<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration Number 333-37231
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 24, 1997)
$250,000,000
[LOGO]
FLEET FINANCIAL GROUP, INC.
6.70% SUBORDINATED DEBENTURES DUE 2028
----------------
The interest on the 6.70% Subordinated Debentures due July 15, 2028 (the
"Subordinated Debentures") is payable semiannually on January 15 and July 15 of
each year, commencing January 15, 1999. The Subordinated Debentures will mature
on July 15, 2028, are not subject to redemption prior to maturity and are not
subject to any sinking fund.
The Subordinated Debentures are unsecured and subordinated as set forth in
the accompanying Prospectus under "Subordinated Debt Securities--Subordination".
As of March 31, 1998, the principal amount of Senior Indebtedness of Fleet and
Fleet's obligations under Other Financial Obligations (each as defined in the
accompanying Prospectus) aggregated approximately $1.7 billion (holding company
only). Payment of principal of the Subordinated Debentures may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of Fleet. There
is no right of acceleration in the case of a default in the payment of interest
on the Subordinated Debentures or in the performance of any other covenant of
Fleet. See "Subordinated Debt Securities" in the accompanying Prospectus.
The Subordinated Debentures will be represented by Global Securities
registered in the name of the nominee of The Depository Trust Company (the
"Depository"). Interests in the Global Securities will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depository and its participants. Except as provided herein, Subordinated
Debentures in definitive form will not be issued. Settlement for the
Subordinated Debentures will be made in immediately available funds. The
Subordinated Debentures will trade in the Depository's Same-Day Funds Settlement
System until maturity, and secondary market trading activity for the
Subordinated Debentures will therefore settle in immediately available funds.
All payments of principal and interest will be made by Fleet in immediately
available funds. See "Description of Subordinated Debentures--Same-Day
Settlement and Payment".
---------------------
THE SUBORDINATED DEBENTURES 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 THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) FLEET(1)(3)
<S> <C> <C> <C>
Per Subordinated Debenture............................... 99.934% 0.875% 99.059%
Total.................................................... $249,835,000 $2,187,500 $247,647,500
</TABLE>
(1) Plus accrued interest, if any, from July 10, 1998 to date of delivery.
(2) Fleet has agreed to indemnify the Underwriter against certain liabilities
under the Securities Act of 1933. See "Underwriting".
(3) Before deduction of expenses payable by Fleet estimated at $175,000, which
will be reimbursed by the Underwriter. See "Underwriting".
------------------------
The Subordinated Debentures offered by this Prospectus Supplement are
offered by the Underwriter subject to prior sale, withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
Underwriter and to certain further conditions. The Underwriter reserves the
right to withdraw, cancel or modify such offers and to reject orders in whole or
in part. It is expected that the delivery of the Subordinated Debentures will be
made in book-entry form through the facilities of the Depository on or about
July 10, 1998.
---------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is July 7, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MADE HEREBY MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
SUBORDINATED DEBENTURES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-
COVERING TRANSACTIONS IN THE SUBORDINATED DEBENTURES, AND THE IMPOSITION OF A
PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
AVAILABLE INFORMATION
THIS SECTION REPLACES THE SECTION ENTITLED "AVAILABLE INFORMATION" IN THE
ACCOMPANYING PROSPECTUS.
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 or by accessing the Commission's World Wide Web site
at http://www.sec.gov. The common stock, $.01 par value, of Fleet (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 Supplement and the accompanying Prospectus do 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
THIS SECTION REPLACES THE SECTION ENTITLED "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" IN THE ACCOMPANYING PROSPECTUS.
The following documents filed with the Commission by Fleet are incorporated
in this Prospectus Supplement by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1997.
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
3. Current Reports on Form 8-K dated January 15, 1998, January 15, 1998,
January 26, 1998, February 2, 1997, March 4, 1998, March 6, 1998,
March 30, 1998, April 15, 1998, April 28, 1998, May 5, 1998 and May
20, 1998.
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
Supplement and prior to the termination of the offering of the Subordinated
Debentures 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 Supplement and
accompanying 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 Supplement and accompanying Prospectus to the
extent that a statement contained
S-2
<PAGE>
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 Supplement and
accompanying Prospectus.
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS SUPPLEMENT AND ACCOMPANYING
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., ONE FEDERAL STREET, BOSTON,
MASSACHUSETTS 02110. TELEPHONE REQUESTS MAY BE DIRECTED TO (617) 346-4000.
S-3
<PAGE>
FLEET FINANCIAL GROUP, INC.
THIS SECTION REPLACES THE SECTION ENTITLED "FLEET FINANCIAL GROUP, INC. --
GENERAL" IN THE ACCOMPANYING PROSPECTUS.
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At March 31, 1998, Fleet was among the eleven
largest bank holding companies in the United States, with total assets of $97.7
billion, total deposits of $68.2 billion and stockholders' equity of $8.6
billion.
Fleet is engaged in a general consumer and commercial banking and investment
management business throughout the states of Connecticut, Massachusetts, New
Jersey, New York, Rhode Island, Maine, New Hampshire and Florida through its
banking subsidiaries, and also provides, through its other subsidiaries, a
variety of financial services, including mortgage banking, asset-based lending,
consumer finance, real estate financing, securities brokerage services, capital
markets services and investment banking, investment advice and management, data
processing and student loan servicing.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02110, telephone number (617) 346-4000.
THIS SECTION REPLACES THE SECTION ENTITLED "FLEET FINANCIAL GROUP,
INC.--REGULATORY MATTERS--GENERAL" IN THE ACCOMPANYING PROSPECTUS.
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 Subordinated Debentures 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 March 31, 1998, Fleet's banking subsidiaries could have
declared additional dividends of approximately $566 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 Govenors of the Federal Reserve Systems
(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 would be assumed by the bankruptcy trustee and
entitled to a priority of payment.
S-4
<PAGE>
RECENT TRANSACTIONS
Consistent with Fleet's strategy to combine the strengths of a leading
regional bank with the national distribution capabilities of a diversified
financial services company, Fleet has made three acquisitions which will expand
its investment advisory, discount brokerage and credit card business lines, as
well as expand the number and geographic diversity of its customer base.
COLUMBIA MANAGEMENT COMPANY
On December 10, 1997, Fleet consummated its acquisition of Columbia
Management Company ("Columbia"), a Portland, Oregon-based asset manager. The
premium paid for the purchase of Columbia was $466 million. The agreement
stipulates potential earnout and management retention incentives to be paid over
six years. The acquisition of Columbia increases Fleet's investment advisory
assets under management by approximately 40% and broadens its institutional
product and mutual fund offerings and both retail and institutional national
client base. Columbia is managed as an independent business unit of Fleet, with
senior members of Columbia's management committed to remain with Fleet. Fleet
accounted for this acquisition under the purchase method of accounting.
THE QUICK & REILLY GROUP, INC.
On February 1, 1998, Fleet consummated its acquisition of The Quick & Reilly
Group, Inc. ("Quick & Reilly") at an exchange ratio of 0.578 shares of Fleet
Common Stock for each share of Quick & Reilly common stock. Approximately 22
million shares of Fleet Common Stock were issued in the merger. The acquisition
was accounted for as a pooling of interests.
The Quick & Reilly transaction gives Fleet the opportunity to significantly
expand its distribution channels for its consumer banking, investment management
services, discount brokerage services and sales of its mutual fund and annuity
products. The transaction also allows Fleet to expand its retail customer base
and provide its existing customers with additional investment and securities
products. Quick & Reilly is operated as an independent operation within Fleet's
investment management services division. As part of the transaction, the top six
members of Quick & Reilly's management have entered into five-year employment
agreements to continue with Fleet following the closing. The agreement also
provides for management retention and performance-based incentives to be paid to
Quick & Reilly's senior managers over three years.
ADVANTA CORPORATION
On February 20, 1998, Fleet acquired the consumer credit card operations of
Advanta Corporation ("Advanta"), recording goodwill of approximately $500
million and purchased credit card intangibles of approximately $150 million,
with an aggregate potential earnout of $100 million to be paid over five years.
The transaction was accounted for under the purchase method of accounting.
Advanta's credit card operations added approximately $11.5 billion in managed
credit card receivables. Following consummation of this transaction and the
combination of Fleet's credit card operations with those of Advanta's, Fleet
believes that it will be among the top ten issuers of credit cards in the United
States, with approximately $14 billion in managed receivables and over 8 million
customers.
The acquisition of Advanta's consumer credit card operations allows Fleet to
compete on a larger scale in a competitive environment of credit card business
consolidations in order to retain and grow Fleet's customer base. Fleet believes
that this acquisition enhances Fleet's credit card operations by providing the
opportunity to combine Fleet's risk management practices with Advanta's state of
the art database technology, direct marketing and product testing capabilities
in the credit card business.
S-5
<PAGE>
FIRST QUARTER RESULTS
Fleet reported operating earnings of $367 million, or $1.21 per diluted
share, for the first quarter of 1998, a 10% increase compared with $334 million,
or $1.10 per diluted share, earned in the first quarter of 1997. Return on
assets and return on common equity for the first quarter of 1998 were 1.62% and
18.27%, respectively.
During the quarter, Fleet completed the acquisitions of Quick & Reilly and
the consumer credit card operations of Advanta. Financial data for all prior
periods has been restated to reflect the pooling of Fleet and Quick & Reilly.
Financial results of Advanta, accounted for as a purchase, are included
subsequent to the closing date of February 20, 1998. Net income for the first
quarter of 1998, including the impact of merger-related charges relating to
these acquisitions, was $323 million, or $1.06 per diluted share.
Asset quality continued to improve in all aspects of Fleet's loan portfolio
as nonperforming assets decreased nearly 50% in the past year to $373 million at
the end of the first quarter. Net charge-offs and the provision for credit
losses were both $92 million in the first quarter. The reserve for loan losses
was $1.55 billion at March 31, 1998 and represented 2.39% of total loans and
441% of nonperforming loans.
Net interest income totaled $938 million during the first quarter of 1998,
an increase of $20 million from the first quarter of 1997. The increase is
principally attributable to strong growth in Fleet's earning assets and
increased loan fees. Fleet reported a net interest margin of 4.75% which
reflected the impact of lower-yielding assets acquired with both Advanta and
Quick & Reilly.
Noninterest income in the first quarter totaled $695 million, an increase of
$82 million, or 13%, from the same period in 1997. Investment services revenue
has increased 18% to $201 million in the first quarter driven by a strong equity
market, a $33 billion growth in assets under management, partially attributable
to the acquisition of Columbia late in 1997, and increased sales of mutual fund
and annuity products. Capital markets revenue, excluding securities gains,
climbed 50% to $87 million in comparison to the first quarter of 1997 as
market-making revenue derived from Fleet's discount brokerage firm has nearly
doubled, while venture capital revenue increased 67% to $30 million. Credit card
revenue increased $42 million over the prior year's first quarter which is
attributable to the Advanta acquisition.
As a result of the sharply decreasing interest-rate environment, Fleet's
mortgage banking business experienced a strong acceleration in mortgage
prepayments this quarter. To recognize this, Fleet established a $75 million
charge against the value of the investment in this business. Because of the
anticipated volatility of this asset, Fleet protects itself against a decrease
to net income through various hedging strategies. As a result of these
strategies, Fleet was able to fully offset the impact of this charge through the
recognition of $50 million in gains from the securities portfolio, which had a
substantial increase in value in this interest rate environment, and $25 million
of gains from the sales of mortgage servicing.
Noninterest expense in the first quarter of 1998, excluding merger-related
charges, totaled $924 million, an increase of only $20 million, or 2.2%, from
the first quarter of 1997, despite the additions of Advanta and Columbia.
Notable declines were realized in several categories, including employee
compensation and occupancy expenses as Fleet continues to tightly manage its
expense levels.
Total assets at March 31, 1998 were $97.7 billion, including total loans of
$65.0 billion, compared with $91.0 billion of total assets and $62.6 billion of
loans at December 31, 1997. Stockholders' equity amounted to $8.6 billion at
March 31, 1998.
S-6
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
THIS SECTION REPLACES THE SECTION ENTITLED "CONSOLIDATED RATIOS OF EARNINGS
TO FIXED CHARGES" IN THE ACCOMPANYING PROSPECTUS.
Fleet's consolidated ratios of earnings to fixed charges were as follows for
the years and periods indicated:
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------ ------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges:
Excluding Interest on
Deposits.................. 3.23x 4.10x 3.90x 3.38x 1.79x 2.30x 2.39x
Including Interest on
Deposits.................. 1.79 1.93 1.94 1.79 1.36 1.64 1.58
</TABLE>
- ------------------------
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest).
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.
The net proceeds from the sale of the Subordinated Debentures are estimated
to be approximately $247.6 million, after deduction of the underwriting discount
but not taking into account reimbursement of certain expenses by the
Underwriter. See "Underwriting". Fleet intends to use the net proceeds 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 financing of a character and amount to be
determined as the need arises.
S-7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
The following unaudited consolidated summary sets forth selected financial data
for Fleet and its subsidiaries for the three months ended March 31, 1998 and
1997 and for each of the years in the five-year period ending December 31, 1997.
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." The summary for the three
months ended March 31, 1998 and 1997 is based on unaudited financial statements
which include all adjustments that, in the opinion of management of Fleet, are
necessary for a fair presentation of the results of the respective interim
periods. The results of operations for the three months ended March 31, 1998 are
not necessarily indicative of the results expected for 1998 or any other interim
period. All data has been restated to reflect the Quick & Reilly acquisition,
accounted for as a pooling of interests. Certain amounts in prior periods have
been reclassified to conform to current-year presentation.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------------------- -----------------------------------------------------
1998 1997 1997 1996 1995
-------------- -------------- -------------- -------------- ---------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY
OF OPERATIONS:
Interest income
(fully taxable
equivalent)...... $ 1,603 $ 1,499 $ 6,130 $ 6,064 $ 6,257
Interest expense... 665 581 2,391 2,566 3,139
Net interest income
(fully taxable
equivalent)...... 938 918 3,739 3,498 3,118
Provision for
credit losses.... 92 65 322 213 101
Net interest income
after provision
for credit
losses........... 846 853 3,417 3,285 3,017
Noninterest
income........... 695 613 2,631 2,333 1,939
Noninterest
expense.......... 997 904 3,715 3,512 3,755
Net income......... 323(e) 334 1,367 1,221 679(a)
EARNINGS PER COMMON
SHARE:
Basic.............. $ 1.09(e) $ 1.13 $ 4.73 $ 4.04 $ 1.83(a)
Diluted............ 1.06(e) 1.10 4.59 3.96 1.70(a)
Weighted average
basic shares
outstanding...... 283,889,064 280,835,256 275,978,241 284,448,131 265,459,028
Weighted average
diluted shares
outstanding...... 293,591,781 288,513,429 284,302,405 290,012,987 285,995,539
Book value per
common share..... $ 27.91 $ 23.74 $ 27.36 $ 24.08 $ 22.03
Cash dividends
declared per
common share..... 0.49 0.45 1.84 1.74 1.63
Common dividend
payout ratios.... 44.69% 36.28% 36.32% 40.73% 79.38%
RATIO OF EARNINGS TO
FIXED CHARGES:
Excluding interest
on deposits...... 3.23x 4.10x 3.90x 3.38x 1.79x
Including interest
on deposits...... 1.79 1.93 1.94 1.79 1.36
RATIO OF EARNINGS TO
FIXED CHARGES AND
DIVIDENDS ON
PREFERRED STOCK:
Excluding interest
on deposits...... 3.05 3.68 3.57 3.10 1.76
Including interest
on deposits...... 1.77 1.89 1.90 1.76 1.36
CONSOLIDATED BALANCE
SHEET--
AVERAGE BALANCES:
Total assets....... $ 91,834 $ 87,018 $ 86,660 $ 86,738 $ 86,241
Securities held to
maturity(c)...... 1,239 1,159 1,167 1,045 7,736
Securities
available for
sale(c).......... 8,812 7,421 7,507 10,287 12,779
Loans, net of
unearned
income........... 62,603 59,687 60,076 57,046 52,164
Due from
brokers/dealers... 3,749 2,618 2,884 2,179 1,927
Interest-bearing
deposits......... 48,596 48,495 47,514 47,334 43,120
Short-term
borrowings....... 6,914 4,175 5,266 6,351 14,807
Due to
brokers/dealers... 4,564 3,080 3,463 2,645 2,341
Long-term
debt/subordinated
notes
and debentures... 4,853 5,003 4,608 5,486 6,581
Stockholders'
equity........... 8,562 7,605 7,589 7,369 6,863
<CAPTION>
1994 1993
-------------- --------------
<S> <C> <C>
CONSOLIDATED SUMMARY
OF OPERATIONS:
Interest income
(fully taxable
equivalent)...... $ 5,389 $ 5,154
Interest expense... 2,245 1,956
Net interest income
(fully taxable
equivalent)...... 3,144 3,198
Provision for
credit losses.... 65 327
Net interest income
after provision
for credit
losses........... 3,079 2,871
Noninterest
income........... 1,654 1,833
Noninterest
expense.......... 3,221 3,479
Net income......... 890 859(b)
EARNINGS PER COMMON
SHARE:
Basic.............. $ 3.25 $ 3.18(b)
Diluted............ 3.00 2.95(b)
Weighted average
basic shares
outstanding...... 264,692,874 258,040,862
Weighted average
diluted shares
outstanding...... 285,973,026 278,419,490
Book value per
common share..... $ 19.87 $ 20.74
Cash dividends
declared per
common share..... 1.40 1.03
Common dividend
payout ratios.... 35.86% 23.97%
RATIO OF EARNINGS TO
FIXED CHARGES:
Excluding interest
on deposits...... 2.30x 2.39x
Including interest
on deposits...... 1.64 1.58
RATIO OF EARNINGS TO
FIXED CHARGES AND
DIVIDENDS ON
PREFERRED STOCK:
Excluding interest
on deposits...... 2.24 2.31
Including interest
on deposits...... 1.62 1.57
CONSOLIDATED BALANCE
SHEET--
AVERAGE BALANCES:
Total assets....... $ 82,143 $ 77,763
Securities held to
maturity(c)...... 8,787 7,735
Securities
available for
sale(c).......... 16,923 14,140
Loans, net of
unearned
income........... 44,754 43,917
Due from
brokers/dealers... 1,606 1,611
Interest-bearing
deposits......... 40,113 39,766
Short-term
borrowings....... 15,807 13,268
Due to
brokers/dealers... 1,821 1,759
Long-term
debt/subordinated
notes
and debentures... 5,383 5,039
Stockholders'
equity........... 6,019 5,516
</TABLE>
S-8
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------------------- -----------------------------------------------------
1998 1997 1997 1996 1995
-------------- -------------- -------------- -------------- ---------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
CONSOLIDATED RATIOS:
<S> <C> <C> <C> <C> <C>
Net interest margin
(fully taxable
equivalent)...... 4.75% 4.99% 5.01% 4.68% 4.03%
Return on average
assets........... 1.43(e) 1.56 1.58 1.40 0.79(a)
Return on average
common
stockholders'
equity........... 16.00(e) 19.17 19.30 17.68 9.93(a)
Average
stockholders'
equity to average
assets........... 9.32 8.74 8.76 8.50 7.96
Tier 1 risk-based
capital ratio.... 6.39 7.58 7.26 7.70 7.60
Total risk-based
capital ratio.... 10.37 11.17 10.71 11.27 11.16
Period-end reserve
for credit losses
to period-end
loans net of
unearned
income........... 2.39 2.43 2.29 2.49 2.51
Net charge-offs to
average loans,
net of unearned
income........... 0.60 0.61 0.63 0.65 0.58
Period-end
nonperforming
assets to
period-end loans,
net of unearned
income, and other
real estate
owned............ 0.57(d) 1.17(d) 0.66(d) 1.21(d) 0.95(d)
<CAPTION>
1994 1993
-------------- --------------
CONSOLIDATED RATIOS:
<S> <C> <C>
Net interest margin
(fully taxable
equivalent)...... 4.23% 4.52%
Return on average
assets........... 1.08 1.11(b)
Return on average
common
stockholders'
equity........... 15.74 17.26(b)
Average
stockholders'
equity to average
assets........... 7.33 7.09
Tier 1 risk-based
capital ratio.... 9.15 10.35
Total risk-based
capital ratio.... 12.82 14.65
Period-end reserve
for credit losses
to period-end
loans net of
unearned
income........... 3.20 3.76
Net charge-offs to
average loans,
net of unearned
income........... 0.53 1.33
Period-end
nonperforming
assets to
period-end loans,
net of unearned
income, and other
real estate
owned............ 1.63 2.33
</TABLE>
- ------------------------
(a) Includes impact of the loss on assets held for sale or accelerated
disposition ($175 million pre-tax) and merger-related charges ($490 million
pre-tax) recorded in 1995. Excluding these special charges, return on
average common stockholders' equity and return on average assets would have
been 16.55% and 1.29%, respectively, while net income and earnings per share
would have been $1,108 million and $3.90, respectively.
(b) Includes impact of cumulative effect of change in accounting method of $53
million in 1993.
(c) 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 substantially all of its securities held
to maturity to securities available for sale as the FASB permitted a one-
time opportunity for institutions to reassess the appropriateness of the
designations of all securities.
(d) Excludes $176 million, $253 million, $214 million, $265 million and $317
million of nonperforming assets reclassified to held for sale or accelerated
disposition at March 31, 1998 and 1997 and December 31, 1997, 1996 and 1995,
respectively. Including such amounts, the ratios would have been .84%,
1.59%, 1.01%, 1.65% and 1.55% at March 31, 1998 and 1997 and December 31,
1997, 1996 and 1995, respectively.
(e) Includes impact of merger-related charges ($73 million pre-tax, $44 million
post-tax) recorded in the three months ended March 31, 1998. Excluding these
merger-related charges, return on average common stockholders' equity and
return on average assets would have been 18.27% and 1.62%, respectively,
while net income and diluted earnings per share would have been $367 million
and $1.21, respectively.
S-9
<PAGE>
DESCRIPTION OF SUBORDINATED DEBENTURES
THE FOLLOWING DESCRIPTION OF THE SUBORDINATED DEBENTURES OFFERED HEREBY
(REFERRED TO HEREIN AS THE "SUBORDINATED DEBENTURES" AND IN THE ACCOMPANYING
PROSPECTUS AS THE "SUBORDINATED DEBT SECURITIES") SUPPLEMENTS, AND TO THE EXTENT
INCONSISTENT THEREWITH REPLACES, THE DESCRIPTION OF THE GENERAL TERMS AND
PROVISIONS OF THE SUBORDINATED DEBT SECURITIES SET FORTH IN THE ACCOMPANYING
PROSPECTUS, TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE.
GENERAL
The Subordinated Debentures will be issued under an indenture dated as of
October 1, 1992, between Fleet and The First National Bank of Chicago, as
Trustee (as supplemented by a First Supplemental Indenture dated November 30,
1992, the "Indenture"). The Subordinated Debentures will be limited to
$250,000,000 million aggregate principal amount and will mature on July 15,
2028. Interest on the Subordinated Debentures will be payable at the rate per
annum shown on the cover page of this Prospectus Supplement from July 10, 1998,
or from the most recent Interest Payment Date to which interest has been paid or
provided for, semi-annually on January 15 and July 15 of each year, beginning on
January 15, 1999 to the persons in whose names the Subordinated Debentures are
registered at the close of business one business day prior to the relevant
payment date and, in the event the Subordinated Debentures are not in book-entry
form, the first day of the month in which the relevant payment date occurs. The
Subordinated Debentures may not be redeemed prior to maturity.
BOOK-ENTRY, DELIVERY AND FORM
The Subordinated Debentures will be issued in the form of fully registered
Global Securities. The Global Securities will be deposited with, or on behalf
of, the Depository and registered in the name of the Depository's nominee. The
Depository currently limits the maximum denomination of any global security to
$200,000,000. Therefore, for purposes of this Prospectus Supplement, "Global
Security" refers to the Global Securities representing the entire issue of
Subordinated Debentures offered hereby.
The Depository has advised as follows: The Depository is a limited-purpose
trust company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. The Depository holds securities that its
participants ("Participants") deposit with the Depository. The Depository also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers (including the Underwriter named in this
Prospectus Supplement), banks, trust companies, clearing corporations and
certain other organizations. The Depository is owned by a number of its direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the Depository's system is also available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("indirect
participants"). Persons who are not Participants may own beneficial interests in
securities held by the Depository only through Participants or indirect
participants. The Rules applicable to the Depository and its Participants are on
file with the Commission.
The Depository has advised that pursuant to procedures established by it (i)
upon issuance of the Global Security by Fleet, the Depository will credit the
accounts of the Participants designated by the Underwriter with the principal
amount of the Subordinated Debentures purchased by the Underwriter and (ii)
ownership of beneficial interests in the Global Security will be shown on, and
the transfer of that
S-10
<PAGE>
ownership will be effected only through, records maintained by the Depository
(with respect to Participants' interests), the Participants and the indirect
participants (with respect to the owners of beneficial interests in such Global
Security). The laws of some states may require that certain persons take
physical delivery in definitive form of securities which they own. Consequently,
such persons may be prohibited from purchasing beneficial interests in the
Global Security from any beneficial owner or otherwise.
So long as the Depository's nominee is the registered owner of the Global
Security, such nominee for all purposes will be considered the sole owner or
holder of the Subordinated Debentures represented by such Global Security for
all purposes under the Indenture. Except as provided below, owners of beneficial
interests in the Global Security will not be entitled to have any of the
Subordinated Debentures represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of the
Subordinated Debentures in definitive form and will not be considered the owners
or holders thereof under the Indenture. Accordingly, each person owning a
beneficial interest in the Global Security must rely on the procedures of the
Depository and, if such person is not a Participant, on the procedures of the
Participant and, if applicable, the indirect participant, through which such
person owns its interest, to exercise any rights of a holder under the
Indenture. Fleet understands that under existing practice, in the event that
Fleet requests any action of the holders or a beneficial owner desires to take
any action a holder is entitled to take, the Depository would act upon the
instructions of, or authorize, the Participant to take such action.
Principal and interest payments on the Global Security registered in the
name of the Depository's nominee will be made to the Depository's nominee as the
registered owner of such Global Security. Fleet and the Trustee will treat the
person in whose name the Global Security is registered as the owner of such
Global Security for the purpose of receiving payment of principal and interest
on the Subordinated Debentures and for all other purposes whatsoever. None of
Fleet, the Trustee, the Paying Agent or the Security Registrar has any
responsibility or liability for the payment of principal or interest on the
Subordinated Debentures to owners of beneficial interests in the Global
Security. The Depository has advised that upon receipt of any payment of
principal or interest in respect of the Global Security, it will immediately
credit the accounts of the Participants with such payment in amounts
proportionate to their respective beneficial interests in such Global Security
as shown on the records of the Depository. Payments by Participants and indirect
participants to owners of beneficial interests in the Global Security will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of the Participants or indirect
participants.
None of Fleet, the Trustee, the Paying Agent or the Security Registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Security, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Global Security representing all but not part of the Subordinated
Debentures being offered hereby is exchangeable for Subordinated Debentures in
definitive form of like tenor and terms if (i) the Depository notifies Fleet
that it is unwilling or unable to continue as depository for such Global
Security or if at any time the Depository ceases to be a clearing agency
registered under the Exchange Act, and, in either case, a successor depository
is not appointed by Fleet within 90 days of receipt by Fleet of such notice or
of Fleet becoming aware of such ineligibility, (ii) Fleet in its discretion at
any time determines not to have all of the Subordinated Debentures represented
by the Global Security and notifies the Trustee thereof, or (iii) an Event of
Default has occurred and is continuing with respect to the Subordinated
Debentures. The Global Security exchangeable pursuant to the preceding sentence
shall be exchangeable for Subordinated Debentures issuable in authorized
denominations and registered in such names as the Depository holding such Global
Security shall direct. Subject to the foregoing, a Global Security is not
exchangeable, except for a Subordinated Debenture or Subordinated Debentures of
the same aggregate
S-11
<PAGE>
denomination to be registered in the name of the depository or its nominee or in
the name of a successor of the Depository or a nominee of such successor.
A further description of the Depository's procedures with respect to the
Global Security representing the Subordinated Debentures is set forth in the
Prospectus under "Description of Debt Securities--Global Securities". The
Depository has confirmed that it intends to follow such procedures.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Subordinated Debentures will be made by the Underwriter
in immediately available funds. All payments of principal and interest will be
made by Fleet in immediately available funds, so long as the Depository
continues to make its Same-Day Funds Settlement System available to Fleet.
Secondary trading in long-term notes and notes of corporate issuers is
generally settled in clearinghouse or next day funds. In contrast, the
Subordinated Debentures will trade in the Depository's Same-Day Funds Settlement
System until maturity, and secondary market trading activity in the Subordinated
Debentures will therefore be required by the Depository to settle in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the
Subordinated Debentures.
S-12
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated July 7, 1998 (the "Underwriting Agreement") between Fleet and Merrill
Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter"), Fleet has agreed
to sell to the Underwriter, and the Underwriter has agreed to purchase, the
entire principal amount of the Subordinated Debentures.
The Underwriting Agreement provides that the obligation of the Underwriter
is subject to certain conditions precedent and that the Underwriter will be
obligated to purchase all the Subordinated Debentures, if any are purchased. The
Underwriter has agreed to reimburse Fleet for certain expenses incurred in
connection with the offering of the Subordinated Debentures, including expenses
set forth on the cover page, to a total of $1,062,500.
Fleet has been advised by the Underwriter that the Underwriter proposes to
offer the Subordinated Debentures to the public initially 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 0.45% of the principal
amount per Subordinated Debenture and the Underwriter and such dealers may
reallow a discount not in excess of 0.25% of such principal amount per
Subordinated Debenture on sales to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The Subordinated Debentures are a new issue of securities with no
established trading market. The Underwriter has advised Fleet that it intends to
act as a market maker for the Subordinated Debentures. However, the Underwriter
is not obligated to do so and may discontinue any market making at any time
without notice. No assurance can be given as to the liquidity of the trading
market for the Subordinated Debentures.
Fleet has agreed to indemnify the Underwriter against certain liabilities,
including civil liabilities under the Securities Act, or contribute to payments
which the Underwriter may be required to make in respect thereof.
The Underwriter and its 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 and its subsidiaries
in the ordinary course of business.
In connection with the offering made hereby, the Underwriter may purchase
and sell the Subordinated Debentures in the open market. These transactions may
include over-allotment and stabilizing transactions and purchases to cover short
positions created by the Underwriter in connection with the offering.
Stabilizing transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of the Subordinated
Debentures, and short positions created by the Underwriter involve the sale by
the Underwriter of a greater aggregate principal amount of Subordinated
Debentures than they are required to purchase from Fleet. The Underwriter also
may impose a penalty bid, whereby selling concessions allowed to broker-dealers
in respect of the Subordinated Debentures sold in the offering may be reclaimed
by the Underwriter if such Subordinated Debentures are repurchased by the
Underwriter in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Subordinated
Debentures, which may be higher than the price that might otherwise prevail in
the open market; and these activities, if commenced, may be discontinued at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
S-13
<PAGE>
EXPERTS
THIS SECTION REPLACES THE SECTION ENTITLED "EXPERTS" IN THE ACCOMPANYING
PROSPECTUS.
The consolidated financial statements of Fleet contained in Fleet's Current
Report on Form 8-K dated May 5, 1998, 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.
LEGAL MATTERS
THIS SECTION REPLACES THE SECTION ENTITLED "LEGAL MATTERS" IN THE
ACCOMPANYING PROSPECTUS.
Certain legal matters in connection with the Subordinated Debentures offered
hereby will be passed upon for Fleet by Edwards & Angell, LLP, Providence, Rhode
Island, and for the Underwriter by Cravath, Swaine & Moore, New York, New York.
V. Duncan Johnson, a partner of Edwards & Angell, LLP, is a director of Fleet
National Bank, a wholly owned subsidiary of Fleet, and beneficially owns 4,052
shares of Common Stock.
S-14
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE OFFERING
COVERED BY THIS PROSPECTUS SUPPLEMENT. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FLEET OR
THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FLEET SINCE
SUCH DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Available Information..................................................... S-2
Incorporation of Certain Documents by Reference........................... S-2
Fleet Financial Group, Inc................................................ S-4
Recent Transactions....................................................... S-5
First Quarter Results..................................................... S-6
Consolidated Ratios of Earnings to Fixed Charges.......................... S-7
Use of Proceeds........................................................... S-7
Selected Consolidated Financial Data...................................... S-8
Description of Subordinated Debentures.................................... S-10
Underwriting.............................................................. S-13
Experts................................................................... S-14
Legal Matters............................................................. S-14
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Fleet Financial Group, Inc................................................ 3
Consolidated Ratios of Earnings to Fixed Charges.......................... 7
Use of Proceeds........................................................... 7
Description of Debt Securities............................................ 8
Senior Debt Securities.................................................... 12
Subordinated Debt Securities.............................................. 15
Description of Warrants................................................... 19
Plan of Distribution...................................................... 20
Experts................................................................... 20
Legal Opinions............................................................ 21
</TABLE>
$250,000,000
[LOGO]
FLEET FINANCIAL
GROUP, INC.
6.70% SUBORDINATED DEBENTURES
DUE 2028
------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
JULY 7, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
