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 20, 1999
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FLEET BOSTON CORPORATION
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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, MA 02210
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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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FLEET FINANCIAL GROUP, INC.
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
Pursuant to Form 8-K, General Instruction F, the Company hereby
incorporates by reference the press release attached hereto as Exhibit
99.
Item 7. Financial Statements and Other Exhibits.
Exhibit No. Description
----------- -----------
Exhibit 99 Press Release
Dated October 20, 1999
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/ Erich Schumann
----------------------------
Erich Schumann
Senior Vice President,
Chief Accounting Officer
Dated: October 20, 1999
Contacts: Media: James Mahoney Investor: John Kahwaty
(617) 346-5472 (617) 434-3650
THIRD QUARTER EARNINGS RISE 41% TO $711 MILLION EARNINGS PER SHARE OF $.74
DIVIDEND INCREASED BY 11%
Boston, Massachusetts, October 20, 1999: Fleet Boston Corporation
(FLT-NYSE) today reported net income of $711 million, or $.74 per diluted share,
for the third quarter of 1999, a 41% increase compared with net income of $506
million, or $.52 per diluted share, earned in the third quarter of 1998. Return
on assets and return on equity were 1.50% and 19.55%, respectively, for the
third quarter of 1999 compared to 1.17% and 15.03%, respectively, for the third
quarter of 1998. For the nine month period ending September 30, 1999, the
corporation earned $2.1 billion, or $2.15 per diluted share, up 22% compared to
$1.7 billion, or $1.76 per diluted share, for the same period of 1998. The
current and prior period results have been presented on a supplemental basis and
restated to reflect the merger of Fleet Financial Group and BankBoston which was
accounted for using the pooling of interests method. Fleet Boston also announced
today an 11% increase in its quarterly dividend to $.30 per share for
shareholders of record on December 3, 1999.
"We are very pleased to have completed the merger of these two great
institutions," commented Terrence Murray, Fleet Boston's chairman and chief
executive officer. "This quarter's results clearly demonstrate the
diversification and power of Fleet Boston. Our integration is well advanced and
we are poised to capitalize on the complementary and unique strengths of each
company. We have leading positions in those businesses needed to succeed in the
global marketplace. We expect to create considerable value for our shareholders
as we do the job for our customers, communities and employees."
"Both companies came into the merger with excellent momentum and we didn't
miss a beat in the third quarter," said Chad Gifford, Fleet Boston's president
and chief operating officer. "Our financial performance was marked by strong
double-digit earnings growth, solid returns, and balance sheet strength. All
aspects of our operations - regional, national, and global - are performing
well. We are determined to execute to the full potential of our new company and
expect to deliver consistent, high quality results to our shareholders."
Financial Highlights
Net interest income totaled $1.7 billion during the third quarter of 1999,
up $105 million from the third quarter of 1998. The increase was principally
attributable to strong growth of interest earning assets, the purchase of Sanwa
Business Credit earlier this year, and growth in Latin America, primarily from
wider spreads. The corporation's net interest margin was 4.21% down 12 basis
points from the third quarter of 1998, related principally to the growth of the
commercial loan portfolio at lower spreads. Net interest income and net interest
margin were $5.1 billion and 4.27%, respectively, for the nine month period
ending September 30, 1999 and $4.8 billion and 4.40%, respectively, for the same
period in 1998.
Noninterest income in the third quarter of 1999 totaled $1.7 billion, up
37%, or $460 million from the same period in 1998, due primarily to strong gains
in the capital markets, investment services and credit card revenue categories.
Capital markets revenue doubled to $471 million as a result of robust gains in
market-making revenue from the corporation's equity specialists business, strong
private equity gains, as well as higher investment banking fees at Robertson
Stephens. Investment services revenue increased 22% to $363 million driven by
strong transactional volume, which benefited the corporation's brokerage and
clearing units at Quick & Reilly. Credit card revenue increased $58 million over
the prior year's third quarter, which was attributable to the acquisition of
various credit card portfolios during 1998 and a decline in charge-offs within
the securitized portfolio. For the nine month period ending September 30, 1999,
noninterest income jumped 32% to $5.0 billion when compared to $3.8 billion for
the same period of 1998, as the corporation continues to experience robust
growth in all major business lines as well as the benefit of a number of
acquisitions, principally Robertson Stephens.
Noninterest expense in the third quarter of 1999 totaled $2.0 billion, up
$184 million from the third quarter of 1998. The increase was due primarily to
the impact of various acquisitions, including Robertson Stephens and Sanwa, in
addition to incentive- and volume-related increases in compensation at many of
Fleet Boston's businesses that delivered strong revenue growth. In the third
quarter of 1998, the corporation incurred $80 million of costs associated with
the acquisition of Robertson Stephens and $45 million of charges related to the
realignment of other businesses. Noninterest expense increased to $6.0 billion
for the first nine months of 1999 when compared to $5.2 billion for the same
period of 1998 as a result of various acquisitions made throughout 1998 and 1999
as well as an increase in incentive compensation driven by higher revenue.
Fleet Boston is Year 2000 ready. All of Fleet Boston's internal systems
have been successfully remediated, tested and placed back into production. Year
2000 expenses for the third quarter were $18 million and $201 million since the
inception of the project. Focus areas for the remainder of 1999 include: vendor
management, contingency planning, borrower readiness and communications with
customers.
Nonperforming assets were $786 million, .66% of total loans at the end of
the third quarter of 1999, an increase of $102 million over the past year as a
result of additions in the commercial and industrial portfolio, coupled with the
acquisition of Sanwa Business Credit. Net charge-offs and the provision for
credit losses were both $228 million in the third quarter, higher than the third
quarter of 1998 due to the acquisition of various credit card portfolios and
Sanwa Business Credit, as well as higher credit losses in the commercial
portfolio. The reserve for credit losses was $2.5 billion at September 30, 1999,
and represents 2.10% of total loans and 341% of nonperforming loans.
Total assets at September 30, 1999 were $185.3 billion, up $7 billion from
December 31, 1998. Stockholders' equity amounted to $15.5 billion at September
30, 1999, an increase of $1.3 billion from year end.
###
<PAGE>
FLEET BOSTON CORPORATION
SUPPLEMENTAL SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, June 30, September 30, September 30, September 30,
1999 1999 1998 1999 1998
For the Period ($ in millions)
<S> <C> <C> <C> <C> <C>
Net Income $ 711 $ 700 $ 506 $ 2,072 $ 1,702
Total Revenue 3,406 3,467 2,841 10,112 8,568
Total Expense 2,016 2,081 1,832 6,032 5,159
Provision for Credit Losses 228 241 180 688 590
Per Common Share (a)
Diluted earnings per share $ .74 $ .72 $ .52 $ 2.15 $ 1.76
Basic earnings per share .76 .74 .54 2.20 1.81
Cash dividends declared .27 .27 .245 .81 .735
Book value (period-end) 16.01 15.31 14.38 16.01 14.38
At Period-End ($ in billions)
Assets $ 185.3 $ 184.5 $ 173.3 $ 185.3 $ 173.3
Loans 119.8 117.0 113.9 119.8 113.9
Deposits 113.2 115.4 112.4 113.2 112.4
Total stockholders' equity 15.5 14.8 13.9 15.5 13.9
Operating Ratios
Return on average assets 1.50% 1.48% 1.17% 1.47% 1.35%
Return on common equity 19.55 19.78 15.03 19.42 17.45
Net interest margin 4.21 4.25 4.33 4.27 4.40
Efficiency ratio (b) 59.2 60.5 59.4 59.8 58.0
Total equity/assets (period-end) 8.3 8.0 8.0 8.3 8.0
Tier 1 risk-based capital ratio 7.1 7.1 6.9 7.1 6.9
Total risk-based capital ratio 11.3 11.5 11.3 11.3 11.3
Asset Quality ($ in millions)
Nonperforming assets $ 786 $ 704 $ 684 $ 786 $ 684
Reserve for credit losses 2,515 2,515 2,292 2,515 2,292
Nonperforming assets as a % of loans .66% .60% .60% .66% .60%
Nonperforming assets as a % of total assets .42 .38 .39 .42 .39
Reserve for credit losses to period-end loans 2.10 2.15 2.01 2.10 2.01
Reserve for credit losses to nonperforming loans 341 374 358 341 358
Net charge-offs/average loans .76 .71 .63 .74 .71
</TABLE>
(a) All common share data for all periods presented reflects the two-for-one
common stock split which was effective during 1998.
(b) The efficiency ratio excludes the impact of merger-related charges and
other special items.
<PAGE>
FLEET BOSTON CORPORATION
SUPPLEMENTAL CONSOLIDATED INCOME STATEMENTS
($ in millions)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, June 30, September 30, September 30, September 30,
1999 1999 1998 1999 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
$1,714 $1,716 $1,609 Net interest income (FTE) $ 5,111 $ 4,780
Noninterest income:
471 503 231 Capital markets revenue 1,371 806
391 373 347 Banking fees and commissions 1,115 984
363 390 298 Investment services revenue 1,108 881
193 187 135 Credit card revenue 542 311
146 157 128 Processing-related revenue 457 311
128 141 93 Other 408 495
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1,692 1,751 1,232 Total noninterest income 5,001 3,788
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3,406 3,467 2,841 Total Revenue 10,112 8,568
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Noninterest expense:
1,053 1,126 937 Employee compensation and benefits 3,196 2,585
143 143 133 Occupancy 425 392
128 126 118 Equipment 384 352
88 85 70 Intangible asset amortization 259 200
604 601 574 Other 1,768 1,630
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2,016 2,081 1,832 Total noninterest expense 6,032 5,159
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1,390 1,386 1,009 Earnings before income taxes and provision 4,080 3,409
228 241 180 Provision for credit losses 688 590
451 445 323 Income taxes and tax-equivalent adjustment 1,320 1,117
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$ 711 $ 700 $ 506 Net income $ 2,072 $ 1,702
======================================================================================================================
$ .74 $ .72 $ .52 Diluted earnings per share $ 2.15 $ 1.76
.76 .74 .54 Basic earnings per share 2.20 1.81
</TABLE>
<PAGE>
FLEET BOSTON CORPORATION
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
($ in millions)
(Unaudited)
<TABLE>
<CAPTION>
September 30 June 30, September 30,
1999 1999 1998
---- ---- ----
ASSETS:
<S> <C> <C> <C>
Cash and equivalents $ 11,333 $ 15,755 $ 10,915
Securities 24,708 24,284 22,750
Trading assets 6,050 5,172 3,814
Loans and leases 119,772 116,995 113,880
Reserve for credit losses (2,515) (2,515) (2,292)
Due from brokers/dealers 2,856 2,444 3,248
Mortgages held for resale 1,052 1,381 2,710
Other assets 22,039 20,957 18,287
- ------------------------------------------------------------------------------------
Total assets $185,295 $184,473 $173,312
====================================================================================
LIABILITIES:
Deposits $113,184 $115,380 $112,375
Short-term borrowings 17,289 19,555 22,647
Due to brokers/dealers 3,884 3,775 4,307
Long-term debt 25,240 22,033 12,802
Trading liabilities 3,358 2,624 1,890
Other liabilities 6,883 6,313 5,422
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Total liabilities 169,838 169,680 159,443
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STOCKHOLDERS' EQUITY:
Preferred stock 691 691 691
Common stock 14,766 14,102 13,178
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Total stockholders' equity 15,457 14,793 13,869
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Total liabilities and stockholders'
equity $185,295 $184,473 $173,312
====================================================================================
</TABLE>
<PAGE>
FLEET BOSTON CORPORATION
SUPPLEMENTAL CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
September 30, 1999 September 30, 1998
------------------ ------------------
Average Average
Balance Rate Balance Rate
------- ---- ------- ----
ASSETS:
<S> <C> <C> <C> <C>
Securities $ 24,454 6.51 % $ 21,488 6.82 %
Loans and leases 116,873 8.77 109,905 8.97
Mortgages held for resale 2,790 7.05 2,466 7.16
Due from brokers/dealers 3,289 4.45 3,869 4.94
Other earning assets 12,502 6.37 7,363 8.38
- -------------------------------------------------------------------------------------------
Total interest-earning assets 159,908 8.12 % 145,091 8.48 %
- -------------------------------------------------------------------------------------------
Reserve for credit losses (2,488) - (2,238) -
Other assets 29,708 - 25,106 -
- -------------------------------------------------------------------------------------------
Total assets $ 187,128 - $ 167,959 -
===========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings - Domestic $ 47,257 2.19 % $ 43,685 2.48 %
Time - Domestic 27,424 4.95 28,061 5.41
International 16,295 6.80 15,787 6.96
- -------------------------------------------------------------------------------------------
Total interest-bearing deposits 90,976 3.85 87,533 4.23
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Short-term borrowings 23,037 5.14 21,598 5.94
Due to brokers/dealers 4,080 4.50 4,693 4.81
Long-term debt 21,311 6.06 10,111 7.13
- -------------------------------------------------------------------------------------------
Total interest-bearing liabilities $ 139,404 4.42 % $ 123,935 4.79 %
===========================================================================================
Net interest spread - 3.70 % - 3.69 %
===========================================================================================
Demand deposits and other noninterest-
bearing time deposits $ 24,008 - $ 24,101 -
Other liabilities 9,095 - 6,357 -
- -------------------------------------------------------------------------------------------
Total liabilities 172,507 - 154,393 -
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Stockholders' equity 14,621 - 13,566 -
- -------------------------------------------------------------------------------------------
Total liabilities and stockholders'
equity $ 187,128 - $ 167,959 -
===========================================================================================
Net interest margin 4.27 % 4.40 %
===========================================================================================
</TABLE>
<PAGE>
FLEET BOSTON CORPORATION
SUPPLEMENTAL CONSOLIDATED AVERAGE BALANCE SHEETS
($ in millions)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
September 30, 1999 September 30, 1998
------------------ ------------------
Average Average
Balance Rate Balance Rate
------- ---- ------- ----
ASSETS:
<S> <C> <C> <C> <C>
Securities $ 24,454 6.51 % $ 21,488 6.82 %
Loans and leases 116,873 8.77 109,905 8.97
Mortgages held for resale 2,790 7.05 2,466 7.16
Due from brokers/dealers 3,289 4.45 3,869 4.94
Other earning assets 12,502 6.37 7,363 8.38
- -----------------------------------------------------------------------------------------
Total interest-earning assets 159,908 8.12 % 145,091 8.48 %
- -----------------------------------------------------------------------------------------
Reserve for credit losses (2,488) - (2,238) -
Other assets 29,708 - 25,106 -
- -----------------------------------------------------------------------------------------
Total assets $ 187,128 - $ 167,959 -
=========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings - Domestic $ 47,257 2.19 % $ 43,685 2.48 %
Time - Domestic 27,424 4.95 28,061 5.41
International 16,295 6.80 15,787 6.96
- -----------------------------------------------------------------------------------------
Total interest-bearing deposits 90,976 3.85 87,533 4.23
- -----------------------------------------------------------------------------------------
Short-term borrowings 23,037 5.14 21,598 5.94
Due to brokers/dealers 4,080 4.50 4,693 4.81
Long-term debt 21,311 6.06 10,111 7.13
- -----------------------------------------------------------------------------------------
Total interest-bearing
liabilities $ 139,404 4.42 % $ 123,935 4.79 %
=========================================================================================
Net interest spread - 3.70 % - 3.69 %
=========================================================================================
Demand deposits and other noninterest-
bearing time deposits $ 24,008 - $ 24,101 -
Other liabilities 9,095 - 6,357 -
- -----------------------------------------------------------------------------------------
Total liabilities 172,507 - 154,393 -
- -----------------------------------------------------------------------------------------
Stockholders' equity 14,621 - 13,566 -
- -----------------------------------------------------------------------------------------
Total liabilities and stockholders'
equity $ 187,128 - $ 167,959 -
=========================================================================================
Net interest margin 4.27 % 4.40 %
=========================================================================================
</TABLE>
