SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 13, 2000
FLEETBOSTON FINANCIAL 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 BOSTON CORPORATION
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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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.
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Exhibit No. Description
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Exhibit 99 Press Release
Dated April 13, 2000
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.
FLEETBOSTON FINANCIAL CORPORATION
By: /s/ William C. Mutterperl
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William C. Mutterperl
Executive Vice President, General
Counsel and Secretary
Dated: April 20, 2000
Exhibit 99
Contacts: Media: James Mahoney Investor: John Kahwaty
(617) 346-5472 (617) 434-3650
FLEETBOSTON REPORTS RECORD NET INCOME OF
$957 MILLION OR $1.03 PER SHARE
OPERATING EPS OF $.87, UP 28% FROM PRIOR YEAR
Boston, Massachusetts, April 13, 2000: FleetBoston Financial (FBF-NYSE)
today reported record first quarter earnings of $957 million, or $1.03 per
share, up 51% on an earnings per share basis from $661 million, or $.68 per
share in the first quarter of 1999. Return on assets and return on equity for
the quarter, on a reported basis, were 1.94% and 26.83%, respectively. The
quarter included divestiture gains and merger-related expenses of $149 million
(after-tax) related to the March 24 divestiture of approximately $4 billion of
loans and deposits to Sovereign Bancorp and expenses related to the merger of
BankBoston and Fleet. Excluding the impact of these items, operating net income
was $808 million, or $.87 per share in the first quarter of 2000, up 28% on an
earnings per share basis from $661 million, or $.68 per share, in the first
quarter of 1999. Return on assets and return on equity for the quarter, on an
operating basis, were 1.63% and 22.59%, respectively, compared with 1.44% and
18.92%, a year ago.
Terry Murray, chairman and chief executive officer of FleetBoston
commented, "The merged company has outperformed all expectations. The results
for this quarter are indicative of the growth and revenue generating capacity of
our new company. Our diversified business mix extends far beyond traditional
banking services and has provided us with the ability to capitalize on the
strong growth occurring across the broad economic spectrum. We are also very
pleased to report that our merger integration efforts remain on track. We are
very enthused by the potential of our franchise and our focus remains on
successfully completing the integration, and leveraging leadership positions in
our existing businesses."
Chad Gifford, president and chief operating officer said, "It has been a
year since we announced the merger of Fleet and BankBoston. We couldn't be
happier with how our two companies have come together. We had outstanding
performances this quarter from both our traditional and capital markets-related
businesses. We are cognizant of the dramatic changes that e-commerce is
generating and are positioning this company to not only participate, but also
profit from this growth sector of the economy. Currently, we are exploiting the
competitive advantages that we enjoy in the emerging growth sector via Robertson
Stephens and Principal Investing. On the investor side, we are also terrifically
positioned at Quick & Reilly to benefit from the explosion in transaction
volumes in the securities markets. We believe that these three businesses have
significant embedded values and along with our other growth businesses are
expected to generate considerable shareholder value in the future."
Strong Results from Both Traditional & Capital Markets Businesses
Exceptional results were reported by a number of our traditional banking
and capital markets businesses.
Net income from Commercial and Retail Banking, which includes consumer and
small business banking within the corporation's northeast footprint, middle
market lending, asset based lending, leasing and other commercial banking
services was $320 million in the first quarter, an increase of $40 million, or
14%, from the prior year. This increase was mainly driven by wider spreads on
deposits, cost savings from merger integration activities and higher commercial
loan volume. Net income from international operations improved $21 million, or
30%, to $90 million reflecting higher volumes of loans and deposits as well as
wider spreads in Latin America. The Investment Services area, which includes the
corporation's asset management businesses and Quick & Reilly, posted net income
of $121 million in the first quarter, which represented a $40 million, or 49%,
improvement over the prior year. Quick & Reilly, a full service discount
brokerage company that also includes one of the largest New York Stock Exchange
specialist and clearing businesses, recorded record revenues arising from
sharply higher stock exchange-related volumes.
Improvements in net income were also registered in the corporation's
capital markets businesses. Robertson Stephens, the corporation's San
Francisco-based investment banking operation that provides a variety of capital
markets services, including equity underwriting, M&A advisory, and brokerage
services, saw its net income increase to $119 million. The improvement was
driven by significant increases in underwriting and advisory fees, as well as
higher trading volumes. In addition, Principal Investing, a global business that
invests in early and later stage companies operating in a variety of industries
in the U.S. and abroad, posted net income of $153 million, a more than
three-fold increase from the prior year.
First Quarter Consolidated Financial Highlights
Total revenue, excluding the net gain from the divestitures to Sovereign,
was $4.1 billion in the first quarter, up 26% from $3.2 billion in the prior
year, as strong growth was generated throughout the franchise.
Noninterest income on an operating basis was $2.4 billion in the first
quarter, an increase of $798 million, or 51%, over the first quarter of 1999.
This significant growth was mainly due to higher levels of capital markets and
investment services revenue. Noninterest income as a percentage of total revenue
grew to 58% in the current quarter from 48% in the prior year.
Net interest income for the first quarter of 2000 was $1.7 billion, which
represented a $42 million increase over the prior year. This increase was mainly
driven by domestic and international loan growth. Net interest margin declined
17 basis points to 4.18% due, in part, to the impact of higher required levels
of low yielding assets to accommodate Robertson Stephens' nearly 400% increase
in revenue. Net interest margin improved 6 basis points from the fourth quarter
of 1999 level.
Noninterest expense, excluding the impact of the merger and related
charges, was $2.4 billion during the quarter, a $477 million increase over the
first quarter of 1999. This increase includes the impact of higher compensation
expense directly attributable to higher levels of revenue, particularly from
capital markets-related businesses. Partially offsetting this increase was a
cumulative decline from cost savings achieved from merger integration activities
of $65 million ($40 million this quarter), bringing the total amount of cost
savings achieved to $260 million on an annualized basis.
Nonperforming assets were $886 million, or .75% of total loans, at March
31, 2000, compared with $841 million, or .70% of loans, at December 31, 1999.
Net charge-offs and the provision for credit losses were $275 million and $300
million, respectively, in the current quarter, compared with $245 million for
both items in the fourth quarter of 1999. Net charge-offs and the provision for
credit losses were $216 million and $219 million, respectively, in the first
quarter of 1999. The reserve for credit losses was $2.5 billion at March 31,
2000, representing 2.11% of total loans and leases.
Total assets at March 31, 2000 were $187.8 billion, compared with $190.7
billion at December 31, 1999 and $181.9 billion at March 31, 1999. Stockholders'
equity amounted to $15.0 billion at March 31, 2000.
<PAGE>
FLEETBOSTON FINANCIAL
CONSOLIDATED INCOME STATEMENTS
($ IN MILLIONS)
Three Months Ended
March 31, March 31,
2000 1999
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Net interest income (FTE) $ 1,723 $ 1,681
Noninterest income:
Capital markets revenue 1,059 397
Investment services revenue 500 356
Banking fees and commissions 364 350
Credit card revenue 159 162
Processing-related revenue 156 154
Other 118 139
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Total noninterest income 2,356 1,558
Total Revenue 4,079 3,239
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Noninterest expense:
Employee compensation and benefits 1,408 1,016
Occupancy 142 139
Equipment 126 130
Intangible asset amortization 88 86
Other 648 564
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Total noninterest expense 2,412 1,935
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Provision for credit losses (300) (219)
Divestiture gain 366 --
Integration charges (100) --
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Earnings before taxes 1,633 1,085
Income taxes and tax-equivalent adjustment 676 424
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Net income - Reported 957 661
Divestiture gain, net of tax (209) --
Integration charges, net of tax 60 --
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Net income - Operating $ 808 $ 661
================================================================================
Diluted earnings per share - operating $ .87 $ .68
Diluted earnings per share - reported 1.03 .68
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FLEETBOSTON FINANCIAL
CONSOLIDATED BALANCE SHEETS
($ IN MILLIONS)
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March 31, 2000 March 31, 1999
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ASSETS:
Cash and equivalents $ 12,078 $ 12,625
Securities 23,083 24,894
Trading assets 8,020 4,856
Loans and leases 117,353 116,425
Reserve for credit losses (2,477) (2,481)
Due from brokers/dealers 4,252 2,726
Mortgages held for resale 904 2,188
Other assets 24,601 20,640
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Total assets $ 187,814 $ 181,873
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LIABILITIES:
Deposits $ 109,201 $ 116,101
Short-term borrowings 18,788 17,648
Due to brokers/dealers 5,561 3,823
Long-term debt 26,347 21,200
Trading liabilities 3,329 2,334
Other liabilities 9,635 6,214
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Total liabilities 172,861 167,320
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STOCKHOLDERS' EQUITY:
Preferred stock 566 691
Common stock 14,387 13,862
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Total stockholders' equity 14,953 14,553
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Total liabilities and stockholders' equity $ 187,814 $ 181,873
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FLEETBOSTON FINANCIAL
CONSOLIDATED AVERAGE BALANCE SHEETS
($ IN MILLIONS)
<TABLE>
<CAPTION>
March 31, 2000 March 31, 1999
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Balance Rate Balance Rate
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ASSETS:
<S> <C> <C> <C> <C>
Securities $ 24,237 6.50% $ 23,896 6.36%
Loans and leases 119,650 9.30 115,136 8.89
Mortgages held for resale 1,198 8.08 3,867 6.86
Due from brokers/dealers 3,922 5.27 3,404 4.41
Other earning assets 16,680 5.74 9,901 6.15
Total interest-earning assets 165,687 8.43% 156,204 8.18%
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Reserve for credit losses (2,536) -- (2,444) --
Other assets 35,176 -- 29,200 --
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Total assets $ 198,327 -- $ 182,960 --
========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Savings - Domestic $ 46,563 2.44% $ 46,824 2.16%
Time - Domestic 25,212 5.08 28,780 5.11
International 16,924 7.06 16,271 7.10
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Total interest-bearing deposits 88,699 4.07 91,875 3.96
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Short-term borrowings 25,990 5.63 21,444 4.92
Due to brokers/dealers 5,062 5.39 3,865 4.12
Long-term debt 25,608 6.65 18,726 6.07
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Total interest-bearing liabilities $ 145,359 4.85% $ 135,910 4.41%
========================================================================================================================
Net interest spread -- 3.58% -- 3.77%
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Demand deposits and other noninterest-
bearing time deposits $ 25,308 -- $ 23,911 --
Other liabilities 12,901 -- 8,774 --
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Total liabilities 183,568 -- 168,595 --
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Stockholders' equity 14,759 -- 14,365 --
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Total liabilities and stockholders' equity $ 198,327 -- $ 182,960 --
========================================================================================================================
Net interest margin -- 4.18% -- 4.35%
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</TABLE>
<PAGE>
FLEETBOSTON FINANCIAL
FINANCIAL HIGHLIGHTS
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Three Months Ended
March 31, March 31,
2000 1999
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FOR THE PERIOD ($ IN MILLIONS)
Net Income - operating (a) $ 808 $ 661
Divestiture Gains/Integration charges, net of tax 149 --
Net Income - reported 957 661
Total Revenue (a) 4,079 3,239
Total Expense (a) 2,412 1,935
Provision for Credit Losses 300 219
PER COMMON SHARE
Earnings per share - operating (a) $ .87 $ .68
Earnings per share - reported 1.03 .68
Cash earnings per share - operating (a) .93 .75
Cash dividends declared .30 .27
Book value (period-end) 15.93 15.07
AT PERIOD-END ($ IN BILLIONS)
Assets $ 187.8 $ 181.9
Loans 117.4 116.4
Deposits 109.2 116.1
Total stockholders' equity 15.0 14.6
RATIOS
Return on average assets (a) 1.63% 1.44%
Return on common equity (a) 22.59 18.92
Net interest margin 4.18 4.35
Efficiency ratio (a) 59.1 59.7
Total equity/assets (period-end) 8.0 8.0
Tangible common equity/assets 5.6 5.4
Tier 1 risk-based capital ratio 6.9 6.8
Total risk-based capital ratio 11.4 11.2
ASSET QUALITY ($ IN MILLIONS)
Nonperforming assets $ 886 $ 662
Reserve for credit losses 2,477 2,481
Nonperforming assets as a % of loans .75% .57%
Reserve for credit losses to period-end loans 2.11 2.13
Reserve for credit losses to nonperforming loans 295 397
Net charge-offs/average loans .92 .76
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(a) Excludes the impact of divestiture gains and merger and integration
charges.
