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 15, 1997
FLEET FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
RHODE ISLAND
(State or other jurisdiction of incorporation)
1-6366 05-0341324
(Commission File Number) (IRS Employer Identification No.)
ONE FEDERAL STREET, BOSTON, MA 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-292-2000
(Former name or former address, if changed since last report)
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Item 5.OTHER EVENTS.
Pursuant to Form 8-K, General Instruction 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 Fleet Financial Group, Inc.
Press Release
Dated October 15, 1997
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
-----------------------------------------
William C. Mutterperl
Senior Vice President
and General Counsel
Dated: October 15, 1997
Exhibit 99
Fleet Financial Group, Inc.
Press Release dated October 15, 1997
Contacts: Media: James Mahoney Investor: Thomas Rice
(617) 346-5472 (617) 346-0148
T. Kevin Beatty
(617) 346-4963
FLEET FINANCIAL GROUP REPORTS THIRD QUARTER
NET INCOME OF $329 MILLION
EARNINGS PER SHARE UP 18% TO $1.20
BOSTON, MA., OCTOBER 15, 1997 - Fleet Financial Group, Inc. today reported
net income of $329 million for the third quarter of 1997, an increase of $34
million from the $295 million reported in the third quarter of 1996. Earnings
per share were $1.20 for the quarter or 18% higher than the $1.02 per share
reported in last year's third quarter. Return on assets and return on equity for
the quarter were 1.60% and 19.89%, compared with 1.35% and 17.83% for the third
quarter of 1996.
Nine month earnings were $968 million, an increase of $132 million over the
comparable period of 1996. Earnings per share were $3.48 for the period, an
increase of 20%, compared with $2.91 earned in the comparable period of 1996.
Return on assets and return on equity for this period were 1.58% and 19.65%,
compared with 1.36% and 17.34%, for the same period in 1996.
HIGHLIGHTS
Terrence Murray, Fleet's chairman and chief executive officer commented on
the strong results of the quarter, "I continue to be very pleased with the
earnings momentum demonstrated by our core business lines. Our focus on
providing relevant financial solutions to our customers is increasingly paying
dividends."
"During the quarter," Mr. Murray continued, "Fleet took two exciting steps
to further expand our product and distribution platforms. The announced
acquisition of Columbia Management complements our fast growing asset management
business by broadening our institutional product and mutual fund offerings.
Similarly, Quick & Reilly significantly enhances our distribution channel
capabilities, expands our product set, and helps diversify our mix of
businesses. Both companies present multiple cross-sell opportunities, help to
geographically broaden the company's customer base and revenue sources, and
provide superior and consistent earnings in fast growing fee-based businesses.
We are very pleased to have them join the Fleet family."
Vice Chairman and Chief Financial Officer Eugene M. McQuade commenting on
Fleet's notable performance ratios observed, "Fleet is near the top of the
industry across all measures of profitability. Our recent acquisitions will add
businesses which should further enhance this position."
Mr. McQuade also commented on the profit drivers at Fleet. "Revenue from
continuing operations was up strongly, driven by an 8% increase in loans and
strong Corporate Finance and Venture Capital revenues. This revenue growth,
combined with further expense reductions, resulted in another strong quarter of
earnings."
THIRD QUARTER RESULTS
Net interest income of $926 million was essentially unchanged from a year
ago. This level represents an increase of $10 million from the second quarter as
a result of $1.1 billion of growth in the loan portfolio. The net interest
margin of 5.23%, equal to the second quarter, increased 22 basis points from
last year, reflecting the continuing impact of a comprehensive balance sheet
restructuring program which lowered funding costs and enhanced earning asset
mix; loans and leases currently represent 85% of total interest earning assets
compared to 80% in the third quarter of 1996.
The provision for credit losses was $85 million with net charge-offs of $93
million being $17 million better than the same period in 1996, the result of
continued improvement in the Corporation's commercial credit portfolios.
Improvement was also reflected in the Corporation's nonperforming assets of $479
million which decreased $52 million from June 30, 1997 and $280 million over the
past year. At $1.4 billion, the reserve for loan losses remained exceptionally
strong as evidenced by coverages of 2.4% of total loans and over 300% of
nonperforming loans.
Noninterest income was $514 million for the quarter, an increase of $30
million over the third quarter of 1996 after adjusting for divested businesses.
While growth was experienced in nearly all major core noninterest revenue
categories, the results of certain strategic initiatives have been particularly
noteworthy. Investment services revenue increased 18% in the past year while
Corporate Finance revenues, a business which was only started in 1996, have
grown nearly 7 times.
Noninterest expense of $791 million declined $70 million over the past
year. On an annualized basis, expenses have been reduced by approximately $725
million since the inception of the consolidation activities related to the
Shawmut and NatWest transactions. The Corporation's efficiency ratio of 54.9%
has also shown dramatic improvement over the consolidation period.
The corporation also reported on capital actions taken by its Board of
Directors at today's meeting. An 8.9% increase to its quarterly dividend to $.49
per share on its common stock was declared payable on January 1, 1998 to
shareholders of record on December 3, 1997. Also, in conjunction with the
Corporation's announcement of its intention to acquire the Quick & Reilly Group,
Inc., the Board rescinded its prior authority granted in January of 1997 to
repurchase up to 20 million shares of its common stock effective immediately
prior to consummation of the acquisition. In the event that the acquisition is
not consummated, the authority to repurchase such shares will remain in effect.
Total assets at September 30, 1997 were $83.6 billion compared to $85.5
billion of total assets at December 31, 1996. Stockholders' equity amounted to
$7.2 billion at September 30, 1997.
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FLEET FINANCIAL GROUP
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED NINE MONTHS ENDED
<S> <C> <C> <C> <C> <C>
September 30, June 30, September 30, September 30, September 30,
1997 1997 1996 1997 1996
For the Period ($ in millions)
$ 329 $ 328 $ 295 Net income $ 968 $ 836
1,440 1,430 1,439 Total Revenue 4,299 4,013
791 797 861 Total Expense 2,429 2,416
85 83 65 Provision for credit losses 233 148
Per Common Share
$ 1.20 $ 1.19 $1.02 Fully diluted earnings per share $ 3.48 $ 2.91
65.56 63.25 44.50 Market value (period-end) 65.56 44.50
0.45 0.45 0.43 Cash dividends declared 1.35 1.29
25.42 24.64 23.90 Book value (period-end) 25.42 23.90
At Quarter End ($ in billions)
$ 83.6 $ 83.4 $ 87.2 Assets $ 83.6 $ 87.2
59.3 58.2 60.1 Loans and leases 59.3 60.1
62.9 63.2 67.6 Deposits 62.9 67.6
7.2 7.0 7.3 Total stockholders' equity 7.2 7.3
Operating Ratios
1.60% 1.61% 1.35 Return on average assets 1.58% 1.36%
19.89 20.24 17.83 Return on common equity 19.65 17.34
20.07 20.23 17.69 Return on realized common equity (a) 19.72 17.29
5.23 5.25 5.01 Net interest margin 5.21 4.75
54.90 55.80(b) 59.90 Efficiency ratio 56.50(b) 60.20
8.6 8.4 8.3 Total equity/assets (period-end) 8.6 8.3
7.2 7.2 7.1 Tier 1 risk-based capital ratio (estimated) 7.2 7.1
10.9 10.8 10.9 Total risk-based capital ratio (estimated) 10.9 10.9
Asset Quality ($ in millions)
$ 479 $ 531 759 Nonperforming assets $ 479 $ 759
1,432 1,443 1,548 Reserve for credit losses 1,432 1,548
Nonperforming assets as a % of loans,
0.81% 0.91% 1.26% leases, and OREO 0.81% 1.26%
0.57 0.64 0.87 Nonperforming assets as a % of total assets 0.57 0.87
0.77 0.86 1.18 Nonperforming loans to period-end loans 0.77 1.18
2.42 2.48 2.58 Reserve for credit losses to period-end loans 2.42 2.58
0.64 0.69 0.74 Net charge-offs/average loans 0.65 0.60
(a) Excludes average unrealized gains/losses on securities available for sale
(b) Excludes gains on sales of business units, net of charges
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FLEET FINANCIAL GROUP
CONSOLIDATED INCOME STATEMENTS
($ in millions)
THREE MONTHS ENDED
<S> <C> <C> <C> <C> <C>
September 30, June 30, September 30, September 30, September 30,
1997 1997 1996 1997 1996
$ 926 $ 916 $ 934 Net interest income (FTE) $ 2,744 $ 2,529
85 83 65 Provision for credit losses 233 148
841 833 869 Net interest income after provision 2,511 2,380
Noninterest income:
159 159 153 Service charges, fees, and commissions 475 391
104 103 93 Investment services revenue 310 274
66 91 96 Mortgage banking, net of amortization 260 264
24 26 23 Student loan servicing fees 76 67
161 135 140 Other 434 488
514 514 505 Total noninterest income 1,555 1,484
Noninterest expense:
384 406 425 Employee compensation and benefits 1,215 1,184
70 67 74 Occupancy 212 210
70 67 71 Equipment 207 195
41 39 40 Intangible asset amortization 120 96
226 218 251 Other 675 731
791 797 861 Total noninterest expense 2,429 2,416
564 550 513 Earnings before income taxes and net gains 1,637 1,448
- 20 - Gains on sales of business units, net of charges 20 -
235 242 218 Income taxes and tax-equivalent adjustment 689 612
$ 329 $ 328 $ 295 Net income $ 968 $ 836
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FLEET FINANCIAL GROUP
CONSOLIDATED BALANCE SHEETS
($ in millions)
September 30, June 30, September 30,
1997 1997 1996
ASSETS:
<S> <C> <C> <C>
Cash and cash equivalents $ 6,563 $ 6,057 $ 5,954
Securities 8,770 8,704 11,733
Loans and lease financing 59,264 58,186 60,086
Reserve for credit losses (1,432) (1,443) (1,548)
Mortgages held for resale 1,396 1,000 1,555
Other assets 9,014 10,897 9,414
Total assets $ 83,575 $ 83,401 $ 87,194
LIABILITIES:
Deposits:
Demand $ 15,821 $ 16,471 $ 17,505
Regular savings, NOW, money market 27,569 27,641 28,475
Time 19,517 19,117 21,573
Total deposits 62,907 63,229 67,553
Short-term borrowings 6,524 5,786 5,117
Long-term debt 4,459 4,550 4,923
Other liabilities 2,498 2,818 2,333
Total liabilities 76,388 76,383 79,926
STOCKHOLDERS' EQUITY:
Preferred stock 835 835 1,001
Common stock 6,352 6,183 6,267
Total stockholders' equity 7,187 7,018 7,268
Total liabilities and
stockholders' equity $ 83,575 $ 83,401 $ 87,194
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FLEET FINANCIAL GROUP
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
THREE MONTHS ENDED
September 30, 1997 June 30, 1997 September 30, 1996
Average Average Average
Balance Rate Balance Rate Balance Rate
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Securities $ 8,690 6.78% $ 8,327 6.72% $ 11,838 6.58%
Loans and leases 58,087 8.72 59,027 8.67 59,536 8.66
Mortgages held for resale 1,222 7.47 1,444 7.91 1,676 8.16
Other earning assets 2,434 6.58 1,182 4.81 1,247 7.65
Total interest-earning assets 70,433 8.38% 69,980 8.37% 74,297 8.30%
Reserve for credit losses (1,441) - (1,457) - (1,595) -
Other assets 12,609 - 13,281 - 14,101 -
Total assets $ 81,601 - $81,804 - $ 86,803 -
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings $ 27,325 2.23% $27,611 2.22% $ 28,589 2.33%
Time 19,695 5.17 20,005 5.09 22,170 5.36
Total interest-bearing deposits 47,020 3.46 47,616 3.43 50,759 3.66
Short-term borrowings 5,315 5.03 4,357 4.84 4,512 5.04
Long-term debt 4,487 7.42 4,611 7.33 5,063 7.18
Total interest-bearing liabilities $ 56,822 3.91% $56,584 3.86% $ 60,334 4.06%
Net interest spread - 4.47% - 4.51% - 4.24%
Demand deposits and other noninterest-
bearing time deposits $ 15,475 - $16,161 - $ 16,934 -
Other liabilities 2,219 - 2,027 - 2,406 -
Total liabilities 74,516 - 74,772 - 79,674 -
Stockholders' equity 7,085 - 7,032 - 7,129 -
Total liabilities and stockholders' equity $ 81,601 - $81,804 - $ 86,803 -
Net interest margin 5.23% 5.25% 5.01%
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FLEET FINANCIAL GROUP
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
NINE MONTHS ENDED
September 30, 1997 September 30, 1996
Average Average
Balance Rate Balance Rate
ASSETS:
<S> <C> <C> <C> <C>
Securities $ 8,533 6.72% $ 11,816 6.39%
Loans and leases 58,593 8.67 55,004 8.62
Mortgages held for resale 1,449 7.67 1,982 7.79
Other earning assets 1,734 5.68 2,345 8.36
Total interest-earning assets 70,309 8.34% 71,147 8.22%
Reserve for credit losses (1,462) - (1,475) -
Other assets 13,245 - 12,548 -
Total assets $ 82,092 - $ 82,220 -
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings $ 27,569 2.23% $ 25,737 2.34%
Time 20,134 5.13 20,752 5.46
Total interest-bearing deposits 47,703 3.46 46,489 3.73
Short-term borrowings 4,433 4.79 6,497 5.17
Long-term debt 4,698 7.31 5,669 7.06
Total interest-bearing liabilities $ 56,834 3.88% $ 58,655 4.21%
Net interest spread - 4.46% - 4.01%
Demand deposits and other noninterest-
bearing time deposits $ 15,943 - $ 14,453 -
Other liabilities 2,200 - 2,207 -
Total liabilities 74,977 - 75,315 -
Stockholders' equity 7,115 - 6,905 -
Total liabilities and stockholders' equity $ 82,092 - $ 82,220 -
Net interest margin 5.21% 4.75%
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