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EXHIBIT 99.3
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited Pro Forma Combined Balance Sheet as of June 30,
1995 combines the historical consolidated balance sheets of Eldorado and
subsidiary and Mariners and subsidiary as if the Merger had been effective on
June 30, 1995 after giving effect to the purchase accounting adjustments
described in the accompanying notes. The unaudited Pro Forma Combined Statements
of Operations present the combined results of operations of Eldorado and
Mariners for the six-month period ended June 30, 1995 and the year ended
December 31, 1994, as if the Merger had been effective on January 1, 1995 and
January 1, 1994, respectively, after giving effect to the purchase accounting
adjustments described in the accompanying notes.
Upon consummation of the Merger, each outstanding share of Mariners Common
Stock, other than shares of Mariners Common Stock with respect to which the
holders properly exercise their dissenters' rights, will be converted into the
right to receive one (1) share of Eldorado Common Stock and cash in the amount
of $7.30. The cash portion of the Merger consideration is subject to adjustment
as follows:
(a) if the Average Eldorado Closing Price of Eldorado Common Stock is
less than $12.00, then the cash component of the Merger consideration shall
be increased by an amount equal to the difference between $12.00 and such
Average; provided, however, that the maximum amount of such increase shall
not exceed $1.50 per share. If, on the other hand, the Average Eldorado
Closing Price exceeds $13.00, then the cash component of the Merger
consideration shall be decreased in an amount equal to the difference
between the Average Eldorado Closing Price and $13.00; provided, however,
that the maximum amount of such decrease shall not exceed $1.00 per share.
(b) If the sum of $7,400,000 exceeds Mariners' Consolidated Tangible
Net Worth as of the Determination Date, then the cash component of the
Merger consideration (as the same may have been adjusted as described
above), shall be reduced by an amount equal to the quotient obtained by
dividing such excess by the total number of shares of Mariners Common Stock
outstanding immediately prior to the Effective Time. If Mariners'
Consolidated Tangible Net Worth exceeds $7,600,000 as of the Determination
Date, then the cash component of the Merger consideration (as adjusted),
shall be increased by an amount equal to the quotient obtained by dividing
such excess by the total number of shares of Mariners Common Stock
outstanding immediately prior to the Effective Time.
The unaudited pro forma combined financial statements and accompanying
notes reflect the application of the purchase method of accounting. Under this
method of accounting, the purchase price will be allocated to the assets
acquired and liabilities assumed based on their estimated fair values at the
Effective Time. Deferred tax assets and liabilities will be adjusted for the
difference between the tax basis of the assets and liabilities and their
estimated fair values. The excess, if any, of the total acquisition cost over
the sum of the assigned fair values of the tangible assets acquired less
liabilities assumed is recorded as goodwill. As described in the accompanying
notes, estimates of the fair values of Mariners' assets and liabilities have
been combined with the recorded values of the assets and liabilities of
Eldorado.
The pro forma financial information provides information to assist in
assessing the continuing impact upon Eldorado Bancorp after the mergers of
Mariners and its wholly-owned subsidiary, Mariners Bank, with and into Eldorado
Bank. Such statements are intended to assist in analyzing the future prospects
of Eldorado by illustrating the possible scope of the change in Eldorado's
historical financial position and results of operations caused by the Merger.
The Unaudited Pro Forma Condensed Balance Sheet shows the effect the Merger
would have had on Eldorado's asset and liability balances if the transaction had
been consummated as of June 30, 1995. The total acquisition cost of $12.9
million is allocated to the individual assets of Mariners based upon estimates
of fair market values. Goodwill of $5.4 million is shown, representing the
excess of acquisition cost over the fair value of the assets acquired less
liabilities assumed. The pro forma adjustments include only items that are
directly attributable to the acquisition and are factually supportable. (See
Explanatory Note (2) to the Unaudited Pro Forma Condensed Balance Sheet).
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The Unaudited Pro Forma Condensed Income Statements for the year ended
December 31, 1994 and the six months ended June 30, 1995 show the effect the
Merger might have had on historical operations. The pro forma adjustments
include only items that are directly attributable to the transaction, are
expected to have a continuing impact on the operations and are factually
supportable.
Pro forma earnings per share for the year ended December 31, 1994 is $0.66
compared to $0.93 for Eldorado and $0.35 for Mariners. Pro forma earnings per
share for the six month period ended June 30, 1995 is $0.60 compared to $0.70
and $0.63 for Eldorado and Mariners, respectively, as a result of the increase
in the number of Eldorado shares that would have occurred as of January 1, 1994
and January 1, 1995 had the Merger taken place on those respective dates. The
pro forma earnings per share do not include anticipated economies, from the
consolidation of branch and administrative operations, or other anticipated
opportunities provided by the Merger.
Results of operations of Mariners subsequent to June 30, 1995 may affect
the allocation of the purchase price by increasing or decreasing the amount of
the unallocated portion of the purchase price. In addition, changes to the
adjustments already included in the unaudited pro forma combined financial
statements are expected as evaluations of assets and liabilities are completed
and as additional information becomes available. Accordingly, the final pro
forma combined amounts will differ from those set forth in the unaudited pro
forma combined financial statements.
THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS ARE INTENDED FOR
INFORMATIONAL PURPOSES AND ARE NOT NECESSARILY INDICATIVE OF THE FUTURE
FINANCIAL POSITION OR FUTURE RESULTS OF OPERATIONS OF THE COMBINED COMPANY, OR
OF THE FINANCIAL POSITION OR THE RESULTS OF OPERATIONS OF THE COMBINED COMPANY
THAT WOULD HAVE ACTUALLY OCCURRED HAD THE MERGER BEEN IN EFFECT AS OF THE DATE
OR FOR THE PERIODS PRESENTED.
These unaudited pro forma combined financial statements and the
accompanying notes should be read in conjunction with and are qualified in their
entirety by the consolidated financial statements, including the accompanying
notes, of Eldorado and Mariners appearing elsewhere in this Joint Proxy
Statement.
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PRO FORMA FINANCIAL INFORMATION
MERGER OF MARINERS BANCORP WITH AND INTO ELDORADO BANK
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF JUNE 30, 1995
PURCHASE
ELDORADO MARINERS ACCOUNTING PROFORMA
BANCORP BANCORP ADJUSTMENTS COMBINED
------------- ------------ ----------- -------------
Cash and due from banks.............. $ 25,187,000 $ 3,674,000 $(4,609,000)(a) $ 24,252,000
Interest-bearing deposits in
other banks........................ -- 586,000 586,000
Federal funds sold................... 15,600,000 3,245,000 18,845,000
Investment securities
available-for-sale................. 82,216,000 -- 82,216,000
Investment securities
held-to-maturity................... 2,589,000 11,787,000 -- (b) 14,376,000
Loans and leases, gross.............. 173,338,000 53,903,000 463,000 (c) 227,704,000
Less: Allowance for credit losses.... 5,562,000 685,000 6,247,000
------------ ----------- ------------
Net Loans.................. 167,776,000 53,218,000 221,457,000
Premises and equipment............... 7,324,000 1,498,000 (200,000)(d) 8,622,000
Other real estate owned.............. 2,144,000 1,531,000 3,675,000
Goodwill............................. 1,058,000 -- 5,386,000 (e) 6,444,000
Deferred tax asset................... 184,000 304,000 488,000
Other assets......................... 5,267,000 1,378,000 6,645,000
------------ ----------- ------------
Total assets............... 309,345,000 77,221,000 387,606,000
============ =========== ============
Deposits............................. 268,050,000 68,898,000 (2,000)(f) 336,946,000
Federal funds purchased.............. 6,721,000 -- 6,721,000
Other liabilities.................... 3,248,000 665,000 456,000 (g) 4,369,000
Shareholders' equity:
Preferred stock.................... -- -- --
Common stock....................... 17,479,000 2,111,000 (2,111,000)(h)
8,244,000 (i) 25,723,000
Retained earnings.................. 13,453,000 5,547,000 (5,547,000)(h) 13,453,000
Securities valuation allowance,
net............................. 394,000 -- 394,000
------------ ----------- ------------
Total shareholders'
equity................... 31,326,000 7,658,000 39,570,000
------------ ----------- ------------
Total liabilities and shareholders'
equity............................. $309,345,000 $77,221,000 $387,606,000
============ =========== ============
See accompanying notes to pro forma financial statements.
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PRO FORMA FINANCIAL INFORMATION
MERGER OF MARINERS BANCORP WITH AND INTO ELDORADO BANK
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF JUNE 30, 1995
EXPLANATORY NOTES
(1) UNAUDITED PRO FORMA CONDENSED BALANCE SHEET ASSUMPTIONS
The pro forma condensed balance sheet shows the effect the business
combination would have had on Eldorado Bancorp's asset and liability balances if
the transaction had been consummated as of June 30, 1995.
The pro forma condensed balance sheet accounts for the business combination
under the purchase accounting method, whereby a portion of the total cost of the
acquisition is allocated to each individual asset acquired on the basis of its
fair value. The excess of the total acquisition cost over the sum of the
assigned fair values of the tangible assets acquired less liabilities assumed is
recorded as goodwill.
The total acquisition cost, for the purpose of the pro forma condensed
balance sheet presentation, is the sum of: 1) the estimated fair value of the
right to receive one (1) share of Eldorado Bancorp common stock of $13.08, and
2) the cash component of the merger consideration of $7.30 less $0.08 adjustment
for the Average Eldorado Closing Price of $13.08 plus $0.09 adjustment for
Mariners' Consolidated Tangible Net Worth of $7,658,000, the sum of which is
multiplied by the number of Mariners' common shares outstanding, and 3) the
estimated direct costs of the acquisition of $400,000. The Merger Agreement
provides for adjustment to the cash component of the merger consideration, as
described in the Introduction above, contingent upon the market price of
Eldorado Bancorp common stock based upon a future period. This contingent
adjustment may affect the actual total acquisition cost upon consummation of the
merger.
The pro forma total acquisition cost of $12.9 million is allocated to the
individual assets of Mariners based upon Mariners' historical cost with
adjustments for estimated fair values. The tax basis of an asset or liability
has not been considered in determining its fair value. A deferred tax asset has
been recorded for the deferred tax consequences of differences between the
assigned values and the tax bases of the assets and liabilities (except the
portion of goodwill for which amortization is not deductible for tax purposes).
Goodwill of $5.4 million is shown, representing the excess of acquisition cost
over the fair value of the assets acquired less liabilities assumed. The pro
forma adjustments, subject to later adjustment, include only items that are
directly attributable to the acquisition and are factually supportable and are
described in Note (2) below.
(2) DESCRIPTION OF PRO FORMA ADJUSTMENTS
The following descriptions reference the adjustments as labeled on the pro
forma condensed balance sheet as of June 30, 1995:
(a) Reduction of Cash and Due From Banks balances to reflect cash
disbursement of approximately $4.6 million to Mariners shareholders
representing the total cash component of the merger consideration.
(b) No adjustment to Investment Securities Held-to-Maturity balances
is necessary as the book value at June 30, 1995 reflects the fair value of
the investment securities acquired in the merger.
(c) Adjustment to loans to reflect fair value of assets acquired.
(d) Adjustment to Premises and Equipment to reflect fair value of assets
acquired.
(e) Increase to Goodwill balance to reflect the excess of the total
acquisition cost over the fair value of the assets acquired less
liabilities assumed.
(f) Adjustment to deposits to reflect fair value of liabilities assumed.
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(g) Increase to Other Liabilities to reflect the direct costs of
acquisition (e.g. legal, accounting, etc.) and an amount required to record
deferred tax liability for the differences between the assigned values and
the tax bases of the assets and liabilities.
(h) Adjustments to Common Stock and Retained Earnings to reflect the
elimination of Mariners shareholder equity interest.
(i) Adjustment to reflect the Eldorado Bancorp common stock issued to
Mariners shareholders representing the total stock component of the merger
consideration estimated at $13.08 per share.
(3) POSSIBLE RANGE OF ACQUISITION COST
As described in the Introduction above, the Merger Agreement provides for
adjustment to the cash component of the merger consideration, contingent upon
(1) the market price of Eldorado Common Stock based upon the average daily price
of the shares for the month preceding the consummation of the transaction (the
"Average Eldorado Closing Price") and separately (2) the Mariners' Consolidated
Tangible Net Worth at consummation of the transaction. This contingent
adjustment may affect the actual total acquisition cost upon consummation of the
merger.
The following table indicates the range of possible adjustment to the
acquisition cost (excluding direct costs) based upon the range of the Average
Eldorado Closing Price:
POSSIBLE RANGE OF AVERAGE ELDORADO CLOSING PRICE
---------------------------------------------------------------------------------------
$9.50 $10.50 $12.00 $13.00 $14.00 $15.00
------------ ------------ ------------ ------------ ------------ ------------
Cash per share to be
paid(1)............... $8.80 $8.80 $7.30 $7.30 $6.30 $6.30
Total acquisition cost
per share(1).......... $18.30 $19.30 $19.30 $20.30 $20.30 $21.30
Total acquisition
cost(1)............... $11,534,000 $12,164,000 $12,164,000 $12,795,000 $12,795,000 $13,425,000
- ---------------
(1) The total cash per share and total acquisition cost, on a per share and
aggregate basis, also are subject to adjustment as follows: (i) if Mariners'
Consolidated Tangible Net Worth as of the Determination Date is less than
$7,400,000, the cash, and therefore the total acquisition cost, payable by
Eldorado would be reduced by the amount by which $7,400,000 exceeds such
Consolidated Tangible Net Worth; or (ii) if such Consolidated Tangible Net
Worth exceeds $7,600,000, the cash, and therefore the total acquisition
cost, payable by Eldorado would increase by the amount of that excess. The
effect of any such adjustment on the cash per share and acquisition cost per
share can be determined by dividing the decrease or increase (as the case
may be) in the total acquisition cost resulting from such adjustment by
630,276, which is the total number of shares of Mariners Common Stock
outstanding. Accordingly, for example, for each $100,000 that the Mariners'
Consolidated Tangible Net Worth exceeds $7,600,000 as of the Determination
Date, the acquisition cost per share would increase by approximately $0.159
per share, all of which increase would be payable in cash. See "THE
MERGER -- Merger Consideration."
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PRO FORMA FINANCIAL INFORMATION
MERGER OF MARINERS BANCORP WITH AND INTO ELDORADO BANK
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1994
ELDORADO MARINERS PROFORMA
BANCORP BANCORP ADJUSTMENTS COMBINED
----------- ---------- ----------- -----------
Interest and fees on loans.............. $16,170,000 $5,035,000 (56,000)(a) $21,149,000
Interest on investment securities....... 3,721,000 682,000 4,403,000
Other interest income................... 1,143,000 511,000 (265,000)(b) 1,389,000
----------- ---------- -----------
Total interest income......... 21,034,000 6,228,000 26,941,000
Interest on deposits and other
borrowings............................ 4,626,000 1,393,000 6,019,000
----------- ---------- -----------
Net interest income..................... 16,408,000 4,835,000 20,922,000
Provision for credit losses............. 2,006,000 182,000 2,188,000
----------- ---------- -----------
Net interest income after provision for
credit losses......................... 14,402,000 4,653,000 18,734,000
Other income............................ 4,848,000 1,631,000 6,479,000
Other expenses:
Salaries and related expense.......... 6,309,000 2,334,000 8,643,000
Occupancy............................. 1,865,000 576,000 (20,000)(c) 2,421,000
Goodwill amortization................. 110,000 -- 359,000 (d) 469,000
Settlement of litigation.............. -- 785,000 785,000
Other................................. 6,652,000 2,255,000 8,907,000
----------- ---------- -----------
Total noninterest expense..... 14,936,000 5,950,000 21,225,000
Income before taxes..................... 4,314,000 334,000 3,988,000
Taxes................................... 1,758,000 115,000 (120,000)(e) 1,753,000
----------- ---------- -----------
Net income.............................. $ 2,556,000 $ 219,000 $ 2,235,000
=========== ========== ===========
Average shares outstanding.............. 2,753,934 630,276 3,384,210
Earnings per share...................... $ 0.93 $ 0.35 $ 0.66
=========== ========== ===========
See accompanying notes to pro forma financial statements.
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PRO FORMA FINANCIAL INFORMATION
MERGER OF MARINERS BANCORP WITH AND INTO ELDORADO BANK
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1994
EXPLANATORY NOTES
(1) UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT ASSUMPTIONS
The Pro Forma Condensed Income Statement for the year ended December 31,
1994 shows the effect the acquisition might have had on historical operations if
the merger had been consummated on January 1, 1994.
The pro forma condensed income statement accounts for the business
combination under the purchase accounting method, whereby the reported income
includes the operations of Mariners only after acquisition based upon the costs
assigned (fair value) to the assets acquired. The Goodwill recorded, which is
the excess of the total acquisition cost over the sum of the assigned fair
values of the assets acquired less liabilities assumed, is amortized by
systematic charges to income over a period of 15 years.
The pro forma adjustments, subject to later adjustment, include only items
that are directly attributable to the transaction, are expected to have a
continuing impact on the operations and are factually supportable. The pro forma
adjustments do not include anticipated economies, from the consolidation of
branch and administrative operations, or other anticipated opportunities
provided by the acquisition. The pro forma adjustments are described in Note (2)
below.
(2) DESCRIPTION OF PRO FORMA ADJUSTMENTS
The following descriptions reference the adjustments as labeled on the pro
forma condensed income statement for the year ended December 31, 1994:
(a) Amortization of purchase accounting premium adjustment to loans.
(b) Reduction of Other Interest Income reflecting the opportunity cost
of the cash paid to Mariners shareholders for partial merger consideration.
The interest opportunity cost assumes a rate at the current federal funds
rate of approximately 5.75 percent per annum.
(c) Reduction in fixed asset depreciation due to purchase accounting
adjustment to premises and equipment.
(d) Increase in Goodwill Amortization reflecting the charge to income
assuming an estimated life of 15 years.
(e) Tax effect of adjustments at an effective federal and state income
tax rate of 40 percent excluding nondeductible portion of goodwill.
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PRO FORMA FINANCIAL INFORMATION
MERGER OF MARINERS BANCORP WITH AND INTO ELDORADO BANK
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1995
ELDORADO MARINERS PROFORMA
BANCORP BANCORP ADJUSTMENTS COMBINED
---------- ---------- -------- -----------
Interest and fees on loans.............. $8,460,000 $2,934,000 (28,000)(a) $11,366,000
Interest on investment securities....... 2,580,000 328,000 2,908,000
Other interest income................... 527,000 180,000 (133,000)(b) 574,000
---------- ---------- ----------
Total interest income......... 11,567,000 3,442,000 14,848,000
Interest on deposits and other
borrowings............................ 2,605,000 771,000 3,376,000
---------- ---------- ----------
Net interest income before provision.... 8,962,000 2,671,000 11,472,000
Provision for credit losses............. 603,000 90,000 693,000
---------- ---------- ----------
Net interest income after provision..... 8,359,000 2,581,000 10,779,000
Other income............................ 2,038,000 684,000 2,722,000
Other expenses:
Salaries and related expense.......... 3,170,000 1,148,000 4,318,000
Occupancy............................. 762,000 332,000 (10,000)(c) 1,084,000
Goodwill amortization................. 56,000 -- 180,000 (d) 236,000
Other................................. 3,145,000 1,087,000 4,232,000
---------- ---------- ----------
Total noninterest expense..... 7,133,000 2,567,000 9,870,000
Income before taxes..................... 3,264,000 698,000 3,631,000
Taxes................................... 1,347,000 298,000 (60,000)(e) 1,585,000
---------- ---------- ----------
Net income.............................. $1,917,000 $ 400,000 $2,046,000
========== ========== ==========
Average shares outstanding.............. 2,757,041 630,276 3,387,317
Earnings per share...................... $ 0.70 $ 0.63 $ 0.60
========== ========== ==========
See accompanying explanatory notes to pro forma financial statements.
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PRO FORMA FINANCIAL INFORMATION
MERGER OF MARINERS BANCORP WITH AND INTO ELDORADO BANK
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1995
EXPLANATORY NOTES
(1) UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT ASSUMPTIONS
The Pro Forma Condensed Income Statement for the six months ended June 30,
1995 shows the effect the acquisition might have had on historical operations if
the merger had been consummated on January 1, 1995.
The pro forma condensed income statement accounts for the business
combination under the purchase accounting method, whereby the reported income
includes the operations of Mariners only after acquisition based upon the costs
assigned (fair value) to the assets acquired. The Goodwill recorded, which is
the excess of the total acquisition cost over the sum of the assigned fair
values of the assets acquired less liabilities assumed, is amortized by
systematic charges to income over a period of 15 years.
The pro forma adjustments include only items that are directly attributable
to the transaction, are expected to have a continuing impact on the operations
and are factually supportable. The pro forma adjustments do not include
anticipated economies, from the consolidation of branch and administrative
operations, or other anticipated opportunities provided by the acquisition. The
pro forma adjustments are described in Note (2) below.
(2) DESCRIPTION OF PRO FORMA ADJUSTMENTS
The following descriptions reference the adjustments as labeled on the pro
forma condensed income statement for the six months ended June 30, 1995:
(a) Amortization of purchase accounting premium adjustment to loans.
(b) Reduction of Other Interest Income reflecting the opportunity cost
of the cash paid to Mariners shareholders for partial merger consideration.
The interest opportunity cost assumes a rate at the current federal funds
rate of approximately 5.75 percent per annum.
(c) Reduction in fixed asset depreciation due to purchase accounting
adjustment to premises and equipment.
(d) Increase in Goodwill Amortization reflecting the charge to income
assuming an estimated life of 15 years.
(e) Tax effect of adjustments at an effective federal and state income
tax rate of 40 percent excluding nondeductible portion of goodwill.
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