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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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</TABLE>
* 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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<TABLE>
<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
-------- ----- ------
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
</TABLE>
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FIRST CHICAGO NBD CORPORATION
CAPITAL DATA
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<CAPTION>
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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
</TABLE>
(1) Net of investment in First Chicago Capital Markets, Inc.
(2) 12/31/96 ratios are estimated.
