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 21, 1998
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, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 346-4000
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
Pursuant to Form 8-K, General Instructions F, Registrant hereby
incorporates by reference the press release 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 Third Quarter 1998
Earnings - dated October 21, 1998
Exhibit 99(b) Press Release Reporting 10% Increase in
Common Stock Dividend-dated October 21, 1998
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, Fleet 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: October 21, 1998
Exhibit 99(a)
Contacts: James Mahoney Investor: Thomas R. Rice
(617) 346-5472 (617) 346-0148
FLEET FINANCIAL GROUP
14% EARNINGS INCREASE TO $401 MILLION
$1.5 BILLION COMMON STOCK BUYBACK AUTHORIZED
10% DIVIDEND INCREASE
Boston, Massachusetts, October 21, 1998: Fleet Financial Group, Inc.
(FLT-NYSE) today reported net income of $401 million, or $.66 per diluted share,
for the third quarter of 1998, a 14% increase compared with $352 million, or
$.60 per diluted share, earned in the third quarter of 1997. Return on assets
and return on common equity for the third quarter of 1998 were 1.60% and 18.56%,
respectively. All earnings per share amounts have been adjusted to reflect a
two-for-one common stock split which was effective October 7, 1998.
Operating earnings for the first nine months of 1998 were $1.16 billion, or
$1.91 per diluted share, a 12% increase compared with $1.03 billion, or $1.73
per diluted share for the first nine months of 1997. Year-to-date return on
assets and return on common equity were 1.60% and 18.60%, respectively. Net
income for the first nine months of 1998 was $1.12 billion including charges
related to the acquisitions of Quick & Reilly and the credit card operations of
Advanta.
"We had another outstanding quarter achieving record earnings, " said
Terrence Murray, chairman and chief executive officer of Fleet Financial Group.
"During a period of unparalleled turbulence in the financial markets, Fleet's
formula of providing traditional banking and related financial services to
consumers in the northeast and corporations domestically has served our
shareholders well."
"We have focused our efforts on meeting the needs of our region and stayed
with businesses we know well," Mr. Murray continued. "This disciplined business
approach has led to consistently strong financial performance while supporting
the vibrancy of our regional economies, and contributed to the financial health
of our local communities."
"We are pleased to be able to share these strong results with our
shareholders in the form of an increase in our common dividend to $.27 per
quarter which was approved today by Fleet's board of directors," Mr. Murray
added.
In addition, Fleet today announced its intention to repurchase up to $1.5
billion of its common stock from time to time as market conditions permit.
Robert Higgins, president and chief operating officer, elaborated on the
accomplishments in the quarter, "Our credit quality remains superb. Fleet's
adherence to prudent credit standards has served us well despite extremely
volatile global financial markets. Our financial strength allowed us to serve
our customers' credit needs, resulting in loan growth of 7%, while avoiding the
headline financial issues that other entities are experiencing. Less than
one-half of one percent of Fleet's assets are overseas with exposures limited to
short term trade financing."
Asset quality continued the strong positive trend over the past years.
Nonperforming assets decreased nearly $50 million in the past quarter to $289
million at the end of the third quarter or just .42% of total loans. This marks
the Corporation's eighth consecutive quarter of decreasing levels of
nonperforming assets. Net charge-offs and the provision for credit losses were
both $120 million in the quarter. The reserve for loan losses is $1.55 billion
at September 30, 1998 and represents 2.28% of loans and almost 570% coverage of
nonperforming loans.
Financial Highlights - Revenues increase $260 million or 17% since last year
Net interest income totaled $979 million during the third quarter of 1998,
up $35 million from the third quarter of 1997. The increase is principally
attributable to the acquisition of Advanta in the first quarter and the growth
of $8.6 billion in Fleet's earning assets. The Corporation reported a net
interest margin of 4.58%. Net interest income for the first nine months of 1998
was $2.9 billion, an increase of $103 million over the same period in 1997.
Noninterest income in the third quarter totaled $843 million, an increase
of $224 million, or 36%, from the same period in 1997. Investment services
revenue increased 18% to $210 million in the third quarter, driven by the
acquisitions of Quick & Reilly and Columbia Management Co. Processing-related
revenue increased 28% to $129 million in the third quarter primarily related to
strong mortgage production driven by a low mortgage-rate environment as well as
increased servicing by the student loan and health care units. Credit card
revenue increased $101 million over the prior year's third quarter, which is
attributable to the Advanta acquisition. For the first nine months of 1998,
noninterest income totaled $2.3 billion, an increase of 28% over the $1.8
billion earned in the comparable period in 1997. This increase was driven by the
acquisition of Advanta, which has added $255 million of revenue, and strong
growth in investment services and capital markets revenues.
Noninterest expense in the third quarter of 1998 increased $169 million
from the third quarter of 1997 to $1.0 billion, primarily the result of the
acquisitions of Advanta and Columbia. Employee compensation and benefits
increased due to investments in two businesses that strengthen our future
revenue potential, increases in commissions expense related to increase mortgage
production at Fleet Mortgage as well as the acquisitions of Advanta and
Columbia. The Company reported an efficiency ratio of 56.7%. Noninterest expense
for the first nine months of 1998 amounted to $3.0 billion compared to $2.6
billion for the same period in 1997, as Advanta has incrementally added almost
$230 million of expense.
Total assets at September 30, 1998 were $99.5 billion, including total
loans of $68.2 billion, compared with $88.1 billion of total assets and $60.5
billion of loans at September 30, 1997. Stockholders' equity amounted to $9.2
billion at September 30, 1998.
<PAGE>
FLEET FINANCIAL GROUP
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, June 30, September 30, September 30, September 30,
1998 1998 1997 1998 (a) 1997
<S> <C> <C> <C> <C> <C>
For the Period ($ in millions)
Net income (operating basis) $ 401 $ 393 $ 352 $ 1,161 $ 1,033
Total Revenue 1,822 1,790 1,563 5,246 4,627
Total Expense 1,042 1,017 873 2,984 2,647
Provision for credit losses 120 118 85 330 233
Per Common Share (b)
Basic earnings per share $ 0.68 $ 0.67 $ 0.62 $ 1.98 $ 1.78
Diluted earnings per share 0.66 0.65 0.60 1.91 1.73
Market value (period-end) 36.72 41.75 32.78 36.72 32.78
Cash dividends declared 0.245 0.245 0.225 0.735 0.675
Book value (period-end) 14.95 14.39 12.46 14.95 12.46
At Quarter End ($ in billions)
Assets $ 99.5 $ 100.7 $ 88.1 $ 99.5 $ 88.1
Loans 68.2 66.8 60.5 68.2 60.5
Deposits 66.0 67.0 62.9 66.0 62.9
Total stockholders' equity 9.2 8.9 7.6 9.2 7.6
Operating Ratios
Return on average assets 1.60% 1.59% 1.62% 1.60% 1.60%
Return on common equity 18.56 18.97 19.99 18.60 19.77
Net interest margin 4.58 4.60 5.03 4.64 5.03
Efficiency ratio (c) 56.7 56.8 55.9 56.7 57.2
Total equity/assets (period-end) 9.2 8.8 8.6 9.2 8.6
Tier 1 risk-based capital ratio 6.9 6.8 7.2 6.9 7.2
Total risk-based capital ratio 11.2 11.0 10.7 11.2 10.7
Asset Quality ($ in millions)
Nonperforming assets $ 289 $ 337 $ 479 $ 289 $ 479
Reserve for credit losses 1,552 1,551 1,432 1,552 1,432
Nonperforming assets as a % of loans 0.42% 0.50% 0.79% 0.42% 0.79%
Nonperforming assets as a % of total assets 0.29 0.33 0.54 0.29 0.54
Reserve for credit losses to period-end loans 2.28 2.32 2.37 2.28 2.37
Reserve for credit losses to nonperforming loans 566 491 315 566 315
Net charge-offs/average loans 0.70 0.71 0.62 0.67 0.64
</TABLE>
(a) Excludes merger-related charges of $44 million (post tax) for the nine
months ended September 30, 1998. Including merger-related charges,
financial data and ratios were as follows:
<TABLE>
Nine Months
Ended
September 30, 1998
<S> <C>
Net Income $ 1,117
Total Expense 3,057
Basic earnings per share 1.90
Diluted earnings per share 1.84
Return on average assets 1.54%
Return on common equity 17.87
</TABLE>
(b) All common share data for all periods presented reflects the two-for-one
common stock split which was effective October 7, 1998.
(c) The efficiency ratio for the three months and nine months ended September
30, 1998 excludes $20 million of securities gains and $20 million of branch
reconfiguration charges. The nine months ended September 30, 1998 also excludes
merger-related charges recorded in the first quarter of 1998.
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP
CONSOLIDATED INCOME STATEMENTS
($ in millions)
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, June 30, September 30, September 30, September 30,
1998 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C>
Net interest income (FTE) $ 979 $ 981 $ 944 $ 2,898 $ 2,795
Provision for credit losses 120 118 85 330 233
--- --- -- --- ---
Net interest income after provision 859 863 859 2,568 2,562
--- --- --- ----- -----
Noninterest income:
Investment services revenue 210 220 178 631 513
Banking fees and commissions 197 182 180 556 532
Processing-related revenue 129 126 101 315 372
Capital markets revenue 124 107 103 369 239
Credit card revenue 117 98 16 271 45
Other 66 76 41 206 131
-- -- -- --- ---
Total noninterest income 843 809 619 2,348 1,832
--- --- --- ----- -----
Noninterest expense:
Employee compensation and benefits 489 482 428 1,415 1,330
Equipment 77 74 81 231 236
Occupancy 75 75 74 224 220
Intangible asset amortization 58 59 43 167 125
Other 343 327 247 947 736
--- --- --- --- ---
Total noninterest expense 1,042 1,017 873 2,984 2,647
----- ----- --- ----- -----
Gains on sales of business units, net of charges - - - - 20
Earnings before income taxes and merger-related charges 660 655 605 1,932 1,767
Income taxes and tax-equivalent adjustment 259 262 253 771 734
--- --- --- --- ---
Operating earnings before merger-related charges 401 393 352 1,161 1,033
Merger-related charges, net of tax - - - 44 -
----- ----- ----- ----- -----
--
Net Income $ 401 $ 393 $ 352 $ 1,117 $ 1,033
======= ======= ======== ========= =========
Basic earnings per share, excluding
merger-related charge $ 0.68 $ 0.67 $ 0.62 $ 1.98 $ 1.78
Diluted earnings per share, excluding
merger-related charges 0.66 0.65 0.60 1.91 1.73
Basic earnings per share 0.68 0.67 0.62 1.90 1.78
Diluted earnings per share 0.66 0.65 0.60 1.84 1.73
</TABLE>
<PAGE>
FLEET FINANCIAL GROUP
CONSOLIDATED BALANCE SHEETS
($ in millions)
<TABLE>
<CAPTION>
September 30, June 30, September 30,
1998 1998 1997
<S> <C> <C> <C>
ASSETS:
Cash and equivalents $ 4,759 $ 6,067 $ 6,649
Securities 10,227 11,293 8,770
Loans 68,205 66,754 60,494
Reserve for credit losses (1,552) (1,551) (1,432)
Due from brokers/dealers 3,248 3,885 2,772
Mortgages held for resale 2,638 2,875 1,396
Other assets 11,954 11,390 9,456
------ ------ -----
Total assets $ 99,479 $ 100,713 $ 88,105
=========== ========== ==========
LIABILITIES:
Deposits $ 65,955 $ 66,992 $ 62,907
Short-term borrowings 9,435 11,147 7,086
Due to brokers/dealers 4,307 4,983 3,415
Long-term debt 7,368 5,654 4,459
Other liabilities 3,239 3,076 2,622
----- ----- -----
Total liabilities 90,304 91,852 80,489
====== ====== ======
STOCKHOLDERS' EQUITY:
Preferred stock 691 691 835
Common stock 8,484 8,170 6,781
----- ----- -----
Total stockholders' equity 9,175 8,861 7,616
----- ----- -----
Total liabilities and stockholders' equity $ 99,479 $ 100,713 $ 88,105
=========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
THREE MONTHS ENDED
September 30, 1998 June 30, 1998 September 30, 1997
Average Average Average
Balance Rate Balance Rate Balance Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Securities $ 10,010 6.62% $ 11,099 6.58% $ 8,690 6.78%
Loans 67,908 8.58 66,329 8.68 59,317 8.70
Mortgages held for resale 3,064 7.08 2,513 7.26 1,222 7.47
Due from brokers/dealers 3,380 5.25 4,482 4.55 2,772 5.34
Other earning assets 1,076 4.59 1,018 3.82 2,618 6.60
----- ---- ----- ---- ----- ----
Total interest-earning assets 85,438 8.11% 85,441 8.09% 74,619 8.26%
------ ---- ------ ---- ------ ----
Reserve for credit losses (1,523) (1,527) (1,441)
Other assets 15,424 15,233 12,952
------ ------ ------
Total assets $ 99,339 $ 99,147 $ 86,130
========== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings $ 28,861 2.42% $ 28,557 2.40% $ 27,325 2.23%
Time 22,106 5.30 22,765 5.33 19,695 5.17
------ ---- ------ ---- ------ ----
Total interest-bearing deposits 50,967 3.67 51,322 3.70 47,020 3.46
------ ---- ------ ---- ------ ----
Short-term borrowings 9,051 5.04 9,005 4.77 5,877 4.83
Due to brokers/dealers 4,350 5.00 5,167 4.62 3,415 4.80
Long-term debt 6,575 7.19 5,572 7.48 4,487 7.42
----- ---- ----- ---- ----- ----
Total interest-bearing liabilities $ 70,943 4.25% $ 71,066 4.20% $ 60,799 3.96%
========== ==== ========= ==== ======== ====
Net interest spread 3.86% 3.89% 4.30%
- -------------------------------------------------------------------------------------------------------------------------
Demand deposits and other noninterest-
bearing time deposits $ 16,157 $ 16,283 $ 15,475
Other liabilities 3,253 3,064 2,343
----- ----- -----
Total liabilities 90,353 90,413 78,617
------ ------ ------
Stockholders' equity 8,986 8,734 7,513
----- ----- -----
Total liabilities and stockholders' equity $ 99,339 $ 99,147 $ 86,130
========== ========= ========
Net interest margin 4.58% 4.60% 5.03%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FLEET FINANCIAL GROUP
CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
September 30, 1998 September 30, 1997
Average Average
Balance Rate Balance Rate
<S> <C> <C> <C> <C>
ASSETS:
Securities $ 10,387 6.59% $ 8,533 6.72%
Loans 65,633 8.64 59,672 8.67
Mortgages held for resale 2,410 7.17 1,449 7.67
Due from brokers/dealers 3,869 4.94 2,673 4.78
Other earning assets 1,039 4.47 1,904 5.92
----- ---- ----- ----
Total interest-earning assets 83,338 8.12% 74,231 8.22%
------ ---- ------ ----
Reserve for credit losses (1,506) (1,462)
Other assets 14,969 13,603
------ ------
Total assets $ 96,801 $ 86,372
========== =========
- ------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings $ 28,288 2.40% $ 27,570 2.23%
Time 22,016 5.32 20,134 5.13
------ ---- ------ ----
Total interest-bearing deposits 50,304 3.68 47,704 3.46
------ ---- ------ ----
Short-term borrowings 8,331 4.90 5,012 4.58
Due to brokers/dealers 4,693 4.81 3,175 4.53
Long-term debt 5,673 7.31 4,698 7.31
----- ---- ----- ----
Total interest-bearing liabilities $ 69,001 4.20% $ 60,589 3.90%
========== ==== ========= ====
Net interest spread 3.92% 4.32%
- -------------------------------------------------------------------------------------------------
Demand deposits and other noninterest-
bearing time deposits $ 16,096 $ 15,942
Other liabilities 2,942 2,322
----- -----
Total liabilities 88,039 78,853
------ ------
Stockholders' equity 8,762 7,519
----- -----
Total liabilities and stockholders' equity $ 96,801 $ 86,372
========== =========
Net interest margin 4.64% 5.03%
- -------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 99(b)
Contacts: James Mahoney
(617) 346-5472
FLEET FINANCIAL GROUP
DECLARES 10% INCREASE IN COMMON STOCK DIVIDEND
DECLARES REGULAR QUARTERLY PREFERRED STOCK DIVIDENDS
Boston, Massachusetts, October 21, 1998: The Board of Directors of Fleet
Financial Group, Inc. (NYSE: FLT) today declared a 10% increase in Fleet's
quarterly common stock dividend to $.27 per common share. The dividend will be
payable on January 1, 1999 to shareholders of record on December 3, 1998.
The Board of Directors also declared regular quarterly dividends of $.825
per depositary share on the Corporation's Series VII Fixed/Adjustable Rate
Cumulative Preferred Stock and $.825 per depositary share on the Corporation's
Series VIII Fixed/Adjustable Rate Cumulative Preferred Stock. The preferred
stock dividends on these two issues are payable on January 1, 1999 to
shareholders of record on December 15, 1998.
Fleet Financial Group, headquartered in Boston and listed on the New York
Stock Exchange (NYSE: FLT), is a diversified financial services company with
$99.5 billion in assets and more than $74 billion in assets under management.
Fleet is the nation's sixth largest commercial lender and New England's leading
small business lender. Fleet's products and services include consumer banking,
government banking, mortgage banking, corporate finance, commercial real estate
lending, credit cards, insurance services, cash management, capital markets,
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 more than 2,400 ATMs,
Fleet also provides 24-hour telephone banking as well as online banking services
through the Internet and through its PC Banking software for individuals and
businesses.
