SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 17, 1996
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FLEET FINANCIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
RHODE ISLAND
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(State or other jurisdiction of incorporation)
1-6366 05-0341324
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(Commission File Number) (IRS Employer Identification No.)
One Federal Street, Boston, MA 02110
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-292-2000
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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Pursuant to Form 8-K, General Instructions F, Registrant hereby
incorporates by reference the press release attached hereto as Exhibit 99.
Item 7. Financial Statements and Other Exhibits.
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Exhibit No. Description
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Exhibit 99 Fleet Financial Group,
Inc. Press Release
Dated April 17, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed in its behalf
by the undersigned hereunto duly authorized.
FLEET FINANCIAL GROUP, INC.
Registrant
By /s/ William C. Mutterperl
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William C. Mutterperl
Senior Vice President and General
Counsel
Dated: April 17, 1996
Exhibit 99
Contacts: Media: James Mahoney Investor: Thomas R. Rice
(617) 346-5472 (617) 346-0148
FLEET FINANCIAL GROUP REPORTS
FIRST QUARTER EARNINGS OF $264 MILLION
Boston, Massachusetts, April 17, 1996: Fleet Financial Group, Inc.
(FLT-NYSE) today reported net income of $263.8 million for the first quarter of
1996, or $0.94 per common share, compared with $226.0 million, or $0.82 per
common share earned in the first quarter of 1995. Return on average assets and
return on average common equity for the first quarter of 1996 were 1.41% and
16.96%, respectively, compared with 1.14% and 16.24%, respectively, for the
first quarter of 1995.
Terrence Murray, Fleet's president and chief executive officer, expressed
his satisfaction with the continuing favorable trends evident in the quarter,
"Fleet's earnings were up 17 percent relative to last year's first quarter, and
we have barely started to see the momentum we expect once the full integration
of recent acquisitions is achieved. In light of the recent regulatory approvals
regarding the NatWest acquisition, our plans for the financial contribution from
this acquisition are about to become a reality."
Fleet's chief financial officer, Eugene M. McQuade, said that Fleet's full
financial momentum was partially hidden in the first quarter by the
implementation of a balance sheet restructuring initiated in anticipation of the
pending NatWest acquisition. "Assets were reduced by $12 billion in the quarter
to accommodate the assets of NatWest." said Mr. McQuade. "The opportunity cost
of operating with a temporarily lower level of assets restrained earnings for
the quarter." Mr. McQuade also noted that 64 branches and $1.8 billion in loans
were divested in the quarter as part of the Shawmut merger agreement.
"We were conservative in our market timing, with respect to the balance
sheet restructuring, and we captured some benefits by selling the assets before
interest rates moved up later in the quarter," Mr. McQuade added. "This strategy
worked very well, producing $10.9 million in gains which would have been lost
had we waited until later in the quarter to act. In similar fashion, the early
actions to raise preferred stock for the NatWest acquisition created a modest
cost in the first quarter. But the attractive terms achieved by timing the
markets when we did will generate a rapid payback," Mr. McQuade continued.
Joel B. Alvord, Fleet's chairman, commented on the significant progress
made in the quarter, "The integration of Shawmut's operations is proceeding
according to plan. The financial benefits from these efforts are expected to
build steadily as our operations become fully integrated during the course of
the year. We are especially pleased that this significant undertaking, involving
the coordinated efforts of thousands of people, is being executed on
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schedule. As had been our goal from the start, we are achieving this integration
with minimal disruption to our customers."
Mr. Murray offered some additional thoughts on Fleet's plans for cost
savings as the integration of Shawmut's operations progresses, "The
consolidation of 169 branches, as well as our most significant system
conversions, are planned for the second quarter. The preparations for this
process added to Fleet's noninterest expense levels in the first quarter. These
initiatives will begin to produce savings as early as our second quarter."
INCOME STATEMENT
Net interest income totaled $732 million during the first quarter of 1996
compared to $747 million during the fourth quarter of 1995. The $15 million
decrease in net interest income is principally attributable to the divesting of
approximately $1.8 billion of loans and $2.3 billion of deposits as part of the
Shawmut merger, as well as the Corporation's strategic decision to restructure
its balance sheet in anticipation of the NatWest acquisition. The Corporation
reported a higher net interest margin of 4.43%, an increase of 43 basis points
over the 4.00% recorded in the fourth quarter of 1995, which reflected the
balance sheet restructuring implemented during the quarter. The restructuring
included a reduction of lower-yielding securities and higher-cost short-term
borrowings.
First quarter provision for credit losses was $35 million compared to $20
million in the prior year's first quarter. Net charge-offs for both the first
quarter of 1996 and 1995 amounted to $60 million. Nonperforming assets increased
in the first quarter to $553 million from $499 million at December 31, 1995, the
increase not being concentrated in any specific portfolio. The reserve for loan
losses has remained relatively level at $1.3 billion at both March 31, 1996 and
December 31, 1995.
Noninterest income in the first quarter totaled $519 million compared to
$402 million for the same period in 1995, an increase of 29%. This increase in
noninterest income is primarily attributable to $60 million of pre-tax gains
relating to branch divestitures as a result of the Shawmut merger ($24 million
after-tax), an $18 million increase in noninterest income at Fleet Private
Equity as the value of their investments has continued to increase, and a $21
million increase in mortgage banking revenue as a result of higher servicing
revenue and strong mortgage production activity.
Noninterest expense in the first quarter of 1996 totaled $758 million, a
reduction of $6 million, compared to the $764 million during the first quarter
of 1995, despite the acquisitions completed during the first half of 1995 of
Plaza Mortgage, Barclays Business Credit, Northeast Bancorp, and New Bedford
Bancorp. The first quarter of 1995 includes a $37 million restructuring charge
recorded in connection with the Shawmut merger. The first quarter of 1996 also
saw an increase in merger-related expenses in the form of merger integration
costs of $13 million pertaining to the Shawmut merger, and a $17 million
increase in mortgage servicing rights amortization.
Total assets at March 31, 1996 were $72.1 billion, while total loans and
leases were $47.6 billion at the same date, compared with $84.4 billion of total
assets and $51.5 billion of loans and leases at December 31, 1995. Total assets
and loans and leases were $81.9 billion and $50.5 billion, respectively, at
March 31, 1995. Loans and leases decreased from December 31, 1995, primarily as
a result of the Corporation divesting $1.8 billion of loans in conjunction with
the Shawmut merger as well as a general reduction in loans, primarily mortgages,
as part of the restructuring for the NatWest acquisition. The investment
securities portfolio decreased $9.2 billion from $19.3 billion at December 31,
1995 to $10.1 billion at March 31, 1996, as part of the aforementioned balance
sheet restructuring program. Stockholders' equity amounted to $6.84 billion at
March 31, 1996, and $6.37 billion at December 31, 1995, an increase of $479
million. The increase is primarily attributable to the issuance of $425 million
of preferred stock during the first quarter.
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FLEET FINANCIAL GROUP
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED
March 31, 1996 March 31, 1995
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FOR THE PERIOD ($ IN MILLIONS)
Net income $ 264 $ 226
Net interest income 732 769
Provisions for credit losses 35 20
PER COMMON SHARE
Fully diluted earnings $ 0.94 $ 0.82
Market value (period-end) 40.50 32.38
Cash dividends declared 0.43 0.40
Book value (period-end) 22.90 22.49
AT QUARTER-END ($ IN MILLIONS)
Assets $ 72,123 $81,862
Loans and leases 47,559 50,475
Deposits 50,121 53,436
Total stockholders' equity 6,844 6,164
OPERATING RATIOS
Return on average assets 1.41% 1.14%
Return on common equity 16.96 16.24
Return on realized common equity 17.08 15.60
Net interest margin 4.43 4.27
Total equity/assets (period-end) 9.49 7.53
Tier 1 risk-based capital ratio (Estimated) 9.2 8.4
Total risk-based capital ratio (Estimated) 13.0 12.4
ASSET QUALITY ($ IN MILLIONS)
Nonperforming assets $ 553 $ 819
Nonperforming assets as a % of loans, leases 1.16% 1.62%
Nonperforming assets as a % of total assets 0.77 1.00
Nonperforming loans to period-end loans 1.05 1.42
Reserve for credit losses to period-end loan 2.71 3.02
RESERVE FOR CREDIT LOSSES ($ IN MILLIONS)
Beginning reserve for credit losses $ 1,321 $ 1,496
Provision for credit losses 35 20
Gross charge-offs (83) (83)
Recoveries 23 23
Acquisition/other (9) 69
Ending reserve for credit losses 1,287 1,525
