BankBoston Reports Second Quarter Net Income of $242 Million or $.80 Per Share 18% Growth in EPS From Prior Year.BOSTON--(BUSINESS WIRE)--July 16, 1998--BankBoston Corporation (NYSE NYSE See: New York Stock Exchange :BKB BKB Basler Kantonalbank (Switzerland) BKB Black King Bar (gaming weapon) BKB BV Kwaliteitsverklaringen Bouw (Dutch) BKB BankBoston Corporation ) reported today second quarter net income of $242 million, or $.80 per common share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis. This compares with $212 million, or $.68 per share, in the second quarter of 1997. Net income for the first half of 1998 was $480 million, or $1.58 per share, compared with net income for the first half of 1997 of $419 million, or $1.31 per share. All quarterly and six month earnings per share amounts have been adjusted to reflect the Corporation's recent 2 for 1 stock split. Operating highlights were as follows: -- On a fully taxable equivalent basis, revenues were $1,102 million in the current quarter compared with $997 million in the second quarter of 1997; -- On a fully taxable equivalent basis, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income before provision for credit losses) was $455 million in the second quarter compared with $419 million in the second quarter of 1997; -- Return on average common equity was 20.70% in the second quarter compared with 19.54% in the second quarter of 1997; -- Return on average assets was 1.36% in the second quarter compared with 1.33% in the second quarter of 1997; -- Provision for credit losses was $60 million in the second quarter compared with net credit losses in the quarter of $51 million. The provision in the second quarter of 1997 was $60 million compared with net credit losses of $79 million; -- Nonaccrual loans and OREO totaled $382 million at June June: see month. 30, 1998, compared with $398 million at June 30, 1997. Chad Chad (chăd, chäd), Fr. Tchad, officially Republic of Chad, republic (2005 est. pop. 9,826,000), 495,752 sq mi (1,284,000 sq km), N central Africa. Gifford, Chairman and Chief Executive Officer, said, "Our second quarter results were marked by strong core revenue growth on a number of fronts. The strength of our revenues has been the real driver of our bottom line growth and has enabled us to fund key business investing, especially Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . Returns remain at healthy levels with an ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. in excess of 20%. We remain encouraged by the performance of our primary businesses and have continued to redeploy re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. our capital into areas of strength." Gifford added, "During the past quarter we continued to take actions that reinforce re·in·force v. 1. To give more force or effectiveness to something; strengthen. 2. To reward an individual, especially an experimental subject, with a reinforcer subsequent to a desired response or performance. 3. our commitment to manage for value as a focused financial institution. We announced the acquisition of Robertson Rob·ert·son , Oscar Palmer Born 1938. American basketball player. As a guard for the Cincinnati Royals, he became in 1962 the only player in National Basketball Association history to average in double figures in scoring, rebounding, and assists. Stephens Ste·phens , Alexander Hamilton 1812-1883. American politician who was vice president of the Confederacy (1861-1865) under Jefferson Davis. which will provide us with the equity underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. capability that has been demanded by our corporate non-investment grade customers. Given the degree of industry and customer overlap o·ver·lap n. 1. A part or portion of a structure that extends or projects over another. 2. The suturing of one layer of tissue above or under another layer to provide additional strength, often used in dental surgery. v. , we are very excited by the revenue growth possibilities which this combination brings to BankBoston. Our integration planning efforts are off to a fast start and we look forward to closing this deal later this year. Within our regional business, our redesign re·de·sign tr.v. re·de·signed, re·de·sign·ing, re·de·signs To make a revision in the appearance or function of. re project is progressing nicely with key decisions being made to vastly improve the way we deal with our customers. Actions of this type, along with the sale of our Berkshire Berkshire (bärk`shĭr, –shər, bûrk`–) or Berks (bärks, bûrks), former county, S central England. county operation, will provide the capital and resources for desired reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. in other areas of our regional operation, transforming it into one that caters more to the needs of our customers and provides opportunities for revenue growth. In Latin America, we have essentially completed our branch expansion program in Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. and are diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d working on completing the integration of Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/[1]) (ISIN: DE0005140008, NYSE: DB) (English: German Bank Argentina into our operations. Our branch expansion program in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. remains on target and is scheduled for completion later this year." Gifford concluded, "Building shareholder value continues to be the top priority of this company and the developments described above provide concrete examples of this philosophy in action." -0-
Noninterest income
The components of noninterest income are as follows:
First
Quarter Second Quarter Six Months
1998 (in millions) 1998 1997 Change 1998 1997 Change
$163 Financial service fees $192 $156 $36 $355 $293 $ 62
Net equity and mezzanine
52 profits 84 55 29 136 92 44
31 Mutual fund fees 32 27 5 62 52 10
40 Personal trust fees 41 36 5 82 70 12
8 Other trust and agency fees 9 6 3 17 13 4
Trading profits and
34 commissions (4) 28 (32) 30 47 (17)
Net foreign exchange
28 trading profits 32 20 12 61 39 22
Securities portfolio
25 gains, net 11 32 (21) 36 41 (5)
43 Other income 60 17 43 102 60 42
165 Gain on sale of HomeSide 0 0 0 165 0 165
$589 Total $457 $377 $80 $1,046 $707 $339
-0- -- Changes in financial service fees are detailed below. -- The level of equity and mezzanine mez·za·nine n. 1. A partial story between two main stories of a building. 2. The lowest balcony in a theater or the first few rows of that balcony. profits in the second quarter of 1998 reflected a higher level of gains and the ongoing strong performance from the Corporation's Private Equity business. At June 30, 1998, the Private Equity portfolio had a carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of $1.2 billion compared with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $825 million at June 30, 1997. -- Mutual fund fees improved in all comparisons, mainly driven by higher fees from Argentina and Private Banking. The combined level of assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. in Argentina and Brazil was $7.0 billion at June 30, 1998 compared with $5.3 billion at June 30, 1997. -- The increase in personal trust fees from prior year periods mainly relates to an increase in domestic assets under management. -- The second quarter loss in trading account Trading Account 1. An account similar to a traditional bank account, holding cash and securities, and is administered by an investment dealer. 2. An account held at a financial institution and administered by an investment dealer that the account holder uses to employ a profits and commissions mainly reflects losses from emerging markets securities due to volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in the world financial markets related to the ongoing crisis in Asia. -- Foreign exchange profits improved in all comparisons due principally to higher customer demand for products arising out of volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. market conditions. -- Securities gains declined in both quarterly comparisons due, in part, to lower gains from sales of emerging markets securities. -- Compared with all prior periods, the growth in other income reflects a gain from the sale of the Corporation's minority interest in a Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum pension company in the second quarter of 1998 and a higher level of gains from sales of loans principally related to corporate finance activities. In addition, comparisons with prior year periods were also affected by earnings in 1998 from an investment in bank owned life insurance policies, which was largely offset by the funding cost for the investment that was included in net interest revenue. -0-
The components of financial service fees are as follows:
First
Quarter Second Quarter Six Months
1998 (in millions) 1998 1997 Change 1998 1997 Change
Deposit and ATM-related
$ 70 fees $76 $62 $14 $146 $120 $26
Letters of credit and
18 acceptance fees 19 18 1 38 34 4
15 Syndication and agent fees 20 23 (3) 35 38 (3)
9 Other loan-related fees 12 9 3 21 18 3
51 Other 65 44 21 115 83 32
$163 Total $192 $156 $36 $355 $293 $62
-0- -- Deposit and ATM-related fees increased in all comparisons due, in part, to higher fees from Argentine Argentine having some relationship with the country Argentina. Argentine tick margaropuswinthemi. Argentine tortoise geochelonechilensis. operations, including an increase from the acquisition of Deutsche Bank Argentina, and an increase in domestic electronic banking fees. -- Syndication See syndication format. and agent fees improved from the prior quarter due to a higher number of transactions. -- The growth in other financial service fees from all prior periods is due mainly to higher levels of advisory and underwriting fees Underwriting fee The portion of the gross underwriting spread that compensates the securities firms that underwrite a public offering for their services. , as well as an increase in credit card fees from Argentina, including an increase from the acquisition of Deutsche Bank Argentina. Net interest revenue Net interest revenue, on a fully taxable equivalent basis, was $645 million for the second quarter of 1998, compared with $607 million in the prior quarter and $620 million in the second quarter of 1997. Net interest margin was 4.17% for the second quarter of 1998, compared with 4.07% in the first quarter of 1998 and 4.38% in the second quarter of last year. For the first half of 1998, net interest revenue on a fully taxable equivalent basis was $1,252 million, compared with $1,245 million in the first half of 1997. Net interest margin was 4.12% for the first half of 1998, compared with 4.43% for the first half of 1997. The increases in net interest revenue and net interest margin from the prior quarter reflected wider spreads in Brazil, as the Corporation's interest rate positions benefited from volatility in the local markets, a higher level of dividends from private equity investments, and an increase in loan fees. In addition, the growth in net interest revenue reflected an additional day in the second quarter accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. period, and an increase from Argentina due, in part, to the acquisition of Deutsche Bank Argentina S.A., which closed in late January January: see month. and contributed a full three months of revenue in the second quarter. Compared with prior year periods, net interest revenue increased while net interest margin declined. Net interest revenue was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. affected by increases in average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin , which, excluding the effect of national consumer loans, were up approximately $7 billion in both the quarterly and six month comparisons. Approximately $4.5 billion of these increases related to average loans and leases mainly reflecting growth in the domestic commercial portfolio and in Argentina, including the impact of the Deutsche Bank Argentina S.A. acquisition. The prior year comparisons of net interest revenue and margin were favorably affected by wider spreads and a higher volume of average earning assets in Brazil. Partially offsetting the improvements in net interest revenue and contributing to the decline in net interest margin were the Corporation's exit from its national consumer businesses (Fidelity Fidelity is a notion that at its most abstract level implies a truthful connection to a source or sources. Its original meaning dealt with loyalty and attentiveness to one's duty to a lord or a king, in a broader sense than the related concept of fealty. Acceptance Corporation, Ganis and credit card) and the impact of funding costs associated with an investment in bank owned life insurance policies. The latter was largely offset by the revenue from this investment that was included in noninterest income as discussed previously. -0-
Noninterest expense
The components of noninterest expense are as follows:
First
Quarter Second Quarter Six Months
1998 (in millions) 1998 1997 Change 1998 1997 Change
$354 Employee costs $368 $312 $56 $722 $622 $100
94 Occupancy & equipment 96 88 8 190 174 16
24 Professional fees 22 12 10 46 24 22
Advertising and public
22 relations 32 27 5 54 49 5
30 Communications 31 28 3 61 54 7
8 Goodwill amortization 8 7 1 16 15 1
129 Other 90 104 (14) 219 184 35
$661 Total $647 $578 $69 $1,308 $1,122 $186
-0- The $14 million decline in noninterest expense from the prior quarter reflected: -- The absence of $48 million of costs in the first quarter related to charges for realignments of the Corporation's European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations and domestic private banking business and costs incurred in the New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. regional businesses, including the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of software, redesign costs, and the merger of the Rhode Island Rhode Island, island, United States Rhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches. banking subsidiary into BankBoston, N.A. -- Noninterest expense from Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of operations increased $16 million. The Corporation continued to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. expenses related to its de novo [Latin, Anew.] A second time; afresh. A trial or a hearing that is ordered by an appellate court that has reviewed the record of a hearing in a lower court and sent the matter back to the original court for a new trial, as if it had not been previously heard nor decided. branch expansion programs in Argentina and Brazil. As of June 30, 1998, the Corporation had opened 64 branches in Argentina and 15 branches in Brazil in connection with these programs. The increase in noninterest expense was also affected by the acquisition of Deutsche Bank Argentina S.A., which closed in late January and contributed a full three months of expense in the second quarter. -- Noninterest expense from Corporate Banking increased $10 million due mainly to higher levels of incentive compensation in the corporate finance and private equity units in line with their increased operating performance. -- Higher advertising costs, mainly related to the introduction of new home-banking products from our regional consumer business also contributed to the increase. Noninterest expense grew $69 million from the second quarter of 1997 and $186 million in the six month comparison. These increases were mainly related to investment spending in Latin America, including de novo expansion costs and the Deutsche Bank Argentina acquisition, and the ongoing buildup build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. of the Corporation's Corporate Banking and Global Capital Markets businesses, including higher incentive compensation in line with the growth in revenues. In addition, charges incurred in the first quarter of 1998, as discussed above, related to the European, private banking, and regional consumer businesses contributed to the increase in the six month comparison. Partially offsetting these increases was the absence of expenses from the national consumer businesses. -0-
Credit Profile
Loan and Lease Portfolio
The segments of the lending portfolio are as follows:
(in millions) 6-30-98 3-31-98 12-31-97 9-30-97 6-30-97
United States Operations:
Commercial, industrial
and financial $16,275 $15,887 $15,268 $15,062 $14,527
Commercial real estate
Construction 219 260 271 317 314
Other commercial
real estate 3,876 3,736 4,211 3,845 3,398
Consumer-related loans:
Residential mortgages 2,229 2,551 2,570 2,720 3,016
Home equity 2,871 2,802 2,823 2,952 2,924
Credit card 412 503 1,756 1,596 1,488
Other 2,753 2,801 2,956 3,118 4,739
Lease financing 1,609 2,017 1,938 1,880 1,780
Unearned income (232) (303) (302) (293) (277)
30,012 30,254 31,491 31,197 31,909
International Operations:
Commercial 10,218 10,682 10,159 9,261 8,643
Consumer-related loans:
Residential mortgages 1,318 1,302 947 893 781
Credit card 248 226 182 155 148
Other 1,087 987 828 678 566
Lease financing 519 517 452 345 357
Unearned Income (148) (146) (79) (68) (91)
13,242 13,568 12,489 11,264 10,404
Total loans and lease
financing $43,254 $43,822 $43,980 $42,461 $42,313
-0- Loans and leases were $43.3 billion at June 30, 1998, compared with $43.8 billion at March 31, 1998. The domestic portfolio declined approximately $250 million due to the transfer of certain leveraged leases into a newly created partnership, a further decline in the indirect auto portfolio as planned, and lower levels of residential mortgage and credit card loans. These declines more than offset an increase in domestic commercial loans which was mainly attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to growth in several of the specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. lending portfolios. The decline in international loans reflected lower levels of Brazilian, Asian and European loans, partially offset by an increase from Argentina. Nonaccrual Loans and OREO Nonaccrual loans and OREO amounted to $382 million at June 30, 1998, compared with $369 million at March 31, 1998, and $398 million at June 30, 1997. Nonaccrual loans and OREO represented .9% of related assets at June 30, 1998, compared with .8% at March 31, 1998 and .9% at June 30, 1997. The nonaccrual loan total at June 30, 1998 included $27 million related to Indonesian loans, compared with $19 million at March 31, 1998. Net credit losses incurred in 1998 on Indonesian loans were $10 million in both the second quarter and first six months. Total loan exposure to Indonesia Indonesia (ĭn'dənē`zhə), officially Republic of Indonesia, republic (2005 est. pop. 241,974,000), c.735,000 sq mi (1,903,650 sq km), SE Asia, in the Malay Archipelago. continued its steady decline to approximately $75 million at June 30, 1998 compared with approximately $200 million at December December: see month. 31, 1997. -0-
The components of consolidated nonaccrual loans and OREO are as
follows:
(in millions) 6-30-98 3-31-98 12-31-97 9-30-97 6-30-97
Domestic nonaccrual loans:
Commercial, industrial
and financial $ 63 $ 43 $ 59 $ 68 $ 39
Commercial real estate
Construction 2 3 3 4 3
Other commercial real
estate 33 41 40 44 48
Consumer-related loans
Residential mortgages 42 46 50 51 56
Home equity 15 15 14 26 26
Credit card 6 6 26 22 22
Other 18 20 20 23 44
179 174 212 238 238
International nonaccrual loans:
Commercial 107 97 64 58 72
Consumer-related loans
Residential mortgages 36 34 28 31 29
Credit card 6 4 4 3 4
Other 26 18 12 7 8
175 153 108 99 113
Total nonaccrual loans 354 327 320 337 351
OREO 28 42 36 50 47
Total $382 $369 $356 $387 $398
-0- Provision and Reserve for Credit Losses The reserve for credit losses at June 30, 1998 was $734 million, or 1.70% of outstanding loans and leases, compared with $725 million, or 1.65% at March 31, 1998, and $845 million, or 2.00% at June 30, 1997. The reserve for credit losses was 207% of nonaccrual loans at June 30, 1998, compared with 222% at March 31, 1998 and 240% at June 30, 1997. The provision for credit losses was $60 million in the second quarter of 1998, compared with $140 million in the first quarter of 1998 and $60 million in the second quarter of 1997. Net credit losses were $51 million in the second quarter of 1998, compared with $141 million in the first quarter of 1998 and $79 million in the second quarter of 1997. Net credit losses in the first quarter of 1998 included $66 million related to a previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). situation surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. a series of loans made by a former officer in the Corporation's international private banking office in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . Net credit losses as a percent of average loans and leases on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis were .46% in the second quarter of 1998, compared with 1.30% for the first quarter of 1998 (.69% without the $66 million chargeoff from international private banking) and .76% for the second quarter of 1997. -0-
Net credit losses were as follows:
First
Quarter Second Quarter Six Months
1998 (in millions) 1998 1997 1998 1997
Domestic
Commercial, industrial
$ 13 and financial $ 5 $ 5 $ 18 $ 23
(1) Commercial real estate (1) (3) (2) (3)
Consumer-related loans:
2 Residential mortgages 1 0 3 1
20 Credit card 6 24 26 43
2 Home equity 1 1 3 3
19 Other 11 34 30 69
55 23 61 78 136
International
76 Commercial 13 12 89 11
Consumer-related loans:
2 Credit card 2 1 4 3
8 Other 13 5 21 8
86 28 18 114 22
$141 Total $51 $79 $192 $158
-0- The Corporation BankBoston, with assets of $70.5 billion and some 22,900 employees, is the nation's oldest commercial bank and New England's only global bank. BankBoston is engaged in consumer, small business, and corporate banking in New England; delivering sophisticated financial solutions to corporations and governments nationally and internationally; and full service banking in leading Latin American markets. The Corporation's common stock is listed on the New York and Boston stock exchanges The Boston Stock Exchange (BSE) is a regional stock exchange located in Boston, Massachusetts. The third-oldest stock exchange in the United States, it was founded in 1834. On October 2nd, 2007 Nasdaq agreed to acquire BSE for $61 million. . -0-
Consolidated Balance Sheet
(dollars in millions)
March 31 June 30
1998 1998 1997
Assets
Securities:
$10,587 Available for sale $11,142 $8,969
617 Held to maturity 604 636
43,822 Loans and lease financing 43,254 42,313
(725) Reserve for credit losses (734) (845)
43,097 Net loans and lease financing 42,520 41,468
5,875 Other earning assets 5,704 5,758
11,252 Cash and other nonearning assets 10,529 9,307
$71,428 Total Assets $70,499 $66,138
Liabilities and Stockholders' Equity
$46,397 Deposits $45,196 $42,978
12,495 Funds borrowed 12,507 12,377
3,469 Notes payable 3,682 2,696
3,513 Other liabilities 3,139 2,666
Guaranteed preferred beneficial
interests in corporation's junior
747 subordinated debentures 995 747
66,621 Total Liabilities 65,519 61,464
Stockholders' Equity
278 Preferred equity 278 508
4,529 Common equity 4,702 4,166
4,807 Total Stockholders' Equity 4,980 4,674
Total Liabilities and
$71,428 Stockholders' Equity $70,499 $66,138
Selected Average Balances
Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
1998 1998 1997 1998 1997
Assets
$43,706 Loans and lease financing $44,196 $42,112 $43,952 $41,923
10,606 Securities 11,188 9,488 10,898 9,375
60,487 Total earning assets 61,961 56,834 61,228 56,738
69,710 Total assets 71,236 63,946 70,476 63,580
Liabilities and Stockholders'
Equity
37,158 Interest bearing deposits 37,195 34,391 37,176 34,370
Noninterest bearing
8,616 deposits 8,209 7,855 8,411 7,703
45,774 Total deposits 45,404 42,246 45,587 42,073
3,749 Notes payable (1) 4,392 3,351 4,073 3,333
Total interest bearing
53,216 liabilities 54,641 49,208 53,932 48,871
Common stockholders'
4,452 equity 4,600 4,159 4,525 4,294
Total stockholders'
4,730 equity 4,878 4,667 4,803 4,802
(1) Amounts include guaranteed beneficial interests in
Corporation's junior subordinated debentures.
Consolidated Statement of Income
(dollars in millions, except per share amounts)
Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
1998 1998 1997 1998 1997
$1,337.4 Interest income $1,390.2 $1,280.7 $2,727.6 $2,555.7
734.1 Interest expense 750.7 664.8 1,484.8 1,319.8
603.3 Net interest revenue 639.5 615.9 1,242.8 1,235.9
Provision for credit
140.0 losses 60.0 60.0 200.0 120.0
Net interest revenue
after provision
463.3 for credit losses 579.5 555.9 1,042.8 1,115.9
Noninterest income:
162.8 Financial service fees 191.7 155.7 354.5 293.2
79.3 Trust and agency fees 82.1 69.4 161.4 135.4
Trading profits and
34.0 commissions (3.7) 27.9 30.4 47.2
Securities portfolio
24.8 gains, net 11.4 31.9 36.2 40.8
288.1 Other income 175.9 91.9 464.0 190.0
Total noninterest
589.0 income 457.4 376.8 1,046.5 706.6
Noninterest expense:
292.7 Salaries 305.1 260.2 597.8 517.9
60.9 Employee benefits 63.3 51.3 124.2 103.9
54.4 Occupancy expense 55.8 52.1 110.1 102.9
40.1 Equipment expense 39.6 35.8 79.8 71.5
212.9 Other expense 183.6 178.5 396.6 325.9
Total noninterest
661.0 expense 647.4 577.9 1,308.5 1,122.1
Income before income
391.3 taxes 389.5 354.8 780.8 700.4
Provision for income
153.0 taxes 147.6 142.8 300.7 281.6
$238.3 NET INCOME $241.9 $212.0 $480.1 $418.8
Net Income Per Common Share:
$.80 Basic $.81 $.68 $1.61 $1.33
$.79 Diluted $.80 $.68 $1.58 $1.31
Dividends Paid Per
$.29 Common Share $.29 $.26 $.58 $.48
Average number of common shares, in thousands:
292,542 Basic 293,769 295,820 293,159 301,300
296,840 Diluted 298,275 299,574 297,579 305,382
$4.4 Preferred dividends $4.4 $9.3 $8.8 $18.6
Number of Employees
June 30 Mar 31 June 30
1998 1998 1997
Full time equivalent employees 22,900 22,500 22,000
Other Data
(dollars in millions, except per share amounts)
Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
1998 1998 1997 1998 1997
Return on average total
1.39% assets (annualized) 1.36% 1.33% 1.37% 1.33%
Return on average common
21.31% equity (annualized) 20.70% 19.54% 21.01% 18.79%
Net interest revenue,
fully taxable
$607.0 equivalent basis $644.9 $620.4 $1,251.9 $1,245.4
4.07% Net interest margin 4.17% 4.38% 4.12% 4.43%
Domestic net interest
4.14% margin (estimated) 4.12% 4.58% 4.13% 4.56%
International net
interest margin
3.92% (estimated) 4.29% 3.83% 4.11% 4.06%
March 31 June 30
1998 1998 1997
Common stockholders' equity:
$4,529 Common stockholders' equity $4,702 $4,166
293,413 Common shares outstanding, in thousands 294,126 294,221
Per common share:
$15.44 Book value $15.99 $14.16
55.13 Market value 55.63 36.19
Capital Ratios/Regulatory capital:
5.75% Tangible Common Equity ratio 6.09% 5.78%
Risk-based capital ratios: Estimate
Tier 1 capital ratio (minimum
7.9% required 4.00%) 8.5% 8.8%
Total capital ratio (minimum
12.3% required 8.00%) 13.2% 12.8%
7.3% Leverage ratio 7.8% 7.8%
$5,049 Tier 1 capital $5,491 $4,918
7,874 Total capital 8,524 7,160
63,848 Total risk-adjusted assets 64,748 55,764
Reserve for Credit Losses
(dollars in millions)
Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
1998 1998 1997 1998 1997
$711.6 Beginning balance $725.1 $864.0 $711.6 $883.3
Provision for credit
140.0 losses 60.0 60.0 200.0 120.0
Reserve of acquired
14.0 companies 0.0 0.0 14.0 0.0
(156.1) Credit losses (73.4) (106.5) (229.6) (203.2)
15.6 Recoveries 22.2 27.2 37.9 44.6
(140.5) Net credit losses (51.2) (79.3) (191.7) (158.6)
$725.1 Ending balance $733.9 $844.7 $733.9 $844.7
Reserve as a % of
1.65% loans and leases 1.70% 2.00% 1.70% 2.00%
Reserve as a % of
222% nonaccrual loans 207% 240% 207% 240%
-0- CONTACT: Investor Relations Investor relations The process by which the corporation communicates with its investors. contact: John Kahwaty (617) 434-3650 or Media contact: Karen Karen Any member of a variety of tribal peoples of southern Myanmar (Burma). Constituting the second largest minority in Myanmar, the Karen are not a unitary group in any ethnic sense, as they differ among themselves linguistically, religiously, and economically. Schwartzman Schwartzman is a surname and may refer to:
(617) 434-7594 |
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