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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1993 - Commission file number 1-6366
FLEET FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Rhode Island 05-0341324
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
50 Kennedy Plaza
Providence, Rhode Island 02903
(Address of principal executive office) (Zip Code)
(401) 278-5800
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, $1 Par Value New York Stock Exchange
Preferred Stock with Cumulative and Adjustable Dividends, $1 Par Value New York Stock Exchange
Preferred Stock with Cumulative and Adjustable Dividends, $20 Par Value New York Stock Exchange
Depositary Shares representing a one-fourth interest in a share
of Series III, 10.12% Perpetual Preferred stock, $1 Par Value New York Stock Exchange
Depositary Shares representing a one-fourth interest in a share
of Series IV, 9.375% Perpetual Preferred Stock, $1 Par Value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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, and (2) has been subject to such filing
requirements for the past 90 days: YES XX NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K 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. [ ]
The aggregate market value on March 3, 1994 of the voting stock held by
nonaffiliates of the Registrant was $4.5 billion, which includes $274 million
held by banking subsidiaries of the Registrant under trust agreements and other
instruments.
The number of shares of common stock of the Registrant outstanding as of
March 3,1994 was 137,559,732.
DOCUMENTS INCORPORATED BY REFERENCE
1. Pertinent extracts from Registrant's accompanying 1993 Annual Report to
Shareholders (Parts I and II).
2. Pertinent extracts from Registrant's Proxy Statement for its annual meeting
on April 20, 1994, previously filed with the Commission. Such incorpor-
ation by reference shall not be deemed to specifically incorporate by
reference the information referred to in Item 402 (a)(8) of Regulation S-K.
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FORM 10-K
FLEET FINANCIAL GROUP, INC.
For the Year Ended December 31, 1993
Table of Contents
Description Page Number
Part I. Item 1 - Business 3
Item 2 - Properties 10
Item 3 - Legal Proceedings 10
Item 4 - Submission of Matters to a Vote
of Security-Holders 10
Part II. Item 5 - Market for the Registrant's Common Stock
and Related Stockholder Matters 10
Item 6 - Selected Financial Data 10
Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
Item 8 - Financial Statements and Supplementary
Data 11
Item 9 - Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure 11
Part III. Item 10 - Directors and Executive Officers of the
Registrant 11
Item 11 - Executive Compensation 13
Item 12 - Security Ownership of Certain Beneficial
Owners and Management 13
Item 13 - Certain Relationships and Related
Transactions 13
Part IV. Item 14 - Exhibits, Financial Statement Schedules
and Reports on Form 8-K 13
Signatures 16
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PART I.
Item 1. BUSINESS
Fleet Financial Group, Inc. (the "Registrant", "Corporation" or"Fleet")
is a diversified financial services company organized under the laws of the
State of Rhode Island. Fleet is a legal entity separate and distinct from its
subsidiaries, assisting such subsidiaries by providing financial resources and
management. By most measures, Fleet is among the 15 largest bank holding
companies in the United States, with total assets of $47.9 billion at December
31, 1993. Fleet has approximately 26,000 employees.
Fleet reported net income for 1993 of $488 million, or $3.01 per share.
This compared to net income of $280 million, or $1.77 per share in 1992. For
a more detailed discussion of the Corporation's financial results, refer to
"Management's Discussion and Analysis" (pages 9-23) of the accompanying 1993
Annual Report to Shareholders which is hereby incorporated by reference.
Banking Subsidiaries
Fleet is engaged in a general commercial banking and trust business
throughout the states of Rhode Island, New York, Connecticut, Massachusetts,
Maine and New Hampshire through its banking subsidiaries, Fleet Bank of New
York ("Fleet-Upstate"); Fleet Bank ("Fleet-Long Island"); Fleet National Bank
("Fleet-RI"); Fleet Bank, National Association ("Fleet-CT"); Fleet Bank of
Massachusetts, National Association ("Fleet-MA"); Fleet Bank of Maine
("Fleet-Maine") and Fleet Bank-NH ("Fleet-NH"). All of the subsidiary banks
are members of the Federal Reserve System, and the deposits of each are
insured by the FDIC to the extent provided by law.
The following table shows the total offices, assets, deposits and equity
capital of Fleet's banking subsidiaries at December 31, 1993:
Equity
($ in millions) Offices Assets Deposits Capital
- ---------------------------------------------------------------------------------
Fleet-Upstate 258 $ 9,651 $ 7,567 $ 827
Fleet-CT 149 8,021 6,049 558
Fleet-MA 177 7,726 6,125 578
Fleet-RI 52 6,652 5,604 630
Fleet-Maine 106 2,895 2,164 225
Fleet-Long Island 72 2,795 2,263 173
Fleet-NH 39 1,776 1,313 123
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853 $39,516 $31,085 $3,114
- ---------------------------------------------------------------------------------
Nonbanking Subsidiaries
Fleet provides, through its nonbanking subsidiaries, a variety of
financial services, including mortgage banking, asset-based lending, equipment
leasing, consumer finance, real estate financing, credit related life and
accident/health insurance, securities brokerage services, investment banking,
investment advice and management, data processing, and student loan servicing.
The following is a summary of these subsidiaries by line of business:
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Item 1. BUSINESS - (continued)
Mortgage Banking
Fleet Mortgage Group, Inc. ("FMG") is a Rhode Island corporation. FMG's
mortgage banking business consists primarily of the origination, purchase,
sale and servicing of residential first mortgage loans, and the purchase and
sale of servicing rights associated with mortgage loans. In 1992, the
Corporation sold a 19% interest in FMG, in a public offering of FMG's common
stock.
FMG currently ranks as the second largest mortgage servicer in the
nation. It produces mortgage loans through its 91 retail branch offices
located in 37 states and acquires mortgage loans through correspondent
lenders, which originate mortgage loans pursuant to guidelines provided by
FMG. FMG services a portfolio of approximately $70 billion in mortgage loans.
Asset-Based Lending
Fleet Credit Corporation ("Fleet Credit") engages primarily in middle
market equipment leasing. Fleet Credit had total assets of $1.4 billion as of
December 31, 1993, making it one of the largest bank-affiliated commercial
finance leasing firms in the U.S. Fleet Credit operates 23 offices in 14
states.
Fleet Factors Corporation ("Fleet Factors") is based in New York City,
and engages in factoring and commercial finance for various industries,
principally textiles, but also including hard goods and electronics. Fleet
Factors had total assets of approximately $350 million at December 31, 1993.
All of the outstanding common stock of Fleet Factors was sold on February 14,
1994.
Consumer Finance
Fleet Finance, Inc. ("Fleet Finance") located in Atlanta, Georgia,
engages primarily in consumer lending and home equity lending operations
through 130 offices in 22 states and underwrites credit life, accident and
health insurance. Fleet Finance services a portfolio of approximately $2.3
billion in loans, primarily secured by residential real estate. (Information
set forth in Note 16. Commitments, Contingencies, and Other Disclosures (page
47) of the accompanying 1993 Annual Report to Shareholders, which is hereby
incorporated by reference, provides a description of certain litigation
involving Fleet Finance, Inc.)
Securities Brokerage
Fleet Securities, Inc. is a full-service municipal securities underwriter
and dealer providing services throughout New York and New England.
Fleet Brokerage Securities, Inc., is engaged in providing securities
brokerage services (including clearing services), related securities credit
extension, and other incidental activities through offices in New York City
and throughout the country. Fleet Brokerage operates 12 offices in 11 states.
Trust and Investment Management
Fleet Investment Services Group which has responsibility for overall
management of the Corporation's trust activities provides personalized money
management and a full range of trust services for individuals, large and small
companies, religious and educational endowments and charitable organizations.
In total, the Fleet trust operations manage or have under custody
approximately $50 billion in assets.
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Item 1. BUSINESS - (continued)
Fleet Investment Advisors Inc. located in Providence, Rhode Island
handles investment policy matters and all personal and institutional portfolio
management.
Data Processing
Fleet Services Corporation ("Fleet Services") was formed to consolidate
the Corporation's previously existing data processing operations. Fleet
Services' principal function is to provide data processing services for the
banking and nonbanking subsidiaries of the Corporation.
AFSA Data Corporation ("AFSA") provides student loan processing and
portfolio management services for Federal Perkins and Federal Family student
loans to over 700 colleges, universities, and financial institutions
nationwide. AFSA is located in Long Beach, California and operates student
loan processing centers in Lombard, IL and Utica, NY. AFSA services a
portfolio of approximately $7 billion in student loans.
Competition
The Corporation's subsidiaries are subject to competition in all aspects
of the businesses in which they compete from domestic and foreign banks,
equipment leasing companies, finance companies, securities and investment
advisory firms, real estate financing companies, mortgage banking companies,
and other financial institutions. The Corporation principally competes on
interest rates and other terms of financing arrangements, including
specialized customer services and various banking arrangements and
conveniences to attract depositors, borrowers, and other customers. The
Corporation maintains a Products and Services Group to review existing
programs and institute new services.
Supervision and Regulation
Banking is a highly regulated industry, with numerous federal and state
laws and regulations governing the organization and operation of banks and
their affiliates. As a bank holding company, Fleet is subject to regulation
by the Board of Governors of the Federal Reserve Board (the "Federal Reserve
Board") under the Bank Holding Company Act of 1956 (as amended) (the "BHCA").
Fleet-Maine, Fleet-NH, Fleet-Upstate and Fleet-Long Island as state-chartered
member banks are subject to regulation by the Federal Reserve Board and bank
regulators in their respective states. Fleet-CT, Fleet-MA and Fleet-RI are
national banks subject to regulation and supervision by the Office of the
Comptroller of the Currency (the "OCC"). Each subsidiary bank's deposits are
insured by the Federal Deposit Insurance Corporation (FDIC) and each bank
subsidiary is a member of the Federal Reserve System. Fleet is also subject
to the reporting and other requirements of the Securities Exchange Act of 1934
(the "Exchange Act").
The BHCA requires that Fleet obtain prior approval from the Federal
Reserve Board for bank and nonbank acquisitions and restricts the business
operations permitted to Fleet. The BHCA also restricts the acquisition of
shares of out-of-state banks unless the acquisition is specifically authorized
by the laws of the state in which the bank to be acquired is located. In
addition, Fleet's bank subsidiaries must obtain prior approval from their
respective primary regulators for most acquisitions. Virtually all aspects of
the subsidiary banks' businesses are subject to regulation and examination,
depending on the charter of the particular banking subsidiary, by the Federal
Reserve Board, the OCC, the banking regulatory agency of the state in which
they operate, or a combination of the above.
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Item 1. BUSINESS - (continued)
On December 19, 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") was signed into law. In general, FDICIA
subjects banks to significantly increased regulation and supervision. Among
other things, FDICIA requires federal bank regulatory authorities to take
"prompt corrective action" in respect of banks that do not meet minimum capital
requirements. FDICIA establishes five capital tiers: well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized, and
critically undercapitalized. Under the OCC's regulations, a bank is defined to
be well capitalized if it maintains a risk-adjusted Tier I capital ratio of at
least 6%, a risk-adjusted total capital ratio of at least 10% and a Tier I
leverage ratio of at least 5%, and is not otherwise in a "troubled condition"
as specified by its appropriate federal regulatory agency. A bank is defined
to be adequately capitalized if it maintains a risk-adjusted Tier 1 ratio of at
least 4%, a risk-adjusted total capital ratio of at least 8%, and a Tier 1
leverage ratio of at least 4% (3% for certain highly rated institutions), and
does not otherwise meet the well capitalized definition. The three
undercapitalized categories are based upon the amount by which the bank falls
below the ratios applicable to adequately capitalized institutions. A
depository institution may be deemed to be in a capitalization category that is
lower than is indicated by its actual capital position if it receives an
unsatisfactory examination rating. As of December 31, 1993, all of the
Registrant's banking subsidiaries met the requirements of a "well capitalized"
institution.
Under FDICIA, a bank that is not well capitalized is generally prohibited
from accepting brokered deposits and offering interest rates on deposits
higher than the prevailing rate in its market; in addition, "pass through"
deposit insurance coverage may not be available for certain employee benefit
accounts. Adequately capitalized institutions may apply to the FDIC for a
waiver of the prohibition against accepting brokered deposits.
Undercapitalized banks are subject to limitations on growth, on their
ability to borrow from the Federal Reserve System and on the payment of
dividends and are required to submit a capital restoration plan. If a bank
fails to submit an acceptable plan, it is treated as if it is significantly
undercapitalized. Significantly undercapitalized banks may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions (which are defined to include
institutions which still have a positive net worth) are generally subject to
the mandatory appointment of a receiver or conservator.
FDICIA directs that each federal banking agency prescribe new safety and
soundness standards for depository institutions and depository institution
holding companies relating to internal controls, information systems, internal
audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth compensation, a maximum rate of classified assets to
capital, minimum earnings sufficient to absorb losses, a minimum ratio of
market value to book value for publicly traded shares and other standards
which the agencies deem appropriate. The federal banking regulators recently
issued a joint proposal to implement such standards. In general, the
standards are expected to increase the regulatory burden and expense of
conducting the banking business.
FDICIA also contains a variety of other provisions that may affect
Fleet's operations, including new reporting requirements, regulatory standards
for real estate lending, "truth in savings" provisions, and the requirements
that a depository institution give 90 days' prior notice to customers and
regulatory authorities before closing any branch. Fleet does not expect the
application of the standards to have a material adverse effect on its
business.
The OCC and the Federal Reserve Board have each issued guidelines which
impose upon national banks and state banks, that are members of the Federal
Reserve System, risk-based capital and leverage standards. The risk-based
capital ratio guidelines are based on an international agreement developed by
the Basle Committee of Banking Regulations and Supervisory Practices, which
consists of representatives of central banks and supervisory authorities in 12
countries, including the United States and the United Kingdom. The guidelines
establish a systematic analytical framework that makes regulatory capital
requirements more sensitive to differences in risk
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Item 1. BUSINESS - (continued)
profiles among banking organizations, takes off-balance sheet exposure into
explicit account in assessing adequacy, and minimizes disincentives to holding
liquid, low-risk assets. The risk-based ratio is determined by allocating
assets and specified off-balance sheet commitments into four weighted
categories, with higher levels of capital being required for categories
perceived as representing greater risk.
Under these guidelines, a bank's capital is divided into two tiers. The
first tier includes common equity, non-cumulative perpetual preferred stock
(excluding auction rate issues) and minority interests in equity accounts of
consolidated subsidiaries less ineligible intangible assets. Supplementary
(Tier 2) capital includes, among other items, cumulative and limited life
preferred stock, mandatory convertible securities, subordinated debt and the
allowance for loan and lease losses, subject to certain limitations.
National banks and state-chartered member banks are required to maintain
a minimum total risk-based capital ratio of 8%, of which at least half must be
Tier I capital. The OCC and the Federal Reserve Board may, however, set
higher capital requirements for an individual bank when the bank's particular
circumstances warrant. In addition to the risk-based capital standard,
national banks and state-chartered member banks are also subject to a leverage
capital standard, with a numerator consisting of Tier I capital a denominator
consisting of total assets (as defined by the OCC's and the Federal Reserve
Board's rules). The OCC and the Federal Reserve Board established a 3%
minimum Tier I leverage ratio applicable only to banks meeting certain
specified criteria, including excellent asset quality, high liquidity, low
interest rate exposure, and the highest regulatory rating. Institutions not
meeting these criteria are expected to maintain a ratio which exceeds the 3%
minimum by at least 100 to 200 basis points.
Failure to meet applicable capital guidelines could subject a bank to a
variety of enforcement remedies available to the federal regulatory
authorities, including limitations on the ability to pay dividends, the
issuance by the appropriate bank regulatory agency of a capital directive to
increase capital, the termination of deposit insurance by the FDIC, and (in
severe cases) the appointment of a conservator or receiver.
In September 1993, the OCC and the Federal Reserve Board, in conjunction
with the FDIC, issued proposed revisions to their risk-based capital
regulations which provide for consideration of interest rate risk in the
overall determination of a bank's minimum capital requirement. The intended
effect of the proposal would be to ensure that banking institutions
effectively measure and monitor their interest rate risk and that they
maintain adequate capital for that risk. Under the proposal, an institution's
exposure to interest rate risk would be measured using either a supervisory
model, developed by the federal bank regulatory agencies, or the bank's own
internal model. An institution that exceeds the threshold level of interest
rate risk established by its primary federal regulator would be required to
allocate additional capital to cover such exposure. If such additional
capital was not available to be allocated, such institution would be required
to raise additional capital.
Pursuant to certain provisions of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 ("FIRREA"), an insured depository
institution which is commonly controlled with another insured depository
institution is generally liable for any loss incurred, or reasonably
anticipated to be incurred, by the FDIC in connection with the default of such
commonly controlled institution, or any assistance provided by the FDIC to
such commonly controlled institution, which is in danger of default. The term
"default" is defined to mean the appointment of a conservator or receiver for
such institution. Thus, each subsidiary bank could incur liability to the
FDIC pursuant to this statutory provision in the event of the default of any
other subsidiary bank or any of the other insured depository institutions
owned or controlled by the Corporation. Such liability is subordinated in
right and payment to depository liabilities, secured obligations, any other
general or senior liability, and any obligation subordinated to depositors or
other general creditors, other than obligations owed to any affiliate of the
depository institution (with certain exceptions), and any obligations to
shareholders in such capacity.
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Item 1. BUSINESS - (continued)
In its resolution of the problems of an insured depository institution in
default or in danger of default, the FDIC is obligated to satisfy its
obligations to insured depositors at the least possible cost to the deposit
insurance fund. In addition, the FDIC may not take any action that would have
the effect of increasing the losses to a deposit insurance fund by protecting
depositors for more than the insured portion of deposits (generally $100,000)
or creditors other than depositors. FDICIA authorized the FDIC to settle all
uninsured and unsecured claims in the insolvency of an insured bank by making
a final settlement payment after the declaration of insolvency. Such a
payment would constitute full payment and disposition of the FDIC's
obligations to claimants. The rate of such final settlement payment is to be
a percentage rate determined by the FDIC reflecting an average of the FDIC's
receivership recovery experience.
On August 10, 1993, the President signed into law legislation which
accords the claims of a receiver of an insured depository institution for
administrative expenses and the claims of holders of deposit liabilities of
such an institution (including the FDIC, as the subrogee of such holders)
priority over the claims of general unsecured creditors of such an institution
in the event of a liquidation or other resolution of such institution. Under
an FDIC interim rule, which became effective August 13, 1993, "administrative
expenses" of a receiver are defined as those incurred by a receiver in
liquidating or resolving the affairs of a failed insured depository
institution.
Fleet is a legal entity separate and distinct from its subsidiaries. In
addition to those discussed herein, there are various other statutory and
regulatory limitations on the extent to which banking subsidiaries of Fleet
can finance or otherwise transfer funds to Fleet or its nonbanking
subsidiaries, whether in the form of loans, extensions of credit, investments,
or asset purchases. Such transfers by any subsidiary bank to Fleet or any
nonbanking subsidiary are limited in amount to 10% of the bank's capital and
surplus and, with respect to Fleet and all such nonbanking subsidiaries, to an
aggregate of 20% of each such bank's capital and surplus. Furthermore, loans
and extensions of credit are required to be secured in specified amounts and
are required to be on terms and conditions consistent with safe and sound
banking practice.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Fleet from its banking subsidiaries. Under
applicable banking statutes, at December 31, 1993, Fleet's banking
subsidiaries could have paid additional dividends of approximately $417
million, of which $125 million and $95 million could have been paid by Fleet-
MA and Fleet-CT, respectively. Federal and state regulatory agencies have the
authority to limit further Fleet's banking subsidiaries' payment of dividends.
The payment of dividends by any subsidiary bank may also be affected by other
factors, such as the maintenance of adequate capital for such subsidiary bank.
Further, holders of Fleet's Dual Convertible Preferred Stock are entitled to
dividends equal to one-half of the total dividends declared (after the first
$15 million in dividends) to Fleet, if any, on the common stock of Fleet
Banking Group, the parent of Fleet-MA and Fleet-CT. Dividends on the Dual
Convertible Preferred Stock, if accrued and unpaid, will be cumulative.
Under the policies of the Federal Reserve Board, Fleet is expected to act
as a source of financial strength to each subsidiary bank and to commit
resources to support such subsidiary bank in circumstances where it might not
do so absent such policy. In addition, any subordinated loans by Fleet to
provide capital to any of the subsidiary banks would also be subordinate in
right of payment to deposits and to certain other indebtedness of such
subsidiary bank. The ability of holders of debt and equity securities of
Fleet to benefit from the distribution of assets of any subsidiary upon the
liquidation or reorganization of such subsidiary is subordinate to prior
claims of creditors of the subsidiary except to the extent that a claim of
Fleet as a creditor may be recognized.
The banking industry is also affected by the monetary and fiscal policies
of the federal government, including the Federal Reserve, which exerts
considerable influence over the cost and availability of funds obtained for
lending and investing. In addition, proposals to change the laws and
regulations governing the operations and taxation of banks, companies that
control banks, and other financial institutions are frequently raised in
Congress, in the state legislatures and before various bank regulatory
authorities. The likelihood of any major changes and the impact such changes
might have on Fleet are impossible to determine.
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Item 1. BUSINESS - (continued)
Reference is made to Note 16 Commitments, Contingencies, and Other
Disclosures (pages 47-48) of the Notes to Consolidated Financial Statements
and to the "Capital" and "Liquidity" sections of Management's Discussion and
Analysis in the accompanying 1993 Annual Report to Shareholders for
information concerning restrictions on the banking subsidiaries' ability to
pay dividends and other regulatory matters and legal proceedings.
Executive Officers of the Corporation
The information required by this item is included in Item 10. Directors
and Executive Officers of the Registrant on pages 11 through 12 of this Form
10-K.
STATISTICAL INFORMATION BY BANK HOLDING COMPANIES
The following information set forth in the accompanying 1993 Annual
Report to Shareholders is hereby incorporated by reference:
Consolidated Average Balances/Interest Earned-Paid/Rates 1989-1993 table
(Page 52-53) for average balance sheet amounts, related taxable
equivalent interest earned or paid, and related average yields and rates
paid.
Rate/Volume Analysis table (page 54) for changes in the taxable
equivalent interest income and expense for each major category
of interest-earning assets and interest-bearing liability.
Note 3. Securities Available for Sale and Note 4. Investment
Securities of the Notes to Consolidated Financial Statements
(pages 32-34) for information regarding book values, market
values, maturities and weighted average yields of securities
(by category).
Note 5. Loans and Leases of the Notes to the Consolidated
Financial Statements (page 35) for distribution of loans of the
Registrant.
Loan and Lease Maturity table and Interest Sensitivity of Loans
Over One Year table (page 54) for maturities and sensitivities
of loans to changes in interest rates.
Note 7. Nonperforming Assets (page 36) and Note 1. Summary of
Significant Accounting Policies - Loans and Leases (page 30) of
the Notes to Consolidated Financial Statements for information
on nonaccrual, past due and restructured loans and the
Registrant's policy for placing loans on nonaccrual status.
"Loans and Leases" section of Management's Discussion and
Analysis (pages 13-15 and 44-45) for information regarding loan
concentrations of the Registrant.
"Reserve for Credit Losses" section of Management's Discussion
and Analysis (pages 17-18) for the analysis of loss experience,
the allocation of the reserve for credit losses, and a
description of factors which influenced management's judgment in
determining the amount of additions to the allowance charged to
operating expense.
Consolidated Average Balances/Interest Earned-Paid/Rates
1989-1993 table (pages 52-53) and the "Deposits" section of
Management's Discussion and Analysis (page 18) for deposit
information.
Selected Financial Highlights (page 1) for return on assets,
return on equity, dividend payout ratio and equity to asset
ratio.
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Item 1. BUSINESS - (continued)
Note 8. Short-term Borrowings of the Notes to Consolidated
Financial Statements (page 37) for information on short-term
borrowings of the Registrant.
Item 2. PROPERTIES
The Registrant maintains its corporate headquarters in Providence, Rhode
Island, located in a building in which the Registrant has a partnership
interest through a subsidiary. The subsidiary is a partner with certain other
parties in the ownership and management of the building. Adjacent to the
Providence headquarters building, Fleet-RI owns a building which houses the
main branch of Fleet-RI and the offices of many of the Providence-based
subsidiaries. Fleet-RI also owns an operations center, located in Providence.
The Registrant also owns office buildings in Buffalo, NY and Albany, NY, which
house operational facilities of Fleet-Upstate. Fleet-LI owns an office
building in Melville, NY, which houses its headquarters. Portions of the
Fleet-RI, Fleet-Upstate and Fleet-LI buildings are leased to nonaffiliates.
As of December 31, 1993, the Registrant's subsidiaries also operated
approximately 1,200 domestic offices, of which approximately 500 are owned and
700 are leased from others. The Registrant also leases office space in
London. In general, all leases run from one to ten years and most contain
options to renew.
Item 3. LEGAL PROCEEDINGS
Information regarding legal proceedings of the Registrant is hereby
incorporated by reference from Note 16. Commitments, Contingencies and Other
Disclosures (pages 47-48) of the Registrant's accompanying 1993 Annual Report
to Shareholders.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
There were no matters submitted to a vote of security-holders in the
fourth quarter.
PART II.
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
For information regarding the Registrant common stock's principal U.S.
market, high and low quarterly sales prices, approximate number of holders,
and quarterly dividends declared and paid, see the Common Stock Price and
Dividend Information table (page 51) of the Registrant's accompanying 1993
Annual Report to Shareholders, which is hereby incorporated by reference.
Item 6. SELECTED FINANCIAL DATA
The information set forth in Selected Financial Highlights (page 1) of
the Registrant's accompanying 1993 Annual Report to Shareholders is hereby
incorporated by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information set forth in Management's Discussion and Analysis (pages
9-23) of the Registrant's accompanying 1993 Annual Report to Shareholders is
hereby incorporated by reference.
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information set forth in the Registrant's accompanying 1993
Annual Report to Shareholders is hereby incorporated by reference.
The Consolidated Financial Statements together with the report
thereon by KPMG Peat Marwick (pages 25-29); the Notes to the
Consolidated Financial Statements (pages 30-50); and the
unaudited information presented in the Quarterly Summarized
Financial Information table (page 51).
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on accounting
and financial disclosure as defined by Item 304 of Regulation S-K.
PART III.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the caption "Election of Directors" (page
2-7) in the Registrant's Proxy Statement with respect to the name of each
nominee or director, his age, his positions and offices with the Registrant,
his service on the Registrant's Board, his business experience, his
directorships held in other public companies, and certain family relationships
is hereby incorporated by reference.
The names, positions, ages and business experience during the past five
years of the executive officers of the Corporation as of March 25, 1994 are
set forth below. The term of office of each executive officer extends until
the annual meeting of the Board of Directors, and until a successor is chosen
and qualified or until they shall have resigned, retired, or have been
removed.
Name Positions with the Corporation Age
---- ------------------------------ ---
Terrence Murray Chairman, President & Chief Executive Officer 54
Robert J. Higgins Vice Chairman 48
H. Jay Sarles Vice Chairman 49
Michael R. Zucchini Vice Chairman 47
Eugene M. McQuade Executive Vice President & Chief Financial Officer 45
James P. Murphy Executive Vice President 63
John B. Robinson, Jr. Executive Vice President 47
Peter C. Fitts Senior Vice President 52
William C. Mutterperl Senior Vice President and General Counsel 47
Anne M. Slattery Senior Vice President 46
Terrence Murray joined Fleet-RI in 1962. After serving in various
capacities for Fleet-RI and the Corporation, in April 1978, he was elected
President of the Corporation and Fleet-RI. He is a Director of the
Corporation, Fleet-RI and FMG. He became Chairman of the Board of Directors
of the Corporation and Fleet-RI in May of 1982. Mr. Murray has been a
Director of Fleet since 1976, a Director of Fleet-RI since 1977 and a Director
of FMG since 1985. Upon the merger of Fleet and Norstar in January 1988, he
became President and Chief Operating Officer of Fleet. Mr. Murray was elected
Chairman and Chief Executive Officer of Fleet in September 1988.
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12
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -
(continued)
Robert J. Higgins joined Fleet-RI in 1971. In March 1984, he was named a
Vice President of the Corporation. He was elected President in February 1986.
In 1989, he was named an Executive Vice President of the Corporation and Chief
Executive Officer of Fleet-RI. In 1991, Mr. Higgins was named President of
Fleet-CT. In March 1993, he was named a Vice Chairman of the Corporation in
charge of commercial banking.
H. Jay Sarles joined Fleet-RI in 1968. In 1980, he was appointed a Vice
President of the Corporation. Mr. Sarles was appointed Executive Vice
President of the Corporation in February of 1986. In 1991, Mr. Sarles became
President and Chief Executive Officer of Fleet Banking Group, the parent
company of Fleet-MA and Fleet-CT. In March 1993, he was named a Vice Chairman
of the Corporation in charge of investment services and administration.
Michael R. Zucchini joined the Corporation in August 1987 as Executive
Vice President and Chief Information Officer responsible for all data
processing activities of the Corporation and its subsidiaries. Since 1974,
Mr. Zucchini had served in various capacities for General RE Corp., Stamford,
Connecticut and its subsidiary, General RE Services Corp., which engages in
data processing. In March 1993, Mr. Zucchini was named a Vice Chairman of the
Corporation in charge of consumer banking and operations.
Eugene M. McQuade joined the Corporation in 1992 as Senior Vice
President-Finance. From 1980 to 1991, Mr. McQuade served in various
capacities with Manufacturers Hanover Corporation and Manufacturers Hanover
Trust Company, having served as an Executive Vice President and Controller
from 1985 to 1991. In March 1993, Mr. McQuade was named an Executive Vice
President of the Corporation and in July 1993 was elected as Chief Financial
Officer of the Corporation.
James P. Murphy joined the Corporation in 1989 as an Executive Vice
President and Director of Public Policy and External Relations. Before
joining Fleet, Mr. Murphy had served as Executive Vice President of the New
York State Bankers Association since March 1976.
John B. Robinson, Jr., became an Executive Vice President of the
Corporation in 1988. Mr. Robinson had been associated with Norstar Bank
("Norstar") since 1970 when he joined Hempstead Bank (now Fleet-LI). He
served in various capacities with Norstar and in 1987, he became President of
Norstar. Mr. Robinson is currently in charge of government banking.
Peter C. Fitts joined the Corporation in May, 1991 as Senior Vice
President-Credit Administration and is responsible for corporate-wide credit
administration. In March 1994, Mr. Fitts was named senior credit officer for
the Corporation. From 1965 to 1991, Mr. Fitts served in various capacities
with Citibank, N.A., having last served as a Senior Vice President and Head of
Credit Policy, North America, from 1985 to 1991.
William C. Mutterperl joined Fleet-RI in 1977. In June 1985, Mr.
Mutterperl was named Vice President, Secretary, and General Counsel of the
Corporation. In 1989, Mr. Mutterperl was named a Senior Vice President of the
Corporation.
Anne M. Slattery joined the Corporation in January, 1994 as Senior Vice
President and head of Consumer and Community Banking. From 1969 through 1993,
Ms. Slattery served in various capacities with Citicorp, having last served as
a managing director of U.S. Consumer Banking.
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13
Item 11. EXECUTIVE COMPENSATION
Pursuant to Instructions to Form 10-K and Item 402 of Regulation S-K,
information set forth in the following sections of the Corporation's Proxy
Statement (pages 7-18) are hereby incorporated by reference: "Committees of
the Board of Directors", "Compensation Committee Interlocks and Insider
Participation", "Compensation Committee Report on Executive Compensation",
"Directors' Compensation", "Executive Compensation", "Option/SAR Grants in
Last Fiscal Year", "Aggregated Option/SAR Exercises in Last Fiscal Year and FY
Option/SAR Values", "Pension Plans", "Change in Control Contracts", and
"Stockholder Return Performance Graph". Such incorporation by reference shall
not be deemed to specifically incorporate by reference the information
required by Item 402(a)(8) of Regulation S-K.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Pursuant to Instructions to Form 10-K and Item 403 of Regulation S-K,
information set forth in the "Securities of the Corporation and Fleet Mortgage
Group, Inc. Owned by Management" (page 9) of the Corporation's Proxy Statement
is hereby incorporated by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to Instructions to Form 10-K and Item 404 of Regulation S-K,
information set forth in the "Indebtedness and Other Transactions" section
(pages 18-20) of the Corporation's Proxy Statement is hereby incorporated by
reference.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)1. The financial statements of Fleet required in response to
this Item are listed in response to Item 8 of this Report and
are incorporated by reference.
(a)2. All schedules to the consolidated financial statements
required by Article 9 of Regulation S-X and all other schedules
to the financial statements of the Registrant have been omitted
because the information is either not required, not applicable,
or is included in the financial statements or notes thereto.
(b) Two Current Reports on Form 8-K were filed during the fourth
quarter of 1993; one dated October 11, 1993 (describing the merger
agreement with Sterling Bancshares Corporation), and a second dated
December 16, 1993 (announcing a settlement agreement with the
Georgia Attorney General and the Governor's Office of Consumer
Affairs relative to suits filed against Fleet Finance, Inc.).
(c) Exhibit Index
Exhibit Page of this
Number Report
- ----------------------------------------------------------------------------
3 Restated Articles of Incorporation and By-Laws (1)
4(a) Shareholder Rights Plan of Registrant (2)
4(b) Instruments defining the rights of security
holders, including indentures (3)
4(c) Form of Rights Certificate for stock purchase
rights issued to Whitehall Associates, L.P.,
and KKR Partners II, L.P. (4)
10(a) 1992 Stock Option and Restricted Stock Plan (5)
10(b) Form of 1992 Restricted Stock Agreement entered
into with each of the following executive
officers and the number of shares of restricted
stock awarded to each under the Amended and Re-
stated 1988 Stock Option and Restricted Stock
Plan: Terrence Murray, 50,000 shares; William C.
Mutterperl, 10,000 shares; John B. Robinson, Jr.,
10,000 shares and Michael R. Zucchini, 25,000
shares (6)
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14
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(continued)
10(c) Form of 1993 Restricted Stock Agreement entered
into with each of the following executive officers
and the number of shares of restricted stock
awarded to each under the 1992 Stock Option and
Restricted Stock Plan: Robert J. Higgins, 15,000
shares and H. Jay Sarles, 20,000 shares (7)
10(d) Form of Change in Control Agreement together with
Schedule of Persons who have entered into such
contacts (8)
10(e) Stock Purchase Agreement dated July 12, 1991
between Registrant and Whitehall Associates,
L.P., and KKR Partners II, L.P. (9)
10(f) Assistance Agreement dated as of July 12, 1991,
among the FDIC, the Registrant, Fleet Banking
Group, Inc., the FDIC, (in its capacity as Re-
ceiver of the Bridge Banks), Fleet Bank of
Maine, Fleet Bank of Massachusetts, National
Association and Fleet Bank, National Association (10)
10(g) Shareholders' Agreement dated as of July 14, 1991,
among the FDIC, the Registrant, Fleet Banking
Group, Inc., Fleet Bank of Massachusetts, National
Association and Fleet Bank, National Association (11)
10(h) Service Agreement dated as of June 1, 1991, among
the FDIC, the Registrant, RECOLL Management
Corporation, New Bank of New England, National
Association, New Connecticut Bank and Trust
Company, National Association and New Maine
National Bank, as amended by Amendment No. 1,
dated July 14, 1991 (12)
10(i) Supplemental Compensation Plan for former Norstar
directors 17
10(j) Fleet Finanical Group Directors Retirement Plan 19
10(k) Supplemental Executive Retirement Plan 20
11 Statement re computation of per share earnings 28
12 Statement re computation of ratios 29
13 1993 Annual Report to Shareholders 31
21 Subsidiaries of the Registrant 91
23 Accountants' consent 92
(1) Incorporated by reference to Exhibit 1 of Registrant's Form 10-Q
Quarterly Report dated June 30, 1992.
(2) Incorporated by reference to Registrant's Registration Statement Form
8-A dated November 29, 1990, as amended by First Amendment to Rights
Agreement dated March 28, 1991 and as further amended by Second
Amendment to Rights Agreement dated July 12, 1991, as reported on
Form 8 Amendment to Application or Report dated September 6, 1991.
(3) Registrant has no instruments defining the rights of holders of
equity or debt securities where the amount of securities authorized
thereunder exceeds 10% of the total assets of the Registrant and its
subsidiaries on a consolidated basis. Registrant hereby agrees to
furnish a copy of any such instrument to the Commission upon
request.
(4) Incorporated by reference to Exhibit 4(c) of the Registrant's Form
8-K Current Report dated July 12, 1991.
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15
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(continued)
[FN]
(5) Incorporated by reference to Exhibit 4(a) of Registrant's
Registration Statement on Form S-8/S-3 dated June 25, 1992
(No. 33-48818).
(6) Incorporated by reference to Exhibit 10(b) of the Registrant's 1992
Form 10-K Annual Report filed March 31, 1993.
(7) Incorporated by reference to Exhibit 10(c) of the Registrant's 1992
Form 10-K Annual Report filed March 31, 1993.
(8) Incorporated by reference to Exhibit 10 of Registrant's 1989 Form
10-K filed March 31, 1990. (In January 1994, Ms. Slattery entered
into a contract in the same form as set forth in such Exhibit 10.)
(9) Incorporated by reference to Exhibit 4 of Registrant's Form 8-K
Current Report dated July 12, 1991.
(10) Incorporated by reference to Exhibit 4(a) of the Registrant's Form
8-K Current Report dated July 14, 1991.
(11) Incorporated by reference to Exhibit 10(d) of the Registrant's Form
10-K Annual Report dated December 31, 1991.
(12) Incorporated by reference to Exhibit 4(b) of the Registrant's Form
8-K Current Report dated July 14, 1991.
(d) Financial Statement Schedules - None
-15-
16
SIGNATURES
Pursuant to the requirements of Section 13 of 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.
FLEET FINANCIAL GROUP, INC.
(Registrant)
/s/ Eugene M. McQuade
----------------------
Eugene M. McQuade
Executive Vice President and Chief Financial Officer
Dated March 30, 1994
/s/ Robert C. Lamb, Jr.
-----------------------
Robert C. Lamb, Jr.
Chief Accounting Officer and Controller
Dated March 30, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated.
/s/ Terrence Murray /s/ Ruth R. McMullin
---------------------- ---------------------
Terrence Murray, Chairman, President, Ruth R. McMullin, Director
Chief Executive Officer and Director
/s/ William Barnet III /s/ Arthur C. Milot
----------------------- ---------------------
William Barnet III, Director Arthur C. Milot, Director
/s/ Bradford R. Boss /s/ Thomas D. O'Connor
---------------------- ------------------------
Bradford R. Boss, Director Thomas D. O'Connor, Director
/s/ Michael B. Picotte
---------------------- ------------------------
James E. Chandler, Director Michael B. Picotte, Director
/s/ Paul J. Choquette, Jr. /s/ James J. Preble
--------------------------- ----------------------
Paul J. Choquette, Jr., Director James J. Preble, Director
/s/ James F. Hardymon /s/ John D. Reardon
---------------------- ---------------------
James F. Hardymon, Director John D. Reardon, Director
/s/ Robert M. Kavner /s/ John A. Reeves
--------------------- ---------------------
Robert M. Kavner, Director John A. Reeves, Director
/s/ Lafayette Keeney /s/ John R. Riedman
--------------------- ---------------------
Lafayette Keeney, Director John R. Riedman, Director
/s/ E. Douglas Kenna /s/ John S. Scott
--------------------- -------------------
E. Douglas Kenna, Director John S. Scott, Director
/s/ Raymond C. Kennedy
-----------------------
Raymond C. Kennedy, Director
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