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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 17, 1996
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) 973-7488
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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 July 17, 1996.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 8-K/A, Amendment No. 1 to its current
report on Form 8-K dated July 17, 1996, 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 and Counsel
Dated: July 17, 1996
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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 July 17, 1996 4
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CoreStates Financial Corp.
Broad and Chestnut Streets
P.O. Box 7558
Philadelphia, PA 19101-7558
[LOGO OF CORESTATES
APPEARS HERE]
Contact Gary Brooten or George Biechler
(215) 973-3546
For Release
Immediately Upon Receipt
CoreStates Operating Earnings Continue Strong;
Second Quarter up 10%, First Half up 16%
Philadelphia, July 17, 1996--CoreStates Financial Corp today reported
operating earnings -- excluding significant and unusual items, primarily merger-
related charges -- of $193,442,000 or 88 cents per share for the second quarter,
a 10% increase from $177,017,000 or 80 cents per share a year earlier. Operating
earnings excluding significant and unusual items for the first six months were
$384,339,000 or $1.75 per share, up 16% from last year's $337,795,000 or $1.51
per share.
Net income was $79,597,000 or 36 cents per share for the quarter, compared
to $158,150,000 or 71 cents per share a year ago; and $256,741,000 or $1.17 per
share for the first six months, compared to $268,319,000 or $1.20 per share a
year ago.
Significant and unusual items for all quarters are detailed below. In the
second quarter they were comprised primarily of previously announced charges
associated with the April 9 acquisition of Meridian Bancorp. All results
predating the merger are restated for the merger, which was accounted for as a
pooling of interests.
The second quarter operating earnings continued to reflect performance
ratios among the best in the banking industry. Return on average assets was
1.78% and return on average equity was 20.22%.
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Terrence A. Larsen, chairman, said that year-to-year earnings growth in the
second quarter, as in the first, was primarily due to reduced non-financial
expenses. On a year-to-year basis, he said, revenues from fee-based services
were flat and net interest revenue was down slightly as a result of a $1.4
billion drop in average earning assets. That decline largely reflected a $1.8
billion decrease in the lower-yielding investment portfolio compared to the 1995
second quarter. The net interest margin in the second quarter remains among the
best in the industry at 5.56%, up by four basis points from a year earlier.
Compared to the first quarter, Larsen said, net interest income improved
modestly and revenues from fee-based services were up in all major categories,
with the strongest growth in international service fees. Expenses also were up
slightly compared to the first quarter, he said, but the expense ratio remained
at an efficient 53.95%.
Larsen said the company, as anticipated, had reached the financial targets
of last year's BEST process redesign project during the second quarter.
"Our people have done a tremendous job of maintaining customer service
while carrying out the goals of both CoreStates' BEST project and Meridian's
59.9 redesign project over the past year," he said.
"With those initiatives successfully behind us, we now can focus fully on
realizing the benefits of the Meridian merger, and in particular on plans we
have developed over the past few months for building revenues," Larsen said.
Larsen said the second quarter brought improved credit quality. Non-
performing assets resumed their downward trend, reaching $254 million as
compared to $281 million at the end of the first quarter and $368 million a year
ago. The June 30, 1996 total represented 0.6% of total assets and 0.8% of total
loans.
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"Like the rest of the industry, we have been watching credit card quality
especially closely in recent months, and it is encouraging to see that our
delinquency rates have been stable over the past two quarters," Larsen said.
The reserve for loan losses at June 30 was $705 million, or 2.2% of total
loans and 323% of non-performing loans. Net charge-offs were $70.7 million for
the second quarter and $113.9 million for the first six months of 1996, compared
to $34.2 million and $70.0 million, respectively, a year earlier. Net charge-
offs in the second quarter included $34 million related to the Meridian
acquisition and $5.8 million related to a policy change to charge off delinquent
credit card accounts at 150 rather than 180 days. The provision for loan losses
in the second quarter included $70.0 million (part of the net merger-related
charges of $175 million) reflecting a change in strategic direction related to
Meridian's problem assets and bringing Meridian's consumer lending charge-off
policies into conformity with those of CoreStates.
Consolidated total assets at June 30 were $43.7 billion, including $31.95
billion of consolidated net loans. Consolidated total deposits were $32.5
billion. The comparable numbers for a year earlier were $45.6 billion, $31.4
billion and $33.9 billion, respectively.
Shareholders' equity at June 30 was $3.9 billion, or 8.9% of total assets.
The Tier 1 leverage ratio (Tier 1 or core capital as a percentage of quarterly
average assets) was 8.3% for the second quarter. Tier 1 capital at June 30 was
9.5% of risk-adjusted assets and total capital was 12.9% of risk-adjusted
assets, compared to regulatory minimum levels of 4% and 8%, respectively.
The significant and unusual items excluded from operating earnings were, by
quarter, as follows: In the first quarter of 1995 they were a pre-tax gain of
$19.0 million related to changes in CoreStates' investment in the EPS, Inc.,
joint venture; a pre-tax restructuring
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charge of $110.0 million for the BEST project redesign; and a $12.0 million pre-
tax gain on an exchange of equity securities. In the second quarter of 1995,
they were a pre-tax restructuring gain of $3.0 million from BEST and a $32.0
million pre-tax restructuring charge for 59.9. In the first quarter of 1996 the
items were a pre-tax restructuring credit of $2.5 million for 59.9 and pre-tax
merger-related costs of $16.6 million for Meridian's acquisition of United
Counties. In the second quarter of 1996 they were net pre-tax merger-related
charges of $175 million for CoreStates' acquisition of Meridian, the largest
parts of which were employee-related severance, branch restructuring charges and
the previously-mentioned provision; a net pre-tax gain on sales of securities of
$14.6 million and a pre-tax $1.0 million restructuring credit for 59.9.
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CoreStates Financial Corp
(in thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
1996 1995(a) 1996 1995(a)
-------- --------- -------- ----------
<S> <C> <C> <C> <C>
Net interest income plus
non-interest income... $762,022 $761,501 $1,502,116 $1,526,427
======== ======== ========== ==========
Net income................ $ 79,597(b) $158,150(b) $256,741(b) $268,319(b)
======== ======== ========== ==========
Net income per share...... $ 0.36(b) $0.71(b) $1.17(b) $1.20(b)
======== ======== ========== ==========
Average number of
shares outstanding.... 219,478 222,440 219,495 224,255
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</TABLE>
(a) On April 9, 1996, CoreStates acquired Meridian Bancorp, Inc. ("Meridian")
in a transaction accounted for as a pooling of interests. All prior period
data presented has been restated to include Meridian.
(b) Selected financial results for the three and six months ended June 30, 1996
and 1995, excluding the significant items listed below, were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Month Ended
June 30, June 30,
------------------------ ----------------------
1996 1995(a) 1996 1995(a)
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<S> <C> <C> <C> <C>
Net income................. $ 79,597 $158,150 $256,741 $268,319
Exclude the following
after tax items:
Restructuring and
merger-
related charges......... 123,334 18,867 137,087 88,867
Net investment gains... (9,489) - (9,489) (7,630)
EPS gain............... - - - (11,761)
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Operating earnings......... $193,442 $177,017 $384,339 $337,795
======== ======== ======== ========
Operating earnings per
share..................... $ 0.88 $ 0.80 $ 1.75 $ 1.51
Return on average total
assets.................... 1.78% 1.58% 1.77% 1.52%
Return on average
shareholders' equity... 20.22% 19.29% 19.88% 18.37%
</TABLE>
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