SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
This Form 10-Q/A is being filed to amend Part I, Item 1 to include an update of
the supplemental notes to quarterly financial statements and to amend Part II,
Item 1 to include an update of the legal proceedings.
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1997 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 1-6505
SIGNET BANKING CORPORATION
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(Exact name of registrant as specified in its charter)
Virginia 54-6037910
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(State or other jurisdiction of (I. R. S. Employer Identification No.)
incorporation or organization)
7 North Eighth Street, Richmond, Virginia 23219
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 804 747-2000
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Not Applicable
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
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Common Shares outstanding as of October 31, 1997 - 61,040,633
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<PAGE>
SIGNET BANKING CORPORATION AND SUBSIDIARIES
September 30, 1997
The Registrant hereby amends the following items of its Quarterly Report on Form
10-Q for the period ended September 30, 1997 as set forth below:
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Supplemental Notes to Quarterly Financial Statements
(dollars in thousands) (unaudited)
Commercial Fraud Loss
On March 19, 1996, Signet's management discovered that the Company was
one of several major financial institutions that were victims of fraudulent
commercial loan transactions which occurred prior to 1996. The Company had loan
outstandings related to these transactions of approximately $81 million. Federal
authorities informed the Company that there had been substantial recoveries of
assets related to these transactions. Management recorded a $35 million
commercial fraud loss in non-interest expense at December 31, 1995 and recorded
the estimated probable recovery amount of $46 million in other assets as a
receivable. The receivable represented an amount management believed was likely
to be recovered based on facts and circumstances at the time. The amount of the
recovery was based on the Company's share of known claims to the total amount
held by federal authorities, less associated costs. The recovery amount was
subject to change as additional assets were recovered and/or additional claims
were asserted.
In June 1997, Federal authorities distributed funds to the various
banks victimized by the fraud. Signet's share represented principal and interest
earned on the funds while held by the authorities. A portion of the funds
received by Signet remain in dispute with the other financial institutions
involved. Signet's share, net of the disputed amount, was applied against the
receivable with the resulting excess amount of $3.6 million applied to
non-interest income and as a reduction to non-interest expense. The Company will
vigorously pursue all other sources of recovery, but currently is unable to
determine the probability or amount of additional recoveries.
In connection with the fraudulent loan transactions referred to above,
the Company is involved in proceedings in the United States District Court for
the Eastern District of Virginia, in which the relief sought will determine
whether the Company has any on-going duties, or liabilities, to any of the
financial institutions to which the Company sold interests in the fraudulent
loans. The plaintiff financial institutions are suing for recovery of
approximately $41 million in the aggregate, plus unspecified amounts for
interest, costs and attorneys' fees. On November 6, 1997, summary judgment was
rendered by the United States Court for the Eastern District of Virginia in
Hitachi Credit America Corp. v. Signet Bank in the amount of approximately $8
million. Signet believes that the ruling is in error and expects to prevail upon
its appeal to the United States Court of Appeals for the Fourth Circuit. Signet
deems this case to have no material financial impact on the Company and has not
charged earnings for it. Management plans to vigorously defend the remaining
claim which is scheduled for trial in January 1998.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On March 19, 1996, Signet's management discovered that the Company was
one of several major financial institutions that were victims of fraudulent
commercial loan transactions which occurred prior to 1996. The Company had loan
outstandings related to these transactions of approximately $81 million. Federal
authorities informed the Company that there had been substantial recoveries of
assets related to these transactions. Management recorded a $35 million
commercial fraud loss in non-interest expense at December 31, 1995 and recorded
the estimated probable recovery amount of $46 million in other assets as a
receivable. The receivable represented an amount management believed was likely
to be recovered based on facts and circumstances at the time. The amount of the
recovery was based on the Company's share of known claims to the total amount
held by federal authorities, less associated costs. The recovery amount was
subject to change as additional assets were recovered and/or additional claims
were asserted.
In June 1997, Federal authorities distributed funds to the various
banks victimized by the fraud. Signet's share represented principal and interest
earned on the funds while held by the authorities. A portion of the funds
received by Signet remain in dispute with the other financial institutions
involved. Signet's share, net of the disputed amount, was applied against the
receivable with the resulting excess amount of $3.6 million applied to
non-interest income and as a reduction to non-interest expense. The Company will
vigorously pursue all other sources of recovery, but currently is unable to
determine the probability or amount of additional recoveries.
In connection with the fraudulent loan transactions referred to above,
the Company is involved in proceedings in the United States District Court for
the Eastern District of Virginia, in which the relief sought will determine
whether the Company has any on-going duties, or liabilities, to any of the
financial institutions to which the Company sold interests in the fraudulent
loans. The plaintiff financial institutions are suing for recovery of
approximately $41 million in the aggregate, plus unspecified amounts for
interest, costs and attorneys' fees. On November 6, 1997, summary judgment was
rendered by the United States Court for the Eastern District of Virginia in
Hitachi Credit America Corp. v. Signet Bank in the amount of approximately $8
million. Signet believes that the ruling is in error and expects to prevail upon
its appeal to the United States Court of Appeals for the Fourth Circuit. Signet
deems this case to have no material financial impact on the Company and has not
charged earnings for it. Management plans to vigorously defend the remaining
claim which is scheduled for trial in January 1998.
<PAGE>
SIGNET BANKING CORPORATION AND SUBSIDIARIES
September 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SIGNET BANKING CORPORATION
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(Registrant)
Date: November 25, 1997 /s/ W. H. Catlett, Jr.
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W. H. Catlett, Jr.
Executive Vice President and Controller
(Principal Accounting Officer)
