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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1994 - Commission file number 1-6366
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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
incorporation or organization) Identification No.)
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
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
Warrants to purchase Common Stock 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 (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 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 February 28, 1995 of the voting stock held by
nonaffiliates of the Registrant was $4.2 billion, which excludes $150 million
held by directors, executive officers, and banking subsidiaries of the
Registrant under trust agreements and other instruments.
The number of shares of common stock of the Registrant outstanding as of
February 28, 1995 was 141,198,173.
DOCUMENTS INCORPORATED BY REFERENCE
1. Pertinent extracts from Registrant's 1994 Annual Report to Shareholders
(Parts I and II).
2. Pertinent extracts from Registrant's Joint Proxy Statement-Prospectus
("Proxy Statement"), to be filed with the Commission. Such incorporation
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, 1994
Table of Contents
Description Page Number
----------- -----------
Part I. Item 1 - Business 3
Item 2 - Properties 8
Item 3 - Legal Proceedings 8
Item 4 - Submission of Matters to a Vote of Security-Holders 8
Part II. Item 5 - Market for the Registrant's Common Stock and Related 8
Stockholder Matters
Item 6 - Selected Financial Data 8
Item 7 - Management's Discussion and Analysis of Financial Condition 8
and Results of Operations
Item 8 - Financial Statements and Supplementary Data 8
Item 9 - Changes in and Disagreements with Accountants on Accounting 8
and Financial Disclosure
Part III. Item 10 - Directors and Executive Officers of the Registrant 9
Item 11 - Executive Compensation 10
Item 12 - Security Ownership of Certain Beneficial Owners and 10
Management
Item 13 - Certain Relationships and Related Transactions 10
Part IV. Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 10
8-K
Signatures 13
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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 20 largest bank holding
companies in the United States, with total assets of $48.8 billion at December
31, 1994. Fleet has approximately 21,500 employees.
Fleet reported net income for 1994 of $613 million, or $3.75 per share.
This compared to net income of $488 million, or $3.01 per share in 1993. For a
more detailed discussion of the Corporation's financial results, see
"Management's Discussion and Analysis" (pages 9-25) of the 1994 Annual Report to
Shareholders, which is incorporated by reference herein.
On February 20, 1995, Fleet and Shawmut National Corporation
("Shawmut") entered into a definitive merger agreement providing for the merger
of Shawmut with and into Fleet. The combined institution will have in excess of
$80 billion in assets, $50 billion in deposits, and will be headquartered in
Boston, Massachusetts. The merger agreement provides that each share of Shawmut
common stock would be exchanged for 0.8922 newly issued shares of Fleet common
stock on a tax-free basis. As a result of the merger, cost savings are
expected to be realized primarily through: reductions in staff; elimination,
consolidation or divestiture of certain branches; and the consolidation of
certain offices, data processing and other redundant back office operations and
staff functions. Fleet and Shawmut expect to take restructuring charges
aggregating approximately $400 million to cover expenses related to the merger.
The merger is expected to be completed in the fourth quarter of 1995 and is
subject to certain conditions, including the approval of federal and state bank
regulators and the shareholders of both companies.
The Corporation is organized along four functional lines of business,
which include Commercial Banking, Consumer Banking, Investment Services and
Asset Collection, and Financial.
Commercial Banking includes a broad range of commercial and corporate
lending as well as government banking, commercial real estate, asset-based
lending, and leasing. In addition to incorporating the commercial function in
each of the Corporation's six banking subsidiaries, this business unit also
includes Fleet Credit Corporation and Fleet Securities, Inc. Fleet Credit
Corporation, which has 18 offices nationwide, has two divisions: the Leasing
Division, which engages in middle market equipment leasing and the Business
Credit Division, which engages in commercial finance activities. Fleet
Securities, Inc. is a full-service municipal securities underwriter and dealer
located in New York City. This line of business also has an operating services
unit that encompasses cash management, corporate trust, and trade services
functions.
The Consumer Banking business unit includes retail and community
banking, consumer finance, and the Corporation's major processing businesses,
including mortgage banking at Fleet Mortgage Group, Inc. ("FMG") and student
loan processing at AFSA Data Corporation. This business unit has almost 1,100
offices in 38 states, and has the largest branch-based banking franchise in the
Northeast with a total of 864. 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. FMG currently ranks as the second largest mortgage company in
the nation and has 86 loan origination offices in 36 states and 1.2 million
customers. In February 1995, the Corporation completed its tender offer to
purchase the approximate 19% of FMG common stock that it does not already own
for $20.00 in cash per share. AFSA Data Corporation is the nation's largest
third-party servicer of student loans as it services more than $7 billion of
asset value in more than 2.5 million accounts. AFSA's three basic product lines
include a campus-based product, a federal direct loan program, and the Federal
Family Education Loan Program. The Corporation's consumer finance company, Fleet
Finance, Inc., engages primarily in consumer lending and home equity lending,
and underwrites credit life, accident and health insurance.
The Investment Services and Asset Collection line of business includes
investment management, private banking, discount brokerage, equity capital, and
asset collection businesses. The Corporation's investment management business
consists of personal asset management, endowment and custody services, employee
benefit management and mutual funds. These services are provided by the
Corporation's trust and investment management subsidiaries, Fleet Investment
Services Group and Fleet Investment Advisors, Inc. The Corporation's discount
brokerage subsidiary, Fleet Brokerage Securities, Inc., is engaged in providing
securities brokerage services, including clearing services, related securities
credit extension, and other incidental activities through 12 offices in 11
states. The Corporation's asset collection business was originally started
through its subsidiary, RECOLL Management Corp., which manages, collects, and
liquidates assets owned by the FDIC. Fleet has started an affiliated business,
Fleet Capital, which specializes in providing asset servicing primarily for
commercial real estate.
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ITEM 1. BUSINESS - (CONTINUED)
The Financial line of business includes the results of the treasury
group and the securities portfolio and trading group, as well as the
Corporation's financial staff areas. The treasury group manages the overall
funding needs of the Corporation and includes the asset/liability management of
interest-rate risk and liquidity within parameters established by various boards
of directors of the Corporation's subsidiaries. The securities portfolio and
trading group includes the overall management of the Corporation's $11.2 billion
securities portfolio as well as the management of Fleet's trading activities.
Fleet is engaged in general commercial banking and trust business
throughout the states of Rhode Island, New York, Connecticut, Massachusetts,
Maine and New Hampshire through its banking subsidiaries: Fleet Bank ("Fleet-New
York"); Fleet National Bank ("Fleet-RI"); Fleet Bank, National Association
("Fleet-CT"); Fleet Bank of Massachusetts, National Association ("Fleet-MA");
Fleet Bank of Maine ("Fleet-Maine") and Fleet Bank-NH ("Fleet-NH"). All of the
subsidiary banks are members of the Federal Reserve System, and the deposits of
each are insured by the Federal Deposit Insurance Corporation ("FDIC") to the
extent provided by law.
The following table shows the total offices, assets, deposits and
equity capital of Fleet's banking subsidiaries at December 31, 1994:
Equity
($ in millions) Offices Assets Deposits Capital
- --------------------------------------------------------------------------
Fleet-New York 347 $12,668 $11,629 $ 892
Fleet-MA 172 9,435 7,857 724
Fleet-RI 50 7,630 6,119 658
Fleet-CT 150 6,251 5,712 512
Fleet-Maine 110 2,963 2,202 182
Fleet-NH 42 1,758 1,287 112
- --------------------------------------------------------------------------
871 $40,705 $34,806 $3,080
==========================================================================
COMPETITION
The Corporation's subsidiaries are subject to intense 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 designed 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, and Fleet-New York 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 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 banking 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)
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") subjects banks to significantly increased regulation and
supervision. Among other things, it requires federal bank regulatory
authorities to take "prompt corrective action" in respect of banks that do not
meet minimum capital requirements. FDICIA establishes five tiers of capital
measurement ranging from "well-capitalized" to "critically undercapitalized".
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, 1994, 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.
FDICIA directs that each federal banking agency prescribe 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 ratio 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. Proposed regulations to implement the safety and soundness
standards were issued in November 1993. The ultimate cumulative effect of these
standards cannot currently be forecast.
The 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.
As a result of the enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 ("FIRREA"), any or all of Fleet's
subsidiary banks can be held liable for any loss incurred by, or reasonably
expected to be incurred by the FDIC after August 9, 1989, in connection with
(a) the default of any other of Fleet's subsidiary banks or (b) any assistance
provided by the FDIC to any other of Fleet's subsidiary banks in danger of
default. "Default" is defined generally as the appointment of a conservator or
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a "default" is likely to occur without
regulatory assistance.
Under the Federal Reserve Board risk-based capital guidelines, the
minimum ratio of total capital to risk-adjusted assets (including certain
off-balance sheet items, such as standby letters of credit) is 8%. At least
half of the total capital is to be comprised of common equity, retained
earnings, minority interests in the equity accounts of consolidated
subsidiaries and a limited amount of perpetual preferred stock, less goodwill
("Tier 1 capital"). The remainder may consist of perpetual debt, mandatory
convertible debt securities, a limited amount of subordinated debt, other
preferred stock and a limited amount of loan loss reserves ("Tier 2 capital").
Fleet is also subject to a minimum leverage ratio (Tier 1 capital to average
quarterly assets, net of goodwill) requirement of 3% for bank holding companies
that meet certain specified criteria, including that they have the highest
regulatory rating. The rule indicates that the minimum leverage ratio should be
1% to 2% higher for holding companies undertaking major expansion programs or
that do not have the highest regulatory rating. Fleet and its banking
subsidiaries are subject to these minimum capital requirements.
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ITEM 1. BUSINESS - (CONTINUED)
Under FIRREA and the FDICIA, failure to meet the minimum regulatory
requirements could subject a banking institution to a variety of enforcement
remedies available to federal regulatory authorities, including the termination
of deposit insurance by the FDIC and seizure of the institution.
Fleet is a legal entity separate and distinct from its subsidiaries.
There are various 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. 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.
On September 29, 1994, President Clinton signed into law the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Act"). The Interstate Act facilitates the interstate expansion and
consolidation of banking organizations by permitting (i) beginning one year
after enactment of the legislation, bank holding companies that are adequately
capitalized and managed to acquire banks located in states outside their home
states regardless of whether such acquisitions are authorized under the law of
the host state, (ii) the interstate merger of banks after June 1, 1997, subject
to the right of individual states to "opt in" or "opt out" of this authority
prior to such date, (iii) banks to establish new branches on an interstate basis
provided that such action is specifically authorized by the law of the host
state, (iv) foreign banks to establish, with approval of the regulators in the
United States, branches outside their home states to the same extent that
national or state banks located in such state would be authorized to do so and
(v) beginning September 29, 1995, banks to receive deposits, renew time
deposits, close loans, service loans and receive payments on loans and other
obligations as agent for any bank or thrift affiliate, whether the affiliate is
located in the same or different state. Fleet does not currently have any plans
to consolidate its banking subsidiaries or to take any other actions as a result
of this new statute. However, Fleet is considering the potential benefits in
cost savings and convenience to its customers that might be achieved through
combinations of two or more of its banking subsidiaries.
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. 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.
See "Note 17. Commitments, Contingencies, and Other Disclosures" (pages
47-48) of the Notes to Consolidated Financial Statements and the "Capital"
(pages 24-25) and "Liquidity" (pages 23-24) sections of Management's Discussion
and Analysis in the 1994 Annual Report to Shareholders (each of which are
incorporated by reference herein) for information concerning restrictions on the
banking subsidiaries' ability to pay dividends and other regulatory matters and
legal proceedings.
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ITEM 1. BUSINESS - (CONTINUED)
STATISTICAL INFORMATION BY BANK HOLDING COMPANIES
The following information set forth in the 1994 Annual Report to
Shareholders is incorporated by reference herein:
"Rate/Volume Analysis" table (page 51) for changes in the taxable
equivalent interest income and expense for each major category of
interest-earning assets and interest-bearing liabilities.
"Consolidated Average Balances/Interest Earned-Paid/Rates
1990-1994" table (pages 52-53) for average balance sheet amounts,
related taxable equivalent interest earned or paid, and related
average yields and rates paid.
"Note 3. Securities" of the Notes to Consolidated Financial
Statements (pages 35-36) for information regarding book values,
market values, maturities and weighted average yields of
securities (by category).
"Note 4. Loans and Leases" of the Notes to the Consolidated
Financial Statements (pages 36-37) for distribution of loans of
the Registrant.
"Loan and Lease Maturity" table and "Interest Sensitivity of Loans
Over One Year" table (page 51) for maturities and sensitivities of
loans to changes in interest rates.
"Note 6. Nonperforming Assets" (page 37) and "Note 1. Summary of
Significant Accounting Policies - Loans and Leases" (page 32) 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 17-18) for information regarding loan concentrations of the
Registrant.
"Reserve for Credit Losses" section of Management's Discussion and
Analysis (pages 19-20) 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
1990-1994" table (pages 52-53) and the "Funding Sources" section
of Management's Discussion and Analysis (pages 20-21) for deposit
information.
"Selected Financial Highlights" (page 1) for return on assets,
return on equity, dividend payout ratio and equity to asset ratio.
"Note 9. Short-term Borrowings" of the Notes to Consolidated
Financial Statements (page 39) for information on short-term
borrowings of the Registrant.
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ITEM 2. PROPERTIES
The Registrant maintains its corporate headquarters in Providence,
Rhode Island. A subsidiary of the registrant 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-New York. Portions of the Fleet-RI and Fleet-New
York buildings are leased to nonaffiliates.
As of December 31, 1994, the Registrant's subsidiaries also operated
approximately 1,100 domestic offices, of which approximately 500 are owned and
600 are leased from others. In general, all leases run from one to thirteen
years and most contain options to renew.
ITEM 3. LEGAL PROCEEDINGS
Information regarding legal proceedings of the Registrant is
incorporated by reference herein from "Note 17. Commitments, Contingencies and
Other Disclosures" (pages 47-48) of the Registrant's 1994 Annual Report to
Shareholders and information set forth in the "Involvement in Certain Legal
Proceedings" of the Corporation's Proxy Statement.
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 of 1994.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
For information regarding the U.S. market, high and low quarterly sales
prices, approximate number of holders, and quarterly dividends declared and
paid, in each case on the Registrant's common stock, see the "Common Stock Price
and Dividend Information" table (page 54) of the Registrant's 1994 Annual Report
to Shareholders, which is incorporated by reference herein.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth in "Selected Financial Highlights" (page 1)
of the Registrant's 1994 Annual Report to Shareholders is incorporated by
reference herein.
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 9-25) of the Registrant's 1994 Annual Report to Shareholders is
incorporated by reference herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information set forth in the Registrant's 1994 Annual
Report to Shareholders is incorporated by reference herein:
The Consolidated Financial Statements, together with the report thereon
by KPMG Peat Marwick LLP (pages 27-31); the Notes to the Consolidated Financial
Statements (pages 32-50); and the unaudited information presented in the
"Quarterly Summarized Financial Information" table (page 54).
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.
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PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the caption "Election of Directors" 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 incorporated by reference
herein.
The names, positions, ages and business experience during the past five
years of the executive officers of the Corporation as of February 28, 1995 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 55
Robert J. Higgins Vice Chairman 49
H. Jay Sarles Vice Chairman 49
Michael R. Zucchini Vice Chairman 48
Eugene M. McQuade Executive Vice President & Chief Financial Officer 46
John B. Robinson, Jr. Executive Vice President 48
Peter C. Fitts Senior Vice President 54
William C. Mutterperl Senior Vice President, Secretary & General Counsel 48
Anne M. Slattery Senior Vice President 47
M. Anne Szostak Senior Vice President 44
Brian T. Moynihan Vice President 35
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,
Fleet-MA, Fleet-CT and FMG. He became Chairman of the Board of Directors of the
Corporation and Fleet-RI in May 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 Bancorp, Inc. 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.
Robert J. Higgins joined Fleet-RI in 1971 and was elected President in February
1986. In March 1984, he was named a Vice President of the Corporation. 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.
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.
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. Mr.
Zucchini is a Director of FMG and from June 1994 until November 1994, served as
interim Chairman and Chief Executive Officer.
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 its 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. Mr. McQuade
is a Director of FMG.
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - (CONTINUED)
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. He served in various capacities with Norstar and
in 1987, he became President of Norstar.
Peter C. Fitts joined the Corporation in May 1991 as Senior Vice
President-Credit Administration and is responsible for corporate-wide credit
administration. 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.
M. Anne Szostak joined Fleet-RI in 1973, where she was an executive vice
president from 1985 to 1988. In 1988 she was named Vice President of Human
Resources for the Corporation. In 1991 she was named Chairman, President and
Chief Executive Officer of Fleet-Maine. In May 1994, Ms. Szostak was
named a Senior Vice President, Human Resources and Corporate Communications, of
the Corporation.
Brian T. Moynihan joined the Corporation in 1993 as Deputy General Counsel. In
March 1994, he was named Vice President of Strategic Planning for the
Corporation. From 1991 to 1993, Mr. Moynihan was a partner in the law firm of
Edwards & Angell, where he had been an associate since 1984.
Pursuant to Instructions to Form 10-K and Item 405 of Regulation S-K,
information set forth in the "Section 16 Compliance" of the Corporation's Proxy
Statement is incorporated by reference herein.
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 is incorporated by reference herein: "Committees of the Board of
Directors", "Compensation Committee Interlocks and Insider Participation",
"Directors' Compensation", "Executive Compensation", "Option/SAR Grants in Last
Fiscal Year", "Aggregated Option/SAR Exercises in Last Year and FY-End
Option/SAR Values", "Pension Plans", and "Change in Control Contracts". 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 following sections of the Corporation's Proxy
Statement is incorporated by reference herein: "Principal Stockholders" and
"Securities of the Corporation Owned by Management".
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 of
the Corporation's Proxy Statement is incorporated by reference herein.
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 herein.
(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.
(a)(3). See the exhibits listed below.
(b) Four Current Reports on Form 8-K were filed during the fourth quarter
of 1994: October 9, 1994 (announcing Fleet's third quarter earnings);
October 21, 1994 (reporting the issuance of $200 million of 7.25%
Notes due 1997); November 28, 1994 (announcing the closing of Fleet's
$1.127 billion Senior and Subordinated Medium Term Notes program);
December 28, 1994 (announcing Fleet's merger proposal to acquire all
outstanding shares of Fleet Mortgage Group, Inc. owned by the minority
shareholders).
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K -
(CONTINUED)
(c) Exhibit Index
Exhibit
Number Page of this Report
- ----------------------------------------------------------------------------------------------------------------
2 Agreement of Merger dated February 20, 1995 between the Registrant and
Shawmut National Corporation ("Shawmut") (1)
3 Restated Articles of Incorporation and By-Laws (2)
4(a) Rights Agreement dated November 21, 1990 as amended by First Amendment to
Rights Agreement dated March 28, 1991, a Second Amendment to Rights
Agreement dated July 12, 1991, and a Third Amendment to Rights Agreement
dated February 20, 1995 (3)
4(b) Instruments defining the rights of security holders, including indentures (4)
4(c) Form of Rights Certificate for stock purchase rights issued to Whitehall
Associates, L.P., and KKR Partners II, L.P. (5)
10(a)* Form of Change in Control Agreement together with Schedule of Persons who
have entered into such contracts (6)
10(b) Stock Purchase Agreement dated July 12, 1991 between Registrant and
Whitehall Associates, L.P., and KKR Partners II, L.P. (7)
10(c)* Supplemental Compensation Plan for former Norstar directors (8)
10(d)* Fleet Financial Group Directors Retirement Plan (9)
10(e)* Supplemental Executive Retirement Plan (10)
10(f) Stock Option Agreement between Fleet and Shawmut (11)
10(g) Stock Option Agreement between Shawmut and Fleet (12)
10(h)* 1994 Performance-Based Bonus Plan for the Named Executive Officers
10(i)* Amended and Restated 1992 Stock Option and Restricted Stock Plan
11 Statement re: computation of per share earnings
12 Statement re: computation of ratios
13 1994 Annual Report to Shareholders
22 Subsidiaries of the Registrant
23 Accountants' consent
27 Financial Data Schedule
*Management contract, or compensatory plan or arrangement.
11
12
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K -
(CONTINUED)
(1) Incorporated by reference to Exhibit 2 of Registrant's Form 8-K
Current Report dated February 20, 1995.
(2) Incorporated by reference to Exhibit 1 of Registrant's Form 10-Q
Quarterly Report dated June 30, 1992.
(3) Incorporated by reference to Registrant's Registration Statement
on Form 8-A dated November 29, 1990, as amended by Form 8
Amendment to Application dated September 6, 1991, and as further
amended by a Form 8-A/A dated March 17, 1995.
(4) 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.
(5) Incorporated by reference to Exhibit 4(c) of the Registrant's
Form 8-K Current Report dated July 12, 1991.
(6) Incorporated by reference to Exhibit 10 of Registrant's 1989 Form
10-K filed March 31, 1990. (In 1994, Ms. Slattery, Ms. Szostak
and Mr. Fitts entered into contracts in the same form as set
forth in such Exhibit 10(a).)
(7) Incorporated by reference to Exhibit 4 of Registrant's Form 8-K
Current Report dated July 12, 1991.
(8) Incorporated by reference to Exhibit 10(i) of the Registrant's
1993 Form 10-K Annual Report filed March 30, 1994.
(9) Incorporated by reference to Exhibit 10(j) of the Registrant's
1993 Form 10-K Annual Report filed March 30, 1994.
(10) Incorporated by reference to Exhibit 10(k) of the Registrant's
1993 Form 10-K Annual Report filed March 30, 1994.
(11) Incorporated by reference to Exhibit 10.1 of the Registrant's
Form 8-K Current Report dated February 20, 1995.
(12) Incorporated by reference to Exhibit 10.2 of the Registrant's
Form 8-K Current Report dated February 20, 1995.
(d) Financial Statement Schedules - None.
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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 17 1995
/s/ Robert C. Lamb, Jr.
-----------------------
Robert C. Lamb, Jr.
Chief Accounting Officer and Controller
Dated March 17 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
is 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, Chief Ruth R. McMullin, Director
Executive Officer and Director
/s/ William Barnet /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/ Paul J. Choquette, Jr. /s/ Michael B. Picotte
- ------------------------------------------- ----------------------------
/s/ Paul J. Choquette, Jr., Director Michael B. Picotte, Director
/s/ James F. Hardymon /s/ John A. Reeves
- ------------------------------------------- ----------------------------
James F. Hardymon, Director John A. Reeves, Director
/s/ John R. Riedman
- ------------------------------------------- ----------------------------
Robert M. Kavner, Director John R. Riedman, Director
/s/ Lafayette Keeney /s/ John S. Scott
- ------------------------------------------- ----------------------------
Lafayette Keeney, Director John S. Scott, Director
/s/ Raymond C. Kennedy
----------------------------
Raymond C. Kennedy, Director
13