SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 26, 1994
SIGNET BANKING CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 1-6505 54-6037910
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
7 North Eighth Street, Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 804 747-2000
Not Applicable
Former name, former address and former fiscal year, if
changed since last report
Page 1 of 12
<PAGE>
ITEM 5. Other Events.
On July 26, 1994, the board of directors of Signet Banking
Corporation (the "Corporation") approved the transfer of designated
assets and liabilities of Signet Bank/Virginia's credit card
division to OakStone Bank, a newly chartered limited purpose
Virginia state member credit card bank which will, in conjunction
with this transfer, become a wholly-owned subsidiary of OakStone
Financial Corporation, a wholly-owned subsidiary of the Corporation
(the "Separation"); concurrently with the Separation shares of
common stock, par value $.01 per share, of OakStone Financial
Corporation (the "Common Stock") representing up to 19.9% of the
outstanding shares of such stock will be offered in a global
offering (the "Offerings"); and, subject to the satisfaction of
certain conditions, on the first business day that is at least 90
days after the consummation of the Offerings, or on a date as soon
as practicable thereafter that such conditions thereto have been
satisfied, the Corporation intends to distribute all of the Common
Stock it holds to its stockholders in a tax-free distribution.
ITEM 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(b) The following pro forma financial information is being
filed herewith:
(1) Pro Forma Unaudited Consolidated Condensed Statement of
Income for the three months ended March 31, 1994.
(2) Pro Forma Unaudited Consolidated Condensed Statement of
Income for the year ended December 31, 1993.
(3) Pro Forma Unaudited Consolidated Condensed Balance Sheet
as of March 31, 1994.
(c) Exhibits.
1. News release dated July 27, 1994.
Page 2 of 12
<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 thereunto duly
authorized.
SIGNET BANKING CORPORATION
(Registrant)
Date: July 27, 1994 /s/ D. S. Norris
D. S. Norris
Executive Vice President and Controller
(Chief Accounting Officer)
Page 3 of 12
<PAGE>
Item 7.(b). Pro Forma Financial Information
The following tables present (i) the historical consolidated
condensed statements of income for the three months ended March
31, 1994 (unaudited) and the year ended December 31, 1993, and the
unaudited historical consolidated condensed balance sheet as of
March 31, 1994, for Signet Banking Corporation and Subsidiaries
(the "Corporation) and (ii) the unaudited pro forma
consolidated condensed statements of income for the three months
ended March 31, 1994 and the year ended December 31, 1993, and the
unaudited pro forma consolidated condensed balance sheet as of
March 31, 1994 for the Corporation giving effect to the Pro Forma
Adjustments described below. The pro forma consolidated
condensed statements of income were prepared assuming that the
Pro Forma Adjustments had occurred January 1, 1993. The pro forma
consolidated condensed balance sheet was prepared assuming that
the Pro Forma Adjustments had occurred March 31, 1994.
The pro forma consolidated condensed financial statements
presented below do not purport to represent what the results of
operations or financial position would actually have been if
the Pro Forma Adjustments had occurred on the dates referred to
above or to be indicative of the future results of operations or
financial position of the Corporation. The Pro Forma
Adjustments are based upon available information and certain
assumptions that the Corporation believes are reasonable.
Page 4 of 12
<PAGE>
Item 7.(b).1.
Signet Banking Corporation and Subsidiaries
Pro Forma Unaudited Consolidated Condensed Statement of Income
Three Months Ended March 31, 1994
(in thousands - except per share)
Signet Signet
Banking Banking
Corporation Pro Forma Corporation
Historical Adjustments Pro Forma
Interest income:
Loans, including fees $134,164 $(52,697)(1) $81,467
Investment securities 4,781 4,781
Other 50,690 (7,875)(1) 42,815
Total interest 189,635 (60,572) 129,063
income
Interest expense:
Interest on deposits 42,273 (1,153)(1) 41,120
Short-term borrowings 16,280 (16,280)(1)
Long-term borrowings 3,866 3,866
Total interest expense 62,419 (17,433) 44,986
Net interest income 127,216 (43,139) 84,077
Provision for loan losses 5,499 (7,982)(1) (2,483)
Net interest income after
provision for loan losses 121,717 (35,157) 86,560
Non-interest income 128,363 (87,664)(1) 40,699
Non-interest expense 172,109 (68,774)(1) 103,335
Income before income taxes 77,971 (54,047) 23,924
Applicable income taxes 24,858 (18,917)(2) 5,941
Net income $53,113 $(35,130) $17,983
Earnings per common $0.93 $0.31
share
Cash dividends declared
declared per share 0.25 0.25
Average common shares
outstanding 57,247 57,247
Page 5 of 12
<PAGE>
Item 7.(b).2.
Signet Banking Corporation and Subsidiaries
Pro Forma Unaudited Consolidated Condensed Statement of Income
Year Ended December 31, 1993
(in thousands - except per share)
Signet Signet
Banking Banking
Corporation Pro Forma Corporation
Historical Adjustments Pro Forma
Interest income:
Loans, including fees $552,071 $(223,594)(1) $328,477
Investment securities 114,928 114,928
securities
Other 136,726 (36,263)(1) 100,463
Total interest income 803,725 (259,857) 543,868
Interest expense:
Interest on deposits 168,197 168,197
Short-term borrowings 89,507 (67,994)(1) 21,513
Long-term borrowings 16,681 16,681
Total interest expense 274,385 (67,994) 206,391
Net interest income 529,340 (191,863) 337,477
Provision for loan
losses 47,286 (34,030)(1) 13,256
Net interest income
after provision for
loan losses 482,054 (157,833) 324,221
Non-interest income 365,436 (194,825)(1) 170,611
Non-interest expense 598,316 (181,804)(1) 416,512
Income before income 249,174 (170,854) 78,320
taxes
Applicable income
taxes 74,760 (60,369)(2) 14,391
Net income $174,414 $(110,485) $63,929
Earnings per common $3.06 $1.12
share
Cash dividends
declared per share 0.80 0.80
Average common
shares outstanding 56,920 56,920
Page 6 of 12
<PAGE>
Item 7.(b).1. and 2.
Signet Banking Corporation and Subsidiaries
Pro Forma Unaudited Consolidated Condensed Statements of Income
Pro Forma Adjustments
(in thousands)
1) The pro forma consolidated condensed income statements
reflect the reduction of income and expenses related to the
designated assets and liabilities of the Corporation's
credit card division had the distribution of all of the
common stock in OakStone Financial Corporation occurred for
the periods presented.
2) The pro forma consolidated condensed income statements
reflect the net effects of the Pro Forma Adjustments at the
federal statutory rate of 35% for the periods presented.
Page 7 of 12
<PAGE>
Item 7.(b).3.
Signet Banking Corporation and Subsidiaries
Pro Forma Unaudited Consolidated Condensed Balance Sheet
March 31, 1994
(in thousands)
<TABLE>
Signet Banking Signet Banking
Corporation Pro Forma Corporation
Historical Adjustments Pro Forma
<S> <C> <C> <C>
Assets
Cash and due from banks $ 502,040 $ (362)(1) $501,678
Interest bearing deposits
with other banks 217,430 217,430
Federal funds sold and
securities purchased
under resale
agreements 728,735 728,735
Securities available for
sale 1,637,359 1,637,359
Credit card loans held for
securitization 1,000,000 (1,000,000)(1)
Loans held for sale 241,312 241,312
Trading account securities 262,944 262,944
Investment securities 232,393 232,393
Gross loans 6,028,232 (1,649,005)(1) 4,379,227
Less: Unearned income (53,494) (53,494)
Allowance for loan losses (250,477) 63,516 (1) (186,961)
Net loans 5,724,261 (1,585,489)(1) 4,138,772
Premises and equipment (net) 232,267 (36,231)(1) 174,660
(21,376)(3)
Interest receivable 92,951 (10,349)(1) 82,602
Other assets 657,883 (187,982)(1) 469,901
Total assets $11,529,575 $(2,841,789) $8,687,786
Liabilities
Deposits $7,934,684 $ (496,581) $7,438,103
Short-term borrowings 2,101,941 (2,101,941)(1)
Long-term borrowings 254,124 254,124
Interest payable 35,490 35,490
Other liabilities 185,403 (46,195)(1) 139,208
Total liabilities 10,511,642 (2,644,717) 7,866,925
Stockholders' equity 1,017,933 (197,072)(2) 820,861
Total liabilities and $11,529,575 $(2,841,789) $8,687,786
stockholders' equity
</TABLE>
Page 8 of 12
<PAGE>
Item 7.(b).3.
Signet Banking Corporation and Subsidiaries
Pro Forma Unaudited Consolidated Condensed Balance Sheet
Pro Forma Adjustments
(in thousands)
1) The pro forma consolidated condensed balance sheet
reflects the reduction of the designated assets and
liabilities of the Corporation's credit card division had
the distribution of all of the common stock of OakStone
Financial Corporation occurred at the balance sheet date.
(2)The pro forma consolidated condensed balance sheet
reflects the reduction of stockholders' equity designated
to be transferred to OakStone Financial Corporation as of
the balance sheet date.
(3)The pro forma consolidated condensed balance
sheet reflects, at the balance sheet date, the transfer
of ownership of an operations building in Richmond,
Virginia that OakStone Financial Corporation will use for
future operations. Pursuant to a separation agreement,
such building will be transferred to OakStone Financial
Corporation at net book value upon consummation of the
Separation and Offering.
Page 9 of 12
Signet Banking Corporation
Announces Plans for Credit Card Spin-off
RICHMOND, VA (July 27, 1994) - Today, Signet Banking Corporation filed
a registration statement with the Securities and Exchange Commission for an
initial public offering of up to a 19.9 percent interest in a newly formed
corporation that will house Signet's national credit card business.
Signet stated that the initial public offering could be completed by
early fall. Signet intends to follow this offering with a tax-free
distribution to Signet shareholders of its remaining interest in the credit
card company. This distribution could be completed as early as year-end
1994. The new credit card company will apply for a listing on the New York
Stock Exchange.
J.P. Morgan Securities Inc., Goldman, Sachs & Co. and Smith Barney Inc.
will act as managing underwriters of the offering.
"This is a milestone event for our company in which we take great pride
- - marking the culmination of an extensive 12-month review by our Board of
Directors and senior management team," said Robert M. Freeman, chairman and
chief executive officer of Signet Banking Corporation.
"In 1988, we began investing in technology that would enable us to
become a state-of-the-art, unique provider of financial products and
services. We successfully achieved this objective in our credit card
division, and with the spin-off, we will be able to concentrate fully on
improving the business strategies of our Core Bank. The transactions we
are announcing today will enhance shareholder value by creating two strong
and independent financial institutions," Freeman said.
Richard D. Fairbank, who heads Signet's credit card division, will
serve as chief executive officer of the new credit card bank. When the
spin-off is complete, Fairbank will assume the additional title of
chairman. Signet's existing management committee will remain at Signet,
and will oversee the plans the company has developed for its core banking
businesses.
Page 10 of 12
"This initiative is the result of a great team effort at Signet on
behalf of the shareholders," Fairbank said. "We are excited by the
opportunities and challenges of continuing innovative financial strategies
in the new company. We have named the new company OakStone Financial
Corporation reflecting its financial strength and stability."
Signet's credit card business is one of the 15 largest issuers of
MasterCard and VISA credit cards in the United States, as measured by loan
outstandings. As of June 30, 1994, Signet had about 4 million accounts and
$6.6 billion in managed loans outstanding.
The new credit card company will be headquartered in Northern Virginia
with operations centers in Richmond and Fredericksburg, VA. Signet's Board
of Directors will serve as the interim board of the new card company until
the spin-off is complete and a separate board is established.
Signet also announced that it intends to implement a comprehensive core
bank improvement program that will focus on cost reductions and revenue
initiatives. Signet expects to take special one-time charges during the
third quarter in connection with cost reduction measures (an early
retirement plan and employee severance) and termination of certain data
processing services related to the separation of the credit card business.
It is estimated that these charges in the aggregate may range between $60
and $70 million on a pretax basis.
Revenue initiatives will include the development of selected national
product strategies in the areas of student lending, equity and mortgage
lending, and installment lending. Signet plans to apply the experience it
has gained in the use of information-based technology as it continues to
redefine its core banking business.
"Throughout this year and next, we will reinvent Signet Bank one
process and one product at a time with the goal of delivering maximum long-
term value to our customers and our shareholders," stated Malcolm S.
McDonald, Signet's president and chief operating officer.
"We will turn what is already a very good banking franchise into a
'Best Bank'," Freeman added. "We've done it before, and we'll do it again.
Signet has a proud 73-year history of serving our customers and
communities, and we will continue in that proud and independent tradition
as we look toward what we believe to be a very promising future."
Page 11 of 12
Signet Banking Corporation is a $10.8 billion organization comprised of
five lines of business, including Bank Card, Consumer Banking, Capital
Markets, Commercial Banking and Real Estate Lending. Signet has gained
national prominence as one of the fastest-growing credit card issuers in
the United States. With 240 full-service banking offices throughout
Virginia, Maryland and the District of Columbia and a 24-hour Telebanking
center, Signet provides a full array of investment, credit, cash
management, and general banking products and services to institutional and
individual customers.
###
A registration statement relating to these securities has been filed with
the Securities and Exchange Commission but has not yet become effective.
These securities may not be sold nor may offers to buy be accepted prior to
the time the registration statement becomes effective. This news release
shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
Page 12 of 12
