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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 EXCHANGE ACT OF 1934
EXHIBIT INDEX IS ON PAGE 3
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 16, 1997
CoreStates Financial Corp
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(EXACT NAME OF REGISTRANT AS 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 News Release dated July 16, 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)
Dated: July 16, 1997 By /s/ Christopher J. Carey
---------------------------------
Christopher J. Carey
Senior Vice President
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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 16, 1997 4
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CoreStates Financial Corp.
Broad and Chestnut Streets
PO Box 7558
Philadelphia, PA 19101-7558
Exhibit 99
[Logo of
CoreStates
appears here]
Contact
Gary Brooten or George Biechler
(215) 973-3546
For Release
Immediately Upon Receipt
CORESTATES REPORTS IMPROVING REVENUES, STRONG EARNINGS;
OPERATING EARNINGS PER SHARE UP 10.2%; STOCK BUYBACK EXTENDED
Philadelphia, July 16, 1997--CoreStates Financial Corp today reported
operating earnings and net income of $199,726,000 or 97 cents per share for the
second quarter and $397,839,000 or $1.91 per share for the first half of 1997.
On an operating basis, excluding significant and unusual charges in the first
half of 1996, per share earnings were up 10.2% for the quarter and 9.1% for the
first six months.
Performance ratios for the second quarter continued among the best in the
top 50 banking companies. Return on average assets was 1.78% and return on
average common equity was 23.54%.
CoreStates also announced that its share repurchase program has reached 98%
of its original authorization and has been extended by board authorization for
the repurchase of up to an additional 3% of outstanding shares by the end of
1997.
EARNINGS HIGHLIGHTS
Chairman Terrence A. Larsen said the double-digit year-to-year operating
earnings per share increase in the quarter reflected business growth that was
"more broadly based than we have seen for several quarters" as well as effects
of the share buyback program. Loans and fees were up and total nonfinancial
expenses were down compared to 1996.
Average loans increased more than $2 billion or 6.3% compared to the 1996
second quarter, and June 30 loans were up $2.5 billion from a year earlier. Net
interest income increased only slightly, however, because changes in the asset
mix, a relative flatness of average deposits compared to loans, and effects of
the share buyback reduced the net interest margin to 5.37% in the quarter. While
strong relative to the industry, the net interest margin was 19 basis points
less than a year earlier.
Revenues from CoreStates' fee-based services were higher in every category,
by percentages that ranged from 27.7% for third party processing revenues to
6.4%
-more-
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for fees on deposit accounts. Larsen noted particularly that the trust and asset
management business turned in a second consecutive strong quarter after several
relatively flat prior quarters; its fee revenues were up more than 10% from
1996.
Non-financial expenses were down 1.2% year to year on an operating basis as
a result of merger expense savings. Larsen said all expense categories were
relatively flat year to year. Expenses were higher than in the first quarter,
however, largely because of expenses related to current technology initiatives
along with some seasonal effects.
Net income in 1996 was $79.6 million or 36 cents per share in the second
quarter and $256.7 million or $1.17 per share for the first half, reflecting
significant and unusual items including a total of $175 million in second-
quarter merger-related charges. On a net income basis, earnings per share were
up 169% for the quarter and 63% for the first half.
CREDIT QUALITY
Total non-performing assets at June 30 were $282 million, up from $259
million on March 31, 1997 and $254 million on June 30, 1996. The $282 million
represented 0.6% of total assets and 0.8% of total loans plus real estate
foreclosed as of June 30. Larsen said the increase was attributable to the
addition of three wholesale accounts totaling $51 million to non-performing
status.
Net charge-offs were $62.7 million in the second quarter, compared to $49.3
million in the first quarter and $70.7 million a year earlier. The 1996 charge-
offs included $34 million related to the April 9, 1996 acquisition of Meridian
Bancorp and $5.8 million related to a policy change to charge off delinquent
credit card accounts at 150 days instead of 180 days.
"We are continuing to see a high level of retail charge-offs, especially
credit card charge-offs, and these are the bulk of what we're reporting," Larsen
said. "This quarter, however, slightly more than half of the increase in charge-
offs compared to the first quarter was on the wholesale side.
"With these factors in mind, it felt appropriate to make a fairly
aggressive increase in the loan loss provision," he said. "At this point in the
business cycle, it's only prudent to anticipate that there is in fact still a
business cycle and that we should be prepared to deal with a normal, cyclical
deterioration in credit quality."
The provision was $50 million, compared to $43 million in the first quarter
and $40 million on an operating basis, excluding a special provision in
connection
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with the acquisition, in the second quarter a year ago.
The reserve for possible loan losses at June 30 was $691 million, or 2.0%
of total loans and 262% of total non-performing loans.
BALANCE SHEET HIGHLIGHTS
Consolidated total assets at June 30 were $46.8 billion, including $34.4
billion consolidated net loans. Consolidated total deposits were $34.2 billion.
The comparable figures for June 30, 1996 were $43.7 billion, $31.95 billion and
$32.5 billion, respectively.
Shareholders' equity at June 30 was $3.2 billion or 6.8% of total assets.
The Tier 1 leverage ratio (Tier 1 or "core" capital as a percentage of quarterly
average assets) was 8.2% for the second quarter. Tier 1 capital at June 30 was
8.7% of risk-adjusted assets and total capital was 12.4% of risk-adjusted
assets, well above the regulatory minimums of 4% and 8%, respectively.
SHARE REPURCHASE PROGRAM
Average shares outstanding in the second quarter of 1997 were 205.0
million, compared with 219.5 million a year earlier. The company's authorized
repurchase of 10% or 22 million shares by the end of 1997 reached approximately
98% completion with a privately negotiated repurchase of six million shares in
mid-June.
At its meeting Tuesday, the board of directors voted to extend the program
by authorizing the repurchase of up to 3% of outstanding shares, or
approximately six million additional shares, by the end of 1997.
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CORESTATES FINANCIAL CORP
(In thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ------------------------
1997 1996 1997 1996
--------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net interest income plus
non-interest income........... $760,717 $762,022 $1,501,832 $1,502,116
======== ======== ========== ==========
Net income....................... $199,726 $79,597(a) $397,839 $256,741(a)
======== ========= ========== ========
Net income per share............. $0.97 $0.36(a) $1.91 $1.17(a)
======== ========= ========== ========
Average number of
shares outstanding............ 204,982 219,478 208,111 219,495
======== ======== ========== ==========
</TABLE>
(a) Selected financial results for the three and six months ended June 30, 1997
and 1996 excluding the significant 1996 items listed below, were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
1997 1996 1997 1996
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net income.............................. $199,726 $79,597 $397,839 $256,741
Exclude the following after-tax items:
Restructuring and merger-
related charges................... - 123,334 - 137,087
Certain net investment gains......... - (9,489) - (9,489)
-------- -------- -------- --------
Operating earnings...................... $199,726 $193,442 $397,839 $384,339
======== ======== ======== ========
Operating earnings per share............ $0.97 $0.88 $1.91 $1.75
Return on average total assets.......... 1.78% 1.78% 1.80% 1.77%
Return on average
shareholders' equity................. 23.54% 20.22% 22.69% 19.88%
</TABLE>
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