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EXHIBIT 99a
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UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following Unaudited Pro Forma Combined Financial Information combines the
historical Consolidated Financial Statements of Bank of Boston and BayBanks
giving effect to the proposed merger of Bank of Boston and BayBanks, as if it
had been effective on September 30, 1995, with regard to the Pro Forma Combined
Balance Sheet, and as of the beginning of the periods indicated herein, with
regard to the Pro Forma Combined Statements of Income. The proposed merger
will be accounted for as a pooling of interests. This information should be
read in conjunction with the historical consolidated financial statements of
Bank of Boston and BayBanks, including their respective notes thereto. The
effect of estimated acquisition and restructuring costs has been reflected in
the pro forma combined balance sheet; however, since the estimated costs are
nonrecurring, they have not been reflected in the pro forma combined statements
of income. The pro forma combined financial information does not give effect
to any anticipated cost savings in connection with the proposed merger. The
pro forma combined balance sheet is not necessarily indicative of the actual
financial position that would have existed had the proposed merger with
BayBanks been consummated on September 30, 1995 or that may exist in the future.
The pro forma combined statements of income are not necessarily indicative of
the results that would have occurred had the proposed merger been consummated
on the dates indicated or that may be achieved in the future.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AT SEPTEMBER 30, 1995
(IN MILLIONS) BANK OF PRO FORMA PRO FORMA
BOSTON BAYBANKS(1) ADJUSTMENTS(1) COMBINED
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ASSETS
Cash and due from banks $ 2,208 $ 750 $ 2,958
Interest bearing deposits in other banks 1,249 160 1,409
Federal funds sold and securities purchased
under agreements to resell 1,236 189 1,425
Securities held to maturity 1,765 2,190 3,955
Securities available for sale 3,277 318 3,595
Trading account securities 594 77 671
Mortgages held for sale 558 558
Loans and leases 31,691 7,476 39,167
Reserve for credit losses (704) (154) (858)
Premises and equipment 589 205 794
Due from customers on acceptances 381 1 382
Other assets 3,239 313 3,552
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Total assets $46,083 $11,525 $57,608
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LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits $30,009 $ 9,724 $39,733
Funds borrowed 8,720 732 9,452
Acceptances outstanding 381 1 382
Other liabilities 1,321 97 $ 83 (2) 1,501
Notes payable 2,059 65 2,124
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Total liabilities 42,490 10,619 83 53,192
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Stockholders'equity:
Preferred stock 508 508
Common stock 252 39 58 (3) 349
Surplus 916 359 (58) (3) 1,217
Retained earnings 1,927 508 (83) (2) 2,352
Net unrealized loss on
securities available for sale, net of tax (6) (6)
Cumulative translation adjustments (4) (4)
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Total stockholders' equity 3,593 906 (83) 4,416
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Total liabilities and stockholders' equity $46,083 $11,525 $57,608
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See Notes to Unaudited Pro Forma Combined Financial Information
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UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME SUMMARY
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) NINE MONTHS YEARS ENDED DECEMBER 31,
ENDED ------------------------
SEPT. 30, 1995 1994 1993 1992
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INTEREST INCOME:
Loans and lease financing, including fees $ 2,860 $ 3,114 $ 2,584 $ 2,823
Securities 507 495 362 485
Mortgages held for sale 18 43 85 67
Federal funds sold and securities
purchased under agreements to resell 273 605 147 98
Deposits in other banks 182 119 152 191
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Total interest income 3,840 4,376 3,330 3,664
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INTEREST EXPENSE:
Deposits 1,348 1,301 1,177 1,640
Funds borrowed 698 906 268 275
Notes payable 119 132 116 77
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Total interest expense 2,165 2,339 1,561 1,992
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Net interest revenue 1,675 2,037 1,769 1,672
Provision for credit losses 194 154 107 288
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Net interest revenue after provision
for credit losses 1,481 1,883 1,662 1,384
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NONINTEREST INCOME:
Financial service fees 480 580 529 519
Trust and agency fees 179 215 193 181
Trading profits and commissions 16 18 26 18
Securities gains 7 14 32 116
Other income 260 208 165 186
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Total noninterest income 942 1,035 945 1,020
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NONINTEREST EXPENSE:
Salaries and employee benefits 857 1,043 984 926
Occupancy and equipment expense 248 317 312 317
Other real estate owned expense 7 38 82 172
Acquisition and restructuring expense 21 85
Other expense 418 526 539 534
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Total noninterest expense 1,530 1,945 2,002 1,949
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Income before income taxes, extraordinary
item and cumulative effect of
accounting change 893 973 605 455
Provision for income taxes 395 423 262 190
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INCOME BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $ 498 $ 550 $ 343 $ 265
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PER COMMON SHARE:
Income before extraordinary item and
cumulative effect of accounting change:
Primary $ 3.07 $ 3.44 $ 2.09 $ 1.77
Fully diluted 3.00 3.37 2.05 1.73
Average number of common shares (in thousands):
Primary 153,086 148,913 147,033 138,444
Fully diluted 156,409 153,619 152,067 144,044
See Notes to Unaudited Pro Forma Combined Financial Information
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UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) BANK OF PRO FORMA PRO FORMA
BOSTON BAYBANKS(1) ADJUSTMENTS(1) COMBINED
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INTEREST INCOME:
Loans and lease financing, including fees $ 2,394 $ 466 $ 2,860
Securities 395 112 507
Mortgages held for sale 17 1 18
Federal funds sold and securities
purchased under agreements to resell 267 6 273
Deposits in other banks 177 5 182
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Total interest income 3,250 590 3,840
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INTEREST EXPENSE:
Deposits 1,179 169 1,348
Funds borrowed 656 42 698
Notes payable 116 3 119
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Total interest expense 1,951 214 2,165
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Net interest revenue 1,299 376 1,675
Provision for credit losses 175 19 194
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Net interest revenue after provision
for credit losses 1,124 357 1,481
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NONINTEREST INCOME:
Financial service fees 337 143 480
Trust and agency fees 168 11 179
Trading profits and commissions 14 2 16
Securities gains 7 7
Other income 252 8 260
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Total noninterest income 778 164 942
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NONINTEREST EXPENSE:
Salaries and employee benefits 670 187 857
Occupancy and equipment expense 180 68 248
Other real estate owned expense 6 1 7
Other expense 312 106 418
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Total noninterest expense 1,168 362 1,530
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Income before income taxes 734 159 893
Provision for income taxes 335 60 395
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NET INCOME $ 399 $ 99 $ 498
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PER COMMON SHARE:
Net income:
Primary $ 3.36 $ 5.11 $ 3.07
Fully diluted 3.27 5.10 3.00
Average number of common shares
(in thousands):
Primary 110,188 19,499 153,086
Fully diluted 113,458 19,523 156,409
See Notes to Unaudited Pro Forma Combined Financial Information
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UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) BANK OF PRO FORMA PRO FORMA
BOSTON BAYBANKS(1) ADJUSTMENTS(1) COMBINED
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INTEREST INCOME:
Loans and lease financing, including fees $ 2,606 $ 508 $ 3,114
Securities 355 140 495
Mortgages held for sale 41 2 43
Federal funds sold and securities
purchased under agreements to resell 600 5 605
Deposits in other banks 116 3 119
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Total interest income 3,718 658 4,376
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INTEREST EXPENSE:
Deposits 1,148 153 1,301
Funds borrowed 868 38 906
Notes payable 130 2 132
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Total interest expense 2,146 193 2,339
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Net interest revenue 1,572 465 2,037
Provision for credit losses 130 24 154
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Net interest revenue after provision
for credit losses 1,442 441 1,883
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NONINTEREST INCOME:
Financial service fees 396 184 580
Trust and agency fees 201 14 215
Trading profits and commissions 16 2 18
Securities gains 14 14
Other income 201 7 208
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Total noninterest income 828 207 1,035
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NONINTEREST EXPENSE:
Salaries and employee benefits 813 230 1,043
Occupancy and equipment expense 231 86 317
Other real estate owned expense 22 16 38
Acquisition and restructuring expense 21 21
Other expense 392 134 526
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Total noninterest expense 1,479 466 1,945
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Income before income taxes, extraordinary
item and cumulative effect of
of accounting change 791 182 973
Provision for income taxes 349 74 423
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INCOME BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $ 442 $ 108 $ 550
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PER COMMON SHARE:
Income before extraordinary item and
cumulative effect of accounting change:
Primary $ 3.79 $ 5.65 $ 3.44
Fully diluted 3.67 5.65 3.37
Average number of common shares (in thousands):
Primary 106,730 19,174 148,913
Fully diluted 111,427 19,177 153,619
See Notes to Unaudited Pro Forma Combined Financial Information
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UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) BANK OF PRO FORMA PRO FORMA
BOSTON BAYBANKS(1) ADJUSTMENTS(1) COMBINED
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INTEREST INCOME:
Loans and lease financing, including fees $ 2,112 $ 472 $ 2,584
Securities 271 91 362
Mortgages held for sale 76 9 85
Federal funds sold and securities
purchased under agreements to resell 139 8 147
Deposits in other banks 141 11 152
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Total interest income 2,739 591 3,330
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INTEREST EXPENSE:
Deposits 1,016 161 1,177
Funds borrowed 264 4 268
Notes payable 114 2 116
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Total interest expense 1,394 167 1,561
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Net interest revenue 1,345 424 1,769
Provision for credit losses 70 37 107
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Net interest revenue after provision
for credit losses 1,275 387 1,662
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NONINTEREST INCOME:
Financial service fees 350 179 529
Trust and agency fees 178 15 193
Trading profits and commissions 24 2 26
Securities gains 32 32
Other income 162 3 165
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Total noninterest income 746 199 945
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NONINTEREST EXPENSE:
Salaries and employee benefits 771 213 984
Occupancy and equipment expense 224 88 312
Other real estate owned expense 44 38 82
Acquisition and restructuring expense 85 85
Other expense 407 132 539
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Total noninterest expense 1,531 471 2,002
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Income before income taxes and
cumulative effect of accounting change 490 115 605
Provision for income taxes 215 47 262
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INCOME BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE $ 275 $ 68 $ 343
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PER COMMON SHARE:
Income before cumulative effect
of accounting change:
Primary $ 2.28 $ 3.57 $ 2.09
Fully diluted 2.22 3.56 2.05
Average number of common shares (in thousands):
Primary 105,336 18,953 147,033
Fully diluted 110,258 19,004 152,067
See Notes to Unaudited Pro Forma Combined Financial Information
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UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1992
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) BANK OF PRO FORMA PRO FORMA
BOSTON BAYBANKS(1) ADJUSTMENTS(1) COMBINED
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INTEREST INCOME:
Loans and lease financing, including fees $ 2,291 $ 532 $ 2,823
Securities 391 94 485
Mortgages held for sale 58 9 67
Federal funds sold and securities
purchased under agreements to resell 81 17 98
Deposits in other banks 186 5 191
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Total interest income 3,007 657 3,664
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INTEREST EXPENSE:
Deposits 1,407 233 1,640
Funds borrowed 271 4 275
Notes payable 74 3 77
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Total interest expense 1,752 240 1,992
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Net interest revenue 1,255 417 1,672
Provision for credit losses 181 107 288
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Net interest revenue after provision
for credit losses 1,074 310 1,384
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NONINTEREST INCOME:
Financial service fees 355 164 519
Trust and agency fees 166 15 181
Trading profits and commissions 16 2 18
Securities gains 39 77 116
Other income 183 3 186
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Total noninterest income 759 261 1,020
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NONINTEREST EXPENSE:
Salaries and employee benefits 726 200 926
Occupancy and equipment expense 227 90 317
Other real estate owned expense 113 59 172
Other expense 408 126 534
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Total noninterest expense 1,474 475 1,949
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Income before income taxes and
extraordinary item 359 96 455
Provision for income taxes 153 37 190
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INCOME BEFORE EXTRAORDINARY
ITEM $ 206 $ 59 $ 265
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PER COMMON SHARE:
Income before extraordinary
item:
Primary $ 1.82 $ 3.57 $ 1.77
Fully diluted 1.78 3.54 1.73
Average number of common shares (in thousands):
Primary 101,977 16,576 138,444
Fully diluted 107,157 16,767 144,044
See Notes to Unaudited Pro Forma Combined Financial Information
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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(1) Certain historical data of BayBanks have been reclassified on a pro forma
basis to conform to Bank of Boston's classifications. Transactions
between Bank of Boston and BayBanks are not material in relation to the
pro forma combined financial statements, and have not been eliminated from
the pro forma combined amounts.
(2) Reflects preliminary estimated acquisition and restructuring costs of
$140 million ($83 million net of taxes). Such costs include estimated
investment banking and other professional fees, stock issuance costs and
other expenses associated with the proposed merger and estimated
facilities and operations consolidation and involuntary termination costs
associated with expected reorganizations following the proposed merger.
(3) Reflects the conversion of BayBanks Common Stock into Bank of Boston
Common Stock. Pursuant to the agreement with BayBanks, each outstanding
share (19,622,393 shares at September 30, 1995) of BayBanks Common
Stock will be converted into 2.2 shares of Bank of Boston Common Stock,
subject to adjustment in certain circumstances.
(4) In connection with its proposed merger with BayBanks, Bank of Boston will
file a Registration Statement on Form S-4 with the Securities and
Exchange Commission (the "Commission") registering Bank of Boston Common
Stock to be issued in connection therewith. This registration statement,
which will be subject to review and comment by the Staff of the
Commission, will include pro forma financial information for Bank of
Boston and BayBanks. Such pro forma financial information may differ from
the pro forma financial information included herein.