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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) January 15, 1997
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First Chicago NBD Corporation
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 1-7127 38-1984850
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
One First National Plaza, Chicago, IL 60670
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 312-732-4000
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ITEM 5. OTHER EVENTS
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The Registrant hereby incorporates by reference the information contained
in Attachment A hereto in response to this Item 5.
Pursuant to the requirements of the Securities Exchange Act of l934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
First Chicago NBD Corporation
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(REGISTRANT)
Date: January 15, 1997 By: /s/ M. Eileen Kennedy
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Title: Senior Vice President and
Treasurer
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Attachment A
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CHICAGO, January 15, 1997 -- First Chicago NBD Corporation today reported
record net income of $377 million, or $1.14 per fully diluted common share, for
the fourth quarter. In the year-ago fourth quarter, operating earnings were $318
million, or $0.96 per common share. Return on common stockholders' equity for
the fourth quarter of 1996 was 17.5%, compared with 15.4% a year ago.
Full-year 1996 net income was a record $1.436 billion, or $4.32 per share.
These results include a one-time charge of 4 cents per share related to the
recapitalization of the Savings Association Insurance Fund. For 1995, operating
earnings were $1.341 billion, or $3.99 per share. Return on equity for 1996 was
17.0%, versus 16.8% for 1995. All 1995 operating results exclude merger-related
charges of $267 million, taken in the fourth quarter.
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<CAPTION>
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FIRST CHICAGO NBD KEY RATIOS
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4TH QTR. 4TH QTR.* FULL YEAR FULL YEAR*
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Earnings per common share $1.14 0.96 4.32 3.99
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Return on common equity 17.5% 15.4 17.0 16.8
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Return on assets 1.46% 1.02 1.28 1.10
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Adjusted net interest margin 4.64% 3.93 4.44 3.89
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Operating efficiency 51.2% 54.0 51.9 55.4
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* On an operating basis
A-1
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HIGHLIGHTS
. The adjusted net interest margin for the fourth quarter rose to 4.64% from
4.51% for the third quarter and 3.93% for the year-ago quarter. The full-
year ratio was 4.44%, compared with 3.89% for 1995. This substantial
improvement resulted from the merger-related strategic reduction of low-
margin assets, and from loan growth in the higher-yielding credit card and
regional banking businesses.
. The credit card business produced record profits for the fourth quarter,
and its return on equity for the year exceeded 30%. Managed credit card
receivables increased 5.7% to $18.5 billion at December 31, compared with
$17.5 billion at the end of 1995. During the fourth quarter, the
Corporation securitized $1.3 billion of credit card assets, bringing total
securitized receivables to $8.9 billion at year-end. The charge-off rate
for the managed portfolio increased to 6.7% for the fourth quarter,
compared with 5.9% for the third quarter.
. The Corporation repurchased 7.3 million shares of its common stock during
the fourth quarter at an average price of $53.93. Remaining authorization
on the stock repurchase program announced in October 1996 is 32.7 million
shares.
. Commercial credit quality continued to be excellent, with year-end
nonperforming assets of $290 million, or 0.4% of total loans and other real
estate.
A-2
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. Market-driven revenues for the fourth quarter rose to $83 million, versus
$40 million for the third quarter.
. Operating expenses for 1996 totaled $3.253 billion, versus last year's
$3.268 billion, reflecting the achievement of the merger-related target of
$200 million in run-rate expense savings by the end of 1996.
. In November, the Corporation announced an 11% increase in the quarterly
common stock dividend to $0.40 per share, effective with the January 1,
1997, payment.
. Tier 1 and total risk-based capital ratios increased to 9.1% and 13.2%,
respectively, at December 31, 1996. During the quarter the Corporation
issued $750 million of trust preferred securities, which qualify as tax-
advantaged Tier 1 capital. Book value per common share was $27.31 at year-
end, an increase from $25.25 one year ago.
NET INTEREST INCOME
NET INTEREST INCOME on a tax-equivalent basis was $907 million for the
fourth quarter, up from $864 million in the year-ago quarter. AVERAGE LOANS
grew to $65.5 billion from $62.3 billion a year ago. AVERAGE EARNING ASSETS were
$87.9 billion for the quarter.
NET INTEREST MARGIN on a reported basis was 4.11%, an increase of 11 basis
points from last quarter. For 1996, the reported margin was 3.83%, 69 basis
points higher than 1995's 3.14%. Adjusted for credit card securitizations and
the activities of
A-3
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First Chicago Capital Markets, Inc., the net interest margin was 4.64% for the
fourth quarter, versus 4.51% in the third quarter. This ratio was 4.44% for the
full year, up from 3.89% in 1995.
NONINTEREST INCOME
NONINTEREST INCOME was $682 million in the fourth quarter. Total
noninterest income for the year was $2.548 billion.
MARKET-DRIVEN REVENUE was $83 million for the quarter, with EQUITY
SECURITIES GAINS totaling $71 million and COMBINED TRADING PROFITS of $12
million.
CREDIT CARD FEE REVENUE was $259 million. Adjusted for securitizations,
credit card fees grew 28% from a year earlier. FIDUCIARY AND INVESTMENT
MANAGEMENT FEES were $102 million, and SERVICE CHARGES AND COMMISSIONS were $218
million for the fourth quarter.
NONINTEREST EXPENSE
NONINTEREST EXPENSE was $813 million in the fourth quarter, compared with
operating expense of $821 million in the year-ago quarter. For the year,
operating expense was essentially flat with 1995's level. The fourth-quarter
OPERATING EFFICIENCY RATIO was 51.2%, and the full-year ratio was 51.9%.
CREDIT QUALITY
THE PROVISION FOR CREDIT LOSSES was $190 million for the fourth quarter,
versus $185 million for the third quarter and $210 million in the fourth quarter
of 1995.
A-4
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THE ALLOWANCE FOR CREDIT LOSSES stood at $1.407 billion at December 31,
representing 537% of total nonperforming loans.
TOTAL NET CHARGE-OFFS in the fourth quarter were $190 million, of which
$154 million were related to credit card receivables. THE NET CHARGE-OFF RATE
FOR MANAGED CREDIT CARD RECEIVABLES was 6.7% for the fourth quarter, up from
5.9% for the third quarter and 4.4% a year ago. For 1996, the managed credit
card charge-off rate was 5.8%, versus 4.0% in 1995. THE 30-DAY DELINQUENCY
RATIO FOR MANAGED CREDIT CARD RECEIVABLES was 4.5% at year-end, versus 3.6% at
year-end 1995.
A-5
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<CAPTION>
First Chicago NBD Corporation and Subsidiaries
Comparative Summary
Three Months Ended December 31
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(Dollars in millions, except per share data) 1996 1995 Change
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<S> <C> <C> <C>
Net interest income--tax-equivalent basis..................... $ 907 $ 864 + 5%
Provision for credit losses................................... 190 210 - 10
Noninterest income............................................ 682 655 + 4
Noninterest expense (excludes merger related costs)........... 813 821 - 1
Merger-related costs.......................................... - 267 -
Net income.................................................... 377 126 -
Earnings per share
Primary
Net income................................................ $1.15 $0.37 -
Average common and common-equivalent shares (in millions). 321.4 320.0 -
Fully diluted
Net income................................................ $1.14 $0.37 -
Average shares, assuming full dilution (in millions)...... 327.6 326.9 -
Average balances
Loans....................................................... $ 65,494 $ 62,258 + 5%
Earning assets.............................................. 87,896 106,187 - 17
Total assets................................................ 102,687 123,773 - 17
Common stockholders' equity................................. 8,421 7,998 + 5
Stockholders' equity........................................ 8,886 8,488 + 5
Net interest margin........................................... 4.11% 3.23% + 27%
Return on assets.............................................. 1.46 0.40 -
Return on common stockholders' equity......................... 17.5 5.9 -
Twelve Months Ended December 31
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(Dollars in millions, except per share data) 1996 1995 Change
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Net interest income--tax-equivalent basis..................... $ 3,722 3,311 + 12%
Provision for credit losses................................... 735 510 + 44
Noninterest income............................................ 2,548 2,591 - 2
Noninterest expense (excludes merger related costs)........... 3,271 3,268 -
Merger-related costs.......................................... - 267 -
Net income.................................................... 1,436 1,150 + 25
Earnings per share
Primary
Net income................................................ $4.39 $3.45 + 27
Average common and common-equivalent shares (in millions). 320.2 322.9 - 1
Fully diluted
Net income................................................ $4.32 $3.41 + 27
Average shares, assuming full dilution (in millions)...... 328.1 330.1 - 1
Average balances
Loans....................................................... $ 64,949 $ 58,944 + 10%
Earning assets.............................................. 97,274 105,306 - 8
Total assets................................................ 112,565 122,370 - 8
Common stockholders' equity................................. 8,253 7,765 + 6
Stockholders' equity........................................ 8,736 8,335 + 5
Net interest margin........................................... 3.83% 3.14% + 22%
Return on assets.............................................. 1.28 0.94 + 36
Return on common stockholders' equity......................... 17.0 14.3 + 19
At December 31
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1996 1995 Change
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Assets........................................................ $104,619 $122,002 - 14%
Loans......................................................... 66,414 64,434 + 3
Deposits...................................................... 63,669 69,106 - 8
Common stockholders' equity................................... 8,563 7,961 + 8
Stockholders' equity.......................................... 9,007 8,450 + 7
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FIRST CHICAGO NBD CORPORATION
CAPITAL DATA
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12/31/96 9/30/96 6/30/96 3/31/96 12/31/95
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<S> <C> <C> <C> <C> <C>
Common Equity/Assets Ratio (1).................................... 8.2% 8.1% 7.6% 7.3% 6.9%
Risk-Based Capital Ratios: (1)(2).................................
Tier 1.......................................................... 9.1% 8.4% 8.1% 8.1% 7.8%
Total........................................................... 13.2% 12.4% 12.2% 12.3% 11.8%
Leverage Ratio (1)(2)............................................. 9.3% 8.1% 7.6% 7.3% 6.9%
Book Value of Common Equity....................................... $27.31 $27.11 $26.31 $25.70 $25.25
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(1) Net of investment in First Chicago Capital Markets, Inc.
(2) 12/31/96 ratios are estimated.
