SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
C U R R E N T R E P O R T
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 18, 1995
Date of Report (Date Of Earliest Event Reported)
MIDLANTIC CORPORATION
(Exact Name Of Registrant As Specified In Its Charter)
New Jersey
(State Or Other Jurisdiction Of Incorporation)
0-15870 22-2699903
(Commission File Number) (IRS Employer Identification No.)
499 Thornall Street, Metro Park Plaza
P.O. Box 600, Edison, New Jersey 08818
(Address Of Principal Executive Offices) (Zip Code)
(908) 321-8000
(Registrant's Telephone Number, including Area Code)
NOT APPLICABLE
(Former Name Or Former Address, If Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On October 18, 1995, Midlantic Corporation
issued a press release containing its third quarter
earnings. The press release is attached hereto as an
exhibit and is incorporated herein by reference in its
entirety.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) Exhibits
The following Exhibits are filed with this
Current Report on Form 8-K:
Exhibit
Number Description
99.1 Press Release of Midlantic Corporation,
dated October 18, 1995.
SIGNATURE
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
hereunder duly authorized.
Dated: October 20, 1995
MIDLANTIC CORPORATION
By: /s/ Joseph H. Kott
Name: Joseph H. Kott
Title: Executive Vice President
and General Counsel
EXHIBIT INDEX
Exhibit
Number Description
99.1 Press Release of Midlantic Corporation,
dated October 18, 1995.
MEDIA CONTACT: ANALYST CONTACT:
Barbara H. Maddox Donald W. Ebbert, Jr.
(908) 321-8294 (908) 321-8138
MIDLANTIC CORPORATION REPORTS IMPROVED THIRD QUARTER OPERATING RESULTS
AND NET INCOME OF $61 MILLION;
DECLARES REGULAR QUARTERLY DIVIDEND ON COMMON STOCK
EDISON, NJ, October 18, 1995 -- Midlantic Corporation
(NASDAQ:MIDL) today reported third quarter net income of $61
million, or $1.13 per fully diluted common share, compared with
net income of $76 million, or $1.40 per fully diluted common
share, including $28 million in tax benefits, for the same period
in 1994. Excluding tax benefits, net income for the third
quarter 1994 was $48 million, or $.89 per fully diluted common
share.
Also today, Midlantic Corporation's Board of Directors
declared a regular quarterly dividend of $.32 per share on the
Corporation's common stock. The dividend is payable November 13,
1995 to shareholders of record at the close of business on
November 1, 1995.
Highlights of the third quarter 1995 included:
* REGULATORY APPROVALS HAVE BEEN RECEIVED BY PNC BANK CORP.
TO PROCEED WITH THE MERGER WITH MIDLANTIC CORPORATION.
The merger, which will create one of the largest U.S.
banking companies with assets of nearly $78 billion, is
currently expected to be completed by year-end 1995,
pending approval by shareholders of both companies.
* NET INTEREST MARGIN ON A FULLY TAX-EQUIVALENT BASIS
REMAINED STRONG AT 5.33 PERCENt for the third quarter
1995, compared with 5.36 percent for the second quarter
1995, and 4.99 percent for the third quarter 1994. Net
interest income for the third quarter 1995 was $162
million, compared with $160 million for the second quarter
1995 and $152 million for the third quarter 1994.
* TOTAL NONACCRUAL LOANS AND OTHER REAL ESTATE OWNED (OREO)
DECLINED $6 MILLION TO $181 MILLION, A 3 PERCENT DECLINE
FROM JUNE 30, 1995, and a $112 million, or 38 percent,
decline from September 30, 1994.
* RESERVE COVERAGE FOR NONACCRUAL LOANS INCREASED TO 271
PERCENT from 263 percent at June 30, 1995, and 168 percent
at September 30, 1994. The reserve for loan losses as a
percent of total period-end loans was 3.89 percent at
September 30, 1995.
Commenting on third quarter results, Garry J. Scheuring,
Midlantic Corporation chairman, president and chief executive
officer, stated, "Midlantic continued to achieve strong financial
results during the third quarter, highlighted by a 27 percent
increase in earnings over the past year, excluding tax benefits
realized in 1994. We are concentrating our energies on
completing the merger with PNC Bank Corp. and planning intensely
for a smooth integration of our two companies in order to provide
uninterrupted delivery of the highest quality service for our
customers."
For the nine months ended September 30, 1995, the
Corporation reported net income of $171 million, or $3.14 per
fully diluted common share, compared with net income of $194
million, or $3.57 per fully diluted common share, for the same
period in 1994. Excluding tax benefits and nonrecurring charges
or gains, net income for the first nine months of 1994 was $122
million, or $2.25 per fully diluted common share.
NET INTEREST INCOME
Net interest income for the third quarter 1995 was $162
million, compared with $160 million for the second quarter 1995
and $152 million for third quarter 1994. Total loans, net of
unearned income, at September 30, 1995 were $8.786 billion,
compared with $8.656 billion and $8.231 billion at June 30, 1995
and September 30, 1994, respectively. The 7 percent increase in
net interest income for the third quarter 1995 compared with
third quarter 1994 reflected growth in most major loan
categories.
On a fully tax-equivalent basis, net interest margin for the
third quarter 1995 was 5.33 percent, compared with 5.36 percent
for the second quarter 1995 and 4.99 percent for third quarter
1994. The year-to-year improvement in net interest margin
primarily reflects improved yields on earning assets, lower
levels of nonaccruing assets and growth in the loan portfolio.
Net interest income for the nine months ended September 30,
1995 was $478 million, compared with $434 million for the same
period in 1994. On a tax-equivalent basis, net interest margin
for the first nine months of 1995 was 5.35 percent, compared with
4.73 percent for the same period in 1994.
NONINTEREST INCOME
Noninterest income for the third quarter 1995 was $51
million, compared with $48 million and $49 million for the second
quarter 1995 and third quarter 1994 respectively.
NONINTEREST INCOME Quarter Quarter Quarter
(In millions) 9/30/95 6/30/95 9/30/94
Service charges on deposits $20 $20 $20
Trust income 12 12 11
Other 19 16 17
__ __ __
Subtotal 51 48 48
Securities gains (losses) 0 0 0
Gains on asset dispositions 0 0 1
__ __ __
TOTAL $51 $48 $49
== == ==
For the nine months ended September 30, 1995, noninterest
income was $148 million, compared with $167 million for the first
nine months of 1994. Results for both years include gains on the
disposition of assets primarily through bulk sales transactions
amounting to $3 million in 1995 (all realized in the first
quarter) and $26 million in 1994 (substantially all realized in
the second quarter.)
NONINTEREST EXPENSES
Noninterest expenses for the third quarter 1995 were $116
million, compared with $117 million for second quarter 1995 and
$115 million for third quarter 1994. Excluding nonrecurring
charges, OREO costs and a $6 million FDIC assessment rebate,
noninterest expenses were $124 million for the third quarter
1995, compared with $118 million and $116 million for the second
quarter 1995 and third quarter 1994, respectively.
NONINTEREST EXPENSES Quarter Quarter Quarter
(In millions) 9/30/95 6/30/95 9/30/94
Salaries and benefits $65 $62 $58
Net occupancy 11 11 11
Equipment rental and expense 6 6 6
OREO costs (credits) (2) (1) (1)
FDIC assessment 0 6 7
Legal and professional fees 10 9 12
Other 26 24 22
__ __ __
TOTAL $116 $117 $115
=== === ===
Total excluding OREO credits,
and nonrecurring charges/
credits $124 $118 $116
=== === ===
Core operating efficiency
ratio 58% 57% 58%
The increase in salary and benefit expenses since third
quarter 1994 resulted from an increase in full-time equivalent
employees, principally in customer service and sales functions.
Income tax expense for third quarter 1995 was $35 million,
compared with $34 million and $5 million for second quarter 1995
and third quarter 1994, respectively. Income tax expense for
third quarter 1994 included tax benefits of $28 million,
reflecting reduction in Midlantic's Financial Accounting
Standards (FAS) No. 109 valuation reserve, and $33 million of
federal and state tax expenses on third quarter operating
results.
For the nine months ended September 30, 1995, noninterest
expenses were $350 million compared with $355 million for the
same period in 1994. Excluding nonrecurring charges, OREO
costs/credits and the FDIC rebate, noninterest expenses were $355
million for the first nine months of 1995, and $349 million for
the same period in 1994.
ASSET QUALITY AND RESERVE FOR LOAN LOSSES
At September 30, 1995, nonaccrual loans and OREO totalled
$181 million, representing a $6 million, or 3 percent, reduction
from June 30, 1995 and a $112 million, or 38 percent, reduction
from September 30, 1994.
The Corporation's provision for loan losses for the third
quarter 1995 was $1.5 million, compared with $1.5 million for the
second quarter 1995 and $5 million for the third quarter 1994.
Net recoveries were $1 million in the quarter ended September 30,
1995, compared with net charge-offs of $6 million in the quarter
ended June 30, 1995 and $21 million in the quarter ended
September 30, 1994.
The reserve for loan losses as a percent of nonaccrual loans
was 271 percent at September 30, 1995, compared with 263 percent
at June 30, 1995 and 168 percent at September 30, 1994. The
Corporation's reserve for loan losses at September 30, 1995 was
$341 million, compared with $339 million at June 30, 1995 and
$357 million at September 30, 1994.
ASSET QUALITY* Quarter Quarter Quarter
(In millions) 9/30/95 6/30/95 9/30/94
NONACCRUAL LOANS AND OREO (1)
_____________________________
Nonaccrual loans $ 126 $ 129 $ 212
OREO, net 55 58 81
Total nonaccrual loans
& OREO $ 181 $ 187 $ 293
Nonaccrual loans as % of
total loans 1.4% 1.5% 2.6%
RESERVE FOR LOAN LOSSES
_______________________
Beginning balance $ 339 $ 337 $ 373
Reserve of acquired entity 0 7 0
Provision 1 1 5
Net recoveries (charge-offs) 1 (6) (21)
__ __ __
Ending balance $ 341 $ 339 $ 357
=== === ===
Reserves as % of
nonaccrual loans 271% 263% 168%
Secondary reserves as %
of nonaccrual loans (2) 202% 197% 130%
* Pursuant to FAS No. 114, insubstance foreclosures for all periods
presented were reclassified from OREO to the loan portfolio as
nonaccrual loans.
(1) Nonaccrual loans and OREO do not include assets held for
accelerated disposition, most of which were sold prior to
12/31/94.
(2) Secondary reserves ratio calculated as actual reserves less
1% of period-end accrual loans as a percent of nonaccrual
loans.
CAPITAL STRENGTH
The Corporation's shareholders' equity at September 30, 1995 was
$1.449 billion; the ratio of shareholders' equity to assets was 10.45
percent.
At September 30, 1995, the Corporation's estimated risk-based
capital ratios were 13.00 percent for Tier I capital and 17.00 percent
for Total capital. The estimated leverage ratio was 9.40 percent.
At September 30, 1995, the Corporation had 52.4 million common
shares outstanding. Book value per common share was $27.67 at
September 30, 1995, and tangible book value per common share was
$25.24.
RISK-BASED Minimum Estimated Actual Actual
CAPITAL RATIOS Guidelines 9/30/95 6/30/95 9/30/94
Risk-based capital:
Tier I Capital 4.00% 13.00% 12.60% 11.90%
Total Capital 8.00 17.00 16.60 16.00
Leverage 3.00 9.40 9.05 8.80
ASSETS, DEPOSITS AND LOANS
At September 30, 1995, total assets of the Corporation were $13.9
billion, total earning assets were $12.7 billion, total deposits were
$10.9 billion and total loans, net of unearned income, were $8.8
billion.
Midlantic Corporation, an interstate bank holding company
headquartered in Edison, NJ., is committed to providing service
excellence to consumers, businesses and communities. The Corporation's
principal subsidiary, Midlantic Bank, N.A., operates 336 banking
offices in New Jersey and southeastern Pennsylvania.
(Three Pages of Tabular Data Follow)
Midlantic Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30 SEPT. 30
1995 1994 1995 1994
_______________________________________________________________________________
INTEREST INCOME
Interest and fees on loans $193,578 $174,284 $555,281 $505,305
Interest on investment securities 53,354 26,882 157,728 80,668
Interest on deposits with banks 1,125 4,313 5,990 13,982
Interest on other short-term
investments 5,978 15,583 24,234 38,103
_______________________________________________________________________________
Total interest income 254,035 221,062 743,233 638,058
_______________________________________________________________________________
INTEREST EXPENSE
Interest on deposits 73,001 55,278 208,858 162,673
Interest on short-term borrowings 10,300 5,084 30,671 15,906
Interest on long-term debt 8,508 8,586 25,678 25,865
_______________________________________________________________________________
Total interest expense 91,809 68,948 265,207 204,444
_______________________________________________________________________________
Net interest income 162,226 152,114 478,026 433,614
Provision for loan losses 1,500 4,785 4,500 23,768
_______________________________________________________________________________
Net interest income after
provision for loan losses 160,726 147,329 473,526 409,846
NONINTEREST INCOME
Trust income 12,460 11,285 35,330 31,927
Service charges on deposit
accounts 19,914 20,029 58,289 57,995
Investment securities gains
(losses) -- -- 184 (3,374)
Net gains on disposition of assets -- 1,064 3,100 26,120
Other 18,665 16,992 50,796 54,260
_______________________________________________________________________________
Total noninterest income 51,039 49,370 147,699 166,928
_______________________________________________________________________________
211,765 196,699 621,225 576,774
_______________________________________________________________________________
NONINTEREST EXPENSES
Salaries and benefits 65,318 58,223 189,447 172,338
Net occupancy 11,529 10,469 33,249 33,524
Equipment rental and expense 5,887 5,922 18,679 18,837
Other real estate owned, net (2,243) (472) (5,086) 139
FDIC assessment charges (415) 7,005 11,473 21,386
Legal and professional fees 9,666 11,512 26,932 32,647
Other 25,771 22,395 74,812 76,130
_______________________________________________________________________________
Total noninterest expenses 115,513 115,054 349,506 355,001
_______________________________________________________________________________
Income before income taxes
and cumulative effect of the
change in accounting principle 96,252 81,645 271,719 221,773
Income tax expense 35,133 5,398 100,884 19,894
_______________________________________________________________________________
Income before cumulative effect of
the change in accounting principle 61,119 76,247 170,835 201,879
Cumulative effect of the change
in accounting for postemployment
benefits -- -- (7,528)
_______________________________________________________________________________
Net income $61,119 $ 76,247 $170,835 $194,351
===============================================================================
INCOME PER COMMON SHARE
Income before accounting changes
Primary $1.15 $1.42 $3.20 $3.76
Fully diluted 1.13 1.40 3.14 3.71
Net income
Primary 1.15 1.42 3.20 3.62
Fully diluted 1.13 1.40 3.14 3.57
===============================================================================
Midlantic Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
Sept. 30 Sept. 30
1995 1994
_______________________________________________________________________________
ASSETS
Cash and due from banks $ 832,114 $ 923,580
Interest-bearing deposits in other banks 80,601 257,723
Other short-term investments 535,500 1,202,912
Investment securities
Held-to-maturity 2,444,472 1,791,281
Available-for-sale 807,251 492,974
Trading account 1,194 21,558
Total loans (net of unearned income of
$164,942 in 1995 and $144,257 in 1994) 8,785,786 8,231,281
Less: reserve for loan losses 341,474 357,163
____________________________________________________________________________
Net loans 8,444,312 7,874,118
____________________________________________________________________________
Premises and equipment, net 156,721 146,459
Due from customers on acceptances 16,905 11,451
Other assets 542,277 566,626
____________________________________________________________________________
Total assets $13,861,347 $13,288,682
============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Domestic deposits
Noninterest-bearing demand $ 2,728,947 $ 2,666,200
Interest-bearing demand 1,258,345 1,308,077
Savings 1,585,302 1,671,969
Retail money market accounts 1,688,535 1,985,101
CDs over $100,000 806,628 576,913
Other time 2,781,986 2,676,934
Overseas branch deposits 6,785 10,751
____________________________________________________________________________
Total deposits 10,856,528 10,895,945
____________________________________________________________________________
Short-term borrowings 1,006,301 553,717
Bank acceptances outstanding 16,905 11,451
Other liabilities 164,222 146,918
Long-term debt 368,650 373,000
____________________________________________________________________________
Total liabilities 12,412,606 11,981,031
____________________________________________________________________________
Shareholders' equity
Capital stock
Preferred stock: no par value
Authorized 40,000,000 shares
Issued 500,000 shares in 1994 -- 50,000
Common stock: par value $3 per share
Authorized 150,000,000 shares
Issued 52,762,097 shares in 1995
and 52,491,042 shares in 1994 158,286 157,473
Surplus 619,214 610,115
Retained earnings 682,521 491,898
Unrealized holding gains (losses) on
available for sale securities, net of taxes 3,527 (1,835)
____________________________________________________________________________
1,463,548 1,307,651
Less treasury stock at cost: 402,322
common shares in 1995 14,807 --
____________________________________________________________________________
Total shareholders' equity 1,448,741 1,307,651
____________________________________________________________________________
Total liabilities and shareholders' equity $13,861,347 $13,288,682
============================================================================
Midlantic Corporation
SUPPLEMENTAL FINANCIAL INFORMATION
(Dollars in thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30 SEPT. 30
1995 1994 1995 1994
______________________________________________________________________________
RESULTS OF OPERATIONS
_____________________
Net interest income $162,226 $152,114 $478,026 $433,614
Income before cumulative effect
of changing accounting methods 61,119 76,247 170,835 201,879
Per common share-fully diluted 1.13 1.42 3.14 3.71
Net income 61,119 76,247 170,835 194,351
Per common share-fully diluted 1.13 1.40 3.14 3.57
PERFORMANCE RATIOS
__________________
Return on average assets 1.79% 2.28% 1.71% 1.92%
Return on average common equity 17.12 24.50 16.50 22.24
Net interest margin 5.21 4.97 5.23 4.70
Net interest margin (FTE) 5.33 4.99 5.35 4.73
Efficiency Ratio 58.3 57.6 57.0 60.4
SELECTED AVERAGE BALANCES
_________________________
Assets $13,527 $13,277 $13,352 $13,548
Interest-earning assets 12,363 12,141 12,225 12,326
Loans, net of unearned income 8,676 8,319 8,371 8,355
Deposits 10,825 10,954 10,672 11,186
Shareholders' equity 1,416 1,270 1,403 1,202
Average common shares
outstanding-fully diluted 54,765,661 54,618,174 54,671,957 54,500,540
<TABLE>
<CAPTION>
QUARTERLY DATA
________________________________________________________________________________________________
SELECTED PERIOD-END BALANCES 9/30/95 6/30/95 3/31/95 12/31/94 9/30/94
________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Assets $13,861,347 $13,733,847 $13,634,216 $13,293,538 $13,288,682
Interest-earning assets 12,654,804 12,541,101 12,468,238 12,126,577 11,997,729
Loans, net of unearned income 8,785,786 8,656,421 8,222,887 8,256,375 8,231,281
Deposits 10,856,528 10,887,342 10,657,304 10,807,334 10,895,945
Shareholders' equity 1,448,741 1,397,206 1,409,474 1,374,186 1,307,651
Common shares outstanding 52,359,775 52,128,214 52,433,679 52,564,346 52,491,042
ASSET QUALITY DATA (In millions)
________________________________
Nonaccrual loans $126 $129 $155 $184 $212
Other real estate owned, net (OREO) 55 58 60 64 81
Nonaccrual loans and OREO 181 187 215 248 293
Loans-90 days past due 30 32 31 30 28
Net (recoveries) charge-offs* (1) 6 (14) (7) (21)
Reserve for loan losses 341 339 337 350 357
Reserve as % of loans, net 3.9% 3.9% 4.1% 4.2% 4.3%
Reserve as % of nonaccrual loans 271 263 218 191 168
Net (recoveries) charge-offs
(annualized) as % of average loans (.1) .3 .7 .4 1.0
SELECTED CAPITAL RATIOS
Tier I Capital 13.00%* 12.57% 13.58% 13.07% 12.01%
Total Capital 17.00* 16.63 17.77 17.22 16.10
Leverage 9.40* 9.08 9.43 9.43 8.87
Shareholders' equity to assets 10.45 10.17 10.34 10.34 9.84
SELECTED PER SHARE DATA
Book value per common share $27.67 $26.80 $25.93 $25.19 $23.96
Tangible book per common share 25.24 24.32 24.03 23.49 22.19
- --------------------------------------------------------------------------------------------------
* Estimated
</TABLE>
