42
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
-------------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ------------------------
Commission file number 1-10683
---------------------------------------------------------
MBNA Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1713008
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Wilmington, DE 19884
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(800) 362-6255
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
---------- ----------
Common Stock, $.01 Par Value -- 222,750,000 Shares
Outstanding as of March 31, 1996
<PAGE>
MBNA CORPORATION AND SUBSIDIARIES
Table of Contents
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statements of Financial Condition - 1
March 31, 1996 (unaudited) and December 31, 1995
Consolidated Statements of Income - 3
For the Three Months Ended March 31, 1996 and 1995 (unaudited)
Consolidated Statements of Changes in Stockholders' Equity - 5
For the Three Months Ended March 31, 1996 and 1995 (unaudited)
Consolidated Statements of Cash Flows - 7
For the Three Months Ended March 31, 1996 and 1995 (unaudited)
Notes to the Consolidated Financial Statements (unaudited) 9
Item 2. Management's Discussion and Analysis of Financial Condition 11
and Results of Operations
Supplemental Financial Information 27
Part II - Other Information
Item 1. Legal Proceedings 29
Item 2. Changes in Securities 29
Item 4. Submission of Matters to a Vote of Security Holders 29
Item 6. Exhibits and Reports on Form 8-K 30
Signature 42
<PAGE>
MBNA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(dollars in thousands)
March 31, December 31,
1996 1995
------------ ------------
(unaudited)
ASSETS
Cash and due from banks.......................... $ 365,575 $ 291,856
Interest-earning time deposits in other banks.... 534,210 448,611
Federal funds sold and securities purchased
under resale agreements......................... 325,000 125,000
Investment securities:
Available-for-sale (at market value, amortized
cost of $1,163,999 and $911,877 at March 31,
1996 and December 31, 1995, respectively)..... 1,163,822 912,064
Held-to-maturity (market value of $1,045,623
and $1,188,101 at March 31, 1996 and
December 31, 1995, respectively).............. 1,050,046 1,183,727
Loans held for securitization.................... 2,418,371 3,168,427
Loans:
Credit card.................................... 4,322,272 4,090,553
Other consumer................................. 926,952 876,938
------------ ------------
Total loans.................................. 5,249,224 4,967,491
Reserve for possible credit losses............. (106,904) (104,886)
------------ ------------
Net loans.................................... 5,142,320 4,862,605
Premises and equipment, net...................... 872,381 816,277
Accrued income receivable........................ 83,807 93,636
Accounts receivable from securitizations......... 1,119,225 951,568
Prepaid expenses and deferred charges............ 148,525 139,901
Other assets..................................... 306,251 235,217
------------ ------------
Total assets................................. $ 13,529,533 $ 13,228,889
============ ============
<PAGE>
March 31, December 31,
1996 1995
------------ ------------
(unaudited)
LIABILITIES
Deposits:
Time deposits.................................. $ 6,291,358 $ 6,147,599
Money market deposit accounts.................. 2,477,513 2,257,565
Noninterest-bearing demand deposits............ 182,843 169,571
Interest-bearing transaction accounts.......... 21,588 24,514
Savings accounts............................... 10,079 9,665
------------ ------------
Total deposits............................... 8,983,381 8,608,914
Short-term borrowings............................ 7,856 289,543
Long-term debt and bank notes.................... 2,764,551 2,657,600
Accrued interest payable......................... 101,472 93,400
Accrued expenses and other liabilities........... 361,912 314,374
------------ ------------
Total liabilities............................ 12,219,172 11,963,831
STOCKHOLDERS' EQUITY
Preferred stock($.01 par value, 20,000,000
shares authorized, 6,000,000 shares issued and
outstanding at March 31, 1996).................. 60 60
Common stock ($.01 par value, 390,000,000 shares
authorized, 222,750,000 shares issued and
outstanding at March 31, 1996).................. 2,228 2,228
Additional paid-in capital....................... 483,815 491,735
Retained earnings................................ 824,258 771,035
------------ ------------
Total stockholders' equity................... 1,310,361 1,265,058
------------ ------------
Total liabilities and stockholders' equity... $ 13,529,533 $ 13,228,889
============ ============
==============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MBNA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(dollars in thousands, except per share amounts)
For the Three Months Ended
March 31,
-----------------------------
1996 1995
----------- -----------
(unaudited)
INTEREST INCOME
Loans....................................... $ 178,979 $ 130,857
Investment securities:
Taxable................................... 29,559 28,561
Tax-exempt................................ 824 833
Time deposits in other banks................ 6,904 736
Federal funds sold and securities
purchased under resale agreements.......... 743 1,423
Loans held for securitization............... 105,294 76,733
----------- -----------
Total interest income................... 322,303 239,143
INTEREST EXPENSE
Deposits.................................... 122,921 90,184
Short-term borrowings....................... 2,801 1,369
Long-term debt and bank notes............... 45,386 27,901
----------- -----------
Total interest expense.................. 171,108 119,454
----------- -----------
NET INTEREST INCOME......................... 151,195 119,689
Provision for possible credit losses........ 49,488 25,585
----------- -----------
Net interest income after provision for
possible credit losses..................... 101,707 94,104
OTHER OPERATING INCOME
Interchange................................. 19,809 19,246
Merchant discount........................... 2,309 2,191
Credit card fees............................ 25,550 17,119
Loan servicing fees......................... 337,064 245,620
Processing fees............................. 4,864 6,272
Other....................................... 7,952 6,783
----------- -----------
Total other operating income............ $ 397,548 $ 297,231
<PAGE>
For the Three Months Ended
March 31,
-----------------------------
1996 1995
----------- -----------
(unaudited)
OTHER OPERATING EXPENSE
Salaries and employee benefits.............. $ 170,186 $ 126,182
Occupancy expense of premises............... 14,703 9,889
Furniture and equipment expense............. 21,977 18,460
Other....................................... 139,666 123,617
----------- -----------
Total other operating expense........... 346,532 278,148
----------- -----------
Income before income taxes and special
marketing program.......................... 152,723 113,187
Special marketing program................... 54,331 -
----------- -----------
Income before income taxes.................. 98,392 113,187
Applicable income taxes..................... 38,963 44,462
Tax benefit from Customer-based intangible
assets..................................... (32,793) -
----------- -----------
NET INCOME.................................. $ 92,222 $ 68,725
=========== ===========
EARNINGS PER COMMON SHARE................... $ .39 $ .30
Weighted average common shares outstanding
and common stock equivalents (000)......... 229,896 226,394
==============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MBNA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(dollars in thousands, except per share amounts)
(unaudited)
Outstanding Shares
------------------
Preferred Common Preferred Common
(000) (000) Stock Stock
--------- -------- --------- --------
BALANCE, DECEMBER 31, 1995........... 6,000 222,750 $ 60 $ 2,228
Net income........................... - - - -
Cash dividends:
Common-$.16 per share.............. - - - -
Preferred-$.46875 per share........ - - - -
Exercise of stock options and other
awards.............................. - 760 - 8
Acquisition and retirement of common
stock............................... - (760) - (8)
Foreign currency translation, net of
tax (accumulated amount of $132 at
March 31, 1996)..................... - - - -
Net unrealized losses on investment
securities available-for-sale, net
of tax (accumulated amount of ($98)
at March 31, 1996).................. - - - -
--------- -------- --------- --------
BALANCE, MARCH 31, 1996.............. 6,000 222,750 $ 60 $ 2,228
========= ======== ========= ========
BALANCE, DECEMBER 31, 1994........... - 222,750 $ - $ 2,228
Net income........................... - - - -
Cash dividends:
Common-$.14 per share.............. - - - -
Exercise of stock options and other
awards.............................. - 717 - 7
Acquisition and retirement of common
stock............................... - (717) - (7)
Foreign currency translation, net of
tax (accumulated amount of $1,336
at March 31, 1995).................. - - - -
Net unrealized gains on investment
securities available-for-sale, net
of tax (accumulated amount of
($251) at March 31, 1995)........... - - - -
--------- -------- --------- --------
BALANCE, MARCH 31, 1995.............. - 222,750 $ - $ 2,228
========= ======== ========= ========
<PAGE>
Additional Total
Paid-in Retained Stockholders'
Capital Earnings Equity
---------- ---------- -------------
BALANCE, DECEMBER 31, 1995........... $ 491,735 $ 771,035 $ 1,265,058
Net income........................... - 92,222 92,222
Cash dividends:
Common-$.16 per share.............. - (35,640) (35,640)
Preferred-$.46875 per share........ - (2,813) (2,813)
Exercise of stock options and other
awards.............................. 13,218 - 13,226
Acquisition and retirement of common
stock............................... (21,138) - (21,146)
Foreign currency translation, net of
tax (accumulated amount of $132
at March 31, 1996).................. - (259) (259)
Net unrealized losses on investment
securities available-for-sale, net
of tax (accumulated amount of ($98)
at March 31, 1996).................. - (287) (287)
---------- ---------- -------------
BALANCE, MARCH 31, 1996.............. $ 483,815 $ 824,258 $ 1,310,361
========== ========== =============
BALANCE, DECEMBER 31, 1994........... $ 374,345 $ 543,005 $ 919,578
Net income........................... - 68,725 68,725
Cash dividends:
Common-$.14 per share.............. - (31,186) (31,186)
Exercise of stock options and other
awards.............................. 8,182 - 8,189
Acquisition and retirement of common
stock............................... (13,367) - (13,374)
Foreign currency translation, net of
tax (accumulated amount of $1,336
at March 31, 1995).................. - 1,093 1,093
Net unrealized gains on investment
securities available-for-sale, net
of tax (accumulated amount of
($251) at March 31, 1995)........... - 581 581
---------- ---------- -------------
BALANCE, MARCH 31, 1995.............. $ 369,160 $ 582,218 $ 953,606
========== ========== =============
===============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MBNA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(dollars in thousands)
For the Three Months Ended
March 31,
--------------------------
1996 1995
----------- ------------
(unaudited)
OPERATING ACTIVITIES
Net income......................................... $ 92,222 $ 68,725
Adjustments to reconcile net income to net cash
(used for) provided by operating activities:
Provision for possible credit losses............ 49,488 25,585
Depreciation, amortization, and accretion....... 22,506 14,834
Provision for deferred income taxes............. (61,714) 5,544
Decrease (increase) in accrued income
receivable..................................... 9,829 (2,318)
Increase in accrued interest payable............ 8,072 5,648
Increase in other operating activities.......... (135,703) (58,370)
----------- ------------
Net cash (used for) provided by operating
activities................................... (15,300) 59,648
INVESTING ACTIVITIES
Proceeds from maturities of investment securities
available-for-sale................................ 808,796 638,179
Purchases of investment securities
available-for-sale................................ (1,057,503) (881,465)
Proceeds from maturities of investment securities
held-to-maturity ................................. 141,128 138,543
Purchases of investment securities
held-to-maturity.................................. (7,464) (5,542)
Net (increase) decrease in money market
instruments....................................... (285,599) 189,274
Proceeds from securitization of loans.............. 1,694,503 972,883
Portfolio acquisitions............................. (19,734) -
Amortization of securitized loans.................. (166,666) (187,500)
Net loan originations.............................. (1,096,670) (1,552,791)
Net purchases of premises and equipment............ (74,680) (85,763)
----------- ------------
Net cash used for investing activities........ $ (63,889) $ (774,182)
<PAGE>
For the Three Months Ended
March 31,
--------------------------
1996 1995
----------- ------------
(unaudited)
FINANCING ACTIVITIES
Net increase in money market deposit accounts,
noninterest-bearing demand deposits,
interest-bearing transaction accounts,
and savings accounts.............................. $ 230,708 $ 118,656
Net increase in time deposits...................... 143,759 359,050
Net (decrease) increase in short-term borrowings... (281,687) 142,107
Proceeds from issuance of long-term debt
and bank notes.................................... 106,196 99,683
Proceeds from exercise of stock options
and other awards.................................. 8,172 5,021
Acquisition and retirement of common stock......... (21,146) (13,374)
Dividends paid..................................... (33,094) (26,730)
----------- ------------
Net cash provided by financing activities..... 152,908 684,413
----------- ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS... 73,719 (30,121)
Cash and cash equivalents at beginning of period... 291,856 158,564
----------- ------------
Cash and cash equivalents at end of period......... $ 365,575 $ 128,443
=========== ============
SUPPLEMENTAL DISCLOSURE
Interest expense paid.............................. $ 162,860 $ 113,919
=========== ============
Income taxes paid.................................. $ 45,055 $ 6,608
=========== ============
===============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MBNA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of MBNA
Corporation ("the Corporation") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete consolidated financial statements.
For purposes of comparability, certain prior period amounts have been
reclassified. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1996,
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1996. The notes to the consolidated financial statements
contained in the Annual Report on Form 10-K for the year ended December 31,
1995 should be read in conjunction with these consolidated financial
statements.
NOTE B: EARNINGS PER COMMON SHARE
Earnings per common share are computed using net income applicable to
common stock and the weighted average number of common shares outstanding
during the period after consideration of the dilutive effect of stock options.
For comparative purposes, earnings per common share and weighted average
common shares outstanding and common stock equivalents have been restated to
reflect the three-for-two split of the Corporation's Common Stock effected in
the form of a dividend, paid February 16, 1996, to stockholders of record as of
February 2, 1996.
NOTE C: SPECIAL MARKETING PROGRAM
During the three months ended March 31, 1996, the Corporation charged
$32.8 million net of tax ($54.3 million pre-tax) to earnings related to the
launch of the MBNA Platinum Plus Visa and Mastercard program.
<PAGE>
NOTE D: LONG-TERM DEBT AND BANK NOTES
Long-term debt and bank notes consist of borrowings having an original
maturity of one year or more. During the three months ended March 31, 1996,
the Corporation, through MBNA International Bank Limited, a foreign bank
subsidiary in the United Kingdom, drew down the following advances from
existing credit facilities:
Par Value
---------
(dollars in thousands)
Revolving Credit Facility, priced at 22.5
basis points over either the three-month
or five-month Sterling London Interbank Offered
Rate (LIBOR), payable upon maturity, maturing
in 1998(60 million pounds sterling)................. $91,608
Bilateral Credit Facility, priced at 22.5
basis points over the six-month Sterling
LIBOR, payable semi-annually, maturing in 1997
(10 million pounds sterling)........................ 15,268
NOTE E: TAX BENEFIT FROM CUSTOMER-BASED INTANGIBLE ASSETS
Net income for the three months ended March 31, 1996, includes a $32.8
million tax benefit. As previously described in the Corporation's annual
reports to stockholders, the Corporation acquired Customer-based intangible
assets in connection with its 1991 initial public offering. The Corporation
did not initially recognize, for financial statement purposes, any tax benefit
related to those assets because there were uncertainties concerning the tax
treatment of such assets. During the second quarter of 1993, the U.S. Supreme
Court in the "Newark Morning Ledger" case affirmed that Customer-based
intangible assets may be amortized for tax purposes and the Corporation
recognized $89.8 million of the tax benefit related to the Customer-based
intangible assets. During the first quarter of 1996, the Internal Revenue
Service completed an audit of the Corporation's 1991 and 1992 tax returns and
entered into a final agreement with the Corporation regarding the tax treatment
of the intangible assets. As a result, the Corporation recognized the
remaining amount of the tax benefit relating to the intangible assets in the
first quarter of $32.8 million.
NOTE F: CORPORATION'S CHARTER AMENDMENT
On April 22, 1996, the stockholders of the Corporation approved an
amendment to the Corporation's charter to increase the number of authorized
shares of Common Stock from 390 million shares to 700 million shares. This
amendment became effective May 3, 1996.
<PAGE>
MBNA CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion is intended to further the reader's understanding of the
consolidated financial condition and results of operations of MBNA Corporation
("the Corporation"). It should be read in conjunction with the consolidated
financial statements, notes, and tables included elsewhere in this report.
INTRODUCTION
MBNA Corporation, a bank holding company, is the parent company of MBNA
America Bank, N.A. ("the Bank"), a national bank. Through the Bank, the
Corporation is one of the world's largest bank credit card lenders and is the
leading issuer of affinity credit cards marketed primarily to members of
associations and Customers of financial institutions. In addition to its
credit card lending, the Corporation also makes other consumer loans and offers
various deposit products.
The Corporation generates interest and other income through finance
charges assessed on outstanding loan receivables, interchange income, merchant
discount fees, credit card fees, loan servicing fees, processing fees, and
interest earned on investment securities and money market instruments. The
Corporation's primary costs are the costs of funding its loan receivables and
investment securities, which include interest paid on deposits, short-term
borrowings, and long-term debt and bank notes; credit losses; royalties paid to
affinity groups and financial institutions; business development and operating
expenses; and income taxes.
On January 17, 1996, the Board of Directors approved a three-for-two split
of the Corporation's Common Stock effected in the form of a dividend. In
connection with this transaction, one additional share of common stock was
issued on February 16, 1996, for every two shares of common stock held by
stockholders of record as of the close of business on February 2, 1996.
Accordingly, all common share and per common share data have been restated to
reflect the stock split.
EARNINGS SUMMARY
Net income for the three months ended March 31, 1996 was $92.2 million, or
$.39 per common share, increasing 34.2% from $68.7 million or $.30 per common
share for the same period in 1995. Earnings per common share is computed using
weighted average common shares outstanding, including common stock equivalents,
of 229.9 million shares and 226.4 million shares for the three months ended
March 31, 1996 and 1995, respectively.
The overall growth in earnings was primarily attributable to the growth in
average managed loans outstanding. Average managed loans increased $7.7
billion or 40.2% to $27.0 billion for the three months ended March 31, 1996,
compared to $19.3 billion for the same period in 1995. Included in average
managed loans are the Corporation's loans held for securitization, loan
portfolio, and securitized loans.
<PAGE>
The Corporation continues to be an active participant in the asset
securitization market. Securitizations leave net income substantially the same
by converting interest income, interchange, and other fees in excess of
interest paid to Certificateholders; credit losses; and other trust expenses
into loan servicing fees, while reducing the Corporation's on-balance-sheet
assets. During the first quarter of 1996, the Corporation securitized
approximately $1.7 billion of loan receivables, bringing the total amount of
outstanding securitized loans to $20.1 billion as of March 31, 1996.
Return on average total assets for the three months ended March 31, 1996,
was 2.79%, compared to 2.85% for the same period during 1995. The lower return
is primarily a result of a 36.1% increase in average total assets which
exceeded the 34.2% increase in net income. Return on average stockholders'
equity for the three months ended March 31, 1996, was 29.85%, compared to
30.41% for the three months ended March 31, 1995. The lower return is
primarily a result of an increase in average stockholders' equity related to
the issuance by the Corporation of $150.0 million of 7 1/2% Cumulative
Preferred Stock, Series A, in November 1995.
NET INTEREST INCOME
Net interest income for the three months ended March 31, 1996, on a fully
taxable equivalent basis, increased 26.2% or $31.5 million to $151.6 million
compared to the same period in 1995, primarily as a result of the growth in
average interest-earning assets. Average interest-earning assets increased
$2.7 billion as a result of increased loan growth for the period ended
March 31, 1996, compared to the same period in 1995. This growth in average
interest-earning assets was partially offset by a $3.1 billion increase in
average interest-bearing liabilities, and a 35 basis point decline in the
Corporation's net interest margin from 5.99% at March 31, 1995 to 5.64% as of
March 31, 1996. The decline in the net interest margin is primarily the result
of a 23 basis point increase in the rates paid on interest-bearing deposits.
INVESTMENT SECURITIES AND MONEY MARKET INSTRUMENTS
Interest income earned on investment securities and money market
instruments, on a fully taxable equivalent basis, increased $6.5 million for
the three months ended March 31, 1996, as compared to the same period in 1995.
The increase is primarily the result of an increase of $386.2 million in
average money market instruments in addition to an increase of $122.4 million
in average investment securities from the same period in 1995. This increase
was partially offset by a decline of 21 basis points in the yields earned on
the Corporation's investment securities. The increases in average money market
instruments and average investment securities are the result of the timing of
receipt of funds from asset securitizations. Funds received from these
securitizations are typically invested in money market instruments and
investment securities available-for-sale until they are needed to fund loan
growth.
<PAGE>
LOAN RECEIVABLES
Interest income generated by the Corporation's loan receivables increased
$76.7 million to $284.3 million for the three months ended March 31, 1996, from
$207.6 million for the same period in 1995. The increase is attributable to an
increase in average loan receivables of $2.2 billion to $8.2 billion for the
three months ended March 31, 1996, compared to the same period in 1995. The
yields earned on the Corporation's average loan receivables declined by 8 basis
points.
At March 31, 1996, variable-rate credit cards and home equity loans were
41.1% of total managed loans, compared to 39.9% at December 31, 1995. These
variable-rate loans are indexed to the U.S. Prime Rate published in The Wall
Street Journal and generally reprice quarterly. In April 1996, the rate on the
variable-rate loans decreased 50 basis points based on reductions in the Prime
Rate.
DEPOSITS
Total interest expense on deposits increased $32.7 million to $122.9
million for the three months ended March 31, 1996, compared to $90.2 million
for the same period in 1995. The increase is primarily the result of an
increase in average interest-bearing deposits of $2.0 billion as the
Corporation continues to emphasize marketing certificates of deposits and money
market deposit accounts to fund loan growth and diversify funding sources.
Also, the rates paid on average interest-bearing deposits increased 23 basis
points from 1995.
BORROWED FUNDS
Interest expense on short-term borrowings increased $1.4 million to $2.8
million for the three months ended March 31, 1996, compared to $1.4 million of
interest expense for the same period in 1995. This increase reflects the
Corporation's utilization of federal funds purchased and other short-term
borrowings to meet short-term funding requirements.
Total interest expense on long-term debt and bank notes increased $17.5
million to $45.4 million for the three months ended March 31, 1996, compared to
$27.9 million for the same period in 1995. The increase in interest expense
reflects the issuance of additional long-term debt and bank notes to fund loan
growth and diversify funding sources. As a result, average long-term debt and
bank notes increased $1.0 billion to $2.7 billion for the three months ended
March 31, 1996 from $1.7 billion for the same period in 1995. Also, the rates
paid on average long-term debt and bank notes increased 11 basis points from
1995.
<PAGE>
TABLE 1: STATEMENT OF AVERAGE BALANCES, YIELDS AND RATES, INCOME AND EXPENSE
(dollars in thousands; rates and yields on a fully taxable equivalent basis)
For the Three Months Ended
March 31, 1996
--------------------------------
Average Yield/ Amount Paid
Amount Rate or Earned
------------ ------ -----------
(unaudited)
ASSETS
Interest-earning assets:
Money market instruments:
Interest-earning time deposits in other
banks...................................... $ 486,486 5.71% $ 6,904
Federal funds sold and securities purchased
under resale agreements.................... 53,769 5.56 743
------------ -----------
Total money market instruments............ 540,255 5.69 7,647
Investment securities (a):
Taxable..................................... 2,037,647 5.83 29,559
Tax-exempt(b)............................... 84,464 6.04 1,268
------------ -----------
Total investment securities............... 2,122,111 5.84 30,827
Loans held for securitization................. 3,014,301 14.05 105,294
Loans:
Credit card................................. 4,233,784 13.92 146,493
Other consumer.............................. 912,599 14.32 32,486
------------ -----------
Total loans............................... 5,146,383 13.99 178,979
------------ -----------
Total interest-earning assets........... 10,823,050 11.99 $ 322,747
Cash and due from banks....................... 324,613
Premises and equipment, net................... 845,250
Other assets.................................. 1,431,480
Reserve for possible credit losses............ (106,243)
------------
Total assets............................ $ 13,318,150
============
<PAGE>
For the Three Months Ended
March 31, 1996
--------------------------------
Average Yield/ Amount Paid
Amount Rate or Earned
------------ ------ -----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
Time deposits (c)........................... $ 6,255,715 5.84% $ 90,853
Money market deposit accounts............... 2,357,451 5.41 31,702
Interest-bearing transaction accounts....... 21,620 4.69 252
Savings accounts............................ 9,711 4.72 114
------------ -----------
Total interest-bearing deposits........... 8,644,497 5.72 122,921
Borrowed funds:
Federal funds purchased and securities sold
under repurchase agreements................ 125,771 5.36 1,677
Other short-term borrowings................. 81,669 5.54 1,124
Long-term debt and bank notes (c)........... 2,727,700 6.69 45,386
------------ -----------
Total borrowed funds...................... 2,935,140 6.60 48,187
------------ -----------
Total interest-bearing liabilities...... 11,579,637 5.94 171,108
Demand deposits............................... 160,653
Other liabilities............................. 335,327
------------
Total liabilities....................... 12,075,617
Stockholders' equity.......................... 1,242,533
------------
Total liabilities and stockholders'
equity................................. $ 13,318,150
============ -----------
Net interest income..................... $ 151,639
===========
Net interest margin..................... 5.64
Interest rate spread.................... 6.05
(a) Average amounts for investment securities available-for-sale are based on
market values; if these securities were carried at amortized cost, there
would be no impact on the net interest margin.
(b) The fully taxable equivalent (FTE) basis adjustment for the three months
ended March 31, 1996 was $444.
(c) Includes the impact of interest rate swap agreements used to change fixed-
rate funding sources to floating-rate funding sources.
<PAGE>
For the Three Months Ended
March 31, 1995
--------------------------------
Average Yield/ Amount Paid
Amount Rate or Earned
------------ ------ -----------
(unaudited)
ASSETS
Interest-earning assets:
Money market instruments:
Interest-earning time deposits in other
banks...................................... $ 55,091 5.42% $ 736
Federal funds sold and securities purchased
under resale agreements.................... 98,978 5.83 1,423
------------ -----------
Total money market instruments............ 154,069 5.68 2,159
Investment securities (a):
Taxable..................................... 1,919,998 6.03 28,561
Tax-exempt(b)............................... 79,687 6.52 1,282
------------ -----------
Total investment securities............... 1,999,685 6.05 29,843
Loans held for securitization................. 2,207,434 14.10 76,733
Loans:
Credit card................................. 3,235,622 14.14 112,776
Other consumer.............................. 532,231 13.78 18,081
------------ -----------
Total loans............................... 3,767,853 14.08 130,857
------------ -----------
Total interest-earning assets........... 8,129,041 11.95 $ 239,592
Cash and due from banks....................... 168,821
Premises and equipment, net................... 573,207
Other assets.................................. 1,012,813
Reserve for possible credit losses............ (101,770)
------------
Total assets............................ $ 9,782,112
============
<PAGE>
For the Three Months Ended
March 31, 1995
--------------------------------
Average Yield/ Amount Paid
Amount Rate or Earned
------------ ------ -----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
Time deposits (c)........................... $ 5,008,578 5.40% $ 66,697
Money market deposit accounts............... 1,627,906 5.77 23,166
Interest-bearing transaction accounts....... 17,930 5.09 225
Savings accounts............................ 7,653 5.09 96
------------ -----------
Total interest-bearing deposits........... 6,662,067 5.49 90,184
Borrowed funds:
Federal funds purchased and securities sold
under repurchase agreements................ 35,950 6.13 543
Other short-term borrowings................. 59,317 5.65 826
Long-term debt and bank notes (c)........... 1,720,748 6.58 27,901
------------ -----------
Total borrowed funds...................... 1,816,015 6.54 29,270
------------ -----------
Total interest-bearing liabilities...... 8,478,082 5.71 119,454
Demand deposits............................... 113,736
Other liabilities............................. 273,679
------------
Total liabilities....................... 8,865,497
Stockholders' equity.......................... 916,615
------------
Total liabilities and stockholders'
equity................................. $ 9,782,112
============ -----------
Net interest income..................... $ 120,138
===========
Net interest margin..................... 5.99
Interest rate spread.................... 6.24
(a) Average amounts for investment securities available-for-sale are based on
market values; if these securities were carried at amortized cost, there
would be no impact on the net interest margin.
(b) The fully taxable equivalent basis adjustment for the three months ended
March 31, 1995 was $449.
(c) Includes the impact of interest rate swap agreements used to change fixed-
rate funding sources to floating-rate funding sources.
<PAGE>
OTHER OPERATING INCOME
Total other operating income increased $100.3 million or 33.8% to $397.5
million for the three months ended March 31, 1996, from $297.2 million for the
same period in 1995. This increase is primarily attributable to a 37.2%
increase in loan servicing fees, which grew $91.4 million to $337.1 million for
the three months ended March 31, 1996, as compared to the three months ended
March 31, 1995. The increase in loan servicing fees is primarily the result of
a $5.6 billion or 41.8% increase in average securitized loans to $18.9 billion
for the three months ended March 31, 1996, compared to $13.3 billion for the
same period in 1995. Loan servicing fees, generated by securitized loans,
consist of interest income, interchange, and other fees in excess of interest
paid to Certificateholders; credit losses; and other trust expenses. In
addition, credit card fees increased $8.4 million primarily resulting from an
increase in late fees.
OTHER OPERATING EXPENSE
Total other operating expense increased 24.6% to $346.5 million for the
three months ended March 31, 1996 from $278.1 million for the same period in
1995. The growth in other operating expense reflects the Corporation's
continued expansion of business development activities including regional
marketing and sales, account activation, Customer retention, and Customer
service. These activities are expected to enhance the ability of the
Corporation to attract and retain Customers. During the three months ended
March 31, 1996, the Corporation opened approximately 1.8 million new accounts.
Table 2 presents the other expense component of other operating expense.
TABLE 2: OTHER EXPENSE COMPONENT OF OTHER OPERATING EXPENSE
(dollars in thousands)
For the Three Months Ended
March 31,
--------------------------
1996 1995
--------- ---------
(unaudited)
Purchased services....................... $ 37,277 $ 32,108
Advertising.............................. 13,414 13,037
Collection............................... 6,286 4,807
Stationery and supplies.................. 5,332 4,220
Service bureau........................... 4,810 4,402
Postage and delivery..................... 24,967 24,851
Telephone usage.......................... 9,755 8,358
Credit card fraud losses................. 11,004 10,120
Amortization of intangible assets........ 2,526 2,428
Computer software........................ 5,246 3,675
Other.................................... 19,049 15,611
--------- ---------
Total other operating expense.......... $ 139,666 $ 123,617
========= =========
<PAGE>
SPECIAL MARKETING PROGRAM
During the three months ended March 31, 1996, the Corporation charged
$32.8 million net of tax ($54.3 million pre-tax) to earnings related to the
launch of the MBNA Platinum Plus Visa and Mastercard program.
TAX BENEFIT FROM CUSTOMER-BASED INTANGIBLE ASSETS
Net income for the three months ended March 31, 1996, includes a $32.8
million tax benefit. As previously described in the Corporation's annual
reports to stockholders, the Corporation acquired Customer-based intangible
assets in connection with its 1991 initial public offering. The Corporation
did not initially recognize, for financial statement purposes, any tax benefit
related to those assets because there were uncertainties concerning the tax
treatment of such assets. During the second quarter of 1993, the U.S. Supreme
Court in the "Newark Morning Ledger" case affirmed that Customer-based
intangible assets may be amortized for tax purposes and the Corporation
recognized $89.8 million of the tax benefit related to the Customer-based
intangible assets. During the first quarter of 1996, the Internal Revenue
Service completed an audit of the Corporation's 1991 and 1992 tax returns and
entered into a final agreement with the Corporation regarding the tax treatment
of the intangible assets. As a result, the Corporation recognized the
remaining amount of the tax benefit relating to the intangible assets in the
first quarter of $32.8 million.
ASSET QUALITY
Delinquencies
An account is contractually delinquent if the minimum payment is not
received by the specified date on the Customer's statement. However, the
Corporation generally continues to accrue interest until the loan is charged
off. Delinquency as a percentage of the Corporation's loans was 3.36% at
March 31, 1996, compared with 3.11% at December 31, 1995. The Corporation's
loan delinquency has continued to increase during this period to a level that
the Corporation believes is more consistent with its long-term historical
delinquency rate. The Corporation believes that several factors contributed to
the increase in delinquency, including general economic conditions and
increased consumer debt levels. Table 3 presents the delinquency of the
Corporation's loan portfolio, excluding loans held for securitization.
<PAGE>
TABLE 3: DELINQUENT LOANS
(dollars in thousands)
March 31, 1996 December 31, 1995
----------------- -----------------
(unaudited)
Loan portfolio..................... $ 5,249,224 $ 4,967,491
Loans delinquent:
30 to 59 days.................... $ 71,780 1.37% $ 65,651 1.32%
60 to 89 days.................... 33,945 .65 30,162 .61
90 or more days.................. 70,630 1.34 58,894 1.18
----------- ---- ----------- ----
Total.......................... $ 176,355 3.36% $ 154,707 3.11%
=========== ==== =========== ====
Net Credit Losses
The Corporation's policy is generally to charge off accounts when they
become 180 days contractually past due. After being charged off, the loans are
referred to the Corporation's recovery department. Net credit losses for the
three months ended March 31, 1996 for the Corporation's loan portfolio were
$47.4 million, compared to $24.7 million for the same period in 1995. Net
credit losses as a percentage of average loan receivables were 2.32% for the
three months ended March 31, 1996, compared to 1.65% for the same period last
year. For the full year ended December 31, 1995, net credit losses were 1.91%
of average loan receivables.
Reserve and Provision for Possible Credit Losses
The loan portfolio is regularly reviewed to determine an appropriate range
for the reserve for possible credit losses based upon the impact of economic
conditions on the borrowers' ability to repay, past collection experience, the
risk characteristics of the portfolio, and other factors that deserve current
recognition. A provision is charged to operating expense to maintain the
reserve level within this range. The reserve for possible credit losses,
however, does not include an allocation for credit risk related to securitized
loans, which is absorbed directly by the related trusts under their respective
contractual agreements, thus reducing loan servicing fees rather than the
reserve for possible credit losses. The provision for possible credit losses
for the three months ended March 31, 1996 was $49.5 million compared to $25.6
million for the same period in 1995. The increase in the Corporation's
provision for possible credit losses reflects the increase in the Corporation's
net credit losses. Table 4 presents the change to the Corporation's reserve
for possible credit losses.
<PAGE>
TABLE 4: RESERVE FOR POSSIBLE CREDIT LOSSES
(dollars in thousands)
For the Three Months Ended
March 31,
--------------------------
1996 1995
----------- -----------
(unaudited)
Reserve balance, beginning of period......... $ 104,886 $ 101,519
Provision charged to operating expense..... 49,488 25,585
Foreign currency translation............... (72) 76
Credit losses............................ (59,108) (33,674)
Recoveries............................... 11,710 8,982
----------- -----------
Net credit losses.......................... (47,398) (24,692)
----------- -----------
Reserve balance, end of period............... $ 106,904 $ 102,488
=========== ===========
LIQUIDITY
The objective of liquidity management is to diversify the sources of funds
available to meet the Corporation's operating requirements. Also, as part of
the liquidity management process, the Corporation anticipates the level of
funds required for future periods and regularly reviews funding alternatives
based on its asset and liability mix. These requirements include funding new
loans, deposit withdrawals, long-term debt and bank note maturities and the
portion of loans previously securitized that need to be refinanced as the
underlying securitizations amortize. Funding is provided from a variety of
sources, including deposits, securitizations, and debt issuance. The
Corporation also borrows in the short-term and interbank funding markets.
Deposits generated by the Bank are a major source of funds for the
Corporation. Total deposits at March 31, 1996 and December 31, 1995 were $9.0
billion and $8.6 billion, respectively. The Corporation continues to increase
its direct deposits primarily as a result of offering competitive rates on
money market deposit accounts and certificates of deposits. Table 5 presents
the maturities of the Corporation's deposits as of March 31, 1996.
<PAGE>
TABLE 5: MATURITIES OF DEPOSITS AT MARCH 31, 1996
(dollars in thousands)
Direct Other Total
Deposits Deposits Deposits
---------- ---------- ----------
(unaudited)
Three months or less.................... $3,180,255 $ 369,045 $3,549,300
Over three months through twelve months. 1,763,976 525,332 2,289,308
Over one year through five years........ 1,598,601 1,532,233 3,130,834
Over five years......................... 5,906 8,033 13,939
---------- ---------- ----------
Total deposits........................ $6,548,738 $2,434,643 $8,983,381
========== ========== ==========
The Corporation also holds investment securities, which are generally
AAA-rated securities, of $2.2 billion at March 31, 1996, most of which can be
used as collateral under repurchase agreements. Also, the Corporation had
$859.2 million of money market instruments at March 31, 1996. Of the $2.2
billion in investment securities, $1.2 billion were classified as available-for-
sale. These investment securities and the money market instruments provide
increased liquidity and flexibility to support the Corporation's anticipated
growth and funding needs. Estimated maturities (including the impact of
estimated prepayments) of the Corporation's investment securities portfolio are
presented in table 6.
<PAGE>
TABLE 6: SUMMARY OF INVESTMENT SECURITIES AT MARCH 31, 1996
(dollars in thousands)
Estimated Maturity
-------------------------------------------
Within 1 After
Year 1-5 Years 5-10 Years 10 Years
--------- --------- ---------- ---------
AVAILABLE-FOR-SALE
U.S. Treasury and other U.S.
government agencies obligations.. $ 406,381 $ - $ - $ -
State and political subdivisions
of the United States............. 56,429 29,513 - -
Asset-backed and other securities. 20,051 598,987 52,461 -
--------- --------- ---------- ---------
Total investment securities
available-for-sale............. $ 482,861 $ 628,500 $ 52,461 $ -
========= ========= ========== =========
HELD-TO-MATURITY
U.S. Treasury and other U.S.
government agencies obligations.. $ 419,058 $ 437,786 $ - $ 37,411
State and political subdivisions
of the United States............. - - - 426
Asset-backed and other securities. 77,925 67,023 1,000 9,417
--------- --------- ---------- ---------
Total investment securities
held-to-maturity............... $ 496,983 $ 504,809 $ 1,000 $ 47,254
========= ========= ========== =========
Book Market
Value Value
---------- ----------
AVAILABLE-FOR-SALE
U.S. Treasury and other U.S.
government agencies obligations.. $ 406,381 $ 406,381
State and political subdivisions
of the United States............. 85,942 85,942
Asset-backed and other securities. 671,499 671,499
---------- ----------
Total investment securities
available-for-sale............. $1,163,822 $1,163,822
========== ==========
HELD-TO-MATURITY
U.S. Treasury and other U.S.
government agencies obligations.. $ 894,255 $ 890,032
State and political subdivisions
of the United States............. 426 341
Asset-backed and other securities. 155,365 155,250
---------- ----------
Total investment securities
held-to-maturity............... $1,050,046 $1,045,623
========== ==========
<PAGE>
CAPITAL ADEQUACY
The Corporation is subject to risk-based capital guidelines adopted by the
Federal Reserve Board for bank holding companies. The Bank is also subject to
similar capital requirements adopted by the Office of the Comptroller of the
Currency. Under these requirements, the regulatory agencies have set minimum
thresholds for Tier 1 capital, Total capital, and Leverage ratios. At
March 31, 1996, both the Corporation's and the Bank's capital exceeded all
minimum regulatory requirements, and the Bank was "well capitalized" as defined
in the regulations issued pursuant to the FDIC Improvement Act of 1991. Both
the Corporation's and the Bank's risk-based capital ratios, shown in table 7,
have been computed in accordance with regulatory accounting policies.
TABLE 7: REGULATORY CAPITAL RATIOS
March 31, 1996
----------------------------------------
MBNA MBNA America Minimum
Corporation Bank, N.A. Requirements
----------- ------------ ------------
(unaudited)
Tier 1............................ 11.50% 9.12% 4.00%
Total............................. 14.20 12.10 8.00
Leverage.......................... 9.79 7.63 3.00
During the three months ended March 31, 1996, the Corporation declared
dividends on its preferred and common stock of $38.5 million. The payment of
preferred and common stock dividends by the Corporation may be limited by
certain factors including regulatory capital requirements, broad enforcement
powers of the federal bank regulatory agencies, and tangible net worth
maintenance requirements under the Corporation's revolving credit facilities.
The primary source of funds for payment of preferred and common stock
dividends by the Corporation is dividends received from the Bank. The amount
of dividends that a bank may declare in any year is subject to certain
regulatory restrictions. Generally, dividends declared in a given year by a
national bank are limited to its net profit, as defined by regulatory agencies,
for that year, combined with its retained net income for the preceding two
years. Also, a bank may not declare dividends if such declaration would leave
the bank inadequately capitalized. Therefore, the ability of the Bank to
declare dividends will depend on its future net income and capital
requirements. At March 31, 1996, the amount of retained earnings available for
declaration of dividends from the Bank to the Corporation was $413.9 million.
Payment of dividends by the Bank to the Corporation, however, may be limited by
federal bank regulatory agencies.
The Bank's payment of dividends to the Corporation may also be limited by
a tangible net worth requirement under the Bank's revolving credit facility.
This facility was not drawn upon as of March 31, 1996. If this facility were
drawn upon as of March 31, 1996, the amount of retained earnings available for
declaration of dividends would have been limited to $209.5 million.
<PAGE>
SECURITIZATION
Securitization of the Bank's loan receivables continues to be another
major funding alternative for the Corporation. This is accomplished primarily
through the public and private issuance of asset-backed securities. As loan
receivables are securitized, the Corporation's on-balance sheet funding needs
are reduced by the amount of loans securitized.
Securitization involves the sale, generally to a trust, of a group of loan
receivables. These loan receivables arise from accounts whose ownership is
retained by the Bank. In addition to selling the existing loan receivables,
rights to new loan receivables, including most fees generated by and payments
made from these accounts, are sold. Certificates representing undivided
interests in the trust are issued. The Investor Certificates are sold by the
trust to investors, generally through a public offering. Interest is paid to
the Investor Certificateholder during the life of the transaction. The Seller
Certificate is retained by the Bank. The Bank continues to service the
accounts and receives a servicing fee for doing so.
During the revolving period, which generally ranges from 24 to 108 months,
no principal payments are made to the Investor Certificateholders. Payments
received on the accounts are used to pay interest to the Investor
Certificateholders and to purchase new loan receivables generated by the
accounts, so that the principal dollar amount of the Investor Certificate
remains unchanged. Once the revolving period ends, principal payments are
allocated for distribution to the Investor Certificateholders according to the
terms of the transaction. As principal payments are allocated to the Investor
Certificateholders, the Bank's loan receivables increase by the amount of the
principal allocation.
During the three months ended March 31, 1996, the Bank securitized loan
receivables totaling $1.7 billion through both public and private markets.
During the same period in 1995, the Bank securitized a total of $975.0 million
of its loan receivables. Amortization of previously securitized loan
receivables totaled $166.7 million for the three month period ended March 31,
1996, compared to $187.5 million for the same period last year. During the
amortization period, new charges and cash advances are for the account of the
Bank, which increases the Corporation's on-balance-sheet assets. An additional
$1.6 billion of previously securitized loans will amortize into the Bank's loan
portfolio during the remainder of 1996.
Distribution of principal to the Investor Certificateholders may begin
sooner if the average annualized yield (generally including interest income,
interchange, and other fees) for three consecutive months drops below a minimum
yield (generally equal to the sum of the certificate rate payable to investors,
contractual servicing fees, and principal credit losses during the period) or
certain other events occur. Table 8 compares the average annualized yield for
the three-month period ended March 31, 1996, to the minimum yield for each
transaction. The yield for each of the transactions is presented on a cash
basis and includes various credit card or other fees as specified in the
securitization agreements.
<PAGE>
TABLE 8: YIELDS ON SECURITIZED TRANSACTIONS (a)
Three-Month Average
----------------------- Yield in
Annualized Minimum Excess of
Yield Yield Minimum
---------- ----------- ---------
(unaudited)
MasterTrust 91-1..................... 18.69% 13.75% 4.94%
MasterTrust 92-1..................... 18.69 13.25 5.44
MasterTrust 92-2..................... 18.69 12.20 6.49
MasterTrust 92-3..................... 18.69 11.81 6.88
MasterTrust 93-1..................... 18.69 11.76 6.93
MasterTrust 93-2 (b)................. 19.90 11.85 8.05
MasterTrust 93-3..................... 18.69 11.40 7.29
MasterTrust 93-4..................... 18.69 11.71 6.98
MasterTrust 94-1..................... 18.69 11.61 7.08
MasterTrust 94-2..................... 18.69 11.67 7.02
MasterTrust II 94-A.................. 17.97 12.10 5.87
MasterTrust II 94-B.................. 17.97 12.09 5.88
MasterTrust II 94-C.................. 17.97 12.18 5.79
MasterTrust II 94-D.................. 17.97 12.14 5.83
MasterTrust II 94-E.................. 17.97 12.26 5.71
Gold Reserve......................... 18.85 12.83 6.02
MasterTrust II 95-A.................. 17.97 12.18 5.79
MasterTrust II 95-B.................. 17.97 12.06 5.91
MasterTrust II 95-C.................. 17.97 12.11 5.86
MasterTrust II 95-D.................. 17.97 11.98 5.99
MasterTrust II 95-E.................. 17.97 12.12 5.85
Cards No. 1.......................... 20.56 11.38 9.18
MasterTrust II 95-F.................. 17.97 13.00 4.97
MasterTrust II 95-G.................. 17.97 12.12 5.85
MasterTrust II 95-H.................. 17.97 11.98 5.99
MasterTrust II 95-I.................. 17.97 12.02 5.95
MasterTrust II 95-J.................. 17.97 12.09 5.88
(a) MasterTrust II 96-A issued on February 28, 1996, MasterTrust II 96-B issued
on March 26, 1996, and MasterTrust II 96-C issued March 27, 1996, are
excluded from the yields presented above as a result of their recency.
(b) Represents a maturing transaction that has entered its scheduled controlled
amortization period.
Securitizations do not have a material impact on earnings reported for
each period. Due to the relatively short average life of loans, no gain or
loss is recorded at the time of sale. Rather, loan servicing fees (interest
income, interchange, and other fees in excess of interest paid to
Certificateholders; credit losses; and other trust expenses) are recognized
monthly over the life of the transaction when earned. The monthly pattern of
recording loan servicing fees is similar to the revenue recognition that the
Bank would have experienced if the loans had not been securitized.
<PAGE>
MBNA CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited)
The following supplemental information illustrates the effects of
securitizations on selected line items of the Corporation's consolidated
statements of income and financial condition. This information is used to
evaluate the generation of revenue, as well as the impact that securitizations
have on the Corporation's consolidated financial statements.
IMPACT OF SECURITIZATIONS ON INCOME BEFORE INCOME TAXES AND SPECIAL MARKETING
PROGRAM
(dollars in thousands)
For the Three Months Ended
March 31,
--------------------------
1996 1995
---------- ----------
Consolidated Statements of Income (As Reported)
Net interest income.......................... $ 151,195 $ 119,689
Provision for possible credit losses......... 49,488 25,585
Other operating income....................... 397,548 297,231
Other operating expense...................... 346,532 278,148
---------- ----------
Income before income taxes and special
marketing program........................... $ 152,723 $ 113,187
========== ==========
Adjustments for Securitizations (Supplemental)
Net interest income.......................... $ 415,124 $ 267,948
Provision for possible credit losses......... 173,796 102,698
Other operating income....................... (241,328) (165,250)
Other operating expense...................... - -
---------- ----------
Income before income taxes and special
marketing program........................... $ - $ -
========== ==========
Managed Income Statements (Supplemental)
Net interest income.......................... $ 566,319 $ 387,637
Provision for possible credit losses......... 223,284 128,283
Other operating income....................... 156,220 131,981
Other operating expense...................... 346,532 278,148
---------- ----------
Income before income taxes and special
marketing program........................... $ 152,723 $ 113,187
========== ==========
<PAGE>
MANAGED ASSET DATA
(dollars in thousands)
March 31, 1996 December 31, 1995
----------------- -----------------
AT PERIOD END:
Loans held for securitization......... $ 2,418,371 $ 3,168,427
Loan portfolio........................ 5,249,224 4,967,491
Securitized loans..................... 20,125,383 18,575,786
----------------- -----------------
Total managed loans................. $ 27,792,978 $ 26,711,704
================= =================
Total managed interest-earning
assets............................. $ 30,866,056 $ 29,381,106
================= =================
Total managed assets................ $ 33,654,916 $ 31,804,675
================= =================
For the Three Months Ended
March 31,
------------------------------------
1996 1995
----------------- -----------------
AVERAGE:
Loans held for securitization......... $ 3,014,301 $ 2,207,434
Loan portfolio........................ 5,146,383 3,767,853
Securitized loans..................... 18,850,045 13,294,108
----------------- -----------------
Total managed loans................. $ 27,010,729 $ 19,269,395
================= =================
Total managed interest-earning
assets............................. $ 29,673,095 $ 21,423,149
================= =================
Total managed assets................ $ 32,168,195 $ 23,076,220
================= =================
MANAGED RATIOS:
Delinquency........................... 3.85% 3.00%
Net credit losses..................... 3.28 2.64
Net interest margin (on an FTE basis). 7.68 7.35
<PAGE>
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 3, 1996, Andrew B. Spark filed a lawsuit against the Corporation,
the Bank and certain of its officers and its subsidiary MBNA Marketing Systems,
Inc. in the United States District Court for the Middle District of Florida.
This suit is a purported class action. The plaintiff complains that the Bank's
advertising of its cash promotional annual percentage rate program was
fraudulent and deceptive. The plaintiff seeks unspecified damages including
actual, treble and punitive damages and attorneys fees for an alleged breach of
contract, and violation of the Delaware Deceptive Trade Practices Act and the
federal Racketeer Influenced and Corrupt Organizations Act. The Corporation
believes that its advertising practices are proper under applicable federal and
state law and intends to defend vigorously against the action.
ITEM 2: CHANGES IN SECURITIES
Effective May 3, 1996, the Corporation's charter was amended to increase
the number of authorized shares of common stock from 390 million shares to 700
million shares. This amendment was approved by the stockholders of MBNA
Corporation during MBNA Corporation's 1996 Annual Stockholders Meeting.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1996 Annual Meeting of the Stockholders of MBNA Corporation was held
on April 22, 1996.
The stockholders elected the following nominees to the Corporation's Board
of Directors to serve for the coming year and until their successors are
elected and qualify. The following shows the separate tabulation of votes for
each nominee:
Number of Votes
-------------------------------
For Withheld
----------- ---------
Alfred Lerner................ 182,512,731 1,699,739
Charles M. Cawley............ 182,513,775 1,698,695
James H. Berick, Esq......... 180,040,941 4,171,529
Benjamin R. Civiletti, Esq... 181,423,803 2,788,667
Randolph D. Lerner, Esq...... 182,939,831 1,272,639
Stuart L. Markowitz, M.D..... 183,431,154 781,316
Michael Rosenthal, Ph.D...... 183,433,316 779,154
The stockholders approved an amendment to the Corporation's charter to
increase the number of authorized shares of common stock from 390 million
shares to 700 million shares. There were 170,946,447 affirmative votes,
12,147,657 negative votes, and 1,118,366 votes abstained.
<PAGE>
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Index of Exhibits
Exhibit Description of Exhibit
- ------- ----------------------
3(i) Articles of Incorporation
11 Computation of Earnings Per Common Share
Exhibit 3(i): Articles of Incorporation
MBNA CORPORATION
COMPOSITE CHARTER
ARTICLE I - NAME
The name of the corporation (hereinafter called the "Corporation") is
MBNA Corporation.
ARTICLE II - PURPOSE
The Corporation is formed to engage in the business of banking and
finance, directly and through subsidiaries. It may engage in any other business
permitted by law.
ARTICLE III - PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. The resident agent of the Corporation in the State of Maryland
is The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland
21202. The resident agent is a Maryland corporation.
ARTICLE IV - CAPITAL STOCK
(a) The total number of shares of all classes which the Corporation
has authority to issue is 720,000,000 shares, of which 700,000,000 shares are
classified as Common Stock, par value $.01 per share, and 20,000,000 shares
are classified as Preferred Stock, par value $.01 per share. The aggregate par
value of all shares of all classes which the Corporation is authorized to issue
is $7,200,000.
(b) The Preferred Stock may be issued in series. Prior to issuance,
the Board of Directors shall set the terms of the Preferred Stock, including
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption.
<PAGE>
(c) The Board of Directors shall have the power to classify or
reclassify any unissued stock, whether now or hereafter authorized, by setting
or changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such stock.
(d) Unless otherwise provided by the Board of Directors, no holder of
stock of any class shall be entitled to preemptive rights to subscribe for or
purchase or receive any stock of any class or securities convertible into stock
of any class of the Corporation.
ARTICLE V - BOARD OF DIRECTORS
(a) The Corporation shall initially have four directors. The initial
directors, who shall act as such until the first annual meeting or until their
successors are duly elected and qualify shall be Charles M. Cawley, John R.
Cochran, Bruce L. Hammonds and M. Scot Kaufman. The number of directors may be
increased or decreased as provided in the By-Laws of the Corporation.
(b) The Board of Directors may authorize the issuance from time to
time of stock of the Corporation of any class, now or hereafter authorized, and
securities convertible into stock of the Corporation of any class, now or
hereafter authorized, for such consideration and on such other terms as the
Board of Directors may deem advisable, without stockholder approval.
ARTICLE VI - VOTING
Notwithstanding any provision of law requiring any action to be taken
or authorized by the affirmative vote of the holders of a greater proportion of
the votes of all classes or of any class of stock of the Corporation, such
action shall be effective and valid if taken or authorized by the affirmative
vote of a majority of the total number of votes entitled to be cast thereon,
except as otherwise provided in the charter.
ARTICLE VII - LIABILITY AND INDEMNIFICATION
(a) To the fullest extent that limitations on the liability of
directors and officers are permitted by the Maryland General Corporation Law,
no director or officer of the Corporation shall have any liability to the
Corporation or its stockholders for damages. This limitation on liability
applies to events occurring at the time a person serves as director or officer
of the Corporation whether or not such person is a director or officer at the
time of any proceeding in which liability is asserted.
(b) To the fullest extent permitted by the Maryland General
Corporation Law, the Corporation shall indemnify and advance expenses to its
currently acting and its former directors. The Corporation shall indemnify and
advance expenses to its officers to the same extent as its directors, and may
do so to such further extent as is consistent with law. The Board of Directors
may by bylaw, resolution or agreement make further provision for
indemnification of directors, officers, employees and agents to the fullest
extent permitted by the Maryland General Corporation Law.
<PAGE>
(c) References to the Maryland General Corporation Law in this Article
are to that law as from time to time amended. No amendment to the charter of
the Corporation shall affect any right of any person under this Article based
on any event, omission or proceeding prior to the amendment.
ARTICLE VIII - CONTROL SHARE ACQUISITION STATUTE EXEMPTIONS
Any acquisition of shares of the Corporation on or after January 21,
1991 by Alfred Lerner (or his successor in interest) ("Lerner") or by The
Progressive Corporation (or its successors in interest) ("Progressive"), or by
any present or future affiliate or associate thereof so long as such affiliate
or associate is at the time in question such an affiliate or associate (or any
person acting in concert or in a group with any of the foregoing) is, pursuant
to Section 3-702(b) of the Maryland General Corporation Law (the "MGCL") (or
any successor or replacement provision or statute), hereby approved for
purposes of and exempted from the provisions of, Subtitle 7 of Title 3 of the
MGCL (or any successor or replacement provision or statute), with the result
that any shares acquired by any such person shall have all voting rights
otherwise appurtenant thereto, notwithstanding Subtitle 7 of Title 3 of the
MGCL (or any successor or replacement provision or statute).
Notwithstanding anything in the Charter or bylaws of the Corporation
(as each may be amended from time to time) to the contrary, this ARTICLE may
not be amended, altered or repealed except with the unanimous approval of all
of the members of the Board of Directors and the written consent of all
persons or entities then in existence and specified above that may be adversely
affected, or that may lose any privilege or right, as a result of such
amendment, alteration or repeal.
ARTICLE IX - AMENDMENTS
Except as set forth in this Article, The Corporation reserves the
right to make, from time to time, any amendments of its charter which may now
or hereafter be authorized by law, including any amendments which alter the
contract rights of any class of outstanding stock as expressly set forth in the
charter.
<PAGE>
MBNA CORPORATION
ARTICLES SUPPLEMENTARY
(Filed November 9, 1995)
6,000,000 shares of authorized but unissued Preferred
Stock of the Corporation have been classified as 7-1/2% Cumulative
Preferred Stock, Series A, $.01 par value, of the Corporation (the
"Series") with the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption, as follows:
1. Dividends. (a) Dividends shall be payable on the
shares of this Series: (i) for the period (the "Initial Dividend
Period") from the date of original issue of shares of this Series to
and including January 14, 1996 and (ii) for each quarterly dividend
period thereafter (the Initial Dividend Period and each quarterly
dividend period thereafter being hereinafter individually referred to
as a "Dividend Period" and collectively referred to as "Dividend
Periods"), which quarterly Dividend Periods shall commence on
January 15, April 15, July 15 and October 15 in each year, commencing
January 15, 1996, and shall end on and include the day next preceding
the first day of the next Dividend Period, in an amount equal to
$.46875 per share per quarterly Dividend Period. Dividends shall be
cumulative from such date of original issue and shall be payable,
when, as and if declared by the Board of Directors, on April 15, July
15, October 15 and January 15 of each year (each, a "Dividend Payment
Date"), commencing on January 15, 1996. Each dividend on the shares
of this Series will be payable to the holders of record of the shares
of this Series as they appear on the stock books of the Corporation on
such record date as may be fixed by the Board of Directors of the
Corporation, which record date will not be more than sixty (60) days
prior to the applicable Dividend Payment Date.
(b) Dividends payable on this Series for any period
greater or less than a full Dividend Period, including the Initial
Dividend Period, shall be computed on the basis of a 360-day year
consisting of twelve 30-day months and the actual number of days
included in the Dividend Period.
(c) Holders of shares of this Series shall not be
entitled to any dividend, whether payable in cash, property or stock,
in excess of full cumulative dividends, as herein provided, on this
Series. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series
which may be in arrears.
(d) No full dividends shall be declared or paid or set
apart for payment on any series stock ranking, as to dividends, on a
parity with this Series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for
such payment on this Series for all Dividend Periods terminating on or
<PAGE>
prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of this
Series and any other stock ranking on a parity as to dividends with
this Series, all dividends declared upon shares of this Series and any
other series of stock ranking on a parity as to dividends with this
Series shall be declared pro rata so that the amount of dividends
declared per share on this Series and such other stock shall in all
cases bear to each other the same ratio that accrued and unpaid
dividends per share on the shares of this Series and such other stock
bear to each other.
(e) So long as any shares of this Series are outstanding,
no dividend (other than a dividend payable in common stock or in any
other stock ranking junior to this Series as to dividends and upon
liquidation) shall be declared or paid or set aside for payment or
other distribution declared or made upon the common stock or upon any
other stock ranking junior to this Series as to dividends or upon
liquidation, nor shall any common stock or any other stock of the
Corporation ranking junior to this Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by
the Corporation (except by conversion into or exchange for stock of
the Corporation ranking junior to this Series as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on
all outstanding shares of this Series shall have been paid or declared
and set aside for payment for all past Dividend Periods.
2. Redemption. (a) The holders of the shares of this
Series may not require the Corporation to redeem any shares of this
Series. The Corporation, at its option, may redeem shares of this
Series, as a whole or in part, at any time on or after January 15,
2001, at a redemption price of $25 per share, plus accrued and unpaid
dividends thereon to the date fixed for redemption.
(b) In the event that fewer than all the outstanding
shares of this Series are to be redeemed, the number of shares to be
redeemed shall be determined by lot or pro rata as may be determined
by the Corporation or by any other method as may be determined by the
Board of Directors of the Corporation in its sole discretion to be
equitable, provided that such method satisfies any applicable
requirements of any securities exchange on which this Series is
listed.
(c) In the event the Corporation shall redeem shares of
this Series, notice of such redemption shall be given by first class
mail, postage prepaid, mailed not less than 30 or more than 60 days
prior to the redemption date, to each holder of record of the shares
to be redeemed, at such holder's address as the same appears on the
stock register of the Corporation. Each such notice shall state: (i)
the redemption date; (ii) the number of shares of this Series to be
redeemed and, if fewer than all the shares held by such holder are to
be redeemed, the number of such shares to be redeemed from such
holder; (iii) the redemption price; (iv) the place or places where
<PAGE>
certificates for such shares are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be redeemed
cease to accrue on the redemption date.
(d) Notice having been mailed as aforesaid, from and
after the redemption date (unless default shall be made by the
Corporation in providing money for the payment of the redemption
price) dividends on the shares of this Series so called for redemption
shall cease to accrue, and said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of
the Corporation (except the right to receive from the Corporation the
redemption price) shall cease. Upon surrender in accordance with said
notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so require
and the notice shall so state), such shares shall be redeemed by the
Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(e) Any shares of this Series which shall at any time
have been redeemed shall, after such redemption, have the status of
authorized but unissued shares of Preferred Stock, without designation
as to series.
(f) Notwithstanding the foregoing provisions of this
Section 2, if any dividends on this Series or any other series of
cumulative Preferred Stock ranking on a parity with this Series are in
arrears, no shares of this Series or any such parity series shall be
redeemed unless all outstanding shares of this Series or any such
parity series are simultaneously redeemed, and the Corporation shall
not purchase or otherwise acquire any shares of this Series or any
such parity series; provided, however, that the foregoing shall not
prevent the purchase or acquisition of shares of this Series or any
such parity series pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding shares of this Series.
3. Conversion. The holders of shares of this
Series shall not have any rights to convert such shares into shares of
any other class or series of capital stock of the Corporation.
4. Liquidation Rights. (a) Upon the voluntary
or involuntary dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be
entitled to receive and to be paid out of the assets of the
Corporation available for distribution to its stockholders, before any
payment or distribution shall be made on the common stock or on any
other class of stock ranking junior to this Series upon liquidation,
the amount of $25 per share, plus accrued and unpaid dividends
thereon.
<PAGE>
(b) After the payment to the holders of the shares of
this Series of the full preferential amounts provided for in this
Section 4, the holders of this Series as such shall have no right or
claim to any of the remaining assets of the Corporation.
(c) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the amounts payable
with respect to the shares of this Series and any other shares of
stock of the Corporation ranking as to any such distribution on a
parity with the shares of this Series are not paid in full, the
holders of the shares of this Series and of such other shares will
share ratably in any such distribution of assets of the Corporation in
proportion to the full preferential amounts to which they are
entitled.
(d) Neither the sale of all or substantially all of the
assets of the Corporation, nor the merger or consolidation or share
exchange of the Corporation into or with any other corporation or the
merger or consolidation or share exchange of any other corporation
into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes
of this Section 4.
(e) Upon the dissolution, liquidation or winding up of
the Corporation, the holders of shares of this Series then outstanding
shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders all amounts to which
such holders are entitled pursuant to paragraph (a) of this Section 4
before any payment shall be made to the holder of any class of capital
stock of the Corporation ranking junior to this Series upon
liquidation.
5. Ranking. Any stock of any class or classes of the
Corporation shall be deemed to rank:
(a) prior to the shares of this Series, either as to
dividends or upon liquidation, if the holders of such class or classes
shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up
of the Corporation, as the case may be, in preference or priority to
the holders of shares of this Series;
(b) on a parity with shares of this Series, either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share
or sinking fund provisions, if any, be different from those of this
Series, if the holders of such stock shall be entitled to the receipt
of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, without
preference or priority, one over the other, as between the holders of
such stock and the holders of shares of this Series; and
<PAGE>
(c) junior to shares of this Series, either as to
dividends or upon liquidation, if such class shall be common stock or
if the holders of shares of this Series shall be entitled to receipt
of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or
priority to the holders of shares of such class or classes.
6. Voting Rights. (a) Except as indicated below
the shares of this Series shall not be entitled to vote on any
matter including, but not limited to:
(i) Any merger, consolidation, share exchange or
sale of all or substantially all of the assets of the
Corporation except to the extent such action changes or alters
the preferences, conversion and other rights, voting powers,
restrictions, limitation as to dividends, qualifications and
terms and conditions of redemption of this Series as expressly
set forth herein in a manner adverse to the holders of this
Series, or,
(ii) An increase in the authorized amount of this
Series or the creation, authorization or issuance of an
additional series ranking on a parity with the shares of this
Series as to dividends or upon liquidation, or to reclassify
any authorized stock of the Corporation into any such shares
ranking on a parity with, or to authorize or issue any
obligation or security convertible into or evidencing the
right to purchase any such pari passu shares.
(b) Notwithstanding the foregoing:
(i) The affirmative vote of at least two-thirds
of the votes entitled to be cast by holders of shares of this
Series, shall be necessary for any amendment, alteration or
repeal, whether by merger, consolidation, share exchange or
otherwise, of the Charter of the Corporation, any articles
supplementary thereto or of the resolutions contained in the
articles supplementary thereto, which changes or alters the
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of this Series as expressly
set forth herein in a manner adverse to the holders of this
Series;
<PAGE>
(ii) The affirmative vote of at least two-thirds
of the votes entitled to be cast by the holders of the shares
of this Series and all other series of Preferred Stock ranking
on a parity with shares of this Series as to dividends or upon
liquidation upon which like voting rights have been conferred
and are exercisable, voting together as a single class without
regard to series, shall be necessary to authorize or issue any
shares of any class of stock of the Corporation ranking prior
to the shares of this Series as to dividends or upon
liquidation, or to reclassify any authorized stock of the
Corporation into any such prior shares, or authorize or issue
any obligation or security convertible into or evidencing the
right to purchase any such prior shares; and
(iii) If at the time of any annual meeting of the
Corporation's stockholders for the election of directors there
is a default in preference dividends (as hereinafter defined)
on this Series, the number of directors constituting the Board
of Directors of the Corporation shall be increased by two, and
the holders of the shares of this Series (together with the
holders of the Preferred Stock of all other series upon which
like voting rights have been conferred and are exercisable),
shall have the right at such meeting, voting together as a
single class without regard to series, to the exclusion of the
holders of common stock, to elect two directors of the
Corporation (each a "Preferred Director") to fill such newly
created directorships. Each holder of shares of this Series
will have one vote for each share of stock held and each
holder of each other series of Preferred Stock with like
voting rights will have such number of rights, if any, for
each share of stock held as may be granted to such holder.
Such right shall continue until there are no dividends in
arrears upon this Series, subject to re-vesting in the event
of each and every subsequent default in preference dividends
on this Series. Any Preferred Director may be removed with or
without cause by the vote of the holders of record of the
outstanding shares of Preferred Stock entitled to elect such
Preferred Director, voting together as a single class without
regard to series, at a meeting of the Corporation's
stockholders, or of the holders of such shares of Preferred
Stock, called for the purpose. Any Preferred Director may be
removed for cause by the vote of the holders of outstanding
shares of stock of the Corporation entitled to vote for the
election of directors. So long as a default in any preference
dividends on this Series shall exist, (a) any vacancy in the
office of a Preferred Director may be filled (except as
provided in the following clause (b)) by an instrument in
writing signed by the remaining Preferred Director and filed
with the Corporation and (b) in the case of the removal of any
Preferred Director, the vacancy may be filled by the vote of
the holders of the outstanding shares of Preferred
Stock, voting together as a single class without
regard to series, at the same meeting at which such removal
<PAGE>
shall be voted. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes
hereof, to be a Preferred Director. Whenever a default in
preference dividends shall no longer exist, subject to the
rights of the holders of any other series of Preferred Stock,
the number of directors constituting the Board of Directors of
the Corporation shall be reduced by two. For the purposes
hereof, a "default in preference dividends" on this Series
shall be deemed to have occurred whenever the amount of
accrued dividends upon this Series shall be equivalent to six
full quarterly dividends or more (whether or not consecutive),
and, having so occurred, such default shall be deemed to exist
thereafter until, but only until, all accrued dividends on all
shares of this Series shall have been paid to the end of the
last preceding dividend period.
<PAGE>
Exhibit 11: Computation of Earnings Per Common Share
(dollars in thousands, except per share data)
For the Three Months Ended
March 31,
--------------------------
1996 1995
----------- -----------
(unaudited)
PRIMARY
Average common shares outstanding............... 222,763 222,759
Net effect of dilutive stock options--based on
the treasury stock method using average
market price................................... 7,133 3,635
----------- -----------
Total......................................... 229,896 226,394
=========== ===========
Net income...................................... $ 92,222 $ 68,725
Less: preferred stock dividend requirements.... 2,813 -
----------- -----------
Net income applicable to common stock........... $ 89,409 $ 68,725
=========== ===========
Per common share amount......................... $ .39 $ .30
=========== ===========
FULLY DILUTED
Average common shares outstanding............... 222,763 222,759
Net effect of dilutive stock options--based on
the treasury stock method using the higher of
ending or average market prices................ 7,796 4,376
----------- -----------
Total......................................... 230,559 227,135
=========== ===========
Net income...................................... $ 92,222 $ 68,725
Less: preferred stock dividend requirements.... 2,813 -
----------- -----------
Net income applicable to common stock........... $ 89,409 $ 68,725
=========== ===========
Per common share amount......................... $ .39 $ .30
=========== ===========
Earnings per common share is based on the weighted average number of
common shares outstanding during the period after consideration of the dilutive
effect of common stock options. Primary earnings per common share assumes the
maximum dilutive effect of common stock equivalents, using average market
prices. Fully diluted earnings per common share assumes the maximum dilutive
effect of common stock equivalents, using the higher of ending or average
market prices.
<PAGE>
To the extent stock options are exercised or restricted shares are awarded
from time to time under the Corporation's 1991 Long-Term Incentive Plan, the
Board of Directors has approved the purchase on the open market or in privately
negotiated transactions of the number of shares issued.
b. Reports on Form 8-K
1. Report dated January 17, 1996, reporting MBNA Corporation's earnings
release for the fourth quarter of 1995.
2. Report dated January 31, 1996, reporting the net credit losses and loan
delinquencies for MBNA America Bank, N.A., for its net loan portfolio and
managed loan portfolio for January 1996.
3. Report dated February 28, 1996, reporting the securitization of
approximately $700.0 million of credit card receivables by MBNA America
Bank, N.A.
4. Report dated February 29, 1996, reporting the net credit losses and loan
delinquencies for MBNA America Bank, N.A., for its net loan portfolio and
managed loan portfolio for February 1996.
5. Report dated March 26, 1996, reporting the securitization of
approximately $500.0 million of credit card receivables by MBNA America
Bank, N.A.
6. Report dated March 27, 1996, reporting the securitization of
approximately $500.0 million of credit card receivables by MBNA America
Bank, N.A.
7. Report dated March 31, 1996, reporting the net credit losses and loan
delinquencies for MBNA America Bank, N.A., for its net loan portfolio and
managed loan portfolio for March 1996.
8. Report dated April 18, 1996, reporting MBNA Corporation's earnings
release for the first quarter of 1996.
9. Report dated April 30, 1996, reporting the net credit losses and loan
delinquencies for MBNA America Bank, N.A., for its net loan portfolio and
managed loan portfolio for April 1996.
10. Report dated May 1, 1996, reporting the securitization of
approximately $1.0 billion of credit card receivables by MBNA America
Bank, N.A.
<PAGE>
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 hereunto duly authorized.
MBNA CORPORATION
Date: May 15, 1996 By: /s/ Victor P. Manning
----------------------------
Victor P. Manning
Sr. Executive Vice President
Chief Accounting Officer
MBNA America Bank, N.A.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 365,575
<INT-BEARING-DEPOSITS> 534,210
<FED-FUNDS-SOLD> 325,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,163,822
<INVESTMENTS-CARRYING> 1,050,046
<INVESTMENTS-MARKET> 1,045,623
<LOANS> 7,667,595<F1>
<ALLOWANCE> 106,904
<TOTAL-ASSETS> 13,529,533
<DEPOSITS> 8,983,381
<SHORT-TERM> 7,856
<LIABILITIES-OTHER> 463,384
<LONG-TERM> 2,764,551
0
60
<COMMON> 2,228
<OTHER-SE> 1,308,073
<TOTAL-LIABILITIES-AND-EQUITY> 13,529,533
<INTEREST-LOAN> 284,273<F1>
<INTEREST-INVEST> 30,383
<INTEREST-OTHER> 7,647
<INTEREST-TOTAL> 322,303
<INTEREST-DEPOSIT> 122,921
<INTEREST-EXPENSE> 171,108
<INTEREST-INCOME-NET> 151,195
<LOAN-LOSSES> 49,488
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 346,532
<INCOME-PRETAX> 98,392
<INCOME-PRE-EXTRAORDINARY> 98,392
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 92,222<F2>
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
<YIELD-ACTUAL> 11.99<F3>
<LOANS-NON> 0
<LOANS-PAST> 70,630<F4>
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 104,886
<CHARGE-OFFS> 59,108
<RECOVERIES> 11,710
<ALLOWANCE-CLOSE> 106,904
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Includes Loans Held for Securitization.
<F2>Net income for the three months ended March 31, 1996, includes a
$32.8 million tax benefit related to deductions for the amortization
of Customer-based intangible assets acquired in connection with the
1991 intial public offering of the Corporation's Common Stock, and a
charge of $32.8 million net of tax ($54.3 million pre-tax) related to
the launch of the MBNA Platinum Plus Visa and MasterCard program.
<F3>On a fully taxable equivalent basis.
<F4>Excludes Loans Held for Securitization.
</FN>
</TABLE>
