Attached files
file | filename |
---|---|
8-K/A - FORM 8-K/A - Riverview Financial Corp | d149795d8ka.htm |
EX-23.2 - EX-23.2 - Riverview Financial Corp | d149795dex232.htm |
EX-99.3 - EX-99.3 - Riverview Financial Corp | d149795dex993.htm |
EX-99.4 - EX-99.4 - Riverview Financial Corp | d149795dex994.htm |
EX-23.1 - EX-23.1 - Riverview Financial Corp | d149795dex231.htm |
EX-99.5 - EX-99.5 - Riverview Financial Corp | d149795dex995.htm |
Exhibit 99.6
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION AS OF AND FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 2014
The unaudited pro forma combined financial information and explanatory notes present how the combined statements of Riverview and Citizens may have appeared had the businesses actually been combined as of the date indicated. The unaudited pro forma combined balance sheets at December 31, 2014 assume the merger was completed on that date. The unaudited pro forma combined income statements for the twelve months ended December 31, 2014 give effect to the merger as if the merger had been completed January 1, 2014. The unaudited pro forma combined financial information shows the impact of the merger on Riverviews and Citizens combined financial position and results of operations under the purchase method of accounting with Riverview treated as the acquirer from an accounting standpoint. Under this method of accounting, Riverview will be required to record the assets and liabilities of Citizens at their estimated fair values as of the date the merger is completed.
The unaudited pro forma combined financial information has been derived from and should be read in conjunction with the historical consolidated financial statements and the related notes of both Riverview and Citizens that can be found elsewhere in the joint proxy statement/prospectus.
The unaudited pro forma combined 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 at the beginning of the period presented. Furthermore, the information does not include the impact of possible revenue enhancements, expense efficiencies, asset disposition and share repurchases, among other factors. In addition, as explained in more detail in the accompanying notes to the unaudited pro forma combined financial information, the allocation of the purchase price reflected in the unaudited pro forma combined financial information is subject to adjustment and will vary from the actual purchase price allocation that will be recorded upon completion of the merger based upon changes in the balance sheet, including fair market estimates.
PRO FORMA COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 2014
Unaudited (in thousands, except for share and per share data)
Riverview | Citizens | Combined | Pro forma Adjustments |
Pro forma Combined |
||||||||||||||||
ASSETS |
||||||||||||||||||||
Cash and due from banks |
$ | 8,477 | $ | 609 | $ | 9,086 | $ | (811 | )(1) | $ | 8,275 | |||||||||
Interest bearing deposits |
6,103 | 1,323 | 7,426 | | 7,426 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cash and cash equivalents |
14,580 | 1,932 | 16,512 | (881 | ) | 15,701 | ||||||||||||||
Interest bearing time deposits with banks |
992 | 162 | 1,154 | | 1,154 | |||||||||||||||
Investment securities available for sale |
48,818 | 17,650 | 66,468 | | 66,468 | |||||||||||||||
Mortgage loans held for sale |
216 | | 216 | | 216 | |||||||||||||||
Loans, net of unearned income |
342,693 | 47,216 | 389,909 | (164 | )(2) | 389,745 | ||||||||||||||
Less: Allowance for loan losses |
3,792 | 665 | 4,457 | (665 | )(3) | 3,792 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net loans |
338,901 | 46,551 | 385,452 | 501 | 385,953 | |||||||||||||||
Premises and equipment, net |
11,440 | 1,017 | 12,457 | (200 | )(4) | 12,257 | ||||||||||||||
Accrued interest receivable |
1,237 | 203 | 1,440 | | 1,440 | |||||||||||||||
Restricted investment in bank stocks |
1,002 | 97 | 1,099 | | 1,099 | |||||||||||||||
Cash value of life insurance |
8,587 | 2,845 | 11,432 | | 11,432 | |||||||||||||||
Foreclosed assets |
1,022 | 31 | 1,053 | | 1,053 | |||||||||||||||
Goodwill |
2,297 | | 2,297 | 2,635 | (5) | 4,932 | ||||||||||||||
Intangible assets |
1,381 | | 1,381 | 365 | (6) | 1,746 | ||||||||||||||
Deferred tax asset |
4,092 | 1,641 | 5,733 | (135 | )(7) | 5,598 | ||||||||||||||
Other assets |
1,581 | 97 | 1,678 | | 1,678 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 436,146 | 72,226 | 508,372 | $ | 2,355 | $ | 510,727 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||||||||||||
LIABILITIES |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Non-interest bearing |
$ | 53,620 | $ | 9,571 | $ | 63,191 | $ | | $ | 63,191 | ||||||||||
Interest bearing |
318,642 | 55,439 | 374,081 | 954 | (8) | 375,035 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
372,262 | 65,010 | 437,272 | 954 | 438,226 | |||||||||||||||
Capital lease payable |
1,655 | | 1,655 | | 1,655 | |||||||||||||||
Short-term borrowings |
12,500 | | 12,500 | | 12,500 | |||||||||||||||
Long-term debt |
7,000 | | 7,000 | 1,600 | (12) | 8,600 | ||||||||||||||
Accrued interest payable |
154 | 104 | 258 | | 258 | |||||||||||||||
Other liabilities |
4,367 | 611 | 4,978 | 350 | (9) | 5,328 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
397,938 | 65,725 | 463,663 | 2,904 | 466,567 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
SHAREHOLDERS EQUITY |
||||||||||||||||||||
Total Shareholders Equity |
38,208 | 6,501 | 44,709 | (549 | )(1)(10) | 44,160 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities and Shareholders Equity |
$ | 436,146 | 72,226 | $ | 508,372 | $ | 2,355 | $ | 510,727 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Per Share Data: |
||||||||||||||||||||
Common shares outstanding |
2,708,840 | 208,000 | 2,916,840 | 284,311 | 3,201,151 | |||||||||||||||
Book value per common share |
$ | 14.10 | $ | 31.25 | $ | 13.80 | ||||||||||||||
Tangible book value per common share |
$ | 12.75 | $ | 31.25 | $ | 11.71 |
PRO FORMA COMBINED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2014
Unaudited (In thousands, except for share and per share data)
Riverview | Citizens | Combined | Pro forma Adjustments |
Pro forma Combined |
||||||||||||||||
Interest income |
||||||||||||||||||||
Loans, including fees |
$ | 15,864 | $ | 1,949 | $ | 17,813 | $ | (71 | )(2) | $ | 17,742 | |||||||||
Investment securitiestaxable |
1,178 | 452 | 1,630 | | 1,630 | |||||||||||||||
Investment securitiestax exempt |
632 | | 632 | | 632 | |||||||||||||||
Federal funds sold |
1 | | 1 | | 1 | |||||||||||||||
Interest-bearing deposits |
39 | 10 | 49 | | 49 | |||||||||||||||
Dividends |
57 | | 57 | | 57 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest income |
17,771 | 2,411 | 20,182 | (71 | ) | 20,111 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest expense |
||||||||||||||||||||
Deposits |
1,853 | 773 | 2,626 | (318 | )(8) | 2,308 | ||||||||||||||
Short-term borrowings |
21 | | 21 | | 21 | |||||||||||||||
Long-term debt |
250 | | 250 | 68 | (12) | 318 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest expense |
2,124 | 773 | 2,897 | (250 | ) | 2,647 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest income |
15,647 | 1,638 | 17,285 | 179 | 17,464 | |||||||||||||||
Provision for loan losses |
526 | | 526 | | 526 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest income after provision for loan losses |
15,121 | 1,638 | 16,759 | 179 | 16,938 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Noninterest income |
||||||||||||||||||||
Service charges on deposit accounts |
451 | 85 | 536 | | 536 | |||||||||||||||
Other service charges and fees |
812 | 138 | 950 | | 950 | |||||||||||||||
Earnings on cash value of life insurance |
223 | 87 | 310 | | 310 | |||||||||||||||
Fees and commissions from securities brokerage |
834 | | 834 | | 834 | |||||||||||||||
Gain (loss) on sale of available for sale securities |
463 | 148 | 611 | | 611 | |||||||||||||||
Gain (loss) on sale and valuation of other real estate owned |
(317 | ) | (1 | ) | (318 | ) | | (318 | ) | |||||||||||
Gain (loss) on sale of other assets |
(2 | ) | | (2 | ) | | (2 | ) | ||||||||||||
Gain from sale of mortgage loans |
315 | | 315 | | 315 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total noninterest income |
2.779 | 457 | 3,236 | | 3,236 | |||||||||||||||
Other expense |
||||||||||||||||||||
Salaries and employee benefits |
7,599 | 1,007 | 8,606 | | 8,606 | |||||||||||||||
All other operating expenses |
6,853 | 1,743 | 8,596 | 52 | (6) | 8,648 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total other expense |
14,452 | 2,750 | 17,202 | 52 | 17,254 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) before income taxes |
3,448 | (655 | ) | 2,793 | 127 | 2,920 | ||||||||||||||
Federal income tax expense/(benefit) |
727 | (268 | ) | 459 | 43 | (11) | 502 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) |
$ | 2,721 | $ | (387 | ) | $ | 2,334 | $ | 84 | $ | 2,418 | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic earnings (loss) per (weighted average) share |
$ | 1.01 | $ | (1.86 | ) | $ | 0.80 | $ | 0.76 | |||||||||||
Diluted earnings (loss) per (weighted average) share |
$ | 1.00 | $ | (1.86 | ) | $ | 0.80 | $ | 0.75 | |||||||||||
Weighted average number of shares outstanding |
||||||||||||||||||||
Basic |
2,705,675 | 208,000 | 2,913,675 | 284,311 | 3,197,986 | |||||||||||||||
Diluted |
2,715,874 | 208,000 | 2,923,874 | 284,311 | 3,208,185 |
Notes to Unaudited Pro forma Combined Financial Information
Note 1 Basis of Pro forma Presentation
The unaudited pro forma combined balance sheets as of September 30, 2015 and the combined statements of income for the nine months ended September 30, 2015 and the unaudited pro forma combined balance sheets as of December 31, 2014 and combined statements of income for the year ended December 31, 2014 illustrate the effect of the proposed merger. As required by FASB ASC Topic 805-Business combinations, we have used the acquisition method of accounting and adjusted the recorded value of the acquired assets and liabilities of Citizens to their fair value as of the balance sheet date. Under this method, we will record Citizens assets and liabilities as of the date of the acquisition at their respective fair values and add them to those of Riverview. We will record in goodwill any difference between the purchase price for Citizens and the fair value of the identifiable net assets acquired (including core deposit intangibles). We will not expense the amortization of the goodwill that results from the acquisition, if any, but will review it for impairment at least annually. To the extent there is an impairment of the goodwill, we will expense the impairment. We will amortize to expense core deposit and other intangibles with definite useful lives that we record in conjunction with the merger. Financial statements that Riverview issues after the acquisition will reflect the results attributable to the acquired operations of Citizens beginning on the date of completion of the merger.
In connection with the merger, Riverview and Citizens are currently working to further develop their preliminary plans to consolidate their operations. During the next several months, we expect to refine the specific details. We are currently in the process of assessing the two companies personnel, benefit plans, premises and equipment, computer systems and service contracts to determine where we may take advantage of redundancies. We will record costs associated with such decisions and any other merger related costs as incurred and have not included them in the pro forma adjustments to the pro forma combined statements of income.
The unaudited pro forma combined financial information contained herein reflects the receipt by Citizens shareholders, for each share of Citizens common stock they own immediately prior to completion of the merger, either: (i) 2.9586 shares of Riverview common stock, which we refer to as the exchange ratio, or (ii) $38.46 in cash. Citizens shareholders who elected to receive the cash consideration or the stock consideration for each share owned, were subject to the limitation that no more than 20% of the outstanding Citizens shares may be converted into the cash consideration. Cash elections that were made for more than 20% of the outstanding Citizens shares, were proportionately converted into stock elections until the 20% limit was met. Utilizing the exchange ratio of 2.9586 to 1.0 for Citizens, it was determined that the Citizens common shareholders own 15.4% of the voting stock and Riverview common shareholders own approximately 84.6% of the combined company after the merger.
The unaudited pro forma combined financial information were based upon the fact that the total number of shares of Citizens common stock was 208,000 and the total number of Riverview common shares were 2,713,366 immediately prior to the completion of the merger. The Citizens shareholder election resulted in 20% of the outstanding Citizens shares, equaling 41,600 shares that were converted into cash at $38.46, totaling $1.6 million. Applying the 2.9586 exchange rate to the remaining 166,400 shares of Citizens common stock, Riverview issued 492,311 additional shares of Riverview stock. The total outstanding shares of Riverview common stock after the effective date of the merger were 3,205,677 shares.
The unaudited pro forma combined financial information as of September 30, 2015 and December 31, 2014, respectively, combine the historical consolidated financial statements of Riverview and Citizens and give effect to the proposed consolidation as if the merger occurred on those respective dates.
The notes to the unaudited pro forma combined financial statements describe the pro forma amounts and adjustments presented below.
Note 1 Basis of Pro forma Presentation (Continued)
THIS PRO FORMA IS NOT NECESSARILY INDICATIVE OF THE OPERATING RESULTS THAT RIVERVIEW WOULD HAVE ACHIEVED HAD IT COMPLETED THE MERGER AS OF THE BEGINNING OF THE PERIOD PRESENTED AND SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF FUTURE OPERATIONS.
The unaudited pro forma combined financial information presented below is based on, and should be read together with the historical financial information that Riverview and Citizens included in the joint proxy statement/prospectus as of and for the indicated periods.
The total estimated purchase price of Citizens common stock for the purpose of this pro forma financial information is $8,000,000.
September 30, 2015 | ||||||||
Unaudited (In thousands, except share data) |
||||||||
Purchase Price: |
||||||||
Citizens common stock outstanding to be exchanged |
166,400 | |||||||
Exchange ratio |
2.9586 | |||||||
|
|
|||||||
Riverview common stock to be issued |
492,311 | |||||||
Assumed price per Riverview common share |
$ | 13.00 | ||||||
|
|
|||||||
Purchase price assigned to shares exchanged for stock |
$ | 6,400 | ||||||
Citizens common stock to be converted to cash |
41,600 | |||||||
Per share value assigned to Citizens shares to be converted to cash consideration |
$ | 38.46 | ||||||
|
|
|||||||
1,600 | ||||||||
|
|
|||||||
Total purchase price |
$ | 8,000 | ||||||
|
|
|||||||
Net Assets Acquired |
||||||||
Citizens shareholders equity |
$ | 6,677 | ||||||
Estimated adjustments to reflect assets acquired at fair value: |
||||||||
Loans |
||||||||
Impaired loan credit mark |
(120 | ) | ||||||
Non-impaired loan credit mark and yield adjustment |
(44 | ) | ||||||
Allowance for loan losses |
568 | |||||||
Bank premises & furniture, fixtures and equipment |
(200 | ) | ||||||
Core deposit intangibles |
365 | |||||||
Deferred tax asset |
(135 | ) | ||||||
Estimated adjustments to reflect liabilities acquired at fair value: |
||||||||
Time deposits |
(954 | ) | ||||||
Unfunded pension liability adjustment |
(350 | ) | ||||||
Transaction merger expenses to be incurred by Citizens |
(243 | ) | ||||||
|
|
|||||||
5,564 | ||||||||
|
|
|||||||
Goodwill |
$ | 2,436 | ||||||
|
|
|||||||
Reconcilement of ProForma Shares Outstanding |
||||||||
Riverview shares outstanding |
2,711,258 | |||||||
Citizens shares outstanding |
208,000 | |||||||
Estimated percentage of Citizens shares to be exchanged |
80 | % | ||||||
|
|
|||||||
Estimated shares to be exchanged |
166,400 | |||||||
Exchange ratio |
2.9586 | |||||||
|
|
|||||||
Estimated Citizens shares exchanged into Riverview shares |
492,311 | |||||||
|
|
|||||||
Total pro forma shares |
3,203,569 | |||||||
Percentage ownership for Riverview |
84.6 | % | ||||||
Percentage ownership for Citizens |
15.4 | % |
Note 1 Basis of Pro forma Presentation (Continued)
The merger will be accounted for using the acquisition method of accounting for business combinations which requires that the assets and liabilities of Citizens be adjusted to the fair value as of the date of the merger.
The unaudited pro forma combined financial information has been prepared to include the estimated adjustments necessary to record the assets and liabilities of Citizens at their respective fair values and represent managements best estimates based upon the information available at this time. These pro forma adjustments are expected to be revised as additional information becomes available and additional detailed analysis is performed. The final purchase accounting adjustments may be materially different from the pro forma adjustments presented herein. Increases or decreases in the fair value of certain balance sheet amounts including loans, securities, deposits and related intangibles and debt will result in adjustments to both the balance sheet and income statement. Such adjustments, when compared with the information shown in this document, may change the amount of the purchase price allocated to goodwill while changes to other assets and liabilities may impact the income statement due to adjustments in the yield and/or amortization/accretion of the adjusted assets and liabilities.
The unaudited pro forma combined financial information presented herein does not necessarily provide an indication of the combined results of operations, combined financial position or the final goodwill resulting from the merger that would have resulted had the merger actually been completed as of the assumed consummation date, nor is it indicative of the results of operations in future periods or the future financial position of the combined companies.
Note 2 Pro forma Adjustments
The purchase accounting and pro forma adjustments relating to the unaudited pro forma combined balance sheets and income statements are described as follows:
(1) | For purposes of the unaudited pro forma combined consolidated financial statements, merger costs for both Riverview and Citizens are not included in the unaudited pro forma combined statements of income. The merger costs related to Riverview and Citizens, respectively, associated with the acquisition will be recorded as expense as incurred for GAAP reporting. Total direct transaction costs were estimated to be $528,000 for Riverview and $469,000 for Citizens, for a total of $997,000. Pending direct transaction costs included in the pro forma combined consolidated balance sheets as a decrease to cash and equity are as follows for the dates presented: |
September 30, 2015 |
December 31, 2014 |
|||||||
Riverview |
$ | 187,000 | $ | 448,000 | ||||
Citizens |
243,000 | 363,000 | ||||||
|
|
|
|
|||||
Total |
$ | 430,000 | $ | 811,000 | ||||
|
|
|
|
(2) | Citizens loan receivable adjustments include: (a) a fair value premium of $500,000 on non-impaired loans to reflect fair value of loans based on current interest rates of similar loans. This adjustment will be substantially recognized over approximately 7 years using an amortization method based upon the expected life of the loans and is expected to decrease pro forma pre-tax interest income by $71,000 in the first year following consummation of the merger; and (b) loan credit mark-downs on non-impaired and impaired loans of $544,000 and $120,000, respectively, for which no pro forma earnings impact was assigned. |
Note 2 Pro forma Adjustments
(3) | Reversal of Citizens allowance for loan losses of $568,000 as of September 30, 2015 and $665,000 as of December 31, 2014 in accordance with the acquisition method of accounting for the merger. |
(4) | Adjustment of $200,000 to reflect the decrease in fair value for Citizens premises and equipment. Pro forma occupancy and equipment expense will not be affected by this adjustment. |
(5) | Goodwill is created when the purchase price exceeds the fair value of the net assets acquired, which for purposes of this analysis results in goodwill of $2,436,000 as of September 30, 2015 and $2,635,000 as of December 31, 2014. Riverview will determine the final allocation of the purchase price after it has completed additional analysis to determine the fair values of Citizens tangible and identifiable intangible assets and liabilities as of the date of merger. Changes in the fair value of the net assets of Citizens as of the date of the merger will likely change the amount of the purchase price allocable to goodwill. The further refinement of transaction costs and changes in Citizens shareholders equity, including net income between September 30, 2015 and the date of the merger will likely change the amount of goodwill recorded. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein. Riverview has prepared the pro forma financial information to include the estimated adjustments necessary to record the assets and liabilities of Citizens at their respective fair values and represents managements best estimate based upon the information available at this time. The pro forma adjustments included herein are subject to change as additional information becomes available as additional analysis is performed. The final purchase accounting adjustments may be materially different from the pro forma adjustments presented herein. Increases or decreases in the fair value of certain balance sheet amounts including loans, securities, deposits and related intangibles and debt will result in adjustments to the balance sheet and statement of operations. Such adjustments, when compared to the information shown in this document, may change the amount of the purchase price allocated to goodwill while changes to other assets and liabilities may impact the statement of income due to adjustments in the yield and/or amortization/accretion of the adjusted assets and liabilities |
(6) | A premium adjustment of $365,000 to record a core deposit intangible of acquired Citizens deposit liabilities to reflect the fair value of deposits and the related amortization using an accelerated method based upon an expected life of 7 years. The amortization of the core deposit intangible is expected to increase pro forma pre-tax noninterest expense by $39,000 for the nine months ended September 30, 2015 and $52,000 in the twelve months ended December 31, 2014. |
(7) | Adjustment to reflect Citizens net deferred tax at a rate of 34% related to fair value adjustments on the balance sheet and a statutory tax rate of 34% for book tax expense. The accumulated reduction to net deferred tax assets related to purchase accounting adjustments and eliminations totals $135,000. |
(8) | A fair value premium of $954,000 to reflect the fair value of certain Citizens interest-bearing time deposit liabilities based on current interest rates for similar instruments. The adjustment |
Note 2 Pro forma Adjustments
will be recognized using an amortization method based upon the estimated maturities of the deposit liabilities. The adjustment is expected to decrease pro forma pre-tax interest expense by $239,000 for the nine months ended September 30, 2015 and $318,000 for the twelve months ended December 31, 2014. |
(9) | Includes an unfunded pension liability adjustment of $350,000 for a discontinued Citizens defined benefit pension plan. |
(10) | Pro forma adjustments to shareholders equity consist of the following: |
Elimination of Citizens shareholders equity accounts as follows:
September 30, 2015 | December 31, 2014 | |||||||
Common stock |
($ | 208,000 | ) | ($ | 208,000 | ) | ||
Surplus |
(292,000 | ) | (292,000 | ) | ||||
Retained earnings |
(6,940,000 | ) | (6,808,000 | ) | ||||
Accumulated other comprehensive income |
763,000 | 807,000 | ||||||
Exchange Citizens shares for Riverview shares |
6,400,000 | 6,400,000 | ||||||
Riverview transaction costs |
(187,000 | ) | (448,000 | ) | ||||
|
|
|
|
|||||
Total pro forma adjustment |
($ | 464,000 | ) | ($ | 549,000 | ) | ||
|
|
|
|
(11) | The adjustment to federal income taxes related to the fair value adjustments assumes a tax rate of 34%. The after-tax effect presented in the unaudited pro forma combined statements of income is as follows (in thousands): |
Pro forma Adjustment to Federal Income Tax Associated with: |
For the Nine Months Ended September 30, 2015 |
For the Twelve Months Ended December 31, 2014 |
||||||
Loans, including fees |
($ | 18 | ) | ($ | 24 | ) | ||
Deposits |
81 | 108 | ||||||
Long-term debt |
(17 | ) | (23 | ) | ||||
All other operating expenses |
(13 | ) | (18 | ) | ||||
|
|
|
|
|||||
Total |
$ | 33 | $ | 43 | ||||
|
|
|
|
(12) | The combined pro forma financial information reflects the result of the shareholder election, where 20% of Citizens shareholders elected to receive the cash consideration of $38.46 per share, totaling $1,600,000. The financial information also reflects that the funding for this cash portion of the consideration was borrowed at a rate of 4.25% and increased pro forma interest expense by $51,000 for the nine months ended September 30, 2015 and $68,000 the twelve months ended December 31, 2014. |
Note 2 Pro forma Adjustments
(13) | The pro forma EPS is calculated by dividing the earnings for the stated period by the weighted average shares outstanding for the same stated period. The pro forma adjustment for weighted average shares can be computed in the following manner: |
Citizens shares |
208,000 | |||
Assumed percentage of shares exchanged |
80 | % | ||
|
|
|||
Citizens shares to be exchanged for Riverview shares |
166,400 | |||
Exchange ratio |
2.9586 | |||
|
|
|||
Assumed Riverview shares created through exchange |
492,311 | |||
Less: Citizens shares eliminated by transaction |
208,000 | |||
|
|
|||
Pro forma adjustment to shares outstanding |
284,311 | |||
|
|