PROVIDENT BANCORP, INC.
Pro Forma Balance Sheet
September 30, 2004
PBI WCBI Purchase Note Combined
Consolidated Consolidated Adjustments # Pro Forma
Assets
Cash and due from banks $ 107,571 $ 67,400 $ (90,393) (1) $ 84,578
Securities available for sale 534,297 291,349 - 825,646
Securities held to maturity 69,078 2,255 - 71,333
Loans, net 980,281 284,556 2,018 (2) 1,266,855
Loans held for sale 855 - - 855
Premises and equipment net 16,846 9,018 3,147 (3) 29,011
Accrued interest receivable 6,815 2,987 - 9,802
FHLB stock 10,247 7,605 - 17,852
Goodwill 65,260 886 107,080 (4) 173,226
Bank owned life insurance 13,245 13,320 - 26,565
Other identifiable intangibles 5,624 1,361 9,034 (5) 16,019
Deferred income taxes, net 5,821 4,026 5,089 (7) 14,936
Other assets 10,211 4,447 - 14,658
----------- -------- --------- -----------
Total Assets $ 1,826,151 $689,210 $ 35,975 $ 2,551,336
=========== ======== ========= ===========
Liabilities and Equity
Deposits $ 1,239,532 $471,368 $ 397 (2) $ 1,711,297
Escrow deposits 2,526 745 - 3,271
Borrowings 214,909 152,100 8,421 (6) 375,430
Accrued expenses and other liabilities 19,672 17,284 - 36,956
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Total Liabilities 1,476,639 641,497 8,818 2,126,954
----------- -------- --------- -----------
Stockholders equity
Preferred stock - - - -
Common stock 397 68 7 472
Additional paid-in capital 269,325 68,701 6,094 (8) 344,120
Retained earnings 91,373 23,270 (23,270) (8) 91,373
Unallocated ESOP stock (10,854) (2,551) 2,551 (8) (10,854)
Unallocated RRP stock - - - -
Treasury stock (432) (40,539) 40,539 (432)
Accumulated other comprehensive income (297) (1,236) 1,236 (297)
----------- -------- --------- -----------
Total Equity 349,512 47,713 27,157 424,382
----------- -------- --------- -----------
Total liabilities and Stockholders' equity $ 1,826,151 $689,210 $ 35,975 $ 2,551,336
=========== ======== ========= ===========
PROVIDENT BANCORP, INC.
Pro Forma Income Statement
For the Year Ended September 30, 2004 and December 31, 2003
PBI 9/30 WCBI 12/31 Combined
Consolidated Consolidated Purchase Note Pro Forma
Historical Historical Adjustments #
Interest Income
Loans $ 54,093 $ 26,979 $(1,003) (1) $ 80,069
Securities 20,231 11,536 (3,500) (2) 28,267
Other earning assets 184 357 - 541
--------- -------- ------- --------
Total Interest Income 74,508 38,872 (4,503) 108,877
--------- -------- ------- --------
Interest Expense
Interest on deposits 7,901 6,698 (253) (3) 14,346
Interest of borrowings 5,081 10,633 (2,413) (3) 13,301
--------- -------- ------- --------
Total Interest Expense 12,982 17,331 (2,666) 27,647
--------- -------- ------- --------
Net Interest Income 61,526 21,541 (1,837) 81,230
Provision for Loan Loss 800 90 - 890
--------- -------- ------- --------
Net Interest Income After Provision 60,726 21,451 (1,837) 80,340
Non-Interest Income
Banking fees and services charges 6,570 5,946 - 12,516
Gain on sales of securities available for sale 2,455 405 - 2,860
Gain on sales of loans 320 451 - 771
Other 2,228 695 - 2,923
--------- -------- ------- --------
Total Non-Interest Income 11,573 7,497 - 19,070
--------- -------- ------- --------
Non-Interest Expenses
Compensation and employee benefits 23,001 10,538 - 33,539
Occupancy and office operations 6,741 2,094 - 8,835
Data and check processing 3.634 1,382 - 5,016
Advertising and promotion 2,050 120 - 2,170
Professional fees 2,655 1,110 - 3,765
Amortization of core deposit intangible 2,063 206 1,975 (4) 4,244
Establishment of charitable foundation 5,000 - - 5,000
Merger integrationosts 773 - - 773
Other 10,229 3,309 - 13,538
--------- -------- ------- --------
Total non-interest expense 56,146 18,759 1,975 76,880
--------- -------- ------- --------
Net Income Before Taxes 16,153 10,189 (3,812) 22,530
Provision for Income Tax 5,136 3,729 (1,308) 7,557
--------- -------- ------- --------
Net Income $ 11,017 $ 6,460 $(2,504) $ 14,973
========= ======== ======= ========
Earnings per share: Basic $ 0.30 $ 1.50 $ 0.35
Diluted $ 0.29 $ 1.44 $ 0.34
Footnotes to Pro Forma Consolidated Financial Statements
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Balance Sheet
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(1) Represents the funds used to complete the cash portion ($72.601
million) of the acquisition purchase price paid from securities held
for sale, along with pre-tax acquisition expenses of $22.5 million.
Includes receipt of funds ($3.35 million) related to termination of
the ESOP and repayment of the associated loan, and forfeiture of RRP
shares.
(2) Represents the estimated fair value adjustments relating to the loan
and time deposits portfolios. The estimated lives of the portfolios
are approximately three years and five years, respectively. The
adjustments are assumed to amortize over the remaining lives of the
underlying asset or liability on an accelerated basis.
(3) Represents the estimated fair market value adjustment relating to
premises and equipment. The adjustment is assumed to amortize on a
straight-line basis over the remaining useful lives of the underlying
assets.
(4) Represents the estimate of the excess of the total direct acquisition
costs over the estimated fair value of the net assets acquired based
upon currently available information. Goodwill is expected to be
tested for impairment annually with impairment losses, if any, charged
to expense if and when they occur.
(5) Represents the estimated fair market value adjustment relating to the
future economic benefit of the acquired core deposits. The adjustment
is assumed to amortize to expense on an accelerated basis over its
estimated life of approximately 15 years.
(6) Represents the estimated fair value adjustment related to the
Borrower's portfolio. The estimated life of the portfolio is
approximately seven years.
(7) Represents the net deferred tax asset recorded at a marginal rate of
40.0% for the tax effect on the fair market value adjustments and on
the deductible portion of the acquisition costs.
(8) Represents the elimination of WCBI's equity as of the date of the
transaction and the issuance of 6,257,892 shares at $11.92 per share
to complete the common stock portion of the acquisition purchase
price.
Footnotes (continued)
Income Statements
- -----------------
The pro forma income statements assume that the acquisition of Warwick Community
Bancorp, Inc. was completed at the beginning of the periods presented.
(1) Represents the amortization of the purchase accounting adjustment
using a level yield method over the estimated life of the related
asset for the years ended September 30, 2004 and December 31, 2003.
(2) Represents lost earnings on merger-related costs and 50% of the
purchase price that was paid in cash ($72.601 million). Reinvestment
rates of 3.68% were applied for the years ended September 30, 2004 and
December 31, 2003, respectively.
(3) Represents the amortization of the purchase accounting adjustment
using a level yield method over the estimated life of the related
liabilities for the years ended September 30, 2004 and December 31,
2003.
(4) Represents the amortization on an accelerated basis of the intangible
asset recorded. Amortization is based on estimated life of the asset
and calculated for the the years ended September 30, 2004 and December
31, 2003