Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - STATE BANK FINANCIAL CORP | alostar2q2017financialstat.htm |
| EX-99.1 - EXHIBIT 99.1 - STATE BANK FINANCIAL CORP | a2016alostarannualreport.htm |
| EX-23.1 - EXHIBIT 23.1 - STATE BANK FINANCIAL CORP | alostarbankofcommerceconse.htm |
| 8-K/A - 8-K/A - STATE BANK FINANCIAL CORP | a8kcoverpage102317.htm |
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information combines the historical financial position and results of operations of State Bank Financial Corporation ("STBZ") and State Bank and Trust Company ("State Bank"), a wholly-owned subsidiary of STBZ, and AloStar Bank of Commerce ("AloStar"), after giving effect to the merger of AloStar with and into State Bank, using the acquisition method of accounting and giving effect to the related pro forma adjustments described in the accompanying explanatory notes. Under the acquisition method of accounting, the assets and liabilities of AloStar will be recorded by State Bank at their respective fair values as of September 30, 2017, the date the merger was completed, and the excess of the merger consideration over the fair value of AloStar’s net assets will be allocated to goodwill. The unaudited pro forma condensed combined balance sheet gives effect to the merger as if the merger was consummated on June 30, 2017. The unaudited pro forma condensed combined statements of income for the six months ended June 30, 2017 and for the year ended December 31, 2016 give effect to the merger as if the merger was consummated on January 1, 2017 and January 1, 2016, respectively.
The unaudited pro forma condensed combined financial information should be read together with STBZ's separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2016, included in STBZ's Annual Report on Form 10-K for the year ended December 31, 2016; STBZ's separate unaudited historical consolidated financial statements and accompanying notes as of and for the three and six months ended June 30, 2017, included in STBZ's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017; and other information pertaining to STBZ contained in previous Securities and Exchange Commission ("SEC") filings.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily indicate the financial results of the combined companies had the companies actually been combined at the beginning of the periods presented. The adjustments included in these unaudited pro forma combined financial statements are preliminary and may be revised. The unaudited pro forma condensed combined financial information also does not consider any potential impacts of current market conditions on revenues, potential revenue enhancements, anticipated cost savings and expense efficiencies, or asset dispositions, among other factors. In addition, the purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment. The unaudited pro forma condensed combined balance sheet has also been adjusted to reflect the preliminary allocation of the estimated purchase price to net assets acquired.
The final allocation of the purchase price will be determined after completion of thorough analyses to determine the fair value of AloStar's tangible and identifiable intangible assets and liabilities as of the September 30, 2017 acquisition date. Increases or decreases in the estimated fair values of the net assets of AloStar as compared with the information shown in the unaudited pro forma condensed combined financial information may change the amount of the purchase price allocated to goodwill and may impact the statement of income due to adjustments in yield and/or amortization of the adjusted assets or liabilities. Any changes to AloStar’s shareholder’s equity including results of operations through the date the merger is completed will also change the purchase price allocation, which may include the recording of goodwill. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein.
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Unaudited Pro Forma Condensed Combined Balance Sheet | |||||||||||||||||
As of June 30, 2017 | |||||||||||||||||
Historical | Pro Forma | STBZ & AloStar (Pro Forma) | |||||||||||||||
(Dollars in thousands) | STBZ | AloStar | Adjustments | ||||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 137,674 | $ | 80,821 | $ | (114,005 | ) | (a)(h) | $ | 104,490 | |||||||
Investment securities | 910,899 | 81,596 | — | 992,495 | |||||||||||||
Loans receivable | 2,881,000 | 783,362 | (29,286 | ) | (b) | 3,635,076 | |||||||||||
Allowance for loan losses | (27,988 | ) | (10,774 | ) | 10,774 | (c) | (27,988 | ) | |||||||||
Loans, net | 2,853,012 | 772,588 | (18,512 | ) | 3,607,088 | ||||||||||||
Loans held-for-sale | 48,895 | — | — | 48,895 | |||||||||||||
Other real estate owned | 2,407 | — | — | 2,407 | |||||||||||||
Goodwill | 77,476 | — | 11,411 | (d) | 88,887 | ||||||||||||
Other intangibles, net | 11,599 | 18 | 1,132 | (e) | 12,749 | ||||||||||||
SBA servicing rights | 3,828 | — | — | 3,828 | |||||||||||||
Other assets | 188,187 | 10,331 | 8,249 | (f) | 206,767 | ||||||||||||
Total assets | $ | 4,233,977 | $ | 945,354 | $ | (111,725 | ) | $ | 5,067,606 | ||||||||
Liabilities and Shareholders’ Equity | — | ||||||||||||||||
Total deposits | 3,452,692 | 703,912 | 1,374 | (g) | 4,157,978 | ||||||||||||
Borrowings | 105,654 | 40,000 | 80,000 | (h) | 225,654 | ||||||||||||
Other liabilities | 43,294 | 5,736 | 2,607 | (i) | 51,637 | ||||||||||||
Total liabilities | 3,601,640 | 749,648 | 83,981 | 4,435,269 | |||||||||||||
Total shareholders’ equity | 632,337 | 195,706 | (195,706 | ) | (j) | 632,337 | |||||||||||
Total liabilities and shareholders’ equity | $ | 4,233,977 | $ | 945,354 | $ | (111,725 | ) | $ | 5,067,606 | ||||||||
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Unaudited Pro Forma Condensed Combined Statement of Income | |||||||||||||||||
For the Six Months Ended June 30, 2017 | |||||||||||||||||
Historical | |||||||||||||||||
(Dollars in thousands, except per share amounts) | STBZ | AloStar | Pro Forma Adjustments | STBZ & AloStar Pro Forma | |||||||||||||
Interest income: | |||||||||||||||||
Loans, including accretion income and fees | $ | 85,837 | $ | 20,063 | $ | 492 | (k) | $ | 106,392 | ||||||||
Investment securities | 11,023 | 748 | (748 | ) | (l) | 11,023 | |||||||||||
Deposits with other financial institutions | 184 | 553 | (320 | ) | (m) | 417 | |||||||||||
Total interest income | 97,044 | 21,364 | (576 | ) | 117,832 | ||||||||||||
Interest expense: | |||||||||||||||||
Deposits | 6,231 | 3,695 | (284 | ) | (n) | 9,642 | |||||||||||
Borrowings | 377 | 120 | 25 | (o) | 522 | ||||||||||||
Total interest expense | 6,608 | 3,815 | (259 | ) | 10,164 | ||||||||||||
Net interest income | 90,436 | 17,549 | (317 | ) | 107,668 | ||||||||||||
Provision for loan and lease losses | 2,847 | (46 | ) | — | (p) | 2,801 | |||||||||||
Net interest income after provision for loan and lease losses | 87,589 | 17,595 | (317 | ) | 104,867 | ||||||||||||
Total noninterest income (1) | 19,935 | 6,655 | — | 26,590 | |||||||||||||
Total noninterest expense | 66,562 | 12,834 | 76 | (q) | 79,472 | ||||||||||||
Income before income taxes | 40,962 | 11,416 | (393 | ) | 51,985 | ||||||||||||
Income tax expense | 14,201 | 4,397 | (21 | ) | (r) | 18,577 | |||||||||||
Net income | $ | 26,761 | $ | 7,019 | $ | (372 | ) | $ | 33,408 | ||||||||
Earnings per share | |||||||||||||||||
Basic | $ | .69 | $ | .86 | |||||||||||||
Diluted | .69 | .86 | |||||||||||||||
Weighted average shares outstanding | |||||||||||||||||
Basic | 37,881,999 | 37,881,999 | |||||||||||||||
Diluted | 37,934,187 | 37,934,187 | |||||||||||||||
(1) AloStar's results of operation for the six months ended June 30, 2017 include a one-time gain of $3,793 related to the early termination of their loss share agreements with the Federal Deposit Insurance Corporation.
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Unaudited Pro Forma Condensed Combined Statement of Income | |||||||||||||||||
For the Year Ended December 31, 2016 | |||||||||||||||||
Historical | |||||||||||||||||
(Dollars in thousands, except per share amounts) | STBZ | AloStar | Pro Forma Adjustments | STBZ & AloStar Pro Forma | |||||||||||||
Interest income: | |||||||||||||||||
Loans, including accretion income and fees | $ | 146,334 | $ | 39,056 | $ | 956 | (k) | $ | 186,346 | ||||||||
Investment securities | 18,629 | 1,792 | (1,792 | ) | (l) | 18,629 | |||||||||||
Deposits with other financial institutions | 294 | 822 | (376 | ) | (m) | 740 | |||||||||||
Total interest income | 165,257 | 41,670 | (1,212 | ) | 205,715 | ||||||||||||
Interest expense: | |||||||||||||||||
Deposits | 9,331 | 6,488 | (1,228 | ) | (n) | 14,591 | |||||||||||
Borrowings | 288 | 914 | 16 | (o) | 1,218 | ||||||||||||
Total interest expense | 9,619 | 7,402 | (1,212 | ) | 15,809 | ||||||||||||
Net interest income | 155,638 | 34,268 | — | 189,906 | |||||||||||||
Provision for loan and lease losses | 237 | 1,537 | — | (p) | 1,774 | ||||||||||||
Net interest income after provision for loan and lease losses | 155,401 | 32,731 | — | 188,132 | |||||||||||||
Total noninterest income | 39,301 | 6,692 | — | 45,993 | |||||||||||||
Total noninterest expense | 120,927 | 26,804 | 152 | (q) | 147,883 | ||||||||||||
Income before income taxes | 73,775 | 12,619 | (152 | ) | 86,242 | ||||||||||||
Income tax expense | 26,184 | 4,818 | 83 | (r) | 31,085 | ||||||||||||
Net income | $ | 47,591 | $ | 7,801 | $ | (235 | ) | $ | 55,157 | ||||||||
Earnings per share | |||||||||||||||||
Basic | $ | 1.29 | $ | 1.49 | |||||||||||||
Diluted | 1.28 | 1.49 | |||||||||||||||
Weighted average shares outstanding | |||||||||||||||||
Basic | 35,931,528 | 35,931,528 | |||||||||||||||
Diluted | 36,033,643 | 36,033,643 | |||||||||||||||
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Notes to Pro Forma Condensed Financial Statements (Unaudited)
Note 1 - Basis of Presentation
The unaudited pro forma condensed combined financial information has been prepared pursuant to the rules and regulations of the SEC. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted pursuant to such rules and regulations. However, management believes that the disclosures are adequate to make the information presented not misleading.
Note 2 - Pro Forma Adjustments
The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on current assumptions and valuations, which are subject to change.
(a) | Adjustment reflects cash payments to AloStar shareholders of $194.0 million. |
(b) | Adjustment reflects estimated fair value adjustment to acquired loan portfolio. |
(c) | Adjustment reflects elimination of AloStar's historical allowance for loan and lease losses. Purchased loans in a business combination are recorded at their estimated fair value on the acquisition date and the carryover of the related allowance for loan and lease losses is prohibited. |
(d) | Goodwill represents the excess of the purchase price over the fair values of the assets and liabilities acquired. A summary regarding estimated goodwill follows (in thousands): |
AloStar | |||
Purchase price: | |||
Cash paid to former shareholders | $ | 194,005 | |
Total purchase price | 194,005 | ||
Book value of acquired assets | 945,354 | ||
Fair market value adjustment to acquired assets, excluding goodwill | (9,131 | ) | |
Book value of liabilities assumed | 749,648 | ||
Fair market value adjustment to liabilities assumed | 3,981 | ||
Fair value of net assets acquired, excluding goodwill | 182,594 | ||
Goodwill | $ | 11,411 | |
The final purchase price in the merger is dependent upon several factors, including changes in AloStar's tangible book value.
(e) | Adjustment reflects the estimated fair value of the acquired core deposit intangible. |
(f) | Adjustment reflects estimated adjustments to deferred tax assets to reflect the tax position of the combined companies. |
(g) | Adjustment reflects estimated fair value adjustment to the acquired deposit portfolio. |
(h) | Adjustment reflects estimated additional borrowings of $80.0 million to fund the acquisition of AloStar. |
(i) | Adjustment reflects the fair value adjustment based on State Bank's evaluation of other liabilities and to record certain liabilities directly related to the acquisition. |
(j) | Adjustment reflects the cash paid for all of AloStar's outstanding shares. |
(k) | Adjustment reflects the difference between the recorded interest earned on loans and the estimated incremental income accretion of the acquired loans based on current market yields for similar loans over their remaining lives. |
(l) | Adjustment reflects the reduction in investment income related to AloStar's investment securities sold shortly after acquisition. |
(m) | Adjustment reflects the reduction in interest income related to cash used in the acquisition of AloStar. |
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(n) | Adjustment reflects the amortization of the premium on AloStar's deposits. |
(o) | Adjustment reflects the increase in interest expense related to additional borrowings used in the acquisition of AloStar. |
(p) | Acquired loans are recorded at their estimated fair value at acquisition, which includes adjustments for identified and estimated credit losses expected at acquisition. The recording of acquired loans at their estimated fair value would be expected to significantly reduce AloStar's provision for loan and lease losses for the six months ended June 30, 2017 and the year ended December 31, 2016, respectively. However, we have assumed no reduction to the historic amount of AloStar's provision for loan losses in these pro forma financial statements. |
(q) | Adjustment reflects the amortization of the core deposit intangible over 7 years using the straight-line method. |
(r) | Adjustment reflects a 38.39% marginal statutory income tax rate on the pro forma adjustments and an increase of the historic statutory federal income tax rate from AloStar's 34.00% to STBZ's 35.00% |
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