<PAGE>
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): January 18, 1995
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 99 is incorporated by reference and made a part
hereof.
Item 7. Exhibits
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99 CoreStates Financial Corp Earnings News Release dated January 18,
1995.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CORESTATES FINANCIAL CORP
(Registrant)
By /s/David T. Walker
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David T. Walker
Deputy Chief Counsel
Dated: January 19, 1995
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Exhibit Index
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Exhibit No. Page
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99 CoreStates Financial Corp Earnings News
Release Dated January 18, 1995 4
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Contact Gary Brooten or Gregg Feistman [LOGO OF CORESTATES
(215) 973-3546 APPEARS HERE]
For Release Immediately Upon Receipt
CoreStates Ends 1994 With Record Fourth Quarter;
Full-Year Operating Results Reflect Continued Strength
Philadelphia, January 18, 1995--CoreStates Financial Corp today reported
record fourth quarter net income of $111,475,000 or 78 cents per share, for
returns of 1.60% on average assets and 19.50% on average equity. The earnings
were up more than 17% from $94,676,000 or 65 cents per share in 1993, a per
share increase of 20%
Full year operating results -- excluding one-time charges related to two
first-half mergers -- were $416,239,000 or $2.92 per share, for returns of 1.50%
on average assets and 18.34% on average equity. Including the $167 million of
one-time after-tax charges, net income for the year was $245,362,000 or $1.75
per share. Full year 1993 operating earnings were $362,429,000 or $2.49 per
share.
Terrence A. Larsen, chairman, said the record fourth quarter results
reflected continuing strength and stability in CoreStates' overall business,
combined with moderate growth. The major contributing factors were continued
strength in the net interest margin and improved expense management.
On a year-to-year basis, quarterly net interest income grew by more than
7%. This was due mainly to a 34 basis point increase in the net interest margin
compared to the 1993 fourth quarter; at 5.89%, CoreStates' margin in the 1994
fourth quarter was near the top among major banking organizations.
Average quarterly loan volume was up slightly, Larsen said, reflecting two
opposing factors. During the year CoreStates sold low-quality or narrow-margin
loans from portfolios of acquired
-more-
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banks; the sales were more than offset by loan growth of about 5%, primarily in
higher-margin lines such as credit card and commercial finance.
"These offsetting factors contributed to our margin strength," Larsen said.
"Also, the stability of our margin benefited from our strategic decision many
years ago to minimize the interest rate risk that remains on our balance sheet.
This means the strength of our margin is related quite directly to the mix of
our basic banking business.
"A number of CoreStates' businesses, notably Congress Financial Corporation
and the credit card business, are relatively wide-margin lending activities. In
combination with the relative size of our loan portfolio, this contributes
positively to our net interest margin.
"On the funding side, our strong base of consumer deposits and demand
deposit balances associated with our cash management businesses both provide a
stable, low cost of funds," he added.
"This business mix is enhanced by strong asset/liability management skills,
a disciplined internal funds pricing system and the strategic use of derivatives
to hedge balance sheet risk. All of this contributes to both the strength and
stability of CoreStates' net interest margin."
Overall revenues from fee-based services increased slightly from the 1993
fourth quarter, with the highlight being 14% growth in international service
fees.
Larsen said the fourth quarter included a net benefit of about $1 million
to pretax earnings from the acquisition of Germantown Savings Bank on
December 2.
The company's expense ratio for the fourth quarter dropped below 60% for
the first time, at 59.74% compared to 63.18% a year earlier. This improvement
continued a year-long trend. Larsen said it resulted from continued progress in
achieving merger efficiencies and from the heightened attention to expense
management created by the process-redesign program CoreStates initiated in
September.
Full Year 1994 Results
The full year results, excluding the one-time charges related
-more-
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to the acquisitions of Constellation Bancorp in the first quarter and
Independence Bancorp in the second quarter, reflected much the same underlying
factors that characterized the fourth quarter.
Net interest income was up just under 5%, based on improvement of 21 basis
points in the net interest margin and moderate loan growth offset by sales of
portions of acquired portfolios. Revenues from fee-based services also followed
a pattern similar to that of the fourth quarter.
Non-performing assets resumed their two-year decline in the fourth quarter
after being flat from June to September. Total non-performing assets at December
31 were $311 million, compared to $357 million at September 30, 1994 and $439
million at December 31, 1993. The year-end 1994 total represented 1.06% of total
assets and 1.51% of total loans plus real estate foreclosed or in foreclosure.
The reserve for loan losses at December 31 was $501 million, or 203% of
total non-performing loans. Net charge-offs were $26.0 million for the fourth
quarter and $220.9 million (including $103.1 million associated with the
Constellation acquisition) for the full year 1994, compared to $28.8 million and
$115.0 million, respectively, in 1993.
Consolidated total assets at December 31 were $29.3 billion, including
$20.5 billion of consolidated net loans. Consolidated total deposits were $22.0
billion.
Shareholders' equity at December 31 was $2.35 billion, or 8.01% 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 fourth quarter. Tier 1 capital at
December 31 was 8.7% of risk-adjusted assets and total capital was 12.5% of
risk-adjusted assets, well in excess of regulatory minimums of 4% and 8%,
respectively.
-30-
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CoreStates Financial Corp
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
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1994 1993(a) 1994 1993(a)
--------- --------- ---------------- -----------
<S> <C> <C> <C> <C>
Income before cumulative
effect of a change in
accounting principle $111,475 $ 94,676 $248,792(b) $362,429
======== ======== =============== ==========
Net income $111,475 $ 94,676 $245,362(c) $349,419(d)
======== ======== =============== ==========
Per Share
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Income before cumulative
effect of a change
in accounting principle $ 0.78 $ 0.65 $1.75(b) $ 2.49
======== ======== =============== ==========
Net income $ 0.78 $ 0.65 $1.73(c) 2.40(d)
======== ======== =============== ==========
Average number of shares
outstanding 142,252 145,372 142,498 145,398
======== ======== =============== ==========
</TABLE>
(a) Restated to include Constellation Bancorp which was acquired on March 16,
1994 and Independence Bancorp which was acquired on June 27, 1994. Both
transactions were accounted for as a pooling of interests.
(b) Excluding after-tax merger-related charges of $127.8 million, or $0.89 per
share, recorded in the first quarter of 1994 for the Constellation
acquisition and $39.6 million, or $0.28 per share, recorded in the second
quarter of 1994 for the Independence acquisition, selected financial
results for the 1994 full year compared to the prior year follows:
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Income before cumulative effect of
a change in accounting
principle $416,239 $362,429
Per share $ 2.92 $ 2.49
</TABLE>
(c) Reflects Independence's writedown to fair value for certain mortgage
securities deemed to be impaired under FASB's 1994 interpretation of FAS
115.
(d) 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 or 0.09 per share, as the cumulative effect of a change in accounting
principle in the first quarter of 1993.
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