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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): April 15, 1997
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 April 15, 1997.
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/ Christopher J. Carey
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Christopher J. Carey
Senior Vice President
Dated: April 15, 1997
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Exhibit Index
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<CAPTION>
Exhibit No. Page
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<S> <C>
99 CoreStates Financial Corp Earnings News
Release dated April 15, 1997 4
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CoreStates Financial Corp
Broad and Chestnut Streets
PO Box 7558
Philadephia, PA 19101-7558
[LOGO OF CORESTATES APPEARS HERE]
Exhibit 99
Contact
Gary Brooten or George Biechler
(215) 973-3546
For Release
Immediately Upon Receipt
CoreStates Reports First Quarter Earnings
Philadelphia, April 15, 1997-- CoreStates Financial Corp today announced
first quarter earnings of $198 million or 94 cents per share on both an
operating and net income basis. The 94 cents per share was an increase of 7
cents per share or 8% in operating earnings and 13 cents per share or 16% in net
income, compared to the first quarter of 1996.
Performance ratios continued strong. Return on average assets was 1.82% and
return on average equity was 21.89%.
Terrence A. Larsen, chairman, said CoreStates (NYSE-CFL) was "pleased that
the level of earnings, as reflected in our performance ratios, continues to be
among the best in the industry. On the other hand, like many banks we would
like to be seeing broader-based revenue progress and more earnings growth at
this point."
Year-to-year growth in earnings per share resulted primarily from expense
reduction and the impact of the share repurchase program announced last October,
Larsen said, while revenue trends were mixed.
First quarter nonfinancial expenses declined 2.5% compared to a year earlier
to $392 million. This progress drove down the efficiency ratio to 52.49%, its
first time under 53% and like other CoreStates performance ratios among the best
in the industry. The expense reductions are associated primarily with the
integration of CoreStates' April 9, 1996 acquisition of Meridian Bancorp.
The key factors in the mixed revenue picture were:
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. Net interest income was essentially flat, with 4.4% growth in average loans
year-to-year offset by a decline of four basis points in the net interest
margin. The net interest margin was lower as a result of spread reductions
in the competitive banking arena as well as from share repurchases during
the first quarter. The net interest margin at 5.47% remains very strong
relative to the industry. CoreStates had essentially no loan growth in the
first quarter until March, when average loans increased by $300 million.
. Revenues from the four major categories of the bank's traditional fee-based
services grew 5% year-to-year, led by 14% growth in international service
fees year-to-year and strong first quarter growth in asset management and
trust fees. Offsetting that strength, the largest single category of fees,
service charges on deposit accounts, was down slightly year-to-year.
. Both credit-based and fee-based revenues were adversely affected year-to-
year by the sale of branches, deposits and loans that was required for
regulatory approval of the Meridian acquisition and which occurred late in
the second quarter of 1996.
Larsen noted that the first quarter is traditionally the weakest for
CoreStates because of cyclicality in some of the key businesses, for example
Congress Financial Corporation and the international business. "We knew this
would be a particularly challenging quarter, given the remaining work to be done
to realize the benefits of the merger. Our people put in an outstanding effort
and achieved a great deal, and we have much more to accomplish," he said.
Credit Quality
Credit quality indicators were slightly less favorable in the first quarter,
in keeping with current industry trends. Total non-performing assets were $259
million at March 31, down from $281 million a year earlier but up from $245
million on
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December 31. The March 31 non-performing assets represented 0.77% of total loans
plus real estate foreclosed and 0.57% of total assets.
The provision for loan losses was increased to $43 million, compared to
$38.8 million a year ago and $40 million in the fourth quarter of 1996, in
recognition of the growth in loan outstandings over the past year. Net charge-
offs were $49.3 million in the first quarter, compared to $43.2 million a year
ago. Two thirds of the charge-offs were in consumer loans, led by credit card
losses pushed up by the increasing levels of personal bankruptcy declarations.
Delinquency rates in the credit card, however, were down from the fourth quarter
of 1996.
The reserve for possible loan losses at March 31 was $704 million, or 2.1%
of total loans and 301% of non-performing loans.
Balance Sheet
Consolidated total assets at March 31 were $45.1 billion, including
consolidated net loans of $33.6 billion. Consolidated total deposits were $33.1
billion. The comparable figures for March 31, 1996 were $43.9 billion, $32.0
billion and $32.6 billion, respectively.
Shareholders' equity at March 31 was $3.4 billion or 7.6% of total assets.
The Tier 1 leverage ratio (Tier 1 or "core" capital as a percentage of quarterly
average assets) was 9.0% for the first quarter. Tier 1 capital at March 31 was
9.7% of risk-adjusted assets and total capital was 13.6% of risk-adjusted
assets, well above the regulatory minimums of 4% and 8%, respectively.
Shareholders' equity and shares outstanding have been reduced over the past two
quarters by the repurchase of shares in connection with the repurchase program
authorized by the directors in October 1996. That program authorizes repurchase
of a total of 22 million shares, exclusive of purchases for compensation and
benefit programs, by the end of 1997. A privately-negotiated repurchase of 6
million shares closed in mid-March as part of the program.
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CoreStates Financial Corp
(in thousands, except per share)
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<CAPTION>
Three Months Ended
March 31,
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1997 1996
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<S> <C> <C>
Net interest income plus
non-interest income...... $741,115 $740,094
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Net income................ $198,113 $177,144(a)
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Net income per share...... $0.94 $0.81(a)
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Average number of
shares outstanding....... 211,276 219,512
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(a) Selected financial results for the three months ended March 31, 1997 and
1996 excluding net restructuring and merger-related charges in 1996 were as
follows:
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<CAPTION>
Three Months Ended
March 31,
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1997 1996
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<S> <C> <C>
Net income...................... $198,113 $177,144
Exclude net restructuring and
merger-related charges......... - 13,753
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Operating earnings.............. $198,113 $190,897
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Operating earnings per share.... $0.94 $0.87
Return on average total assets.. 1.82% 1.75%
Return on average
shareholders' equity........... 21.89% 19.54%
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