Exhibit 99
Contacts: Media: James Mahoney Investor: John Kahwaty
(617) 346-5472 (617) 434-3650
FLEETBOSTON REPORTS NET INCOME OF
$847 MILLION OR $.91 PER SHARE
OPERATING EPS $.83, UP 15% FROM PRIOR YEAR
Boston, Massachusetts, July 17, 2000: FleetBoston Financial (FBF-NYSE)
today reported second quarter operating earnings of $772 million, or $.83 per
share, up 15% on an earnings per share basis from $700 million, or $.72 per
share, in the second quarter of 1999. Return on assets and return on equity for
the quarter, on an operating basis, were 1.67% and 21.43%, respectively,
compared with 1.48% and 19.78%, a year ago. In addition, the institution
realized divestiture gains, net of merger-related expenses, of $75 million
(after-tax) related to the second quarter divestitures of approximately $3.6
billion of loans and $4 billion of deposits to Sovereign Bancorp and certain
community banks, as well as expenses related to the merger of BankBoston and
Fleet. Including the impact of these items, net income was $847 million, or $.91
per share, in the second quarter of 2000, up 26% on an earnings per share basis
from the second quarter of 1999. Return on assets and return on equity for the
quarter were 1.83% and 23.53%, respectively.
For the first six months of 2000, operating earnings were $1.58
billion, or $1.69 per share, up 20% on an earnings per share basis from $1.36
billion, or $1.41 per share in the first six months of 1999. Net income for the
first six months of 2000, which included divestiture gains and merger-related
expenses, was $1.8 billion, or $1.94 per share, up 38% on an earnings per share
basis from $1.36 billion, or $1.41 per share, in the first six months of 1999.
Terry Murray, Chairman and Chief Executive Officer of FleetBoston
commented, "The power and promise of our company is really coming to fruition.
The earnings growth is driven by the diversity and leadership positions of our
new franchise, despite a tougher business environment for our industry. We've
achieved this growth while also bolstering the strength of our balance sheet as
evidenced by reserves that equal 2.2% of loans and capital that has risen above
$15 billion. As we near the completion of the divestiture and conversion phases
of our merger, we fully expect to meet or exceed all the commitments made at the
time of the Fleet and BankBoston merger announcement."
Chad Gifford, President and Chief Operating Officer said, "We are
intent on creating one of the finest financial services companies. The business
fit from the merger is terrific and jelling quite rapidly. Our revenue strength
enables us to absorb critical reinvestment in our high return businesses without
compromising our overall earnings growth. We have a number of promising
initiatives planned and underway, especially related to e-commerce, that will
keep us positioned as an innovative provider of services to our customers."
Strong Results From Many Business Lines
Eugene M. McQuade, Vice-Chairman and Chief Financial Officer noted,
"Exceptional results were reported across the breadth of our business franchise
this quarter."
Earnings 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, cash management, and commercial
banking services were $328 million in the second quarter, an increase of $72
million, or 28%, from the prior year. This increase was mainly driven by
strength in our deposit businesses, cost savings from merger integration
activities, and higher loan volume.
Earnings from Global Banking and Financial Services, which includes
asset management and brokerage, national commercial banking, capital markets and
international, improved $141 million, or 44%, to $460 million. The Investment
Services area, which includes the corporation's asset management businesses and
Quick & Reilly, posted net income of $120 million in the second quarter,
representing a $29 million, or 32%, improvement over the prior year due to
sharply higher stock exchange-related volumes at Quick & Reilly and higher asset
management fees. In addition, net income from the Principal Investing business
grew $86 million to $122 million reflecting, in part, a higher level of gains
realized from maturing investments, while Latin America continued to be an area
of strength, led by Brazil, which saw its net income grow 18% over the second
quarter of last year.
Second Quarter Consolidated Financial Highlights
Total revenue, excluding the net gain from the divestitures, was $3.7
billion in the second quarter, up 8% from the prior year, as strong growth in
noninterest income more than offset the loss of revenues from divestitures.
Noninterest income as a percentage of total revenue grew to 55% in the current
quarter from 51% in the second quarter of last year. For the year, revenues are
up 16% over the first six months of 1999.
Noninterest income on an operating basis was $2.0 billion in the second
quarter, an increase of $294 million, or 17%, over the second quarter of 1999.
This growth was mainly due to higher levels of capital markets and investment
services revenue.
Net interest income for the second quarter of 2000 was $1.7 billion,
down $30 million from the second quarter of last year. Lost revenue from
divestitures more than offset the impact of domestic and international loan
growth, as well as wider deposit spreads. The net interest margin improved 12
basis points to 4.37% due, in part, to the elimination of the regulatory
requirement to maintain certain levels of low yielding assets to support revenue
from Robertson Stephens.
Noninterest expense, excluding the impact of the merger and related
charges, was $2.1 billion during the quarter, up $55 million from the second
quarter of 1999. An increase in incentive compensation expense directly
attributable to higher levels of revenue, particularly from capital
markets-related businesses, was partially offset by cost savings and the impact
of divestitures. The cost savings achieved from merger integration activities
this quarter were $34 million, bringing the total amount of cost savings
achieved to nearly $400 million on an annualized basis.
Nonperforming assets were $950 million, or .84% of total loans, at June
30, 2000, compared with $886 million, or .75% of loans, at March 31, 2000. The
provision for credit losses and net charge-offs were $310 million and $285
million, respectively, in the current quarter and $241 million and $207 million,
respectively, in the second quarter of 1999. The reserve for credit losses was
$2.5 billion at June 30, 2000, representing 2.20% of total loans and leases.
Total assets at June 30, 2000 were $181.3 billion, compared with $187.8
billion at March 31, 2000 and $184.5 billion at June 30, 1999. The decline in
total assets is due to the divestiture of loans to Sovereign Bancorp and other
community banks during the first six months of 2000, as well as the
aforementioned elimination of the regulatory requirement to maintain certain
levels of low yielding assets to support revenue from Robertson Stephens.
Stockholders' equity amounted to $15.2 billion at June 30, 2000, with a common
equity to assets ratio of 8.08%.
<PAGE>
FleetBoston Financial
Financial Highlights
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------------------------------------------------------------------------------------------------------------
FOR THE PERIOD ($ IN MILLIONS)
<S> <C> <C> <C> <C>
$ 772 $ 700 Operating earnings (a) $1,580 $1,361
75 - Divestiture Gains/Integration charges, net of tax 224 -
847 700 Net Income 1,804 1,361
3,731 3,467 Total Revenue (a) 7,809 6,706
2,136 2,081 Total Expense (a) 4,548 4,016
310 241 Provision for Credit Losses 610 460
PER COMMON SHARE
$ .83 $ .72 Earnings per share - operating (a) $ 1.69 $ 1.41
.91 .72 Earnings per share - reported 1.94 1.41
.89 .79 Cash earnings per share - operating (a) 1.82 1.53
.30 .27 Cash dividends declared .60 .54
16.24 15.31 Book value (period-end) 16.24 15.31
AT PERIOD-END ($ IN BILLIONS)
$181.3 $184.5 Assets $181.3 $184.5
112.5 117.0 Loans 112.5 117.0
104.7 115.4 Deposits 104.7 115.4
15.2 14.8 Total stockholders' equity 15.2 14.8
RATIOS
1.67% 1.48% Return on average assets (a) 1.65% 1.48%
21.43 19.78 Return on common equity (a) 22.01 19.57
4.37 4.25 Net interest margin 4.27 4.30
57.2 60.5 Efficiency (a) 58.2 60.1
8.4 8.0 Total equity/assets (period-end) 8.4 8.0
6.0 5.5 Tangible common equity/assets 6.0 5.5
7.4 7.1 Tier 1 risk-based capital 7.4 7.1
11.8 11.5 Total risk-based capital 11.8 11.5
ASSET QUALITY ($ IN MILLIONS)
$ 950 $ 704 Nonperforming assets $ 950 $ 704
2,472 2,515 Reserve for credit losses 2,472 2,515
.84% .60% Nonperforming assets as a % of loans .84% .60%
2.20 2.15 Reserve for credit losses to period-end loans 2.20 2.15
275 374 Reserve for credit losses to nonperforming loans 275 374
.98 .71 Net charge-offs/average loans .95 .73
=============================================================================================================
</TABLE>
(a) Excludes the impact of merger-related charges and other special items.
<PAGE>
FleetBoston Financial
Consolidated Income Statements
($ in millions)
<TABLE>
<CAPTION>
=====================================================================================================================
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 2000
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,686 $ 1,716 Net interest income (FTE) $ 3,409 $ 3,397
Noninterest income:
813 503 Capital markets revenue 1,871 900
426 390 Investment services revenue 925 746
356 370 Banking fees and commissions 715 716
169 187 Credit card revenue 329 349
150 157 Processing-related revenue 306 311
131 144 Other 254 287
------------------------------------------------------------------------------------------------------------------------
2,045 1,751 Total noninterest income 4,400 3,309
------------------------------------------------------------------------------------------------------------------------
3,731 3,467 Total Revenue 7,809 6,706
------------------------------------------------------------------------------------------------------------------------
Noninterest expense:
1,145 1,126 Employee compensation and benefits 2,553 2,142
131 143 Occupancy 273 282
126 126 Equipment 252 256
87 85 Intangible asset amortization 175 171
647 601 Other 1,295 1,165
------------------------------------------------------------------------------------------------------------------------
2,136 2,081 Total noninterest expense 4,548 4,016
------------------------------------------------------------------------------------------------------------------------
1,595 1,386 Earnings before provision and income taxes 3,261 2,690
310 241 Provision for credit losses 610 460
513 445 Income taxes and tax-equivalent adjustment 1,071 869
------------------------------------------------------------------------------------------------------------------------
772 700 Net income - Operating 1,580 1,361
------------------------------------------------------------------------------------------------------------------------
127 - Divestiture gain, net of tax 336 -
52 - Integration charges, net of tax 112 -
------------------------------------------------------------------------------------------------------------------------
847 700 Net income - Reported 1,804 1,361
========================================================================================================================
$ .83 $ .72 Diluted earnings per share - operating $ 1.69 $ 1.41
.91 .72 Diluted earnings per share - reported 1.94 1.41
</TABLE>
<PAGE>
FleetBoston Financial
Consolidated Balance Sheets
($ in millions)
================================================================================
June 30, 2000 June 30, 1999
------------- -------------
Balance Balance
--------------------------------------------------------------------------------
ASSETS:
Cash and equivalents $ 12,244 $ 15,755
Securities 22,846 24,284
Trading assets 8,199 5,172
Loans and leases 112,476 116,995
Reserve for credit losses (2,472) (2,515)
Due from brokers/dealers 3,158 2,444
Mortgages held for resale 1,087 1,381
Other assets 23,721 20,957
--------------------------------------------------------------------------------
Total assets $181,259 $184,473
================================================================================
LIABILITIES:
Deposits $104,692 $115,380
Short-term borrowings 15,578 19,555
Due to brokers/dealers 4,773 3,775
Long-term debt 27,733 22,033
Trading liabilities 3,478 2,624
Other liabilities 9,788 6,313
--------------------------------------------------------------------------------
Total liabilities 166,042 169,680
--------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Preferred stock 566 691
Common stock 14,651 14,102
--------------------------------------------------------------------------------
Total stockholders' equity 15,217 14,793
--------------------------------------------------------------------------------
Total liabilities and stockholders' equity $181,259 $184,473
================================================================================
