EX-99.C.4 5 y49806a2ex99-c_4.txt MATERIALS PRESENTED BY GOLDMAN, SACHS & CO. 1 Exhibit 99(c)(4) [GOLDMAN SACHS LOGO] HIGHLY CONFIDENTIAL PROJECT SUNBEAR PRESENTATION TO THE SPECIAL COMMITTEE GOLDMAN, SACHS & CO. APRIL 18, 2001 2 TABLE OF EXHIBITS
EXHIBIT ------- Executive Summary 1 Banking Industry Overview 2 Overview of Neptune 3 Analysis of 1998 Neptune Merger 4 Summary Pro Forma Analysis with Blue 5 Competitive Merger Analysis 6 APPENDIX Overview of Blue Strategy A Detailed Financial Data for Neptune B Selected Transactions in the Banking Industry C
3 EXHIBIT 1 EXECUTIVE SUMMARY 4 OVERVIEW OF DISCUSSIONS WITH BLUE - Blue has approached Neptune to discuss a possible acquisition of Neptune's public float prior to the expiration of the standstill - Blue has suggested that such conversations be based on the following terms - 100% cash transaction - $32.00 per Neptune share - Blue has indicated that a stock transaction would not be possible - Blue has indicated that retaining the current management team is critical 5 EXECUTIVE SUMMARY
PROPOSITION ADVANTAGES DISADVANTAGES ----------------------------------------------------------------------------------------------------------------------------------- - Blue may have strongest - Few (if any) financial SALE TO BLUE (RATHER THAN ANOTHER PARTY) strategic desire synergies compared to other potential acquirors - Eliminates the need for a - Eliminates ability to use stock three-way negotiation involving as an acquisition currency Neptune, Blue, and another buyer - Few immediate strategic - Neptune may become Blue's benefits for Neptune platform for U.S. retail banking expansion - Blue is likely to require no restructuring ----------------------------------------------------------------------------------------------------------------------------------- - Price - Few competitive buyers today SALE TODAY - Negotiating leverage gained by - Neptune stands to realize the fact that standstill with Blue substantial benefits from recent is still in place improvement in Hawaii's economic outlook as well as continued - Blue is strategically focused strength of California's economy today on Neptune and that could change: - Elimination of pooling may result in increase in valuation of - Neptune has outperformed Neptune (15% of income is expectations amortization of goodwill) - Blue wants to expand U.S. - Fundamental operating outlook consumer banking operations for banks (generally) is not good - Benefits of Neptune MOE in 1998 - Bank merger valuations are near are largely realized a low point: - Elimination of pooling (expected - First Union / Wachovia in June) makes acquisition more difficult for U.S. acquirors - Comerica / Imperial - Fundamental operating outlook for commercial banks (generally) is not good
2 6 EXHIBIT 2 OUTLOOK FOR BANKING INDUSTRY 7 GOLDMAN SACHS RESEARCH BANKING OUTLOOK - A soft revenue picture will drive moderated earnings growth: - As low as 4-5% in the first quarter - Expect 7-8% for 2001 - Bank revenues have been negatively impacted by slowing loan growth and equity-related activities, including declines in fee income in trust, asset management and brokerage businesses - Offsets to slowing loan growth include: - Improving margins - Strong mortgage banking results - Accelerating deposit growth - Further credit quality deterioration, driven by the slowing economy, is widely expected and may vary regionally: - Middle market commercial - Consumer lending - Syndicated credits, however, have been improving 3 8 MULTIPLE DIFFERENTIAL BETWEEN HIGHEST AND LOWEST P/E BANKS 1989-PRESENT [Line graph showing multiple differential between highest and lowest P/E banks beginning on 12/1989 and ending on 4/11/2001 with the following events noted:] 1990-91 recession: migration to higher P/E stocks and then movement to lower P/E stocks as the Fed eases in October 1990 1994 interest rate tightening cycle: migration to higher P/E stocks and then movement to lower P/E stocks as the Fed eases in early 1995 1998 Asian crisis: migration to higher P/E stocks and then movement to lower P/E stocks as the Fed subsequently eases. 1999-2000 interest rate tightening cycle begins with migration again to higher P/E stocks. 2001 Fed begins to ease rates in January 2001 and then movement to lower P/E stocks 4 9 MERGER MARKET ENVIRONMENT - Merger activity has slowed considerably in the past twelve months due to multiple factors: - Sell-off in the public equity markets in 2000 - Adverse shareholder reaction to certain large bank mergers, as well as continued "digestion" issues - Substantial shortfalls in meeting earnings expectations - Concerns over deteriorating credit quality - Very limited hostile activity among shareholders - Stocks of certain acquirors have underperformed their non-acquiring peers: - Inability to achieve promised expense reduction programs - Potential for reduction in long-term earnings growth rate - There are a number of arguments for a modest increase in merger activity over the next twelve months: - Continued overcapacity in the banking system and substantial cost savings that may result from consolidation - Selected active acquirors emerging from major integrations and/or restructurings - Interest in penetrating key geographies - Declining organic opportunities causing banks/thrifts to look to acquisitions for continued growth - Lack of success of many non-bank acquisitions - Sellers becoming more accustomed to lower valuations - However, a number of factors will likely limit any increase in merger activity: - Impact of new accounting rules on transaction activity is unclear - Continuing asset quality concerns - Depressed capital markets - Slower revenue growth and rising expenses 6 10 PRICING TRENDS IN THE BANK MERGER MARKET [Line graph showing pricing trends in the bank merger market for Price/TBV, Price/LTM EPS and Transaction P/E/Buyer P/E beginning 1996 and ending 2000. The graph notes the following data points:
Price/TBV Price/LTM EPS Transaction P/E/Buyer P/E 1996 2.6x 19.6x 1.4x 1997 3.2x 20.6x 1.3x 1998 3.8x 27.1x 1.4x 1999 3.3x 21.3x 1.0x 2000 2.3x 14.8x 1.2x]
6 11 S&P MAJOR REGIONAL BANKS - P/E HISTORY MONTHLY PRICE TO IBES MEDIAN CURRENT YEAR ESTIMATE & RELATIVE TO S&P 500 P/E PRICE TO LTM EPS [Line graph showing price to median FY1 rolling EPS for S&P major regional banks monthly beginning on 4/1996 and ending 4/2001.] P/E RELATIVE TO S&P 500 P/E [Line graph showing relative P/E for major regional bank. P/E as a multiple of S&P 500 P/E monthly beginning 4/96 and ending 4/2001.] 7 12 BUSINESS COMBINATION CHANGES IMPACT ON THE BANKING INDUSTRY ADVANTAGES - Proposed accounting changes should generally be accretive to EPS and ROEs as compared to the old purchase accounting rules - Few banks are likely to be subject to large impairment charges upon implementation of the new standard - New accounting rules may make it even more difficult for foreign buyers to compete with U.S. buyers - Reduced earnings dilution from goodwill makes acquisitions more attractive for domestic acquirors - Foreign banks may seek U.S. listings in order to compete with U.S. buyers in the future DISADVANTAGES - Advantages are likely to be offset in part by the need to recognize identifiable intangibles which will be subject to amortization and reduce GAAP tangible capital - The FASB specifically listed core deposit intangibles as needing to be recognized under the new rules - These core deposit intangibles not only give rise to amortization charges but in a tax-free transaction require the recognition of a deferred tax liability which results in the creation of additional goodwill, thus reducing GAAP tangible capital VALUATION - We expect modest revaluation for the sector as a whole as a result of the proposed changes - Some revaluation possible for banks with high current amortization charges - P/E ratios often reflect underlying growth rates - There may be increasing valuations for a limited number of banks as a result of merger speculation resulting from the ability to structure leveraged deals or deals involving asset dispositions 8 13 BANKS POSITIONED TO BENEFIT THE MOST FROM SWITCH TO VALUATION BASED ON CASH EPS - With the implementation of new purchase accounting rules in early 2001, meaningfully positive GAAP EPS revisions may be experienced by a number of banks - Though the accounting change applies only to goodwill added in purchase transactions rather than deposit or other types of intangibles, most of the difference in banks' cash and GAAP EPS is derived from goodwill added in purchase acquisitions - Goldman Sachs research believes that the new purchase accounting rules are a highly attractive form of accounting for acquisitions relative to poolings - Goodwill is not amortized, but rather subject to an impairment test - Active capital management strategies can continue to be deployed subsequent to announcing a deal - There will be no restrictions on selling portions of the company acquired since the 10% limitation under pooling rules will no longer apply - More flexibility may be taken in upfront charges - covering credit quality or other items BANKS WITH LARGEST DIFFERENCES BETWEEN CASH AND GAAP EPS --------------------------------------------------------
2001E Cash / GAAP EPS Company Differential (% Change) -------------------------- ----------------------- WELLS FARGO & CO. 15.0% Neptune 15.0% ZIONS BANCORP 12.0% First Union Corp. 11.0% City National Corp. 11.0% FIRSTAR CORP. / US BANCORP 10.0% Bank of America 10.0% Mellon Bank 9.0% Huntington Bancshares 9.0% PNC Financial 9.0%
---------- Note: Companies in bold are potential acquirors of Neptune. 9 14 EXHIBIT 3 OVERVIEW OF NEPTUNE PERFORMANCE 15 SUMMARY FINANCIAL DATA FOR NEPTUNE (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
AT OR FOR THE YEAR ENDED DECEMBER 31, 2001 CAGRS ------------------------------------- ---- ----- 1996 1997 1998 1999 2000 BUDGET 1999-00 2000-01 ---- ---- ---- ---- ---- ------ ------- ------- BALANCE SHEET: Assets $ 8,642 $ 8,880 $ 15,929 $ 16,681 $ 18,457 $ 20,116 10.6% 9.0% Deposits 6,507 6,790 12,043 12,878 14,128 15,572 9.7 10.2 Equity 753 801 1,746 1,843 1,989 2,122 7.9 6.7 PROFITABILITY: Reported Net Income $ 85 $ 93 $ 84 $ 172 $ 216 $ 235 25.5% 8.7% Normalized Net Income (a) 85 93 106 184 217 18.3 Cash Earnings (a) 91 100 117 217 250 272 15.4 8.7 Return on Tangible Common Equity 14.9% 15.1% 16.3% 19.7% 20.3% 21.1% Net Interest Margin 4.63 4.77 4.81 4.76 4.75 4.65 Fee Income Ratio 22.7% 24.0% 25.0% 23.8% 23.9% 23.5% Efficiency Ratio (b) 64.5 65.5 62.5 54.5 51.5 51.9 CAPITAL ADEQUACY: TCE / TA 7.31% 7.76% 6.81% 7.28% 7.49% 7.07% 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 $ 16.40(d) 8.0% 2.7% Diluted Reported EPS 1.20 1.29 1.05 1.38 1.73 1.87 25.2 8.1 Diluted Normalized EPS (a) 1.20 1.29 1.32 1.48 1.74 1.87 17.3 7.7 Diluted Normalized Cash EPS (a) 1.28 1.38 1.46 1.74 2.00 2.16 14.9 8.0 Dividends 0.57 0.58 0.58 0.62 0.68 0.76 9.7 11.8
(a) Adjusted to exclude extraordinary and non-recurring items. (b) Excludes amortization of intangibles. (c) Nonperforming loans include loans 90 days past due. (d) Represents book value per share at 3/31/2001. 10 16 SUMMARY FINANCIAL DATA FOR NEPTUNE
QUARTER ENDED, % CHANGE -------------- 3/31/00 3/31/01 QTR./QTR. ------- ------- --------- BALANCE SHEET: Assets $ 17,528 $ 19,419 10.8% Deposits 13,326 14,710 10.4 Equity 1,870 2,045 9.4 PROFITABILITY: Reported Net Income $ 49 $ 62 24.9% Normalized Net Income (a) 49 64 29.7 Cash Earnings (a) 58 73 26.1 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 7.1% 6.9% ASSET QUALITY: NPA / Total Loans + OREO 1.10% 1.04% NPL / Total Loans (c) 0.91 0.89 Reserve / NPL (c) 141.7 146.9% Net Charge-Offs / Avg. Loans 0.37 0.61 PER SHARE DATA: Book Value $ 15.00 $ 16.40 9.3% Diluted Reported EPS 0.40 0.49 22.5 Diluted Normalized EPS (a) 0.40 0.51 27.5 Diluted Normalized Cash EPS (a) 0.46 0.58 26.1 Dividends 0.17 0.19 11.8
(a) Adjusted to exclude extraordinary and non-recurring items. (b) Excludes amortization of intangibles. (c) Nonperforming loans include loans 90 days past due. (d) Represents book value per share at 3/31/2001. 11 17 COMPARISON OF SELECTED WEST COAST BANKS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
PRICE AS A MULTIPLE OF: 2002 PE/ PRICE AS OF % OF MARKET GAAP CASH TANGIBLE LT NAME (04/17/01) 52-W HIGH CAP. 2001E 2002E 2001E 2002E BV GROWTH NEPTUNE $ 24.33 89% $ 3,034 12.8X 11.4X 11.1X 10.1X 2.4X 1.2X Wells Fargo & Company $ 45.70 82% $ 78,537 15.8x 14.1x 13.6x 12.3x 4.5x 1.1x U.S. Bancorp 22.37 81 42,622 12.7 11.2 11.2 10.0 4.2 0.8 Comerica Incorporated 54.70 84 9,739 10.8 9.9 10.4 9.5 2.4 0.9 Zions Bancorp 52.04 83 4,609 16.0 14.3 14.2 12.8 4.0 1.0 UnionBanCal Corporation 27.82 79 4,425 9.3 7.8 9.3 7.8 2.1 0.8 City National Corporation 36.85 90 1,758 12.5 11.2 11.1 10.1 3.2 0.9 Pacific Century Financial Corp. 20.90 91 1,664 12.1 11.1 10.8 10.0 1.5 1.4 Westamerica Bancorporation 36.71 84 1,310 15.6 14.4 15.2 14.1 4.2 1.3 Silicon Valley Bancshares 23.59 37 1,163 9.3 8.1 9.3 8.1 1.9 0.5 Pacific Capital Bancorp 28.05 92 744 12.2 10.9 11.7 10.5 2.7 NA ---------- -------- -------- ----- ----- ----- ----- ------ ----- MEDIAN 12.3X 11.1X 11.2X 10.0X 2.9X 0.9X ---------- -------- -------- ----- ----- ----- ----- ------ -----
NPA/ CASH EFFICIENCY (LOANS+ NAME TCE/TA ROE RATIO (a)(b) REO) NEPTUNE 6.9% 20.9% 54.3% 1.0% Wells Fargo & Company 6.4% 31.9% 52.0% 0.9% U.S. Bancorp 6.5 37.6 55.8 1.2 Comerica Incorporated 8.1 23.7 49.3 1.3 Zions Bancorp 5.3 27.4 60.2 0.7 UnionBanCal Corporation 9.1 13.3 64.1 1.6 City National Corporation 6.2 29.3 56.2 1.0 Pacific Century Financial Corp. 8.0 11.8 58.2 2.1 Westamerica Bancorporation 7.8 25.2 45.0 0.4 Silicon Valley Bancshares 10.2 33.3 45.7 1.1 Pacific Capital Bancorp 7.6 19.9 55.9 0.7 ----- ---- -------- -------- MEDIAN 7.7% 26.3% 55.8% 1.1% ----- ---- -------- --------
(a) Non-Interest Expense / (Net Interest Income + Non-Interest Income). Adjusted to exclude non-recurring items. (b) Excludes amortization of intangibles. 12 18 SUMMARY ANALYST COMMENTS ON NEPTUNE
COMPANY / ANALYST DATE COMMENTS ----------------- ---- -------- Goldman Sachs / Lori Appelbaum 1/19/2001 - Neptune delivered another quarter of 18% EPS growth in the fourth quarter driven by solid revenue momentum, good expense discipline, and modest deterioration in credit trends - Loans grew by 11% over last year driven mostly by the Mainland while Hawaii is beginning to experience some growth in commercial and credit card loans Fox-Pitt, Kelton / Brian Harvey 1/29/2001 - Neptune has had an acceleration in its revenue growth from 4% in 1Q '99 to 9% in 4Q '00 due to the strength in the California economy and a rebound in the Hawaiian economy - Neptune has lowered its cash efficiency ratio from 56% in 1Q '99 to 51% in 4Q `00 - At $26.00 / share, Neptune trades at 11.8x our 2001 cash estimate of $2.20 / share or about a 1-2 multiple discount to the small-cap group - We believe that Neptune should trade at least in line with the small-cap bank group, given its double-digit earnings growth rate, robust revenue growth, and strong credit quality Dain Rauscher Wessels / Joe Morford 1/22/2001 - The majority of Neptune's growth continued to come from the company's mainland operations, but with the strengthening economic recovery in Hawaii, we would expect to see lending activity pick up there as well during the next few quarters - Overall, Neptune turned in another solid performance in 4Q '00, and we are optimistic about its prospects for the year ahead - Currently the shares are trading at 13.5x this year's earnings, representing a 5% premium to the S&P major regional bank median. Over time, we would expect this premium to gradually widen, recognizing the company's impressive track record for consistently delivering high-quality earnings growth
13 19 OVERVIEW OF MARKET PERFORMANCE ANNOTATED PRICE HISTORY [Line graph showing closing market price (USD) of BancWest Common stock beginning on 4/12/1996 and ending on 12/22/2000 with the following events noted:] (5/27/98) Merger between Neptune and Trident announced. (9/22/98) 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 elected as buyer of 30 First Security branches. 14 20 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 4/13/2001.] One Year [Line graph showing indexed price for Neptune, S&P Regional Banks, S&P 500 and Pacific Century beginning on 4/17/2000 and ending on 4/12/2001.] 15 21 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 Major Regional Banks P/E beginning on 4/17/1996 and ending on 4/17/2001.] P/E Differential [Line graph showing LTM P/E differential for Neptune P/E -- S&P Major Regional Banks P/E beginning on 4/17/1996 and ending on 4/17/01.] 16 22 TOTAL RETURN ANALYSIS
PACIFIC PEER S&P MAJ. NEPTUNE CENTURY GROUP (a) REG. BANKS S&P 500 ------- ------- --------- ---------- ------- TOTAL RETURN: 5 Years 95.3% 24.1% 173.7% NA 91.2% 3 Years 39.3 (3.5) 8.7 (1.3)% 9.5 1 Year 41.9 9.2 16.6 24.6 (16.4) 6 Months 40.2 42.5 14.9 14.1 (11.2) ANNUALIZED RETURN: 5 Years 14.3% 4.4% 22.3% NA 13.8% 3 Years 11.7 (1.2) 2.8 (0.4)% 3.1
(a) Consists of City National, Comerica, Pacific Capital, Pacific Century, Silicon Valley Bancshares, U.S. Bancorp, Wells Fargo, UnionBanCal, Westamerica and Zions. 17 23 TOP FIFTEEN DEPOSITORS IN CALIFORNIA (DOLLARS IN MILLIONS)
MARKET RANK COMPANY TOTAL DEPOSITS SHARE ---- ------- -------------- ----- 1 Bank of America $103,123 22.7% 2 Wells Fargo 58,005 12.8 3 Washington Mutual 56,150 12.4 4 Union Bank 23,638 5.2 5 Golden State 21,232 4.7 6 Golden West 16,581 3.7 7 Comerica / Imperial 10,403 2.3 8 Downey Financial 7,265 1.6 9 Neptune 6,975 1.5 10 City National 6,339 1.4 11 Sanwa 6,242 1.4 12 Citigroup 6,061 1.3 13 U.S. Bancorp 5,452 1.2 14 Zions 5,288 1.2 15 Silicon Valley Bancshares 4,851 1.1
18 24 DISCOUNTED CASH FLOW ANALYSIS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
PROJECTED CAGR --------- ASSUMP. 2000 2001 2002 2003 2004 2005 2000-05 ------- ---- ---- ---- ---- ---- ---- ------- Net Interest Income $ 747 Provision for Credit Losses 60 ------ Net Interest Income After Provision 687 ------ Non-Interest Income 216 ------ Non-Interest Expense 533 ------ Pre-tax Income 370 ------ Provision for Income Taxes 152 ------ NET INCOME $ 217 CASH NET INCOME $ 250 $ 275 $ 304 $ 333 $ 365 $ 399 9.8% ====== ====== ====== ====== ====== ====== EPS: (a) GAAP $ 1.74 $ 1.90 $ 2.13 Cash 2.00 2.19 2.42 $ 2.65 $ 2.90 $ 3.18 9.7% LT Growth Rate 9.5% 9.5% 9.5% 9.5% Shares Outstanding 125.0 125.7 125.7 125.7 125.7 125.7 DISTRIBUTION TO SHAREHOLDERS 34% $ 84.7 $ 93.3 $103.1 $112.9 $123.6 $135.4 9.8% ====== ====== ====== ====== ====== ======
PV OF PV OF TERMINAL VALUE DISCOUNT CASH FLOWS ASSUMING CASH NET INCOME MULTIPLES OF: FIRM VALUE RATE (12/31/00) 12.0X 14.0X 16.0X 18.0X 12.0X 14.0X 16.0X 18.0X ---- ---------- ----- ----- ----- ----- ----- ----- ----- ----- 10.0% 423 3,272 3,817 4,363 4,908 3,695 4,241 4,786 5,331 12.5 396 2,991 3,489 3,988 4,486 3,387 3,885 4,384 4,882 15.0 371 2,739 3,196 3,652 4,109 3,110 3,567 4,023 4,480 $29.41 $33.75 $38.09 $42.43 Implied Price per Share 26.95 30.92 34.88 38.85 24.75 28.38 32.02 35.65
(a) Based on Company information and I/B/E/S median estimates. 19 25 EXHIBIT 4 ANALYSIS OF 1998 NEPTUNE MERGER 26 SUMMARY OBSERVATIONS ON 1998 MOE - The merger between Trident and Neptune has been a tremendous success: - EPS is ahead of original forecast - Cost reductions have been achieved as originally forecast - Earnings growth of 13% vs. 5% for Neptune stand-alone - Management ability to integrate the two companies is particularly remarkable in light of integration struggles that have plagued many other banks - Neptune stands poised to take full advantage of a strong California presence as well as a recovering Hawaiian economy: - Approximately 60%-70% of business now outside of Hawaii - Acquisitions have added to results (Sierra West, First Security branches) - Partly as a result of the merger, Neptune trades much better relative to other banks: - 3.0-6.0 point P/E disadvantage has been eliminated - Although Neptune trades at a premium today, on a cash P/E basis it is a still modest premium - Some concerns remain: - With cost reductions substantially complete, earnings growth rates could slow (18.3% growth in 2000 vs. 7.5% expected in 2001) - Significant consumer credit exposure due to auto lending business (consumer loans and lease finance are 40% of loans) 20 27 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 $116.5 Trident Net Income 91.4 110.0 131.7 Parent/Other (6.4) (4.8) (12.9) -------- -------- -------- NET INCOME $183.5 $217.2 $235.3 13.2% ======== ======== ======== EPS $ 1.47 $ 1.74 $ 1.87 12.7 Change in EPS vs. Original Projection 4.8% 5.6% 4.2%
(a) Per Management projections at the time of merger. (b) Adjusted to exclude one-time and non-recurring charges. 21 28 ANALYSIS OF NEPTUNE/TRIDENT MERGER RELATIVE MULTIPLE EXPANSION
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 12.8x 11.4x 11.6x 10.5x West Coast Avg. 12.6 11.3 11.7 10.5 ---- ---- ---- ---- DIFFERENCE (0.2)x (0.1)x 0.1x 0.1x ==== ==== ==== ====
22 29 ANALYSIS OF NEPTUNE/TRIDENT MERGER IMPLIED MERGER VALUE CREATED FOR SHAREHOLDERS
REPRESENTATIVE MULTIPLES: 2001E --------------------------------------- EPS 12.0x 14.0x 16.0x 18.0x ----- ------ ------ ------ ------ Neptune Stand-Alone EPS $1.65 $19.80 $23.10 $26.40 $29.70 14.0x 16.0x 18.0x 20.0x ------ ------ ------ ------ Neptune Current $1.87 26.18 29.92 33.66 37.40 MARGIN $ 6.38 $ 6.82 $ 7.26 $ 7.70 ====== ====== ====== ======
23 30 Exhibit 4 Summary Pro Forma Analysis with Blue 31 ANALYSIS AT VARIOUS PRICES (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
CURRENT PRICE PER NEPTUNE SHARE COMPANY PRICE ---------------------------------------------------------------- DATA $24.33 $32.00 $33.00 $34.00 $35.00 $36.00 ------- ------- -------- -------- -------- -------- -------- Aggregate Consideration (a) $4,056 $4,183 $4,310 $4,436 $4,563 IMPLIED PREMIUM: ---------------- Current 31.5 % 35.6 % 39.7 % 43.9 % 48.0 % 52-Week High $27.25 17.4 21.1 24.8 28.4 32.1 Price / EPS: ------------ LTM $ 1.85 13.2 x 17.3 x 17.9 x 18.4 x 19.0 x 19.5 x 2001E (b) 1.90 12.8 16.8 17.4 17.9 18.4 18.9 2002E (b) 2.13 11.4 15.0 15.5 16.0 16.4 16.9 Price / Cash EPS: ----------------- LTM $ 2.09 11.6 x 15.3 x 15.8 x 16.3 x 16.7 x 17.2 x 2001E (b)(c) 2.19 11.1 14.6 15.1 15.5 16.0 16.4 2002E (b)(c) 2.42 10.1 13.2 13.6 14.1 14.5 14.9 Price / Book: ------------- Stated $ 16.40 1.5 x 2.0 x 2.0 x 2.1 x 2.1 x 2.2 x Tangible 10.33 2.4 3.1 3.2 3.3 3.4 3.5 Core Deposit Premium (d) $10,490 16.7 % 26.0 % 27.2 % 28.4 % 29.6 % 30.8 %
---------------------------- (a) Aggregate consideration adjusted to reflect dilutive impact of 4.4 million options outstanding with weighted average strike price of $16.66. (b) I/B/E/S median estimate. (c) Amortization per management estimates. (d) Assumes core deposits represent 71.3% of total deposits. 24 32 METHODOLOGY (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) - Neptune cash EPS of $2.19 in 2001 and $2.42 in 2002 (based on IBES median EPS estimates of $1.90 in 2001 and $2.13 in 2002 and management projections for amortization expense) - 100% cash consideration - Pre-tax cost of capital of 6.65% for Blue - No synergies or cost savings for Blue - Purchase accounting in accordance with French GAAP: - 10% of goodwill is treated as identifiable, and is not amortized - The remainder is unidentifiable and is amortized over 20 years, the maximum period Blue allows for amortization - Key assumptions for Neptune - Stock price as of April 17, 2001 - Tax rate of 35% 25 33 SUMMARY PRO FORMA ANALYSIS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
@ $32.00 PER SHARE @ $34.00 PER SHARE @ $36.00 PER SHARE 2001E 2002E 2001E 2002E 2001E 2002E ------ ------ ------ ------ ------ ------ NET INCOME: Blue (Including 45% of Neptune Net Income) $3,741 $4,059 $3,741 $4,059 $3,741 $4,059 (Less 45% of Neptune Net Income) 124 137 124 137 124 137 (Less Goodwill Amortization) (a) 32 32 37 37 41 41 (Less Financing Costs) 96 96 103 103 109 109 ------ ------ ------ ------ ------ ------ Blue Adjusted Net Income $3,488 $3,793 $3,478 $3,783 $3,468 $3,773 Neptune Net Income 275 304 275 304 275 304 ------ ------ ------ ------ ------ ------ Pro Forma Unadjusted Net Income 3,763 4,097 3,753 4,087 3,743 4,077 ------ ------ ------ ------ ------ ------ After-tax Revenue Enhancements 0 0 0 0 0 0 Synergies Assumed 0 0 0 0 0 0 ------ ------ ------ ------ ------ ------ PRO FORMA ADJUSTED NET INCOME $3,763 $4,097 $3,753 $4,087 $3,743 $4,077 ====== ====== ====== ====== ====== ====== SHARE INFORMATION: Blue Stand Alone Shares 448.0 448.0 448.0 448.0 448.0 448.0 Shares Issued in Transaction 0.0 0.0 0.0 0.0 0.0 0.0 ------ ------ ------ ------ ------ ------ PRO FORMA SHARES 448.0 448.0 448.0 448.0 448.0 448.0 PER SHARE DATA: Blue Stand-Alone EPS $ 8.35 $ 9.06 $ 8.35 $ 9.06 $ 8.35 $ 9.06 Pro Forma EPS 8.40 9.15 8.38 9.12 8.35 9.10 Accretion / (Dilution) 0.6% 0.9% 0.3% 0.7% 0.1% 0.4%
-------------------------------- (a) 10.0% of goodwill is indentifiable and, per French GAAP, not amortized. 26 34 EXHIBIT 5 COMPETITIVE MERGER ANALYSIS 35 POTENTIAL ACQUIRORS OF NEPTUNE (DOLLARS IN MILLIONS)
NAME / HEADQUARTERS MARKET CAP ($) 2001 P/E MULTIPLE (a) OBSERVATIONS WELLS FARGO 78,537 15.8x -- Large player in California (San Francisco) -- Does not have significant interest in Hawaii -- Although acquisitive, have recently been cautious FIRSTAR / US BANCORP 42,622 12.7 -- Are in the process of integrating a merger of (Minneapolis) equals that closed in February -- Have been very acquisitive in the past (California Bancshares, Western Bank) COMERICA 9,739 10.8 -- Bought Imperial Bancorp in November (large (Detroit) decline in stock price following announcement) -- One of the largest commercial banks in California -- Continue to look for acquisition opportunities ZIONS 4,609 16.0 -- Failed acquisition of First Security last year (Salt Lake City) -- Have recently begun looking for acquisition opportunities. However, Neptune would be a large deal FIRST UNION / WACHOVIA 42,619 9.8(a) -- Recent acquisition of Wachovia by First Union (Charlotte) -- Have no California retail presence and have expressed interest in the past BANK ONE 42,206 13.7 -- Recently acquired Wachovia credit card (Chicago) portfolio -- Have no California retail presence and have expressed interest in the past WASHINGTON MUTUAL 30,445 11.8 -- Large and acquisitive (Seattle) -- Strong California presence -- Focused on mortgage / consumer markets UNIONBANCAL 4,425 9.3 -- Valuation has plummeted due to credit quality (San Francisco) issues -- Have never been acquisitive
(a) Based on 2002 E EPS, pro forma for Wachovia acquisition 27 36 OVERVIEW OF ASSUMPTIONS -- Neptune cash EPS of $2.19 in 2001 and $2.42 in 2002 (based on IBES median EPS estimates of $1.90 in 2001 and $2.13 in 2002 and management projections for amortization expense) -- 100% stock consideration -- Pre-tax synergies vary according to Buyer: - 15% of Neptune NIE for out-of-market buyers - 25% of Neptune NIE for in-market buyers - 50% of synergies phase-in in 2001, 100% in 2002 -- Two accounting scenarios: - "Old" Pooling Accounting - "New" 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 -- Key assumptions for Neptune - Stock prices as of April 17, 2001 - Balance sheet items as of March 31, 2001 - IBES EPS estimates - Tax rate of 40% 28 37 SUMMARY COMPETITIVE MERGER ANALYSIS - POOLING (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) [Bar graph showing summary competitive merger analysis based on a pooling accounting method.] --------------------------------------
Wells Zions USB Comerica ----- ----- --- -------- $37.50 $35.96 $28.12 $26.80
Market Cap. (bn) $78.5 $4.6 $42.6 $9.7 2001 P/E 15.8x 16.0x 12.7x 10.8x Pro Forma TCE / TA 6.1% 6.1% 6.5% 8.2% Neptune Ownership 5.7 49.5 7.6 25.7
29 38 SUMMARY COMPETITIVE MERGER ANALYSIS - PURCHASE (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) [Bar graph showing summary competitive merger analysis based on a purchase accounting method.] -------------------------------------------------
Blue Wells Zions USB Comerica ----- ----- ----- --- -------- $39.45 $32.92 $31.08 $24.30 $23.17
Market Cap. (bn) $38.8 $78.5 $4.6 $42.6 $9.7 2001 P/E 10.4x 15.8x 16.0x 12.7x 10.8x Pro Forma TCE / TA NA 6.1% 6.1% 6.5% 8.2% Neptune Ownership 0.0 5.1 45.9 6.7 23.0
30 39 APPENDIX A OVERVIEW OF BLUE STRATEGY 40 OVERVIEW OF BLUE'S STRATEGY - In October, 1999, Blue publicly announced that it intended to invest as much as E3.5 billion into its retail business in an effort to expand both its retail banking and specialty finance capabilities - Since the announcement, Blue has made a couple of acquisitions in the specialty finance business: - Acquired BD Lease, a French leasing company, for E20 million - Bought PHH Europe, an auto finance business, for E1.0 billion - At a November analyst meeting, management announced interest in pursuing Banque Hervet, a French retail bank as well as an investment in Asia, likely to be in Singapore - In addition, management acknowledged to analysts that it continues to consider pursuing Neptune's expansion within the United States - May seek to continue to build out Neptune's franchise in the Western half of the United States - Unlikely to expand much outside of Neptune - Lastly, Blue, like many of Europe's largest banks, has little desire to list shares on an American exchange in order to facilitate acquisitions in the United States - Unlike European peers, Blue has luxury of an existing acquisition platform in the United States 31 41 SELECTED ANALYST COMMENTS ON VALUE OF NEPTUNE TO BLUE
COMPANY / ANALYST DATE COMMENTS -------------------------------------------------------------------------------------------------------------- Dresdner Kleinwort Benson / Alain Tchibozo 12/11/2000 - The only areas that represent strong growth potential for Blue outside France are Africa and California / Hawaii (Neptune) - With 250 branches and 5,000 employees, Neptune is benefiting from an uptick in loan production in California and Hawaii, sparked by economic recovery in Asian countries. We expect Neptune, which was created through a series of small mergers, to press ahead with its acquisition strategy and carve out a place for itself as a major local player Deutsche Bank / Jean Baptiste Bellon 11/16/2000 - Foreign profits grew for the third quarter, reflecting the good contribution of Neptune. This regional bank has a rather specific position in the US, being a community bank with Hawaiian exposure (a different economic cycle than on the mainland) and there have been no worries as yet about NPL's (down 5% at 88bp in Q3) Meeschaert - Rousselle / Philippe Leonnard 11/11/2000 - A key to Blue's strategy is a targeted acquisition drive funded by E1.2 billion in allocated capital to retail banking outside France, for which Neptune is the primary growth motor - In retail banking outside France, the group will mainly funnel its external growth drive through Neptune to expand its presence in the western part of the United States. Neptune is a good example of how to carry out a successful acquisition drive. Highlights of this success include a doubling of branch agencies since 1998, a trebling of total assets, and, above all, a doubling of net profit accompanied by robust ROE growth Commerzbank / Daniel Garrod 9/8/2000 - Blue is the most internationally focused retail bank of its domestic peers. We are particularly encouraged by the healthy contribution from the US subsidiary, Neptune - International retail banking still only accounts for a low percentage of operating income (10% at 12/31/99), however, its return on equity is high at 21%. We are very positive about the increased international focus of the group, particularly America, and would like to see further expansion - We continue to remain positive about the continued healthy contribution of Neptune, which will produce a return on equity in excess of that for the domestic retail division
32 42 APPENDIX B DETAILED FINANCIAL DATA FOR NEPTUNE 43 SUMMARY INCOME STATEMENT - YEARLY (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
FOR THE YEAR ENDED DECEMBER 31, CAGRS ---------------------------------------------- 2001 ------------------- 1996 1997 1998 1999 2000 BUDGET 1999-01 1999-00 ------ ------ ------ ------ ------ ------ ------- ------- Interest Income $ 621 $ 651 $ 750 $1,136 $1,310 $1,472 13.9% 15.3% Interest Expense 271 281 316 447 563 661 21.7 26.0 ------ ------ ------ ------ ------ ------ Net Interest Income 350 370 434 689 747 811 8.5 8.4 Provision for Credit Losses 25 20 31 55 60 56 0.7 9.3 Non-Interest Income: Service Charges on Deposit Accounts 32 40 68 75 10.4 Trust and Investment Service Income 25 27 33 36 10.8 Other Service Charges and Fees 34 40 65 73 11.9 Securities Gains (Losses) 0 0 0 0 NM Other 19 27 32 32 (0.3) ------ ------ ------ ------ ------ ------ Total Non-Interest Income 96 111 134 198 216 232 8.4 9.3 ------ ------ ------ ------ ------ ------ Non-Interest Expense: Salaries and Wages 126 131 182 185 1.6 Employee Benefits 39 39 52 55 6.3 Occupancy Expenses 42 47 60 63 4.4 Outside Services 13 22 45 46 2.7 Intangible Amortization 9 14 36 37 2.3 Equipment Expense 28 29 30 29 (3.9) Non-Operating Charges -- 26 18 1 (92.8) Other 66 85 113 118 4.8 ------ ------ ------ ------ ------ ------ Total Non-Interest Expense 297 322 392 535 534 585 4.5 (0.2) ------ ------ ------ ------ ------ ------ Income Before Income Taxes 124 138 145 296 369 403 16.6 24.5 Provision for Income Taxes 39 45 61 124 152 167 16.3 23.0 ------ ------ ------ ------ ------ ------ NET INCOME $ 85 $ 93 $ 84 $ 172 $ 216 $ 235 16.8% 25.5% ====== ====== ====== ====== ====== ====== NORMALIZED NET INCOME(a) $ 85 $ 93 $ 106 $ 184 $ 217 $ 235 ====== ====== ====== ====== ====== ====== % Change 6.0% 9.4% 13.9% 72.8% 18.3% 8.4% AVERAGE SHARES OUTSTANDING: Basic 68.7 70.9 79.5 124.0 124.6 Diluted 71.0 72.4 80.4 124.7 125.0 125.6 EARNINGS PER SHARE: Basic (Reported) $ 1.24 $ 1.31 $ 1.06 $ 1.39 $ 1.74 Diluted (Reported) 1.20 1.29 1.05 1.38 1.73 $ 1.87 Diluted (Normalized)(a) 1.20 1.29 1.32 1.47 1.74 1.87
(a) Excludes extraordinary and non-recurring charges. 33 44 SUMMARY INCOME STATEMENT - QUARTERLY (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
For the Quarter Ended, ---------------------------------------------------------------------------------- 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99 ------- ------- ------- -------- ------- ------- ------- -------- Interest Income $ 151 $ 153 $ 172 $ 274 $ 277 $ 278 $ 288 $ 293 Interest Expense 66 66 73 111 108 109 113 116 Net Interest Income 86 86 99 163 168 169 176 176 ------- ------- ------- -------- ------- ------- ------- -------- Provision for Credit Losses 4 8 7 12 10 13 12 20 Non-Interest Income: Service Charges on Deposit Accounts 7 7 9 16 16 17 17 18 Trust and Investment Service Income 7 6 7 7 9 8 8 8 Other Service Charges and Fees 8 8 10 13 16 18 14 17 Securities Gains (Losses) (0) -- 0 (0) (0) (0) (0) 0 Other 3 10 4 11 6 6 7 12 ------- ------- ------- -------- ------- ------- ------- -------- Total Non-Interest Income 25 31 30 47 47 50 46 55 ------- ------- ------- -------- ------- ------- ------- -------- Non-Interest Expense: Salaries and Wages 28 28 32 44 45 46 45 46 Employee Benefits 8 7 9 15 13 14 14 11 Occupancy Expenses 10 10 11 17 15 15 15 15 Outside Services NA NA NA 22 11 10 11 12 Intangible Amortization 1 3 2 7 9 9 9 9 Equipment Expense 6 7 7 9 8 8 8 7 Non-Operating Charges -- -- -- 26 1 1 16 0 Other 20 22 22 21 28 29 27 29 ------- ------- ------- -------- ------- ------- ------- -------- Total Non-Interest Expense 73 76 82 160 130 131 145 129 ------- ------- ------- -------- ------- ------- ------- -------- Income Before Income Taxes 33 34 40 38 75 74 65 82 Provision for Income Taxes 12 15 34 32 30 28 34 ------- ------- ------- -------- ------- ------- ------- -------- NET INCOME $ 33 $ 22 $ 25 $ 4 $ 43 $ 45 $ 37 $ 48 ======= ======= ======= ======== ======= ======= ======= ======== NORMALIZED NET INCOME(a) $ 33 $ 22 $ 25 $ 26 $ 43 $ 45 $ 47 $ 48 ======= ======= ======= ======== ======= ======= ======= ======== AVERAGE SHARES OUTSTANDING: Basic 62.4 62.3 70.8 122.6 123.5 123.7 124.4 124.6 Diluted 62.7 62.7 71.4 124.7 124.4 124.3 125.2 124.9 EARNINGS PER SHARE: Basic (Reported) $0.53 $0.35 $0.36 $0.03 $0.34 $0.36 $0.30 $0.39 Diluted (Reported) 0.53 0.35 0.36 0.03 0.34 0.36 0.29 0.39 Diluted (Normalized)(a) 0.53 0.35 0.36 0.21 0.35 0.36 0.38 0.39
For the Quarter Ended, --------------------------------------------------- 3/31/00 6/30/00 9/30/00 12/31/00 3/31/01 ------- ------- ------- -------- ------- Interest Income $ 301 $ 324 $ 338 $ 346 $ 339 Interest Expense 122 138 148 155 149 Net Interest Income 179 187 190 191 189 ------- ------- ------- -------- ------- Provision for Credit Losses 13 16 15 16 35 Non-Interest Income: Service Charges on Deposit Accounts 17 18 19 20 20 Trust and Investment Service Income 9 9 9 9 9 Other Service Charges and Fees 18 18 18 19 18 Securities Gains (Losses) 0 (0) (0) 0 41 Other 6 13 7 6 9 ------- ------- ------- -------- ------- Total Non-Interest Income 50 58 54 54 98 ------- ------- ------- -------- ------- Non-Interest Expense: Salaries and Wages 45 45 47 48 49 Employee Benefits 14 14 14 14 18 Occupancy Expenses 15 16 16 16 16 Outside Services 12 12 11 11 12 Intangible Amortization 9 9 9 9 10 Equipment Expense 7 7 7 8 8 Non-Operating Charges -- -- -- 1 4 Other 29 32 28 29 33 ------- ------- ------- -------- ------- Total Non-Interest Expense 132 135 131 135 150 ------- ------- ------- -------- ------- Income Before Income Taxes 85 93 97 93 103 Provision for Income Taxes 35 39 40 37 41 ------- ------- ------- -------- ------- NET INCOME $ 49 $ 54 $ 57 $ 56 $ 62 ======= ======= ======= ======== ======= NORMALIZED NET INCOME(a) $ 49 $ 54 $ 57 $ 57 $ 64 ======= ======= ======= ======== ======= AVERAGE SHARES OUTSTANDING: Basic 124.6 124.7 124.7 124.5 124.7 Diluted 124.7 125.0 125.1 125.4 125.6 EARNINGS PER SHARE: Basic (Reported) $0.40 $0.43 $0.46 $0.45 $0.50 Diluted (Reported) 0.40 0.43 0.45 0.45 0.49 Diluted (Normalized)(a) 0.40 0.43 0.45 0.45 0.51
34 45 YEAR-END LOAN PORTFOLIO (DOLLARS IN MILLIONS)
At December 31, -------------------------------------------------------- 1996 1997 1998 ---------------- ---------------- ---------------- $ % $ % $ % ------- ----- ------- ----- ------- ----- OUTSTANDING LOANS AND LEASES: DOMESTIC: Commercial, Financial and Agricultural $ 1,482 23.7% $ 1,710 25.2% $ 2,233 18.7% Real Estate: Commercial 1,421 22.8 1,509 22.2 2,284 19.1 Construction 262 4.2 228 3.4 430 3.6 Residential 1,963 31.4 1,980 29.2 2,692 22.5 ------- ----- ------- ----- ------- ----- Total Real Estate 3,646 58.4 3,717 54.7 5,406 45.2 ------- ----- ------- ----- ------- ----- Consumer 590 9.5 689 10.1 2,583 21.6 Lease Financing 245 3.9 338 5.0 1,361 11.4 FOREIGN: Commercial and Industrial 55 0.9 68 1.0 81 0.7 Other 225 3.6 270 4.0 301 2.5 ------- ----- ------- ----- ------- ----- Total Foreign 280 4.5 338 5.0 382 3.2 ------- ----- ------- ----- ------- ----- TOTAL LOANS AND LEASES $ 6,243 100.0% $ 6,792 100.0% $11,965 100.0% ======= ===== ======= ===== ======= ===== NON-PERFORMING ASSETS: Nonperforming Loans: Nonaccrual Loans $ 49 35.5% $ 27 20.4% $ 62 36.1% Restructured Loans 30 21.8 37 28.4 37 21.5 ------- ----- ------- ----- ------- ----- Total NPL 79 57.4 64 48.8 98 57.6 ------- ----- ------- ----- ------- ----- OREO 26 19.0 32 24.4 34 20.2 Accruing Loans 90 Days Past Due 33 23.6 35 26.8 38 22.2 ------- ----- ------- ----- ------- ----- TOTAL NONPERFORMING ASSETS $ 138 100.0% $ 132 100.0% $ 171 100.0% ======= ===== ======= ===== ======= ===== SELECTED RATIOS: NPA / Total Assets 1.60% 1.49% 1.07% NPA / Total Loans + REO 2.20 1.94 1.42 NPL(inc. 90 Days Past Due) / Total Loans 1.79 1.47 1.14 Reserve / Total Loans 1.46% 1.33% 1.32% Reserve / NPL(inc. 90 Days Past Due) 81.4 90.7 116.3 Net Charge Offs / Avg. Loans 0.42 0.33 0.31
At December 31, Quarter Ended ------------------------------------ ---------------- 1999 2000 3/31/2001 ---------------- ---------------- ---------------- $ % $ % $ % ------- ----- ------- ----- ------- ----- OUTSTANDING LOANS AND LEASES: DOMESTIC: Commercial, Financial and Agricultural $ 2,213 17.7% $ 2,605 18.6% Real Estate: Commercial 2,467 19.7 2,618 18.7 Construction 408 3.3 406 2.9 Residential 2,363 18.9 2,360 16.9 ------- ----- ------- ----- Total Real Estate 5,238 41.8 5,384 38.5 ------- ----- ------- ----- Consumer 2,987 23.9 3,600 25.8 Lease Financing 1,738 13.9 2,038 14.6 FOREIGN: Commercial and Industrial 65 0.5 66 0.5 Other 283 2.3 279 2.0 ------- ----- ------- ----- Total Foreign 348 2.8 345 2.5 ------- ----- ------- ----- ------- TOTAL LOANS AND LEASES $12,524 100.0% $13,972 100.0% $14,203 ======= ===== ======= ===== ======= NON-PERFORMING ASSETS: Nonperforming Loans: Nonaccrual Loans $ 77 53.4% $ 85 61.2% $ 101 68.5% Restructured Loans 21 14.5 9 6.5 7 4.9 ------- ----- ------- ----- ------- ----- Total NPL 98 67.9 94 67.7 108 73.4 ------- ----- ------- ----- ------- ----- OREO 28 19.6 27 19.9 21 14.0 Accruing Loans 90 Days Past Due 18 12.4 17 12.4 19 12.6 ------- ----- ------- ----- ------- ----- TOTAL NONPERFORMING ASSETS $ 145 100.0% $ 138 100.0% $ 147 100.0% ======= ===== ======= ===== ======= ===== SELECTED RATIOS: NPA / Total Assets 0.87% 0.75% 0.76% NPA / Total Loans + REO 1.15 0.99 1.04 NPL(inc. 90 Days Past Due) / Total Loans 0.93 0.79 0.89 Reserve / Total Loans 1.29% 1.23% 1.31% Reserve / NPL(inc. 90 Days Past Due) 138.7 155.7 146.9 Net Charge Offs / Avg. Loans 0.42 0.37 0.15
35 46 APPENDIX C SELECTED TRANSACTIONS IN THE BANKING INDUSTRY 47 OVERVIEW OF SELECTED U.S. BANK & THRIFT TRANSACTIONS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) U.S. BANK AND THRIFT MERGER TRANSACTIONS -- 2000(a) (DOLLARS IN MILLIONS)
PREMIUM TO ANNC'D DEAL PRICE/ PRICE/ PRICE/ CORE PREMIUM TO BUYER SELLER DATE VALUE BV TBV LTM EPS DEPOSITS MARKET(b) ---------------------------------------------------------------------------------------------------------------------------- ABN Amro Michigan National(c) 11/24/00 $2,750 1.9x 3.1x 18.4x 29.1% NA Fifth Third Old Kent 11/20/00 4,900 3.1 3.3 18.4 23.7 35.5% Comerica Imperial Bancorp 11/1/00 1,300 2.6 2.6 16.2 12.7 14.0 Washington Mutual Bank United 8/21/00 1,426 1.7 1.9 11.6 11.0 20.0 M&T Bank Keystone Financial 5/17/00 1,027 1.8 2.0 12.5 10.4 33.4 Wells Fargo First Security 4/10/00 2,778 1.6 2.0 10.2 11.5 17.6 National Commerce CCB Financial Corp. 3/20/00 1,930 2.7 2.7 14.8 20.7 42.7 BB&T Corp. One Valley Bancorp 2/7/00 1,202 2.1 2.3 15.1 16.6 28.6 ---------------------------------------------------------------------------------------------------------------------------- MEDIAN 2.1x 2.3x 14.8x 12.7% 28.6% ============================================================================================================================
U.S. BANK AND THRIFT MERGER TRANSACTIONS -- 1999(a) (DOLLARS IN MILLIONS)
PREMIUM TO ANNC'D DEAL PRICE/ PRICE/ PRICE/ CORE PREMIUM TO BUYER SELLER DATE VALUE BV TBV LTM EPS DEPOSITS MARKET(b) ---------------------------------------------------------------------------------------------------------------------------- Royal Bank of Scotland UST Corporation 6/21/99 1,400 2.6 2.9 20.0 23.4 32.0 Fifth Third Bancorp CNB Bancshares 6/16/99 2,363 3.2 3.4 22.4 36.6 44.0 Charter One Financial St. Paul Bancorp 5/17/99 1,207 2.4 2.4 20.3 18.7 17.1 ---------------------------------------------------------------------------------------------------------------------------- MEDIAN 2.6x 2.9x 20.3x 23.4% 32.0% ============================================================================================================================
-------------------------------------------------------------------------------- (a) Announced deal values between $500 million and $5 billion. (b) Premium to market 6 business days prior to announcement. (c) Owned by National Australia. 36 48 OVERVIEW OF SELECTED U.S. BANK & THRIFT TRANSACTIONS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) U.S. BANK AND THRIFT MERGER TRANSACTIONS -- 1998(a) (DOLLARS IN MILLIONS)
PREMIUM TO ANNC'D DEAL PRICE/ PRICE/ PRICE/ CORE PREMIUM TO BUYER SELLER DATE VALUE BV TBV LTM EPS DEPOSITS MARKET(b) ---------------------------------------------------------------------------------------------------------------------------- Charter One Financial ALBANK Finl Corp. 6/15/98 1,076 2.6 3.3 23.1 24.9 40.5 Roslyn Bancorp TR Financial 5/26/98 1,071 4.0 4.0 27.2 41.6 9.5 Astoria Financial Long Island Bancorp 4/3/98 1,766 3.0 3.0 32.1 35.6 10.1 Union Planters Corp Magna Group 2/23/98 2,240 3.0 3.9 27.8 36.9 32.1 Regions Financial First Commercial 2/9/98 2,707 4.0 4.2 26.1 40.1 10.6 ---------------------------------------------------------------------------------------------------------------------------- MEDIAN 3.0x 3.9x 27.2x 36.9% 10.6% ============================================================================================================================
-------------------------------------------------------------------------------- (a) Announced deal values between $500 million and $5 billion. (b) Premium to market 6 business days prior to announcement. U.S. BANK AND THRIFT MERGER TRANSACTIONS -- 1997(a) (DOLLARS IN MILLIONS)
PREMIUM TO ANNC'D DEAL PRICE/ PRICE/ PRICE/ CORE PREMIUM TO BUYER SELLER DATE VALUE BV TBV LTM EPS DEPOSITS MARKET(b) ---------------------------------------------------------------------------------------------------------------------------- First American Corp Deposit Guaranty 12/7/97 2,693 4.2 5.4 29.8 45.6 32.8 Bank One Corporation First Commerce Corp 10/20/97 3,061 3.5 3.6 23.3 39.0 16.0 First Union Corp. Signet Banking Corp 7/21/97 3,323 3.5 3.6 34.6 30.9 43.1 Wachovia Corp Central Fidelity 6/24/97 2,303 2.8 3.0 20.6 21.9 20.9 Allied Irish Banks Dauphin Deposit Corp 1/21/97 1,357 2.4 2.5 19.4 24.2 32.3 ---------------------------------------------------------------------------------------------------------------------------- MEDIAN 3.5x 3.6x 23.3x 30.9% 32.3% ============================================================================================================================
-------------------------------------------------------------------------------- (a) Announced deal values between $500 million and $5 billion. (b) Premium to market one week prior to announcement. 37 49 OVERVIEW OF SELECTED U.S. BANK & THRIFT TRANSACTIONS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) U.S. BANK AND THRIFT MERGER TRANSACTIONS -- 1995(a) (DOLLARS IN MILLIONS)
PREMIUM TO ANNC'D DEAL PRICE/ PRICE/ PRICE/ CORE PREMIUM TO BUYER SELLER DATE VALUE BV TBV LTM EPS DEPOSITS MARKET(b) ---------------------------------------------------------------------------------------------------------------------------- Fleet Fin'l Group National Westminster 12/19/95 3,260 1.0 1.6 12.2 6.1 NA BankBoston Corp. BayBanks, Inc 12/12/95 2,047 2.2 2.3 15.3 12.5 22.8 CoreStates Financial Meridian Bancorp 10/10/95 3,193 2.1 2.4 18.3 NA 24.1 UJB Financial Summit Bancorp 09/11/95 1,134 2.4 2.5 34.7 16.1 31.9 NationsBank Corp. Bank South Corp. 09/05/95 1,625 2.4 2.8 21.5 22.7 23.7 National City Corp. Integra Financial 08/28/95 2,112 2.0 2.1 13.1 14.9 24.6 Boatmen's Bancshares Fourth Financial 08/25/95 1,180 1.8 2.2 17.2 11.2 9.6 PNC Bank Corp. Midlantic Corp 07/10/95 3,043 2.1 2.3 11.3 17.0 40.4 Union Bank of CA. BanCal Tri-State 05/19/95 1,006 1.4 1.4 5.2 7.4 NA US Bancorp West One Bancorp 05/08/95 1,475 1.9 2.1 13.9 12.8 42.3 Fleet Fin'l Group Shawmut National 02/21/95 3,697 1.8 1.9 16.0 9.6 42.0 Nat'l Australia Bank Michigan Nat'l Corp 02/05/95 1,518 1.8 1.8 10.1 10.5 26.4 ---------------------------------------------------------------------------------------------------------------------------- MEDIAN 2.0x 2.1x 14.6x 12.5% 25.5% ============================================================================================================================
-------------------------------------------------------------------------------- (a) Announced deal values between $500 million and $5 billion. (b) Premium to market one week prior to announcement. 38