EXHIBIT 99.3
Oak Hill Financial, Inc.
PROFORMA FINANCIAL INFORMATION
Oak Hill Financial, Inc. and Lawrence Financial Holdings, Inc.
Unaudited Pro Forma Condensed Combined Consolidated Financial Statements
The following Unaudited Pro Forma Condensed Combined Consolidated Statement of
Financial Condition combines the historical Consolidated Statement of Financial
Condition of Oak Hill Financial, Inc, (the "Company") and Lawrence Financial
Holdings, Inc. ("Lawrence"), giving effect to the related pro forma adjustments
described in the accompanying Notes to the Unaudited Pro Forma Condensed
Combined Consolidated Financial Statements.
The following Unaudited Pro Forma Condensed Combined Consolidated Statements of
Income for the three months ended March 31, 2005 and the year ended December 31,
2004 combine the historical Consolidated Statements of Income of the Company and
Lawrence giving effect to the merger as if the merger had become effective at
the beginning of the period presented, using the purchase method of accounting
and giving effect to the related pro forma adjustments described in the
accompanying Notes to the Unaudited Pro Forma Condensed Combined Consolidated
Financial Data.
Although pro forma financial information is not a measure of performance
calculated in accordance with accounting principals generally accepted in the
United States of America, the Company and Lawrence believe that pro forma
financial information is important because it gives effect to the merger as if
the merger had become effective at the beginning of the period presented. The
manner in which the Company and Lawrence calculate pro forma financial
information may differ from similarly titled measures reported by other
companies.
The unaudited pro forma condensed combined consolidated financial statements
included herein are presented for informational purposes only. This information
includes various estimates and may not necessarily be indicative of the
financial position or results of operations that would have occurred if the
merger has been consummated on the date or at the beginning of the period
indicated or which may be obtained in the future. The unaudited Pro Forma
Condensed Combined Consolidated Financial Statements and accompanying notes
should be read in conjunction with and are qualified in their entirety by
reference to the historical financial statements and related notes thereto of
the Company and Lawrence.
These pro forma financial statements do not include the effects of any potential
cost savings that management believes will result from operating the Lawrence
banking business as branches and combining certain operations functions. It also
does not necessarily reflect what the historical results of the combined company
would have been had the companies been combined during these periods.
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Oak Hill Financial, Inc.
PROFORMA COMBINED STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
March 31, 2005
Pro forma Pro forma
(In thousands, except share data) Oak Hill Lawrence Adjustments Combined
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ASSETS
Cash and due from banks $ 24,721 $ 12,860 $ (14,722) $ 22,724
Federal funds sold 269 -- -- 269
Investment securities designated as available for sale 104,084 18,007 (287) 121,638
Investment securities designated as held to maturity - at cost 3,635 -- -- 3,635
Loans receivable - net 926,578 76,463 596 1,003,637
Office premises and equipment - net 15,673 3,221 292 19,186
Federal Home Loan Bank stock - at cost 6,663 673 -- 7,336
Accrued interest receivable 4,500 512 -- 5,012
Goodwill - net 1,686 -- 4,113 5,799
Core deposit intangible 1,198 -- 3,751 4,949
Cash surrender value of life insurance 10,197 2,394 -- 12,591
Other assets 6,472 3,419 (1,320) 8,571
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TOTAL ASSETS $1,105,676 $ 117,549 $ (7,577) $1,215,648
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LIABILITIES & STOCKHOLDERS' EQUITY
Deposits
Demand $ 81,125 $ 9,497 $ -- $ 90,622
Savings and time deposits 777,031 94,812 (6,585) 865,258
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Total deposits 858,156 104,309 (6,585) 955,880
Securities sold under agreement to repurchase 16,600 -- -- 16,600
Federal Home Loan Bank advances 122,607 3,200 -- 125,807
Guaranteed preferred beneficial interests in the Company's
junior subordinated debentures 18,000 -- -- 18,000
Other liabilities 3,525 459 -- 3,984
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Total liabilities 1,018,888 107,968 (6,585) 1,120,271
Stockholders' equity
Common stock 2,827 8 103 2,938
Additional paid-in capital 6,474 7,593 885 14,952
Retained earnings 80,382 5,320 (5,320) 80,382
Treasury stock - at cost (2,451) (2,729) 2,729 (2,451)
Unearned ESOP shares -- (310) 310 --
Accumulated comprehensive loss:
Unrealized loss on securities designated as available for sale,
net of related tax effects (444) (301) 301 (444)
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Total stockholders' equity 86,788 9,581 (992) 95,377
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,105,676 $ 117,549 $ (7,577) $1,215,648
===========================================================================================================================
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Oak Hill Financial, Inc.
PROFORMA COMBINED STATEMENT OF INCOME (UNAUDITED)
For the Year Ended December 31, 2004
Pro forma Pro forma
(In thousands, except share data) Oak Hill Lawrence Adjustments Combined
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INTEREST INCOME
Loans $55,540 $ 5,230 $ (108) $ 60,662
Investment securities 3,668 910 453 5,031
Interest-bearing deposits and other 43 74 -- 117
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Total interest income 59,251 6,214 345 65,810
INTEREST EXPENSE
Deposits 15,923 1,830 (288) 17,465
Borrowings 4,915 -- -- 4,915
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Total interest expense 20,838 1,830 (288) 22,380
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Net interest income 38,413 4,384 633 43,430
Provision for losses on loans 3,136 590 -- 3,726
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Net interest income after provision for losses on loans 35,277 3,794 633 39,704
OTHER INCOME
Service fees, charges and other operating 5,047 567 -- 5,614
Insurance commissions 3,050 -- -- 3,050
Gain (loss) on sale of loans 1,882 (4,435) -- (2,553)
Gain on sale of securities 276 75 -- 351
Loss on sale of consumer finance loan portfolio and related assets (3,585) -- -- (3,585)
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Total other income 6,670 (3,793) -- 2,877
GENERAL, ADMINISTRATIVE AND OTHER EXPENSE
Employee compensation and benefits 14,519 2,016 -- 16,535
Occupancy and equipment 3,400 423 15 3,838
Federal deposit insurance premiums 132 16 -- 148
Franchise taxes 988 133 -- 1,121
Other operating 7,905 1,887 908 10,700
Employment agreement termination costs 813 813
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Total general, administrative and other expense 26,944 5,288 923 33,155
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Earnings (loss) before federal income taxes 15,003 (5,287) (290) 9,426
FEDERAL INCOME TAXES
Federal income tax expense (benefit) 4,341 (1,843) (102) 2,396
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NET EARNINGS (LOSS) $10,662 $ (3,444) $ (188) $ 7,030
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EARNINGS PER SHARE
Basic $ 1.92 $ (5.66) $ 1.22
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Diluted $ 1.87 $ (5.66) $ 1.19
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Oak Hill Financial, Inc.
PROFORMA COMBINED STATEMENT OF INCOME (UNAUDITED)
For the Three Months Ended March 31, 2005
Pro forma Pro forma
(In thousands, except share data) Oak Hill Lawrence Adjustments Combined
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INTEREST INCOME
Loans $14,740 $ 1,173 $ (28) $15,885
Investment securities 944 202 308 1,454
Interest-bearing deposits and other 93 57 -- 150
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Total interest income 15,777 1,432 280 17,489
INTEREST EXPENSE
Deposits 4,710 444 (74) 5,080
Borrowings 1,381 9 -- 1,390
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Total interest expense 6,091 453 (74) 6,470
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Net interest income 9,686 979 354 11,019
Provision for losses on loans 750 -- -- 750
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Net interest income after provision for losses on loans 8,936 979 354 10,269
OTHER INCOME
Service fees, charges and other operating 1,407 198 -- 1,605
Insurance commissions 671 -- -- 671
Gain on sale of loans 318 -- -- 318
Gain (loss) on sale of securities 143 (68) -- 75
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Total other income 2,539 130 -- 2,669
GENERAL, ADMINISTRATIVE AND OTHER EXPENSE
Employee compensation and benefits 3,582 552 -- 4,134
Occupancy and equipment 1,002 107 1 1,110
Federal deposit insurance premiums 30 14 -- 44
Franchise taxes 53 38 -- 91
Other operating 2,228 874 227 3,329
Employment agreement termination costs -- 744 -- 744
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Total general, administrative and other expense 6,895 2,329 228 9,452
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Earnings (loss) before federal income taxes 4,580 (1,220) 126 3,486
FEDERAL INCOME TAXES
Federal income tax expense (benefit) 1,320 (428) 44 936
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NET EARNINGS (LOSS) $ 3,260 $ (792) $ 82 $ 2,550
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EARNINGS PER SHARE
Basic $ 0.59 $ (0.99) $ 0.44
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Diluted $ 0.57 $ (0.99) $ 0.43
===========================================================================================================================
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Oak Hill Financial, Inc.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
March 31, 2005
NOTE 1: BASIS OF PRESENTATION
The unaudited pro forma combined financial data has been prepared based
upon the historical consolidated financial statements of Oak Hill Financial,
Inc. (the "Company") and the historical consolidated financial statements of
Lawrence Financial Holdings, Inc. ("Lawrence"), which have been adjusted to
reflect the historical cost of Lawrence's assets and liabilities at their fair
value. Pro forma adjustments for the Pro forma Combined Statement of Earnings
include amortization of core deposit intangible and other adjustments based on
the allocated purchase price of net assets acquired.
NOTE 2: PRO FORMA COMBINED CONSOLIDATED STATEMENT OF CONDITION ADJUSTMENTS
In purchase accounting, Lawrence's assets and liabilities and ay
identifiable intangible assets are required to be adjusted to their estimated
fair values. The estimated fair values have been determined by an independent
third party based upon available information.
The following are the preliminary pro forma adjustments, which may be
revised, that were made to record the transaction and to adjust Lawrence's
assets and liabilities to their estimated fair values at March 31, 2005:
Purchase price of Lawrence
Market value of Company common stock issued $ 7,734
Cash in exchange for Lawrence common stock 7,722
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15,456
Historical net assets of Lawrence to be acquired 8,892 Fair market value
adjustments:
Investments (453)
Loans 596
Fixed assets 292
Deposits (415)
Core deposit intangible 3,751
Deferred taxes on purchase price adjustments (1,320)
--------
11,343
Goodwill $ 4,113
=======
The pro forma adjustment for cash and due from banks and interest-bearing
deposits includes a $7.0 million certificate of deposit that Lawrence had with
the Company prior to the acquisition and $7.7 million paid to Lawrence
shareholders as part of the merger consideration.
NOTE 3: SHAREHOLDERS' EQUITY
Shareholders of Lawrence received $7.7 million cash and 221,501 shares of
the Company's no par common stock in exchange for all of the shares of Lawrence.
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Oak Hill Financial, Inc.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
March 31, 2005
NOTE 4: PRO FORMA COMBINED STATEMENT OF EARNINGS ADJUSTMENTS
For purposes of determining the pro forma effect of the Lawrence
acquisition on the statement of earnings, the following pro forma adjustments
have been made as if the acquisition had occurred as of January 1, with respect
to each of the periods:
Three Twelve
Months Ended Months Ended
March 31, 2005 December 31, 2004
--------------------------------------------
Yield adjustment for investment securities available for sale $ 308 $ 453
Yield adjustment for interest income on loans (28) (108)
Yield adjustment for interest expense on deposits 74 288
Depreciation of fixed assets (1) (15)
Amortization of core deposit intangible (227) (908)
--------------------------------------------
126 (290)
Tax expense (benefit) of pro forma adjustments 44 (102)
--------------------------------------------
$ 82 $(188)
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In accordance with Statement of Financial Accounting Standard No. 142,
"Goodwill and Other Intangible Assets," goodwill will not be amortized, but will
be reviewed for impairment at least annually.
NOTE 5: AVERAGE SHARES OUTSTANDING
The pro forma weighted-average shares outstanding is based on the
Company's historical weighted-average shares outstanding plus 221,501 shares of
the Company's common stock that was issued to Lawrence shareholders.
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