The following unaudited pro forma statement of operations data for the nine months ended September 30, 2012, and for the year ended December 31, 2011, give effect to the merger as if it occurred on January 1, 2011. The unaudited pro forma combined balance sheet data was computed as if the merger had been completed on September 30, 2012. This information is based on the historical consolidated balance sheets and related adjusted historical consolidated statements of income of MidSouth and PSB and gives effect to the merger using the purchase method of accounting for business combinations. The pro forma financial information assumes that no adjustments are made to the merger consideration as a result of (1) PSB’s Adjusted Capital being below $26.0 million as of the closing date or (2) the credit losses on the specified loans for purposes of the CVR payment exceeding the threshold that would require adjustment thereto.
The companies may have performed differently had they been combined at the date or for the periods presented. You should not rely on the selected unaudited pro forma combined financial data as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that MidSouth will experience after the merger.
The unaudited pro forma combined financial data includes estimated adjustments to record assets and liabilities of PSB at their respective fair values and represents estimates based on available information. The pro forma adjustments included herein are subject to change as additional information becomes available. The final allocation of the purchase price will be determined after further analyses with respect to the fair value of tangible and intangible assets as of the date the merger is completed. The excess of the total purchase price over the net of the amounts assigned to tangible and identifiable intangible assets acquired and liabilities assumed is recognized as goodwill. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein.
MidSouth Bancorp, Inc. and Subsidiaries | ||||||||||||||||||
Unaudited Pro Forma Combined Consolidated Balance Sheet | ||||||||||||||||||
(in thousands) | ||||||||||||||||||
September 30, 2012 | ||||||||||||||||||
MidSouth | PSB Financial | Pro Forma | ||||||||||||||||
Bancorp, Inc. | Corp | Acquisition | Combined | |||||||||||||||
Assets | Historical | Historical | Adjustments | Pro Forma | ||||||||||||||
Cash and due from banks | $ | 57,155 | $ | 22,348 | $ | (27,603 | ) | (1 | ) | $ | 51,900 | |||||||
Federal funds sold | 2,500 | 5,800 | - | 8,300 | ||||||||||||||
Time Deposits in other banks | 709 | - | - | 709 | ||||||||||||||
Securities available-for-sale | 341,170 | 162,849 | - | 504,019 | ||||||||||||||
Securities held-to-maturity | 117,628 | - | - | 117,628 | ||||||||||||||
Other investments | 5,820 | 2,489 | - | 8,309 | ||||||||||||||
Loans | 808,833 | 269,684 | (14,000 | ) | (2 | ) | 1,064,517 | |||||||||||
Allowance for loan losses | (7,374 | ) | (3,580 | ) | 3,580 | (3 | ) | (7,374 | ) | |||||||||
Loans, net of allowance | 801,459 | 266,104 | (10,420 | ) | 1,057,143 | |||||||||||||
Bank premises and equipment, net | 48,086 | 11,834 | 5,000 | (4 | ) | 64,920 | ||||||||||||
Accrued interest receivable | 5,562 | 2,055 | - | 7,617 | ||||||||||||||
Goodwill | 24,824 | 3,364 | 8,031 | (5 | ) | 36,219 | ||||||||||||
Other assets | 24,023 | 16,586 | 6,248 | (6 | ) | 46,857 | ||||||||||||
Total Assets | $ | 1,428,936 | $ | 493,429 | $ | (18,744 | ) | $ | 1,903,621 | |||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||
Liabilities: | ||||||||||||||||||
Deposits | $ | 1,179,012 | $ | 402,995 | $ | 385 | (7 | ) | $ | 1,582,392 | ||||||||
Notes payable | - | 27,483 | - | 27,483 | ||||||||||||||
Securities sold under repurchase agreements | 55,233 | 1,085 | - | 56,318 | ||||||||||||||
Junior subordinated debenture | 15,465 | 13,919 | - | 29,384 | ||||||||||||||
Other liabilities | 10,891 | 7,667 | 151 | (8 | ) | 18,709 | ||||||||||||
Total liabilities | 1,260,601 | 453,149 | 536 | 1,714,286 | ||||||||||||||
Stockholders' Equity: | ||||||||||||||||||
Preferred stock | 32,000 | 9,603 | 397 | (9 | ) | 42,000 | ||||||||||||
Common stock | 1,063 | 720 | (644 | ) | (10 | ) | 1,139 | |||||||||||
Additional paid-in-capital | 99,066 | 477 | 10,447 | (11 | ) | 109,990 | ||||||||||||
Unearned ESOP shares | - | (173 | ) | 173 | (12 | ) | - | |||||||||||
Accumulated other comprehensive income | 9,390 | 3,245 | (3,245 | ) | (13 | ) | 9,390 | |||||||||||
Treasury stock | (3,286 | ) | - | - | (3,286 | ) | ||||||||||||
Retained earnings | 30,102 | 26,408 | (26,408 | ) | (14 | ) | 30,102 | |||||||||||
Total stockholders' equity | 168,335 | 40,280 | (19,280 | ) | 189,335 | |||||||||||||
Total Liabilities and Stockholders' Equity | $ | 1,428,936 | $ | 493,429 | $ | (18,744 | ) | $ | 1,903,621 | |||||||||
(1) To record $18 million of cash paid to PSB common stockholders (including the CVR threshold amount of $2 million) and $9.603 million paid to PSB preferred stockholders for redemption of shares | ||||||||||||||||||
(2) To record estimated fair value adjustment of PSB's loans | ||||||||||||||||||
(3) To eliminate preacquisition allowance for loan losses on PSB's financial statements | ||||||||||||||||||
(4) To record estimated fair value adjustment of PSB's premises and equipment | ||||||||||||||||||
(5) To eliminate preacquisition goodwill on PSB's financial statements and record goodwill on acquisition | ||||||||||||||||||
(6) To record estimated fair value of the core deposit intangible of PSB | ||||||||||||||||||
(7) To record estimated fair value adjustment of PSB's time deposits | ||||||||||||||||||
(8) To record the estimated deferred income taxes of PSB | ||||||||||||||||||
(9) To record the redemption of PSB preferred stock and the issuance of MidSouth preferred stock to be issued to PSB's stockholders | ||||||||||||||||||
(10) To eliminate the par value of PSB common stock and to record the par value of MidSouth stock to be issued to PSB's stockholders | ||||||||||||||||||
(11) To eliminate the the additional paid-in-capital on PSB's financial statements and record the excess of fair value over par value of MidSouth common stock to be issued to PSB's stockholders | ||||||||||||||||||
(12) To eliminate value of preacquisition unearned ESOP shares on PSB's financial statements | ||||||||||||||||||
(13) To eliminate preacquisition accumulated other comprehensive income on PSB's financial statements | ||||||||||||||||||
(14) To eliminate preacquisition retained earnings on PSB's financial statements |
The following table provides the calculation of the purchase price used in the pro forma financial statements. | ||||
MidSouth Bancorp, Inc. and Subsidiaries | ||||
Purchase Price Allocation | ||||
(in thousands) | ||||
Allocation of purchase price: | ||||
Common stock (756,534 shares at $14.54 per share) | $ | 11,000 | ||
Preferred stock (100,000 shares at $100.00 per share) | 10,000 | |||
Cash | 18,000 | |||
Net assets acquired (book value) | (30,677 | ) | ||
8,323 | ||||
Allocated to: | ||||
Loans, net of allowance | (10,420 | ) | ||
Bank premises and equipment, net | 5,000 | |||
Core deposit intangible | 6,248 | |||
Deferred income tax liability | (151 | ) | ||
Deposits | (385 | ) | ||
Write-off of goodwill on PSB's books | (3,364 | ) | ||
Total allocations | (3,072 | ) | ||
Purchase price less allocation to identifiable assets and liabilities (goodwill) | $ | 11,395 |
MidSouth Bancorp, Inc. and Subsidiaries | ||||||||||||||||||
Unaudited Pro Forma Combined Consolidated Statement of Operations | ||||||||||||||||||
(in thousands) | ||||||||||||||||||
For the Nine Months Ended September 30, 2012 | ||||||||||||||||||
MidSouth | PSB Financial | Pro Forma | ||||||||||||||||
Bancorp, Inc. | Corp | Acquisition | Combined | |||||||||||||||
Historical | Historical | Adjustments | Pro Forma | |||||||||||||||
Interest income: | ||||||||||||||||||
Loans, including fees | $ | 37,298 | $ | 11,003 | $ | 1,650 | (1 | ) | $ | 49,951 | ||||||||
Investments | 8,609 | 3,208 | (675 | ) | (2 | ) | 11,022 | |||||||||||
(120 | ) | (3 | ) | |||||||||||||||
Federal funds sold | 6 | 13 | - | 19 | ||||||||||||||
Interest bearing deposits in other banks | 73 | 37 | - | 110 | ||||||||||||||
Total interest income | 45,986 | 14,261 | 855 | 61,102 | ||||||||||||||
Interest expense: | ||||||||||||||||||
Deposits | 3,189 | 1,675 | (86 | ) | (4 | ) | 4,778 | |||||||||||
Other borrowings | 564 | 559 | - | 1,123 | ||||||||||||||
Junior subordinated debentures | 733 | 401 | - | 1,134 | ||||||||||||||
Total interest expense | 4,486 | 2,635 | (86 | ) | 7,035 | |||||||||||||
Net interest income | 41,500 | 11,626 | 941 | 54,067 | ||||||||||||||
Provision for loan losses | 1,550 | 154 | - | 1,704 | ||||||||||||||
Net interest income after provision for loan losses | 39,950 | 11,472 | 941 | 52,363 | ||||||||||||||
Non-interest income: | ||||||||||||||||||
Service charges on deposits | 5,590 | 1,492 | - | 7,082 | ||||||||||||||
Gain or loss on securities, net | 204 | (194 | ) | - | 10 | |||||||||||||
Other charges and fees | 5,453 | 1,072 | - | 6,525 | ||||||||||||||
Total non-interest income | 11,247 | 2,370 | - | 13,617 | ||||||||||||||
Non-interest expenses: | ||||||||||||||||||
Salaries and employee benefits | 18,511 | 5,425 | (1,485 | ) | (5 | ) | 22,451 | |||||||||||
Occupancy expense | 8,283 | 1,449 | - | 9,732 | ||||||||||||||
FDIC Insurance | 695 | 229 | - | 924 | ||||||||||||||
Other | 12,599 | 3,870 | (521 | ) | (6 | ) | 15,948 | |||||||||||
Total non-interest expenses | 40,088 | 10,973 | (2,007 | ) | 49,055 | |||||||||||||
Income before income taxes | 11,109 | 2,869 | 2,948 | 16,926 | ||||||||||||||
Provision for income taxes | 3,096 | 703 | 1,032 | 4,831 | ||||||||||||||
Net earnings | $ | 8,013 | $ | 2,166 | $ | 1,916 | $ | 12,095 | ||||||||||
Dividends on preferred stock | 1,180 | 146 | 300 | (7 | ) | 1,626 | ||||||||||||
Net earnings available to common shareholders | $ | 6,833 | $ | 2,020 | $ | 1,616 | $ | 10,469 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||
Basic | 10,471 | 73 | 11,228 | |||||||||||||||
Diluted | 10,499 | 73 | 11,256 | |||||||||||||||
Earnings per share: | ||||||||||||||||||
Basic | $ | 0.65 | $ | 27.75 | $ | 0.93 | ||||||||||||
Diluted | $ | 0.65 | $ | 27.75 | $ | 0.93 | ||||||||||||
(1) To record the accretion of the fair value adjustments to loans | ||||||||||||||||||
(2) To record the increase in bond amortization as a result of the acquisition | ||||||||||||||||||
(3) To record the opportunity cost of cash paid out to PSB shareholders | ||||||||||||||||||
(4) To record the amortization of the fair value adjustments to deposits | ||||||||||||||||||
(5) To record the estimated cost savings resulting from the acquisition | ||||||||||||||||||
(6) To record the estimated cost savings resulting from the acquisition, net of the core deposit intangible amortization | ||||||||||||||||||
(7) To record the dividend on preferred stock issued to PSB shareholders |
MidSouth Bancorp, Inc. and Subsidiaries | ||||||||||||||||||
Unaudited Pro Forma Combined Consolidated Statement of Operations | ||||||||||||||||||
(in thousands) | ||||||||||||||||||
For the Twelve Months Ended December 31, 2011 | ||||||||||||||||||
MidSouth | PSB Financial | Pro Forma | ||||||||||||||||
Bancorp, Inc. | Corp | Acquisition | Combined | |||||||||||||||
Historical | Historical | Adjustments | Pro Forma | |||||||||||||||
Interest income: | ||||||||||||||||||
Loans, including fees | $ | 41,887 | $ | 14,001 | $ | 2,800 | (1 | ) | $ | 58,688 | ||||||||
Investments | 8,910 | 4,971 | (1,000 | ) | (2 | ) | 12,721 | |||||||||||
(160 | ) | (3 | ) | |||||||||||||||
Federal funds sold | 14 | 17 | - | 31 | ||||||||||||||
Interest bearing deposits in other banks | 196 | 19 | - | 215 | ||||||||||||||
Total interest income | 51,007 | 19,008 | 1,640 | 71,655 | ||||||||||||||
Interest expense: | ||||||||||||||||||
Deposits | 4,023 | 3,074 | (231 | ) | (4 | ) | 6,866 | |||||||||||
Other borrowings | 808 | 1,392 | - | 2,200 | ||||||||||||||
Junior subordinated debentures | 971 | 778 | - | 1,749 | ||||||||||||||
Total interest expense | 5,802 | 5,244 | (231 | ) | 10,815 | |||||||||||||
Net interest income | 45,205 | 13,764 | 1,871 | 60,840 | ||||||||||||||
Provision for loan losses | 3,925 | 729 | - | 4,654 | ||||||||||||||
Net interest income after provision for loan losses | 41,280 | 13,035 | 1,871 | 56,186 | ||||||||||||||
Non-interest income: | ||||||||||||||||||
Service charges on deposits | 6,921 | 3,076 | - | 9,997 | ||||||||||||||
Gain or loss on securities, net | 99 | 1,816 | - | 1,915 | ||||||||||||||
Other charges and fees | 6,041 | 139 | - | 6,180 | ||||||||||||||
Total non-interest income | 13,061 | 5,031 | - | 18,092 | ||||||||||||||
Non-interest expenses: | ||||||||||||||||||
Salaries and employee benefits | 21,763 | 7,867 | (1,237 | ) | (5 | ) | 28,393 | |||||||||||
Occupancy expense | 9,281 | 1,129 | - | 10,410 | ||||||||||||||
Other | 18,260 | 5,756 | (200 | ) | (6 | ) | 23,816 | |||||||||||
Total non-interest expenses | 49,304 | 14,752 | (1,437 | ) | 62,619 | |||||||||||||
Income before income taxes | 5,037 | 3,314 | 3,308 | 11,659 | ||||||||||||||
Provision for income taxes | 564 | 854 | 1,158 | 2,576 | ||||||||||||||
Net earnings | $ | 4,473 | $ | 2,460 | $ | 2,150 | $ | 9,083 | ||||||||||
Dividends on preferred stock | 1,802 | 195 | 400 | (7 | ) | 2,397 | ||||||||||||
Net earnings available to common shareholders | $ | 2,671 | $ | 2,265 | $ | 1,750 | $ | 6,686 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||
Basic | 9,787 | 73 | 10,544 | |||||||||||||||
Diluted | 9,799 | 73 | 10,556 | |||||||||||||||
Earnings per share: | ||||||||||||||||||
Basic | $ | 0.27 | $ | 31.02 | $ | 0.63 | ||||||||||||
Diluted | $ | 0.27 | $ | 31.02 | $ | 0.63 | ||||||||||||
(1) To record the accretion of the fair value adjustments to loans | ||||||||||||||||||
(2) To record the increase in bond amortization as a result of the acquisition | ||||||||||||||||||
(3) To record the opportunity cost of cash paid out to PSB shareholders | ||||||||||||||||||
(4) To record the amortization of the fair value adjustments to deposits | ||||||||||||||||||
(5) To record the estimated cost savings resulting from the acquisition | ||||||||||||||||||
(6) To record the estimated cost savings resulting from the acquisition, net of the core deposit intangible amortization | ||||||||||||||||||
(7) To record the dividend on preferred stock issued to PSB shareholders |