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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) April 13, 1998
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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: April 13, 1998 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, April 13, 1998 -- First Chicago NBD Corporation today reported net
income of $383 million, or a record $1.30 per diluted common share, for the
first quarter of 1998. Net income for the year-ago quarter was $380 million, or
$1.17 per share. Return on common stockholders' equity was 19.9%, compared with
17.8% a year ago.
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<CAPTION>
First Chicago NBD Key
Ratios
1st Qtr. 1998 4th Qtr. 1997 1st Qtr. 1997
<S> <C> <C> <C>
Earnings per common share $1.30 $1.28 $1.17
Return on common equity 19.9% 19.5% 17.8%
Return on assets 1.38% 1.38% 1.47%
Adjusted net interest margin 4.25% 4.27% 4.73%
Operating efficiency 52.4% 54.0% 50.4%
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HIGHLIGHTS
. Fee-based income for the quarter, adjusted for the effects of credit card
securitizations, was $561 million, a 9% increase over the year-ago quarter.
This reflects strong results from loan syndications, cash management and
consumer banking activities.
. Market-driven revenue -- trading results and securities gains -- was $114
million for the first quarter, above the targeted range of $90 million to
$100 million. Combined trading profits reached $46 million, the best
quarterly result in more than two years. Total equity and investment
securities gains were $68 million.
. Operating expenses totaled $848 million for the quarter, compared with $800
million for the year-ago quarter and $872 million for the fourth quarter of
1997. The Corporation's operating efficiency ratio for the quarter was
52.4%, reflecting continued expense discipline despite increasing
technology-related expenditures.
. The provision for credit losses, on a managed receivables basis, was
essentially unchanged from the fourth quarter of 1997. The core credit card
charge-off rate declined to 6.7% from 7.1% in the fourth quarter.
. Tier 1 and total risk-based capital ratios were 7.7% and 11.4%,
respectively, at March 31, 1998. Book value per common share was $27.21.
The Corporation repurchased 2.9 million shares of common stock in the first
quarter.
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NET INTEREST INCOME
Net interest income on a tax-equivalent basis was $878 million for the
first quarter, compared with $888 million for the fourth quarter and $907
million for the year-ago quarter. Average loans grew to $67.8 billion, up 4%
from a year ago. Average managed credit card receivables were $17.6 billion for
the quarter, up slightly from both the year-ago quarter and the fourth quarter
of 1997. Average earning assets were $97 billion.
Net interest margin on a reported basis was 3.67% for the quarter. Adjusted
for credit card securitizations and the activities of First Chicago Capital
Markets, Inc., the net interest margin was 4.25%, versus 4.27% for the fourth
quarter of 1997 and 4.73% for the year-ago period. Contributing to the declining
margin were the impact of the share repurchase program and the recognition of
the results of certain business activities in the tax or other revenue lines.
NONINTEREST INCOME
Noninterest income for the first quarter was $739 million, up 9% from a
year ago. Market-driven revenue was $114 million for the quarter. Combined
trading profits were $46 million. Equity securities gains were $58 million, and
investment securities gains were $10 million.
Credit card fee revenue was $234 million, up slightly from $230 million in
the fourth quarter and essentially unchanged from the year-ago period. Adjusted
for the effects of securitizations, credit card fees increased 3% over a year
ago. Fiduciary and investment management fees were $106 million for the first
quarter, compared with $101 million in the fourth quarter and $105 million a
year ago. Service charges and commissions were $251 million for the quarter, an
18% increase from $213 million for the year-ago quarter.
NONINTEREST EXPENSE
Total operating expense for the first quarter was $848 million, compared
with $800 million in the year-ago quarter and $872 million in the fourth quarter
of 1997. Much of the year- over-year increase resulted from Year 2000
compliance, system integration and implementation projects, and business
reengineering efforts.
CREDIT QUALITY
The provision for credit losses was $179 million for the first quarter,
compared with $187 million in the year-ago quarter and $167 million in the
fourth quarter.
The allowance for credit losses stood at $1.408 billion at March 31,
representing 400% of total nonperforming loans. Nonperforming assets increased
to $364 million at March 31, 1998, compared with $326 million at year-end 1997.
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Net charge-offs for the first quarter totaled $179 million, of which $135
million was related to credit card receivables. The core net charge-off rate for
managed credit card receivables was 6.7% for the first quarter, down from 7.3%
in the year-ago quarter and 7.1% in the fourth quarter of 1997. The 30-day
delinquency ratio for managed credit card receivables was 4.1% at quarter-end,
versus 4.4% one year ago and 4.3% at year-end 1997.
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<CAPTION>
FIRST CHICAGO NBD CORPORATION AND SUBSIDIARIES
COMPARATIVE SUMMARY
Three Months Ended March 31
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(Dollars in millions, except per share data) 1998 1997 Change
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<S> <C> <C> <C>
Net interest income--tax-equivalent basis.......... $ 878 $ 907 - 3%
Provision for credit losses........................ 179 187 - 4
Noninterest income................................. 739 679 + 9
Noninterest expense................................ 848 800 + 6
Net income......................................... 383 380 + 1
Earnings per share
Basic......................................... $ 1.32 $ 1.19 + 11
Average shares (in millions).................. 288.1 312.1 - 8
Assuming full dilution........................ $ 1.30 $ 1.17 + 11
Average shares (in millions).................. 293.0 320.8 - 9
Average balances
Loans............................................ $ 67,773 $ 65,177 + 4
Earning assets................................... 96,988 89,352 + 9
Total assets..................................... 112,914 105,133 + 7
Common stockholders' equity...................... 7,781 8,517 - 9
Stockholders' equity............................. 7,971 8,936 - 11
Net interest margin
Reported...................................... 3.67 % 4.11 %
Adjusted...................................... 4.25 4.73
Return on assets................................... 1.38 1.47
Return on common stockholders' equity.............. 19.9 17.8
At March 31
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1998 1997 Change
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Assets............................................. $114,804 $109,133 + 5%
Loans.............................................. 69,590 66,536 + 5
Deposits........................................... 68,170 64,927 + 5
Common stockholders' equity........................ 7,816 8,495 - 8
Stockholders' Equity............................... 8,006 8,785 - 9
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<CAPTION>
FIRST CHICAGO NBD CORPORATION AND SUBSIDIARIES
CAPITAL DATA
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03/31/98 12/31/97 9/30/97 6/30/97 3/31/97
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<S> <C> <C> <C> <C>
Common Equity/Assets Ratio.............................. 6.8% 6.8% 6.9% 7.3% 7.8%
Risk-Based Capital Ratios: (1)(2).......................
A Tier 1............................................. 7.7% 7.9% 8.1% 8.6% 9.1%
Total................................................ 11.4% 11.7% 11.9% 12.4% 13.1%
Regulatory Leverage Ratio (2)........................... 7.6% 7.8% 8.2% 8.6% 9.2%
Book Value of Common Equity............................. $27.21 $26.87 $26.62 $27.08 $27.20
(1) 3/31/98 ratios are estimated.
(2) 12/31/97 and subsequent ratios include activities of
FCCM. For prior periods, ratios were calculated net
of the investment in FCCM.
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