FORM 10-K
SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO __________
Commission file number: 1-6522
BANK OF BOSTON CORPORATION
(Exact name of Registrant as specified in its charter)
MASSACHUSETTS 04-2471221
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (6l7) 434-2200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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Title of each class
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Common Stock, par value $1.50 per share
Preferred Stock Purchase Rights
Adjustable Rate Cumulative Preferred Stock, Series A (liquidation preference $50
per share)
Adjustable Rate Cumulative Preferred Stock, Series B (liquidation preference $50
per share)
Adjustable Rate Cumulative Preferred Stock, Series C (liquidation preference
$100 per share)
Depositary Shares, each representing one-tenth of a share of 8.60% Cumulative
Preferred Stock, Series E
(liquidation preference $25 per Depositary Share)
Depositary Shares, each representing one-tenth of a share of 7 7/8% Cumulative
Preferred Stock, Series F
(liquidation preference $25 per Depositary Share)
NAME OF EACH EXCHANGE ON WHICH REGISTERED:
-------------------------------------
Each class is registered on the New York Stock Exchange and the Boston Stock
Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ((S) 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Aggregate market value of shares of common Number of shares of common
stock held by non-affiliates of Registrant stock outstanding as of
as of March 1, 1997 March 1, 1997
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$11,566,085,355 154,257,660
DOCUMENTS INCORPORATED BY REFERENCE:
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1. Pertinent extracts from Registrant's 1996 Annual Report to Stockholders
(Parts I, II and IV).
2. Pertinent extracts from Registrant's Proxy Statement in connection with the
Registrant's 1997 Annual Meeting of Stockholders (Part III).
INDEX
Name of Item Page
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PART I
Item 1. Business............................................ 3
Statistical Disclosure by Bank Holding
Companies....................................... 12
Item 2. Properties.......................................... 18
Item 3. Legal Proceedings................................... 18
Item 3A. Executive Officers of the Corporation............... 20
Item 4. Submission of Matters to a Vote of Security
Holders............................................ 21
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters...................... 22
Item 6. Selected Financial Data.......................... 22
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 22
Item 8. Financial Statements and Supplementary Data...... 22
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.............. 23
PART III
Item 10. Directors and Executive Officers of the Registrant 23
Item 11. Executive Compensation............................ 23
Item 12. Security Ownership of Certain Beneficial Owners
and Management................................... 23
Item 13. Certain Relationships and Related Transactions.... 23
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K...................................... 24
SIGNATURES
Signatures......................................... II-1
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PART I
ITEM 1. BUSINESS.
THE CORPORATION
Bank of Boston Corporation (the "Corporation") is a registered bank
holding company, organized in 1970 under Massachusetts law with both national
and international operations. The Corporation, through its subsidiaries and, in
certain cases, joint ventures, is engaged in providing a wide variety of
personal, corporate and global banking services to individuals, corporate and
institutional customers, governments and other financial institutions. The
Corporation, together with its subsidiaries, operates a network of 650 offices
across the U.S. and more than 100 offices in 24 countries in Latin America,
Europe, Asia and Africa. As of December 31, 1996, approximately 76% of the
Corporation's total loan volume consisted of domestic loans and leases, with
the balance international. As of December 31, 1996, the Corporation's
subsidiaries employed, in the aggregate, 21,990 full-time equivalent employees
in their domestic and foreign operations.
The Corporation's principal subsidiary is The First National Bank of
Boston ("FNBB"), a national banking association with its headquarters in
Massachusetts. Other major banking subsidiaries of the Corporation are
BayBank, N.A. ("BBNA"), Bank of Boston Connecticut ("BKB Connecticut"), Rhode
Island Hospital Trust National Bank ("Hospital Trust") and BayBank NH, N.A.
("BBNH").
The executive office of the Corporation and the head office of FNBB are
located at 100 Federal Street, Boston, Massachusetts 02110 (Telephone (617)
434-2200).
ACQUISITION OF BAYBANKS, INC.
On December 12, 1995, the Corporation and BayBanks, Inc. ("BayBanks")
entered into an Agreement and Plan of Merger providing for the merger of a
wholly owned subsidiary of the Corporation with and into BayBanks (the "
Merger"), with BayBanks becoming a wholly owned subsidiary of the Corporation.
The Merger was consummated on July 29, 1996, and was accounted for as a pooling
of interests. Under the terms of the Merger, approximately 43.6 million shares
of the Corporation's common stock, par value $1.50 per share, were exchanged
for all of the outstanding shares of BayBanks' common stock, par value $2.00
per share. The combination of the two Boston-based institutions created a
consumer and corporate banking entity with over $60 billion in assets and over
$40 billion in deposits. In connection with the Merger, and specifically to
address competitive issues raised by the United States Department of Justice
and the Massachusetts Attorney General relative to the transaction, the
Corporation sold 20 branches of the combined entity, having aggregate deposits
of approximately $700 million and loans of approximately $500 million, in the
fourth quarter of 1996.
In order to facilitate the establishment of a new brand identity for the
combined Bank of Boston and BayBanks organizations, the Corporation will be
seeking approval from stockholders at its 1997 Annual Meeting to change the
name of the Corporation to "BankBoston Corporation." In addition, by the middle
of 1997, the Corporation intends to merge BBNA into FNBB, with the combined
bank being called "BankBoston, N.A.," and to make the "BankBoston" name a
single brand for the advertising and marketing of all of the Corporation's
branches, products and operations both domestically and internationally.
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BUSINESS OF THE CORPORATION
During the latter half of 1996, the Corporation announced certain
organizational and managerial changes, including the creation of a Policy
Council. The Policy Council, the senior decision-making group of the
Corporation, consists of 14 members, including Chief Executive Officer Charles
K. Gifford, Chairman William M. Crozier, Jr., President and Chief Operating
Officer Henrique de Campos Meirelles, Vice Chairman, Chief Financial Officer
and Treasurer William J. Shea, Vice Chairman, Corporate Banking, Paul F. Hogan
and Executive Vice President, Chief of Staff, Susannah M. Swihart (who serves
as Chair of the corporate-wide Marketing Committee). The remaining members of
the Policy Council include six executives who manage the Corporation's other
key line businesses and the Chairs of the corporate-wide Risk Management and
Human Resources Committees. In addition to the Risk Management and Human
Resources Committees, the Policy Council oversees the Technology Policy
Committee, the Asset, Liability and Capital Committee and the Marketing
Committee. The Corporation was previously managed by a Corporate Working
Committee, which consisted of the members of the Chairman's Office and a group
of executives in charge of core business units and corporate-wide support
areas.
The Corporation's principal revenue-producing areas are grouped into the
following major business lines: Corporate Banking, Regional Consumer and Small
Business, Latin America, Global Asset Management and Other Global. For a
discussion of the operating results and other key financial measures of these
five business lines for 1996 and 1995, as well as discussions of the
Corporation's business activities, including its lending activities, its cross-
border outstandings and the management of its off-balance-sheet exposure, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 22 through 43 of the Corporation's 1996 Annual Report to
Stockholders, which pages are included in Exhibit 13 hereto and which
discussions are incorporated herein by reference.
Activities in which the Corporation and its subsidiaries are presently
engaged or which they may undertake in the future are subject to certain
statutory and regulatory restrictions. Banks and bank holding companies are
extensively regulated under both federal and state law. There are various legal
limitations upon the extent to which bank subsidiaries of the Corporation can
finance or otherwise supply funds to the Corporation or certain of its
affiliates. See "Supervision and Regulation."
For financial information on the Corporation's revenue, net income and
assets attributable to its domestic and international operations, see "Segment
Information" which appears in Note 26 to the Financial Statements and "Cross-
Border Outstandings" and "Emerging Markets Countries," which appear on pages 35
through 37 of the Corporation's 1996 Annual Report to Stockholders, which pages
are included in Exhibit 13 hereto and which information is hereby incorporated
by reference.
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COMPETITION AND INDUSTRY CONSOLIDATION
The Corporation's subsidiaries compete with other major financial
institutions, including commercial banks, investment banks, mutual savings
banks, savings and loan associations, credit unions, consumer finance companies
and other nonbank institutions, such as insurance companies, major retailers,
brokerage firms, and investment companies in New England, throughout the United
States, and internationally. Principal methods of competing effectively in the
financial services industry are to improve customer service through the quality
and range of services available, to improve efficiencies and to price services
competitively.
One outgrowth of the competitive environment discussed above has been
significant consolidation within the financial services industry both on a
national and regional level. The Corporation engages on an ongoing basis in
reviewing and discussing strategic initiatives focused on leveraging its core
competencies over attractive markets, including the expansion of its global
banking businesses, increasing the capital markets activities of its corporate
banking business, the divestiture of non-core business units and the formation
of strategic alliances. Consistent with this strategy, in 1996 and early 1997,
the Corporation engaged in the following transactions in addition to the
completion of the BayBanks acquisition:
During the first half of 1996, the Corporation completed a
transaction with two equity investment firms and Barnett Banks, Inc.
("Barnett") to form an independent mortgage company, HomeSide, Inc.
("HomeSide"), to which the Corporation and Barnett sold their mortgage
banking subsidiaries, BancBoston Mortgage Corporation ("BBMC") and Barnett
Mortgage Company, respectively. The Corporation, Barnett and the two
equity investment firms each held an approximate one-third interest in
HomeSide, which, as a result of an initial public offering in January,
1997, was reduced to approximately 27 percent.
In June of 1996, the Corporation completed its acquisition of The
Boston Bancorp ("Bancorp"), the holding company of South Boston Savings
Bank, a Massachusetts chartered savings bank with approximately $1.3
billion in deposits at the time of the acquisition. In connection with
this acquisition, the Corporation exchanged 4.6 million shares of its
common stock, with a value of approximately $229 million, for all of the
outstanding common stock of Bancorp. The transaction was accounted for as
a purchase.
During the third quarter of 1996, the Corporation completed its
acquisition of GBFC, Inc. ("GBFC"), a specialty finance company affiliated
with Gordon Brothers Finance Company, a Boston-based firm offering a
variety of restructuring services to the retail industry. GBFC, the
largest asset-based lender in the country exclusively devoted to meeting
the financing needs of retailers, has originated and agented over $300
million in loans for middle-market retailers throughout North America.
In the first quarter of 1997, FNBB formed a pension company joint
venture in Mexico with American International Group, Inc. and The Bank of
Nova Scotia. This entity, named "Previnter," was established in response
to legislation recently adopted in Mexico privatizing that country's
social security system.
As previously announced, in February, 1997, the Corporation
terminated an agreement to sell its consumer finance subsidiary, Fidelity
Acceptance Corporation ("FAC"), to a third party. The Corporation is
continuing its strategic review of this
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business and its other national consumer lending businesses (Ganis Credit
Corporation and the national credit card portfolio).
The Corporation intends to continue to explore strategic opportunities as
they arise in order to expand its businesses in its selected markets and
improve service to its customers.
In 1994, federal legislation was enacted which permits certain interstate
banking transactions. It is anticipated that this legislation may facilitate
consolidation within financial institutions that currently have separate
operations in two or more states and within the financial services industry in
general. See "Supervision and Regulation" for a discussion of the impact of
this legislation upon the Corporation and its subsidiaries.
SUPERVISION AND REGULATION
The business in which the Corporation and its subsidiaries are engaged is
subject to extensive supervision, regulation and examination by various bank
regulatory authorities and other governmental agencies in the states and
countries where the Corporation and its subsidiaries operate. The supervision,
regulation and examination to which the Corporation and its subsidiaries are
subject are often intended by the regulators primarily for the protection of
depositors or are aimed at carrying out broad public policy goals, rather than
for the protection of security holders.
Several of the more significant regulatory provisions applicable to banks
and bank holding companies to which the Corporation and its subsidiaries are
subject are discussed below along with certain regulatory matters concerning
the Corporation and its bank subsidiaries. To the extent that the following
information describes statutory or regulatory provisions, it is qualified in
its entirety by reference to the particular statutory provisions. Any change
in applicable law or regulation may have a material effect on the business and
prospects of the Corporation and its subsidiaries.
THE CORPORATION
The Corporation, as a bank holding company under the Bank Holding Company
Act of 1956, as amended (the "BHCA"), is registered with the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board") and is regulated
under the provisions of the BHCA. The BHCA requires every bank holding company
to obtain the prior approval of the Federal Reserve Board before it may acquire
substantially all of the assets of any bank, or ownership or control of any
voting shares of any bank, if, after such acquisition, it would own or control,
directly or indirectly, more than 5% of the voting shares of such bank.
Under the BHCA, the Corporation is prohibited, with certain exceptions,
from acquiring direct or indirect ownership or control of more than 5% of the
voting shares of any company which is not a bank and from engaging in any
business other than that of banking, managing or controlling banks or
furnishing services to, or acquiring premises for, its affiliated banks. The
Corporation may, however, engage in and own voting shares of companies engaging
in certain activities determined by the Federal Reserve Board, by order or by
regulation, to be so closely related to banking or to managing or controlling
banks "as to be a proper incident thereto." The location of such "nonbank"
subsidiaries of the Corporation is not restricted geographically under the
BHCA. The Corporation is required by the BHCA to file with the Federal Reserve
Board periodic reports and such additional reports as the Federal Reserve Board
may require. The
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Federal Reserve Bank of Boston performs periodic examinations of the
Corporation and certain of its subsidiaries.
Since the Corporation is also a bank holding company under the laws of
Massachusetts, the Commissioner of Banks for The Commonwealth of Massachusetts
has authority to require certain reports from the Corporation from time to time
and to examine the Corporation and each of its subsidiaries other than national
banking associations. Prior approval of the Massachusetts Board of Bank
Incorporation also may be required before the Corporation may acquire any
additional commercial banks located in Massachusetts. Acquisitions by the
Corporation of non-Massachusetts banks or bank holding companies may be subject
to the prior approval by both the Massachusetts and the applicable state or
federal banking regulators. Massachusetts has an interstate bank acquisition
law which permits banking organizations outside Massachusetts to acquire
Massachusetts banking organizations if the state law of the acquirer permits
acquisitions of banking organizations in that state by Massachusetts-based
banking organizations. In addition, in August, 1996, legislation was passed in
Massachusetts providing for an early opt-in to the federal interstate banking
legislation enacted in 1994. See "Legislation" below with respect to federal
interstate banking legislation.
Massachusetts has a business combinations law which provides that if any
acquirer buys 5% or more of a target company's stock without the prior approval
of the target company's board of directors, it generally may not (i) complete
the acquisition through a merger, (ii) pledge or sell any assets of the target
company, or (iii) engage in other self-dealing transactions with the target
company for a period of three years. The prior board approval requirement does
not apply if the acquirer buys at least 90% of the target company's outstanding
stock in the transaction in which it crosses the 5% threshold or if the
acquirer, after crossing the threshold, obtains the approval of the target
company's board of directors and two-thirds of the target company's stock held
by persons other than the acquirer. This legislation automatically applies to
Massachusetts corporations, including the Corporation, which did not elect to
"opt out" of the statute. Massachusetts law also provides for classified boards
of directors for most public companies incorporated in Massachusetts, unless
the company elected to "opt out" of the law. As a result of this law, the
Corporation's Board of Directors is divided into three classes of Directors and
the three-year terms of the classes are staggered.
Other Massachusetts legislation exists which is intended to provide
limited anti-takeover protection to certain Massachusetts corporations by
preventing an acquirer of certain percentages of such corporation's stock from
obtaining voting rights in such stock unless the corporation's other
stockholders authorize such voting rights. The legislation automatically
applies to certain Massachusetts corporations which have not elected to "opt
out" of the statute. The Corporation, by vote of its Board of Directors, has
"opted out" of the statute's coverage.
In June 1990, the Board of Directors of the Corporation adopted a
stockholder rights agreement (the "Rights Agreement") providing for a dividend
of one preferred stock purchase right for each outstanding share of common
stock of the Corporation (the "Rights"). Under certain circumstances, the
Rights would enable stockholders to purchase common stock of the Corporation or
of an acquiring Corporation at a substantial discount. The dividend was
distributed on July 12, 1990 to stockholders of record on that date. Holders
of shares of the Corporation's common stock issued subsequent to that date
receive the Rights with their shares. The Rights trade automatically with
shares of the Corporation's common stock and become exercisable only under
certain circumstances.
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The purpose of the Rights Agreement is to encourage potential acquirers to
negotiate with the Corporation's Board of Directors prior to attempting a
takeover and to provide the Board with leverage in negotiating on behalf of all
stockholders the terms of any proposed takeover. The Rights may have certain
anti-takeover effects. The Rights should not interfere, however, with any
merger or other business combination approved by the Board of Directors. The
Rights Agreement was amended in December, 1995 to exclude the BayBanks merger
agreement, the stock option agreement granted by the Corporation to BayBanks in
connection with the merger agreement, and all transactions contemplated
thereby, from the scope of the Rights Agreement. For a further discussion of
the Corporation's Rights Agreement, see the description of the Rights set forth
in the Corporation's registration statement on Form 8-A relating to the Rights
(including the Rights Agreement, dated as of June 28, 1990, between the
Corporation and FNBB, as Rights Agent, which is attached as an exhibit to the
Form 8-A) and the amendment thereto, which are incorporated herein by
reference.
THE CORPORATION'S BANK SUBSIDIARIES
GENERAL
The Corporation's bank subsidiaries that are national banks are subject to
the supervision of, and are regularly examined by, the Office of the
Comptroller of the Currency (the "OCC"). BKB Connecticut, the Corporation's
state-chartered bank subsidiary, is subject to the supervision of, and is
regularly examined by, the Federal Deposit Insurance Corporation (the "FDIC")
and the Connecticut Banking Commissioner. The domestic deposits of the
Corporation's subsidiary banks are insured (to the extent allowed by law) by
the Bank Insurance Fund of the FDIC (the "BIF") and, accordingly, those banks
are subject to the regulations of the FDIC. As members of the Federal Reserve
System, the Corporation's nationally-chartered banks are also subject to
regulation by the Federal Reserve Board. BBNA, BKB Connecticut and Hospital
Trust, as members of the Federal Home Loan Bank of Boston, are also subject to
the regulations of the Federal Housing Finance Board.
FIRREA
Under the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 ("FIRREA"), a bank can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC in connection with (i) the
default of a commonly controlled bank or (ii) any assistance provided by the
FDIC to a commonly controlled bank in danger of default. The term "default" is
defined as the appointment of a conservator or receiver for such bank and "in
danger of default" as the existence of certain conditions indicating that a
"default" is likely to occur in the absence of regulatory assistance. In
addition, FIRREA broadened the enforcement powers of the federal banking
agencies, including the power to impose fines and penalties over all financial
institutions. Further, under FIRREA the failure to meet capital guidelines
could subject a financial institution to a variety of regulatory actions,
including the termination of deposit insurance by the FDIC.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") also provided for expanded regulation of financial institutions.
Under FDICIA, banks are placed in one of five capital categories, ranging from
"well-capitalized" to "critically undercapitalized," for
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which the federal banking agencies have established specific capital ratio
levels. Pursuant to the agencies' regulations, an institution is considered
"well capitalized" if it has a total risk-based capital ratio of at least 10%,
a tier 1 risk-based capital ratio of at least 6%, a leverage capital ratio of
at least 5% and is not subject to a cease and desist order, formal agreement,
capital directive, or prompt corrective action directive that requires it to
achieve or maintain a higher level of capital. At December 31, 1996, all of the
Corporation's banking subsidiaries met the requirements of the "well
capitalized" category. The capital categories of the Corporation's bank
subsidiaries are determined solely for purposes of applying FDICIA's
provisions, and such capital categories may not constitute an accurate
representation of the overall financial condition or prospects of any of the
Corporation's bank subsidiaries.
OTHER REGULATORY RESTRICTIONS
The FDIC's deposit insurance assessments are based on a risk-based system.
The risk-based system places a bank in one of nine risk categories, principally
on the basis of its capital level and an evaluation of the bank's risk to the
BIF, and bases premiums on the probability of loss to the FDIC with respect to
each individual bank. During 1996, the assessment premiums for the BIF risk-
based system ranged from $0 to $.27 per $100 of insured deposits.
The Corporation's domestic subsidiary banks and the subsidiaries of such
banks are subject to a large number of other regulatory restrictions, including
certain restrictions upon: (i) any extensions of credit by such banks to, from
or for the benefit of the Corporation and the Corporation's nonbank affiliates
(collectively with the Corporation, the "Affiliates"), (ii) the purchase of
assets or services from or the sale of assets or the provision of services to
Affiliates, (iii) the issuance of a guarantee, acceptance or letter of credit
on behalf of or for the benefit of Affiliates, (iv) the purchase of securities
of which an Affiliate is a principal underwriter during the existence of the
underwriting and (v) investments in stock or other securities issued by
Affiliates or acceptance thereof as collateral for an extension of credit. The
Corporation and all of its subsidiaries, including FNBB, are also subject to
certain restrictions with respect to engaging in the issue, flotation,
underwriting, public sale or distribution of certain types of securities. The
Federal Reserve Board permits subsidiaries of bank holding companies to
underwrite and deal in securities consistent with the provisions of Section 20
of the Glass-Steagall Act of 1933. In the first quarter of 1997, following
approval by the Federal Reserve Board, BancBoston Securities Inc. ("BSI"), a
wholly owned subsidiary of the Corporation, commenced operations under Section
20. BSI will offer corporate financing options and investments, including
underwriting and dealing in high-yield public debt securities. In addition,
under both the BHCA and regulations which have been issued by the Federal
Reserve Board, the Corporation and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale of any property or the furnishing of any service. In
operations in other countries, the Corporation and FNBB are also subject to
restrictions imposed by the laws and banking authorities of such countries.
The Corporation's bank subsidiaries are also required to maintain cash
reserves against deposits and are subject to restrictions, among others, upon
(i) the nature and amount of loans which they may make to a borrower; (ii) the
nature and amount of securities in which they may invest; (iii) the amount
which may be invested in bank premises; (iv) the geographic location of their
branches; and (v) the nature and extent to which they can borrow money.
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DIVIDENDS
The payment of dividends by the Corporation is determined by its Board of
Directors based on the Corporation's liquidity, asset quality profile, capital
adequacy and recent earnings history, as well as economic conditions and other
factors, including applicable government regulations and policies and the
amount of dividends payable to the Corporation by its subsidiaries.
In 1996, the aggregate dividends declared by the Corporation on its common
and preferred stock were approximately $284 million. For the first quarter of
1996, a dividend of $.37 per share was declared and paid on the Corporation's
common stock. In each of the last three quarters of 1996 and in the first
quarter of 1997, the Corporation declared and paid a dividend on its common
stock of $.44 per share.
The Corporation is a legal entity separate and distinct from its
subsidiary banks and its other nonbank subsidiaries. The Corporation's
revenues (on a parent company only basis) result primarily from interest and
dividends paid to the Corporation by its subsidiaries. The right of the
Corporation, and consequently the right of creditors and stockholders of the
Corporation, to participate in any distribution of the assets or earnings of
any subsidiary through the payment of such dividends or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary
(including depositors, in the case of banking subsidiaries), except to the
extent that claims of the Corporation in its capacity as a creditor may be
recognized.
It is the policy of the OCC and the Federal Reserve Board that banks and
bank holding companies, respectively, should pay dividends only out of current
earnings and only if after paying such dividends the bank or bank holding
company would remain adequately capitalized. Federal banking regulators also
have authority to prohibit banks and bank holding companies from paying
dividends if they deem such payment to be an unsafe or unsound practice. In
addition, it is the position of the Federal Reserve Board that a bank holding
company is expected to act as a source of financial strength to its subsidiary
banks.
Various federal and state laws, regulations and policies limit the ability
of the Corporation's subsidiaries to pay dividends to the Corporation. Federal
banking law requires the approval of the OCC if the aggregate total of the
dividends declared by any of the Corporation's national bank subsidiaries in
any calendar year will exceed the bank's net profits, as defined by applicable
regulation, for that year combined with retained net profits for the preceding
two years. Also, state law requires the approval of state bank regulatory
authorities if the dividends declared by state banks exceed similar prescribed
limits. In 1996, an aggregate of approximately $560 million of dividends were
declared and paid by the Corporation's subsidiaries. The payment of any future
dividends by the Corporation's subsidiaries will be determined based on a
number of factors, including the subsidiary's liquidity, asset quality profile,
capital adequacy and recent earnings history. Information concerning the
Corporation and its bank subsidiaries with respect to dividends is set forth in
Note 15 to the Financial Statements in the Corporation's 1996 Annual Report to
Stockholders which is included in Exhibit 13 hereto and which discussion is
incorporated herein by reference. See the related discussions set forth below
in "Capital" and "Legislation."
CAPITAL
Information concerning the Corporation and its bank subsidiaries with
respect to capital is set forth in Note 14 to the Financial Statements and
under "Capital Management," which appears on page 42 of the Corporation's 1996
Annual Report to Stockholders, which pages are
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included in Exhibit 13 hereto and which information is incorporated herein by
reference. See also "Legislation" below and "Dividends" above.
LEGISLATION
In addition to extensive existing government regulation, laws and
regulations in the states and countries where the Corporation and its
subsidiaries do business can change in unpredictable ways, often with
significant effects on the way in which financial institutions may conduct
business. The enactment of banking legislation such as FIRREA and FDICIA has
affected the banking industry by, among other things, broadening the powers of
the federal banking agencies in a number of areas. Other legislation which has
been enacted in recent years has substantially increased the level of
competition among commercial banks, thrift institutions and non-banking
institutions, including insurance companies, brokerage firms, mutual funds,
investment banks and major retailers. In 1994, the Riegle-Neal Interstate
Banking and Branching Act of 1994 (the "Interstate Act") was enacted. The
Interstate Act's provisions, among other things: (i) permit bank holding
companies to acquire control of banks in any state beginning September 28,
1995, subject to (a) specified maximum national and state deposit concentration
limits; (b) any applicable state law provisions requiring that the acquired
bank has to have been in existence for a specified period of up to 5 years; (c)
any applicable nondiscriminatory state provisions that make an acquisition of a
bank contingent upon a requirement to hold a portion of such bank's assets
available for call by a state sponsored housing entity; and (d) applicable
anti-trust laws; (ii) authorize interstate mergers by banks in different
states, including branching through bank mergers, beginning June 1, 1997,
subject to the provisions noted in (i) and to any state laws that opt in as of
an earlier date or opt out of the provision entirely; (iii) authorize states to
enact legislation permitting interstate de novo branching; and (iv) provide for
certain additional limitations on foreign bank activities.
The full impact of the Interstate Act will not be completely known until
the enactment and implementation by the various federal banking agencies of the
underlying regulations and actions required by the Act. However, it is
anticipated that the Interstate Act may facilitate consolidation within
financial institutions that currently have separate operations in two or more
states and within the financial services industry.
Additional laws and regulations are considered from time to time that
could affect the business of the Corporation, including a number of significant
legislative proposals which, if adopted, would result in a fundamental
restructuring of the financial services industry. The effect of any such
legislation on the business of the Corporation and its subsidiaries cannot be
accurately predicted. See also "Supervision and Regulation -- the Corporation"
above.
GOVERNMENTAL POLICIES AND ECONOMIC CONDITIONS
In 1996, the U.S. economy remained on a path of steady growth and moderate
inflation. Despite the longevity of the current expansion now about to enter
its seventh year, there is little evidence of the kinds of imbalances and
excesses which typically threaten ongoing economic growth. The New England
economy fully participated in the 1996 expansion. Though the region has yet to
fully regain all of the jobs lost in the last recession, at year-end New
England's unemployment rate stood at 4.4 per cent, almost a full percentage
point below the nation's jobless rate.
The Corporation's earnings and business are also affected by the policies
of various government and regulatory authorities in New England and throughout
the United States, as well as foreign governments and international agencies,
including, in the United States, the Federal Reserve Board. Important
functions of the Federal Reserve Board, in addition to those
-11-
enumerated under "Supervision and Regulation" above, are to regulate the supply
of money and of bank credit, to deal with general economic conditions within
the United States and to be responsive to international economic conditions.
From time to time, the Federal Reserve Board and the central banks of foreign
countries have taken specific steps to effect changes in the value of the
United States dollar in foreign currency markets as well as to control domestic
inflation and to control the country's money supply. The instruments of
monetary policy employed by the Federal Reserve Board for these purposes
(including interest rates and the level of cash reserves banks are required to
maintain against deposits) influence, in various ways, the interest rates paid
on interest bearing liabilities and the interest received on earning assets, as
well as the overall level of bank loans, investments and deposits. Inflation
has generally had a minimal impact on the Corporation because substantially all
of its assets and liabilities are of a monetary nature and a large portion of
its operations are based in the United States, where inflation has been low.
Prospective domestic and international economic and political conditions and
the policies of the Federal Reserve Board and the Central Banks of Argentina
and Brazil, as well as other domestic and international regulatory authorities,
may affect the future business and earnings of the Corporation.
The Corporation continues to monitor the economic situation in those
countries in which the Corporation has local operations or cross-border
exposure, particularly in Argentina and Brazil. Additional information with
respect to the countries where the Corporation has local operations or cross-
border exposure is included in "Cross-Border Outstandings" and "Emerging
Markets Countries" on pages 35 through 37 of the Corporation's 1996 Annual
Report to Stockholders, which pages are included in Exhibit 13 hereto and which
discussions are incorporated herein by reference.
This section should be read in conjunction with "Management's Discussion
and Analysis of Financial Conditions and Results of Operations" contained in
the Corporation's 1996 Annual Report to Stockholders on pages 22 through 43,
which pages are included in Exhibit 13 hereto and which discussion is
incorporated herein by reference.
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES
The information set forth below is being provided in accordance with
Industry Guide 3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Such information reflects the Corporation's acquisition of
BayBanks for all periods presented, as described in Note 2 to the Financial
Statements in the Corporation's 1996 Annual Report to Stockholders.
AVERAGE BALANCES AND INTEREST RATES
The information required by this item is presented on pages 44 through 46
of the Corporation's 1996 Annual Report to Stockholders, which pages are
included in Exhibit 13 hereto, and such information is incorporated herein by
reference.
CHANGE IN NET INTEREST REVENUE-VOLUME AND RATE ANALYSIS: 1996 COMPARED WITH
1995, AND 1995 COMPARED WITH 1994
The information required by this item is presented on page 47 of the
Corporation's 1996 Annual Report to Stockholders, which page is included in
Exhibit 13 hereto, and such information is incorporated herein by reference.
-12-
SECURITIES
The following table sets forth the carrying values of securities held to
maturity on the dates indicated:
December 31 1996 1995 1994
(In millions)
U.S. Treasury $ 3 $ 4 $ 2,146
U.S. government agencies
and corporations -
mortgage-backed securities 535 523 1,449
States and political subdivisions 6 5 201
Foreign debt securities 11 11 123
Other debt securities 200
Other equity securities 125 117 119
----- ----- -----
$ 680 $ 660 $ 4,238
===== ===== =====
The following table sets forth the carrying values of securities available for
sale on the dates indicated:
December 31 1996 1995 1994
(In millions)
U.S. Treasury $ 1,675 $ 2,591 $ 1,487
U.S. government agencies
and corporations -
mortgage-backed securities 3,801 3,037 766
States and political subdivisions 173 248 9
Foreign debt securities 1,133 685 384
Other debt securities 256 334 142
Marketable equity securities 217 222 144
Other equity securities 549 465 330
----- ----- -----
$ 7,804 $ 7,582 $ 3,262
===== ===== =====
The following tables set forth the relative maturities and weighted average
interest rates of securities available for sale and held to maturity at
December 31, 1996, excluding equity securities. Certain securities, such as
mortgage-backed securities, may not become due at a single maturity date. Such
securities have been classified within the category that represents the due
dates for the majority of the instrument. Rates for states and political
subdivisions are stated on a fully taxable equivalent basis assuming a 35%
federal income tax rate, adjusted for applicable state and local income taxes
net of related federal tax benefit.
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years Total
Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate
AVAILABLE FOR SALE
(Dollars in millions)
U.S. Treasury $ 551 6.5% $ 1,000 6.3% $ 124 6.1% $ 1,675 6.3%
U.S. government agencies
and corporations -
mortgage-backed
securities 75 7.6 1,248 6.3 882 6.6 $ 1,596 6.5% 3,801 6.5
States and political
subdivisions 57 4.0 57 5.2 57 5.5 2 8.2 173 4.9
Foreign debt securities 639 16.1 272 12.8 161 15.4 61 9.7 1,133 14.9
Other debt securities 18 9.7 30 13.2 208 9.1 . 256 9.6
----- ----- ----- ----- -----
Total carrying value $ 1,340 11.1% $ 2,607 7.0% $ 1,432 7.9% $ 1,659 6.7% $ 7,038 7.9%
===== ===== ===== ===== =====
-13-
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years Total
Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate
HELD TO MATURITY
(Dollars in millions)
U.S. Treasury $ 3 5.0% $ 3 5.0%
U.S. government agencies
and corporations -
mortgage-backed
securities $ 110 6.5% $ 237 7.0% $ 188 6.5% 535 6.7
States and political
subdivisions 6 3.1 6 3.1
Foreign debt securities 2 7.8 4 7.9 4 7.1 1 7.8 11 7.5
----- ----- ----- ----- -----
Total carrying value $ 11 4.6% $ 114 6.5% $ 241 7.0% $ 189 6.5% $ 555 6.7%
===== ===== ===== ===== =====
LOANS AND LEASES
A portion of the information required by this item is presented on page 30 of
the Corporation's 1996 Annual Report to Stockholders, which page is included in
Exhibit 13 hereto, and such information is incorporated herein by reference.
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
The following table presents the maturities and interest rate sensitivity,
based on original contractual terms, of the Corporation's loans at December 31,
1996, exclusive of domestic office loans secured by 1-4 family residential
properties, domestic office loans to individuals and lease financing:
After One
But
Within Within After
December 31, 1996 One Year Five Five Total
(In millions) Years Years
Commercial, industrial and financial $ 4,947 $ 5,687 $ 2,528 $13,162
Real estate
Construction 183 93 8 284
Other 1,687 1,419 134 3,240
Overseas offices 8,611 822 178 9,611
------ ----- ----- -------
$ 15,428 $ 8,021 $ 2,848 $26,297
------ ----- ----- -------
Loans with predetermined interest rates $ 4,705 $ 2,050 $ 491 $ 7,246
Loans with floating interest rates 10,723 5,971 2,357 19,051
------ ----- ----- -------
$ 15,428 $ 8,021 $ 2,848 $26,297
====== ===== ===== =======
The Corporation does not have an automatic renewal policy for maturing loans.
Rather, loans are renewed at the maturity date only at the request of those
customers who are deemed to be creditworthy by the Corporation. Additionally,
the Corporation reviews such requests in substantially the same manner as
applications by new customers for extensions of credit. The maturity dates and
interest terms of renewed loans are based, in part, upon the needs of the
individual customer and the Corporation's credit review and evaluation of
current and future economic conditions. Since these factors have varied
considerably, and will most likely continue to do so, the Corporation believes
it is impracticable to estimate the amount of loans in the portfolio which may
be renewed in the future.
-14-
NONACCRUAL LOANS AND LEASES
The majority of the information required by this item is presented on pages 32
and 33 of the Corporation's 1996 Annual Report to Stockholders, which pages are
included in Exhibit 13 hereto, and such information is incorporated herein by
reference.
The following table presents a five-year analysis of the Corporation's loans
and leases that were over ninety days past due and remained on accrual status:
December 31 1996 1995 1994 1993 1992
(In millions)
Loans and leases over ninety days past $ 41 $ 56 $ 49 $ 59 $ 98
due and on accrual status.............. ===== ===== ===== ===== =====
RENEGOTIATED LOANS
Loans are renegotiated when the Corporation determines that it will ultimately
receive greater economic value by revising the terms than through foreclosure,
liquidation or bankruptcy. Candidates for renegotiation must meet specific
guidelines and undergo extensive due diligence reviews. Once a renegotiation
takes place, the loan is subject to the accounting and disclosure rules
prescribed by Statement of Financial Accounting Standards No. 15, "Accounting
by Debtors and Creditors for Troubled Debt Restructurings."
Renegotiated loans at the end of each of the last five years were as follows:
December 31 1996 1995 1994 1993 1992
(In millions)
Renegotiated loans . $ 8 $ 33 $ 82 $ 243 $ 413
===== ===== ===== ===== =====
CROSS-BORDER OUTSTANDINGS
The information required by this item is presented on pages 35 through 37 and
40 of the Corporation's 1996 Annual Report to Stockholders, which pages are
included in Exhibit 13 hereto, and such information is incorporated herein by
reference.
RESERVE FOR CREDIT LOSSES: ALLOCATION OF RESERVE FOR CREDIT LOSSES AND
ANALYSIS OF RESERVE FOR CREDIT LOSSES
The majority of the information required by this item is presented on pages 33
and 34 of the Corporation's 1996 Annual Report to Stockholders, which pages are
included in Exhibit 13 hereto, and such information is incorporated herein by
reference.
ALLOCATION OF RESERVE FOR CREDIT LOSSES
The following table presents the allocation of the reserve for credit losses by
loan and lease financing category, with the excess between the total reserve
and the amounts specifically allocated to each loan category identified as
''unallocated.'' The unallocated reserve is part of the general reserve of the
Corporation and, as such, is available for both Domestic and International
credit losses. The percentage of loans outstanding in each category to total
loans is presented on page 30 of the Corporation's 1996 Annual Report to
Stockholders, which page is included in Exhibit 13 hereto, and such information
is incorporated herein by reference.
-15-
DECEMBER 31 1996 1995 1994 1993 1992
(Dollars in millions) Percent Percent Percent Percent Percent
Amount of Total Amount of Total Amount of Total Amount of Total Amount of Total
UNITED STATES
Commercial, industrial and financial. $230 26.0% $221 24.8% $284 34.3% $290 30.8% $ 340 30.4%
Commercial real estate, including
construction....................... 83 9.4 158 17.8 194 23.5 300 31.9 394 35.3
Consumer related loans
Secured by 1-4 family
residential properties................. 13 1.5 36 4.0 34 4.1 47 5.0 49 4.4
Other.................................. 193 21.9 131 14.7 104 12.6 97 10.3 89 8.0
Lease financing......................... 16 1.8 22 2.5 21 2.5 18 1.9 4 .4
---- ----- ---- ----- ---- ----- ---- ----- ------ -----
535 60.6 568 63.8 637 77.0 752 79.9 876 78.5
INTERNATIONAL........................... 217 24.6 171 19.2 99 12.0 89 9.5 121 10.8
---- ----- ---- ----- ---- ----- ---- ----- ------ -----
752 85.2 739 83.0 736 89.0 841 89.4 997 89.3
UNALLOCATED............................. 131 14.8 151 17.0 91 11.0 100 10.6 119 10.7
---- ----- ---- ----- ---- ----- ---- ----- ------ -----
$883 100.0% $890 100.0% $827 100.0% $941 100.0% $1,116 100.0%
==== ===== ==== ===== ==== ===== ==== ===== ====== =====
The above allocation reflects provisions for credit losses for International
operations for the years ended December 31, 1996, 1995, 1994, 1993 and 1992 of
$84 million, $60 million, $25 million, $26 million and $12 million,
respectively. International reserve transfers (to)from unallocated reserves and
Domestic operations were $0, $67 million, $4 million, $0 and $19 million,
respectively, for the same periods.
DEPOSITS
A portion of the information required by this item is presented on pages 44
through 46 of the Corporation's 1996 Annual Report to Stockholders, which pages
are included in Exhibit 13 hereto, and such information is incorporated herein
by reference.
The aggregate amount of deposits by foreign depositors in domestic offices
averaged $1,412 million in 1996, $1,131 million in 1995 and $863 million in
1994. The following table presents the maturities of time certificates of
deposit and other time deposits issued by domestic offices in denominations of
$100,000 or more, at December 31, 1996:
Certificates Time
of Deposit Deposits Total
(In millions)
Maturing within three months $ 1,890 $ 18 $ 1,908
After three but within six months 245 17 262
After six but within twelve months 632 18 650
After twelve months 304 84 388
----- --- -----
$ 3,071 $ 137 $ 3,208
===== === =====
The majority of foreign office deposits are in denominations of $100,000 or
more.
RETURN ON EQUITY AND ASSETS
The information required by this item is presented on page 21 of the
Corporation's 1996 Annual Report to Stockholders, which page is included in
Exhibit 13 hereto, and such information is incorporated herein by reference.
-16-
SHORT-TERM BORROWINGS
The following table summarizes the Corporation's short-term borrowings for
the three years ended December 31, 1996:
Maximum Average Average
Weighted Amount Amount Interest
Balance Average Outstanding Outstanding Rate
(Dollars in millions) At end of Interest During the During the During the
Category of Aggregate Short-Term Period Rate (1) Period Period Period
Borrowings
For the Year Ended December 31, 1996
Federal funds purchased (2) $ 527 5.21% $ 2,523 $ 1,348 5.35%
Term federal funds purchased (2) 1,442 5.51 2,140 1,413 7.35
Securities sold under agreements to
repurchase (3) 2,034 5.06 2,236 1,848 5.28
Demand notes issued to the U.S.
Treasury (4) 704 6.01 1,183 390 5.37
All other (5) 3,801 10.93 3,801 2,372 12.65
For the Year Ended December 31, 1995
Federal funds purchased (2) $ 1,869 5.25% $ 1,920 $ 1,119 5.86%
Term federal funds purchased (2) 870 5.80 2,058 1,409 5.16
Securities sold under agreements to
repurchase (3) 1,688 6.24 2,935 1,983 7.31
Demand notes issued to the U.S.
Treasury (4) 361 4.85 1,051 406 5.75
All other (5) 2,511 13.37 3,724 3,006 17.31
For the Year Ended December 31, 1994
Federal funds purchased (2) $ 416 5.51% $ 1,240 $ 763 4.28%
Term federal funds purchased (2) 765 5.77 2,504 1,793 3.62
Securities sold under agreements to
repurchase (3) 2,680 5.86 2,950 1,921 7.05
Demand notes issued to the U.S.
Treasury (4) 395 4.63 1,060 329 4.34
All other (5) 2,734 18.44 3,807 2,895 17.36
________________________________________________________________________________
(1) The weighted average interest rates at year-end are not necessarily
indicative of the Corporation's normal borrowing rates since interest rates for
certain categories of borrowing are subject to abnormal short-term movements.
(2) Federal funds purchased are overnight transactions while term federal funds
purchased have maturities in excess of one day. A large portion of federal funds
purchased arise because of money market activity in federal funds for regional
correspondent banks.
(3) Securities sold under agreements to repurchase by domestic offices mature
within one year and are collateralized by U.S. Treasury and U.S. government
agencies and corporations securities. The majority of securities sold under
agreements to repurchase by overseas offices in 1996, 1995 and 1994 related to
Brazilian operations of FNBB for which various Brazilian government securities
served as collateral.
(4) Demand notes issued to the U.S. Treasury represent depository liabilities
that are not subject to reserve requirements and bear interest at one-quarter of
one percent below the weekly average federal funds effective interest rate as
published by the Federal Reserve Board.
(5) The majority of other short-term borrowings represent short-term bank notes
issued by FNBB and secured and unsecured obligations of the Corporation's
overseas branches and subsidiaries.
-17-
ITEM 2. PROPERTIES.
The head offices of the Corporation and FNBB are located in a 37-story
building at 100 Federal Street, Boston, Massachusetts. In 1996, FNBB leased
approximately 90% of the building's approximately 1.3 million square feet.
FNBB's data processing and record keeping operations are located at Columbia
Park in Boston. The Columbia Park facility, comprising approximately 425,000
square feet, and the land on which it is situated are owned by FNBB. In
Waltham, Massachusetts the Corporation owns a facility housing 189,000 square
feet of administrative space and 117,000 square feet of operations space. In
addition, FNBB leases operations facilities in Dedham and Canton,
Massachusetts, which comprise approximately 180,000 square feet and 105,000
square feet, respectively.
The headquarters for FNBB's operations in Argentina are located in a 12-story
historic landmark building in the center of Buenos Aires. The building
consists of approximately 256,000 square feet and is owned by FNBB. The
headquarters for FNBB's operations in Brazil are in three interconnected
buildings in the center of Sao Paulo. FNBB owns a total of 119,000 square feet
in the three buildings and leases another 102,000 square feet. In addition,
FNBB owns a 10-story, 99,000 square foot building in Sao Paulo where it has
consolidated part of its Brazilian operations.
Hospital Trust owns a 30-story building and a building adjacent thereto at
One Hospital Trust Plaza, Providence, Rhode Island. Hospital Trust occupies
approximately 40% of the complex's approximately 546,000 square feet. In
addition, Hospital Trust maintains an operations center in East Providence,
Rhode Island that also serves as the primary backup for FNBB's Columbia Park
facility. The East Providence operations center, which consists of
approximately 141,000 square feet, is owned by Hospital Trust.
BKB Connecticut's headquarters are in Hartford, Connecticut, where it has
offices at 31 Pratt Street and 100 Pearl Street. BKB Connecticut owns and
occupies approximately 50,000 square feet at the Pratt Street location, and
owns an undivided one-half interest in the Pearl Street location where it
currently occupies approximately 54,000 square feet. BKB Connecticut also
maintains regional offices in Connecticut, the largest of which is in Waterbury
and comprises approximately 157,000 square feet of owned space in three
interconnected buildings.
None of these properties is subject to any material encumbrance. The
Corporation's subsidiaries also own or lease numerous other premises used in
their domestic and foreign operations.
ITEM 3. LEGAL PROCEEDINGS.
The Corporation and its subsidiaries in 1996 were or currently are parties to
a number of legal proceedings that have arisen in connection with the normal
course of business activities of the Corporation, FNBB and the Corporation's
other subsidiaries, including the following matters:
Society Class Action. As previously reported, in 1990 a class action
complaint was filed in U.S. District Court for the District of Connecticut
against Society for Savings Bancorp, Inc. ("Society"), two of its then senior
officers and one former officer. The complaint, as subsequently amended,
alleges that Society's financial reports for fiscal years 1988, 1989, and the
first half of 1990 contained material misstatements or omissions concerning its
real estate
-18-
loan portfolio and other matters, in violation of Connecticut common law and of
Sections 10(b) and 20 of the Exchange Act. The action was brought by a Society
shareholder, individually and as a class action on behalf of purchasers of
Society's stock from January 19, 1989 through November 30, 1990 and seeks
damages in an unspecified amount. Society and the defendant officers have
denied the allegations of the amended complaint and on July 14, 1995 filed a
motion for summary judgment. On December 11, 1996, a hearing was held on the
motion, but the court has not yet rendered a decision.
Lender Liability Litigation. The Corporation's subsidiaries, in the normal
course of their business in collecting outstanding obligations, are named as
defendants in complaints or counterclaims filed in various jurisdictions by
borrowers or others who allege that lending practices by such subsidiaries have
damaged the borrowers or others. Such claims, commonly referred to as lender
liability claims, frequently request not only relief from repayment of the debt
obligation, but also recovery of actual, consequential, and punitive damages.
Fidelity Acceptance Corporation Litigation. Fidelity Acceptance Corporation
("FAC"), an indirect subsidiary of the Corporation that is engaged in consumer
lending, and/or certain of FAC's subsidiaries (collectively referred to as
FAC), are defendants in class action and other lawsuits brought in various
states by FAC borrowers. These lawsuits, which include claims for punitive
damages, often for large dollar amounts, challenge various of FAC's lending and
insurance practices, including, among others, the placing of collateral
protection insurance, calculating the amount of credit life insurance, and the
determination of applicable interest rates.
Management, after reviewing all actions and proceedings pending against the
Corporation and its subsidiaries, considers that the aggregate loss, if any,
resulting from the final outcome of these proceedings should not be material to
the Corporation's results of operations or financial condition.
-19-
ITEM 3A. EXECUTIVE OFFICERS OF THE CORPORATION.
Information with respect to the executive officers of the Corporation, as of
March 1, 1997, is set forth below. Executive Officers are generally elected
annually by the Board of Directors and hold office until the following year and
until their successors are chosen and qualified, unless they sooner resign,
retire, die or are removed. Except where otherwise noted, the positions listed
for the officers are for both the Corporation and FNBB.
EXECUTIVE OFFICER
-----------------
NAME AGE CURRENT POSITION SINCE
- --------------------------- --- --------------------------- -----------------
Charles K. Gifford 54 Chief Executive Officer of 1987
the Corporation and
Chairman and Chief
Executive Officer of FNBB
William M. Crozier, Jr. 64 Chairman of the Board of 1996
the Corporation and Senior
Chairman of FNBB
Henrique de Campos
Meirelles 51 President and Chief 1994
Operating Officer
William J. Shea 49 Vice Chairman, Chief 1993
Financial Officer and
Treasurer of the
Corporation and Vice
Chairman and Chief
Financial Officer of FNBB
Paul F. Hogan 52 Vice Chairman, Corporate 1993
Banking
Susannah M. Swihart 41 Executive Vice President, 1993
Chief of Staff
Guilliaem Aertsen IV 49 Executive Vice President, 1993
Global Asset Management
Melville E. Blake III 42 Executive Director, 1993
Strategic Planning
Robert L. Champion, Jr. 52 Executive Director, 1993
Corporate Administrative
Services
Carlos Craide 49 Regional Manager, Brazil 1996
Helen G. Drinan 49 Executive Vice President, 1993
Human Resources
Thomas J. Hollister 42 Executive Vice President, 1993
Consumer and Small
Business Banking
Ali Inanilan 52 Executive Director, Finance 1996
Ira A. Jackson 48 Executive Vice President, 1987
External Affairs
Robert T. Jefferson 49 Comptroller 1993
John A. Kahwaty 46 Executive Director, 1996
Investor Relations
Lindsey C. Lawrence 59 Executive Vice President, 1996
Consumer Marketing and
Technology Banking
Michael R. Lezenski 49 Executive Director, 1993
Technology and System
Services
Mark A. MacLennan 43 Executive Vice President, 1993
Global Financial Services
Peter J. Manning 58 Executive Vice President, 1990
Mergers and Acquisitions
John L. Mastromarino 43 Executive Vice President, 1995
Risk Management
Kathleen M. McGillycuddy 47 Executive Director, Global 1996
Treasury
Joanne E. Nuzzo 54 Executive Director, 1994
Banking Operations
Richard A. Remis 42 Executive Vice President, New 1993
England Corporate Banking
Manuel R. Sacerdote 54 Regional Manager, Southern 1994
Cone (Argentina, Uruguay,
Chile)
Gary A. Spiess 56 General Counsel and Clerk 1987
of the Corporation and
General Counsel, Secretary
& Cashier of FNBB
Bradford H. Warner 45 Executive Vice President, 1989
Global Capital Markets
-20-
All of the foregoing individuals have been officers of the Corporation or one
of its subsidiaries for the past five years, except for Messrs. Crozier, Blake,
Craide and Inanilan, Ms. Lawrence and Messrs. Mastromarino and Shea. Prior to
joining the Corporation in July, 1996, Mr. Crozier had served as Chairman of
the Board and Chief Executive Officer of BayBanks since 1974. Mr. Blake joined
the Corporation in 1992 and prior to that time had been Vice President of the
MAC Group/Gemini Consulting since 1988. Mr. Craide came to the Corporation in
October, 1996 from Citibank, N.A., where he had served for several years as
head of Corporate Banking and Bank Products in Brazil. Mr. Inanilan joined the
Corporation in 1993 from Coopers & Lybrand, where he had served as a partner
since 1986. Prior to assuming her current position with the Corporation, Ms.
Lawrence was employed by BayBank Systems, Inc., a BayBanks subsidiary, as
President and Chief Operating Officer from 1988 to 1994 and as President and
Chief Executive Officer from 1994 to September, 1996. Mr. Mastromarino came to
the Corporation in 1995 from the OCC, where he had served as Examiner-in-Charge
of the OCC's London office from 1993 to 1995, and prior to that time had been
the OCC's Examiner-in-Charge at the Corporation since 1988. Mr. Shea joined
the Corporation in 1993 from Coopers & Lybrand, where he had served as a
partner since 1983 and as Vice Chairman since 1991.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
-21-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information required by this Item is presented on pages 20, 21 and 48 of
the Corporation's 1996 Annual Report to Stockholders, which pages are included
in Exhibit 13 hereto, and such information is hereby incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The "Consolidated Selected Financial Data" of the Corporation for the six
years ended December 31, 1996 appears on pages 20 and 21 of the Corporation's
1996 Annual Report to Stockholders, which pages are included in Exhibit 13
hereto, and such information is hereby incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information in response to this Item is included in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 22 through 43 of the Corporation's 1996 Annual Report to Stockholders,
which pages are included in Exhibit 13 hereto, and such information is hereby
incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data required by this Item are
included on the pages of the Corporation's 1996 Annual Report to Stockholders
indicated below, which pages are included in Exhibit 13 hereto, and such
statements and data are hereby incorporated by reference.
PAGE OF 1996 ANNUAL
REPORT TO STOCKHOLDERS
Summary of Quarterly Consolidated Financial Information
and Common Stock Data.................................. 48
Report of Independent Accountants.......................... 50
Bank of Boston Corporation:
Consolidated Balance Sheet as of December 31, 1996
and 1995............................................... 51
Consolidated Statement of Income for the years
ended December 31, 1996, 1995 and 1994................. 52
Consolidated Statement of Changes in Stockholders' Equity
for the years ended December 31, 1996, 1995 and 1994... 53
Consolidated Statement of Cash Flows for the years
ended December 31, 1996, 1995 and 1994................. 54
Notes to Financial Statements.............................. 55 through 80
-22-
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." The standard
specifies the computation, presentation and disclosure requirements for earnings
per share, and will simplify the computation required by existing guidelines.
The standard is effective for financial statements issued for periods ending
after December 15, 1997, and must be applied prospectively. The Corporation
does not expect that, upon adoption, this standard will have a material effect
on its calculation of earnings per share.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning the Executive Officers of the Corporation which
responds to this Item is contained in the response to Item 3A contained in Part
I of this Report and is hereby incorporated by reference herein. The
information that responds to this Item with respect to Directors is contained
under the heading "Election of Directors" in the Corporation's definitive proxy
statement for its 1997 Annual Meeting of Stockholders (the "Proxy Statement").
Information with respect to compliance by the Corporation's directors and
executive officers with Section 16(a) of the Exchange Act is contained under
the heading "Compliance with Section 16(a) of the Exchange Act" in the Proxy
Statement. The foregoing information from the Proxy Statement is hereby
incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required in response to this Item is contained under the
heading "Compensation of Executive Officers" in the Proxy Statement. The
foregoing information from the Proxy Statement, with the exception of the
section entitled "Compensation Committee Report on Executive Compensation," is
hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required in response to this Item is contained under the
headings "Security Ownership of Directors and Executive Officers" and "Security
Ownership of Certain Beneficial Owners" in the Proxy Statement. The foregoing
information from the Proxy Statement is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required in response to this Item is contained under the
heading "Indirect Interest of Directors and Executive Officers in Certain
Transactions" in the Proxy Statement. The foregoing information from the Proxy
Statement is hereby incorporated by reference.
-23-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) The financial statements required in response to this Item are listed in
response to Item 8 of this Report and are incorporated herein by reference.
(a)(2) Financial statement schedules have been omitted because the information
is either not required, not applicable, or is included in the financial
statements or notes thereto.
(a)(3) Exhibits
3(a) - Restated Articles of Organization of the Corporation, as amended
through April 26, 1996, incorporated herein by reference to
Exhibit 3 to the Corporation's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996 (File No. 1-6522).
3(b) - By-Laws of the Corporation, as amended through October 24, 1996,
incorporated herein by reference to Exhibit 3(b) to the
Corporation's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996 (File No. 1-6522).
4(a) - Fiscal and Paying Agency Agreement dated as of February 10, 1986
defining rights of holders of the Corporation's Subordinated
Floating Rate Notes Due 2001, incorporated herein by reference
to Exhibit 4(d) to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1985 (File No. 1-6522).
4(b) - Fiscal and Paying Agency Agreement dated as of August 26, 1986
defining rights of holders of the Corporation's Floating Rate
Subordinated Equity Commitment Notes Due 1998 incorporated
herein by reference to Exhibit 4(e) to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1986 (File
No. 1-6522).
4(c) - Indenture dated as of June 15, 1987 defining the rights of
holders of the Corporation's 9 1/2% Subordinated Equity Contract
Notes due 1997, incorporated herein by reference to Exhibit 4(g)
to the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1987 (File No. 1-6522).
-24-
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(3) Exhibits (cont'd)
4(d) - Subordinated Indenture dated as of June 15, 1992, as amended by
the First Supplemental Indenture dated as of June 24, 1993, and
forms of notes defining rights of the holders of the
Corporation's 6 7/8% Subordinated Notes due 2003, the 6 5/8%
Subordinated Notes due 2005, and the 6 5/8% Subordinated Notes
due 2004, incorporated herein by reference to Exhibit 4(d) to
the Corporation's Registration Statement on Form S-3
(Registration Numbers 33-48418 and 33-52571), Exhibits 4(e) and
4(f) to the Corporation's Current Report on Form 8-K dated June
24, 1993, Exhibit 4 to the Corporation's Current Report on Form
8-K dated November 15, 1993, and Exhibit 4 to the Corporation's
Current Report on Form 8-K dated January 5, 1994 (File No. 1-
6522).
4(e) - Senior Indenture dated as of June 15, 1992, and forms of notes
defining rights of the holders of the Corporation's Senior
Floating Rate Medium-Term Notes Due Nine Months or More from the
Date of Issue, incorporated herein by reference to Exhibit 4(c)
to the Corporation's Registration Statement on Form S-3
(Registration Numbers 33-48418 and 33-52571), Exhibit 4 to the
Corporation's Current Report on Form 8-K dated June 15, 1994 and
Exhibit 4(b) to the Corporation's Current Report on Form 8-K
dated December 16, 1994 (File No. 1-6522).
4(f) - Rights Agreement, dated as of June 28, 1990, between the
Corporation and FNBB, as Rights Agent, and the description of
the Rights, incorporated herein by reference to the
Corporation's registration statement on Form 8-A relating to the
Rights and to Exhibit 1 of such registration statement (File No.
1-6522).
4(g) - Amendment, dated December 12, 1995, to the Corporation's Rights
Agreement, incorporated herein by reference to Exhibit 4(b) to
the Corporation's Current Report on Form 8-K dated July 25, 1996
(File No. 1-6522).
4(h) - Deposit Agreement, dated August 13, 1992 between the Corporation
and FNBB, as Depositary, relating to the Corporation's
Depositary Shares, each representing a one-tenth interest in the
Corporation's 8.60% Cumulative Preferred Stock, Series E,
incorporated herein by reference to Exhibit 4(b) to the
Corporation's Current Report on Form 8-K dated August 13, 1992
(File No. 1-6522).
4(i) - Deposit Agreement, dated as of June 30, 1993 between the
Corporation and FNBB, as Depositary, relating to the
Corporation's Depositary Shares, each representing a one-tenth
interest in the Corporation's 7 7/8% Cumulative Preferred Stock,
Series F, incorporated herein by reference to Exhibit 4(b) to
the Corporation's Current Report on Form 8-K dated June 24, 1993
(File No. 1-6522).
-25-
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(3) Exhibits (cont'd)
4(j) - Indenture dated as of November 26, 1996 defining the rights of
holders of the Corporation's 8.25% Series A Junior Subordinated
Deferrable Interest Debentures due 2026 and its 8.25% Series B
Junior Subordinated Deferrable Interest Debentures due 2026,
incorporated herein by reference to Exhibit 4.1 to the
Corporation's Registration Statement on Form S-4 (Registration
Number 333-19083).
4(k) - Form of Certificate for the Corporation's 8.25% Series B Junior
Subordinated Deferrable Interest Debentures due 2026, incorporated
herein by reference to Exhibit 4.1 to the Corporation's
Registration Statement on Form S-4 (Registration Number 333-
19083).
4(l) - Certificate of Trust of BankBoston Capital Trust I dated as of
November 20, 1996, incorporated herein by reference to Exhibit 4.3
to the Corporation's Registration Statement on Form S-4
(Registration Number 333-19083).
4(m) - Declaration of Trust of BankBoston Capital Trust I dated as of
November 20, 1996, incorporated herein by reference to Exhibit 4.4
to the Corporation's Registration Statement on Form S-4
(Registration Number 333-19083).
4(n) - Amended and Restated Declaration of Trust of BankBoston Capital
Trust I dated as of November 26, 1996, incorporated herein by
reference to Exhibit 4.5 to the Corporation's Registration
Statement on Form S-4 (Registration Number 333-19083).
4(o) - Form of Certificate for the 8.25% Series B Capital Securities of
BankBoston Capital Trust I, incorporated herein by reference to
Exhibit 4.5 to the Corporation's Registration Statement on Form S-
4 (Registration Number 333-19083).
4(p) - Form of Guarantee Agreement in respect of the 8.25% Series B
Capital Securities of BankBoston Capital Trust I, incorporated
herein by reference to Exhibit 4.7 to the Corporation's
Registration Statement on Form S-4 (Registration Number 333-
19083).
4(q) - Registration Rights Agreement dated as of November 26, 1996,
relating to the 8.25% Series A Capital Securities of BankBoston
Capital Trust I, incorporated herein by reference to Exhibit 4.8
to the Corporation's Registration Statement on Form S-4
(Registration Number 333-19083).
-26-
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(3) Exhibits (cont'd)
4(r) - Indenture dated as of December 10, 1996 defining the rights of
holders of the Corporation's 7 3/4% Series A Junior Subordinated
Deferrable Interest Debentures due 2026 and its 7 3/4% Series B
Junior Subordinated Deferrable Interest Debentures due 2026,
incorporated herein by reference to Exhibit 4.1 to the
Corporation's Registration Statement on Form S-4 (Registration
Number 333-19111).
4(s) - Form of Certificate for the Corporation's 7 3/4% Series B
Junior Subordinated Deferrable Interest Debentures due 2026,
incorporated herein by reference to Exhibit 4.1 to the
Corporation's Registration Statement on Form S-4 (Registration
Number 333-19111).
4(t) - Certificate of Trust of BankBoston Capital Trust II dated as of
December 3, 1996, incorporated herein by reference to Exhibit 4.3
to the Corporation's Registration Statement on Form S-4
(Registration Number 333-19111).
4(u) - Declaration of Trust of BankBoston Capital Trust II dated as of
December 3, 1996, incorporated herein by reference to Exhibit 4.4
to the Corporation's Registration Statement on Form S-4
(Registration Number 333-19111).
4(v) - Amended and Restated Declaration of Trust of BankBoston Capital
Trust II dated as of December 10, 1996, incorporated herein by
reference to Exhibit 4.5 to the Corporation's Registration
Statement on Form S-4 (Registration Number 333-19111).
4(w) - Form of Certificate for the 7 3/4% Series B Capital Securities
of BankBoston Capital Trust II, incorporated herein by reference
to Exhibit 4.5 to the Corporation's Registration Statement on Form
S-4 (Registration Number 333-19111).
4(x) - Form of Guarantee Agreement in respect of the 7 3/4% Series B
Capital Securities of BankBoston Capital Trust II, incorporated
herein by reference to Exhibit 4.7 to the Corporation's
Registration Statement on Form S-4 (Registration Number 333-
19111).
4(y) - Registration Rights Agreement dated as of December 10, 1996,
relating to the 7 3/4% Series A Capital Securities of BankBoston
Capital Trust II, incorporated herein by reference to Exhibit 4.8
to the Corporation's Registration Statement on Form S-4
(Registration Number 333-19111).
-27-
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(3) Exhibits (cont'd)
10(a) - Bank of Boston Corporation 1982 Stock Option Plan, as amended,
effective February 13, 1995, incorporated herein by reference to
Exhibit 10(a) to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1994 (File No. 1-6522).*
10(b) - Bank of Boston Corporation 1986 Stock Option Plan, as amended,
effective February 13, 1995, incorporated herein by reference to
Exhibit 10(b) to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1994 (File No. 1-6522).*
10(c) - Bank of Boston Corporation and its Subsidiaries Performance
Recognition Opportunity Plan, as amended effective June 23,
1994, incorporated herein by reference to Exhibit 10(c) to the
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-6522).*
10(d) - Bank of Boston Corporation Executive Deferred Compensation Plan,
as amended, effective June 23, 1994, incorporated herein by
reference to Exhibit 10(d) to the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1994 (File No. 1-
6522).*
10(e) - The First National Bank of Boston Bonus Supplemental Employee
Retirement Plan, as amended, through June 23, 1994, incorporated
herein by reference to Exhibit 10(e) to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1994 (File
No. 1-6522).*
10(f) - Description of the Corporation's Supplemental Life Insurance
Plan, incorporated herein by reference to Exhibit 10(h) to the
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1988 (File No. 1-6522).*
10(g) - The First National Bank of Boston Excess Benefit Supplemental
Employee Retirement Plan, as amended, effective June 23, 1994,
incorporated herein by reference to Exhibit 10(g) to the
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-6522).*
10(h) - Bank of Boston Corporation 1991 Long-Term Stock Incentive Plan,
as amended, effective February 13, 1995, incorporated herein by
reference to Exhibit 10(h) to the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1994 (File No. 1-
6522).*
-----------------------------------------------
* Indicates that document is a management contract or compensatory plan or
arrangement that is required to be filed as an exhibit to this Report pursuant
to Item 14(c) of Form 10-K.
-28-
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(3) Exhibits (cont'd)
10(i) - Bank of Boston Corporation Relocation Policy, as amended through
October, 1990, incorporated herein by reference to Exhibit 10(j)
to the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1990 (File No. 1-6522).*
10(j) - Description of the Corporation's Supplemental Long-Term
Disability Plan effective as of February 10, 1994, incorporated
herein by reference to Exhibit 10(l) to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1993 (File
No. 1-6522).*
10(k) - Bank of Boston Corporation's Director Stock Award Plan effective
as of January 1, 1995, incorporated herein by reference to
Exhibit 10(m) to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1994 (File No. 1-6522).*
10(l) - Form of Severance Agreement for certain officers, incorporated
herein by reference to Exhibit 10(a) to the Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 (File No. 1-6522).*
10(m) - Form of Severance Agreement for certain officers, incorporated
herein by reference to Exhibit 10(b) to the Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 (File No. 1-6522).*
10(n) - Bank of Boston Corporation Directors Deferred Compensation Plan
effective March 28, 1991, incorporated herein by reference to
Exhibit 10(q) to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1994 (File No. 1-6522).*
10(o) - The First National Bank of Boston Directors Deferred
Compensation Plan effective March 28, 1991, incorporated herein
by reference to Exhibit 10(r) to the Corporation's Annual Report
on Form 10-K for the year ended December 31, 1994 (File No. 1-
6522).*
10(p) - Bank of Boston Corporation 1996 Long-Term Incentive Plan
effective as of January 1, 1997, incorporated herein by
reference to Exhibit G to the Joint Proxy Statement-Prospectus
included in the Corporation's Registration Statement on Form S-4
(Registration No. 333-01761).*
-------------------------------------------------
* Indicates that document is a management contract or compensatory plan or
arrangement that is required to be filed as an exhibit to this Report pursuant
to Item 14(c) of Form 10-K.
-29-
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(3) Exhibits (cont'd)
10(q) - 1978 Stock Option Plan for Key Employees of BayBanks, Inc., and
Affiliates, as amended, incorporated herein by reference to
Exhibit 10.1 to BayBanks' Annual Report on Form 10-K for the
year ended December 31, 1991 (File No. 0-959).*
10(r) - Amendment dated October 27, 1994 to 1978 Stock Option Plan for
Key Employees of BayBanks, Inc. and Affiliates, incorporated
herein by reference to Exhibit 10.1 to BayBanks' Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994
(File No. 0-959).*
10(s) - 1988 Stock Option Plan for Key Employees of BayBanks, Inc., and
Affiliates, as amended, incorporated herein by reference to
Exhibit 10.2 to BayBanks' Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994 (File No. 0-959).*
10(t) - BayBanks, Inc., Incentive Compensation Plan, as amended,
incorporated herein by reference to Exhibit 10.5 to BayBanks'
Quarterly Report on Form 10-Q for the quarter ended September
30, 1994 (File No. 0-959).*
10(u) - BayBanks Supplemental Executive Retirement Plan, incorporated
herein by reference to Exhibit 19.6 to BayBanks' Quarterly
Report on Form 10-Q for the quarter ended June 30, 1991 (File
No. 0-959).*
10(v) - First Amendment dated February 26, 1992, to BayBanks
Supplemental Executive Retirement Plan, incorporated herein by
reference to Exhibit 10.8 to BayBanks' Annual Report on Form 10-
K for the year ended December 31, 1991 (File No. 0-959).*
10(w) - Second Amendment dated July 19, 1994 to BayBanks Supplemental
Executive Retirement Plan, incorporated herein by reference to
Exhibit 10.2 to BayBanks' Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994 (File No. 0-959).*
10(x) - Third Amendment dated October 27, 1994 to BayBanks Supplemental
Executive Retirement Plan, incorporated herein by reference to
Exhibit 10.8 to BayBanks' Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994 (File No. 0-959).*
-------------------------------------------------
* Indicates that document is a management contract or compensatory plan or
arrangement that is required to be filed as an exhibit to this Report pursuant
to Item 14(c) of Form 10-K.
-30-
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(3) Exhibits (cont'd)
10(y) - Fourth Amendment dated December 10, 1996 to BayBanks
Supplemental Executive Retirement Plan.*
10(z) - Fifth Amendment dated November 27, 1996 to BayBanks Supplemental
Executive Retirement Plan.*
10(aa) - BayBanks Profit Sharing Excess Benefit Plan, incorporated herein
by reference to Exhibit 10.1 to BayBanks' Quarterly Report on
Form 10-Q for the quarter ended March 31, 1993
(File No. 0-959).*
10(bb) - First Amendment to BayBanks Profit Sharing Excess Benefit Plan,
incorporated herein by reference to Exhibit 10.1 to BayBanks'
Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 (File No. 0-959).*
10(cc) - BayBanks Deferred Payment Plans Trust Agreement, incorporated
herein by reference to Exhibit 19 to BayBanks' Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992 (File No. 0-
959).*
10(dd) - First Amendment dated October 27, 1994 to BayBanks Deferred
Payment Plans Trust Agreement, incorporated herein by reference
to Exhibit 10.10 to BayBanks' Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994 (File No. 0-959).*
10(ee) - Employment Agreement dated as of December 12, 1995 by and among
the Corporation, BayBanks, Inc., and William M. Crozier, Jr.,
incorporated herein by reference to Exhibit 99(d) to the
Corporation's Registration Statement on Form S-4 (Registration
No. 333-01761).*
10(ff) - Lease dated as of September 1, 1991 between The First National
Bank of Boston and Equitable Federal Street Realty Company
Limited Partnership, incorporated herein by reference to Exhibit
10(l) to the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1991 (File No. 1-6522).
10(gg) - Amendment of Lease dated as of July 2, 1993 between The First
National Bank of Boston and Equitable Federal Street Realty
Company Limited Partnership.
-------------------------------------------------
* Indicates that document is a management contract or compensatory plan or
arrangement that is required to be filed as an exhibit to this Report pursuant
to Item 14(c) of Form 10-K.
-31-
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(3) Exhibits (cont'd)
10(hh) - Amendment of Lease dated as of March 31, 1994 between The First
National Bank of Boston and Equitable Federal Street Realty
Company Limited Partnership.
10(ii) - Amendment of Lease dated as of April 1, 1994 between The First
National Bank of Boston and Equitable Federal Street Realty
Company Limited Partnership.
10(jj) - Amendment of Lease dated as of March 31, 1996 between The First
National Bank of Boston and Equitable Federal Street Realty
Company Limited Partnership.
10(kk) - Amendment of Lease dated as of October 1, 1996 between The
First National Bank of Boston and Equitable Federal Street
Realty Company Limited Partnership.
11 - Computation of earnings per common share.
12(a) - Computation of the Corporation's Consolidated Ratio of Earnings
to Fixed Charges (excluding interest on deposits).
12(b) - Computation of the Corporation's Consolidated Ratio of Earnings
to Fixed Charges (including interest on deposits).
12(c) - Computation of the Corporation's Consolidated Ratio of Earnings
to Combined Fixed Charges and Preferred Stock Dividend
Requirements (excluding interest on deposits).
12(d) - Computation of the Corporation's Consolidated Ratio of Earnings
to Combined Fixed Charges and Preferred Stock Dividend
Requirements (including interest on deposits).
13 - Pages 20 through 48 and 50 through 80 of the Corporation's 1996
Annual Report to Stockholders.
21 - List of subsidiaries of Bank of Boston Corporation.
23 - Consent of Independent Accountants.
24 - Power of attorney of certain officers and directors (included
on pages II-1 through II-2).
-32-
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(3) Exhibits (cont'd)
27 - Financial Data Schedule
99 - Notice of Annual Meeting and Proxy Statement for the Annual
Meeting of the Corporation's Stockholders to be held April 24,
1997, incorporated herein by reference to the Corporation's
filing under Regulation 14A of the Exchange Act. (File No.
1-6522).
(b) During the fourth quarter of 1996, the Corporation filed one Current
Report on Form 8-K. The current report, dated October 17, 1996, contained
information pursuant to items 5 and 7 of Form 8-K. The Corporation also
filed a Current Report on Form 8-K dated January 16, 1997, which contained
information pursuant to items 5 and 7 of Form 8-K.
-33-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Boston, and the Commonwealth of Massachusetts, on the 19th day of March,
1997.
BANK OF BOSTON CORPORATION
By /s/ CHARLES K. GIFFORD
-----------------------------
(Charles K. Gifford)
(Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates listed below. By so signing, each of the undersigned, in his or her
capacity as a director or officer, or both, as the case may be, of the
Corporation, does hereby appoint Charles K. Gifford, William M. Crozier, Jr.,
Henrique de Campos Meirelles, William J. Shea, Kathleen M. McGillycuddy, Robert
T. Jefferson and Gary A. Spiess, and each of them severally, or if more than
one acts, a majority of them, his or her true and lawful attorneys or attorney
to execute in his or her name, place and stead, in his or her capacity as a
director or officer or both, as the case may be, of the Corporation, any and
all amendments to said report and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do
and perform in the name and on behalf of each of the undersigned, in any and
all capacities, every act whatsoever requisite or necessary to be done in the
premises as fully and to all intents and purposes as each of the undersigned
might or could do in person, hereby ratifying and approving the acts of said
attorneys and each of them.
SIGNATURE TITLE DATE
----------- ----- ------
/s/ CHARLES K. GIFFORD Chief Executive Officer and
- -------------------------------- Director (Chief Executive March 19, 1997
(Charles K. Gifford) Officer)
/s/ WILLIAM M. CROZIER, JR. Chairman of the Board March 19, 1997
- -------------------------------- and Director
(William M. Crozier, Jr.)
/s/ HENRIQUE DE CAMPOS MEIRELLES President and Chief Operating
- -------------------------------- Officer and Director March 19, 1997
(Henrique de Campos Meirelles)
/s/ WILLIAM J. SHEA Vice Chairman, Chief Financial
- -------------------------------- Officer and Treasurer (Chief
(William J. Shea) Financial Officer) March 19, 1997
/s/ ROBERT T. JEFFERSON
- -------------------------------- Comptroller(Chief Accounting March 19, 1997
(Robert T. Jefferson) Officer)
II-1
SIGNATURE TITLE DATE
--------- ----- ----
/s/ WAYNE A. BUDD Director March 19, 1997
- -------------------------
(Wayne A. Budd)
/s/ JOHN A. CERVIERI JR. Director March 19, 1997
- -------------------------
(John A. Cervieri Jr.)
/s/ WILLIAM F. CONNELL Director March 19, 1997
- -------------------------
(William F. Connell)
/s/ GARY L. COUNTRYMAN Director March 19, 1997
- -------------------------
(Gary L. Countryman)
/s/ ALICE F. EMERSON Director March 19, 1997
- -------------------------
(Alice F. Emerson)
/s/ THOMAS J. MAY Director March 19, 1997
- -------------------------
(Thomas J. May)
/s/ DONALD F. MCHENRY Director March 19, 1997
- -------------------------
(Donald F. McHenry)
/s/ PAUL C. O'BRIEN Director March 19, 1997
- -------------------------
(Paul C. O'Brien)
/s/ THOMAS R. PIPER Director March 19, 1997
- -------------------------
(Thomas R. Piper)
/s/ JOHN W. ROWE Director March 19, 1997
- -------------------------
(John W. Rowe)
/s/ RICHARD A. SMITH Director March 19, 1997
- -------------------------
(Richard A. Smith)
/s/ GLENN P. STREHLE Director March 19, 1997
- -------------------------
(Glenn P. Strehle)
/s/ WILLIAM C. VAN FAASEN Director March 19, 1997
- -------------------------
(William C. Van Faasen)
/s/ THOMAS B. WHEELER Director March 19, 1997
- -------------------------
(Thomas B. Wheeler)
/s/ ALFRED M. ZEIEN Director March 19, 1997
- -------------------------
(Alfred M. Zeien)
II-2