SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 16, 1996
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FLEET FINANCIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
RHODE ISLAND
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(State or other jurisdiction of incorporation)
1-6366 05-0341324
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(Commission File Number) (IRS Employer Identification No.)
One Federal Street, Boston, MA 02211
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-292-2000
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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.
Exhibit No. Description
Exhibit 99 Press Release
Dated October 16, 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: October 16, 1996
Exhibit 99
Contacts: Media: James Mahoney Investor: Thomas R. Rice
(617) 346-5472 (617) 346-0148
FLEET FINANCIAL GROUP REPORTS
THIRD QUARTER EARNINGS UP 10% TO $295 MILLION
Boston, Massachusetts, October 16, 1996: Fleet Financial Group, Inc.
(FLT-NYSE) today reported third quarter net income of $295 million, an increase
of 10% compared to net income of $268 million in the third quarter of 1995.
Earnings per share increased to $1.02 per share from $.96 per share in last
year's comparable period. Year to date earnings were $836 million, an increase
of 12%, compared to $748 million for the first nine months of 1995. Earnings per
share increased to $2.91 per share from $2.69 per share for the first nine
months of 1995. Return on assets and return on common equity for the third
quarter were 1.35% and 17.83%, respectively, up from 1.27% and 16.86% for the
third quarter of 1995.
Terrence Murray, Fleet's president and chief executive officer, commented,
" The past year's acquisitions, tightened business focus, and attention to
efficiency have provided a powerful kick to Fleet's earnings power. We're
working across our diversified franchise on a number of continuing projects
which will sustain and add to this momentum. Investments in technology, new
distribution channels, and a broader product array are unleashing value across
Fleet's franchise of 6 million customers."
Eugene M. McQuade, Fleet's chief financial officer, commented on one of the
key drivers of this earnings momentum, "The balance sheet restructuring and
acquisition of NatWest have provided a strong impetus to net income. The
corporation has increased net interest by over $160 million from the comparable
period of 1995, through an increase of 25% in our net interest margin this year
and a more productive mix of earning assets."
Net interest income totaled $934 million during the third quarter of 1996,
an increase of $70 million from the second quarter, and $162 million from the
third quarter of 1995. The increase over the second quarter is primarily
attributable to the inclusion of the NatWest franchise for the entire period, as
well as an increase of 25 basis points in net interest margin to 5.01%,
reflecting the NatWest acquisition, which added higher yielding loans and lower
cost core deposits.
The provision for credit losses was $65 million, compared to $27 million
for the third quarter of 1995. The increase in the provision is primarily
attributable to an increase in charge-offs as a result of the additional loans
from NatWest coupled with increased charge-offs in the credit card portfolio.
Noninterest income in the third quarter totaled $555 million, up $107
million or 24%, from the third quarter of 1995. This increase in noninterest
income is attributable to a $76 million contribution from NatWest and a 7%
revenue increase in Fleet's business lines. Mortgage banking revenues increased
$9 million over the prior year as mortgages serviced increased $10 billion to
$121 billion. Investment management revenue increased $13 million, or 16%, year
over year, due to growth in the levels of managed assets, which was fueled by
the strong equity market. Student loan servicing revenue increased $6 million,
or 37%, compared to the prior year due to an increase in the volume of loans
serviced as a result of the extension of our direct loan servicing contracts
with the federal government. Revenues from our venture capital business, Fleet
Private Equity, increased $28 million to $41 million compared to the same period
of the prior year due to increasing values in equity capital investments
managed.
Noninterest expense totaled $911 million, including $189 million related to
the acquired NatWest, compared to $747 million during the third quarter of 1995.
Excluding the impact of NatWest, noninterest expense declined $39 million from
the second quarter of 1996, a reduction of $160 million on an annualized basis.
This decrease was primarily the result of cost savings associated with the
Shawmut and NatWest mergers.
Total assets at September 30, 1996 were $87.2 billion, flat compared to
$87.7 billion a year ago. Total loans were up 7%, on an annualized basis, to
$60.1 billion at September 30, 1996, as a result of growth in the commercial,
real estate, and credit card portfolios during the quarter. Nonperforming assets
increased $14 million in the third quarter to $759 million. Stockholders' equity
amounted to $7.27 billion at September 30, 1996, an increase of $141 million
from June 30, 1996. Additionally, during the quarter the corporation redeemed
its 10.12% Series III preferred stock, which resulted in a one-time charge to
earnings per share of $.01 and replaced it with Series VIII preferred stock at
an initial rate of 6.59%.
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FLEET FINANCIAL GROUP
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED NINE MONTHS ENDED
Sept 30, June 30, Sept 30, Sept 30, Sept 30,
1996 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C>
For the Period ($ in millions)
Net income $ 295 $ 278 $ 268 $ 836 $ 748
Net interest income (a) 934 863 772 2,528 2,318
Provision for credit losses 65 48 27 148 75
Per Common Share
Fully diluted earnings per share $ 1.02 $ 0.96 0.96 $ 2.91 $ 2.69
Market value (period-end) 44.50 43.50 37.75 44.50 37.75
Cash dividends declared 0.43 0.43 0.40 1.29 1.20
Book value (period-end) 23.90 23.25 24.47 23.90 24.47
At Quarter End ($ in millions)
Assets $87,192 $ 87,728 $ 83,751 $ 87,192 $ 83,751
Loans and leases 60,086 59,093 52,435 60,086 52,435
Deposits 67,551 68,145 53,822 67,551 53,822
Total stockholders' equity 7,268 7,127 6,698 7,268 6,698
Operating Ratios
Return on average assets 1.35 % 1.32 % 1.27 % 1.36 % 1.21 %
Return on common equity 17.83 17.20 16.86 17.34 16.65
Return on realized common equity (b) 17.69 17.08 17.02 17.29 16.46
Net interest margin 5.01 4.76 4.12 4.75 4.18
Total equity/assets (period-end) 8.34 8.12 8.00 8.34 8.00
Tier 1 risk-based capital ratio (estimated) 7.1 7.0 8.4 7.1 8.4
Total risk-based capital ratio (estimated) 10.8 10.9 12.2 10.8 12.2
Asset Quality ($ in millions)
Nonperforming assets $ 759 $ 745 $ 771 $ 759 $ 771
Nonperforming assets as a % of loans, leases,
and OREO 1.26 % 1.26 % 1.47 % 1.26 % 1.47 %
Nonperforming assets as a % of total asset 0.87 0.85 0.92 0.87 0.92
Nonperforming loans to period-end loans 1.18 1.17 1.31 1.18 1.31
Reserve for credit losses to period-end loans 2.58 2.70 2.76 2.58 2.76
Net charge-offs/average loans 0.74 0.54 0.55 0.60 0.55
Reserve for Credit Losses ($ in millions)
Beginning reserve for credit losses $ 1,597 $ 1,287 $ 1,492 $ 1,321 $ 1,496
Provision for credit losses 65 48 27 148 75
Gross charge-offs (144) (107) (101) (335) (292)
Recoveries 34 32 30 89 85
Acquisitions/Other (4) 337 -- 325 84
Ending reserve for credit losses 1,548 1,597 1,448 1,548 1,448
(a) Fully taxable equivalent
(b) Excludes average unrealized gains/losses
on securities available for sale.
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FLEET FINANCIAL GROUP
CONSOLIDATED INCOME STATEMENTS
($ in millions)
THREE MONTHS ENDED NINE MONTHS ENDED
Sept 30, June 30, Sept 30, Sept 30, Sept 30,
1996 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C>
Net interest income (FTE) $ 933.5 $ 863.1 $ 771.7 $ 2,528.5 $ 2,317.8
Provision for credit losses 64.8 48.3 27.3 148.4 75.1
Net interest income after provision 868.7 814.8 744.4 2,380.1 2,242.7
Noninterest income:
Service charges, fees, and commissions 171.9 146.1 123.6 437.4 371.4
Mortgage banking 146.4 133.2 137.0 403.2 379.5
Investment services revenue 93.3 93.5 80.6 274.1 237.6
Student loan servicing fees 22.7 22.4 16.6 67.1 46.6
Other 120.8 153.9 90.4 442.1 293.7
Total noninterest income 555.1 549.1 448.2 1,623.9 1,328.8
Noninterest expense:
Employee compensation and benefits 425.4 410.5 360.7 1,183.7 1,086.3
Mortgage servicing and intangible asset amortization 89.9 78.6 59.2 235.1 177.1
Occupancy 74.1 75.3 62.6 210.4 186.4
Equipment 70.6 68.2 52.8 195.5 154.2
Other 251.5 252.5 211.4 730.3 706.7
Total noninterest expense 911.5 885.1 746.7 2,555.0 2,310.7
Pre-tax income 512.3 478.8 445.9 1,449.0 1,260.8
Income taxes and tax-equivalent adjustment 217.4 201.1 177.9 612.5 512.8
Net income $ 294.9 277.7 268.0 836.5 748.0
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FLEET FINANCIAL GROUP
CONSOLIDATED BALANCE SHEETS
($ in millions)
Sept 30, June 30, Sept 30,
1996 1996 1995
ASSETS:
Cash and equivalents $ 6,399 $ 7,048 $ 4,065
Securities 11,733 11,415 19,500
Loans and lease financing 60,086 59,093 52,435
Reserve for credit losses (1,548) (1,597) (1,448)
Mortgages held for resale 1,555 1,860 2,252
Other assets 8,967 9,909 6,947
Total assets $ 87,192 $ 87,728 $ 83,751
LIABILITIES:
Deposits:
Demand $ 17,503 $ 17,527 $ 10,658
Regular savings, NOW, money market 28,475 28,801 22,817
Time 21,573 21,817 20,347
Total deposits 67,551 68,145 53,822
Short-term borrowings 5,117 4,637 14,999
Long-term debt 4,923 5,303 6,734
Other liabilities 2,333 2,516 1,498
Total liabilities 79,924 80,601 77,053
STOCKHOLDERS' EQUITY:
Preferred stock 1,001 1,003 682
Common stock 6,267 6,124 6,016
Total stockholders' equity 7,268 7,127 6,698
Total liabilities and stockholders' equity $ 87,192 $ 87,728 $ 83,751
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FLEET FINANCIAL GROUP
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
THREE MONTHS ENDED
Sept 30, 1996 June 30, 1996 Sept 30, 1995
Average Average Average
Balance Rate Balance Rate Balance Rate
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Securities $ 11,838 6.58 % $ 11,481 6.32 % $ 19,651 6.21 %
Loans and leases 59,536 8.66 55,935 8.58 51,831 9.10
Mortgages held for resale 1,676 8.16 2,190 7.79 2,064 7.76
Other earning assets 1,247 7.65 3,242 8.20 1,349 5.87
Total interest-earning assets 74,297 8.30 % 72,848 8.18 % 74,895 8.23 %
Reserve for credit losses (1,595) (1,510) (1,484)
Other assets 14,101 13,442 10,228
Total assets $ 86,803 $ 84,780 $ 83,639
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings $ 28,589 2.33 % $ 26,494 2.25 % $ 23,058 2.59 %
Time 22,170 5.36 20,920 5.43 20,665 5.74
Total interest-bearing deposits 50,759 3.66 47,414 3.65 43,723 4.08
Short-term borrowings 4,512 5.04 6,941 5.10 14,849 5.73
Long-term debt 5,063 7.18 5,871 7.10 6,098 7.38
Total interest-bearing liabilities $ 60,334 4.06 % 60,226 4.15 % $ 64,670 4.77 %
Net interest spread 4.24 % 4.03 % 3.46 %
Demand deposits $ 16,934 15,218 $ 10,821
Other liabilities 2,406 2,296 1,378
Total liabilities 79,674 77,740 76,869
Stockholders' equity 7,129 7,040 6,770
Total liabilities and stockholders'
equity $ 86,803 $ 84,780 $ 83,639
Net interest margin 5.01 % 4.76 % 4.12 %
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FLEET FINANCIAL GROUP
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
NINE MONTHS ENDED
Sept 30, 1996 Sept 30, 1995
Average Average
Balance Rate Balance Rate
ASSETS:
<S> <C> <C> <C> <C>
Securities $ 11,816 6.39 % $ 20,980 6.22 %
Loans and leases 55,004 8.62 50,563 9.12
Mortgages held for resale 1,982 7.79 1,238 8.38
Other earning assets 2,345 8.36 1,231 5.74
Total interest-earning assets 71,147 8.22 % 74,012 8.23 %
Reserve for credit losses (1,475) (1,508)
Other assets 12,548 9,921
Total assets $ 82,220 $ 82,425
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Savings $ 25,737 2.34 % $ 23,104 2.55 %
Time 20,752 5.46 19,826 5.59
Total interest-bearing deposits 46,489 3.73 42,930 3.96
Short-term borrowings 6,497 5.17 14,355 5.79
Long-term debt 5,669 7.06 6,365 7.36
Total interest-bearing liabilities $ 58,655 4.21 % 63,650 4.71 %
Net interest spread 4.01 % 3.52 %
Demand deposits 14,453 10,786
Other liabilities 2,207 1,521
Total liabilities 75,315 75,957
Stockholders' equity 6,905 6,468
Total liabilities and stockholders' equity $ 82,220 $ 82,425
Net interest margin 4.75 % 4.18 %
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