<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
MAY 25, 1995
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
SHAWMUT NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
<TABLE>
<S> <C>
1-10102 06-1212629
(Commission File Number) (IRS Employer Identification No.)
777 MAIN STREET, HARTFORD, CONNECTICUT 06115
ONE FEDERAL STREET, BOSTON, MASSACHUSETTS 02211
(Address of principal executive offices) (Zip Code)
</TABLE>
(203) 986-2000
(617) 292-2000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
===============================================================================
<PAGE> 2
ITEM 5. OTHER EVENTS
PENDING MERGER
As previously reported, Shawmut National Corporation ("Shawmut") and Fleet
Financial Group, Inc. ("Fleet") 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").
As previously reported, Shawmut and Northeast Federal Corp. ("Northeast")
have entered into an Agreement and Plan of Merger dated June 11, 1994 providing
for the acquisition of Northeast by Shawmut (the "Northeast Acquisition").
Shawmut hereby files Unaudited Pro Forma Condensed Combined Financial
Statements and Notes thereto for the period ending March 31, 1995.
For additional information regarding the Merger and the Northeast
Acquisition, see Shawmut's Current Reports on Form 8-K dated February 20, 1995,
February 21, 1995 and April 13, 1995.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits
The following exhibits are filed with this Current Report, except for
Exhibit 99.b, which is incorporated by reference from Shawmut's filing as
indicated.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- ----------------------------------------------------------------------------
<C> <S>
99.a. Unaudited Pro Forma Condensed Combined Financial Information for Fleet
Financial Group and Subsidiaries and Shawmut National Corporation and
Subsidiaries and Notes thereto.
99.b. The following unaudited financial statements of Fleet and accompanying notes
are incorporated by reference from Fleet's quarterly report on Form 10-Q for
the quarter ended March 31, 1995 (File No. 1-6366): Consolidated Balance
Sheet -- March 31, 1995, Consolidated Statement of Income for the three
months ended March 31, 1995, Consolidated Statement of Cash Flows and
Consolidated Statement of Changes in Stockholders' Equity for the three
months ended March 31, 1995; Notes to Consolidated Financial Statements (to
the extent applicable to the foregoing Financial Statements). (Portions of
Fleet's Form 10-Q not specifically incorporated by reference are not
required for this Current Report and are not incorporated by reference
herein.)
99.c. The following unaudited financial statements of Northeast and accompanying
notes are incorporated by reference from Northeast's quarterly report on
Form 10-Q for the quarter ended March 31, 1995 (File No. 1-10571);
Consolidated Statement of Financial Condition -- March 31, 1995;
Consolidated Statement of Operations for the three months ended March 31,
1995, Consolidated Statement of Cash Flows and Consolidated Statement of
Changes in Stockholders' Equity for the three months ended March 31, 1995;
Notes to Consolidated Financial Statements (to the extent applicable to the
foregoing Financial Statements). (Portions of Northeast's Form 10-Q not
specifically incorporated by reference are not required for this Current
Report and are not incorporated by reference herein.)
</TABLE>
2
<PAGE> 3
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.
SHAWMUT NATIONAL CORPORATION
Registrant
By (SUSAN E. LESTER)
------------------------------------
Susan E. Lester
Chief Financial Officer
Dated: May 25, 1995
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
99.a. Unaudited Pro Forma Condensed Combined Financial Information for Fleet
Financial Group and Subsidiaries and Shawmut National Corporation and
Subsidiaries and Notes thereto.
99.b. The following unaudited financial statements of Fleet and accompanying notes
are incorporated by reference from Fleet's quarterly report on Form 10-Q for
the quarter ended March 31, 1995 (File No. 1-6366): Consolidated Balance
Sheet -- March 31, 1995, Consolidated Statement of Income for the three
months ended March 31, 1995, Consolidated Statement of Cash Flows and
Consolidated Statement of Changes in Stockholders' Equity for the three
months ended March 31, 1995; Notes to Consolidated Financial Statements (to
the extent applicable to the foregoing Financial Statements). (Portions of
Fleet's Form 10-Q not specifically incorporated by reference are not
required for this Current Report and are not incorporated by reference
herein.)
99.c. The following unaudited financial statements of Northeast and accompanying
notes are incorporated by reference from Northeast's quarterly report on
Form 10-Q for the quarter ended March 31, 1995 (File No. 1-10571);
Consolidated Statement of Financial Condition -- March 31, 1995;
Consolidated Statement of Operations for the three months ended March 31,
1995, Consolidated Statement of Cash Flows and Consolidated Statement of
Changes in Stockholders' Equity for the three months ended March 31, 1995;
Notes to Consolidated Financial Statements (to the extent applicable to the
foregoing Financial Statements). (Portions of Northeast's Form 10-Q not
specifically incorporated by reference are not required for this Current
Report and are not incorporated by reference herein.)
</TABLE>
<PAGE> 1
EXHIBIT 99(a)
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Balance Sheet as of
March 31, 1995, and the Unaudited Pro Forma Condensed Combined Statement of
Income for the quarter ended March 31, 1995, give effect to the pending merger
(the "Merger") of Shawmut National Corporation ("Shawmut") into Fleet Financial
Group, Inc. ("Fleet") accounted for as a pooling of interests, the pending
merger (the "Northeast Merger") of Northeast Federal Corp. ("Northeast") into
Shawmut, the consummation of the merger (the "NBB Merger") of NBB Bancorp, Inc.
("NBB") into Fleet, the consummation of the merger (the "Plaza Merger") of Plaza
Home Mortgage Corp. ("Plaza") into Fleet, the consummation of the acquisition
(the "Barclays Acquisition") of substantially all of the assets of the Barclays
Business Finance Division of Barclays Business Credit, Inc. ("Barclays") by
Shawmut, and Fleet's repurchase (the "FMG Repurchase") of the publicly-held
shares of Fleet's majority-owned subsidiary, Fleet Mortgage Group, Inc. ("FMG"),
each of which were or will be accounted for by the purchase method of
accounting, in each case as if such transactions had occurred on January 1,
1995. The Unaudited Pro Forma Condensed Combined Statement of Income for the
quarter ended March 31, 1994, give effect to the Merger as if the Merger had
occurred on January 1, 1994, and does not take into account the effect of the
Northeast Merger, the NBB Merger, the Plaza Merger, the Barclays Acquisition and
the FMG Repurchase since such transactions were or will be accounted for under
the purchase method of accounting.
The pro forma information is based on the historical consolidated financial
statements of Fleet, Shawmut, Northeast, NBB, Plaza, Barclays and FMG and their
subsidiaries under the assumptions and adjustments set forth in the accompanying
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements. The
pro forma condensed combined financial statements do not give effect to the
anticipated cost savings in connection with the Merger, the Northeast Merger,
the NBB Merger and the Plaza Merger or the effects of any required regulatory
divestitures.
The Unaudited Pro Forma Condensed Combined Financial Statements should be
read in conjunction with the consolidated historical financial statements of
Fleet and Shawmut, including the respective notes thereto. The pro forma data is
presented for comparative purposes only and is not necessarily indicative of the
combined financial position or results of operations in the future or of the
combined financial position or results of operations which would have been
realized had the acquisitions been consummated during the period or as of the
dates for which the pro forma data is presented.
Pro forma per share amounts for the combined Fleet and Shawmut entity are
based on the Common Exchange Ratio of 0.8922 shares of Fleet Common Stock for
each share of Shawmut Common Stock. In addition, the pro forma data assumes the
issuance of approximately 6,165,912 shares of Fleet Common Stock in the NBB
Merger, an exchange ratio of 0.415 shares of Shawmut Common Stock for each
outstanding share and stock option of Northeast, calculated as set forth in the
Shawmut/Northeast merger agreement, assuming for illustrative purposes only,
that the average closing price of Shawmut Common Stock used to determine such
exchange ratio is $27.625, the closing price of the Shawmut Common Stock on May
12, 1995.
1
<PAGE> 2
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1995(A)
<TABLE>
<CAPTION>
FLEET &
SHAWMUT
SHAWMUT PRO FORMA PRO FORMA
FLEET PRO FORMA ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents............ $ 2,297,496 $ 1,498,130 $ -- $ 3,795,626
Federal funds sold and securities
purchased under agreements to
resell............................. 249,912 296,565 -- 546,477
Securities available for sale, at
market............................. 10,337,213 2,207,070(d) (153,289)(f) 12,390,994 (d)
Securities held to maturity.......... 951,834 9,716,428(d) -- 10,668,262 (d)
Loans and leases..................... 29,498,399 22,073,657 -- 51,572,056
Reserve for credit losses............ (965,958) (570,728) -- (1,536,686)
Mortgages held for resale............ 654,976 44,181 -- 699,157
Premises and equipment............... 687,046 349,954 -- 1,037,000
Purchased mortgage servicing
rights............................. 1,049,460 39,800 -- 1,089,260
Excess cost over net assets of
subsidiaries acquired.............. 473,402 479,552 -- 952,954
Other intangibles.................... 197,931 17,089 -- 215,020
Other assets......................... 2,382,327 1,413,855 155,912(f)(g) 3,952,094
----------- ----------- --------- -----------
Total assets......................... $47,814,038 $37,565,553 $ 2,623 $85,382,214
=========== =========== ========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand............................. $ 6,056,121 $ 4,014,951 -- $10,071,072
Regular savings, NOW, money
market.......................... 14,968,632 8,823,441 -- 23,792,073
Time............................... 11,809,164 10,231,602 -- 22,040,766
----------- ----------- --------- -----------
Total deposits..................... 32,833,917 23,069,994 -- 55,903,911
----------- ----------- --------- -----------
Federal funds purchased and
securities sold under agreements to
repurchase......................... 2,915,847 7,299,551 -- 10,215,398
Other short-term borrowings.......... 3,243,395 1,723,357 -- 4,966,752
Accrued expenses and other
liabilities........................ 1,277,299 510,421 361,868(f)(g) 2,149,588
Long-term debt....................... 3,623,176 2,397,444 -- 6,020,620
----------- ----------- --------- -----------
Total liabilities.................... 43,893,634 35,000,767 361,868 79,256,269
----------- ----------- --------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock.................... 378,815 303,185 -- (e) 682,000
Common stock....................... 141,731 1,287 108,333 (e) 251,351
Common surplus..................... 1,534,246 1,486,770 (234,064)(e) 2,786,952
Retained earnings.................. 2,017,904 813,227 (217,888)(g) 2,613,243
Net unrealized gain/(loss) on
securities available for sale... (133,718) (37,411) (17,898)(f) (189,027)(d)
Treasury stock, at cost............ (18,574) (2,272) 2,272 (e) (18,574)
----------- ----------- --------- -----------
Total stockholders' equity........... 3,920,404 2,564,786 (359,245) 6,125,945
----------- ----------- --------- -----------
Total liabilities and stockholders'
equity............................. $47,814,038 $37,565,553 $ 2,623 $85,382,214
=========== =========== ========= ===========
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
statements
2
<PAGE> 3
SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1995(A)
<TABLE>
<CAPTION>
PRO
FORMA SHAWMUT
SHAWMUT NORTHEAST ADJUSTMENTS PRO FORMA
----------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents.......... $ 1,549,100 $ 37,546 $(88,516)(h) $ 1,498,130
Federal funds sold and securities
purchased under agreements
to resell........................ 274,500 22,065 -- 296,565
Securities available for sale, at
market........................... 2,074,880(d) 132,190(d) -- 2,207,070(d)
Securities held to maturity........ 7,798,357(d) 1,967,386(d) (49,315)(i) 9,716,428(d)
Loans and leases................... 21,134,820 943,556 (4,719)(i) 22,073,657
Reserve for credit losses.......... (559,210) (11,518) -- (570,728)
Mortgages held for resale.......... 42,715 1,466 -- 44,181
Premises and equipment............. 328,605 27,349 (6,000)(i) 349,954
Purchased mortgage servicing
rights........................... 13,124 1,676 25,000(i) 39,800
Excess cost over net assets of
subsidiaries acquired............ 339,837 -- 139,715(j) 479,552
Other intangibles.................. 16,976 113 -- 17,089
Other assets....................... 1,175,832 241,933 (3,910)(i) 1,413,855
----------- ---------- -------- -----------
Total assets....................... $34,189,536 $3,363,762 $ 12,255 $37,565,553
=========== ========== ======== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Deposits:
Demand........................... $ 3,988,683 $ 26,268 $ $ 4,014,951
Regular savings, NOW, money
market........................ 8,108,268 715,173 -- 8,823,441
Time............................. 8,504,607 1,730,774 (3,779)(i) 10,231,602
----------- ---------- -------- -----------
Total deposits................... 20,601,558 2,472,215 (3,779) 23,069,994
----------- ---------- -------- -----------
Federal funds purchased and
securities sold under agreements
to repurchase.................... 7,299,551 -- -- 7,299,551
Other short-term borrowings........ 1,070,695 653,493 (831)(i) 1,723,357
Accrued expenses and other
liabilities...................... 435,203 49,578 25,640(i) 510,421
Long-term debt..................... 2,397,444 42,257 (42,257)(h)(i) 2,397,444
----------- ---------- -------- -----------
Total liabilities.................. 31,804,451 3,217,543 (21,227) 35,000,767
----------- ---------- -------- -----------
Stockholders' equity:
Preferred stock.................. 303,185 4 (4)(h)(k) 303,185
Common stock..................... 1,221 155 (89)(k) 1,287
Common surplus................... 1,307,135 197,278 (17,643)(h)(k) 1,486,770
Retained earnings................ 813,227 (53,213) 53,213(k) 813,227
Net unrealized gain/(loss) on
securities available for
sale.......................... (37,411) 1,995 (1,995)(k) (37,411)(d)
Treasury stock, at cost............ (2,272) -- -- (2,272)
----------- ---------- -------- -----------
Total stockholders' equity......... 2,385,085 146,219 33,482 2,564,786
----------- ---------- -------- -----------
Total liabilities and stockholders'
equity........................... $34,189,536 $3,363,762 $ 12,255 $37,565,553
=========== ========== ======== ===========
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
statements
3
<PAGE> 4
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995
<TABLE>
<CAPTION>
FLEET
PRO SHAWMUT
FLEET SHAWMUT FORMA PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest and fees on loans and leases... $ 693,634 $ 459,185 $ -- $ 1,152,819
Interest on securities.................. 186,364 195,676 (1,279)(f) 380,761
----------- ----------- -------- -----------
Total interest income.............. 879,998 654,861 (1,279) 1,533,580
Interest expense:
Deposits........................... 251,079 174,116 -- 425,195
Short-term borrowings.............. 70,145 146,733 -- 216,878
Long-term debt..................... 66,761 39,769 -- 106,530
----------- ----------- -------- -----------
Total interest expense........ 387,985 360,618 -- 748,603
----------- ----------- -------- -----------
Net interest income..................... 492,013 294,243 (1,279) 784,977
Provision for credit losses............. 20,332 750 -- 21,082
----------- ----------- -------- -----------
Net interest income after provision for
credit losses......................... 471,681 293,493 (1,279) 763,895
----------- ----------- -------- -----------
Mortgage banking........................ 98,384 4,370 -- 102,754
Investment services revenue............. 46,233 30,845 -- 77,078
Service charges, fees and commissions... 80,943 55,112 -- 136,055
Securities available for sale gains
(losses).............................. 664 2,602 -- 3,266
Other noninterest income................ 82,045 10,641 -- 92,686
----------- ----------- -------- -----------
Total noninterest income...... 308,269 103,570 -- 411,839
----------- ----------- -------- -----------
Employee compensation and benefits...... 251,899 128,095 -- 379,994
Occupancy and equipment................. 78,309 41,787 -- 120,096
Purchased mortgage servicing rights
amortization.......................... 28,262 1,734 -- 29,996
FDIC assessment......................... 18,090 12,648 -- 30,738
Marketing............................... 14,721 6,362 -- 21,083
Core deposit and goodwill
amortization.......................... 20,537 6,349 -- 26,886
OREO expense............................ 3,427 2,159 -- 5,586
Merger-related charges.................. -- 36,853 (36,853)(g) --
Other noninterest expense............... 106,722 52,833 -- 159,555
----------- ----------- -------- -----------
Total noninterest expense..... 521,967 288,820 (36,853) 773,934
----------- ----------- -------- -----------
Income before taxes..................... 257,983 108,243 35,574 401,800
Applicable income taxes................. 103,877 41,714 14,229 159,820
----------- ----------- -------- -----------
Net income before minority interest..... 154,106 66,529 21,345 241,980
Minority interest....................... -- -- -- --
----------- ----------- -------- -----------
Net income.............................. $ 154,106 $ 66,529 $ 21,345 $ 241,980
=========== =========== ======== ===========
Net income applicable to common
shares: (m)........................... $ 151,643 $ 59,586 $ 232,574
=========== =========== ===========
Weighted average common shares
outstanding: (l)
Primary............................ 160,599,370 128,201,345 271,019,000
Fully diluted...................... 160,635,463 128,201,345 271,075,083
Earnings per share:
Primary............................ $ 0.94 $ 0.46 $ 0.86
Fully diluted...................... $ 0.94 $ 0.46 $ 0.86
</TABLE>
See accompanying notes to the unaudited condensed combined financial statements
4
<PAGE> 5
FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995(A)
<TABLE>
<CAPTION>
PRO FLEET
FLEET FORMA PRO
HISTORICAL ADJUSTMENTS(B) FORMA
---------- -------------- -----
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
Interest and fees on loans and leases................... $681,500 $ 12,134 $693,634
Interest on securities.................................. 186,083 281 186,364
-------- -------- --------
Total interest income.............................. 867,583 12,415 879,998
Interest expense:
Deposits.............................................. 243,982 7,097 251,079
Short-term borrowings................................. 69,718 427 70,145
Long-term debt........................................ 66,761 -- 66,761
-------- -------- --------
Total interest expense............................. 380,461 7,524 387,985
-------- -------- --------
Net interest income..................................... 487,122 4,891 492,013
Provision for credit losses............................. 20,164 168 20,332
-------- -------- --------
Net interest income after provision for credit losses... 466,958 4,723 471,681
-------- -------- --------
Mortgage banking........................................ 99,457 (1,073) 98,384
Investment services revenue............................. 46,233 -- 46,233
Service charges, fees and commissions................... 80,574 369 80,943
Securities available for sale gains (losses)............ 664 -- 664
Other noninterest income................................ 81,380 665 82,045
-------- -------- --------
Total noninterest income........................... 308,308 (39) 308,269
-------- -------- --------
Employee compensation and benefits...................... 241,164 10,735 251,899
Occupancy and equipment................................. 74,688 3,621 78,309
Purchased mortgage servicing rights amortization........ 22,992 5,270 28,262
FDIC assessment......................................... 17,670 420 18,090
Marketing............................................... 14,641 80 14,721
Core deposit and goodwill amortization.................. 17,609 2,928 20,537
OREO expense............................................ 3,261 166 3,427
Merger-related charges.................................. -- -- --
Other noninterest expense............................... 105,654 1,068 106,722
-------- -------- --------
Total noninterest expense.......................... 497,679 24,288 521,967
-------- -------- --------
Income before taxes..................................... 277,587 (19,604) 257,983
Applicable income taxes................................. 111,434 (7,557) 103,877
-------- -------- --------
Net income before minority interest..................... 166,153 (12,047) 154,106
Minority interest....................................... 2,014 (2,014) --
-------- -------- --------
Net income.............................................. $164,139 $(10,033) $154,106
======== ======== ========
Net income applicable to common shares:(m).............. $161,676 $151,643
======== ========
Weighted average common shares outstanding:(l)
Primary............................................... 158,818,106 160,599,370
Fully diluted......................................... 158,854,199 160,635,463
Earnings per share:
Primary............................................... $1.02 $0.94
Fully diluted......................................... $1.02 $0.94
</TABLE>
See accompanying notes to the unaudited condensed combined financial statements
5
<PAGE> 6
SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995(A)
<TABLE>
<CAPTION>
SHAWMUT
BARCLAYS
SHAWMUT BARCLAYS PRO
HISTORICAL PRO FORMA(C) FORMA
---------- ------------ --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Interest and fees on loans and leases............ $ 421,960 $17,899 $439,859
Interest on securities........................... 159,463 -- 159,463
----------- ------- --------
Total interest income....................... 581,423 17,899 599,322
Interest expense:
Deposits....................................... 146,547 -- 146,547
Short-term borrowings.......................... 124,770 11,164 135,934
Long-term debt................................. 39,769 -- 39,769
----------- ------- --------
Total interest expense...................... 311,086 11,164 322,250
----------- ------- --------
Net interest income.............................. 270,337 6,735 277,072
Provision for credit losses...................... -- -- --
----------- ------- --------
Net interest income after provision for credit
losses......................................... 270,337 6,735 277,072
----------- ------- --------
Mortgage banking................................. 3,156 -- 3,156
Investment services revenue...................... 30,845 -- 30,845
Service charges, fees and commissions............ 51,580 2,410 53,990
Securities available for sale gains (losses)..... (101) -- (101)
Other noninterest income......................... 10,629 -- 10,629
----------- ------- --------
Total noninterest income.................... 96,109 2,410 98,519
----------- ------- --------
Employee compensation and benefits............... 119,624 3,358 122,982
Occupancy and equipment.......................... 38,599 -- 38,599
Purchased mortgage servicing rights
amortization................................... 846 -- 846
FDIC assessment.................................. 10,961 -- 10,961
Marketing........................................ 6,011 -- 6,011
Core deposit and goodwill amortization........... 4,007 -- 4,007
OREO expense..................................... 1,579 -- 1,579
Merger-related charges........................... 36,853 -- 36,853
Other noninterest expense........................ 47,933 1,571 49,504
----------- ------- --------
Total noninterest expense................... 266,413 4,929 271,342
----------- ------- --------
Income before taxes.............................. 100,033 4,216 104,249
Applicable income taxes.......................... 37,412 1,686 39,098
----------- ------- --------
Net income before minority interest.............. 62,621 2,530 65,151
Minority interest................................ -- -- --
----------- ------- --------
Net income....................................... $ 62,621 $ 2,530 $ 65,151
=========== ======= ========
Net income applicable to common shares:(m)....... $ 56,652
===========
Weighted average common shares outstanding:(l)
Primary........................................ 121,637,585
Fully diluted.................................. 121,637,585
Earnings per share:
Primary........................................ $ 0.47
Fully diluted.................................. $ 0.47
</TABLE>
See accompanying notes to the unaudited condensed combined financial statements.
6
<PAGE> 7
<TABLE>
<CAPTION>
NORTHEAST
PRO FORMA SHAWMUT
NORTHEAST ADJUSTMENTS PRO FORMA
--------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Interest and fees on loans and leases............. $19,247 $ 79(i) $ 459,185
Interest on securities............................ 34,158 2,055(i) 195,676
------- ------- -----------
Total interest income........................ 53,405 2,134 654,861
Interest expense:
Deposits........................................ 27,097 472(i) 174,116
Short-term borrowings........................... 10,730 69(i) 146,733
Long-term debt.................................. 1,020 (1,020)(h) 39,769
------- ------- -----------
Total interest expense....................... 38,847 (479) 360,618
------- ------- -----------
Net interest income............................... 14,558 2,613 294,243
Provision for credit losses....................... 750 -- 750
------- ------- -----------
Net interest income after provision for credit
losses.......................................... 13,808 2,613 293,493
------- ------- -----------
Mortgage banking.................................. 1,214 -- 4,370
Investment services revenue....................... -- -- 30,845
Service charges, fees and commissions............. 1,122 -- 55,112
Securities available for sale gains (losses)...... 2,703 -- 2,602
Other noninterest income.......................... 12 -- 10,641
------- ------- -----------
Total noninterest income..................... 5,051 -- 103,570
------- ------- -----------
Employee compensation and benefits................ 5,113 -- 128,095
Occupancy and equipment........................... 3,338 (150)(i) 41,787
Purchased mortgage servicing rights
amortization.................................... 107 781(i) 1,734
FDIC assessment................................... 1,687 -- 12,648
Marketing......................................... 351 -- 6,362
Core deposit and goodwill amortization............ 14 2,328(j) 6,349
OREO expense...................................... 580 -- 2,159
Merger-related charges............................ -- -- 36,853
Other noninterest expense......................... 3,329 -- 52,833
------- ------- -----------
Total noninterest expense.................... 14,519 2,959 288,820
------- ------- -----------
Income before taxes............................... 4,340 (346) 108,243
Applicable income taxes........................... 1,823 793 41,714
------- ------- -----------
Net income before minority interest............... 2,517 (1,139) 66,529
Minority interest................................. -- -- --
------- ------- -----------
Net income........................................ $ 2,517 $(1,139) $ 66,529
======= ======= ==========
Net income applicable to common shares:(m)........ $ 59,586
==========
Weighted average common shares outstanding:(l)
Primary......................................... 128,201,345
Fully diluted................................... 128,201,345
Earnings per share:
Primary......................................... $ 0.46
Fully diluted................................... $ 0.46
</TABLE>
See accompanying notes to the unaudited condensed combined financial statements
7
<PAGE> 8
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1994
<TABLE>
<CAPTION>
FLEET
SHAWMUT
PRO FORMA PRO FORMA
FLEET SHAWMUT ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest and fees on loans and
leases............................. $ 561,021 $ 305,759 -- $ 866,780
Interest on securities............... 223,482 148,595 -- 372,077
----------- ----------- ----------- -----------
Total interest income........... 784,503 454,354 -- 1,238,857
Interest expense:
Deposits........................... 161,193 85,668 -- 246,861
Short-term borrowings.............. 64,948 80,079 -- 145,027
Long-term debt..................... 54,615 16,112 -- 70,727
----------- ----------- ----------- -----------
Total interest expense.......... 280,756 181,859 -- 462,615
----------- ----------- ----------- -----------
Net interest income.................. 503,747 272,495 -- 776,242
Provision for credit losses.......... 22,386 3,000 -- 25,386
----------- ----------- ----------- -----------
Net interest income after provision
for credit losses.................. 481,361 269,495 -- 750,856
----------- ----------- ----------- -----------
Mortgage banking..................... 100,359 4,127 -- 104,486
Investment services revenue.......... 44,466 29,417 -- 73,883
Service charges, fees and
commissions........................ 70,159 48,473 -- 118,632
Securities available for sale gains
(losses)........................... 166 (768) -- (602)
Other noninterest income............. 79,400 7,475 -- 86,875
----------- ----------- ----------- -----------
Total noninterest income........ 294,550 88,724 -- 383,274
----------- ----------- ----------- -----------
Employee compensation and benefits... 258,110 125,791 -- 383,901
Occupancy and equipment.............. 79,269 39,718 -- 118,987
Purchased mortgage servicing rights
amortization....................... 30,955 1,268 -- 32,223
FDIC assessment...................... 18,092 11,771 -- 29,863
Marketing............................ 12,854 4,308 -- 17,162
Core deposit and goodwill
amortization....................... 13,442 1,699 -- 15,141
OREO expense......................... 7,016 5,730 -- 12,746
Restructuring charges................ 25,000 -- -- 25,000
Other noninterest expense............ 104,767 51,545 -- 156,312
----------- ----------- ----------- -----------
Total noninterest expense....... 549,505 241,830 -- 791,335
----------- ----------- ----------- -----------
Income before taxes.................. 226,406 116,389 -- 342,795
Applicable income taxes.............. 88,349 39,115 -- 127,464
----------- ----------- ----------- -----------
Net income before minority
interest........................... 138,057 77,274 -- 215,331
Minority interest.................... 2,495 -- -- 2,495
----------- ----------- ----------- -----------
Net income........................... $ 135,562 $ 77,274 -- $ 212,836
=========== =========== =========== ===========
Net income applicable to common
shares:(m)......................... $ 127,830 $ 73,415 $ 201,245
=========== =========== ===========
Weighted average common shares
outstanding:(l)
Primary............................ 161,163,854 117,818,951 267,555,327
Fully diluted...................... 161,241,430 117,818,951 267,654,528
Earnings per share:
Primary............................ $ 0.79 $ 0.62 $ 0.75
Fully diluted...................... $ 0.79 $ 0.62 $ 0.75
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
statements
8
<PAGE> 9
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(a) The pro forma information presented is not necessarily indicative of
the results of operations or the combined financial position that would have
resulted had the Merger, the Northeast Merger, the NBB Merger, the Plaza Merger,
the Barclays Acquisition and the FMG Repurchase been consummated at the
beginning of the periods indicated, nor is it necessarily indicative of the
results of operations in future periods or the future financial position of the
combined entities. The NBB Merger was consummated on January 27, 1995, the
Barclays Acquisition was consummated on January 31, 1995, the Plaza Merger was
consummated on March 3, 1995 and the FMG Repurchase was consummated on February
28, 1995 with the follow-up merger consummated on April 30, 1995. It is
anticipated that the Merger will be consummated in the fourth quarter of 1995
and the Northeast Merger will be consummated in the second quarter of 1995.
Under generally accepted accounting principles ("GAAP"), the assets and
liabilities of Shawmut will be combined with those of Fleet at book value. In
addition, the statements of income of Shawmut will be combined with the
statements of income of Fleet as of the earliest period presented. Certain
reclassifications have been included in the Unaudited Pro Forma Condensed
Combined Balance Sheet and Unaudited Pro Forma Condensed Combined Statements of
Income to conform to Fleet's presentation. Certain transactions conducted in the
ordinary course of business between Fleet, Shawmut, Northeast, NBB, Barclays,
Plaza and FMG are immaterial and, accordingly, have not been eliminated.
The pro forma condensed combined financial statements do not give effect to
the anticipated cost savings in connection with the Merger and the Northeast
Merger or the effects of any required regulatory divestitures. While no
assurance can be given, Fleet and Shawmut expect to achieve cost savings of
approximately $400 million (pre-tax) within fifteen months following the Merger.
Such cost savings are expected to be realized primarily through reductions in
staff, elimination, consolidation or divestiture of certain branches and the
consolidation of certain offices, data processing and other redundant
back-office operations and staff functions. Cost reductions and branch
consolidations will come from both companies and will be spread throughout the
geographic region. Cost savings are also expected to be achieved in connection
with the Northeast Merger, the NBB Merger and the Plaza Merger. These cost
savings are expected to be approximately $25 million, $20 million and $15
million, respectively, and are expected to be achieved within the first twelve
months after the consummation of these respective mergers. The extent to which
cost savings will be achieved is dependent upon various factors beyond the
control of Fleet and Shawmut, including the regulatory environment, economic
conditions, unanticipated changes in business conditions, inflation and the
level of Federal Deposit Insurance Corporation assessments. Therefore, no
assurances can be given with respect to the ultimate level of cost savings to be
realized, or that such savings will be realized in the time-frame currently
anticipated. In addition, certain regulatory agencies may seek the divestiture
of certain assets and liabilities of the combined company following the Merger.
Such divestitures may affect certain pro forma combined financial statement
amounts, merger and restructuring costs and cost savings.
All dollar amounts included in these Notes to Unaudited Pro Forma Condensed
Combined Financial Statements are in thousands unless otherwise indicated.
(b) Pro forma adjustments reflect the impact of the NBB Merger, the Plaza
Merger and the FMG Repurchase which were consummated on January 27, 1995, March
3, 1995, and February 28, 1995, respectively, as if such transactions had been
consummated on January 1, 1995.
(c) Pro forma adjustments reflect the impact of the Barclays Acquisition,
which was consummated on January 31, 1995, as if it had been consummated on
January 1, 1995.
(d) Fleet is currently reviewing the investment securities portfolios of
Shawmut and Northeast to determine the classification of such securities as
either available for sale or held to maturity in connection with Fleet's
existing interest-rate risk position. As a result of this review, certain
reclassifications of Shawmut and Northeast investment securities may result. No
adjustments have been made to either the available for sale or the held to
maturity portfolios in the accompanying pro forma combined balance sheet to
reflect any such reclassification as management has not made a final
determination with respect to such matters. Any such
9
<PAGE> 10
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (Continued)
reclassification will be accounted for in accordance with Financial Accounting
Standards Board Statement No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," which requires that securities transferred from held to
maturity to available for sale be transferred at fair value with any unrealized
gain or loss, net of taxes, at the date of transfer recognized as a separate
component of stockholders' equity. At March 31, 1995, securities held to
maturity at Shawmut and Northeast had unrealized losses of $248,544 and $49,315,
respectively.
(e) Pro forma adjustments to common shares and common surplus at March 31,
1995, reflect the Merger accounted for as a pooling of interests, through: (a)
the exchange of 109,619,746 shares of Fleet Common Stock (using the Common
Exchange Ratio of 0.8922) for the 122,864,544 outstanding shares of Shawmut
Common Stock at March 31, 1995 (which includes the 6,563,760 shares of Shawmut
Common Stock issued to acquire all the outstanding shares of Northeast common
stock and stock options and excludes the 5,811,900 shares of Shawmut Common
Stock held by Fleet as of such date, which are assumed to be retired for
combining purposes), and (b) the exchange of shares of Fleet New Preferred Stock
for all shares of Shawmut Preferred on a share-for-share basis.
(f) Pro forma adjustments to securities available for sale at March 31,
1995, and to dividend income on securities for the quarter ended March 31, 1995,
reflect the elimination of 5,811,900 shares of Shawmut Common Stock held by
Fleet at March 31, 1995, and the corresponding dividend income recorded on such
shares. Pro forma adjustments to other assets and accrued expenses and other
liabilities at March 31, 1995, include the elimination of Fleet's dividend
receivable related to such shares and the elimination of Shawmut's corresponding
dividend payable. The Unaudited Pro Forma Condensed Combined Balance Sheet also
eliminates the after-tax unrealized gain on these securities recorded in equity
and the related deferred tax expense.
(g) A liability of $400,000 ($363,147 net of the $36,853 charge taken by
Shawmut in the first quarter of 1995) has been recorded in the Unaudited Pro
Forma Condensed Combined Balance Sheet to reflect management's best estimate of
merger and restructuring related charges in connection with the Merger. This
liability resulted in a $240,000 after-tax charge ($217,888 net of the after-tax
impact of the charge recorded by Shawmut in the first quarter of 1995) to
retained earnings in the Unaudited Pro Forma Condensed Combined Balance Sheet.
It is anticipated that substantially all of these charges will be paid during
the first 15 months subsequent to the Merger. During the first quarter of 1995
Shawmut recognized $36,853 of this charge due to the settlement of certain of
Shawmut's retirement benefits as a result of the execution of Shawmut's
agreement to merge with Fleet. This charge has been eliminated from the pro
forma income statement due to the nonrecurring nature of the charge. The
following table provides details of the estimated charges by type:
<TABLE>
<CAPTION>
ESTIMATED
TYPE OF COST COSTS
--------------------------------------------------------------- --------
(DOLLARS
IN
THOUSANDS)
<S> <C>
Personnel...................................................... $255,000
Facilities and equipment....................................... 68,000
Branch related................................................. 37,000
Other merger expenses.......................................... 40,000
--------
Total.......................................................... $400,000
========
</TABLE>
Personnel related costs consist primarily of charges related to employee
severance, termination of certain employee benefits plans and employee
assistance costs for separated employees. Facilities and equipment charges
consist of lease termination costs and other facilities related exit costs
resulting from consolidation of duplicate headquarters and operational
facilities, and computer equipment and software write-offs due to duplication or
incompatibility. Branch related costs are primarily related to the cost of
exiting branches anticipated to be closed, including lease terminations and
equipment write-offs. The effect of the proposed charge has been reflected in
the Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31,
10
<PAGE> 11
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
1995; however, since the proposed charge is nonrecurring, it has not been
reflected in the pro forma combined statements of income.
(h) The pro forma adjustments to cash include the redemption of the
Northeast $8.50 Cumulative Preferred Stock, Series B based on the redemption
value of such stock at March 31, 1995 ($43,790), and the redemption of all of
the Northeast Uncertificated Debentures ("the Northeast Debentures") based on
the face value of the Northeast Debentures at March 31, 1995 ($44,726), as if
such redemptions had occurred on January 1, 1995, and a related adjustment to
eliminate the interest expense recorded on such debentures ($1,020) for the
quarter ended March 31, 1995.
(i) These pro forma adjustments reflect the purchase accounting adjustments
related to the assets acquired and liabilities assumed for the Northeast Merger.
These adjustments are based on the best available information and may be
different from the actual adjustments to reflect the fair value of the net
assets purchased as of the date of the acquisition.
(j) Pro forma adjustment reflects adjustment for the excess cost over net
assets acquired for the Northeast Merger calculated as follows:
<TABLE>
<S> <C>
Purchase price................................................. $181,701
Historical net tangible assets acquired...................... 102,429
Estimated fair value adjustments............................. 60,443
--------
Estimated fair value net assets................................ 41,986
--------
Excess cost over net assets of subsidiaries acquired........... $139,715
========
</TABLE>
Adjustments have been made to the Unaudited Pro Forma Condensed Combined
Balance Sheet to reflect the recording of the intangible as calculated above in
accordance with the purchase method of accounting. Reflected in the 1995
Unaudited Pro Forma Condensed Combined Income Statement is an adjustment to
reflect the amortization of Northeast's excess cost over net assets of
subsidiaries acquired ("goodwill") over 15 years.
(k) The pro forma stockholders' equity accounts of Northeast have been
adjusted in the Unaudited Pro Forma Condensed Combined Balance Sheet to reflect
the elimination of the stockholders' equity accounts in accordance with the
purchase method of accounting. The Shawmut Pro Forma adjustments reflect the
issuance of 6,563,760 shares of Shawmut Common Stock in exchange for all of the
outstanding shares of Northeast common stock and stock options (assuming that
the exchange ratio in connection with the Northeast Merger is 0.415 which is
based on the closing sales price for Shawmut Common Stock on the Stock Exchange
on May 12, 1995).
(l) The Fleet Pro Forma weighted average shares outstanding for the quarter
ended March 31, 1995, reflect Fleet's historical weighted average shares
outstanding plus the one month effect of the issuance of 6,165,912 shares of
Fleet Common Stock in connection with the NBB Merger as if such Merger occurred
on January 1, 1995. The Shawmut Pro Forma weighted average shares outstanding
for the quarter ended March 31, 1995 reflect Shawmut's historical weighted
average shares outstanding plus the issuance of 6,563,760 shares of Shawmut
Common Stock in connection with the Northeast Merger as if such Merger occurred
on January 1, 1995. The Fleet/Shawmut Pro Forma weighted average shares
outstanding for the quarter ended March 31, 1995 reflect the Fleet Pro Forma
weighted average shares plus the converted Shawmut Pro Forma weighted average
shares outstanding (after adjustment to eliminate the 5,811,900 shares of
Shawmut Common Stock owned by Fleet, which are assumed to be retired for
combining purposes). Each share of Shawmut Common Stock is converted into 0.8922
shares of Fleet Common Stock.
(m) The Fleet/Shawmut Pro Forma net income applicable to common shares
reflects the sum of the Fleet Pro Forma net income applicable per common share
and the Shawmut Pro Forma net income applicable per common shares adjusted for
any Fleet/Shawmut Pro Forma adjustments.
11
