Community First Bancshares, Inc. - FORM 8-K/A - EX-99.4

Attached files

file	filename
EX-99.3 - EX-99.3 - Community First Bancshares, Inc.	d589903dex993.htm
EX-99.2 - EX-99.2 - Community First Bancshares, Inc.	d589903dex992.htm
8-K/A - 8-K/A - Community First Bancshares, Inc.	d589903d8ka.htm

Exhibit 99.4

The following unaudited pro forma condensed combined financial information is based on the historical consolidated financial statements of Community First Bancshares, Inc. and ABB Financial Group, Inc. under the assumptions and adjustments set forth in the accompanying notes. The pro forma information, while helpful in illustrating the financial characteristics of Community First Bancshares, Inc. 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 Community First Bancshares, Inc. would have been had our companies been combined during the periods or as of the date for which the pro forma information is presented.

COMMUNITY FIRST BANCSHARES, INC. / ABB FINANCIAL GROUP, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of September 30, 2019 ($000)

(Unaudited)


	As of September 30, 2019						Pro Forma Adjustments			Cancel Sub Debt & Redeem Preferred Stock			Pro Forma Combined
	Historical
	COMMUNITY FIRST (1)			ABB FINANCIAL(2)
ASSETS
									^{(3) (7)}
Cash and Due From Banks	$	3,329		$	5,498		$	(21,906	)^(11b)	$	(10,641	)⁽²¹⁾	$	(23,720	)
Interest-Earning Deposits in Other Depository Institutions		34,672			18,078			—			—			52,750
Fed Funds Sold		—			17,058			—			—			17,058
Investment Securities		4,047			17,325			—			—			21,372
Federal Home Loan Bank Stock		278			1,892			—			—			2,170
Loans & Leases Held for Sale		—			—			—			—			—
Loans & Leases Held to Maturity		252,367			257,200			(2,327	)⁽⁴⁾		—			507,240
Allowance for Loan and Lease Losses		(4,242	)		(2,820	)		2,820	⁽⁵⁾		—			(4,242	)

Loans, net		248,125			254,380			493			—			502,998

Premises and Fixed Assets		8,590			1,034			—			—			9,624
Bank Owned Life Insurance		7,410			7,401			—			—			14,811
Other Real Estate Owned		140			1,407			(11	)⁽⁶⁾		—			1,536
Goodwill		—			—			17,915	⁽⁸⁾		—			17,915
Core Deposit Intangible		—			—			1,913	⁽⁹⁾		—			1,913
Deferred Tax Asset		2,048			3,098			—			—			5,146
Other Assets		1,088			1,966			—			(232	)⁽²²⁾		2,822

Total Assets	$	309,727		$	329,137		$	(1,596	)	$	(10,873	)	$	626,395

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits	$	229,056		$	251,376		$	265	⁽¹⁰⁾	$	—		$	480,697
Securities Sold under Repurchase Agreements		—			9,062			—			—			9,062
FHLB Advances/Other Borrowings		—			33,000			21,453	⁽¹¹⁾		—			54,453
Subordinated Debentures		—			1,657			—			(1,657	)^(17) (22)		—
Other Liabilities (a)		4,124			5,041	^(a)		21	^{(12) (13)}		(3,325	)^(18) (19)		5,861

Total Liabilities		233,180			300,136			21,739			(4,982	)		550,073

Shareholders’ Equity
Preferred Stock		—			5,891			—			(5,891	)⁽²⁰⁾		—
Common Stock		76			33,924			(33,924	)⁽¹⁴⁾					76
Additional Paid in Capital		29,384			—			—						29,384
Retained Earnings (a)		47,082			(10,990	)^(a)		10,765	⁽¹⁵⁾					46,857
AOCI		5			176			(176	)⁽¹⁶⁾					5

Total Shareholders’ Equity		76,547			29,001			(23,335	)		(5,891	)		76,322

Total Liabilities and Shareholders’ Equity	$	309,727		$	329,137		$	(1,596	)	$	(10,873	)	$	626,395


Footnotes: ($000)									$	0

(1)	Source: Community First’s September 30, 2019 10-Q.
(2)	Source: ABB’s September 30, 2019 Internal Consolidated Financial Statements adjusted (a).
	(a) Adjusted to reflect the accrual of deferred preferred dividends of $2.677 million.
(3)	Remaining acquisition related expenses, consisting of:
	Acquisition expenses for Community First:					$	225
	Acquisition expenses for ABB:						70
	After tax restructuring charges for ABB:						1,273

	Total					$	1,568

(4)	Estimated credit and interest rate fair market value adjustments to acquired loan portfolio as follows:
	Credit fair value adjustment		$	(3,256	)
	Interest rate fair value adjustment			929

	Total		$	(2,327	)

(5)	Elimination of ABB’s allowance (credit risk contemplated in fair value adjustment in footnote 4 above)
(6)	Adjustment to carrying value of ABB’s OREO					$	(11	)

	Goodwill is calculated as:
(7)	Purchase price, total	(Cash consideration)							$	40,338

	Acquired common equity@9/30/2019					$	23,110
	Less: ABB’s acquisition costs/restructuring cost						(1,343	)

	Taxable fair value accounting adjustments:
	Loan yield premium						929
	Loan credit discount						(3,256	)
	Elimination of existing loan ALLL						2,820
	OREO valuation adjustment						(11	)
	Certificates of Deposit Yield Premium						(265	)
	Borrowings Yield Premium						(1,453	)
	Lease liability adjustment						209
	Core Deposit Intangible						1,913
	Deferred Tax Asset from FV Adjusts @26%						(230	)

	Net Assets Acquired									22,423

(8)	Goodwill								$	17,915
Goodwill is an intangible asset that is not subject to amortization, and will be tested annually for impairment.


Footnotes (continued) ($000)
(9)	Core deposit intangible adjustment; amortized over 9 years using the SYD method.				$	1,913
(10)	Fair market value yield premium adjustment on certificates of deposits				$	265
(11)	FHLB borrowings adjustment:				$	1,453
(11a)	Fair market value yield premium adjustment on FHLB borrowings	$	1,453
(11b)	90 day FHLB advance to partially fund purchase price		20,000

		$	21,453

(12)	Fair market value lease liability				$	(209	)
(13)	Deferred tax liability created in the merger				$	230
(14)	Elimination of ABB’s common stock equity (no par value)				$	(33,924	)
(15)	Consists of:
	Elimination of ABB’s retained earnings deficit	$	10,990
	Acquisition related expenses		(225	)		For Community First

	Total retained earnings adjustment	$	10,765

(16)	Elimination of ABB’s AOCI	$	(176	)

(17)	Cancel/Repay ABB’s subordinated debt	$	(1,425	)
(18)	Repayment of accrued interest on ABB’s subordinated debt		(648	)
(19)	Repayment of ABB’s accrued Preferred Stock dividends		(2,677	)
(20)	Redemption of ABB’s Preferred Stock		(5,891	)

(21)	Total cash paid	$	(10,641	)

(22)	Eliminate wholly-owned grantor trust (re sub debt)	$	(232	)

COMMUNITY FIRST BANCSHARES, INC. / ABB FINANCIAL GROUP, INC.

PRO FORMA INCOME STATEMENT FOR THE 9 MONTHS ENDED SEPTEMBER 30, 2019 ($000)


	Historical
	COMMUNITY FIRST (1)			ABB FINANCIAL(2)			Pro Forma Adjustments			Pro Forma Combined
*Interest Income:*
Loans	$	10,464		$	9,154		$	393	⁽³⁾	$	20,011
Investments		332			522			—			854
Other Interest-Earning Assets		448			522			—			970

Total Interest Income		11,244			10,198			393			21,835

*Interest Expense:*
Deposits		1,635			2,223			(212	)⁽⁴⁾	$	3,646
Borrowings		26			738			(45	)⁽⁵⁾		719

Total Interest Expense		1,661			2,961			(257	)		4,365

Net Interest Income		9,583			7,237			650			17,470
Provision for Loan and Lease Losses		—			82			—			82

Net Interest Income After Provision		9,583			7,155			650			17,388

*Noninterest Income:*
Service Charges and Fees		620			53			—			673
Investment Securities Gains		—			—			—			—
Other Income		610			314			—			924

Total Noninterest Income		1,230			367			—			1,597

*Noninterest Expense:*
Salaries and Benefits		5,519			2,944			—			8,463
Premises and equipment		1,421			578			41	⁽⁶⁾		2,040
Data Processing		1,360			302			—			1,662
Legal and Accounting		1,037			213			—			1,250
Other Real Estate Owned		(85	)		149			—			64
Other expenses		1,616			1,203			261	⁽⁶⁾		3,080

Total Noninterest Expense		10,868			5,389			302	⁽⁶⁾		16,559

Income Before Income Taxes		(55	)		2,133			348			2,426
Income Tax (Benefit)/Provision		(94	)		634			91	⁽⁷⁾		631

*Net Income*		39			1,499			258			1,796
Preferred Dividend Payments (a)		—		$	(447	)^(a)	$	447	⁽⁸⁾		—

*Income Available to Common Shareholders*	$	39		$	1,052		$	705		$	1,796


(1) Source: Community First’s September 30, 2019 10-Q.
(2) Source: ABB’s September 30, 2019 Internal Consolidated Financial Statements adjusted (a).
(a) Adjusted to reflect the accrual of 9 months of deferred dividends on preferred stock of $447,000.
(3) Consists of:
9 months of Year 1 amortization of loan yield premium:	$	(168	)		Level yield method
9 months of Year 1 accretion of loan credit discount:		561			Level yield method

	$	393

(4) 9 months of Year 1 amortization of CD yield premium:	$	(212	)		Straight line amortization
(5) Consists of:
9 months of Year 1 amortization of borrowings yield premium		(192	)		Straight line amortization
9 months of interest expense savings from sub debt canceled		(108	)
9 months interest expense on new $20 million FHLB borrowing		255

	$	(45	)

(6) Consists of:
Less: 9 months amortization cost of the core deposit intangible: sum of years digits 10 yr				$	261
Less: 9 months amortization cost lease fair value adjustment: straight line					41

				$	302

(7) Marginal tax rate of 26%.

(8) 9 months of Year 1 dividend savings from redemption of preferred stock				$	447

COMMUNITY FIRST BANCSHARES, INC. / ABB FINANCIAL GROUP, INC.

PRO FORMA INCOME STATEMENT FOR THE LATEST FISCAL YEAR END ($000)


	Historical					Pro Forma Adjustments			Pro Forma Combined
	9/30/2018 COMMUNITY FIRST (1)		12/31/2018 ABB FINANCIAL(2)			Pro Forma Adjustments			Pro Forma Combined
*Interest Income:*
Loans	$	13,301	$	10,553		$	530	⁽³⁾	$	24,384
Investments		573		544			—			1,117
Other Interest-Earning Assets		418		485			—			903

Total Interest Income		14,292		11,582			530			26,404

*Interest Expense:*
Deposits		1,420		1,729			(228	)⁽⁴⁾		2,921
Borrowings		136		822			(60	)⁽⁵⁾		898

Total Interest Expense		1,556		2,551			(288	)		3,819

Net Interest Income		12,736		9,031			818			22,585
Provision for Loan and Lease Losses		500		—			—			500

Net Interest Income After Provision		12,236		9,031			818			22,085

*Noninterest Income:*
Service Charges and Fees		727		69			—			796
Investment Security Gains		—		559			—			559
Small Business Administration (SBA) Loan Fees		586		—			—			586
Other Income		595		341			—			936

Total Noninterest Income		1,908		969			—			2,877

*Noninterest Expense:*
Salaries and Benefits		6,585		3,890			—			10,475
Premises and equipment		1,706		721			55	⁽⁶⁾		2,482
Data Processing		891		270			—			1,161
Legal and Accounting		1,091		174			—			1,265
Other Real Estate Owned		80		111			—			191
Other expenses		2,137		1,605			348	⁽⁶⁾		4,090

Total Noninterest Expense		12,490		6,771			402	⁽⁶⁾		19,663

Income Before Income Taxes		1,654		3,229			416			5,299
Income Tax/Provision		1,205		823			108	⁽⁷⁾		2,136

*Net Income*		449		2,406			308			3,163

Preferred Dividend Payments (b)		—		(597	)^(b)		597	⁽⁸⁾		—

*Income Available to Common Shareholders*	$	449	$	1,809		$	905		$	3,163


(1) Source: Community First’s 10-K for fiscal year ended September 30, 2018 (a)
(a) Fiscal year changed to December 31 effective with 12/31/2018 10-QT
(2) Source: ABB’s Audited Financial Report December 31, 2018 (b)
(b) Adjusted to reflect the accrual of 12 months of deferred dividends on preferred stock of $597,000.
(3) Consists of:
12 months of Year 1 amortization of loan yield premium:	$	(218	)		Level yield method
12 months of Year 1 accretion of loan credit discount:		748			Level yield method

	$	530

(4) 12 months of Year 1 amortization of CD yield premium:	$	(228	)		Straight line amortization
(5) Consists of:
12 months of Year 1 amortization of borrowings yield premium:	$	(256	)		Straight line amortization
12 months of interest expense savings from sub debt canceled:		(144	)
12 months interest expense on new $20 million FHLB borrowing		340

	$	(60	)

(6) Consists of:
Less: 12 months amortization cost of the core deposit intangible: sum of years digits 10 yr				$	348
Less: 12 months amortization cost lease fair value adjustment: straight line					55

				$	402

(7) Marginal tax rate of 26%.
(8) 12 months of dividend savings from redemption of preferred stock				$	597

Community First Bancshares, Inc. - FORM 8-K/A - EX-99.4 - February 11, 2020

Attached files

Community First Bancshares, Inc. Reports