-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, QoupIXY57gzQc+ECoQCJrX3mdI1ySgsJ8zCEQalF0WWOeYRCkTvsMqja5FhqabZA Ic5P/Ps8Xjbke1a35+wQSg== 0000950135-95-001214.txt : 19950518 0000950135-95-001214.hdr.sgml : 19950518 ACCESSION NUMBER: 0000950135-95-001214 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950516 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950517 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEET FINANCIAL GROUP INC /RI/ CENTRAL INDEX KEY: 0000050341 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 050341324 STATE OF INCORPORATION: RI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-38867 FILM NUMBER: 95540518 BUSINESS ADDRESS: STREET 1: 50 KENNEDY PLZ CITY: PROVIDENCE STATE: RI ZIP: 02903 BUSINESS PHONE: 4012785800 MAIL ADDRESS: STREET 1: 111 WESTMINISTER STREET CITY: PROVIDENCE STATE: RI ZIP: 02903 FORMER COMPANY: FORMER CONFORMED NAME: FLEET NORSTAR FINANCIAL GROUP INC DATE OF NAME CHANGE: 19920525 FORMER COMPANY: FORMER CONFORMED NAME: FLEET FINANCIAL GROUP INC DATE OF NAME CHANGE: 19880110 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL NATIONAL CORP DATE OF NAME CHANGE: 19820512 8-K 1 FLEET FINANCIAL GROUP 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 May 17, 1995 --------------------------------- (Date of earliest event reported) Fleet Financial Group, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Rhode Island 1-6366 05-0341324 - ---------------------------- ------------- ---------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) file number) Identification Number) 50 Kennedy Plaza Providence, Rhode Island 02903 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 401-278-5800 ---------------------------------------------------- (Registrant's telephone number, including area code) 2 Item 5. Other Events Pending Merger As previously reported, Fleet Financial Group, Inc. ("Fleet") and Shawmut National Corporation ("Shawmut") have entered into an Agreement and Plan of Merger dated February 20, 1995 (the "Merger Agreement") providing for the merger of Shawmut with and into Fleet (the "Merger"). Fleet hereby files Unaudited Pro Forma Condensed Combined Financial Statements and Notes thereto for the period ending March 31, 1995. For additional information regarding the Merger, see Fleet's Current Reports on Form 8-K dated February 20, 1995 and April 13, 1995. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Businesses Acquired. Not applicable. (b) Pro Forma Financial Information. Not applicable (c) Exhibits The following exhibits are filed with this Current Report, except for Exhibit 99.b, which is incorporated by reference from Shawmut's filing as indicated. 3 Exhibit Number Description - ---------------- ------------------------------------------------------------ 99.a. Unaudited Pro Forma Condensed Combined Financial Information for Fleet Financial Group and Subsidiaries and Shawmut National Corporation and Subsidiaries ("SNC") and Notes thereto. 99.b. The following unaudited financial statements of SNC and accompanying notes are incorporated by reference from SNC's quarterly report on Form 10-Q for the quarter ended March 31, 1995 (File No. 1-10102): Consolidated Balance Sheet - March 31, 1995, Consolidated Statement of Income for the three months ended March 31, 1995, Consolidated Statement of Cash Flows and Consolidated Statement of Changes in Stockholders' Equity for the three months ended March 31, 1995; Notes to Consolidated Financial Statements (to the extent applicable to the foregoing Financial Statements). (Portions of SNC's Form 10-Q not specifically incorporated by reference are not required for this Current Report and are not incorporated by reference herein.) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Fleet Financial Group, Inc. --------------------------- (Registrant) /s/ Robert C. Lamb, Jr. ------------------------ By: Robert C. Lamb, Jr. Chief Accounting Officer and Controller Date: May 17, 1995 EX-99.A 2 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL 1 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 1995, and the Unaudited Pro Forma Condensed Combined Statement of Income for the quarter ended March 31, 1995, give effect to the pending merger (the "Merger") of Shawmut National Corporation ("Shawmut") into Fleet Financial Group, Inc. ("Fleet") accounted for as a pooling of interests, the pending merger (the "Northeast Merger") of Northeast Federal Corp. ("Northeast") into Shawmut, the consummation of the merger (the "NBB Merger") of NBB Bancorp, Inc. ("NBB") into Fleet, the consummation of the merger (the "Plaza Merger") of Plaza Home Mortgage Corp. ("Plaza") into Fleet, the consummation of the acquisition (the "Barclays Acquisition") of substantially all of the assets of the Barclays Business Finance Division of Barclays Business Credit, Inc. ("Barclays") by Shawmut, and Fleet's repurchase (the "FMG Repurchase") of the publicly-held shares of Fleet's majority-owned subsidiary, Fleet Mortgage Group, Inc. ("FMG"), each of which were or will be accounted for by the purchase method of accounting, in each case as if such transactions had occurred on January 1,1995. The Unaudited Pro Forma Condensed Combined Statement of Income for the quarter ended March 31, 1994, give effect to the Merger as if the Merger had occurred on January 1, 1994, and does not take into account the effect of the Northeast Merger, the NBB Merger, the Plaza Merger, the Barclays Acquisition and the FMG Repurchase since such transactions were or will be accounted for under the purchase method of accounting. The pro forma information is based on the historical consolidated financial statements of Fleet, Shawmut, Northeast, NBB, Plaza, Barclays and FMG and their subsidiaries under the assumptions and adjustments set forth in the accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements. The pro forma condensed combined financial statements do not give effect to the anticipated cost savings in connection with the Merger, the Northeast Merger, the NBB Merger and the Plaza Merger or the effects of any required regulatory divestitures. The Unaudited Pro Forma Condensed Combined Financial Statements should be read in conjunction with the consolidated historical financial statements of Fleet and Shawmut, including the respective notes thereto. The pro forma data is presented for comparative purposes only and is not necessarily indicative of the combined financial position or results of operations in the future or of the combined financial position or results of operations which would have been realized had the acquisitions been consummated during the period or as of the dates for which the pro forma data is presented. Pro forma per share amounts for the combined Fleet and Shawmut entity are based on the Common Exchange Ratio of 0.8922 shares of Fleet Common Stock for each share of Shawmut Common Stock. In addition, the pro forma data assumes the issuance of approximately 6,165,912 shares of Fleet Common Stock in the NBB Merger, an exchange ratio of 0.415 shares of Shawmut Common Stock for each outstanding share and stock option of Northeast, calculated as set forth in the Shawmut/Northeast merger agreement, assuming for illustrative purposes only, that the average closing price of Shawmut Common Stock used to determine such exchange ratio is $27.625, the closing price of the Shawmut Common Stock on May 12, 1995. 2
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET MARCH 31, 1995 (A) FLEET & SHAWMUT SHAWMUT PRO FORMA PRO FORMA (DOLLARS IN THOUSANDS) FLEET PRO FORMA ADJUSTMENTS COMBINED ----------- ----------- ----------- ------------ ASSETS: Cash and cash equivalents $ 2,297,496 $ 1,498,130 $ - $ 3,795,626 Federal funds sold and securities purchased under agreements to resell 249,912 296,565 - 546,477 Securities available for sale, at market 10,337,213 2,207,070 (d) (153,289) (f) 12,390,994 (d) Securities held to maturity 951,834 9,716,428 (d) - 10,668,262 (d) Loans and leases 29,498,399 22,073,657 - 51,572,056 Reserve for credit losses (965,958) (570,728) - (1,536,686) Mortgages held for resale 654,976 44,181 - 699,157 Premises and equipment 687,046 349,954 - 1,037,000 Purchased mortgage servicing rights 1,049,460 39,800 - 1,089,260 Excess cost over net assets of subsidiaries acquired 473,402 479,552 - 952,954 Other intangibles 197,931 17,089 - 215,020 Other assets 2,382,327 1,413,855 155,912 (f)(g) 3,952,094 ----------- ----------- --------- ------------ Total assets $47,814,038 $37,565,553 $ 2,623 $ 85,382,214 =========== =========== ========= ============ LIABILITIES and STOCKHOLDERS' EQUITY: Deposits: Demand $ 6,056,121 $ 4,014,951 - $ 10,071,072 Regular savings, NOW, money market 14,968,632 8,823,441 - 23,792,073 Time 11,809,164 10,231,602 - 22,040,766 ----------- ----------- --------- ------------ Total deposits 32,833,917 23,069,994 - 55,903,911 ----------- ----------- --------- ------------ Federal funds purchased and securities sold under agreements to repurchase 2,915,847 7,299,551 - 10,215,398 Other short-term borrowings 3,243,395 1,723,357 - 4,966,752 Accrued expenses and other liabilities 1,277,299 510,421 361,868 (f)(g) 2,149,588 Long-term debt 3,623,176 2,397,444 - 6,020,620 ----------- ----------- --------- ------------ Total liabilities 43,893,634 35,000,767 361,868 79,256,269 ----------- ----------- --------- ------------ Stockholders' equity: Preferred stock 378,815 303,185 - (e) 682,000 Common stock 141,731 1,287 108,333 (e) 251,351 Common surplus 1,534,246 1,486,770 (234,064) (e) 2,786,952 Retained earnings 2,017,904 813,227 (217,888) (g) 2,613,243 Net unrealized gain/(loss) on securities available for sale (133,718) (37,411) (17,898) (f) (189,027)(d) Treasury stock, at cost (18,574) (2,272) 2,272 (e) (18,574) ----------- ----------- --------- ------------ Total stockholders' equity 3,920,404 2,564,786 (359,245) 6,125,945 ----------- ----------- --------- ------------ Total liabilities and stockholders' equity $47,814,038 $37,565,553 $ 2,623 $ 85,382,214 =========== =========== ========= ============
See accompanying notes to the unaudited pro forma condensed combined financial statements 3
SHAWMUT NATIONAL CORPORATION UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET MARCH 31, 1995 (A) PRO FORMA SHAWMUT (DOLLARS IN THOUSANDS) SHAWMUT NORTHEAST ADJUSTMENTS PRO FORMA ----------- ----------- ----------- ----------- ASSETS: Cash and cash equivalents $ 1,549,100 $ 37,546 $(88,516)(h) $ 1,498,130 Federal funds sold and securities purchased under agreements to resell 274,500 22,065 - 296,565 Securities available for sale, at market 2,074,880 (d) 132,190 (d) - 2,207,070 (d) Securities held to maturity 7,798,357 (d) 1,967,386 (d) (49,315)(i) 9,716,428 (d) Loans and leases 21,134,820 943,556 (4,719)(i) 22,073,657 Reserve for credit losses (559,210) (11,518) - (570,728) Mortgages held for resale 42,715 1,466 - 44,181 Premises and equipment 328,605 27,349 (6,000)(i) 349,954 Purchased mortgage servicing rights 13,124 1,676 25,000 (i) 39,800 Excess cost over net assets of subsidiaries acquired 339,837 - 139,715 (j) 479,552 Other intangibles 16,976 113 - 17,089 Other assets 1,175,832 241,933 (3,910)(i) 1,413,855 ----------- ----------- -------- ----------- Total assets $34,189,536 $ 3,363,762 $ 12,255 $37,565,553 =========== =========== ======== =========== LIABILITIES and STOCKHOLDERS' EQUITY: Deposits: Demand $ 3,988,683 $ 26,268 $ $ 4,014,951 Regular savings, NOW, money market 8,108,268 715,173 - 8,823,441 Time 8,504,607 1,730,774 (3,779)(i) 10,231,602 ----------- ----------- -------- ----------- Total deposits 20,601,558 2,472,215 (3,779) 23,069,994 ----------- ----------- -------- ----------- Federal funds purchased and securities sold under agreements to repurchase 7,299,551 - - 7,299,551 Other short-term borrowings 1,070,695 653,493 (831)(i) 1,723,357 Accrued expenses and other liabilities 435,203 49,578 25,640 (i) 510,421 Long-term debt 2,397,444 42,257 (42,257)(h)(i) 2,397,444 ----------- ----------- -------- ----------- Total liabilities 31,804,451 3,217,543 (21,227) 35,000,767 ----------- ----------- -------- ----------- Stockholders' equity: Preferred stock 303,185 4 (4)(h)(k) 303,185 Common stock 1,221 155 (89)(k) 1,287 Common surplus 1,307,135 197,278 (17,643)(h)(k) 1,486,770 Retained earnings 813,227 (53,213) 53,213 (k) 813,227 Net unrealized gain/(loss) on securities available for sale (37,411) 1,995 (1,995)(k) (37,411)(d) Treasury stock, at cost (2,272) - - (2,272) ----------- ----------- -------- ----------- Total stockholders' equity 2,385,085 146,219 33,482 2,564,786 ----------- ----------- -------- ----------- Total liabilities and stockholders' equity $34,189,536 $ 3,363,762 $ 12,255 $37,565,553 =========== =========== ======== ===========
See accompanying notes to the unaudited pro forma condensed combined financial statements 4
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATIONw UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1995 FLEET FLEET SHAWMUT PRO FORMA SHAWMUT (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) PRO FORMA PRO FORMA ADJUSTMENTS PRO FORMA COMBINED ------------ ------------ ----------- ------------ Interest and fees on loans and leases $ 693,634 $ 459,185 $ - $ 1,152,819 Interest on securities 186,364 195,676 (1,279)(f) 380,761 ------------ ------------ -------- ------------ Total interest income 879,998 654,861 (1,279) 1,533,580 Interest expense: Deposits 251,079 174,116 - 425,195 Short-term borrowings 70,145 146,733 - 216,878 Long-term debt 66,761 39,769 - 106,530 ------------ ------------ -------- ------------ Total interest expense 387,985 360,618 - 748,603 ------------ ------------ -------- ------------ Net interest income 492,013 294,243 (1,279) 784,977 Provision for credit losses 20,332 750 - 21,082 ------------ ------------ -------- ------------ Net interest income after provision for credit losses 471,681 293,493 (1,279) 763,895 ------------ ------------ -------- ------------ Mortgage banking 98,384 4,370 - 102,754 Investment services revenue 46,233 30,845 - 77,078 Service charges, fees and commissions 80,943 55,112 - 136,055 Securities available for sale gains (losses) 664 2,602 - 3,266 Other noninterest income 82,045 10,641 - 92,686 ------------ ------------ -------- ------------ Total noninterest income 308,269 103,570 - 411,839 ------------ ------------ -------- ------------ Employee compensation and benefits 251,899 128,095 - 379,994 Occupancy and equipment 78,309 41,787 - 120,096 Purchased mortgage servicing rights amortization 28,262 1,734 - 29,996 FDIC assessment 18,090 12,648 - 30,738 Marketing 14,721 6,362 - 21,083 Core deposit and goodwill amortization 20,537 6,349 - 26,886 OREO expense 3,427 2,159 - 5,586 Merger-related charges - 36,853 (36,853)(g) - Other noninterest expense 106,722 52,833 - 159,555 ------------ ------------ -------- ------------ Total noninterest expense 521,967 288,820 (36,853) 773,934 ------------ ------------ -------- ------------ Income before taxes 257,983 108,243 35,574 401,800 Applicable income taxes 103,877 41,714 14,229 159,820 ------------ ------------ -------- ------------ Net income before minority interest 154,106 66,529 21,345 241,980 Minority interest - - - - ------------ ------------ -------- ------------ Net income $ 154,106 $ 66,529 $ 21,345 $ 241,980 ============ ============ ======== ============ Net income applicable to common shares: (m) $ 151,643 $ 59,586 $ 232,574 ============ ============ ============ Weighted average common shares outstanding: (l) Primary 160,599,370 128,201,345 271,019,000 Fully diluted 160,635,463 128,201,345 271,075,083 Earnings per share: Primary $0.94 $0.46 $0.86 Fully diluted $0.94 $0.46 $0.86
See accompanying notes to the unaudited condensed combined financial statements 5
FLEET FINANCIAL GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1995 (A) FLEET PRO FORMA FLEET (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) HISTORICAL ADJUSTMENTS (B) PRO FORMA ------------- --------------- ------------ Interest and fees on loans and leases $ 681,500 $ 12,134 $ 693,634 Interest on securities 186,083 281 186,364 ------------- -------- ------------ Total interest income 867,583 12,415 879,998 Interest expense: Deposits 243,982 7,097 251,079 Short-term borrowings 69,718 427 70,145 Long-term debt 66,761 - 66,761 ------------- -------- ------------ Total interest expense 380,461 7,524 387,985 ------------- -------- ------------ Net interest income 487,122 4,891 492,013 Provision for credit losses 20,164 168 20,332 ------------- -------- ------------ Net interest income after provision for credit losses 466,958 4,723 471,681 ------------- -------- ------------ Mortgage banking 99,457 (1,073) 98,384 Investment services revenue 46,233 - 46,233 Service charges, fees and commissions 80,574 369 80,943 Securities available for sale gains (losses) 664 - 664 Other noninterest income 81,380 665 82,045 ------------- -------- ------------ Total noninterest income 308,308 (39) 308,269 ------------- -------- ------------ Employee compensation and benefits 241,164 10,735 251,899 Occupancy and equipment 74,688 3,621 78,309 Purchased mortgage servicing rights amortization 22,992 5,270 28,262 FDIC assessment 17,670 420 18,090 Marketing 14,641 80 14,721 Core deposit and goodwill amortization 17,609 2,928 20,537 OREO expense 3,261 166 3,427 Merger-related charges - - - Other noninterest expense 105,654 1,068 106,722 ------------- -------- ------------ Total noninterest expense 497,679 24,288 521,967 ------------- -------- ------------ Income before taxes 277,587 (19,604) 257,983 Applicable income taxes 111,434 (7,557) 103,877 ------------- -------- ------------ Net income before minority interest 166,153 (12,047) 154,106 Minority interest 2,014 (2,014) - ------------- -------- ------------ Net income $ 164,139 $(10,033) $ 154,106 ============= ======== ============ Net income applicable to common shares: (m) $ $161,676 $ 151,643 ============= ============ Weighted average common shares outstanding: (l) Primary 158,818,106 160,599,370 Fully diluted 158,854,199 160,635,463 Earnings per share: Primary $1.02 $0.94 Fully diluted $1.02 $0.94
See accompanying notes to the unaudited condensed combined financial statements 6 SHAWMUT NATIONAL CORPORATION UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1995 (A)
SHAWMUT SHAWMUT BARCLAYS BARCLAYS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) HISTORICAL PRO FORMA (C) PRO FORMA ------------ ------------- ------------ Interest and fees on loans and leases $ 421,960 $ 17,899 $ 439,859 Interest on securities 159,463 - 159,463 ------------ ----------- ------------ Total interest income 581,423 17,899 599,322 Interest expense: Deposits 146,547 - 146,547 Short-term borrowings 124,770 11,164 135,934 Long-term debt 39,769 - 39,769 ------------ ----------- ------------ Total interest expense 311,086 11,164 322,250 ------------ ----------- ------------ Net interest income 270,337 6,735 277,072 Provision for credit losses - - - ------------ ----------- ------------ Net interest income after provision for credit losses 270,337 6,735 277,072 ------------ ----------- ------------ Mortgage banking 3,156 - 3,156 Investment services revenue 30,845 - 30,845 Service charges, fees and commissions 51,580 2,410 53,990 Securities available for sale gains (losses) (101) - (101) Other noninterest income 10,629 - 10,629 ------------ ----------- ------------ Total noninterest income 96,109 2,410 98,519 ------------ ----------- ------------ Employee compensation and benefits 119,624 3,358 122,982 Occupancy and equipment 38,599 - 38,599 Purchased mortgage servicing rights amortization 846 - 846 FDIC assessment 10,961 - 10,961 Marketing 6,011 - 6,011 Core deposit and goodwill amortization 4,007 - 4,007 OREO expense 1,579 - 1,579 Merger-related charges 36,853 - 36,853 Other noninterest expense 47,933 1,571 49,504 ------------ ----------- ------------ Total noninterest expense 266,413 4,929 271,342 ------------ ----------- ------------ Income before taxes 100,033 4,216 104,249 Applicable income taxes 37,412 1,686 39,098 ------------ ----------- ------------ Net income before minority interest 62,621 2,530 65,151 Minority interest - - - ------------ ----------- ------------ Net income $ 62,621 $ 2,530 $ 65,151 ============ =========== ============ Net income applicable to common shares: (m) $ 56,652 ============ Weighted average common shares outstanding: (l) Primary 121,637,585 Fully diluted 121,637,585 Earnings per share: Primary $0.47 Fully diluted $0.47
See accompanying notes to the unaudited condensed combined financial statements. 7
NORTHEAST PRO FORMA SHAWMUT (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NORTHEAST ADJUSTMENTS PRO FORMA ----------- ---------- ----------- Interest and fees on loans and leases $ 19,247 $ 79 (i) $ 459,185 Interest on securities 34,158 2,055 (i) 195,676 ----------- ---------- ----------- Total interest income 53,405 2,134 654,861 Interest expense: Deposits 27,097 472 (i) 174,116 Short-term borrowings 10,730 69 (i) 146,733 Long-term debt 1,020 (1,020)(h) 39,769 ----------- ---------- ----------- Total interest expense 38,847 (479) 360,618 ----------- ---------- ----------- Net interest income 14,558 2,613 294,243 Provision for credit losses 750 - 750 ----------- ---------- ----------- Net interest income after provision for credit losses 13,808 2,613 293,493 ----------- ---------- ----------- Mortgage banking 1,214 - 4,370 Investment services revenue - - 30,845 Service charges, fees and commissions 1,122 - 55,112 Securities available for sale gains (losses) 2,703 - 2,602 Other noninterest income 12 - 10,641 ----------- ---------- ----------- Total noninterest income 5,051 - 103,570 ----------- ---------- ----------- Employee compensation and benefits 5,113 - 128,095 Occupancy and equipment 3,338 (150)(i) 41,787 Purchased mortgage servicing rights amortization 107 781 (i) 1,734 FDIC assessment 1,687 - 12,648 Marketing 351 - 6,362 Core deposit and goodwill amortization 14 2,328 (j) 6,349 OREO expense 580 - 2,159 Merger-related charges - - 36,853 Other noninterest expense 3,329 - 52,833 ----------- ---------- ----------- Total noninterest expense 14,519 2,959 288,820 ----------- ---------- ----------- Income before taxes 4,340 (346) 108,243 Applicable income taxes 1,823 793 41,714 ----------- ---------- ----------- Net income before minority interest 2,517 (1,139) 66,529 Minority interest - - - ----------- ---------- ----------- Net income $ 2,517 $ (1,139) $ 66,529 =========== ========== =========== Net income applicable to common shares: (m) $ 59,586 =========== Weighted average common shares outstanding: (l) Primary 128,201,345 Fully diluted 128,201,345 Earnings per share: Primary $0.46 Fully diluted $0.46
See accompanying notes to the unaudited condensed combined financial statements 8 FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1994
FLEET SHAWMUT PRO FORMA PRO FORMA (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) FLEET SHAWMUT ADJUSTMENTS COMBINED ------------ ------------ ----------- ------------ Interest and fees on loans and leases $ 561,021 $ 305,759 - $ 866,780 Interest on securities 223,482 148,595 - 372,077 ------------ ------------ ----------- ------------ Total interest income 784,503 454,354 - 1,238,857 Interest expense: Deposits 161,193 85,668 - 246,861 Short-term borrowings 64,948 80,079 - 145,027 Long-term debt 54,615 16,112 - 70,727 ------------ ------------ ----------- ------------ Total interest expense 280,756 181,859 - 462,615 ------------ ------------ ----------- ------------ Net interest income 503,747 272,495 - 776,242 Provision for credit losses 22,386 3,000 - 25,386 ------------ ------------ ----------- ------------ Net interest income after provision for credit losses 481,361 269,495 - 750,856 ------------ ------------ ----------- ------------ Mortgage banking 100,359 4,127 - 104,486 Investment services revenue 44,466 29,417 - 73,883 Service charges, fees and commissions 70,159 48,473 - 118,632 Securities available for sale gains (losses) 166 (768) - (602) Other noninterest income 79,400 7,475 - 86,875 ------------ ------------ ----------- ------------ Total noninterest income 294,550 88,724 - 383,274 ------------ ------------ ----------- ------------ Employee compensation and benefits 258,110 125,791 - 383,901 Occupancy and equipment 79,269 39,718 - 118,987 Purchased mortgage servicing rights amortization 30,955 1,268 - 32,223 FDIC assessment 18,092 11,771 - 29,863 Marketing 12,854 4,308 - 17,162 Core deposit and goodwill amortization 13,442 1,699 - 15,141 OREO expense 7,016 5,730 - 12,746 Restructuring charges 25,000 - - 25,000 Other noninterest expense 104,767 51,545 - 156,312 ------------ ------------ ----------- ------------ Total noninterest expense 549,505 241,830 - 791,335 ------------ ------------ ----------- ------------ Income before taxes 226,406 116,389 - 342,795 Applicable income taxes 88,349 39,115 - 127,464 ------------ ------------ ----------- ------------ Net income before minority interest 138,057 77,274 - 215,331 Minority interest 2,495 - - 2,495 ------------ ------------ ----------- ------------ Net income $ 135,562 $ 77,274 - $ 212,836 ============ ============ =========== ============ Net income applicable to common shares: (m) $ 127,830 $ 73,415 $ 201,245 ============ ============ ============ Weighted average common shares outstanding: (l) Primary 161,163,854 117,818,951 267,555,327 Fully diluted 161,241,430 117,818,951 267,654,528 Earnings per share: Primary $0.79 $0.62 $0.75 Fully diluted $0.79 $0.62 $0.75
See accompanying notes to the unaudited pro forma condensed combined financial statements 9 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (a) The pro forma information presented is not necessarily indicative of the results of operations or the combined financial position that would have resulted had the Merger, the Northeast Merger, the NBB Merger, the Plaza Merger, the Barclays Acquisition and the FMG Repurchase been consummated at the beginning of the periods indicated, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. The NBB Merger was consummated on January 27, 1995, the Barclays Acquisition was consummated on January 31, 1995, the Plaza Merger was consummated on March 3, 1995 and the FMG Repurchase was consummated on February 28, 1995 with the follow-up merger consummated on April 30, 1995. It is anticipated that the Merger will be consummated in the fourth quarter of 1995 and the Northeast Merger will be consummated in the second quarter of 1995. Under generally accepted accounting principles ("GAAP"), the assets and liabilities of Shawmut will be combined with those of Fleet at book value. In addition, the statements of income of Shawmut will be combined with the statements of income of Fleet as of the earliest period presented. Certain reclassifications have been included in the Unaudited Pro Forma Condensed Combined Balance Sheet and Unaudited Pro Forma Condensed Combined Statements of Income to conform to Fleet's presentation. Certain transactions conducted in the ordinary course of business between Fleet, Shawmut, Northeast, NBB, Barclays, Plaza and FMG are immaterial and, accordingly, have not been eliminated. The pro forma condensed combined financial statements do not give effect to the anticipated cost savings in connection with the Merger and the Northeast Merger or the effects of any required regulatory divestitures. While no assurance can be given, Fleet and Shawmut expect to achieve cost savings of approximately $400 million (pre-tax) within fifteen months following the Merger. Such cost savings are expected to be realized primarily through reductions in staff, elimination, consolidation or divestiture of certain branches and the consolidation of certain offices, data processing and other redundant back-office operations and staff functions. Cost reductions and branch consolidations will come from both companies and will be spread throughout the geographic region. Cost savings are also expected to be achieved in connection with the Northeast Merger, the NBB Merger and the Plaza Merger. These cost savings are expected to be approximately $25 million, $20 million and $15 million, respectively, and are expected to be achieved within the first twelve months after the consummation of these respective mergers. The extent to which cost savings will be achieved is dependent upon various factors beyond the control of Fleet and Shawmut, including the regulatory environment, economic conditions, unanticipated changes in business conditions, inflation and the level of Federal Deposit Insurance Corporation assessments. Therefore, no assurances can be given with respect to the ultimate level of cost savings to be realized, or that such savings will be realized in the time-frame currently anticipated. In addition, certain regulatory agencies may seek the divestiture of certain assets and liabilities of the combined company following the Merger. Such divestitures may affect certain pro forma combined financial statement amounts, merger and restructuring costs and cost savings. All dollar amounts included in these Notes to Unaudited Pro Forma Condensed Combined Financial Statements are in thousands unless otherwise indicated. (b) Pro forma adjustments reflect the impact of the NBB Merger, the Plaza Merger and the FMG Repurchase which were consummated on January 27, 1995, March 3, 1995, and February 28, 1995, respectively, as if such transactions had been consummated on January 1, 1995. (c) Pro forma adjustments reflect the impact of the Barclays Acquisition, which was consummated on January 31, 1995, as if it had been consummated on January 1, 1995. (d) Fleet is currently reviewing the investment securities portfolios of Shawmut and Northeast to determine the classification of such securities as either available for sale or held to maturity in connection with Fleet's existing interest-rate risk position. As a result of this review, certain reclassifications of Shawmut and Northeast investment securities may result. No adjustments have been made to either the available for sale or the held to maturity portfolios in the accompanying pro forma combined balance sheet to reflect any such reclassification as management has not made a final determination with respect to such matters. Any such 10 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS reclassification will be accounted for in accordance with Financial Accounting Standards Board Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires that securities transferred from held to maturity to available for sale be transferred at fair value with any unrealized gain or loss, net of taxes, at the date of transfer recognized as a separate component of stockholders' equity. At March 31, 1995, securities held to maturity at Shawmut and Northeast had unrealized losses of $248,544 and $49,315, respectively. (e) Pro forma adjustments to common shares and common surplus at March 31, 1995, reflect the Merger accounted for as a pooling of interests, through: (a) the exchange of 109,619,746 shares of Fleet Common Stock (using the Common Exchange Ratio of 0.8922) for the 122,864,544 outstanding shares of Shawmut Common Stock at March 31, 1995 (which includes the 6,563,760 shares of Shawmut Common Stock issued to acquire all the outstanding shares of Northeast common stock and stock options and excludes the 5,811,900 shares of Shawmut Common Stock held by Fleet as of such date, which are assumed to be retired for combining purposes), and (b) the exchange of shares of Fleet New Preferred Stock for all shares of Shawmut Preferred on a share-for-share basis. (f) Pro forma adjustments to securities available for sale at March 31, 1995, and to dividend income on securities for the quarter ended March 31, 1995, reflect the elimination of 5,811,900 shares of Shawmut Common Stock held by Fleet at March 31, 1995, and the corresponding dividend income recorded on such shares. Pro forma adjustments to other assets and accrued expenses and other liabilities at March 31, 1995, include the elimination of Fleet's dividend receivable related to such shares and the elimination of Shawmut's corresponding dividend payable. The Unaudited Pro Forma Condensed Combined Balance Sheet also eliminates the after-tax unrealized gain on these securities recorded in equity and the related deferred tax expense. (g) A liability of $400,000 ($363,147 net of the $36,853 charge taken by Shawmut in the first quarter of 1995) has been recorded in the Unaudited Pro Forma Condensed Combined Balance Sheet to reflect management's best estimate of merger and restructuring related charges in connection with the Merger. This liability resulted in a $240,000 after-tax charge ($217,888 net of the after-tax impact of the charge recorded by Shawmut in the first quarter of 1995) to retained earnings in the Unaudited Pro Forma Condensed Combined Balance Sheet. It is anticipated that substantially all of these charges will be paid during the first 15 months subsequent to the Merger. During the first quarter of 1995 Shawmut recognized $36,853 of this charge due to the settlement of certain of Shawmut's retirement benefits as a result of the execution of Shawmut's agreement to merge with Fleet. This charge has been eliminated from the pro forma income statement due to the nonrecurring nature of the charge. The following table provides details of the estimated charges by type:
Type of Cost ESTIMATED COSTS ------------ ---------------------- (DOLLARS IN THOUSANDS) Personnel ................ $255,000 Facilities and equipment . 68,000 Branch related ........... 37,000 Other merger expenses .... 40,000 -------- Total .................... $400,000 ========
Personnel related costs consist primarily of charges related to employee severance, termination of certain employee benefits plans and employee assistance costs for separated employees. Facilities and equipment charges consist of lease termination costs and other facilities related exit costs resulting from consolidation of duplicate headquarters and operational facilities, and computer equipment and software write-offs due to duplication or incompatibility. Branch related costs are primarily related to the cost of exiting branches anticipated to be closed, including lease terminations and equipment write-offs. The effect of the proposed charge has been reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 1995; however, since the proposed charge is nonrecurring, it has not been reflected in the pro forma combined statements of income. 11 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (h) The pro forma adjustments to cash include the redemption of the Northeast $8.50 Cumulative Preferred Stock, Series B based on the redemption value of such stock at March 31, 1995 ($43,790), and the redemption of all of the Northeast Uncertificated Debentures ("the Northeast Debentures") based on the face value of the Northeast Debentures at March 31, 1995 ($44,726), as if such redemptions had occurred on January 1, 1995, and a related adjustment to eliminate the interest expense recorded on such debentures ($1,020) for the quarter ended March 31, 1995. (i) These pro forma adjustments reflect the purchase accounting adjustments related to the assets acquired and liabilities assumed for the Northeast Merger. These adjustments are based on the best available information and may be different from the actual adjustments to reflect the fair value of the net assets purchased as of the date of the acquisition. (j) Pro forma adjustment reflects adjustment for the excess cost over net assets acquired for the Northeast Merger calculated as follows: Purchase price ................................ $181,701 Historical net tangible assets acquired ..... 102,429 Estimated fair value adjustments ............ 60,443 -------- Estimated fair value net assets ............... 41,986 -------- Excess cost over net assets of subsidiaries acquired ..................... $139,715 ========
Adjustments have been made to the Unaudited Pro Forma Condensed Combined Balance Sheet to reflect the recording of the intangible as calculated above in accordance with the purchase method of accounting. Reflected in the 1995 Unaudited Pro Forma Condensed Combined Income Statement is an adjustment to reflect the amortization of Northeast's excess cost over net assets of subsidiaries acquired ("goodwill") over 15 years. (k) The pro forma stockholders' equity accounts of Northeast have been adjusted in the Unaudited Pro Forma Condensed Combined Balance Sheet to reflect the elimination of the stockholders' equity accounts in accordance with the purchase method of accounting. The Shawmut Pro Forma adjustments reflect the issuance of 6,563,760 shares of Shawmut Common Stock in exchange for all of the outstanding shares of Northeast common stock and stock options (assuming that the exchange ratio in connection with the Northeast Merger is 0.415 which is based on the closing sales price for Shawmut Common Stock on the Stock Exchange on May 12, 1995). (l) The Fleet Pro Forma weighted average shares outstanding for the quarter ended March 31, 1995, reflect Fleet's historical weighted average shares outstanding plus the one month effect of the issuance of 6,165,912 shares of Fleet Common Stock in connection with the NBB Merger as if such Merger occurred on January 1, 1995. The Shawmut Pro Forma weighted average shares outstanding for the quarter ended March 31, 1995 reflect Shawmut's historical weighted average shares outstanding plus the issuance of 6,563,760 shares of Shawmut Common Stock in connection with the Northeast Merger as if such Merger occurred on January 1, 1995. The Fleet/Shawmut Pro Forma weighted average shares outstanding for the quarter ended March 31, 1995 reflect the Fleet Pro Forma weighted average shares plus the converted Shawmut Pro Forma weighted average shares outstanding (after adjustment to eliminate the 5,811,900 shares of Shawmut Common Stock owned by Fleet, which are assumed to be retired for combining purposes). Each share of Shawmut Common Stock is converted into 0.8922 shares of Fleet Common Stock. (m) The Fleet/Shawmut Pro Forma net income applicable to common shares reflects the sum of the Fleet Pro Forma net income applicable per common share and the Shawmut Pro Forma net income applicable per common shares adjusted for any Fleet/Shawmut Pro Forma adjustments. -----END PRIVACY-ENHANCED MESSAGE-----