<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8K
CURRENT REPORT
Current Report Pursuant
to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: December 12, 1997
Date of earliest event reported: December 7, 1997
FIRST AMERICAN CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE
(State or other jurisdiction of incorporation)
0-6198 62-0799975
(Commission File Number) (I.R.S. Employer
Identification No.)
FIRST AMERICAN CENTER, NASHVILLE, TENNESSEE 37237-0700
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (615) 748-2000
<PAGE> 2
Item 5. Other Event
On December 7, 1997, First American Corporation, a corporation
organized and existing under the laws of the State of Tennessee
("FATN"), and Deposit Guaranty Corp., a corporation organized and
existing under the laws of the State of Mississippi ("DEP"), and each
registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended, entered into an Agreement and Plan of Merger
(the "Merger Agreement"), pursuant to which DEP will be merged with
and into FATN (the "Merger"). The Board of Directors of both FATN and
DEP approved the Merger Agreement and the transactions contemplated
thereby at their respective meetings held on December 7, 1997.
Under the terms of the agreement, DEP shareholders will receive,
in a tax-free exchange, 1.17 shares of FATN common stock for each
share of DEP common stock. The value of the transaction is $2.7
billion and represents an exchange value of $64.06 for each common
share of DEP, based on FATN's closing share price of $54.75 on Friday,
December 5, 1997. The merger will be accounted for as a
pooling-of-interests.
On December 8, 1997, FATN and DEP issued a joint press release
and gave a joint investor presentation with respect to the Merger. The
press release and written investor presentation are included as
Exhibits 99.1 and 99.2 hereto, and are hereby incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The following exhibits are filed as part of this report:
<TABLE>
<CAPTION>
Exhibit No. Description
- ---------- -----------
<S> <C>
99.1 Press Release dated December 8, 1997
99.2 Investor Presentation dated December 8, 1997
</TABLE>
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.
FIRST AMERICAN CORPORATION
(Registrant)
Date: December 12, 1997 /s/ Mary Neil Price
-------------------
Name: Mary Neil Price
Title: Executive Vice President, General
Counsel and Corporate Secretary
<PAGE> 3
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No: Description
- ----------- -----------
<S> <C>
99.1 Press Release dated December 8, 1997
99.2 Investor Presentation dated December 8, 1997
</TABLE>
<PAGE> 1
EXHIBIT 99.1
[FIRST AMERICAN CORPORATION LOGO]
NEWS RELEASE
<TABLE>
<S> <C> <C> <C>
Financial Contact: First American: Carroll Kimball, Telephone: 615 / 748-2455, Fax: 615 / 748-2755
Deposit Guaranty: Joe Powell, Telephone: 601 / 354-8018, Fax: 601 / 354-8192
Media Contact: First American: Vicki Kessler, Telephone: 615 / 748-2912, Fax: 615 / 748-2535
Deposit Guaranty: Pam Kloha, Telephone: 601 / 968-4759, Fax: 601 / 368-4644
</TABLE>
For Immediate Release
FIRST AMERICAN AND DEPOSIT GUARANTY ANNOUNCE MERGER AGREEMENT
NASHVILLE, TENN., Dec. 8, 1997 - First American Corporation (NASDAQ:
FATN) and Deposit Guaranty Corp. (NYSE: DEP) today announced the signing of a
definitive agreement under which Deposit Guaranty will be merged into First
American.
ACQUISITION OVERVIEW:
Under the terms of the agreement, Deposit Guaranty shareholders will
receive, in a tax-free exchange, 1.17 shares of First American common stock for
each share of Deposit Guaranty common stock. The value of the transaction is
$2.7 billion and represents an exchange value of $64.06 for each common share of
Deposit Guaranty stock, based on First American's closing share price of $54.75
on Friday, Dec. 5, 1997. The merger will be accounted for as a
pooling-of-interests and is expected to be neutral to earnings in 1998 and 6
percent accretive to First American's consensus earnings estimate in 1999.
Dennis C. Bottorff, chairman and CEO of First American, said, "First
American has set strategic goals to become one of the highest performing, most
highly valued financial services institutions in the industry. We believe this
combination with Deposit Guaranty will enhance our ability to attain those
goals."
"We anticipate the combined company's return on equity will increase
250 - 300 basis points from 16.8 percent in the third quarter to more than 19.0
percent pro forma. An improving net interest margin, resulting from the lower
cost of funds in the Deposit Guaranty markets, along with improving productivity
in the core banking business, will fuel the ROE increase. We expect the
efficiency in the core banking business to improve to less than 50 percent,
driven by additional cost and revenue synergies," Bottorff said.
--MORE--
<PAGE> 2
FIRST AMERICAN ANNOUNCES MERGER (CONTD) - PAGE 2 OF 4
E.B. Robinson Jr., chairman and CEO of Deposit Guaranty Corp., said,
"Deposit Guaranty sought a merger partner who would generate superior value for
our shareholders. First American is a financial services provider of the future
rather than a bank of the past. First American is farther down the road with
customer profitability and distribution management than most banks in the
country and we concluded that the fit of the two organizations was excellent.
Deposit Guaranty believes both shareholder groups will win in this merger as the
enhanced revenue and lower costs of distribution occur in the future," he said.
While First American expects the merger to be accretive to earnings by
6 percent in 1999, if the benefits of earnings on excess capital were included
in the earnings, the merger should, on a proforma basis be accretive by 10
percent. These expectations are based on estimated cost savings of 25 percent
($68 million) and revenue synergies of 7.5 percent ($20 million) of Deposit
Guaranty's cost base, which should be fully phased in during 1999. The company
expects to incur restructuring and merger-related, pre-tax charges of
approximately $102 million.
Included in the restructuring and merger-related costs is $15 million
to fund a charitable foundation dedicated to supporting the communities Deposit
Guaranty serves. A board of trustees, which will be led by Mr. Robinson, will
administer the foundation.
Cost savings are expected to be achieved primarily from the
consolidation of back-office processing and support functions, and through
improvements in the efficiency of the retail distribution system. The revenue
enhancements should result from utilizing First American's customer
profitability and distribution management technology, increased investment
product sales resulting from the integration of its investment products sales
structure with Deposit Guaranty's branch system, and a more proactive small
business focus throughout the Deposit Guaranty franchise.
The combined company, which will be headquartered in Nashville, Tenn.,
will have assets of approximately $17.4 billion, deposits of $13 billion and
stockholders' equity of $1.5 billion. It will operate in Tennessee, Mississippi,
Louisiana, Arkansas, Virginia, and Kentucky and will be the 4th largest
financial services institution in the Mid-South region in total assets.
--MORE--
<PAGE> 3
FIRST AMERICAN ANNOUNCES MERGER (CONTD) - PAGE 3 OF 4
Subject to regulatory and stockholder approvals, the transaction is expected to
close in the second quarter of 1998.
MANAGEMENT STRUCTURE:
Dennis C. Bottorff will remain chairman and CEO of First American
Corporation (Corporation). E.B. Robinson, Jr. will be named vice chairman and
chief operating officer of the Corporation. Dale W. Polley will remain president
of the Corporation. Robert A. McCabe, Jr. will remain vice chairman of the
Corporation and president of First American Enterprises. Howard L. McMillan Jr.,
currently president of Deposit Guaranty, will be named chairman of the Deposit
Guaranty operating units.
DEPOSIT GUARANTY FRANCHISE OVERVIEW:
Deposit Guaranty is a $6.8 billion financial services holding company
headquartered in Jackson, Miss., with 171 banking offices and 195 ATMs in its
three state operating areas of Mississippi, Louisiana and Arkansas.
Approximately 3,500 people work for Deposit Guaranty. The corporation is the
parent company of Deposit Guaranty National Bank, and has mortgage offices in
Oklahoma, Nebraska, Texas, Indiana and Iowa. Deposit Guaranty has previously
announced plans to acquire Victory Bancshares (total assets of $118 million) in
Memphis, Tenn., which is scheduled to close during the first quarter of 1998.
FIRST AMERICAN FRANCHISE OVERVIEW:
First American is a $10.6 billion financial services holding company
headquartered in Nashville, Tenn., with 169 banking offices and 440 ATMs.
Approximately 4,200 people work for First American. The corporation is the
parent company of First American National Bank, First American Federal Savings
Bank of Virginia and First American Enterprises Inc. The company also owns 98
percent of INVEST Financial Corporation. Through INVEST, the
--MORE--
<PAGE> 4
FIRST AMERICAN ANNOUNCES MERGER (CONTD) - PAGE 4 OF 4
company has approximately 1,900 representatives selling mutual funds, annuities
and other investment and insurance products in more than 1,000 investment
centers throughout the U.S.
TO THE EXTENT THAT STATEMENTS IN THIS REPORT RELATE TO THE PLANS,
OBJECTIVES OR FUTURE PERFORMANCE OF FIRST AMERICAN CORPORATION, THESE STATEMENTS
ARE CONSIDERED TO BE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE BASED ON
MANAGEMENT'S CURRENT EXPECTATIONS AND THE CURRENT ECONOMIC ENVIRONMENT. ACTUAL
STRATEGIES AND RESULTS IN FUTURE PERIODS MAY DIFFER MATERIALLY FROM THOSE
CURRENTLY EXPECTED DUE TO VARIOUS RISKS AND UNCERTAINTIES. ADDITIONAL DISCUSSION
OF FACTORS AFFECTING FIRST AMERICAN'S BUSINESS AND PROSPECTS IS CONTAINED IN THE
COMPANY'S PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
XXXX
<PAGE> 5
FIRST AMERICAN CORPORATION DEPOSIT GUARANTY CORPORATION
December 8, 1997
Deal Summary Fact Sheet
STRUCTURE:
- Pooling of interests
- Tax-free exchange
- Definitive agreement signed
- Due diligence completed
TERMS:
- 1.17 shares of First American common stock for each common
share of Deposit Guaranty
- 19.9% stock option from DEP to FATN
- Deposit Guaranty has the right to terminate the agreement if
First American's stock price on average for the 20 business
days preceding consummation either;
- (1) Declines by more than 25%, or
- (2) Declines by more than 20% and more than 15%
relative to a specified bank index
PRICING: (Based on closing share prices as of Dec. 5, 1997)
- FATN closing price (12/5/97): $54.75
- DEP closing price (12/5/97): $52.38
- Purchase price: $2.7 billion
- Purchase price per share: $64.06
- Price/Book: 4.19x
- Price/1998 EPS consensus: 25.33x
- Pricing compares favorably to recent transactions based on
contribution analysis, implied ROA, price-to-earnings adjusted
for synergies and earnings contribution.
TIMING:
- Expected to close in the second quarter of 1998
- Subject to shareholder (both organizations) and regulatory
approvals
ACQUISITION RATIONALE:
- Aids in FATN becoming one of the highest performing, most
highly valued companies in the industry
- Neutral to earnings in 1998; 6% accretive in 1999 (based on
IBES consensus estimates)
- 250-300 basis point expected increase in ROE
- Expected improvement in productivity
- Opportunity to increase net interest margin
- Low cost source of funds in Mississippi, Louisiana and
Arkansas markets
- 32.5% expected synergies (25% cost, 7.5% revenue); fully
phased in during 1999
- Broadened geographic presence
- Opportunity to capitalize on FATN customer profitability and
distribution management technologies
<PAGE> 1
EXHIBIT 99.2
FIRST AMERICAN'S ACQUISITION OF
DEPOSIT GUARANTY
[LOGO]
LEVERAGING THE JOINT STRENGTHS TO BUILD ONE
OF THE NATION'S BEST PERFORMING COMPANIES
December 8, 1997
[LOGO] FORWARD LOOKING INFORMATION
TO THE EXTENT THAT STATEMENTS IN THIS PRESENTATION RELATE TO THE PLANS,
OBJECTIVES OR FUTURE PERFORMANCE OF FIRST AMERICAN CORPORATION, DEPOSIT
GUARANTY CORP. AND THE COMBINED COMPANY FOLLOWING THE MERGER, THESE STATEMENTS
ARE CONSIDERED TO BE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE BASED ON
MANAGEMENT'S CURRENT EXPECTATIONS AND THE CURRENT ECONOMIC ENVIRONMENT. ACTUAL
STRATEGIES AND RESULTS IN FUTURE PERIODS MAY DIFFER MATERIALLY FROM THOSE
CURRENTLY EXPECTED DUE TO VARIOUS RISKS AND UNCERTAINTIES. ADDITIONAL
DISCUSSION OF FACTORS AFFECTING FIRST AMERICAN'S, DEPOSIT GUARANTY'S OR THE
COMBINED COMPANY'S BUSINESS AND PROSPECTS IS CONTAINED IN THE COMPANY'S
PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 2
[LOGO] AGENDA
[]ATTRACTIVE COMBINATION
[]OVERVIEW OF TRANSACTION
[]BUILDING SHAREHOLDER VALUE
[]CONCLUSION
[LOGO] AGENDA
[]ATTRACTIVE COMBINATION
[]OVERVIEW OF TRANSACTION
[]BUILDING SHAREHOLDER VALUE
[]CONCLUSION
<PAGE> 3
[LOGO] ATTRACTIVE ACQUISITION
[]SIGNIFICANTLY ACCRETIVE TO EARNINGS
[]SUBSTANTIALLY IMPROVES PROFITABILITY
[]MINIMAL INTEGRATION RISK
[]COMPLEMENTARY STRENGTHS
[]BROADENS MANAGEMENT TEAM
[LOGO] SUBSTANTIALLY ACCRETIVE
TO EARNINGS
[]NEUTRAL IN 1998
[]6% ACCRETIVE IN 1999 - $0.18/SHARE
- EARNINGS ON EXCESS CAPITAL NOT INCLUDED ABOVE
[]10% ACCRETIVE IF EARNINGS ON EXCESS CAPITAL
ARE ASSUMED
NOTE:
(1) BASED ON IBES ESTIMATE
(2) ASSUMES SYNERGIES ARE FULLY RECOGNIZED
(3) EXCLUSIVE OF ONE-TIME CHARGES
<PAGE> 4
[LOGO] SUBSTANTIALLY IMPROVES
PROFITABILITY
<TABLE>
<CAPTION>
PRO FORMA
FATN DEP COMBINED
PERFORMANCE MEASURE 3Q97 3Q97 3Q97
- ------------------------------------------------------
<S> <C> <C> <C>
ROE 16.8% 15.1% 19 - 20 %
ROA 1.4% 1.4% 1.6 - 1.8%
NIM 4.1% 4.9% 4.4 - 4.5%
EFFICIENCY 54.8% 60.8% <50.0%
(BANKING BUSINESS)
</TABLE>
[LOGO] MINIMAL
INTEGRATION RISK
Common Strategies
- - Business line organization
- - Centralized operations and technology
- - Centralized staff
- - Standardized products
- - Superior credit quality
- - Shared commitment to customer
<PAGE> 5
[LOGO] COMPLEMENTARY
STRENGTHS
[] FIRST AMERICAN
- Majority of franchise serves attractive growth
markets
- Rapidly growing non-bank fee businesses
(Enterprises)
- State-of-the-art customer information
[] DEPOSIT GUARANTY
- Market source for low cost funding
- Excess liquidity
- Mortgage servicing efficiency
[LOGO] BROADENS
MANAGEMENT TEAM
<TABLE>
<CAPTION>
PRE-ACQUISITION POST-ACQUISITION RESPONSIBILITIES
<S> <C> <C> <C>
Dennis C. Bottorff Chairman & CEO - Chairman & CEO -
FAC FAC
E.B. Robinson, Jr. Chairman & CEO - Vice Chairman - FAC Banking Operations
Deposit Guaranty President-FANB
Chief Oper. Officer
Dale W. Polley President - FAC/FANB President - FAC Administrative
Functions
Robert A. McCabe, Jr. Vice Chairman - FAC Vice Chairman - FAC Non-banking
President - FAE President - FAE Operation
</TABLE>
<PAGE> 6
[LOGO] AGENDA
[] Attractive Combination
[] Overview of Transaction
[] Building Shareholder Value
[] Conclusion
[LOGO] TERMS OF TRANSACTION
<TABLE>
<S> <C>
Fixed Exchange Ratio: - 1.17 shares of First American
stock for each share of Deposit Guaranty
- Tax Free Exchange
Purchase Price Per Share: $64.06 (based on FATN 12/5/97 closing price)
Other Terms: 19.9% Stock option from DEP to FATN
Transaction Value: $2.7 Billion
Accounting: Pooling of Interests
Expected Closing 2nd Quarter of 1998
Expected Conversion Within 12 months
</TABLE>
<PAGE> 7
[LOGO] ACCRETIVE TO EARNINGS
<TABLE>
<CAPTION>
----- -----
1998 1999
----- -----
<S> <C> <C>
First American -- IBES $2.68 $2.97
Deposit Guaranty -- IBES $2.51 $2.71
<CAPTION>
- --------------------------------------------------
ESTIMATED AFTER-TAX ADJ. ($MM) ($MM)
- ------------------------ ----- -----
<S> <C> <C>
Expense Efficiencies $19.9 $39.8
Revenue Enhancements $ 6.0 $12.0
---------------
Total Adjustments $25.9 $51.8
- --------------------------------------------------
<CAPTION>
EPS EPS
---- ----
<S> <C> <C>
TOTAL EARNINGS OF COMBINED $2.68 $3.15
ACCRETION TO EPS $0.00 $0.18
</TABLE>
[LOGO] SYNERGY OPPORTUNITIES
[] Expected Cost Savings of $68MM
- 25% of Deposit Guaranty's expense base
- Synergies start in 1998
[] Projected Revenue Enhancements of $20MM
- 7.5% of Deposit Guaranty's expense base
- Synergies start in 1998
[] Potential Earnings from Excess Capital
- $10 million - 1998
- $19 million - 1999
- Not included in synergies or EPS calculation
<PAGE> 8
[LOGO] RESTRUCTURING AND
MERGER-RELATED COSTS
<TABLE>
<CAPTION>
($millions)
<S> <C>
Severance/Retention $ 27
Systems Conversions 13
Facilities Contracts 18
Other 29
Sub-Total $ 87
Charitable Foundation 15
Total $102
</TABLE>
[LOGO] PRO FORMA ANALYSIS
<TABLE>
<CAPTION>
SIZE($MM)
- ---- ------- ------ -------
<S> <C> <C> <C>
Market Value (12/5/97) $ 3,197 $2,138 $ 5,335
Assets 10,562 6,839 17,401
Loans 7,152 4,353 11,505
Deposits 7,701 5,283 12,985
Common Equity 889 624 1,513
PROFITABILITY
- -------------
ROA 1.4% 1.4% 1.7%
ROE 16.8% 15.1% 19.6%
Net. Int. Margin 4.1% 4.9% 4.4%
Efficiency 54.8% 60.8% <50.0%
Fees/Revenues 40% 33% 40%
ASSET QUALITY
- -------------
NPA Ratio 0.31% 0.65% 0.45%
NCO Ratio 0.18% 0.65%(3) 0.37%(3)
</TABLE>
Note:
(1) Financial information for the quarter ending 9/30/97.
(2) Includes cost savings and revenue enhancements of 32.5%.
(3) Exclusive of one large DEP loan = 0.16%; Pro Forma = .017%.
<PAGE> 9
[LOGO] TRANSACTION PRICING
COMPARISON
--------------------------
[] Significant increases in bank stock trading multiples, including First
American's, make Deposit Guaranty transaction multiples appear higher than
recent market transactions
[] Relative multiples compare favorably
[LOGO] TRANSACTION PRICING
COMPARISON
--------------------------
<TABLE>
<CAPTION>
As a % of Buyer's
Multiple
--------------
Transaction Buyer's Transaction
Transaction Forward Year Forward Year Forward Year
Forward Year EPS Multiple EPS EPS Multiple
Acquiror/Acquiree EPS Multiple with Synergies Multiple w/Synergies
- ----------------- ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
NB/BOAT 15.2x 10.3x 10.3x 100%
ONE/FCOM 20.1 12.9 13.7 94
FTU/SBK 20.5 9.8 12.5 78
NB/BBI 20.8 9.6 12.6 76
FTU/FFB 10.9 7.6 7.7 98
FTU/CFL 19.6 11.4 13.2 87
NCC/FOA 22.3 12.0 16.6 72
- -------------------------------------------------------------------------------
FATN/DEP 25.3x 16.9x 20.4x 83%
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
[LOGO] FAVORABLE
GIVE/GET RATIO
<TABLE>
<CAPTION>
LAST OWNERSHIP
QUARTER BOOK SELLER'S PREMIUM TO
ACQUIROR/ACQUIREE EARNINGS ASSETS VALUE OWNERSHIP EARNINGS
<S> <C> <C> <C> <C> <C>
ONE/FCOM 6.4% 7.5% 7.2% 8.6% 34.8%
FTU/SBK 7.0 7.7 8.6 10.8 53.2
NB/BBI 17.1 15.5 15.1 23.9 39.8
FTU/FFB 32.3 31.3 32.6 39.9 23.5
FTU/CFL 26.6 23.4 20.9 34.8 30.8
NCC/FOA 27.9 29.2 29.6 32.7 17.2
FATN/DEP 38.7% 39.7% 41.6% 45.7% 18.1%
</TABLE>
[LOGO] GEOGRAPHIC PRESENCE
<TABLE>
<CAPTION>
PRO FORMA
#OF DEPOSITS %MARKET
RANK STATE BRANCHES (MM) SHARE
<S> <C> <C> <C> <C>
2 Tennessee 150 $ 6,996 12.0%
2 Mississippi 105 3,438 14.1
5 Louisiana 52 1,757 4.3
31 Virginia 19 305 0.4
14 Arkansas 6 272 1.0
31 Kentucky 4 194 0.5
TOTALS 336 $12,962
</TABLE>
[MAP]
[ ] First American
[ ] Deposit Guaranty
[ ] Overlap
[Appearing here is a map portraying the pro forma geographic layout
of the combined company's branch system.]
Note: (1) Deposits as of 6/30/96. Includes all pending and completed
transactions through 11/21/97.
<PAGE> 11
[LOGO]
GEOGRAPHIC PRESENCE
<TABLE>
<CAPTION>
DEPOSITS % OF
MARKETS ($MM) FRANCHISE DEP.
<S> <C> <C>
DEP
Fast Growing Mkts $2.3 42%
Slow Growing Mkts w/High Mkt Share $1.9 35%
Other Mkts $1.3 23%
FATN
Fast Growing Mkts $5.2 71%
Slow Growing Mkts w/High Mkt Share $ .9 12%
Other Mkts $1.2 17%
PRO FORMA
Fast Growing Mkts $7.5 60%
Slow Growing Mkts w/High Mkt Share $2.8 21%
Other Mkts $2.5 19%
</TABLE>
[LOGO]
NON-BANK ACTIVITIES
[]INVEST
-Largest third-party marketer of investment and insurance products
-400+clients in 43 states
-1900 registered reps selling $3 billion of investment products
[]SSI
-Third largest processor of hospital healthcare claims in the U.S.
-550 hospital clients in 44 states
-$29 billion of claims processed annually
[]MORTGAGE SERVICING
-Approximately $5 billion servicing portfolio
-Eight States
-Very efficient cost of service
<PAGE> 12
[LOGO] AGENDA
[]ATTRACTIVE COMBINATION
[]OVERVIEW OF TRANSACTION
[]BUILDING SHAREHOLDER VALUE
[]CONCLUSION
[LOGO] BENEFITS OF ACQUISITION:
MOVES FIRST AMERICAN CLOSER TO ITS
GOAL OF "SWEET 16"
<PAGE> 13
[LOGO] FIRST AMERICAN'S GOAL
TO PRODUCE RESULTS CONSISTENT WITH THE HIGHEST PERFORMING, MOST HIGHLY VALUED
COMPANIES IN THE INDUSTRY - "SWEET 16"
"SWEET-16" PERFORMANCE
- - Current Median ROE = 20.1%
- - Current Median ROA - 1.64%
- - Current Median Price-to-Book Multiple = 4.4X
[LOGO] FIRST AMERICAN GOALS
(end of 2000)
- - Soundness:
- remain conservative
- - Profitability
-ROE > 19.50%
-
-ROA > 1.60%
-
- - Efficiency in the banking business < 50%
-
- - Growth
- EPS growth 10-15% (CAGR)
<PAGE> 14
[LOGO] FIRST AMERICAN
PERFORMANCE
[] First American is Closing the Gap on "Sweet 16" Performance
ROA ROE
[GRAPH] [GRAPH]
Represents the median of each group in each year.
Appearing here is a graph showing the ROA for the High Performing
peer group and First American for years 1991-1996 and third quarter 1997.
Appearing here is a graph showing the ROE for the High Performing
peer group and First American for years 1991-1996 and third quarter 1997.
[LOGO] ACQUISITION WILL
ACCELERATE PROGRESS:
[] Increased Profitability
[] Enhanced Earnings Growth
- Neutral to 1998
- Accretive to 1999
<PAGE> 15
[LOGO] FINANCIAL BENEFITS
OF THE ACQUISITION:
[] Increased Profitability
- ROA
- ROE
- Margin
- Cost of Deposits
- Liquidity
- Efficiency
[LOGO] INCREASED
PROFITABILITY
ROA
[GRAPH]
Appearing here is a graph showing historical ROA for "Sweet-16" and
First American plus the proforma results of the combined company's
ROA for the third quarter of 1997.
Note: Assumes synergies are fully recognized
<PAGE> 16
[LOGO] INCREASED
PROFITABILITY
[GRAPH]
Appearing here is a graph showing historical ROE for "Sweet-16" and
First American plus the proforma results of the combined company's
ROE for the third quarter of 1997.
[LOGO] INCREASED MARGIN
[GRAPH]
Appearing here is a graph showing 1996 and third quarter 1997
net interest margin for FATN and DEP.
<PAGE> 17
[LOGO] LOWER COST OF DEPOSITS
[GRAPH]
Appearing here is a graph showing the historical cost of deposits for
FATN and DEP for 1995, 1996, and the third quarter 1997.
[LOGO] LOWER COST OF DEPOSITS
[GRAPH]
Appearing here is a graph showing historical cost of deposits for the U.S.,
Tennessee, and Mississippi for 1995 and 1996.
<PAGE> 18
[LOGO] INCREASED LIQUIDITY
[GRAPH]
Appearing here is a graph showing historical loan-to-deposit ratios for
FATN and DEP for 1995, 1996, and third quarter 1997.
[LOGO] IMPROVED EFFICIENCY
[GRAPH]
Appearing here is a graph showing third quarter 1997 efficiency ratios for
FATN, DEP, and the proforma combined company.
<PAGE> 19
[LOGO] IMPROVED EFFICIENCY
[] Efficiency Will Improve As A Result Of:
- A wider margin
- Lower Costs & Higher Revenue
> Traditional consolidation cost savings
> Leveraging First American's expertise in executing three of its key
strategies
[LOGO] FIRST AMERICAN
STRATEGIC FOCUS
[] Focus the Bank on Targeted Profitable Segments Where we can Maintain
Competitiveness by Offering a "Tailored Solution" Value Proposition
[] Continually Lower the Cost of Distribution in the Bank
[] Transform the Organization from a Bank to a Financial Services Company
<PAGE> 20
[LOGO] TRANSITION TEAM
[] E. B. Robinson, Jr. - Operations
[] Dale W. Polley - Administration
[LOGO] AGENDA
[] Attractive Combination
[] Overview of Transaction
[] Building Shareholder Value
-Recognizing the Synergies
[] Conclusion
<PAGE> 21
[LOGO] TRADITIONAL COST
SYNERGIES
[] Traditional Cost Synergies Related To:
- Executive & Administration - $23MM
> Represents approximately 42% of Finance, Human Resources, Facilities,
Credit Policy, and Executive and Administration Costs
- Operations/Technology - $16MM
> Represents approximately 38% of total Ops/Tech costs
[LOGO] STRATEGIC SYNERGIES
[] Focus the Bank on Targeted Profitable Segments...
- Enhanced customer profitability focus $11MM
- Proactive small business focus - $4MM
[] Lower the Cost of Distribution...
- Retail, corporate asset mgmt. and mortgage - $29MM
- Represents approximately 18% of total retail, corporate and mortgage costs
[] Transform From Bank to Financial Services Company
- Asset management group (increased investment sales) - $5MM
<PAGE> 22
[LOGO] SYNERGIES
[] Cost:
- Executive & Administration - $23MM
- Operations/Technology - $16MM
- Retail, Corporate, Asset Mgmt. and Mortgage - $29MM
[] Revenue:
- Enhanced Customer Profitability Information $11MM
- Asset Mgmt. Group (Increased Investment Sales) - $5MM
- Proactive Small Business Focus - $4MM
[] Total:
- $88MM
[LOGO] CONCLUSION
GIANT STEP TOWARD HIGH
PERFORMANCE
