<PAGE>
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): OCTOBER 22, 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 Earnings News Release dated October 22, 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: October 22, 1997 By /s/ David T. Walker
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David T. Walker
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 October 22, 1997 4
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Exhibit 99
CoreStates Financial Corp.
Broad and Chestnut Streets [CORESTATES LOGO
PO Box 7558 APPEARS HERE]
Philadelphia PA 19101-7558
Contact Gary Brooten or George Biechler
(215) 973-3546
For Release Immediately Upon Receipt
CORESTATES REPORTS RECORD EARNINGS
Philadelphia, October 22, 1997--CoreStates Financial Corp today reported
net income of $198,814,000 or $1.00 per share for the third quarter and
$596,653,000 or $2.91 per share for the first nine months of 1997. Earnings per
share were up 12% for the quarter and 10% for the nine months compared to 1996
and were all-time records for CoreStates.
The third quarter return on common equity of 24.53% placed CoreStates first
among the top 25 U. S. banking companies and among the most elite of the world's
banking organizations. Other third quarter performance measures -- return on
assets of 1.71%, expense to revenue ratio of 53.07% and net interest margin of
5.13% --also ranked CoreStates in the top tier of the nation's largest banking
companies.
"These results continue the record of operating performance that has placed
us consistently among the leaders of the banking industry throughout the 1990s,"
said Terrence A. Larsen, chairman.
"At the same time, we know that CoreStates' continued success depends upon
our ability to use these achievements as a platform for generating much higher
levels of revenue growth," Larsen said. "I am completely committed to enhancing
shareholder value. To that end, our strategic reassessment now under way is
designed to evaluate which areas of our business will provide the greatest
opportunities for further growth and how best to pursue these opportunities."
THIRD QUARTER RESULTS
Larsen said the quarterly results were fueled by "the strongest across-the-
board fee revenue growth we have seen in several years and by healthy loan
growth."
Net income was $198,814,000 or $1.00 per share, compared with net income of
$196,857,000 or 89 cents per share and operating income of $194,855,000 or 89
cents per share in the third quarter of 1996. The 1996 net income included
significant and unusual items detailed in the attached table.
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2
Revenues from CoreStates' five major categories of fee-based services were
up by $23 million or 14% from a year earlier, led by double-digit growth in
trust, international, third party processing and debit and credit card fees.
Third party processing fees grew 38% year to year. Annualized growth in overall
fee revenues compared to the second quarter was even stronger than year to year.
The broader measure of total non-interest income was up 13% year to year and 16%
annualized from the second quarter.
Total loans were up $2.3 billion or 7% on September 30 compared to a year
earlier and $637 million compared to June 30. The strongest areas of loan growth
were in the commercial loan portfolio and, for the year to year period, short
term international lending. Net interest income was down slightly due to effects
of the share repurchase program discussed below. The net interest margin, while
it is in the top five among the country's largest 25 banks, declined 45 basis
points from a year earlier. Twenty basis points of the decline resulted from the
effects of the stock repurchase program over the past year. The remainder
resulted from the fact that loan growth was supported by market funding rather
than core deposits, which reduced the margin even though the lending increased
total net interest income.
NINE-MONTH RESULTS
Net income was $596,653,000 or $2.91 per share, compared to 1996 nine-month
net income of $453,598,000 or $2.06 per share and operating income of
$579,194,000 or $2.64 per share. Net income in the 1996 period included special
items, mostly related to the Meridian acquisition, detailed in the attached
tables.
The record earnings for the first nine months of the year were driven by
three quarters of growth in fee revenues, with a particularly strong third
quarter, and by solid loan growth. Revenues from the principal fee-based
services were up $52 million or 11% and overall non-interest income was up 7%
compared to 1996 figures that exclude the significant and unusual items.
Average loans were $1.9 billion higher for the full nine months than in
1996, but the net interest margin for the period was down 23 basis points. The
key factors affecting the net interest margin were share repurchases and a
decrease in the proportion of loans funded by core deposits. Net interest income
was down slightly.
CREDIT QUALITY
The third quarter showed modest improvement in the indicators of
CoreStates' traditionally strong credit quality. Non-performing assets declined
$20
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3
million from June 30 to $262 million at September 30, representing 0.5% of total
assets and 0.7% of total loans plus real estate foreclosed.
Net charge-offs in the quarter were $62.0 million, up from $36.9 million a
year ago but near the level of $62.7 million in the second quarter of 1997. Net
charge-offs for the nine months were $173.9 million, compared to $150.8 million
in 1996.
The provision for loan losses was $50 million in the third quarter and $143
million for the first nine months of 1997, compared to $40 million and $189
million, respectively, in 1996. The 1996 nine-month provision included $70
million that were part of the net merger-related charges of $175 million in the
second quarter of 1996.
SHARE REPURCHASE PROGRAM
CoreStates made a privately-negotiated repurchase of three million shares
in early September. In addition to providing shares for employee benefit and
dividend reinvestment programs, this transaction completed the original
authorization for repurchasing approximately 10% of outstanding shares and in
addition fulfilled approximately 30% of the authorization to repurchase a
further 3% of outstanding shares by year-end 1997.
BALANCE SHEET AND CAPITAL STRENGTH
Consolidated total assets at September 30 were $47.6 billion, including
consolidated net loans of $35.1 billion. Consolidated total deposits were $33.7
billion. The comparable numbers for a year earlier were $45.2 billion, $32.8
billion and $32.3 billion, respectively.
Shareholders' equity at September 30 was $3.1 billion or 6.54% of total
assets. The Tier 1 leverage ratio (Tier 1 or core capital as a percentage of
quarterly average assets) was 7.9%. Tier 1 capital at September 30 was 8.3% of
risk-adjusted assets and total capital was 11.9% of risk-adjusted assets,
compared to regulatory minimum levels of 4% and 8%, respectively.
There have been no significant and unusual items in 1997 earnings.
Significant and unusual items for 1996 are detailed in the attached table.
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CORESTATES FINANCIAL CORP
(In thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- ------------------------------
1997 1996 1997 1996
------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Net interest income plus
non-interest income....... $765,971 $776,978 $2,267,803 $2,279,094
======== ======== ========== ==========
Net income................. $198,814 $196,857(a) $ 596,653 $453,598(a)
======== ======== ========== ==========
Net income per share....... $ 1.00 $0.89(a) $ 2.91 $2.06(a)
======== ======== ========== ==========
Average number of
shares outstanding........ 199,817 220,409 205,316 219,802
======== ======== ========== ==========
</TABLE>
(a) Selected financial results for the three and nine months ended September
30, 1997 and 1996 excluding the significant 1996 items listed below, were
as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- ------------------------------
1997 1996 1997 1996
------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Net income................. $198,814 $196,857 $ 596,653 $ 453,598
Exclude the following
after-tax items:
Restructuring and merger-
related charges......... - 7,704 - 144,791
Certain net investment
gains................... - (18,626) - (28,115)
SAIF Fund special
assessment.............. - 8,920 8,920
-------- -------- ---------- ----------
Operating earnings......... $198,814 $194,855 $ 596,653 $ 579,194
======== ======== ========== ==========
Operating earnings per
share..................... $ 1.00 $ 0.89 $ 2.91 $ 2.64
Return on average total
assets.................... 1.71% 1.79% 1.77% 1.77%
Return on average
shareholders' equity..... 24.53% 19.53% 23.27% 19.76%
</TABLE>
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