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EXHIBIT 99.4
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined condensed balance sheet as of March
31, 1998, and the unaudited pro forma combined condensed statements of income
for the three month periods ended March 31, 1998 and 1997, and for the years
ended December 31, 1997, 1996, and 1995 combine the historical financial
statements of First American and Deposit Guaranty. The pro forma combined
condensed statements give effect to the acquisition of Deposit Guaranty with
First American as if the acquisition occurred on March 31, 1998, with respect to
the balance sheet, and of January 1, 1995, for the income statements. The pro
forma combined condensed statements give effect to the merger of First American
with Deposit Guaranty under the pooling-of-interests 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 First
American and Deposit Guaranty had been combined at the beginning of the reported
period.
The unaudited pro forma combined condensed statements of income do not include
nonrecurring merger-related charges. It is anticipated that approximately $71
million, after tax, will be expensed as incurred in connection with the merger
of First American and Deposit Guaranty.
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PRO FORMA COMBINED CONDENSED BALANCE SHEET
The following unaudited pro forma combined condensed balance sheet combines the
consolidated historical balance sheets of First American and Deposit Guaranty,
assuming the companies had been combined as of March 31, 1998 on a pooling of
interest accounting basis.
AT MARCH 31, 1998
FIRST DEPOSIT PROFORMA
AMERICAN GUARANTY ADJUSTMENT COMBINED
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(DOLLARS IN THOUSANDS)
Assets
Cash and due from other banks $ 539,902 410,163 950,065
Time deposits with other banks 63,840 3,155 66,995
Securities:
Held to maturity 648,964 180,758 829,722
Available for sale 2,293,754 1,578,149 3,871,903
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Total securities 2,942,718 1,758,907 4,701,625
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Federal funds sold and securities purchased under agreements to resell 39,417 7,692 47,109
Trading account securities 70,001 3,119 73,120
Total loans 6,915,722 4,537,753 11,453,475
Unearned discount and net deferred loan fees 4,402 1,765 6,167
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Loans, net of unearned discount and net deferred loan fees 6,911,320 4,535,988 11,447,308
Allowance for possible loan losses 114,854 65,603 180,457
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Total net loans 6,796,466 4,470,385 11,266,851
Premises and equipment, net 200,753 171,980 372,733
Foreclosed properties 3,679 4,936 8,615
Other assets 404,813 320,746 a 31,000 756,559
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Total assets $11,061,589 7,151,083 31,000 18,243,672
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Liabilities
Deposits $ 8,061,418 5,579,242 13,640,660
Short-term borrowings 1,377,271 522,857 1,900,128
Long-term debt 409,514 271,354 680,868
Other liabilities 321,849 129,183 a 102,000 553,032
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Total liabilities 10,170,052 6,502,636 102,000 16,774,688
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Shareholders' equity
Common stock 144,475 22,775 b 98,973 266,223
Additional paid-in capital 77,015 155,613 b -98,973 133,655
Retained earnings 697,046 470,828 a -71,000 1,096,874
Other -30,984 0 -30,984
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Realized shareholders' equity 887,552 649,216 -71,000 1,465,768
Net unrealized gains (losses) on securities available for sale,
net of tax 3,985 -769 3,216
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Total shareholders' equity 891,537 6,748,447 -71,000 1,468,984
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Total liabilities and shareholders' equity $11,061,589 7,151,083 31,000 18,243,672
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A To record a liability for estimated one-time charges of $71,000,000, after
taxes, for various items such as investment bankers fees, severance, and
systems and software writeoffs, as well as a related deferred tax asset in
the amount of $31,000,000.
B Reclassification of $98,973,000 of additional paid-in capital surplus to
common stock to reflect the common stock of First American Corporation of
$144,475,000 plus the $2.50 par value of 48,669,000 shares of First
American Corporation common stock to be issued to effect the merger.
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PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
The following unaudited pro forma combined condensed statement of income
presents the combined statement of income of First American and Deposit
Guaranty, assuming the companies had been combined as of January 1, 1998 on
a pooling of interest accounting basis.
THREE MONTHS ENDED MARCH 31, 1998
FIRST DEPOSIT
AMERICAN GUARANTY COMBINED
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(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Interest income
Interest and fees on loans $151,298 93,650 244,948
Interest and dividends on securities 43,580 26,814 70,394
Other interest income 2,042 480 2,522
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Total interest income 196,920 120,944 317,864
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Interest expense
Interest on deposits 71,061 40,317 111,378
Interest on short-term borrowings 17,357 7,418 24,775
Interest on long-term debt 6,119 3,075 9,194
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Total interest expense 94,537 50,810 145,347
Net interest income 102,383 70,134 172,517
Provision for loan losses 4,000 2,000 6,000
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Net interest income after provision for loan losses 98,383 68,134 166,517
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Noninterest income 69,039 34,343 103,382
Net realized gain (loss) on sales and writedowns of securities 1,100 581 1,681
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Total noninterest income 70,139 34,924 105,063
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Noninterest expense 108,086 66,028 174,114
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Income before income tax expense 60,436 37,030 97,466
Income tax expense 22,790 12,690 35,480
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Net income $ 37,646 24,340 61,986
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Per common share:
Net income - basic $ 0.66 0.60 0.59
Net income - diluted $ 0.64 0.59 0.58
Weighted-average common shares outstanding - basic 57,118 40,850 104,913
Weighted-average common shares outstanding - diluted 59,096 41,278 107,391
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PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
The following unaudited pro forma combined condensed statement of income
presents the combined statement of income of First American and Deposit
Guaranty, assuming the companies had been combined as of January 1, 1997 on
a pooling of interest accounting basis.
THREE MONTHS ENDED MARCH 31, 1997
FIRST DEPOSIT
AMERICAN GUARANTY COMBINED
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(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Interest income
Interest and fees on loans $ 138,702 90,639 229,341
Interest and dividends on securities 40,567 29,262 69,829
Other interest income 2,031 1,072 3,103
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Total interest income 181,300 120,973 302,273
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Interest expense
Interest on deposits 70,054 41,140 111,194
Interest on short-term borrowings 13,356 6,910 20,266
Interest on long-term debt 4,956 1,477 6,433
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Total interest expense 88,366 49,527 137,893
Net interest income 92,934 71,446 164,380
Provision for loan losses 0 1,875 1,875
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Net interest income after provision for loan losses 92,934 69,571 162,505
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Noninterest income 61,604 30,565 92,169
Net realized gain on sales and writedowns of securities 147 86 233
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Total noninterest income 61,751 30,651 92,402
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Noninterest expense 99,537 66,316 165,853
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Income before income tax expense 55,148 33,906 89,054
Income tax expense 21,118 11,293 32,411
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Net income $ 34,030 22,613 56,643
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Per common share:
Net income - basic $ 0.58 0.54 0.52
Net income - diluted $ 0.56 0.53 0.51
Weighted-average common shares outstanding - basic 59,081 42,201 108,456
Weighted-average common shares outstanding - diluted 60,757 42,519 110,504
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PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
The following unaudited pro forma combined condensed statement of income
presents the combined statement of income of First American and Deposit
Guaranty, assuming the companies had been combined as of January 1, 1997 on
a pooling of interest accounting basis.
YEAR ENDED DECEMBER 31, 1997
FIRST DEPOSIT
AMERICAN GUARANTY COMBINED
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(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Interest income
Interest and fees on loans $ 583,453 372,016 955,469
Interest and dividends on securities 160,669 110,992 271,661
Other interest income 8,336 2,457 10,793
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Total interest income 752,458 485,465 1,237,923
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Interest expense
Interest on deposits 288,202 163,779 451,981
Interest on short-term borrowings 61,287 28,780 90,067
Interest on long-term debt 19,559 8,310 27,869
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Total interest expense 369,048 200,869 569,917
Net interest income 383,410 284,596 668,006
Provision for loan losses 5,000 7,500 12,500
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Net interest income after provision for loan losses 378,410 277,096 655,506
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Noninterest income 257,445 131,517 388,962
Net realized gain on sales and writedowns of securities 2,149 2,086 4,235
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Total noninterest income 259,594 133,603 393,197
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Noninterest expense 402,002 271,047 673,049
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Income from continuing operations before income tax expense 236,002 139,652 375,654
Income tax expense 90,530 47,372 137,902
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Net income $ 145,472 92,280 237,752
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Per common share:
Net income - basic $ 2.48 2.25 2.23
Net income - diluted $ 2.40 2.23 2.18
Weighted-average common shares outstanding - basic 58,679 41,082 106,745
Weighted-average common shares outstanding - diluted 60,497 41,413 108,950