<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 17, 1996
CoreStates Financial Corp
- --------------------------------------------------------------------------------
(Exact name of registrant specified in its Charter)
Pennsylvania 0-6879 23-1899716
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employee
jurisdiction of File Number) identification No.)
incorporation)
Centre Square West, 1500 Market Street
Philadelphia, Pennsylvania 19101
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone, including area code: (215) 973-7488
--------------
- --------------------------------------------------------------------------------
(Former name and former address, if changed since last report)
Page 1 of 9
<PAGE>
Item 5. Other Events.
-------------
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
--------
99 CoreStates Financial Corp Earnings News Release dated January 17, 1996.
SIGNATURE
---------
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
-------------------------
David T. Walker
Senior Vice President
Dated: January 18, 1996
Page 2 of 9
<PAGE>
Exhibit Index
-------------
Exhibit No. Page
- ----------- ----
99 CoreStates Financial Corp Earnings
News Release Dated January 17, 1996 4
Page 3 of 9
<PAGE>
Exhibit 99
[LETTERHEAD OF CORESTATES APPEARS HERE]
Contact
Gary Brooten or Linda Stryker
(215) 973-3546
For Release
Immediately Upon Receipt
CoreStates Reports Record Net and Operating Results;
Operating Earnings Up 23% for Quarter, Year
Philadelphia, January 17, 1996--CoreStates Financial Corp today
reported record operating earnings and net income for the fourth quarter,
ending its best earnings year ever with increases of 23% in operating
earnings for both the quarter and the full year.
Net income was $136,954,000 or 99 cents per share for the quarter
and $452,237,000 or $3.22 per share for the full year, compared to
$111,475,000 or 78 cents per share and $245,362,000 or $1.73 per share,
respectively, for 1994. These figures reflect one-time items in both
years that are detailed below.
Operating earnings, excluding the one-time items, were $132,889,000
or 96 cents per share for the fourth quarter and $502,951,000 or $3.58
per share for the full year, compared to $111,475,000 or 78 cents per
share and $416,239,000 or $2.92 per share, respectively, in 1994.
Earnings set records for the quarter and the year on both an
operating and a net basis. Based on operating earnings, the company had
returns on average assets of 1.84% for the quarter and 1.77% for the full
year, and returns on equity of 22.52% for the quarter and 21.78% for the
full year.
-more-
Page 4 of 9
<PAGE>
"We have had our best year ever," said Chairman Terrence A. (Terry)
Larsen. "The exceptional performance of our people, together with the
difficult organizational decisions we have made in order to be more
competitive, have contributed to improved success with our customers and
to the record earnings we are reporting today."
Larsen said the primary factors in operating earnings growth for
both the quarter and the full year were higher net interest income and
reduced expenses.
Net interest income for the full year was up 7.1% or nearly $100
million, based on growth in average loans of $1.2 billion or 6.0% and an
increase in the net interest margin from 5.80% to 5.97% for the year.
CoreStates' net interest margin has been one of the highest in the
banking industry for many years.
For the fourth quarter net interest income was up 4.3% compared to
1994. The net interest margin was 5.97%, up from 5.89% a year earlier.
Revenues from fee-based services were up slightly compared to 1994
for both the quarter and the full year. In other non-interest income,
securities gains were down $3.7 million for the quarter and $9.4 million
for the full year compared to 1994.
Total non-financial expenses, excluding one-time charges, were down
2.7% or $33 million for the year, he said.
On an operating earnings basis, CoreStates' expense ratio was 54.81%
for the fourth quarter and 56.22% for the full year 1995. The expense
ratio had been above 60% until the fourth quarter of 1994 when it was
59.74%.
Impact of the BEST Project
Larsen said CoreStates continued ahead of schedule on implementing
its
-more-
Page 5 of 9
<PAGE>
BEST (Building Exceptional Service Together) redesign project, as cost
savings continued well ahead of schedule and revenue enhancements caught
up with original projections.
The impact of BEST on fourth quarter earnings was $33.4 million pre-
tax or 15 cents per share, compared to original projections of $22
million pre-tax or 9 cents per share. For the full first nine months of
BEST implementation, ending December 31, Larsen said, the impact on
earnings was $62.9 million pre-tax or 28 cents per share, compared to the
company's original projection of $39.0 million or 16 cents per share.
"We are clearly on track to meet all of the targets we announced in
March," he said. He noted CoreStates' pending merger with Meridian
Bancorp, which also is carrying out a re-engineering program, "59.9", on
a similar time frame.
"We remain confident of our combined ability to achieve all the
goals of the two programs and, in addition, to accomplish the substantial
synergies and efficiencies of the partnership we are creating between the
two companies," Larsen said.
Credit Quality and Capital Strength
Non-performing assets continued their broad three-year decline in
the fourth quarter. Total non-performing assets at December 31 were $172
million, compared to $311 million at December 31, 1994, and $208 million
on September 30. The year-end 1995 total represented 0.58% of total
assets and 0.81% of total loans plus other real estate owned (foreclosed
properties).
The reserve for loan losses at December 31 was $495 million, or
2.35% of total loans and 342% of non-performing loans. Net charge-offs
were $33.8 million
-more-
Page 6 of 9
<PAGE>
for the fourth quarter and $110.6 million for the full year 1995,
compared with $26.0 million for the fourth quarter and $220.9 million
(including $103.1 million associated with assets acquired with
Constellation Bancorp) for the full year 1994.
Consolidated total assets at December 31 were $29.6 billion,
including $21.0 billion of consolidated net loans. Comparable figures for
1994 were $29.3 billion and $20.5 billion, respectively. Consolidated
total deposits were $21.5 billion at December 31, 1995, compared with
$22.0 billion a year earlier.
Shareholders' equity at December 31 was $2.38 billion, or 8.0% of
total assets. The Tier 1 leverage ratio (Tier 1 or core capital as a
percentage of quarterly average assets) was 7.6% for the fourth quarter.
Tier 1 capital at December 31 was 8.4% of risk-adjusted assets and total
capital was 12.1% of total risk-adjusted assets, well in excess of the
regulatory minimums of 4% and 8%, respectively.
One-Time Items Excluded from Operating Earnings
In calculating operating earnings, CoreStates excluded the following
one-time items: one-time charges of 89 cents per share and 28 cents per
share associated with the acquisitions of Constellation Bancorp and
Independence Bancorp in the first and second quarters of 1994,
respectively; the BEST restructuring charge of 49 cents per share in the
first quarter of 1995 and restructuring credits of 1 cent, 1 cent and 3
cents per share in the second, third and fourth quarters of 1995
respectively; and the gain of 8 cents per share on the first quarter 1995
restructuring of Electronic Payment Services, Inc., CoreStates' joint
venture in retail electronic payments services.
Page 7 of 9
<PAGE>
CoreStates Financial Corp
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------- --------------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income before cumulative
effect of a change in
accounting principle.... $136,954(a)(b) $111,475 $452,237(a)(b) $248,792(b)
======== ======== ======== ========
Net income................ $136,954(a)(b) $111,475 $452,237(a)(b) $245,362(b)(c)
======== ======== ======== ========
Per Share:
Income before cumulative
effect of a change in
accounting principle..... $0.99(a)(b) $0.78 $3.22(a)(b) $1.75(b)
===== ===== ===== =====
Net income................. $0.99(a)(b) $0.78 $3.22(a)(b) $1.73(b)(c)
===== ===== ===== =====
Average number of
shares outstanding....... 138,468 142,252 140,600 142,498
======= ======= ======= =======
</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. CoreStates recorded restructuring credits of $6.4 million, $4.1
million after-tax or $0.03 per share in the fourth quarter of 1995 and
$11.8 million, $7.5 million after-tax or $0.05 per share for the full year
of 1995, primarily related to gains on the curtailment of future pension
benefits associated with employees terminated during 1995 and gains on the
sale of branches which were sold as a result of the process redesign. The
process redesign is expected to generate by early to mid 1996, annual run-
rate efficiencies which will reduce expenses by approximately $180 million
and revenue enhancements which will net an addition of approximately $30
million, combining to improve net income at an annual rate of $0.90 per
share.
(b) Selected financial results for the three months and twelve months ended
December 31, 1995 and 1994 excluding: after-tax restructuring credits of
$4.1 million, or $0.03 per share in the fourth quarter of 1995, $1.5
million, or $0.01 per share in the third quarter of 1995 and $1.9 million,
or $0.01 per share, in the second quarter of 1995, and a first quarter of
1995 after-tax restructuring charge of $70.0 million, or $0.49 per share,
all related to a corporate-wide process redesign; an after-tax gain of
$11.8 million, or $0.08 per share, related to changes in an investment in
an affiliate joint venture, recorded in the first quarter of 1995; and
after-tax merger-related charges of $167.4 million, or $1.17 per share,
recorded in the 1994 full year were as follows:
Page 8 of 9
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income before cumulative
effect of a change in
accounting principle...... $132,889 $111,475 $502,951 $416,239
Per share................... $ 0.96 $ 0.78 $ 3.58 $ 2.92
Return on average total
assets.................... 1.84% 1.60% 1.77% 1.50%
Return on average common
shareholders' equity...... 22.52 19.50 21.78 18.34
</TABLE>
(c) Reflects the writedown to fair value for certain mortgage securities deemed
to be impaired under FASB's 1994 interpretation of FAS 115.
Page 9 of 9
