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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): April 19, 1994
CoreStates Financial Corp
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(Exact name of registrant specified in its Charter)
Pennsylvania 0-6879 23-1899716
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(State or other (Commission (IRS Employee
jurisdiction of File Number) identification No.)
incorporation)
Centre Square West, 1500 Market Street
Philadelphia, Pennsylvania 19101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone, including area code: (215) 973-3806
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(Former name and former address, if changed since last report)
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Item 5. Other Events.
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The information set forth in the earnings news release of CoreStates
Financial Corp as Exhibit 28 is incorporated by reference and made a part
hereof.
Item 7. Exhibits
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28 CoreStates Financial Corp Earnings News Release dated April 19, 1994.
CORESTATES FINANCIAL CORP
(Registrant)
By /s/ David T. Walker
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David T. Walker
Deputy Chief Counsel
Dated: April 20, 1994
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Exhibit Index
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Exhibit No. Page
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<S> <C> <C>
28 CoreStates Financial
Corp Earnings News
Release dated
April 19, 1994 4
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[LETTERHEAD OF CORESTATES APPEARS HERE] Exhibit 28
Contact Gary Brooten or Gregg Feistman
(215) 973-3546
For Release Immediately Upon Receipt
CoreStates Reports Solid First Quarter Earnings
Philadelphia, April 19, 1994--CoreStates Financial Corp today reported
net income for the first quarter of $91,912,000 or 72 cents per share,
reflecting strong returns on average assets of 1.48% and on average equity of
17.72%.
Net income for the first quarter of 1993, before a change in accounting
principles, was $75,050,000 or 58 cents per share. The 1993 figures have been
restated for the acquisition of Constellation Bancorp during the first quarter
of 1994, which is accounted for as a pooling of interests. All figures reflect
the two-for-one split in CoreStates' common stock on October 15, 1993.
Terrence A. Larsen, chairman, said earnings were up about 14% over the
year-earlier quarter, excluding effects of the pooling. With the Constellation
pooling, net income was up 24%.
He said year-to-year revenue growth was "less than what we had been
seeing in recent quarters," on both credit and fee-based products and
services. He noted, however, that the banking company did see a pickup of loan
demand in March, and that trend has continued to build so far in April. He
said revenue slowing may have
-more-
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2
been related to severe weather in the region.
"The banking industry continues to face challenges on both margins and
volume growth," said Larsen, "and we are not immune to those issues."
"Revenue growth is particularly an issue, and earnings are being driven
at least as much by expense control as they are by revenue growth."
Larsen said total non-financial expenses declined slightly, though the
majority of the cost savings from the Constellation acquisition will not begin
until the second quarter.
"We continue to chip away at our expense ratio, which has come down a bit
in each recent quarter, excluding the one-time charges associated with the
Constellation acquisition," he said. "This is an area where we will be
focusing greater attention."
"As our performance ratios suggest," he said, "we are continuing to
outperform the industry. We have confidence that the quality of our people, in
whom we have made substantial investments over the last three years, will
enable us to maintain our leadership position in the industry."
The company's investment in the joint venture Electronic Payment
Services, Inc., was restructured in December. This action adds $3 million to
quarterly revenues over ten years, representing recognition of deferred gains
from CoreStates' contribution of its former electronic payment services
businesses to the venture.
On a restated basis, non-performing assets were down from $538 million a
year ago to $464 million on March 31. The decrease reflected continuous
decline in non-performing assets in the original CoreStates portfolio and
declines during the middle quarters of 1993 in Constellation's non-performing
assets. These declines were partly offset by implementation in the first
quarter of a previously-announced plan to move to earlier recognition of
non-performing assets in the Constellation portfolio.
The provision for loan losses was $25 million, down from the
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3
restated $27.5 million of a year earlier. Net charge-offs were $30.2 million,
compared to $20.7 million in the first quarter of 1993. The reserve for loan
losses, strengthened by a $120 million supplemental provision charged to
Constellation's fourth quarter, grew to $533 million, or 142% of non-performing
loans, as of March 31.
"We recognized going in that there would be a need to manage the
Constellation portfolio aggressively, and I am happy to say that we are right
on plan in our progress so far," Larsen said.
He said that sales of Constellation securities undertaken in the quarter
to create a better fit with CoreStates' asset and liability management program
had resulted in $5 million in securities gains, more than offsetting first
quarter earnings dilution that otherwise would have been caused by the
acquisition.
Consolidated total assets at March 31 were $25.7 billion, including $18.5
billion consolidated net loans. Consolidated deposits were $18.7 billion.
Shareholders' equity at March 31 was $2.0 billion, or 7.9% of total
assets. The Tier 1 leverage ratio (Tier 1 or core capital as a percentage of
quarterly average assets) was 7.8% for the quarter. Tier 1 capital at March 31
was 8.9% of risk-adjusted assets and total capital was 13.1% of risk-adjusted
assets, compared to minimum regulatory requirements of 4% and 8%,
respectively.
-30-
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CoreStates Financial Corp
(in thousands, except per share amounts)
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<CAPTION>
Three Months ended March 31.
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1994 1993(a)
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Income before cumulative effect of
a change in accounting principle $91,912 $75,050
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Net income $91,912 $62,040(b)
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Per Share
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Income before cumulative effect of
a change in accounting principle $0.72 $0.58
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Net income $0.72 $0.48(b)
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Average number of shares outstanding 128,089 128,300
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(a) Restated to include Constellation Bancorp which was acquired on March
16, 1994 in a transaction accounted for as a pooling of interests.
(b) Reflects the adoption of Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits" (FAS 112). As
required under FAS 112, CoreStates recognized immediately the January 1,
1993 transitional liability of $20.0 million pre-tax, $13.0 million after-
tax, as the cumulative effect of a change in accounting principle in the
first quarter of 1993.
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