EX-99.2 5 a81913a1exv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 BANCWEST CORPORATION AND UNITED CALIFORNIA BANK PRO FORMA COMBINED STATEMENT OF INCOME (UNAUDITED) The following unaudited pro forma combined statement of income was prepared in connection with BancWest Corporation's ("BancWest") acquisition of United California Bank ("UCB"). BancWest, a wholly-owned subsidiary of BNP Paribas, completed its acquisition of all outstanding stock of UCB from UFJ Bank Ltd. of Japan on March 15, 2002. On this date, UCB had total assets of $10.1 billion, net loans of $8.5 billion, total deposits of $8.3 billion and a total of 115 branches. The preceding amounts do not include final purchase price accounting adjustments. The acquisition was accounted for as a purchase and the purchase price of approximately $2.4 billion was paid in cash. BNP Paribas funded BancWest's acquisition of UCB by providing $1.6 billion of additional capital to BancWest and by lending it $800 million. UCB was merged into Bank of the West, a subsidiary of BancWest Corporation, on April 1, 2002. Branches of UCB are expected to be fully integrated into the Bank of the West network system by late 2002. The unaudited pro forma combined statement of income is based on the consolidated statements of income (excluding notes) of BancWest and UCB for the year ended December 31, 2001. The pro forma adjustments to income and expense are the result of the pro forma amounts that assume a January 1, 2001 acquisition date. The statement of income does not give effect to the anticipated cost savings, revenue synergies or the disposition of certain assets. In order to attain desired cost savings in overlapping markets, selective branch consolidations are planned. The finalization of estimates pertaining to the assets and liabilities of UCB may affect the allocation of the purchase price, the actual amount of goodwill and consequently, future net income. However, any such finalization of estimates is not expected to have a significant impact on the ultimate amount of goodwill. The adjustments already included in the unaudited pro forma combined statement of income are subject to change as additional information becomes available. Accordingly, the final combined amounts will differ from those set forth in the unaudited pro forma combined statement of income. The unaudited pro forma combined statement of income and the accompanying notes should be read in conjunction with and are qualified in their entirety by the consolidated historical financial statements of BancWest in its Annual Report on Form 10-K for the year ended December 31, 2001 and the quarterly report on Form 10-Q for the quarter ended March 31, 2002, which are incorporated herein by reference. The unaudited pro forma combined statement of income and the accompanying notes should also be read in conjunction with and are qualified in their entirety by the consolidated historical financial statements of UCB, which are included as an exhibit to this Form 8-K/A. The pro forma data are presented for comparative purposes only and are not necessarily indicative of the combined results of operations in the future. The pro forma data are also not necessarily indicative of the results of operations which would have been realized had the acquisition been consummated during the period for which the pro forma statement of income is presented. In addition, this Form 8-K/A includes forward-looking statements that involve inherent risks and uncertainties. BancWest cautions readers that a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include fluctuations in interest rates, inflation, government regulations, the progress of integrating UCB with Bank of the West, economic conditions and competition in the geographic and business areas where BancWest conducts its operations, and other factors discussed in this document or in BancWest's other filings with the SEC. BancWest's forward-looking statements are based on management's current views about future events. Those statements speak only as of the date on which they are made. We do not intend to update forward-looking statements, and, except as required by law, we disclaim any obligation or undertaking to update or revise any such statements to reflect any change in our expectations or any change in events, conditions, circumstances or assumptions on which forward-looking statements are based. BANCWEST AND UNITED CALIFORNIA BANK PRO FORMA STATEMENT OF INCOME (Unaudited) YEAR ENDED DECEMBER 31, 2001
United Pro Forma Pro Forma (in thousands) BancWest California Bank Combined Adjustments Combined -------------- ----------- --------------- ----------- ----------- ----------- INTEREST INCOME Loans $ 1,020,585 $ 685,862 $ 1,706,447 $ -- $ 1,706,447 Lease financing 147,865 835 148,700 -- 148,700 Investment securities: Taxable 136,185 38,874 175,059 (5,368) 169,691 Exempt from Federal income taxes 452 578 1,030 -- 1,030 Trading securities -- 1,747 1,747 -- 1,747 Other 18,562 7,908 26,470 -- 26,470 ----------- ----------- ----------- ----------- ----------- Total interest income 1,323,649 735,804 2,059,453 (5,368) 2,054,085 ----------- ----------- ----------- ----------- ----------- INTEREST EXPENSE Deposits 393,263 225,393 618,656 (6,193) 612,463 Short-term borrowings 34,956 25,673 60,629 -- 60,629 Long-term debt 78,916 8,789 87,705 54,320 142,025 ----------- ----------- ----------- ----------- ----------- Total interest expense 507,135 259,855 766,990 48,127 815,117 ----------- ----------- ----------- ----------- ----------- Net interest income 816,514 475,949 1,292,463 (53,495) 1,238,968 Provision for loan losses 103,050 54,544 157,594 -- 157,594 ----------- ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 713,464 421,405 1,134,869 (53,495) 1,081,374 ----------- ----------- ----------- ----------- ----------- NONINTEREST INCOME Service charges on deposit accounts 89,175 42,016 131,191 -- 131,191 Trust and investment services 32,330 19,755 52,085 -- 52,085 Other service charges and fees 78,787 11,604 90,391 -- 90,391 Securities gains, net 71,797 30,117 101,914 -- 101,914 Other 36,309 27,904 64,213 -- 64,213 ----------- ----------- ----------- ----------- ----------- Total noninterest income 308,398 131,396 439,794 -- 439,794 ----------- ----------- ----------- ----------- ----------- NONINTEREST EXPENSE Salaries and wages 207,054 173,810 380,864 -- 380,864 Employee benefits 72,442 30,013 102,455 -- 102,455 Occupancy 66,233 34,562 100,795 725 101,520 Outside services 47,658 20,320 67,978 -- 67,978 Intangible amortization 43,618 -- 43,618 12,444 56,062 Equipment 30,664 30,884 61,548 -- 61,548 Restructuring and integration costs 3,935 32,093 36,028 -- 36,028 Other 124,142 58,257 182,399 -- 182,399 ----------- ----------- ----------- ----------- ----------- Total noninterest expense 595,746 379,939 975,685 13,169 988,854 ----------- ----------- ----------- ----------- ----------- Income before income taxes 426,116 172,862 598,978 (66,664) 532,314 Provision for income taxes 171,312 57,961 229,273 (26,999) 202,274 ----------- ----------- ----------- ----------- ----------- NET INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE $ 254,804 $ 114,901 $ 369,705 $ (39,665) $ 330,040 ----------- ----------- ----------- ----------- ----------- Cumulative effect of change in accounting principle -- 6,304 6,304 -- 6,304 ----------- ----------- ----------- ----------- ----------- NET INCOME $ 254,804 $ 121,205 $ 376,009 $ (39,665) $ 336,344 ----------- ----------- ----------- ----------- -----------
NOTE A: BASIS OF PRESENTATION The pro forma combined statement of income combines the historical consolidated statements of income of BancWest and UCB as if BancWest's acquisition of UCB had become effective on January 1, 2001. Certain amounts in the historical financial statements of UCB have been reclassified in the unaudited pro forma combined statement of income to conform to BancWest's historical financial statements. The acquisition was accounted for as a purchase, in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations. The assets and liabilities of UCB were adjusted to their estimated fair value and combined with the recorded book values of the assets and liabilities of BancWest. Certain transactions conducted in the ordinary course of business between BancWest and UCB have not been eliminated. For the purpose of the combined pro forma statement of income, estimates of the fair value of UCB's assets and liabilities and their expected useful lives as of March 15, 2002 have been used. The impact upon income from amortization of the fair value adjustments is, therefore, also an estimate and subject to update as additional information becomes available. UCB was merged into Bank of the West, a subsidiary of BancWest Corporation, on April 1, 2002. In order to obtain desired cost savings, certain branch and operational consolidations are planned. The impact these consolidations or any revenue synergies may have on future earnings of BancWest has not been incorporated into the pro forma combined statement of income. NOTE B: PURCHASE PRICE The purchase price of approximately $2.4 billion was paid in cash. BNP Paribas funded BancWest's acquisition of UCB by providing $1.6 billion of additional capital to BancWest and by lending it $800 million. The following table provides an allocation of the purchase price:
(dollars in thousands) Total purchase price $2,400,000 Equity of UCB prior to the purchase 1,083,000 ---------- Excess of purchase price over the carrying value of net assets acquired 1,317,000 ---------- Purchase accounting adjustments related to assets and liabilities acquired: Sublease loss reserve 32,874 Premise and equipment (6,421) Severance and employee relocation liability 38,018 New core deposit intangible (124,443) Other assets 11,406 Deposits 8,047 Deferred costs on pension plan 29,783 Deferred tax liability 2,323 Other liabilities 10,000 ---------- Goodwill resulting from purchase by BancWest $1,318,587 ==========
NOTE C: RESTRUCTURING AND INTEGRATION COSTS EXCLUDED FROM PRO FORMA COMBINED INCOME STATEMENT BancWest estimates it will incur expenses associated with exiting certain branches, operational centers and technology platforms of pre-merged Bank of the West, as well as certain other conversion and restructuring expenses, totaling approximately $15 million. These costs have not been included in the combined pro forma income statement as they are not ongoing costs of BancWest. Approximately $6 million of these costs were incurred during the first quarter of 2002. Exit costs associated with UCB were considered as part of the purchase accounting for the acquisition and are described in Form 10-Q for the first quarter of 2002. BancWest has established a severance reserve of approximately $40.5 million, to cover approximately 600 employees throughout the organization whose positions will be eliminated as a result of the acquisition. Of this amount, $3.6 million pertains to the pre-merged Bank of the West employees and were included as part of the $6 million expensed in the first quarter of 2002. The remaining $36.9 million pertains to UCB employees and is included in the purchase accounting for the acquisition. These amounts are estimates and subject to change as more information becomes available. NOTE D: RESTRUCTURING AND INTEGRATION COSTS INCLUDED IN THE PRO FORMA COMBINED INCOME STATEMENT The restructuring and integration costs of approximately $4 million included in the pro forma combined statement of income for BancWest relate to the acquisition (in the first quarter of 2001) of 30 branches in Nevada and New Mexico divested by Wells Fargo & Company in connection with its merger with First Security Corporation. The restructuring and integration costs of approximately $32 million included in the pro forma combined statement of income for UCB relate to the merger of UCB with Tokai Bank, which closed in the third quarter of 2001. These separate transactions, and the restructuring and integration costs reflected, are unrelated to BancWest's acquisition of UCB. NOTE E: INTEREST INCOME -- SECURITIES UCB's portfolio of available for sale securities was assigned a cost basis equal to that of its fair value as of March 15, 2002. The resulting fair value premium, which is primarily due to changes in interest rates, is being amortized to interest income over the expected duration of the securities, estimated to be 30 months. NOTE F: INTEREST EXPENSE -- DEPOSITS UCB's deposits were recorded at their estimated fair values on March 15, 2002. The resulting fair value premium, primarily due to changes in interest rates, is being amortized to interest expense over the remaining maturities of the associated deposits, not exceeding three years. NOTE G: INTEREST EXPENSE -- LONG-TERM DEBT The acquisition was accounted for as a purchase and the purchase price of approximately $2.4 billion was paid in cash. BNP Paribas funded BancWest's acquisition of UCB by providing $1.6 billion of additional capital to BancWest and by lending it $800 million. As of the date of this filing, BancWest and BNP Paribas have not finalized the terms of the $800 million loan as a long-term financing arrangement and are relying on 30 day bridge financing, currently at a rate of 2.09%. It is expected that a long-term financing agreement will be reached within the next 60 days. For the purpose of the pro forma combined statement of income, we have assumed that the long-term financing loan agreement will bear a rate of 1.65% over current 10 year Treasuries, or approximately 6.8%. This is similar in basis and spread to earlier financing obtained by BancWest from BNP Paribas. NOTE H: NONINTEREST EXPENSE -- OCCUPANCY Premises and buildings owned by UCB were recorded at their estimated fair values on March 15, 2002. The resulting fair value premium is being amortized to occupancy expense over the remaining life of the associated property, not exceeding 30 years. NOTE I: NONINTEREST EXPENSE -- INTANGIBLE AMORTIZATION Adjustments have been made to reflect the recording of intangibles. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill totaling $1.3 billion resulting from BancWest's acquisition of UCB will not be expensed over a set period of time, but will be tested for impairment on a regular (annual) basis. In management's opinion, goodwill relating to the acquisition is presently not impaired. The pro forma combined statement of income, therefore, includes no provision for any such goodwill impairment. Identifiable intangible assets, namely core deposit intangibles of $124.4 million, are being amortized over their estimated period of benefit (not exceeding 10 years) on a straight-line basis. The 12-month total included in the pro forma adjustment is $12.4 million. NOTE J: PURCHASE ACCOUNTING ADJUSTMENTS AND LONG-TERM INTEREST EXPENSE -- FIVE YEAR ESTIMATES Purchase accounting adjustments were made to reflect the recording of intangibles, including goodwill and core deposit intangibles, and reflect the fair value of UCB's assets and liabilities. The incremental effect on net income of the purchase accounting adjustments and the additional interest expense assumed in completing the purchase is estimated to be a net after-tax expense of approximately $39.7 million for the first 12-month period subsequent to the acquisition, approximately $40.9 million for the second 12-month period, approximately $40.1 million for the third 12-month period, approximately $40.2 million for the fourth 12-month period and approximately $40.2 million for the fifth 12-month period.