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EXHIBIT 99.1
PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed consolidated
balance sheet combines the consolidated historical balance sheets of Peoples
Heritage Financial Group, Inc. ("Peoples Heritage") and Banknorth Group, Inc.
("Banknorth"), assuming the merger of Banknorth with and into Peoples Heritage
was consummated as of December 31, 1999 on a pooling of interests accounting
basis, and the following unaudited pro forma combined condensed consolidated
statements of operations present the combined consolidated statements of
operations of Peoples Heritage and Banknorth assuming the merger was consummated
as of the beginning of the indicated periods. Certain insignificant
reclassifications have been reflected in the pro forma information to conform
statement presentations.
The effect of an expected reorganization and restructuring charge in
connection with the merger has been reflected in the pro forma combined
condensed consolidated balance sheet; however, because the reorganization and
restructuring charge is nonrecurring, it has not been reflected in the pro forma
combined condensed consolidated statements of operations. The pro forma
financial data does not reflect cost savings, revenue enhancements and other
operating synergies which are expected to be realized after the merger is
completed.
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 December 31, 1999 or 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 pro forma information should be read in conjunction with the
historical consolidated financial statements of Peoples Heritage and Banknorth,
including the related notes.
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PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
PEOPLES HERITAGE AND BANKNORTH
DECEMBER 31, 1999
(Unaudited)
(In Thousands)
Peoples Pro Forma
Heritage Banknorth Adjustments Combined
-------- --------- ----------- --------
ASSETS
Cash and due from banks $ 398,759 $ 148,057 $ -- $ 546,816
Federal funds sold and other short-term investments 203,789 25,790 -- 229,579
Securities available for sale, at market value 5,161,009 1,155,022 -- 6,316,031
Securities held to maturity 541,332 15,819 -- 557,151
Loans and leases held for sale 67,220 15,098 -- 82,318
Loans and leases 6,844,659 3,009,997 -- 9,854,656
Less: Allowance for loan and lease losses 107,871 47,177 -- 155,048
------------ ------------ ------------ ------------
Net loans and leases 6,736,788 2,962,820 -- 9,699,608
Premises and equipment 141,739 50,801 -- 192,540
Goodwill and other intangibles 113,264 71,117 -- 184,381
Mortgage servicing rights 46,829 5,895 -- 52,724
Bank owned life insurance 228,423 60,360 288,783
Other assets 280,376 77,957 -- 358,333
------------ ------------ ------------ ------------
Total assets $ 13,919,528 $ 4,588,736 $ -- $ 18,508,264
============ ------------ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Interest-bearing $ 6,629,847 $ 3,085,092 $ -- $ 9,714,939
Non-interest bearing 1,311,112 510,652 -- 1,821,764
Brokered deposits 173,798 -- -- 173,798
------------ ------------ ------------ ------------
Total deposits 8,114,757 3,595,744 -- 11,710,501
------------ ------------ ------------ ------------
Borrowings from the Federal Home Loan Bank of
Boston 3,667,399 330,420 -- 3,997,819
Federal funds purchased and securities sold under
repurchase agreements 1,089,316 213,505 -- 1,302,821
Other borrowings 31,849 34,989 -- 66,838
Other liabilities 96,455 42,781 30,972(1) 170,208
------------ ------------ ------------ ------------
Total liabilities 12,999,776 4,217,439 30,972(1) 17,248,187
------------ ------------ ------------ ------------
Corporation-obligated, mandatorily redeemable
securities of subsidiary trust 68,775 30,000 -- 98,775
------------ ------------ ------------ ------------
Shareholders' equity:
Preferred Stock -- -- -- --
Common Stock:
Peoples Heritage 1,066 -- 428(2) 1,494
Banknorth -- 23,548 (23,548)(2) --
Paid-in capital 509,009 85,396 19,543(2) 613,948
Retained earnings 530,002 257,236 (30,972)(1) 756,266
Unamortized employee restricted stock -- (992) -- (992)
Unearned compensation (1,690) (69) -- (1,759)
Accumulated other comprehensive income:
Net unrealized loss on securities available for (105,149) (20,245) -- (125,394)
sale
Treasury stock, at cost (82,261) (3,577) 3,577(2) (82,261)
------------ ------------ ------------ ------------
Total shareholders' equity 850,977 341,297 (30,972)(1) 1,161,302
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity $ 13,919,528 $ 4,588,736 $ -- $ 18,508,264
============ ============ ============ ============
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Notes to Pro Forma Combined Condensed Consolidated Balanced Sheet
(1) Reflects an estimated $31 million, net of taxes, of reorganization
and restructuring charges related to the merger. Additionally, in the first
quarter of 2000, Peoples Heritage recorded $1 million, net of taxes, of special
charges related to branch closings and Banknorth recorded $2 million, net of
taxes, of special charges related to write-downs of a facility held for sale and
auto lease residuals. In the second quarter of 2000, Peoples Heritage also
expects to record approximately $10 million, net of taxes, in securities losses
to restructure the combined investment portfolio. These items are not included
in the above pro forma financial statements.
(2) Reflects the par value of the Peoples Heritage common stock to be
issued in exchange for Banknorth common stock in connection with the merger,
with related adjustments to paid-in capital. The Peoples Heritage common stock
to be issued in connection with the merger was calculated by multiplying the
number of outstanding shares of Banknorth common stock as of December 31, 1999
by the 1.825 exchange ratio and adding the number of shares of Peoples Heritage
common stock issuable or potentially issuable prior to the effective time of the
merger, based on the 1.825 exchange ratio, with respect to the Banknorth common
stock equivalents which were outstanding on such date.
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PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
PEOPLES HERITAGE AND BANKNORTH
YEAR ENDED DECEMBER 31, 1999
(Unaudited)
(In Thousands, Except Share Data)
Peoples Pro Forma
Heritage Banknorth Combined(1)
-------- --------- -----------
Interest and dividend income:
Interest and fees on loans and leases $ 579,196 $ 247,369 $ 826,565
Interest and dividends on securities 328,739 72,215 400,954
------------ ------------ ------------
Total interest and dividend income 907,935 319,584 1,227,519
------------ ------------ ------------
Interest expense:
Interest on deposits 252,195 121,331 373,526
Interest on borrowed funds 209,493 20,271 229,764
------------ ------------ ------------
Total interest expense 461,688 141,602 603,290
------------ ------------ ------------
Net interest income 446,247 177,982 624,229
Provision for loan and lease losses 14,100 9,475 23,575
------------ ------------ ------------
Net interest income after provision for loan losses 432,147 168,507 600,654
------------ ------------ ------------
Noninterest income:
Customer services 53,402 18,842 72,244
Mortgage banking services 16,342 4,081 20,423
Trust and investment advisory services 19,923 19,455 39,378
Insurance commissions 20,289 -- 20,289
Net securities gains 281 374 655
Bank owned life insurance income 11,479 2,654 14,133
Bank owned life insurance claim -- 1,389 1,389
Other noninterest income 7,472 5,733 13,205
------------ ------------ ------------
129,188 52,528 181,716
------------ ------------ ------------
Noninterest expenses:
Salaries and employee benefits 163,621 67,879 231,500
Data processing 28,043 6,758 34,801
Occupancy 27,278 12,048 39,326
Equipment 21,068 10,309 31,377
Amortization of goodwill and deposit premiums 11,778 8,864 20,642
Distributions on securities of subsidiary trust 6,678 3,156 9,834
Advertising and marketing 9,456 4,716 14,172
Special charges 29,346 (1,344) 28,002
Other noninterest expenses 49,606 30,554 80,160
------------ ------------ ------------
346,874 142,940 489,814
------------ ------------ ------------
Income before income tax expense 214,461 78,095 292,556
Income tax expense 72,039 23,559 95,598
------------ ------------ ------------
Net income $ 142,422 $ 54,536 $ 196,958
============ ============ ============
Basic earnings per share $ 1.38 $ 2.33 $ 1.35
============ ============ ============
Diluted earnings per share $ 1.37 $ 2.30 $ 1.34
============ ============ ============
Average common shares - basic 102,988,690 23,435,122 145,757,788
============ ============ ============
Average common shares - diluted 104,112,038 23,734,591 147,427,667
============ ============ ============
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PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
PEOPLES HERITAGE AND BANKNORTH
YEAR ENDED DECEMBER 31, 1998
(Unaudited)
(In Thousands, Except Share Data)
Peoples Pro Forma
Heritage Banknorth Combined(1)
-------- --------- -----------
Interest and dividend income:
Interest and fees on loans and leases $ 669,991 $ 238,953 $ 908,944
Interest and dividends on securities 167,468 69,748 237,216
------------ ------------ ------------
Total interest and dividend income 837,459 308,701 1,146,160
------------ ------------ ------------
Interest expense:
Interest on deposits 284,935 120,481 405,416
Interest on borrowed funds 126,051 24,177 150,228
------------ ------------ ------------
Total interest expense 410,986 144,658 555,644
------------ ------------ ------------
Net interest income 426,473 164,043 590,516
Provision for loan and lease losses 14,430 9,345 23,775
------------ ------------ ------------
Net interest income after provision for loan and lease
losses 412,043 154,698 566,741
------------ ------------ ------------
Noninterest income:
Customer services 40,982 16,142 57,124
Mortgage banking services 27,202 5,492 32,694
Trust and investment advisory services 16,590 12, 838 29,428
Insurance commissions 13,006 -- 13,006
Net securities gains 5,904 519 6,423
Bank owned life insurance income 3,705 2,229 5,934
Other noninterest income 11,297 4,253 15,550
------------ ------------ ------------
118,686 41,473 160,159
------------ ------------ ------------
Noninterest expenses:
Salaries and employee benefits 164,888 65,545 230,433
Data processing 25,399 6,889 32,288
Occupancy 26,811 9,826 36,637
Equipment 20,621 9,392 30,013
Amortization of goodwill and deposit premiums 11,611 5,743 17,354
Distributions on securities of subsidiary trust 9,060 3,156 12,216
Advertising and marketing 10,805 3,870 14,675
Special charges 39,172 21,968 61,140
Other noninterest expenses 52,631 26,347 78,978
------------ ------------ ------------
360,998 152,736 513,734
------------ ------------ ------------
Income before income tax expense 169,731 43,435 213,166
Income tax expense 56,907 14,515 71,422
------------ ------------ ------------
Net income $ 112,824 $ 28,920 $ 141,744
============ ============ ============
Basic earnings per share $ 1.09 $ 1.24 $ 0.97
============ ============ ============
Diluted earnings per share $ 1.07 $ 1.22 $ 0.95
============ ============ ============
Average common shares - basic 103,637,875 23,277,560 146,119,422
============ ============ ============
Average common shares - diluted 105,767,728 23,669,540 148,964,639
============ ============ ============
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PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
PEOPLES HERITAGE AND BANKNORTH
YEAR ENDED DECEMBER 31, 1997
(Unaudited)
(In Thousands, Except Share Data)
Peoples Pro Forma
Heritage Banknorth Combined(1)
-------- --------- -----------
Interest and dividend income:
Interest and fees on loans and leases $ 590,000 $ 233,414 $ 823,414
Interest and dividends on securities 171,270 61,343 232,613
------------ ------------ ------------
Total interest and dividend income 761,270 294,757 1,056,027
------------ ------------ ------------
Interest expense:
Interest on deposits 261,478 109,443 370,921
Interest on borrowed funds 94,868 23,892 118,760
------------ ------------ ------------
Total interest expense 356,346 133,335 489,681
------------ ------------ ------------
Net interest income 404,924 161,422 566,346
Provision for loan and lease losses 6,391 9,372 15,763
------------ ------------ ------------
Net interest income after provision for loan
and lease losses 398,533 152,050 550,583
------------ ------------ ------------
Noninterest income:
Customer services 34,525 15,260 49,785
Mortgage banking services 28,679 4,667 33,346
Trust and investment advisory services 12,621 11,223 23,844
Insurance commissions 1,899 -- 1,899
Bank owned life insurance income 2,251 77 2,328
Net securities gains 2,571 266 2,837
Other noninterest income 11,825 6,363 18,188
------------ ------------ ------------
94,371 37,856 132,227
------------ ------------ ------------
Noninterest expenses:
Salaries and employee benefits 156,197 62,994 219,191
Data processing 19,833 7,232 27,065
Occupancy 24,741 10,259 35,000
Equipment 21,641 9,398 31,039
Amortization of goodwill and deposit premiums 8,743 5,286 14,029
Distributions on securities of subsidiary trust 8,351 2,104 10,455
Advertising and marketing 10,998 3,428 14,426
Special charges 23,559 -- 23,559
Other noninterest expenses 58,176 27,228 85,404
------------ ------------ ------------
332,239 127,929 460,168
------------ ------------ ------------
Income before income tax expense 160,665 61,977 222,642
Income tax expense 56,993 20,161 77,154
------------ ------------ ------------
Net income $ 103,672 $ 41,816 $ 145,488
============ ============ ============
Basic earnings per share $ 1.01 $ 1.76 $ 1.00
============ ============ ============
Diluted earnings per share $ 0.99 $ 1.74 $ 0.98
============ ============ ============
Average common shares - basic 102,219,049 23,705,320 145,481,258
============ ============ ============
Average common shares - diluted 104,722,008 24,042,800 148,600,118
============ ============ ============
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Note to Pro Forma Combined Condensed Consolidated Statements of Operations
(1) Peoples Heritage expects to achieve cost savings, revenue
enhancements and other operating synergies following consummation of the merger.
The cost savings, revenue enhancements and other operating synergies are
expected to be achieved in various amounts at various times during the periods
subsequent to consummation of the merger and not ratably over or at the
beginning or end of such periods. No adjustment has been reflected in the pro
forma combined statements of operations for the anticipated cost savings,
revenue enhancements and other operating synergies.
For the reasons noted above, it should not be assumed that the
dilution in Peoples Heritage earnings per share reflected in the pro forma
combined condensed consolidated statements of operations will represent actual
dilution with respect to the merger.
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