<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
April 21, 1999
- --------------------------------------------------------------------------------
(Date of earliest event reported)
Peoples Heritage Financial Group, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maine 0-16947 01-0437984
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
P.O. Box 9540, One Portland Square, Portland, Maine 04112-9540
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(207) 761-8500
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
At the beginning of the day on April 21, 1999, Peoples Heritage Financial
Group, Inc. released the press release included as an exhibit to this Current
Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Not applicable.
(b) Not applicable.
(c) Exhibit: 99.1 Press Release, dated April 21, 1999.
SIGNATURES
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 thereunto duly authorized.
PEOPLES HERITAGE FINANCIAL GROUP, INC.
By: /s/ Peter J. Verrill
--------------------------------------------
Name: Peter J. Verrill
Title: Executive Vice President,
Chief Financial Officer and Treasurer
Date: April 23, 1999
<PAGE> 1
Exhibit 99.1
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION, CONTACT
BRIAN ARSENAULT, SENIOR VICE PRESIDENT, CORPORATE COMMUNICATIONS
(207) 761-8517
RECORD QUARTERLY OPERATING EARNINGS AT PEOPLES HERITAGE
(Earnings conference call, 1:30 p.m. eastern time, today, April 21, 1999.
Conference call telephone number: 1 888 695-0608, confirmation code 669464.
24-hour replay telephone number: 1 888 203-1112)
Portland, Maine, April 21, 1999 -- Peoples Heritage Financial Group, Inc.
(NASDAQ: PHBK) today announced record quarterly operating net income of $37.6
million, or 36 cents per diluted share, for the first quarter ended March 31,
1999. Operating net income, which is exclusive of acquisition and other special
charges, was up 19 percent from $31.7 million, or 30 cents per diluted share,
from the first quarter of 1998. Operating cash net income, exclusive of goodwill
and deposit premiums, was up 17 percent to $40.5 million, or 39 cents per
diluted share, for the quarter ended March 31, 1999 from $34.6 million, or 33
cents per diluted share, for the quarter ended March 31, 1998.
"The strengths of the quarter were strong growth in commercial and consumer
lending and expense control," said William J. Ryan, Company president, chairman
and chief executive officer. "The loan growth reflects our ability to bring new
loan products to new markets entered through acquisition, as well as success in
our established markets. The expense control reflects cost savings resulting
from the successful integration of CFX Corporation, acquired about a year ago,
and SIS Bancorp, Inc., acquired on January 1 of this year."
Commercial business loans and leases at March 31, 1999 were up 13 percent over a
year ago. Consumer loans were up 7 percent for the same period.
Noninterest expenses, exclusive of special charges primarily related to the
acquisition of SIS, were down to $77.8 million for the quarter ended March 31,
1999 from $84.1 million for the quarter ended March 31, 1998.
Key categories of fee income also contributed to the record quarter, including
insurance commissions and trust and investment advisory services income, up 82%
and 23%, respectively, in the quarter ended March 31, 1999 from the same quarter
a year ago. Regular account fees and other customer service fees increased 14%
during the same period.
(more)
<PAGE> 2
2
The acquisition of SIS Bancorp was accounted for as a pooling of interests. As a
result, all financial data for all periods has been restated to reflect the
combined financial condition and results of operations as if the acquisition had
been in effect for all such periods.
Merger related charges for the quarter ended March 31, 1999 totaled $18.8
million on an after-tax basis. Severance and transactions costs, such as legal,
advisory and accounting fees, made up the bulk of the SIS acquisition related
charges. Other special charges in the quarter were $5.3 million in after-tax
charges related to the Company exiting the correspondent mortgage business. As a
result of the merger related charges and charges related to the exiting of the
correspondent mortgage lending business, net income was $13.5 million, or 13
cents per diluted share for the quarter ended March 31, 1999.
Key performance ratios showed improvement over the same period a year ago.
Operating return on average equity (ROE) for the quarter ended March 31, 1999
was 17.23%, up from 15.06% for the same quarter a year ago. Operating return on
average assets (ROA) was 1.25% for the quarter ended March 31, 1999, up from
1.13% for the same quarter a year ago. Cash ROE and cash ROA for the quarter
ended March 31, 1999 were 21.60% and 1.37%, respectively, as compared to 18.83%
and 1.24%, respectively, for the same quarter a year ago. The Company's
efficiency ratio improved to 55.17% at March 31, 1999, down from 61.44% at March
31, 1998.
Asset quality also strengthened during the first quarter of 1999. Nonperforming
assets at March 31, 1999 were $60.1 million, down from $80.1 million at March
31, 1998 and from $67.2 million at year-end 1998. The Company's reserve coverage
of nonperforming loans was 229 percent at March 31, 1999, up from 161 percent at
March 31, 1998 and from 196 percent at year-end 1998.
Based on 104.1 million shares outstanding at March 31, 1999, book value was
$8.70 per share, up from $8.39 per share at March 31, 1998. Trust preferred
securities were reduced by 30% in the quarter ended March 31, 1999 as the result
of the Company repurchasing $30 million of the securities. Shareholders' equity
at March 31, 1999 was $905.2 million.
Peoples Heritage Financial Group is a multi-state financial services holding
company with total assets of $12.6 billion, ranking it fifth among New England
banking companies; fourth once the anticipated merger of Fleet Financial Group
and BankBoston is completed. The Company's banking subsidiaries include Peoples
Heritage Bank in Maine and Bank of New Hampshire, each with the leading deposit
market share in their respective states; Family/SIS Bank in Massachusetts with a
strong market presence in the traditional Family market area in northeastern
Massachusetts and the traditional SIS market in the Springfield region; and
Glastonbury Bank and Trust Company in north central Connecticut.
The Company also engages in financial planning and investment advisory services
through Heritage Investment Planning Services, and insurance brokerage through
Morse, Payson and Noyes Insurance and its subsidiaries, Catalano Insurance in
Massachusetts and A.D. Davis in New Hampshire, as well as mortgage banking,
trust services and equipment leasing.
(end)
<PAGE> 3
Peoples Heritage Financial Group, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
----------------------------- %
(In Thousands) 1999 1998 Change
----------- ----------- ------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 325,053 $ 500,973 -35%
Federal funds sold and other short-term investments 151,383 160,542 -6%
Securities available for sale 4,133,343 2,182,793 89%
Securities held to maturity -- 241,692 -100%
Loans and leases held for sale 296,801 929,588 -68%
Loans and leases:
Residential real estate mortgages 2,099,833 2,600,326 -19%
Commercial real estate mortgages 1,647,042 1,597,744 3%
Commercial business loans and leases 1,197,341 1,063,334 13%
Consumer loans and leases 2,123,251 1,991,226 7%
----------- -----------
Total loans and leases 7,067,467 7,252,630 -3%
Less: Allowance for loan losses 110,573 112,101 -1%
----------- -----------
Loans and leases, net 6,956,894 7,140,529 -3%
Premises and equipment 143,810 153,236 -6%
Goodwill and other intangible assets 121,401 125,900 -4%
Mortgage servicing rights 45,266 73,324 -38%
Other real estate and repossessed assets owned 12,221 10,428 17%
Other assets 408,152 305,835 33%
----------- -----------
$12,594,324 $11,824,840 7%
=========== ===========
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES & SHAREHOLDERS' EQUITY
Deposits:
Regular savings $ 1,300,211 $ 1,377,150 -6%
Retail money market and NOW accounts 2,062,179 1,871,395 10%
Retail certificates of deposit 3,440,780 3,493,812 -2%
Brokered deposits 204,815 331,163 -38%
Demand deposits 1,209,169 1,222,465 -1%
----------- -----------
Total deposits 8,217,154 8,295,985 -1%
----------- -----------
Federal funds purchased -- 110,000 -100%
Borrowings from Federal Home Loan Bank 2,809,865 1,739,251 62%
Securities sold under repurchase agreements 519,801 556,028 -7%
Other borrowings 24,340 21,266 14%
Other liabilities 47,986 129,589 -63%
----------- -----------
Total liabilities 11,619,146 10,852,119 7%
----------- -----------
Company obligated, mandatorily redeemable securities of
subsidiary trust holding solely parent junior subordinated debentures 70,000 100,000 -30%
Shareholders' equity 905,178 872,721 4%
----------- -----------
$12,594,324 $11,824,840 7%
=========== ===========
</TABLE>
<PAGE> 4
Peoples Heritage Financial Group, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
(In Thousands, except number of Three Months Ended March 31,
shares and per share data) ------------------------------- %
1999 1998 Change
------------ ------------ ------
<S> <C> <C> <C>
Interest and dividend income $ 210,248 $ 209,679 0%
Interest expense 102,310 103,127 -1%
------------ ------------
Net interest income 107,938 106,552 1%
Provision for loan and lease losses 3,565 3,249 10%
------------ ------------
Net interest income after provision
for loan and lease losses 104,373 103,303 1%
------------ ------------
Noninterest income:
Customer services 10,812 9,485 14%
Mortgage banking services 4,205 7,367 -43%
Trust and investment advisory services 4,445 3,607 23%
Net gains on sales of securities 18 2,050 -99%
Insurance commissions 5,282 2,898 82%
Other noninterest income 4,672 3,309 41%
------------ ------------
29,434 28,716 3%
------------ ------------
Noninterest expense:
Salaries and employee benefits 40,170 42,812 -6%
Data processing 7,006 5,814 21%
Occupancy and equipment expense 11,756 13,084 -10%
Distributions on securities of subsidiary trust 1,986 2,244 -11%
Amortization of goodwill & deposit premiums 2,968 2,862 4%
Special charges (1) 33,235 900 NM
Other noninterest expense 13,883 17,272 -20%
------------ ------------
111,004 84,988 31%
------------ ------------
Income before income tax expense 22,803 47,031 -52%
Income tax expense 9,309 15,915 -42%
------------ ------------
Net income $ 13,494 $ 31,116 -57%
============ ============
Weighted average shares outstanding:
Basic 103,429,129 102,965,178 0%
Diluted 104,851,511 105,486,888 -1%
Earnings per share:
Basic $ 0.13 $ 0.30 -57%
Diluted $ 0.13 $ 0.29 -56%
- --------------------------------------------------------------------------------------------------------
Operating Financial Data
Operating non-interest expense (2) $ 77,769 $ 84,088 -8%
Operating net income (3) $ 37,573 $ 31,701 19%
Basic operating earnings per share (3) $ 0.36 $ 0.31 18%
Diluted operating earnings per share (3) $ 0.36 $ 0.30 20%
</TABLE>
- --------------------------------------------------------------------------------
(1) Consists of merger related charges of $25,871 and $900 and costs to exit the
correspondent mortgage business of $7,364 and $0 for the quarters ended
March 31, 1999 and 1998, respectively .
(2) Excludes pre-tax special charges of $33,235 and $900 for the quarters ended
March 31, 1999 and 1998, respectively.
(3) Excludes post-tax special charges of $24,079 and $585 for the quarters ended
March 31, 1999 and 1998, respectively.
<PAGE> 5
Peoples Heritage Financial Group, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
(In Thousands, except number of Three Months Ended March 31,
shares and per share data) -------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net interest income $ 107,938 $ 106,552
Net income $ 13,494 $ 31,116
Operating net income (1) $ 37,573 $ 31,701
Shares outstanding (end of period) 104,099,804 104,040,612
Weighted average shares outstanding:
Basic 103,429,129 102,965,178
Diluted 104,851,511 105,486,888
Earnings per share:
Basic $ 0.13 $ 0.30
Diluted $ 0.13 $ 0.29
Operating earnings per share (1):
Basic $ 0.36 $ 0.31
Diluted $ 0.36 $ 0.30
Operating cash earnings per share (2):
Basic $ 0.39 $ 0.34
Diluted $ 0.39 $ 0.33
Shareholders' equity $ 905,178 $ 872,721
Book value per share $ 8.70 $ 8.39
Tangible book value per share $ 7.53 $ 7.18
- ---------------------------------------------------------------------------------------------
Ratios:
Net interest margin (net interest income
as a % of average earning assets) (3) 3.86% 4.13%
Net interest spread (yield on earning assets minus
yield on interest-bearing liabilities) (3) 3.36% 3.59%
Return on average assets 0.45% 1.10%
Operating return on average assets (1) 1.25% 1.13%
Operating cash return on average assets (2) 1.37% 1.24%
Return on average equity 6.19% 14.79%
Operating return on average equity (1) 17.23% 15.06%
Operating cash return on average equity (2) 21.60% 18.83%
Tier 1 leverage capital ratio at end of period 7.07% 7.45%
Efficiency ratio (4) 55.17% 61.44%
Non-performing loans $ 48,191 $ 69,711
Total non-performing assets $ 60,105 $ 80,139
Non-performing loans as a % of total loans 0.68% 0.96%
Non-performing assets as a % of total assets 0.48% 0.68%
Full service banking offices 221 230
</TABLE>
- --------------------------------------------------------------------------------
(1) Excludes merger related and special charges of $24,079 and $585 after tax
for the quarters ended March 31, 1999 and 1998, respectively.
(2) Earnings before special charges and amortization of goodwill and core
deposit premiums.
(3) Adjusted to fully taxable equivalent basis.
(4) Excludes distributions on securities of subsidiary trust, net gains on sales
of securities and special charges.
<PAGE> 6
Peoples Heritage Financial Group, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
- ---------------------------------------------------------------------------------------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------------------
AVERAGE YIELD/ Average Yield/
(Dollars in Thousands) BALANCE RATE Balance Rate
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Loans and leases (1)
Residential real estate mortgages $ 2,556,325 7.36% $ 3,388,356 7.75%
Commercial real estate mortgages 1,653,097 9.05% 1,596,801 9.56%
Commercial loans and leases 1,139,847 9.17% 1,015,809 9.25%
Consumer loans and leases 2,127,014 8.59% 1,972,781 8.98%
----------- -----------
7,476,283 8.36% 7,973,747 8.61%
Securities available for sale 3,583,507 6.05% 2,439,674 6.57%
Federal funds sold & other short-term investments 186,465 3.96% 90,671 5.77%
----------- -----------
Total earning assets 11,246,255 7.55% 10,504,092 8.11%
Nonearning assets 912,961 918,811
----------- -----------
Total assets $12,159,216 $11,422,903
=========== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Interest-bearing deposits:
Regular savings $ 1,283,505 2.04% $ 1,372,469 2.50%
Retail money market and NOW accounts 2,036,837 2.39% 1,809,653 2.58%
Retail certificates of deposit 3,449,865 5.16% 3,452,992 5.48%
Brokered deposits 211,412 5.05% 290,177 5.93%
----------- -----------
Total interest-bearing deposits 6,981,619 3.77% 6,925,291 4.15%
Borrowed funds 2,923,476 5.18% 2,334,920 5.60%
----------- -----------
Total interest-bearing liabilities 9,905,095 4.19% 9,260,211 4.52%
Demand accounts 1,235,688 1,123,814
Other liabilities 46,166 85,381
Minority interest 88,000 100,000
Shareholders' equity 884,267 853,497
----------- -----------
Total liabilities, minority interest
and shareholders' equity $12,159,216 $11,422,903
=========== ===========
Net earning assets $ 1,341,160 $ 1,243,881
=========== ===========
Net interest income (fully taxable equivalent) $ 108,402 $ 107,781
Less: fully taxable equivalent adjustments (464) (561)
----------- -----------
Net interest income $ 107,938 $ 107,220
=========== ===========
Net interest rate spread (fully taxable equivalent) 3.36% 3.59%
Net interest margin (fully taxable equivalent) 3.86% 4.13%
</TABLE>
- --------------------------------------------------------------------------------
(1) Loans and leases include portfolio loans and leases, loans held for sale and
nonperforming loans.
