EX-99.C.2 3 y49806a2ex99-c_2.txt MATERIALS PRESENTED BY GOLDMAN, SACHS & CO. 1 Exhibit 99(c)(2) [Goldman Sachs Logo] Presentation to the Special Committee Project SunBear Goldman, Sachs & Co. May 6, 2001 2 Table of Exhibits Exhibit ------- Overview of Proposed Transaction 1 Overview of Neptune 2 Overview of Market Performance 3 Analysis of 1998 Neptune Merger 4 Valuation: Neptune Valuation 5 Competitive Merger Analysis 6 Analysis of Comparable Transactions 7 3 Summary of Merger Consideration (dollars in millions, except per share data)
-------------- -------------------------------- Consideration: Premium to Neptune Market Price: -------------- -------------------------------- Offer Price per Share $35.00 All-time High (1/29/01) 28.4% Implied Consideration: 52-Week Low (6/23/00) 150.0 Shares Outstanding (a) $4,365 Options (a) 93 One Day Prior (5/4/01) 40.1% ------- Total Consideration (b) $4,458 One Week Prior (4/27/01) 40.9 ======= % Currently Owned by Blue 45.0% One Month Prior (4/4/01) 47.6 ---------------------- Transaction Multiples: ---------------------- Earnings per Share: GAAP: Cash: LTM (3/01) 19.0x LTM (3/01) 17.0x 2001E (C) 18.4 2001E (c) 16.2 2002E (C) 16.3 2002E (c) 14.5 At 3/31/01: Book Value 2.1x Tangible Book Value 3.4 ----------------------------------- Jupiter Accretion / (Dilution) (c): ----------------------------------- 2001E: 2002E: GAAP EPS (0.8)% GAAP EPS (0.4)% Cash EPS 1.0 Cash EPS 1.3
---------------------------------------- (a) Based on basic shares outstanding of 124.7mm and outstanding options of 5.1mm with an average exercise price of $16.58. (b) For 100% of the Company. (c) I/B/E/S median estimates. 4 Summary of Key Terms ----------------- Price: o $35.00 per share in cash ----------------- ----------------- Management: o Top four senior executives to sign employment agreements ----------------- ----------------- Termination Fee: o $100mm, if a sale to a third party is consummated ----------------- ----------------- Key Contract o Approval by 2/3 of shareholders (40% of public float) Provisions: o Fiduciary out ----------------- ----------------- Expected Closing: o August 30th, 2001 ----------------- 2 5 Summary of Financial Data for Neptune (dollars in millions, except per share data)
At or For the Year Ended December 31, ----------------------------------------------------------- 1996 1997 1998 1999 2000 ---- ---- ---- ---- ---- Balance Sheet: Assets $ 8,642 $ 8,880 $ 15,929 $ 16,681 $ 18,457 Deposits 6,507 6,790 12,043 12,878 14,128 Equity 753 801 1,746 1,843 1,989 Profitability: Reported Net Income $ 85 $ 93 $ 84 $ 172 $ 216 Normalized Net Income (a) 85 93 106 184 217 Cash Earnings (a) 91 100 117 217 250 Return on Tangible Common Equity 14.9% 15.1% 16.3% 19.7% 20.3% Net Interest Margin 4.63 4.77 4.81 4.76 4.75 Fee Income Ratio 22.7% 24.0% 25.0% 23.8% 23.9% Efficiency Ratio (b) 64.5 65.5 62.5 54.5 51.5 Capital Adequacy: TCE/TA 7.31% 7.76% 6.81% 7.28% 7.49% Tier 1 Capital Ratio 8.49 9.63 8.32 8.80 9.73 Total Capital Ratio 11.93 11.87 10.18 10.56 11.39 Asset Quality: NPA/Total Loans + OREO 2.20% 1.94% 1.42% 1.15% 0.99% NPL/Total Loans (c) 1.79 1.47 1.14 0.93 0.79 Reserve/NPL (c) 81.4% 90.7% 116.3% 138.7% 155.7% Net Charge-Offs/Avg. Loans 0.42 0.33 0.31 0.42 0.37 Per Share Data: Book Value $ 10.85 $ 11.30 $ 14.15 $ 14.79 $ 15.97 Diluted Reported EPS 1.20 1.29 1.05 1.38 1.73 Diluted Normalized EPS (a) 1.20 1.29 1.32 1.48 1.74 Diluted Normalized Cash EPS (a) 1.28 1.38 1.46 1.74 2.00 Dividends 0.57 0.58 0.58 0.62 0.68 Quarter Ended CAGR ---------------------- 3/31/2000 3/31/2001 1999-00 --------- --------- ------- Balance Sheet: Assets $ 17,528 $ 19,419 10.6% Deposits 13,326 14,710 9.7 Equity 1,870 2,045 7.9 Profitability: Reported Net Income $ 49 $ 62 25.5% Normalized Net Income (a) 49 64 18.3 Cash Earnings(a) 58 65 15.4 Return on Tangible Common Equity 19.9% 22.3% Net Interest Margin 4.82 4.58 Fee Income Ratio 23.1% 39.0% Efficiency Ratio (b) 53.4 52.9 Capital Adequacy: TCE/TA 7.05% 6.90% Tier 1 Capital Ratio 8.63 NA Total Capital Ratio 10.34 NA Asset Quality: NPA/Total Loans + OREO 1.10% 1.04% NPL/Total Loans (c) 0.89 0.89 Reserve/NPL (c) 141.7% 146.9% Net Charge-Offs/Avg. Loans 0.09 0.15 Per Share Data: Book Value $ 15.00 $ 16.40 8.0% Diluted Reported EPS 0.40 0.49 25.2 Diluted Normalized EPS (a) 0.40 0.51 17.3 Diluted Normalized Cash EPS (a) 0.46 0.52 14.9 Dividends 0.17 0.19 9.7
---------------------------------------- Source: Company financial reports. (a) Adjusted to exclude extraordinary and non-recurring items. (b) Excludes amortization of intangibles. (c) Nonperforming loans include loans 90 days past due. 3 6 Overview of Management Projections (dollars in millions, except per share data)
Management Projections CAGR's ---------------------- ------------------------- 2000A 2001 2002 2003 2000-01 2000-03 2001-03 ----- ------ ---- ------ ------- ------- ------- Net Interest Income $ 747 $ 783 $ 858 $ 914 4.8% 6.9% 8.0% Provision for Credit Losses 60 71 67 69 17.5 4.5 (1.4) ----- ----- ----- ----- Net Interest Income, Net of Provision 687 712 791 845 3.7 7.2 8.9 ----- ----- ----- ----- Noninterest Income: Service Charges on Deposits 75 85 94 114 13.8 15.1 15.8 Securities Transactions -- 41 -- -- NM NM NM Trust Revenue 36 35 39 42 (3.2) 5.1 9.5 Other 105 110 123 133 4.8 8.2 10.0 ----- ----- ----- ----- Total Noninterest Income 216 271 256 289 25.7 10.2 3.2 ----- ----- ----- ----- Operating Revenues: Salaries and Benefits 240 265 283 304 10.3 8.2 7.1 Occupancy and Equipment 63 100 95 106 59.5 19.1 3.0 Intangible Amortization 37 42 44 44 14.8 6.3 2.4 Other 194 173 183 191 (11.0) (0.6) 5.1 ----- ----- ----- ----- Total Noninterest Expenses 534 580 605 645 8.6 6.5 5.5 ----- ----- ----- ----- Pre-tax Income 368 403 442 489 9.5 9.9 10.1 Provision for Income Taxes 152 162 177 196 6.1 8.7 10.0 ----- ----- ----- ----- Reported Net Income $ 216 $ 242 $ 265 $ 293 11.8% 10.7% 10.1% ===== ===== ===== ===== Adjusted Net Income $ 217 $ 244 $ 265 $ 293 12.5% 10.5% 9.6% ===== ===== ===== ===== Diluted Shares Outstanding 125.0 126.3 126.4 127.3 Diluted Earnings Per Share: Reported $1.73 $1.92 $2.10 $2.30 10.7% 10.0% 9.7% Adjusted 1.74 1.93 2.10 2.30 11.1 9.9 9.3 Cash 2.00 2.20 2.36 2.56 10.0 8.6 7.9 Memo: I/B/E/S Estimates (a) -- $1.90 $2.15 -- NM 8.5% 8.5% Summary Ratios: Tangible ROE 20.3% 18.9% 19.5% 19.9% Efficiency Ratio 51.5 51.0 50.3 50.0
---------------------------------------- Source: Management projections. (a) Represents GAAP net income. CAGR's for 2000-03 and 2001-03 are I/B/E/S long-term growth estimates. 4 7 Comparison of Selected West Coast Banks (dollars in millions, except per share data)
Price as a Multiple of: ----------------------------------------------- GAAP (a) Cash (a) Price as of % of Market --------------- ---------------- Tangible Name (05/04/01) 52-W High Cap. 2001E 2002E 2001E 2002E BV ---- ---------- --------- ---- ----- ----- ----- ----- -- Neptune $24.98 92% $ 3,115 13.1x 11.6x 11.6x 10.4x 2.4x Wells Fargo & Company $47.30 85% $81,287 16.6x 14.6x 14.4x 12.9x 5.0x U.S. Bancorp 22.68 83 43,212 13.0 11.2 11.4 10.0 4.3 Comerica Incorporated 52.70 81 9,383 11.0 10.0 10.6 9.7 2.3 Zions Bancorp 54.75 87 5,040 16.8 15.0 14.9 13.4 3.7 UnionBanCal Corporation 29.80 85 4,725 10.0 8.5 9.7 8.3 1.4 City National Corporation 39.55 97 1,886 13.4 12.2 11.9 10.9 3.2 Pacific Century Financial Corp. 23.48 100 1,860 15.7 10.9 13.5 9.8 1.6 Westamenca Bancorporation 37.70 86 1,345 16.0 14.9 15.6 14.6 4.3 Silicon Valley Bancshares 27.46 43 1,359 11.4 10.1 11.4 10.1 2.1 Pacific Capital Bancorp 28.00 92 744 12.2 10.9 11.9 10.7 2.4 ================================================================================================================ Median 13.2x 11.1x 11.9x 10.4x 2.8x ================================================================================================================ 2002 PE/ NPA/ LT Cash Efficiency (Loans+ Name Growth TCE/TA ROE Ratio (b) REO) ---- ------ ------ --- --------- ---- Neptune 1.4x 6.9% 20.9% 51.4% 1.0% Wells Fargo & Company 1.1x 6.0% 31.9% 56.0% 0.9% U.S. Bancorp 0.9 6.5 37.6 45.4 1.2 Comerica Incorporated 1.0 8.1 24.3 45.8 1.3 Zions Bancorp 1.1 5.9 27.4 58.2 0.8 UnionBanCal Corporation 0.9 9.7 12.1 51.5 1.8 City National Corporation 1.1 6.7 27.7 53.1 1.0 Pacific Century Financial Corp. 1.4 8.8 9.6 58.2 1.5 Westamenca Bancorporation 1.4 7.8 27.0 44.3 0.4 Silicon Valley Bancshares 0.7 12.8 29.6 45.6 1.2 Pacific Capital Bancorp 1.0 7.8 20.6 55.7 0.9 =============================================================================== Median 1.0x 7.8% 27.2% 52.3% 1.1% ===============================================================================
---------------------------------------- Source: Company financials as of 3/31/01 or latest available. Prices per FactSet. (a) I/B/E/S median estimates. (b) Non-Interest Expense / (Net Interest Income + Non-Interest Income). Adjusted to exclude non-recurring items and intangible amortization. 5 8 Overview of Market Performance Annotated Price History [Line graph showing closing market price (USD) of BancWest Common Stock beginning on 5/31/1996 and ending on 5/4/2001 with the following events noted:] (5/27/1998) Merger between Neptune and Trident announced. (9/22/1998) Management announces that merger with Trident will be less dilutive to earnings than expected due to revision of amortization expense. (2/25/1999) Acquisition of Sierra West Bancorp announced. (1/19/2000) Plan to acquire 68 branches of First Security announced. (3/31/2000) Zions shareholders vote against First Security deal, Neptune's plan to acquire branches falls through. (9/18/2000) Neptune selected as buyer of 30 First Security branches. ---------- Source: Muller. 6 9 Neptune Relative Performance Indexed Price Comparison Since the Merger ---------------- [Line graph showing indexed price for Neptune, S&P Regional Banks, S&P 500 and Pacific Century beginning on 5/29/1998 and ending on 5/4/2001.] One Year -------- [Line graph showing indexed price for Neptune, S&P Regional Banks, S&P 500 and Pacific Century beginning on 5/4/2000 and ending on 5/4/2001.] ---------- Source: FactSet. 7 10 Neptune Relative P/E Performance Five Years Relative Trailing P/E --------------------- [Line graph showing price to last twelve months EPS for Neptune P/E and S&P Regional Banks P/E beginning on 4/24/1996 and ending on 4/24/2001.] P/E Differential ---------------- [Line graph showing LTM P/E differential for Neptune P/E - S&P Major Regional Banks P/E beginning on 4/24/1996 and ending on 4/24/2001.] ---------- Source: FactSet. 8 11 Total Return Analysis
Pacific Peer S&P Maj. Neptune Century Group (a) Reg. Banks S&P 500 ------- ------- --------- ---------- ------- Total Return: 5 Years 103.1% 52.2% 179.7% 122.8% 110.6% 3 Years 39.5 5.5 15.5 6.4 17.4 1 Year 43.1 25.8 19.3 31.4 (9.1) 6 Months 27.6 43.9 6.9 5.6 (11.1) Annualized Return: 5 Years 15.2% 8.8% 22.8% 17.4% 16.1% 3 Years 11.7 1.8 4.9 2.1 5.5
---------- Source: Bloomberg. Data as of 05/04/01. (a) Consists of City National, Comerica, Pacific Capital, Pacific Century, Silicon Valley Bancshares, U.S. Bancorp, Wells Fargo, UnionBanCal, Westamerica and Zions. 9 12 Summary Analyst Comments on Neptune
Company / Analyst Date Comments ----------------- ---- -------- Goldman Sachs / Lori Appelbaum 4/19/2001 o Neptune delivered 13% EPS growth in the first quarter and expanded its mainland presence into New Mexico and Las Vegas. Revenue momentum was aided by strong loan growth and fee income while credit quality concerns increased. We are maintaining our current estimates and our market outperformer rating o Loan growth continued to remain strong at 12% with double-digit growth experienced across commercial, consumer, and auto lease portfolios Merrill Lynch / Beth Messmore 4/23/2001 o Neptune is strategically positioned in generally faster-growth markets and continues to build consumer / business relationships. Excluding the branches acquisition, total deposits and non-interest bearing demand rose 6% and 10% respectively during the quarter o Management appears well aware of the risks inherent in its syndicated loan portfolio and is closely monitoring its situation Dain Rauscher Wessels / Joe Morford 4/23/2001 o Given the solid operating performance in the first quarter, we are maintaining our 2001 and 2002 EPS estimates of $1.95 and $2.15, respectively o Currently, the shares are trading at 12.7x this year's earnings, representing almost a 10% discount to the S&P major regional bank median. Over time, we would expect this discount to narrow Lehman Brothers / Brock Vandervliet 4/18/2001 o Although results are not quite as strong as we would have hoped, we believe Neptune remains on target to realize our estimates for the year. We reiterate our strong buy rating o In a thoughtful move, Neptune increased its provision by $18.8 million sequentially given the current economic slowdown nationally and in California, agricultural lending, and the addition of loans with the recent branch acquisitions. Having been concerned with the reserve level in the past, we applaud the move
10 13 Summary Observations on 1998 MOE o The merger between Trident and Neptune has resulted in: - EPS ahead of 1998 forecast (a) - Earnings growth of 15% vs. 5% originally forecast for Neptune stand-alone (a) - Integration of the companies is widely viewed as a success - As a result of the 1998 MOE, Neptune is more geographically diversified than it was before the merger o Neptune is positioned to take advantage of a strong California presence as well as a recovering Hawaiian economy: - Approximately 60%-70% of business now outside of Hawaii (b) - Two additional acquisitions outside Hawaii (Sierra West, First Security branches) o Today, Neptune trades in-line with comparable West Coast banks ---------- (a) Per 1998 management projections. (b) Based on management estimates. 11 14 Analysis of Neptune/Trident Merger
For the Year Ended December 31, ---------------------------------------------------- 1997-00 1997A 1998 1999 2000 2001 CAGR -------- -------- -------- -------- -------- -------- Stand-Alone (At Time of Merger): (a) Neptune Net Income $ 84.3 $ 88.7 $ 93.4 $ 98.1 $ 103.0 5.2% EPS 1.32 1.42 1.49 1.57 1.65 5.8 Trident Net Income $ 62.9 $ 71.4 $ 81.2 $ 90.5 $ 101.0 12.9% 1999-01 Combined (At Time of Merger) (a): CAGR -------- Neptune Net Income $ 93.4 $ 98.1 $ 103.0 5.0% Trident Net Income 81.2 90.5 101.0 11.5 -------- -------- -------- Subtotal 174.6 188.6 204.0 8.1 -------- -------- -------- Cost Savings (After-tax) 17.7 30.5 31.4 Interest Income (Incremental) (3.4) (2.6) (1.8) Goodwill Amortization (28.0) (28.0) (28.0) -------- -------- -------- Pro Forma Net Income $ 160.9 $ 188.5 $ 205.6 13.0% ======== ======== ======== Pro Forma EPS $ 1.40 $ 1.64 $ 1.79 Actual Results: (b) Neptune Net Income $ 98.5 $ 112.0 Trident Net Income 91.4 110.0 Parent/Other (6.4) (4.8) -------- -------- -------- Net Income $ 183.5 $ 217.2 $ 244.2 (c) 15.4% ======== ======== ======== EPS $ 1.47 $ 1.74 $ 1.93 14.5 Change in EPS vs. Original Projection 4.8% 5.6% 7.6%
---------- (a) Per Management projections at the time of merger. (b) Adjusted to exclude one-time and non-recurring charges. Per Company financial reports. (c) Per management projections. 12 15 Analysis of Neptune/Trident Merger
P/E Cash P/E ------------ ------------ 1998 1999 1998 1999 ---- ---- ---- ---- 1998: Neptune 13.9x 13.2x 12.3x 11.7x West Coast Avg. 20.6 17.7 18.1 15.8 ---- ---- ---- ---- Difference 6.7x 4.5x 5.8x 4.1x ==== ==== ==== ==== P/E Cash P/E ------------ ------------ 2000 2001 2000 2001 ---- ---- ---- ---- Current: Neptune 13.1x 11.6x 11.6x 10.4x West Coast Avg. 13.6 11.8 12.5 11.0 ---- ---- ---- ---- Difference 0.5x 0.2x 1.0x 0.7x ==== ==== ==== ====
---------- (a) Average consists of City National, Comerica, Pacific Capital, Pacific Century, Silicon Valley, U.S. Bancorp, UnionBanCal, Wells Fargo, Westamerica, and Zions. 13 16 Analysis at Various Prices (dollars in millions, except per share data)
Current Price Per Neptune Share Company Price ---------------------------------------------------- Data $24.98 $32.00 $33.00 $34.00 $35.00 ---------- ---------- ---------- ---------- ---------- ---------- Aggregate Consideration (a) $4,069 $4,198 $4,328 $4,458 Implied Premium: Current 28.1% 32.1% 36.1% 40.1% 52-Week High $27.25 17.4 21.1 24.8 28.4 Price / EPS: LTM $1.85 13.5x 17.3x 17.9x 18.4x 19.0x 2001E (b) 1.90 13.1 16.8 17.4 17.9 18.4 2002E (b) 2.15 11.6 14.9 15.3 15.8 16.3 Price / Cash EPS: LTM $2.05 12.2x 15.6x 16.1x 16.6x 17.0x 2001E (b)(c) 2.16 11.6 14.8 15.3 15.7 16.2 2002E (b)(c) 2.41 10.4 13.3 13.7 14.1 14.5 Price / Book: Stated $16.40 1.5x 2.0x 2.0x 2.1x 2.1x Tangible 10.33 2.4 3.1 3.2 3.3 3.4 Core Deposit Premium (d) $10,490 17.4% 26.1% 27.3% 28.5% 29.8%
---------- (a) Aggregate consideration adjusted to reflect dilutive impact of 5.1 million options outstanding with weighted average strike price of $16.58. (b) I/B/E/S median estimate. (c) Amortization per management estimates. (d) Assumes core deposits represent 71.3% of total deposits. 14 17 Summary of Assumptions o Neptune cash EPS of $2.16 in 2001 and $2.41 in 2002 (based on IBES median EPS estimates of $1.90 in 2001 and $2.15 in 2002 and management projections for amortization expense) o 100% cash consideration o Pre-tax cost of capital of 6.65% for Jupiter o No synergies or cost savings for Jupiter o Purchase accounting in accordance with French GAAP (a): -- 100% of purchase premium is attributed to goodwill and is amortized over 20 years, the maximum period Jupiter allows for amortization -- Goodwill is not tax deductible o Key assumptions for Neptune: -- Stock price as of May 4, 2001 (b) -- Tax rate of 35% ---------- (a) Per Arthur Andersen. (b) Per FactSet. 15 18 Summary Pro Forma Analysis (dollars in millions, except per share data)
@ $35.00 / share ------------------ 2001E 2002E ------ ------ Summary Income Statement (a): JUPITER $3,741 $4,059 55.0% of NEPTUNE 146 163 ------ ------ Unadj. Pro Forma $3,887 $4,222 ====== ====== Transaction Adjustments: Cost Savings $0 $0 Revenue Synergies 0 0 Interest Expense (106) (106) Transaction Amortization (68) (68) Earnings on Cash Flow (2) (7) ------ ------ Total Adjustments ($176) ($180) ------ ------ Pro Forma Net Income $3,711 $4,041 ====== ====== Cash Net Income $3,778 $4,109 ====== ====== Stand-Alone Acquiror (a): EPS $8.35 $9.06 Cash EPS 8.64 9.35 Pro Forma Per Share Data: -------------------------------------------------------------------------------- Diluted EPS: GAAP $8.28 $9.02 % Change vs. Acq. Stand - Alone (0.8)% (0.4)% Cash $8.73 $9.47 % Change vs. Acq. Stand - Alone 1.0% 1.3% --------------------------------------------------------------------------------
---------- (a) Per I/B/E/S median estimates. 16 19 Discounted Cash Flow Analysis -- I/B/E/S Estimates (a) (dollars in millions, except per share data)
Projected -------------------------------------------------------- Assump. 2000 2001 2002 2003 2004 2005 ------- ---- ---- ---- ---- ---- ---- Net Interest Income $747 Provision for Credit Losses 60 ----- Net Interest Income After Provision 687 ----- Non-Interest Income 216 Non-Interest Expense 534 ----- Pre-Tax Income 369 ----- Provision for Income Taxes 152 ----- "Old" GAAP Net Income $217 $238 $269 $292 $317 $344 ===== ===== ====== ====== ====== ====== "New" GAAP Net Income 244 265 296 319 344 371 ===== ===== ====== ====== ====== ====== Cash Net Income 250 270 302 324 349 376 ===== ===== ====== ====== ====== ====== Earnings per Share: "Old" GAAP $1.73 $1.90 $2.15 $2.33 $2.53 $2.75 "New" GAAP 1.95 2.12 2.37 2.55 2.75 2.96 Cash 2.00 2.16 2.41 2.59 2.79 3.01 ----- LT Growth Rate (b) 8.5% 8.5% 8.5% 8.5% ----- Shares Outstanding 125.0 125.1 125.1 125.1 125.1 125.1 ----- Dividend Payout Rate 36.4% 36.4% 36.4% 36.4% 36.4% 36.4% 36.4% ----- Distribution to Shareholders $84.7 $98.4 $109.8 $118.1 $127.1 $136.9 ===== ===== ====== ====== ====== ====== PV of Terminal value Firm PV of Assuming Cash Net Income Multiples of: Value Discount Cash Flows ---------------------------------------------- ------- Rate (12/31/00) 12.0x 14.0x 16.0x 18.0x 12.0x ------- --------- ------ ------ ------ ------ ------ 10.0% $441 $3,083 $3,597 $4,111 $4,624 $3,524 --------------------------------------------------------------------------------------- 12.5 412 2,818 3,287 3,757 4,227 3,230 --------------------------------------------------------------------------------------- 15.0 387 2,581 3,011 3,441 3,871 2,968 ----------------------------------------------- $27.80 Implied Price per Share 25.54 23.52 ----------------------------------------------- CAGRs ----------------------------------- 2001-05 2001-03 2003-05 ------- ------- ------- Net Interest Income Provision for Credit Losses Net Interest Income After Provision Non-Interest Income Non-Interest Expense Pre-Tax Income Provision for Income Taxes "Old" GAAP Net Income 9.6% 10.8% 8.5% "New" GAAP Net Income 8.8 9.7 7.8 Cash Net Income 8.6 9.6 7.7 Earnings per Share: "Old" GAAP "New" GAAP 8.8% 9.7% 7.8% Cash 8.6 9.6 7.7 LT Growth Rate (b) Shares Outstanding Dividend Payout Rate Distribution to Shareholders 8.6% 9.6% 7.7% Firm Value ----------------------------------- 14.0x 16.0x 18.0x ------ ----- ------ $4,037 $4,551 $5,065 ----------------------------------- 3,700 4,170 4,639 ----------------------------------- 3,398 3,828 4,258 ----------------------------------- $31.76 $35.72 $39.68 Implied Price per Share 29.16 32.78 36.40 26.83 30.15 33.46 -----------------------------------
---------- (a) Based on Company information and I/B/E/S median estimates. (b) Represents long-term growth rate on "Old GAAP" I/B/E/S estimates. Growth rates on both cash and "New GAAP" incomes are lower due to lack of intangible amortization growth. 17 20 Discounted Cash Flow Analysis -- Management Projections (a) (dollars in millions, except per share data)
Projected --------------------------------------------------------- Assump. 2000 2001 2002 2003 2004 2005 ------- ---- ------ ---- ---- ---- ---- Net Interest Income $747 $783 $858 $914 60 71 67 69 ----- ------ ------ ------ Net Interest Income, Net of Provision 687 712 791 845 ----- ------ ------ ------ Total Noninterest Income 216 271 256 289 Total Noninterest Expenses 534 580 605 645 ----- ------ ------ ------ Pre-tax Income 369 403 442 489 ----- ------ ------ ------ Provision for Income Taxes 152 162 177 196 ----- ------ ------ ------ "Old" GAAP Net Income $217 $242 $265 $293 $323 $355 ===== ====== ====== ====== ====== ====== Cash Net Income $250 $277 $298 $326 $355 $387 ===== ====== ====== ====== ====== ====== Earnings per Share: GAAP $1.73 $1.92 $2.10 $2.30 $2.53 $2.79 Cash 2.00 2.20 2.36 2.56 2.79 3.04 ----- ----- LT Growth Rate 10.0% 10.0% ----- ----- Diluted Shares Outstanding 125.0 126.3 126.4 127.3 127.3 127.3 ---- Dividend Payout Rate 36.4% 36.4% 36.4% 36.4% 36.4% 36.4% 36.4% ---- Distribution to Shareholders $84.7 $100.9 $108.5 $118.6 $129.3 $141.0 ===== ====== ====== ====== ====== ====== PV of Terminal value Firm PV of Assuming Cash Net Income Multiples of: Value Discount Cash Flows ---------------------------------------------- ------- Rate (12/31/00) 12.0x 14.0x 16.0x 18.0x 12.0x ------- --------- ------ ------ ------ ------ ------ 10.0% $446 $3,175 $3,704 $4,233 $4,762 $3,621 --------------------------------------------------------------------------------------- 12.5 418 2,902 3,386 3,869 4,353 3,320 --------------------------------------------------------------------------------------- 15.0 392 2,658 3,101 3,544 3,987 3,050 ----------------------------------------------- $28.55 Implied Price per Share 26.23 24.15 ----------------------------------------------- CAGRs ----------------------------------- 2001-05 2001-03 2003-05 ------- ------- ------- Net Interest Income Net Interest Income, Net of Provision Total Noninterest Income Total Noninterest Expenses Pre-tax Income Provision for Income Taxes "Old" GAAP Net Income 10.1% 10.1% 10.0% Cash Net Income 8.7 8.4 9.0 Earnings per Share: GAAP 9.8% 9.7% 10.0% Cash 8.5 8.0 9.0 LT Growth Rate Diluted Shares Outstanding Dividend Payout Rate Distribution to Shareholders 8.7% 8.4% 9.0% Firm Value ----------------------------------- 14.0x 16.0x 18.0x ------ ----- ------ $4,150 $4,680 $5,209 ----------------------------------- 3,803 4,287 4,771 ----------------------------------- 3,493 3,935 4,378 ----------------------------------- $32.63 $36.71 $40.79 Implied Price per Share 29.96 33.68 37.41 27.56 30.97 34.39 -----------------------------------
---------- (a) Based on Company management projections. 18 21 Overview of Comparable Transactions
Selected Bank Transaction >$1.0 bn --------------------------------------------------- Deal Price as a Multiple of: ---------------------------------- 1 Day LTM NFY Premium EPS EPS TBV to Market ----- ----- ----- --------- Median Statistics: 2001 18.8x 15.9x 2.79x 29.5% 2000 15.0 13.3 3.11 18.6 1999 21.1 19.0 3.36 26.4 1998 27.8 20.8 4.11 20.5 1997 23.4 20.1 3.98 22.4
---------- Source: SNL Securities. Includes transactions with aggregate consideration over $1 billion, excluding MOE's. Note: Please refer to Exhibit 7 for detailed data. 19 22 Representative Potential Acquirors of Neptune
Name / Headquarters Market Cap ($) 2001 P/E Multiple ------------------------------- ----------------- -------------------- Wells Fargo 81,287 16.6x (San Francisco) -------------------------------------------------------------------------------- Firstar / US Bancorp 43,212 13.0 (Minneapolis) -------------------------------------------------------------------------------- Comerica 9,383 11.0 (Detroit) -------------------------------------------------------------------------------- Zions 5,040 16.8 (Salt Lake City) ================================================================================ First Union / Wachovia 41,329 9.6(a) (Charlotte) -------------------------------------------------------------------------------- Bank One 44,758 14.5 (Chicago) -------------------------------------------------------------------------------- Washington Mutual 29,190 10.6 (Seattle) -------------------------------------------------------------------------------- UnionBanCal 4,725 10.0 (San Francisco) -------------------------------------------------------------------------------- HSBC 114,076 15.2 (Hong Kong)
(a) Based on 2002E EPS, pro forma for Wachovia acquisition. 20 23 Overview of Assumptions o Neptune cash EPS of $2.16 in 2001 and $2.41 in 2002 (based on IBES median EPS estimates of $1.90 in 2001 and $2.15 in 2002 and management projections for amortization expense) o 100% stock consideration o Pre-tax synergies vary according to Buyer: -- 25% of Neptune NIE for Wells Fargo -- 15% of Neptune NIE for other buyers -- 50% of synergies phase-in in 2001, 100% in 2002 o Expected Purchase Accounting: -- Excess of consideration over target tangible book value booked as goodwill, not amortized -- Identifiable intangible deposit amortization equal to 6.0% of target's deposits, amortized over 8 years (a) o Key assumptions for Neptune (b): -- Stock prices as of May 4, 2001 -- Balance sheet items as of December 31, 2000 -- Tax rate of 35% ---------- (a) Assumption reviewed with management. (b) Per Company reports and FactSet. 21 24 Summary Competitive Merger Analysis [Bar graph showing summary competitive merger analysis based on earnings per I/B/E/S estimates.] Wells Zions Comerica USB $33.10 $30.56 $21.51 $2.21
Market Cap. (bn) $81.3 $5.0 $9.4 $43.2 2002 P/E (GAAP) 14.6x 15.0x 10.0x 11.2x 2002 P/E (Cash) 12.9 13.4 9.7 10.0 Pro Forma TCE / TA 7.8% 7.2% 8.8% 7.8% Neptune Ownership 4.9 44.9 24.7 13.5
---------- Source: Earnings per I/B/E/S median estimates. 22 25 Selected Transactions in the Banking Industry -- 1997 - Present (dollars in millions)
Deal Price as a Multiple of Seller's: ------------------------- Premium to Market EPS (a) Tangible ---------------------- Announce Deal -------------- Book One One One Date Acquiror/Target Value LTM NFY Value Day Week Month -------- -------------------------------------------- ------ ------ ------ ------- ------ ----- ------ Selected Transactions (>$1.Obn): 04/15/01 First Union Corp./ Wachovia Corp. $13,522 15.4x 13.1x 2.58x 6.6% 7.2% 6.0% 01/26/01 Royal Bank of Canada/Centura Banks Inc. 2,330 18.8 15.9 2.79 29.5 34.1 27.0 01/24/01 BB&T Corp./ F&M National Corp. 1,163 21.9 19.5 3.22 47.2 54.9 53.1 Median 18.8x 15.9x 2.79x 29.5% 34.1% 27.0% 11/20/00 Fifth Third Bancorp/ Old Kent Financial Corp. $4,962 18.4x 15.4x 3.31x 42.3% 39.5% 39.5% 11/01/00 Comerica Inc./ Imperial Bancorp 1,289 20.3 15.9 2.42 14.1 47.0 45.1 10/04/00 Firstar Corp./ U.S. Bancorp 21,237 13.4 13.0 4.43 21.4 32.8 30.5 10/02/00 FleetBoston Financial Corp./ Summit Bancorp 6,991 15.0 13.3 2.92 15.7 43.4 45.0 09/13/00 Chase Manhattan Corp./ J.P. Morgan & Co. 34,423 22.2 NM 3.44 5.8 16.3 35.7 05/17/00 M&T Bank Corp./ Keystone Financial Inc. 1,027 12.5 12.1 2.04 33.4 38.4 22.7 04/10/00 Wells Fargo & Co./ First Security Corp. 2,778 13.0 12.3 3.73 15.8 17.0 17.0 02/07/00 BB&T Corp./ One Valley Bancorp Inc. 1,202 15.0 14.1 2.31 30.1 39.4 20.3 Median 15.0x 13.3x 3.11x 18.6% 38.9% 33.1% 12/21/99 Wells Fargo & Co./ National Bancorp of Alaska $1,099 21.0x 17.0x 2.50x 10.6% 15.9% 31.0% 06/21/99 Citizens Financial Group, Inc./ UST Corp. 1,412 20.0 18.3 2.83 32.0 36.2 33.3 06/16/99 Fifth Third Bancorp/ CNB Bancshares Inc. 2,328 26.5 21.3 3.59 44.0 38.4 47.1 06/01/99 AmSouth Bancorp./ First American Corp. 6,328 21.3 19.8 3.89 30.1 27.2 36.8 05/10/99 HSBC Holdings, Plc/Republic New York Corp. 7,496 19.1 18.2 3.13 17.0 20.8 30.6 04/30/99 Firstar Corp./ Mercantile Bancorp. 9,801 21.7 20.6 4.31 22.7 23.6 37.9 Median 21.1x 19.0x 3.36x 26.4% 25.4% 35.1% 11/30/98 Deutsche Bank AG/ Bankers Trust Corp. $9,501 NM 16.6x 2.29x 20.4% 43.5% 48.1% 07/20/98 SunTrust Banks Inc./ Crestar Financial Corp. 8,767 26.0x 22.7 4.37 20.7 40.3 56.0 02/22/98 Union Planters Corp./ Magna Group Inc. 2,240 27.8 21.0 4.00 30.9 32.1 41.7 02/08/98 Regions Financial Corp./ First Commercial Corp. 2,710 30.9 20.6 4.22 3.0 10.6 19.7 Median 27.8x 20.8x 4.11x 20.5% 36.2% 44.9% 12/07/97 First American Corp./ Deposit Guaranty Corp. $2,693 29.8x 25.6x 5.41x 22.3% 32.8% 68.8% 12/01/97 National City Corp./ First of America Bank Corp. 7,045 24.4 22.4 4.31 36.3 39.3 43.7 11/18/97 First Union Corp./CoreStates Financial Corp. 17,104 22.6 20.1 6.07 17.2 18.2 13.4 10/20/97 Bank One Corp./ First Commerce Corporation 3,069 23.4 20.2 3.58 21.5 18.0 27.3 08/29/97 NationsBank Corp./ Barnett Banks Inc. 15,523 24.6 20.9 5.81 37.2 43.9 35.3 07/21/97 First Union Corp./ Signet Banking Corp. 3,323 25.0 19.1 3.63 46.1 42.9 47.8 06/24/97 Wachovia Corp./ Central Fidelity Banks Inc. 2,306 19.5 16.6 3.02 23.8 23.3 33.2 03/20/97 First Bank System Inc./ U.S. Bancorp 9,086 18.5 15.8 3.98 22.4 17.6 19.4 01/21/97 Allied Irish Banks Plc / Dauphin Deposit Corp. 1,357 18.7 16.5 2.46 21.1 31.3 36.5 Median 23.4x 20.1x 3.98x 22.4% 31.3% 35.3% Est. Announce Cost Market Account. Date Acquiror/Target Savings Type (b) Treat. (c) -------- -------------------------------------------- ------- -------- ----------- Selected Transactions (>$1.Obn): 04/15/01 First Union Corp./ Wachovia Corp. 35% P U 01/26/01 Royal Bank of Canada/Centura Banks Inc. 14 E U 01/24/01 BB&T Corp./ F&M National Corp. 35 P P Median 35% 11/20/00 Fifth Third Bancorp/ Old Kent Financial Corp. 20% P P 11/01/00 Comerica Inc./ Imperial Bancorp 20 P P 10/04/00 Firstar Corp./ U.S. Bancorp 8 P P 10/02/00 FleetBoston Financial Corp./ Summit Bancorp 30 E P 09/13/00 Chase Manhattan Corp./ J.P. Morgan & Co. 12 E P 05/17/00 M&T Bank Corp./ Keystone Financial Inc. 20 E U 04/10/00 Wells Fargo & Co./ First Security Corp. NA P P 02/07/00 BB&T Corp./ One Valley Bancorp Inc. NA E P Median 20% 12/21/99 Wells Fargo & Co./ National Bancorp of Alaska NA E U 06/21/99 Citizens Financial Group, Inc./ UST Corp. 40% I U 06/16/99 Fifth Third Bancorp/ CNB Bancshares Inc. 20 P P 06/01/99 AmSouth Bancorp./ First American Corp. 18 P P 05/10/99 HSBC Holdings, Plc/Republic New York Corp. 47 P U 04/30/99 Firstar Corp./ Mercantile Bancorp. 19 P P Median 20% 11/30/98 Deutsche Bank AG/ Bankers Trust Corp. NA E U 07/20/98 SunTrust Banks Inc./ Crestar Financial Corp. 17% E P 02/22/98 Union Planters Corp./ Magna Group Inc. 30 P P 02/08/98 Regions Financial Corp./ First Commercial Corp. 25 E P Median 25% 12/07/97 First American Corp./ Deposit Guaranty Corp. 25% E P 12/01/97 National City Corp./ First of America Bank Corp. 30 E P 11/18/97 First Union Corp./CoreStates Financial Corp. 45 I P 10/20/97 Bank One Corp./ First Commerce Corporation 9 I P 08/29/97 NationsBank Corp./ Barnett Banks Inc. 55 I P 07/21/97 First Union Corp./ Signet Banking Corp. 55 I P 06/24/97 Wachovia Corp./ Central Fidelity Banks Inc. 30 E P 03/20/97 First Bank System Inc./ U.S. Bancorp 28 E P 01/21/97 Allied Irish Banks Plc / Dauphin Deposit Corp. 28 P U Median 30%
---------- Source: SNL Securities. Includes transactions with aggregate consideration over $1 billion, excluding MOE. (a) EPS before non-recurring and extraordinary items (b) (I) In-market, (E) Expansion, (P) Partial Expansion. (c) (P) Pooling, (U) Purchase. 23