STATEMENTS OF FINANCIAL CONDITION
Consolidated--Barnett Banks, Inc. and Subsidiaries
June 30 December 31
(Unaudited) (Audited)
-------------------------- -----------
Dollars in Thousands 1997 1996 1996
- -------------------- ----------- ----------- -----------
Assets
Cash and due from banks...................................................... $ 2,388,144 $ 2,109,441 $ 2,781,146
Federal funds sold and securities purchased under agreements to resell....... 4,800 1,054,475 2,500
Investment securities available for sale..................................... 4,579,544 5,024,079 5,031,123
Investment securities held to maturity (fair value $122,552,
$184,187 and $139,999)..................................................... 113,555 173,083 129,595
Loans........................................................................ 31,022,124 30,484,664 30,297,954
Less: Allowance for loan losses............................................. (481,965) (506,892) (476,709)
Unearned income........................................................ (98,482) (29,399) (45,430)
----------- ----------- -----------
Net loans.......................................................... 30,441,677 29,948,373 29,775,815
Assets under operating leases................................................ 1,789,064 -- --
Premises and equipment....................................................... 1,185,205 1,076,949 1,135,644
Intangible assets............................................................ 1,105,915 616,017 592,142
Other assets................................................................. 2,397,167 1,672,037 1,783,410
----------- ----------- -----------
Total assets....................................................... $ 44,005,071 $ 41,674,454 $ 41,231,375
----------- ----------- -----------
----------- ----------- -----------
Liabilities
Demand deposits.............................................................. $ 6,453,827 $ 5,673,099 $ 6,528,006
NOW and money market accounts................................................ 11,880,355 11,715,564 12,163,289
Savings deposits............................................................. 2,850,778 3,149,093 2,938,243
Certificates of deposit under $100,000....................................... 9,555,051 9,729,532 9,708,311
Other time deposits 2,645,014 4,077,923 2,482,409
----------- ----------- -----------
Total deposits..................................................... 33,385,025 34,345,211 33,820,258
Short-term borrowings:
Federal funds purchased and securities sold
under agreements to repurchase......................................... 2,973,449 957,787 1,265,837
Commercial paper......................................................... 264,558 870,783 42,297
Other short-term borrowings.............................................. 1,313 110,127 1,233
Other liabilities............................................................ 1,161,308 869,154 1,004,890
Long-term debt............................................................... 1,933,627 1,227,716 1,226,529
----------- ----------- -----------
Total liabilities.................................................. 39,719,280 38,380,778 37,361,044
----------- ----------- -----------
Minority Interest
Company obligated mandatorily redeemable securities of trusts holding
solely parent debentures................................................... 750,000 -- 500,000
Shareholders' Equity
Preferred stock, $.10 par value: 20,000,000 shares
authorized; 8,489, 10,669 and 8,489 shares
outstanding................................................................ 212 267 212
Common stock, $2 par value: 400,000,000 shares
authorized; 190,668,090, 192,830,212 and
189,668,922 shares outstanding............................................ 397,336 385,660 395,338
Contributed capital.......................................................... 518,343 343,227 220,041
Net unrealized gain (loss) on investment
securities available for sale and certain
other financial assets..................................................... (721) (2,358) 8,187
Retained earnings............................................................ 2,677,885 2,634,837 2,808,749
Less: Employee stock ownership plan obligation,
collateralized by 3,547,064, 4,209,410
and 3,852,556 shares................................................. (57,264) (67,957) (62,196)
----------- ----------- -----------
Total shareholders' equity......................................... 3,535,791 3,293,676 3,370,331
----------- ----------- -----------
Total liabilities, minority interest and shareholders' equity...... $ 44,005,071 $ 41,674,454 $ 41,231,375
----------- ----------- -----------
----------- ----------- -----------
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
Barnett
14
STATEMENTS OF INCOME
Consolidated--Barnett Banks, Inc. and Subsidiaries
Three Months Six Months
--------------------------- -----------------------
For the Periods Ended June 30--Dollars in Thousands (Unaudited) 1997 1996 1997 1996
---------------------------------------------------------
Interest Income
Loans............................................................. $ 685,188 $ 664,872 $ 1,342,675 $ 1,333,429
Investment securities............................................. 78,679 83,180 159,514 162,611
Federal funds sold and securities purchased under agreements
to resell....................................................... 4,257 9,175 11,956 17,465
----------------------------------------------------------
Total interest income......................................... 768,124 757,227 1,514,145 1,513,505
---------------------------------------------------------
Interest Expense
Deposits.......................................................... 231,238 227,609 457,134 462,559
Federal funds purchased and securities sold under agreements
to repurchase................................................... 37,261 14,990 60,221 28,347
Other short-term borrowings....................................... 6,467 14,081 10,692 28,157
Long term debt.................................................... 37,396 24,718 59,833 48,189
--------------------------------------------------------
Total interest expense........................................ 312,362 281,398 587,880 567,252
--------------------------------------------------------
Net interest income........................................... 455,762 475,829 926,265 946,253
Provision for loan losses......................................... 36,170 39,444 67,945 81,042
--------------------------------------------------------
Net interest income after provision for loan losses........... 419,592 436,385 858,320 865,211
--------------------------------------------------------
Non-Interest Income
Service charges on deposit accounts............................... 63,674 58,023 126,043 115,933
Consumer finance income........................................... 48,563 24,342 90,206 55,789
Net rental income................................................. 45,496 -- 45,496 --
Trust income...................................................... 20,339 20,586 41,364 41,776
Credit card discounts and fees.................................... 9,200 13,137 17,783 24,672
Mortgage banking income........................................... 11,700 18,772 27,952 40,135
Brokerage income.................................................. 13,427 11,796 25,098 23,015
Other service charges and fees.................................... 42,862 35,941 80,483 65,714
Securities transactions........................................... 56 340 56 19,302
Other income...................................................... 15,303 11,259 31,817 23,419
---------------------------------------------------------
Total non-interest income..................................... 270,620 194,196 486,298 409,755
--------------------------------------------------------
Non-Interest Expense
Salaries and employee benefits.................................... 222,823 207,437 440,449 418,687
Net occupancy expense............................................. 38,186 33,933 71,232 67,353
Furniture and equipment expense................................... 40,718 37,805 80,379 75,134
Other expense..................................................... 131,227 121,529 256,747 247,123
------------------------------------------------------
Total non-interest expense.................................... 432,954 400,704 848,807 808,297
------------------------------------------------------
Net non-interest expense...................................... 162,334 206,508 362,509 398,542
-----------------------------------------------------
Earnings
Income before income taxes and minority interest.................. 257,258 229,877 495,811 466,669
Income tax provision.............................................. 91,922 90,346 176,514 178,939
Minority interest expense, net of income taxes.................... 8,308 -- 16,619
-------------------------------------------------------
Net income.................................................... $ 157,028 $ 139,531 $ 302,678 $ 287,730
-------------------------------------------------------
-------------------------------------------------------
Earnings Per Common Share
Restated for 2-for-1 stock split in September 1996
Primary: Earnings per share................................ $.80 $.71 $1.59 $1.47
Average number of shares.......................... 196,062,719 196,187,050 190,797,93 194,120,142
Dividends on preferred stock...................... -- $1 -- $2,168
Fully Diluted: Earnings per share................................ $.80 $.71 $1.58 $1.45
Average number of shares.......................... 196,546,702 196,439,044 191,536,447 197,951,134
---------------------------------------------------------
--------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
Barnett
15
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Consolidated--Barnett Banks, Inc. and Subsidiaries
Contri- Net
Preferred Common buted Unrealized Retained ESOP
Dollars in Thousands (Unaudited) Stock Stock Capital Gain (Loss) Earnings Obligation Total
- -----------------------------------------------------------------------------------------------------------------------------------
For the Period
Balance at January 1, 1996 ............ $ 97,753 $ 379,461 $ 385,734 $ 38,242 $2,445,810 $ (74,814) $ 3,272,186
Net income ............................ 287,730 287,730
Change in net unrealized gain (loss) on
investment securities available for
sale ................................ (40,600) (40,600)
Cash dividends declared:
Common ($.51 per share) ............. (96,523) (96,523)
Preferred ........................... (2,180) (2,180)
Issuances of common stock:
Stock purchase, option and employee
benefit plans ..................... 2,966 38,924 6,857 48,747
Preferred stock conversions ......... (97,486) 14,636 82,287 (563)
Repurchases of common stock ........... (11,403) (163,718) (175,121)
----------------------------------------------------------------------------------------
Balance at June 30, 1996 .............. $ 267 $ 385,660 $ 343,227 $ (2,358) $2,634,837 $(67,957) $ 3,293,676
---------------------------------------------------------------------------------------
For the Period
Balance at January 1, 1997 ............ $ 212 $ 395,338 $ 220,041 $ 8,187 $2,808,749 $ (62,196) $ 3,370,331
Net income ............................ 302,678 302,678
Change in net unrealized gain (loss) on
investment securities available for
sale and certain other financial
assets .............................. (8,908) (8,908)
Cash dividends declared:
Common ($.58 per share) ............. (107,076) (107,076)
Preferred ........................... (11) (11)
Issuances of common stock:
Stock purchase, option and employee
benefit plans ..................... 3,419 30,529 4,932 38,880
Acquisition of Oxford Resources Corp. 27,262 550,540 577,802
Repurchases of common stock ........... (28,683) (282,767) (326,455) (637,905)
----------------------------------------------------------------------------------------
Balance at June 30, 1997 .............. $ 212 $ 397,336 $ 518,343 $ (721) $2,677,885 $ (57,264) $ 3,535,791
-----------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
Barnett
16
STATEMENTS OF CASH FLOWS
Consolidated--Barnett Banks, Inc. and Subsidiaries
For the Periods Ended June 30--
Dollars in Thousands (Unaudited) 1997 1996
- ------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 302,678 $ 287,730
Reconcilement of net income to net cash
provided by operating activities:
Provision for loan losses. . . . . . . . . . . . . . . 67,945 81,042
Gains from securities transactions . . . . . . . . . . (56) (19,302)
Gain on securitization and sale of loans . . . . . . . (81,022) (47,934)
Depreciation on assets under operating leases. . . . . 41,011 --
Depreciation and amortization, excluding
depreciation on assets under operating leases . . . 136,196 130,433
Employee benefits funded by equity . . . . . . . . . . 13,830 12,216
Deferred income tax provision (benefit). . . . . . . . 26,861 (4,562)
Decrease (increase) in interest receivable . . . . . . (9,304) 16,776
Increase (decrease) in interest payable. . . . . . . . 3,430 (10,592)
Increase in other assets . . . . . . . . . . . . . . . (516,200) (296,494)
Increase in other liabilities. . . . . . . . . . . . . 87,930 276,567
Originations of loans held for sale. . . . . . . . . .(2,735,567) (3,030,481)
Proceeds from sales of loans held for sale . . . . . . 2,783,796 2,879,074
Other . . . . . . . . . . . . . . . . . . . . . . . . (28,002) (11,799)
- ------------------------------------------------------------------------------------
Net cash provided by operating activities. . . . . . 93,526 262,674
- ------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Purchases of investment securities available
for sale . . . . . . . . . . . . . . . . . . . . . . . (687,294) (2,191,971)
Proceeds from sales of investment securities
available for sale . . . . . . . . . . . . . . . . . . 1,720 379,665
Proceeds from maturities of investment securities
available for sale . . . . . . . . . . . . . . . . . . 1,140,706 1,926,142
Purchases of investment securities held to maturity. . . -- (2,932)
Proceeds from maturities of investment securities
held to maturity . . . . . . . . . . . . . . . . . . . 16,285 31,074
Net decrease (increase) in loans . . . . . . . . . . . . (609,179) 17,539
Purchases of vehicles under operating leases . . . . . . (300,429) --
Proceeds from sales of vehicles under operating leases 120,862 --
Proceeds from sales of premises and equipment. . . . . . 16,828 15,179
Purchases of premises and equipment. . . . . . . . . . . (118,508) (73,916)
Receipts related to dispositions and
acquisitions, net of cash acquired . . . . . . . . . . -- 378,249
- ------------------------------------------------------------------------------------
Net cash provided by (used for)investing
activities . . . . . . . . . . . . . . . . . . . . (419,009) 479,029
- ------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net decrease in demand, NOW, savings and
money market accounts . . . . . . . . . . . . . . . . (444,578) (1,534,036)
Net increase in certificates of deposit and
other time deposits . . . . . . . . . . . . . . . . . 9,345 1,528,310
Net increase (decrease) in short-term borrowings . . . . 1,917,800 (140,252)
Principal repayments of long-term debt . . . . . . . . .(1,077,844) (213,098)
Proceeds from issuance of long-term debt . . . . . . . . -- 250,000
Proceeds from issuance of company obligated
mandatorily redeemable securities of trusts
holding solely parent debentures . . . . . . . . . . . 250,000 --
Issuances of common stock. . . . . . . . . . . . . . . . 25,050 35,968
Repurchases of common stock. . . . . . . . . . . . . . . (637,905) (175,121)
Cash dividends . . . . . . . . . . . . . . . . . . . . . (107,087) (98,703)
- -------------------------------------------------------------------------------------
Net cash used for financing activities . . . . . . (65,219) (346,932)
- -------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (390,702) 394,771
Cash and cash equivalents, January 1 . . . . . . . . . 2,783,646 2,769,145
- ------------------------------------------------------------------------------------
Cash and cash equivalents, June 30 . . . . . . . . . . $2,392,944 $3,163,916
- ----------------------------------------------------------------------------------
For the periods ended June 30, 1997 and 1996, income tax payments of $69 million
and $198 million were paid and interest of $584 million and $578 million was
paid, respectively. Cash and cash equivalents includes cash and due from banks,
interest-bearing deposits in other banks, securities purchased under agreements
to resell and federal funds sold.
For each of the periods ended June 30, 1997 and 1996, $32 million and $24
million of loans, respectively, were transferred to real estate held for sale.
During the period ended June 30, 1997, the company acquired $2.4 billion of
non-cash assets and $1.9 billion of liabilities. During the period ended June
30, 1996, the company disposed of $559 million of non-cash assets and $55
million of liabilities.
The accompanying Notes to Financial Statements are an integral part of these
financial statements.
Barnett
17
NOTES TO FINANCIAL STATEMENTS
In September 1996, Barnett completed a 2-for-1 stock split. All historical data
in this report has been restated to reflect the split.
A. General
The accounting and reporting policies of Barnett Banks, Inc. and its
subsidiaries conform to generally accepted accounting principles and to
predominant practices within the banking industry. Except as noted below, the
company has not changed its accounting and reporting policies from those
disclosed in its 1996 Annual Report on Form 10-K.
On January 1, 1997, the company adopted Statement of Financial Accounting
Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." This Statement establishes new
ground rules for determining whether a transfer of financial assets constitutes
a sale and, if so, the determination of any resulting gain or loss. This
statement requires that an enterprise recognize only assets it controls and
liabilities it has incurred, to remove assets only when control has been
surrendered and to remove liabilities only when they have been extinguished. The
adoption of SFAS No. 125 did not have a material impact on the financial
position or results of operations of the company.
The results of operations for the three and six-month periods ended June 30,
1997 may not be indicative of operating results for the year ending December 31,
1997. Certain prior year and prior quarter amounts have been reclassified to
conform to current classifications.
On April 1, 1997, the company acquired all of the outstanding common stock of
Oxford Resources Corp., the nation's largest independent automobile leasing
company for 13.6 million shares of company common stock. The acquisition was
accounted for as a purchase transaction, and, accordingly, the results of
operations of Oxford are included from the date of purchase. The primary asset
of Oxford was automobiles under operating leases of $1.6 billion. The company
enters into or purchases leases on new and used automobiles from automobile
dealers. All of the leases which are entered into are accounted for as operating
leases. At the inception of the lease, no revenue is recognized and the leased
vehicle, together with the initial direct costs of originating the lease, which
are capitalized, appear on the statements of financial condition as "Assets
Under Operating Leases." The capitalized cost of each vehicle is depreciated
over the lease term on a straight line basis down to the company's original
estimate of the projected value of the vehicle at the end of the scheduled lease
term. Income from Oxford's automobile leasing program is included in the
statements of income as net rental income and is presented net of related
depreciation. The purchase price in excess of the fair value of net assets
acquired was $515 million and may change as certain estimates are finalized.
In the opinion of the company's management, all adjustments necessary to
fairly present the financial position as of June 30, 1997 and 1996, and the
results of operations and cash flows for the periods then ended, all of which
are of a normal and recurring nature, have been included.
B. Loans
June 30--Dollars in Thousands
Net of Unearned Income 1997 1996
------------ ------------
Commercial, financial and agricultural....... $ 5,533,593 $ 4,902,115
Real estate construction..................... 813,043 818,364
Commercial mortgages......................... 1,706,892 2,049,812
Residential mortgages........................ 9,606,952 10,095,321
Installment.................................. 11,204,123 10,045,435
Bank card.................................... 1,202,098 1,785,464
Credit lines................................. 856,941 758,754
------------ ------------
Total...................................... $ 30,923,642 $ 30,455,265
------------ ------------
------------ ------------
C. Allowance for Loan Losses
For the Six Months Ended June 30--
Dollars in Thousands 1997 1996
------------ ------------
Beginning balance............................ $476,709 $ 505,148
Recoveries................................... 16,146 23,935
Provision expense............................ 67,945 81,042
Loans charged off............................ (83,969) (104,784)
Other, net................................... 5,134 1,551
------------ ------------
Ending Balance............................... $481,965 $ 506,892
------------ ------------
------------ ------------
D. Long-Term Debt
June 30--Dollars in Thousands 1997 1996
------------ ------------
Parent Company:
7.75% Sinking Fund Debentures, due 1997...... -- $ 9,500
Less: Face value of debentures repurchased
and held for future retirements............ -- (72)
------------ ------------
Total outstanding.......................... -- 9,428
Medium-term notes, due in varying
maturities through 2003, with interest
from a floating 5.87% to a fixed 9.83%.... $ 251,500 401,500
8.50% Subordinated Capital Notes, due 1999... 200,000 200,000
9.875% Subordinated Capital Notes, due 2001.. 100,000 100,000
10.875% Subordinated Capital Notes, due 2003. 55,000 55,000
6.90% Subordinated Capital Notes, due 2005... 150,000 150,000
8.50% Subordinated Capital Notes, due 2007... 100,000 100,000
Senior Notes, with interest from a
floating 5.85%, due 1998................... 200,000 200,000
Subsidiaries:
Notes payable to finance the purchase of
leased vehicles, fixed interest rates
ranging from 6.11% to 9.05%................ 364,673 --
Capitalized lease obligations................ 512,454 11,788
------------ ------------
Total...................................... $ 1,933,627 $ 1,227,716
------------ ------------
------------ ------------
Notes payable to finance the purchase of leased vehicles are due in
installments equal to the lease rentals receivable by the company from the
lease. The final payments on these borrowings are equal to the residual value of
the vehicle at lease termination.
Barnett
18
E. Earnings Per Common Share
The weighted-average number of shares used in the computation of earnings per
share are as follows:
Three Months Six Months
For the Periods Ended June 30-- ------------------------- -------------------------
Dollars in Thousands 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------
Primary Shares
Average common shares outstanding.......................... 190,801,184 193,206,438 185,922,564 191,140,266
Common shares assumed outstanding to reflect dilutive
effect of:
Convertible preferred stock............................ 44,122 55,552 44,122 56,224
Common stock options................................... 5,217,413 2,925,060 4,831,249 2,923,652
- -------------------------------------------------------------------------------------------------------------------
Total.................................................. 196,062,719 196,187,050 190,797,935 194,120,142
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Adjustments for preferred dividends........................ -- $1 -- $2,168
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Three Months Six Months
------------------------- -------------------------
For the Periods Ended June 30-- 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------
Fully Diluted Shares
Average common shares outstanding.......................... 190,801,184 193,206,438 185,922,564 191,140,266
Common shares assumed outstanding to reflect dilutive
effect of:
Convertible preferred stock............................ 44,122 307,546 44,122 3,887,216
Common stock options................................... 5,701,396 2,925,060 5,569,761 2,923,652
- -------------------------------------------------------------------------------------------------------------------
Total.................................................. 196,546,702 196,439,044 191,536,447 197,951,134
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share" which, when adopted, will replace the current
methodology for calculating and presenting earnings per share. Under SFAS No.
128, primary and fully diluted earnings per share will be replaced with the
presentation of basic and diluted earnings per share. Basic earnings per share
excludes dilution and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share is computed similarly to fully diluted
earnings per share. The Statement will be effective for the company's December
31, 1997 consolidated financial statements.
Barnett
19