MISSION COMMUNITY BANCORP - FORM 8-K/A - EX-99.3 - UNAUDITED PRO FORMA FINANCIAL INFORMATION - January 5, 2012

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EX-99.2 - UNAUDITED INTERIM SANTA LUCIA FINANCIAL STATEMENTS - MISSION COMMUNITY BANCORPexh99-2.htm
EX-99.1 - SANTA LUCIA AUDITED FINANCIAL STATEMENTS - MISSION COMMUNITY BANCORPexh99-1.htm
EX-23.1 - CONSENT OF VAVRINEK, TRINE, DAY & CO., LLP - MISSION COMMUNITY BANCORPexh23-1.htm
8-K/A - FORM 8-K/A - SANTA LUCIA FINANCIAL STATEMENTS - MISSION COMMUNITY BANCORPform8ka.htm
Exhibit 99.3

 
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION - UNAUDITED

On October 21, 2011 the two mergers contemplated under an Agreement and Plan of Merger dated June 24, 2011 by and among Mission Community Bancorp (the “Company”), Carpenter Fund Manager GP, LLC as General Partner of Carpenter Community BancFund L.P. and Carpenter Community BancFund-A, L.P. (the “Funds”) Mission Community Bank (“MC Bank”), Santa Lucia Bancorp (“SL Bancorp”) and Santa Lucia Bank Company (“SL Bank) (the “Merger Agreement”) were consummated. The Funds are the controlling shareholder of the Company.  A copy of the Merger Agreement was filed as an exhibit to the Company’s 8-K filed on June 27, 2011.

Subject to the terms and conditions of the Merger Agreement, SL Bancorp was merged with CCI One Acquisition Corporation, a newly-formed wholly-owned subsidiary of the Funds (“CCI One”), with SL Bancorp being the surviving corporation (the “Merger”).  At the effective time of the Merger, each outstanding share of SL Bancorp common stock, other than any shares dissenting from the Merger, was converted into the right to receive $0.35 in cash or an aggregate of approximately $700,000 (the “Merger Consideration”).  In addition, immediately prior to the Merger, and as a condition to the Merger, CCI One purchased from the United States Department of the Treasury the outstanding preferred stock and warrants issued by SL Bancorp in the Troubled Asset Relief Program for an aggregate purchase price of $2.8 million.   Immediately following the Merger, Santa Lucia Bank, the wholly-owned subsidiary of SL Bancorp, was merged with and into MC Bank, the wholly-owned subsidiary of the Company, with MC Bank being the surviving bank (the “Bank Merger”).  Certain assets and liabilities, consisting primarily of approximately $8.3 million in non-performing loans and the assumption (and subsequent redemption) of SL Bancorp’s TARP preferred stock, were retained by CCI One and not contributed to the Company.  In connection with the Bank Merger, the Company assumed the payment obligations of SL Bancorp’s trust preferred securities.

The following unaudited pro forma combined condensed consolidated financial information has been prepared using the acquisition accounting method, giving effect to the aforementioned mergers. The unaudited pro forma condensed consolidated statement of financial condition combines the historical financial information of MC Bancorp and SL Bancorp as of September 30, 2011, and assumes that the merger was completed on that date.

The unaudited pro forma condensed consolidated statements of operations for the twelve month period ended December 31, 2010 and the nine month period ended September 30, 2011 give effect to the acquisition as if the transaction had been completed on January 1, 2010.

The unaudited pro forma combined condensed consolidated financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined on the dates described above, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. The unaudited pro forma condensed consolidated financial information also does not consider any potential impacts of current market conditions on revenues and expense efficiencies, among other factors.

The pro forma financial information includes estimated adjustments to record assets and liabilities of SL Bank at their fair values and represents MC Bancorp’s pro forma estimates based on available information. The pro forma adjustments included herein are subject to change depending on changes in interest rates and the fair value of the components of assets and liabilities, as additional information becomes available and additional analyses are performed. The final allocation of the purchase price will be determined after completion of thorough analyses to determine the fair value of SL Bank’s tangible and identifiable intangible assets and liabilities as of the dates the acquisition. Increases or decreases in the estimated fair values of the net assets as compared with the information shown in the unaudited pro forma combined condensed consolidated financial information may change other assets and liabilities and may impact MC Bancorp’s statement of income due to adjustments in yield and/or amortization of the adjusted assets or liabilities. The final adjustments may be

 
 
 

materially different from the unaudited pro forma adjustments presented herein.

MC Bancorp anticipates that the SL Bank acquisition will provide financial benefits that include reduced operating expenses. The unaudited pro forma condensed consolidated financial information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not necessarily reflect the exact benefits of expected cost savings or opportunities to earn additional revenue and, accordingly, does not attempt to predict or suggest future results. 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.

The unaudited pro forma combined condensed consolidated financial information has been derived from and should be read in conjunction with the respective periods’ historical consolidated financial statements and the related notes of MC Bancorp. The historical consolidated financial statements of MC Bancorp are filed with the SEC in its Annual Report on Form 10-K for the year ended December 31, 2010 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2011. The historical consolidated financial statements of Santa Lucia Bancorp, parent of Santa Lucia Bank, its wholly owned subsidiary, are included as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K.

The unaudited pro forma combined shareholders' equity and net income are qualified by the statements set forth under this caption and should not be considered indicative of the market value of MC Bancorp common stock or the actual or future results of operations of MC Bancorp for any period. Actual results may be materially different from the pro forma information presented.


 
 
 

Pro Forma Condensed Consolidated Statement of Financial Condition
As of September 30, 2011
Unaudited
(In thousands of dollars)

     
Pro Forma Adjustments - Note D
  
Pro Forma   SL Bank with SL Bancorp Trust Preferred Securities (Contributed to MC Bancorp)
    
Pro Forma Adjustments - Note D
  
ASSETS
SL Bancorp Consolidated as Reported 9/30/11
  
Assets Assumed & Liabilities Retired by SL Bancorp
Fair Value and Other Transaction Adjustments
    
MC Bancorp Consolidated as Reported 9/30/2011
Preferred Stock Issuance
Pro Forma MC Bancorp Consolidated
                           
 Cash and due from banks
 $11,851
  
 $(843)
 a.,b.
 $-
    
 $11,008
  
 $15,894
 $10,000
 u.
 $36,902
 Interest Bearing Deposits
 37,900
  
 -
  
 -
    
 37,900
  
 302
 -
  
 38,202
 Securities/Investments
 21,700
  
 -
  
 -
    
 21,700
  
 90,159
 -
  
 111,859
 Loans held for sale
 -
  
 -
  
 -
    
 -
  
 9,951
 -
  
 9,951
 Loans & Leases
 151,449
  
 (10,653)
 c.
 (16,400)
 j.
  
 124,396
  
 109,275
 -
  
 233,671
 Less: allowance for loan loss
 (9,473)
  
 2,364
 d.
 7,109
 k.
  
 -
  
 (3,164)
 -
  
 (3,164)
 Premises and equipment, net
 7,389
  
 -
  
 5,680
 l.
  
 13,069
  
 3,047
 -
  
 16,116
 Goodwill
 -
  
 -
  
 -
    
 -
  
 -
    
 -
 Core deposit intangible
 -
  
 -
  
 2,648
 n.
  
 2,648
  
 -
 -
  
 2,648
 Other real estate owned
 3,416
  
 -
  
 (331)
 o.
  
 3,085
  
 1,889
 -
  
 4,974
 Other assets
 8,207
  
 -
  
 -
    
 8,207
  
 7,294
 -
  
 15,501
 Total Assets
 $232,439
  
 $(9,132)
  
 $(1,294)
    
 $222,013
  
 $234,647
 $10,000
  
 $466,660
                           
 LIABILITIES & SHAREHOLDER EQUITY
                          
 Deposits:
                          
      Noninterest-bearing deposits
 $71,969
  
 $-
  
 $-
    
 $71,969
  
 $33,733
 $-
  
 $105,702
      Interest-bearing deposits
 145,996
  
 -
  
 -
    
 145,996
  
 157,813
 -
  
 303,809
 Total Deposits
 217,965
  
 -
  
 -
    
 217,965
  
 191,546
 -
  
 409,511
                           
 Trust preferred securities
 5,155
  
 -
  
 (2,775)
 p.
  
 2,380
  
 3,093
 -
  
 5,473
 Accrued interest payable and other liabilities
 2,113
  
 (1,819)
 a., e., f.
 -
    
 294
  
 1,951
 -
  
 2,245
 Total Liabilities
 225,233
  
 (1,819)
  
 (2,775)
    
 220,639
  
 196,590
 -
  
 417,229
                           
 Preferred stock
 3,909
  
 (3,909)
 g.
 -
    
 -
  
 6,152
 8,063
 u.
 14,215
 Common stock
 10,665
  
 -
  
 (10,665)
 q.
  
 -
  
 46,387
 -
  
 46,387
 Additional paid-in capital
 1,131
{
 4,000
 g., h.
 (5,131)
 g., h., r.
}
 1,374
  
 432
 -
  
 1,806
 1,374
 m2.
  
 Common stock warrants
 -
  
 -
  
 -
    
 -
    
 1,937
 u.
 1,937
 Retained earnings(deficit)
 (8,809)
{
 (91)
 h.
 16,213
 s.
}
 -
  
 (16,101)
 -
  
 (16,101)
 976
 e., f., i.
  
 (8,289)
 m1.
  
 Accumulated other comprehensive income(loss)
 310
  
 -
  
 (310)
 t.
  
 -
  
 1,187
 -
  
 1,187
 Total shareholders' equity
 7,206
  
 (7,313)
  
 1,481
    
 1,374
  
 38,057
 10,000
  
 49,431
 Total liabilities and shareholders' equity
 $232,439
  
 $(9,132)
  
 $(1,294)
    
 $222,013
  
 $234,647
 $10,000
  
 $466,660
                           
The accompanying notes are an integral part of these pro forma financial statements


 
 
 

Pro Forma Condensed Consolidated Statement of Operations
For the twelve month period ended December 31, 2010
Unaudited
(In thousands of dollars except share and per share data)

   
Historical
              
   
MC Bancorp
    
SL Bancorp
    
Pro Forma Transaction Adjustments - Note D
    
Pro Forma MC Bancorp Consolidated
  
                         
Interest Income
                        
Interest and fees on loans
   $ 7,538     $ 11,456     $ 767  
aa.
 $ 19,761  
Interest on investment securities
     1,297       1,117       -       2,414  
Other interest income
     47       14       -       61  
                                 
          Total Interest Income
     8,882       12,587       767       22,236  
                                 
Interest Expense
                                
Interest on Money Market, NOW and Savings deposits
     483       658       -       1,141  
Interest on time deposits
     1,192       1,524       -       2,716  
Other interest expense
     316       109       145  
bb.
   570  
                                 
          Total Interest Expense
     1,991       2,291       145       4,427  
                                 
               Net Interest Income
     6,891       10,296       622       17,809  
                                 
Provision for loan losses
     5,800       15,198       -       20,998  
                                 
          Net Interest Income after provision
                             -  
              for loan losses
     1,091       (4,902 )     622       (3,189 )
                                 
Non Interest Income
                                
Service charges and fees
     354       479       -       833  
Gain on sale of loans
     430       -       -       430  
Loan servicing fees, net of amortization
     135       -       -       135  
Grants and awards
     600       -       -       600  
Gain(losses) sale of OREO, net
     (486 )     39       -       (447 )
Securities gains (losses), net
     497       588       -       1,085  
Other non interest income
     182       504       -       686  
                                 
          Total Non Interest Income
     1,712       1,610       -       3,322  
                                 
Non Interest Expense
                                
Salaries and employee benefits
     4,035       5,176       -       9,211  
Occupancy
     1,270       1,219       436  
cc.
   2,925  
Other non interest expense
     4,181       4,260       331  
dd.
   8,772  
                                 
          Total Non Interest Expense
     9,486       10,655       767       20,908  
                                 
               Income(loss) before taxes
     (6,683 )     (13,947 )     (145 )     (20,775 )
                                 
Income tax expense(benefit)
     -       807       (807 )
ee.
   -  
                                 
                    Net (Loss) / Income
   $ (6,683 )   $ (14,754 )   $ 662     $ (20,775 )
                                 
Dividends and accretion on preferred stock
   $ 71     $ 240     $ 954  
ff.
 $ 1,265  
                                 
                   Net (Losses)/Income Applicable to Common Shareholders
   $ (6,754 )   $ (14,994 )   $ (292 )   $ (22,040 )
                                 
Per share data:
                                
   Net (loss) - Basic
   $ (1.54 )                   $ (5.02 )
                                 
Weighted average common shares outstanding -basic
     4,388,691       -       -       4,388,691  


 
 
 

Pro Forma Condensed Consolidated Statement of Operations
For the nine month period ended September 30, 2011
Unaudited
(In thousands of dollars except share and per share data)

   
Historical
              
   
MC Bancorp
    
SL Bancorp
    
Pro Forma Transaction Adjustments - Note D
    
Pro Forma MC Bancorp Consolidated
  
                         
Interest Income
                        
Interest and fees on loans
   $ 5,271     $ 7,038     $ 575  
aa.
 $ 12,884  
Interest on investment securities
     1,350       546       -       1,896  
Other interest income
     22       53       -       75  
                                 
          Total Interest Income
     6,643       7,637       575       14,855  
                                 
Interest Expense
                                
Interest on Money Market, NOW and Savings deposits
     304       210       -       514  
Interest on time deposits
     693       655       -       1,348  
Other interest expense
     81       69       109  
bb.
   259  
                                 
          Total Interest Expense
     1,078       934       109       2,121  
                                 
               Net Interest Income
     5,565       6,703       466       12,734  
                                 
Provision for loan losses
     300       530       -       830  
                                 
          Net Interest Income after provision
                                
              for loan losses
     5,265       6,173       466       11,904  
                                 
Non Interest Income
                                
Service charges and fees
     312       257       -       569  
Gain on sale or other disposition of loans
     427       -       -       427  
Loan servicing fees, net of amortization
     97       -       -       97  
Gain(losses) sale of OREO, net
     (71 )     (107 )     -       (178 )
Securities gains (losses), net
     4       105       -       109  
Other non interest income
     260       296               556  
                                 
          Total Non Interest Income
     1,029       551       -       1,580  
                                 
Non Interest Expense
                                
Salaries and employee benefits
     4,364       3,537       -       7,901  
Occupancy
     1,339       907       327  
cc.
   2,573  
Other non interest expense
     3,275       3,022       248  
dd.
   6,545  
                                 
          Total Non Interest Expense
     8,978       7,466       575       17,019  
                                 
               Income(loss) before taxes
     (2,684 )     (742 )     (109 )     (3,535 )
                                 
Income tax expense(benefit)
     6       274       (274 )
ee.
   6  
                                 
                    Net (Loss) / Income
   $ (2,690 )   $ (1,016 )   $ 165     $ (3,541 )
                                 
Net Income(Loss) Applicable to Preferred Stock
   $ 144     $ 180     $ 715  
ff.
 $ 1,039  
                                 
                   Net (Losses)/Income Applicable to Common Shareholders
   $ (2,834 )   $ (1,196 )   $ (550 )   $ (4,580 )
                                 
Per share data:
                                
   Net (loss) - Basic
   $ (0.40 )                   $ (0.65 )
                                 
Weighted average common shares outstanding -basic
     7,094,274                       7,094,274  
                                 
The accompanying notes are an integral part of these pro forma financial statements
  


 
 
 


NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION - UNAUDITED

Note A—Basis of Presentation

        On October 21, 2011 the two mergers contemplated under an Agreement and Plan of Merger dated June 24, 2011 by and among Mission Community Bancorp (the “Company”), Carpenter Fund Manager GP, LLC as General Partner of Carpenter Community BancFund L.P. and Carpenter Community BancFund-A, L.P. (the “Funds”) Mission Community Bank (“MC Bank”), Santa Lucia Bancorp (“SL Bancorp”) and Santa Lucia Bank Company (“SL Bank) (the “Merger Agreement”) were consummated. The Funds are the controlling shareholder of the Company.  A copy of the Merger Agreement was filed as an exhibit to the Company’s 8-K filed on June 27, 2011.

Subject to the terms and conditions of the Merger Agreement, SL Bancorp was merged with CCI One Acquisition Corporation, a newly-formed wholly-owned subsidiary of the Funds (“CCI One”), with SL Bancorp being the surviving corporation (the “Merger”).  At the effective time of the Merger, each outstanding share of SL Bancorp common stock, other than any shares dissenting from the Merger, was converted into the right to receive $0.35 in cash or an aggregate of approximately $700,000 (the “Merger Consideration”).  In addition, immediately prior to the Merger, and as a condition to the Merger, CCI One purchased from the United States Department of the Treasury the outstanding preferred stock and warrants issued by SL Bancorp in the Troubled Asset Relief Program for an aggregate purchase price of $2.8 million.   Immediately following the Merger, Santa Lucia Bank, the wholly-owned subsidiary of SL Bancorp, was merged with and into MC Bank, the wholly-owned subsidiary of the Company, with MC Bank being the surviving bank (the “Bank Merger”).  Certain assets and liabilities, consisting primarily of approximately $8.3 million in non-performing loans and the assumption (and subsequent redemption) of SL Bancorp’s TARP preferred stock, were retained by CCI One and not contributed to the Company. In connection with the Bank Merger, the Company assumed the payment obligations of SL Bancorp’s trust preferred securities.

The unaudited pro forma combined condensed consolidated financial information and explanatory notes show, under the acquisition accounting method, the impact on the historical financial condition and results of operations of the Company resulting from the contribution by the Fund of certain SL Bancorp assets and liabilities. Under the acquisition accounting method, the assets and liabilities of SL Bancorp that were contributed to the Company are recorded at their respective fair values as of the date the transaction is consummated. The unaudited pro forma condensed consolidated statement of financial condition combines the historical financial information of MC Bancorp and SL Bancorp as of September 30, 2011, and assumes that the acquisition was completed on that date. The unaudited pro forma condensed consolidated statements of operations for the twelve month period ended December 31, 2010 and the nine month period ended September 30, 2011 give effect to the acquisition as if the transaction had been completed on January 1, 2010.

Since the transaction is recorded using the acquisition method of accounting, all loans are recorded at fair value, including adjustments for credit quality, and no allowance for credit losses is carried over to MC Bancorp's balance sheet. In addition, certain anticipated nonrecurring costs associated with the acquisition such as potential severance, professional fees, legal fees and conversion-related expenditures are not reflected in the pro forma statements of operations.

While the recording of the acquired loans at their fair value will impact the prospective determination of the provision for credit losses and the allowance for credit losses, for purposes of the unaudited pro forma combined condensed consolidated statement of operations for the nine months ended September 30, 2011 and the year ended December 31, 2010, MC Bancorp assumed no adjustments to the historical amount of SL Bank’s provision for credit losses. If such adjustments were estimated, there could be a reduction, which could be significant, to the historical amounts of SL Bank’s provision for credit losses presented.

Deferred tax entries that would be associated with certain transaction items are not reflected in the pro forma as the result of a full valuation allowance maintained by the Company against net deferred tax assets.


 
 
 

Note B—Merger and Acquisition Integration Costs

In connection with the acquisition, a plan to integrate MC Bancorp's and SL Bank’s operations has been developed. The implementation of this plan will occur over the next several months, and will include actions regarding personnel, benefit plans, premises and equipment, and service contracts to take advantage of redundancies. Certain decisions arising from this plan may involve involuntary termination of employees, vacating leased premises, changing information systems, canceling contracts with certain service providers, and selling or otherwise disposing of certain premises and furniture and equipment. MC Bancorp also expects to incur merger-related costs including professional fees, legal fees, system conversion costs and costs related to communications with customers and others. To the extent there are costs associated with these actions, the costs will be recorded based on the nature of the cost and the timing of these integration actions.


Note C—Estimated Annual Cost Savings

MC Bancorp expects to realize cost savings following the SL Bank acquisition. These cost savings are not reflected in the pro forma financial information and there can be no assurance they will be achieved in the amount or manner currently contemplated.


Note D—Pro Forma Adjustments –

Balance Sheet

The following pro forma adjustments have been reflected in the unaudited pro forma combined condensed consolidated financial information. All adjustments are based on current assumptions and valuations, which are subject to change.


  a.     $ (500 )
Compensation plan termination payout by SLBank
  b.       (343 )
SLBancorp Transaction expenses post 9-30-11 through closing date
        $ (843 )
Net effect to cash as of the closing date
                   
  c.     $ (10,653 )
Carrying balance of loans distributed to SL Bancorp.
                   
  d.     $ 2,364  
Fair Value adjustment on loans distributed to SL Bancorp
                   
  e.     $ (1,119 )
Termination of compensation plans effected prior to closing
                   
  f.     $ (200 )
Reversal of accrued dividend for TARP
                   
  g.     $ (3,909 )
Repurchase of TARP preferred stock by SL Bancorp
                   
  h.     $ (91 )
Repurchase of TARP preferred stock by SL Bancorp
                   
  i.     $ 343  
SLBancorp Transaction expenses post 9-30-11 through closing date
                   
  j.     $ (16,400 )
Fair value discount on loans
                   
  k.     $ 7,109  
Reversal of SL Bank loan loss allowance; shown after loan distribution to SL Bancorp
                   
  l.    
Fair value of bank owned property:
    
       
Carrying Value
  
Fair Value
 Write Up
  
        $ 2,031  
 $4,010
 $1,979
Land
          4,999  
 8,764
 3,765
Buildings
          462  
 398
 (64)
FF&E
        $ 7,492  
 $13,172
 $5,680
  



 
 
 

Note D—Pro Forma Adjustments – Balance Sheet, continued


  m.    
Goodwill / Bargain Purchase Gain:
          
        $ 700      
Consideration paid to SL Bancorp common shareholders
          2,800      
Consideration paid to SL Bancorp TARP preferred shareholder
        $ 3,500   A  
Total consideration paid by SL Bancorp
                             
        $ 7,206      
SL Bancorp Shareholders' Equity at September 30, 2011
                 
Adjustments to shareholders' equity:
          1,119      
Termination of compensation plans effected prior to closing
          (343 )    
Direct expenses of merger transaction
          200      
Reversal of accrued dividends on TARP
          976      
Total SLBancorp post 9-30-11 merger transactions through closing date
          (16,400 )    
Fair value discount on loans
          (331 )    
Fair value discount on OREO
          7,109      
Reversal of loan loss reserve after loan distribution
          5,680      
Increase in value of bank premises
          2,775      
Fair value discount on trust preferred securities
          2,648      
Core deposit intangible (footnote n.)
          1,481      
Total fair value adjustments
        $ 9,663   B  
Estimated fair value of SLB net assets on acquisition date
                             
        $ 10,653      
Carrying balance of loans distributed to SL Bancorp
          (2,364 )    
Fair value discount on loans distributed to SL Bancorp
  m1.     $ 8,289   C  
Fair value of net loans retained by SL Bancorp
  m2.     $ 1,374   D  
Net contribution of the Funds to Mission Community Bancorp [D = B - C]
                             
        $ 6,163   E  
Preliminary bargain purchase gain recognized by SL Bancorp [E = B - A]
                             
  n.    
Core deposit intangible:
                  
       
Amount
      
Percent
    
CDI
    
        $ 71,969         0.40 %   $ 288  
 Non-interest bearing deposits
          13,592         3.00 %     408  
 Interest bearing trans accts
          70,986         2.75 %     1,952  
 MMDAs + Savings
          61,418         0.00 %     -  
 Time deposits
        $ 217,965               $ 2,648  
 Total CDI
                                 
  o.     $ (331 )    
Fair value discount on OREO
          
                                 
  p.     $ (2,775 )    
Fair value adjustment to Santa Lucia Captial Trust obligation
  
                                 
  q.     $ (10,665 )    
Reversal of SLBancorp common stock and surplus
    
                                 
  r.     $ (1,131 )    
Reversal of SL Bancorp Additional Paid-In Capital
    
                                 
  s.     $ 16,213      
Reversal of remaining SLBancorp retained deficit
    
                                 
  t.     $ (310 )    
Reverse SL Bancorp other comprehensive income
    
                                 
  u.     $ 10,000      
Non-cumulative preferred stock issued (non-controlling investment)
  
          (1,937 )    
Fair value of warrants associated with non-cumulative preferred stock issuance
        $ 8,063      
Fair value of preferred stock issue
          
                 
On October 21, 2011, Mission Asset Management, Inc. (a wholly owned subsidiary of the Company)
                 
issued 10,000 shares of preferred stock, designated as "Series A Non-Cumulative Perpetual
                 
Preferred Stock" combined with approximately 2.2 million warrants for Company common stock.
                 
The proceeds were allocated among the warrants and the preferred stock (as a non-controlling interest).
                 
The preferred stock carries a 10% dividend. The warrants are exercisable at $4.54 per share
                 
and will expire on October 21, 2021.


 
 
 

Note D—Pro Forma Adjustments, continued

Income Statement

        The following pro forma adjustments have been reflected in the unaudited pro forma combined condensed consolidated financial information. All adjustments are based on current assumptions and valuations, which are subject to change.

 
 
aa.
Accretion of fair value adjustment on loans based on a weighted average life of 6 years. The Company has excluded from the pro forma adjustment the estimated portion of the fair value adjustment for loans that will be accounted for pursuant to ASC 310-30, Accounting for Loans Acquired with Deteriorated Credit Quality:
   
Annual
    
9 mos.
    
    $ 767     $ 575    
                   
bb.
Accretion of discount on Trust Preferred Security over remaining life of 24.75 years:
   
Annual
    
9 mos.
    
    $ 145     $ 109    
                   
                   
cc.
Additional depreciation expense associated with premises acquired over an estimated life of 25 years:
   
Annual
    
9 mos.
    
    $ 436     $ 327    
                   
dd.
Amorization of core deposit intangible based on 8 year estimated life:
   
Annual
    
9 mos.
    
    $ 331     $ 248    
                   
ee.
Reversal of SL Bancorp tax expense:
          
   
Annual
    
9 mos.
    
    $ (807     $ (274 )  
                   
ff.
Dividends and accretion on preferred stock:
    
   
Annual
    
9 mos.
    
    $ 1,000     $ 750  
Dividend on $10 million new preferred securities
    $ 194     $ 145  
Accretion of fair value of warrants over estimated life of 10 years
    $ (240     $ (180 )
Reversal of SL Bancorp preferred dividends
    $ 954     $ 715    





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