period and, in the case of Cumulative
Preferred Stock, all prior periods have been paid or provided for.
Fleet $1 Par Preferred Stock and any other class of preferred stock have, or
upon issuance will have, preference over the Common Stock with respect to the
payment of dividends and the distribution of assets in the event of liquidation
or dissolution of Fleet and such other preferences as may be fixed by the Board
of Directors.
The holders of the Common Stock are entitled to one vote for each share held
and are vested with all of the voting power except as the Board of Directors has
provided with respect to outstanding preferred stock or may provide, in the
future, with respect to Preferred Stock or any other class or series of
preferred stock which it may hereafter authorize. See "Description of Existing
Preferred Stock". Shares of Common Stock are not redeemable and have no
subscription, conversion or preemptive rights.
The affirmative vote of not less than 80% of Fleet's outstanding voting
stock, voting separately as a class, is required for certain Business
Combinations between Fleet and/or its subsidiaries and persons owning 10% or
more of its voting stock. See "Selected Provisions in the Articles of Fleet;
Business Combinations with Related Persons".
The Common Stock is listed on the New York Stock Exchange. The outstanding
shares of Common Stock are, and the shares to be issued in connection with any
offering hereunder will be, validly issued, fully paid and non-assessable and
the holders thereof are not, and will not be, subject to any liability as
stockholders.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Fleet Common Stock is Fleet-RI.
RESTRICTIONS ON OWNERSHIP
The Bank Holding Company Act (the "BHCA") requires any "bank holding
company", as such term is defined therein, to obtain the approval of the Federal
Reserve Board prior to the acquisition of 5% or more of the Common Stock. Any
person other than a bank holding company is required to obtain prior approval of
the Federal Reserve Board to acquire 10% or more of the Common Stock under the
Change in Bank Control Act (the "CBCA"). The Partnerships which purchased the
Dual Convertible Preferred Stock made a filing under the CBCA because of their
acquisition of such stock. Any holder of 25% or more of the Common Stock (or a
holder of 5% or more if such holder otherwise exercises a "controlling
influence" over Fleet) is subject to regulation as a bank holding company under
the BHCA.
PREFERRED SHARE PURCHASE RIGHTS
On November 21, 1990, the Board of Directors of Fleet declared a dividend of
one Preferred Share Purchase Right (a "Right") for each outstanding share of
Common Stock of Fleet. The dividend was paid on December 4, 1990 to the
shareholders of record on that date. Each Right, when exercisable, will entitle
the registered holder to purchase from Fleet one one-hundredth of a share of
Junior Preferred Stock at an exercise price of $50 per one one-hundredth of a
share of Junior Preferred Stock (the "Purchase Price"), subject to certain
adjustments. Until the Distribution Date (as hereinafter defined), Fleet will
issue one Right with each share of Common Stock. The following summary does not
purport
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to be complete and is subject to, and is qualified in its entirety by reference
to, all of the provisions of the Rights Agreement dated as of November 21, 1990
between Fleet and Fleet-RI, as Rights Agent, a copy of which was filed as an
exhibit to the Registration Statement on Form 8-A filed with the Commission on
December 4, 1990, as amended by a First Amendment to Rights Agreement dated
March 28, 1991 and a Second Amendment to Rights Agreement dated July 12, 1991,
copies of which were filed as exhibits to Fleet's Amendment to Application or
Report on Form 8 dated September 6, 1991 and a Third Amendment to Rights
Agreement dated February 20, 1995, a copy of which was filed as an exhibit to
Fleet's Form 8-A/A dated March 17, 1995 (as amended, the "Rights Agreement").
The Rights are not represented by separate certificates and are not
exercisable or transferable apart from the Common Stock until the earlier to
occur of (i) the tenth day after a public announcement by Fleet (x) that a
person or group of affiliated or associated persons has acquired, or obtained
the right to acquire, beneficial ownership (as defined in the Rights Agreement)
of 10% or more (or, in the case of an institutional investor, acting in the
ordinary course of business and not with the purpose of changing or influencing
control of Fleet (a "Qualifying Investor"), 15% or more) of the outstanding
shares of Common Stock, (y) that any person or group of affiliated or associated
persons, which beneficially owned 10% or more (or, in the case of a Qualifying
Investor, 15% or more) of the outstanding shares on the Declaration Date, or
which acquired beneficial ownership of 10% or more (or, in the case of a
Qualifying Investor, 15% or more) of the outstanding shares as a result of any
repurchase of shares by Fleet, thereafter acquired beneficial ownership of
additional shares constituting 1% or more of the outstanding shares, or (z) that
any person who was a Qualifying Investor owning 10% or more of the outstanding
shares of Common Stock ceased to qualify as a Qualifying Investor and thereafter
acquired beneficial ownership of additional shares constituting 1% or more of
the outstanding shares (any person described in clause (x), (y) or (z) being an
"Acquiring Person"); and (ii) the tenth day (or such later day as may be
determined by action of the Board of Directors of Fleet prior to such time as
any person becomes an Acquiring Person) after the date of the commencement of a
tender or exchange offer by any person (other than Fleet) to acquire (when added
to any shares as to which such person is the beneficial owner immediately prior
to such commencement) beneficial ownership of 10% or more of the issued and
outstanding shares of Common Stock (the earlier of such dates being called the
"Distribution Date"). On March 28, 1991 and July 12, 1991, the Rights Agreement
was amended to change the definition of an "Acquiring Person" (i) to permit the
sale of the Dual Convertible Preferred Stock and issuance of rights to purchase
Common Stock to the Partnerships and (ii) to permit the Board of Directors of
Fleet to determine that a person who would otherwise be an "Acquiring Person"
had become such inadvertently and therefore allow divestiture of a sufficient
number of shares to avoid such designation. The Rights Agreement was further
amended on February 20, 1995 to amend the definition of "Acquiring Person to
permit the execution and delivery by Fleet of the Shawmut Merger Agreement and
the option agreement in connection therewith without Shawmut becoming an
Acquiring Person under the Rights Agreement.
The Rights will first become exercisable on the Distribution Date and could
then begin trading separately from the Common Stock. The Rights will expire on
November 21, 2000 (the "Final Expiration Date"), unless the Final Expiration
Date is extended or unless the Rights are earlier redeemed by Fleet.
In the event any person becomes an Acquiring Person, the Rights would give
holders (other than such Acquiring Person and its transferees) the right to buy,
for the Purchase Price, Common Stock (or, under certain circumstances, cash,
property or other debt or equity securities ("Common Stock equivalents")) with a
market value of twice the Purchase Price. In addition, at any time after any
person becomes an Acquiring Person, the Board may, at its option and in lieu of
any transaction described in the preceding sentence, exchange the outstanding
and exercisable Rights (other than Rights held by such Acquiring Person and its
transferees) for shares of Common Stock or Common Stock equivalents at an
exchange ratio of one share of Common Stock per Right, subject to certain
adjustments.
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In any merger or consolidation involving Fleet after the Rights become
exercisable, each Right will be converted into the right to purchase, for the
Purchase Price, common stock of the surviving corporation (which may be Fleet)
with a market value of twice the Purchase Price. The Board of Directors of Fleet
may amend the Rights Agreement or redeem the Rights for $.01 each at any time
until there is an Acquiring Person. Thereafter, the Board of Directors can amend
the Rights Agreement only to eliminate ambiguities or to provide additional
benefits to the holders of the Rights (other than the Acquiring Person).
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of Fleet, including, without limitation, the right to vote or
to receive dividends.
The Purchase Price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights, and
the number of outstanding Rights, are subject to customary antidilution
adjustments.
The Rights have certain "anti-takeover" effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire Fleet on
terms not approved by the Board of Directors of Fleet, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors prior to the time that there is an Acquiring Person (at
which time holders of the Rights become entitled to exercise their Rights for
shares of Common Stock at one-half the market price), since until such time the
Rights generally may be redeemed by the Board of Directors of Fleet at $.01 per
Right.
SELECTED PROVISIONS IN THE ARTICLES OF FLEET
BUSINESS COMBINATIONS WITH RELATED PERSONS
The Articles require that neither Fleet nor any of its subsidiaries may
engage in a Business Combination with a Related Person unless such Business
Combination (a) was approved by an 80% vote of the Board of Directors prior to
the time the Related Person became such; (b) is approved by a vote of 80% of the
Continuing Directors and a majority of the entire Board and certain conditions
as to price and procedure are complied with; or (c) is approved by a vote of 80%
of Fleet's outstanding shares of Fleet capital stock entitled to vote generally
in the election of directors, voting as a single class. Under the Articles, a
"Business Combination" includes any merger or consolidation of Fleet or any of
its subsidiaries into or with a Related Person or any of its affiliates or
associates; any sale, exchange, lease, transfer or other disposition to or with
a Related Person of all, substantially all or any Substantial Part (defined as
assets having a value of more than 5% of the total consolidated assets of Fleet)
of the assets of Fleet or any of its subsidiaries; any purchase, exchange, lease
or other acquisition by Fleet or any of its subsidiaries of all or any
Substantial Part of the assets or business of a Related Person or any of its
affiliates or associates; any reclassification of securities, recapitalization
or other transaction which has the effect, directly or indirectly, of increasing
the proportionate amount of voting shares of Fleet or any subsidiary which are
beneficially owned by a Related Person; and the acquisition by a Related Person
of beneficial ownership of voting securities, securities convertible into voting
securities or any rights, warrants or options to acquire voting securities of a
subsidiary of Fleet; a "Related Person" includes any person who is the
beneficial owner of 10% or more of Fleet's voting shares prior to the
consummation of a Business Combination or any person who is an affiliate of
Fleet and was the beneficial owner of 10% or more of Fleet's voting shares at
any time within the five years preceding the date on which a binding agreement
providing for a Business Combination is authorized by the Board of Directors;
and the "Continuing Directors" are those individuals who were members of the
Fleet Board of Directors prior to the time a Related Person became the
beneficial owner of 10% or more of Fleet's voting stock or those individuals
designated as Continuing Directors (prior to their initial election as
directors) by a majority of the then Continuing Directors. To amend these
provisions, a super majority vote (80%) of the Board of Directors, a majority
vote of the Continuing Directors and a super majority vote (80%) of the
stockholders is required unless the amendment is recommended to the stockholders
by a majority of the
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Board of Directors and not less than 80% of the Continuing Directors, in which
event only the vote provided under Rhode Island law is required.
DIRECTORS
The Articles contain a number of additional provisions which are intended to
delay an insurgent's ability to take control of Fleet's Board of Directors, even
after an insurgent has obtained majority ownership of the Fleet Common Stock.
The Articles provide for a classified Board of Directors, consisting of three
classes of directors serving staggered three-year terms. Directors of Fleet may
only be removed for cause and only (a) by a vote of the holders of 80% of the
outstanding shares of Fleet stock entitled to vote thereon voting separately as
a class at a meeting called for that purpose or (b) by a vote of a majority of
the Continuing Directors and a majority of the Board of Directors as constituted
at that time. Vacancies on the Board of Directors, whether due to resignation,
death, incapacity or an increase in the number of directors, may only be filled
by the Board, acting by a vote of 80% of the directors then in office. The
Articles provide that the number of directors of Fleet (exclusive of directors
to be elected by the holders of any one or more series of the Preferred Stock
voting separately as a class or classes) that shall constitute the Board of
Directors shall be 13, unless otherwise determined by resolution adopted by a
super majority vote (80%) of the Board of Directors and a majority of the
Continuing Directors. Pursuant to such an adopted resolution, the number of
directors that may serve is currently fixed at 15, except in the event that
quarterly dividends are not paid on non-voting Preferred Stock as described
above, and may only be increased by the affirmative vote of 80% of the Board of
Directors and a majority of the Continuing Directors. A super majority vote
(80%) of the Board of Directors, a majority vote of the Continuing Directors and
a super majority vote (80%) of the outstanding shares of Fleet stock entitled to
vote thereon voting separately as a class are required to amend any of these
provisions.
DESCRIPTION OF WARRANTS
Fleet may issue Warrants for the purchase of Preferred Stock or Common
Stock. Warrants may be issued independently or together with Preferred Stock or
Common Stock offered by any Prospectus Supplement and may be attached to or
separate from any such Securities. Each series of Warrants will be issued under
a separate warrant agreement (a "Warrant Agreement") to be entered into between
Fleet and a bank or trust company, as warrant agent (the "Warrant Agent"). The
Warrant Agent will act solely as an agent of the Company in connection with the
Warrants and will not assume any obligation or relationship of agency or trust
for or with any holders or beneficial owners of Warrants. The following summary
of certain provisions of the Warrants does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the provisions of the
Warrant Agreement that will be filed with the Commission in connection with the
offering of such Warrants.
The Prospectus Supplement relating to any particular issue of Preferred
Stock Warrants or Common Stock Warrants will describe the terms of such
Warrants, including the following: (a) the title of such Warrants; (b) the
offering price for such Warrants, if any; (c) the aggregate number of such
Warrants; (d) the designation and terms of the Common Stock or Preferred Stock
purchasable upon exercise of such Warrants; (e) if applicable, the designation
and terms of the Securities with which such Warrants are issued and the number
of such Warrants issued with each such Security; (f) if applicable, the date
from and after which such Warrants and any Securities issued therewith will be
separately transferable; (g) the number of shares of Common Stock or Preferred
Stock purchasable upon exercise of a Warrant and the price at which such shares
may be purchased upon exercise; (h) the date on which the right to exercise such
Warrants shall commence and the date on which such right shall expire; (i) if
applicable, the minimum or maximum amount of such Warrants that may be exercised
at any one time; (j) information with respect to book-entry procedures, if any;
(k) the currency or currency units in which the offering price, if any, and the
exercise price are payable; (l) if applicable, a discussion of material United
States federal income tax considerations; (m) the antidilution provisions of
such Warrants, if any; (n) the redemption or call provisions, if any, applicable
to such Warrants; and (o) any additional terms of the Warrants, including terms,
procedures, and limitations relating to the exchange and exercise of such
Warrants.
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PLAN OF DISTRIBUTION
Fleet may sell Securities to or through underwriters, and also may sell
Securities through agents (which are registered broker-dealers or banks) which
may be affiliates.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each Prospectus
Supplement will describe the method of distribution of the Securities. Certain
restrictions relating to the distribution of Securities in connection with an
International Offering will be set forth in the applicable Prospectus
Supplement.
In connection with the sale of Securities, underwriters or agents acting on
Fleet's behalf may receive compensation from Fleet or from purchasers of
Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers and agents that
participate in the distribution of Securities may be deemed to be underwriters
under the Act and any discounts or commissions received by them and any profits
on the resale of Securities by them may be deemed to be underwriting discounts
and commissions under the Act. Any such underwriter will be identified and any
such compensation will be described in the applicable Prospectus Supplement.
Under agreements which may be entered into by Fleet, underwriters, dealers
and agents who participate in the distribution of Securities may be entitled to
indemnification by Fleet against certain liabilities, including liabilities
under the Act, and to certain rights of contribution from Fleet.
If so indicated in the applicable Prospectus Supplement, Fleet will
authorize underwriters or other persons acting as Fleet's agents to solicit
offers by certain institutions to purchase Preferred Stock, Depositary Shares or
Warrants from Fleet pursuant to delayed delivery contracts providing for payment
and delivery on a future date or dates stated in the applicable Prospectus
Supplement. Each such contract will be for an amount not less than, and the
aggregate amount of such securities sold pursuant to such contracts shall not be
less nor more than, the respective amounts stated in the applicable Prospectus
Supplement. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all cases
such institutions must be approved by Fleet. The obligations of any purchaser
under any such contract will not be subject to any condition except that (1) the
purchase of the Preferred Stock, Depositary Shares or Warrants shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject, and (2) if the Preferred Stock, Depositary Shares or
Warrants are also being sold to underwriters acting as principals for their own
account, the underwriters shall have purchased such Preferred Stock, Depositary
Shares or Warrants not sold for delayed delivery. The underwriters and such
other persons will not have any responsibility in respect of the validity or
performance of such contracts.
Certain of the underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including investment banking services, for, Fleet
or one or more of its affiliates in the ordinary course of business.
EXPERTS
The consolidated financial statements of Fleet appearing in Fleet's 1994
Annual Report to Stockholders and incorporated by reference in Fleet's 1994
Annual Report on Form 10-K for the year ended December 31, 1994 (as amended by a
Form 10-K/A dated April 28, 1995), incorporated by reference herein (and
elsewhere in the Registration Statement) have been incorporated by reference
herein (and elsewhere in the Registration Statement) in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts
22
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in accounting and auditing. The report of KPMG Peat Marwick LLP covering the
December 31, 1994 financial statements refers to a change in the method of
accounting for investments.
The consolidated financial statements of Shawmut incorporated in this
Prospectus by reference to Fleet's Current Report on Form 8-K dated April 13,
1995, have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for Fleet by
Edwards & Angell, One Hospital Trust Plaza, Providence, Rhode Island 02903, and
for the Underwriters by Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019. V. Duncan Johnson, a partner of Edwards & Angell, is a director
of Fleet-RI, Fleet-MA and Fleet-CT and beneficially owns 4,052 shares of Common
Stock.
23
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NO DEALER, SALESMAN OR OTHER PERSON HAS 3,000,000
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR DEPOSITARY SHARES
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS IN CONNECTION WITH THE OFFER [LOGO]
MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE FLEET FINANCIAL
RELIED UPON AS HAVING BEEN AUTHORIZED BY GROUP, INC.
FLEET OR BY ANY UNDERWRITER. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER EACH REPRESENTING A ONE-FIFTH
AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE INTEREST IN A SHARE OF
CREATE AN IMPLICATION THAT THERE HAS BEEN NO SERIES VI 6.75% PERPETUAL
CHANGE IN THE AFFAIRS OF FLEET SINCE THE PREFERRED STOCK
DATE HEREOF. THIS PROSPECTUS SUP PLEMENT AND
THE PROSPECTUS DOES NOT CONSTITUTE AN OFFER -----------------
OR SOLICITATION BY ANYONE IN ANY STATE IN PROSPECTUS SUPPLEMENT
WHICH SUCH OFFER OR SOLICITATION IS NOT -----------------
AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED
TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by
Reference.......................... S-2
Fleet Financial Group, Inc. ......... S-3
Consolidated Ratios of Earnings to
Fixed Charges and Dividends on
Preferred Stock...................... S-4
Use of Proceeds...................... S-4
Recent Developments.................. S-4
Selected Consolidated Financial
Data.............................. S-8
Unaudited Pro Forma Combined
Financial Statements.............. S-10
Notes to Unaudited Pro Forma Combined
Financial Statements.............. S-19
Certain Terms of the Perpetual
Preferred Stock.................... S-21
Certain Terms of the Depositary
Shares.............................. S-25
Description of Existing Preferred
Stock............................... S-25
Federal Income Tax Consequences....... S-27
Regulatory Matters.................... S-28
Underwriting.......................... S-30
Experts............................... S-31
PROSPECTUS MERRILL LYNCH & CO.
Available Information................ 2 BEAR, STEARNS & CO. INC.
Incorporation of Certain Documents by GOLDMAN, SACHS & CO.
Reference.......................... 2 LEHMAN BROTHERS
Fleet Financial Group, Inc. ......... 3
Consolidated Ratios of Earnings to
Fixed Charges and Dividends on
Preferred Stock...................... 6
Use of Proceeds...................... 7
Description of Preferred Stock....... 7
Description of Depositary Shares..... 11
Description of Existing Preferred
Stock............................. 14
Description of Common Stock.......... 18
Selected Provisions in the Articles
of Fleet........................... 20
Description of Warrants.............. 21
Plan of Distribution................. 22
Experts.............................. 22 FEBRUARY 13, 1996
Legal Opinions....................... 23
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