UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
UST CORP.
AFFILIATED COMMUNITY BANCORP, INC.
FIRESTONE FINANCIAL CORP.
SOMERSET SAVINGS BANK
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
September 30, 1997
The following Unaudited Pro Forma Condensed Combining Balance Sheet
presents the combined financial position of UST Corp. and Subsidiaries ("UST")
and Somerset Savings Bank ("Somerset) as of September 30, 1997, assuming the
Merger had occurred as of September 30, 1997. The Unaudited Pro Forma Condensed
Combining Balance Sheet also gives effect to the acquisition of Firestone
Financial Corp. ("Firestone") completed on October 15, 1997 and the pending
acquisition of Affiliated Community Bancorp, Inc. ("AFCB") pursuant to an
agreement entered into on December 15, 1997.
The accompanying pro forma information is based on historical balance
sheet data of UST, Firestone, Somerset and AFCB as of September 30, 1997, giving
effect to the completed merger of UST and Firestone and the proposed mergers of
UST with Somerset and AFCB under the pooling of interests method of accounting.
The Unaudited Pro Forma Condensed Combining Balance Sheet should be read
in conjunction with the Unaudited Pro Forma Condensed Combined Statements of
Income appearing elsewhere in this Current Report on Form 8-K and the historical
financial statements and notes thereto of UST, Firestone, Somerset and AFCB
which are included in this Current Report on Form 8-K. The Unaudited Pro Forma
Condensed Combining Balance Sheet is presented for informational purposes only
and is not necessarily indicative of the combined financial position that
would have occurred if the mergers of UST, Firestone, Somerset and
AFCB had been consummated on September 30, 1997 or at the beginning of the
periods indicated or which may be obtained in the future.
125
UST CORP.
AFFILIATED COMMUNITY BANCORP, INC.
FIRESTONE FINANCIAL CORP.
SOMERSET SAVINGS BANK
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
September 30, 1997
Pro Forma Pro Forma Pro
Historical Adjustments Pro Forma Adjustments Forma
-------------------------------------
UST Firestone Somerset (Notes 1 & 2) Combined AFCB (Notes 1 & 2) Combined
---------- ----------- ---------- ------------- --------- ---------- ------------- --------
(in thousands)
ASSETS
Cash, due from banks
and interest
bearing deposits $ 92,171 $ 21 $ 7,704 $ (8,500) $ 91,396 $ 15,979 $ (12,000) $ 95,375
Excess funds sold 129,731 1,155 130,886 4,584 135,470
Securities
Available-for-sale 712,415 712,415 204,277 916,692
Held to maturity 92,909 92,909 177,168 270,077
Loans, net of reserve
for possible loan losses 2,587,498 83,633 389,526 3,060,657 699,554 3,760,211
Premises, furniture
and equipment 64,258 114 12,668 77,040 8,790 85,830
Intangible assets, net 59,634 59,634 59,634
Other real estate owned 1,106 104 7,240 8,450 1 8,451
Other assets 44,036 1,228 9,137 54,401 18,226 72,627
---------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets $3,690,849 $ 85,100 $ 520,339 $ (8,500) $4,287,788 $1,128,579 $ (12,000) $5,404,367
========== ======== ========== ========== ========== ========== ========== ==========
LIABILITIES AND
STOCKHOLDERS'
INVESTMENT
Deposits:
Noninterest bearing $ 618,862 $ $ 22,697 $ $641,559 $ 46,682 $ 688,241
Interest bearing:
NOW accounts 42,268 27,089 69,357 56,513 125,870
Regular savings 662,295 68,779 731,074 123,475 854,549
Money market 628,746 48,555 677,301 74,877 752,178
Time deposits 911,756 290,693 1,202,449 403,887 1,606,336
---------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Total deposits 2,863,927 457,813 3,321,740 705,434 4,027,174
Short-term borrowings 427,782 65,439 3,100 496,321 260,073 756,394
Other borrowings 18,063 20,447 38,510 46,057 84,567
Other liabilities 66,743 5,371 $ 4,646 (2,200) 74,560 6,857 $ (3,300) 78,117
---------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Total liabilities 3,376,515 70,810 486,006 (2,200) 3,931,131 1,018,421 (3,300) 4,946,252
Stockholders' investment:
Common Stock
UST 17,832 2,715 20,547 5,722 26,269
AFCB 67 (67)
Firestone 20 (20)
Somerset 16,652 (16,652)
Additional paid-in capital 116,087 1,231 18,637 13,957 149,912 50,040 (9,057) 190,895
Retained earnings (deficit) 179,767 13,039 (956) (6,300) 185,550 64,055 (8,700) 240,905
Unrealized gain on
securities held as
available-for-sale 245 245 506 751
Treasury stock, at cost (3,402) 3,402
Deferred compensation
and other 403 403 (1,108) (705)
---------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Total stockholders'
investment 314,334 14,290 34,333 (6,300) 356,657 110,158 (8,700) 458,115
---------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and
stockholders' investment $3,690,849 $ 85,100 $ 520,339 $ (8,500) $4,287,788 $1,128,579 $ (12,000) $5,404,367
========== ======== ========== ========== ========== ========== ========== ==========
See accompanying notes to unaudited pro forma condensed financial information.
126
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
UST CORP.
AFFILIATED COMMUNITY BANCORP, INC.
FIRESTONE FINANCIAL CORP.
SOMERSET SAVINGS BANK
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
The following Unaudited Pro Forma Condensed Combined Statements of
Income give effect to UST's proposed acquisition of Somerset by combining the
results of operations of UST for the nine month periods ended September 30,
1997 and 1996, and for each of the three years ended December 31, 1996 (pro
forma including Walden Bancorp, Inc. ("Walden") acquired on January 3, 1997
as a pooling of interests as if the acquisition had occurred on January 1,
1994) with the results of operations of Firestone (acquired on October 15,
1997 as a pooling of interests) and Somerset for the nine month periods ended
September 30, 1997 and 1996 and for each of the three years ended December
31, 1997 on a pooling of interests basis, assuming the acquisitions had
occurred on January 1, 1994. Also presented are the Unaudited Pro Forma
Condensed Combined Statements of Income of UST (pro forma including Walden),
Firestone, Somerset and AFCB for the same periods. Income per common share and
weighted average shares outstanding are based on the exchange ratios
specified in the respective Affiliation Agreements. The Unaudited Pro Forma
Condensed Combined Statements of Income should be read in conjunction with
the Unaudited Pro Forma Condensed Combining Balance Sheet appearing elsewhere
in this Current Report on Form 8-K and the historical financial statements
and notes thereto of UST, Somerset, Firestone and AFCB which are included in
this Current Report on Form 8-K. The Unaudited Pro Forma Condensed Combined
Statements of Income are presented for information purposes only and are not
necessarily indicative of the combined results of operations that would have
occurred if UST's acquisitions of Somerset, Firestone and AFB had been
consummated on September 30, 1997 or at the beginning of the periods
indicated or which may be obtained in the future.
127
UST CORP.
FIRESTONE FINANCIAL CORP.
SOMERSET SAVINGS BANK
AFFILIATED COMMUNITY BANCORP, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
---------------------------------------------------------------------
UST FIRESTONE SOMERSET COMBINED AFCB COMBINED
---------- ---------- ----------- --------- ---------- ---------
(In thousands, except per share data)
Interest income:
Interest and fees on loans and leases................ $ 165,324 $ 8,199 $ 26,753 $ 200,276 $ 41,879 $ 242,155
Interest and dividends on securities................. 34,386 4,463 38,849 18,242 57,091
Interest on excess funds and other................... 3,728 135 3,863 162 4,025
---------- ----------- --------- ---------- --------- ----------
Total interest income............................... 203,438 8,199 31,351 242,988 60,283 303,271
---------- ----------- --------- ---------- --------- ----------
Interest expense:
Interest on deposits................................. 61,485 15,353 76,838 20,847 97,685
Interest on borrowed funds........................... 16,976 3,637 1,218 21,831 13,067 34,898
---------- ----------- --------- ---------- --------- ----------
Total interest expense.............................. 78,461 3,637 16,571 98,669 33,914 132,583
---------- ----------- --------- ---------- --------- ----------
Net interest income................................. 124,977 4,562 14,780 144,319 26,369 170,688
Provision for possible loan losses................... 600 900 1,500 700 2,200
---------- ----------- --------- ---------- --------- ----------
Net interest income after provision for possible
loan losses........................................ 124,377 4,562 13,880 142,819 25,669 168,488
---------- ----------- --------- ---------- --------- ----------
Noninterest income:
Asset management fees............................... 9,600 9,600 9,600
Fees and charges.................................... 11,047 479 11,526 1,170 12,696
Securities gains (losses), net...................... (1,151) (1,151) 97 (1,054)
Gain on sale of assets.............................. 1,804 194 1,998 85 2,083
Other............................................... 5,611 947 331 6,889 106 6,995
---------- ----------- --------- ---------- --------- ----------
Total noninterest income.......................... 26,911 947 1,004 28,862 1,458 30,320
---------- ----------- --------- ---------- --------- ----------
Noninterest expense:
Salary and employee benefits........................ 53,128 1,983 5,237 60,348 7,783 68,131
Occupancy and equipment............................. 14,661 270 1,194 16,125 1,708 17,833
Restructuring charges............................... 11,752 11,752 11,752
Merger related charges.............................. 3,082 714 3,796 3,796
Foreclosed and workout expense...................... 315 1,411 1,726 (141) 1,585
Deposit insurance assessment........................ 687 673 1,360 198 1,558
Other............................................... 33,389 736 2,842 36,967 3,498 40,465
---------- ----------- --------- ---------- --------- ----------
Total noninterest expense.......................... 117,014 3,703 11,357 132,074 13,046 145,120
---------- ----------- --------- ---------- --------- ----------
Income before taxes.................................. 34,274 1,806 3,527 39,607 14,081 53,688
Income tax expense (benefit)........................ 14,859 948 (918) 14,889 5,253 20,142
---------- ----------- --------- ---------- --------- ----------
---------- ----------- --------- ---------- --------- ----------
Net income........................................... $ 19,415 $ 858 $ 4,445 $ 24,718 $ 8,828 $ 33,546
---------- ----------- --------- ---------- --------- ----------
---------- ----------- --------- ---------- --------- ----------
Net income per share................................. $ 0.67 $ 0.43 $ 0.26 $ 0.74 $ 1.32 $ 0.79
Weighted average number of common shares
outstanding........................................ 28,855 2,000 16,878 33,242 6,679 42,659
See accompanying Notes to Unaudited Pro Forma Condensed Financial
Information.
128
UST CORP.
FIRESTONE FINANCIAL CORP.
SOMERSET SAVINGS BANK
AFFILIATED COMMUNITY BANCORP, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996
---------------------------------------------------------------------
UST FIRESTONE SOMERSET COMBINED AFCB COMBINED
---------- ---------- ----------- --------- ---------- ---------
(In thousands, except per share data)
Interest income:
Interest and fees on loans and leases............... $ 128,979 $ 8,287 $ 26,596 $ 163,862 $ 35,586 $ 199,448
Interest and dividends on securities................ 40,792 3,580 44,372 16,617 60,989
Interest on excess funds and other.................. 440 257 697 200 897
---------- ----------- --------- ---------- --------- ----------
Total interest income.............................. 170,211 8,287 30,433 208,931 52,403 261,334
---------- ----------- --------- ---------- --------- ----------
Interest expense:
Interest on deposits................................ 53,123 15,155 68,278 18,988 87,266
Interest on borrowed funds.......................... 18,128 3,850 1,528 23,506 10,389 33,895
---------- ----------- --------- ---------- --------- ----------
Total interest expense............................. 71,251 3,850 16,683 91,784 29,377 121,161
---------- ----------- --------- ---------- --------- ----------
Net interest income................................. 98,960 4,437 13,750 117,147 23,026 140,173
Provision for possible loan losses.................. (17,674) 144 900 (16,630) 405 (16,225)
---------- ----------- --------- ---------- --------- ----------
Net interest income after provision for possible
loan losses........................................ 116,634 4,293 12,850 133,777 22,621 156,398
---------- ----------- --------- ---------- --------- ----------
Noninterest income:
Asset management fees............................... 9,807 9,807 9,807
Fees and charges.................................... 7,961 434 8,395 1,135 9,530
Securities gains (losses), net...................... 1,450 1,450 1,450
Gain on sale of assets.............................. 16 25 41 86 127
Other............................................... 5,127 751 288 6,166 38 6,204
---------- ----------- --------- ---------- --------- ----------
Total noninterest income........................... 24,361 751 747 25,859 1,259 27,118
---------- ----------- --------- ---------- --------- ----------
Noninterest expense:
Salary and employee benefits........................ 44,545 1,893 5,154 51,592 6,863 58,455
Occupancy and equipment............................. 11,593 230 1,151 12,974 1,562 14,536
Foreclosed and workout expense...................... 1,517 2,116 3,633 164 3,797
Deposit insurance assessment........................ 4,292 776 5,068 2,707 7,775
Other............................................... 21,437 644 2,838 24,919 3,494 28,413
---------- ----------- --------- ---------- --------- ----------
Total noninterest expense.......................... 83,384 2,767 12,035 98,186 14,790 112,976
---------- ----------- --------- ---------- --------- ----------
Income before taxes.................................. 57,611 2,277 1,562 61,450 9,090 70,540
Income tax expense (benefit)........................ 22,457 919 (440) 22,936 3,266 26,202
---------- ----------- --------- ---------- --------- ----------
Net income........................................... $ 35,154 $ 1,358 $ 2,002 $ 38,514 $ 5,824 $ 44,338
---------- ----------- --------- ---------- --------- ----------
---------- ----------- --------- ---------- --------- ----------
Net income per share................................. $ 1.24 $ 0.68 $ 0.12 $ 1.18 $ 0.90 $ 1.06
Weighted average number of common shares
outstanding........................................ 28,396 2,000 16,652 32,740 6,496 41,899
See accompanying Notes to Unaudited Pro Forma Condensed Financial
Information.
129
UST CORP.
FIRESTONE FINANCIAL CORP.
SOMERSET SAVINGS BANK
AFFILIATED COMMUNITY BANCORP, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1996
--------------------------------
UST FIRESTONE SOMERSET COMBINED AFCB COMBINED
---------- ---------- ----------- --------- ---------- ---------
(In thousands, except per share data)
Interest income:
Interest and fees on loans and leases............... $ 176,897 $ 10,904 $ 35,521 $ 223,322 $ 48,661 $ 271,983
Interest and dividends on securities................ 53,188 5,034 58,222 22,415 80,637
Interest on excess funds and other.................. 2,223 303 2,526 265 2,791
---------- ----------- --------- ---------- --------- ----------
Total interest income.............................. 232,308 10,904 40,858 284,070 71,341 355,411
---------- ----------- --------- ---------- --------- ----------
Interest expense:
Interest on deposits................................ 71,625 20,202 91,827 25,775 117,602
Interest on borrowed funds.......................... 25,428 5,074 2,126 32,628 14,289 46,917
---------- ----------- --------- ---------- --------- ----------
Total interest expense............................. 97,053 5,074 22,328 124,455 40,064 164,519
---------- ----------- --------- ---------- --------- ----------
Net interest income................................. 135,255 5,830 18,530 159,615 31,277 190,892
Provision for possible loan losses................... (17,300) 1,200 (16,100) 605 (15,495)
---------- ----------- --------- ---------- --------- ----------
Net interest income after provision for possible
loan losses........................................ 152,555 5,830 17,330 175,715 30,672 206,387
---------- ----------- --------- ---------- --------- ----------
Noninterest income:
Asset management fees............................... 12,947 12,947 12,947
Fees and charges.................................... 11,020 587 11,607 1,540 13,147
Securities gains (losses), net...................... 1,179 1,179 (47) 1,132
Gain on sale of bank subsidiary..................... 6,806 6,806 6,806
Gain on sale of assets.............................. 2 43 45 76 121
Other............................................... 6,871 1,116 427 8,414 69 8,483
---------- ----------- --------- ---------- --------- ----------
Total noninterest income........................... 38,825 1,116 1,057 40,998 1,638 42,636
---------- ----------- --------- ---------- --------- ----------
Noninterest expense:
Salary and employee benefits........................ 62,056 2,523 6,869 71,448 9,054 80,502
Occupancy and equipment............................. 15,877 264 1,536 17,677 2,086 19,763
Foreclosed and workout expense...................... 1,687 2,728 4,415 129 4,544
Deposit insurance assessment........................ 3,959 1,040 4,999 2,860 7,859
Acquisition related expenses........................ 5,933 5,933 5,933
Other............................................... 31,426 943 3,841 36,210 4,837 41,047
---------- ----------- --------- ---------- --------- ----------
Total noninterest expense.......................... 120,938 3,730 16,014 140,682 18,966 159,648
---------- ----------- --------- ---------- --------- ----------
Income before taxes.................................. 70,442 3,216 2,373 76,031 13,344 89,375
Income tax expense (benefit)........................ 27,261 1,120 (440) 27,941 4,821 32,762
---------- ----------- --------- ---------- --------- ----------
Net income........................................... $ 43,181 $ 2,096 $ 2,813 $ 48,090 $ 8,523 $ 56,613
---------- ----------- --------- ---------- --------- ----------
---------- ----------- --------- ---------- --------- ----------
Net income per share................................. $ 1.52 $ 1.05 $ 0.17 $ 1.47 $ 1.31 $ 1.35
Weighted average number of common shares
outstanding........................................ 28,396 2,000 16,652 32,740 6,510 41,919
See accompanying Notes to Unaudited Pro Forma Condensed Financial
Information.
130
UST CORP.
FIRESTONE FINANCIAL CORP.
SOMERSET SAVINGS BANK
AFFILIATED COMMUNITY BANCORP, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1995
--------------------------------
UST FIRESTONE SOMERSET COMBINED AFCB COMBINED
---------- ---------- ----------- --------- ---------- ---------
(In thousands, except per share data)
Interest income:
Interest and fees on loans and leases............... $ 172,480 $ 10,296 $ 36,350 $ 219,126 $ 41,924 $ 261,050
Interest and dividends on securities................ 42,503 3,844 46,347 18,598 64,945
Interest on excess funds and other.................. 3,939 242 4,181 474 4,655
---------- ----------- --------- ---------- --------- ----------
Total interest income.............................. 218,922 10,296 40,436 269,654 60,996 330,650
---------- ----------- --------- ---------- --------- ----------
Interest expense:
Interest on deposits................................ 69,381 18,932 88,313 22,878 111,191
Interest on borrowed funds.......................... 16,181 5,070 3,841 25,092 10,346 35,438
---------- ----------- --------- ---------- --------- ----------
Total interest expense............................. 85,562 5,070 22,773 113,405 33,224 146,629
---------- ----------- --------- ---------- --------- ----------
Net interest income................................. 133,360 5,226 17,663 156,249 27,772 184,021
Provision for possible loan losses................... 14,115 280 1,200 15,595 325 15,920
---------- ----------- --------- ---------- --------- ----------
Net interest income after provision for possible
loan losses........................................ 119,245 4,946 16,463 140,654 27,447 168,101
---------- ----------- --------- ---------- --------- ----------
Noninterest income:
Asset management fees............................... 13,581 13,581 13,581
Fees and charges.................................... 11,278 587 11,865 1,553 13,418
Securities gains (losses), net...................... 2,395 2,395 33 2,428
Gain on sale of assets.............................. 157 54 211 16 227
Other............................................... 6,943 939 415 8,297 91 8,388
---------- ----------- --------- ---------- --------- ----------
Total noninterest income........................... 34,354 939 1,056 36,349 1,693 38,042
---------- ----------- --------- ---------- --------- ----------
Noninterest expense:
Salary and employee benefits........................ 57,425 2,394 6,476 66,295 8,587 74,882
Occupancy and equipment............................. 15,471 287 1,535 17,293 1,994 19,287
Foreclosed and workout expense...................... 5,972 4,641 10,613 (107) 10,506
Deposit insurance assessment........................ 4,051 1,189 5,240 1,006 6,246
Other............................................... 31,557 964 3,600 36,121 6,754 42,875
---------- ----------- --------- ---------- --------- ----------
Total noninterest expense.......................... 114,476 3,645 17,441 135,562 18,234 153,796
---------- ----------- --------- ---------- --------- ----------
Income before taxes.................................. 39,123 2,240 78 41,441 10,906 52,347
Income tax expense (benefit)........................ 14,866 668 (1,000) 14,534 5,199 19,733
---------- ----------- --------- ---------- --------- ----------
Income before accretion of purchase discount......... 24,257 1,572 1,078 26,907 5,707 32,614
Accretion of purchase discount....................... 1,224 1,224 1,224
---------- ----------- --------- ---------- --------- ----------
Net income........................................... $ 24,257 $ 2,796 $ 1,078 $ 28,131 $ 5,707 $ 33,838
---------- ----------- --------- ---------- --------- ----------
---------- ----------- --------- ---------- --------- ----------
Income per share before accretion of purchase
discount........................................... $ 0.86 $ 0.79 $ 0.06 $ 0.83 $ 0.85 $ 0.78
Net income per share................................. $ 0.86 $ 1.40 $ 0.06 $ 0.86 $ 0.85 $ 0.81
Weighted average number of common shares
outstanding........................................ 28,237 2,000 16,652 32,581 6,683 42,004
131
UST CORP.
FIRESTONE FINANCIAL CORP.
SOMERSET SAVINGS BANK
AFFILIATED COMMUNITY BANCORP, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1994
--------------------------------------------
UST FIRESTONE SOMERSET COMBINED AFCB COMBINED
---------- ---------- ----------- --------- ---------- ---------
(In thousands, except per share data)
Interest income:
Interest and fees on loans and leases............... $ 146,263 $ 8,571 $ 34,326 $ 189,160 $ 33,150 $ 222,310
Interest and dividends on securities................ 43,643 3,109 46,752 13,752 60,504
Interest on excess funds and other.................. 2,717 61 2,778 469 3,247
---------- ----------- --------- ---------- --------- ----------
Total interest income.............................. 192,623 8,571 37,496 238,690 47,371 286,061
---------- ----------- --------- ---------- --------- ----------
Interest expense:
Interest on deposits................................ 52,944 16,325 69,269 17,762 87,031
Interest on borrowed funds.......................... 11,887 3,867 2,818 18,572 5,130 23,702
---------- ----------- --------- ---------- --------- ----------
Total interest expense............................. 64,831 3,867 19,143 87,841 22,892 110,733
---------- ----------- --------- ---------- --------- ----------
Net interest income................................. 127,792 4,704 18,353 150,849 24,479 175,328
Provision for possible loan losses................... 25,481 193 1,800 27,474 550 28,024
---------- ----------- --------- ---------- --------- ----------
Net interest income after provision for possible
loan losses........................................ 102,311 4,511 16,553 123,375 23,929 147,304
---------- ----------- --------- ---------- --------- ----------
Noninterest income:
Asset management fees............................... 14,419 14,419 14,419
Fees and charges.................................... 12,084 609 12,693 1,595 14,288
Securities gains (losses), net...................... 1,215 1,215 (420) 795
Gain on sale of assets.............................. 337 (32) 305 92 397
Other............................................... 5,992 929 378 7,299 81 7,380
---------- ----------- --------- ---------- --------- ----------
Total noninterest income........................... 34,047 929 955 35,931 1,348 37,279
---------- ----------- --------- ---------- --------- ----------
Noninterest expense:
Salary and employee benefits........................ 55,157 2,166 6,085 63,408 7,930 71,338
Occupancy and equipment............................. 15,342 166 1,613 17,121 1,772 18,893
Foreclosed and workout expense...................... 9,202 13,384 22,586 (124) 22,462
Deposit insurance assessment........................ 6,382 1,296 7,678 1,251 8,929
Other............................................... 29,095 1,195 3,466 33,756 4,616 38,372
---------- ----------- --------- ---------- --------- ----------
Total noninterest expense.......................... 115,178 3,527 25,844 144,549 15,445 159,994
---------- ----------- --------- ---------- --------- ----------
Income (loss) before taxes........................... 21,180 1,913 (8,336) 14,757 9,832 24,589
Income tax expense (benefit)........................ 6,946 786 7 7,739 2,806 10,545
---------- ----------- --------- ---------- --------- ----------
Income (loss) before accretion of purchase
discount........................................... 14,234 1,127 (8,343) 7,018 7,026 14,044
Accretion of purchase discount....................... 1,912 1,912 1,912
---------- ----------- --------- ---------- --------- ----------
Net income (loss).................................... $ 14,234 $ 3,039 $ (8,343) $ 8,930 $ 7,026 $ 15,956
---------- ----------- --------- ---------- --------- ----------
---------- ----------- --------- ---------- --------- ----------
Income (loss) per share before accretion of purchase
discount........................................... $ 0.51 $ 0.56 ($0.50) $ 0.22 $ 1.06 $ 0.34
Net income per share................................. $ 0.51 $ 1.52 ($0.50) $ 0.28 $ 1.06 $ 0.38
Weighted average number of common shares
outstanding........................................ 27,829 2,000 16,652 32,173 6,633 41,525
See accompanying Notes to Unaudited Pro Forma Condensed Financial
Information.
132
NOTES TO UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION
NOTE 1:
It is contemplated that the pending acquisitions will be accounted for as
poolings of interests. Accordingly, pro forma financial information assumes that
the transactions were consummated as of the beginning of each of the periods
indicated herein. Certain reclassifications have been made to the accounts of
Firestone, Somerset and AFCB in the accompanying Unaudited Pro Forma Condensed
Combining Balance Sheet and Unaudited Pro Forma Condensed Combined Statements of
Income to conform to UST presentation. Pro forma results of operations do not
reflect recurring items of income and expense resulting directly from the
proposed mergers. In addition, the accompanying Unaudited Pro Forma Condensed
Combined Statements of Income do not include the $1.2 million and $1.9 million
accretion of purchase discount in 1995 and 1994, respectively, resulting from
the purchase of Firestone from the FDIC in 1992. The fair value of Firestone's
assets exceeded the purchase price by $5.7 million and was accreted into income
over a thirty-six month period ending in 1995 and was non-taxable.
The effect of an estimated one-time charge of $5.3 million ($7.5 million
pre-tax), to be taken by UST in connection with the Somerset acquisition has
been reflected in the accompanying Unaudited Pro Forma Condensed Combining
Balance Sheet as a reduction in cash and retained earnings, net of a 40% tax
benefit of $2.2 million recorded in other liabilities after excluding $2.1
million of nondeductible expense.
The effect of an estimated one-time charge of $8.7 million ($12.0 million
pre-tax), to be taken by UST in connection with the AFCB acquisition has been
reflected in the accompanying Unaudited Pro Forma Condensed Combining Balance
Sheet as a reduction in cash and retained earnings, net of a 40% tax benefit of
$3.3 million recorded in other liabilities after excluding $3.8 million of
nondeductible expense.
The effect of a one-time nondeductible charge of $1.0 million recorded by
UST and Firestone in connection with the Firestone acquisition has been
reflected in the accompanying Unaudited Pro Forma Condensed Combining Balance
Sheet as a reduction in cash and retained earnings.
These charges have not been reflected in the Unaudited Pro Forma Condensed
Combined Statements of Income since they are nonrecurring. The pro forma
financial information does not give effect to any cost savings in connection
with the pending acquisitions.
NOTE 2:
SOMERSET
The pro forma Stockholders' investment accounts of UST and Somerset have
been adjusted in the accompanying Unaudited Pro Forma Condensed Combining
Balance Sheet to reflect the issuance of shares of UST Common Stock in exchange
for all of the outstanding shares of Somerset Common Stock. The number of shares
of UST Common Stock to be issued pursuant to the acquisition of Somerset is
based upon the number of Somerset shares outstanding as of
133
NOTES TO UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION (Continued)
September 30, 1997, and the exchange ratio of 0.19 shares of UST Common
Stock for each share of Somerset Common Stock as specified in the Affiliation
Agreement. The excess of the par value of the Common Stock of Somerset to be
acquired over the par value of the UST Common Stock to be issued has been
credited to Additional paid-in-capital.
FIRESTONE AND AFCB
The pro forma Stockholders' investment accounts of UST, as adjusted for
Somerset, have been further adjusted to reflect the issuance of shares of UST
Common Stock in exchange for all of the outstanding shares of Firestone and AFCB
Common Stock.
The number of shares of UST Common Stock issued pursuant to the
acquisition of Firestone is based upon the number of Firestone shares
outstanding as of September 30, 1997, and the exchange ratio of 0.59 shares of
UST Common Stock for each share of Firestone Common Stock. The excess of the par
value of the UST Common Stock issued over the par value of the Firestone
Common Stock to be acquired has been charged to Additional paid-in-capital.
The number of shares of UST Common Stock to be issued pursuant to the
acquisition of AFCB is based upon the number of AFCB shares outstanding as of
September 30, 1997, and the exchange ratio of 1.41 shares of UST Common Stock
for each share of AFCB Common Stock. The excess of the par value of the UST
Common Stock to be issued over the par value of the AFCB Common Stock to be
acquired has been charged to Additional paid-in-capital. The Stockholders'
investment accounts of AFCB reflect the retirement of AFCB Treasury Stock ($3.4
million) upon consummation of the AFCB acquisition through a charge to surplus.
NOTE 3:
UST classifies its investments in debt and equity securities as
"Securities Available for Sale" in accordance with the provisions of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Accordingly, such securities are
carried at fair value, with unrealized gains and losses reported as a
separate component of Stockholders' investment. It is anticipated that, in
order to maintain UST's existing interest rate risk position, the securities
in the AFCB and Somerset portfolios which are designated as Held-to-Maturity,
and are carried at cost adjusted for the amortization of premium and
accretion of discount, will be redesignated as Available-for-Sale upon
consummation of the acquisitions. At September 30, 1997, the
Available-for-Sale designation would add approximately $1.2 million and $11
thousand, respectively, to the Stockholders' investment accounts of AFCB and
Somerset. The effect of the fair-value adjustments have not been reflected
in the accompanying Unaudited Pro Forma Condensed Combining Balance Sheet
since the actual amount of any unrealized gains or losses at consummation is
subject to market conditions and other factors and may vary significantly
from the balance reported at September 30, 1997.
NOTE 4:
Pro forma earnings per share amounts in the accompanying Unaudited Pro
Forma Condensed Combined Statements of Income are based on the weighted average
number of common shares of the constituent companies outstanding during each
period as specified in the respective Affiliation Agreements.
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