EX-99.C.5 6 y49806a3ex99-c_5.txt DRAFT DISCUSSION MATERIALS 1 DRAFT DISCUSSION MATERIALS PROJECT NEPTUNE January 30, 2001 2 PROJECT NEPTUNE -------------------------------------------------------------------------------- Table of Contents TAB --- Executive Summary ......................................................... 1 Valuation Analysis ........................................................ 2 Appendix: Perceived Objectives ............................................ A Suggested Talking Points ............................................... B [MERRILL LYNCH LOGO] 3 -------------------------------------------------------------------------------- EXECUTIVE SUMMARY -------------------------------------------------------------------------------- 4 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- What Has Changed? - Neptune's regional bank peers have traded up significantly since our video conference on 10/30/2000 - Neptune has outperformed its peers over this period, with its stock price increasing close to 30% compared to 16% for the peer group - Although Neptune had traded at a significant discount to its peers back in late October, Neptune has steadily converged to its peer group from a price/forward GAAP earnings and a price/forward cash earnings perspective - Neptune now trades in line with the peer group on a price/forward GAAP earnings basis but still trades at an 11% discount on a price/forward cash earnings basis - Neptune's regional bank peers are now trading at 12.8x forward cash earnings vs. 11.3x previously, impacting theoretical valuation from a discounted dividend perspective, internal rate of return analysis, and acquisition pricing - The Federal Reserve has begun to cut interest rates in response to the significant economic slowdown, with additional reductions expected to follow in the coming weeks - Neptune should benefit from a lower interest rate environment more than its peer group due to its spread concentrated earnings stream [MERRILL LYNCH LOGO] 1 ---------------------------------------------------------- 5 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- What Has Changed? (cont'd) - Credit quality has begun to suffer, leading to earnings shortfalls for a number of prominent banks including Bank One, First Union, Bank of America, UnionBanCal, Wachovia, and Suntrust - NPAs estimated to have already increased 15% between 3Q/4Q 2000, though the current level of NPAs is still low relative to historical levels - Neptune has not encountered similar credit problems and has delivered consistently on earnings - We should see a tiered operating performance for regional banks - those with low credit exposure and higher interest rate sensitivity should benefit from the present economic environment - Bank acquisition multiples appear to be rising along with bank acquiror's stock prices - The price/forward GAAP earnings multiples paid in the two $1 billion+ bank transactions announced in 2001 have equaled 19.55x and 15.85x, respectively, compared to an average of 12.49x for deals in 2000 [MERRILL LYNCH LOGO] 2 ---------------------------------------------------------- 6 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- Neptune Investment Highlights - Neptune has achieved consistent earnings growth and met or exceeded estimates for 12 consecutive quarters - FY2000 operating earnings were in line with performance targets set subsequent to the 1998 merger and Street estimates - Neptune has largely avoided the credit quality problems afflicting a number of other regional banks - ML Research expects Neptune's credit quality trends to "remain relatively benign intermediate term" and notes the Company does not have any direct credit exposure to the troubled California utilities - Impact of potential downturn of mainland economy limited due to Hawaiian exposure - Much of Neptune's non-operating credits are tied to Hawaiian commercial real estate, which is generally benefiting from an improving economic environment - NPAs rose 1% over 3Q but down 4.5% from 4Q99 - Neptune is expanding into higher growth markets such as Las Vegas, Nevada and Albuquerque, New Mexico and, in the process, diversifying its geographical lending base and increasing its overall earnings growth rate - Lower interest rates likely to benefit Neptune, particularly given Neptune's spread concentrated earnings stream (net interest income / revenues = 85%) - The market thus expects that Neptune will benefit from the lower credit risk in its loan portfolio, further interest rate reductions and continued expense management [MERRILL LYNCH LOGO] 3 ---------------------------------------------------------- 7 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- Neptune Investment Highlights (cont'd) - As a result, Neptune has traded up significantly since the last meeting - While the peer group has risen 15.8%, Neptune's stock price has increased 29.6% - Neptune has steadily converged to its peer group from a price/forward GAAP earnings and price/forward cash earnings perspective - Neptune now trades in line with the peer group from a price/forward GAAP earnings perspective but still trades at a significant discount from a price/forward cash earnings perspective - The proposed changes to purchase accounting, in particular the treatment of goodwill amortization, will significantly boost Neptune's reported EPS, which could lead to further price appreciation [MERRILL LYNCH LOGO] 4 8 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- While Many Regional Banks Appear Poised For An Earnings Shortfall, Neptune Appears Well Positioned [Bar Chart] MARGIN PRESSURE Net Interest Margin Banking 3Q 99 4.28% 3Q 00 3.98% 3Q 99 Neptune 4.78% 3Q 00 Neptune 4.79%
[Bar Chart] SLOWING REVENUE GROWTH Year Over Year Revenue Growth Banking 1999 10.0% 2000E 4.4% 1999 Neptune 15.5% 2000E Neptune 8.6%
[Bar Chart] RISING EXPENSES Efficiency Ratio Banking 3Q 99 53.3% 3Q 00E 53.8% 3Q 99 Neptune 55.2% 3Q 00 Neptune 52.5%
[Bar Chart] EMERGING CREDIT QUALITY CONCERN Banking NPAs/Loans & OREO 3Q 99 0.61% 3Q 00 0.69% 3Q 99 Neptune 1.06% 3Q 00 Neptune 0.96%
Reserves/NPLs 3Q 99 288% 3Q 00 255% 3Q 99 Neptune 166% 3Q 00 Neptune 168%
---------- * Peer group includes Merrill Lynch regional banks (21 in all.) [MERRILL LYNCH LOGO] 5 9 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- Recent Price Performance ONE YEAR PERFORMANCE
Neptune S&P 500 Neptune Peers 1/25/00 100 100 100 1/26/00 98.52 99.58 101.79 1/27/00 96.3 99.19 103.11 1/28/00 95.93 96.46 101.57 1/31/00 95.56 98.9 104.16 2/1/00 97.41 99.95 104.49 2/2/00 95.19 99.94 103.23 2/3/00 98.15 101.06 103.23 2/4/00 99.26 101.02 102.45 2/7/00 100 101.01 101.52 2/8/00 98.52 102.25 102.02 2/9/00 98.15 100.12 100.7 2/10/00 92.96 100.48 98.91 2/11/00 93.33 98.38 98.93 2/14/00 90 98.58 96.93 2/15/00 94.07 99.43 98.34 2/16/00 92.22 98.41 97.65 2/17/00 92.22 98.46 97.24 2/18/00 88.52 95.47 94.5 2/21/00 88.52 95.47 94.5 2/22/00 88.15 95.9 94.16 2/23/00 88.52 96.5 93.4 2/24/00 87.41 95.99 92.93 2/25/00 85.56 94.56 92.13 2/28/00 87.04 95.6 93.56 2/29/00 90 96.91 91.67 3/1/00 88.52 97.81 91.13 3/2/00 88.52 98 90.8 3/3/00 93.33 99.94 90.95 3/6/00 92.59 98.67 89.72 3/7/00 91.48 96.14 87.23 3/8/00 92.96 96.93 85.98 3/9/00 94.81 99.41 87.79 3/10/00 89.63 98.94 87.07 3/13/00 90.37 98.13 87.04 3/14/00 92.59 96.39 86.87 3/15/00 98.89 98.73 92.15 3/16/00 106.67 103.44 100.42 3/17/00 107.78 103.86 98.11 3/20/00 106.67 103.3 95.37 3/21/00 106.67 105.95 98.3 3/22/00 106.67 106.43 98.88 3/23/00 110.37 108.32 100.12 3/24/00 107.78 108.33 99.08 3/27/00 107.78 108.07 97.22 3/28/00 104.81 106.93 98.71 3/29/00 107.41 106.98 98.46 3/30/00 106.67 105.52 98.31 3/31/00 117.04 106.28 104.42 4/3/00 114.81 106.8 105.08 4/4/00 112.59 106.01 104 4/5/00 112.22 105.49 103.3 4/6/00 108.52 106.48 102.91 4/7/00 107.78 107.54 101.61 4/10/00 111.11 106.7 101.32 4/11/00 111.11 106.42 102.21 4/12/00 110 104.05 104.3 4/13/00 109.26 102.16 102.83 4/14/00 103.7 96.21 98.16 4/17/00 105.19 99.39 98.48 4/18/00 105.56 102.24 100.6 4/19/00 110.37 101.24 98.51 4/20/00 112.59 101.74 100.59 4/21/00 112.59 101.74 100.59 4/24/00 111.48 101.41 100.75 4/25/00 111.48 104.78 103.58 4/26/00 105.56 103.61 101.34 4/27/00 104.81 103.89 99.17 4/28/00 108.52 103.01 98.33 5/1/00 111.48 104.13 99.63 5/2/00 105.56 102.57 98.33 5/3/00 110 100.36 96.73 5/4/00 107.04 99.97 96.98 5/5/00 108.52 101.6 97.31 5/8/00 104.07 101 98.71 5/9/00 105.93 100.15 99.21 5/10/00 102.59 98.09 96.97 5/11/00 106.67 99.84 98.96 5/12/00 105.93 100.78 99.6 5/15/00 108.15 103 100.63 5/16/00 110 103.97 100.26 5/17/00 106.67 102.68 99.34 5/18/00 105.19 101.93 100.8 5/19/00 106.3 99.78 98.16 5/22/00 108.52 99.34 99.6 5/23/00 106.3 97.43 101.5 5/24/00 109.63 99.22 104.6 5/25/00 104.81 97.98 103.31 5/26/00 107.04 97.73 104.79 5/29/00 107.04 97.73 104.79 5/30/00 110 100.88 105.68 5/31/00 110.74 100.75 106.31 6/1/00 111.11 102.75 109.05 6/2/00 113.7 104.77 112.57 6/5/00 110.74 104.09 109.77 6/6/00 106.67 103.39 107.96 6/7/00 108.89 104.35 108.99 6/8/00 103.7 103.66 106.46 6/9/00 105.19 103.33 104.87 6/12/00 106.67 102.55 105.75 6/13/00 107.78 104.21 105.76 6/14/00 107.78 104.29 106.23 6/15/00 105.56 104.87 102.77 6/16/00 95.93 103.86 96.92 6/19/00 100 105.39 98.84 6/20/00 94.07 104.68 99.34 6/21/00 88.89 104.9 96.44 6/22/00 85.56 102.99 95.94 6/23/00 94.44 102.23 96.35 6/26/00 94.81 103.21 96.64 6/27/00 90.37 102.87 96.74 6/28/00 90.74 103.18 98.78 6/29/00 88.52 102.3 97.97 6/30/00 97.41 103.16 92.57 7/3/00 97.78 104.22 97.32 7/4/00 97.78 104.22 97.32 7/5/00 97.41 102.57 97.64 7/6/00 97.41 103.31 97.41 7/7/00 106.3 104.88 99.47 7/10/00 104.07 104.65 99.99 7/11/00 102.59 105.02 98.68 7/12/00 105.93 105.88 100.2 7/13/00 102.96 106.09 98.64 7/14/00 103.7 107.09 99.8 7/17/00 100.37 107.12 98.92 7/18/00 105.93 105.94 98.22 7/19/00 103.7 105.1 98.62 7/20/00 108.15 106.07 100.72 7/21/00 107.78 104.98 99.1 7/24/00 109.26 103.85 99.41 7/25/00 109.63 104.57 99.31 7/26/00 110.74 103.01 98.64 7/27/00 110.37 102.81 98.57 7/28/00 109.26 100.7 97.78 7/31/00 109.26 101.48 98.91 8/1/00 110 101.99 99.57 8/2/00 108.89 102.03 100.51 8/3/00 108.89 103.02 103.2 8/4/00 108.89 103.75 106.19 8/7/00 108.89 104.91 105.51 8/8/00 111.11 105.16 105.32 8/9/00 111.48 104.46 105.04 8/10/00 112.22 103.56 105.5 8/11/00 112.59 104.38 107.26 8/14/00 111.85 105.78 107.87 8/15/00 108.15 105.28 106.74 8/16/00 106.3 104.95 106.1 8/17/00 103.7 106.1 106.11 8/18/00 102.22 105.79 104.86 8/21/00 101.11 106.34 104.76 8/22/00 101.48 106.25 106.09 8/23/00 100.74 106.8 105.04 8/24/00 102.22 106.97 105.27 8/25/00 102.59 106.84 105.48 8/28/00 104.81 107.38 105.2 8/29/00 103.7 107.08 105.15 8/30/00 100 106.56 105.4 8/31/00 104.81 107.63 107.04 9/1/00 104.81 107.85 107.18 9/4/00 104.81 107.85 107.18 9/5/00 104.44 106.88 107.06 9/6/00 106.67 105.83 107.69 9/7/00 108.15 106.56 108.74 9/8/00 111.11 105.99 110.25 9/11/00 109.63 105.62 111.47 9/12/00 109.26 105.1 111.27 9/13/00 109.26 105.31 111.7 9/14/00 111.48 105.02 113.2 9/15/00 116.67 103.96 111.76 9/18/00 116.67 102.45 107.25 9/19/00 116.67 103.54 109.53 9/20/00 115.56 102.93 108.99 9/21/00 114.07 102.77 107.23 9/22/00 119.63 102.74 106.95 9/25/00 117.04 102.06 108.99 9/26/00 119.26 101.22 108.84 9/27/00 118.52 101.17 109.03 9/28/00 119.26 103.42 113.39 9/29/00 115.19 101.88 110.48 10/2/00 116.67 101.86 111.26 10/3/00 118.15 101.17 111.33 10/4/00 117.78 101.72 111.55 10/5/00 115.93 101.86 111.37 10/6/00 113.33 99.93 108.7 10/9/00 111.85 99.43 107.22 10/10/00 110 98.37 104.76 10/11/00 105.56 96.78 102.4 10/12/00 102.22 94.31 100.15 10/13/00 107.04 97.46 103.41 10/16/00 107.04 97.49 102.87 10/17/00 104.44 95.74 100.28 10/18/00 102.59 95.18 99.11 10/19/00 107.41 98.49 101.3 10/20/00 108.89 99.07 101.33 10/23/00 110 98.99 100.62 10/24/00 111.48 99.16 101.88 10/25/00 115.56 96.8 102.39 10/26/00 114.81 96.77 102.17 10/27/00 117.04 97.84 104.42 10/30/00 118.89 99.19 107.49 10/31/00 121.11 101.37 108.54 11/1/00 122.22 100.79 107.98 11/2/00 126.67 101.3 110.3 11/3/00 124.44 101.18 110.07 11/6/00 124.07 101.57 110.02 11/7/00 127.41 101.55 109.86 11/8/00 126.67 99.95 109.48 11/9/00 128.15 99.3 109.87 11/10/00 126.3 96.88 108.31 11/13/00 125.19 95.83 106.75 11/14/00 130 98.08 106.91 11/15/00 128.52 98.57 105.69 11/16/00 125.93 97.33 105.17 11/17/00 124.81 97 105.08 11/20/00 121.48 95.22 104.22 11/21/00 122.22 95.55 105.17 11/22/00 121.11 93.78 104.39 11/23/00 121.11 93.78 104.39 11/24/00 123.33 95.16 106.4 11/27/00 123.7 95.67 106.67 11/28/00 126.3 94.76 107.34 11/29/00 125.93 95.17 110.11 11/30/00 123.7 93.26 111.71 12/1/00 124.07 93.28 112.8 12/4/00 123.7 93.97 111.76 12/5/00 127.04 97.62 114.92 12/6/00 126.67 95.85 114.59 12/7/00 128.89 95.29 115.06 12/8/00 140.74 97.15 119.2 12/11/00 140 97.88 120.14 12/12/00 135.93 97.24 117.7 12/13/00 130.74 96.45 115.87 12/14/00 131.85 95.1 114.58 12/15/00 132.22 93.06 113.1 12/18/00 137.78 93.81 117.98 12/19/00 137.78 92.59 118.83 12/20/00 134.44 89.7 118.9 12/21/00 140.74 90.41 121.65 12/22/00 142.59 92.62 123.94 12/25/00 142.59 92.62 123.94 12/26/00 147.41 93.27 125.05 12/27/00 151.85 94.25 126.61 12/28/00 152.22 94.62 127.86 12/29/00 154.81 93.63 126.41 1/1/01 154.81 93.63 126.41 1/2/01 143.33 91.01 122.65 1/3/01 144.44 95.57 127.37 1/4/01 150.37 94.56 128.88 1/5/01 140.37 92.08 123.64 1/8/01 142.22 91.9 122.53 1/9/01 133.33 92.25 120.65 1/10/01 144.44 93.14 124 1/11/01 146.67 94.1 123.95 1/12/01 150.74 93.5 121.87 1/15/01 150.74 93.5 121.87 1/16/01 153.33 94.09 124.19 1/17/01 154.07 94.29 125.14 1/18/01 156.3 95.6 121.34 1/19/01 155.93 95.21 120.23 1/22/01 149.63 95.24 121.6 1/23/01 150.37 96.48 123.36 1/24/01 151.85 96.76 123.4 1/25/01 154.07 96.28 122.84 1/26/01 154.07 96.09 124.45
SINCE VIDEO CONFERENCE (10/30/00)
Neptune S&P 500 Neptune Peers 10/30/00 100 100 100 10/31/00 101.87 102.2 100.98 11/1/00 102.8 101.61 100.46 11/2/00 106.54 102.12 102.61 11/3/00 104.67 102 102.4 11/6/00 104.36 102.4 102.35 11/7/00 107.17 102.37 102.2 11/8/00 106.54 100.76 101.86 11/9/00 107.79 100.11 102.22 11/10/00 106.23 97.66 100.77 11/13/00 105.3 96.61 99.32 11/14/00 109.35 98.88 99.47 11/15/00 108.1 99.37 98.33 11/16/00 105.92 98.12 97.85 11/17/00 104.98 97.79 97.76 11/20/00 102.18 95.99 96.96 11/21/00 102.8 96.33 97.84 11/22/00 101.87 94.54 97.12 11/23/00 101.87 94.54 97.12 11/24/00 103.74 95.93 98.99 11/27/00 104.05 96.45 99.25 11/28/00 106.23 95.53 99.87 11/29/00 105.92 95.94 102.44 11/30/00 104.05 94.02 103.93 12/1/00 104.36 94.04 104.95 12/4/00 104.05 94.73 103.97 12/5/00 106.85 98.42 106.91 12/6/00 106.54 96.63 106.61 12/7/00 108.41 96.06 107.05 12/8/00 118.38 97.94 110.9 12/11/00 117.76 98.68 111.77 12/12/00 114.33 98.04 109.5 12/13/00 109.97 97.24 107.8 12/14/00 110.9 95.87 106.6 12/15/00 111.21 93.81 105.22 12/18/00 115.89 94.57 109.76 12/19/00 115.89 93.35 110.55 12/20/00 113.08 90.43 110.62 12/21/00 118.38 91.15 113.18 12/22/00 119.94 93.37 115.31 12/25/00 119.94 93.37 115.31 12/26/00 123.99 94.03 116.34 12/27/00 127.73 95.01 117.79 12/28/00 128.04 95.39 118.96 12/29/00 130.22 94.4 117.61 1/1/01 130.22 94.4 117.61 1/2/01 120.56 91.75 114.1 1/3/01 121.5 96.35 118.5 1/4/01 126.48 95.33 119.9 1/5/01 118.07 92.83 115.03 1/8/01 119.63 92.65 114 1/9/01 112.15 93 112.25 1/10/01 121.5 93.89 115.37 1/11/01 123.36 94.86 115.32 1/12/01 126.79 94.26 113.38 1/15/01 126.79 94.26 113.38 1/16/01 128.97 94.85 115.54 1/17/01 129.6 95.05 116.43 1/18/01 131.46 96.38 112.89 1/19/01 131.15 95.99 111.86 1/22/01 125.86 96.01 113.13 1/23/01 126.48 97.26 114.77 1/24/01 127.73 97.54 114.8 1/25/01 129.6 97.06 114.29 1/26/01 129.6 96.87 115.79
---------- Note: Neptune peers include regional banks with market capitalizations between $1 and $5 billion. [MERRILL LYNCH LOGO] 6 10 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- Recent Forward P/E and Forward Cash P/E Trends PRICE/ FORWARD GAAP EARNINGS
CURRENT Neptune: 13.5x Neptune Peers (1): 13.5x % Discount: -0.2%
AT VIDEO CONFERENCE Neptune: 10.6x Neptune Peers (1): 11.9x % Discount: -10.8%
Date Neptune Neptune Peers 1/24/00 9.61 10.63 1/25/00 9.87 10.71 1/26/00 9.72 10.88 1/27/00 9.5 10.95 1/28/00 9.47 10.81 1/31/00 9.45 10.98 2/1/00 9.63 11.01 2/2/00 9.41 10.9 2/3/00 9.7 10.89 2/4/00 9.81 10.85 2/7/00 9.89 10.75 2/8/00 9.74 10.8 2/9/00 9.7 10.7 2/10/00 9.19 10.51 2/11/00 9.23 10.45 2/14/00 8.9 10.25 2/15/00 9.3 10.35 2/16/00 9.12 10.3 2/17/00 9.12 10.26 2/18/00 8.75 9.99 2/21/00 8.75 9.99 2/22/00 8.72 9.92 2/23/00 8.75 9.84 2/24/00 8.64 9.77 2/25/00 8.46 9.72 2/28/00 8.61 9.85 2/29/00 8.9 9.78 3/1/00 8.75 9.74 3/2/00 8.75 9.69 3/3/00 9.23 9.71 3/6/00 9.16 9.62 3/7/00 9.05 9.42 3/8/00 9.19 9.33 3/9/00 9.38 9.51 3/10/00 8.86 9.39 3/13/00 8.94 9.37 3/14/00 9.16 9.38 3/15/00 9.78 9.92 3/16/00 10.55 10.83 3/17/00 10.65 10.7 3/20/00 10.54 10.49 3/21/00 10.54 10.75 3/22/00 10.54 10.79 3/23/00 10.92 10.91 3/24/00 10.67 10.82 3/27/00 10.67 10.64 3/28/00 10.37 10.8 3/29/00 10.63 10.77 3/30/00 10.56 10.79 3/31/00 11.58 11.47 4/3/00 11.04 10.95 4/4/00 10.83 10.84 4/5/00 10.79 10.79 4/6/00 10.43 10.91 4/7/00 10.36 10.79 4/10/00 10.68 10.72 4/11/00 10.68 10.8 4/12/00 10.58 11.04 4/13/00 10.51 10.92 4/14/00 9.97 10.51 4/17/00 10.11 10.51 4/18/00 10.15 10.72 4/19/00 10.61 10.55 4/20/00 10.83 10.72 4/21/00 10.83 10.72 4/24/00 10.72 10.71 4/25/00 10.72 10.99 4/26/00 10.16 10.82 4/27/00 10.09 10.61 4/28/00 10.44 10.55 5/1/00 10.94 10.67 5/2/00 10.36 10.5 5/3/00 10.79 10.34 5/4/00 10.5 10.39 5/5/00 10.65 10.44 5/8/00 10.21 10.58 5/9/00 10.39 10.67 5/10/00 10.07 10.44 5/11/00 10.47 10.69 5/12/00 10.39 10.74 5/15/00 10.61 10.85 5/16/00 10.79 10.86 5/17/00 10.47 10.76 5/18/00 10.32 10.89 5/19/00 10.43 10.62 5/22/00 10.65 10.75 5/23/00 10.29 10.96 5/24/00 10.61 11.27 5/25/00 10.15 11.14 5/26/00 10.36 11.25 5/29/00 10.36 11.25 5/30/00 10.65 11.35 5/31/00 10.72 11.39 6/1/00 10.76 11.68 6/2/00 11.01 12.05 6/5/00 10.72 11.8 6/6/00 10.33 11.62 6/7/00 10.54 11.69 6/8/00 10.04 11.49 6/9/00 10.19 11.37 6/12/00 10.33 11.43 6/13/00 10.44 11.42 6/14/00 10.43 11.47 6/15/00 10.21 11.15 6/16/00 9.28 10.76 6/19/00 9.68 10.97 6/20/00 9.1 11 6/21/00 8.6 10.76 6/22/00 8.28 10.74 6/23/00 9.14 10.78 6/26/00 9.17 10.76 6/27/00 8.74 10.81 6/28/00 8.78 11.1 6/29/00 8.56 11.07 6/30/00 9.42 10.36 7/3/00 9.21 10.49 7/4/00 9.21 10.49 7/5/00 9.17 10.56 7/6/00 9.17 10.61 7/7/00 10.01 10.83 7/10/00 9.8 10.88 7/11/00 9.66 10.75 7/12/00 9.97 10.94 7/13/00 9.69 10.75 7/14/00 9.76 10.89 7/17/00 9.45 10.81 7/18/00 9.97 10.65 7/19/00 9.76 10.69 7/20/00 10.15 10.9 7/21/00 10.12 10.89 7/24/00 10.26 10.86 7/25/00 10.29 10.89 7/26/00 10.4 10.87 7/27/00 10.36 10.88 7/28/00 10.26 10.8 7/31/00 10.26 10.89 8/1/00 10.33 10.91 8/2/00 10.22 10.98 8/3/00 10.22 11.25 8/4/00 10.22 11.51 8/7/00 10.21 11.46 8/8/00 10.42 11.41 8/9/00 10.45 11.38 8/10/00 10.52 11.41 8/11/00 10.56 11.6 8/14/00 10.49 11.68 8/15/00 10.14 11.56 8/16/00 9.97 11.52 8/17/00 9.72 11.53 8/18/00 9.59 11.39 8/21/00 9.48 11.37 8/22/00 9.52 11.51 8/23/00 9.45 11.47 8/24/00 9.59 11.55 8/25/00 9.62 11.59 8/28/00 9.83 11.57 8/29/00 9.72 11.56 8/30/00 9.38 11.56 8/31/00 9.83 11.74 9/1/00 9.83 11.73 9/4/00 9.83 11.73 9/5/00 9.79 11.72 9/6/00 10 11.79 9/7/00 10.14 11.88 9/8/00 10.42 12.05 9/11/00 10.28 12.18 9/12/00 10.24 12.16 9/13/00 10.24 12.21 9/14/00 10.45 12.36 9/15/00 10.94 12.23 9/18/00 10.94 11.81 9/19/00 10.94 12.05 9/20/00 10.84 12.01 9/21/00 10.7 11.82 9/22/00 11.22 11.82 9/25/00 10.98 12 9/26/00 11.18 12.01 9/27/00 11.11 12.07 9/28/00 11.18 12.54 9/29/00 10.8 12.35 10/2/00 10.71 12.06 10/3/00 10.85 12.09 10/4/00 10.81 12.15 10/5/00 10.64 12.13 10/6/00 10.41 11.88 10/9/00 10.27 11.71 10/10/00 10.1 11.42 10/11/00 9.69 11.19 10/12/00 9.39 10.94 10/13/00 9.83 11.01 10/16/00 9.83 10.97 10/17/00 9.59 11.04 10/18/00 9.19 10.95 10/19/00 9.61 11.15 10/20/00 9.74 11.04 10/23/00 9.83 10.96 10/24/00 9.96 11.06 10/25/00 10.33 11.11 10/26/00 10.26 11.12 10/27/00 10.46 11.44 10/30/00 10.62 11.91 10/31/00 10.82 12.05 11/1/00 10.92 11.95 11/2/00 11.32 12.22 11/3/00 11.12 12.19 11/6/00 11.09 12.18 11/7/00 11.38 12.16 11/8/00 11.32 12.13 11/9/00 11.45 12.19 11/10/00 11.28 11.98 11/13/00 11.19 11.83 11/14/00 11.62 11.88 11/15/00 11.48 11.74 11/16/00 11.25 11.64 11/17/00 11.15 11.61 11/20/00 10.85 11.54 11/21/00 10.92 11.58 11/22/00 10.82 11.5 11/23/00 10.82 11.5 11/24/00 11.02 11.74 11/27/00 11.05 11.79 11/28/00 11.28 11.83 11/29/00 11.25 12.09 11/30/00 11.05 12.23 12/1/00 11.09 12.41 12/4/00 11.05 12.29 12/5/00 11.35 12.64 12/6/00 11.32 12.62 12/7/00 11.52 12.68 12/8/00 12.57 13.12 12/11/00 12.51 13.24 12/12/00 12.14 12.95 12/13/00 11.68 12.77 12/14/00 11.78 12.63 12/15/00 11.81 12.56 12/18/00 12.31 13.1 12/19/00 12.31 13.22 12/20/00 12 13.21 12/21/00 12.57 13.57 12/22/00 12.73 13.87 12/25/00 12.73 13.87 12/26/00 13.16 14.02 12/27/00 13.56 14.27 12/28/00 13.59 14.4 12/29/00 13.82 14.22 1/1/01 13.4 13.71 1/2/01 12.4 13.25 1/3/01 12.5 13.73 1/4/01 13.01 13.86 1/5/01 12.15 13.35 1/8/01 12.31 13.18 1/9/01 11.54 12.98 1/10/01 12.5 13.32 1/11/01 12.69 13.3 1/12/01 13.04 13.1 1/15/01 13.04 13.1 1/16/01 13.27 13.29 1/17/01 13.33 13.38 1/18/01 13.67 13.11 1/19/01 13.63 13.04 1/22/01 13.08 13.16 1/23/01 13.15 13.37 1/24/01 13.28 13.36 1/25/01 13.5 13.32 1/26/01 13.5 13.5
PRICE/ FORWARD CASH EARNINGS CURRENT Neptune: 11.4x Neptune Peers (1): 12.8x % Discount: -11.0%
AT VIDEO CONFERENCE Neptune: 8.8x Neptune Peers (1): 11.3x % Discount: -22.2%
Neptune Neptune Peers 1/24/00 7.177947598 9.934931464 1/25/00 7.368995633 10.00838437 1/26/00 7.259825328 10.16366327 1/27/00 7.096069869 10.23094232 1/28/00 7.068777293 10.09921492 1/31/00 7.041484716 10.26631456 2/1/00 7.177947598 10.3047133 2/2/00 7.01419214 10.19912878 2/3/00 7.232532751 10.2091924 2/4/00 7.31441048 10.17072197 2/7/00 7.368995633 10.07161686 2/8/00 7.259825328 10.10630148 2/9/00 7.232532751 10.03046784 2/10/00 6.850436681 9.845868196 2/11/00 6.877729258 9.793989677 2/14/00 6.63209607 9.605993159 2/15/00 6.93231441 9.701692728 2/16/00 6.795851528 9.650308477 2/17/00 6.795851528 9.610894046 2/18/00 6.522925764 9.347852948 2/21/00 6.522925764 9.347852948 2/22/00 6.495633188 9.297258722 2/23/00 6.522925764 9.22383159 2/24/00 6.441048035 9.147844989 2/25/00 6.304585153 9.098402843 2/28/00 6.413755459 9.220495125 2/29/00 6.63209607 9.132127573 3/1/00 6.522925764 9.073241813 3/2/00 6.522925764 9.016609263 3/3/00 6.877729258 9.056930277 3/6/00 6.823144105 8.956005843 3/7/00 6.741266376 8.780444453 3/8/00 6.850436681 8.682855503 3/9/00 6.986899563 8.841637814 3/10/00 6.604803493 8.75913322 3/13/00 6.659388646 8.731705384 3/14/00 6.823144105 8.723720339 3/15/00 7.287117904 9.222212161 3/16/00 7.860262009 10.05421465 3/17/00 7.942139738 9.918504472 3/20/00 7.860262009 9.711002899 3/21/00 7.860262009 9.961417587 3/22/00 7.860262009 10.00281079 3/23/00 8.133187773 10.10346097 3/24/00 7.942139738 10.01707671 3/27/00 7.942139738 9.861570253 3/28/00 7.723799127 9.992708643 3/29/00 7.914847162 9.957052992 3/30/00 7.860262009 9.979176599 3/31/00 8.624454148 10.59581399 4/3/00 8.46069869 10.65029179 4/4/00 8.296943231 10.54740967 4/5/00 8.269650655 10.52904044 4/6/00 7.996724891 10.47070964 4/7/00 7.942139738 10.36689139 4/10/00 8.187772926 10.28341535 4/11/00 8.187772926 10.34381812 4/12/00 8.105895197 10.51134433 4/13/00 8.051310044 10.43870859 4/14/00 7.641921397 10.05202451 4/17/00 7.751091703 10.05354687 4/18/00 7.778384279 10.26826301 4/19/00 8.133187773 10.10443416 4/20/00 8.296943231 10.2308148 4/21/00 8.296943231 10.2308148 4/24/00 8.215065502 10.2087741 4/25/00 8.215065502 10.46272387 4/26/00 7.778384279 10.32007683 4/27/00 7.723799127 10.15757305 4/28/00 7.996724891 10.09585191 5/1/00 8.215065502 10.19784016 5/2/00 7.778384279 10.05157403 5/3/00 8.105895197 9.895008576 5/4/00 7.887554585 9.95007672 5/5/00 7.996724891 9.99831584 5/8/00 7.669213974 10.1166202 5/9/00 7.805676856 10.17286234 5/10/00 7.560043668 9.949541127 5/11/00 7.860262009 10.16207842 5/12/00 7.805676856 10.18480291 5/15/00 7.969432314 10.29931469 5/16/00 8.105895197 10.27315468 5/17/00 7.860262009 10.18037618 5/18/00 7.751091703 10.30243654 5/19/00 7.832969432 10.05153956 5/22/00 7.996724891 10.1797124 5/23/00 7.832969432 10.34560901 5/24/00 8.07860262 10.65675791 5/25/00 7.723799127 10.52584159 5/26/00 7.887554585 10.61965832 5/29/00 7.887554585 10.61965832 5/30/00 8.105895197 10.7133767 5/31/00 8.160480349 10.7558752 6/1/00 8.187772926 11.01375203 6/2/00 8.378820961 11.36095048 6/5/00 8.160480349 11.16037803 6/6/00 7.860262009 10.99411631 6/7/00 8.024017467 11.06932521 6/8/00 7.641921397 10.90744109 6/9/00 7.751091703 10.79494555 6/12/00 7.860262009 10.84724634 6/13/00 7.942139738 10.85782293 6/14/00 7.942139738 10.87739676 6/15/00 7.778384279 10.59827313 6/16/00 7.068777293 10.14868794 6/19/00 7.368995633 10.31772195 6/20/00 6.93231441 10.36234271 6/21/00 6.550218341 10.09904602 6/22/00 6.304585153 10.02787456 6/23/00 6.959606987 10.06706892 6/26/00 6.986899563 10.12940584 6/27/00 6.659388646 10.17344758 6/28/00 6.686681223 10.38768975 6/29/00 6.522925764 10.3434094 6/30/00 7.177947598 9.739261757 7/3/00 7.205240175 10.17322566 7/4/00 7.205240175 10.17322566 7/5/00 7.177947598 10.213579 7/6/00 7.177947598 10.23105939 7/7/00 7.832969432 10.44246562 7/10/00 7.669213974 10.49183405 7/11/00 7.560043668 10.34572857 7/12/00 7.805676856 10.53768685 7/13/00 7.587336245 10.36799619 7/14/00 7.641921397 10.47786065 7/17/00 7.39628821 10.38236353 7/18/00 7.805676856 10.31219909 7/19/00 7.641921397 10.31617981 7/20/00 7.969432314 10.50569042 7/21/00 7.942139738 10.35771166 7/24/00 8.051310044 10.38442042 7/25/00 8.07860262 10.41059797 7/26/00 8.160480349 10.38694245 7/27/00 8.133187773 10.39858064 7/28/00 8.051310044 10.33441372 7/31/00 8.051310044 10.50857747 8/1/00 8.105895197 10.52189991 8/2/00 8.024017467 10.5833452 8/3/00 8.024017467 10.83886784 8/4/00 8.024017467 11.06597104 8/7/00 8.024017467 11.03326025 8/8/00 8.187772926 10.99580879 8/9/00 8.215065502 10.96812428 8/10/00 8.269650655 10.99586811 8/11/00 8.296943231 11.15479924 8/14/00 8.242358079 11.24571967 8/15/00 7.969432314 11.14027232 8/16/00 7.832969432 11.0872391 8/17/00 7.641921397 11.09236766 8/18/00 7.532751092 10.95691837 8/21/00 7.450873362 10.91478522 8/22/00 7.478165939 11.0347071 8/23/00 7.423580786 10.94953119 8/24/00 7.532751092 10.96922205 8/25/00 7.560043668 10.99926482 8/28/00 7.723799127 10.97172874 8/29/00 7.641921397 10.94323873 8/30/00 7.368995633 10.94617028 8/31/00 7.723799127 11.10557401 9/1/00 7.723799127 11.11048688 9/4/00 7.723799127 11.11048688 9/5/00 7.69650655 11.09498569 9/6/00 7.860262009 11.15573919 9/7/00 7.969432314 11.25325552 9/8/00 8.187772926 11.37732282 9/11/00 8.07860262 11.50596102 9/12/00 8.051310044 11.50385139 9/13/00 8.051310044 11.5498938 9/14/00 8.215065502 11.69149223 9/15/00 8.597161572 11.54106402 9/18/00 8.597161572 11.14499188 9/19/00 8.597161572 11.37196939 9/20/00 8.515283843 11.34280512 9/21/00 8.406113537 11.17411958 9/22/00 8.815502183 11.15536263 9/25/00 8.624454148 11.33184444 9/26/00 8.788209607 11.33255017 9/27/00 8.733624454 11.36552788 9/28/00 8.788209607 11.79640594 9/29/00 8.487991266 11.53285438 10/2/00 8.597161572 11.62050246 10/3/00 8.706331878 11.63819624 10/4/00 8.679039301 11.69942224 10/5/00 8.542576419 11.67274226 10/6/00 8.351528384 11.41186941 10/9/00 8.242358079 11.26618377 10/10/00 8.105895197 11.00231213 10/11/00 7.778384279 10.77421018 10/12/00 7.532751092 10.52901249 10/13/00 7.887554585 10.89458689 10/16/00 7.887554585 10.84700542 10/17/00 7.69650655 10.58721107 10/18/00 7.560043668 10.46072545 10/19/00 7.914847162 10.68587017 10/20/00 8.024017467 10.71147657 10/23/00 8.105895197 10.63658891 10/24/00 8.215065502 10.72814916 10/25/00 8.515283843 10.75975485 10/26/00 8.46069869 10.75774652 10/27/00 8.624454148 10.97414838 10/30/00 8.760917031 11.25740686 10/31/00 8.924672489 11.39515068 11/1/00 9.006550218 11.30473511 11/2/00 9.334061135 11.56023602 11/3/00 9.170305677 11.52496539 11/6/00 9.1430131 11.49935097 11/7/00 9.388646288 11.4891072 11/8/00 9.334061135 11.45753774 11/9/00 9.443231441 11.50807434 11/10/00 9.306768559 11.30405856 11/13/00 9.22489083 11.15764254 11/14/00 9.579694323 11.21201472 11/15/00 9.470524017 11.09225194 11/16/00 9.279475983 10.98775818 11/17/00 9.197598253 10.95512255 11/20/00 8.951965066 10.88533027 11/21/00 9.006550218 10.91697302 11/22/00 8.924672489 10.83068243 11/23/00 8.924672489 10.83068243 11/24/00 9.088427948 11.06183856 11/27/00 9.115720524 11.10129695 11/28/00 9.306768559 11.13571442 11/29/00 9.279475983 11.3678066 11/30/00 9.115720524 11.50189468 12/1/00 9.1430131 11.66737344 12/4/00 9.115720524 11.55731595 12/5/00 9.361353712 11.88604178 12/6/00 9.334061135 11.86232474 12/7/00 9.497816594 11.92853837 12/8/00 10.37117904 12.34830151 12/11/00 10.31659389 12.45285871 12/12/00 10.01637555 12.18503516 12/13/00 9.634279476 12.01767139 12/14/00 9.716157205 11.89379718 12/15/00 9.743449782 11.80228987 12/18/00 10.15283843 12.26509109 12/19/00 10.15283843 12.38035723 12/20/00 9.90720524 12.36132692 12/21/00 10.37117904 12.64105051 12/22/00 10.50764192 12.87016877 12/25/00 10.50764192 12.87016877 12/26/00 10.86244541 13.02058817 12/27/00 11.18995633 13.2518632 12/28/00 11.21724891 13.36280265 12/29/00 11.40829694 13.18979542 1/1/01 11.40829694 13.18979542 1/2/01 10.56222707 12.74417345 1/3/01 10.6441048 13.22277521 1/4/01 11.08078603 13.37961088 1/5/01 10.34388646 12.85908938 1/8/01 10.48034934 12.7191054 1/9/01 9.825327511 12.510206 1/10/01 10.6441048 12.83018771 1/11/01 10.80786026 12.81618021 1/12/01 11.1080786 12.61903472 1/15/01 11.1080786 12.61903472 1/16/01 11.29912664 12.80828226 1/17/01 11.35371179 12.86044298 1/18/01 11.51746725 12.566602 1/19/01 11.49017467 12.39202364 1/22/01 11.02620087 12.49899056 1/23/01 11.08078603 12.70080217 1/24/01 11.18995633 12.68336426 1/25/01 11.35371179 12.59436814 1/26/01 11.35371179 12.76024144
---------- (1) Neptune peers include regional banks with market capitalizations between $1 and 5 billion. [MERRILL LYNCH LOGO] 7 11 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- Current GAAP EPS v. Cash EPS Comparison
Current GAAP Current Cash % Neptune Peers (1) 2001E EPS 2001E EPS Difference ----------------- --------- --------- ---------- Neptune $1.92 $2.28 18.8% BOK Financial $1.99 $2.27 14% Hibernia Corporation 1.32 1.50 14% Huntington 1.20 1.36 13% Cullen/Frost Bankers 2.23 2.52 13% City National 2.96 3.32 12% Pacific Century Fin. 1.78 1.98 11% First Virginia 3.15 3.47 10% Compass Bancshares 2.07 2.27 10% Citizens Banking 2.30 2.52 10% Banknorth 1.80 1.94 8% Old National 1.73 1.84 6% FirstMerit 1.94 2.06 6% Valley National 1.87 1.98 6% Associated 2.58 2.71 5% TCF Financial 2.60 2.73 5% First Tennessee 2.00 2.09 4% Colonial BancGroup 1.12 1.17 4% Commerce Bancorp 2.86 2.98 4% Sky Financial 1.48 1.54 4% Commerce 3.00 3.12 4% Provident Financial 2.70 2.80 4% First Midwest 1.98 2.05 4% Mercantile Bankshares 2.72 2.81 3% UnionBanCal 3.05 3.13 3% Westamerica 2.36 2.42 3% Trustmark 1.60 1.64 2% BancorpSouth 1.27 1.29 2% Fulton Financial 1.60 1.62 1% Greater Bay 1.99 1.99 0%
---------- (1) Neptune peers include regional banks with market capitalizations between $1 and $5 billion [MERRILL LYNCH LOGO] 8 12 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- Analyst Recommendations
LAST PRICE LONG-TERM FIRM RECOMMENDATION UPDATE 2001E EPS 2002E EPS TARGET GROWTH RATE ---- -------------- ------ --------- --------- ------ ----------- Merrill Lynch Short-term Neutral/ 1/23/01 $1.90 $2.05 NA 8% Long-term Accumulate Dain Rauscher Wessels Buy 1/22/01 1.95 2.15 $30.00 11% Lehman Brothers Buy 1/18/01 1.90 2.10 35.00 11% Goldman Sachs Market Outperform 1/19/01 1.90 2.10 NA NA Keefe, Bruyette & Woods Buy 1/19/01 1.95 2.20 NA NA CS First Boston Hold 1/18/01 1.90 2.10 NA 9% Fox-Pitt Kelton - 1/24/01 1.95 2.15 NA NA
Mean $1.92 $2.12 Median 1.90 2.10
[MERRILL LYNCH LOGO] 9 13 -------------------------------------------------------------------------------- VALUATION ANALYSIS -------------------------------------------------------------------------------- 14 VALUATION ANALYSIS -------------------------------------------------------------------------------- Price Performance Since 11/1/98 All-time High: $26.38 All-time Low: 14.44 52-Week High: 26.38 52-Week Low: 14.44 2-Year Average: 19.70 1-Year Average: 18.94 6-Month Average: 20.64 3-Month Average: 22.81 Current Price (01/26/01): 26.00
Volume in thousands Share price ------------ ----------- 11/2/98 92.4 20.81 11/3/98 64.8 20.75 11/4/98 49.6 20.97 11/5/98 79.4 20.91 11/6/98 70.2 21.5 11/9/98 108.2 22.06 11/10/98 33.2 22 11/11/98 61.4 21.41 11/12/98 26.2 21.34 11/13/98 55.2 21.22 11/16/98 55.4 21.03 11/17/98 64.6 20.78 11/18/98 56.6 20.59 11/19/98 43.6 20.91 11/20/98 26.6 21.19 11/23/98 50.2 21.13 11/24/98 45.6 21.53 11/25/98 30.2 21.72 11/27/98 6.2 21.72 11/30/98 35 21.63 12/1/98 55.8 22.09 12/2/98 90.4 22.03 12/3/98 30.8 22.03 12/4/98 77.4 21.97 12/7/98 118.6 21.69 12/8/98 55.6 21.75 12/9/98 32.4 21.56 12/10/98 24 21.72 12/11/98 51.4 21.88 12/14/98 9.8 21.5 12/15/98 48.4 21.5 12/16/98 62.2 21.78 12/17/98 83.6 22 12/18/98 153 22.47 12/21/98 47.4 22.47 12/22/98 56.4 22.53 12/23/98 56.6 22.94 12/24/98 40.6 23.09 12/28/98 69 23.53 12/29/98 27.4 23.28 12/30/98 31.4 23.59 12/31/98 46 24 1/4/99 73.6 24.25 1/5/99 125.8 24.16 1/6/99 54.4 23.81 1/7/99 81.4 23.5 1/8/99 119 23.53 1/11/99 117.4 23.94 1/12/99 52.6 23.5 1/13/99 70.6 23.47 1/14/99 42.8 23.09 1/15/99 45.6 23.09 1/19/99 41.8 23.34 1/20/99 48.8 23.47 1/21/99 28.2 23.38 1/22/99 24 23.06 1/25/99 76.6 22.59 1/26/99 76.4 22.72 1/27/99 35.6 22.34 1/28/99 123 22.41 1/29/99 76.2 22.44 2/1/99 79.8 22.78 2/2/99 53.2 22.38 2/3/99 63.6 22.59 2/4/99 28.6 22.03 2/5/99 28.2 21.88 2/8/99 79 21.97 2/9/99 33.4 21.91 2/10/99 48.6 21.78 2/11/99 92.8 21.81 2/12/99 33.2 21.63 2/16/99 57.6 21.34 2/17/99 32.4 20.94 2/18/99 61.8 21.38 2/19/99 37 21.88 2/22/99 16.8 22.03 2/23/99 24.4 22.31 2/24/99 43.6 22 2/25/99 26 21.5 2/26/99 433.2 19.59 3/1/99 104.4 20.19 3/2/99 120 20.16 3/3/99 108.8 20.16 3/4/99 29.6 20 3/5/99 189.4 20.25 3/8/99 115.4 20.19 3/9/99 197.4 20.56 3/10/99 66.6 20.59 3/11/99 80 20.59 3/12/99 66.8 20.66 3/15/99 65 20.78 3/16/99 22 20.47 3/17/99 53.8 20.38 3/18/99 103 20.5 3/19/99 128.6 20.41 3/22/99 81.8 20.34 3/23/99 87.4 20.22 3/24/99 128.2 20.16 3/25/99 40 20.03 3/26/99 14.4 19.97 3/29/99 90.6 20.09 3/30/99 237.6 20.09 3/31/99 421.6 21.25 4/1/99 56.8 20.78 4/5/99 71.4 20.22 4/6/99 69.2 19.88 4/7/99 50.4 20.03 4/8/99 49 19.91 4/9/99 78.8 19.88 4/12/99 67.2 20.28 4/13/99 76 20.31 4/14/99 102.2 20.28 4/15/99 48.8 19.94 4/16/99 76 20.25 4/19/99 50 20.53 4/20/99 101.2 20.75 4/21/99 36.4 20.72 4/22/99 30.4 20.44 4/23/99 48.2 20.25 4/26/99 15.8 20.34 4/27/99 36 20.38 4/28/99 25.2 20.16 4/29/99 90.4 20.16 4/30/99 71.4 19.91 5/3/99 40.6 20 5/4/99 6.2 19.84 5/5/99 64 20 5/6/99 26 19.84 5/7/99 36 19.94 5/10/99 44.6 19.94 5/11/99 38.2 20.09 5/12/99 18.4 19.84 5/13/99 55.6 19.88 5/14/99 62.4 19.78 5/17/99 86.4 19.88 5/18/99 110.6 19.88 5/19/99 54.6 20 5/20/99 41.4 19.81 5/21/99 20.6 20 5/24/99 96.8 19.53 5/25/99 45.2 19.34 5/26/99 26 19.31 5/27/99 25.2 18.97 5/28/99 62.4 19 6/1/99 45.2 19 6/2/99 38.2 19.34 6/3/99 145.6 19.5 6/4/99 74.8 19.5 6/7/99 48 19.47 6/8/99 121 19.25 6/9/99 90.4 19.44 6/10/99 507.8 18.63 6/11/99 132.6 18.88 6/14/99 156.2 18.63 6/15/99 46.2 18.94 6/16/99 58 19.19 6/17/99 89.2 19.5 6/18/99 56.2 19.41 6/21/99 22.8 19.31 6/22/99 32.4 19.31 6/23/99 24.8 19.38 6/24/99 19.2 19.03 6/25/99 27 19.16 6/28/99 100.2 19.22 6/29/99 35.6 19.09 6/30/99 218.4 18.56 7/1/99 121.4 18.69 7/2/99 110.2 19.25 7/6/99 180.2 19.56 7/7/99 333.6 19.72 7/8/99 117 19.75 7/9/99 117.8 19.97 7/12/99 49.2 19.88 7/13/99 53.6 20 7/14/99 57 19.91 7/15/99 324 20.22 7/16/99 71.6 20 7/19/99 141.2 20.03 7/20/99 61 20.03 7/21/99 527.2 21.16 7/22/99 181.8 20.63 7/23/99 77.6 20.5 7/26/99 38.2 20.47 7/27/99 163.6 20.84 7/28/99 195.6 20.88 7/29/99 99.2 20.91 7/30/99 56.6 20.84 8/2/99 158.8 20.88 8/3/99 120 20.91 8/4/99 168.4 20.91 8/5/99 152 21 8/6/99 88.2 20.81 8/9/99 127.6 21 8/10/99 200.4 20.97 8/11/99 67.8 21.06 8/12/99 99.6 21.19 8/13/99 72.4 21.41 8/16/99 86.8 21.5 8/17/99 181.2 21.47 8/18/99 38.2 21.59 8/19/99 49.8 21.59 8/20/99 85.6 21.94 8/23/99 131.4 21.69 8/24/99 54.6 21.91 8/25/99 15.6 21.91 8/26/99 79 21.81 8/27/99 31.2 21.69 8/30/99 88.4 21.25 8/31/99 74.8 20.91 9/1/99 446.4 20.97 9/2/99 124 20.84 9/3/99 60 20.91 9/7/99 55.4 21.06 9/8/99 22.6 20.97 9/9/99 44.2 20.97 9/10/99 27.8 21.16 9/13/99 20.4 21.06 9/14/99 75.4 20.88 9/15/99 67 20.84 9/16/99 59 20.78 9/17/99 110 20.91 9/20/99 46 20.84 9/21/99 91 20.75 9/22/99 51.6 20.63 9/23/99 79.6 20.63 9/24/99 85.6 20.63 9/27/99 41.8 20.88 9/28/99 44.2 20.91 9/29/99 67.2 20.88 9/30/99 315.4 20.31 10/1/99 89.2 19.78 10/4/99 59 20.47 10/5/99 76.6 20.56 10/6/99 60.6 21.13 10/7/99 62.4 21.16 10/8/99 47.2 21.16 10/11/99 32.4 21.09 10/12/99 28.4 21.19 10/13/99 38.6 21.16 10/14/99 59.2 20.88 10/15/99 38.6 20.69 10/18/99 70.2 20.47 10/19/99 73.2 20.84 10/20/99 84.6 21.13 10/21/99 60.8 20.72 10/22/99 149 20.47 10/25/99 120.2 20.5 10/26/99 122.4 20.19 10/27/99 58 20.63 10/28/99 40.8 21.09 10/29/99 42 20.91 11/1/99 87 21.44 11/2/99 74 21.56 11/3/99 203.6 22 11/4/99 86 22.56 11/5/99 98.8 22.31 11/8/99 36.4 22.16 11/9/99 99.6 21.81 11/10/99 66.8 21.81 11/11/99 92.4 21.78 11/12/99 96 21.72 11/15/99 30.4 21.63 11/16/99 41.4 21.75 11/17/99 73 21.75 11/18/99 228.4 22.41 11/19/99 194.8 22.56 11/22/99 270.8 22.56 11/23/99 119.8 22.28 11/24/99 345.8 22.22 11/26/99 33.4 22.06 11/29/99 119.8 22.06 11/30/99 70.8 22.03 12/1/99 37.6 22.09 12/2/99 57.4 21.88 12/3/99 40.2 21.88 12/6/99 43.4 21.84 12/7/99 45.6 21.59 12/8/99 43.8 21.38 12/9/99 44.8 21.28 12/10/99 69.8 20.5 12/13/99 69.2 20.75 12/14/99 99.4 20.25 12/15/99 283.4 20.06 12/16/99 49.2 19.56 12/17/99 165.5 20.25 12/20/99 44.8 19.25 12/21/99 235.9 19.63 12/22/99 53.7 20.38 12/23/99 85.3 19.19 12/27/99 51.7 19.44 12/28/99 54.3 19.88 12/29/99 29.1 19.88 12/30/99 33.3 20.06 12/31/99 26.9 19.5 1/3/00 101.1 19.13 1/4/00 77.4 18.25 1/5/00 187.2 18.69 1/6/00 83.1 17.75 1/7/00 39.1 18 1/10/00 45.4 17.94 1/11/00 99.6 17.38 1/12/00 35.2 17.25 1/13/00 40.1 17.81 1/14/00 49.9 18.38 1/18/00 30.4 17.88 1/19/00 142.2 17.25 1/20/00 92.9 16.56 1/21/00 98.9 16.44 1/24/00 69.2 16.44 1/25/00 100.5 16.88 1/26/00 68.4 16.63 1/27/00 216.7 16.25 1/28/00 91.1 16.19 1/31/00 91.1 16.13 2/1/00 122.4 16.44 2/2/00 1492 16.06 2/3/00 512.4 16.56 2/4/00 113 16.75 2/7/00 60.1 16.88 2/8/00 54 16.63 2/9/00 46 16.56 2/10/00 174.8 15.69 2/11/00 83.2 15.75 2/14/00 89.4 15.19 2/15/00 28.1 15.88 2/16/00 42.1 15.56 2/17/00 32 15.56 2/18/00 74.1 14.94 2/22/00 45.1 14.88 2/23/00 51.7 14.94 2/24/00 37.4 14.75 2/25/00 67.5 14.44 2/28/00 50.1 14.69 2/29/00 57.7 15.19 3/1/00 46.3 14.94 3/2/00 88.6 14.94 3/3/00 303 15.75 3/6/00 30 15.63 3/7/00 52.3 15.44 3/8/00 108.3 15.69 3/9/00 134.4 16 3/10/00 92.3 15.13 3/13/00 38.3 15.25 3/14/00 134.2 15.63 3/15/00 172.1 16.69 3/16/00 306.6 18 3/17/00 273.9 18.19 3/20/00 68.6 18 3/21/00 217.8 18 3/22/00 23.3 18 3/23/00 193.1 18.63 3/24/00 76.7 18.19 3/27/00 122.7 18.19 3/28/00 78.3 17.69 3/29/00 190 18.13 3/30/00 112.7 18 3/31/00 188.4 19.75 4/3/00 50.2 19.38 4/4/00 108.4 19 4/5/00 24.3 18.94 4/6/00 76.6 18.31 4/7/00 64.3 18.19 4/10/00 117.9 18.75 4/11/00 21.9 18.75 4/12/00 29.4 18.56 4/13/00 23.3 18.44 4/14/00 45.2 17.5 4/17/00 38.7 17.75 4/18/00 68.5 17.81 4/19/00 109.5 18.63 4/20/00 50.1 19 4/24/00 77.2 18.81 4/25/00 49.6 18.81 4/26/00 34.9 17.81 4/27/00 55.1 17.69 4/28/00 80.3 18.31 5/1/00 42.2 18.81 5/2/00 29.9 17.81 5/3/00 99.1 18.56 5/4/00 8.1 18.06 5/5/00 32.6 18.31 5/8/00 28.4 17.56 5/9/00 46.4 17.88 5/10/00 16.1 17.31 5/11/00 34.9 18 5/12/00 90.6 17.88 5/15/00 23.4 18.25 5/16/00 87.8 18.56 5/17/00 43.1 18 5/18/00 79.2 17.75 5/19/00 55.5 17.94 5/22/00 42.6 18.31 5/23/00 36.9 17.94 5/24/00 103.5 18.5 5/25/00 25.3 17.69 5/26/00 35.4 18.06 5/30/00 49.3 18.56 5/31/00 38.8 18.69 6/1/00 80.8 18.75 6/2/00 99.4 19.19 6/5/00 52 18.69 6/6/00 32.3 18 6/7/00 145.7 18.38 6/8/00 90.3 17.5 6/9/00 70.2 17.75 6/12/00 41.1 18 6/13/00 27.2 18.19 6/14/00 42.7 18.19 6/15/00 98.2 17.81 6/16/00 124.2 16.19 6/19/00 68.6 16.88 6/20/00 110.4 15.88 6/21/00 172.6 15 6/22/00 244.5 14.44 6/23/00 530.4 15.94 6/26/00 184.7 16 6/27/00 120.1 15.25 6/28/00 145.8 15.31 6/29/00 205.6 14.94 6/30/00 845.7 16.44 7/3/00 324 16.5 7/5/00 127.6 16.44 7/6/00 79.6 16.44 7/7/00 249.8 17.94 7/10/00 103.4 17.56 7/11/00 99.7 17.31 7/12/00 55.1 17.88 7/13/00 94.6 17.38 7/14/00 99.7 17.5 7/17/00 65.2 16.94 7/18/00 101.4 17.88 7/19/00 58.6 17.5 7/20/00 106.6 18.25 7/21/00 84.4 18.19 7/24/00 63.3 18.44 7/25/00 91.5 18.5 7/26/00 82.3 18.69 7/27/00 73.7 18.63 7/28/00 120.5 18.44 7/31/00 76.2 18.44 8/1/00 32.1 18.56 8/2/00 53.1 18.38 8/3/00 84.5 18.38 8/4/00 87.2 18.38 8/7/00 97.3 18.38 8/8/00 84.9 18.75 8/9/00 50.7 18.81 8/10/00 17.2 18.94 8/11/00 76.2 19 8/14/00 82 18.88 8/15/00 300.2 18.25 8/16/00 67.1 17.94 8/17/00 81.9 17.5 8/18/00 38.7 17.25 8/21/00 65.8 17.06 8/22/00 272.9 17.13 8/23/00 131.8 17 8/24/00 44.1 17.25 8/25/00 206.3 17.31 8/28/00 122.4 17.69 8/29/00 156.9 17.5 8/30/00 100.7 16.88 8/31/00 301.4 17.69 9/1/00 101.1 17.69 9/5/00 45.2 17.63 9/6/00 270.6 18 9/7/00 77.9 18.25 9/8/00 431.5 18.75 9/11/00 108.4 18.5 9/12/00 24.2 18.44 9/13/00 62.8 18.44 9/14/00 102.3 18.81 9/15/00 446.9 19.69 9/18/00 322.4 19.69 9/19/00 44.4 19.69 9/20/00 81.1 19.5 9/21/00 33.4 19.25 9/22/00 150.1 20.19 9/25/00 22 19.75 9/26/00 77.3 20.13 9/27/00 124.7 20 9/28/00 144.3 20.13 9/29/00 107.7 19.44 10/2/00 59.3 19.69 10/3/00 61.8 19.94 10/4/00 48.3 19.88 10/5/00 69.3 19.56 10/6/00 22.1 19.13 10/9/00 20.5 18.88 10/10/00 16.1 18.56 10/11/00 33.3 17.81 10/12/00 28.1 17.25 10/13/00 37.9 18.06 10/16/00 16.1 18.06 10/17/00 18.1 17.63 10/18/00 50 17.31 10/19/00 53 18.13 10/20/00 83 18.38 10/23/00 36 18.56 10/24/00 36 18.81 10/25/00 195 19.5 10/26/00 60 19.38 10/27/00 66.4 19.75 10/30/00 68.6 20.06 10/31/00 48 20.44 11/1/00 67.6 20.63 11/2/00 72.2 21.38 11/3/00 55.6 21 11/6/00 76.9 20.94 11/7/00 70.7 21.5 11/8/00 109.9 21.38 11/9/00 37.4 21.63 11/10/00 45.6 21.31 11/13/00 56.9 21.13 11/14/00 155.8 21.94 11/15/00 141.3 21.69 11/16/00 59.7 21.25 11/17/00 201.3 21.06 11/20/00 121 20.5 11/21/00 175.8 20.63 11/22/00 28.4 20.44 11/24/00 23 20.81 11/27/00 86.2 20.88 11/28/00 97 21.31 11/29/00 93.5 21.25 11/30/00 125.1 20.88 12/1/00 152.6 20.94 12/4/00 105.6 20.88 12/5/00 272.2 21.44 12/6/00 89.4 21.38 12/7/00 217.6 21.75 12/8/00 203.7 23.75 12/11/00 191 23.625 12/12/00 108.7 22.9375 12/13/00 112.1 22.0625 12/14/00 115.8 22.25 12/15/00 234.5 22.3125 12/18/00 103.6 23.25 12/19/00 192.2 23.25 12/20/00 75.8 22.6875 12/21/00 176.8 23.75 12/22/00 212.2 24.0625 12/26/00 167.2 24.875 12/27/00 179.6 25.625 12/28/00 181.8 25.6875 12/29/00 119.3 26.125 1/2/01 142.2 24.1875 1/3/01 234.4 24.375 1/4/01 146.5 25.375 1/5/01 196 23.6875 1/8/01 74.5 24 1/9/01 262 22.5 1/10/01 219 24.375 1/11/01 165.2 24.75 1/12/01 350.6 25.4375 1/16/01 221.8 25.875 1/17/01 146.4 26 1/18/01 159.1 26.375 1/19/01 368 26.3125 1/22/01 163 25.25 1/23/01 238.2 25.375 1/24/01 189.2 25.625 1/25/01 167.6 26 1/26/01 82.6 26
[MERRILL LYNCH LOGO] 10 15 VALUATION ANALYSIS -------------------------------------------------------------------------------- Discounted Dividend Analysis - Assumptions JUPITER PERSPECTIVE - No synergies - EPS growth of 9% - Earnings in excess of those necessary to maintain Neptune's current tangible common equity ratio at 6.00% are dividendable - First Call estimated earnings of $1.92 per share for 2001 and $2.12 per share in 2002 - Terminal year multiple of 11.0x-13.0x forward cash earnings - Discount rate of 10% to 12% to reflect Jupiter's estimated cost of equity(1) NEPTUNE PERSPECTIVE - 10-40% synergies (measured as a percent of Neptune's expense base) possible in a combination with a potential acquiror - EPS growth of 9% - Earnings in excess of those necessary to maintain Neptune's tangible common equity ratio at 6.00% are dividendable - First Call estimated earnings of $1.92 per share for 2001 and $2.12 per share in 2002 - Terminal year multiple of 11.0x-13.0x forward cash earnings - Discount rate of 14% reflects implied cost of equity capital for similarly sized U.S. regional banks and other potential acquirors ---------- (1) Source: Merrill Lynch research dated September 29, 2000. [MERRILL LYNCH LOGO] 11 16 VALUATION ANALYSIS -------------------------------------------------------------------------------- Discounted Dividend Analysis The tables below illustrate the theoretical value of Neptune from both parties' perspectives JUPITER PERSPECTIVE
TERMINAL VALUE MULTIPLE OF FORWARD CASH EARNINGS ---------------------------------- 11.0x 12.0x 13.0x ----- ----- ----- 10.0% $29.02 $30.89 $32.77 Discount 11.0% 27.91 29.71 31.50 Rate 12.0% 26.87 28.58 30.29
NEPTUNE PERSPECTIVE
TERMINAL VALUE MULTIPLE OF FORWARD CASH EARNINGS ----------------------------------- 11.0x 12.0x 13.0x ----- ----- ----- 10.0% $27.56 $29.34 $31.12 Synergies 20.0% 29.51 31.44 33.37 30.0% 31.46 33.54 35.62 40.0% 33.41 35.64 37.87
- Assuming Jupiter's 45% ownership in Neptune is valued at its current market price, the following table illustrates the implied incremental value that Jupiter could offer for the remaining 55% of Neptune to result in an overall value for Neptune equal to the theoretical DDA value (from Jupiter's perspective)
Terminal Value Multiple of Forward Cash Earnings -------------------------------------- 11.0x 12.0x 13.0x ----- ----- ----- 10.0% $31.49 $34.89 $38.30 Discount 11.0% 29.48 32.74 35.99 Rate 12.0% 27.57 30.69 33.80
[MERRILL LYNCH LOGO] 12 17 VALUATION ANALYSIS -------------------------------------------------------------------------------- Imputed Valuation based on Comparable Acquisitions between $1 and $10 Billion Since 6/30/00
Price / Deal Implied Price Premium Price / LTM Announce Value ----------------------------- Price / Tangible Deposit GAAP Date Buyer / Seller ($M) 1-Day 1-Week 1-Month Book Book Premium Earnings ---- -------------- ---- ----- ------ ------- ---- ---- ------- -------- 01/26/2001 Royal Bank of Canada $2,280.9 1.29x 1.34x 1.27x 2.38x 2.79x 19.00% 17.17x Centura Banks 01/24/2001 BB&T 1,167.9 1.47 1.50 1.53 2.95 3.25 39.04 21.18 F&M National 11/20/2000 Fifth Third 4,919.3 1.42 1.39 1.39 2.88 3.12 20.68 15.70 Old Kent 11/01/2000 Comerica 1,289.4 1.14 1.47 1.45 2.40 2.42 19.76 16.32 Imperial Bancorp 10/02/2000 Fleet Boston 7,016.0 1.16 1.43 1.44 2.39 2.96 17.80 14.84 Summit Bancorp
Price / Price / Price / Estimated LTM Estimated Announce GAAP Cash Cash Date Buyer / Seller Earnings Earnings Earnings ---- -------------- -------- -------- -------- 01/26/2001 Royal Bank of Canada 15.85x 17.16x 15.85x Centura Banks 01/24/2001 BB&T 19.55 20.48 18.95 F&M National 11/20/2000 Fifth Third 14.20 14.81 13.47 Old Kent 11/01/2000 Comerica 14.60 14.47 14.47 Imperial Bancorp 10/02/2000 Fleet Boston 12.24 13.69 11.44 Summit Bancorp
SUMMARY STATISTICS High 1.47x 1.50x 1.53x 2.95x 3.25x 39.04% 21.18x 19.55x 20.48x 18.95x Mean 1.30 1.43 1.42 2.60 2.91 23.26 17.04 15.29 16.12 14.83 Median 1.29 1.43 1.44 2.40 2.96 19.76 16.32 14.60 14.81 14.47 Low 1.14 1.34 1.27 2.38 2.42 17.80 14.84 12.24 13.69 11.44 NEPTUNE $26.00 $26.31 $24.88 $15.97 $10.71 $120.90 $1.74 $1.92 $2.03 $2.29 SUMMARY STATISTICS High $38.28 $39.45 $38.09 $47.11 $34.84 $57.91 $36.85 $37.54 $41.64 $43.42 Mean 33.74 37.57 35.24 41.54 31.15 38.83 29.65 29.35 32.78 33.99 Median 33.66 37.72 35.74 38.40 31.65 34.60 28.39 28.03 30.11 33.15 Low 29.67 35.30 31.58 38.08 25.95 32.23 25.82 23.50 27.84 26.21
[MERRILL LYNCH LOGO] 13 18 VALUATION ANALYSIS ================================================================================ Pro Forma Merger Analysis - Results - Improvement in Jupiter's EPS forecast combined with rally of Euro versus the US$ positively impacts Jupiter's acquisition capacity - Up to US$35 per share, the transaction is accretive to Jupiter's cash EPS, irrespective of the financing mix - From a GAAP EPS perspective, the transaction is slightly dilutive around US$31 per Neptune share in the cash/preferred scenario, which appears as the most likely structure at this stage - However, the synergies necessary for the transaction to be accretive from a GAAP EPS perspective, in the cash/preferred scenario, would represent between 6.6-10.5% of Neptune's operating cost base for an offer of US$33-35 [MERRILL LYNCH LOGO] 14 19 VALUATION ANALYSIS ================================================================================ Pro Forma Merger Analysis - Impact on Jupiter with No Synergies (Current GAAP)
CASH / PREFERRED STOCK CASE (2) CASH / COMMON STOCK CASE (3) ----------------------------------------- ------------------------------------------ OFFER PRICE PER SHARE OFFER PRICE PER SHARE ----------------------------------------- ------------------------------------------ $29.00 $31.00 $33.00 $35.00 $29.00 $31.00 $33.00 $35.00 ------ ------ ------ ------ ------ ------ ------ ------ PRICING MULTIPLES Market 12% 19% 27% 35% 12% 19% 27% 35% 2001E EPS 15.1x 16.1x 17.2x 18.2x 15.1x 16.1x 17.2x 18.2x 2001E Cash EPS 12.7x 13.5x 14.4x 15.3x 12.7x 13.5x 14.4x 15.3x Book Value 1.90x 2.03x 2.16x 2.29x 1.90x 2.03x 2.16x 2.29x Tangible Book 2.05x 2.19x 2.33x 2.47x 2.05x 2.19x 2.33x 2.47x FINANCING Cash $1,387 $1,376 $1,375 $1,387 $1,391 $1,393 $1,381 $1,394 Preferred Shares 623 774 917 1,046 171 280 401 499 Common Stock 0 0 0 0 448 478 509 540 ------ ------ ------ ------ ------ ------ ------ ------ Total $2,010 $2,151 $2,292 $2,433 $2,010 $2,151 $2,292 $2,433 ====== ====== ====== ====== ====== ====== ====== ======
PRO FORMA EPS IMPACT NO REVENUE ENHANCEMENT NO REVENUE ENHANCEMENT -------------------- ------------------------------------------ ------------------------------------------- 2001 E 0.0% -0.6% -1.0% -1.4% -0.6% -1.3% -1.7% -2.1% 2002 E 0.4% -0.2% -0.5% -0.9% -0.3% -0.9% -1.3% -1.7% Cash 2001E 1.6% 1.1% 1.0% 0.8% 0.9% 0.4% 0.2% 0.0% Cash 2002E 1.8% 1.4% 1.2% 1.1% 1.1% 1.4% 0.4% 0.2% Incremental Net Income Required -$15.2 $ 9.4 $23.3 $37.0 $14.4 $40.9 $57.0 $73.0 for 0% GAAP 2002 EPS Dilution Pre-Tax as a % of Target Noninterest Exp. -4.3% 2.7% 6.6% 10.5% 4.1% 11.6% 16.1% 20.7% TIER 1 CAPITAL RATIO (1) 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50%
--------------------------------- * Cash / preference share mix adjusted such that Tier 1 Capital Ratio does not fall below 6.50% (1) Current Tier 1 Capital Ratio = 6.99%. (2) Cost of preferred stock = 7.6% (3) Stock issued to Damon Trust, which owns 22.5% of Neptune common stock. [MERRILL LYNCH LOGO] 15 20 VALUATION ANALYSIS ================================================================================ Jupiter Internal Rate of Return Analysis Assumptions TOTAL INVESTMENT IRR - Measures Jupiter's internal rate of return based on total investment GOING FORWARD, including acquisition of 55% of Neptune not currently owned - Cash outflow calculated at 45% of current market value plus the offer value for the 55% of Neptune not currently owned - Cash inflows represent dividends distributed over a 5-year period plus the terminal value at the end of year 5 (which is estimated to be 12.0x forward cash earnings) [MERRILL LYNCH LOGO] 16 21 VALUATION ANALYSIS ================================================================================ Internal Rate of Return Analysis and Pricing Multiples (1) [RETURN ANALYSIS AND PRICING MULTIPLES LINE GRAPH]
OFFER PRICE IRR TOTAL INVESTMENT IRR $29.00 11.50% 16.20% $31.00 9.80% 15.00% $33.00 8.20% 13.90% $35.00 6.80% 12.80%
-------------------------------------------------------------------------------- Premium to current market 11.9% 19.2% 26.9% 34.6% Price/2001E 15.1x 16.1x 17.2x 18.2x Price/2002E 13.7x 14.6x 15.6x 16.5x Price/2001E Cash EPS 12.7x 13.5x 14.4x 15.3x Price/2002E Cash EPS 11.6x 12.4x 13.3x 14.1x Price/Tangible Book 2.71x 2.89x 3.08x 3.27x --------------------------------------------------------------------------------
---------------------------- (1) Assumes a 12.0x terminal multiple and no synergies. [MERRIL LYNCH LOGO] 17 22 VALUATION ANALYSIS ================================================================================ Internal Rate of Return Analysis and EPS Accretion/Dilution (1) [RETURN ANALYSIS AND EPS ACCRETION/DILUTION LINE GRAPH]
OFFER PRICE IRR TOTAL INVESTMENT IRR $29.00 11.50% 16.20% $31.00 9.80% 15.00% $33.00 8.20% 13.90% $35.00 6.80% 12.80%
-------------------------------------------------------------------------------- JUPITER EPS ACCRETION / (DILUTION) 2001E (Current GAAP) 0.0% -0.6% -1.0% -1.4% 2002E (Current GAAP) 0.4% -0.2% -0.5% -0.9% 2001E (Cash GAAP) 1.6% 1.1% 1.0% 0.8% 2002E (Cash GAAP) 1.8% 1.4% 1.2% 1.1% --------------------------------------------------------------------------------
------------------------------- (1) Assumes a 12.0x terminal multiple and no synergies. Cash / preferred stock case. [MERRILL LYNCH LOGO] 18 23 VALUATION ANALYSIS ================================================================================ Summary of Potential Partners - There is a relatively long list of potential merger partners for Neptune that could theoretically pay a mid $30s or higher price per share without incurring EPS dilution
REQUIRED DIVESTITURES COMMON PRICE / % BRANCH REQUIRED AS a % OF MKT. VALUE EQUITY 2002E EPS OVERLAP DIVESTITURES NEPTUNE DEPOSITS ---------- ------ --------- ------- ------------ ---------------- U.S. BANKS Wells Fargo $ 88,304 $26,221 17.88x 54.9% $1,876 13.80% Bank of America 64,723 46,785 7.28 56.0 787 5.79 FleetBoston 47,385 18,853 12.00 0.0 0 0.00 Bank One 45,603 18,445 14.51 0.0 0 0.00 New U.S. Bancorp 45,354 14,670 13.35 26.5 247 1.82 Washington Mutual 29,966 11,030 11.82 35.0 80 0.59 Comerica 10,852 4,262 12.08 4.7 0 0.00 Zions 4,965 1,779 17.54 7.4 0 0.00 FOREIGN BANKS HSBC $141,114 $35,319 17.26x 0.0% 0 0.00% ABN AMRO 37,545 11,897 11.67 0.0 0 0.00 Royal Bank of Canada 19,877 7,568 12.07 0.0 0 0.00 TD Bank 17,960 7,436 14.44 0.0 0 0.00 Bank of Montreal 14,128 6,874 12.61 0.0 0 0.00
[MERRILL LYNCH LOGO] 19 24 VALUATION ANALYSIS ================================================================================ Theoretical Capacity for Potential Acquirers - Purchase Accounting (Current GAAP) Offer Price Per Share = $35.00 Aggregate Deal Value= $4,423 million --------------------------------------------------------------------------- Offer Price / Market 1.35 x Price/2001E EPS 18.23 x Price/ F.D. Book 2.19 Price/2002E Eps 16.51 Price/ F.D. Tangible Book 3.27 Price/2002E Cash 14.11 ---------------------------------------------------------------------------
PRO FORMA IMPACT OF ACQUISITION -------------------------------------------------------------------------------------------------- PURCHASE TRANSACTION (a) ---------------------------------------------------------------------------- CONSIDERATION GAAP 2002 GAAP 2002 CASH SYN. REQ'D MIX (b) PRO FORMA BREAK PRICE/ EPS ACC./ EPS ACC./ FOR 0% ------------- LEVERAGE TANG. BOOK SYNERGIES EVEN INSTITUTION 2002E EPS (DIL.) (DIL.) EPS DILUTION CASH STOCK RATIO IMPACT ASSUMED PRICE(c) ----------- --------- ------ ------ ------------ ---- ----- ----- ------ ------- -------- US BANKS Wells Fargo (c) 17.88x 1.48% 3.65% ($110) 2% 98% 5.41% 1.99% 40.00% $41.03 Bank of America (c) 10.74 1.31 2.87 ($160) 1 99 6.46 (1.71) 40.00 $40.94 New U.S. Bancorp (c) 13.35 1.21 4.57 ($46) 0 100 7.01 2.46 35.00 $37.91 Zions 17.54 3.75 24.02 ($2) 3 98 6.18 5.29 30.00 $36.52 Washington Mutual (c) 11.82 0.27 5.07 $ 20 9 91 4.66 (4.68) 35.00 $35.47 Bank One 14.51 (0.01) 4.11 $ 34 0 100 7.29 (2.36) 20.00 $34.98 FleetBoston 12.00 (0.44) 2.43 $ 68 0 100 7.42 (0.71) 20.00 $33.84 Comerica 12.08 (4.60) 6.42 $133 0 100 7.53 (6.58) 30.00 $31.53 FOREIGN BANKS HSBC 17.26x 0.92% 2.56% ($104) 29% 71% 5.69% (2.20)% 20.00 $41.78 ABN AMRO 11.67 (0.59) 3.61 $ 69 0 100 2.84 (1.30) 20.00 $33.79 TD Bank 14.44 (1.47) 7.22 $ 72 1 100 3.50 (3.47) 20.00 $33.49 Royal Bank of Canada 12.07 (2.87) 4.04 $131 0 100 3.90 (4.04) 20.00 $31.59 Bank of Montreal 12.61 (4.49) 5.65 $147 0 100 4.47 (9.54) 20.00 $30.98
----------------------------- Financial Data as of 12/31/00 and pro forma for pending acquisitions. Market data as of 01/26/01. (a) Assumes each acquiror issues cash common mix to maintain target tangible common equity ratio. Goodwill is amortized over 20 years. Assumes one-time restructuring charge equal to fully-realized synergies. (b) Represents the cash/stock mixture to result in the target ongoing leverage ratio for the acquiror. (c) Includes assumed required divestitures of $787 million for BAC, $1.9 billion for WFC, $247 million for new USB, and $80 million for WM and yield spread of 1.2%. [MERRILL LYNCH LOGO] 20 25 VALUATION ANALYSIS ================================================================================ FASB Developments Regarding Accounting for Goodwill - NEW PROPOSAL ON GOODWILL BY THE FASB IN DECEMBER 2000 - Recorded goodwill will NOT be amortized against current earnings - Goodwill would be subjected to an impairment test - illustrative indicator events provided by the FASB - Carrying amount of goodwill would be adjusted through earnings for any impairment - Amortization of existing goodwill would cease - Increased focus on allocation of intangibles to specific assets - Such allocations, including core deposits intangible, will have to be amortized - LIKELY RESULTS - More flexibility than pooling-of-interests while retaining some of its greatest benefits - Increase use of cash/debt with focus on pro forma capital structure in M&A - Increased scrutiny on intangible allocation, limiting benefit of no goodwill amortization - Acquiror size/scale will afford a significant competitive advantage, high P/E not a panacea - Foreign adoption of similar accounting rules - TIMING - The final statement effective date is expected to be sometime in 3Q 2001 following the issuance of the final statement in June 2001 [MERRILL LYNCH LOGO] 21 26 VALUATION ANALYSIS ================================================================================ Theoretical Capacity for Potential Acquirers - Purchase Accounting (Proposed GAAP) Offer Price Per Share = $35.00 Aggregate Deal Value= $4,423 million ----------------------------------------------------------------- Offer Price/Market 1.35 xPrice/2001E EPS 18.23 x Price/F.D. Book 2.19 Price/2002E EPS 16.51 Price/F.D. Tangible Book 3.27 Price/2002E Cash 14.11 -----------------------------------------------------------------
PRO FORMA IMPACT OF ACQUISITION --------------------------------------------------------------------------------------------- PURCHASE TRANSACTION (A) --------------------------------------------------------------------------------------------- CONSIDERATION GAAP % INCREASE 2002 GAAP SYN. REQ'D MIX (B) PRO FORMA TANG. BREAK OVER PRICE/ EPS ACC./ FOR 0% ------------- LEVERAGE BOOK SYNERGIES EVEN CURRENT INSTITUTION 2002E EPS (DIL.) EPS DILUTION CASH STOCK RATIO IMPACT ASSUMED PRICE(C) GAAP --------- ------ ------------ ---- ----- ----- ------ ------- -------- ---- US BANKS Wells Fargo (c) 15.61x 2.58% ($246) 0% 100% 5.40% 1.69% 40.00% $52.31 27.49% Bank of America (c) 9.72 1.86 ($267) 0 100 6.45 (1.98) 40.00 $51.42 25.60 Bank One 14.09 1.74 ($74) 0 100 7.25 (3.00) 20.00 $41.66 19.10 Washington Mutual (c) 11.17 2.31 ($87) 6 94 4.66 (5.09) 35.00 $41.29 16.41 Zions 15.49 8.53 ($55) 0 100 6.15 3.50 30.00 $41.07 12.46 New U.S. Bancorp (c) 12.18 1.87 ($104) 0 100 6.94 1.30 35.00 $39.58 4.41 FleetBoston 10.94 1.02 ($52) 0 100 7.36 (1.48) 20.00 $39.15 15.69 Comerica 11.60 0.00 $33 0 100 7.35 (8.83) 30.00 $35.01 11.04 FOREIGN BANKS HSBC 17.26x 1.75% ($229) 29% 71% 5.69% (2.20)% 20.00 $60.03 43.68% TD Bank 14.44 3.17 ($51) 1 100 3.50 (3.47) 20.00 $40.43 20.72 ABN AMRO 11.67 1.45 ($55) 0 100 2.84 (1.30) 20.00 $39.66 17.37 Royal Bank of Canada 12.07 0.76 $8 0 100 3.90 (4.04) 20.00 $36.41 15.26 Bank of Montreal 12.61 0.44 $22 0 100 4.47 (9.54) 20.00 $35.62 14.98
-------------------------------------- Financial Data as of 12/31/00 and pro forma for pending acquisitions. Market data as of 01/26/01. (a) Assumes each acquiror issues cash common mix to maintain target tangible common equity ratio. Goodwill is amortized over 20 years. Assumes one-time restructuring charge equal to fully-realized synergies. (b) Represents the cash/stock mixture to result in the target ongoing leverage ratio for the acquiror. (c) Includes assumed required divestitures of $787 million for BAC, $1.9 billion for WFC, $247 million for new USB, and $80 million for WM and yield spread of 1.2%. [MERRILL LYNCH LOGO] 22 27 ================================================================================ PERCEIVED OBJECTIVES ================================================================================ 28 PERCEIVED OBJECTIVES ================================================================================ JUPITER PERSPECTIVE - Buy the remaining 55% Neptune stake at a price that is fair to Jupiter shareholders - Premium paid should reflect: - Fundamental value to Jupiter of acquiring remaining 55% stake - Competitive advantage of Jupiter's existing 45% minority interest in Neptune - Should consider relative value of "old" Neptune contributed by Jupiter - Allows Jupiter to significantly increase its U.S. market presence - Simplifies Neptune's ownership structure, which allows for potential synergies - Facilitates Neptune's acquisition strategy and simplifies the execution of Jupiter's U.S. acquisition strategy NEPTUNE PERSPECTIVE - Local/social (rather than financial) issues could be paramount - Maximize Neptune shareholder value - Premium received should reflect: - Scarcity value of attractive Bay Area franchise combined with leading position in rebounding Hawaiian economy - Depressed trading value due to lack of liquidity from Jupiter ownership overhang - Multiples being paid in comparable transactions and premiums that other third-parties could theoretically pay - Relative contribution of "old" Neptune not relevant for purpose of determining premium of remaining 55% - Exchange ratio was subject to exhaustive negotiations at that time and took into account all relevant factors [MERRILL LYNCH LOGO] 23 29 PERCEIVED OBJECTIVES ================================================================================ JUPITER PERSPECTIVE NEPTUNE PERSPECTIVE (CONT'D) - Jupiter acquired 45% of Neptune without paying a control premium. It will only be paying a control premium on the 55% it does not own, which effectively lowers the overall control premium paid - With no clear mechanism to consider competing proposals during the Standstill period compared to the Post-Standstill Period (i.e., Jupiter could just vote "no", making shareholder approval problematic), Neptune may well conclude that it is better to wait until the Post-Standstill Period if it perceives Jupiter's offer to be inadequate - Jupiter's current 45% stake cannot block an attractive proposal from a third-party; however, need to consider impact of Jupiter's stake in obtaining a 50%+ shareholder vote during the Standstill Period and Post-Standstill "topping rights" [MERRILL LYNCH LOGO] 24 30 ================================================================================ SUGGESTED TALKING POINTS ================================================================================ 31 [MERRILL LYNCH LOGO] IBK-BUSINESS SUPPORT CENTER FIERY DUPLICATING REQUEST FORM -------------------------------------------------------------------------------- CICG PRESENTATIONS -------------------------------------------------------------------------------- DEAL [ ] [ ] [ ] [ ] [ ] Banker:_______________________ DEPT [ ] [ ] [ ] [ ] [ ] [ ] Floor: _______________________ COMPANY KEY [ ] [ ] [ ] [ ] [ ] [ ] Ext: _______________________ DATE/TIME DUE: ________________________ Call When Ready: ________________________ -------------------------------------------------------------------------------- JOB DESCRIPTION : ---------------- No. of Originals No. of Copies ---------------- -------------------------------------------------------------------------------- ARE COPIES TO BE: [ ] Print Format (white background) [ ] Slide Format (colored background) -------------------------------------------------------------------------------- BINDING & FINISHING: COVER STOCK: ----------------- [ ] CUSTOM COVERS ----------------- [ ] Spiral Front Back [ ] Soft Velo [ ] [ ] Grey Flannel Card [ ] W/Window [ ] 3 Hole Drill [ ] [ ] Grey Vinyl [ ] No Window [ ] Staple [ ] [ ] Grey Card [ ] W/Logo [ ] Clip [ ] [ ] Clear Acetate [ ] No Logo -------------------------------------------------------------------------------- TABS: [ ] Custom [ ] Horizontal [ ] Vertical [ ] Alpha __________________________ [ ] Numeric ________________________ -------------------------------------------------------------------------------- SPECIAL INSTRUCTIONS: Graphics Operator: -------------------------------------------------------------------------------- FOR COPY CENTER USE ONLY -------------------------------------------------------------------------------- Received By: ______________________________________________________________ Site Rep(s): ______________________________________________________________ Team Leaders: ______________________________________________________________ -------------------------------------------------------------------------------- 25