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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): JANUARY 21, 1998
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 January 21, 1998.
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: January 21, 1998 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 January 21, 1998 4
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Exhibit 99
Corestates Financial Corp
Broad and Chestnut Streets
PO Box 7558
Philadelphia, PA 19101-7558
[CORESTATES LOGO APPEARS HERE]
Contact Gary Brooten or George Biechler
(215) 973-3546
Immediately Upon Receipt
For Release
CORESTATES REPORTS RECORD 1997 EARNINGS
Philadelphia, January 21, 1998--CoreStates Financial Corp today reported
strong fourth quarter results and record earnings for the full year 1997. The
company also reported special items in the fourth quarter that contributed a net
favorable nine cents per share.
Fourth quarter operating earnings, which exclude special items, were $198.6
million or $1.00 per average common share, equal to the company's record third
quarter and up 8% from 93 cents per average common share in 1996. Net income,
which includes special items, was a record $216.6 million or $1.09 per average
common share, up 20% from 91 cents per average common share in 1996.
A new accounting rule, FAS 128, requires reporting dual earnings per share.
In addition to reporting per share amounts based on average shares, as in the
past, companies are required to report results diluted for the impact of
outstanding options. The impact on CoreStates' quarterly earnings is
approximately one cent per share. Per share results diluted to account for stock
options were 99 cents (operating) and $1.08 (net) for the 1997 fourth quarter,
compared to 93 cents and 90 cents, respectively, in 1996.
On an operating basis the company reported fourth quarter returns of 1.66%
on assets and a very strong 24.84% on equity.
Full year operating earnings were $795.3 million or $3.91 per average
common share, up 10% from $3.57 per average common share a year earlier. Net
income was $813.3 million or $4.00 per average common share, up 35% from $2.97
per average common share in 1996. The diluted 1997 per share results were $3.87
operating and $3.96 net, compared to $3.54 and $2.94, respectively, in 1996.
On an operating basis the full year return on assets was 1.74% and the full
year return on equity was 23.64%.
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Terrence A. Larsen, chairman, said the results reflected "the hard work of
dedicated CoreStates employees, whose efforts have returned us to record
earnings after a year spent integrating our 1996 Meridian acquisition."
CoreStates and First Union Corporation on November 18, 1997 announced an
agreement to merge. The merger is expected to be consummated by April 30, 1998,
pending CoreStates and First Union shareholder approval, regulatory approval and
other customary conditions of closing.
SPECIAL ITEMS
The special items in fourth quarter 1997 included a tax benefit of $109
million resulting from a business transaction involving the liquidation of an
affiliate. CoreStates also incurred significant and unusual charges totaling
$142 million ($91 million after tax). These included a special loan loss
provision of $70 million ($45 million after tax), primarily related to a
decision to sell $450 million of credit card outstandings; restructuring and
merger-related charges totaling $15 million ($9 million after tax), primarily
related to the pending First Union merger and the strategic technology alliance
with Andersen Consulting; a charitable contribution of $25 million ($16 million
after tax); and other charges totaling $32 million ($21 million after tax). All
special items added a net $18 million after-tax or 9 cents per share to
earnings. There were no other significant and unusual items during 1997.
During the fourth quarter of 1996 there was a merger-related charge of two
cents per share. For the full year 1996 the significant and unusual items were
net merger-related charges of 68 cents per share; a special assessment for the
SAIF Fund of four cents per share; and net investment gains of 12 cents per
share.
EARNINGS AND CREDIT QUALITY
Compared to 1996, both the fourth quarter and full year 1997 earnings
reflected solid growth in revenues from fee-based services. Net interest income
was down slightly for both the quarter and the year, with double-digit loan
growth offset by narrowing of the net interest margin. A significant factor in
both the decreased net interest margin and the increased earnings per share was
the repurchase of 17 million shares of stock during the first ten months of the
year.
Larsen said that fee-based services have been leading the company's efforts
to enhance revenue growth. Collectively, the five principal categories of fee-
based services generated 11% revenue growth for both the quarter and the full
year
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compared to 1996, reaching $715 million for the full year. Total non-interest
income was up 8%.
Total non-financial expenses were up slightly for the quarter but flat for
the year compared to 1996, Larsen said.
Non-performing assets at December 31, 1997 were $268 million, 0.55% of
total assets and 0.77% of loans plus real estate foreclosed. Net charge-offs
were $63.0 million for the quarter and $236.9 million for the year, compared to
$37.9 million and $188.7 million, respectively, in 1996.
The provision for losses on loans was $120 million, including the $70
million special provision, in the fourth quarter, and $263 million for the year.
The reserve for possible loan losses at December 31 was $634 million,
representing 1.82% of total loans and 250% of non-performing loans.
BALANCE SHEET AND CAPITAL
Consolidated total assets at December 31 were $48.5 billion, including
consolidated net loans of $34.8 billion. Consolidated total deposits were $34.2
billion. The comparable figures for December 31, 1996 were $45.5 billion, $32.3
billion and $33.7 billion, respectively.
Shareholders' equity at December 31 was $3.2 billion, or 6.7% of total
assets. The Tier 1 leverage ratio (Tier 1 or "core" capital as a percentage of
quarterly average assets) was 8.0% for the fourth quarter. Tier 1 capital at
December 31 was 8.5% of risk-adjusted assets and total capital was 12.0% of
risk-adjusted assets, well above regulatory minimums of 4% and 8% respectively.
Shareholders' equity and total shares outstanding at year-end were reduced by
the repurchase of shares authorized by the directors in fall 1996 and extended
in summer 1997. A total of 17 million shares were repurchased during 1997.
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CORESTATES FINANCIAL CORP
(In thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
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1997 1996 1997 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net interest income plus
non-interest income.................. $773,835 $761,465 $3,041,638 $3,040,559
======== ======== ========== ==========
Net income.............................. $216,626(a) $195,546(a) $813,279(a) $649,144(a)
======== ======== ========== ==========
Net income per common share:
Basic................................ $1.09(a) $0.91(a) $4.00(a) $2.97(a)
======== ======== ========= ==========
Diluted.............................. $1.08(a) $0.90(a) $3.96(a) $2.94(a)
======== ======= ========= ==========
Common shares outstanding:
Average basic........................ 197,920 215,866 203,452 218,812
======== ======== ========= ==========
Average diluted...................... 200,416 218,020 205,568 220,698
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</TABLE>
(a) Selected financial results for the three and twelve months ended December
31, 1997 and 1996 excluding the significant items listed below, were as
follows:
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Net income.............................. $ 216,626 $195,546 $ 813,279 $649,144
Exclude the following after-tax items:
Special tax benefit.................... (109,000) - (109,000) -
Special provision for loan losses...... 44,862 - 44,862 -
Restructuring and merger-
related charges....................... 9,612 6 ,049 9,612 150,840
Certain net investment gains........... - - - (28,115)
Other.................................. 36,526 - 36,526 8,920
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Operating earnings...................... $ 198,626 $201,595 $ 795,279 $780,789
========= ======== ========= ========
Operating earnings per common share:
Basic.................................. $ 1.00 $ 0.93 $ 3.91 $ 3.57
Diluted................................ $ 0.99 $ 0.93 $ 3.87 $ 3.54
Return on average total assets.......... 1.66% 1.81% 1.74% 1.78%
Return on average
shareholders' equity................... 24.84% 21.03% 23.64% 20.07%
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