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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
Date of Report (Date of earliest event reported) May 15, 1996
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.)
ONE FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 617-292-2000
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<PAGE>
ITEM 5. OTHER EVENTS
------------
On May 1, 1996, Fleet Financial Group, Inc. ("Fleet") consummated the
merger (the "Merger") of Fleet Bank of New York, National Association ("FBNY"),
a wholly-owned subsidiary of Fleet, with and into NatWest Bank N.A. ("Natwest")
which shall continue its existence as the surviving bank under the name "Fleet
Bank N.A.". Pursuant to the terms of the Agreement and Plan of Merger (the
"Merger Agreement") dated December 19, 1995 between Fleet and National
Westminster Bank Plc ("NatWest Plc"), Fleet purchased from NatWest Plc the three
main operating entities of NatWest Bancorp ("Bancorp"), a wholly-owned, indirect
subsidiary of NatWest Plc: NatWest Bank N.A., NatWest (Delaware) and NatWest
Services Inc. The Merger Agreement also required that certain assets and
liabilities of NatWest be retained by Bancorp or transferred to other affiliates
of NatWest Plc. NatWest was a wholly-owned, direct subsidiary of National
Westminster Bancorp NJ, a New Jersey Corporation, which was a wholly-owned,
direct subsidiary of Bancorp, a Delaware corporation and a wholly-owned,
indirect subsidiary of NatWest Plc.
Fleet hereby files its Unaudited Pro Forma Combined Financial Statements
and Notes thereto in connection with the Merger as of March 31, 1996.
For additional information regarding the Merger, see the Registrant's
Current Reports on Form 8-K dated May 1, 1996, April 5, 1996, March 25, 1996,
March 15, 1996 and December 19, 1995.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
The following exhibits are filed as part of this report:
99(a) Unaudited Pro Forma Combined Financial Statements and Notes Thereto
99(b) Consolidated Statement of Condition of Bancorp as of March 31, 1996;
Bancorp's Consolidated Statements of Operations, Consolidated
Statements of Changes in Equity Capital and Consolidated Statements of
Cash Flows for the three month periods ended March 31, 1996 and 1995
(unaudited).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed in its behalf
by the undersigned hereunto duly authorized.
FLEET FINANCIAL GROUP, INC.
(Registrant)
By: /s/ Robert C. Lamb, Jr.
-----------------------
Robert C. Lamb, Jr.
Chief Accounting Officer
Controller
Dated: May 15, 1996
<PAGE>
Exhbit
No. Description
- ------ -----------
99(a) Unaudited Pro Forma Combined Financial Statements and Notes Thereto
99(b) Consolidated Statement of Condition of Bancorp as of March 31, 1996;
Bancorp's Consolidated Statements of Operations, Consolidated
Statements of Changes in Equity Capital and Consolidated Statements of
Cash Flows for the three month periods ended March 31, 1996 and 1995
(unaudited).
EXHIBIT 99 (a)
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On May 1, 1996, Fleet Financial Group, Inc. ("Fleet") consummated the
merger (the "Merger") of Fleet Bank of New York, National Association ("FBNY"),
a wholly-owned subsidiary of Fleet, with and into NatWest Bank N.A. ("NatWest"),
a wholly-owned indirect subsidiary of NatWest Plc, which shall continue as the
surviving bank under the name "Fleet Bank, N.A." (the "Surviving Bank"). The
following Unaudited Pro Forma Combined Balance Sheet as of March 31, 1996, and
the Unaudited Pro Forma Combined Statements of Income for the three months ended
March 31, 1996 and for the year ended December 31, 1995, give effect to the
Merger accounted for by the purchase method of accounting as if such transaction
had occurred on January 1, 1995.
The pro forma information is based on the historical consolidated
financial statements of Fleet and National Westminster Bancorp, Inc. ("Bancorp")
and their subsidiaries under the assumptions and adjustments set forth in the
accompanying Notes to the Unaudited Pro Forma Combined Financial Statements.
NatWest was a wholly-owned direct subsidiary of National Westminster Bancorp NJ,
a New Jersey corporation, which was a wholly-owned indirect subsidiary of
National Westminster Bancorp, Inc., a Delaware corporation. Bancorp was a
wholly-owned indirect subsidiary of NatWest Plc. Pursuant to the terms of the
Merger Agreement, certain operating subsidiaries of Bancorp, including its
leasing subsidiary, and certain assets and liabilities of NatWest were retained
by Bancorp or transferred to other affiliates of NatWest Plc. Such assets and
liabilities are included as pro forma adjustments in the Unaudited Pro Forma
Combined Financial Statements. The Unaudited Pro Forma Combined Financial
Statements should be read in conjunction with the consolidated financial
statements of Fleet, filed in Fleet's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996 and Fleet's Annual Report on Form 10-K for the year
ended December 31, 1995 and the consolidated financial statements of Bancorp,
filed as Exhibit 99b to this Current Report on Form 8-K and Fleet's Current
Report on Form 8-K dated March 25, 1996. 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 Merger been consummated during the period or as of the date for which the
pro forma information is presented.
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
March 31, 1996 (a)
<TABLE><CAPTION>
Fleet/
Balance Sheet NatWest
Fleet NatWest Pro Forma Restructuring Pro Forma
(Dollars in millions) Historical Pro Forma Adjustments Adjustments (d) Combined
---------- --------- ----------- --------------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents $3,305 $1,668 $ 0 $ 0 $ 4,973
Federal funds sold and securities purchased
under agreements to resell 1,808 2,650 (750)(b) (2,650) 1,058
Securities 10,091 2,837 (1,800) 11,128
Loans and leases 47,559 13,763 0 0 61,322
Reserve for credit losses (1,287) (252) 0 0 (1,539)
Mortgages held for resale 2,398 2,554 0 (2,554) 2,398
Premises and equipment 974 420 (88)(c) 0 1,306
Mortgage servicing rights 1,406 16 5 (c) 0 1,427
Excess cost over net assets acquired 907 964 (382)(c) 0 1,489
Other intangibles 164 24 243 (c) 0 431
Other assets 4,798 1,050 (12)(c) 0 5,836
------- ------- ----- ------- --------
Total assets $72,123 $25,694 $(984) $(7,004) $ 89,829
======= ======= ===== ======= ========
LIABILITIES and STOCKHOLDERS' EQUITY:
Deposits:
Demand $10,485 $4,454 $ 0 $ 0 $ 14,939
Regular savings, NOW, money market 21,783 8,453 0 0 30,236
Time 17,853 5,749 0 (1,332) 22,270
------- ------- ----- ------- --------
Total deposits 50,121 18,656 0 (1,332) 67,445
------- ------- ----- ------- --------
Federal funds purchased and securities sold
under agreements to repurchase 3,810 462 700 (b) (1,972) 3,000
Other short-term borrowings 3,363 2,142 675 (b) (3,700) 2,480
Accrued expenses and other liabilities 1,985 934 521 (c) 0 3,440
Long-term debt 6,000 45 400 (b) 0 6,445
------- ------- ----- ------- --------
Total liabilities 65,279 22,239 2,296 (7,004) 82,810
------- ------- ----- ------- --------
Stockholders' equity:
Preferred equity 824 0 175 (b) 0 999
Common equity 6,020 3,455 (3,455)(c) 0 6,020
------- ------- ----- ------- --------
Total stockholders' equity 6,844 3,455 (3,280) 0 7,019
------- ------- ----- ------- --------
Total liabilities and stockholders' equity $72,123 $25,694 $ (984) $(7,004) $89,829
======= ======= ===== ======= ========
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
March 31, 1996 (a)
<TABLE><CAPTION>
NatWest
Bancorp Pro Forma NatWest
(Dollars in millions) Historical Adjustments(e) Pro Forma
---------- -------------- ---------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $1,668 $ 0 $1,668
Federal funds sold and securities purchased
under agreements to resell 2,650 0 2,650
Securities 2,839 (2) 2,837
Loans and leases 14,163 (400) 13,763
Reserve for credit losses (255) 3 (252)
Mortgages held for resale 2,554 0 2,554
Premises and equipment 537 (117) 420
Mortgage servicing rights 16 0 16
Excess cost over net assets acquired 964 0 964
Other intangibles 24 0 24
Other assets 2,521 (1,471) 1,050
------- ------- -------
Total assets $27,681 $(1,987) $25,694
======= ======== =======
LIABILITIES and STOCKHOLDERS' EQUITY:
Deposits:
Demand $4,454 $ 0 $4,454
Regular savings, NOW, money market 8,453 0 8,453
Time 5,949 (200) 5,749
------- ------- -------
Total deposits 18,856 (200) 18,656
------- ------- -------
Federal funds purchased and securities sold
under agreements to repurchase 1,662 (1,200) 462
Other short-term borrowings 2,173 (31) 2,142
Accrued expenses and other liabilities 1,067 (133) 934
Long-term debt 643 (598) 45
------- ------- -------
Total liabilities 24,401 (2,162) 22,239
------- ------- -------
Stockholders' equity:
Preferred equity 0 0 0
Common equity 3,280 175 3,455
------- ------- -------
Total stockholders' equity 3,280 175 3,455
------- ------- -------
Total liabilities and stockholders' equity $27,681 $(1,987) $25,694
======= ======== =======
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
<PAGE>
<TABLE><CAPTION>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Three Months Ended March 31, 1996 (a)
Fleet /
Balance Sheet NatWest
Fleet NatWest Pro Forma Restructuring Pro Forma
(Dollars in millions, except per share data) Historical Pro Forma Adjustments Adjustments(d) Combined
------------- ---------- ----------- -------------- --------
<S> <C> <C> <C> <C> <C>
Interest and fees on loans and leases $1,144 $ 370 $ 0 $ (51) $1,463
Interest on securities 193 110 (26)(b) (59) 218
---------- -------- --------- --------- --------
Total interest income 1,337 480 (26) (110) 1,681
Interest expense:
Deposits 402 147 0 (18) 531
Short-term borrowings 106 73 0 (75) 104
Long-term debt 105 1 7 (b) 0 113
---------- -------- --------- --------- --------
Total interest expense 613 221 7 (93) 748
---------- -------- --------- --------- --------
Net interest income 724 259 (33) (17) 933
Provision for credit losses 35 23 0 0 58
---------- -------- --------- --------- --------
Net interest income after provision for credit losses 689 236 (33) (17) 875
---------- -------- --------- --------- --------
Mortgage banking 124 9 0 0 133
Investment services revenue 87 4 0 0 91
Service charges, fees and commissions 119 59 0 0 178
Securities available for sale gains 18 3 0 0 21
Gain from branch divestitures 60 0 0 0 60
Other noninterest income 111 24 0 0 135
---------- -------- --------- --------- --------
Total noninterest income 519 99 0 0 618
---------- -------- --------- --------- --------
Employee compensation and benefits 348 124 (1)(c) 0 471
Occupancy and equipment 118 37 (1)(c) 0 154
Mortgage servicing rights amortization 41 1 0 0 42
FDIC assessment 2 0 0 0 2
Marketing 22 10 0 0 32
Intangible asset amortization 25 19 (4)(c) 0 40
OREO expense 3 0 0 0 3
Other noninterest expense 199 46 0 0 245
---------- -------- --------- --------- --------
Total noninterest expense 758 237 (6) 0 989
---------- -------- --------- --------- --------
Income before income taxes 450 98 (27) (17) 504
Applicable income taxes 186 47 (16) (7) 210
---------- -------- --------- --------- --------
Net income $ 264 $ 51 $ (11) $ (10) $ 294
========== ======== ========= ========= ========
Net income applicable to common shares: (f) $ 251 $ 51 $ (18) (b) $ (10) $ 274
========== ======== ========= ========= ========
Weighted average common shares outstanding:(g)
Primary 268,352,754 268,352,754
Fully Diluted 268,376,014 268,376,014
Earnings per share:
Primary $ 0.94 $ 1.02
Fully Diluted 0.94 1.02
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Three Months Ended March 31, 1996 (a)
<TABLE><CAPTION>
NatWest
Bancorp Pro Forma NatWest
(Dollars in millions, except per share data) Historical Adjustments(e) Pro Forma
---------- ---------- ----------
<S> <C> <C> <C>
Interest and fees on loans and leases $371 $(1) $370
Interest on securities 110 0 110
---------- ---------- ---------
Total interest income 481 (1) 480
Interest expense:
Deposits 147 0 147
Short-term borrowings 67 6 73
Long-term debt 15 (14) 1
---------- ---------- ---------
Total interest expense 229 (8) 221
---------- ---------- ---------
Net interest income 252 7 259
Provision for credit losses 23 0 23
---------- ---------- ---------
Net interest income after provision for credit losses 229 7 236
---------- ---------- ---------
Mortgage banking 9 0 9
Investment services revenue 4 0 4
Service charges, fees and commissions 59 0 59
Securities available for sale gains 3 0 3
Gain from branch divestitures 0 0 0
Other noninterest income 23 1 24
---------- ---------- ---------
Total noninterest income 98 1 99
---------- ---------- ---------
Employee compensation and benefits 124 0 124
Occupancy and equipment 38 (1) 37
Mortgage servicing rights amortization 1 0 1
FDIC assessment 0 0 0
Marketing 10 0 10
Intangible asset amortization 19 0 19
OREO expense 0 0 0
Other noninterest expense 45 1 46
---------- ---------- ---------
Total noninterest expense 237 0 237
---------- ---------- ---------
Income before income taxes 90 8 98
Applicable income taxes 44 3 47
---------- ---------- =========
Net income $46 $5 $51
========== ========== =========
Net income applicable to common shares: (f) $46 $5 $51
========== ========== =========
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
<PAGE>
<TABLE><CAPTION>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Twelve Months Ended December 31, 1995 (a)
Fleet /
Balance Sheet NatWest
Fleet NatWest Pro Forma Restructuring Pro Forma
(Dollars in millions, except per share data) Pro Forma Pro Forma Adjustments Adjustments(d) Combined
----------- --------- ----------- -------------- --------
<S> <C> <C> <C> <C> <C>
Interest and fees on loans and leases $4,785 $1,499 $ 0 $ (279) $6,005
Interest on securities 1,365 641 (105)(b) (1,006) 895
----------- --------- -------- -------- ---------
Total interest income 6,150 2,140 (105) (1,285) 6,900
Interest expense:
Deposits 1,782 619 0 (271) 2,130
Short-term borrowings 836 446 0 (872) 410
Long-term debt 478 0 29 (b) 0 507
----------- --------- -------- -------- ---------
Total interest expense 3,096 1,065 29 (1,143) 3,047
----------- --------- -------- -------- ---------
Net interest income 3,054 1,075 (134) (142) 3,853
Provision for credit losses 102 95 0 0 197
----------- --------- -------- -------- ---------
Net interest income after provision for credit losses 2,952 980 (134) (142) 3,656
----------- --------- -------- -------- ---------
Mortgage banking 512 30 0 0 542
Investment services revenue 322 16 0 0 338
Service charges, fees and commissions 496 237 0 0 733
Securities available for sale gains 38 90 0 0 128
Other noninterest income 496 143 0 0 639
----------- --------- -------- -------- ---------
Total noninterest income 1,864 516 0 0 2,380
----------- --------- -------- -------- ---------
Employee compensation and benefits 1,474 452 (2)(c) 0 1,924
Occupancy and equipment 468 136 (4)(c) 0 600
Mortgage servicing rights amortization 196 2 1 (c) 0 199
FDIC assessment 70 21 0 0 91
Marketing 94 52 0 0 146
Intangible asset amortization 113 77 (21)(c) 0 169
OREO expense 16 6 0 0 22
Merger and restructuring related charges 490 7 0 0 497
Loss on assets held for sale or accelerated disposition 175 0 0 0 175
Other noninterest expense 701 210 0 0 911
----------- --------- -------- -------- ---------
Total noninterest expense 3,797 963 (26) 0 4,734
----------- --------- -------- -------- ---------
Income before income taxes 1,019 533 (108) (142) 1,302
Applicable income taxes 420 210 (65) (57) 508
----------- --------- -------- -------- ---------
Net income $599 $323 $ (43) $ (85) $794
=========== ========= ======== ======== =========
Net income applicable to common shares: (f) $404 $323 $ (85)(b) $ (85) $557
=========== ========= ======== ======== =========
Weighted average common shares outstanding: (g)
Primary 264,352,367 264,352,367
Fully Diluted 265,442,513 265,442,513
Earnings per share:
Primary $1.53 $2.11
Fully Diluted 1.52 2.10
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Twelve Months Ended December 31, 1995 (a)
<TABLE><CAPTION>
Fleet Pro Forma Fleet
(Dollars in millions, except per share data) Historical Adjustments(h) Pro Forma
-------------- -------------- -----------
<S> <C> <C> <C>
Interest and fees on loans and leases $4,721 $64 $4,785
Interest on securities 1,304 61 1,365
-------------- -------- --------------
Total interest income 6,025 125 6,150
Interest expense:
Deposits 1,726 56 1,782
Short-term borrowings 801 35 836
Long-term debt 478 0 478
-------------- -------- --------------
Total interest expense 3,005 91 3,096
-------------- -------- --------------
Net interest income 3,020 34 3,054
Provision for credit losses 101 1 102
-------------- -------- --------------
Net interest income after provision for credit losses 2,919 33 2,952
-------------- -------- --------------
Mortgage banking 511 1 512
Investment services revenue 322 0 322
Service charges, fees and commissions 492 4 496
Securities available for sale gains 32 6 38
Other noninterest income 493 3 496
-------------- -------- --------------
Total noninterest income 1,850 14 1,864
-------------- -------- --------------
Employee compensation and benefits 1,448 26 1,474
Occupancy and equipment 459 9 468
Mortgage servicing rights amortization 190 6 196
FDIC assessment 67 3 70
Marketing 93 1 94
Intangible asset amortization 105 8 113
OREO expense 15 1 16
Merger and restructuring related charges 490 0 490
Loss on assets held for sale or accelerated disposition 175 0 175
Other noninterest expense 693 8 701
-------------- -------- --------------
Total noninterest expense 3,735 62 3,797
-------------- -------- --------------
Income before income taxes 1,034 (15) 1,019
Applicable income taxes 424 (4) 420
-------------- -------- -------------
Net income $610 $ (11) $599
============== ======== =============
Net income applicable to common shares: (f) $416 $ (12) $404
============== ======== =============
Weighted average common shares outstanding: (g)
Primary 264,796,217 264,352,367
Fully Diluted 265,886,363 265,442,513
Earnings per share:
Primary $1.57 $1.53
Fully Diluted 1.57 1.52
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
<PAGE>
<TABLE><CAPTION>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
For the Twelve Months Ended December 31, 1995 (a)
NatWest
Bancorp Pro Forma NatWest
(Dollars in millions, except per share data) Historical Adjustments(e) Pro Forma
---------- -------------- ---------
<S> <C> <C> <C>
Interest and fees on loans and leases $1,508 $ (9) $1,499
Interest on securities 642 (1) 641
---------- -------- ---------
Total interest income 2,150 (10) 2,140
Interest expense:
Deposits 619 0 619
Short-term borrowings 420 26 446
Long-term debt 61 (61) 0
---------- -------- ---------
Total interest expense 1,100 (35) 1,065
---------- -------- ---------
Net interest income 1,050 25 1,075
Provision for credit losses 95 0 95
---------- -------- ---------
Net interest income after provision for credit losses 955 25 980
---------- -------- ---------
Mortgage banking 30 0 30
Investment services revenue 16 0 16
Service charges, fees and commissions 237 0 237
Securities available for sale gains 90 0 90
Other noninterest income 145 (2) 143
---------- -------- ---------
Total noninterest income 518 (2) 516
---------- -------- ---------
Employee compensation and benefits 459 (7) 452
Occupancy and equipment 137 (1) 136
Mortgage servicing rights amortization 2 0 2
FDIC assessment 21 0 21
Marketing 56 (4) 52
Intangible asset amortization 78 (1) 77
OREO expense 6 0 6
Merger and restructuring related charges 10 (3) 7
Loss on assets held for sale or accelerated disposition 0 0 0
Other noninterest expense 197 13 210
---------- -------- ---------
Total noninterest expense 966 (3) 963
---------- -------- ---------
Income before income taxes 507 26 533
Applicable income taxes 201 9 210
---------- -------- =========
Net income $306 $17 $323
========== ======== =========
Net income applicable to common shares: (f) $306 $17 $323
========== ======== =========
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
<PAGE>
NOTES TO UNAUDITED PRO FORMA 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 been consummated at the beginning of the period
indicated, nor is it necessarily indicative of the results of operations in
future periods or the future financial position of the combined entities. Under
generally accepted accounting principles ("GAAP"), the assets and liabilities of
NatWest will be combined at market value with those of Fleet with the excess of
the purchase price over the net assets acquired allocated to goodwill. On
November 30, 1995, Fleet completed the merger (the "Shawmut Merger") of Shawmut
National Corporation ("Shawmut") with and into Fleet with such merger accounted
for as a pooling of interests.
The pro forma combined financial statements do not give effect to the
anticipated cost savings in connection with the Merger or the Shawmut Merger.
While no assurance can be given, Fleet expects to achieve cost savings of
approximately $200 million (pre-tax) within eighteen months following the
Merger. Cost savings of $400 million (pre-tax) are also expected to be achieved
in connection with the Shawmut Merger. Such cost savings are expected to be
achieved within the first fifteen months after the consummation of the Shawmut
Merger. Cost savings from both the Merger and the Shawmut Merger are expected to
be realized primarily through reductions in staff, elimination and consolidation
of certain branches, and the consolidation of certain offices, data processing
and other redundant back-office operations. The extent to which cost savings
will be achieved in connection with the Merger and the Shawmut Merger is
dependent upon various factors beyond the control of Fleet, including the
regulatory environment, economic conditions, unanticipated changes in business
conditions and inflation. 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.
The pro forma information gives effect to the Merger as if the Merger had
occurred on January 1, 1995. In connection with the Merger, Fleet is in the
process of substantially restructuring its balance sheet to replace
lower-yielding assets, primarily securities and residential loans, with
higher-earning assets acquired from NatWest, and to replace higher-cost funding
with lower-cost deposits acquired from NatWest (see note d). The pro forma
information gives effect to the balance sheet restructuring. However, due to
differences in market conditions and the balance sheet mix and size during 1995
and 1996 compared to the current market conditions and the current balance sheet
mix and size, pro forma results of operations may not be indicative of the
results of operations in the future or which would have resulted had the Merger
been consummated during the period for which the pro forma information is
presented.
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
All dollar amounts included in these Notes to Unaudited Pro Forma Combined
Financial Statements are in thousands unless otherwise indicated.
(b) On May 1, 1996, Fleet purchased NatWest for $2.7 billion in cash.
Pursuant to the Merger Agreement, the purchase price will be adjusted upward or
downward post closing based upon the tangible equity of NatWest as of the
closing date of the Merger. The following funding transactions occurred in
conjunction with the Merger and are reflected in the accompanying Unaudited Pro
Forma Combined Financial Statements. The $2.7 billion purchase price was funded
through the issuance of $600 million of preferred stock with a weighted average
dividend rate of 6.94%, the issuance of $400 million of long-term debt with an
average borrowing rate of 7.20%, dividends of $1.375 billion received from Fleet
subsidiaries and asset sales within Fleet Bank N.A. totaling $325 million. The
source of funds for the $1.375 billion in dividends received from subsidiaries
were assumed to be the result of asset sales, primarily securities. As part of
this transaction, pro forma adjustments assume Fleet raised an additional $675
million of short-term borrowings (primarily commercial paper) to recapitalize
certain of the subsidiaries and that such subsidiaries reduced short-term
borrowings by $675 million. All funding transactions are assumed to have
occurred as of January 1, 1995.
(c) Purchase accounting adjustments include adjustments to reflect the
estimated fair value of the assets acquired and liabilities assumed, the
elimination of NatWest's stockholder's equity, and the recording of goodwill and
core deposit intangible in accordance with the purchase method of accounting.
These adjustments are based on the best information available as of the date of
the filing of these Unaudited Pro Forma Combined Financial Statements and may be
different from the actual adjustments to reflect fair value of the net assets
purchased as of the date of consummation of the Merger. Adjustments have been
made to the Unaudited Pro Forma Combined Balance Sheet to reflect the recording
of goodwill as well as to eliminate any goodwill balances previously recorded at
NatWest, in accordance with the purchase method of accounting.
Purchase price $2,700
Historical net tangible assets acquired $3,455
Elimination of NatWest goodwill and core
deposit intangible (971) 2,484
-----------
Estimated fair value adjustments (34)
Estimated purchase price adjustment (165)(1)
---------
Estimated fair value of net assets acquired 2,285
---------
Excess cost over net assets acquired (goodwill) $ 415
=========
(1) In accordance with the Merger Agreement, the purchase price will be
adjusted based upon the tangible equity of NatWest as of the closing date
of the Merger. The pro forma adjustment reflects the estimated increase in
the purchase price as if the Merger had been consummated on March 31, 1996.
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Goodwill of $415 million has been estimated assuming a purchase price of $2.7
billion. The Merger Agreement provides for additional payments (the "Earnout")
to be made annually based upon the level of earnings from the NatWest franchise,
not to exceed $560 million during an eight year "Earnout Period", which will
commence on May 1, 1996 and end on April 30, 2004. Assuming full payout of the
Earnout, the total purchase price would be $3.26 billion resulting in an
increase to goodwill of $560 million. Such increase, if any, will be recorded
when earned during the Earnout Period and will be amortized over the remaining
life of the goodwill. Included in the pro forma adjustments is an increase to
goodwill of $167 million ($169 million net of $2 million of amortization for the
first quarter of 1996) as of March 31, 1996, reflecting the estimated payment
required for fiscal year 1995 under the Earnout assuming consummation of the
Merger as of January 1, 1995. This estimate is based on the level of NatWest pro
forma earnings and is not necessarily indicative of payments that may be made,
if any. Estimated fair value adjustments include merger-related charges and
other adjustments to reflect the estimated fair value of assets being acquired
and liabilities being assumed. Significant adjustments include core deposit
intangible of $150 million, net of tax, and a liability of $106 million, net of
tax, to reflect Fleet's best estimate of merger-related charges. Goodwill due to
the Merger is assumed to be amortized on a straight line basis over 25 years.
Other identifiable intangible assets due to the Merger are assumed to be
amortized over the estimate period of benefit (primarily core deposit
intangible, not exceeding 10 years).
(d) In conjunction with the Merger, Fleet and Bancorp have taken certain
actions to restructure the Combined Balance Sheet through the liquidation of
low-return assets and the reduction of borrowed funds. Since Fleet and Bancorp
began restructuring their respective balance sheets during the first quarter of
1996, the Unaudited Pro Forma Combined Statements of Income assume different
levels of restructuring for the three months ended March 31, 1996, when compared
to the year ended December 31, 1995. The accompanying Unaudited Pro Forma
Combined Statements of Income assume the reduction of approximately $7.0 billion
and $19.9 billion of assets and an equal amount of borrowed funds at March 31,
1996 and December 31, 1995, respectively. The assets assumed to be reduced
include: approximately $1.8 billion and $13.4 billion of securities with an
average yield of 6.24% and 6.18% for 1996 and 1995, respectively; approximately
$2.6 billion and $3.5 billion of loans, primarily residential real estate, with
an average yield of 7.99% and 7.98% for 1996 and 1995, respectively; and
approximately $2.6 billion and $3.0 billion in federal funds sold with an
average yield of 4.74% and 5.89% for 1996 and 1995, respectively. The $7.0
billion and $19.9 billion of borrowed funds assumed to be reduced include:
approximately $5.7 billion and $14.6 billion of short-term borrowings with an
average borrowing rate of 5.30% and 5.69% for 1996 and 1995, respectively; and
$1.3 billion and $5.3 billion of time deposits with an average borrowing rate of
5.33% and 5.89% for 1996 and 1995, respectively. Asset yields and funding costs
have been estimated based upon historical weighted average yields and funding
costs of similar assets and liabilities in the aggregate and may not be
indicative of the results of operations in the future or which would have been
realized had such transactions been consummated during the period for which the
pro forma information is presented. The balance sheet restructuring adjustments
have been calculated assuming a certain balance sheet size as well as a certain
mix of balance sheet assets (primarily securities and residential loans) to
total assets as of March 31, 1996 and December 31, 1995. As a result,
restructuring assumptions may not be indicative of the results of operations in
the future or that would have been achieved had the Merger been consummated at
the beginning of the period indicated. Also, due to changing market conditions,
balance sheet mix and balance sheet size restructuring assumptions may differ as
compared to the ultimate balance sheet restructuring.
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(e) Pursuant to the Merger Agreement, certain operating subsidiaries of
Bancorp, including its leasing business, and certain assets and liabilities of
NatWest were retained by Bancorp. Pro forma adjustments reflect the approximate
impact of those assets not being purchased and liabilities not being assumed.
(f) The Fleet/NatWest Pro Forma net income applicable to common shares
reflects the sum of the Fleet Pro Forma net income applicable per common share
and the NatWest Pro Forma net income applicable per common share adjusted for
the purchase accounting, funding, and restructuring adjustments.
(g) The Fleet Pro Forma weighted average shares outstanding for the year
ended December 31, 1995, reflects the effect of reissuing treasury stock in
connection with the NBB Bancorp, Inc. ("NBB") and Northeast Federal Corp.
("Northeast") transactions as if such repurchase of common stock and reissuance
of treasury stock occurred on January 1, 1995.
(h) During 1995, Fleet also completed the merger (the "NBB Merger") of NBB
with and into Fleet, the merger (the "Plaza Merger") of Plaza Home Mortgage
Corp. ("Plaza") with and into Fleet, the merger (the "Northeast Merger") of
Northeast with and into Fleet, the acquisition (the "Barclays Acquisition") of
substantially all of the assets of Barclays Business Finance Division of
Barclays Business Credit, Inc. ("Barclays") by Fleet 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 and each of which is included in the
Unaudited Pro Forma Combined Balance Sheet. Pro forma adjustments to the
Unaudited Pro Forma Combined Statements of Income reflect the impact of the NBB
Merger, the Barclays Acquisition, the FMG Repurchase, the Plaza Merger and the
Northeast Merger which were consummated on January 27, 1995, January 31, 1995,
February 28, 1995, March 3, 1995 and June 9, 1995, respectively, as if such
transactions had been consummated on January 1, 1995. Certain acquisitions
completed by NatWest during 1995 have not been reflected in the Unaudited Pro
Forma Combined Financial Statements due to immateriality.
EXHIBIT 99 (b)
Consolidated Statement of Condition
National Westminster Bancorp Inc. and Subsidiaries
(Unaudited)
(Amounts in Thousands except Share Amounts)
- ------------------------------------------------------------------------------
March 31 1996
- ------------------------------------------------------------------------------
Assets
Cash and due from banks $ 1,331,003
Interest bearing deposits with banks 336,873
Securities available for sale (at fair value) 2,838,523
Trading account 1,402,674
Federal funds sold and securities
purchased under agreement to resell 2,650,479
Loans, net of unearned income 14,162,572
Allowance for loan losses (255,169)
- ------------------------------------------------------------------------------
Loans, net 13,907,403
Mortgages available for sale 2,553,817
Goodwill 964,214
Premises and equipment, net 536,578
Due from customers on acceptances 158,540
Other assets 1,000,499
- ------------------------------------------------------------------------------
Total assets $ 27,680,603
==============================================================================
Liabilities and Equity Capital
Deposits
Domestic offices
Demand $ 4,453,513
Retail savings and time 11,214,991
Other domestic time 1,589,949
Foreign offices 1,597,055
- ------------------------------------------------------------------------------
Total 18,855,508
Short-term borrowed funds 3,834,789
Long-term debt 643,388
Acceptances outstanding 159,532
Accounts payable and accrued liabilities 907,911
- ------------------------------------------------------------------------------
Total liabilities 24,401,128
- ------------------------------------------------------------------------------
Equity capital
Common stock, no par value (1,500 shares
authorized; 1,000 shares issued and outstanding) 500,000
Surplus 2,478,128
Retained earnings 301,579
Unrealized losses on available for sale securities (232)
- ------------------------------------------------------------------------------
Total equity capital 3,279,475
- ------------------------------------------------------------------------------
Total liabilities and equity capital $ 27,680,603
===============================================================================
See accompanying Condensed Notes to Unaudited Consolidated Financial Statements.
<PAGE>
Consolidated Statement of Operations
National Westminster Bancorp Inc. and Subsidiaries
(Unaudited)
(Amounts in Thousands)
- ------------------------------------------------------------------------------
Three Months Ended March 31 1996 1995
- ------------------------------------------------------------------------------
Interest Income
Loans $ 371,393 $ 349,279
Securities 37,123 74,685
Trading account 18,970 14,294
Deposits with banks,
Federal funds sold and
securities purchased under
agreements to resell 53,399 57,087
- ------------------------------------------------------------------------------
Total interest income 480,885 495,345
- ------------------------------------------------------------------------------
Interest Expense
Deposits 147,512 124,109
Short-term borrowed funds 66,749 83,816
Long-term debt 14,707 15,028
- ------------------------------------------------------------------------------
Total interest expense 228,968 222,953
- ------------------------------------------------------------------------------
Net interest income 251,917 272,392
Provision for loan losses 23,001 20,000
- ------------------------------------------------------------------------------
Net interest income after
provision for loan losses 228,916 252,392
- ------------------------------------------------------------------------------
Non-Interest Income
Service charges on deposit accounts 35,542 33,013
Syndication and other loan-related fees 10,980 6,818
Credit card fees 7,283 10,577
Gain on sale of mortgage loans 6,619 --
Securities trading and foreign exchange 5,324 5,142
Letter of credit and acceptance fees 5,068 4,793
Insurance and investment products 3,864 3,755
Trust and custody fees 3,582 3,781
Other securities gains 3,488 532
Other 16,785 22,240
- ------------------------------------------------------------------------------
Total non-interest income 98,535 90,651
- ------------------------------------------------------------------------------
Operating Expenses
Salaries and benefits 124,258 113,038
Supplies and services 40,207 30,413
Net occupancy 24,131 21,876
Equipment 13,675 15,421
Business development 9,841 12,893
Foreclosed assets 268 1,023
FDIC insurance 2 10,507
Restructuring - 9,921
Amortization of goodwill 18,157 17,680
Other 6,770 7,828
- ------------------------------------------------------------------------------
Total operating expenses 237,309 240,600
- ------------------------------------------------------------------------------
Income before income taxes 90,142 102,443
Provision for income taxes 43,858 46,943
- ------------------------------------------------------------------------------
Net income $ 46,284 $ 55,500
==============================================================================
See accompanying Condensed Notes to Unaudited Consolidated Financial Statements.
<PAGE>
Consolidated Statement of Changes in Equity Capital
National Westminster Bancorp Inc. and Subsidiaries
(Unaudited)
<TABLE><CAPTION>
(Amounts in Thousands except Share Amounts)
- ---------------------------------------------------------------------------------------------------------------------------
Retained
earnings/ Unrealized
Common (accumulated gains and
stock Surplus deficit) (losses) Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995 $ 500,000 $ 2,265,065 $ (50,327) $ (28,322) $ 2,686,416
Net income 55,500 55,500
Cash dividends paid (91,500) (91,500)
Capital contributions 306,060 306,060
Change in unrealized gains and
(losses), on available
for sale securities, net of
related tax effect of $8,963 18,342 18,342
- ---------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1995
(1,500 shares authorized;
1,000 shares issued and
outstanding) $ 500,000 $ 2,479,625 $ 5,173 $ (9,980) $ 2,974,818
===========================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------
Balance, January 1, 1996 $500,000 $2,478,128 $255,295 $ 2,019 $3,235,442
Net income 46,284 46,284
Change in unrealized gains and
(losses), on available
for sale securities, net of
related tax effect of $1,697 (2,251) (2,251)
- ---------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1996
(1,500 shares authorized;
1,000 shares issued and
outstanding) $500,000 $2,478,128 $301,579 $ (232) $3,279,475
===========================================================================================================================
</TABLE>
See accompanying Condensed Notes to Unaudited Consolidated Financial Statements.
<PAGE>
Consolidated Statement of Cash Flows
National Westminster Bancorp Inc. and Subsidiaries
(Unaudited)
<TABLE><CAPTION>
(Amounts in Thousands)
- -------------------------------------------------------------------------------------------------
For the Three Months Ended March 31 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net income $ 46,284 $ 55,500
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Amortization of goodwill 18,157 17,680
Depreciation of premises and equipment 14,540 11,957
Provision for loan losses 23,001 20,000
Provision and charge-offs for foreclosed assets 64 637
Amortization of discount on securities (28,429) (1,441)
Amortization of unearned income on loans (14,859) (23,050)
Provision for deferred income taxes 16,878 35,418
Securities gains (3,488) (532)
Gain on sale of mortgage loans (6,619) -
Premises and equipment losses - 704
Increase in interest and other income receivable (67,180) (66,608)
Increase (decrease) in interest and other expenses payable (37,967) 121,189
Net increase in trading account (123,151) (199,650)
Other, net 29,443 73,699
- ---------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (133,326) 45,503
- ---------------------------------------------------------------------------------------------------
Investing Activities
Net decrease in interest bearing deposits with banks 165,300 320,751
Net (increase) decrease in Federal funds sold and
securities purchased under agreements to resell 314,732 (1,300,926)
Purchases of securities held to maturity - (684,713)
Maturities of securities held to maturity - 178,825
Purchases of securities available for sale (1,883,663) (1,713,786)
Maturities of securities available for sale 1,045,083 675,170
Sales of securities available for sale 1,064,184 1,238,730
Purchase of residential mortgages - (156,236)
Sale of residential mortgages 1,534,080 -
Net principal disbursed on loans (43,153) (68,656)
Net increase in acceptances (2,573) (9,551)
Capital expenditures on premises and equipment (6,353) (23,648)
Proceeds from sale of premises and equipment - 577
Cash received from the purchase of Central Jersey - 104,438
- ---------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 2,187,637 (1,439,025)
- ---------------------------------------------------------------------------------------------------
Financing Activities
Net decrease in demand deposits (412,664) (470,239)
Net decrease in retail savings and time deposits (256,542) (398,020)
Net increase (decrease) in other domestic time deposits (866,911) 90,611
Net decrease in foreign office deposits (613,997) (9,419)
Net increase (decrease) in short-term borrowed funds (80,141) 2,244,876
Repayment of long-term debt (12,618) -
Dividends paid to NatWest Holdings - (91,500)
Proceeds of capital contribution from NatWest Holdings - 30,000
- ---------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (2,242,873) 1,396,309
- ---------------------------------------------------------------------------------------------------
Increase (decrease) in cash and due from banks (188,562) 2,787
Cash and due from banks at January 1 1,519,565 1,327,644
- ---------------------------------------------------------------------------------------------------
Cash and due from banks at March 31 $1,331,003 $ 1,330,431
===================================================================================================
</TABLE>
For the three months ended March 31, 1996 and 1995, income tax payments totaled
$322,000 and $12,929,000, respectively, and interest payments totaled
$232,893,000, and $188,539,000, respectively.
See accompanying Condensed Notes to Unaudited Consolidated Financial Statements.
<PAGE>
National Westminster Bancorp, Inc.
Condensed Notes to Unaudited Consolidated Financial Statements
March 31, 1996
Note 1. General Accounting Standards
NatWest Bancorp's accounting and reporting policies conform with
generally accepted accounting principles and with general practice in the
banking industry. All significant intercompany accounts and transactions have
been eliminated. Prior period financial statements have been restated where
necessary to conform with current year classifications.
The accompanying consolidated financial statements are unaudited;
however, in the opinion of management all adjustments, consisting solely of
normal recurring accruals, necessary for a fair presentation have been made. See
the notes to the financial statements contained in the December 31, 1995,1994
and 1993 Consolidated Financial Statements for a description of the accounting
policies used in the preparation of the consolidated financial statements.
Note 2. Loans
On January 1, 1995, NatWest Bancorp adopted FASB Statement No. 114-
"Accounting by Creditors for Impairment of a Loan" (SFAS 114) as amended by FASB
Statement No. 118 - "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosure" (SFAS 118). The Statement, as amended, prescribes
the recognition criterion for loan impairment and the measurement methods for
certain impaired loans and loans whose terms are modified in a troubled debt
restructuring (a "restructured loan"). It does not apply to groups of
smaller-balance homogeneous loans that are collectively evaluated for impairment
(mostly consumer loans). Under this standard, a loan is considered to be
impaired when, based on current information and events, management considers it
probable that all amounts contractually due under the terms of the loan
agreement will not be recovered. For those loans subject to SFAS 114, impairment
is measured based on either the present value of future cash flows discounted at
the loan's effective interest rate or the observable market price of the loan
or, for collateral dependent loans, at the market value of the collateral. SFAS
114 does not affect the timing of charge-offs. Generally, NatWest Bancorp
defines impaired loans as non accrual loans, accruing loans with specific
reserves and certain restructured loans, excluding those consumer loans that are
collectively evaluated for impairment. In accordance with SFAS 114, prior
periods have not been restated. The adoption of SFAS 114 had no significant
financial statement impact.
Mortgages available for sale are carried at the lower of cost or market.
Note 3. Premises and Equipment
On January 1, 1996 NatWest Bancorp adopted FASB Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" (SFAS 121). SFAS 121 requires that long-lived assets and certain
<PAGE>
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In addition, the Statement
requires long-lived assets and certain identifiable intangibles to be disposed
of to be reported at the lower of carrying amount or fair value less cost to
sell. The adoption of the Statement did not have a material impact on the
financial statements.
Note 4. Mortgage Servicing Rights
Effective June 1, 1995 NatWest Bancorp adopted FASB Statement No. 122
"Accounting for Mortgage Servicing Rights". The Statement amends Statement No.
65 to require that a mortgage banking enterprise recognize as separate assets
the rights to service mortgage loans for others, however those servicing rights
are acquired. The Statement requires the assessment of capitalized mortgage
servicing rights for impairment to be based on the current fair value of those
rights. Mortgage servicing rights are amortized in proportion to and over the
period of the estimated net servicing income. The impact of this adoption
resulted in the generation of an additional $2.8 million in mortgage sale gains
for the reported period ended March 31, 1996.
Note 5. Acquisitions
On June 30, 1994, NatWest Bancorp announced a definitive merger
agreement with Central Jersey Bancorp (Central Jersey). The acquisition was
consummated on January 14, 1995 following approval by the shareholders of
Central Jersey and by the bank regulatory agencies.
In consideration of the merger, the holders of Central Jersey issued and
outstanding common stock, at their option, received $33.50 in cash or an
equivalent value in NatWest Plc American Depository receipts (ADRs). The
resultant aggregate purchase price was approximately $276,060,000. This included
previously acquired stock in the amount of $3,343,000.
The acquisition was accounted for under the purchase method of
accounting whereby Central Jersey assets of approximately $1.8 billion and
liabilities of approximately $1.6 billion were recorded at their fair value.
This resulted in goodwill of approximately $204,000,000. This amount will be
amortized on a straight-line basis over an estimated benefit period of 15 years.
Note 6. Sale of NatWest Bancorp
On December 19, 1995, NatWest Plc announced a definitive
agreement to sell the three main operating entities of NatWest Bancorp-NatWest
Bank N.A., NatWest (Delaware) and NatWest Services Inc.- and certain other
assets and liabilities to Fleet Financial Group (FFG). The transaction
closed on May 1, 1996.
Terms of the transaction call for an initial payment, which will be
dependent on the tangible net asset value of the three main operating entities
to be sold, of
<PAGE>
approximately $2.7 billion. The agreement also calls for additional deferred
consideration of up to $560 million. The deferred consideration involves annual
payments from FFG to NatWest Plc equal to approximately 50 percent of the net
income from the NatWest franchise over a maximum of eight years.
The transaction excludes certain NatWest Bancorp subsidiaries with
assets of approximately $215 million, the parent company only assets and
liabilities of NatWest Bancorp and NatWest Bancorp NJ, a loan portfolio of
approximately $315 million (net of the allowance for loan losses), and 175 Water
Street-a building in downtown Manhattan with a net book value of approximately
$85 million.
As part of the sale agreement, NatWest Bancorp agreed to sell a
substantial portion of its residential mortgage portfolio. In conjunction with
this agreement, mortgage loans totaling approximately $2.6 billion were
classified as "mortgages available for sale" at March 31, 1996 and were carried
at historical cost which was less than market value.
Additionally, pursuant to the sale agreement NatWest Bancorp closed out
its asset and liability management swap portfolio by entering into interest rate
swaps with NatWest Plc that offset its existing swap hedge portfolio (see
footnote P of the 1995 Annual Report). In consideration for entering
into the offsetting agreements, a premium of $209 million was received
by NatWest Bancorp. The premium was deferred and is being amortized over
the remaining life of the liquidated swaps. Upon settlement of the sale
of NatWest Bancorp, FFG will pay to NatWest Plc an amount equal to
the unamortized portion of the premium net of applicable income taxes.
