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FleetBoston Financial Corp. (NYSE and BSE: FBF)
FleetBoston Financial Corp. (NYSE and BSE: FBF)
One Federal Street, Boston, MA
02110-2010
Chairman and CEO: Terrence Murray
Revenues (FYE December 31, 1999): 12.8 billion
Net Income (FYE December 31, 1999): $2.0 billion
Market Capitalization: $33.629 billion
Employees: 55,000
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Business New Haven
4/17/2000
By: Kristine Hansen
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Last September 7, the Federal Reserve Board approved the merger application of the then-Fleet Financial Group (NYSE: FLT) and BankBoston (NYSE: BKB). Less than one month later, on October 1, the merger was completed to create the eighth-largest bank holding company in the country: FleetBoston Financial Corp.
Based in Boston, the company offers retail and commercial banking as well as investment services to 20 million customers in a market area spanning more than 20 countries.
Although the merger was announced as a done deal last fall, the actual mechanics of the marriage are still in progress. Customers of both banks are able to bank as usual at their respective Fleet or BankBoston branches until further notice, but it is expected that by mid-year, the two banks will operate as a single entity.
To satisfy regulatory requirements related to the merger, FleetBoston must divest hundreds of branches with several slated for sale to community banks in the area and more than 275 divested to Sovereign Bank. The divestiture is the largest ever of its kind in U.S. history.
The first of the three planned divestitures of branches and related business unit segments to Sovereign was completed late last month. The targeted BankBoston branches in Connecticut, Rhode Island and Massachusetts were reopened under the Sovereign Bank of New England flag.
Future divestitures to Sovereign will include Fleet branches in eastern Massachusetts and Rhode Island scheduled for June, followed in the next month by Fleet branches in New Hampshire and western Massachusetts.
FleetBoston also plans seven other divestitures for the sale of 30 more of its branches to community banks in Connecticut and Massachusetts. The divestitures will trim the bank's asset size to approximately $170 billion. Employee count will be reduced due to sale of the branches, a hiring freeze and attrition. Beyond that, the new company continues with business as usual.
FleetBoston's retail banking function services individual consumers and small businesses through a network of more than 1,200 branches (post-divestiture) in the Northeast. Included in its array of products is BankBoston's HomeLink Internet banking, which also includes access to the company's Quick & Reilly discount brokerage.
For the children of consumers, the bank offers Fleetkids.com to help them learn about finance. Small businesses may have access to OfficeLink for online banking and storefronts@fleet to assist customers in business development using the Internet.
Money-management services span the spectrum of personal and commercial needs, including the Fleet Private Clients Group for clients with high net worth and the Fleet Investment Advisors and Columbia Management Co. for institutional investors. The bank offers investment and retirement services including management, administration, trust and custody services.
FleetBoston offers an array of wholesale banking products and services for the commercial client as well, including lending, raising capital, foreign exchange and risk-management. Complementing the portfolio of services is the company's investment bank, Robertson Stephens, which handles the raising of capital, initial public offerings, mergers and acquisitions.
Financial performance was positive for the 1999 year even though the company posted merger-related expenses of $760 million after tax in the fourth quarter. Although a net loss of $34 million (minus five cents per share) was posted for the quarter ended December 31, the company reported net income for the year of $2.0 billion ($2.10 per diluted share), compared to $2.3 billion ($2.41 per diluted share) for 1998. The total of net interest income (after provision for credit losses) and non-interest income was $12.8 billion for 1999, compared to $10.9 billion for the year before.
The company's stock has traded on the New York Stock Exchange (NYSE) under its new symbol, FBF, since November. Last month the stock also commenced trading on the Boston Stock Exchange (BSE).
It is currently trading close to the middle of its 52-week range of 25 1/8 to 45 1/4, closing April 5 at 37 1/4. Although there are analyst recommendations of a hold, the majority of recommendations range from a moderate to strong buy. The current average earnings estimate for 2000 is $3.30 per share, and for 2001 $3.67 per share.
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