Filed by FleetBoston Financial Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: FleetBoston Financial Corporation
Commission File No. 1-6366
On October 2, 2000, FleetBoston Financial Corporation issued the following press
release:
BOSTON, Oct. 2 /PRNewswire/ -- FleetBoston Financial Corporation (NYSE: FBF)
today announced that it has signed a definitive merger agreement to acquire
Summit Bancorp (NYSE: SUB), the leading retail and commercial bank in New
Jersey. The transaction, which is valued at $7.0 billion, solidifies Fleet's
presence in the New Jersey and metropolitan New York markets, and is a logical
extension of Fleet's geographic franchise across the Northeast.
Under the terms of the agreement, Summit shareholders will receive 1.02 shares
of Fleet for each share of Summit they own in a fixed stock exchange. Based on
the closing price of Fleet's stock on Friday, September 29, the transaction
values Summit at $39.78 per share (or in the aggregate at $7.0 billion). The
price per share represents a 15.7% premium over Summit's stock price as of
September 29. The transaction, which is expected to be tax-free to Summit
shareholders, will be accounted for on a pooling basis and has been approved by
the Boards of Directors of both companies. The transaction is expected to close
before March 31, 2001 and is subject to approval by Summit shareholders as well
as customary regulatory approvals.
Terrence Murray, Chairman and Chief Executive Officer of Fleet, said, "Summit
has a formidable presence in the attractive New Jersey market. This transaction
is an excellent geographic fit with our existing franchises, making Fleet the
number one bank in New Jersey and, for the first time, extending our banking
franchise into the Philadelphia region. In addition, it furthers Fleet's
strategic goals of balanced earnings and leveraging our product and services
capabilities over an expanded customer base, as we extend our range of
sophisticated offerings to Summit's one million households."
Chad Gifford, President and Chief Operating Officer of Fleet, said, "We will
bring together the best of the two companies, specifically the capabilities and
expertise of Fleet and the relationship management skills of Summit. Moreover,
we will combine and maintain the outstanding community investment and
philanthropic levels of both companies in New Jersey, which total $4 million per
year."
T. Joseph Semrod, Chief Executive Officer of Summit, said, "This acquisition is
the right one for Summit, as it provides significant value to our shareholders,
our customers, our employees, and the members of our communities. Together, our
combined organization will be able to offer our customers a broader and more
sophisticated array of products and services, while continuing to
<PAGE>
provide the highest levels of customer service. Importantly, Fleet has committed
to maintaining our current high levels of community, charitable and economic
development commitments, deserving of our outstanding CRA rating." Semrod has
agreed to continue to serve as Chairman of the New Jersey bank and will be named
a Vice Chairman and a member of the board of directors of FleetBoston Financial
Corporation. John G. Collins, a current Vice Chairman of Summit, will serve as
President of the New Jersey bank.
Summit has $39 billion in assets, and more than 500 branches across New Jersey,
Pennsylvania and Connecticut. Fleet, with assets of $181 billion, has
approximately 1,200 branches in New England, New York and New Jersey. At
completion of the transaction, expected in the first quarter of 2001, the
combined institution will have approximately $220 billion in assets.
The transaction is expected to be immediately accretive to Fleet's earnings.
Also today, Fleet announced that its Board of Directors has rescinded its prior
authority, granted in April 2000, to repurchase up to $2.0 billion of its common
stock to comply with the limitations of pooling-of-interests accounting in its
acquisition of Summit.
FleetBoston Financial is the eighth largest financial holding company in the
United States. An $181 billion diversified financial services company, it offers
a comprehensive array of innovative financial solutions to 20 million customers
in more than 20 countries and territories. Among the company's key lines of
business are: retail banking, with approximately 1,200 branches and over 3,400
ATMs in the Northeast; commercial banking, including capital markets/investment
banking and commercial finance; investment services, including discount
brokerage, and full service banking through more than 250 offices in Latin
America. Fleet Boston Financial is headquartered in Boston and listed on the New
York Stock Exchange (NYSE: FBF) and the Boston Stock Exchange (BSF: FBF).
Summit Bancorp (NYSE: SUB) is a $39 billion diversified financial services
company headquartered in Princeton, New Jersey. Through Summit's 500 branches,
600 ATMs and electronic commerce offerings such as Summit Online Banking, it
provides comprehensive financial services to an extensive retail, corporate
banking and private bank customer base in New Jersey, Eastern Pennsylvania, and
Connecticut. For additional information about the company, please visit its web
site at http://www.summitbank.com.
A conference call for the investing public will be broadcast live over the
Internet at 10:00 a.m. EDT on Monday, October 2, 2000. The call is available at
http://www.fleet.com (listen only).
SOURCE FleetBoston Financial Corporation
CONTACT: Media - James Mahoney of FleetBoston Financial, 617-434-9552; or
Steven Lubetkin of Summit Bancorp, 609-514-7920; or Investor - John Kahwaty
of FleetBoston Financial, 617-434-3650; or Kerry Calaiaro of Summit Bancorp,
609-987-3226/
<PAGE>
Analysts presentation:
[FLEETBOSTON LOGO] [SUMMIT LOGO]
OCTOBER 2, 2000
Leveraging the Franchise
<PAGE>
Strategic Rationale:
Compelling Fit with FleetBoston's Franchise
o COMMANDING SHARE IN HIGHLY ATTRACTIVE MARKET
o ACCELERATES FEE INCOME GROWTH RATE:
o Bringing FleetBoston's Products to Summit Customers
o MAINTAINS DIVERSIFIED BUSINESS MIX AND EARNINGS CONSISTENCY
o LEVERAGES SCALE CREATED BY FLEET/BKB MERGER
o ATTRACTIVE SHAREHOLDER ECONOMICS
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<PAGE>
Why Summit.... ?
New Jersey - A Highly Attractive Market
o # 1 in Population Density
o # 2 in Household Income
o 9 of the Top 100 Wealthiest Counties in the U.S.
o 25% of all Households in Northeast with $1MM+ of Investable Assets
o Small Business Base - Equals MA and CT Combined
o 50% of Fortune 500 have HQ's or Operations in N.J.
... Great Opportunity to Leverage Our Franchise
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<PAGE>
Northeast Powerhouse
FleetBoston will have Sizable Lead Positions in
Three of the Wealthiest States
FBF DEPOSIT
HOUSEHOLD INCOME RANK STATE SHARE RANK
--------------------------------------------------------------------------------
#1 Conn. 27% #1
--------------------------------------------------------------------------------
#2 N.J. 21% (pro forma) #1
--------------------------------------------------------------------------------
#6 Mass. 37% #1
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<PAGE>
Ability to Cross-Sell
Synergies Emerging From Fleet/Summit Merger
On-Line Banking Customers (000s)
12/98: 510 (12% penetration)
9/00: 1,023 (26% penetration)
On-Line Brokerage Customer (000s)
12/98: 230
9/00: 950
Cash Management Revenues ($ billions)
1999: $0.8
2000 Annualized: $1.0
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<PAGE>
Accelerating Summit's Growth Rate
Huge Opportunity to Leverage Summit's Customers with
FleetBoston's Stronger Product Mix
Commercial:
o Ssmall Business (#1 SBA Lender)
o Global services (Forex, Trade)
o Cash Management (Top 5 Provider)
o Capital Markets (equity & debt, principal Inv.)
o Comm'l Finance (leasing, asset based)
Consumer:
o E-commerce initiavies
o On-Line Banking (Home Link)
o On-Line Brokerage (Quick & Reilly)
o Invest Mgmt ($130B AUM)
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<PAGE>
Compelling Fit
Summit Brings Features Unique to the Combination
o PENNSYLVANIA PRESENCE
o $3B Deposits
o 115 Branches
o $11B AUM
o Includes High-Performing Pillar Funds
o INSURANCE BROKERAGE
o # 1 in N.J.
o 3rd Largest Among Banks
o MERCHANT BANKCARD PROCESSING
o # 1 in N.J.
o 16,000+ Merchants
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<PAGE>
How This Transforms our Strategy
Circle of Value Creation
Move Customers in Highly Attractive Markets -> Greater Penetration
Growth & Scale -> Free Cash Flow and Capital -> Reinvestment in Growth
Businesses
-8-
<PAGE>
PPT SLIDE
Attractive Shareholder Economics
o ACCRETIVE TO OPERATING EARNINGS IN 2001
o 3% ACCRETIVE IN 2002 AND BEYOND
o IRR: 19%
o 30% COST SAVES
o GENERATES $1B OF EXCESS CAPITAL THROUGH BALANCE SHEET REPOSITIONING
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<PAGE>
Transaction Summary
STRUCTURE: - POOLING
- TAX-FREE EXCHANGE
FIXED EXCHANGE RATIO: - 1.02 FBF SHARES FOR EACH SUB SHARE
PRICE: - $39.78 PER SHARE (BASED ON FBF CLOSE ON 9/29)
- $7B AGGREGATE TRANSACTION VALUE
- 15.7% PREMIUM TO MARKET
TIMING: - SUBJECT TO REGULATORY AND SUMMIT SHAREHOLDER APPROVAL
- TARGETED TO CLOSE Q1'01
BOARD OF DIRECTORS - 2 SUMMIT DIRECTORS INCLUDING T. JOSEPH SEMROD, CHAIRMAN
& CEO, TO JOIN FBF BOARD
DIVESTITURES - $250MM - PRIMARILY SOUTHERN NEW JERSEY
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<PAGE>
PPT SLIDE
Low-Risk Integration
o FBF: AN EXCELLENT OPERATOR & CONSOLIDATOR
o NATURAL EXTENSION OF CURRENT GEOGRAPHY
o EACH COMPANY ALREADY ON A SINGLE OPERATING PLATFORM
o MANY COMMON VENDOR SYSTEMS
o VAST MAJORITY OF FLEETBOSTON BUSINESSES NOT AFFECTED
o EXPECT TO COMPLETE WITHIN 6 MONTHS
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<PAGE>
We've Delivered
Fleet/BKB Merger Completed
E.P.S. Expectations Pre-Merger We've Delivered
Announcement
--------------------------------
1999 $2.85 $2.91
--------------------------------
2000 $3.19 $3.39
--------------------------------
1% accretion 7% accretion
--------------------------------------------------------------------------------
Cost Savings $1 Billion Achieved by
year end
--------------------------------
-$600mm -$800mm
(merger) annualized
--------------------------------
-$400mm Thru 3Q 100
(divestiture)
--------------------------------------------------------------------------------
Divestitures $13B Deposits Done
--------------------------------
12% premium $13B & 315
Branches to
Sovereign &
Community
Banking
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<PAGE>
Financial Assumptions
COST SAVINGS: $275 MILLION (60% IN 2001 / 100% IN 2002)
BALANCE SHEET $15B OF LOW-MARGIN ASSET DISPOSITIONS REPOSITIONING - $10B
INVESTMENT SECURITIES
- $ 5B Loans
$175 million after-tax cost
RESTRUCTURING CHARGES: $250 MILLION AFTER-TAX AT CLOSE $ 60 MILLION
AFTER-TAX IN SUBSEQUENT PERIODS
REVENUE ENHANCEMENTS: NONE ASSUMED
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<PAGE>
Estimated Cost Savings
Personnel $ 150MM
Facilities and Equipment 60
Other 65
Total $ 275MM
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<PAGE>
E.P.S. Accretion
------------ -----------
2001E 2002E
------------ -----------
FBF EPS $ 3.72 $ 4.09
FBF Net Income 3,440 3,775
Summit Net Income 560 600
Combined Net Income 4,000 4,375
Cost Savings (after-tax) 100 175
Balance Sheet Restructuring (25) (35)
Earnings on Reinvested Capital 50 110
--------------------------------------------------------------------------------
Incremental Earnings 125 250
--------------------------------------------------------------------------------
Pro Forma Earnings 4,125 4,625
Pro Forma E.P.S. $ 3.73 $ 4.20
--------------------------------------------------------------------------------
E.P.S. Accretion $ $ .01 $ .11
% 0.3% 3%
--------------------------------------------------------------------------------
Note: Above figures are derived from First Call earnings consensus for both
companies and assumes after-tax earnings of 8.5% in 1001 and 8% in 2002 on
reinvested capital. Excludes merger-related charges
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<PAGE>
Balance Sheet
June 30, 2000
$ IN BILLIONS
Balance
Sheet
FleetBoston Summit Restruct ProForma*
Net Loans $ 110.0 $ 24.7 $ (5.0) $ 129.7
Securities 22.8 11.3 (10.0) 24.1
Other Asset 48.5 3.0 - 51.5
------------ ---------- ----------- ----------
Total Assets $ 181.3 $ 39.0 $ (15.0) $ 205.3
Deposits $ 104.7 $ 26.1 $ - $ 130.8
Borrowings 51.5 9.5 (15.0) 46.0
Other Liabilities 9.8 0.4 - 10.2
----------- ---------- ----------- ----------
Total Assets $ 166.0 $ 36.0 $ (15.0) $ 187.0
Preferred Stock 0.6 - - 0.6
Common Stock 14.7 2.9 - 17.6
----------- ---------- ----------- -----------
Total Liab & Equity $ 181.3 $ 39.0 $ (15.0) $ 205.3
----------- ---------- ---------- -----------
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<PAGE>
<TABLE>
<CAPTION>
Loan Composition
$ IN BILLIONS
<S> <C> <C> <C> <C>
FleetBoston Summit Balance Sheet Pro Forma
Restruct
Q2'00 % of Q2'00 % of Q2'00 % of
Avg Total Avg Total Avg Total
C&I/ Lease Financing $ 66.0 57% $ 8.5 35% $ 74.5 55%
Commercial Real Estate 8.0 7% 3.2 13% 11.2 8%
Residential Real Estate 9.1 8% 5.8 24% (5.0) 9.9 7%
Consumer 18.5 16% 6.4 27% 24.9 18%
International 15.1 13% - 0% 15.1 11%
------- ---- ----- ---- ------------- ------ ------
Gross Loans $116.7 100% $24.0 100% $ (5.0) 136.7 100%
</TABLE>
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<PAGE>
Deposit Composition
$ IN BILLIONS
FleetBoston Summit Pro Forma
Q2'00 % of Q2'00 % of Q2'00 % of
Avg Total Avg Total Avg Total
Demand $ 25.7 24% $ 4.9 20% $ 30.6 23%
Savings NOW 44.0 41% 11.8 47% 55.8 42%
CDs 22.0 20% 8.3 33% 30.3 23%
Foreign 16.0 15% - 0% 16.0 12%
------- ------- ------ ------- ------ ------
Total $ 107.7 100% $ 25.1 100% $ 132.8 100%
* Excludes Expected Divestitures of $250MM
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<PAGE>
Credit Quality
June 30, 2000
$ IN BILLIONS
----------- ----------- ------------------ ---------
Avg Loans FBF SUB Balance Sheet Pro Forma
Restruct
----------- ----------- ------------------ ---------
Gross Loans $112,476 $25,048 $(5,000) $132,524
Loan Loss Reserve 2,472 335 2,807
Non-Performing Assets 950 120 1,070
NPAs/Loans 0.84% 0.48% 0.81%
NCOs/Avg Loans 0.96% 0.36% 0.89%
Reserve/Loans 2.20% 1.34% 2.12%
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<PAGE>
Compelling Fit with FleetBoston's Franchise
o COMMANDING SHARE IN HIGHLY ATTRACTIVE MARKET
o ACCELERATES FEE INCOME GROWTH RATE:
o Bringing FleetBoston's Products to Summit Customers
o MAINTAINS DIVERSIFIED BUSINESS MIX AND EARNINGS CONSISTENCY
o LEVERAGES SCALE CREATED BY FLEET/BKB MERGER
o ATTRACTIVE SHAREHOLDER ECONOMICS
Strategic Rationale
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<PAGE>
APPENDIX
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<PAGE>
FORWARD LOOKING INFORMATION
This presentation contains forward looking statements with respect to the
financial condition, results of operations and business of FleetBoston
Financial Corporation ("Fleet") and Summit Bancorp ("Summit"), and assuming
the consummation of the merger, a combined Fleet and BankBoston, including
statements relating to: (i) the cost savings and revenue enhancements and
accretion to reported earnings that will be realized from the merger; and
(ii) the restructuring charges expected to be incurred in connection with the
merger. These forward looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially
from those contemplated by such forward looking statements include, among
other things, the following possibilities: (i) expected cost savings from the
merger cannot be fully realized or realized within the expected time; (ii)
revenues following the merger are lower than expected; (iii) competitive
pressure among depository institutions increases significantly; (iv) costs
related to the integration of the business of Fleet and BankBoston are
greater than expected; (v) changes in the interest rate environment reduce
interest margins; (vi) general economic conditions, either internationally or
domestically in those regions in which the combined company will be doing
business, are less favorable than expected; (vii) legislation or regulatory
requirements or changes adversely affect the business in which the combined
company will be engaged; and (viii) changes which may occur in the securities
market.
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