-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MrxrlQAvK98nGVXPeQ5nJU00sr8NO4qUoGkmQ5csMfQe+UewMY3nxg8bwtdNYDT3 OvCG3tCwsceJiuqHCs0smg== 0000912057-96-017100.txt : 19960813 0000912057-96-017100.hdr.sgml : 19960813 ACCESSION NUMBER: 0000912057-96-017100 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARNETT BANKS INC CENTRAL INDEX KEY: 0000010012 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 590560515 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07901 FILM NUMBER: 96608220 BUSINESS ADDRESS: STREET 1: 50 N LAURA ST STREET 2: P.O. BOX 40789 CITY: JACKSONVILLE STATE: FL ZIP: 32202-0789 BUSINESS PHONE: 9047917720 MAIL ADDRESS: STREET 1: 50 NORTH LAURA STREET STREET 2: P.O. BOX 40789 CITY: JACKSONVILLE STATE: FL ZIP: 32203-0789 FORMER COMPANY: FORMER CONFORMED NAME: BARNETT BANKS OF FLORIDA INC DATE OF NAME CHANGE: 19870512 FORMER COMPANY: FORMER CONFORMED NAME: BARNETT NATIONAL SECURITIES CORP DATE OF NAME CHANGE: 19700514 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period Commission file number 1-7901. ended June 30, 1996 BARNETT BANKS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Florida 59-0560515 - ----------------------------------- ----------------------- (State of incorporation) (I.R.S. Employer Identification No.) 50 North Laura Street Jacksonville, Florida 32202 -------------------------------------- (Address of Principal Executive Offices) (904) 791-7720 ------------------------------------------------- (Registrants telephone number, Including area code) 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 requirement for the past 90 days. Yes X No ----- ----- Barnett Banks, Inc. Common Stock - June 30, 1996: 96,415,106 shares outstanding - ------- BARNETT BANK - ------- [GRAPHIC] SECOND QUARTER 1996 FORM 10-Q BARNETT BANKS, INC. Barnett Banks, Inc. Financial Review and Form 10-Q TABLE OF CONTENTS PART I--FINANCIAL INFORMATION - -------------------------------------------------------------------------------- Consolidated Financial Highlights............................................ 3 Management Discussion (Item 2)............................................... 4 Quarterly Average Balances, Yields and Rates............................... 12 Financial Statements (Item 1): Statements of Financial Condition.......................................... 14 Statements of Income....................................................... 15 Statements of Changes in Shareholders' Equity.............................. 16 Statements of Cash Flows................................................... 17 Notes to Financial Statements.............................................. 18 PART II--OTHER INFORMATION - -------------------------------------------------------------------------------- EXHIBITS AND REPORTS ON FORM 8-K (ITEM 6) Exhibit 11, "Statement Re: computation of per share earnings," is included in the Notes to Financial Statements on page 19 of this report. BARNETT BANKS, INC. AND SUBSIDIARIES FORM 10-Q, JUNE 30, 1996 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. BARNETT BANKS, INC. Dated: August 9, 1996 /s/ Charles W. Newman ------------------------------ Charles W. Newman Chief Financial Officer Dated: August 9, 1996 /s/ Patrick J. McCann ------------------------------ Patrick J. McCann Controller 2 - ------------------- BARNETT BANKS, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS
Three Months Six Months For the Periods Ended June 30-- ---------------------------- ----------------------------- Dollars in Millions Except Per Share Data 1996 1995 Change 1996 1995 Change - -------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD Net interest income (taxable-equivalent).................... $480.3 $435.6 10% $955.6 $866.1 10% Provision for loan losses................................... 39.4 26.8 47 81.0 51.1 59 Non-interest income (excluding securities transactions)..... 193.9 183.1 6 390.5 345.9 13 Securities transactions..................................... .3 -- -- 19.3 -- -- Non-interest expense........................................ 400.7 381.9 5 808.3 745.5 8 Net income.................................................. 139.5 132.2 6 287.7 260.9 10 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- PER COMMON SHARE Net income: Primary................................................... $ 1.42 $ 1.30 9% $ 2.94 $ 2.57 14% Fully diluted............................................. 1.42 1.26 13 2.91 2.49 17 Dividends declared.......................................... .54 .47 15 1.01 .88 15 Book value(1)............................................... 34.86 33.22 5 34.86 33.22 5 Stock price: High...................................................... 64.13 52.25 23 64.13 52.25 23 Low....................................................... 59.00 45.50 30 55.50 38.75 43 Close..................................................... 61.00 51.38 19 61.00 51.38 19 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- KEY RATIOS Return on assets............................................ 1.36% 1.28% 6% 1.40% 1.27% 10% Return on equity............................................ 16.92 15.83 7 17.41 15.90 9 Net yield on earning assets................................. 5.30 4.80 10 5.29 4.79 10 Overhead ratio.............................................. 59.43 61.73 (4) 60.05 61.51 (2) Shareholders' equity to total assets(1)..................... 8.07 8.18 (1) 8.07 8.18 (1) Leverage ratio.............................................. 6.67 6.31 6 6.67 6.31 6 Total risk-based capital ratio.............................. 11.93 11.26 6 11.93 11.26 6 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- AVERAGE BALANCES Assets...................................................... $41,117 $41,232 -- $41,126 $ 41,046 -- Deposits.................................................... 33,486 33,702 (1)% 33,665 33,820 -- Loans, net of unearned income............................... 30,364 29,562 3 30,355 29,232 4% Earning assets.............................................. 36,333 36,317 -- 36,247 36,302 -- Shareholders' equity........................................ 3,299 3,340 (1) 3,306 3,282 1 Fully diluted shares (thousands)............................ 98,220 104,998 (6) 98,976 104,955 (6) - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- PERIOD-END Assets.................................................................................... $41,674 $ 41,787 -- Deposits.................................................................................. 34,345 33,970 1% Loans, net of unearned income............................................................. 30,455 29,952 2 Long-term debt............................................................................ 1,228 925 33 Preferred stock........................................................................... -- 215 -- Shareholders' equity...................................................................... 3,294 3,339 (1) Common shares (thousands)................................................................. 96,415 96,465 -- - -------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------
(1) COMPUTED ON EQUITY BEFORE DEDUCTION OF THE EMPLOYEE STOCK OWNERSHIP PLAN OBLIGATION. 3 ------------------- BARNETT BANKS, INC. MANAGEMENT DISCUSSION TABLE 1 SELECTED QUARTERLY DATA
1996 1995 --------------- ----------------------------------- Dollars in Millions Except Per Share Data--Taxable-Equivalent SECOND First Fourth Third Second First - --------------------------------------------------------------------------------------------------------------------------------- Net interest income .................................................... $480.3 $475.3 $459.2 $446.9 $435.6 $430.5 Provision for loan losses .............................................. 39.4 41.6 37.2 34.2 26.8 24.3 - --------------------------------------------------------------------------------------------------------------------------------- Net interest income after loan loss provision .......................... 440.9 433.7 422.0 412.7 408.8 406.2 Non-interest income (excluding securities transactions) ........................................... 193.9 196.6 185.5 182.6 183.1 162.8 Securities transactions ................................................ .3 19.0 4.9 .1 -- -- Non-interest expense ................................................... 400.7 407.6 393.9 379.3 381.9 363.5 - --------------------------------------------------------------------------------------------------------------------------------- Income before income taxes ............................................. 234.4 241.7 218.5 216.1 210.0 205.5 Income tax provision ................................................... 90.4 88.6 75.0 75.4 69.4 66.5 Taxable-equivalent adjustment .......................................... 4.5 4.9 5.2 6.6 8.4 10.3 - --------------------------------------------------------------------------------------------------------------------------------- Net income ........................................................ $139.5 $148.2 $138.3 $134.1 $132.2 $128.7 - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Primary net income per common share .................................... $1.42 $1.52 $1.39 $1.34 $1.30 $1.27 Fully diluted net income per common share .............................. 1.42 1.49 1.35 1.29 1.26 1.23 - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------
SUMMARY Barnett's second quarter earnings per share rose 13% from a year ago. The company earned $139.5 million, or $1.42 per fully diluted share, in the second quarter of 1996, compared to $132.2 million, or $1.26 per share, a year earlier and $148.2 million, or $1.49 per share, in the first quarter of 1996. First quarter results included a $19.0 million pre-tax securities gain, representing $.12 per share. For the first six months of 1996, Barnett earned $287.7 million, or $2.91 per share, up from $260.9 million, or $2.49 per share, a year ago. Return on assets in the second quarter increased to 1.36% from 1.28% a year earlier and return on shareholders' equity increased to 16.92% from 15.83%. Revenue, excluding securities transactions, increased for the ninth consecutive quarter, rising $55.5 million, or 9%, over the second quarter of 1995 and $2.3 million over the first quarter to $674.2 million. Second quarter taxable-equivalent net interest income rose $44.7 million from the same period last year and $5.0 million from the first quarter to $480.3 million, due to an increase in the net yield on earning assets of 50 basis points from last year and 3 basis points from the first quarter. The increase in the net yield was largely the result of lower funding costs and strategic decisions by the company that favorably changed the mix of earning assets. Non-interest income, excluding securities transactions, rose 6% from a year earlier to $193.9 million, as consumer finance income, brokerage commissions and other retail fees showed healthy gains. Non-interest expense increased 5% to $400.7 million, reflecting spending for strategic initiatives to enhance future results. Non-interest income, excluding securities transactions, fell $2.7 million from the first quarter while non-interest expense fell $6.9 million, reflecting the impact of the company's mortgage servicing venture with HomeSide Lending, Inc. ("HomeSide"). The provision for loan losses was $39.4 million in the second quarter compared to $26.8 million last year and $41.6 million in the first quarter. Net charge-offs of $39.4 million in the second quarter were $12.1 million higher than the same period last year but $2.0 million lower than the first quarter. Second quarter net charge-offs represented an annualized .52% of average loans. Non-performing assets of $252 million on June 30 represented .82% of gross loans plus real estate held for sale. In May, the company completed the sale of its mortgage servicing operation to HomeSide, a mortgage banking venture in which Barnett holds a one-third ownership interest. The remainder is owned by Bank Boston Corporation and two equity investors. This transaction had no material impact on second quarter net operating results. The company also consolidated 26 of its bank charters into a single national bank charter in order to reduce regulatory burden and allow management to increase their focus on revenue generating opportunities. This reduced the number of separately chartered banking subsidiaries from 32 to 7. The consolidation had no material impact on second quarter results. Selected quarterly data is provided in TABLE 1. EARNING ASSETS LOANS. Average loans rose 3%, or $802 million, from a year earlier to $30.4 billion, reflecting growth in commercial, installment and bank card balances. Loans grew slightly from the first quarter, reflecting strong installment loan growth, largely offset by a decline in residential mortgage outstandings. Installment loans rose 16%, or $1.4 billion, from the same period last year and $512 million from the first quarter to $9.8 billion. Expansion of indirect 4 - ------------------- BARNETT BANKS, INC. automobile lending to new markets and retention of some home equity loans originated through the EquiCredit franchise that normally are securitized were the principal factors in the growth of the installment loan portfolio. The volume of automobile loans, the most significant component of installment loans, is dependent upon new and used automobile sales, which can vary depending on economic conditions and other factors. Residential mortgage loans fell 7%, or $807 million, from last year and $426 million from the first quarter to $10.3 billion. These reductions reflect management's decision to utilize liquidity from amortizing residential mortgages to fund growth in loan categories with higher risk-adjusted rates of return. At the end of the second quarter, 75% of the residential loan portfolio consisted of adjustable-rate mortgages. Most of these mortgages reprice annually based on a spread over the one-year constant maturity Treasury index. This repricing is limited by annual and lifetime caps. Bank card outstandings of $1.7 billion were 21% higher than a year earlier but virtually unchanged from the first quarter. The growth from last year reflects expanded marketing through the first quarter of 1996 of the credit card both within Florida and in neighboring markets. The significant reduction in the number of card solicitations since the first quarter contributed to balances being unchanged from that quarter. The rate of growth in card balances is expected to remain below 1995 levels as marketing of the credit card focuses on existing customers in Barnett's banking markets. Commercial loans grew 7% from last year and at an annualized rate of 4% from the first quarter to $4.9 billion. Commercial real estate loans decreased 13% from a year earlier and $108 million from the first quarter to $2.9 billion and represented 9% of the loan TABLE 2 INTEREST RATE SENSITIVITY ANALYSIS
Non-Rate Sensitive 0-30 31-90 91-180 181-365 and Over June 30, 1996--Dollars in Millions Days Days Days Days One Year Total - -------------------------------------------------------------------------------------------------------------------------------- Commercial, financial and agricultural ............................ $ 3,523 $ 124 $ 124 $ 177 $ 954 $ 4,902 Real estate construction .......................................... 759 12 11 9 27 818 Commercial mortgages .............................................. 969 93 154 242 592 2,050 Residential mortgages ............................................. 1,280 1,370 1,745 3,039 2,661 10,095 Installment ....................................................... 2,503 699 965 1,623 4,256 10,046 Other loans ....................................................... 2,008 -- -- -- 536 2,544 - -------------------------------------------------------------------------------------------------------------------------------- Total loans(1) ............................................... 11,042 2,298 2,999 5,090 9,026 30,455 Securities(1) ..................................................... 245 400 698 838 3,016 5,197 Federal funds sold and securities purchased under agreements to resell ..................................................... 1,055 1,055 - -------------------------------------------------------------------------------------------------------------------------------- Total earning assets ......................................... $12,342 $2,698 $3,697 $5,928 $12,042 $36,707 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- NOW and money market accounts(1) .................................. $ 6,946 $ 4,770 $11,716 Savings deposits(1) ............................................... 1,049 2,100 3,149 Time deposits ..................................................... 3,187 $2,086 $2,631 $3,192 2,711 13,807 - -------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits .............................. 11,182 2,086 2,631 3,192 9,581 28,672 Short-term borrowings ............................................. 1,939 1,939 Long-term debt .................................................... 4 458 59 707 1,228 - -------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities ........................... $13,125 $2,544 $2,631 $3,251 $10,288 $31,839 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- Gap before interest rate swaps .................................... $ (783) $ 154 $1,066 $2,677 $ 1,754 Interest rate swaps ............................................... (1,764) (1,720) 430 3,054 - -------------------------------------------------------------------------------------------------------------------------------- Interest rate sensitivity gap adjusted for interest rate swaps .... (2,547) (1,566) 1,066 3,107 4,808 Cumulative adjusted interest rate sensitivity gap ................. (2,547) (4,113) (3,047) 60 Cumulative adjusted gap as a percentage of earning assets: June 30, 1996 ................................................ (6.94)% (11.20)% (8.30)% .16% June 30, 1995 ................................................ (11.11) (11.26) (4.65) 10.89 - -------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------
(1) REFLECTS MANAGEMENT'S ADJUSTMENTS FOR THE COMPANY'S ESTIMATES OF THE EFFECTS OF EARLY PRINCIPAL REPAYMENTS ON RESIDENTIAL AND OTHER AMORTIZING LOANS AND SECURITIES AND THE ANTICIPATED REPRICING SENSITIVITY OF NON-MATURITY DEPOSIT PRODUCTS. HISTORICALLY, BALANCES ON NON-MATURITY DEPOSIT ACCOUNTS HAVE REMAINED RELATIVELY STABLE DESPITE CHANGES IN MARKET INTEREST RATES. MANAGEMENT HAS CLASSIFIED CERTAIN OF THESE ACCOUNTS AS NON-RATE SENSITIVE BASED ON MANAGEMENT'S HISTORICAL PRICING PRACTICES AND RUNOFF EXPERIENCE. TWO-THIRDS OF THE NOW AND SAVINGS ACCOUNT BALANCES, AND APPROXIMATELY 20% OF THE MONEY MARKET ACCOUNT BALANCES, ARE CLASSIFIED AS NON-RATE SENSITIVE. 5 ------------------- BARNETT BANKS, INC. TABLE 3 DERIVATIVE FINANCIAL INSTRUMENTS
Weighted Average Interest Rate -------------------------------------------- Average Notional Replacement Receive Pay Maturity June 30--Dollars in Millions Amount Value Rate(1) Index Rate(1) Index In Years - ------------------------------------------------------------------------------------------------------------------------- 1996 Interest rate swaps: Basis swap ........................ $ 50 $ .71 5.49% LIBOR 5.98% CMT 1.58 Generic swaps: Receive fixed .................... 3,600 (31.34) 5.43 FIXED 5.50 LIBOR 1.40 Pay fixed ........................ 266 .76 5.57 LIBOR 6.38 FIXED 1.21 Interest rate floors ................ 250 1.25 6.00(2) LIBOR -- -- 1.50 - ------------------------------------------------------------------------------------------------------------------------- Total ............................... $4,166 $(28.62) 5.47% 5.57% 1.40 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- 1995 Interest rate swaps: Basis swap ........................ $ 50 $ .47 6.06% LIBOR 5.13% CMT 2.58 Generic swaps: Receive fixed .................... 1,040 (9.24) 4.38 Fixed 6.34 LIBOR .65 Pay fixed ........................ 267 (.71) 6.09 LIBOR 6.38 Fixed 2.24 Index-principal swaps ............. 997 (5.93) 4.63 Fixed 6.18 LIBOR .90 Interest rate floors ................ 250 3.56 6.00(2) LIBOR -- -- 2.50 - ------------------------------------------------------------------------------------------------------------------------- Total ............................... $2,604 $(11.85) 4.84% 6.25% 1.12 - ------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------
(1) BASED UPON CONTRACTUAL RATES AT JUNE 30. (2) THE COMPANY RECEIVES INTEREST EQUAL TO THE AMOUNT BY WHICH LIBOR IS LESS THAN 6.00% portfolio. INVESTMENT SECURITIES AND OTHER EARNING ASSETS. The company's $5.3 billion securities portfolio has an average life of 1.4 years and consists primarily of AAA or equivalent-rated securities. U.S. Treasury securities comprised 42% of the portfolio at June 30. Average securities fell $1.4 billion, or 21%, from the same period last year reflecting the deployment of liquidity from maturing securities into higher yielding loans. Average securities rose $79 million from last quarter. Federal funds sold and securities purchased under agreements to resell rose $642 million from a year earlier and $76 million from the first quarter. At June 30, the available-for-sale securities portfolio had a $3.7 million unrealized loss compared to a $29.6 million unrealized gain at June 30, 1995 and a $16.4 million unrealized gain at March 31, 1996. DEPOSITS AND OTHER FUNDING SOURCES DEPOSITS. Average deposits declined $216 million from a year ago and $359 million from the first quarter to $33.5 billion. Transaction, money market and savings account balances dropped $329 million from a year ago and $401 million during the quarter, primarily due to the transfer of mortgage escrow deposits to HomeSide. The reduction from the first quarter also reflected seasonal outflows. CD balances rose $113 million from a year ago and $42 million during the quarter. OTHER FUNDING SOURCES. Average federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings decreased $470 million, or 17%, from the same period last year but increased $272 million during the quarter to $2.3 billion. The company issues commercial paper to fund certain mortgage banking and consumer lending activities. As of June 30, Barnett's commercial paper outstandings totaled $871 million. ASSET-LIABILITY MANAGEMENT Net interest income is affected by changes in interest rates as well as fluctuations in the level and duration of assets and liabilities contained on the company's balance sheet. The impact of changes in interest rates on the company's net interest income represents Barnett's level of interest rate risk. Interest rate sensitivity is primarily a function of the repricing structure of the company's balance sheet. TABLE 2 shows this structure as of June 30, with each maturity interval referring to the earliest repricing opportunity (i.e., the earlier of scheduled contractual maturity or repricing date) for each asset and liability category. The resultant gaps are a measure of the sensitivity of earnings to changes in interest rates. In order to more appropriately reflect the repricing structure of the company's balance sheet, management has made certain adjustments to the balances shown in the table. Based on historical and industry data, an estimate of the expected prepayments of amortizing loans and investment securities is reflected in the balances in the table. Changes in the economic and interest rate environments may impact these expected prepayments. 6 - ------------------- BARNETT BANKS, INC. TABLE 4 CHANGE IN NET INTEREST INCOME
Three Months Six Months --------------------------------- --------------------------------- For the Periods Ended June 30, 1996-- Change from Previous Year Due to: Change from Previous Year Due to: --------------------------------- --------------------------------- Taxable-Equivalent Dollars in Millions Volume Rate(1) Total Change Volume Rate(1) Total Change - --------------------------------------------------------------------------------------------------------------------------------- Interest income: Loans ............................................... $ 25.2 $ (1.6) $ 23.6 $ 62.2 $ 24.6 $ 86.8 Taxable securities .................................. (15.5) 8.8 (6.7) (39.0) 16.0 (23.0) Tax-free securities ................................. (9.6) (.3) (9.9) (23.3) (2.1) (25.4) Federal funds sold and securities purchased under agreements to resell .................... 9.8 (1.3) 8.5 17.1 (1.6) 15.5 - --------------------------------------------------------------------------------------------------------------------------------- Total interest income ......................... 9.9 5.6 15.5 17.0 36.9 53.9 - --------------------------------------------------------------------------------------------------------------------------------- Interest expense: NOW and money market accounts ....................... (2.3) (12.5) (14.8) (5.8) (28.1) (33.9) Savings deposits .................................... (1.2) (2.2) (3.4) (2.9) (6.4) (9.3) Certificates of deposit under $100,000 .............. (4.2) (6.5) (10.7) (2.0) .7 (1.3) Other time deposits ................................. 6.0 (1.1) 4.9 11.2 2.1 13.3 - --------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits ............... (1.7) (22.3) (24.0) .5 (31.7) (31.2) Federal funds purchased and securities sold under agreements to repurchase ........... (10.5) (2.4) (12.9) (20.5) (3.5) (24.0) Other short-term borrowings ......................... 3.3 (2.5) .8 8.8 (2.5) 6.3 Long-term debt ...................................... 10.5 (3.6) 6.9 19.4 (6.1) 13.3 - --------------------------------------------------------------------------------------------------------------------------------- Total interest expense ........................ 1.6 (30.8) (29.2) 8.2 (43.8) (35.6) - --------------------------------------------------------------------------------------------------------------------------------- Net interest income ........................... $ 8.3 $ 36.4 $ 44.7 $ 8.8 $ 80.7 $ 89.5 - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------
(1) INCLUDES CHANGES IN INTEREST INCOME AND EXPENSE NOT DUE SOLELY TO VOLUME OR RATE CHANGES. Similarly, an adjustment to deposits is made to reflect the behavioral characteristics of certain core deposits that do not have maturities (i.e., interest-bearing checking, savings and money market deposit accounts). The footnote accompanying the table more fully explains the specific adjustments made to the analysis. This interest rate sensitivity analysis indicates that the company was moderately liability sensitive on June 30, with a cumulative six-month negative gap of 8.30%. In addition to gap analysis, management uses rate-shock simulation and duration of equity to measure the rate sensitivity of its balance sheet. Rate-shock simulation is a modeling technique used to estimate the impact of changes in rates on the company's net interest margin. Duration of equity measures the change in the market value of the company's equity resulting from a change in interest rates. It is designed to evaluate the economic impact of rate changes for periods that extend beyond the time horizons targeted by gap and rate shock simulation analysis. These analyses, which analyze longer term impacts of rate changes, indicate that Barnett is relatively rate neutral. The company's rate shock simulation indicates that an instantaneous 1% change in interest rates would have less than a 2% impact on net interest income over a twelve-month period. This simulation is based on the company's business mix, as well as interest rate exposures at a point in time and includes a parallel shift of the yield curve. It also requires certain assumptions about the future pricing of loans and deposits in response to changes in interest rates. This simulation is a useful measure of the company's sensitivity to changing rates; it is not a forecast of future results and is based on many assumptions, which if changed, could cause a different outcome from the simulation. The primary objective of Barnett's asset-liability management is to maximize net interest income while maintaining acceptable levels of interest-rate sensitivity. The Asset-Liability Management Committee sets specific rate-sensitivity limits for the company. The committee monitors and adjusts the company's exposure to changes in interest rates to achieve predetermined risk targets that it believes are consistent with current and expected market conditions. Management strives to minimize the negative impact on net interest income caused by changes in interest rates. At this time, management believes the company's asset-liability mix is sufficiently balanced within a broad range of interest rate scenarios to minimize the impact of significant rate movements. Barnett controls its interest rate risk by managing the level and duration of certain balance sheet assets and liabilities. The company also uses off-balance-sheet instruments (derivatives) to manage its interest rate sensitivity position. Barnett ensures that both balance sheet and off-balance-sheet instruments used for asset-liability management purposes are consistent with safe and sound banking practices. The company's derivative portfolio used for asset-liability management purposes, summarized in TABLE 3, had a notional amount of $4.2 billion at June 30. This portfolio consisted of $3.9 billion of interest rate swaps and $250 million of interest rate floors. Most of the company's swaps involve receipt of 7 ------------------- BARNETT BANKS, INC. TABLE 5 OTHER NON-INTEREST EXPENSE
1996 1995 ------------------ -------------------------------------- Dollars in Thousands SECOND First Fourth Third Second First - ------------------------------------------------------------------------------------------------------------------------ Advertising and marketing................................... $ 12,693 $ 13,905 $ 11,959 $ 8,407 $ 7,737 $ 5,416 Amortization of intangibles................................. 13,043 13,440 13,031 13,415 14,022 12,326 Communications.............................................. 11,416 10,970 10,349 10,852 10,464 9,321 Expenses and provision on real estate held for sale......... 3,384 2,409 2,280 2,901 3,418 3,513 FDIC assessments............................................ 2,514 2,720 5,517 612 18,565 18,533 Franchise and credit card fees.............................. 3,733 4,531 5,235 5,184 5,613 4,398 Outside computer services................................... 8,973 9,739 8,474 8,220 7,494 7,790 Postage..................................................... 7,390 6,920 6,553 6,878 6,584 6,311 Stationery and supplies..................................... 5,634 5,762 6,169 4,750 4,770 4,708 Insurance, taxes and other.................................. 52,749 55,198 54,887 57,713 46,054 48,338 - ------------------------------------------------------------------------------------------------------------------------ Total..................................................... $121,529 $125,594 $124,454 $118,932 $124,721 $120,654 - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------
fixed cash flows in exchange for variable (primarily LIBOR-based) cash flows. The purpose of the swaps is to convert variable cash flows from floating-rate loans to fixed cash flows. The derivatives reduce the sensitivity of the net interest margin to flat or falling interest rates. The swap portfolio consists of fixed-term, non-amortizing interest rate swaps, $150 million of which mature in 1996 and $3.7 billion of which mature beginning January 1997 through April 1998. During the second quarter, the company entered into $50 million of non-amortizing fixed-term swaps. The swap portfolio performed as expected during the quarter. The replacement value related to the company's derivatives portfolio was a negative $28.6 million on June 30, 1996 compared to a negative $11.9 million on the same date last year and a negative $19.0 million on March 31. The derivatives portfolio increased net interest income in the second quarter of 1996 by $1.0 million, representing a 1 basis point increase in the net yield on earning assets. The swap portfolio reduced second quarter 1995 net interest income by $9.6 million, representing an 11 basis point reduction in the net yield on earning assets. Barnett manages the counterparty exposure of its derivatives in a manner consistent with the granting of credit. Any exposure is generally measured by the market replacement value at any point in time. Barnett utilizes collateral exchange agreements with derivatives counterparties in order to control the level of credit exposure to these entities. NET INTEREST INCOME Barnett's taxable-equivalent net interest income, which represented 71% of revenues, was $480.3 million in the second quarter, up $44.7 million from a year earlier and $5.0 million from the first quarter. These increases primarily reflect a higher net yield on earning assets. TABLE 4 shows the changes in net interest income by category due to shifts in volume and rate. The net yield on earning assets rose to 5.30% from 4.80% a year earlier and 5.27% last quarter. The expansion of the net interest margin from last year was primarily caused by the increase in loans as a percentage of earning assets, continued upward repricing of adjustable-rate mortgages and a decrease in funding costs. Loans grew from 81% of earning assets in the second quarter of 1995 to 84% in the second quarter of 1996, while repricing of adjustable-rate mortgages fueled a 22 basis point increase in the residential loan yield. The rate paid on interest-bearing liabilities fell 31 basis points from last year. Lower rates paid on NOW, money market and savings accounts more than offset the higher cost resulting from a change in deposit mix. The rise in the net yield on earning assets from the first quarter was driven by lower funding costs and the shift from residential mortgages to higher yielding commercial and consumer loans. This was partially offset by a change in financial presentation of mortgage servicing costs as a result of the HomeSide venture. Barnett previously reported mortgage servicing costs in non-interest expense. With the consummation of the mortgage servicing venture, Homeside bears those costs and they are reflected as a reduction of Barnett's interest income received on residential loans. Second quarter results include one month's impact of this change. NON-INTEREST INCOME Non-interest income, excluding securities transactions, rose 6% to $193.9 million from $183.1 million a year ago largely as the result of growth in consumer finance income, brokerage commissions and other retail fees. Non-interest income, excluding securities transactions, fell 1% from the first quarter due to decreases in consumer finance and mortgage banking income offset by an increase in other service charges and fees. Brokerage income grew 61% from a year ago to $11.8 million, primarily reflecting a significant increase in annuity and mutual fund sales. Consumer finance income of $24.3 8 - ------------------- BARNETT BANKS, INC. million represents revenue generated through the company's quarterly securitization program of consumer finance loan production and related loan servicing. Consumer finance income rose 31%, or $5.7 million, from the same period a year ago but fell 23%, or $7.1 million, from the first quarter. The increase from last year reflects increased securitization volumes and the adoption of Statement of Financial Accounting Standards (SFAS) No. 122, Accounting for Mortgage Servicing Rights. The decrease from last quarter reflects narrowed spreads between interest received on loans and interest passed through to investors on the second quarter loan securitization. Also, the company retained $182 million of EquiCredit's second quarter loan originations. SFAS No. 122 requires that an enterprise recognize as separate assets the rights to service mortgage loans for others, however those servicing rights are acquired. The adoption of this standard increased mortgage banking income by $9.8 million and consumer finance income by $2.7 million during the second quarter and by $11.1 million and $2.6 million, respectively, during the first quarter of 1996. TABLE 6 NON-PERFORMING ASSETS
1996 1995 ------------------------ ------------------------ PERCENTAGE Percentage OF TOTAL of Total June 30--Dollars in Thousands AMOUNT OUTSTANDING(1) Amount Outstanding(1) - --------------------------------------------------------------------------------------------------------- Non-accruing loans: Less than 90 days past due.................... $ 26,164 .09% $ 71,495 .24% 90 days past due.............................. 158,830 .52 132,920 .44 - --------------------------------------------------------------------------------------------------------- Total non-accruing loans...................... 184,994 .61 204,415 .68 Reduced-rate loans................................ 7,717 .02 3,727 .01 - --------------------------------------------------------------------------------------------------------- Total non-performing loans.................... 192,711 .63 208,142 .69 Real estate held for sale......................... 59,258 .19 72,727 .24 - --------------------------------------------------------------------------------------------------------- Total non-performing assets................... $251,969 .82% $280,869 .93% - --------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------- Non-performing loans by category: Commercial, financial and agricultural.......... $ 39,775 .13% $ 38,427 .13% Real estate construction........................ 8,142 .02 22,979 .08 Commercial mortgages............................ 41,946 .14 76,395 .25 Residential mortgages........................... 102,848 .34 70,341 .23 - --------------------------------------------------------------------------------------------------------- Total....................................... $192,711 .63% $208,142 .69% - --------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------- 90 days past due accruals......................... $ 62,304 .20% $ 35,661 .12% - --------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------
(1) BEFORE DEDUCTION FOR UNEARNED INCOME. Mortgage banking income fell $6.2 million from the same period last year and $2.6 million from the first quarter to $18.8 million. The decrease from last year was due to the sale of servicing to HomeSide, last year's $6.7 million gain on sale of servicing rights and results of secondary market sales, partially offset by the impact of adoption of SFAS No. 122. The decrease from the first quarter reflects the sale of servicing to HomeSide. Other service charges and fees rose 26%, or $7.3 million, from last year and 21%, or $6.2 million, over the first quarter, reflecting higher retail fees, including the new ATM surcharge for non-Barnett customers. Credit card fees fell $1.7 million, or 11%, from last year's second quarter as the company entered into a joint venture to perform bank card merchant processing. As a result of this new structure, the company now records its share of net income from the venture under the equity method of accounting rather than gross revenues and expenses. Credit card fees grew 14% from the first quarter to $13.1 million, reflecting increased card transaction volumes. NON-INTEREST EXPENSE Non-interest expense rose 5%, or $18.8 million, from a year ago, primarily reflecting the company's spending on strategic initiatives to diversify sources of revenue, improve marketing and expand the use of technology for competitive advantage. Non-interest expense decreased $6.9 million from last quarter, reflecting the transfer of costs associated with the residential loan servicing operation to HomeSide, partially offset by continued spending on strategic initiatives. The overhead ratio was 59.43% in the second quarter, below last year's 61.73% and the prior quarter's 60.67%. Salaries and benefits increased $17.5 million from the same period last year, primarily due to staffing related to strategic initiatives, higher performance-related incentives and annual salary increases. The $3.8 million decrease from the first quarter primarily represents the impact of the HomeSide transaction and lower payroll taxes, partially offset by salary increases. The company had 19,475 average full-time equivalent employees in the second quarter, compared to 19,781 during the first quarter and 20,001 a year ago. Other expense decreased 3%, or $3.2 million, from last year, reflecting the impact of HomeSide and a $16.1 million reduction in FDIC premiums partially offset by increased marketing and technology expenses related to strategic initiatives. Other expense decreased $4.1 million from the first quarter. Other expense for the past six quarters is shown in TABLE 5. ASSET QUALITY RISK ELEMENTS. As shown in TABLE 6, non-performing assets were $252 million on June 30, representing .82% of gross loans plus real estate held for sale. By comparison, non-performing assets stood at $281 million, or .93% of outstandings, on the same date last year, and $245 million, or .80% of outstandings, on March 31. The changed composition of the loan portfolio continued to contribute to the reduction of non-performing assets. 9 ------------------- BARNETT BANKS, INC. TABLE 7 LOAN QUALITY INFORMATION
1996 1995 --------------------- --------------------------------------------- Dollars in Thousands Second First Fourth Third Second First - ------------------------------------------------------------------------------------------------------------------------- Net charge-offs (recoveries): Commercial, financial and agricultural.......... $ (740) $ (334) $(1,484) $ 2,049 $(1,863) $(2,781) Real estate construction........................ -- (175) (1) 428 147 190 Commercial mortgages............................ (2,184) (1,850) (2,828) 515 2,392 499 Residential mortgages........................... 608 508 1,140 543 261 739 Installment..................................... 12,795 15,428 17,212 12,318 12,229 12,381 Bank card....................................... 28,254 26,797 21,443 17,384 13,510 12,683 Credit lines.................................... 711 1,031 718 810 629 727 - ------------------------------------------------------------------------------------------------------------------------- Total net charge-offs......................... $ 39,444 $ 41,405 $ 36,200 $ 34,047 $ 27,305 $ 24,438 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Gross charge-offs................................. $ 53,284 $ 51,500 $ 50,163 $ 44,062 $ 42,529 $ 36,125 Allowance for loan losses......................... 506,892 506,315 505,148 503,032 502,521 502,800 Non-performing loans.............................. 192,711 181,382 170,268 207,902 208,142 221,943 Non-performing assets............................. 251,969 244,638 237,898 282,194 280,869 297,223 Non-performing asset ratio........................ .82% .80% .78% .92% .93% 1.01% Net charge-offs to average loans (annualized)..... .52 .55 .48 .45 .37 .34 Allowance to non-performing loans................. 263 279 297 242 241 227 Allowance to period-end loans..................... 1.66 1.67 1.66 1.65 1.68 1.72 - ------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------
Consumer loans represent 74% of total loans and, except for residential real estate, tend to be charged off rather than placed on non-accrual status. Borrower experience and financial capacity are critical factors in underwriting and approving all loan requests. Barnett's commercial real estate loan policies generally require a maximum loan-to-value ratio of 75%. Barnett has reduced its exposure to commercial real estate from a high of 28% of loans in 1988 to 9% on June 30 and anticipates maintaining this portfolio at or below 15% of loans. The commercial loan portfolio, representing 16% of total loans, is not concentrated in any single industry, but reflects the broad-based economies in Florida and southern Georgia. Barnett's residential loans generally are secured by 1-4 family homes, conform to federal agency underwriting standards and have a maximum loan-to-value ratio of 80% unless they are protected by mortgage insurance. At June 30, 4.36% of residential loans were 30 days or more past due compared to 3.73% a year earlier and 4.74% at March 31. At the end of the second quarter, 1.04% of residential loans were non-performing compared to .86% a year earlier and .99% on March 31. Non-performing residential loans and delinquencies have risen for Barnett and the industry as adjustable-rate mortgages have repriced upward. Losses in this portfolio were 2 basis points in the second quarter and have historically been in the 2-to-5 basis point range as Florida residential real estate values have remained stable. At June 30, 1.08% of installment loans were 30 days or more past due compared to .79% a year earlier and .96% at March 31. Barnett's installment loan portfolio consists primarily of loans secured by new and used automobiles (60%), home equity loans (21%), government-guaranteed student loans (13%) and other secured loans (2%). Excluding government-guaranteed student loans, less than 4% of installment loans are unsecured. At June 30, 3.48% of bank card outstandings were 30 days or more past due, down from 3.58% in the first quarter, but up from 2.52% a year earlier. NET CHARGE-OFFS. As shown in TABLE 7, net charge-offs were $39.4 million, up from $27.3 million a year earlier but 5% lower than the first quarter. The increase from last year was primarily a result of increased bank card charge-offs offset by commercial real estate net recoveries. The decrease from last quarter primarily resulted from a $2.6 million decline in installment net losses. Bank card net charge-offs were $14.7 million higher than the same period last year and $1.5 million higher than the first quarter. Net charge-offs in the second quarter represented an annualized .52% of average outstandings, compared to .55% in the first quarter and .37% for the same period last year. PROVISION/ALLOWANCE FOR LOAN LOSSES. Barnett's provision expense in the second quarter was $39.4 million, compared to $26.8 million in last year's second quarter and $41.6 million in the first quarter. At June 30, the allowance for loan losses stood at $507 million, or 1.66% of outstandings, up slightly from a year ago and March 31. Management considers the allowance appropriate and adequate to cover potential losses inherent in the loan portfolio based on the current economic environment. The ratio of the allowance for loan losses to non-performing loans remained a strong 263% at June 30, 10 - ------------------- BARNETT BANKS, INC. TABLE 8 CAPITAL RATIOS June 30--Dollars in Millions 1996 1995 - ----------------------------------------------------------------- Tier I capital............................. $ 2,705 $ 2,554 Total risk-based capital................... 3,699 3,297 Total risk-adjusted assets................. 31,009 29,270 - ----------------------------------------------------------------- Tier I capital ratio....................... 8.72% 8.72% Total risk-based capital ratio............. 11.93 11.26 Tier I leverage ratio...................... 6.67 6.31 - ----------------------------------------------------------------- - ----------------------------------------------------------------- compared to 241% a year earlier and 279% in the first quarter. TAXES Barnett's income tax expense in interim reporting periods is determined by estimating the combined federal and state effective tax rate for the year and applying this rate to taxable income. The company's estimated effective taxable equivalent tax rate for 1996 is 40% compared to 37% last year, primarily reflecting higher state taxes this year and the utilization of loss carryforwards in 1995. LIQUIDITY For banks, liquidity represents the ability to meet both loan commitments and deposit withdrawals. Funds to meet these needs can be obtained by converting liquid assets to cash or by attracting new deposits or other sources of funding. Many factors affect a bank's ability to meet liquidity needs, including variations in the markets served, its asset-liability mix, its reputation and credit standing in the market and general economic conditions. In addition to its traditional in-market deposit sources, Barnett has many other sources of liquidity, including proceeds from maturing securities and loans, the sale of securities, asset securitization and other non-relationship funding sources, such as senior or subordinated debt, bank notes, commercial paper and wholesale purchased funds. The high proportion of residential and installment loans on Barnett's balance sheet provides it with an exceptional amount of contingent liquidity through the conventional securitization programs that exist today. Management believes that the level of liquidity is sufficient to meet current and future funding requirements. During the quarter, the company utilized a commercial paper facility to fund certain mortgage banking and consumer lending activities. Borrowings under this facility were $871 million at June 30. As of June 30, the company had $1.4 billion in debt available under existing shelf registrations with the Securities and Exchange Commission. CAPITAL At June 30, shareholders' equity totaled $3.3 billion. The company continued to use internally generated capital to fund the company's common stock repurchase program. The company repurchased 1.4 million shares during the quarter primarily to fund future benefit plan needs. Fully diluted shares outstanding fell to 98.2 million from 105.0 million a year ago and 99.5 million last quarter. On April 15, management redeemed the Series A $4.50 Cumulative Convertible preferred stock, which converted into 3.4 million common shares. The company had previously repurchased an equivalent amount of common shares in anticipation of this conversion. Shareholders' equity, before deducting the Employee Stock Ownership Plan obligation, was 8.07% of assets at the end of the second quarter, compared to 8.18% a year earlier and 8.09% on March 31. Barnett declared a dividend of $.54 for the second quarter, up 15% from the $.47 declared last quarter and representing a dividend payout ratio of 38%. The company is subject to risk-based capital guidelines that measure capital relative to risk-weighted assets and off-balance-sheet financial instruments. Capital guidelines issued by the Federal Reserve Board require bank holding companies to have a minimum total risk-based capital ratio of 8%, with at least half of total capital in the form of Tier I capital. As TABLE 8 shows, Barnett exceeded these capital guidelines on June 30, with a Tier I capital ratio of 8.72% and a total risk-based capital ratio of 11.93%. In addition, a leverage ratio is used in connection with the risk-based capital standards and is defined as Tier I capital divided by average assets for the most recent quarter. The minimum leverage ratio under this standard is 3% for the highest-rated bank holding companies which are not undertaking significant expansion programs. An additional 1% to 2% may be required for other companies, depending upon their regulatory ratings and expansion plans. On June 30, 1996, Barnett's leverage ratio was 6.67%, up 36 basis points from both a year earlier and March 31 due primarily to lower intangible assets as a result of the HomeSide transaction. 11 ------------------- BARNETT BANKS, INC. QUARTERLY AVERAGE BALANCES, YIELDS AND RATES CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
1996 ------------------------------------------------------- Second First -------------------------- -------------------------- Average Average Average Yield Average Yield Dollars in Millions--Taxable-Equivalent Balance Interest or Rate Balance Interest or Rate - ---------------------------------------------------------------------------------------------------------------- ASSETS Loans(1): Commercial, financial and agricultural............. $ 4,873 $100.8 8.32% $ 4,821 $ 99.5 8.30% Real estate construction........................... 795 19.8 10.02 826 20.9 10.15 Commercial mortgages............................... 2,078 46.1 8.92 2,155 47.8 8.92 Residential mortgages.............................. 10,303 200.5 7.79 10,729 211.4 7.88 Installment........................................ 9,813 216.3 8.86 9,301 206.0 8.91 Bank card.......................................... 1,746 68.0 15.67 1,756 68.0 15.56 Credit lines....................................... 756 18.6 9.87 759 19.0 10.08 - --------------------------------------------------------------------------------------------------------------- Total loans, net of unearned income.............. 30,364 667.3 8.83 30,347 671.2 8.88 - --------------------------------------------------------------------------------------------------------------- Securities(2): Taxable............................................ 5,084 79.6 6.28 4,992 75.9 6.09 Tax-free........................................... 196 5.6 11.36 209 5.8 11.18 - --------------------------------------------------------------------------------------------------------------- Total securities................................. 5,280 85.2 6.47 5,201 81.7 6.29 - --------------------------------------------------------------------------------------------------------------- Federal funds sold and securities purchased under agreements to resell................................ 689 9.2 5.35 613 8.3 5.44 - --------------------------------------------------------------------------------------------------------------- Total earning assets............................. 36,333 $761.7 8.42% 36,161 $761.2 8.45% - --------------------------------------------------------------------------------------------------------------- Cash................................................. 1,926 1,980 Other assets......................................... 3,365 3,501 Allowance for loan losses............................ (507) (506) - --------------------------------------------------------------------------------------------------------------- Total assets..................................... $41,117 $41,136 - --------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------- LIABILITIES AND EQUITY NOW and money market accounts........................ $12,268 $ 58.7 1.93% $12,599 $ 61.9 1.97% Savings deposits..................................... 3,213 13.8 1.73 3,310 14.4 1.75 Certificates of deposit under $100,000 9,747 120.8 4.98 9,867 125.7 5.12 Other time deposits.................................. 2,570 34.3 5.36 2,408 33.0 5.52 - --------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits.................. 27,798 227.6 3.29 28,184 235.0 3.35 Federal funds purchased and securities sold under agreements to repurchase............................ 1,215 15.0 4.96 1,046 13.3 5.14 Other short-term borrowings.......................... 1,045 14.1 5.42 942 14.1 6.00 Long-term debt....................................... 1,337 24.7 7.40 1,242 23.5 7.56 - --------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities............... 31,395 $281.4 3.60% 31,414 $285.9 3.66% Demand deposits...................................... 5,688 5,661 Other liabilities.................................... 735 748 Preferred equity..................................... 1 97 Common equity........................................ 3,298 3,216 - --------------------------------------------------------------------------------------------------------------- Total liabilities and equity..................... $41,117 $41,136 - --------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------- SPREAD AND NET YIELD Interest rate spread................................. 4.82% 4.79% Cost of funds supporting earning assets.............. 3.12 3.18 Net yield on earning assets.......................... $480.3 5.30 $475.3 5.27 - --------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------
(1) INCOME ON NON-ACCRUING LOANS IS RECOGNIZED ON A CASH BASIS. INTEREST INCOME ON INDIVIDUAL LOAN CATEGORIES IS AT CONTRACTUAL RATES, WHILE TOTAL LOAN INTEREST INCOME IS NET OF REVERSALS OF INTEREST ON NON-ACCRUING LOANS. (2) AVERAGE YIELDS ON INVESTMENT SECURITIES AVAILABLE FOR SALE HAVE BEEN CALCULATED ON AMORTIZED COST. 12 - ------------------- BARNETT BANKS, INC.
1995 -------------------------------------------------------- Fourth Third -------------------------- -------------------------- Average Average Average Yield Average Yield Dollars in Millions--Taxable-Equivalent Balance Interest or Rate Balance Interest or Rate - ------------------------------------------------------------------------------------------------------- ASSETS Loans(1): Commercial, financial and agricultural...... $ 4,661 $ 99.3 8.46% $ 4,556 $ 97.2 8.47% Real estate construction.................... 904 23.9 10.51 946 25.0 10.48 Commercial mortgages........................ 2,246 50.0 8.81 2,304 50.7 8.73 Residential mortgages....................... 11,180 217.7 7.79 11,417 219.4 7.69 Installment................................. 9,000 202.4 8.92 8,667 195.5 8.95 Bank card................................... 1,677 63.6 15.05 1,566 62.0 15.69 Credit lines................................ 746 18.9 10.06 735 19.5 10.50 - ------------------------------------------------------------------------------------------------------- Total loans, net of unearned income....... 30,414 674.5 8.82 30,191 665.8 8.77 - ------------------------------------------------------------------------------------------------------- Securities(2): Taxable..................................... 5,471 81.4 5.93 5,771 81.0 5.59 Tax-free.................................... 232 6.4 11.10 356 10.5 11.82 - ------------------------------------------------------------------------------------------------------- Total securities.......................... 5,703 87.8 6.14 6,127 91.5 5.95 - ------------------------------------------------------------------------------------------------------- Federal funds sold and securities purchased under agreements to resell................... 148 2.1 5.78 46 .7 5.84 - ------------------------------------------------------------------------------------------------------- Total earning assets...................... 36,265 $764.4 8.39% 36,364 $758.0 8.29% - ------------------------------------------------------------------------------------------------------- Cash.......................................... 2,033 1,943 Other assets.................................. 3,396 3,332 Allowance for loan losses..................... (504) (503) - ------------------------------------------------------------------------------------------------------- Total assets.............................. $41,190 $41,136 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- LIABILITIES AND EQUITY NOW and money market accounts................. $12,598 $ 69.0 2.17% $12,576 $ 69.6 2.19% Savings deposits.............................. 3,314 16.7 1.99 3,362 16.9 2.00 Certificates of deposit under $100,000........ 9,863 130.5 5.25 9,990 133.1 5.29 Other time deposits........................... 2,281 32.3 5.61 2,209 31.2 5.61 - ------------------------------------------------------------------------------------------------------- Total interest-bearing deposits........... 28,056 248.5 3.51 28,137 250.8 3.54 Federal funds purchased and securities sold under agreements to repurchase.......... 1,228 17.2 5.55 1,491 21.2 5.65 Other short-term borrowings................... 1,107 17.0 6.11 1,159 18.2 6.24 Long-term debt................................ 1,131 22.5 7.98 1,028 20.9 8.11 - ------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities........ 31,522 $305.2 3.84% 31,815 $311.1 3.88% Demand deposits............................... 5,598 5,340 Other liabilities............................. 717 634 Preferred equity.............................. 104 214 Common equity................................. 3,249 3,133 - ------------------------------------------------------------------------------------------------------- Total liabilities and equity.............. $41,190 $41,136 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- SPREAD AND NET YIELD Interest rate spread.......................... 4.55% 4.41% Cost of funds supporting earning assets....... 3.34 3.39 Net yield on earning assets................... $459.2 5.05 $446.9 4.90 - ------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------
1995 ------------------------------------------------------- Second First -------------------------- -------------------------- Average Average Average Yield Average Yield Dollars in Millions--Taxable-Equivalent Balance Interest or Rate Balance Interest or Rate - -------------------------------------------------------------------------------------------------------- ASSETS Loans(1): Commercial, financial and agricultural...... $ 4,555 $ 95.8 8.43% $ 4,442 $ 91.9 8.39% Real estate construction.................... 948 25.3 10.69 925 24.2 10.62 Commercial mortgages........................ 2,345 51.0 8.72 2,383 50.5 8.60 Residential mortgages....................... 11,110 210.2 7.57 10,755 198.9 7.40 Installment................................. 8,435 185.9 8.84 8,301 176.6 8.63 Bank card................................... 1,439 59.1 16.47 1,375 53.0 15.64 Credit lines................................ 730 19.2 10.55 718 16.9 9.53 - ------------------------------------------------------------------------------------------------------- Total loans, net of unearned income....... 29,562 643.7 8.73 28,899 608.0 8.49 - ------------------------------------------------------------------------------------------------------- Securities(2): Taxable..................................... 6,194 86.3 5.58 6,702 92.2 5.57 Tax-free.................................... 514 15.5 12.02 593 21.3 14.34 - ------------------------------------------------------------------------------------------------------- Total securities.......................... 6,708 101.8 6.07 7,295 113.5 6.29 - ------------------------------------------------------------------------------------------------------- Federal funds sold and securities purchased under agreements to resell................... 47 .7 6.14 92 1.3 5.92 - ------------------------------------------------------------------------------------------------------- Total earning assets...................... 36,317 $746.2 8.23% 36,286 $722.8 8.04% - ------------------------------------------------------------------------------------------------------- Cash.......................................... 2,012 2,064 Other assets.................................. 3,401 3,007 Allowance for loan losses..................... (498) (499) - ------------------------------------------------------------------------------------------------------- Total assets.............................. $41,232 $40,858 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- LIABILITIES AND EQUITY NOW and money market accounts................. $12,665 $ 73.5 2.33% $13,198 $ 81.0 2.49% Savings deposits.............................. 3,451 17.2 2.00 3,619 20.3 2.27 Certificates of deposit under $100,000........ 10,071 131.5 5.24 9,698 116.3 4.86 Other time deposits........................... 2,133 29.4 5.52 1,983 24.6 5.02 - ------------------------------------------------------------------------------------------------------- Total interest-bearing deposits........... 28,320 251.6 3.56 28,498 242.2 3.45 Federal funds purchased and securities sold under agreements to repurchase.......... 1,892 27.9 5.91 1,734 24.4 5.71 Other short-term borrowings................... 838 13.3 6.37 579 8.6 6.02 Long-term debt................................ 842 17.8 8.48 815 17.1 8.40 - ------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities........ 31,892 $310.6 3.91% 31,626 $292.3 3.75% Demand deposits............................... 5,382 5,441 Other liabilities............................. 618 568 Preferred equity.............................. 215 215 Common equity................................. 3,125 3,008 - ------------------------------------------------------------------------------------------------------- Total liabilities and equity.............. $41,232 $40,858 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- SPREAD AND NET YIELD Interest rate spread.......................... 4.32% 4.29% Cost of funds supporting earning assets....... 3.43 3.27 Net yield on earning assets................... $435.6 4.80 $430.5 4.77 - ------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------
13 ------------------- BARNETT BANKS, INC. STATEMENTS OF FINANCIAL CONDITION CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
JUNE 30 DECEMBER 31 (UNAUDITED) (AUDITED) ------------------------ ----------- DOLLARS IN THOUSANDS 1996 1995 1995 - -------------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks.......................................... $ 2,109,441 $ 2,508,889 $ 2,658,661 Federal funds sold and securities purchased under agreements to resell....................................................... 1,054,475 10,207 110,484 Investment securities available for sale......................... 5,024,079 2,521,883 5,133,041 Investment securities held to maturity (fair value $184,187; $3,995,632 and $216,066)........................................ 173,083 3,982,497 200,960 Loans............................................................ 30,484,664 29,993,720 30,514,418 Less: Allowance for loan losses.................................. (506,892) (502,521) (505,148) Unearned income.............................................. (29,399) (41,380) (28,419) - -------------------------------------------------------------------------------------------------------- Net loans.................................................... 29,948,373 29,449,819 29,980,851 Premises and equipment........................................... 1,076,949 1,025,469 1,078,057 Intangible assets................................................ 616,017 801,403 758,297 Other assets..................................................... 1,672,037 1,486,754 1,633,194 - -------------------------------------------------------------------------------------------------------- Total assets............................................... $41,674,454 $41,786,921 $41,553,545 - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- LIABILITIES Demand deposits.................................................. $ 5,673,099 $ 5,614,372 $ 5,938,694 NOW and money market accounts.................................... 11,715,564 12,687,050 12,816,304 Savings deposits................................................. 3,149,093 3,417,652 3,292,157 Certificates of deposit under $100,000........................... 9,729,532 10,063,507 9,853,010 Other time deposits.............................................. 4,077,923 2,187,632 2,333,403 - -------------------------------------------------------------------------------------------------------- Total deposits............................................. 34,345,211 33,970,213 34,233,568 Short-term borrowings: Federal funds purchased and securities sold under agreements to repurchase................................................. 957,787 1,929,649 899,667 Commercial paper............................................... 870,783 537,125 669,766 Other short-term borrowings.................................... 110,127 452,272 509,516 Other liabilities................................................ 869,154 633,351 778,028 Long-term debt................................................... 1,227,716 925,176 1,190,814 - -------------------------------------------------------------------------------------------------------- Total liabilities.......................................... 38,380,778 38,447,786 38,281,359 - -------------------------------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Preferred stock, $.10 par value, 20,000,000 shares authorized; issued 10,669; 4,312,289 and 1,960,371.............. 267 215,307 97,753 Common stock, $2 par value, 200,000,000 shares authorized; issued 96,415,106; 96,465,227 and 94,865,368.................... 192,830 192,930 189,731 Contributed capital.............................................. 536,057 727,256 575,464 Net unrealized gain (loss) on investment securities available for sale........................................................ (2,358) 18,887 38,242 Retained earnings................................................ 2,634,837 2,265,325 2,445,810 Less: Employee stock ownership plan obligation, collateralized by 2,104,705; 2,495,343 and 2,317,067 shares.................... (67,957) (80,570) (74,814) - -------------------------------------------------------------------------------------------------------- Total shareholders' equity................................. 3,293,676 3,339,135 3,272,186 - -------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity................. $41,674,454 $41,786,921 $41,553,545 - -------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 14 - ------------------- BARNETT BANKS, INC. STATEMENTS OF INCOME CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
Three Months Six Months For the Periods Ended June 30--Dollars in Thousands (Unaudited) ----------------------- ----------------------- 1996 1995 1996 1995 - -------------------------------------------------------------------------------------------------------------- INTEREST INCOME Loans....................................................... $664,872 $640,770 $1,333,429 $1,245,936 Investment securities....................................... 83,180 96,323 162,611 202,340 Federal funds sold and securities purchased under agreements to resell.................................................. 9,175 725 17,465 2,065 - -------------------------------------------------------------------------------------------------------------- Total interest income..................................... 757,227 737,818 1,513,505 1,450,341 - -------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Deposits.................................................... 227,609 251,570 462,559 493,792 Federal funds purchased and securities sold under agreements to repurchase.............................................. 14,990 27,897 28,347 52,319 Other short-term borrowings................................. 14,081 13,304 28,157 21,889 Long-term debt.............................................. 24,718 17,821 48,189 34,931 - -------------------------------------------------------------------------------------------------------------- Total interest expense.................................... 281,398 310,592 567,252 602,931 - -------------------------------------------------------------------------------------------------------------- Net interest income....................................... 475,829 427,226 946,253 847,410 Provision for loan losses................................... 39,444 26,849 81,042 51,126 - -------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses....... 436,385 400,377 865,211 796,284 - -------------------------------------------------------------------------------------------------------------- NON-INTEREST INCOME Service charges on deposit accounts......................... 58,023 56,079 115,933 111,515 Consumer finance income..................................... 24,342 18,609 55,789 36,168 Trust income................................................ 20,586 19,707 41,776 39,064 Credit card discounts and fees.............................. 13,137 14,828 24,672 28,983 Mortgage banking income..................................... 18,772 24,980 40,135 33,974 Brokerage income............................................ 11,796 7,327 23,015 13,964 Other service charges and fees.............................. 35,941 28,605 65,714 56,249 Securities transactions..................................... 340 9 19,302 26 Other income................................................ 11,259 12,962 23,419 25,989 - -------------------------------------------------------------------------------------------------------------- Total non-interest income................................. 194,196 183,106 409,755 345,932 - -------------------------------------------------------------------------------------------------------------- NON-INTEREST EXPENSE Salaries and employee benefits.............................. 207,437 189,962 418,687 366,897 Net occupancy expense....................................... 33,933 31,642 67,353 62,268 Furniture and equipment expense............................. 37,805 35,600 75,134 70,919 Other expense............................................... 121,529 124,721 247,123 245,375 - -------------------------------------------------------------------------------------------------------------- Total non-interest expense................................ 400,704 381,925 808,297 745,459 - -------------------------------------------------------------------------------------------------------------- Net non-interest expense.................................. 206,508 198,819 398,542 399,527 - -------------------------------------------------------------------------------------------------------------- EARNINGS Income before income taxes.................................. 229,877 201,558 466,669 396,757 Income tax provision........................................ 90,346 69,381 178,939 135,881 - -------------------------------------------------------------------------------------------------------------- Net income................................................ $139,531 $132,177 $ 287,730 $ 260,876 - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE Primary: Earnings per share........................... $1.42 $1.30 $2.94 $2.57 Average number of shares..................... 98,093,525 98,072,393 97,060,071 97,835,596 Dividends on preferred stock................. $1 $4,550 $2,168 $9,100 Fully Diluted: Earnings per share........................... $1.42 $1.26 $2.91 $2.49 Average number of shares..................... 98,219,522 104,997,655 98,975,567 104,954,574 - -------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 15 ------------------- BARNETT BANKS, INC. STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
NET PREFERRED COMMON CONTRIBUTED UNREALIZED RETAINED ESOP DOLLARS IN THOUSANDS (UNAUDITED) STOCK STOCK CAPITAL GAIN(LOSS) EARNINGS OBLIGATION TOTAL - -------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD Balance at January 1, 1995............... $215,307 $193,466 $ 741,654 $(26,998) $2,098,977 $(88,223) $3,134,183 Net income............................... 260,876 260,876 Change in net unrealized gain (loss) on investment securities available for sale................................ 45,885 45,885 Cash dividends declared: Common ($.88 per share)................ (85,413) (85,413) Preferred.............................. (9,115) (9,115) Issuances of common stock: Stock purchase, option and employee benefit plans........................ 1,614 35,881 7,653 45,148 Repurchases of common stock.............. (2,150) (50,279) (52,429) - ------------------------------------------------------------------------------------------------------------------------------- Balance at June 30, 1995................. $215,307 $192,930 $ 727,256 $ 18,887 $2,265,325 $(80,570) $3,339,135 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD Balance at January 1, 1996............... $ 97,753 $189,731 $ 575,464 $ 38,242 $2,445,810 $(74,814) $3,272,186 Net income............................... 287,730 287,730 Change in net unrealized gain (loss) on investment securities available for sale................................ (40,600) (40,600) Cash dividends declared: Common ($1.01 per share)............... (96,523) (96,523) Preferred.............................. (2,180) (2,180) Issuances of common stock: Stock purchase, option and employee benefit plans........................ 1,483 40,407 6,857 48,747 Preferred stock conversions............ (97,486) 7,318 89,605 (563) Repurchases of common stock.............. (5,702) (169,419) (175,121) - ------------------------------------------------------------------------------------------------------------------------------- Balance at June 30, 1996................. $ 267 $192,830 $ 536,057 $ (2,358) $2,634,837 $(67,957) $3,293,676 - ------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 16 - ------------------- BARNETT BANKS, INC. STATEMENTS OF CASH FLOWS CONSOLIDATED--BARNETT BANKS, INC. AND AFFILIATES
FOR THE PERIODS ENDED JUNE 30--DOLLARS IN THOUSANDS (UNAUDITED) 1996 1995 - ------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income........................................................................ $ 287,730 $ 260,876 Reconcilement of net income to net cash provided by operating activities: Provision for loan losses....................................................... 81,042 51,126 Gains from securities transactions.............................................. (19,302) (26) Gain on securitization and sale of loans........................................ (47,934) (26,267) Depreciation and amortization................................................... 130,433 108,144 Employee benefits funded by equity.............................................. 12,216 13,288 Deferred income tax provision (benefit)......................................... (4,562) 26,494 Decrease in interest receivable................................................. 16,776 9,607 Increase (decrease) in interest payable......................................... (10,592) 21,259 Increase in other assets........................................................ (296,494) (42,707) Increase (decrease) in other liabilities........................................ 276,567 (173,182) Originations of loans held for sale............................................. (3,030,481) (1,482,460) Proceeds from sales of loans held for sale...................................... 2,879,074 1,043,712 Other........................................................................... (11,799) (19,530) - ------------------------------------------------------------------------------------------------------------- Net cash provided (used) by operating activities............................ 262,674 (209,666) - ------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investment securities available for sale............................. (2,191,971) (332,258) Proceeds from sales of investment securities available for sale................... 379,665 173,525 Proceeds from maturities of investment securities available for sale.............. 1,926,142 460,707 Purchases of investment securities held to maturity............................... (2,932) (238,581) Proceeds from maturities of investment securities held to maturity................ 31,074 1,203,716 Net decrease (increase) in loans.................................................. 17,539 (752,365) Purchases of premises and equipment............................................... (73,916) (69,542) Proceeds from sales of premises and equipment..................................... 15,179 26,552 Receipts (payments) related to dispositions and acquisitions, net of cash disposed and acquired............................................................ 378,249 (465,563) - ------------------------------------------------------------------------------------------------------------- Net cash provided by investing activities................................... 479,029 6,191 - ------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in demand, NOW, savings and money market accounts.................... (1,534,036) (1,856,386) Net increase in other time deposits............................................... 1,528,310 717,968 Net increase in federal funds purchased and securities sold under agreements to repurchase.................................................................... 58,120 679,143 Net increase (decrease) in other short-term borrowings............................ (198,372) 16,491 Principal repayments of long-term debt............................................ (213,098) (102,443) Proceeds from issuance of medium-term notes....................................... 50,000 475,000 Proceeds from issuance of long-term debt.......................................... 200,000 -- Issuance of common stock.......................................................... 35,968 31,860 Repurchases of common stock....................................................... (175,121) (52,429) Cash dividends.................................................................... (98,703) (94,528) - ------------------------------------------------------------------------------------------------------------- Net cash used by financing activities....................................... (346,932) (185,324) - ------------------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents......................................... 394,771 (388,799) Cash and cash equivalents, January 1.............................................. 2,769,145 2,907,895 - ------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, June 30................................................ $ 3,163,916 $ 2,519,096 - ------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------
FOR THE PERIODS ENDED JUNE 30, 1996 AND 1995, INCOME TAX PAYMENTS OF $198 MILLION AND $152 MILLION WERE PAID AND INTEREST OF $578 MILLION AND $583 MILLION WAS PAID, RESPECTIVELY. CASH AND CASH EQUIVALENTS INCLUDES CASH AND DUE FROM BANKS, INTEREST-BEARING DEPOSITS IN OTHER BANKS, SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND FEDERAL FUNDS SOLD. FOR EACH OF THE PERIODS ENDED JUNE 30, 1996 AND 1995, $24 MILLION AND $27 MILLION OF LOANS, RESPECTIVELY, WERE TRANSFERRED TO REAL ESTATE HELD FOR SALE. DURING THE PERIOD ENDED JUNE 30, 1996, THE COMPANY DISPOSED OF $559 MILLION OF NON-CASH ASSETS AND $55 MILLION OF LIABILITIES. DURING THE PERIOD ENDED JUNE 30, 1995, THE COMPANY ACQUIRED $990 MILLION OF NON-CASH ASSETS AND $525 MILLION OF LIABILITIES. THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 17 ------------------- BARNETT BANKS, INC. NOTES TO FINANCIAL STATEMENTS A. GENERAL The accounting and reporting policies of Barnett Banks, Inc. and its affiliates conform to generally accepted accounting principles and to predominant practices within the banking industry. The company has not changed its accounting and reporting policies from those disclosed in its 1995 Annual Report on Form 10-K. In the opinion of the company's management, all adjustments necessary to fairly present the financial position as of June 30, 1996 and 1995, and the results of operations and cash flows for the periods then ended, all of which are of a normal and recurring nature, have been included. The results of operations for the three and six-month periods ended June 30, 1996 may not be indicative of operating results for the year ending December 31, 1996. Certain prior year and prior quarter amounts have been reclassified to conform to current classifications. In June 1996, the company consolidated its 32 banking charters into 7. Several of its non-bank affiliates were also consolidated into a resulting subsidary, Barnett Bank, N.A. In May 1996, the company completed the sale of its mortgage servicing portfolio and other assets into HomeSide, Inc., a mortgage servicing venture in which the company holds a one-third ownership interest. B. LOANS June 30--Dollars in Thousands Net of Unearned Income 1996 1995 - --------------------------------------------------------------- Commercial, financial and agricultural. . . . . . . . . . . $ 4,902,115 $ 4,611,842 Real estate construction. . . . . . 818,364 954,073 Commercial mortgages. . . . . . . . 2,049,812 2,345,161 Residential mortgages . . . . . . . 10,095,321 11,257,370 Installment . . . . . . . . . . . . 10,045,435 8,560,266 Bank card . . . . . . . . . . . . . 1,785,464 1,486,919 Credit lines. . . . . . . . . . . . 758,754 736,709 - --------------------------------------------------------------- Total . . . . . . . . . . . . . $30,455,265 $29,952,340 - --------------------------------------------------------------- - --------------------------------------------------------------- C. ALLOWANCE FOR LOAN LOSSES For the Six Months Ended June 30-- Dollars in Thousands 1996 1995 - --------------------------------------------------------------- Beginning balance . . . . . . . . . $ 505,148 $501,447 Recoveries. . . . . . . . . . . . . 23,935 26,911 Provision expense . . . . . . . . . 81,042 51,126 Loans charged off . . . . . . . . . (104,784) (78,654) Other, net. . . . . . . . . . . . . 1,551 1,691 - --------------------------------------------------------------- Ending balance. . . . . . . . . . . $ 506,892 $502,521 - --------------------------------------------------------------- - --------------------------------------------------------------- 18 - ------------------- BARNETT BANKS, INC. D. LONG-TERM DEBT June 30--Dollars in Thousands 1996 1995 - --------------------------------------------------------------- 7.75% Sinking Fund Debentures, due 1997. . . . . . . . . . . . . $ 9,500 $ 10,200 Less: Face value of debentures repurchased and held for future retirements. . . . . . . . (72) (772) - --------------------------------------------------------------- Total outstanding. . . . . . . . 9,428 9,428 8.50% Subordinated Capital Notes, due 1999. . . . . . . . . . . . . . . 200,000 200,000 Medium-term notes, due in varying maturities through 2003, with interest from a floating 4.275% to a fixed 10.00%. . . . . . . . . . 401,500 376,150 9.875% Subordinated Capital Notes, due 2001. . . . . . . . . . . . . 100,000 100,000 10.875% Subordinated Capital Notes, due 2003. . . . . . . . . . . . . 55,000 55,000 8.50% Subordinated Capital Notes, due 2007. . . . . . . . . . . . . 100,000 100,000 6.90% Subordinated Capital Notes, due 2005. . . . . . . . . . . . . 150,000 -- Senior Notes with interest from a floating 5.29% due 1998 . . . . . 200,000 -- Mortgage collaterized Bonds, due 1996 with interest from a floating 6.348%. . . . . . . . . . . . . . -- 71,927 Capitalized lease obligations . . . 11,788 12,671 - --------------------------------------------------------------- Total. . . . . . . . . . . . . . $1,227,716 $925,176 - --------------------------------------------------------------- - --------------------------------------------------------------- E. EARNINGS PER SHARE The weighted-average number of shares used in the computation of earnings per share are as follows:
For the Periods Ended June 30-- Three Months Six Months ------------------------ ------------------------ Dollars in Thousands 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------- PRIMARY SHARES Average common shares outstanding. . . . . 96,603,219 97,082,195 95,570,133 97,031,661 Common shares assumed outstanding to reflect dilutive effect of: Convertible preferred stock . . . . . . 27,776 31,936 28,112 31,936 Common stock options. . . . . . . . . . 1,462,530 958,262 1,461,826 771,999 - ------------------------------------------------------------------------------------------------- Total . . . . . . . . . . . . . . . . . 98,093,525 98,072,393 97,060,071 97,835,596 - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- Adjustments for preferred dividends. . . . $1 $4,550 $2,168 $9,100 - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- Three Months Six Months ------------------ ------------------ For the Periods Ended June 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------- FULLY DILUTED SHARES Average common shares outstanding. . . . . 96,603,219 97,082,195 95,570,133 97,031,661 Common shares assumed outstanding to reflect dilutive effect of: Convertible preferred stock . . . . . . 153,773 6,716,876 1,943,608 6,716,876 Common stock options. . . . . . . . . . 1,462,530 1,198,584 1,461,826 1,206,037 - ------------------------------------------------------------------------------------------------- Total . . . . . . . . . . . . . . . . . 98,219,522 104,997,655 98,975,567 104,954,574 - ------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------
19 ------------------- BARNETT BANKS, INC. Barnett Banks, Inc. Post Office Box 40789 Jacksonville Florida 32203-0789 Telephone: 904/791-7720 EX-27 2 EXHIBIT 27 FINANCIAL DATA SCHEDULE
9 0000010012 BARNETT BANKS, INC. 1,000,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 2,109 0 1,054 0 5,024 173 184 30,455 507 41,674 34,345 1,939 869 1,228 0 0 193 3,101 41,674 1,333 163 17 1,514 463 567 946 81 19 808 467 467 0 0 288 2.94 2.91 0 0 0 0 0 0 0 0 0 0 0 0
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