<PAGE>
Cover
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
Washington, D.C. 20549
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1994
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-7127
- -----------------------------------------------------------------------------
NBD BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 38-1984850
State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
611 Woodward Avenue, Detroit, Michigan 48226
(Address of principal executive offices) (zip code)
(313) 225-1000
(Registrant's telephone number, including area code)
- ----------------------------------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at July 31, 1994
----------------------------- -----------------------------
Common Stock, $1.00 Par Value 157,717,895
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<PAGE>
Page 1
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
- ------- -----------------------------------------
NBD Bancorp, Inc. Consolidated Balance Sheet
(in thousands except share data)
<TABLE>
<CAPTION>
Assets
June 30 December 31 June 30
1994 1993 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cash and Due From Banks........................................ $ 2,279,698 $ 2,405,694 $ 2,218,268
Interest-Bearing Deposits...................................... 637,726 722,109 591,449
Federal Funds Sold and Resale Agreements....................... 316,504 282,481 566,750
Other Money Market Investments................................. - - 32,542
Trading Account Securities..................................... 209,552 109,637 244,291
Investment Securities (Note B):
Available-for-Sale (At Fair Value).......................... 5,134,842 3,784,384 -
Held-to-Maturity (Fair Value of $8,190,292,
$7,017,903 and $10,567,684, respectively)................ 8,184,134 6,607,409 10,014,473
------------ ------------ ------------
13,318,976 10,391,793 10,014,473
------------ ------------ ------------
Loans and Leases (Net of Unearned Income of $139,563,
$140,412 and $133,218, respectively):
Commercial.................................................. 14,527,791 13,794,714 13,902,668
Real Estate Construction.................................... 729,421 789,248 855,421
Residential Mortgage........................................ 2,955,520 2,560,539 2,464,489
Mortgages Held For Sale..................................... 39,155 255,902 402,678
Consumer.................................................... 7,154,088 6,758,171 6,471,536
Lease Financing............................................. 301,804 284,805 251,674
Foreign..................................................... 1,142,117 1,107,413 1,014,146
------------ ------------ ------------
26,849,896 25,550,792 25,362,612
Allowance For Possible Credit Losses (Note C)............... (423,624) (423,030) (421,505)
------------ ------------ ------------
26,426,272 25,127,762 24,941,107
------------ ------------ ------------
Net Premises and Equipment..................................... 637,907 634,541 590,836
Customers' Liability on Acceptances............................ 160,209 172,171 169,328
Other Assets................................................... 1,245,268 929,717 1,020,116
------------ ------------ ------------
Total Assets....................................... $45,232,112 $40,775,905 $40,389,160
============ ============ ============
</TABLE>
<PAGE>
Page 2
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
June 30 December 31 June 30
1994 1993 1993
------------ ------------ ------------
Deposits:
<S> <C> <C> <C>
Demand (Non-Interest Bearing)..................................$ 6,810,491 $ 6,667,958 $ 6,457,086
Savings........................................................ 7,986,172 8,051,337 7,451,875
Money Market Accounts.......................................... 5,204,159 5,561,573 5,875,078
Time........................................................... 7,540,540 7,474,234 8,161,392
Foreign Office................................................. 3,402,024 2,066,005 2,046,008
------------ ------------ ------------
30,943,386 29,821,107 29,991,439
Short-Term Borrowings............................................ 7,822,834 5,354,839 5,145,429
Liability on Acceptances......................................... 160,209 172,171 169,328
Accrued Expenses and Sundry Liabilities.......................... 723,010 744,242 701,692
Long-Term Debt................................................... 2,332,530 1,434,947 1,287,813
------------ ------------ ------------
Total Liabilities............................................ 41,981,969 37,527,306 37,295,701
------------ ------------ ------------
Shareholders' Equity:
Series A Preferred Stock - Par Value $1, Stated Value $50...... - - -
No. of June 30 December 31 June 30
Shares 1994 1993 1993
-------------- ------------ ------------ ------------
Authorized.. 460,000 460,000 460,000
Issued...... - - -
Preferred Stock - No Par Value................................. - - -
No. of June 30 December 31 June 30
Shares 1994 1993 1993
-------------- ------------ ------------ ------------
Authorized.. 10,000,000 10,000,000 10,000,000
Issued...... - - -
Common Stock - Par Value $1.................................... 160,877 160,715 160,570
No. of June 30 December 31 June 30
Shares 1994 1993 1993
-------------- ------------ ------------ ------------
Authorized.. 500,000,000 500,000,000 500,000,000
Issued...... 160,876,769 160,715,173 160,570,299
Capital Surplus................................................ 546,829 541,232 540,024
Retained Earnings.............................................. 2,712,268 2,565,627 2,408,300
Unrealized Loss on Available-for-Sale Securities............... (89,936) (7,012) -
Accumulated Translation Adjustment............................. 7,118 4,384 4,826
Deferred Compensation.......................................... (23,897) (16,347) (19,865)
Less Treasury Stock (2,107,170 and 12,906 shares, respectively) (63,116) - (396)
------------ ------------ ------------
Total Shareholders' Equity................................... 3,250,143 3,248,599 3,093,459
------------ ------------ ------------
Total Liabilities and Shareholders' Equity.............$45,232,112 $40,775,905 $40,389,160
============ ============ ============
</TABLE>
<PAGE>
Page 3
<TABLE>
<CAPTION>
NBD Bancorp, Inc. Consolidated Statement of Income
(in thousands except per share data)
Quarter Ended Six Months Ended
June 30 June 30
------------------------- -------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest Income:
Loans and Leases (including fees).......................... $ 506,959 $ 481,655 $ 969,020 $ 960,471
Investment Securities:
Taxable.................................................. 160,528 138,316 299,474 285,775
Non-Taxable.............................................. 24,490 27,115 49,829 54,803
Trading Account Securities................................. 1,495 1,479 2,379 2,627
Federal Funds Sold and Resale Agreements................... 1,914 919 2,863 1,792
Other Money Market Investments............................. - 805 - 1,419
Interest-Bearing Deposits.................................. 7,992 8,519 14,992 18,845
----------- ----------- ----------- -----------
Total Interest Income.................................... 703,378 658,808 1,338,557 1,325,732
----------- ----------- ----------- -----------
Interest Expense:
Deposits................................................... 207,290 210,703 390,829 430,499
Short-Term Borrowings...................................... 62,302 36,684 107,675 78,374
Long-Term Debt............................................. 27,398 19,648 52,405 36,625
----------- ----------- ----------- -----------
Total Interest Expense................................... 296,990 267,035 550,909 545,498
----------- ----------- ----------- -----------
Net Interest Income.......................................... 406,388 391,773 787,648 780,234
Provision For Possible Credit Losses....................... 8,579 35,060 24,039 74,980
----------- ----------- ----------- -----------
Net Interest Income After Provision
For Possible Credit Losses................................. 397,809 356,713 763,609 705,254
----------- ----------- ----------- -----------
Non-Interest Income:
Trust Fees................................................. 39,803 37,440 77,913 72,788
Service Charges on Deposit Accounts........................ 38,790 41,857 79,769 83,840
Securities Gains(Losses)................................... (85) 1,689 305 2,803
Other...................................................... 55,440 62,183 114,711 128,732
----------- ----------- ----------- -----------
Total Non-Interest Income................................ 133,948 143,169 272,698 288,163
----------- ----------- ----------- -----------
Non-Interest Expenses:
Compensation:
Salaries................................................. 134,856 131,176 268,315 261,169
Benefits................................................. 43,906 41,854 87,195 81,707
----------- ----------- ----------- -----------
Total Compensation.................................... 178,762 173,030 355,510 342,876
Net Occupancy.............................................. 29,968 29,429 60,049 58,955
Equipment Rentals, Depreciation and Maintenance............ 23,597 20,916 45,551 42,113
FDIC and Other Regulatory Assessments...................... 16,741 16,309 33,416 34,971
Amortization of Intangibles................................ 6,577 8,092 13,101 17,218
Other...................................................... 76,664 73,829 147,001 151,027
----------- ----------- ----------- -----------
Total Non-Interest Expenses........................... 332,309 321,605 654,628 647,160
----------- ----------- ----------- -----------
Income before Income Taxes................................... 199,448 178,277 381,679 346,257
Income Tax Expense(Benefit) (Including tax effect of $(35),
$573, $114 and $999, respectively, on securities sales).. 64,224 55,629 123,579 108,528
----------- ----------- ----------- -----------
Income before Extraordinary Item and Cumulative
Effect of Accounting Change................................ 135,224 122,648 258,100 237,729
Extraordinary Item (net of income tax effect) (Note E)..... - - (7,730) -
Cumulative Effect of Accounting Change (net of
income tax effect) (Note A).............................. - - (7,885) 3,950
----------- ----------- ----------- -----------
Net Income................................................... $ 135,224 $ 122,648 $ 242,485 $ 241,679
=========== =========== =========== ===========
Net Income Per Share (on average shares outstanding):
Income before Extraordinary Item and Cumulative
Effect of Accounting Change.............................. $ 0.84 $ 0.76 $ 1.61 $ 1.47
Extraordinary Item (net of income tax effect).............. - - (0.05) -
Cumulative Effect of Accounting Change (net of
income tax effect)....................................... - - (0.05) 0.03
----------- ----------- ----------- -----------
Net Income Per Share......................................... $ 0.84 $ 0.76 $ 1.51 $ 1.50
=========== =========== =========== ===========
</TABLE>
<PAGE>
Page 4
<TABLE>
<CAPTION>
NBD Bancorp, Inc. Consolidated Statement of Shareholders' Equity
(in thousands except share data)
Quarter Ended Six Months Ended
June 30 June 30
------------------------ ------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
Preferred Stock:
<S> <C> <C> <C> <C>
Balance, Beginning and End of Period..................... $ - $ - $ - $ -
----------- ----------- ----------- -----------
Common Stock:
Balance, Beginning of Period............................. 160,872 160,507 160,715 160,386
Conversion of Subordinated Debentures and
Other (161,596 shares in 1994)....................... 5 63 162 184
----------- ----------- ----------- -----------
Balance, End of Period................................... 160,877 160,570 160,877 160,570
----------- ----------- ----------- -----------
Capital Surplus:
Balance, Beginning of Period............................. 546,969 540,664 541,232 536,900
Conversion of Subordinated Debentures and Other........ (140) (640) 5,597 3,124
----------- ----------- ----------- -----------
Balance, End of Period................................... 546,829 540,024 546,829 540,024
----------- ----------- ----------- -----------
Retained Earnings:
Balance, Beginning of Period............................. 2,624,608 2,329,017 2,565,627 2,253,332
Net Income............................................. 135,224 122,648 242,485 241,679
Cash Dividends Declared on Common Stock
($.30, $.27, $.60 and $.54 per share, respectively).. (47,564) (43,365) (95,844) (86,711)
----------- ----------- ----------- -----------
Balance, End of Period................................... 2,712,268 2,408,300 2,712,268 2,408,300
----------- ----------- ----------- -----------
Unrealized Loss on Available-for-Sale Securities:
Balance, Beginning of Period............................. (53,753) - (7,012) -
Net Unrealized Loss.................................... (36,183) - (82,924) -
----------- ----------- ----------- -----------
Balance, End of Period................................... (89,936) - (89,936) -
----------- ----------- ----------- -----------
Accumulated Translation Adjustment:
Balance, Beginning of Period............................. 5,122 6,544 4,384 5,610
Aggregate Translation Gain(Loss)....................... 1,996 (1,718) 2,734 (784)
----------- ----------- ----------- -----------
Balance, End of Period................................... 7,118 4,826 7,118 4,826
----------- ----------- ----------- -----------
Deferred Compensation:
Balance, Beginning of Period............................. (19,119) (18,754) (16,347) (15,335)
Awards Granted......................................... (7,944) (5,452) (14,322) (9,744)
Amortization of Deferred Compensation.................. 2,186 2,625 5,487 5,221
Other.................................................. 980 1,716 1,285 (7)
----------- ----------- ----------- -----------
Balance, End of Period................................... (23,897) (19,865) (23,897) (19,865)
----------- ----------- ----------- -----------
Treasury Stock:
Balance, Beginning of Period............................. - - - -
Purchase of Common Stock (2,513,258 shares in 1994).... (71,099) (6,321) (74,921) (10,119)
Conversion of Subordinated Debentures
and Other (406,088 shares in 1994)................... 7,983 5,925 11,805 9,723
----------- ----------- ----------- -----------
Balance, End of Period................................... (63,116) (396) (63,116) (396)
----------- ----------- ----------- -----------
Total Shareholders' Equity, End of Period.................. $3,250,143 $3,093,459 $3,250,143 $3,093,459
=========== =========== =========== ===========
</TABLE>
<PAGE>
Page 5
<TABLE>
<CAPTION>
NBD Bancorp, Inc. Consolidated Statement of Cash Flows
(in thousands)
Six Months Ended
June 30
---------------------------
1994 1993
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income.................................................................. $ 242,485 $ 241,679
Adjustments to Reconcile Net Income to
Net Cash Provided by Operations:
Depreciation and Amortization............................................ 50,724 50,849
Provision for Possible Credit Losses..................................... 24,039 74,980
Securities Gains......................................................... (305) (2,803)
Increase in Interest Receivable.......................................... (23,380) (35,672)
Decrease in Current Income Taxes Payable................................. (16,046) (14,875)
Decrease in Accrued Expenses............................................. (61,956) (25,123)
Increase in Trading Account Investments.................................. (99,663) (75,246)
Decrease (Increase) in Mortgages Held for Sale........................... 216,747 (112,992)
Other, net............................................................... 17,762 (36,236)
------------ ------------
Net Cash Provided by Operating Activities............................ 350,407 64,561
------------ ------------
Cash Flows from Investing Activities:
Decrease in Interest-Bearing Deposits....................................... 90,358 91,972
Increase in Federal Funds Sold and Resale Agreements........................ (34,023) (443,294)
Decrease in Money Market Investments........................................ - 2,885
Purchase of Investment Securities Available-for-Sale........................ (3,240,460) -
Proceeds from Maturity or Call of Investment Securities Available-for-Sale.. 1,344,020 -
Proceeds from Sale of Investment Securities Available-for-Sale.............. 387,517 -
Purchase of Investment Securities Held-to-Maturity.......................... (2,671,607) (1,486,407)
Proceeds from Maturity or Call of Investment Securities Held-to-Maturity.... 1,062,770 2,341,537
Proceeds from Sale of Investment Securities Held-to-Maturity................ - 36,525
Increase in Loans and Leases................................................ (1,486,161) (181,572)
Purchase of Loan Portfolios................................................. - (19,617)
Proceeds from Sale of Loan Portfolios....................................... - 70,107
Purchase of Premises and Equipment and Other Assets......................... (249,111) (55,069)
Proceeds from Sale of Premises and Equipment and Other Assets............... 37,076 26,222
Net Cash Paid in Purchase of Subsidiary..................................... (5,788) -
------------ ------------
Net Cash (Used) Provided by Investing Activities..................... (4,765,409) 383,289
------------ ------------
Cash Flows from Financing Activities:
Increase (Decrease) in Deposits............................................. 1,090,329 (1,021,612)
Increase in Short-Term Borrowings........................................... 2,463,980 24,484
Proceeds from the Issuance of Debt.......................................... 1,200,000 350,000
Principal Payments on Long-Term Debt........................................ (299,591) (36,798)
Proceeds from Stock Option Exercises........................................ 805 1,675
Payments to Acquire Treasury Stock.......................................... (74,921) (10,119)
Dividends Paid.............................................................. (91,606) (86,669)
------------ ------------
Net Cash Provided (Used) by Financing Activities..................... 4,288,996 (779,039)
------------ ------------
Effect of Exchange Rate Changes on Cash and Due From Banks.................... 10 186
------------ ------------
Net Decrease in Cash and Due From Banks....................................... (125,996) (331,003)
Cash and Due From Banks - Beginning of Period................................. 2,405,694 2,549,271
------------ ------------
Cash and Due From Banks - End of Period....................................... $ 2,279,698 $ 2,218,268
============ ============
Other Cash Flow Disclosures:
Interest Paid.............................................................. $ 640,731 $ 633,031
State and Federal Taxes Paid............................................... 131,025 119,454
</TABLE>
<PAGE>
Page 6
Notes to Consolidated Financial Statements
------------------------------------------
Note A - Accounting Policies
- ----------------------------
Accounting policies of NBD Bancorp, Inc. and its subsidiaries (the
Corporation) are described below.
Basis of Presentation:
The unaudited consolidated financial statements as of and for the three
and six months ended June 30, 1994 and 1993, are prepared in conformity
with generally accepted accounting principles for interim financial
information and the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation have
been included. These financial statements should be read in conjunction
with the consolidated financial statements included in the Corporation's
Form 10-K Annual Report for the year ended December 31, 1993.
The Corporation has adopted Statement of Financial Accounting Standard
(SFAS) No. 112, "Employers' Accounting For Postemployment Benefits,"
effective January 1, 1994. This statement requires the accrual of
benefits provided to former or inactive employees after employment but
before retirement. The cumulative effect of adopting SFAS No. 112 was a
charge of $12,323,000 ($7,885,000 net of income taxes).
The Corporation has adopted SFAS No. 109, "Accounting for Income Taxes,"
effective in the first quarter of 1993, and SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," effective December 31,
1993.
Consolidation:
The consolidated financial statements of the Corporation include the
accounts of its subsidiaries, principally NBD Bank, N.A. (Michigan). All
material inter-company accounts and transactions have been eliminated.
Investments in unconsolidated affiliates in which ownership is at least
20 percent are accounted for by the equity method and are reported in
"Other Assets."
Securities:
In accordance with SFAS No. 115, Investment Securities are accounted for
as follows: (a) Debt securities that the Corporation has the positive
intent and ability to hold to maturity are classified as Held-to-Maturity
and reported at amortized cost; (b) Debt and equity securities that are
bought and held principally for the purpose of selling in the near term
are classified as Trading and reported at fair value, with realized and
unrealized gains and losses included in Other Non-Interest Income; and (c)
Debt and equity securities not classified as Held-to-Maturity or Trading
are classified as Available-for-Sale and reported at fair value, with
unrealized gains and losses excluded from earnings and reported in a
separate component of shareholders' equity, net of tax.
Prior to December 31, 1993, the Corporation classified securities
purchased with the intent and the ability to hold to maturity as
Investment Securities and reported them at amortized cost. If it was
subsequently determined that certain investment securities were to be
sold, their reported
(PAGE>
Page 7
Notes to Consolidated Financial Statements (cont'd.)
value was adjusted as necessary to the lower of cost or fair value with
the adjustments included in Securities Gains(Losses). The Corporation's
accounting for Trading Account Securities was not changed by the adoption
of SFAS No. 115.
Gains and losses realized on the sale of Investment Securities are
determined on the specific identification method and included in
Securities Gains(Losses).
Loans:
Loans are generally reported at the principal amount outstanding, net of
unearned income. Non-refundable loan origination and commitment fees, and
certain costs of origination, are deferred and either included in interest
income over the term of the related loan or commitment or, if the loan is
held for sale, included in Other Non-Interest Income when the loan is
sold.
Mortgages Held For Sale are valued at the lower of aggregate cost or fair
value. Unrealized losses, as well as realized gains or losses, are
included in Other Non-Interest Income.
Interest income on loans is accrued as earned. Except for consumer loans,
loans are placed on non-accrual status and previously accrued but unpaid
interest is reversed against current period interest income when
collectibility of principal or interest is considered doubtful, payment
of principal or interest is 90 days or more past due, or the loan is
completely or partially charged off. Interest income on loans considered
doubtful or 90 days or more past due is recorded as collected.
Collections of principal and interest on charged-off loans are applied in
the following sequence: (1) as a reduction of remaining principal balance;
(2) as recovery of principal charged off; and (3) as interest income.
Consumer loans are not placed on a non-accrual status because they are
charged off when 120 days to 150 days past due. Accrued but unpaid
interest is generally reversed against current period interest income when
the loan is charged off.
Allowance for Possible Credit Losses:
The Allowance is maintained at a level considered by management to be
adequate to provide for probable loan and lease losses inherent in the
portfolio. Management's evaluation is based on a continuing review of the
loan and lease portfolio and includes consideration of the actual loan and
lease loss experience, the present and prospective financial condition of
borrowers, balance of the loan and lease portfolio, industry and country
concentrations within the portfolio and general economic conditions.
Income Taxes:
SFAS No. 109 requires an asset and liability approach to accounting and
reporting for income taxes. Under this approach, current and deferred
income taxes payable and refundable are remeasured annually using
provisions of then enacted tax laws and rates. SFAS No. 109 also
specifies the criteria for recognition and measurement of deferred income
tax benefits.
<PAGE>
Page 8
Notes to Consolidated Financial Statements (cont'd.)
Income Per Share:
Per share amounts are based on the weighted average number of shares
outstanding throughout the period.
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30 June 30
------------------------ -------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Average Shares Outstanding....................... 160,321,949 161,242,541 160,708,551 161,281,683
</TABLE>
Note B - Investment Securities
- ------------------------------
Following are the amortized cost and fair value of Investment Securities
Available-for-Sale and Held-to-Maturity at June 30, 1994:
<TABLE>
<CAPTION>
Investment Securities Available-for-Sale
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ---------
(in thousands)
<S> <C> <C> <C> <C>
U.S. Government..................................... $ 974,820 $ 1,008 $ 4,345 $ 971,483
U.S. Government Agencies
(principally mortgage-backed).................... 3,943,975 2,089 107,176 3,838,888
Other Securities.................................... 356,865 277 32,671 324,471
---------- ---------- ---------- ----------
Total............................................ $5,275,660 $ 3,374 $ 144,192 $5,134,842
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Investment Securities Held-to-Maturity
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ---------
(in thousands)
<S> <C> <C> <C> <C>
U.S. Government..................................... $ 523,252 $ 3,472 $ 4,563 $ 522,161
U.S. Government Agencies
(principally mortgage-backed).................... 6,192,064 101,288 172,277 6,121,075
States and Political Subdivisions................... 1,468,318 87,562 9,336 1,546,544
Other Securities.................................... 500 12 - 512
---------- ---------- ---------- ----------
Total............................................ $8,184,134 $ 192,334 $ 186,176 $8,190,292
========== ========== ========== ==========
</TABLE>
<PAGE>
Page 9
Notes to Consolidated Financial Statements (cont'd.)
Following are the amortized cost and fair value of Investment Securities
Available-for-Sale and Held-to-Maturity at December 31, 1993:
<TABLE>
<CAPTION>
Investment Securities Available-for-Sale
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ---------
(in thousands)
<S> <C> <C> <C> <C>
U.S. Government..................................... $ 965,190 $ 9,405 $ 1 $ 974,594
U.S. Government Agencies
(principally mortgage-backed).................... 2,396,927 5,782 11,535 2,391,174
States and Political Subdivisions................... 1,261 112 - 1,373
Other Securities.................................... 431,488 1,082 15,327 417,243
---------- ---------- ---------- ----------
Total............................................ $3,794,866 $ 16,381 $ 26,863 $3,784,384
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Investment Securities Held-to-Maturity
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ---------
(in thousands)
<S> <C> <C> <C> <C>
U.S. Government..................................... $ 525,698 $ 22,020 $ 36 $ 547,682
U.S. Government Agencies
(principally mortgage-backed).................... 4,573,861 252,846 2,356 4,824,351
States and Political Subdivisions................... 1,505,270 139,527 1,585 1,643,212
Other Securities.................................... 2,580 78 - 2,658
---------- ---------- ---------- ----------
Total............................................ $6,607,409 $ 414,471 $ 3,977 $7,017,903
========== ========== ========== ==========
</TABLE>
Note C - Allowance For Possible Credit Losses
- ---------------------------------------------
The changes in the Allowance for Possible Credit Losses are summarized
below:
Six Months Ended
June 30
------------------
1994 1993
-------- --------
(in thousands)
Balance, Beginning of Period........................ $423,030 $417,764
Provision......................................... 24,039 74,980
Charge-offs....................................... (61,925) (105,742)
Recoveries........................................ 38,052 34,217
-------- --------
Net Charge-offs................................. (23,873) (71,525)
Translation Adjustments........................... 428 286
-------- --------
Balance, End of Period.............................. $423,624 $421,505
======== ========
<PAGE>
Page 10
Notes to Consolidated Financial Statements (cont'd.)
Note D - Assets Pledged
- -----------------------
Assets, principally Investment Securities, carried at approximately
$6,596,905,000 were pledged at June 30, 1994, to secure public deposits
(including deposits of $167,408,000 of the Treasurer, State of Michigan),
repurchase agreements and for other purposes required by law.
Note E - Extraordinary Item
- ---------------------------
On March 15, 1994, an extraordinary item charge of $7,730,000 (net of income
taxes) was incurred, representing the premium paid and unamortized issuance
costs related to the Corporation's call and redemption of the $199,985,000
7.25% Convertible Subordinated Debentures Due 2006.
Note F - Other Commitments and Contingent Liabilities
- -----------------------------------------------------
In the normal course of business the Corporation and its subsidiaries have
various outstanding commitments and contingent liabilities, including
guarantees, commitments to extend credit, foreign exchange futures contracts,
etc., which are not reflected in the financial statements. Management does
not anticipate any material loss as a result of these transactions.
The Corporation is a defendant in various legal proceedings arising in the
normal course of business. In the opinion of management, based on the advice
of legal counsel, the ultimate resolution of these proceedings will not have
a material effect on the Corporation's financial position.
Outstanding standby letters of credit at June 30, 1994, totaled approximately
$1,827,000,000.
<PAGE>
Page 11
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations.
-----------------------
The following discussion and analysis supplements information contained in
the financial statements and related notes appearing in this report.
<TABLE>
<CAPTION>
NBD Bancorp, Inc. Financial Highlights
Quarter Ended June 30
----------------------------
Pct.
1994 1993 Change
-------- -------- -------
(in thousands,
except per share data)
Operating Results:
<S> <C> <C> <C>
Net Interest Income............... $406,388 $391,773 3.7
Provision for Possible
Credit Losses.................. 8,579 35,060 (75.5)
Non-Interest Income............... 133,948 143,169 (6.4)
Non-Interest Expenses............. 332,309 321,605 3.3
-------- --------
Income Before Income Taxes........ 199,448 178,277 11.9
Income Tax Expense............... 64,224 55,629 15.5
-------- --------
Income before Extraordinary
Item and Accounting Change...... 135,224 122,648 10.3
Extraordinary Item
(Redemption of Debt)............ - -
Cumulative Effect of Accounting
Change (SFAS Nos. 112 and 109,
respectively)................... - -
-------- --------
Net Income........................ $135,224 $122,648 10.3
Per Share:
Income before Extraordinary
Item and Accounting Change.... $ 0.84 $ 0.76 10.5
Net Income...................... 0.84 0.76 10.5
Net Interest Margin.........(pct.) 4.28 4.53
Stock Data (per share):
Cash Dividends Declared........... $ 0.30 $ 0.27 11.1
Book Value (period end)........... 20.47 19.27 6.2
Market Value:
Period End..................... 31 5/8 32 3/8
High........................... 32 36 1/4
Low............................ 27 3/8 29 5/8
Average Shares Outstanding........ 160,322 161,243
Financial and Capital Ratios:
Return on Average Shareholders'
Equity:
Before Extraordinary Item and
Accounting Change.....(pct.) 16.39 16.01
After Extraordinary Item and
Accounting Change.....(pct.) 16.39 16.01
Return on Average Assets:
Before Extraordinary Item and
Accounting Change.....(pct.) 1.24 1.23
After Extraordinary Item and
Accounting Change.....(pct.) 1.24 1.23
Capital Ratios (period end):
Tier 1 Capital Ratio.....(pct.) 8.85 8.89
Total Capital Ratio......(pct.) 12.53 12.85
Tier 1 Leverage Ratio....(pct.) 6.80 6.97
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30
-----------------------------
Pct.
1994 1993 Change
-------- -------- ------
(in thousands,
except per share data)
Operating Results:
<S> <C> <C> <C>
Net Interest Income............... $787,648 $780,234 1.0
Provision for Possible
Credit Losses.................. 24,039 74,980 (67.9)
Non-Interest Income............... 272,698 288,163 (5.4)
Non-Interest Expenses............. 654,628 647,160 1.2
-------- --------
Income Before Income Taxes........ 381,679 346,257 10.2
Income Tax Expense................ 123,579 108,528 13.9
-------- --------
Income before Extraordinary
Item and Accounting Change...... 258,100 237,729 8.6
Extraordinary Item
(Redemption of Debt)............ (7,730) -
Cumulative Effect of Accounting
Change (SFAS Nos. 112 and 109,
respectively)................... (7,885) 3,950
-------- --------
Net Income........................ $242,485 $241,679 0.3
Per Share:
Income before Extraordinary
Item and Accounting Change.... $ 1.61 $ 1.47 9.5
Net Income...................... 1.51 1.50 0.7
Net Interest Margin.........(pct.) 4.30 4.50
Stock Data (per share):
Cash Dividends Declared........... $ 0.60 $ 0.54 11.1
Book Value (period end)........... 20.47 19.27 6.2
Market Value:
Period End..................... 31 5/8 32 3/8
High........................... 32 36 3/8
Low............................ 27 1/4 29 5/8
Average Shares Outstanding........ 160,709 161,282
Financial and Capital Ratios:
Return on Average Shareholders'
Equity:
Before Extraordinary Item and
Accounting Change.....(pct.) 15.55 15.65
After Extraordinary Item and
Accounting Change.....(pct.) 14.65 15.89
Return on Average Assets:
Before Extraordinary Item and
Accounting Change.....(pct.) 1.22 1.19
After Extraordinary Item and
Accounting Change.....(pct.) 1.15 1.21
Capital Ratios (period end):
Tier 1 Capital Ratio.....(pct.) 8.85 8.89
Total Capital Ratio......(pct.) 12.53 12.85
Tier 1 Leverage Ratio....(pct.) 6.80 6.97
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data:
June 30 December 31 June 30
1994 1993 1993
----------- ----------- -----------
(in thousands)
<S> <C> <C> <C>
Total Assets.................... $45,232,112 $40,775,905 $40,389,160
Total Earning Assets............ 41,332,654 37,056,812 36,812,117
Total Loans and Leases.......... 26,849,896 25,550,792 25,362,612
Total Goodwill.................. 254,848 264,978 275,228
Total Deposits.................. 30,943,386 29,821,107 29,991,439
Total Common Shareholders'
Equity........................ 3,250,143 3,248,599 3,093,459
</TABLE>
<TABLE>
<CAPTION>
Credit Quality:
June 30 March 31 June 30
1994 1994 1993
----------- ----------- -----------
(in thousands)
<S> <C> <C> <C>
Allowance for Possible
Credit Losses................ $ 423,624 $ 423,410 $ 421,505
Nonperforming Loans............. 225,577 248,797 283,441
Other Real Estate Owned......... 26,263 35,583 55,589
Total Nonperforming Assets...... 251,840 284,380 339,030
Net Loan Charge-offs
(quarter-ended).............. 8,503 15,370 32,776
Ratios:
Nonperforming Loans
to Total Loans........(pct.) 0.84 0.96 1.12
Allowance to Total
Loans.................(pct.) 1.58 1.64 1.66
Allowance to Nonperforming
Loans.................(pct.) 187.80 170.18 148.71
Net Loan Charge-offs
(annualized)..........(pct.) 0.13 0.24 0.52
</TABLE>
<PAGE>
Page 12
SUMMARY OF OPERATIONS
- ---------------------
Net Income for the second quarter of 1994 amounted to a record $135,224,000,
or $.84 per share. This was 10 percent higher than the $122,648,000, or $.76
per share, earned in the second quarter of 1993.
For the first six months of 1994, Net Income was $242,485,000, or $1.51 per
share. Income before the effects of an extraordinary item and an accounting
change totaled $258,100,000, or $1.61 per share. Net income for the first
half of 1993 amounted to $241,679,000, or $1.50 per share, and income before
the effect of an accounting change was $237,729,000, or $1.47 per share.
An extraordinary charge of $7,730,000 (net of income taxes), or five cents
per share, was incurred in the first quarter of 1994, representing premium
paid and unamortized issuance costs related to the redemption on March 15,
1994, of the $199,985,000 outstanding 7.25% Convertible Subordinated
Debentures Due March 2006. Also, Financial Accounting Standards No. 112,
Employers' Accounting for Postemployment Benefits, was adopted as of January
1, 1994, which required a charge against earnings of $7,885,000 (net of
income taxes), or five cents per share. In the first quarter of 1993,
Financial Accounting Standards No. 109, Accounting for Income Taxes, was
adopted, which had the effect of increasing earnings by $3,950,000, or three
cents per share.
<TABLE>
<CAPTION>
Table 1
Summary of Operations
(in thousands except per share data)
Quarter Ended Year-to-Date
--------------------------------------------------------------- ------------------------
June March December September June
1994 1994 1993 1993 1993 1994 1993
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income - Including Taxable
Equivalent Adjustment.................. $ 719,742 $ 651,998 $ 655,717 $ 676,236 $ 677,365 $1,371,739 $1,363,230
Interest Expense........................ (296,990) (253,919) (256,106) (263,109) (267,035) (550,909) (545,498)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Interest Income - Taxable Equivalent 422,752 398,079 399,611 413,127 410,330 820,830 817,732
Taxable Equivalent Adjustment........... (16,364) (16,819) (16,929) (17,936) (18,557) (33,182) (37,498)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Interest Income..................... 406,388 381,260 382,682 395,191 391,773 787,648 780,234
Provision For Possible Credit Losses.... (8,579) (15,460) (19,841) (24,853) (35,060) (24,039) (74,980)
Securities Gains(Losses)................ (85) 390 6,470 55 1,689 305 2,803
Other Non-Interest Income............... 134,033 138,360 149,632 141,063 141,480 272,393 285,360
Compensation............................ (178,762) (176,748) (178,926) (181,942) (173,030) (355,510) (342,876)
Other Non-Interest Expenses............. (153,547) (145,571) (166,089) (147,723) (148,575) (299,118) (304,284)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income Before Taxes..................... 199,448 182,231 173,928 181,791 178,277 381,679 346,257
Applicable Taxes........................ (64,224) (59,355) (54,968) (56,639) (55,629) (123,579) (108,528)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before Extraordinary
Item and Cumulative Effect
of Accounting Change................... 135,224 122,876 118,960 125,152 122,648 258,100 237,729
Extraordinary Item..................... - (7,730) - - - (7,730) -
Cumulative Effect of Accounting Change. - (7,885) - - - (7,885) 3,950
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Income.............................. $ 135,224 $ 107,261 $ 118,960 $ 125,152 $ 122,648 $ 242,485 $ 241,679
=========== =========== =========== =========== =========== =========== ===========
Income Per Share:
Income before Extraordinary Item and
Accounting Change.................... $ 0.84 $ 0.77 $ 0.74 $ 0.77 $ 0.76 $ 1.61 $ 1.47
Net Income............................. $ 0.84 $ 0.67 $ 0.74 $ 0.77 $ 0.76 $ 1.51 $ 1.50
Average Shares Outstanding.............. 160,322 161,099 161,173 161,278 161,243 160,709 161,282
Average Earning Assets (in millions).... $ 39,540 $ 37,127 $ 36,398 $ 36,209 $ 36,302 $ 38,341 $ 36,447
Net Interest Margin..................... 4.28% 4.31% 4.38% 4.55% 4.53% 4.30% 4.50%
</TABLE>
<PAGE>
Page 13
Net Interest Income
Net interest income in the second quarter of 1994 on a tax equivalent basis
was $422.8 million, an increase of $12.4 million, or 3.0 percent, compared
with the second quarter of last year. The increase was attributable to an
increase of $3.2 billion, or 8.9 percent, in average earning assets,
partially offset by lower interest margin, which decreased 25 basis points
from 4.53 percent in the second quarter of 1993 to 4.28 percent in the second
quarter of 1994.
For the first six months of 1994, tax equivalent net interest income rose
$3.1 million, or 0.3 percent over the corresponding period of 1993. The
increase was attributable to a $1.9 billion, or 5.2 percent increase in
average earning assets, partially offset by a 20 basis point decrease in the
interest margin.
Further detail on average balances, yields and rates is shown in Table 7.
Provision for Possible Credit Losses
The Provision for Possible Credit Losses in the second quarter of 1994 was
$8.6 million, down from $35.1 million in the same period last year,
reflecting continuing improvement in loan credit quality.
On a year-to-date basis, the provision was $24.0 million in 1994 versus $75.0
million in 1993. A comprehensive analysis of the related Allowance for
Possible Credit Losses, charge-offs, nonperforming assets and ratios is
presented in Table 5.
Securities Transactions
Over the last five quarters securities gains or losses were insignificant.
Essentially all of the securities gains in the fourth quarter of 1993 were
attributable to the sale of an equity holding in a nonbank financial services
company.
Other Non-Interest Income
Other Non-Interest Income of $134.0 million was earned in the second quarter
of 1994 versus $141.5 million in the comparable period of 1993, a decrease
of $7.4 million, or 5.3 percent. For the first half of 1994 and 1993, Other
Non-Interest Income totaled $272.4 million and $285.4 million, respectively,
a decrease of $13.0 million, or 4.5 percent.
Table 2 and its related discussion provide additional details of the
composition of Other Non-Interest Income.
<PAGE>
Page 14
Compensation
In the second quarter of 1994, compensation expense amounted to $178.8
million, which was $5.7 million, or 3.3 percent, higher than the second
quarter of 1993.
For the first half of 1994, compensation expense amounted to $355.5 million,
an increase of $12.6 million, or 3.7 percent over the comparable period of
1993. Salaries increased $7.1 million, or 2.7 percent, reflecting a 4.5
percent average merit increase, partially offset by a 0.6 percent decrease
in full-time equivalent employment. Benefits expense increased $5.5 million,
or 6.7 percent.
Other Non-Interest Expenses
Other Non-Interest Expenses amounted to $153.5 million for the second quarter
of 1994 compared with $148.6 million for the second quarter of 1993, which
represents an increase of 3.3 percent. On a year-to-date basis, Other
Non-Interest Expenses dropped $5.2 million, or 1.7 percent. Factors
influencing period-to-period changes are discussed in connection with Table
3.
Taxes on Income
Income tax expense amounted to $64.2 million in the second quarter of 1994,
an increase of $8.6 million, or 15.5 percent over the same quarter of last
year. For the first half of 1994, income tax expense totaled $123.6 million,
an increase of $15.1 million, or 13.9 percent, over the same period of last
year, reflecting both a 10.2 percent increase in pre-tax income and the use
of a 34 percent tax rate for reporting net income for the first six months
of 1993 versus a rate of 35 percent in the first half of 1994. In the third
quarter of 1993, the tax rate was increased to 35 percent from 34 percent
retroactive to January 1, 1993. The Corporation's effective tax rate, when
computed after adding the taxable equivalent adjustment to both pre-tax
income and income tax expense, was 38 percent for the first six months of
both 1994 and 1993.
<PAGE>
Page 15
OTHER NON-INTEREST INCOME
- -------------------------
Deposit Service Charges of $38.8 million in the second quarter of 1994 and
$79.8 million in the first six months of 1994 decreased 7.3 percent and 4.9
percent, respectively, compared with the same periods of 1993. The reduction
was attributable to a higher credit given for balances maintained on business
accounts.
Trust fees for the second quarter of 1994 and the first six months of 1994
increased 6.3 percent and 7.0 percent, respectively, over the comparable
periods of 1993.
The decline in Profit on Mortgage Sales in the first two quarters of 1994 was
attributable to changes in interest rates, lower mortgage refinancing volumes
and the retention of more mortgages in the portfolio.
Other Income in the first half of 1994 was $12.2 million versus $18.7 million
in the same period of last year. A gain of $9.6 million on the sale of
credit card receivables occurred in the first quarter of 1993.
<TABLE>
<CAPTION>
Table 2
Other Non-Interest Income
(in thousands)
Quarter Ended Year-to-Date
------------------------------------------------------ ---------------------
June March Dec. Sept. June
1994 1994 1993 1993 1993 1994 1993
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Deposit Service Charges........... $ 38,790 $ 40,979 $ 40,203 $ 41,373 $ 41,857 $ 79,769 $ 83,840
Trust Income...................... 39,803 38,110 39,904 36,860 37,440 77,913 72,788
Charge Card Merchant
Processing Fees................ 8,715 7,689 9,167 10,118 5,679 16,404 11,651
Data Processing Fees.............. 7,830 7,214 7,372 8,017 7,032 15,044 13,474
Letter of Credit Fees............. 5,586 4,692 5,649 5,610 4,817 10,278 9,299
Other Domestic and
International Fees............. 4,643 5,469 5,476 5,293 5,157 10,112 11,265
Mortgage Loan Servicing........... 4,581 4,544 5,156 4,079 5,164 9,125 10,162
Insurance Premiums and
Commissions.................... 3,886 4,341 4,600 3,697 4,017 8,227 8,629
Retail Banking Fees............... 3,380 3,299 3,082 3,688 3,294 6,679 6,619
Foreign Exchange and Translation.. 3,138 2,965 2,927 3,177 3,199 6,103 6,464
Rental Income..................... 2,630 2,656 2,572 2,655 2,633 5,286 4,950
OREO Gains........................ 1,892 1,823 8,037 1,784 3,651 3,715 4,031
Profit(Loss) on Mortgage Sales.... (193) 3,863 9,306 9,262 7,773 3,670 12,275
Mutual Fund and Annuity
Product Fees................... 1,506 1,742 2,311 2,354 2,543 3,248 4,203
Securities Trading
and Underwriting............... 1,434 1,486 1,476 1,807 1,710 2,920 4,388
Charge Card Fees.................. 976 688 1,496 989 1,310 1,664 2,629
Other............................. 5,436 6,800 898 300 4,204 12,236 18,693
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Other Non-Interest
Income...................... $ 134,033 $ 138,360 $ 149,632 $ 141,063 $ 141,480 $ 272,393 $ 285,360
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<PAGE>
Page 16
NON-INTEREST EXPENSES
- ---------------------
Occupancy expense for the first six months of 1994 amounted to $60.0 million,
which was $1.1 million, or 1.9 percent over the same period a year ago.
Equipment expense amounted to $23.6 million in the first quarter of 1994 and
$45.6 million for the first half of 1994, up 12.8 percent and 8.2 percent,
respectively, compared with the corresponding periods of 1993. The increase
was primarily attributable to depreciation and maintenance.
Amortization of Intangibles decreased $4.0 million in the first six months
of 1994 compared with the same period last year. Most of the decrease was
attributable to a higher level of amortization of purchased mortgage
servicing rights during 1993.
OREO Expense for year-to-date June 1994 totaled $2.4 million, a decrease of
$6.7 million compared with the first half of 1993. The decrease resulted
primarily from lower write-downs on properties in the 1994 period.
<TABLE>
<CAPTION>
Table 3
Other Non-Interest Expenses
(in thousands)
Quarter Ended Year-to-Date
------------------------------------------------------ ---------------------
June March Dec. Sept. June
1994 1994 1993 1993 1993 1994 1993
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Occupancy............................. $ 29,968 $ 30,081 $ 30,271 $ 28,837 $ 29,429 $ 60,049 $ 58,955
Equipment............................. 23,597 21,954 21,858 20,309 20,916 45,551 42,113
FDIC & Other Regulatory
Assessments........................ 16,741 16,675 16,927 16,868 16,309 33,416 34,971
Telephone............................. 9,214 6,852 7,999 6,627 7,245 16,066 14,548
Purchased Services.................... 7,577 7,138 7,559 6,824 6,389 14,715 13,245
Professional Services................. 7,567 6,433 9,034 7,580 6,880 14,000 13,238
Amortization of Intangibles........... 6,577 6,524 9,328 9,291 7,997 13,101 17,123
Operating and Other Taxes............. 6,016 6,866 6,352 5,653 5,731 12,882 11,624
Postage............................... 4,719 5,274 5,396 4,635 4,977 9,993 10,627
Marketing............................. 5,995 3,946 7,246 4,569 4,967 9,941 10,210
Stationery and Supplies............... 4,269 4,716 5,712 5,576 5,391 8,985 11,670
Travel and Entertainment.............. 4,025 3,655 5,667 4,587 4,308 7,680 8,046
Public Relations...................... 3,082 2,586 2,777 2,725 2,343 5,668 5,632
Loan and Credit Charges............... 2,811 2,067 2,500 1,855 2,730 4,878 4,427
Federal Reserve Service Charges....... 2,060 1,958 1,845 2,124 2,134 4,018 4,442
Armored Carrier and Cartage........... 2,198 1,819 2,105 1,919 2,076 4,017 4,064
OREO Expense.......................... 1,440 970 2,000 468 2,326 2,410 9,114
Other Insurance....................... 961 913 970 1,451 907 1,874 1,775
Other................................. 14,730 15,144 20,543 15,825 15,520 29,874 28,460
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Other Non-Interest Expenses.. $ 153,547 $ 145,571 $ 166,089 $ 147,723 $ 148,575 $ 299,118 $ 304,284
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<PAGE>
Page 17
FINANCIAL CONDITION AND CAPITAL ACCOUNTS
- ----------------------------------------
The Corporation's consolidated balance sheet is presented on pages 1 and 2.
NBD Bancorp, Inc. consolidated total assets at June 30, 1994, were $45.2
billion, an increase of $4.5 billion since year-end 1993, principally due to
increases of $2.9 billion and $1.3 billion in investment securities and loans
and leases, respectively.
The $2.9 billion increase in Investment Securities since year-end 1993 was
primarily attributable to the acquisition of mortgage-backed U.S. Government
Agency Securities during the first half of 1994.
The increase during the first six months of 1994 in the unrealized losses on
U.S. Government Agencies Securities available-for-sale consists of
approximately $70 million related to the fair value of certain variable rate
mortgage-backed securities, and approximately $30 million related to certain
fixed rate collateralized mortgage obligations. The increase in the
unrealized losses on Other Securities available-for-sale during the same
period consists of approximately $17 million related to the fair value of
United Mexican States obligations. These declines are considered temporary
in nature because they resulted directly from the general increase in
interest rates in the financial markets and were not attributable to any
specific adverse conditions for particular securities. Further, as
management does not intend to dispose of any of the affected securities in
the foreseeable future, it is not probable that the Company will ultimately
realize the declines in value.
The increase in Total Loans and Leases of $1.3 billion since December 31,
1993, was primarily attributable to increases of $733.1 million, or 5.3
percent, in Commercial, $395.9 million, or 5.9 percent, in Consumer, and
$395.0 million, or 15.4 percent, in Residential Mortgage. Mortgages Held For
Sale declined $216.7 million due to lower mortgage refinancing activity and
the retention of more mortgages in the portfolio. An upward trend in loan
growth is expected to continue during the third quarter of 1994.
Included in the commercial loan portfolio are highly leveraged transactions
(HLTs) and investment property term loans. At June 30, 1994, HLT commitments
totaled $437.8 million, of which $218.7 million were outstanding. A total
of $2.0 million of HLT outstandings were classified as nonperforming. About
66 percent of the outstanding amount was domiciled in the Midwest and 69
percent was related to manufacturing activities.
Investment property term loan commitments amounted to $1,851.2 million, of
which $1,537.7 million were outstanding at June 30, 1994, and $52.1 million
were classified as nonperforming.
As of June 30, 1994, real estate construction loan commitments totaled
$1,270.4 million, of which $729.4 million were outstanding and $34.5 million
were classified as nonperforming.
Other Assets increased $315.6 million since year-end 1993. Most of the
increase related to a $200 million investment in corporate owned life
insurance.
The increase of $4.5 million in Total Liabilities since year-end 1993
consisted of increases in Short-Term Borrowings, Total Deposits, and
Long-Term Debt of $2.5 billion, $1.1 billion, and $897.6 million,
respectively.
The increase of 3.8 percent in Total Deposits was primarily attributable to
an increase of $1.3 billion in Foreign Office Deposits, partially offset by
a decrease of $357.4 million in Money Market Accounts. Demand Deposits
increased $142.5 million since December 31, 1993.
<PAGE>
Page 18
FINANCIAL CONDITION AND CAPITAL ACCOUNTS (cont'd.)
- ----------------------------------------
The increase in Long-Term Debt was attributable to an increase of $1.1
billion in bank notes since year-end 1993, partially offset by the redemption
of approximately $200 million of convertible subordinated debentures noted
earlier.
Shareholders' Equity totaled $3.3 billion at June 30, 1994, an increase of
$1.5 million since year-end 1993.
ANALYSIS OF CAPITAL
- -------------------
The table that follows presents the components of Tier I Capital and Total
Capital. Both Tier I and Total capital ratios exceed the regulatory minimum
requirements of 4.0 percent and 8.0 percent, respectively. The Tier I
Leverage Ratio, also presented below, exceeds the regulatory minimum of 3.0
percent.
<TABLE>
<CAPTION>
Table 4
Analysis of Capital
(dollars in thousands)
June 30 March 31 Dec. 31 Sept. 30 June 30
1994 1994 1993 1993 1993
----------- ----------- ----------- ----------- -----------
Capital Components:
Tier 1 Capital:
<S> <C> <C> <C> <C> <C>
Common Shareholders' Equity........ $3,250,143 $3,264,699 $3,248,599 $3,179,606 $3,093,459
Intangible Assets and Other
Adjustments................... (187,852) (224,383) (281,507) (290,557) (300,596)
----------- ----------- ----------- ----------- -----------
Total Tier 1 Capital............. $3,062,291 $3,040,316 $2,967,092 $2,889,049 $2,792,863
=========== =========== =========== =========== ===========
Total Capital:
Common Shareholders' Equity........ $3,250,143 $3,264,699 $3,248,599 $3,179,606 $3,093,459
Qualifying Allowance for Possible
Credit Losses................. 423,624 416,050 406,618 398,047 393,241
Qualifying Long-Term Debt.......... 852,000 854,000 1,053,985 1,053,985 854,067
Intangible Assets and Other
Adjustments................... (191,898) (227,709) (284,819) (290,691) (300,743)
----------- ----------- ----------- ----------- -----------
Total Capital.................... $4,333,869 $4,307,040 $4,424,383 $4,340,947 $4,040,024
=========== =========== =========== =========== ===========
Ratios (End of Period):
Risk-Based Capital Ratios:
Tier 1 Capital Ratio............... 8.85 % 9.14 % 9.13 % 9.08 % 8.89 %
Total Capital Ratio................ 12.53 % 12.94 % 13.61 % 13.64 % 12.85 %
Tier 1 Leverage Ratio............... 6.80 % 7.12 % 7.33 % 7.21 % 6.97 %
</TABLE>
<PAGE>
Page 19
ALLOWANCE FOR POSSIBLE CREDIT LOSSES
- ------------------------------------
An analysis of the changes in the Allowance for Possible Credit Losses and
related credit quality data is presented below. At June 30, 1994, the
Allowance of $423.6 million was equal to 1.58 percent of total loans and
leases, compared with 1.66 percent at both December 31, 1993, and June 30,
1993. Although the Allowance has stayed at relatively the same level over
the last several quarters, the amount of nonperforming loans has declined,
generating an improvement in the Allowance as a percent of nonperforming
loans and leases to 187.80 percent as of June 30, 1994, compared with 157.28
percent at year-end 1993 and 148.71 percent at June 30, 1993. At June 30,
1994, nonperforming loans and leases totaled $225.6 million compared with
$248.8 million at March 31, 1994, $269.0 million as of year-end 1993, and
$283.4 million at the end of the second quarter of 1993.
<TABLE>
<CAPTION>
Table 5
(dollars in thousands)
Allowance for Possible Credit Losses
Quarter Ended Year-to-Date
------------------------------------------------- -------------------
June March December September June
1994 1994 1993 1993 1993 1994 1993
--------- --------- --------- --------- --------- --------- ---------
Summary of Transactions:
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at Beginning of Period...$423,410 $423,030 $422,964 $421,505 $419,271 $423,030 $417,764
Provision for Credit Losses...... 8,579 15,460 19,841 24,853 35,060 24,039 74,980
Translation Adjustment........... 138 290 (16) (153) (50) 428 286
Charge-Offs...................... (30,881) (31,044) (53,243) (47,116) (50,038) (61,925) (105,742)
Recoveries....................... 22,378 15,674 33,484 23,875 17,262 38,052 34,217
--------- --------- --------- --------- --------- --------- ---------
Net Charge-Offs............... (8,503) (15,370) (19,759) (23,241) (32,776) (23,873) (71,525)
--------- --------- --------- --------- --------- --------- ---------
Balance at End of Period.........$423,624 $423,410 $423,030 $422,964 $421,505 $423,624 $421,505
========= ========= ========= ========= ========= ========= =========
Net Loan Charge-Offs by Category:
Commercial and Foreign........... ($3,709) ($9,217) ($12,602) ($8,077) ($18,382) ($12,926) ($45,100)
Real Estate Construction......... (243) 202 1,012 (7,641) (8,524) (41) (12,725)
Residential Mortgage............. (35) (175) (47) (96) 4 (210) 67
Consumer......................... (4,400) (5,680) (7,898) (6,971) (5,349) (10,080) (13,085)
Lease Financing.................. (116) (500) (224) (456) (525) (616) (682)
--------- --------- --------- --------- --------- --------- ---------
Total Net Charge-Offs......... ($8,503) ($15,370) ($19,759) ($23,241) ($32,776) ($23,873) ($71,525)
========= ========= ========= ========= ========= ========= =========
Net Charge-Off Ratio (Annualized) 0.13% 0.24% 0.31% 0.37% 0.52% 0.18% 0.57%
Allowance for Possible Credit
Losses as a Percent of:
Total Loans and Leases........ 1.58% 1.64% 1.66% 1.67% 1.66% 1.58% 1.66%
Nonperforming Loans and
Leases*.................. 187.80% 170.18% 157.28% 137.74% 148.71% 187.80% 148.71%
</TABLE>
<TABLE>
<CAPTION>
Analysis of Nonperforming Assets
June 30 March 31 Dec. 31 Sept. 30 June 30
1994 1994 1993 1993 1993
--------- --------- --------- --------- ---------
Loans:
<S> <C> <C> <C> <C> <C>
Non-Accrual...................$225,495 $248,690 $265,699 $306,916 $283,263
Restructured*................. 82 107 3,268 155 178
--------- --------- --------- --------- ---------
Total Loans................. 225,577 248,797 268,967 307,071 283,441
Other Real Estate Owned.......... 26,263 35,583 44,014 53,572 55,589
--------- --------- --------- --------- ---------
Total Nonperforming Assets..$251,840 $284,380 $312,981 $360,643 $339,030
========= ========= ========= ========= =========
Nonperforming Assets* as a Percent of:
Total Loans and Leases........ 0.94% 1.10% 1.22% 1.43% 1.34%
Allowance for Possible
Credit Losses............... 59.45% 67.16% 73.99% 85.27% 80.43%
*Excludes $88,941 of Mexican restructured debt for the first three quarters of 1993. These obligations were reclassified
to investment securities available-for-sale at year-end 1993, concurrent with the implementation of SFAS No. 115.
Loans 90 Days or More Past Due
and Still Accruing Interest... $36,794 $33,461 $36,905 $38,550 $35,188
</TABLE>
<PAGE>
Page 20
ORGANIZATIONAL PERFORMANCE
- --------------------------
Table 6 presents performance data and other information organized by the
three major geographical banking markets serviced by the Corporation. The
improvement in the profitability of each geographical unit in the second
quarter of 1994 compared with the first three months of 1994 was attributable
to higher net interest income as well as lower provisions for loan losses.
In the first quarter of 1994, an agreement was reached to acquire AmeriFed
Financial Corporation (AFFC), a thrift holding company with $885 million in
assets located in Joliet, Illinois. The Corporation will issue approximately
5.2 million of its shares for all of the outstanding shares of AFFC. The
acquisition, which is subject to the approval of AFFC shareholders and
regulatory authorities, will be accounted for as a purchase.
<TABLE>
<CAPTION>
Table 6
Organizational Performance
(dollars in thousands)
For the Quarter Ended March 31, 1994 Michigan Indiana Illinois
- ---------------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Income before Accounting Changes.............. $85,297 $22,967 $15,051
Net Income.................................... 79,855 22,128 14,547
Average Earning Assets........................ 23,535 8,927 4,357
Return on Assets (Before Accounting Changes).. 1.32 % 0.92 % 1.28 %
Full-Time Equivalent Employees................ 8,583 5,310 1,955
For the Quarter Ended June 30, 1994
- ----------------------------------------------
Net Income.................................... $95,056 $24,271 $17,390
Average Earning Assets........................ 25,986 9,113 4,459
Return on Assets.............................. 1.34 % 0.96 % 1.45 %
Full-Time Equivalent Employees................ 8,580 5,224 1,963
</TABLE>
<PAGE>
Page 21
Average Balances, Yields and Rates
The following table presents average asset and liability balances and related
yields and rates for the latest five quarters and the year-to-date periods.
<TABLE>
<CAPTION>
Table 7
Average Balances, Yields and Rates
(Yields are on a fully taxable equivalent basis.)
(dollars in millions)
Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter
1994 1994 1993 1993 1993
-------------- -------------- -------------- -------------- --------------
Average Yield/ Average Yield/ Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate Balance Rate Balance Rate
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-Bearing Deposits....$ 655 4.90 % $ 645 4.40 % $ 576 4.97 % $ 673 4.79 % $ 661 5.17 %
Federal Funds Sold and
Resale Agreements.......... 188 4.09 114 3.37 176 3.11 203 3.23 110 3.35
Money Market Investments..... - - - - 34 3.99 35 4.27 82 3.96
Trading Account Securities... 131 4.67 92 3.88 140 3.56 172 3.62 165 3.64
Investment Securities:
U.S. Government............. 1,615 5.33 1,583 5.30 1,518 5.36 1,559 5.51 1,637 5.56
U.S. Government Agencies.... 8,706 6.47 7,565 6.44 6,802 6.60 6,472 6.90 6,504 7.23
States and Political
Subdivisions.............. 1,476 8.78 1,492 8.21 1,503 8.43 1,519 8.64 1,551 8.72
Other....................... 346 3.87 389 4.72 362 4.52 428 4.33 512 4.59
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total Investment Securities.. 12,143 6.52 11,029 6.45 10,185 6.62 9,978 6.84 10,204 7.06
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Loans and Leases:
Commercial.................. 14,378 7.51 13,673 6.97 13,699 6.83 13,685 7.26 13,775 7.01
Real Estate Construction.... 755 7.60 754 7.19 751 7.94 811 7.04 830 6.88
Residential Mortgage........ 2,906 7.53 2,759 7.46 2,739 7.99 2,763 8.11 2,822 8.41
Consumer.................... 6,981 8.51 6,751 8.61 6,703 8.78 6,567 9.05 6,354 9.30
Lease Financing............. 291 10.14 284 10.25 273 10.49 260 11.42 249 11.57
Foreign..................... 1,112 5.93 1,026 5.70 1,122 5.73 1,062 6.01 1,050 6.43
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total Loans and Leases....... 26,423 7.74 25,247 7.46 25,287 7.50 25,148 7.81 25,080 7.76
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total Earning Assets......... 39,540 7.29 % 37,127 7.08 % 36,398 7.17 % 36,209 7.43 % 36,302 7.47 %
====== ====== ====== ====== ======
Cash and Due From Banks...... 2,365 2,285 2,766 2,204 2,271
Other Assets................. 2,031 1,931 1,573 1,772 1,703
Less Allowance for Possible
Credit Losses.............. (436) (433) (435) (437) (433)
------- ------- ------- ------- -------
Total Assets.................$43,500 $40,910 $40,302 $39,748 $39,843
======== ======== ======== ======== ========
Liabilities and Shareholders'
Equity:
Interest-Bearing Deposits:
Savings...................$ 7,933 2.29 % $ 7,854 2.29 % $ 7,624 2.42 % $ 7,346 2.50 % $ 7,175 2.54 %
Money Market Accounts..... 5,345 2.79 5,516 2.68 5,683 2.73 5,885 2.78 5,955 2.83
Time...................... 8,908 4.24 7,796 4.30 8,471 4.33 8,388 4.49 9,049 4.55
Foreign Office............ 2,803 4.37 2,035 3.96 1,707 4.24 1,729 4.35 1,810 4.54
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total Interest-Bearing
Deposits................... 24,989 3.33 23,201 3.21 23,485 3.31 23,348 3.42 23,989 3.52
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Short-Term Borrowings........ 6,331 3.95 5,647 3.26 4,739 3.12 5,141 3.13 4,746 3.10
Long-Term Debt............... 1,821 6.02 1,615 6.20 1,402 6.47 1,320 6.45 1,216 6.46
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total Interest-Bearing
Liabilities................ 33,141 3.59 % 30,463 3.37 % 29,626 3.43 % 29,809 3.50 % 29,951 3.57 %
====== ====== ====== ====== ======
Demand Deposits.............. 6,232 6,217 6,565 5,966 6,011
Other Liabilities............ 827 909 850 841 816
Shareholders' Equity......... 3,300 3,321 3,261 3,132 3,065
------- ------- ------- ------- -------
Total Liabilities and
Shareholders' Equity.......$43,500 $40,910 $40,302 $39,748 $39,843
======== ======== ======== ======== ========
Interest Rate Spread......... 3.70 % 3.71 % 3.74 % 3.93 % 3.90 %
====== ====== ====== ====== ======
Net Interest Margin.......... 4.28 % 4.31 % 4.38 % 4.55 % 4.53 %
====== ====== ====== ====== ======
The FTE adjustments are computed using a combined federal and state income tax rate of 36.4% in 1994 and 1993.
The combined amounts for Investment Securities Available-for-Sale and Held-to-Maturity for 1994 are based on their respective
carrying values.
</TABLE>
<PAGE>
Page 22
<TABLE>
<CAPTION>
Year-to-Date Year-to-Date
1994 1993
-------------- --------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
------- ------ ------- ------
Assets:
<S> <C> <C> <C> <C>
Interest-Bearing Deposits....$ 650 4.65 % $ 690 5.51 %
Federal Funds Sold and
Resale Agreements.......... 152 3.82 112 3.22
Money Market Investments..... - - 69 4.13
Trading Account Securities... 112 4.34 138 3.89
Investment Securities:
U.S. Government............. 1,599 5.31 1,649 5.54
U.S. Government Agencies.... 8,139 6.45 6,648 7.31
States and Political
Subdivisions.............. 1,484 8.49 1,573 8.65
Other....................... 367 4.32 560 4.79
------- ------ ------- ------
Total Investment Securities.. 11,589 6.49 10,430 7.10
------- ------ ------- ------
Loans and Leases:
Commercial.................. 14,028 7.25 13,701 6.98
Real Estate Construction.... 755 7.40 846 7.07
Residential Mortgage........ 2,833 7.50 2,818 8.45
Consumer.................... 6,866 8.56 6,348 9.41
Lease Financing............. 287 10.19 250 11.74
Foreign..................... 1,069 5.82 1,045 6.51
------- ------ ------- ------
Total Loans and Leases....... 25,838 7.60 25,008 7.79
------- ------ ------- ------
Total Earning Assets......... 38,341 7.19 % 36,447 7.52 %
====== ======
Cash and Due From Banks...... 2,325 2,230
Other Assets................. 1,980 1,714
Less Allowance for Possible
Credit Losses.............. (434) (432)
------- -------
Total Assets.................$42,212 $39,959
======== ========
Liabilities and Shareholders'
Equity:
Interest-Bearing Deposits:
Savings...................$ 7,894 2.29 % $ 7,015 2.59 %
Money Market Accounts..... 5,430 2.74 6,054 2.86
Time...................... 8,355 4.27 9,179 4.66
Foreign Office............ 2,421 4.20 1,765 4.85
------- ------ ------- ------
Total Interest-Bearing
Deposits................... 24,100 3.27 24,013 3.61
------- ------ ------- ------
Short-Term Borrowings........ 5,991 3.62 5,049 3.13
Long-Term Debt............... 1,719 6.10 1,096 6.69
------- ------ ------- ------
Total Interest-Bearing
Liabilities................ 31,810 3.49 % 30,158 3.65 %
====== ======
Demand Deposits.............. 6,225 5,932
Other Liabilities............ 867 827
Shareholders' Equity......... 3,310 3,042
------- -------
Total Liabilities and
Shareholders' Equity.......$42,212 $39,959
======== ========
Interest Rate Spread......... 3.70 % 3.87 %
====== ======
Net Interest Margin.......... 4.30 % 4.50 %
====== ======
</TABLE>
<PAGE>
Page 23
IMPACT OF RECENTLY ISSUES ACCOUNTING STANDARDS
- ----------------------------------------------
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan." This statement requires that impaired loans be
measured based on the present value of the expected future cash flows
discounted at the loan's effective interest rate. The statement is effective
for fiscal years beginning after December 15, 1994. The Corporation has not
determined the impact that adoption of the standard will have on the
financial statements.
INTERNATIONAL BANKING
- ---------------------
At June 30, 1994, the Corporation had total foreign cross-border outstandings
of $0.9 billion. Foreign outstandings consist primarily of interest-bearing
deposits, bankers acceptances, federal funds sold, and loans denominated in
dollars or other non-local currency. Assets denominated in the local
currency are included to the extent they are not hedged or are not funded by
local borrowings. An item is classified as either foreign or domestic based
on the domicile of the party ultimately responsible for payment.
At June 30, 1994, the Corporation had no foreign outstandings to any
individual country which exceeded 0.75 percent of total assets. However,
foreign cross-border outstandings at June 30, 1994, were $9.9 million
(excluding $98.9 million par value of obligations collateralized by U. S.
Treasury securities) for all countries that the Corporation considers to be
experiencing severe economic and liquidity problems. Of such outstandings,
none were nonperforming. No special reserve was required to be established
under the International Lending Supervision Act of 1983.
<PAGE>
Page 24
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ----------------------------------------------------
(a) The Corporation's annual meeting of stockholders was held on
May 16, 1994.
(b) All nominees for director as listed in the Corporation's proxy
statement dated April 8, 1994, were elected. The directors
whose terms of office continued after the meeting are also
listed in the proxy statement.
(c) A brief description and the results of the matters voted upon
at the meeting follow.
1) Election of the following directors:
Withheld
Nominees For Against Authority
------------------ ----------- ------- ---------
Siegfried Buschmann 135,041,990 - 1,229,335
Bernard B. Butcher 135,208,716 - 1,062,609
John W. Day 135,218,280 - 1,053,044
Alfred R. Glancy III 135,156,564 - 1,114,760
Dennis J. Gormley 135,037,225 - 1,234,099
Verne G. Istock 135,242,973 - 1,028,352
Robert C. Stempel 133,667,132 - 2,604,192
2) Approval of the performance-based, annual incentive
criteria under the NBD Executive Incentive Plan to
preserve NBD's tax deduction for plan awards.
For: 125,320,860
Against: 6,920,499
Abstain: 4,029,804
3) Approval of the performance-based, long-term incentive
criteria under the NBD Performance Incentive Plan to
preserve NBD's tax deduction for plan awards.
For: 111,984,444
Against: 20,034,204
Abstain: 4,252,516
4) Approval of an amendment to the NBD Performance Incentive
Plan to add an individual limit to stock option grants
to preserve NBD's tax deduction for plan awards.
For: 118,167,736
Against: 16,104,292
Abstain: 1,999,135
5) Ratification of the selection of Deloitte & Touche as the
Corporation's independent auditors.
For: 134,476,407
Against: 1,080,082
Abstain: 714,674
<PAGE>
Page 25
PART II - OTHER INFORMATION (cont'd.)
Item 6. Exhibits and Reports on Form 8-K
- ------ ---------------------------------
(a) Exhibits
(11) The Earnings Per Share Computation is attached
hereto.
(b) Reports on Form 8-K
None.
<PAGE>
Page 26
SIGNATURES
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 thereunto duly authorized.
NBD BANCORP, INC.
-----------------
(Registrant)
By: /s/ Louis Betanzos
-----------------------------
Louis Betanzos
Executive Vice President and
Chief Financial Officer
By: /s/ Gerald K. Hanson
----------------------------
Gerald K. Hanson
Senior Vice President and
Comptroller
August 11, 1994
<TABLE>
<CAPTION>
Exhibit (11)
NBD Bancorp, Inc. Consolidated Earnings Per Share Computation
(in thousands except per share data)
Quarter Ended Six Months Ended
June 30 June 30
----------------------- -----------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
Primary:
- ---------
<S> <C> <C> <C> <C>
Net Income..................................... $ 135,224 $ 122,648 $ 242,485 $ 241,679
========== ========== ========= ==========
Average Shares Outstanding..................... 159,990 160,536 160,374 160,488
Adjustment:
Shares Applicable to Common Stock Options.... 332 707 335 794
---------- ---------- ---------- ----------
Shares Applicable to Primary Earnings.......... 160,322 161,243 160,709 161,282
========== ========== ========== ==========
Fully Diluted:
- -------------
Net Income..................................... $ 135,224 $ 122,648 $ 242,485 $ 241,679
Adjustment:
Interest on 7.25% Convertible Debentures..... - 3,663 3,052 7,326
Tax Effect on Above.......................... - (1,245) (1,068) (2,491)
---------- ---------- ---------- ----------
Net Adjustment............................... - 2,418 1,984 4,835
---------- ---------- ---------- ----------
Adjusted Net Income Applicable
to Common Stock.............................. $ 135,224 $ 125,066 $ 244,469 $ 246,514
========== ========== ========== ==========
Average Shares Outstanding..................... 159,990 160,536 160,374 160,488
Adjustment:
Shares Applicable to Convertible Debentures.. - 6,579 2,653 6,579
Shares Applicable to Common Stock Options.... 441 716 427 820
---------- ---------- ---------- ----------
Shares Applicable to Fully Diluted Earnings.... 160,431 167,831 163,454 167,887
========== ========== ========== ==========
Per Share Data:
- --------------
Primary-Net Income per Share of Common Stock..... $ 0.84 $ 0.76 $ 1.51 $ 1.50
========== ========== ========== ==========
Fully Diluted-Net Income per
Share of Common Stock.......................... $ 0.84 $ 0.75 $ 1.50 $ 1.47
========== ========== ========== ==========
</TABLE>
