<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
August 11, 1995
---------------------------------
(Date of earliest event reported)
FLEET FINANCIAL GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
RHODE ISLAND
----------------------------------------------
(State or other jurisdiction of incorporation)
1-6366 05-0341324
----------------------- ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
50 Kennedy Plaza, Providence, Rhode Island 02903
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(401)278-5800
---------------------------------------------------
Registrant's telephone number, including area code:
<PAGE>
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 Combined
Financial Statements and Notes thereto for the period ending
June 30, 1995.
For additional information regarding the Merger, see
Fleet's Current Reports on Form 8-K dated February 20, 1995,
February 21, 1995, April 13, 1995, May 17, 1995 and June 21,
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.
Exhibit Description
Number
-------- ------------------------------------------------
99.a Unaudited Pro Forma 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 June 30, 1995 (File No.
1-10102): Consolidated Balance Sheet - June 30,
1995, Consolidated Statements of Income for the
three and six months ended June 30, 1995,
Consolidated Statement of Cash Flows and
Consolidated Statement of Changes in
Stockholders' Equity for the six months ended
June 30, 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.)
2
<PAGE>
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
Dated: August 11, 1995
3
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Balance
Sheet as of June 30, 1995, and the Unaudited Pro Forma
Combined Statements of Income for the three and six months
ended June 30, 1995, give effect to the merger (the
"Merger") of Shawmut National Corporation ("Shawmut") into
Fleet Financial Group, Inc. ("Fleet") accounted for as a
pooling of interests, 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 merger (the "Northeast Merger") of Northeast Federal
Corp. ("Northeast") into Shawmut, the consummation of the
acquisition (the "Barclays Acquisition") of substantially
all of the assets of 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 was 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 Combined Statements of Income for the
three and six months ended June 30, 1994, give effect to the
Merger as if the Merger had occurred on January 1, 1994, and
do not take into account the effects of the NBB Merger, the
Plaza Merger, the Northeast Merger, the Barclays Acquisition
or the FMG Repurchase since such transactions were accounted
for under the purchase method of accounting.
The pro forma information is based on the historical
consolidated financial statements of Fleet, Shawmut, NBB,
Plaza, Northeast, Barclays, and FMG and their subsidiaries
under the assumptions and adjustments set forth in the
accompanying Notes to the Unaudited Pro Forma Combined
Financial Statements. The pro forma combined financial
statements do not give effect to the anticipated cost
savings in connection with the Merger, the NBB Merger, the
Plaza Merger, or the Northeast Merger or the effects of any
required regulatory divestitures.
The Unaudited Pro Forma 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
information 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 information 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.
1
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
June 30, 1995 (a)
Fleet
Pro Forma Shawmut
(Dollars in thousands) Fleet Shawmut Adjustments Combined
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 2,382,839 $ 1,297,875 $ 0 $ 3,680,714
Federal funds sold and securities purchased
under agreements to resell 728,264 853,000 0 1,581,264
Securities available for sale, at market 10,591,259 1,974,074 (d) (185,254)(f) 12,380,079 (d)
Securities held to maturity 736,167 7,527,910 (d) 0 8,264,077 (d)
Loans and leases 30,107,137 22,371,047 0 52,478,184
Reserve for credit losses (950,979) (541,243) 0 (1,492,222)
Mortgages held for resale 1,468,510 109,808 0 1,578,318
Premises and equipment 686,212 337,526 0 1,023,738
Purchased mortgage servicing rights 1,215,750 12,650 0 1,228,400
Excess cost over net assets of subsidiaries
acquired 462,126 493,706 0 955,832
Other intangibles 190,334 16,606 0 206,940
Other assets 3,699,541 1,507,292 163,263 (f)(g) 5,370,096
-------------- -------------- -------------- --------------
Total assets $ 51,317,160 $ 35,960,251 $ (21,991) $ 87,255,420
============== ============== ============== ==============
LIABILITIES and STOCKHOLDERS' EQUITY:
Deposits:
Demand $ 6,355,494 $ 4,719,589 $ 0 $ 11,075,083
Regular savings, NOW, money market 14,734,947 8,583,519 0 23,318,466
Time 11,939,851 9,381,237 0 21,321,088
-------------- -------------- -------------- --------------
33,030,292 22,684,345 0 55,714,637
-------------- -------------- -------------- --------------
Federal funds purchased and securities sold
under agreements to repurchase 4,585,248 5,600,163 0 10,185,411
Other short-term borrowings 4,589,978 2,315,310 116,363 (h) 7,021,651
Accrued expenses and other liabilities 1,091,658 443,281 348,280 (f)(g) 1,883,219
Long-term debt 3,804,913 2,339,441 0 6,144,354
-------------- -------------- -------------- --------------
Total liabilities 47,102,089 33,382,540 464,643 80,949,272
-------------- -------------- -------------- --------------
Stockholders' equity:
Preferred stock 378,815 303,185 0 (e) 682,000
Common stock 141,960 1,294 103,201 (e)(h)(f) 246,455
Common surplus 1,539,220 1,515,780 (429,437)(e)(h)(f) 2,625,563
Retained earnings 2,132,547 856,885 (209,735)(g) 2,779,697
Net unrealized gain/(loss) on securities
available for sale 31,967 (13,019) (37,077)(f) (18,129)(d)
Treasury stock, at cost (9,438) (86,414) 86,414 (e) (9,438)
-------------- -------------- -------------- --------------
Total stockholders' equity 4,215,071 2,577,711 (486,634) 6,306,148
-------------- -------------- -------------- --------------
Total liabilities and stockholders' equity $ 51,317,160 $ 35,960,251 $ (21,991) $ 87,255,420
============== ============== ============== ==============
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
2
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Three Months Ended June 30, 1995 (a)
Fleet
Shawmut
Shawmut Pro Forma Pro Forma
(Dollars in thousands, except per share data) Fleet Pro Forma Adjustments Combined
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest and fees on loans and leases $ 738,813 $ 473,237 $ 0 $ 1,212,050
Interest on securities 186,865 182,173 (1,279)(f) 367,759
---------------- ---------------- ---------------- ----------------
Total interest income 925,678 655,410 (1,279) 1,579,809
Interest expense:
Deposits 262,839 190,857 0 453,696
Short-term borrowings 96,316 145,091 0 241,407
Long-term debt 70,080 41,506 0 111,586
---------------- ---------------- ---------------- ----------------
Total interest expense 429,235 377,454 0 806,689
---------------- ---------------- ---------------- ----------------
Net interest income 496,443 277,956 (1,279) 773,120
Provision for credit losses 27,632 500 0 28,132
---------------- ---------------- ---------------- ----------------
Net interest income after provision
for credit losses 468,811 277,456 (1,279) 744,988
---------------- ---------------- ---------------- ----------------
Mortgage banking 130,553 10,556 0 141,109
Investment services revenue 46,145 31,411 0 77,556
Service charges, fees and commissions 75,105 55,594 0 130,699
Securities available for sale gains (losses) 3,061 4,893 0 7,954
Other noninterest income 108,117 14,704 0 122,821
---------------- ---------------- ---------------- ----------------
Total noninterest income 362,981 117,158 0 480,139
---------------- ---------------- ---------------- ----------------
Employee compensation and benefits 244,533 127,102 0 371,635
Occupancy and equipment 75,182 39,193 0 114,375
Mortgage servicing rights amortization 45,631 1,204 0 46,835
FDIC assessment 18,034 12,245 0 30,279
Marketing 15,450 6,450 0 21,900
Core deposit and goodwill amortization 20,717 7,051 0 27,768
OREO expense 2,376 1,215 0 3,591
Merger-related charges 0 13,588 (13,588)(g) 0
Other noninterest expense 126,423 56,112 0 182,535
---------------- ---------------- ---------------- ----------------
Total noninterest expense 548,346 264,160 (13,588) 798,918
---------------- ---------------- ---------------- ----------------
Income before taxes 283,446 130,454 12,309 426,209
Applicable income taxes 111,260 49,503 4,924 165,687
---------------- ---------------- ---------------- ----------------
Net income $ 172,186 $ 80,951 $ 7,385 $ 260,522
================ ================ ================ ================
Net income applicable to common shares: (j) $ 169,723 $ 73,716 $ 250,824
================ ================ ================
Weighted average common shares outstanding: (i)
Primary 161,405,299 122,251,693 265,292,883
Fully diluted 161,832,528 122,251,693 265,720,112
Earnings per share:
Primary $ 1.05 $ 0.60 $ 0.95
Fully diluted $ 1.05 $ 0.60 $ 0.94
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
3
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Three Months Ended June 30, 1995 (a)
Shawmut Pro Forma Shawmut
(Dollars in thousands, except per share data) Historical Adjustments (c) Pro Forma
---------------- ---------------- ----------------
<S> <C> <C> <C>
Interest and fees on loans and leases $ 458,150 $ 15,087 $ 473,237
Interest on securities 155,915 26,258 182,173
---------------- ---------------- ----------------
Total interest income 614,065 41,345 655,410
Interest expense:
Deposits 168,880 21,977 190,857
Short-term borrowings 135,282 9,809 145,091
Long-term debt 41,506 0 41,506
---------------- ---------------- ----------------
Total interest expense 345,668 31,786 377,454
---------------- ---------------- ----------------
Net interest income 268,397 9,559 277,956
Provision for credit losses 0 500 500
---------------- ---------------- ----------------
Net interest income after provision
for credit losses 268,397 9,059 277,456
---------------- ---------------- ----------------
Mortgage banking 9,432 1,124 10,556
Investment services revenue 31,411 0 31,411
Service charges, fees and commissions 54,798 796 55,594
Securities available for sale gains (losses) 1,320 3,573 4,893
Other noninterest income 14,694 10 14,704
---------------- ---------------- ----------------
Total noninterest income 111,655 5,503 117,158
---------------- ---------------- ----------------
Employee compensation and benefits 120,368 6,734 127,102
Occupancy and equipment 37,499 1,694 39,193
Mortgage servicing rights amortization 831 373 1,204
FDIC assessment 10,961 1,284 12,245
Marketing 6,052 398 6,450
Core deposit and goodwill amortization 5,271 1,780 7,051
OREO expense 705 510 1,215
Merger-related charges 13,588 0 13,588
Other noninterest expense 52,803 3,309 56,112
---------------- ---------------- ----------------
Total noninterest expense 248,078 16,082 264,160
---------------- ---------------- ----------------
Income before taxes 131,974 (1,520) 130,454
Applicable income taxes 49,366 137 49,503
---------------- ---------------- ----------------
Net income $ 82,608 $ (1,657) $ 80,951
================ ================ ================
Net income applicable to common shares: (j) $ 75,373 $ 73,716
================ ================
Weighted average common shares outstanding: (i)
Primary 123,747,923 122,251,693
Fully diluted 123,747,923 122,251,693
Earnings per share:
Primary $ 0.61 $ 0.60
Fully diluted $ 0.61 $ 0.60
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
4
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1995 (a)
Fleet
Shawmut
Fleet Shawmut Pro Forma Pro Forma
(Dollars in thousands, except per share data) Pro Forma Pro Forma Adjustments Combined
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest and fees on loans and leases $ 1,432,446 $ 932,343 $ 0 $ 2,364,789
Interest on securities 373,230 375,794 (2,558)(f) 746,466
---------------- ---------------- ---------------- ----------------
Total interest income 1,805,676 1,308,137 (2,558) 3,111,255
Interest expense:
Deposits 513,918 364,501 0 878,419
Short-term borrowings 166,461 294,717 0 461,178
Long-term debt 136,842 81,275 0 218,117
---------------- ---------------- ---------------- ----------------
Total interest expense 817,221 740,493 0 1,557,714
---------------- ---------------- ---------------- ----------------
Net interest income 988,455 567,644 (2,558) 1,553,541
Provision for credit losses 47,964 1,250 0 49,214
---------------- ---------------- ---------------- ----------------
Net interest income after provision
for credit losses 940,491 566,394 (2,558) 1,504,327
---------------- ---------------- ---------------- ----------------
Mortgage banking 228,937 14,925 0 243,862
Investment services revenue 92,377 62,256 0 154,633
Service charges, fees and commissions 148,865 110,706 0 259,571
Securities available for sale gains (losses) 3,725 7,495 0 11,220
Other noninterest income 197,346 24,500 0 221,846
---------------- ---------------- ---------------- ----------------
Total noninterest income 671,250 219,882 0 891,132
---------------- ---------------- ---------------- ----------------
Employee compensation and benefits 496,432 255,197 0 751,629
Occupancy and equipment 153,491 80,892 0 234,383
Mortgage servicing rights amortization 73,893 2,614 0 76,507
FDIC assessment 36,124 24,893 0 61,017
Marketing 30,171 12,812 0 42,983
Core deposit and goodwill amortization 41,253 14,396 0 55,649
OREO expense 5,804 3,374 0 9,178
Merger-related charges 0 50,441 (50,441)(g) 0
Other noninterest expense 233,144 107,428 0 340,572
---------------- ---------------- ---------------- ----------------
Total noninterest expense 1,070,312 552,047 (50,441) 1,571,918
---------------- ---------------- ---------------- ----------------
Income before taxes 541,429 234,229 47,883 823,541
Applicable income taxes 215,137 89,560 19,153 323,850
---------------- ---------------- ---------------- ----------------
Net income $ 326,292 $ 144,669 $ 28,730 $ 499,691
================ ================ ================ ================
Net income applicable to common shares: (j) $ 321,365 $ 130,491 $ 480,586
================ ================ ================
Weighted average common shares outstanding: (i)
Primary 161,016,564 121,946,828 264,632,148
Fully diluted 161,633,984 121,946,828 265,249,568
Earnings per share:
Primary $ 2.00 $ 1.07 $ 1.82
Fully diluted $ 1.99 $ 1.07 $ 1.81
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
5
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1995 (a)
Fleet Pro Forma Fleet
(Dollars in thousands, except per share data) Historical Adjustments (b) Pro Forma
---------------- ---------------- ----------------
<S> <C> <C> <C>
Interest and fees on loans and leases $ 1,420,312 $ 12,134 $ 1,432,446
Interest on securities 372,949 281 373,230
---------------- ---------------- ----------------
Total interest income 1,793,261 12,415 1,805,676
Interest expense:
Deposits 506,821 7,097 513,918
Short-term borrowings 166,034 427 166,461
Long-term debt 136,842 0 136,842
---------------- ---------------- ----------------
Total interest expense 809,697 7,524 817,221
---------------- ---------------- ----------------
Net interest income 983,564 4,891 988,455
Provision for credit losses 47,796 168 47,964
---------------- ---------------- ----------------
Net interest income after provision
for credit losses 935,768 4,723 940,491
---------------- ---------------- ----------------
Mortgage banking 230,010 (1,073) 228,937
Investment services revenue 92,377 0 92,377
Service charges, fees and commissions 148,496 369 148,865
Securities available for sale gains (losses) 3,725 0 3,725
Other noninterest income 194,667 2,679 197,346
---------------- ---------------- ----------------
Total noninterest income 669,275 1,975 671,250
---------------- ---------------- ----------------
Employee compensation and benefits 485,697 10,735 496,432
Occupancy and equipment 149,870 3,621 153,491
Mortgage servicing rights amortization 68,623 5,270 73,893
FDIC assessment 35,704 420 36,124
Marketing 30,091 80 30,171
Core deposit and goodwill amortization 38,325 2,928 41,253
OREO expense 5,638 166 5,804
Merger-related charges 0 0 0
Other noninterest expense 232,076 1,068 233,144
---------------- ---------------- ----------------
Total noninterest expense 1,046,024 24,288 1,070,312
---------------- ---------------- ----------------
Income before taxes 559,019 (17,590) 541,429
Applicable income taxes 222,694 (7,557) 215,137
---------------- ---------------- ----------------
Net income $ 336,325 $ (10,033) $ 326,292
================ ================ ================
Net income applicable to common shares: (j) $ 331,398 $ 321,365
================ ================
Weighted average common shares outstanding: (i)
Primary 160,130,853 161,016,564
Fully diluted 160,748,273 161,633,984
Earnings per share:
Primary $ 2.07 $ 2.00
Fully diluted $ 2.06 $ 1.99
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
6
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1995 (a)
Shawmut Pro Forma Shawmut
(Dollars in thousands, except per share data) Historical Adjustments (c) Pro Forma
---------------- ---------------- ----------------
<S> <C> <C> <C>
Interest and fees on loans and leases $ 880,110 $ 52,233 $ 932,343
Interest on securities 315,378 60,416 375,794
---------------- ---------------- ----------------
Total interest income 1,195,488 112,649 1,308,137
Interest expense:
Deposits 315,427 49,074 364,501
Short-term borrowings 260,052 34,665 294,717
Long-term debt 81,275 0 81,275
---------------- ---------------- ----------------
Total interest expense 656,754 83,739 740,493
---------------- ---------------- ----------------
Net interest income 538,734 28,910 567,644
Provision for credit losses 0 1,250 1,250
---------------- ---------------- ----------------
Net interest income after provision
for credit losses 538,734 27,660 566,394
---------------- ---------------- ----------------
Mortgage banking 12,587 2,338 14,925
Investment services revenue 62,256 0 62,256
Service charges, fees and commissions 106,378 4,328 110,706
Securities available for sale gains (losses) 1,219 6,276 7,495
Other noninterest income 24,478 22 24,500
---------------- ---------------- ----------------
Total noninterest income 206,918 12,964 219,882
---------------- ---------------- ----------------
Employee compensation and benefits 239,992 15,205 255,197
Occupancy and equipment 76,098 4,794 80,892
Mortgage servicing rights amortization 1,677 937 2,614
FDIC assessment 21,922 2,971 24,893
Marketing 12,063 749 12,812
Core deposit and goodwill amortization 9,278 5,118 14,396
OREO expense 2,284 1,090 3,374
Merger-related charges 50,441 0 50,441
Other noninterest expense 99,890 7,538 107,428
---------------- ---------------- ----------------
Total noninterest expense 513,645 38,402 552,047
---------------- ---------------- ----------------
Income before taxes 232,007 2,222 234,229
Applicable income taxes 86,778 2,782 89,560
---------------- ---------------- ----------------
Net income $ 145,229 $ (560) $ 144,669
================ ================ ================
Net income applicable to common shares: (j) $ 132,025 $ 130,491
================ ================
Weighted average common shares outstanding: (i)
Primary 122,699,076 121,946,828
Fully diluted 122,699,076 121,946,828
Earnings per share:
Primary $ 1.08 $ 1.07
Fully diluted $ 1.08 $ 1.07
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
7
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Three Months Ended June 30, 1994
Fleet
Shawmut
Pro Forma Pro Forma
(Dollars in thousands, except per share data) Fleet Shawmut Adjustments Combined
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest and fees on loans and leases $ 576,759 $ 322,408 $ 0 $ 899,167
Interest on securities 236,960 149,233 (455)(f) 385,738
---------------- ---------------- ---------------- ----------------
Total interest income 813,719 471,641 (455) 1,284,905
Interest expense:
Deposits 175,145 90,600 0 265,745
Short-term borrowings 80,459 95,440 0 175,899
Long-term debt 55,887 19,859 0 75,746
---------------- ---------------- ---------------- ----------------
Total interest expense 311,491 205,899 0 517,390
---------------- ---------------- ---------------- ----------------
Net interest income 502,228 265,742 (455) 767,515
Provision for credit losses 12,031 0 0 12,031
---------------- ---------------- ---------------- ----------------
Net interest income after provision
for credit losses 490,197 265,742 (455) 755,484
---------------- ---------------- ---------------- ----------------
Mortgage banking 84,491 9,235 0 93,726
Investment services revenue 42,825 29,065 0 71,890
Service charges, fees and commissions 61,533 48,844 0 110,377
Securities available for sale gains (losses) 19,013 0 0 19,013
Other noninterest income 62,606 6,763 0 69,369
---------------- ---------------- ---------------- ----------------
Total noninterest income 270,468 93,907 0 364,375
---------------- ---------------- ---------------- ----------------
Employee compensation and benefits 240,146 122,604 0 362,750
Occupancy and equipment 74,628 38,113 0 112,741
Mortgage servicing rights amortization 20,877 1,120 0 21,997
FDIC assessment 17,456 11,142 0 28,598
Marketing 14,427 6,593 0 21,020
Core deposit and goodwill amortization 14,765 1,773 0 16,538
OREO expense 5,069 3,375 0 8,444
Restructuring charges 0 39,800 0 39,800
Merger-related charges 0 100,900 0 100,900
Other noninterest expense 117,108 53,254 0 170,362
---------------- ---------------- ---------------- ----------------
Total noninterest expense 504,476 378,674 0 883,150
---------------- ---------------- ---------------- ----------------
Income before taxes 256,189 (19,025) (455) 236,709
Applicable income taxes 105,738 (356) (182) 105,200
---------------- ---------------- ---------------- ----------------
Net income before minority interest 150,451 (18,669) (273) 131,509
Minority interest 2,165 0 0 2,165
---------------- ---------------- ---------------- ----------------
Net income $ 148,286 $ (18,669) $ (273) $ 129,344
================ ================ ================ ================
Net income applicable to common shares: (j) $ 145,823 $ (22,528) $ 123,022
================ ================ ================
Weighted average common shares outstanding: (i)
Primary 161,825,198 118,444,898 267,062,206
Fully diluted 161,828,156 118,444,898 267,065,164
Earnings per share:
Primary $ 0.90 $ (0.19) $ 0.46
Fully diluted $ 0.90 $ (0.19) $ 0.46
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
8
<PAGE>
<TABLE>
<CAPTION>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1994
Fleet
Shawmut
Pro Forma Pro Forma
(Dollars in thousands, except per share data) Fleet Shawmut Adjustments Combined
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest and fees on loans and leases $ 1,137,782 $ 628,167 $ 0 $ 1,765,949
Interest on securities 460,442 297,828 (455)(f) 757,815
---------------- ---------------- ---------------- ----------------
Total interest income 1,598,224 925,995 (455) 2,523,764
Interest expense:
Deposits 336,338 176,268 0 512,606
Short-term borrowings 145,406 175,519 0 320,925
Long-term debt 110,502 35,971 0 146,473
---------------- ---------------- ---------------- ----------------
Total interest expense 592,246 387,758 0 980,004
---------------- ---------------- ---------------- ----------------
Net interest income 1,005,978 538,237 (455) 1,543,760
Provision for credit losses 34,418 3,000 0 37,418
---------------- ---------------- ---------------- ----------------
Net interest income after provision
for credit losses 971,560 535,237 (455) 1,506,342
---------------- ---------------- ---------------- ----------------
Mortgage banking 184,850 13,362 0 198,212
Investment services revenue 87,291 58,482 0 145,773
Service charges, fees and commissions 122,276 97,317 0 219,593
Securities available for sale gains (losses) 19,179 (768) 0 18,411
Other noninterest income 151,420 14,238 0 165,658
---------------- ---------------- ---------------- ----------------
Total noninterest income 565,016 182,631 0 747,647
---------------- ---------------- ---------------- ----------------
Employee compensation and benefits 498,256 248,395 0 746,651
Occupancy and equipment 153,898 77,831 0 231,729
Mortgage servicing rights amortization 51,832 2,388 0 54,220
FDIC assessment 35,549 22,912 0 58,461
Marketing 27,281 11,071 0 38,352
Core deposit and goodwill amortization 28,207 3,472 0 31,679
OREO expense 12,085 9,105 0 21,190
Restructuring charges 25,000 39,800 0 64,800
Merger-related charges 0 100,900 0 100,900
Other noninterest expense 221,873 104,630 0 326,503
---------------- ---------------- ---------------- ----------------
Total noninterest expense 1,053,981 620,504 0 1,674,485
---------------- ---------------- ---------------- ----------------
Income before taxes 482,595 97,364 (455) 579,504
Applicable income taxes 194,087 38,759 (182) 232,664
---------------- ---------------- ---------------- ----------------
Net income before minority interest 288,508 58,605 (273) 346,840
Minority interest 4,660 0 0 4,660
---------------- ---------------- ---------------- ----------------
Net income $ 283,848 $ 58,605 $ (273) $ 342,180
================ ================ ================ ================
Net income applicable to common shares: (j) $ 273,653 $ 50,887 $ 324,267
================ ================ ================
Weighted average common shares outstanding: (i)
Primary 161,515,985 118,135,963 267,337,544
Fully diluted 161,735,165 118,135,963 267,619,202
Earnings per share:
Primary $ 1.69 $ 0.43 $ 1.21
Fully diluted $ 1.69 $ 0.43 $ 1.21
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
9
<PAGE>
(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 NBB Merger, the Plaza Merger, the Northeast
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, the FMG Repurchase was consummated on
February 28, 1995 and the Northeast Merger was consummated
on June 9, 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 Combined Balance Sheet and Unaudited
Pro Forma 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 combined financial statements do not give
effect to the anticipated cost savings in connection with
the 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 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 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.
10
<PAGE>
(c) Pro forma adjustments reflect the impact of the
Barclays Acquisition, which was consummated on January 31,
1995, and the Northeast Merger, which was consummated on
June 9, 1995, as if they had been consummated on January 1,
1995. Pro forma adjustments also include interest expense
on Other short-term borrowings to fund the repurchase of
6,483,665 shares of Shawmut Common Stock issued in
connection with the Northeast Merger.
(d) Fleet is currently reviewing the investment
securities portfolio of Shawmut 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 investment securities
may result. No adjustments have been made to either the
available for sale or the held to maturity portfolios in the
accompanying Unaudited 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 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 June 30, 1995, securities held
to maturity at Shawmut had an unrealized loss of $96,820.
(e) Pro forma adjustments to common shares and common
surplus at June 30, 1995, reflect the Merger accounted for
as a pooling of interests, through: (a) the exchange of
104,495,161 shares of Fleet Common Stock (using the Common
Exchange Ratio of 0.8922) for the 117,120,781 outstanding
shares of Shawmut Common Stock at June 30, 1995 (which
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 the repurchase of 6,483,665
shares of Shawmut Common Stock issued in connection with the
Northeast Merger which have been or will be repurchased; as
of June 30 ,1995, 2,714,797 shares had been repurchased
with the remainder expected to be repurchased during the
third quarter of 1995) 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 June 30, 1995, and to dividend income on securities
for the quarter ended June 30, 1995, reflect the elimination
of 5,811,900 shares of Shawmut Common Stock held by Fleet at
June 30, 1995, and the corresponding dividend income
recorded on such shares. Pro forma adjustments to other
assets and accrued expenses and other liabilities at June
30, 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 Combined Balance Sheet also eliminates the after-tax
unrealized gain on these securities recorded in equity and
the related deferred tax liability.
(g) A liability of $400,000 ($349,559 net of the
$36,853 and $13,588 charges taken by Shawmut in the first
and second quarters of 1995 respectively) has been recorded
in the Unaudited Pro Forma 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 ($209,735
net of the after-tax impact of the charge recorded by
Shawmut in the first six months of 1995) to retained
11
<PAGE>
earnings in the Unaudited Pro Forma 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 the merger agreement with Fleet. During the second
quarter of 1995 Shawmut recognized $13,588 of this charge
due to the vesting of certain restricted stock upon
shareholder approval of the Merger. These charges have been
eliminated from the pro forma income statements due to the
nonrecurring nature of the charges. The following table
provides details of the estimated merger and restructuring
related 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 Combined Balance Sheet as of June 30,
1995; however, since the proposed charge is nonrecurring, it
has not been reflected in the Unaudited Pro Forma Combined
Statements of Income.
(h) Pro forma adjustments to Other short-term
borrowings, Common stock and Common surplus at June 30, 1995
assume that the remaining outstanding shares of Shawmut
Common Stock issued in connection with the Northeast Merger
were all repurchased as of June 30, 1995 at an average stock
price of $30.875, the closing price of Shawmut Common Stock
on July 31, 1995. At June 30, 1995, 3,768,868 shares of
Shawmut Common Stock issued in connection with the Northeast
Merger remained outstanding.
(i) The Fleet Pro Forma weighted average shares
outstanding for the six months ended June 30, 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 three and
six months ended June 30, 1995, reflect Shawmut's historical
weighted average shares outstanding adjusted for the
repurchase of the shares of Shawmut Common Stock issued in
connection with the Northeast Merger as if such merger and
repurchase had occurred on January 1, 1995. The
Fleet/Shawmut Pro Forma weighted average shares outstanding
for the three and six months ended June 30, 1995, reflect
the Fleet Pro Forma weighted average shares plus the
12
<PAGE>
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). 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.
(j) 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 share adjusted for any
Fleet/Shawmut Pro Forma adjustments.
13
