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) July 15, 1998
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, Massachusetts 02110
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-346-4000
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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 releases attached hereto as Exhibits 99(a)
and 99(b).
Item 7. FINANCIAL STATEMENTS AND OTHER EXHIBITS.
EXHIBIT NO. DESCRIPTION
Exhibit 99(a) Press Release Reporting Second Quarter
1998 Earnings - dated July 15, 1998
Exhibit 99(b) Press Release Reporting Two-for-One Stock Split -
dated July 15, 1998
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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.
By /s/ ROBERT C. LAMB
---------------------------------
Robert C. Lamb
Controller
Chief Accounting Officer
Date: July 15, 1998
Exhibit 99(a)
Contacts: Media: James Mahoney Investor: Thomas R. Rice
(617) 346-5472 (617) 346-0148
T. Kevin Beatty
(617) 346-4963
FLEET FINANCIAL GROUP
REPORTS RECORD EARNINGS
EARNINGS INCREASE 13% TO $393 MILLION
Boston, Massachusetts, July 15, 1998: Fleet Financial Group, Inc.
(FLT-NYSE) today reported net income of $393 million, or $1.29 per diluted
share, for the second quarter of 1998, a 13% increase compared with $347
million, or $1.17 per diluted share, earned in the second quarter of 1997.
Return on assets and return on common equity for the second quarter of 1998 were
1.59% and 19.0%, respectively.
Operating earnings for the first six months of 1998 were $760 million, or
$2.50 per diluted share, a 12% increase compared with $681 million, or $2.26 per
diluted share for the first six months of 1997. Year to date return on assets
and return on common equity were 1.60% and 18.6%, respectively. Net income for
the first half of 1998 was $716 million including merger-related charges for the
acquisitions of Quick & Reilly and the credit card operations of Advanta.
Terrence Murray, Fleet's chairman and chief executive officer, commented on
the company's record second quarter results, "Continuing revenue growth from our
core franchise and acquisitions coming on stream combined for a very solid
second quarter. This revenue momentum had a powerful impact on the bottom line
as investments in technology, the transition to electronic delivery channels and
the continued development of higher-return, higher-growth business, also
contributed to an outstanding quarter. Continued strength in credit quality
completed a very positive picture in Fleet's second quarter."
Mr. Murray added, "We continue to be pleased by the smooth integration and
financial contribution of Quick & Reilly and Advanta's credit card operations to
Fleet. These two acquisitions contributed to the 35% increase in noninterest
revenues. Strong loan growth in the quarter also contributed to record net
interest income resulting in a $260 million increase in total revenue since last
year."
Robert J Higgins, president and chief operating officer, commented, "The
contribution to this strong quarter from our recent acquisitions was
complemented by core business growth and fee income improvements. Core
businesses such as commercial lending, mortgage banking, and investment services
all posted strong results."
Asset quality continued to improve across all sectors of the Corporation's
loan portfolio. Nonperforming assets decreased nearly 37% in the past year to
$337 million at the end of the second quarter to just .50% of total loans. Net
charge-offs and the provision for credit losses were both $118 million in the
second quarter. The reserve for loan losses is $1.55 billion at June 30, 1998
and represents 2.32% of total loans and almost 500% coverage of nonperforming
loans.
Under the direction of a new management team, Fleet Mortgage had one of its
strongest quarters. Earnings exceeded expectations as loan originations reached
a record $9.0 billion for the quarter, surpassing the production levels of the
1993 refinance boom and exceeded the runoff related to the current refinance
activity.
Separately, Fleet announced a 2-for-1 stock split of the company's common
stock subject to stockholder approval of an increase in the authorized shares
outstanding.
FINANCIAL HIGHLIGHTS
Net interest income totaled $981 million during the second quarter of 1998,
up $48 million from the second quarter of 1997. The increase is principally
attributable to the acquisition of Advanta in the first quarter and growth in
Fleet's earning assets. The Corporation reported a net interest margin of 4.60%.
Net interest income for the first half of 1998 was $1.9 billion, an increase of
$68 million over the same period in 1997.
Noninterest income in the second quarter totaled $809 million, an increase
of $209 million, or 35%, from the same period in 1997. Investment services
revenue increased 34% to $220 million in the second quarter, driven by the
acquisitions of Quick & Reilly and Columbia, as well as strong sales of mutual
fund products and appreciation in the equity markets. Capital markets revenue
climbed 65% to $107 million compared to the second quarter of 1997 as venture
capital revenue increased $29 million, coupled with increased volume in
brokerage market-making revenue and sales of foreign exchange and interest rate
products. Credit card revenue increased $83 million over the prior year's second
quarter, which is attributable to the Advanta acquisition. Noninterest income
for the first six months of 1998 totaled $1.5 billion, an increase of 24% over
the $1.2 billion earned in the comparable period in 1997. This increase was
driven by the acquisition of Advanta, which has added $141 million of revenue,
as well as strong growth in revenues from investment services and capital
markets revenues.
Noninterest expense in the second quarter of 1998 increased $147 million
from the second quarter of 1997 to $1.0 billion, primarily the result of the
acquisitions of Advanta and Columbia Management Company. The Company reported an
efficiency ratio of 56.8%. Noninterest expense for the first half of 1998
amounted to $1.9 billion compared to $1.8 billion for the same period in 1997,
as Advanta has incrementally added $130 million of expenses.
Total assets at June 30, 1998 were $100.7 billion, including total loans of
$66.8 billion, compared with $87.6 billion of total assets and $59.2 billion of
loans at June 30, 1997. Stockholders' equity amounted to $8.9 billion at June
30, 1998.
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<CAPTION>
FLEET FINANCIAL GROUP
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, March 31, June 30, June 30, June 30,
1998 1998 1997 1998 1997
For the Period ($ in millions)
<S> <C> <C> <C> <C>
$ 393 $ 367 $ 347 Net Income (operating basis) (a) $ 760 $ 681
1,790 1,633 1,533 Total Revenue 3,423 3,064
1,017 924 870 Total Expense (a) 1,941 1,774
118 92 83 Provision for credit losses 210 148
Per Common Share
$ 1.34 $ 1.25 $ 1.20 Basic earnings per share (a) $ 2.59 $ 2.33
1.29 1.21 1.17 Diluted earnings per share (a) 2.50 2.26
83.50 85.06 63.25 Market value (period-end) 83.50 63.25
0.49 0.49 0.45 Cash dividends declared 0.98 0.90
28.78 27.91 24.11 Book value (period-end) 28.78 24.11
At Quarter End ($ in billions)
$ 100.7 $ 97.7 $ 87.6 Assets $ 100.7 $ 87.6
66.8 65.0 59.2 Loans 66.8 59.2
67.0 68.2 63.2 Deposits 67.0 63.2
8.9 8.6 7.4 Total stockholders' equity 8.9 7.4
Operating Ratios
1.59% 1.62% 1.62% Return on average assets (a) 1.60% 1.59%
18.97 18.27 20.14 Return on common equity (a) 18.62 19.65
4.60 4.75 5.07 Net interest margin 4.67 5.03
56.8 56.6 56.7 Efficiency ratio 56.7 57.9
8.8 8.8 8.5 Total equity/assets (period-end) 8.8 8.5
6.8 6.4 7.3 Tier 1 risk-based capital ratio 6.8 7.3
11.0 10.4 10.8 Total risk-based capital ratio 11.0 10.8
Asset Quality ($ in millions)
$ 337 $ 373 $ 531 Nonperforming assets $ 337 $ 531
1,551 1,553 1,443 Reserve for credit losses 1,551 1,443
0.50% 0.57% 0.90% Nonperforming assets as a % of loans and OREO 0.50% 0.90%
0.33 0.38 0.61 Nonperforming assets as a % of total assets 0.33 0.61
0.47 0.54 0.84 Nonperforming loans to period-end loans 0.47 0.84
2.32 2.39 2.44 Reserve for credit losses to period-end loans 2.32 2.44
491 441 290 Reserve for credit losses to nonperforming loans 491 290
0.71 0.60 0.68 Net charge-offs/average loans 0.66 0.65
(a) Excludes merger-related charges of $44 million (post tax) for the first
quarter of 1998 and the six months ended June 30, 1998. Including
merger-related charges, financial data and ratios were as follows:
Three Months ended Six Months ended
March 31, 1998 June 30, 1998
$ 323 Net Income $ 716
997 Total Expense 2,014
1.09 Basic earnings per share 2.43
1.06 Diluted earnings per share 2.35
1.43% Return on average assets 1.51%
16.00 Return on common equity 17.51
</TABLE>
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<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP
CONSOLIDATED INCOME STATEMENTS
($ in millions)
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, March 31, June 30, June 30, June 30,
1998 1998 1997 1998 1997
<S> <C> <C> <C> <C>
$ 981 $ 938 $ 933 Net interest income (FTE) $ 1,919 $ 1,851
118 92 83 Provision for credit losses 210 148
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863 846 850 Net interest income after provision 1,709 1,703
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Noninterest income:
220 201 164 Investment services revenue 421 336
182 176 178 Banking fees and commissions 358 352
126 59 130 Processing-related revenue 186 272
107 138 65 Capital markets revenue 245 136
98 56 15 Credit card revenue 154 29
76 65 48 Other 140 88
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809 695 600 Total noninterest income 1,504 1,213
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Noninterest expense:
482 445 443 Employee compensation and benefits 926 902
75 74 70 Occupancy 149 147
74 80 76 Equipment 154 155
59 51 41 Intangible asset amortization 110 82
327 274 240 Other 602 488
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1,017 924 870 Total noninterest expense 1,941 1,774
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- - 20 Gains on sales of business units, net of charges - 20
655 617 600 Earnings before income taxes and merger-related charges 1,272 1,162
262 250 253 Income taxes and tax-equivalent adjustment 512 481
393 367 347 Operating earnings before merger-related charges 760 681
- 44 - Merger-related charges, net of tax 44 -
- --------------------------------------------------------------------------------------------------------------------------------
$ 393 $ 323 $ 347 Net Income $ 716 $ 681
================================================================================================================================
$ 1.34 $ 1.25 $ 1.20 Basic earnings per share, excluding merger-related charges $ 2.59 $ 2.33
1.29 1.21 1.17 Diluted earnings per share, excluding merger-related charges 2.50 2.26
1.34 1.09 1.20 Basic earnings per share 2.43 2.33
1.29 1.06 1.17 Diluted earnings per share 2.35 2.26
</TABLE>
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<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP
CONSOLIDATED BALANCE SHEETS
($ in millions)
June 30, March 31, June 30,
1998 1998 1997
ASSETS:
<S> <C> <C> <C>
Cash and equivalents $ 6,067 $ 5,493 $ 6,162
Securities 11,293 11,279 8,704
Loans 66,754 64,986 59,177
Reserve for credit losses (1,551) (1,553) (1,443)
Due from brokers/dealers 3,885 3,567 2,628
Mortgages held for resale 2,875 2,416 1,000
Other assets 11,390 11,499 11,345
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Total assets $ 100,713 $ 97,687 $ 87,573
=======================================================================================
LIABILITIES:
Deposits $ 66,992 $ 68,165 $ 63,229
Short-term borrowings 11,147 8,238 6,393
Due to brokers/dealers 4,983 4,433 3,026
Long-term debt 5,654 5,095 4,550
Other liabilities 3,076 3,136 2,949
- ---------------------------------------------------------------------------------------
Total liabilities 91,852 89,067 80,147
=======================================================================================
STOCKHOLDERS' EQUITY:
Preferred stock 691 691 835
Common stock 8,170 7,929 6,591
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Total stockholders' equity 8,861 8,620 7,426
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Total liabilities and stockholders' equity $ 100,713 $ 97,687 $ 87,573
=======================================================================================
</TABLE>
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<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
THREE MONTHS ENDED
June 30, 1998 March 31, 1998 June 30, 1997
Average Average Average
Balance Rate Balance Rate Balance Rate
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Securities $ 11,099 6.58% $ 10,051 6.56% $ 8,327 6.72%
Loans 66,329 8.68 62,603 8.66 60,017 8.68
Mortgages held for resale 2,513 7.26 1,637 7.25 1,444 7.91
Due from brokers/dealers 4,482 4.55 3,749 5.13 2,628 4.60
Other earning assets 1,018 3.82 1,025 4.99 1,347 5.40
- -----------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 85,441 8.09% 79,065 8.15% 73,763 8.24%
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Reserve for credit losses (1,527) - (1,466) - (1,457) -
Other assets 15,233 - 14,235 - 13,670 -
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Total assets $ 99,147 - $ 91,834 - $ 85,976 -
=============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings $ 28,557 2.40% $ 27,429 2.37% $ 27,610 2.22%
Time 22,765 5.33 21,167 5.31 20,004 5.09
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Total interest-bearing deposits 51,322 3.70 48,596 3.65 47,614 3.43
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Short-term borrowings 9,005 4.77 6,914 4.90 4,963 4.62
Due to brokers/dealers 5,167 4.62 4,564 4.83 3,026 4.58
Long-term debt 5,572 7.48 4,853 7.31 4,611 7.33
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Total interest-bearing liabilities $ 71,066 4.20% $ 64,927 4.14% $ 60,214 3.89%
=============================================================================================================================
Net interest spread - 3.89% - 4.01% - 4.35%
=============================================================================================================================
Demand deposits and other noninterest-
bearing time deposits $ 16,283 - $ 15,844 - $ 16,163 -
Other liabilities 3,064 - 2,501 - 2,159 -
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities 90,413 - 83,272 - 78,536 -
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Stockholders' equity 8,734 - 8,562 - 7,440 -
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Total liabilities and stockholders' equity $ 99,147 - $ 91,834 - $ 85,976 -
=============================================================================================================================
Net interest margin 4.60% 4.75% 5.07%
=============================================================================================================================
</TABLE>
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<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
SIX MONTHS ENDED
June 30, 1998 June 30, 1997
Average Average
Balance Rate Balance Rate
ASSETS:
<S> <C> <C> <C> <C>
Securities $ 10,578 6.57% $ 8,453 6.70%
Loans 64,476 8.67 59,853 8.66
Mortgages held for resale 2,078 7.25 1,565 7.74
Due from brokers/dealers 4,118 4.81 2,623 4.48
Other earning assets 1,021 4.40 1,540 5.33
- ----------------------------------------------------------------------------------------------
Total interest-earning assets 82,271 8.12% 74,034 8.20%
- ----------------------------------------------------------------------------------------------
Reserve for credit losses (1,497) (1,473)
Other assets 14,737 13,933
- ----------------------------------------------------------------------------------------------
Total assets $ 95,511 $ 86,494
==============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings $ 27,996 2.39% $ 27,694 2.24%
Time 21,971 5.32 20,358 5.11
- ----------------------------------------------------------------------------------------------
Total interest-bearing deposits 49,967 3.68 48,052 3.46
- ----------------------------------------------------------------------------------------------
Short-term borrowings 7,966 4.83 4,572 4.42
Due to brokers/dealers 4,867 4.72 3,053 4.38
Long-term debt 5,214 7.40 4,806 7.25
- ----------------------------------------------------------------------------------------------
Total interest-bearing liabilities $ 68,014 4.17% $ 60,483 3.88%
===============================================================================================
Net interest spread 3.95% 4.32%
===============================================================================================
Demand deposits and other noninterest-
bearing time deposits $ 16,065 $ 16,179
Other liabilities 2,783 2,310
- ----------------------------------------------------------------------------------------------
Total liabilities 86,862 78,972
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Stockholders' equity 8,649 7,522
- ----------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 95,511 $ 86,494
==============================================================================================
Net interest margin 4.67% 5.03%
==============================================================================================
</TABLE>
Exhibit 99(b)
FOR IMMEDIATE RELEASE Contact: James Mahoney
(617) 346-5472
FLEET FINANCIAL GROUP ANNOUNCES A 2-FOR-1 COMMON STOCK SPLIT
BOSTON, MA, July 15, 1998 -- The board of directors of Fleet Financial
Group (NYSE: FLT) yesterday approved a 2-for-1 split of the company's common
stock.
In making the announcement, Terrence Murray, Chairman and CEO of Fleet
Financial Group, said, "Fleet stock has grown in value at an annualized rate of
22.6% since 1980. As Fleet continues to post a strong financial performance, the
stock split will keep the price of Fleet stock in a trading range that is more
widely accessible to a broad range of investors."
The split is subject to stockholder approval of a charter amendment to
increase the company's authorized common stock. A consent solicitation seeking
stockholder approval will be mailed on or about August 4, 1998. Assuming the
requisite majority vote of all outstanding shares, the company expects the
record date for the stock split to be in mid-September with certificates mailed
to stockholders in early October.
The company will be seeking approval to increase the total amount of
authorized common stock from the current 600,000,000 shares to 1,200,000,000
shares.
The company last split its common stock in 1987 in a 2-for-1 split that
took effect on April 3, 1987.
Fleet Financial Group, headquartered in Boston and listed on the New York
Stock Exchange (NYSE: FLT), is a diversified financial services company with
$100.7 billion in assets and more than $80 billion in assets under management.
The nation's sixth largest commercial lender and New England's leading small
business lender, Fleet's lines of business include consumer banking, government
banking, mortgage banking, corporate finance, commercial real estate lending,
credit cards, insurance services, cash management, equipment leasing and
asset-based lending. Fleet also provides a wide array of investment management
services for both individuals and institutional clients and operates the
nation's third largest discount brokerage firm through its Quick & Reilly, Inc.
subsidiary. With 1,200 branches and over 2,400 ATMs, Fleet also provides 24-hour
telephone banking as well as electronic banking services through the Fleet PC
Banking Center.
