Exhibit 99(a)
BANC ONE CORPORATION
PRO FORMA FINANCIAL INFORMATION
On April 10, 1998, First Chicago NBD Corporation (the "Corporation" or "FCNBD")
and Banc One Corporation ("ONE") entered into an Agreement and Plan of
Reorganization (the "Agreement"), pursuant to which, subject to the conditions
and upon the terms stated therein, the Corporation and ONE will each merge into
a new company ("Newco") organized to effect the merger (such mergers,
collectively, the "Merger"). Newco will be renamed Banc One Corporation ("Banc
One").
In accordance with the Agreement, each share of the common stock, without par
value, of ONE ("ONE Common Stock") outstanding immediately prior to the
effective time of the Merger (the "Effective Time") will at the Effective Time
be converted into one share of the common stock, without par value, of Newco
("Newco Common Stock"), and each share of the common stock, par value $1.00 per
share, of the Corporation ("FCN Common Stock") outstanding immediately prior to
the Effective Time will at the Effective Time be converted into the right to
receive 1.62 shares of Newco Common Stock. In addition, each share of the
Corporation's Preferred Stock with Cumulative and Adjustable Dividends, Series
B, and Preferred Stock with Cumulative and Adjustable Dividends, Series C, in
each case outstanding immediately prior to the Effective Time, will be converted
into the right to receive one share of a series of corresponding preferred stock
of Newco with substantially the same terms.
Consummation of the transactions contemplated by the Agreement is subject to the
terms and conditions contained in the Agreement, including among other things,
the receipt of approval of the Merger by the respective shareholders of the
Corporation and ONE at
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meetings of the shareholders of the Corporation and ONE that are expected to
take place in the third quarter of 1998.
It is anticipated that the Merger will be accounted for as a pooling-of-
interests. The Corporation's stock repurchase program has been rescinded. The
following pro forma financial information giving effect to the Merger, accounted
for as a pooling-of-interests, includes: (i) the unaudited pro forma condensed
combined balance sheet as of December 31, 1997, and (ii) the unaudited pro forma
condensed combined statements of income for each of the three years in the
period ended December 31, 1997. The pro forma condensed combined financial
statements should be read in conjunction with the historical consolidated
financial statements and notes thereto of the Corporation and ONE.
The pro forma financial information does not give effect to ONE's pending
acquisition of First Commerce Corporation, a multibank holding company
headquartered in New Orleans, Louisiana, as the acquisition is not material to
ONE.
The pro forma financial statements and the notes thereto included in this
Current Report on Form 8-K, and the exhibits hereto, contain certain estimates
and projections regarding the Corporation, ONE and the combined company
following the Merger, including without limitation estimates and projections
relating to the pro forma business and assets of the combined company, the cost
savings, revenue increases, and restructuring charges expected as a result of
the Merger and the expected impact of the transaction on earnings per share of
the constituent corporations. These estimates and projections constitute
forward-looking statements (within the meaning of the Private Securities
Litigation Reform Act of 1995). Forward-looking statements involve risks and
uncertainties which may cause actual results to differ materially from those in
such statements.
Factors that could cause actual results to differ from those discussed in the
forward-looking statements include, but are not limited to, risks and
uncertainties related to the consummation and execution of the contemplated
transaction (including integration
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activities), as well as: (i) the strength of the U.S. economy in general and the
strength of the local economies in which operations are conducted; (ii) the
effects of and changes in trade, monetary and fiscal policies and laws,
including interest rate policies of the Board of Governors of the Federal
Reserve System; (iii) inflation, interest rate, market and monetary
fluctuations; (iv) the timely development of and acceptance of new products and
services and perceived overall value of these products and services by users;
(v) changes in consumer spending, borrowing and saving habits; (vi)
technological changes (including "Year 2000" data systems compliance issues);
(vii) acquisitions and integration of acquired businesses; (viii) the ability to
increase market share and control expenses; (ix) the effect of changes in laws
and regulations (including laws and regulations concerning taxes, banking,
securities and insurance) with which the Corporation, ONE and the combined
company after the Merger, and their respective subsidiaries and competitors,
must comply; (x) the effect of changes in accounting policies and practices, as
may be adopted by the regulatory agencies as well as the Financial Accounting
Standards Board; (xi) changes in the organization, compensation and benefit
plans of the Corporation, ONE and the combined company after the Merger, and
their respective subsidiaries; (xii) the costs and effects of litigation and of
unexpected or adverse outcomes in such litigation; and (xiii) the success of the
Corporation, ONE and the combined company after the Merger at managing the risks
involved in the foregoing.
Such forward-looking statements speak only as of the date on which such
statements are made, and the Corporation undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made to reflect the occurrence of unanticipated events.
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BANC ONE CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1997
(UNAUDITED)
The following pro forma condensed combined balance sheet as of December 31,
1997, is presented to show the impact on the Corporation's historical financial
condition of the merger with ONE. The Merger has been reflected under the
pooling-of-interests method of accounting.
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BANC ONE CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1997
(in millions) Corporation ONE Pro forma Pro forma
(as reported) (as reported) adjustments Banc One
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Assets
Cash and due from banks-noninterest bearing............. $ 7,223 $ 7,727 $ $ 14,950
Short-term investments.................................. 15,405 838 16,243
Trading account assets.................................. 4,198 1,035 5,233
Investment securities................................... 9,330 14,218 23,548
Loans, net of allowance for credit losses............... 67,316 83,089 150,405
Other assets............................................ 10,624 8,994 19,618
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Total assets............................................ 114,096 115,901 229,997
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Liabilities
Deposits:
Noninterest bearing................................... 19,070 18,444 37,514
Interest bearing...................................... 49,419 58,970 108,389
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Total deposits.......................................... 68,489 77,414 145,903
Short term borrowings................................... 18,981 13,804 32,785
Long term debt.......................................... 10,088 11,066 21,154
Other liabilities....................................... 8,578 3,241 837 12,656
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Total liabilities....................................... 106,136 105,525 837 212,498
Stockholders' Equity
Preferred stock......................................... 190 135 325
Common stock............................................ 320 3,230 (320) 5,572
2,342
Surplus................................................. 1,966 6,719 (1,966) 4,725
(1,994)
Retained earnings....................................... 7,446 240 (837) 6,849
Other................................................... (24) 121 - 97
Less: Treasury stock.................................... (1,938) (69) 1,938 (69)
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Stockholders' equity............................... 7,960 10,376 (837) 17,499
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Total liabilities and stockholders' equity......... $114,096 $115,901 $ - $229,997
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See accompanying notes to pro forma financial information.
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BANC ONE CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
(UNAUDITED)
The following unaudited pro forma condensed combined statements of income are
presented to show the impact on the Corporation's historical results of
operations of the proposed merger with ONE. Such statements assume that the
companies had been combined for each period presented.
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BANC ONE CORPORATION
Pro Forma Condensed Combined Statements of Income
(in millions, except per share data)
For Year Ended December 31,
---------------------------------------------------------------
1997 1996 1995
----------------- ----------------- -----------------
Interest Income
Loans (including fees).................................. $ 14,117 $ 13,222 $ 11,686
Securities, including trading........................... 1,809 2,073 2,378
Other................................................... 804 1,010 1,614
----------------- ----------------- -----------------
Total................................................... 16,730 16,305 15,678
Interest Expense
Deposits................................................ 4,723 4,635 5,008
Borrowings.............................................. 3,043 2,911 3,211
----------------- ----------------- -----------------
Total................................................... 7,766 7,546 8,219
Net Interest Income..................................... 8,964 8,759 7,459
Provision for credit losses............................. 1,936 1,678 1,036
----------------- ----------------- -----------------
Net Interest Income After Provision
for Credit Losses..................................... 7,028 7,081 6,423
Noninterest Income
Credit card fee revenue................................. 2,613 2,254 2,228
Deposit fees............................................ 1,162 1,068 927
Other................................................... 2,812 2,589 2,211
----------------- ----------------- -----------------
Total................................................... 6,587 5,911 5,366
Noninterest Expense
Salaries and employee benefits.......................... 4,116 3,912 3,568
Other operating expense................................. 4,928 4,421 4,027
Merger- and restructure-related charges................. 337 - 267
----------------- ----------------- -----------------
Total................................................... 9,381 8,333 7,862
Income Before Income Taxes.............................. 4,234 4,659 3,927
Applicable income taxes................................. 1,403 1,550 1,332
----------------- ----------------- -----------------
Net Income.............................................. $ 2,831 $ 3,109 $ 2,595
----------------- ----------------- -----------------
Common Share Data
Net income
Basic................................................... $ 2.49 $ 2.66 $ 2.21
Diluted................................................. 2.44 2.59 2.16
Weighted Average Shares
Basic................................................... 1,120.7 1,145.7 1,144.7
Diluted................................................. 1,153.0 1,193.6 1,191.0
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See accompanying notes to pro forma financial information.
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BANC ONE CORPORATION
Pro Forma Condensed Combined Statement of Income
For the Year Ended December 31, 1997
(in millions, except per share data)
UNAUDITED Corporation ONE Pro Forma
(as reported) (as reported) Banc One
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Interest Income
Loans (including fees).............................. $5,849 $8,268 $ 14,117
Securities, including trading....................... 743 1,066 1,809
Other............................................... 755 49 804
---------------- ---------------- ----------------
Total............................................... 7,347 9,383 16,730
Interest Expense
Deposits............................................ 2,178 2,545 4,723
Borrowings.......................................... 1,597 1,446 3,043
---------------- ---------------- ----------------
Total............................................... 3,775 3,991 7,766
Net Interest Income................................. 3,572 5,392 8,964
Provision for credit losses......................... 725 1,211 1,936
---------------- ---------------- ----------------
Net Interest Income After
Provision for Credit Losses........................ 2,847 4,181 7,028
Noninterest Income
Credit card fee revenue............................. 904 1,709 2,613
Deposit fees........................................ 460 702 1,162
Other............................................... 1,387 1,425 2,812
---------------- ---------------- ----------------
Total............................................... 2,751 3,836 6,587
Noninterest Expense
Salaries and employee benefits...................... 1,748 2,368 4,116
Other operating expense............................. 1,584 3,344 4,928
Merger- and restructure-related charges............. - 337 337
---------------- ---------------- ----------------
Total............................................... 3,332 6,049 9,381
Income Before Income Taxes.......................... 2,266 1,968 4,234
Applicable income taxes............................. 741 662 1,403
---------------- ---------------- ----------------
Net Income.......................................... $1,525 $1,306 $ 2,831
---------------- ---------------- ----------------
Common Share Data
Net income
Basic............................................... $ 4.99 $ 2.04 $ 2.49
Diluted............................................. 4.90 1.99 2.44
Weighted Average Shares
Basic............................................... 301.4 632.4 1,120.7
Diluted............................................. 307.0 655.7 1,153.0
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See accompanying notes to pro forma financial information.
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BANC ONE CORPORATION
Pro Forma Condensed Combined Statement of Income
For the Year Ended December 31, 1996
(in millions, except per share data)
UNAUDITED Corporation ONE Pro Forma
(as reported) (as reported) Banc One
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Interest Income
Loans (including fees).............................. $5,745 $7,477 $13,222
Securities, includes trading........................ 851 1,222 2,073
Other............................................... 973 37 1,010
---------------- ---------------- ----------------
Total............................................... 7,569 8,736 16,305
Interest Expense
Deposits............................................ 2,175 2,460 4,635
Borrowings.......................................... 1,774 1,137 2,911
---------------- ---------------- ----------------
Total............................................... 3,949 3,597 7,546
Net Interest Income................................. 3,620 5,139 8,759
Provision for credit losses......................... 735 943 1,678
---------------- ---------------- ----------------
Net Interest Income After
Provision for Credit Losses........................ 2,885 4,196 7,081
Noninterest Income
Credit card fee revenue............................. 914 1,340 2,254
Deposit fees........................................ 414 654 1,068
Other............................................... 1,220 1,369 2,589
---------------- ---------------- ----------------
Total............................................... 2,548 3,363 5,911
Noninterest Expense
Salaries and employee benefits...................... 1,707 2,205 3,912
Other operating expense............................. 1,564 2,857 4,421
---------------- ---------------- ----------------
Total............................................... 3,271 5,062 8,333
Income Before Income Taxes.......................... 2,162 2,497 4,659
Applicable income taxes............................. 726 824 1,550
---------------- ---------------- ----------------
Net Income.......................................... $1,436 $1,673 $ 3,109
---------------- ---------------- ----------------
Common Share Data
Net income
Basic............................................... $ 4.44 $ 2.60 $ 2.66
Diluted............................................. 4.33 2.52 2.59
Weighted Average Shares
Basic............................................... 316.8 632.5 1,145.7
Diluted............................................. 326.7 664.3 1,193.6
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See accompanying notes to pro forma financial information.
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BANC ONE CORPORATION
Pro Forma Condensed Combined Statement of Income
For the Year Ended December 31, 1995
(in millions, except per share data)
UNAUDITED Corporation ONE Pro Forma
(as reported) (as reported) Banc One
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Interest Income
Loans (including fees).............................. $5,260 $6,426 $ 11,686
Securities, including trading....................... 1,288 1,090 2,378
Other............................................... 1,542 72 1,614
---------------- ---------------- ----------------
Total............................................... 8,090 7,588 15,678
Interest Expense
Deposits............................................ 2,581 2,427 5,008
Borrowings.......................................... 2,301 910 3,211
---------------- ---------------- ----------------
Total............................................... 4,882 3,337 8,219
Net Interest Income................................. 3,208 4,251 7,459
Provision for credit losses......................... 510 526 1,036
---------------- ---------------- ----------------
Net Interest Income After
Provision for Credit Losses........................ 2,698 3,725 6,423
Noninterest Income
Credit card fee revenue............................. 901 1,327 2,228
Deposit fees........................................ 382 545 927
Other............................................... 1,308 903 2,211
---------------- ---------------- ----------------
Total............................................... 2,591 2,775 5,366
Noninterest Expense
Salaries and employee benefits...................... 1,692 1,876 3,568
Other operating expense............................. 1,576 2,451 4,027
Merger- and restructure-related charges............. 267 - 267
---------------- ---------------- ----------------
Total............................................... 3,535 4,327 7,862
Income Before Income Taxes.......................... 1,754 2,173 3,927
Applicable income taxes............................. 604 728 1,332
---------------- ---------------- ----------------
Net Income.......................................... $1,150 $1,445 $ 2,595
---------------- ---------------- ----------------
Common Share Data
Net income
Basic............................................... $ 3.48 $ 2.26 $ 2.21
Diluted............................................. 3.41 2.20 2.16
Weighted Average Shares
Basic............................................... 320.0 626.2 1,144.7
Diluted............................................. 329.6 657.1 1,191.0
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See accompanying notes to pro forma financial information.
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BANC ONE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
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 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. It is anticipated that the
Merger will be consummated in the fourth quarter of 1998. Certain
reclassifications have been included in the unaudited pro forma condensed
combined balance sheet and statements of income to conform statement
presentations.
Note 2. Accounting Policies
The Corporation is still in the process of reviewing its accounting policies in
light of those employed by ONE. As a result of this review, certain conforming
accounting adjustments may be necessary. The nature and extent of such
adjustments have not been determined but are not expected to be significant.
Note 3. Merger-Related Effects
Management estimates that the restructuring charge for costs related to or
resulting from the Merger will be approximately $1.25 billion. The pro forma
condensed combined income statement does not reflect the impact of this charge
due to its nonrecurring nature.
The pro forma condensed combined financial statements do not reflect any
benefits from potential cost savings and revenue enhancements in connection with
the Merger.
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Note 4. Pro Forma Adjustments
Pro forma adjustments to common shares and surplus at December 31, 1997, reflect
the Merger accounted for as a pooling-of-interests, through the exchange of
468.4 million shares of Banc One common stock (using the common exchange ratio
of 1.62) for the 289.1 million outstanding common shares of the Corporation.
The pro forma entry is displayed below (in millions):
Dr. Xxxxx (FCNBD) $ 320
Dr. Surplus (FCNBD) 1,966
Cr. Treasury Stock (FCNBD) $1,938
Cr. Common Stock (ONE) 2,342
Dr. Xxxxxxx (ONE) 1,994
Based on management's current estimate of merger- and restructure-related
charges, the following adjustment was made to the pro forma condensed combined
balance sheet as of December 31, 1997.
Dr. Retained Earnings $837
Dr. Other Liabilities-Taxes Payable 413
Cr. Other Liabilities-Merger Reserve $1,250
Note 5. Additional Transaction
The pro forma financial statements do not give effect to ONE's pending
acquisition of First Commerce Corporation as the acquisition is not material to
ONE.
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