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Exhibit 99.7
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On April 10, 1998, BANC ONE CORPORATION ("BANC ONE"), First Chicago NBD
("FCNBD") and HORNET Reorganization Corporation ("Newco") entered into an
Agreement and Plan of Reorganization (the "Agreement") pursuant to which BANC
ONE and FCNBD will be merged seriatim with and into Newco as the surviving
corporation in each case (such mergers together, the "Merger"). Common
shareholders of FCNBD will receive 1.62 shares of Newco common stock for each
share of FCNBD and common shareholders of BANC ONE will receive one share of
Newco common stock for each share of BANC ONE. The Merger will be accounted for
as a pooling of interests and pending regulatory and shareholder approval is
expected to be completed during the fourth quarter of 1998.
The following unaudited pro forma condensed combined financial
information and explanatory notes are presented to show the impact on the
historical financial position and results of operations of BANC ONE of the
Merger under the "pooling of interests" method of accounting. The unaudited pro
forma condensed combined financial information combines the historical financial
information of BANC ONE and FCNBD for the twelve-month periods ended December
31, 1997, 1996, and 1995, respectively.
The pro forma condensed combined financial information for each of the
three years ended December 31, 1997 is based on and derived from, and should be
read in conjunction with, (a) the historical consolidated financial statements
and the related notes thereto of BANC ONE, which are incorporated by reference
herein, and (b) the historical consolidated financial statements and the related
notes thereto of FCNBD, which are incorporated by reference herein.
The pro forma financial information does not give effect to BANC ONE's
pending acquisition of First Commerce Corporation as the acquisition is not
material to BANC ONE.
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BANC ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED)
PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF DECEMBER 31, 1997 (UNAUDITED)
(IN MILLIONS)
The following unaudited pro forma condensed combined balance sheet as of
December 31, 1997 is presented to show the impact on BANC ONE's historical
financial condition of the proposed Merger with FCNBD. The Merger has been
reflected under the "pooling of interests" method of accounting.
PROFORMA
BANC ONE FCNBD ADJUSTMENTS COMBINED
-------- -------- ----------- --------
ASSETS
Total cash and due from banks $ 7,727 $ 7,223 $ 14,950
Short-term investments 838 15,405 16,243
Trading assets 1,035 4,198 5,233
Investment securities 14,218 9,330 23,548
Loans and leases (net of unearned income and
allowance for credit losses) 83,089 67,316 150,405
Other assets 8,994 10,624 19,618
-------- -------- ------- --------
TOTAL ASSETS $115,901 $114,096 $229,997
======== ======== ======= ========
LIABILITIES
Deposits:
Non-interest bearing $ 18,444 $ 19,070 $ 37,514
Interest bearing 58,970 49,419 108,389
-------- -------- ------- --------
Total deposits 77,414 68,489 145,903
Short-term borrowings 13,804 18,981 32,785
Long-term borrowings 11,066 10,088 21,154
Other liabilities 3,241 8,578 $ 837 12,656
-------- -------- ------- --------
TOTAL LIABILITIES 105,525 106,136 837 212,498
-------- -------- ------- --------
STOCKHOLDERS' EQUITY
Preferred stock 135 190 325
Common stock 3,230 320 2,022 5,572
Capital in excess of aggregate stated value 6,719 1,966 (3,960) 4,725
Retained earnings 240 7,446 (837) 6,849
Other shareholders' equity 121 (24) 97
Less: Treasury stock (69) (1,938) 1,938 (69)
-------- -------- ------- --------
Total stockholders' equity 10,376 7,960 (837) 17,499
-------- -------- ------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $115,901 $114,096 $ 0 $229,997
======== ======== ======= ========
See accompanying notes to the pro forma financial information.
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BANC ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED)
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
The following unaudited pro forma condensed combined statements of income are
presented to show the impact on BANC ONE's historical results of operations of
the proposed merger with FCNBD. Such statements assume that the companies had
been combined for each period presented.
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
-------- -------- --------
INTEREST INCOME
Loans and leases $ 14,117 $ 13,222 $ 11,686
Securities including trading 1,809 2,073 2,378
Other interest income 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 revenue 2,613 2,254 2,228
Deposit fees 1,162 1,068 927
Other noninterest income 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 0 267
-------- -------- --------
Total 9,381 8,333 7,862
INCOME BEFORE INCOME TAXES 4,234 4,659 3,927
Income taxes 1,403 1,550 1,332
-------- -------- --------
NET INCOME $ 2,831 $ 3,109 $ 2,595
======== ======== ========
NET INCOME PER COMMON SHARE
Basic $ 2.49 $ 2.66 $ 2.21
Diluted 2.44 2.59 2.16
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 1,120.7 1,145.7 1,144.7
Diluted 1,153.0 1,193.6 1,191.0
See accompanying notes to the pro forma financial information.
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BANC ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED)
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997 (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
PROFORMA
BANC ONE FCNBD COMBINED
-------- ------ --------
INTEREST INCOME
Loans and leases $8,268 $5,849 $ 14,117
Securities including trading 1,066 743 1,809
Other interest income 49 755 804
------ ------ --------
Total 9,383 7,347 16,730
INTEREST EXPENSE
Deposits 2,545 2,178 4,723
Borrowings 1,446 1,597 3,043
------ ------ --------
Total 3,991 3,775 7,766
NET INTEREST INCOME 5,392 3,572 8,964
Provision for credit losses 1,211 725 1,936
------ ------ --------
Net interest income after provision for credit losses 4,181 2,847 7,028
NONINTEREST INCOME
Credit card revenue 1,709 904 2,613
Deposit fees 702 460 1,162
Other noninterest income 1,425 1,387 2,812
------ ------ --------
Total 3,836 2,751 6,587
NONINTEREST EXPENSE
Salaries and employee benefits 2,368 1,748 4,116
Other operating expense 3,344 1,584 4,928
Merger and restructure related charges 337 0 337
------ ------ --------
Total 6,049 3,332 9,381
INCOME BEFORE INCOME TAXES 1,968 2,266 4,234
Income taxes 662 741 1,403
------ ------ --------
NET INCOME $1,306 $1,525 $ 2,831
====== ====== ========
NET INCOME PER COMMON SHARE
Basic $ 2.04 $ 4.99 $ 2.49
Diluted 1.99 4.90 2.44
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 632.4 301.4 1,120.7
Diluted 655.7 307.0 1,153.0
See accompanying notes to the pro forma financial information.
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BANC ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED)
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
PROFORMA
BANC ONE FCNBD COMBINED
-------- ------ --------
INTEREST INCOME
Loans and leases $7,477 $5,745 $13,222
Securities including trading 1,222 851 2,073
Other interest income 37 973 1,010
------ ------ --------
Total 8,736 7,569 16,305
INTEREST EXPENSE
Deposits 2,460 2,175 4,635
Borrowings 1,137 1,774 2,911
------ ------ --------
Total 3,597 3,949 7,546
NET INTEREST INCOME 5,139 3,620 8,759
Provision for credit losses 943 735 1,678
------ ------ --------
Net interest income after provision for credit losses 4,196 2,885 7,081
NONINTEREST INCOME
Credit card revenue 1,340 914 2,254
Deposit fees 654 414 1,068
Other noninterest income 1,369 1,220 2,589
------ ------ --------
Total 3,363 2,548 5,911
NONINTEREST EXPENSE
Salaries and employee benefits 2,205 1,707 3,912
Other operating expense 2,857 1,564 4,421
------ ------ --------
Total 5,062 3,271 8,333
INCOME BEFORE INCOME TAXES 2,497 2,162 4,659
Income taxes 824 726 1,550
------ ------ --------
NET INCOME $1,673 $1,436 $ 3,109
====== ====== ========
NET INCOME PER COMMON SHARE
Basic $ 2.60 $ 4.44 $ 2.66
Diluted 2.52 4.33 2.59
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 632.5 316.8 1,145.7
Diluted 664.3 326.7 1,193.6
See accompanying notes to the pro forma financial information.
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BANC ONE CORPORATION & SUBSIDIARIES (CONSOLIDATED)
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995 (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
COMBINED
BANC ONE FCNBD PROFORMA
-------- ------ --------
INTEREST INCOME
Loans and leases $6,426 $5,260 $ 11,686
Securities including trading 1,090 1,288 2,378
Other interest income 72 1,542 1,614
------ ------ --------
Total 7,588 8,090 15,678
INTEREST EXPENSE
Deposits 2,427 2,581 5,008
Borrowings 910 2,301 3,211
------ ------ --------
Total 3,337 4,882 8,219
NET INTEREST INCOME 4,251 3,208 7,459
Provision for credit losses 526 510 1,036
------ ------ --------
Net interest income after provision for credit losses 3,725 2,698 6,423
NONINTEREST INCOME
Credit card revenue 1,327 901 2,228
Deposit fees 545 382 927
Other noninterest income 903 1,308 2,211
------ ------ --------
Total 2,775 2,591 5,366
NONINTEREST EXPENSE
Salaries and employee benefits 1,876 1,692 3,568
Other operating expense 2,451 1,576 4,027
Merger and restructure related charges 0 267 267
------ ------ --------
Total 4,327 3,535 7,862
INCOME BEFORE INCOME TAXES 2,173 1,754 3,927
Income taxes 728 604 1,332
------ ------ --------
NET INCOME $1,445 $1,150 $ 2,595
====== ====== ========
NET INCOME PER COMMON SHARE
Basic $ 2.26 $ 3.48 $ 2.21
Diluted 2.20 3.41 2.16
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 626.2 320.0 1,144.7
Diluted 657.1 329.6 1,191.0
See accompanying notes to the pro forma financial information.
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BANC ONE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
NOTE 1. BASIS OF PRESENTATION
The pro forma condensed combined financial information reflects the
Merger using the pooling of interests method of accounting. 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, subject to shareholder and
regulatory approval.
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 accounting policies of both companies are in the process of being
reviewed. As a result of this review, certain conforming accounting adjustments
may be necessary. The nature and extent of such adjustments have not been
determined and 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 to 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 information does not reflect
any benefit from potential cost savings and revenue enhancements in connection
with the Merger.
NOTE 4. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been reflected in the pro
forma financial information:
a) Common stock and capital in excess of aggregate stated value
were adjusted by $2,022 million to reflect the Merger
accounted for as a pooling of interests through the exchange
of 468.4 million shares of BANC ONE common stock for 289.1
million shares of FCNBD common stock using an exchange rate of
1.62.
b) Treasury stock and capital in excess of aggregate stated value
were adjusted by $1,938 million to reflect the retirement of
FCNBD treasury stock.
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c) Other liabilities and retained earnings were adjusted by $1.25
billion to reflect the recording of the merger-related charge.
d) Other liabilities and retained earnings were adjusted by $413
million to reflect the tax benefit associated with the merger-
related charge.
NOTE 5. ADDITIONAL TRANSACTION
The pro forma financial information does not give effect to BANC ONE's
pending acquisition of First Commerce Corporation as the acquisition is not
material to BANC ONE.
