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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) October 14, 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: October 14, 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, October 14, 1997 -- First Chicago NBD Corporation today reported
record net income of $385 million, or $1.26 per fully diluted common share, for
the third quarter of 1997. Net income for the year-ago quarter was $358 million,
or $1.08 per share, including a one-time charge of $18 million, or 4 cents per
share, related to recapitalization of the Savings Association Insurance Fund
(SAIF). Return on common stockholders' equity was 19.1%, compared with 16.7% a
year ago.
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First Chicago NBD Key Ratios
3rd Qtr. 3rd Qtr. 9 Mos. 9 Mos.
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Earnings per common share $1.26 $1.08 $3.62 $3.19
Return on common equity 19.1% 16.7% 18.3% 16.9%
Return on assets 1.40% 1.29% 1.42% 1.22%
Adjusted net interest margin 4.47% 4.51% 4.63% 4.37%
Operating efficiency* 51.5% 51.0% 51.2% 52.1%
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* excludes 3Q96 SAIF charge
For the first nine months of 1997, the Corporation earned net income of
$1.143 billion, or $3.62 per share, compared with $1.059 billion, or $3.19 per
share, a year earlier. Return on common stockholders' equity was 18.3% for the
first nine months of 1997, compared with 16.9% for the year-ago period.
HIGHLIGHTS
. Adjusted fee-based revenue for the third quarter increased 11% from a year
ago, reflecting strong results from the cash management and investment
management businesses as well as continued growth in credit card fees.
. The credit card net charge-off rate dropped to 6.7% for the third quarter
from 7.7% for the second quarter, with seasonal factors contributing to the
decline. The Corporation's provision for credit losses increased to $191
million from $180 million last quarter. Nonperforming assets at September
30 were essentially flat at $345 million.
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. Market-driven revenues -- trading profits and securities gains -- were $68
million for the third quarter. In addition, leasing residual and mortgage
loan sales generated gains of $22 million in other market-related income.
. The Corporation repurchased 10 million shares of common stock in the third
quarter. As of September 30, a total of 35.7 million shares had been
repurchased under the 40 million share repurchase authorization announced
in October of 1996.
. Tier 1 and total risk-based capital ratios were 8.1% and 11.8%,
respectively, at September 30. Book value per common share was $26.62.
NET INTEREST INCOME
Net interest income on a tax-equivalent basis was $921 million for the
third quarter. Average loans were $66.8 billion, versus $66.0 billion a year
ago. Average managed credit card receivables were $17.2 billion for the quarter,
versus $17.7 billion for the third quarter of 1996. Average earning assets were
$94.1 billion for the quarter ended September 30, 1997.
Net interest margin on a reported basis was 3.88% for the quarter. Adjusted
for credit card securitizations and the activities of First Chicago Capital
Markets, Inc., the net interest margin was 4.47%, versus 4.51% for the year-ago
quarter and 4.70% for the second quarter.
NONINTEREST INCOME
Noninterest income was $701 million for the third quarter, up 17% from $597
million a year ago.
Market-driven revenue was $68 million. Equity securities gains were $28
million, combined trading profits totaled $32 million, and investment securities
gains equaled $8 million. Other market-related income from leasing residual and
mortgage loan sales totaled $22 million.
Credit card fee revenue was $233 million, compared with $228 million a year
ago and $207 million last quarter. Adjusted for the effects of securitization,
credit card fees rose $15 million from the year-ago quarter. Fiduciary and
investment management fees grew to $102 million for the third quarter, compared
with $100 million a year ago. Other service charges and commissions were $235
million for the quarter, a 17% increase from
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$201 million in the year-ago quarter.
NONINTEREST EXPENSE
Noninterest expense was $835 million for the third quarter, compared with
$816 million for the year-ago quarter, which includes the one-time $18 million
SAIF charge. Total operating expense for the first nine months of 1997 was
virtually flat with the year-ago period. The operating efficiency ratio was
51.2% for the first three quarters of this year, versus 52.1% for the same
period in 1996.
CREDIT QUALITY
The provision for credit losses was $191 million for the third quarter, up
from $185 million for the year-ago quarter and $180 million last quarter.
The allowance for credit losses stood at $1.408 billion at September 30,
representing 427% of total nonperforming loans. Nonperforming assets increased
to $345 million at September 30, from $343 million at the end of the second
quarter.
Net charge-offs for the third quarter totaled $191 million, of which $144
million was related to credit card receivables. The net charge-off rate for
managed credit card receivables was 6.7% for the third quarter, up from 5.9% a
year ago but down from 7.7% for the second quarter of 1997. The 30-day
delinquency ratio for managed credit card receivables was 4.5% at quarter-end,
versus 4.3% both at June 30, 1997, and a year ago.
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FIRST CHICAGO NBD CORPORATION AND SUBSIDIARIES
COMPARATIVE SUMMARY
Three Months Ended September 30
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1997 1996 Change
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(Dollars in millions, except per share data)
<S> <C> <C> <C>
Net interest income--tax-equivalent basis.................................... $ 921 $ 967 - 5 %
Provision for credit losses.................................................. 191 185 + 3
Noninterest income........................................................... 701 597 + 17
Noninterest expense.......................................................... 835 816 + 2
Net income................................................................... 385 358 + 8
Earnings per share
Primary
Net income.............................................................. $ 1.26 $ 1.09 + 16
Average common and common-equivalent shares (in millions)............... 301.6 320.2 - 6
Fully diluted
Net income.............................................................. $ 1.26 $ 1.08 + 17
Average shares, assuming full dilution (in millions).................... 301.8 327.5 - 8
Average balances
Loans...................................................................... $ 66,782 $ 65,962 + 1
Earning assets............................................................. 94,104 96,123 - 2
Total assets............................................................... 108,950 110,715 - 2
Common stockholders' equity................................................ 7,893 8,352 - 5
Stockholders' equity....................................................... 8,183 8,839 - 7
Net interest margin.......................................................... 3.88 % 4.00 %
Return on assets............................................................. 1.40 1.29
Return on common stockholders' equity........................................ 19.1 16.7
Nine Months Ended September 30
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1997 1996 Change
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(Dollars in millions, except per share data)
Net interest income--tax-equivalent basis.................................... $ 2,779 $ 2,815 - 1 %
Provision for credit losses.................................................. 558 545 + 2
Noninterest income........................................................... 2,024 1,866 + 8
Noninterest expense.......................................................... 2,460 2,458 -
Net income................................................................... 1,143 1,059 + 8
Earnings per share
Primary
Net income.............................................................. $ 3.64 $ 3.24 + 12
Average common and common-equivalent shares (in millions)............... 309.4 319.8 - 3
Fully diluted
Net income.............................................................. $ 3.62 $ 3.19 + 13
Average shares, assuming full dilution (in millions).................... 311.9 327.2 - 5
Average balances
Loans...................................................................... $ 66,093 $ 64,766 + 2
Earning assets............................................................. 92,045 100,423 - 8
Total assets............................................................... 107,472 115,882 - 7
Common stockholders' equity................................................ 8,227 8,197 -
Stockholders' equity....................................................... 8,560 8,686 - 1
Net interest margin.......................................................... 4.04 % 3.74 %
Return on assets............................................................. 1.42 1.22
Return on common stockholders' equity........................................ 18.3 16.9
At September 30
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1997 1996 Change
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Assets....................................................................... $ 113,306 $ 106,694 + 6 %
Loans........................................................................ 67,822 66,602 + 2
Deposits..................................................................... 67,565 63,679 + 6
Common stockholders' equity.................................................. 7,792 8,612 - 10
Stockholders' equity......................................................... 8,082 9,087 - 11
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FIRST CHICAGO NBD CORPORATION AND SUBSIDIARIES
CAPITAL DATA
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9/30/97 6/30/97 3/31/97 12/31/96 9/30/96
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<S> <C> <C> <C> <C> <C>
Common Equity/Assets Ratio (1)............................................ 7.0% 7.3% 7.9% 8.2% 8.1%
Risk-Based Capital Ratios: (1)(2).........................................
Tier 1................................................................... 8.1% 8.6% 9.1% 9.2% 8.4%
Total.................................................................... 11.8% 12.4% 13.1% 13.3% 12.4%
Regulatory Leverage Ratio................................................. 8.2% 8.6% 9.2% 9.3% 8.1%
Book Value of Common Equity............................................... $26.62 $27.08 $27.20 $27.31 $27.11
(1) Net of investment in First Chicago Capital Markets, Inc.
(2) 9/30/97 ratios are estimated.
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