EX-99.1 3 b42764fbex99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 [LOGO] FLEET FLEETBOSTON FINANCIAL Contacts: Media: James Mahoney Investor: John Kahwaty (617) 434-9552 (617) 434-3650 FLEETBOSTON REPORTS FIRST QUARTER EARNINGS OF $735 MILLION OR $.70 PER SHARE Boston, Massachusetts, April 16, 2002: FleetBoston Financial (FBF-NYSE) today reported first quarter earnings of $735 million, or $.70 per share compared with net income of $142 million, or $.12 per share in the first quarter of 2001. Return on assets and return on equity for the quarter were 1.52% and 16.9%, respectively compared with 0.27% and 2.8%, respectively, in the first quarter of 2001. Prior year results included $642 million of net after-tax charges related to the merger of FleetBoston and Summit Bancorp, the sale of Fleet Mortgage Group, the restructuring of Robertson Stephens and Quick and Reilly, and business sale gains. Excluding these items, earnings per share in the first quarter of 2001 was $.71. 2002 results were marked by strong cash management revenues, continued expense control, and improved earnings from a number of consumer and wholesale banking businesses. Principal Investing improved due to significantly lower portfolio writedowns compared with a year ago. These improvements were offset by higher domestic credit costs, lower commercial loan volume, and a decline in earnings from Argentina. Chad Gifford, President and Chief Executive Officer of FleetBoston commented, "As noted in the major announcement we made today concerning actions we are taking with some of our non-core businesses, we are focusing this company on our strengths: personal financial services and wholesale banking, especially in our footprint. We intend to concentrate our investment spending in these core franchises, while freeing up capital that has been supporting other businesses whose earnings streams have proven to be too volatile or where the risk in the business has weighed heavily on our shareholder value. Over the past year, we have invested significant time and talent in improving the quality of service in our consumer-related businesses. Customer favorability scores are noticeably better over the past year, we are seeing better results from our cross-selling efforts, wait times are down, core deposits have increased 10% from a year ago, employee turnover has been sharply reduced, and customer attrition is declining. Our recent announcement to add 500 tellers illustrates our resolve to continue to improve the branch experience for our customers. On-line enrollments continue to rise as the HomeLink product has proven to be a great attraction for new customers, as well as a vehicle that motivates existing customers to conduct more of their banking and brokerage business with us. Our asset management business has begun to gain traction under the Columbia brand name and we have assembled a terrific senior management team, with proven skills and experience, to lead this business going forward. Finally, we were also very proud to have recently received an "Outstanding" rating from the Comptroller of the Currency for our efforts in meeting the needs of the communities we serve, including low to moderate income neighborhoods." FIRST QUARTER FINANCIAL HIGHLIGHTS Revenue for the first quarter was $3.3 billion, down 4% from the first quarter of last year but up 27% from the $2.6 billion recorded in the fourth quarter. The linked-quarter increase was driven by improved capital markets revenue, the absence of last quarter's charge for Argentina, and higher levels of investment services revenue and net interest revenue/margin. The decline from a year ago was mainly the result of lower net interest revenue, lower revenue from Argentina, and the impact of selling Fleet Mortgage. Net interest margin was 4.13% in the current quarter, compared with 3.96% in the fourth quarter and 4.23% a year ago. Noninterest expense was $1.8 billion in the current quarter, down 17% from the fourth quarter and 38% from a year ago. The decline from a year ago reflects lower restructuring charges, the absence of a loss from the sale of Fleet Mortgage and lower operating expenses. Various core businesses registered net income growth from the prior year including commercial real estate, retail finance, leasing, credit card, and consumer lending. Eugene M. McQuade, Vice-Chairman and Chief Financial Officer stated, "In our earnings release on January 29, we discussed the situation in Argentina as well as the actions we took to reserve for potential losses arising from the economic turmoil in the country. Since that time, the Duhalde administration has made progress in getting certain measures approved by Congress and in reaching a revenue sharing agreement with the provinces. Currently, the country is negotiating a new loan package with the IMF that it believes will help propel it towards economic recovery. While it is difficult to predict how the situation in Argentina will evolve, we continue to believe that the reserving actions we took in the fourth quarter should prove adequate. For the first quarter, our Argentine operations reported a modest operating profit and equity was reduced by $175 million as a result of translation losses from adopting the peso as the reporting currency for accounting purposes." CREDIT QUALITY/BALANCE SHEET Nonperforming assets were $2.07 billion, or 1.67% of related assets, at March 31, 2002, compared with $1.85 billion, or 1.44% of related assets, at December 31, 2001. The provision for credit losses was $410 million in the current quarter compared with net chargeoffs of $389 million. In the first quarter of 2001, the provision was $315 million and net chargeoffs were $270 million. The reserve for credit losses was $3.6 billion at March 31, 2002, representing 2.92% of total loans and leases. Total assets at March 31, 2002 were $192 billion, compared with $212 billion at March 31, 2001. The decrease from a year ago is due, in part, to a decline in the domestic commercial loan portfolio, the sale of our mortgage company last June, and lower asset levels in Argentina. Average domestic core deposits were $86 billion in the current quarter and are up 10% from the end of 2000. Stockholders' equity amounted to $17.6 billion at March 31, 2002, with a common equity to assets ratio of 9.0%. A detailed financial package containing supplemental information on the first quarter financial results can be found by accessing the Corporation's web site www.fleet.com. Eugene M. McQuade, Vice-Chairman and Chief Financial Officer, will hold a conference call, which will be broadcast live on the Corporation's web site, at 7:45 AM today to discuss first quarter results. The call in number is 888-942-9690 (international: 712-271-0579) and the passcode is Fleet. A taped playback will be available from April 16 until April 18 (7:00 PM EDT) and can be accessed by calling 800-925-4781 (international: 402-220-4189). ************* This release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from estimates. These risks and uncertainties include, among other things, (1) changes in general political and economic conditions, either domestically or internationally; (2) continued economic, political and social instability in Argentina, including the potential impact of those conditions on the economies of other countries in which the Corporation is doing business; (3) the economic effects of the September 11, 2001 terrorist attacks against the United States and related events, including the potential expansion of hostilities; (4) further deterioration in credit quality, including the resultant effect on the level of the Corporation's provision for credit losses, nonperforming assets, net chargeoffs and reserve for credit losses; (5) interest rate and currency fluctuations, equity and bond market fluctuations and inflation; (6) continued weakness in the global capital markets and the impact of such weakness on the Corporation's Principal Investing and other capital markets businesses, including Robertson Stephens; (7) changes in competitive product and pricing pressures among financial institutions within the Corporation's markets; (8) legislative or regulatory developments, including changes in laws concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, insurance and other aspects of the financial services industry; (9) changes in accounting rules, policies, practices and procedures; and (10) technological changes, including the impact of the Internet on the Corporation's businesses. FLEETBOSTON FINANCIAL FINANCIAL HIGHLIGHTS ================================================================================ THREE MONTHS ENDED MARCH 31, MARCH 31, 2002 2001 -------------------------------------------------------------------------------- FOR THE PERIOD ($ IN MILLIONS) Net Income $ 735 $ 142 Revenue 3,336 3,460 Total Expense 1,756 2,853 Provision for Credit Losses 410 315 PER COMMON SHARE Diluted earnings per share $ .70 $ .12 Cash dividends declared .35 .33 Book value (period-end) 16.55 17.38 AT PERIOD-END ($ IN BILLIONS) Assets $ 192.0 $ 211.7 Loans 123.7 131.6 Deposits 121.5 128.0 Total stockholders' equity 17.6 19.4 RATIOS Return on average assets 1.52% .27% Return on common equity 16.92 2.79 Net interest margin 4.13 4.23 Total equity/assets (period-end) 9.2 9.2 Tangible common equity/assets 6.6 6.9 Tier 1 risk-based capital ratio 8.1 8.0 Total risk-based capital ratio 11.7 11.7 ASSET QUALITY ($ IN MILLIONS) Nonperforming assets $ 2,070 $ 1,245 Reserve for credit losses 3,609 2,754 Nonperforming assets as a % of related assets 1.67% .95% Reserve for credit losses to period-end loans 2.92 2.09 Reserve for credit losses to nonperforming loans 177 229 Net charge-offs/average loans 1.25 .82 ================================================================================ FLEETBOSTON FINANCIAL CONSOLIDATED INCOME STATEMENTS ($ IN MILLIONS) ================================================================================ THREE MONTHS ENDED MARCH 31, MARCH 31, 2002 2001 -------------------------------------------------------------------------------- Net interest income (FTE) $ 1,752 $ 1,936 Noninterest income: Investment services revenue 433 388 Banking fees and commissions 389 390 Capital markets revenue 339 359 Credit card revenue 172 164 Business sale and divestiture gains -- 146 Other 251 77 -------------------------------------------------------------------------------- Noninterest income 1,584 1,524 -------------------------------------------------------------------------------- Revenue 3,336 3,460 -------------------------------------------------------------------------------- Noninterest expense: Employee compensation and benefits 926 1,052 Occupancy 139 150 Equipment 130 135 Intangible asset amortization 22 100 Merger and Restructuring charges and loss on sale of Fleet Mortgage 5 859 Other 534 557 -------------------------------------------------------------------------------- Noninterest expense 1,756 2,853 -------------------------------------------------------------------------------- Earnings before provision and income taxes 1,580 607 Provision for credit losses 410 315 Income taxes and tax-equivalent adjustment 435 150 -------------------------------------------------------------------------------- Net income $ 735 $ 142 ================================================================================ Diluted earnings per share $ .70 $ .12 FLEETBOSTON FINANCIAL CONSOLIDATED BALANCE SHEETS ($ IN MILLIONS) ================================================================================ March 31, March 31, 2002 2001 -------------------------------------------------------------------------------- ASSETS: Cash and equivalents $ 11,896 $ 18,112 Securities 29,941 25,609 Trading assets 5,891 6,523 Loans and leases 123,710 131,640 Reserve for credit losses (3,609) (2,754) Due from brokers/dealers 3,722 3,448 Mortgages held for resale 348 3,574 Other assets 20,133 25,589 -------------------------------------------------------------------------------- Total assets $ 192,032 $ 211,741 ================================================================================ LIABILITIES: Deposits $ 121,522 $ 127,989 Short-term borrowings 14,320 18,562 Due to brokers/dealers 3,751 3,700 Long-term debt 24,348 30,134 Trading liabilities 1,877 2,195 Other liabilities 8,628 9,783 -------------------------------------------------------------------------------- Total liabilities 174,446 192,363 ================================================================================ STOCKHOLDERS' EQUITY: Preferred stock 271 566 Common stock 17,315 18,812 -------------------------------------------------------------------------------- Total stockholders' equity 17,586 19,378 -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 192,032 $ 211,741 ================================================================================