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EX-99.3 - EXHIBIT 99.3 - Standard AVB Financial Corp.v469358_ex99-3.htm
EX-99.2 - EXHIBIT 99.2 - Standard AVB Financial Corp.v469358_ex99-2.htm
8-K/A - 8-K/A - Standard AVB Financial Corp.v469358_8ka.htm

 

Exhibit 99.4

 

The following unaudited pro forma condensed combined financial information is based on the historical consolidated financial statements of Standard Financial Corp. and Allegheny Valley Bancorp. under the assumptions and adjustments set forth in the accompanying notes.  The pro forma information, while helpful in illustrating the financial characteristics of Standard AVB Financial Corp. following the merger under one set of assumptions, does not attempt to predict or suggest future results.  The pro forma information also does not necessarily reflect what the historical results of Standard AVB Financial Corp. would have been had our companies been combined during the period or as of the date for which the pro forma information is presented.

 

Unaudited Pro Forma Combined Condensed Balance Sheet

As of March 31, 2017

($ in Thousands, Except for Per Share Data)

 

               Standard/ 
           Pro Forma   Allegheny 
   Standard   Allegheny   Merger   Combined 
   Historical (1)   Historical (1)   Adjustments   Pro Forma 
ASSETS                    
Cash and cash equivalents  $12,756   $7,993   $(2,037)(2)  $18,712 
Securities   58,199    98,034    -(3)   156,233 
Loans receivable, net   387,927    314,627    (3,293)(4)   699,261 
Bank owned life insurance   15,139    6,486    -    21,625 
Other assets   18,545    20,597    12,792(5)   51,934 
Total Assets  $492,566   $447,737   $7,462   $947,765 
                     
LIABILITIES AND SHAREHOLDERS' EQUITY                    
Liabilities                    
Deposits  $369,625   $333,967   $902(6)  $704,494 
Borrowed funds   46,626    62,540    -(7)   109,166 
Other Liabilities   2,370    1,639    -    4,009 
Total Liabilities   418,621    398,146    902    817,669 
                     
Total Stockholders' Equity   73,945    49,591    6,560(8)   130,096 
                     
Total Liabilities and Shareholders' Equity  $492,566   $447,737   $7,462   $947,765 

 

(1)From Standard's Form 10-Q for the quarterly period ended March 31, 2017, filed with the Securities and Exchange Commission on May 15, 2017, and Allegheny's unaudited financial statements as of March 31, 2017, respectively.
(2)Reflects $1,508 of after-tax deal costs plus restructuring costs for Standard and $529 of merger costs for Allegheny. A portion of Allegheny's expenses have been charged to income and result in an increase Standard's combined goodwill. These one-time merger and integration expenses are estimated at approximately $3,700. The merger consideration was all common stock, thus no cash required, with the exception of cash payments for fractional shares.
(3)No adjustment to carrying value of securities as all securities are held as "available for sale".
(4)Consists of $861 yield discount and $6,318 credit discount on the acquired loan portfolio, offset in part by elimination of Allegheny's existing allowance for loan losses of $3,886.
(5)Includes goodwill created from the merger of $16,543, core deposit intangible of $4,116, fixed assets market value adjustment of $384 and deferred taxes of $107 created in the acquisition, offset inpart by elimination of Allegheny's historical goodwill of $8,144.

 

 

 

 

Goodwill is calculated as follows:

 

   Fair Value of Net   Calculation of   Merger 
   Assets Acquired   Goodwill   Consideration 
   (In $000, except per share data)   (Cash/Stock) 
             
Purchase price per share ($)**      $55.41     
Number of AVLY shares acquired               
- Issued and outstanding as of March 31, 2017        1,040,587      
Stock portion of merger consideration       $57,659    100%
Cash portion of merger consideration       $-    0%
Purchase price, total       $57,659      
                
Acquired common equity  $49,591           
Less: AVLY deal costs   (529)          
Less: Existing Goodwill   (8,144)          
Acquired tangible common equity  $40,918           
                
Taxable fair value accounting adjustments:               
Loan yield discount   (861)          
New loan credit discount   (6,318)          
Elimination of existing loan ALLL   3,886           
Certificates of Deposit Yield Premium   (902)          
Core Deposit Intangible   4,116           
Fixed assets   384           
Net taxable fair value accounting adjustments  $305           
                
Deferred Tax Asset from FV Adjusts @35%   (107)          
Net Assets Acquired       $41,116      
Goodwill       $16,543      

 

    **Assumes Standard common stock price of $26.60, as of April 7, 2017, legal close date.

 

(6)Reflects fair value adjustment for yield adjustment on acquired certficate of deposit portfolio.

(7)Assumes immaterial yield adjustment from Allegheny borrowings, all of which are overnight borrowings from the Federal Home Loan Bank of Pittsburgh ("FHLB").

(8)Adjustments include:

 

Elimination of Allegheny's investment in common stock (par value)  $(1,170)
Elimination of Allegheny's historical paid-in-capital   (2,556)
Elimination of Allegheny's historical retained earnings   (44,939)
Elimination of Allegheny's AOCI adjustment   (926)
Total Elimination of Allegheny's equity  $(49,591)
      
Plus: par value of Standard Financial common stock issued as merger consideration  $21 
Plus: additional paid in capital of common stock issued as merger consideration   57,638 
Less: Merger and restructuring expenses incurred by Standard   (1,508)
      
Net adjustments to equity  $6,560 

 

(9)Standard currently maintains a goodwill balance of $8.8 million, booked from prior acquisitions. The merger with Allegheny creates an additional $16.5 million of goodwill.

 

 

 

 

Unaudited Pro Forma Combined Condensed Income Statement

For the 6 Months Ended March 31, 2017

($ in Thousands, Except for Per Share Data)

 

               Standard/ 
           Pro Forma   Allegheny Valley 
   Standard   Allegheny   Merger   Pro Forma 
   Historical (1)   Historical (1)   Adjustments   Combined 
Interest Income:                    
Loans  $7,492   $6,374   $596(2)  $14,462 
Investment Securities   721    1,417    -(3)   2,138 
Total Interest Income   8,213    7,791    596    16,600 
Interest Expense:                    
Deposits   1,343    583    (189)(4)   1,737 
Borrowings   396    228    -(5)   624 
Total Interest Expense   1,739    811    (189)   2,361 
                     
Net Interest Income   6,474    6,980    785    14,239 
Provision (recapture) for Loan and Lease Losses   40    200    -    240 
Net Interest Income After Provision   6,434    6,780    785    14,479 
Noninterest Income:                  
Service Charges   778    533    -    1,311 
Earnings on Bank Owned Life Insurance   244    85    -    329 
Other Non-Interest Income   233    441    -    674 
Total Noninterest Income   1,255    1,059    -    2,314 
Noninterest Expense:                    
Compensation and Employee Benefits   3,332    3,226    -    6,558 
Premises and Occupancy Costs   654    484    -    1,138 
Other Non-Interest Expense   1,915    3,000    (905)(6)   4,010 
Total Noninterest Expense   5,901    6,710    (905)   11,706 
                     
Income Before Income Taxes   1,788    1,129    1,690    4,607 
Income Tax Provision   666    394    592(7)   1,652 
                     
Net Income  $1,122   $735   $1,099   $2,956 
                     
Earnings per common share                    
Basic  $0.47   $0.71   $-   $0.65 
Diluted  $0.45   $0.70   $-   $0.63 
                     
Weighted average common shares outstanding                    
Basic   2,404,455    1,034,904    2,168,097(8)   4,572,552 
Diluted   2,481,910    1,042,675    2,175,868(9)   4,657,778 

 

(1)Based on Standard's Form 10-Q for the quarterly period ended March 31, 2017, filed with the Securities and Exchange Commission on May 15, 2017, and Allegheny's unaudited financial statements as of March 31, 2017, respectively.
(2)Six months accretion of yield and credit discounts on acquired loans, assumes level yield amortization method, beginning yield discount of $861,000 and accretable credit discount of $3.9 million.
(3)No adjustment to carrying value of securities as all securities are held as "available for sale".
(4)Six months deposit premium amortization on certificate of deposit fair value adjustment, based on maturity profile of CD portfolio.
(5)Assumes immaterial yield adjustment from Allegheny borrowings, all of which are overnight borrowings from the FHLB.
(6)Reflects six months amortization cost of the core deposit intangible of $901,000 and eliminates the non-recurring merger expenses for the 6 months ended March 31, 2017 of $559,000 for Standard and $860,000 for Allegheny.
(7)Marginal tax rate of 35.0%.
(8)Reflects common shares issued as part of the merger consideration.
(9)Reflects common shares issued as part of the merger consideration (2,168,097) plus additional diluted shares from the exchange of outstanding Allegheny stock options to Standard stock options.