Insert for Bar Harbor Proxy
Bar Harbor Bankshares and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
September 30, 2008
(dollars in thousands)
(Unaudited)
As of | Pro Forma Adjustments | Pro Forma | |||||||
09/30/08 | Minimum | Maximum | Minimum | Maximum | |||||
Balance Sheet Data: | |||||||||
ASSETS | |||||||||
Cash and due from banks | $9,290 | $0 | $0 | $9,290 | $9,290 | ||||
Securities available for sale, at fair value | 269,609 | 0 | 0 | 269,609 | 269,609 | ||||
Loans, net of allowance for loan losses | 618,985 | 0 | 0 | 618,985 | 618,985 | ||||
Other Assets | 44,120 | 0 | 0 | 44,120 | 44,120 | ||||
TOTAL ASSETS | $942,004 | $0 | $0 | $942,004 | $942,004 | ||||
LIABILITIES | |||||||||
Total deposits (1) | $578,163 | ($6,250) | ($10,000) | $571,913 | $568,163 | ||||
Borrowings(1) | 295,572 | 0 | (8,751) | 295,572 | 286,821 | ||||
Other Liabilities | 5,598 | 0 | 0 | 5,598 | 5,598 | ||||
TOTAL LIABILITIES | 879,333 | (6,250) | (18,751) | 873,083 | 860,582 | ||||
STOCKHOLDERS’ EQUITY | |||||||||
Preferred Stock (1) (2) | $0 | $6,250 | $18,751 | $6,250 | $18,751 | ||||
Capital Stock | 7,287 | 0 | 0 | 7,287 | 7,287 | ||||
Warrants (2) (4) | 0 | 195 | 584 | 195 | 584 | ||||
Discount on Preferred Stock (2) (3) | 0 | (195) | (584) | (195) | (584) | ||||
Surplus | 4,863 | 0 | 0 | 4,863 | 4,863 | ||||
Retained Earnings | 67,258 | 0 | 0 | 67,258 | 67,258 | ||||
| Accumulated other comprehensive (loss) income | (3,715) | 0 | 0 | (3,715) | (3,715) | ||||
Treasury Stock | (13,022) | 0 | 0 | (13,022) | (13,022) | ||||
TOTAL STOCKHOLDERS’ EQUITY | 62,671 | 6,250 | 18,751 | 68,921 | 81,422 | ||||
TOTAL LIABILITIES AND | $942,004 | $0 | $0 | $942,004 | $942,004 | ||||
(1) Pro forma amounts are based on an investment by the UST of a minimum of $6.25 million and a maximum of $18.75 million in Capital Purchase Program Securities. The Company expects ultimately to utilize the proceeds to (i) strengthen the Bank’s capital position, (ii) increase, where prudent, consumer and commercial lending and (iii) facilitate the appropriate acquisition of bank branches or entire banks. Prior to such deployment, the TARP Capital Purchase Program proceeds, as assumed in the pro forma financial statements above, may be used to reduce brokered deposits and other borrowings. Expenses related to the issuance of Capital Purchase Program Securities and the Warrants are expected to be immaterial and have not been deducted from the sale proceeds.
(2) The proceeds from the sale of the Capital Purchase Program Securities would be allocated between the Shares and Warrants based on their relative fair values on the issue date. The fair value of the Warrants would be determined using the Black-Scholes model which includes assumptions regarding the Company’s common stock price, dividend yield, and stock price volatility, as well as assumptions regarding the risk-free interest rate. The fair value of the Shares would be determined based on assumptions regarding the discount rate (market rate) on the Shares (currently estimated at 12%).
(3) The discount on the Shares would be determined based on the value that is allocated to the Warrants upon issuance, and would be accreted back to the value of the Shares over a five-year period (the expected life of the Shares upon issuance) using the constant effective yield method (approximately 5.7%).
(4) In connection with issuance of the Capital Purchase Program Securities, and based on the market value of the Company’s twenty day average common share price as of November 21, 2008, the Company estimates it would issue Warrants to the UST giving it the right to purchase approximately 34.8k shares of common stock based on the Company’s sale of the minimum number of Capital Purchase Program Securities, and 104.4k shares based on the Company’s sale of the maximum number of Capital Purchase Program Securities.
Bar Harbor Bankshares and Subsidiaries
Pro Forma Condensed Consolidated Statements of Income
Pro Forma Impact of Minimum Estimated Proceeds
$6.25MM Preferred and Warrants for 34.8k shares
Year Ended December 31, 2007
(in thousands, except per share data)
Historical | |||||
Adjustments | Pro Forma | ||||
Net Interest Income | $22,903 | $253 | (1) | $23,156 | |
Loan Loss Provision | 456 | 456 | |||
Net Interest Income after Provision | 22,447 | 253 | 22,700 | ||
| Noninterest Income | 5,929 | 5,929 | |||
Noninterest Expense | 18,201 | 18,201 | |||
Income/(Loss) Before Taxes | 10,175 | 253 | 10,428 | ||
| Provision for Income Taxes | 3,020 | 89 | (2) | 3,109 | |
Income before Preferred Dividends | 7,155 | 165 | 7,320 | ||
Less: Preferred Dividends | 0 | 348 | (3) | 348 | |
Income available to common shareholders | $7,155 | ($183) | $6,972 | ||
Basic Earnings Per Share | $2.36 | ($0.06) | $2.30 | ||
Diluted Earnings Per Share | $2.30 | ($0.06) | $2.24 | ||
Weighted Average Shares Outstanding: | |||||
Basic | 3,037,074 | 3,037,074 | |||
| Diluted | 3,112,736 | 4,914 | (4) | 3,117,650 | |
(1) Assumes Capital Purchase Program proceeds are used to reduce brokered deposits and short-term borrowings at an assumed annualized rate of approximately 4%. The actual impact to net interst income would be differnt as the Company expects ultimately to utilize a portion of the proceeds to (i) increase, where prudent, consumer and commercial lending and (ii) facilitate the appropriate acquisition of bank branches or entire banks. However, such impact cannot be estimated at this time as the impact would vary based on the timing of when the loans are funded, the actual pricing of any such loans, and the cost of funding. Prior to such deployment, the TARP Capital Purchase Program proceeds, as assumed in the pro forma financial statements above, may be used to reduce brokered deposits and short term borrowings or augment investment securities.
(2) Additional income tax expense is attributable to additional net interest income as described in Note (1).
(3) Consists of dividends on preferred stock at a 5% annual rate as well as accretion on discount on preferred stock upon issuance. The discount is determined based on the value that is allocated to the warrants upon issuance. The discount is accreted back to par value on a constant effective yield method (approximately 5.7%) over a five year term, which is the expected life of the preferred stock upon issuance. The estimated accretion is based on a number of assumptions which are subject to change. These assumptions include the discount (market rate at issuance) rate on the preferred stock, and assumptions underlying the value of the warrants. The estimated proceeds are allocated based on the relative fair value of the warrants as compared to the fair value of the preferred stock. The fair value of the warrants is determined under a Black-Scholes model. The model includes assumptions regarding Bar Harbor’s common stock price, dividend yield, stock price volatility, as well as assumptions regarding the risk-free interest rate. The lower the value of the warrants, the less negative impact on net income and earnings per share available to common shareholders. The fair value of the preferred stock is determined based on assumptions regarding the discount rate (market rate) on the preferred stock (currently estimated at 12%). The lower the discount rate, the less negative impact on net income and earnings per share available to common shareholders.
(4) As described in the Section titled “Additional Terms of the Capital Purchase Program”, if approved to participate in the Capital Purchase Program, the UST would receive warrants to purchase a number of shares of the Company’s common stock having an aggregate market price equal to 15% of the proceeds on the date of issuance with a strike price equal to the trailing twenty day trading average leading up to the closing date. This pro forma assumes that the warrants would give the UST the option to purchase 34.8k shares of Bar Harbor& Trust common stock. The pro forma adjustment shows the increase in diluted shares outstanding assuming that the warrants had been issued on January 1, 2007 at a strike price of $26.94 (based on the trailing twenty day Bar Harbor average share price as of November 21, 2008) and remained outstanding for the entire period presented. The treasury stock method was utilized to determine dilution of the warrants for the period presented.
Bar Harbor Bankshares and Subsidiaries
Pro Forma Condensed Consolidated Statements of Income
Pro Forma Impact of Maximum Estimated Proceeds
$18.75MM Preferred and Warrants for 104.4k shares
Year Ended December 31, 2007
(in thousands, except per share data)
Historical | |||||
Adjustments | Pro Forma | ||||
Net Interest Income | $22,903 | $759 | (1) | $23,662 | |
Loan Loss Provision | 456 | 456 | |||
Net Interest Income after Provision | 22,447 | 759 | 23,206 | ||
| Noninterest Income | 5,929 | 5,929 | |||
Noninterest Expense | 18,201 | 18,201 | |||
Income/(Loss) Before Taxes | 10,175 | 759 | 10,934 | ||
| Provision for Income Taxes | 3,020 | 266 | (2) | 3,286 | |
Income before Preferred Dividends | 7,155 | 494 | 7,649 | ||
Less: Preferred Dividends | 0 | 1,042 | (3) | 1,042 | |
Income available to common shareholders | $7,155 | ($548) | $6,607 | ||
Basic Earnings Per Share | $2.36 | ($0.18) | $2.18 | ||
Diluted Earnings Per Share | $2.30 | ($0.19) | $2.11 | ||
Weighted Average Shares Outstanding: | |||||
Basic | 3,037,074 | 3,037,074 | |||
| Diluted | 3,112,736 | 14,744 | (4) | 3,127,480 | |
(1) Assumes Capital Purchase Program proceeds are used to reduce brokered deposits and short-term borrowings at an assumed annualized rate of approximately 4%. The actual impact to net interst income would be differnt as the Company expects ultimately to utilize a portion of the proceeds to (i) increase, where prudent, consumer and commercial lending and (ii) facilitate the appropriate acquisition of bank branches or entire banks. However, such impact cannot be estimated at this time as the impact would vary based on the timing of when the loans are funded, the actual pricing of any such loans, and the cost of funding. Prior to such deployment, the TARP Capital Purchase Program proceeds, as assumed in the pro forma financial statements above, may be used to reduce brokered deposits and short term borrowings or augment investment securities.
(2) Additional income tax expense is attributable to additional net interest income as described in Note (1).
(3) Consists of dividends on preferred stock at a 5% annual rate as well as accretion on discount on preferred stock upon issuance. The discount is determined based on the value that is allocated to the warrants upon issuance. The discount is accreted back to par value on a constant effective yield method (approximately 5.7%) over a five year term, which is the expected life of the preferred stock upon issuance. The estimated accretion is based on a number of assumptions which are subject to change. These assumptions include the discount (market rate at issuance) rate on the preferred stock, and assumptions underlying the value of the warrants. The estimated proceeds are allocated based on the relative fair value of the warrants as compared to the fair value of the preferred stock. The fair value of the warrants is determined under a Black-Scholes model. The model includes assumptions regarding Bar Harbor’s common stock price, dividend yield, stock price volatility, as well as assumptions regarding the risk-free interest rate. The lower the value of the warrants, the less negative impact on net income and earnings per share available to common shareholders. The fair value of the preferred stock is determined based on assumptions regarding the discount rate (market rate) on the preferred stock (currently estimated at. The lower the discount rate, the less negative impact on net income and earnings per share available to common shareholders.
(4) As described in the Section titled “Additional Terms of the Capital Purchase Program”, if approved to participate in the Capital Purchase Program, the UST would receive warrants to purchase a number of shares of the Company’s common stock having an aggregate market price equal to 15% of the proceeds on the date of issuance with a strike price equal to the trailing twenty day trading average leading up to the closing date. This pro forma assumes that the warrants would give the UST the option to purchase 104.4k shares of Bar Harbor’s common stock. The pro forma adjustment shows the increase in diluted shares outstanding assuming that the warrants had been issued on January 1, 2007 at a strike price of $26.94 (based on the trailing twenty day Bar Harbor average share price as of November 21, 2008) and remained outstanding for the entire period presented. The treasury stock method was utilized to determine dilution of the warrants for the period presented.
Bar Harbor Bankshares and Subsidiaries
Pro Forma Condensed Consolidated Statements of Income
Pro Forma Impact of Minimum Estimated Proceeds
$6.25MM Preferred and Warrants for 34.8k shares
Year Ended December 31, 2007
(in thousands, except per share data)
Historical | |||||
Adjustments | Pro Forma | ||||
Net Interest Income | $19,952 | $189 | (1) | $20,141 | |
Loan Loss Provision | 1,669 | 1,669 | |||
Net Interest Income after Provision | 18,283 | 189 | 18,472 | ||
| Noninterest Income | 6,205 | 6,205 | |||
Noninterest Expense | 15,334 | 15,334 | |||
Income/(Loss) Before Taxes | 9,154 | 189 | 9,343 | ||
| Provision for Income Taxes | 2,840 | 66 | (2) | 2,906 | |
Income before Preferred Dividends | 6,314 | 123 | 6,437 | ||
Less: Preferred Dividends | 0 | 261 | (3) | 261 | |
Income available to common shareholders | $6,314 | ($138) | $6,176 | ||
Basic Earnings Per Share | $2.13 | ($0.05) | $2.09 | ||
Diluted Earnings Per Share | $2.09 | ($0.05) | $2.04 | ||
Weighted Average Shares Outstanding: | |||||
Basic | 2,959,120 | 2,959,120 | |||
| Diluted | 3,025,526 | 3,286 | (4) | 3,028,812 | |
(1) Assumes Capital Purchase Program proceeds are used to reduce brokered deposits and short-term borrowings at an assumed annualized rate of approximately 4%. The actual impact to net interst income would be differnt as the Company expects ultimately to utilize a portion of the proceeds to (i) increase, where prudent, consumer and commercial lending and (ii) facilitate the appropriate acquisition of bank branches or entire banks. However, such impact cannot be estimated at this time as the impact would vary based on the timing of when the loans are funded, the actual pricing of any such loans, and the cost of funding. Prior to such deployment, the TARP Capital Purchase Program proceeds, as assumed in the pro forma financial statements above, may be used to reduce brokered deposits and short term borrowings or augment investment securities.
(2) Additional income tax expense is attributable to additional net interest income as described in Note (1).
(3) Consists of dividends on preferred stock at a 5% annual rate as well as accretion on discount on preferred stock upon issuance. The discount is determined based on the value that is allocated to the warrants upon issuance. The discount is accreted back to par value on a constant effective yield method (approximately 5.7%) over a five year term, which is the expected life of the preferred stock upon issuance. The estimated accretion is based on a number of assumptions which are subject to change. These assumptions include the discount (market rate at issuance) rate on the preferred stock, and assumptions underlying the value of the warrants. The estimated proceeds are allocated based on the relative fair value of the warrants as compared to the fair value of the preferred stock. The fair value of the warrants is determined under a Black-Scholes model. The model includes assumptions regarding Bar Harbor’s common stock price, dividend yield, stock price volatility, as well as assumptions regarding the risk-free interest rate. The lower the value of the warrants, the less negative impact on net income and earnings per share available to common shareholders. The fair value of the preferred stock is determined based on assumptions regarding the discount rate (market rate) on the preferred stock (currently estimated at the lower the discount rate, the less negative impact on net income and earnings per share available to common shareholders.
(4) As described in the Section titled “Additional Terms of the Capital Purchase Program”, if approved to participate in the Capital Purchase Program, the UST would receive warrants to purchase a number of shares of the Company’s common stock having an aggregate market price equal to 15% of the proceeds on the date of issuance with a strike price equal to the trailing twenty day trading average leading up to the closing date. This pro forma assumes that the warrants would give the UST the option to purchase 34.8k shares of Bar Harbor’s common stock. The pro forma adjustment shows the increase in diluted shares outstanding assuming that the warrants had been issued on January 1, 2007 at a strike price of $26.94 (based on the trailing twenty day Bar Harbor average share price as of November 21, 2008) and remained outstanding for the entire period presented. The treasury stock method was utilized to determine dilution of the warrants for the period presented.
Bar Harbor Bankshares and Subsidiaries
Pro Forma Condensed Consolidated Statements of Income
Pro Forma Impact of Maximum Estimated Proceeds
$18.75MM Preferred and Warrants for 104.4k shares
For the Nine Months Ended September 30, 2008
(in thousands, except per share data)
Historical | |||||
Adjustments | Pro Forma | ||||
Net Interest Income | $19,952 | $567 | (1) | $20,519 | |
Loan Loss Provision | 1,669 | 1,669 | |||
Net Interest Income after Provision | 18,283 | 567 | 18,850 | ||
| Noninterest Income | 6,205 | 6,205 | |||
Noninterest Expense | 15,334 | 15,334 | |||
Income/(Loss) Before Taxes | 9,154 | 567 | 9,721 | ||
| Provision for Income Taxes | 2,840 | 198 | (2) | 3,038 | |
Income before Preferred Dividends | 6,314 | 368 | 6,682 | ||
Less: Preferred Dividends | 0 | 781 | (3) | 781 | |
Income available to common shareholders | $6,314 | ($413) | $5,901 | ||
Basic Earnings Per Share | $2.13 | ($0.14) | $1.99 | ||
Diluted Earnings Per Share | $2.09 | ($0.14) | $1.94 | ||
Weighted Average Shares Outstanding: | |||||
Basic | 2,959,120 | 2,959,120 | |||
| Diluted | 3,025,526 | 9,857 | (4) | 3,035,383 | |
(1) Assumes Capital Purchase Program proceeds are used to reduce brokered deposits and short-term borrowings at an assumed annualized rate of approximately 4%. The actual impact to net interst income would be differnt as the Company expects ultimately to utilize a portion of the proceeds to (i) increase, where prudent, consumer and commercial lending and (ii) facilitate the appropriate acquisition of bank branches or entire banks. However, such impact cannot be estimated at this time as the impact would vary based on the timing of when the loans are funded, the actual pricing of any such loans, and the cost of funding. Prior to such deployment, the TARP Capital Purchase Program proceeds, as assumed in the pro forma financial statements above, may be used to reduce brokered deposits and short term borrowings or augment investment securities.
(2) Additional income tax expense is attributable to additional net interest income as described in Note (1).
(3) Consists of dividends on preferred stock at a 5% annual rate as well as accretion on discount on preferred stock upon issuance. The discount is determined based on the value that is allocated to the warrants upon issuance. The discount is accreted back to par value on a constant effective yield method (approximately 5.7%) over a five year term, which is the expected life of the preferred stock upon issuance. The estimated accretion is based on a number of assumptions which are subject to change. These assumptions include the discount (market rate at issuance) rate on the preferred stock, and assumptions underlying the value of the warrants. The estimated proceeds are allocated based on the relative fair value of the warrants as compared to the fair value of the preferred stock. The fair value of the warrants is determined under a Black-Scholes model. The model includes assumptions regarding Bar Harbor’s common stock price, dividend yield, stock price volatility, as well as assumptions regarding the risk-free interest rate. The lower the value of the warrants, the less negative impact on net income and earnings per share available to common shareholders. The fair value of the preferred stock is determined based on assumptions regarding the discount rate (market rate) on the preferred stock (currently estimated at 12%). The lower the discount rate, the less negative impact on net income and earnings per share available to common shareholders.
(4) As described in the Section titled “Additional Terms of the Capital Purchase Program”, if approved to participate in the Capital Purchase Program, the UST would receive warrants to purchase a number of shares of the Company’s common stock having an aggregate market price equal to 15% of the proceeds on the date of issuance with a strike price equal to the trailing twenty day trading average leading up to the closing date. This pro forma assumes that the warrants would give the UST the option to purchase 104.4k shares of Bar Harbor’s common stock. The pro forma adjustment shows the increase in diluted shares outstanding assuming that the warrants had been issued on January 1, 2007 at a strike price of $26.94 (based on the trailing twenty day Bar Harbor average share price as of November 21, 2008) and remained outstanding for the entire period presented. The treasury stock method was utilized to determine dilution of the warrants for the period presented.