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 16, 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 02211
(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 Fleet Financial Group,
Inc. Press Release
Dated April 16, 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: April 16, 1997
Exhibit 99
Contacts: Media: James Mahoney Investor: Thomas R. Rice
(617) 346-5472 (617) 346-0148
FLEET FINANCIAL GROUP REPORTS RECORD FIRST
QUARTER EARNINGS RISING 18 PERCENT TO $311 MILLION
Boston, Massachusetts, April 16, 1997: Fleet Financial Group, Inc.
(FLT-NYSE) today reported net income of $311 million, or $1.10 per common share,
for the first quarter of 1997, an 18% increase compared with $264 million, or
$0.94 per common share earned in the first quarter of 1996. Return on average
assets and return on average common equity for the first quarter of 1997 were
1.52% and 18.82%, respectively, compared with 1.41% and 16.96% for the first
quarter of 1996.
Terrence Murray, Fleet's chairman and chief executive officer, commented on
Fleet's strong results, "We're delighted with Fleet's performance in the first
quarter. Earnings were up 30% on an operating basis after adjusting for
divestiture gains in last year's first quarter. That's strong growth by any
measure and maintains Fleet's position at the forefront of the financial
services industry. We're seeing strong business opportunities across all our
core businesses which are producing outstanding results on the bottom line."
"We enter 1997 with great optimism as our customer driven strategy
continues to pay dividends." Mr. Murray noted, "The introduction of our
investment banking product line early last year has expanded our revenue growth
prospects as well as demonstrated the broad range of capabilities across which
Fleet addresses customers' changing financial needs."
Eugene M. McQuade, Fleet's chief financial officer, commented, "The
earnings performance with which Fleet has started 1997 demonstrates the
successful implementation of business line strategies. The improvement in our
efficiency ratio to 58.8% reflects our continuing progress in attaining the cost
reduction goal of $600 million from the acquisitions of Shawmut and NatWest."
Mr. McQuade continued, "Net interest margin rose to 5.16%, a 73 basis point
improvement over the 4.43% reported in the first quarter of 1996. This margin
expansion reflects the impact of the comprehensive balance sheet restructuring
undertaken in 1996. Progress in the first quarter also includes significant
sales of mutual fund and annuity products which were more than 55% higher than
sales in the first quarter of 1996."
Net interest income totaled $902 million during the first quarter of 1997
up $170 million from the first quarter of 1996. The increase is principally
attributable to the acquisition of NatWest on May 1, 1996. The Corporation
reported a higher net interest margin of 5.16% which reflected the impact of a
comprehensive balance sheet restructuring program which lowered funding costs
and enhanced the Corporation's earning asset mix.
First quarter provision for credit losses was $65 million compared to $35
million in the prior year's first quarter. The $30 million increase was also due
primarily to the acquisition of NatWest in mid-1996. Net charge-offs for the
first quarter amounted to $90 million compared to $124 million in the fourth
quarter of 1996. Nonperforming assets of $704 million in the first quarter
decreased $19 million from December 31, 1996, as asset quality improved in both
the commercial and consumer portfolios. The reserve for loan losses remained
relatively stable at $1.5 billion at both March 31, 1997 and December 31, 1996.
Noninterest income in the first quarter totaled $526 million, an increase
of $108 million or 26% from the same period in 1996 (excluding a $60 million
gain on the sale of divested branches related to the Shawmut acquisition).
Service charges, fees and commissions increased $49 million, or 45%, mainly due
to the acquisition of NatWest, offset in part by divestitures completed in 1996
related to the Shawmut merger. Investment services revenues increased by $16
million in the first quarter of 1997. This growth was primarily attributable to
increasing sales of mutual funds and annuity products. Investment banking
revenue for the quarter was $10 million.
Mortgage banking revenue of $104 million for the first quarter of 1997
increased $21 million compared to the first quarter of 1996 due to increased
servicing revenue coupled with higher loan production revenue. The Corporation's
mortgage servicing portfolio has increased to $123 billion from the $116 billion
reported at March 31, 1996.
Noninterest expense in the first quarter of 1997 totaled $840 million
compared to $717 million during the first quarter of 1996 (which did not include
NatWest), but declined $17 million from the $857 million reported in the fourth
quarter of 1996. Expense reductions reflect the effective integration of both
NatWest and Shawmut.
Total assets at March 31, 1997 were $81.7 billion, including total loans
and leases of $59.1 billion, compared with $85.5 billion of total assets and
$58.8 billion of loans and leases at December 31, 1996. Stockholders' equity
amounted to $7.1 billion at March 31, 1997. During the quarter the corporation
repurchased 6.9 million of its common shares.
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FLEET FINANCIAL GROUP
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED
<S> <C> <C> <C>
March 31, Dec 31, March 31,
1997 1996 1996
For the Period ($ in millions)
Net income $ 311 $ 302 $ 264
Total Revenue 1,428 1,439 1,210
Total Expense 840 857 717
Provision for credit losses 65 65 35
Per Common Share
Fully diluted earnings per share $ 1.10 $ 1.05 $ 0.94
Market value (period-end) 57.13 49.88 40.50
Cash dividends declared 0.45 0.45 0.43
Book value (period-end) 24.34 24.66 22.90
At Quarter End ($ in billions)
Assets $ 81.7 $ 85.5 $ 72.1
Loans and leases 59.1 58.8 47.6
Deposits 64.1 67.1 50.1
Total stockholders' equity 7.1 7.4 6.8
Operating Ratios
Return on average assets 1.52% 1.40% 1.41%
Return on common equity 18.82 17.67 16.96
Return on realized common equity (a) 18.87 17.77 17.08
Net interest margin 5.16 5.00 4.43
Efficiency ratio 58.8 59.5 59.3
Total equity/assets (period-end) 8.7 8.7 9.5
Tier 1 risk-based capital ratio (estimated) 7.6 7.7 9.2
Total risk-based capital ratio (estimated) 11.3 11.4 13.0
Asset Quality ($ in millions)
Nonperforming assets $ 704 $ 723 $ 553
Reserve for credit losses 1,462 1,488 1,287
Nonperforming assets as a % of loans, leases,
and OREO 1.19% 1.23% 1.16%
Nonperforming assets as a % of total assets 0.86 0.85 0.77
Nonperforming loans to period-end loans 1.14 1.18 1.05
Reserve for credit losses to period-end loans 2.48 2.53 2.71
Net charge-offs/average loans 0.61 0.83 0.49
(a) Excludes average unrealized gain/losses on securities available for sale
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FLEET FINANCIAL GROUP
CONSOLIDATED INCOME STATEMENTS
($ in millions)
THREE MONTHS ENDED
March 31, Dec 31, March 31,
1997 1996 1996
<S> <C> <C> <C>
Net interest income (FTE) $ 902 $ 910 $ 732
Provision for credit losses 65 65 35
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Net interest income after provision 837 845 697
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Noninterest income:
Service charges, fees, and commissions 157 146 108
Mortgage banking, net of amortization 104 109 83
Investment services revenue 103 98 87
Student loan servicing fees 26 31 22
Other 136 145 178
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Total noninterest income 526 529 478
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Noninterest expense:
Employee compensation and benefits 425 423 348
Occupancy 75 74 61
Equipment 70 71 57
Intangible asset amortization 39 40 25
Other 231 249 226
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Total noninterest expense 840 857 717
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Earnings before income taxes 523 517 458
Income taxes and tax-equivalent adjustment 212 215 194
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Net income $ 311 $ 302 $ 264
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FLEET FINANCIAL GROUP
CONSOLIDATED BALANCE SHEETS
($ in millions)
<S> <C> <C> <C>
March 31, Dec 31, March 31,
1997 1996 1996
ASSETS:
Cash and cash equivalents $ 5,309 $ 9,015 $ 5,113
Securities 8,557 8,680 10,091
Loans and lease financing 59,054 58,844 47,559
Reserve for credit losses (1,462) (1,488) (1,287)
Mortgages held for resale 1,334 1,560 2,398
Other assets 8,900 8,907 8,249
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Total assets $ 81,692 $ 85,518 $ 72,123
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LIABILITIES:
Deposits:
Demand $ 16,089 $ 17,903 $ 10,485
Regular savings, NOW, money market 27,738 27,976 21,783
Time 20,312 21,192 17,853
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Total deposits 64,139 67,071 50,121
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Short-term borrowings 3,579 3,627 7,173
Long-term debt 4,617 5,114 6,000
Other liabilities 2,260 2,291 1,985
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Total liabilities 74,595 78,103 65,279
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STOCKHOLDERS' EQUITY:
Preferred stock 869 953 824
Common stock 6,228 6,462 6,020
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Total stockholders' equity 7,097 7,415 6,844
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Total liabilities and stockholders' equity $ 81,692 $ 85,518 $ 72,123
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<CAPTION>
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
THREE MONTHS ENDED
March 31, 1997 December 31, 1996 March 31, 1996
Average Average Average
Balance Rate Balance Rate Balance Rate
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Securities $ 8,580 6.67% $ 10,188 6.72% $ 12,130 6.24%
Loans and leases 58,669 8.63 59,256 8.58 49,497 8.61
Mortgages held for resale 1,686 7.59 1,569 8.20 2,085 7.48
Other earning assets 1,575 4.91 1,535 4.64 2,549 9.13
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Total interest-earning assets 70,510 8.29% 72,548 8.23% 66,261 8.15%
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Reserve for credit losses (1,488) - (1,546) - (1,318) -
Other assets 13,864 - 14,827 - 10,083 -
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Total assets $ 82,886 - $ 85,829 - $ 75,026 -
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings $ 27,779 2.25% $ 28,225 2.30% $ 22,097 2.45%
Time 20,715 5.03 21,622 5.36 19,152 5.62
- --------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 48,494 3.44 49,847 3.63 41,249 3.92
- --------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 3,608 4.91 3,903 4.47 8,059 5.30
Long-term debt 5,003 7.27 4,940 7.24 6,080 6.92
- --------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities $ 57,105 3.87% $ 58,690 3.99% $ 55,388 4.45%
- --------------------------------------------------------------------------------------------------------------------------
Net interest spread - 4.42% - 4.24% - 3.70%
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Demand deposits $ 16,197 - $ 16,808 - $ 11,180 -
Other liabilities 2,354 - 2,961 - 1,916 -
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Total liabilities 75,656 - 78,459 - 68,484 -
- --------------------------------------------------------------------------------------------------------------------------
Stockholders' equity 7,230 - 7,370 - 6,542 -
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Total liabilities and stockholders'
equity $ 82,886 - $ 85,829 - $ 75,026 -
- --------------------------------------------------------------------------------------------------------------------------
Net interest margin 5.16% 5.00% 4.43%
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