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EXHIBIT 99
FULLY PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined condensed balance sheet as of
June 30, 1995, and the unaudited pro forma combined condensed statement of
income for the year ended June 30, 1995, combine the historical financial
statements of FAC, HFB, and Charter. The pro forma combined condensed statements
give effect to the affiliations of each institution with FAC as if the
affiliation occurred on June 30, 1995, with respect to the balance sheet, and as
of July 1, 1994, for the income statement. The pro forma combined condensed
statements give effect to the expected merger of FAC with HFB under the
pooling-of-interests method of accounting and give effect to the expected
affiliation of FAC with Charter under the purchase method of accounting. The
pooling-of-interests method of accounting combines assets and liabilities at
their historical bases and restates the results of operations as if FAC and HFB
had been combined at the beginning of the reported period. The purchase method
of accounting requires that all assets and liabilities of Charter be adjusted to
their estimated fair market value as of the date of acquisition. Since purchase
accounting does not permit restatement of results for prior periods, Charter pro
forma information is only presented as of and for the year ended June 30, 1995.
The unaudited pro forma combined condensed statement of income do not
include nonrecurring merger-related one-time charges. It is anticipated that
approximately $4.5 million, net of taxes, will be expensed as incurred in
connection with the merger of FAC and HFB. Additionally, the unaudited pro forma
combined condensed financial statements do not give effect to any cost savings
which may be realized following the two mergers.
The pro forma financial statements are provided for informational purposes.
The pro forma combined condensed statement of income is not necessarily
indicative of the actual results that would have been achieved had the
acquisitions been consummated at the beginning of the period presented, and is
not indicative of future results. The pro forma financial statements should be
read in conjunction with the audited financial statements and the notes thereof
of FAC and Charter incorporated by reference herein.
FAC reports its financial information on the basis of a December 31 fiscal
year. HFB and Charter report their financial information on the basis of a June
30 fiscal year. The information for FAC in the pro forma combined condensed
statement of income has been restated to conform with HFB's and Charter's fiscal
year end.
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UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 1995
(DOLLARS IN THOUSANDS)
FAC FAC FAC
PRO FORMA PRO FORMA FULLY
PURCHASE WITH POOLING WITH PRO FORMA
FAC CHARTER ADJUSTMENTS CHARTER HFB ADJUSTMENTS HFB COMBINED
---------- -------- ----------- ---------- -------- ----------- ---------- ----------
ASSETS
Cash and due from banks... $ 413,232 $ 24,150 $ (49,340)(h) $ 388,042 $ 14,878 $ 428,110 $ 402,920
Time deposits with other
banks................... 26,284 26,284 26,284 26,284
Securities:
Held to maturity........ 1,461,960 295,191 (814)(c) 1,756,337 170,622 1,632,582 1,926,959
Available for sale...... 558,671 7,603 566,274 20,213 578,884 586,487
---------- -------- -------- ---------- -------- ------- ----------- ----------
Total securities...... 2,020,631 302,794 (814) 2,322,611 190,835 $ 0 2,211,466 2,513,446
---------- -------- -------- ---------- -------- ------- ---------- ----------
Federal funds sold and
securities purchased
under agreements to
resell.................. 83,805 83,805 7,000 90,805 90,805
Trading account
securities.............. 29,224 29,224 29,224 29,224
Total loans............... 5,285,743 410,104 (8,529)(c) 5,687,318 301,768 5,587,511 5,989,086
Unearned discount and net
deferred loan fees...... 5,463 1,272 6,735 1,908 7,371 8,643
---------- -------- -------- ---------- -------- ------- ---------- ----------
Loans, net of unearned
discount and net
deferred loan fees.... 5,280,280 408,832 (8,529) 5,680,583 299,860 0 5,580,140 5,980,443
Allowance for possible
loan losses............. 126,575 5,021 131,596 2,327 128,902 133,923
---------- -------- -------- ---------- -------- ------- ---------- ----------
Total net loans......... 5,153,705 403,811 (8,529) 5,548,987 297,533 0 5,451,238 5,846,520
---------- -------- -------- ---------- -------- ------- ---------- ----------
Premises and equipment,
net..................... 110,186 5,876 116,062 6,786 116,972 122,848
Foreclosed properties..... 9,256 7,006 16,262 9,256 16,262
Other assets.............. 224,823 7,690 8,822(d) 266,110 11,137 1,572(a) 237,532 278,819
24,775(e)
---------- -------- -------- ---------- -------- ------- ---------- ----------
TOTAL ASSETS.......... $8,071,146 $751,327 $ (25,086) $8,797,387 $528,169 $ 1,572 $8,600,887 $9,327,128
========== ======== ======== ========== ======== ======= ========== ==========
LIABILITIES
Deposits.................. $6,158,336 $525,400 $ (3,854)(c) $6,679,882 $449,318 $6,607,654 $7,129,200
Short-term borrowings..... 819,993 63,614 883,607 789 820,782 884,396
Long-term debt............ 251,637 104,500 (3,947)(c) 352,190 17,452 269,089 369,642
Other liabilities......... 203,124 11,389 7,210(f) 222,845 6,836 $ 6,075(a) 216,035 235,756
1,122(g)
---------- -------- -------- ---------- -------- ------- ---------- ----------
TOTAL LIABILITIES..... 7,433,090 704,903 531 8,138,524 474,395 6,075 7,913,560 8,618,994
---------- -------- -------- ---------- -------- ------- ---------- ----------
SHAREHOLDERS' EQUITY
Common stock.............. 127,132 51 2,900(h) 130,032 3,186 9,744(b) 140,062 142,962
(51)(i)
Capital surplus........... 96,223 52,006 17,907(h) 114,130 16,510 (9,744)(b) 102,989 120,896
(52,006)(i)
Retained earnings......... 416,898 (5,612) 5,612(i) 416,898 35,070 (4,503)(a) 447,465 447,465
Other..................... (1,696) (49) 49(i) (1,696) (1,076) (2,772) (2,772)
---------- -------- -------- ---------- -------- ------- ---------- ----------
Realized shareholders'
equity................ 638,557 46,396 (25,589) 659,364 53,690 (4,503) 687,744 708,551
Net unrealized gains
(losses) on securities
available for sale, net
of tax.................. (501) 28 (28)(i) (501) 84 (417) (417)
---------- -------- -------- ---------- -------- ------- ---------- ----------
TOTAL SHAREHOLDERS'
EQUITY.............. 638,056 46,424 (25,617) 658,863 53,774 (4,503) 687,327 708,134
---------- -------- -------- ---------- -------- ------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS
EQUITY.............. $8,071,146 $751,327 $ (25,086) $8,797,387 $528,169 $ 1,572 $8,600,887 $9,327,128
========== ======== ======== ========== ======== ======= ========== ==========
(See footnotes on following page).
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FOOTNOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
The pro forma adjustments are based on the best available preliminary
information as of June 30, 1995, and may be different from the actual
adjustments to reflect the fair value of the net assets purchased as of the date
of acquisition of Charter. The final allocation of intangible assets between
goodwill and other identifiable intangible assets has not been determined.
Subsequent changes to the purchase adjustments, as well as the final allocation
of the intangible assets between goodwill and other identifiable intangible
assets may result in an adjustment to goodwill, which will have a corresponding
impact on amortization expense.
(a) To record a liability for estimated one-time charges of $4,042,000 for
various items such as severance and systems conversions and record a related
deferred tax asset in the amount of $1,572,000, plus record a $2,033,000
estimated liability related to recapture of tax bad debt reserve related to
conversion of HFB to a commercial bank.
(b) Reclassification of $9,744,000 of capital surplus to common stock to reflect
the common stock of FAC of $127,132,000 plus the $5 par value of 2,586,000
shares of FAC common stock to be issued to effect the merger.
(c) Adjustment to reflect the estimated fair value of assets acquired and
estimated fair value of liabilities assumed.
(d) To record estimated fair value of core deposit rights of $8,200,000 and
loan servicing rights of $622,000.
(e) To record goodwill balance of $24,775,000 to reflect the excess of the
total acquisition cost over the estimated fair value of the assets acquired
less liabilities assumed.
(f) To record a liability for estimated one-time charges of $4,410,000 for
various items such as severance and systems conversions, $1,400,000 of
estimated deferred taxes related to Statement of Financial Accounting
Standards No. 109, and $1,400,000 estimated liability related to tax loss
carryforward.
(g) To record net deferred tax liability of $1,122,000 related to the net of
(c), (d),and the $4,410,000 of one-time charges in (f).
(h) Reflects exchange of 1,955,000 FAC shares for Charter shares. FAC expects to
issue 580,000 FAC shares and purchase and reissue 1,375,000 FAC shares.
Common stock will increase $2,900,000 and surplus will increase $17,907,000
based on issuing 580,000 FAC shares. Using the closing price of FAC stock on
June 30, 1995 of $35.875, $49,340,000 of cash will be used to purchase
1,375,000 FAC shares to exchange with Charter shareholders.
(i) Reflects reclassification of Charter's shareholders' equity with a reduction
of common stock $51,000 a reduction of surplus of $52,006,000 an increase in
retained earnings of $5,612,000, an increase in other of $49,000 and a
decrease in net unrealized gains on securities available for sale of
$28,000.
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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FAC FAC FAC
PRO FORMA PRO FORMA FULLY
PURCHASE WITH POOLING WITH PRO FORMA
FAC CHARTER ADJUSTMENTS CHARTER HFB ADJUSTMENTS HFB COMBINED
-------- ------- ----------- --------- ------- ----------- --------- ---------
Interest income.......... $525,989 $53,117 $ 779(a) $576,924 $35,979 $561,968 $612,903
(2,961)(e)
Interest expense......... 238,841 30,818 3,901(b) 273,560 17,798 256,639 291,358
-------- ------- ------- -------- ------- ------- -------- --------
Net interest income.... 287,148 22,299 (6,083) 303,364 18,181 305,329 321,545
Provision for loan
losses................. (10,000) 1,975 (8,025) 82 (9,918) (7,943)
-------- ------- ------- -------- ------- ------- -------- --------
Net interest income
after provision...... 297,148 20,324 (6,083) 311,389 18,099 315,247 329,488
Non-interest income...... 86,831 5,282 92,113 2,755 89,586 94,868
Non-interest expense..... 233,855 16,676 898(c) 253,081 12,241 246,096 265,322
1,652(d)
-------- ------- ------- -------- ------- ------- -------- --------
Income before income tax
expense................ 150,124 8,930 (8,633) 150,421 8,613 158,737 159,034
Income tax expense....... 54,908 3,373 (2,716)(f) 55,565 3,146 58,054 58,711
-------- ------- ------- -------- ------- ------- -------- --------
Net income............... $ 95,216 $5,557 $(5,917) $ 94,856 $ 5,467 $100,683 $100,323
======== ======= ======= ======== ======= ======= ======== ========
Earnings per share....... $ 3.66 $ 3.57 $ 3.52 $ 3.44
Weighted average common
shares outstanding..... 26,020 26,600 28,606 29,186
FOOTNOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENT OF INCOME
(a) $779,000 of accretion associated with purchase accounting adjustments
related to securities and loans accreted over 12 years, the estimated
remaining lives of the related assets.
(b) $3,901,000 of amortization associated with purchase accounting adjustments
related to time deposits and long-term debt amortized over 2 years, the
estimated remaining lives of the liabilities.
(c) $898,000 of amortization associated with purchase accounting adjustments
related to core deposit rights and loan servicing rights amortized over 10
and 8 years, respectively, the estimated remaining lives of the assets.
(d) $1,652,000 of amortization associated with purchase accounting adjustments
related to goodwill amortized over 15 years, the estimated life of the
asset.
(e) Estimated reduction in interest income of $2,961,000 at a rate of 6%, which
represents an investment rate at June 30, 1995, related to $49,340,000 of
cash used to purchase FAC shares to exchange with Charter shareholders.
(f) Reduction in income tax at a rate of 38.9% related to net of amounts in (a),
(b), (c), and (e).
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