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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 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 April 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: April 18, 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 April 18, 1995 4
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[LETTERHEAD OF CORESTATES FINANCIAL CORP APPEARS HERE]
Gary Brooten or Linda Stryker
(215) 973-3546
Immediately Upon Receipt
CoreStates Reports Record Earnings
Excluding Restructuring Charge, One-Time Gain;
Benefits from "Shared Successes With Customers"
Philadelphia, April 18, 1995--CoreStates Financial Corp today
reported first quarter net income of $55,367,000 or 38 cents per share.
Excluding a restructuring charge and one-time gain, operating earnings
were a record $113,606,000 or 79 cents per share.
The first quarter operating earnings resulted in continuing strong
performance ratios. Return on average assets was 1.63% and return on
average equity was 19.63%.
Operating earnings were up 16% from $97,805,000 or 68 cents per
share in the 1994 first quarter. In that quarter, one-time closing costs
for the acquisition of Constellation Bancorp and an accounting change
resulted in a net loss of $33,425,000 or 21 cents per share.
The 1995 first quarter earnings were unchanged from estimates
reported by CoreStates on March 29.
Terrence A. Larsen, chairman, said the strong operating earnings
"reflect the successes our customers are experiencing. Profitability and
growth of our customers brings the opportunity for similar successes at
CoreStates.
"Our people have been capturing these opportunities with skill and
professionalism under difficult market conditions, and our results have
been gratifying."
-more-
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2
CoreStates announced on March 29 that its redesign project, called
Building Exceptional Service Together or BEST, is expected to transform
the way business is conducted with customers, and is expected to benefit
earnings strongly as a result.
In connection with the BEST redesign, CoreStates took a $110 million
pre-tax restructuring charge that reduced first quarter income by 49
cents per share. The annual earnings improvement that will result is
expected to be 90 cents per share at the end of the next 18 months,
Larsen said.
CoreStates also said it had a one-time gain of 8 cents per share
from a first-quarter transaction involving its investment in Electronic
Payment Services, Inc., a joint venture with several other banking
companies.
In the first quarter, net interest income was up about 11% from a
year earlier. Average loans were up $1.1 billion, or 5.5%, even though
CoreStates sold almost $700 million of low-quality or narrow-margin loans
from acquired portfolios during the past year. Compared to a year ago,
the net interest margin increased 37 basis points to 5.93%. CoreStates'
net interest margin has held between 5.86% and 5.93% for the past four
quarters, placing it consistently among the top few larger banking
organizations.
Revenues from fee-based services were relatively flat year to year.
Larsen said CoreStates "partnered growth in international business with
our customers, resulting in a 21% increase in international service fees.
Domestic fees were down modestly, reflecting the need to hold costs with
and for our customers."
CoreStates' expense management showed improvement. Larsen said most
measures, including the overhead expense ratio, improved both
-more-
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3
year-to-year and quarter-to-quarter. The expense ratio was 59.19%.
CoreStates also benefited from the continuing decline in total non-
performing assets. At March 31 non-performing assets were $299 million,
down from $501 million a year ago and from $311 million at December 31.
The March 31, 1995 non-performing assets represented 1.05% of total
assets and 1.42% of total loans plus real estate foreclosed or in
foreclosure.
The reserve for loan losses at March 31 was $499 million, or 206% of
total non-performing loans. Net charge-offs were $26.9 million for the
first quarter, compared to $32.1 million a year ago.
Consolidated total assets at March 31 were $28.5 billion, including
$20.9 billion of consolidated net loans. Consolidated total deposits were
$20.9 billion.
Shareholders' equity at March 31 was $2.29 billion, or 8.04% of
total assets. The Tier 1 leverage ratio (Tier 1 or core capital as a
percentage of quarterly average assets) was 7.36% for the first quarter.
Tier 1 capital at March 31 was 8.29% of risk-adjusted assets and total
capital was 12.07% of risk-adjusted assets, well in excess of regulatory
minimums of 4% and 8%, respectively.
CoreStates' 1994 first quarter results are restated to reflect the
subsequent acquisition of Independence Bancorp, which was accounted for
as a pooling of interests. That restatement also reflects a writedown of
certain Independence mortgage securities with respect to a change of
accounting principle.
-30-
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CoreStates Financial Corp
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months ended March 31,
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1995 1994
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<S> <C> <C>
Income (loss) before cumulative effect of
a change in accounting principle $55,367(a)(b) $(29,995)(b)
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Net income (loss) $55,367(a)(b) $(33,425)(b)(c)
======= ========
Per Share
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Income (loss) before cumulative effect
of a change in accounting principle $0.38(a)(b) $(0.21)(b)
===== ======
Net income (loss) $0.38(a)(b) $(0.23)(b)(c)
===== ======
Average number of shares outstanding 144,246 144,612
======= =======
</TABLE>
(a) In March 1995, CoreStates completed an intensive review of its operations
and businesses and announced a corporate-wide process redesign plan, which
restructures its banking services around customers and enhances employees'
authority to make decisions to benefit customers. As a result of this
process redesign, CoreStates recorded a $110.0 million pre-tax
restructuring charge, $70.0 million after-tax or $0.49 per share, in March
1995. The process redesign is expected to generate by late 1996, annual
run-rate efficiencies which reduce expenses by approximately $180 million
and revenue enhancements which will net an addition of approximately $30
million to revenues, combining to improve net income at an annual rate of
$0.90 per share.
(b) Excluding an after-tax restructuring charge of $70.0 million, or $0.49 per
share, related to a corporate-wide process redesign and an after-tax gain
of $11.8 million, or $0.08 per share, related to changes in an investment
in an affiliate joint venture, both recorded in the first quarter of 1995,
and after-tax merger-related charges of $127.8 million, or $0.89 per share,
recorded in the first quarter of 1994 for the Constellation Bancorp
acquisition, selected financial results for the three months ended March
31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Income before cumulative effect of
a change in accounting principle.. $113,606 $97,805
Per share........................... $ 0.79 $ 0.68
</TABLE>
(c) Reflects the writedown to fair value for certain mortgage securities deemed
to be impaired under FASB's 1994 interpretation of FAS 115.
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