Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - Independent Bank Group, Inc. | d738325dex992.htm |
| EX-99.3 - EX-99.3 - Independent Bank Group, Inc. | d738325dex993.htm |
| 8-K/A - 8-K/A - Independent Bank Group, Inc. | d738325d8ka.htm |
Exhibit 99.4
Introductory Note to Unaudited Pro Forma Condensed Combined Consolidated Financial Information
The following unaudited pro forma combined consolidated balance sheet as of March 31, 2014, and the unaudited pro forma condensed combined consolidated statements of income for the three months ended March 31, 2014, and the year ended December 31, 2013, and have been prepared to reflect the acquisition of BOH Holdings, Inc. (BOH Holdings) by Independent Bank Group, Inc. (IBTX), which was completed on April 15, 2014. The unaudited pro forma combined condensed consolidated financial information is set forth as if the acquisition had occurred as of March 31, 2014, with respect to financial condition data and as of January 1, 2013, with respect to operations data.
The unaudited pro forma combined condensed consolidated financial statements give effect to the acquisition of BOH Holdings as a business combination under U.S. generally accepted accounting principles (GAAP). Accordingly, all assets and liabilities were recorded at estimated fair value. The pro forma adjustments are based on estimates made for the purpose of preparing these pro forma statements and are described in the accompanying notes. IBG’s management believes that the estimates used in these pro forma financial statements are reasonable under the circumstances.
The unaudited pro forma combined consolidated balance sheet as of March 31, 2014, and the unaudited pro forma combined condensed consolidated statements of income for the three months (as of the respective acquisition date) ended March 31, 2014, and the year ended December 31, 2013, also include the historical financial information of Collin Bank and Live Oak Financial Corp., two financial institutions also acquired by IBTX. The acquisition of Collin Bank was effective November 30, 2013, and the acquisition of Live Oak Financial Corp. was closed on January 1, 2014.
The pro forma adjustments included herein are subject to change as additional information becomes available and additional analyses are performed. The final allocation of the purchase price will be determined after further valuation analyses under GAAP are performed with respect to the fair values of certain tangible and intangible assets and liabilities as of the date of acquisition. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein. In addition, the pro forma financial statements do not include the effects of any potential cost savings which management believes will result from combining certain operating procedures.
The Company anticipates that the acquisition of BOH Holdings will provide the combined company with the ability to better serve its customers, reach new customers and reduce operating expenses. In addition, certain subjective estimates have been utilized in determining the pro forma adjustments applied to the historical results of operations of BOH Holdings. The pro forma information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the 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 our 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 historical consolidated financial statements and related notes of the Company and BOH Holdings.
The unaudited pro forma 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 the Company’s common stock or the actual or future results of operations of the Company for any period. Actual results may be materially different than the pro forma information presented herein.
The following table provides the preliminary purchase accounting allocations used in the pro forma financial statements as of March 31, 2014:
Preliminary Purchase Accounting Allocations
| (In Thousands) | ||||
| Assets of acquired bank: |
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| Cash and cash equivalents |
$ | 143,081 | ||
| Securities available for sale |
80,812 | |||
| Loans |
780,283 | |||
| Premises and equipment |
7,520 | |||
| Goodwill |
161,547 | |||
| Core deposit intangible |
6,610 | |||
| Other assets |
26,871 | |||
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| Total assets acquired |
$ | 1,206,724 | ||
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| Liabilities of acquired bank: |
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| Deposits |
$ | 806,978 | ||
| FHLB advances |
130,000 | |||
| Other liabilities |
2,992 | |||
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| Total liabilities assumed |
$ | 939,970 | ||
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| Common stock issued at $57.75 per share |
$ | 208,818 | ||
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| Series A Preferred Stock exchanged |
$ | 23,938 | ||
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| Cash paid |
$ | 33,998 | ||
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2
INDEPENDENT BANK GROUP/BOH HOLDINGS
UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
MARCH 31, 2014
(In Thousands)
| IBTX Consolidated | Historical BOH Holdings |
Pro Forma Purchase Accounting Adjustments Debits (Credits) |
Pro forma IBTX Consolidated |
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| Assets: |
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| Cash and due from banks |
$ | 32,771 | $ | 119,061 | $ | (33,998 | ) G | $ | 117,834 | |||||||
| Interest bearing deposits in banks |
64,944 | 24,020 | — | 88,964 | ||||||||||||
| Investment securities AFS |
204,539 | 80,812 | — | 285,351 | ||||||||||||
| Loans held for sale |
2,191 | — | — | 2,191 | ||||||||||||
| Loans |
1,893,082 | 785,754 | (5,471 | ) A | 2,673,365 | |||||||||||
| Loan Loss Reserve |
(14,841 | ) | (5,471 | ) | 5,471 | B | (14,841 | ) | ||||||||
| Premises and equipment |
74,461 | 7,126 | 394 | C | 81,981 | |||||||||||
| Other real estate |
2,909 | 1,063 | — | 3,972 | ||||||||||||
| Federal home loan bank stock |
9,012 | 6,809 | — | 15,821 | ||||||||||||
| Investment in life insurance |
21,421 | 17,518 | — | 38,939 | ||||||||||||
| Deferred tax asset |
3,936 | 737 | (2,429 | ) H | 2,244 | |||||||||||
| Goodwill |
42,575 | — | 161,547 | E | 204,122 | |||||||||||
| Intangible Assets |
3,813 | — | 6,610 | D | 10,423 | |||||||||||
| Other assets |
12,862 | 3,237 | (64 | ) C | 16,035 | |||||||||||
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| Total Assets |
$ | 2,353,675 | $ | 1,040,666 | $ | 132,060 | $ | 3,526,401 | ||||||||
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| Liabilities and Stockholders’ Equity |
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| Deposits: |
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| Noninterest bearing |
$ | 398,878 | $ | 301,332 | $ | — | $ | 700,210 | ||||||||
| Interest bearing |
1,491,799 | 505,646 | — | 1,997,445 | ||||||||||||
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| Total Deposits |
1,890,677 | 806,978 | — | 2,697,655 | ||||||||||||
| FHLB and Other Borrowings |
174,462 | 130,000 | — | 304,462 | ||||||||||||
| Repurchase Agreements |
4,535 | — | — | 4,535 | ||||||||||||
| Subordinated debentures |
7,730 | — | — | 7,730 | ||||||||||||
| Trust preferred securities |
18,147 | — | — | 18,147 | ||||||||||||
| Other liabilities |
5,616 | 2,992 | — | 8,608 | ||||||||||||
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| Total Liabilities |
2,101,167 | 939,970 | — | 3,041,137 | ||||||||||||
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| Stockholders’ equity: |
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| Preferred Stock Series C |
— | 23,938 | — | 23,938 | ||||||||||||
| Preferred Stock Series D |
— | 1,107 | 1,107 | F | — | |||||||||||
| Common stock |
126 | 38,317 | 38,317 | F | 126 | |||||||||||
| Capital surplus |
240,206 | 11,848 | (196,970 | ) F, G | 449,024 | |||||||||||
| Retained earnings |
16,708 | 24,966 | 24,966 | F | 16,708 | |||||||||||
| Unearned stock awards |
(4,981 | ) | — | — | (4,981 | ) | ||||||||||
| Accumulated comprehensive income |
449 | 520 | 520 | F | 449 | |||||||||||
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| Total Stockholders’ Equity |
252,508 | 100,696 | (132,060 | ) | 485,264 | |||||||||||
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| Total Liabilities and Stockholders’ Equity |
$ | 2,353,675 | $ | 1,040,666 | $ | (132,060 | ) | $ | 3,526,401 | |||||||
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IBTX/BOH Holdings Acquisition
Purchase Accounting Adjustments
| A | Estimated fair market value adjustment on loan portfolio. |
| B | Elimination of BOH Holdings’ allowance for loan loss. |
| C | Represents the fair value adjustment of BOH Holdings’ property and equipment. |
| D | Record core deposit intangibles for BOH Holdings. |
| E | Record goodwill for amount of consideration and liabilities assumed over fair value of assets received. |
| F | Eliminate BOH Holdings capital accounts. |
| G | Issue approximately 3,615,886 shares of IBTX common stock ($57.75 per share) and $34.0 million cash to former shareholders. |
| H | Estimated fair market value adjustment on deferred tax accounts. |
3
INDEPENDENT BANK GROUP/ BOH HOLDINGS
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2014
(In Thousands)
| Historical IBTX | Historical BOH Holdings |
Pro Forma Adjustments |
Pro Forma Combined IBTX |
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| Interest income |
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| Interest & fees on loans |
$ | 24,123 | $ | 9,463 | $ | 99 | A | $ | 33,685 | |||||||
| Interest on securities |
956 | 494 | — | 1,450 | ||||||||||||
| Interest on other |
83 | 27 | — | 110 | ||||||||||||
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| Total interest income |
25,162 | 9,984 | 99 | 35,245 | ||||||||||||
| Interest expense |
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| Interest on deposits |
1,907 | 503 | — | 2,410 | ||||||||||||
| Interest on other borrowings |
1,120 | 123 | — | 1,243 | ||||||||||||
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| Total interest expense |
3,027 | 626 | — | 3,653 | ||||||||||||
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| Net interest income |
22,135 | 9,358 | 99 | 31,592 | ||||||||||||
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| Provision for loan losses |
1,253 | 182 | (182 | ) B | 1,253 | |||||||||||
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| Net interest income after provision |
20,882 | 9,176 | 281 | 30,339 | ||||||||||||
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| Noninterest income |
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| Service charges |
1,211 | 184 | — | 1,395 | ||||||||||||
| Mortgage fee income |
730 | — | — | 730 | ||||||||||||
| Gain on sale of assets |
39 | — | — | 39 | ||||||||||||
| Other |
354 | 347 | — | 701 | ||||||||||||
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| Total noninterest income |
2,334 | 531 | — | 2,865 | ||||||||||||
| Noninterest expense |
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| Salaries & employee benefits |
9,134 | 3,804 | — | 12,938 | ||||||||||||
| Occupancy |
2,538 | 637 | — | 3,175 | ||||||||||||
| Other |
4,404 | 1,638 | 220 | C | 6,262 | |||||||||||
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| Total noninterest expense |
16,076 | 6,079 | 220 | 22,375 | ||||||||||||
| Income before taxes |
7,140 | 3,628 | 61 | 10,829 | ||||||||||||
| Income tax expense |
2,339 | 1,177 | 21 | D | 3,537 | |||||||||||
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| Net income |
$ | 4,801 | $ | 2,451 | $ | 40 | $ | 7,292 | ||||||||
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| A | Adjustment to interest income for accretion on acquired loans based on expected fair market value adjustment. |
| B | BOH Holdings acquired loans, which are marked to fair value at the acquisition date, are not expected to require a provision. |
| C | Expected amortization of core deposit intangible based on a 10 year life using an accelerated amortization method. |
| D | Tax adjustment related to other pro forma adjustments calculated at a 35% rate. |
4
INDEPENDENT BANK GROUP/ BOH HOLDINGS
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2013
(In Thousands)
| Pro Forma IBTX |
BOH Holdings |
Pro Forma Adjustments |
Pro Forma Consolidated IBTX |
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| Interest income |
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| Interest & fees on loans |
$ | 84,350 | $ | 35,753 | $ | 400 | A | $ | 120,503 | |||||||
| Interest on securities |
2,540 | 2,288 | — | 4,828 | ||||||||||||
| Interest on other |
324 | 131 | — | 455 | ||||||||||||
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| Total interest income |
87,214 | 38,172 | 400 | 125,786 | ||||||||||||
| Interest expense |
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| Interest on deposits |
6,974 | 1,911 | — | 8,885 | ||||||||||||
| Interest on other borrowings |
5,307 | 565 | — | 5,872 | ||||||||||||
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| Total interest expense |
12,281 | 2,476 | — | 14,757 | ||||||||||||
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| Net interest income |
74,933 | 35,696 | 400 | 111,029 | ||||||||||||
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| Provision for loan losses |
3,822 | (358 | ) | 358 | B | 3,822 | ||||||||||
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| Net interest income after provision |
71,111 | 36,054 | 42 | 107,207 | ||||||||||||
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| Noninterest income |
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| Service charges |
4,841 | 1,584 | — | 6,425 | ||||||||||||
| Mortgage fee income |
3,743 | — | — | 3,743 | ||||||||||||
| Gain on sale of assets |
1,489 | 617 | — | 2,106 | ||||||||||||
| Other |
948 | 556 | — | 1,504 | ||||||||||||
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| Total noninterest income |
11,021 | 2,757 | — | 13,778 | ||||||||||||
| Noninterest expense |
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| Salaries & employee benefits |
31,836 | 14,135 | — | 45,971 | ||||||||||||
| Occupancy |
9,042 | 2,458 | — | 11,500 | ||||||||||||
| Other |
16,793 | 5,697 | 840 | C | 23,330 | |||||||||||
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| Total noninterest expense |
57,671 | 22,290 | 840 | 80,801 | ||||||||||||
| Income before taxes |
24,461 | 16,521 | (798 | ) | 40,184 | |||||||||||
| Income tax expense |
4,661 | 5,211 | (279 | ) D | 9,593 | |||||||||||
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| Net income |
$ | 19,800 | $ | 11,310 | $ | (519 | ) | $ | 30,591 | |||||||
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| A | Adjustment to interest income for accretion on acquired loans based on expected fair market value adjustment. |
| B | BOH Holdings acquired loans, which are marked to fair value at the acquisition date, are not expected to require a provision. |
| C | Expected amortization of core deposit intangible based on a 10 year life using an accelerated amortization method. |
| D | Tax adjustment related to other pro forma adjustments calculated at a 35% rate. |
5